What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-16 · 101 added, 98 removed, 155 unchanged (56% of the section changed)

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Overview and Recent Developments

Rockwell is a commercial-stage, biopharmaceutical company developing and commercializing our next-generation parenteral iron technology platform, Ferric Pyrophosphate Citrate ("FPC"), which we believe has the potential to lead to transformative treatments for iron deficiency in multiple disease states, that we believe could reduce healthcare costs and improve patients’ lives.

Rockwell is a commercial-stage, biopharmaceutical company developing and commercializing our next-generation parenteral iron technology platform, Ferric Pyrophosphate Citrate ("FPC"), which we believe has the potential to lead to transformative treatments for iron deficiency in multiple disease states, reduce healthcare costs and improve patients’ lives.

We are also one of the two major suppliers of life-saving hemodialysis concentrate products to kidney dialysis clinics in the United States.

We have two novel, FDA approved therapies, Triferic and Triferic AVNU, which are the first two products developed from our FPC platform.

We are marketing both products to kidney dialysis centers for their patients receiving dialysis.

In 2021, we intend to advance our FPC platform strategy outside of dialysis by starting a Phase 2 trial for the treatment of iron deficiency anemia in patients who are receiving long-term and or chronic intravenous (“IV”) medications for various therapeutic needs in the home infusion setting..

The Company has two novel, FDA approved therapies, Triferic and Triferic AVNU, which are the first two products developed from our FPC platform.

The Company is currently target marketing both products to kidney dialysis centers for their patients receiving dialysis and working to find a commercial partner to expand our commercial efforts within the United States.

This decision was based on the dynamics of the hemodialysis ("HD") market, including provider consolidation, the effects of the CMS bundled payment system and competitive product bundling tactics.

In 2021, Rockwell has been working to advance our FPC platform strategy outside of dialysis and plans to start a Phase II trial for the treatment of iron deficiency anemia in patients, who are receiving long-term and or chronic intravenous ("IV") medications for various therapeutic needs in the home infusion setting by the end of the year.

In the Company's R&D pipeline, we are also exploring FPC’s impact in the treatment of hospitalized patients with acute heart failure, with the potential to begin another Phase II trial in these patients in 2022.

The trend toward providing medical care, including the delivery of medicines, at home make the home infusion market a rapidly growing area of healthcare.

We believe that the home infusion setting is a natural path for expansion of our platform as many of the patients suffer from chronic diseases that are associated with iron deficiency and anemia.

We are currently seeking additional FDA feedback and clarification regarding the clinical development plan for FPC in the home-infusion setting.

Our expectations regarding the commencement of a Phase 2 trial in 2021 is based on the assumption that the FDA agrees with the development plan as we have proposed.

In our R&D pipeline, we are also investigating FPC’s impact on iron deficiency in the treatment of hospitalized patients with acute heart failure, with the potential to begin another Phase 2 trial in these patients in 2022.

Subsequent to our Type C and Pre-IND meeting with FDA, and incorporating their advice and feedback, we filed an IND for the treatment of iron deficiency anemia in the home-infusion setting in November 2021.

Our expectations regarding the commencement of a Phase II trial by the end of 2021 are based on the FDA's statutory obligations to respond to an IND submission within 30 calendar days.

R&D pipeline, we are also investigating FPC’s impact on iron deficiency in the treatment of hospitalized patients with acute heart failure, with the potential to begin another Phase II trial in these patients in 2022.

We are the second largest supplier of hemodialysis concentrates in the United States, with a reputation for excellent service, quality, and reliability.

We believe that this reputation, which is based on over 25 years of service to the kidney

dialysis centers, combined with about $60 million in annual revenue, approximately 300 dedicated employees, expertise in manufacturing and logistics and the added expertise in pharmaceutical development and commercialization brought to the Company by recent additions to our management team, gives us a solid foundation on which to grow.

We believe that this reputation, which is based on over 25 years of service to the kidney dialysis centers, combined with about $60 million in annual revenue, approximately 300 dedicated employees, expertise in manufacturing and logistics and the added expertise in pharmaceutical development and commercialization brought to the Company by recent additions to our management team, provides us with a solid foundation on which to grow.

