What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 105 added, 100 removed, 123 unchanged (63% of the section changed)

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our ability to renegotiate certain terms of our supply contracts;

our ability to successfully implement certain cost containment and cost-cutting measures and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.

our ability to successfully implement certain cost containment and cost-cutting measures;

our ability to achieve profitability and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.

While we believe our forward-looking statements are reasonable, you should not place undue reliance on any such forward-looking statements, which are based on information available to us on the date of this report or, if made elsewhere, as of the date made.

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Rockwell is a revenue-generating business and the second largest supplier of acid and bicarbonate concentrates for dialysis patients in the United States.

Hemodialysis is the most common form of end-stage renal disease treatment and is usually performed at a freestanding outpatient dialysis center, at a hospital-based outpatient center, or at the patient’s home.

We manufacture our hemodialysis concentrates under cGMP regulations at our three facilities in Michigan, Texas, and South Carolina totaling approximately 175,000 square feet, from which we deliver these products to dialysis clinics throughout the United States with our own delivery fleet as well as third parties.

We also manufacture mixers that are used by clinics in our Iowa facility.

Hemodialysis is the most common form of end-stage kidney disease treatment and is usually performed at a freestanding outpatient dialysis center, at a hospital-based outpatient center, or in a patient’s home.

This represents a large market opportunity for which Rockwell's products are well-positioned to meet the needs of patients.

Rockwell manufactures hemodialysis concentrates under cGMP regulations at its three facilities in Michigan, Texas, and South Carolina totaling approximately 175,000 square feet, and manufactures mixers in its Iowa facility.

Rockwell delivers the majority of its hemodialysis concentrates products and mixers to dialysis clinics throughout the United States and internationally utilizing its own delivery trucks and third-party carriers.

Rockwell has developed a core expertise in manufacturing and delivering hemodialysis concentrates, and has built a longstanding reputation for reliability, quality, and excellent customer service.

Rockwell commercializes Triferic in the United States, an FDA-approved treatment indicated for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease.

Rockwell also has a number of partnerships with companies seeking to develop and commercialize Triferic outside the United States.

Rockwell is working closely with these partners to progress these programs.

We have an emerging portfolio of drug development candidates we are pursuing.

Rockwell is developing a next-generation, proprietary parenteral iron technology platform, Ferric Pyrophosphate Citrate (“FPC”).

We believe our FPC platform has several advantages over other parenteral iron therapies by immediately providing bioavailable iron for critical

body processes once it is administered.

Rockwell plans to move product candidates derived from this platform into the clinic to treat iron-deficiency anemia in the home infusion setting and for acute heart failure.

Together, with our dedicated employees and deep expertise in manufacturing and logistics and pharmaceutical development and commercialization, We believe Rockwell is well-positioned to realize sustainable business growth and support our mission to provide life-sustaining products for patients suffering from blood disorders and diseases associated with the kidney.

Strategy Overview and Portfolio Evolution

Rockwell’s strategy is to accelerate the Company’s growth by creating and developing pharmaceutical products based on our FPC technology for disease states where patients can benefit the most from an effective treatment for iron deficiency or iron deficiency anemia, while concurrently refining our concentrates dialysis business to drive incremental growth and efficiencies.

We plan to leverage and build on the foundation provided by our current dialysis business serving kidney dialysis centers by developing a pipeline of additional potential drug therapies in multiple disease states outside of nephrology.

Concentrates Business:

Rockwell is the second largest supplier of life-sustaining hemodialysis concentrate products to dialysis clinics in the United States.

Our concentrate products are used to sustain patient lives by removing toxins and balancing electrolytes in a dialysis patient’s bloodstream.

Rockwell has a proprietary parenteral iron product, TRIFERIC ® (ferric pyrophosphate citrate, "FPC"), which is indicated to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease.

While Rockwell has discontinued commercialization of TRIFERIC ® in the United States, the Company has established several international partnerships with companies seeking to develop and commercialize TRIFERIC ® outside the United States and is working closely with these international partners to develop and commercialize TRIFERIC ® in their respective regions.

