ROCKWELL MEDICAL, INC. 10-K

Item 1. Business. Our website is included as an inactive textual reference only and nothing on the website is incorporated by reference into this Annual Report on Form 10-K. Unless otherwise indicated in this Annual Report on Form 10-K “we,” “our,” “us,” “the Company,” "Rockwell," “Rockwell Medical” and other similar terms refer to Rockwell Medical, Inc., together with its consolidated subsidiaries. You are advised to read this Annual Report on Form 10-K in conjunction with other reports and documents that we file from time to time with the Securities and Exchange Commission (“SEC”). In particular, please read our definitive proxy statement, which will be filed with the SEC in connection with our 2022 annual meeting of stockholders, our quarterly reports on Form 10-Q and any current reports on Form 8-K that we may file from time to time. You can access free of charge on our website copies of these reports as soon as practicable after they are electronically filed with the SEC. The SEC also maintains a website on the internet that contains reports, proxy and information statements and other information regarding issuers, such as us, that file electronically with the SEC. The address of the SEC’s website is http://www.sec.gov. General Information We were incorporated in the state of Michigan in 1996, and re-domiciled to the state of Delaware in 2019. Our headquarters is located at 30142 Wixom Road, Wixom Michigan 48393. Our telephone number is (248) 960-9009 and our website is http://www.rockwellmed.com . The information contained on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K. We have included our website in this Annual Report on Form 10-K solely as an inactive textual reference. Triferic ® , CitraPure ® , RenalPure ® and SteriLyte ® are registered trademarks of Rockwell. This Annual Report on Form 10-K contains references to our trademarks and trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Annual Report, including logos, artwork, and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company. OVERVIEW OF BUSINESS Rockwell Medical 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 market both products to kidney dialysis centers for their patients receiving dialysis. In late 2021, we filed an IND with the United Stated Food and Drug Administration ("FDA") with the goal to advance our FPC platform strategy by conducting a Phase II trial for the treatment of iron deficiency anemia in patients outside of dialysis, who are receiving intravenous ("IV") medications in the home infusion setting. The trend toward providing medical care, including the delivery of infused medications 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 diseases that are associated with iron deficiency and anemia. In our R&D pipeline, we are also investigating FPC’s impact in the treatment of hospitalized patients with acute heart failure. At Rockwell Medical, we are dedicated to enhancing the currently sub-optimal standard of care for treatment of iron deficiency in acute and chronic disease by leveraging our proprietary FPC platform technology. Our proprietary drug platform, FPC, is a next-generation parenteral iron therapeutic. We believe our FPC platform has several advantages over other parenteral iron therapies. Importantly, it provides iron that is immediately bioavailable for critical body processes once it is administered. It has been demonstrated to be safe and well-tolerated, with a safety profile similar to placebo in clinical trials. Iron deficiency can develop into a serious medical condition that is often overlooked and undertreated in several illnesses. It is a common comorbidity in many disease states, such as end-stage kidney disease, chronic kidney disease, acute 4 Table of Contents 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. We are the second largest supplier of hemodialysis concentrates in the United States, with a reputation for excellent service, quality, and reliability. We believe this reputation, which is based on over 25 years of service to kidney dialysis centers, combined with approximately $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. STRATEGY Dialysis Business: We are one of the two major suppliers of hemodialysis concentrates in the United States. Over the past 25 years we developed a core expertise in manufacturing and delivering hemodialysis concentrates. Because these concentrates are used to maintain human life by removing toxins and balancing electrolytes in the dialysis patient’s bloodstream, we manufacture them under cGMP regulations as described below. Our concentrates are manufactured in three facilities, totaling 159,000 square feet, located in Michigan, Texas and South Carolina, from which we deliver these products to dialysis clinics throughout most of the United States. We utilize our own delivery fleet as well as third parties. We employ approximately 300 people in the concentrates unit of our dialysis business. We believe that the Company has earned a reputation for dependability, quality and service within our customer base. This reputation was further strengthened during the recent challenges presented, not only by the COVID-19 pandemic, but also by supply chain disruptions due to recent natural disasters, in which our team has been challenged by hurricanes, flooding and freezing, while still meeting production demands. During the recent shortage in dialysis concentrates, the Company was able to fill the supply gaps for many clinics because they had not received deliveries of certain products from other suppliers. We believe that our dialysis business in concentrates and our opportunities with FPC technology are synergistic. We scaled back our commercial organization in 2021, but we are working to maintain our current customer base in the United States while we seek a commercialization partner. We are also seeking to partner with established local and regional pharmaceutical companies for regulatory approval and commercialization in markets outside of the United States. Despite our market position, we believe that our growth opportunities for our concentrates business and Triferic in the US dialysis market are challenged by the consolidated ownership of dialysis clinics, a capitated reimbursement model and the demographics of the dialysis patient population. The two largest dialysis organizations treat approximately 72% of the patients in the United States. One manufactures its own concentrates and IV iron, and we have an existing agreement to supply concentrates to the other. Through our partnership with Baxter Healthcare Corporation, a subsidiary of Baxter International, Inc. ("Baxter"),we currently supply concentrates to a significant percentage of the small and medium sized independent dialysis organizations. In a sector like 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 for dialysis treatment, market adoption became more dependent on the generation of these data, which were not required for the drug's approval by the FDA. Notwithstanding the growth limitations mentioned above, we continue to believe that Triferic has the potential to be an important option for the maintenance of hemoglobin in dialysis patients. To this end, we have continued 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. In addition, we are seeking a partner to help us further commercialize Triferic. A key element of our dialysis business strategy is to also improve the strength of our concentrates business by creating efficiencies and enhancing our manufacturing and transportation operations and to fully recoup manufacturing and shipping expenses so that this business has the potential to be profitable. To date, our concentrates business has operated at a loss, with the loss accelerating recently as inflationary pressures have increased our manufacturing and operating costs, while we have limited ability to pass these costs along to certain customers. We have undertaken discussions with our largest customers to renegotiate our existing supply contracts in an effort to improve the profitability of this business line. On April 6, 2022, we entered into a strategic arrangement with our long-time partner, DaVita, Inc. ("DaVita"), a leading provider of kidney care, to 5 Table of Contents allow the Company to stabilize its concentrates business. The strategic intent of this agreement is to make sure Rockwell Medical is on stable financial footing because it is one of the two major suppliers of dialysis concentrates in the U.S. The amended agreement provides a stronger financial arrangement, encompassing pricing, cost sharing and joint efforts in supply chain improvement and cost cutting, with the goal of having the Company’s concentrates business operate profitably in the future. In addition to the amended agreement, DaVita entered into an agreement pursuant to which it will invest up to $15 million in preferred stock in two equal tranches. The first tranche of $7.5 million was funded on April 7, 2022. The second $7.5 million tranche is to be funded subject to the Company raising $15 million additional capital by June 30, 2022. We are also in discussions with our other major customer to renegotiate certain terms of that agreement. In addition, we are reviewing our entire supply chain to identify opportunities for improvement, prioritizing initiatives that will have the largest impact on long-term efficiency, profitability and growth. Home Infusion: Our strategy is to go beyond our foundational business in dialysis by leveraging the efficacy and safety data from Triferic in new therapeutic settings. Subject to having sufficient capital resources, we are planning to develop an FPC-based therapeutic for iron deficiency to be delivered in the home infusion setting. The number of patients served by home infusion therapy grew from approximately 800,000 in 2010 to over 3,000,000 in 2019. The home infusion setting is expected to continue this rapid expansion, which has been accelerated by the COVID-19 environment. 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%-55% of all home parenteral nutrition patients are iron deficient. We believe, based on our data from hemodialysis patients, FPC as a home infusion therapy for iron deficiency anemia may have distinct advantages over currently available iron replacement therapy options (see Platform Technology below). Based on further feedback received in December 2021 from the FDA, we have made plans to initiate a Phase 2 clinical study in home infusion patients with iron deficient anemia to confirm the dose and duration of FPC treatment. We expect to commence this study in 2022, subject to having sufficient working capital to fund this study, and would expect to have top-line data from the trial approximately 12-18 months following commencement of the study (see Clinical Pipeline below). Pipeline Development In our R&D pipeline, we are also exploring FPC’s impact in the treatment of hospitalized heart failure patients. More than one million people in the United States are hospitalized each year for acute heart failure. Clinical improvement in heart failure has already been demonstrated with older first-generation forms of IV iron in clinical trials in the outpatient setting. We believe that FPC may deliver rapidly bioavailable iron to the heart and improve cardiac energetics during hospitalization. This effect could help patients recover faster resulting in shorter hospital stays and fewer 30-day re-admissions. If so, these outcomes would translate into a meaningful reduction in healthcare costs and human suffering. Platform Technology - Ferric Pyrophosphate Citrate Ferric Pyrophosphate Citrate (“FPC”) is a next-generation parenteral iron that is an important advance in the treatment of iron deficiency anemia, with the potential to be developed for numerous indications. FPC is structurally and functionally different from traditional macromolecular IV iron, or parenteral iron carbohydrate complexes. It is unique in molecular structure and mode-of-action. All components of FPC are normal constituents in the blood. Importantly, FPC has already been shown to be efficacious in clinical trials and is well-tolerated with over 1.6 million doses administered to date. The first two formulations based upon the FPC platform received approval for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease ("HDD-CKD"). Other formulations of our FPC platform, in other disease states, are currently being researched and developed. FPC is a novel complex iron salt, developed to replace iron losses in patients with anemia in an entirely new way. This unique and differentiated molecule consists of an iron atom complexed to one pyrophosphate and two citrate anions. FPC is a form of protected iron in which citrate and pyrophosphate are tightly complexed to the iron. The molecule is water soluble, making the iron completely bioavailable, and has the ability to deliver iron directly and completely to transferrin, the body's iron transport protein. This transferrin-bound iron is immediately delivered to the bone marrow to be incorporated into hemoglobin, as well as to other tissues such as skeletal muscle and smooth muscle (e.g. the heart). As a result, this novel approach to iron management has the potential for application in the treatment of iron disorders and iron deficiency anemia in multiple disease states. This mechanism uses the body’s own means to transport iron safely to tissues that need iron (e.g. red blood cells and muscle). 