At Rockwell Medical, we are dedicated to replacing the currently inadequate standard of care for treatment of iron deficiency in acute and chronic disease by leveraging our proprietary FPC platform technology.

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It is a common comorbidity in many disease states, such as end-stage kidney disease, chronic kidney disease, acute heart failure, cancer and multiple chronic gastrointestinal conditions.

Iron deficiency impacts patients’ health in many ways, including anemia, organ dysfunction, slower recovery, diminished energy and reduced quality of life.

Iron deficiency impacts patients’ health in many ways, including through anemia, organ dysfunction, slower recovery, diminished energy and reduced quality of life.

Strategy Evolution and Overview

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Our first two branded products from our FPC platform, Triferic® (dialysate) and Triferic AVNU® (IV), are used to maintain hemoglobin in patients undergoing hemodialysis.

We are building on our reputation and industry presence by commercializing then to medium and small dialysis organizations.

We are building on our reputation and industry presence by commercializing them to medium and small dialysis organizations.

We began commercializing Triferic and Triferic AVNU in the United States in the second half of 2019 and in early 2021, respectively.

In April 2021, we received marketing approval for Triferic AVNU from Health Canada for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease, which is the first international regulatory approval for our intravenous therapy.

We expect Triferic AVNU to become commercially available in Canada during 2022.

While we had identified a partner to commercialize the product in Canada, we recently terminated the distribution agreement with that partner and are seeking a new partner in Canada.

This may delay commercial availability of Triferic AVNU in Canada.

Our strategy for increasing Triferic adoption is to continue to generate data in clinics showing the benefits of Triferic in real world protocols.

In addition, we expect to study Triferic use with the innovations that we believe have the potential to change future medical practices (e.g.

In addition, we expect to study Triferic use with the innovations that we believe have the potential to change future

medical practices (e.g.

introduction and adoption of HIF-PHIs), subject to FDA approval.

We believe that positive data from these studies would better position Triferic for long-term growth.

We are developing strategic alliance partners for development, regulatory approval and commercialization of Triferic outside of the United States.

As part of this initiative and due to current economic challenges, the Company has adjusted its sales and marketing efforts for Triferic and Triferic AVNU and is seeking a commercial partner within the United States.

This decision was based on the dynamics of the hemodialysis market, including provider consolidation, the effects of the CMS bundled payment system and competitive product bundling tactics.

Additionally, we are developing strategic alliance partners for development, regulatory approval and commercialization of Triferic outside of the United States.

Home Infusion Program:

We plan to initiate a clinical trial program of FPC for the treatment of iron deficiency anemia in the home-infusion setting.

Many patient groups requiring home infusion therapies suffer from chronic diseases that

are associated with a high incidence of iron deficiency and anemia.

Many patient groups requiring home infusion therapies suffer from chronic diseases that are associated with a high incidence of iron deficiency and anemia.

Home infusion represents a large and rapidly-growing segment of healthcare where we believe FPC may have distinct advantages over currently available iron replacement therapy options.

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We commercialize the Triferic products ourselves in the United States, and are partnering with established local pharmaceutical companies for the regulatory approval and commercialization outside of the United States.

Although we have an excellent reputation for dependability and service within the dialysis sector, with concentrates and Triferic, our growth opportunities for both in the United States dialysis market are challenged by the consolidated ownership of dialysis clinics, a capitated reimbursement model and the demographics of the patient population.

The two largest dialysis organizations treat approximately 73% of the patients in the United States.

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Through our partnership with Baxter International, we currently supply concentrates to a significant percentage of the small and medium sized dialysis organizations.

In a sector, such as kidney dialysis, with capitated reimbursement for the dialysis procedure and all included inputs, new product success depends on compelling data demonstrating improved patient outcomes and/or pharmacoeconomics versus the current standard of care in practice in the clinics.

In a sector such as kidney dialysis, with capitated

reimbursement for the dialysis procedure and all included inputs, new product success depends on compelling data demonstrating improved patient outcomes and/or pharmacoeconomics versus the current standard of care in practice in the clinics.