Rockwell continues to evaluate the viability of its FPC platform and FPC's potential to treat iron deficiency and iron deficiency anemia and for acute heart failure.

Rockwell’s strategy is focused on growing the Company's revenue-generating business, which currently includes hemodialysis concentrates and international partnerships for TRIFERIC ® and achieving profitability in 2024 to put the Company in a stronger and more stable financial position.

Hemodialysis Concentrates Business :

Rockwell is the second largest supplier of life-sustaining hemodialysis concentrates products to dialysis clinics in the United States.

Our hemodialysis concentrates products are used to sustain a patient's life by removing toxins and balancing electrolytes in a dialysis patient’s bloodstream.

A key element of our dialysis business strategy going forward is to improve the strength of our concentrates business.

We believe that we can achieve this by creating efficiencies, enhancing our manufacturing and transportation operations, and fully recouping manufacturing and shipping expenses to drive profitability.

To date, our concentrates business has operated at a loss.

This loss has accelerated due to inflation, which has increased our manufacturing and operating costs.

We believe we can achieve this by growing our business through the addition of new customers, expanding our territory coverage, increasing the efficiency by which Rockwell produces its products, and pricing our products appropriately to drive profitability.

Prior to the second quarter of 2022, Rockwell's concentrates business operated at a loss.

This loss was accelerated due to inflation, which has increased our manufacturing and operating costs.

We undertook discussions with our largest customers to renegotiate our existing supply contracts to improve the profitability of this business line.

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The second tranche of $7.5 million was funded on June 16, 2022.

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.

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

We continue to review our entire supply chain to identify opportunities for improvement, prioritizing initiatives that will have the largest impact on long-term efficiency, profitability, and growth.

On November 9, 2022, Rockwell reacquired its distribution rights to its hemodialysis concentrates products from Baxter and has agreed to terminate the exclusive distribution agreement dated October 2, 2014.

Exclusivity and other provisions associated with the distribution agreement terminated November 9, 2022 and the remaining operational elements of the agreement terminate December 31, 2022.

Under the exclusive distribution agreement, Baxter distributed and commercialized Rockwell’s hemodialysis concentrates products in the United States and certain other countries.

Rockwell manufactured all hemodialysis concentrates products and provided customer service and order delivery to nearly all U.S.

Following the reacquisition of these rights, Rockwell will now be able to sell its hemodialysis concentrates products directly to dialysis clinics throughout the United States and around the world.

Additionally, Rockwell will now be able to independently price its products, eliminate costs associated with manufacturing covenants, improve manufacturing efficiencies, realize the full benefits from those improvements, and develop, in-license, or acquire new products to develop a broader kidney care products portfolio.

This is expected to improve Rockwell's overall profitability and set the Company on a positive growth trajectory.

Collectively, this affords Rockwell the opportunity to expand its leadership position within a large market opportunity, which currently is valued at $380 million and is anticipated to grow to approximately $500 million by 2026 in the United States alone.

Rockwell will pay Baxter a fee for the reacquisition of its distribution rights.

This fee will be payable in two equal installments on January 1, 2023 and April 1, 2023.

To ensure that customer needs continue to be met after January 1, 2023, Baxter and Rockwell are working closely together to transition customers’ purchases of Rockwell’s hemodialysis concentrates from Baxter to Rockwell.

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

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

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

In 2021, due to restrictions from the Covid pandemic and following our assessment of our strategic priorities and development strategy, we scaled back our commercial organization and began seeking a commercial partner for the United States market.

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.

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.

In addition, Rockwell established six international partnerships to develop and commercialize TRIFERIC ® in China, India, Korea, Turkey, Peru and Chile.

Rockwell undertook a strategic review of TRIFERIC ® 's viability in the United States.

TRIFERIC ® was launched into a very competitive marketplace with well-entrenched products and a lack of consensus regarding unmet medical needs for dialysis patients with anemia.