6 Table of Contents The structure of FPC minimizes the potential for the iron to be taken up into the body’s storage cells, such as those present in the liver and other tissues, which is a problem with traditional macromolecular IV iron. Iron release from body storage cells can be slowed or blocked when inflammation is present. Because of its mechanism of action, FPC increases bioavailable iron unimpeded by inflammation without excessively increasing body iron stores or causing inflammation, iron toxicity, or oxidative stress. FPC iron is delivered to the bone marrow regardless of other underlying conditions that might otherwise block the release of iron. Some of the challenges of managing iron in sick patients, including inflammation, hepcidin block, and functional iron deficiency, can be overcome with FPC due to its ability to provide immediately bioavailable iron. Our first FPC-based product, Triferic, is used proactively in hemodialysis patients to maintain iron homeostasis, such that the amount of iron delivered to the patient and to the bone marrow for erythropoiesis closely approximates the amount lost during hemodialysis. FPC bypasses the hepcidin induced block caused by inflammation, of iron-release from the macrophages and liver (see “Our Triferic Portfolio” below). Consequently, tissue iron overload is avoided, unlike when traditional macromolecular IV iron are administered proactively. FPC delivers iron and maintains hemoglobin without increasing iron stores (ferritin) and thus addresses an unmet need in hemodialysis patients. FPC has demonstrated an excellent safety profile. No reported instances of anaphylaxis or hypersensitivity events have been received during more than 1.2 million doses administered. Triferic may be administered even to patients with history of allergic reactions to IV iron. We are actively evaluating additional indications for potential development (see "Pipeline" below). PRODUCTS Pipeline We currently sell Triferic, Triferic AVNU and our dialysis concentrates portfolio of products. We partner with Baxter for commercialization of our concentrates products in the United States and certain other countries. We partner with Nipro Medical Corporation for our concentrate products in certain countries not included in our Baxter agreement, as described below. Our clinical development programs are all based on FPC, our proprietary platform technology. We are directly executing on clinical development programs in the United States, while our international development efforts in dialysis for local regulatory approval are conducted by our partners. 7 Table of Contents Our Dialysis Concentrate Products We are an established leader in manufacturing and delivering high-quality hemodialysis concentrates and dialysates, along with certain ancillary products, to dialysis providers and distributors in the United States and abroad. We manufacture, sell and distribute hemodialysis concentrates and other medical products and supplies used in the treatment of patients with End-Stage Kidney Disease (“ESKD”). As one of the two major suppliers in the United States, our dialysis concentrate products are used to maintain human life by removing toxins and replacing critical nutrients in the dialysis patient’s bloodstream. In 2021, we estimate that we supplied approximately 27% of the United States domestic market with dialysis concentrates, with the majority of our sales in the United States. We also supply dialysis concentrates to distributors serving a number of foreign countries, primarily in the Americas and the Pacific Rim. All of our concentrate products are manufactured according to Association for the Advancement of Medical Instrumentation guidelines and the FDA's Current Good Manufacturing Practice ("cGMP"). Our concentrate products are diluted with purified water on-site at the clinic in the dialysis machine, creating dialysate, which works to clean the patient’s blood. CitraPure Citric Acid Concentrat e Our CitraPure Concentrate is citric acid-based, and 100% acetate-free, in contrast to the acetate-based products used for many years. CitraPure does not promote inflammation associated with acetate-based products and the reduction in inflammation is beneficial to improving patient outcomes. Citrate acts as an anticoagulant and has been shown in clinical studies to reduce the need for heparin during dialysis treatment (CitraPure is not indicated for heparin sparing). CitraPure is packaged as a liquid and as a dry powder acid concentrate for use with our Dry Acid Concentrate Mixer. CitraPure is packaged as dry acid concentrate in 25 gallon cases and liquid acid concentrate in 55 gallon drums and four one gallon jugs to a case. Dri-Sate Dry Acid Concentrate Our Dri-Sate Concentrate is our original acetic acid-based product. Dri-Sate is packaged as a dry powder acid concentrate for use with our Dry Acid Concentrate Mixer. Dri-Sate is packaged as dry acid concentrate in 25 gallon cases. RenalPure Liquid Acid Concentrate Our RenalPure Liquid Concentrate is our original acetic acid-based product and is packaged in 55 gallon drums and four one gallon jugs to a case. Dry Acid Concentrate Mixer 8 Table of Contents Our Dry Acid Concentrate Mixer is designed for our CitraPure and Dri-Sate Dry Acid products and enables the clinic to mix acid concentrate on-site. Clinics using our Dry Acid Concentrate products realize numerous advantages, including lower cost per treatment, reduced storage space requirements, reduced number of deliveries and more flexibility in scheduling deliveries, while enabling us to reduce distribution and warehousing costs. RenalPure and SteriLyte Bicarbonate Concentrate RenalPure bicarbonate is a dry powder mixed on-site at the clinic and is packaged for bulk and individual treatment and SteriLyte bicarbonate is a liquid packaged in four one gallon jugs to a case and is used mainly in acute care settings. Ancillary Products We offer certain ancillary products to selected customers including cleaning agents, 6% bleach for disinfection, citric acid descale, filtration salts and other supplies used by hemodialysis providers. Our Triferic Portfolio Triferic Triferic (dialysate) and Triferic AVNU (IV) are currently the only FDA-approved therapies indicated to replace iron and maintain hemoglobin in adult hemodialysis patients. These were our first products based on our FPC platform technology. Triferic (dialysate) in a liquid form was approved in 2015. In 2016, the powder version of Triferic (dialysate) was also approved. These two formulations provide a convenient means to administer Triferic (dialysate) in a clinical setting. Triferic AVNU, approved in 2020, has the same indication for use as Triferic (dialysate), but it is formulated for delivery as an IV infusion. Each hemodialysis treatment results in a small amount of blood loss due to trapping of red blood cells in the extracorporeal blood circuit and blood loss from the vascular access. This blood loss, when combined with repeated blood draws, increased blood loss from the gastrointestinal (“GI”) tract and stimulation of erythropoiesis by use of erythropoiesis stimulating agents (“ESAs”), frequently results in iron deficiency in hemodialysis patients. Hemodialysis-related blood loss averages about 1g to 1.5g of elemental iron annually, not taking into consideration possible blood losses from dialyzer clotting or bleeding from surgical procedures related to vascular access. We believe Triferic addresses an important medical need in the treatment of ongoing iron losses and anemia in ESKD patients. Triferic’s unique mode-of-action (see “Platform Technology” above) distinguishes it from traditional macromolecular IV iron because Triferic donates iron to transferrin, immediately, and completely, as soon as it enters the blood, providing immediately bioavailable iron to the body. The iron bound to transferrin is transported to the bone marrow to facilitate the body’s manufacture of hemoglobin. Triferic delivers approximately 5 mg to 7 mg of iron to the bone marrow with every hemodialysis treatment and maintains hemoglobin without increasing iron stores (ferritin). Triferic (dialysate) Triferic (dialysate) and Triferic AVNU are currently the only FDA-approved therapy indicated to replace iron to maintain hemoglobin in adult hemodialysis patients. We believe that Triferic, due to its unique mechanism of action, facilitates both potential clinical and cost-saving benefits. Triferic is an innovative iron therapy that replaces the ongoing iron losses routinely occurring in the vast majority of hemodialysis patients. Our first formulation of the drug is delivered via the dialysate, which is an innovative mode of delivery we believe that adds a convenience factor for the dialysis units. The first presentation of Triferic (dialysate) is a liquid, single-patient dose, which was approved by the FDA in 2015. The second presentation is a powder packet, multiple-use formulation of Triferic (dialysate), which was approved by the FDA in 2016. We built a commercial organization for our Triferic products and launched both Triferic products in the United States in May 2019. We scaled back our commercial organization in 2021, but we are working to maintain our current customer base in the United States while we seek a commercialization partner. Reimbursement Triferic (dialysate) received a reimbursement J-code on January 1, 2016 from the Centers for Medicare & Medicaid Services (“CMS”), providing that it would be reimbursed for administration to dialysis patients within the existing fixed-price “bundle” of payments that CMS provides to dialysis providers. In June 2018, the Company determined, based on feedback 9 Table of Contents provided from CMS’s Innovation Center (“CMMI”), that Triferic (dialysate) was unlikely to obtain add-on reimbursement in the near term. As a result, the Company changed its commercialization strategy to plan for the commercial launch of Triferic (dialysate) with reimbursement within the bundle of payments to dialysis providers, while continuing to develop Triferic AVNU (IV). On April 26, 2019, we were notified of a preliminary recommendation by CMS to grant our powder packet formulation of Triferic (dialysate) a separate J-Code, which became effective on July 1, 2019.We commercially launched Triferic (dialysate) in May 2019. Triferic AVNU (IV) We also developed Triferic AVNU, an IV formulation of Triferic, for use by hemodialysis patients in the United States as well as international markets. Triferic AVNU was approved by the FDA on March 27, 2020. Triferic AVNU can be administered to any hemodialysis patient regardless of the type of bicarbonate technology, or machine technology including hemodiafiltration, used. Use of Triferic (dialysate) is limited to clinics that use a central loop or liquid jugs to deliver bicarbonate. However, Triferic AVNU must be delivered at every dialysis session via slow IV infusion, over 3-4 hours, which may be logistically challenging for some clinics. Triferic AVNU is not eligible for add-on reimbursement and is reimbursed within the “bundle,” as with Triferic (dialysate). MARKETING, SALES AND INTERNATIONAL Market Opportunity Hemodialysis The United States dialysis market is currently the largest market in the world for dialysis products. As of the end of 2019, there were an estimated 566,600 patients treated with some form of dialysis. Hemodialysis is the primary treatment modality for ESKD employed in the United States, with approximately 87% of all dialysis patients receiving in-center hemodialysis. There were an estimated 492,000 in-center hemodialysis patients in the United States in 2019, representing approximately 74 million treatments annually. We do not currently compete in the other two segments, peritoneal dialysis, representing approximately 11% of the total patients, or home dialysis, representing approximately 2% of the total patients. Hemodialysis treatments are primarily performed in freestanding clinics and in some hospitals. 