Once Medicare determined that Triferic and Triferic AVNU would be reimbursed under the fixed bundled rate, market adoption became more dependent on the generation of these data, which were not required for the drug's approval from the FDA.

Notwithstanding the growth limitations mentioned above, we have made progress and continue to be confident that Triferic has the potential to be the treatment of choice for the maintenance of hemoglobin in dialysis patients.

Toward this end, we have increased our efforts in generating real world data in clinics with current protocols, which we believe will help with the adoption of Triferic and Triferic AVNU as these results are developed and disseminated over time.

To this end, we have increased our efforts in generating real world data in clinics with current protocols, which we believe will help with the adoption of Triferic and Triferic AVNU as these results are developed and disseminated over time, and have adjusted our sales and marketing efforts while seeking a commercial partner within the United States with a bigger footprint to expand commercialization of both products.

In addition, we believe the hemodialysis industry may experience a great deal of change over the next several years.

We plan to take the steps necessary to

generate the data necessary to potentially allow Triferic and Triferic AVNU to benefit from these new innovations, such as the potential approval of a class of drugs, known as hypoxia-inducible factor prolyl hydroxylase inhibitors ("HIF-PHIs"), as well as the new, solid-state dialysis equipment in development.

We plan to take the steps necessary to generate the data necessary to potentially allow Triferic and Triferic AVNU to benefit from these new innovations, such as the potential approval of a class of drugs, known as hypoxia-inducible factor prolyl hydroxylase inhibitors ("HIF-PHIs"), as well as the new, solid-state dialysis equipment in development.

We are planning to study Triferic in combination with these potential new innovations as they become available.

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Our growth strategy is to go beyond our foundational business in dialysis by leveraging the pre-clinical, clinical pharmacology and safety data from Triferic.

We are planning to develop an FPC-based therapeutic for iron deficiency to be given in the home infusion setting.

We are planning development of an FPC-based therapeutic for iron deficiency to be given in the home infusion setting.

According to the National Home Infusion Association, the number of patients served by home infusion therapy has grown from approximately 800,000 in 2010 to over 3,000,000 in 2019.

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Many patient groups requiring home infusion therapies suffer from diseases that are associated with an incidence of iron deficiency and anemia.

For example, it is estimated that 40% to 55% of all home parenteral nutrition patients are iron deficient.

For example, it is estimated that 40% to 55% of all home parenteral nutrition patients have iron deficiency anemia.

We believe, based on our data with hemodialysis patients, FPC as a home infusion therapy for iron deficiency anemia may have distinct advantages over currently available iron replacement therapy options.

We plan on initiating a Phase 2 clinical study in home infusion patients with iron deficient anemia during the second half of 2021 to confirm the dose and duration of FPC treatment.

We expect data from the trial in the second half of 2022.

Prior to commencing this study, the company is planning to further review and discuss this clinical plan with the FDA.

After reviewing the development plan with the FDA, and subject to clarifying expected clinical development requirements, we expect to initiate the trial in the second half of 2021.

We plan on initiating a Phase II trial in home infusion patients with iron deficient anemia by the end of 2021, subject to the clearance of our IND, to confirm the dose and duration of FPC treatment.

We expect data from the trial in the second quarter of 2023.

Pipeline Development

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If so, these outcomes would translate into a meaningful reduction in healthcare costs and human suffering.

We expect to communicate with the FDA in 2021 regarding a development pathway for this indication.

We expect to communicate with the FDA in the first half of 2022 regarding a development pathway for this indication.

We continue exploring other potential patient populations for application of our technology.

We are considering disease states where patients can benefit the most from an effective treatment for iron deficiency, and where the development path, cost estimates and reimbursement are the most favorable.

Results of Operations for the Three Months Ended June 30, 2021 and 2020

Results of Operations for the Three Months Ended September 30, 2021 and 2020

The following table summarizes our operating results for the periods presented below (dollars in thousands):

For the Three Months Ended June 30,

For the Three Months Ended September 30,

2021 % of Revenue 2020 % of Revenue % Change

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Operating Loss $ (6,972) (43.6) % $ (6,690) (43.8) % 4.2 %

During the three months ended June 30, 2021, our net sales were $15.1 million compared to net sales of $15.9 million during the three months ended June 30, 2020.