Due to its limited market adoption, unfavorable reimbursement, and absence of interest from other companies to license or acquire TRIFERIC ® despite Rockwell's significant effort to partner the program, the Company discontinued its New Drug Applications (“NDAs”) for TRIFERIC ® and TRIFERIC ® AVNU in the United States.

TRIFERIC ® commercially in the United States resulted in a loss to Rockwell of approximately $2 million to $3 million, annually.

The decision to discontinue the NDAs was not made lightly as the Company realizes the direct impact this action has on patients currently using the products.

TRIFERIC ® and its approved presentations were not discontinued for safety reasons.

Rockwell will continue to support its partners outside the United States.

Rockwell has six international partnerships in China, India, Korea, Turkey, Peru, and Chile with organizations who have exclusive license agreements to develop and commercialize TRIFERIC ® outside the United States.

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 believe there is still significant opportunity for TRIFERIC ® internationally and will work diligently to support our partners, which requires minimal financial commitment from Rockwell and provides us with potential for near- and long-term revenue.

We continue to pursue international licensing opportunities in other countries and regions.

FPC Platform and Home Infusion:

Our strategy going forward is to go beyond our foundational business in dialysis by leveraging the pre-clinical and clinical data from the development of TRIFERIC ® in new therapeutic settings such as home infusion.

We believe the home infusion setting represents a natural pathway to expand our FPC platform as many of the patients suffer from chronic diseases associated with the development of iron deficiency and anemia.

The number of patients served by home infusion therapy grew from approximately 800,000 in 2010 to over 3,000,000 in 2019 and is projected to accelerate in the wake of COVID-19.

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 40% to 55% of

all home parenteral nutrition patients are iron deficient at any time.

Based on pre-clinical data and clinical data in other therapeutic settings, we believe FPC may have distinct advantages over currently available iron replacement therapy options in the home infusion setting.

In late 2021, we filed an Investigational New Drug (“IND”) application with the United States Food and Drug Administration (“FDA”) for the treatment of iron deficiency anemia in patients, who are receiving medications in the home infusion setting.

Based on feedback received from the FDA, and subject to having sufficient working capital resources, we have made plans to launch a Phase II clinical trial in the first half of 2023 to confirm the dose and duration of FPC treatment.

We would expect to have top-line data from the trial approximately 12 to 18 months following commencement of the trial.

In the interim, we continue to assess our strategic priorities and rationalizing our development strategy based on risk profiles of each opportunity.

Pipeline Development:

In our research and development pipeline, Rockwell is exploring FPC’s impact on the treatment of hospitalized acute heart failure patients, which affects more than one million people in the United States annually Clinical improvement in heart failure has already been demonstrated in an outpatient [chronic] setting with large macromolecular forms of intravenous iron.

We believe FPC may improve cardiac energetics during hospitalization by delivering rapidly bioavailable iron to the heart.

Research and Development Pipeline :

FPC for Home Infusion is Rockwell's follow-up to TRIFERIC ® and utilizes the FPC platform in the home infusion setting.

In late 2021, Rockwell filed an Investigational New Drug (“IND”) application with the United States Food and Drug Administration (“FDA”) for the treatment of iron deficiency anemia in patients, who are receiving medications in the home infusion setting.

During the second quarter 2022, Rockwell provided the FDA with supplemental data to be used in Rockwell’s clinical studies and to clinically support the Company’s IND application for home infusion.

The FDA placed this program on Clinical Hold and requested that additional data related to the microbiology and short-term stability of this formulation be provided to support the application.

During the third quarter of 2022, Rockwell conducted a microbiological and short-term stability study of FPC for Home Infusion, in accordance with FDA guidance, to support the Company’s IND application.

Preliminary results from the microbiology and short-term stability study indicated that the program would likely not meet the FDA’s requirements to support the IND application and would require significant capital expenditure and resources to support additional re-formulation work and conduct a Phase 2 study.

As a result, Rockwell has put development work associated with FPC for Home Infusion on hold.

Rockwell is also exploring FPC’s impact on the treatment of hospitalized acute heart failure patients, which affects more than one million people in the United States annually.