10 Table of Contents According to international data collected by the United States Renal Data System ("USRDS"), the global ESKD population receiving some form of treatment was estimated to be approximately 2.7 million patients at the end of 2019 with an average yearly growth rate over the previous 10 years of 7.4%. Data from USRDS and the European Renal Association indicates that there are more than two million patients undergoing hemodialysis globally. According to the National Kidney Foundation, 10% of the worldwide population is affected by chronic kidney disease and millions die each year because they do not have access to affordable treatments. We have observed that the prevalent ESKD patient population in the United States has grown steadily over the past several decades, with an average yearly growth rate of >3% from 2009 - 2019. Growth rates slowed in 2020 and 2021 due to an increase in deaths associated with the COVID-19 pandemic, however we expect a more typical growth rate of approximately 3% per year to resume in 2022 and persist over the next several years. The Asia-Pacific region is projected to experience rapid growth in both the incidence of kidney disease and total treatment in the ESKD population over the next decade. One common side-effect of dialysis treatments is iron deficiency anemia. The majority of hemodialysis patients receive dialysis treatment three times per week, or approximately 153 times per year. Most patients who have their dialysis treatment performed at a free-standing clinic have permanent loss of kidney function. These are commonly referred to as “chronic” dialysis patients. Patients that undergo dialysis in hospitals for temporary loss of kidney function are typically referred to as “acute” dialysis patients. The small percentage of chronic dialysis patients that receives their treatment at home are referred to as “home” dialysis patients. In each setting, a dialysis machine dilutes concentrated solution, such as Rockwell’s concentrate products, with purified water. The resulting solution is called dialysate. Dialysate is pumped through an artificial kidney or filter (called a dialyzer) while the patient’s blood is pumped through a semi-permeable membrane inside the dialyzer in the opposite direction the dialysate is flowing. The dialysate can exchange bicarbonate, sodium, calcium, magnesium and potassium into the patient’s blood, while removing fluid and waste. Dialysate generally contains dextrose, sodium chloride, calcium, potassium, magnesium, sodium bicarbonate and citric acid or acetic acid. The patient’s physician chooses the proper concentrations required for each patient based on each particular patient’s needs. In addition to using concentrate products during every in-center treatment, a dialysis provider also uses other products such as blood tubing, fistula needles, dialyzers, drugs, specialized component kits, dressings, cleaning agents, filtration salts and other supplies, some of which we sell. Limitations of Existing Anemia Therapies for HDD-CKD Patients The primary causes of anemia in dialysis patients are loss of renal erythropoietin (“EPO”) production and iron deficiency due to chronic inflammation and increased blood losses related to uremia and hemodialysis. The result is an iron loss of∼5–7mg per dialysis session. The current standard of care for treating anemia in HDD-CKD patients are injectable ESAs and traditional macromolecular IV iron. ESAs and traditional macromolecular IV iron are often used together. HDD-CKD patients have abnormalities in iron metabolism caused by ongoing blood loss during the hemodialysis treatment, repeated blood draws to follow laboratory parameters and a limited diet. Furthermore, absorption of iron from the 11 Table of Contents diet and mobilization from body stores is reduced due to increases in a peptide called hepcidin. Hepcidin is the master regulator of iron uptake and distribution and is elevated in patients with inflammation, such as ESKD patients on dialysis. Since iron is a critical component of hemoglobin production, reduced levels of iron can cause iron deficiency anemia. EPO is a hormone that is produced by the kidneys and stimulates red blood cell production in the bone marrow. In patients with HDD-CKD, the kidneys do not make enough EPO and as a result the bone marrow makes fewer red blood cells, causing anemia. ESAs are synthetic recombinant versions of human EPO that are administered to HDD-CKD patients to stimulate red blood cell production. Administration of ESAs creates a significant demand for iron in the bone marrow, since iron is a critical building block for hemoglobin that is contained in red blood cells. IV iron is used to support anemia management in dialysis patients to achieve or maintain an iron replete state prior to, during and following initiation of ESA therapy. Traditional IV iron carbohydrate products are macromolecular carbohydrate complexes which are taken up by macrophages which transfer to the liver where iron gets stored. Iron complexes are metabolized within the macrophages to release iron so that it can bind to transferrin in plasma - the iron carrier in the circulation. Transferrin carries the iron to the bone marrow for hemoglobin generation during red cell production. Due to the inflammation present in hemodialysis patients, hepcidin, the master molecule responsible for regulation of iron absorption from the GI tract and export of recycled iron from the macrophages is elevated, thereby blocking the release of iron from macrophages, which is referred to as iron sequestration. This reduces the efficiency of iron delivery to the bone marrow for erythropoiesis, leading to a state of functional iron deficiency. Since macromolecular IV iron finds a depot in macrophages, it is administered in large doses and is, therefore, suited as a replacement therapy in iron depleted patients. Consistent with this mechanism of action, traditional macromolecular IV iron was approved as large dose injection/infusion to replenish and restore iron stores in iron-depleted patients (serum ferritin level < 200 ng/mL) with iron deficiency anemia. Since macromolecular IV iron has been the only therapy available for hemodialysis patients for over 30 years, it has been commonly used off-label in hemodialysis patients in a proactive manner for maintaining iron balance and preventing the development of iron deficient state. When iron-carbohydrate complexes are administered intravenously to hemodialysis patients, a significant portion of the iron is sequestered, therefore, the dose needed to deliver sufficient iron to the bone marrow far exceeds the amount of iron lost, causing progressive and cumulative tissue iron overload with concomitant elevation of serum ferritin levels. In summary, we believe that cumulative iron overload in tissues caused by high doses of macromolecular IV iron over time may lead to complications and introduce risk to a dialysis patient's long-term health. Furthermore, the carbohydrate moiety in IV iron complexes is thought to be responsible for anaphylactic reactions occasionally seen with clinical use. Home Infusion General Home infusion therapy includes specialized services that allow patients to receive intravenous medications at home. Providers are specialized, closed-door pharmacies with expertise in sterile compounding and clinical management of IV therapies. The therapy is supported by multi-disciplinary clinical teams (pharmacists, nurses, dietitians and doctors). Many patient groups requiring home infusion therapies suffer from chronic diseases that are associated with a risk of iron deficiency and anemia. As an example, one group in particular at high risk for developing iron deficiency anemia (“IDA”) is patients who require parenteral nutrition (food or supplements delivered through a “feeding tube” or via intravenous delivery). It is estimated that 40-55% of all patients on parenteral nutrition are iron deficient. Patients with IDA can exhibit symptoms of fatigue, shortness of breath, rapid or irregular heartbeats and glossitis - all which affect quality of life. The majority of these patients are undertreated, due in part to limitations with currently available IV iron products. 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. Diseases Often Treated With Infusion Therapy At Home Diseases commonly requiring infusion therapy include infections that are unresponsive to oral antibiotics, cancer and cancer-related pain, dehydration, gastrointestinal diseases or disorders which prevent normal functioning of the gastrointestinal system, and more. A recent National Home Infusion Foundation ("NHIF") report found that in 2019 home infusion and specialty providers cared for more than 3 million patients in the United States, representing a 300% increase since the last industry study in 2008. 12 Table of Contents Until the 1980s, patients receiving infusion therapy had to remain in the inpatient setting for the duration of their therapy, which often lasted for several hours. Heightened emphasis on cost-containment in health care, as well as developments in the clinical administration of the therapy, led to strategies to administer infusion therapy in alternate settings. For individuals requiring long-term therapy, inpatient care is not only tremendously expensive but also prevents the individual from resuming normal lifestyle and work activities. The technological advances that enabled safe and effective administration of infusion therapies in the home, the desire of patients to resume normal lifestyles and work activities while recovering from illness, and the cost-effectiveness of home care are important. Consequently, home infusion therapy has evolved into a comprehensive medical therapy that is a much less costly alternative to inpatient treatment in a hospital or skilled nursing facility. Home infusion has been proven to be a safe and effective alternative to inpatient care for many disease states and therapies. For many patients, receiving treatment at home or in an outpatient infusion suite setting is preferable to inpatient care. A thorough patient assessment and home assessment are performed before initiating infusion therapy at home to ensure the patient is an appropriate candidate for home care (Source: www.nhia.org). Home infusion therapy allows patients that require multiple on-going infusions of medications to receive them in the comfort of their own home. The benefits include, increased quality of life, shorter hospital/skilled nursing facility length of stay, lower rates of depression and fatigue, less opioid use and reduced risk of hospital/facility acquired infections. Growth In Home Infusion The home and specialty infusion marketplace is experiencing rapid growth and provides a favorable reimbursement opportunity for suitable drugs because of the benefits listed above. In addition to these factors, COVID-19 and its impact has accelerated existing trends. 