The decrease of $0.8 million was primarily due to a decrease in sales of dialysis concentrates products.

Cost of sales during the three months ended June 30, 2021 was $15.4 million, resulting in gross loss of $0.3 million during the three months ended June 30, 2021, compared to cost of sales of a $15.0 million and a gross profit of $0.9 million during the three months ended June 30, 2020.

Gross profit decreased by $1.2 million mainly due to a decrease in concentrate sales and an increase in costs related to protocols implemented because of the ongoing COVID-19 pandemic, shipping, fuel and labor.

During the three months ended September 30, 2021, our net sales were $16.0 million compared to net sales of $15.3 million during the three months ended September 30, 2020.

The increase of $0.7 million was primarily due to an increase in sales of dialysis concentrates products from our international customers.

Cost of sales during the three months ended September 30, 2021 was 16.3 million, resulting in gross loss of $0.3 million during the three months ended September 30, 2021, compared to cost of sales of $14.9 million and a gross profit of $0.3 million during the three months ended September 30, 2020.

Gross profit decreased by $0.6 million ma inly due to an increase in costs related to protocols implemented because of the ongoing COVID-19 pandemic, as well as increases in shipping, fuel and labor costs.

We expect our gross profit to continue to decrease due to increasing labor and fuel costs for transportation, which we have a limited our ability to recover such costs due to the terms of our agreements with our larger customers.

Research and Product Development Expense

Research and product development expenses were $2.4 million for the three months ended June 30, 2021, compared with $1.6 million during the three months ended June 30, 2020.

The increase of $0.8 million was primarily due to the Company continuing to invest in its medical and scientific programs to support the continued advancement of our FPC technology platform.

Research and product development expenses were $1.2 million for the three months ended September 30, 2021, compared with $1.7 million during the three months ended September 30, 2020.

The decrease of $0.5 million was primarily due to timing of investments we are continuing to make in our medical and scientific programs to support the continued advancement of our FPC technology platform.

Selling and Marketing Expense

Selling and marketing expenses were $1.5 million during the three months ended June 30, 2021, compared with $2.0 million during the three months ended June 30, 2020.

The decrease of $0.5 million is primarily due to a decrease in marketing costs related to Triferic (dialysate) partially offset by a slight increase in costs associated with the launch of Triferic AVNU.

Selling and marketing expenses were $1.5 million during the three months ended September 30, 2021, compared with $1.7 million during the three months ended September 30, 2020.

The decrease of $0.2 million is primarily due t o a decrease in marketing costs related to Triferic (dialysate).

General and Administrative Expense

General and administrative expenses were $3.7 million during the three months ended June 30, 2021, compared with $2.9 million during the three months ended June 30, 2020.

The increase of $0.8 million is due primarily to an increase in stock compensation of $1.9 million, which was a decrease in incentive compensation in Q2 2020 of $1.5 million from forfeited equity awards of the former President and Chief Executive Officer;

partially offset by a decrease of $0.8 million for the reduction of severance costs related to our former President and Chief Executive Officer.

General and administrative expenses were $3.9 million during the three months ended September 30, 2021, compared with $3.6 million during the three months ended September 30, 2020.

The increase of $0.3 million is due primarily to an increase in the insurance costs.

Other Income (Expense)

Other income for the three months ended June 30, 2021 was $7,000, consisting primarily of interest income.

Other income for the three months ended June 30, 2020 was $0.1 million, consisting primarily of interest income.

Other expense for the three months ended June 30, 2021 was $0.6 million of interest expense related to our debt facility (see Note 15 for more

Other income for the three months ended September 30, 2021 was nil.

Other income for the three months ended September 30, 2020 was $6,000, consisting primarily of realized gain on investments and interest income.

Other expense for the three months ended September 30, 2021 was $0.6 million of interest expense related to our debt facility (see Note 15 for more

information on our debt facility).

Other expense for the three months ended June 30, 2020 was $1.4 million, consisting of interest expense of $0.5 million related to our debt facility and warrant modification expense of $0.8 million.

Results of Operations for the Six Months Ended June 30, 2021 and 2020

Other expense for the three months ended September 30, 2020 was $0.7 million of interest expense related to our debt facility.