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 potentially resulting in shorter hospital stays and fewer 30-day re-admissions.

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

Rockwell submitted a pre-IND meeting request to the FDA and expects to meet with the FDA before the end of this year.

Depending on the feedback from FDA, Rockwell will determine the path forward for this program.

Reverse Stock Split

On May 9, 2022, the stockholders of the Company authorized our Board of Directors to effect a reverse stock split of all outstanding shares of common stock, warrants and options.

On May 9, 2022, the Company's stockholders authorized the Company's Board of Directors to effect a reverse stock split of all outstanding shares of common stock, warrants and options.

The Board of Directors subsequently approved the implementation of a reverse stock split as a ratio of one-for-eleven shares, which became effective on May 13, 2022.

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The reverse stock split resulted in an adjustment to the Series X convertible preferred stock conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion.

All share and per share data in these condensed consolidated financial statements and related notes hereto have been retroactively adjusted to the account for the effect of the reverse stock split for the three- and six-month periods ended June 30, 2022 and 2021, respectively, and the balance sheet at June 30, 2022 and December 31, 2021.

Results of Operations for the Three Months Ended June 30, 2022 and 2021

All share and per share data in these condensed consolidated financial statements and related notes hereto have been retroactively adjusted to the account for the effect of the reverse stock split for the three- and nine-month periods ended September 30, 2022 and 2021, respectively, and the balance sheet at September 30, 2022 and December 31, 2021.

Results of Operations for the Three Months Ended September 30, 2022 and 2021

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

For the Three Months Ended June 30,

For the Three Months Ended September 30,

2022 % of Revenue 2021 % of Revenue % Change

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Cost of Sales 17,914 95.8 % 16,317 102.1 % 9.8

Gross (Loss) Profit 1,745 9.3 (262) (1.7) (766.0)

Gross Profit (Loss) 777 4.2 (329) (2.1) (336.2)

Research and Product Development 469 2.5 1,221 7.6 (61.6)

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Operating Loss $ (3,708) (19.8) % $ (6,972) (43.6) % (46.8) %

During the three months ended June 30, 2022, our net sales were $18.7 million compared to net sales of $15.1 million during the three months ended June 30, 2021.

During the three months ended September 30, 2022, our net sales were $18.7 million compared to net sales of $16.0 million during the three months ended September 30, 2021.

The increase of $2.7 million was primarily due to the restructuring of our supply contract with DaVita and increased pricing to other customers.

Gross Profit (Loss)

Cost of sales during the three months ended June 30, 2022 was $16.9 million, resulting in gross profit of $1.7 million during the three months ended June 30, 2022, compared to cost of sales of $15.4 million and a gross loss of $0.3 million during the three months ended June 30, 2021.

Gross profit increased by $2.0 million primarily due to the restructuring of our supply contract with DaVita, a slight reduction of transportation costs due to efficiency initiatives being implemented and increased pricing to other customers.

Cost of sales during the three months ended September 30, 2022 was $17.9 million, resulting in gross profit of $0.8 million during the three months ended September 30, 2022, compared to cost of sales of $16.3 million and a gross loss of $0.3 million during the three months ended September 30, 2021.

Gross profit increased by $1.1 million primarily due to the restructuring of our supply contract with DaVita and increased pricing to other customers.

As a result, the Company expects an improvement in margins for the remainder of 2022.

Research and Product Development Expense

Research and product development expenses were $0.9 million and $2.4 million for the three months ended June 30, 2022 and 2021, respectively.

Research and product development expenses decreased by $1.5 million due to the resignation of our Chief Development Officer and shifting our project timelines.

Research and product development expenses were $0.5 million and $1.2 million for the three months ended September 30, 2022 and 2021, respectively.

Research and product development expenses decreased by $0.7 million due to greater cash management over project costs, a reduction in headcount and shifting our project timelines as noted above in the "Overview and Recent Developments" section above.

Selling and Marketing Expense

Selling and marketing expenses were $0.5 million during the three months ended June 30, 2022, compared with $1.5 million during the three months ended June 30, 2021.