13 Table of Contents We believe the home infusion sector will continue to grow in the future, driven by: (1) high rates of patient demand, and satisfaction with services, (2) site of care optimization programs driven by commercial payers, (3) legislation to expand coverage for Medicare beneficiaries and (4) a robust pipeline of specialty IV treatments. Iron Deficiency Anemia In Home Infusion IDA is a common comorbidity for many different types of patients with diseases that are treated with home infusion therapy. The following home infusion therapies are provided to patients for the treatment of diseases that may be associated with a risk of iron deficiency anemia. Applicability of FPC will depend on length of therapy, prevalence of iron deficiency, and acceptability of alternative therapies such as traditional IV iron loading or oral iron. 1. NHIA Infusion Industry Trends Report 2020. 2. Hwa YL, Rashtak S, Kelly DG, and Murray JA. Iron deficiency in long-term parenteral nutrition therapy. JPEN 2015. 3. Busti E, et al. Anemia and iron deficiency in cancer patients. Role of iron replacement therapy. Pharmaceuticals 2018, 11, 94 4. Beale A, et al. Iron Deficiency in Acute Decompensated Heart Failure. J. Clin. Med. 2019, 8, 1569. 5. Kaitha S, et al. Iron deficiency anemia in inflammatory bowel disease. World J Gastrointest Pathophysiol. 2015. 6(3):62-72. 6. von Haehling S, et al. Iron Deficiency in Heart Failure. JACC. 2019. 7(1):36-46. It is recommended that patients receiving home parenteral nutrition be screened regularly for anemia. Treatment with parenteral iron for these patients with iron deficiency is recommended. Inadequate response to treatment may be related to continued blood loss, inflammation, ineffective absorption or poor adherence to therapy. Treatment patterns are inadequate for patients on home infusion therapy with IDA. IV iron supplementation is more effective than oral formulations, however, concern for adverse events is a deterrent. Home infusion of traditional macromolecular IV iron is limited due to the risk of hypersensitivity and need for medical supervision of the injection, and concerns about incompatibility with other infused drugs (e.g., stability of parenteral nutrition lipids when delivered with carbohydrate-based IV iron preparations). An office visit for infusion of IV iron is costly, inconvenient, and often does not fit the physician practice care model. Limitations with the current approach can lead to a vicious cycle of late diagnosis and treatment, inconsistent follow-up, and increased risk of office visits or hospitalizations. 14 Table of Contents For home parenteral nutrition (“HPN”) patients specifically, there is a significant opportunity for FPC for home infusion and an unmet need for effective proactive iron maintenance therapy. The NHIF estimates there are approximately 113,000 HPN patients annually, of which 83,000 patients require short-term care (averaging 45 days) and 30,000 patients require long-term care. An estimated 36% to 55% of such patients are iron deficient and the majority of patients have a negative iron balance due to low/no dietary iron absorption and inflammation. The current treatment for these patients is daily infusions of parenteral nutrition supplements, which last for 8 to 12 hours per day. Traditional parenteral iron is infrequently used due to risk of hypersensitivity and concerns regarding incompatibility with lipids. Oral iron is also considered to be inadequate due to patient inability to absorb or unwanted side effects. We believe that the inadequacy and burden of current treatments presents an opportunity for our FPC pipeline. We believe FPC may be suited for use as a home infusion therapy: • Home infusion clinicians are hesitant to recommend macromolecular IV iron supplementation at home due to the potential for severe hypersensitivity risk - however rare. FPC has been demonstrated to have a safety profile similar to placebo in prospective randomized clinical trials in hemodialysis patients. • Treatment with loading doses of traditional IV iron therapy can temporarily address iron deficiency, but iron deficiency may persist due to inflammation. FPC provides 100% immediately bioavailable iron, bypassing storage in the liver. Iron from FPC is bioavailable even in the presence of inflammation and elevated hepcidin. • Managing iron with loading doses of macromolecular IV iron is inconsistent for home infusion patients. FPC can be dosed consistently in low doses as a physiologic maintenance dose to address an on-going negative iron balance and prevent iron deficiency anemia. Sales and Marketing Domestic Dialysis Concentrates We use Baxter as our exclusive commercial partner responsible for marketing our Dialysis Concentrate Products within the United States and in select foreign markets pursuant to an exclusive Distribution Agreement, as amended (collectively, the “Distribution Agreement”). In June 2017, we entered into the First Amendment to Exclusive Distribution Agreement with Baxter which, among other things, enabled us to negotiate directly with DaVita, Inc. ("DaVita") on a long-term contract for the supply of our concentrate products. In August 2019, we signed a new Products Purchase Agreement (the "Products Purchase Agreement") with DaVita. In March 2020, we entered into a Second Amendment to the Exclusive Distribution Agreement with Baxter (the “Second Amendment”). The Second Amendment provides for, among other things, a commitment by Rockwell to maintain a specified manufacturing capacity for Baxter, a cap upon the net amount of reimbursable transportation expenses and modified extension terms. The Products Purchase Agreement with DaVita provided for an increase in the product sale prices relative to the prices charged for products under the previous agreement with DaVita. On April 6, 2022, we entered into an amendment to the Products Purchase Agreement under which we agreed to a price increase, effective May 1, 2022, as well as the pass-through of certain costs, determined on a quarterly basis. Certain costs are subject to a cap. The Amendment will provide us with the potential to operate the concentrates business profitably in the future, subject to cost containment activities to be undertaken by the Company. We also supply dialysis concentrates to distributors serving a number of foreign countries, primarily in the Americas and the Pacific Rim. Nipro Medical Corporation is our primary distributor of our dialysis concentrates in certain countries in Latin America that are not covered under the Distribution Agreement. Dialysate concentrates accounted for approximately 98.3% of our 2021 revenue. Approximately 89.4% of our 2021 sales were to distributors and customers for use in the United States. Triferic In The United States Our primary customers in the United States for sales of Triferic (dialysate), Triferic AVNU and our dialysis concentrates are dialysis provider organizations. The dialysis provider market is considerably consolidated, with the top 10 provider organizations treating approximately 90% of in-center hemodialysis patients. We market and sell Triferic (dialysate), 15 Table of Contents Triferic AVNU directly to these medium-sized, and independent dialysis chains and are currently searching for a commercial partner within the United States to continue the commercialization these products into the market. Triferic (dialysate). We significantly scaled back our field-based sales team that supported the commercialization of Triferic (dialysate) in the United States in August 2021. Our initial target customers included selected medium and small sized dialysis chains and independent dialysis centers. The launch of Triferic (dialysate) enabled us to engage with key customers in the dialysis industry regarding the potential clinical and pharmacoeconomic benefits of Triferic and is providing us with valuable experience to support our future commercial and medical initiatives. Triferic AVNU (IV) . Triferic AVNU (IV) was FDA approved on March 27, 2020. We initiated a limited evaluation program with sample product in the fourth quarter of 2020 and we began commercial sales of Triferic AVNU in the first quarter of 2021. Research to Support the Triferic Value Proposition. The kidney dialysis market in the U.S. is a concentrated market, where two companies service approximately 74% of the patients. The dialysis procedure, including all inputs, is reimbursed under capitated reimbursement model at a fixed rate. This means any 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 it was determined by Medicare that Triferic would be reimbursed under the fixed bundled rate, market adoption became dependent on the generation of these data, which were not required for approval from the FDA. We have made progress and continue to be confident that Triferic has the potential to be an important option for the maintenance of hemoglobin in dialysis patients. To this end, we have increased our efforts in generating real world data in clinics with current protocols, which we believe can help with the adoption of Triferic as these results are created and disseminated over time. We are also seeking a commercialization partner that can help us market Triferic on a larger scale. International Dialysis. Our strategy for growth includes the expansion of Triferic sales outside the United States by licensing it to key partners for development and/or commercialization. Partnering in these regions allows us to better leverage the development, regulatory, commercial presence and expertise of business partners to increase sales of our products throughout the world. To date, we have established partnerships in China, India, Korea, Turkey, Peru and Chile. We continue to pursue international licensing opportunities in other countries and regions. China: In 2016, we licensed the commercialization rights for Triferic (dialysate) and Triferic AVNU for the Chinese market to Wanbang Biopharmaceutical ("Wanbang"), a subsidiary of Shanghai Fosun Pharmaceutical (Group) Co., Ltd.. Wanbang estimates there are almost 600,000 patients receiving hemodialysis in the People’s Republic of China and it is expected to become the largest ESRD market in the world over the next several years. Wanbang is currently enrolled patients in a Phase III trial. If approved, Wanbang will commence commercialization of Triferic following the regulatory approval (for more information see Clinical Development below). India: We have licensed the commercialization rights for Triferic (dialysate) in India to a wholly-owned subsidiary of Sun Pharmaceutical Industries Ltd. (together, “Sun Pharma”). It is estimated there are approximately 120,000 patients receiving hemodialysis in India. Sun Pharma has submitted the NDA for Triferic in India and is currently working with the Indian Central Drugs Standard Control Organization for the optimal regulatory path for approval of Triferic (dialysate) in India. A Joint Alliance Committee, comprised of members from the Company and Sun Pharma, continues to guide the development and execution for Triferic (dialysate) in India. Sun Pharma will be responsible for all clinical, regulatory and commercialization activities. Korea: 16 Table of Contents We have licensed the commercialization rights for Triferic (dialysate) and Triferic AVNU for the Korean market to Jeil Pharmaceuticals (“Jeil”). It is estimated there are approximately 78,000 hemodialysis patients in Korea. Jeil has recently submitted the NDA for both Triferic (dialysate) and Triferic AVNU with the goal of being able to commercially launch Triferic (AVNU) in 2022. In January 2022, Jeil received approval by the Ministry of Food and Drug Safety (MFDS) of the Republic of Korea for formulations: Triferic Injection (AVNU) and Triferic Dialysate with the goal of being able to commercially launch Triferic AVNU in 2022. Turkey: In 2021 Drogsan Pharmaceuticals, a leading pharmaceutical company in Turkey, entered into an exclusive