Results of Operations for the Nine Months Ended September 30, 2021 and 2020

The following table summarizes our operating results for the periods presented below (dollars in thousands):

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

2021 % of Revenue 2020 % of Revenue % Change

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Operating Loss $ (21,977) (47.2) % $ (20,348) (43.3) % 8.0 %

During the six months ended June 30, 2021, our net sales were $30.6 million compared to net sales of $31.8 million during the six months ended June 30, 2020.

The decrease of $1.2 million was primarily due to a decrease in sales of dialysis concentrates products.

Cost of sales during the six months ended June 30, 2021 was $30.5 million, resulting in gross profit of $0.1 million during the six months ended June 30, 2021, compared to cost of sales of a $29.8 million and a gross profit of $2.0 million during the six months ended June 30, 2020.

Gross profit decreased by $1.9 million mainly due to a decrease in concentrate sales and an increase in costs related to protocols implemented because of the ongoing COVID-19 pandemic, shipping and fuel costs and labor.

During the nine months ended September 30, 2021, our net sales were $46.6 million compared to net sales of $47.0 million during the nine months ended September 30, 2020.

The decrease of $0.4 million wa s primarily due to a decrease in sales of dialysis concentrates products in the United States the resulted from the COVID-19 pandemic.

Cost of sales during the nine months ended September 30, 2021 was $46.8 million, resulting in gross loss of $0.2 million during the nine months ended September 30, 2021, compared to cost of sales of a $44.7 million and a gross profit of $2.3 million during the nine months ended September 30, 2020.

Gross profit decreased by $2.5 million ma inly due to a decrease in concentrate sales and an increase in costs related to protocols implemented because of the ongoing COVID-19 pandemic, as well as increases in shipping, fuel and labor costs.

Research and Product Development Expense

Research and product development expenses were $4.2 million for the six months ended June 30, 2021, compared with $3.4 million during the six months ended June 30, 2020.

This increase of $0.8 million is primarily due to continued investments the Company is making in its medical and scientific programs to support the continued advancement of our FPC technology platform.

Research and product development expenses were $5.4 million for the nine months ended September 30, 2021, compared with $5.2 million during the nine months ended September 30, 2020.

Th is increase of $0.2 million is primarily due to continued investments we are making in our medical and scientific programs to support the continued advancement of our FPC technology platform.

Selling and Marketing Expense

Selling and marketing expenses were $3.3 million during the six months ended June 30, 2021, compared with $4.1 million during the six months ended June 30, 2020.

The decrease of $0.8 million is primarily due to a decrease in marketing costs related to Triferic (dialysate) partially offset by a slight increase in costs associated with the launch of Triferic AVNU.

Selling and marketing expenses were $4.9 million during the nine months ended September 30, 2021, compared with $5.7 million during the nine months ended September 30, 2020.

The decrease of $0.8 mil lion is primarily due to a headcount reduction in the quarter.

General and Administrative Expense

General and administrative expenses were $7.6 million during the six months ended June 30, 2021, compared with $8.1 million during the six months ended June 30, 2020.

The decrease of $0.5 million is due primarily to a decrease of $0.8 million from the completion of severance pay related to our former President and Chief Executive Officer (CEO);

a decrease in legal costs of $0.3 million, relating to previous litigation that has since been resolved;

and a decrease in insurance and accounting costs of $0.2 million, relating to reduced premiums;

partially offset by an increase of $0.7 million for stock compensation, relating to a decrease in Q2 2020 incentive compensation from forfeited equity awards related to our former President and CEO.

General and administrative expenses were $11.5 million during the nine months ended September 30, 2021, compared with $11.8 million during the nine months ended September 30, 2020.

The decrease of $0.3 million is due primarily t o a decrease of $0.5 million from the completion of severance pay related to our former President and Chief Executive Officer (CEO), a decrease in legal costs of $0.4 million, relating to previous litigation that has since been resolved;

a decrease in recruiting fees of $0.3 million;

partially offset by an increase of $0.3 million in insurance premiums;

and an increase of $0.9 million for stock compensation.