The decrease of $0.9 million is due to a decrease in marketing spend for our TRIFERIC ® products and previous headcount reduction.

Selling and marketing expenses were $0.8 million during the three months ended September 30, 2022, compared with $1.5 million during the three months ended September 30, 2021.

The decrease of $0.7 million is due to reduced marketing spend for our TRIFERIC ® products and previous headcount reduction.

See "Overview and Recent Developments" for more detail.

General and Administrative Expense

General and administrative expenses were $4.8 million during the three months ended June 30, 2022, compared with $3.7 million during the three months ended June 30, 2021.

The increase of $1.1 million is due primarily to a one-time charge for the severance agreement for our former Chief Executive Officer and the accrual of estimated employee performance compensation.

General and administrative expenses were $3.3 million during the three months ended September 30, 2022, compared with $3.9 million during the three months ended September 30, 2021.

The decrease is primarily due to greater cash management and the reduced usage of outside agencies.

Other Income (Expense)

Other income for the three months ended June 30, 2022 was negligible.

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

Other expense for the three months ended June 30, 2022 was $0.5 million of interest expense related to our debt facility (see Note 14 to the condensed consolidated financial statements included elsewhere in this Form 10-Q for more information on our debt facility).

Other expense for the three months ended June 30, 2021 was $0.6 million of interest expense related to our debt facility.

Results of Operations for the Six Months Ended June 30, 2022 and 2021

Other income for the three months ended September 30, 2022 and 2021 was negligible.

Other expense for the three months ended September 30, 2022 was $0.5 million of interest expense related to our debt facility (see Note 14 to the condensed consolidated financial statements included elsewhere in this Form 10-Q for more information on our debt facility).

Other expense for the three months ended September 30, 2021 was $0.6 million of interest expense related to our debt facility.

Results of Operations for the Nine Months Ended September 30, 2022 and 2021

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

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

2022 % of Revenue 2021 % of Revenue % Change

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Cost of Sales 51,760 96.8 % 46,788 100.4 % 10.6

Gross Profit 960 2.8 140 0.5 585.7

Gross Profit (Loss) 1,737 3.2 (189) (0.4) (1,019.0)

Research and Product Development 2,963 5.5 5,445 11.7 (45.6)

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Operating Loss $ (14,814) (27.7) % $ (21,977) (47.2) % (32.6) %

During the six months ended June 30, 2022, our net sales were $34.8 million compared to net sales of $30.6 million during the six months ended June 30, 2021.

During the nine months ended September 30, 2022, our net sales were $53.5 million compared to net sales of $46.6 million during the nine months ended September 30, 2021.

The increase of $6.9 million wa s primarily due to the restructuring of our supply contract with DaVita and increased pricing to other customers.

Cost of sales during the six months ended June 30, 2022 was $33.8 million, resulting in gross profit of $1.0 million during the six months ended June 30, 2022, compared to cost of sales of a $30.5 million and a gross profit of $0.1 million during the six months ended June 30, 2021.

Gross profit increased by $0.8 million primarily due to the restructuring of our supply contract with DaVita, a slight reduction of transportation costs due to efficiency initiatives being implemented and increased pricing to other customers .

Gross Profit (Loss)

Cost of sales during the nine months ended September 30, 2022 was $51.8 million, resulting in gross profit of $1.7 million during the nine months ended September 30, 2022, compared to cost of sales of a $46.8 million and a gross loss of $0.2 million during the nine months ended September 30, 2021.

Gross profit increased by $1.9 million primarily due to the restructuring of our supply contract with DaVita and increased pricing to other customers .

As a result, the Company expects an improvement in margins for the remainder of 2022.

Research and Product Development Expense

Research and product development expenses were $2.5 million for the six months ended June 30, 2022, compared with $4.2 million during the six months ended June 30, 2021.

Th is decrease of $1.7 million is primarily due to the resignation of our Chief Development Officer and shifting our project timelines.

Research and product development expenses were $3.0 million for the nine months ended September 30, 2022, compared with $5.4 million during the nine months ended September 30, 2021.