license agreement with Rockwell Medical for the rights to commercialize Triferic AVNU in Turkey. The agreement also allows for Drogsan to negotiate further geographic expansion into the surrounding region. Drogsan submitted their application for Triferic AVNU in January 2022. Canada: We filed for regulatory approval of Triferic AVNU (IV) in May of 2020, and if approved and granted favorable placement on both national and providence formularies, we would be entitled to receive a transfer price based on our partner’s sales price in Canada. It is estimated that approximately 17,000 patients are receiving hemodialysis in Canada. In 2021 we terminated our distribution agreement with our commercial partner in Canada. We are now seeking a new commercialization partner in that market. Peru: In 2017, we licensed the liquid formulation of Triferic (dialysate) to Quimica Europea in Peru. In January 2019, we received regulatory approval for Triferic (dialysate) in Peru, representing the first approval of a Triferic product outside the United States. Quimica Europea is currently working on submission of Triferic (dialysate) for placement upon Peru’s national formulary. Chile: In 2017, we licensed the liquid formulation of Triferic (dialysate) to Commercializadora Biorenal SpA (Biorenal) in Chile. In June 2020 we received regulatory approval for Triferic (dialysate) in Chile. Biorenal is currently working on submission of Triferic (dialysate) for placement upon Chile’s national formulary. Concentrates: In territories that are not governed under our agreement with Baxter, our primary distributor is Nipro Medical Corporation which distributes our concentrates products within the Latin American region; however, we also sell through distributors and directly to dialysis clinics. Customers We currently operate in one market segment, the hemodialysis market, which involves the manufacture, sale and distribution of hemodialysis products to hemodialysis clinics, including pharmaceutical, dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process. DaVita, Inc., accounted for 47% of our concentrate sales in 2021 and 50% of our concentrate sales in 2020. Our accounts receivable from this customer were $1.0 million and $1.1 million as of December 31, 2021 and 2020, respectively. In August 2019, we signed a new Products Purchase Agreement with DaVita, with an initial term expiring on December 31, 2023. On April 6, 2022, we entered into an amendment to the Products Purchase Agreement under which we agreed to a price increase, effective May 1, 2022, as well as the pass-through of certain costs, determined on a quarterly basis. Certain costs are subject to a cap. The Amendment will provide us with the potential to operate the concentrates business profitably in the future, subject to cost containment activities to be undertaken by the Company. In October 2014, we entered into the Distribution Agreement with Baxter, which was amended in June 2017 and March 2020, pursuant to which Baxter received exclusive distribution rights for our concentrate products in the United States, a commitment by Rockwell to maintain a specified manufacturing capacity for Baxter, a cap upon the net amount of reimbursable transportation expenses and modified extension terms. Our domestic customer contracts for the supply of dialysis concentrate 17 Table of Contents products that permitted assignment to Baxter without consent were assigned to Baxter. As a result, for 2021 and 2020, our direct sales to Baxter aggregated approximately 26% and 25% of sales, respectively, and we had accounts receivable from Baxter of $3.5 million and $1.6 million as of December 31, 2021 and 2020, respectively. Another customer, Nipro Medical Corporation, accounted for 8% and 7% of our sales in 2021 and 2020, respectively. No other customers accounted for more than 10% of our sales in any of the last three years. DaVita, Baxter, the accounts administered by Baxter, and Nipro Medical Corporation are important to our business, financial condition and results of operations. The loss of any significant accounts could have a material adverse effect on our business, financial condition and results of operations. See Item 1A “Risk Factors” for a discussion of certain risks related to our key customers. The majority of our international sales in each of the last two years were sales to domestic distributors that were resold to end users outside the United States. Our total international sales, including sales made through domestic distributors for resale outside the United States, aggregated 10% and 9% of our overall sales in 2021 and 2020, respectively. See Item 1A “Risk Factors” for a discussion of certain risks related to our foreign sales. Competition Dialysis Concentrate Solutions and Dialysis Products Market Competition In the United States, our principal competitor for concentrate products is Fresenius Medical Care NA (“Fresenius”), a vertically integrated manufacturer and marketer of dialysis devices, drugs and supplies and operator of dialysis clinics, which has substantially greater financial, technical, manufacturing, marketing, and research and development resources than we do. Fresenius, through its Fresenius Kidney Care division, operates approximately 2,600 clinics and treats approximately 37% of the in-center hemodialysis patients in the United States. Fresenius also manufactures and sells a full range of renal products, including dialysis machines, dialyzers, concentrates and other supplies used in hemodialysis. Fresenius also services clinics owned by others with its products where it commands a market leading position in its key product lines. Fresenius manufactures its concentrate in its own regional manufacturing facilities. Fresenius and Rockwell are the two major dialysis concentrate suppliers in the United States. Iron Delivery Market Competition We expect to differentiate Triferic (dialysate) and Triferic AVNU for iron maintenance therapy for hemodialysis patients based on its unique mode of action, clinical benefits, ability to lower treatment cost for providers, ease of administration and excellent safety profile. Historically, macromolecular IV iron products have been used to treat iron deficiency anemia, and currently, the drug Venofer® has a dominant market share in dialysis over other macromolecular IV iron drug products, such as Sanofi’s Ferrlecit®. Venofer® is owned by Switzerland-based Vifor Pharma Management Ltd. (“Vifor”). Vifor also markets Injectafer® which is primarily used to treat anemia in a non-dialysis setting. Fresenius has a sublicense agreement that allows Fresenius to distribute Venofer® to the dialysis market in the United States and Canada. Other macromolecular IV iron competitors include Actavis’ generic macromolecular IV iron drug, Nulecit®. Macromolecular IV iron products are indicated for repletion therapy and not explicitly for iron maintenance therapy. The molecular structures, modes-of-action and FDA-approved clinical indications are different. Both therapies are needed to treat dialysis patients, where Triferic is given at every dialysis treatment to maintain iron levels, macromolecular IV iron is intended to be administered only to treat excessively low (or absolute) iron deficiency. Accordingly, if Triferic gains market share, we expect macromolecular IV iron use will decline. The markets for drug products are highly competitive. Competition in drug delivery systems is generally based on marketing strength, product performance characteristics (i.e., reliability, safety, patient convenience) and product price. Acceptance by dialysis providers and nephrologists is also critical to the success of a product. The first product on the market in a particular therapeutic area typically is able to obtain and maintain a significant market share. In a highly competitive marketplace and with evolving technology, additional product introductions or developments by others could render our products or technologies noncompetitive or obsolete. In addition, pharmaceutical and medical device companies are largely dependent upon health care providers being reimbursed by private insurers and government payers. Drugs approved by the FDA might not receive reimbursement from private insurers or government payers. 18 Table of Contents Reimbursement Prior to 2011, CMS had paid providers for dialysis treatments under the Medicare program in two parts: the composite rate and separately reimbursed drugs and services. The composite rate was a payment for the complete dialysis treatment except for physicians’ professional services, separately billed laboratory services and separately billed drugs. CMS implemented a bundled reimbursement rate in 2011. The bundled rate is a single payment per treatment, thereby eliminating reimbursement for individual drugs and services to providers. Regulations provide that the rate is recalculated each year. As a result, dialysis drugs are typically viewed by providers as an additional cost that must be provided within the fixed bundled payment. Both Triferic (dialysate) and Triferic AVNU are reimbursed within the bundle for dialysis treatment. This reimbursement status makes commercialization more difficult, as dialysis centers may view Triferic as increasing their costs and lowering their operating margins. To counter this, we must show improved patient outcomes and experiences, which would justify the lower operating margins for dialysis providers. Medical Affairs We believe that Triferic represents innovation for iron replacement within ESKD. We believe that medical education will play an integral role in helping to further the awareness and understanding of how Triferic can address the replacement of ongoing iron losses and maintenance of hemoglobin in ESKD patients. Medical affairs will be increasingly important as additional data on the use of Triferic become available, as discussed above and in “Clinical Pipeline” below. CLINICAL PIPELINE Home Infusion The FDA has provided feedback on our proposed clinical development plans which we intend to incorporate into the next iteration of clinical protocols and FDA correspondence and dialogue. FDA has accepted our proposed development strategy to pursue an approval via the 505(b)(1) pathway as a novel NDA for FPC for treatment of IDA in adult patients. The FDA further agreed with our approach to cross-reference non-clinical pharmacology and toxicology from our prior INDs and does not foresee the need for additional studies in these areas. We have incorporated feedback provided by FDA from our pre-IND meeting and initial IND submission to further clarify study design, patient selection and study endpoints for our Phase II study of a FPC for treatment of IDA in adult patients receiving home infusion therapies. Dialysis Triferic portfolio Real World Data To support the sales of our Triferic products, we are evaluating potential clinical studies and are conducting real-world data initiatives that we believe have the potential to support the value proposition for both Triferic (dialysate) and Triferic AVNU (IV). Such initiatives, if successful, have the potential to provide valuable clinical and pharmacoeconomic data that can be used by our medical teams to educate dialysis providers of the benefits of Triferic. As part of this program we are collecting data from sites that are purchasing Triferic (dialysate) in the United States so that we can assess the impact of Triferic (dialysate) on various clinical and pharmacoeconomic measures. Results from a study, conducted by New York University and reported in Critical Care Medicine, showed $296,000 in an annual pharmacy cost savings from Triferic. The study, which was independent of Rockwell, reviewed the effects of long-term use of Triferic in a large outpatient dialysis clinic, and showed substantial cost savings due to reductions in ESA and macromolecular IV iron use without impacting patient safety and hemoglobin targets. In a retrospective data review of 100 patients that were followed before and after implementation of Triferic dialysate, there was a relative reduction in