Other Income (Expense)

Other income for the six months ended June 30, 2021 was $18,000, consisting primarily of interest income.

Other income for the six months ended June 30, 2020 was $0.2 million, consisting primarily of interest income.

Other expense for the six months ended June 30, 2021 was $1.2 million of interest expense related to our debt facility (see Note 15 for more information on our debt facility).

Other expense for the six months ended June 30, 2020 was $1.5 million, consisting of warrant modification expense of $0.8 million and interest expense of $0.6 million related to our debt facility.

Other income for the nine months ended September 30, 2021 was $17,000, consisting primarily of interest income.

Other income for the nine months ended September 30, 2020 was $0.2 million, consisting primarily of interest income.

Other expense for the nine months ended September 30, 2021 was $1.8 million of interest expense related to our debt facility (see Note 15 for more information on our debt facility).

Other expense for the nine months ended September 30, 2020 was $2.1 million, consisting of warrant modification expense of $0.8 million and interest expense of $1.3 million related to our debt facility.

Liquidity and Capital Resources

Since inception, Rockwell has incurred significant net losses and has funded its operations primarily through revenue from commercial products, proceeds from the issuance of debt and equity securities and payments from partnerships.

At June 30, 2021, Rockwell had an accumulated deficit of approximately $353.6 million and stockholders' equity of $18.2 million.

As of June 30, 2021, Rockwell had approximately $41.0 million of cash, cash equivalents and investments available-for-sale, and working capital of $18.4 million.

Net cash used in operating activities for the six months ended June 30, 2021 was approximately $17.4 million.

The Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus.

As of the date of this report, the Company is in compliance with all covenants.

As a result of the ongoing COVID-19 pandemic and its effect on the Company's sales activities, among other factors, the Company may not be able to satisfy such covenants over the next 12 months.

However, based on the foregoing, the Company has classified amounts payable under the Loan Agreement as a current liability.

If and when the Company reaches an agreement with Innovatus to avoid an event of default, the amounts payable under the Loan Agreement will be reclassified.

The financial statements for June 30, 2021, have been prepared with the assumption that the Company will be able to agree to an appropriate remedy during the applicable cure period for any future breaches of operating covenants.

If the Company is unable to comply with the covenants under the Loan Agreement, it would pursue all available cure options in order to regain compliance (See Note 15 for further detail).

The Company expects it will require additional capital to sustain its operations and make the investments it needs to execute its strategic plan, including the commercialization of Triferic (dialysate) and Triferic AVNU in dialysis, generating additional data for Triferic in dialysis, developing FPC for iron deficiency anemia in patients undergoing home infusion and for progressing our pipeline development program of new indications for its FPC platform.

At September 30, 2021, Rockwell had an accumulated deficit of approximately $361.1 million and stockholders' equity of $11.1 million.

As of September 30, 2021, Rockwell had approximately $33.2 million of cash, cash equivalents and investments available-for-sale, and working capital of $24.3 million.

Net cash used in operating activities for the nine months ended September 30, 2021 was approximately $24.5 million.

Based on the currently available working capital, the adjustments made to sales and marketing efforts for Triferic and Triferic AVNU and the implementation of key efficiency initiatives within our concentrates business, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

The Company expects it will require additional capital to sustain its operations and make the investments it needs to execute its strategic plan developing FPC for iron deficiency anemia in patients undergoing home infusion and for progressing our pipeline development program of new indications for its FPC platform.

If the Company is unable to generate sufficient revenue from sales of its commercial products and from partnerships, the Company will need to obtain additional equity or debt financing.

If the Company attempts to obtain additional debt or equity financing, the Company cannot assume that such financing will be available on favorable terms, if at all.

Based on the currently available working capital and managements assumption that the Company will be able to agree to an appropriate remedy, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

Currently, because the Company’s public float is less than $75 million, we are subject to the baby shelf limitations under our current registration statement on Form S-3, which limit the amount we may offer under our Form S-3.

This could limit our ability to raise capital under this registration statement.

Additionally, the Company has received a delisting notification letter from the Nasdaq Stock Market ("Nasdaq") regarding compliance with minimum bid requirements.