Th is decrease of $2.4 million is primarily due to the resignation of our Chief Development Officer, headcount reductions, greater cash management over projects costs and shifting our project timelines as noted above in the "Overview and Recent Developments" section above.

Selling and Marketing Expense

Selling and marketing expenses were $1.0 million during the six months ended June 30, 2022, compared with $3.3 million during the six months ended June 30, 2021.

The decrease of $2.3 million is primarily due to a decrease in marketing spend for our TRIFERIC ® products and previous headcount reductions.

Selling and marketing expenses were $1.7 million during the nine months ended September 30, 2022, compared with $4.9 million during the nine months ended September 30, 2021.

The decrease of $3.2 million is primarily due to reduced marketing spend for our TRIFERIC ® products and headcount reductions.

See "Overview and Recent Developments" for more detail.

General and Administrative Expense

General and administrative expenses were $8.6 million during the six months ended June 30, 2022, compared with $7.6 million during the six months ended June 30, 2021.

The increase of $1.0 million is due primarily t o a one-time charge related to the severance agreement for our former Chief Executive Officer and the accrual of estimated employee performance compensation.

General and administrative expenses were $11.8 million during the nine months ended September 30, 2022, compared with $11.5 million during the nine months ended September 30, 2021.

The increase of $0.3 million is due primarily t o a one-time charge related to the severance agreement for our former Chief Executive Officer offset by reductions in the use of outside agencies.

Other Income (Expense)

Other income for the six months ended June 30, 2022 was $4,000, consisting primarily of interest income.

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

Other expense for the six months ended June 30, 2022 was $1.0 million of interest expense related to our debt facility (see Note 14 for more information on our debt facility).

Other expense for the six months ended June 30, 2021 was $1.2 million of interest expense related to our debt facility.

Other income for the nine months ended September 30, 2022 and 2021 was $(10,000) and $17,000, respectively.

Other expense for the nine months ended September 30, 2022 was $1.5 million of interest expense related to our debt facility (see Note 14 for more information on our debt facility).

Other expense for the nine months ended September 30, 2021 was $1.8 million of interest expense related to our debt facility.

Liquidity and Capital Resources

As of June 30, 2022, we had approximately $30.8 million of cash and cash equivalents, and working capital of $28.7 million.

Net cash used in operating activities for the six months ended June 30, 2022 was approximately $15.7 million.

As of September 30, 2022, we had approximately $27.6 million of cash, cash equivalents and investments available-for-sale, and working capital of $23.0 million.

Net cash used in operating activities for the nine months ended September 30, 2022 was approximately $16.8 million.

On April 6, 2022, the Company and DaVita entered into an amendment (the "Amendment") to the Products Purchase Agreement, dated July 1, 2019, under which the Company supplies DaVita with certain dialysis concentrates.

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333-259923) (the “Registration Statement”), which was originally filed with the Securities and Exchange Commission (“SEC”) on September 30, 2021 and declared effective by the SEC on October 8, 2021, the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed with the SEC on April 8, 2022.

As of June 30, 2022, the Company sold 7,500 shares of its common stock pursuant to the Sales Agreement for gross proceeds of $15,135, at a weighted average selling price of approximately $2.02.

The Company paid $378 in commissions and offering fees.

During the quarter ended September 30, 2022, no sales were made pursuant to the Sales Agreement.

Approximately $12.2 million remains available for sale under the ATM facility.

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Based on the currently available working capital, and capital raises described above, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

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

The Company may require additional capital to sustain its operations and make the investments it needs to execute its strategic plan.

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

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

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

As of the date of this report, the Company is in compliance with all covenants (See Note 14 to the condensed consolidated financial statements included elsewhere in this Form 10-Q for more information on our debt facility).

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

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

The Company's international business development activities may also continue to be negatively impacted by COVID-19.

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

the timing and magnitude of cash received from drug product sales;

the timing and expenditures associated with the development programs including our FPC technology for home infusion and potentially acute heart failure;

the timing and magnitude of cash received from product sales;

the timing and expenditures associated with the development programs including our FPC technology;

and the costs associated with our manufacturing and transportation operations related to our concentrate business.