average weekly ESA dose of 26.4%, total use of IV iron replacement therapy decreased with a relative reduction in the use of all iron products of greater than 95% while anemia targets were met. This clinic determined that the reduction of these agents resulted in a net pharmacy savings of more than $296,000 in one fiscal year. Pediatric Study 19 Table of Contents As a post-approval requirement under the Pediatric Research Equity Act, we are required to conduct a further clinical study of the effectiveness of Triferic (dialysate) in a pediatric patient population. We have reached agreement with the FDA on the design of this study, and in 2019 we entered into a contract with a Contract Research Organization (CRO) and initiated start-up work for the conduct of the study. We began enrollment in the study during 2020. International China: In conjunction with our licensee in the People’s Republic of China, Wanbang, we completed two clinical pharmacology studies in 2019, which demonstrated no ethnic difference in Triferic PK in Chinese subjects compared to U.S. subjects. In December 2019, we and Wanbang met with the National Medical Products Administration ("NMPA"), China’s equivalent of the FDA, to discuss the results of the PK studies and confirm that according to previously received guidance they would be sufficient to support a regulatory submission for Triferic (dialysate) in China. During the meeting, we and Wanbang received new guidance from NMPA that an additional clinical Phase 3 study would be required to support a regulatory submission. The start of this clinical study was impacted by the COVID-19 pandemic. Wanbang recently initiated patient enrollment in this clinical study in January 2021. Under the Wanbang Agreement, Wanbang is responsible for all clinical development costs required to support the approval of Triferic in China. Recruitment in this study is ongoing. Europe: We have received regulatory guidance from the European Medicines Agency (“EMA”) regarding the clinical studies that are needed to file for approval of Triferic AVNU in Europe. At the present time, we do not intend to commence these clinical studies, absent finding a development partner in Europe or raising additional capital. We may request additional guidance depending on the uptake of Roxadustat after its approval and launch in the EU. Other Therapeutic Product Candidates in Development Heart Failure We plan to investigate the potential for FPC as a treatment for hospitalized acute heart failure patients. Iron deficiency, which is independent of anemia, is a common co-morbidity in all forms of heart failure (50-70%). Iron deficiency can worsen cardiac function, but is currently under-recognized and under treated, which we believe represents a significant unmet need. There is a significant body of clinical evidence to support the use of IV iron therapy for improvement of cardiac energetics and cardiac function in the outpatient setting (not for the improvement of Hgb). Iron uptake, and thereby the clinical benefit during a hospital stay, is limited by the bioavailability for current traditional macromolecular IV iron. FPC is uniquely suited for hospitalized acute heart failure – 200mg of immediately bioavailable iron can be delivered during an average 5-day hospital stay (approximately equivalent to over 1 gram of currently available traditional macromolecular IV iron). We expect to request advice from the FDA in second half of 2022 to review a proposed clinical development program, starting with a mechanistic clinical proof of concept study that would determine if FPC administration can impact myocardial energetics and cardiac function. Operations Quality Assurance and Control We have established a Quality Management System ("QMS") which defines systems and procedures used to assure quality in the design, manufacture, and delivery of our finished device and pharmaceutical products. Dialysis Concentrate Solutions Business We operate under FDA guidelines and place significant emphasis on providing quality products and services to our customers. We have established an organizational structure and quality system procedures to ensure our device products are designed and produced to meet product quality requirements and FDA guidelines. The Grapevine, TX facility is certified to ISO 13485:2016. Dialysis products are manufactured and tested using validated equipment and defined process controls to ensure rigorous conformance to specifications. To assure quality and consistency of our dialysis concentrates, analytical testing is performed using validated instrument methods to verify that the chemical and microbial properties of each product lot complies with the specifications required by industry standards. Our concentrates are labeled per FDA Unique Device Identifier ("UDI") code requirements to ensure traceability of distributed products. Our quality program activities also include assessments of suppliers of raw materials, packaging components and finished goods, and quality management reviews 20 Table of Contents designed to inform management of key issues that may affect the quality of products, assess the effectiveness of our quality systems and identify areas for improvement. Drug Manufacturing We utilize Contract Manufacturing Organizations (“CMOs”) to manufacture and package our drug products for sale. These contract manufacturers are FDA registered drug manufacturing establishments. We follow defined procedures to qualify manufacturers of our products and to review and approve all manufactured products to ensure compliance with FDA cGMP regulations. We ensure our CMOs have established robust quality systems and employ validated processes to ensure the quality and compliance of our drug products to their specifications prior to distribution. Suppliers The raw materials and packaging materials for our hemodialysis concentrates, the components for our hemodialysis kits and the ancillary hemodialysis products distributed by us are generally available from several potential suppliers. The raw materials for our concentrate products consist primarily of chemical ingredients which meet or exceed the requirements of United States Pharmacopeia (“USP”). Key raw materials used in our hemodialysis concentrates include USP grade sodium chloride, calcium chloride, magnesium chloride, potassium chloride, dextrose, citric acid, glacial acetic acid, and sodium bicarbonate. Key packaging components include bottles, caps, bags, boxes, and labels. We generally negotiate pricing and approximate material quantities for our chemicals on an annual basis and utilize blanket purchase orders with monthly release schedules to meet our needs for production. We have engaged CMO's for the manufacture and packaging of Triferic. We have two suppliers for the active pharmaceutical ingredient (“API”) utilized in Triferic, two packagers for the powder formulation of Triferic (dialysate) and one fill and finish vendor for the liquid formulation of Triferic (dialysate) and Triferic AVNU. New production is generally initiated via purchase orders, though we will evaluate the need for supply agreements based on our forecasted product needs. The lead time to qualify and obtain regulatory approval for an additional CMO could be lengthy. Any material dispute, lack of quality of the product, or loss of any significant drug product supplier could have a material adverse effect on our business, financial condition and results of operations. See Item 1A “Risk Factors” for a discussion of certain risks related to our key suppliers. Distribution and Delivery Operations The majority of our domestic dialysis concentrate products are delivered through our subsidiary, Rockwell Transportation, Inc., which operates a fleet of trucks used to deliver products to our customers. Rockwell distribution and delivery operates under the Distribution Agreement on behalf of Baxter for domestic business. MATERIAL AGREEMENTS Distribution Agreement with Baxter Pursuant to the Distribution Agreement, Baxter is our exclusive agent for commercializing our hemodialysis concentrate and ancillary products in the United States to clinics other than DaVita and various foreign countries for an initial term of 10 years ending October 2, 2024. We retain sales, marketing and distribution rights for our hemodialysis concentrate products for our international customers and in those countries in which we have an established commercial presence. During the term of the Distribution Agreement, Baxter has agreed not to manufacture or sell any competitive concentrate products in the United States hemodialysis market, other than specified products. The Distribution Agreement does not include any of the Company’s drug products. In June 2017, we entered into the First Amendment to the Distribution Agreement with Baxter (the “Amendment”). The Amendment provides for, among other things, reduced pricing on certain accounts and incentives to Baxter to pursue new customers and increase future sales. In March 2020, we entered into the Second Amendment to the Distribution Agreement with Baxter (the “Second Amendment”). The Second Amendment provides for, among other things, a commitment by Rockwell to maintain a specified manufacturing capacity for Baxter, a cap upon the net amount of reimbursable transportation expenses and modified extension terms. Under the Distribution Agreement, Baxter purchases concentrate-related products from us at pre-determined gross margin-based prices per unit adjusted each year during the term and subject to an annual true up. The Distribution Agreement also requires Baxter to meet minimum annual purchase levels, subject to a cure period and certain other relief, in order to maintain its exclusive distribution rights. The minimum purchase levels increase each year over the term of the Distribution 21 Table of Contents Agreement. Purchases in any calendar year that exceed the minimum may be carried forward and applied to future years’ minimum requirements. The Distribution Agreement, as amended by the Second Amendment, also contains provisions regarding our obligations to maintain specified manufacturing capacity and quality levels. We manage customer service, transportation and certain other functions. For customer service, Baxter pays us an amount equal to our related costs plus a slight mark-up for these services. For transportation costs, Baxter pays us an amount equal to our related costs, subject to the defined caps contained within the Second Amendment, which are based upon defined percentages of liquid concentrate product being shipped. The Distribution Agreement also provides that, upon the mutual determination of us and Baxter, Baxter will pay us up to $10 million to build a new manufacturing facility in the Pacific time-zone that would serve customers in the western United States. The fee payable in connection with construction of the facility will be reduced to the extent that the facility is not operational within 12 months after the start of construction. Except for any leased components, we would own and operate the facility when completed. Either party may terminate the Distribution Agreement upon the insolvency or material breach of the other party or in the event of a force majeure. In addition, Baxter may also terminate the Distribution Agreement at any time upon 270 days’ prior written notice to us or if (i) prices increase beyond certain thresholds and notice is provided within 45 days after the true up payment is due for the year in which the price threshold is exceeded, (ii) a change of control of the Company occurs and 270 days’ notice is provided, or (iii) upon written notice that Baxter has been enjoined by a court of competent jurisdiction from selling in the United States any product covered by the Distribution Agreement due to a claim of intellectual property infringement or misappropriation relating to such product. If Baxter terminates the Distribution Agreement under the discretionary termination or the price increase provisions, it would be subject to a limited non-compete obligation in the United States with respect to certain products for a period of two years. The Distribution Agreement may be extended for an additional five years by Baxter if Baxter achieves a specified sales target and pays an extension fee of $7.5 million. If the first extension occurs, the Distribution Agreement term may later be extended an additional five years at Baxter’s option at no additional cost. Product License Agreements We are party to a Licensing Agreement between the Company and Charak, LLC (“Charak”) dated January 7, 2002 (the “2002 Agreement”) that grants the Company exclusive worldwide rights to certain patents and information related to our Triferic products. On October 7, 2018, we entered into a Master Services and IP Agreement (the “Charak MSA”) with Charak and Dr. Ajay Gupta, who is the former Executive Vice President and Chief Scientific Officer of the Company. Pursuant to the Charak MSA, the parties entered into three additional agreements described below related to the license of certain soluble ferric pyrophosphate (“SFP”) intellectual property owned by Charak, as well as the Employment Agreement (defined below). The Charak MSA provided for a payment of $1,000,000 to Dr. Gupta, payable in four quarterly installments of $250,000 each on October 15, 2018, January 15, 2019, April 15, 2019 and July 15, 2019, and reimbursement for certain legal fees incurred in connection with the Charak MSA. As of December 31, 2019, all payments under the Charak MSA were paid. Pursuant to the Charak MSA, the aforementioned parties entered into an Amendment, dated as of October 7, 2018 (the “Charak Amendment”), to the 2002 Agreement, under which Charak granted the Company an exclusive, worldwide, non-transferable license to commercialize SFP for the treatment of patients with renal failure. The Charak Amendment amends the royalty payments due to Charak under the 2002 Agreement such that the Company is liable to pay Charak royalties on net sales by the Company of products developed under the license, which includes the Company’s Triferic product, at a specified rate until December 31, 2021 and thereafter at a reduced rate from January 1, 2022 until February 1, 2034. In addition, the Company is required to pay Charak a percentage of any sublicense income during the term of the agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid patent claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid patent claim, on a country-by-country basis. Also pursuant to the Charak MSA, the Company and Charak entered into a Commercialization and Technology License Agreement Triferic IV, dated as of October 7, 2018 (the “IV Agreement”), under which Charak granted the Company an exclusive, sublicensable, royalty-bearing license to SFP for the purpose of commercializing certain intravenous-delivered products incorporating SFP for the treatment of iron disorders worldwide for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent. The Company is liable to pay Charak royalties on net sales by the Company of products developed under the license at a specified rate until December 31, 2021. From January 1, 2022 until February 1, 2034, the Company is liable to pay Charak a base royalty at a reduced rate on net sales and an additional royalty on net sales while there exists a valid claim of a licensed patent, on a country-by-country basis. The 22 Table of Contents Company shall also pay to Charak a percentage of any sublicense income received during the term of the IV Agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and no be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis. Also pursuant to the Charak MSA, the Company and Charak entered into a Technology License Agreement TPN Triferic, dated as of October 7, 2018 (the “TPN Agreement”), pursuant to which Charak granted the Company an exclusive, sublicensable, royalty-bearing license to SFP for the purpose of commercializing worldwide certain Total Parenteral Nutrition (TPN) products incorporating SFP. The license grant under the TPN Agreement continues for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent. During the term of the TPN Agreement, the Company is liable to pay Charak a base royalty on net sales and an additional royalty on net sales while there exists a valid claim of a licensed patent, on a country-by-country basis. The Company shall also pay to Charak a percentage of any sublicense income received during the term of the TPN Agreement, which amount shall not be less than a minimum royalty on net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis. The foregoing summary does not purport to be a complete description of the terms of the MSA, the Amendment, the IV Agreement and the TPN Agreement and each is qualified in their entirety by reference to the full text of such documents, which are filed as exhibits to this Annual Report on Form 10-K. GOVERNMENT REGULATION We are regulated by the FDA under the Federal Food, Drug and Cosmetic Act (the "FD&C Act"), as well as by other federal, state and local agencies. We hold several FDA product approvals including for both drugs and medical devices. The testing, manufacture and sale of our hemodialysis concentrates and the ancillary products we distribute are subject to regulation by numerous governmental authorities, principally the FDA and corresponding state and foreign agencies. Under the FD&C Act, and FDA regulations, the FDA regulates the pre-clinical and clinical testing, manufacture, labeling, distribution and marketing of medical devices and drugs. Noncompliance with applicable requirements can result in, among other things, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, failure of the government to grant pre-market clearance or pre-market approval for devices, withdrawal of marketing clearances or approvals and criminal prosecution. We are developing and selling selected drug candidates, such as Triferic, Triferic AVNU and other candidates utilizing the FPC Platform. The development and regulatory approval process for new drugs and additional indications for approved drugs includes preclinical testing and human clinical trials and is lengthy and uncertain. Before marketing any pharmaceutical or therapeutic product in the United States, the product must undergo rigorous preclinical testing and clinical trials and an extensive regulatory approval process implemented by the FDA under the FD&C Act. Moreover, the FDA imposes substantial requirements on new product research and the clinical development, manufacture and marketing of pharmaceutical products, including testing and clinical trials to establish the safety and effectiveness of these products. Medical Device Approval and Regulation A medical device may be marketed in the United States only with prior authorization from the FDA, unless it is subject to a specific exemption. Most Class I devices (general controls) and some Class II devices (general and special controls) are exempt from the premarket notification (i.e., 510(k) clearance) requirements. Class III devices generally require "premarket approval" (“PMA”) from the FDA as described in further detail below. FDA grants 510(k) clearance when the submitted information establishes that a proposed device is "substantially equivalent" in terms of safety and effectiveness to a legally marketed device that is not subject to premarket approval. A legally marketed device is a “pre-amendment” device that was legally marketed prior to May 28, 1976 (for which a PMA is not required), a device that has been reclassified from Class III to Class I or II, or a device which has been found substantially equivalent through the 510(k) process. The FDA in recent years has been requiring a more rigorous demonstration of substantial equivalence than in the past, including requiring clinical trial data in some cases. For any devices that are cleared through the 510(k) process, modifications or enhancements that could significantly affect safety or effectiveness, or constitute a new or major change in the intended use of the device, will require new 510(k) submissions. It usually takes from three to six months from the date of submission to obtain 510(k) clearance, and 23 Table of Contents may take substantially longer. Our hemodialysis concentrates (acid and bicarbonate) and other ancillary products are categorized as Class II devices. Class III devices typically are devices that sustain or support life, prevent impairment of human health or present a potential unreasonable risk of illness or injury. A Class III device generally must receive approval through a PMA application, which requires proving the safety and effectiveness of the device to the FDA. The process of obtaining PMA approval is expensive and uncertain. It usually takes approximately one year to obtain approval after filing the request, and may take substantially longer. If human clinical trials of a device are required, whether for a 510(k) submission or a PMA application, and the device presents a “significant risk,” the sponsor of the trial (usually the manufacturer or the distributor of the device) will have to file an investigational device exemption (“IDE”) application prior to commencing human clinical trials. The IDE application must be supported by data, typically including the results of animal and laboratory testing. If the IDE application is approved by the FDA and one or more appropriate Institutional Review Boards (“IRBs”), the device may be shipped for the purpose of conducting the investigations without compliance with all of the requirements of the FD&C Act and human clinical trials may begin. The FDA will specify the number of investigational sites and the number of patients that may be included in the investigation. If the device does not present a “significant risk” to the patient, a sponsor may begin the clinical trial after obtaining approval for the study by one or more appropriate IRBs without the need for FDA approval. Any devices manufactured or distributed by us pursuant to FDA clearances or approvals are subject to continuing regulation by the FDA and certain state agencies. As a manufacturer of medical devices for marketing in the United States, we are required to adhere to regulations, including 21 CFR 820, which is commonly referred to as the Quality System Regulation, setting forth detailed cGMP requirements, which include testing, control and documentation requirements. We must also comply with medical device reporting regulations which require that we report to the FDA any incident in which our products may have caused or contributed to a death or serious injury, or in which our products malfunctioned and, if the malfunction were to recur, it would be likely to cause or contribute to a death or serious injury. Under such a scenario, our products may be subject to voluntary recall by us or required recall by the FDA. Labeling and promotional activities are subject to scrutiny by the FDA and, in certain circumstances, by the Federal Trade Commission. The FD&C Act prohibits the marketing of approved medical devices for unapproved uses. We are subject to routine inspection by the FDA and certain state agencies for compliance with cGMP requirements and other applicable quality system regulations. We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control, transportation and disposal of hazardous or potentially hazardous substances. Our hemodialysis concentrate products and other ancillary devices are subject the FDA 510(k) requirements. We have 510(k) clearance from the FDA to market hemodialysis concentrates in both liquid and powder form. In addition, we have received 510(k) clearance for our Dry Acid Concentrate Mixer. We must comply with the FD&C Act and related laws and regulations, including cGMP, to retain 510(k) clearances. We cannot assure you that we will be able to maintain our 510(k) clearances from the FDA to manufacture and distribute our products. If we fail to maintain our 510(k) clearances, we may be required to cease manufacturing and/or distributing our products, which would have a material adverse effect on our business, financial condition and results of operations. If any of our FDA clearances are denied or rescinded, sales of our products in the United States would be prohibited during the period we do not have such clearances. Drug Approval and Regulation The marketing of pharmaceutical products in the United States, such as Triferic, requires the approval of the FDA. The FDA has established regulations, guidelines and safety standards which apply to the pre‑clinical evaluation, clinical testing, manufacturing and marketing of our new iron maintenance therapy product and other pharmaceutical products. The steps required before a pharmaceutical product can be produced and marketed for human use include: (i) pre‑clinical studies; (ii) submission to the FDA of an Investigational New Drug Application (“IND”), which must become effective before human clinical trials may commence in the United States; (iii) adequate and well controlled human clinical trials; (iv) submission to the FDA of an NDA; and (v) review and approval of the NDA by the FDA. An NDA generally is required for products with new active ingredients, indications, routes of administration, dosage forms or strengths. An NDA requires that complete clinical studies of a product’s safety and efficacy be submitted to the FDA, the cost of which is substantial. The costs are often less, however, for new delivery systems, which utilize already approved drugs than for drugs with new active ingredients. 24 Table of Contents Pre‑clinical studies are conducted to obtain preliminary information on a pharmaceutical product’s efficacy and safety in animal or in vitro models. The results of these studies are submitted to the FDA as part of the IND and are reviewed by the FDA before human clinical trials begin. Human clinical trials may begin 30 days after receipt of the IND by the FDA unless the FDA objects to the commencement of clinical trials. Human clinical trials are typically conducted in three sequential phases, but the phases may overlap. Phase 1 trials consist of testing the product primarily for safety, metabolism and pharmacologic action in a small number of patients or healthy volunteers at one or more doses. In Phase 2 trials, the safety and efficacy of the product are evaluated in a patient population somewhat larger than the Phase 1 trials with the primary intent of determining the effective dose range. Phase 3 trials typically involve additional testing for safety and clinical efficacy in an expanded population at a large number of test sites. A clinical plan, or protocol, accompanied by documentation from the institutions participating in the trials, must be received by the FDA prior to commencement of each of the clinical trials. The FDA may order the temporary or permanent discontinuation of a clinical trial at any time. The results of product development and pre‑clinical and clinical studies are submitted to the FDA as an NDA for approval. If an application is submitted, there can be no assurance that the FDA will review and approve the NDA in a timely manner. The FDA may refuse to file an NDA if it is not sufficiently complete to permit substantive review. The FDA may deny an NDA by way of a complete response letter if applicable regulatory criteria are not satisfied or it may require additional testing, including pre‑clinical, clinical and or product manufacturing tests. Even if such data are submitted, the FDA may ultimately deny approval of the product. Further, if there are any modifications to the drug, including changes in indication, manufacturing process, labeling, or a change in a manufacturing facility, an NDA supplement may be required to be submitted to the FDA. Product approvals may be withdrawn after the product reaches the market if compliance with regulatory standards is not maintained or if problems occur regarding the safety or efficacy of the product. The FDA may require testing and surveillance programs to monitor the effect of products which have been commercialized and has the power to prevent or limit further marketing of these products based on the results of these post‑marketing programs. Manufacturing facilities are subject to periodic inspections for compliance with regulations, such as cGMP requirements, and each domestic drug manufacturing facility must be registered with the FDA. Foreign regulatory authorities may also have similar regulations. We expend significant time, money and effort in the area of quality assurance to comply with all applicable requirements. FDA approval to manufacture a drug is site specific. In the event an approved manufacturing facility for a particular drug becomes inoperable, obtaining the required FDA approval to manufacture such drug at a different manufacturing site could result in production delays, which could adversely affect our business and results of operations. Manufacturers and distributors must comply with various post‑market requirements, including adverse event reporting, re‑evaluation of approval decisions and notices of changes in the product or in the process or procedures used to manufacture a product. Once an NDA is approved, a product is subject to certain post-approval requirements. As an NDA applicant, we are required to submit to FDA information about any adverse event associated with the use of our approved drug, whether or not the adverse event is considered drug related. If our marketed drug is found to be potentially harmful or does not comply with applicable requirements, we also may recall the product. The FDA regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the internet. Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. Major changes and some moderate changes to an approved drug, or to the conditions established in the approved NDA, may require the submission and approval of a new NDA or NDA supplement before the change can be implemented. Other changes may be made at the time of FDA’s receipt of the NDA supplement or may be described in our next annual report for the approved NDA. Pediatric Requirements Under the Pediatric Research Equity Act ("PREA"), NDAs or supplements to NDAs must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective. The FDA may grant full or partial waivers, or deferrals, for submission of data. Unless otherwise required by regulation, PREA does not apply to any drug for an indication where orphan designation has been granted. The Best Pharmaceuticals for Children Act (“BPCA”) provides NDA holders a six-month extension of the marketing exclusivity or patent protection for a drug if certain conditions are met. Conditions for exclusivity include the FDA’s determination that information relating to the use of a new drug in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric clinical trials, and the applicant agreeing to perform, and reporting 25 Table of Contents on, the requested clinical trials within the statutory timeframe. Applications under the BPCA are treated as priority applications, with all of the benefits that designation confers. Other Government Regulations The federal and state governments in the United States, as well as many foreign governments, from time to time explore ways to reduce medical care costs through health care reform. Due to uncertainties regarding the ultimate features of reform initiatives and their enactment and implementation, we cannot predict what impact any reform proposal ultimately adopted may have on the pharmaceutical and medical device industry or on our business or operating results. Our activities are subject to various federal, state and local laws and regulations regarding occupational safety, laboratory practices, and environmental protection and may be subject to other present and possible future local, state, federal and foreign regulations. We do not expect that compliance with these regulations, including environmental laws, will have a material adverse impact on our financial condition. The approval procedures for the marketing of our products in foreign countries vary from country to country, and the time required for approval may be longer or shorter than that required for FDA approval. We generally depend on our foreign distributors or marketing partners to obtain the appropriate regulatory approvals to market our products in those countries, which generally do not require additional testing for products that have received FDA approval. However, since medical practice and governmental regulations differ across regions, further testing may be needed to support market introduction in some foreign countries. Some foreign regulatory agencies may require additional studies involving patients located in their countries. Even after foreign approvals are obtained, further delays may be encountered before products may be marketed. Issues related to import and export can delay product introduction. Many countries require additional governmental approval for price reimbursement under national health insurance systems. PATENTS, TRADEMARKS AND TRADE SECRETS We have several trademarks and service marks used on our products and in our advertising and promotion of our products, and we have applied for registration of such marks in the United States and several foreign countries. Most such applications have resulted in registration of such trademarks and service marks. As of December 31, 2021, we owned or had the rights to 27 issued patents (3 U.S. and 24 foreign) and 53 pending applications (7 U.S. and 46 foreign). Patents and patent applications owned or licensed by us include claims to FPC in both dialysate and IV compositions, formulations and methods of making, as well as other patent claims, including Erythropoietin Stimulation Agent ("ESA") sparing methods using Triferic, and parenteral nutritional compositions including Triferic. United States Foreign Description Issued Expiration Pending Issued Expiration Pending Triferic (IV and Dialysate) 2 2027 - 2029 (1) 1 4 (2) 2028 (1) 26 (3) Triferic (ESA Sparing) — 2034 1 11 (4) 2034 20 Triferic (TPN) 1 2030 — 9 (5) 2026 — Other — — 4 — — — Total 3 6 24 46 1. 2029 expiration date in U.S. and 2028 expiration date in foreign (Europe, Japan and Canada) for the synthesis and formulation of our pharmaceutical grade formulation of our Triferic product. In the United States, this patent is listed in Orange Book. 2. Granted patents validated in 28 European states (not included in total). 3. Pending patents for solid particulate formulation for preparing dialysate, if issued, will expire in 2036. 4. One European patent validated in 3 European states (not included in total). 5. European patent validated in 12 European states (not included in total). See Item 1A “Risk Factors” for a discussion of certain risks related to our intellectual property. Human Capital 26 Table of Contents As of December 31, 2021, we had 300 employees, substantially all of whom are full time employees. Our arrangements with our employees are not governed by any collective bargaining agreement. Our employees are employed on an “at‑will” basis. Our key human capital management objectives are to identify, recruit, integrate, retain and motivate our new and existing employees. We believe that our compensation and benefit programs are appropriately designed to attract and retain qualified talent. Employees receive an annual base salary and are eligible to earn a performance-based merit increase and cash bonuses. To create and maintain a successful work environment, we offer a comprehensive package of additional benefits that support the physical and mental health and wellness of all of our employees and their families. Additionally, we grant equity awards in order to allow for directors, officers and senior-level employees to share in the performance of the Company. We are committed to a safe workplace for our employees and have implemented health and safety management processes into our operations. In response to the COVID-19 pandemic, we have implemented additional safety measures for the protection of our employees, including work-from-home measures for applicable employees, mandatory mask wearing in our manufacturing plants and additional cleaning and protective measures.