The notification letter states that the Company has 180 calendar days, or until December 8, 2021, to regain compliance with Nasdaq Listing Rule 5450(a)(1).

To regain compliance, the closing bid price of the Company’s common stock must be at least $1.00 per share for a minimum of 10 consecutive business days at any time prior to December 8, 2021.

In the event that the Company does not regain compliance by December 8, 2021, the Company may be eligible for additional time to reach compliance with the minimum bid price requirement.

The Company is working on a plan to meet the minimum compliance requirements set forth by Nasdaq.

Based on the above, if the Company attempts to obtain additional debt or equity financing, the Company cannot assume that such financing will be available on favorable terms, if at all.

In addition, the Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus.

As of the date of this report, the Company is in compliance with all covenants.

The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to, the expenses and revenue associated with the commercial operations in the United States and internationally (with partners);

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and (ii) strategic transactions, including potential alliances and collaborations focused on markets outside the United States, as well as potential combinations (including by merger or acquisition) or other corporate transactions.

In particular, our Baxter Agreement prohibits us from entering into a contract that would encumber the assets used in our concentrate business without the prior written consent of Baxter.

Due to the fact that the assets used in our concentrate business currently constitute a substantial portion of the tangible assets we own other than our drug inventory, we may not be able to, or we may find it difficult, to obtain secured debt financing without the consent of Baxter.

We believe that our ability to fund our activities in the long term will be highly dependent upon 1) our ability to execute on the development of the FPC platform for new therapies, and 2) our ability to commercialize and increase adaptation of Triferic (dialysate) and Triferic AVNU.

Both of these strategies is subject to significant risks and uncertainties such that there can be no assurance that we will be successful is achieving approval of FPC in a new therapeutic area or that we will be able to have sustained commercial success with Triferic (dialysate) and Triferic AVNU.

If our planned clinical program is delayed or fails or if our commercialization of Triferic (dialysate) and/or Triferic AVNU should fail to increase sales, we may be forced to implement cost-saving measures that may potentially have a negative impact on our activities and potentially the results of our research and development programs.

research and development activities and operations, which could have a material adverse effect on our business.

If we are unable to raise the required capital, we may be forced to curtail all of our activities and, ultimately, cease operations.

We believe that our ability to fund our activities in the long term will be highly dependent upon 1) our ability to execute on the development of the FPC platform for new therapies, 2) our ability to seek a partner to expand commercialization and increase adoption of Triferic (dialysate) and Triferic AVNU, and 3) our ability to improve profitability in our concentrate business.

These strategies are subject to significant risks and uncertainties such that there can be no assurance that we will be successful is achieving approval of FPC in a new therapeutic area or that we will be able to find a suitable partner and have sustained commercial success with Triferic (dialysate) and Triferic AVNU or be able to improve our profitability due to the current economic environment and the limitations of certain agreements.

If our planned clinical program is delayed or fails or if Triferic (dialysate) and/or Triferic AVNU sales fail to increase or we cannot increase the profitability of our concentrate business, we may be forced to implement cost-saving measures that may potentially have a negative impact on our activities and potentially the results of our research and development programs.

Even though we began commercialization of Triferic (dialysate) and Triferic AVNU as planned, if the results are unsuccessful, we may be unable to secure the additional capital that we will require to continue our research and development activities and operations, which could have a material adverse effect on our business.

If we are unable to raise the required capital, we may be forced to curtail all of our activities and, ultimately,

cease operations.

Even if we are able to raise sufficient capital, such financings may only be available on unattractive terms, or result in significant dilution of stockholders’ interests and, in such event, the market price of our common stock may decline.

Cash Used in Operating Activities

Net cash used in operating activities was $17.4 million for the six months ended June 30, 2021 compared to net cash used in operating activities of $16.2 million for the six months ended June 30, 2020.

The increase in cash used from operating activities during the current period was primarily due to changes in current balance sheet accounts in the ordinary course of business of approximately $3.0 million, including an increase in net accounts receivable of $1.2 million and a reduction in accounts payable and accrued expense of approximately $0.4 million.

Overall, our cash burn for the six months ended June 30, 2021 was in line with our expectations, and we continue to expect, in aggregate, 2021 cash burn to be lower than 2020 cash burn.