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

We believe our ability to fund our activities in the long term will be highly dependent upon 1) our ability to execute on the development of the FPC platform for new therapies, 2) our ability to restructure our other significant commercial contract within our concentrate business, and 3) our ability to find a commercial partner to commercialize and increase adaptation of TRIFERIC ® (dialysate) and TRIFERIC ® AVNU.

All of these strategies are subject to significant risks and uncertainties such that there can be no assurance we will be successful is achieving approval of FPC in a new therapeutic area, we will be successful in restructuring our commercial agreements in our concentrate business or we will be able to find a commercial partner and have sustained commercial success with TRIFERIC ® (dialysate) and TRIFERIC ® AVNU.

If our planned clinical program is delayed or fails, if our other significant commercial contract in the concentrate business cannot be restructured in a way that is beneficial to Rockwell or if our ability to find a commercial partner for TRIFERIC ® (dialysate) and/or TRIFERIC ® AVNU fails, we may be forced to implement cost-saving measures that may potentially have a negative impact on our activities and potentially the results of our research and development programs.

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

We believe our ability to fund our activities in the long term will be highly dependent upon 1) our ability to execute on the growth strategy of our hemodialysis concentrates business, 2) our ability to achieve profitability, and 3) our ability to identify, develop, in-license, or acquire new products in developing our renal care product portfolio.

All of these strategies are subject to significant risks and uncertainties such that there can be no assurance we will be successful in achieving them.

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

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

Cash Used in Operating Activities

Net cash used in operating activities was $15.7 million for the six months ended June 30, 2022 compared to net cash used in operating activities of $17.4 million for the six months ended June 30, 2021.

The decrease in cash used from operating

activities during the current period was primarily due to an increase in net income, offset by changes in current balance sheet accounts in the ordinary course of business of approximately $2.0 million, including a decrease of accounts payable of $1.6 million, an increase in net account receivable of $1.0 million and a decrease in other liabilities of $0.8 million.

Cash Provided by Investing Activities

Net cash provided by investing activities was $9.1 million during the six months ended June 30, 2022 compared to net cash used in investing activities of $1.1 million for the six months ended June 30, 2021.

The net cash provided by investing activities during the six months ended June 30, 2022 was primarily due to sales and purchase of available-for-sale investments during the quarter.

All investments available-for-sale have been liquidated as of June 30, 2022.

Net cash used in operating activities was $16.8 million for the nine months ended September 30, 2022 compared to net cash used in operating activities of $24.5 million for the nine months ended September 30, 2021.

The decrease in cash used from operating activities during the current period was primarily due to an increase in net income, offset by changes in current balance sheet accounts in the ordinary course of business of approximately $3.1 million, including an increase in net account receivable of $1.5 million, decrease in other assets of $2.1 million, decrease in lease liability of $1.4 million and decrease in deferred revenue of $1.4 million.

Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities was $5.6 million during the nine months ended September 30, 2022 compared to net cash used in investing activities of $0.2 million for the nine months ended September 30, 2021.

The net cash provided by investing activities during the nine months ended September 30, 2022 was primarily due to sales and purchase of available-for-sale investments during the year.

Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities was $24.1 million during the six months ended June 30, 2022 compared to the net cash provided by financing activities of nil for the six months ended June 30, 2021.

The net cash provided during the six months ended June 30, 2022 was primarily due to multiple equity raises (See Note 10), offset by payments on the Company's debt and short term note payable.

Net cash provided by financing activities was $22.1 million during the nine months ended September 30, 2022 compared to the net cash used in financing activities of $0.6 million for the nine months ended September 30, 2021.

The net cash provided during the nine months ended September 30, 2022 was primarily due to multiple equity raises (See Note 10), offset by payments on the Company's debt and short term note payable.

Contractual Obligations and Other Commitments

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What changed 10-Q

Item 2. Management’s Discussion and Analysis