Net cash used in operating activities was $24.5 million for the nine months ended September 30, 2021 compared to net cash used in operating activities of $21.1 million for the nine months ended September 30, 2020.

The increase in cash used from operating activities during the current period was primarily due to changes in current balance sheet accounts in the ordinary course of business of approximately $3.6 million, including an increase in net accounts receivable of $1.9 million and an increase in accounts payable and accrued expense of approximately $0.2 million.

Cash Provided by Investing Activities

Net cash provided by investing activities was $1.1 million during the six months ended June 30, 2021 compared to net cash provided by investing activities of $0.7 million for the six months ended June 30, 2020.

The net cash provided by investing activities during the six months ended June 30, 2021 was primarily due to sales and purchase of available-for-sale investments during the quarter.

Net cash used in investing activities was $0.2 million during the nine months ended September 30, 2021 compared to net cash provided by investing activities of $2.6 million for the nine months ended September 30, 2020.

The net cash used in investing activities during the nine months ended September 30, 2021 was primarily due to sales and purchase of available-for-sale investments during the quarter.

Cash (Used in) Provided by Financing Activities

Net cash used in financing activities was $6,000 during the six months ended June 30, 2021 compared to the net cash provided by financing activities of $30.4 million for the six months ended June 30, 2020.

The net cash provided during the six months ended June 30, 2020 was primarily due to net proceeds of $21.2 million related to proceeds from the debt facility and $8.0 million from the sale of our common stock, related to our public offering, offset by $0.8 million for payments on short term notes.

Net cash used in financing activities was $0.6 million during the nine months ended September 30, 2021 compared to the net cash provided by financing activities of $63.3 million for the nine months ended September 30, 2020.

The net cash used during the nine months ended September 30, 2021 was primarily due to the payments on the Company's short term note payable.

COVID-19 Impact

The COVID-19 pandemic and resulting global disruptions have adversely affected our business and operations, including, but not limited to, our sales and marketing efforts and our research and development activities, and the operations of third parties upon whom we rely.

Quarantines, shelter-in-place, executive and similar government orders may negatively impact our sales and marketing activities, particularly if our sales representatives are unable to interact with current and potential customers to the same extent as before onset of the COVID-19 pandemic.

The COVID-19 pandemic and resulting global disruptions, particularly in the supply chain and labor market, among other areas, have adversely affected our business and operations, including, but not limited to, our sales and marketing efforts and our research and development activities, our plant and transportation operations and the operations of third parties upon whom we rely.

Quarantines, shelter-in-place, executive and similar government orders may negatively impact our plant and transportation operations and remaining sales and marketing activities.

Any vaccine hesitancy among our labor force could also disrupt our business if workers become ill or need to quarantine due to illness or exposure to the virus.

The Company's international business development activities may also continue to be negatively impacted by COVID-19, especially with the recent surge in infections internationally, ongoing international travel restrictions and quarantines or shelter-in-place orders.

The COVID-19 pandemic and resulting global disruptions have caused significant volatility in financial and credit markets.

The COVID-19 pandemic and resulting global disruptions have caused and may continue to cause significant volatility in financial and credit markets.

We have utilized a range of financing methods to fund our operations in the past;

however, current conditions in the financial and credit markets may limit the availability of funding or increase the cost of funding.

Due to the rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect our liquidity and capital resources in the future.

Due to the evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect our liquidity and capital resources in the future.

Critical Accounting Policies and Significant Judgments and Estimates

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We have evaluated all recently issued accounting pronouncements and believe such pronouncements do not have a material effect our financial statements.

See Note 3 of the condensed consolidated financial statements at June 30, 2021.

See Note 3 of the condensed consolidated financial statements at September 30, 2021.

Quantitative and Qualitative Disclosures about Market Risk

ROCKWELL MEDICAL, INC.

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Notes to Condensed Consolidated Financial Statements

Quantitative and Qualitative Disclosures about Market Risk

Per §229.305 of Regulation S-K, the Company, designated a Smaller Reporting Company as defined in §229.10(f)(1) of Regulation S-K, is not required to provide the disclosure required by this Item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis