What changed in this filing

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Item 1. Business

2024-03-21 compared with 2023-03-30 · 242 added, 222 removed, 177 unchanged (72% of the section changed)

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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.

Triferic ® , CitraPure ® , Dri-Sate ® , RenalPure ® , and SteriLyte ® are registered trademarks of Rockwell.

CENTRISOL ® , CitraPure ® , Dri-Sate ® , RenalPure ® , RENASOL ® , SteriLyte ® , and Triferic ® are registered trademarks of Rockwell.

This Annual Report on Form 10-K contains references to our trademarks and trademarks belonging to other entities.

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Rockwell Medical is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide.

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

Rockwell is a revenue-generating business.

The Company is the largest supplier of liquid bicarbonate concentrates and the second largest supplier of acid and dry bicarbonate concentrates for dialysis patients in the United States.

Hemodialysis is the most common form of end-stage kidney disease treatment and is usually performed at freestanding outpatient dialysis centers, at hospital-based outpatient centers, at skilled nursing facilities, 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.

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

Rockwell manufactures hemodialysis concentrates under current Good Manufacturing Practices ("cGMP") regulations at its three facilities in Michigan, Texas, and South Carolina totaling approximately 175,000 square feet, and manufactures dry acid concentrate mixers at its facility in Iowa.

Additionally, in July 2023, the Company purchased customer relationships, equipment and inventory from Evoqua Water Technologies related to manufacturing and sale of hemodialysis concentrates products, all of which are manufactured under a cGMP contract manufacturing agreement with a third-party organization in Minnesota.

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.

In addition to its primary focus on hemodialysis concentrates, Rockwell also 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.

Additionally, Rockwell continues to evaluate the viability of its FPC platform and FPC's potential to treat iron deficiency, iron deficiency anemia, and in different therapeutic settings.

Rockwell was incorporated in the state of Michigan in 1996 and re-domiciled to the state of Delaware in 2019.

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Our telephone number is (248) 960-9009 and our website is https://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.

We have included our website in this Annual Report on Form 10-K solely as an inactive textual reference, and content from or that can be accessed through our website is not part of, or incorporated by reference into, this Annual Report on Form 10-K.

SIGNIFICANT 2023 HIGHLIGHTS

Rockwell Medical's key developments from 2023 include:

• In January 2022, we announced regulatory approval of Triferic (dialysate) and Triferic AVNU in South Korea.

• In April 2022, we expanded our partnership with DaVita, Inc.

("DaVita") through an amended supply agreement.

• In April 2022, we entered into a stock purchase agreement with DaVita and closed the initial $7.5 million tranche.

• In April 2022, we announced that our partner in China, Wanbang Biopharmaceuticals, a subsidiary of Shanghai Fosun Pharmaceutical, completed enrollment with over 400 patients for its pivotal phase 3 clinical trial of Triferic in China.

• In May 2022, we announced a 1-for-11 reverse stock split, which became effective at 12:01 a.m.

Eastern Time on May 13, 2022.

The new CUSIP number following the reverse stock split is 774374300.

• In May 2022, we regained compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market.

• In June 2022, we closed a $15 million financing with Armistice Master Fund Ltd., which consisted of a $12 million registered direct offering, and a $3 million private placement, both priced at-market.

• In June 2022, we closed the second $7.5 million tranche of the DaVita stock purchase agreement.

• In July 2022, Jeil Pharmaceutical commercially launched Triferic in South Korea.

• In July 2022, Mark Strobeck, Ph.D.

joined Rockwell as President and Chief Executive Officer and as a member of the Company's Board of Directors.

• In August 2022, Heather Hunter joined the Company as SVP, Chief Corporate Affairs Officer.

• In November 2022, we announced that we reacquired our distribution rights for our hemodialysis concentrates business from Baxter Healthcare Corporation, a subsidiary of Baxter International, Inc.

• In November 2022, we announced that we discontinued our New Drug Applications ("NDAs") for Triferic and Triferic AVNU in the United States.

• In November 2022, we announced a new business strategy focusing on growing our revenue-generating businesses, which include hemodialysis concentrates and international partnerships for Triferic.

• In November 2022, we announced that we put development work associated with FPC for home infusion on hold.

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 Investigational New Drug ("IND") application and would require significant capital expenditure and resources to conduct additional re-formulation work and a Phase 2 study.

• In November 2022, we announced that we will determine the path forward for FPC in acute heart failure as the Company works towards profitability.

• In November 2022, we announced that we undertook workforce reductions as part of our business restructuring.

• In December 2022, we expanded our hemodialysis concentrates distribution capabilities westward into Minnesota with DaVita.

• In February 2023, we signed a three-year, multi-million-dollar supply agreement with the largest non-profit dialysis provider in the United States.

• In February 2023, we signed a three-year, multi-million-dollar product purchase agreement with Concerto Renal Services.

• In February 2023, we were named a 'Great Place to Work'.

• In May 2023, we expanded our geographic footprint to sell our hemodialysis concentrates products into the United Arab Emirates.

• In June 2023, we were added to the Russell Microcap ® Index.

• In June 2023, we entered into a three-year co-promotion services agreement with B.

Braun Medical Inc.

• In July 2023, we acquired the hemodialysis concentrates business from Evoqua Water Technologies.

• In September 2023, we entered into an amended and restated products purchase agreement with DaVita, Inc.

• In September 2023, we entered into a three-year product purchase agreement with Sanderling Renal Services and expanded our distribution capabilities westward into Utah.

• In October 2023, we entered into a three-year product purchase agreement with Centers for Dialysis Care.

• In October 2023, Joan Lau, Ph.D.

was appointed to the Company's board of directors.

• In October 2023, Jesse Neri joined the Company as SVP, Finance.

Rockwell Medical is focused on innovative, long-term growth strategies that enhance its products, its processes, and its people, enabling the Company to deliver exceptional value to the healthcare system and provide a positive impact on the lives of hemodialysis patients.

Rockwell’s strategy is focused on growing the Company's revenue-generating business, which currently includes its hemodialysis concentrates and international partnerships for Triferic, pausing further investment in capital-intensive pharmaceutical development programs, and achieving profitability to put the Company in a stronger and more stable financial position.

Once the Company achieves profitability and sustains cash flow from its revenue-generating businesses, it will then consider investments in higher-value, longer-term products to develop a broader kidney care products portfolio.

Rockwell is focused on growing the Company's revenue-generating business, which currently includes its portfolio of hemodialysis concentrates products.

Once the Company achieves sustainable profitability and cash flow from its revenue-generating business, it plans to consider investments in higher-value, longer-term products to develop a broader kidney care products portfolio.

HEMODIALYSIS CONCENTRATES

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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.

All of our concentrate products are manufactured according to Association for the Advancement of Medical Instrumentation ("AAMI") guidelines and the FDA's Current Good Manufacturing Practice ("cGMP").

All of our concentrate products are manufactured according to Association for the Advancement of Medical Instrumentation ("AAMI") guidelines and cGMP regulations.

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.

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Patients who 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 who 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 small percentage of chronic dialysis patients who receive 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.

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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.

The patient’s physician chooses the proper concentrations required for each patient based on such 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.

CitraPure Citric Acid Concentrate

Our CitraPure Concentrate is citric acid-based, and 100% acetate-free, in contrast to the acetate-based products used for many years.

CitraPure has been shown to 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).

Our CitraPure Concentrate is citric acid-based and 100% acetate-free.

CitraPure is packaged as a liquid acid concentrate in 55-gallon drums and one-gallon jugs sold in cases of four, and as a dry powder acid concentrate for use with our Dry Acid Concentrate Mixer in 25-gallon cases.

Dri-Sate Dry Acid Concentrate

Our Dri-Sate Concentrate is our acetic acid-based product.

Our Dri-Sate Concentrate is an acetic acid-based product.

Dri-Sate is packaged as a dry powder acid concentrate for use with our Dry Acid Concentrate Mixer in 25-gallon cases.

RenalPure Liquid Acid Concentrate

Our RenalPure Liquid Concentrate is our acetic acid-based product and is packaged in 55 gallon drums and cases of four one gallon jugs.

Our RenalPure Liquid Concentrate is an acetic acid-based product and is packaged in 55-gallon drums and in one-gallon jugs (sold in cases of four).

RenalPure Bicarbonate Concentrate

RenalPure bicarbonate is a dry powder mixed on-site at the clinic and is packaged in bulk and individual treatment sizes.

SteriLyte Bicarbonate Concentrate

SteriLyte bicarbonate is a liquid packaged in cases of four one-gallon jugs (sold in cases of four) and is used mainly in acute care settings.

CENTRISOL and RENALSOL Hemodialysis Concentrates

Our CENTRISOL hemodialysis concentrates consist of acid and bicarbonate formulations suitable for 45X dilution three-stream hemodialysis devices.

Our RENASOL acid and bicarbonate concentrates are compatible with 36X dilution devices.

CENTRISOL and RENASOL liquid acids are packaged in 55-gallon drums or in one-gallon jugs (sold in cases of four).

CENTRISOL and RENASOL bicarbonate concentrates are packaged as liquid in one-gallon jugs (sold in cases of four) or as dry powder in bulk and individual treatment sizes.

Dry Acid Concentrate Mixer

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 cases of four one-gallon jugs and is used mainly in acute care settings.

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.

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.

We offer certain ancillary products to selected customers including testing supplies, 5% acetic acid cleaning solution, 5% and 2% citric acid descaler, filtration salts, and other items used by hemodialysis providers.

Market Opportunity:

Rockwell's vision is to become the leading global supplier of hemodialysis concentrates.

Today, Rockwell is the second largest supplier of acid and bicarbonate concentrates for dialysis patients in the United States.

Rockwell's vision is to become the leading global supplier of all hemodialysis concentrates.

Today, Rockwell is the leading supplier of liquid bicarbonate concentrates and the second largest supplier of acid and dry bicarbonate concentrates for dialysis patients in the United States.

According to an independent research report that Rockwell commissioned from L.E.K.

Consulting LLC in 2022, the hemodialysis concentrates market in the United States alone is currently valued at $380 million and is anticipated to grow to approximately $500 million by 2026.

Consulting LLC in 2022, the hemodialysis concentrates market in the United States is anticipated to grow to approximately $500 million by 2026, up from $380 million in 2022.

This is driven primarily by an increasing number of patients suffering from end-stage kidney disease.

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

Rockwell is one of only two suppliers that has the manufacturing scalability and transportation infrastructure to service the over 7,200 dialysis clinics in the United States along with select international markets.

Hemodialysis concentrates represent a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients.

Rockwell is one of only two suppliers that has the manufacturing scalability and transportation infrastructure to service the more than 12,000 individual purchasing facilities (including outpatient dialysis clinics and hospitals) in the United States along with select international markets.

Sales and Marketing:

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.

On April 6, 2022, we amended our agreement with our long-time partner, DaVita, a leading provider of kidney care, to enable us to stabilize our concentrates business.

The amended agreement provides for changes to pricing, cost share, cost cutting, and joint efforts to improve supply chain.

In addition to the amended agreement, DaVita invested $15 million in preferred stock in two equal tranches.

The first tranche of $7.5 million was funded on April 7, 2022.

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

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 agreed to terminate the exclusive distribution agreement dated October 2, 2014.

On November 9, 2022, Rockwell reacquired its distribution rights to its hemodialysis concentrates products from Baxter Healthcare Corporation ("Baxter") and 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 terminated December 31, 2022.

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

On June 29, 2023, the Company announced that it entered into a three-year co-promotion services agreement with B.

Braun Medical Inc.

Braun"), a leader in renal therapies including innovative, high-quality products for hemodialysis.

As part of the agreement, Rockwell designates B.

Braun as an independent, non-exclusive representative to promote the Company's hemodialysis concentrates products to dialysis providers in the United States with a focus on the west coast.

All terms of the sale of any Rockwell product, including price, delivery schedule, and terms and conditions, are set by Rockwell at the Company's sole discretion.

All orders are directed to, and processed by, Rockwell.

Braun receives a fee for any sales generated by its promotional efforts.

On July 10, 2023, the Company executed and consummated the transactions contemplated by an Asset Purchase Agreement (the “Purchase Agreement”) with Evoqua Water Technologies LLC ("Evoqua") (the "Evoqua Acquisition").

Subject to the terms and conditions of the Purchase Agreement, at the closing of the transaction (the “Closing”), the Company purchased customer relationships, equipment and inventory from Evoqua, which were related to manufacturing and selling of hemodialysis concentrates products, all of which are manufactured under a contract manufacturing agreement with a third-party organization .

On September 18, 2023, Rockwell and our long-time partner, DaVita, a leading provider of kidney care, entered into an Amended and Restated Products Purchase Agreement (the "Amended Agreement"), which amends and restates the Product Purchase Agreement, dated July 1, 2019, as amended, under which the Company supplies DaVita with certain dialysis concentrates.

Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment to Rockwell on or after December 1, 2023.

The term of the Amended Agreement will expire on December 31, 2024.

DaVita will have the right, in its sole discretion upon written notice to the Company given no later than September 30, 2024, to further extend the term through December 31, 2025.

In the event of such an extension, product pricing will be increased for the extended term.

In addition, DaVita is required to provide the Company with nine-month purchasing forecasts and a commitment to purchase at least the forecasted amounts.

In the event that DaVita does not meet its forecasts, it is required to pay the Company for the amount forecasted, purchase additional product, or the Company may terminate the Amended Agreement.

Upon expiration or termination of the Amended Agreement, and upon request by DaVita, the Company has agreed to provide transition services to DaVita during a transition period.

In 2023, Rockwell entered into several long-term product purchase agreements, which include supply and purchasing commitments from certain parties.

These agreements include the largest non-profit dialysis provider in the United States;

Concerto Renal Services, the largest provider of dialysis in skilled nursing facilities in the United States;

Sanderling Renal Services, Inc., a full-service provider of in-center, home dialysis and renal telemedicine services focusing on patients in rural and underserved communities across the United States;

Centers for Dialysis Care, the largest non-profit, independent outpatient

dialysis provider in Northeast Ohio;

Houston Methodist, a leading health system and academic medical center;

Dialyze Direct, a leading provider of home dialysis services in the skilled nursing facility setting;

and Outset Medical (Nasdaq:OM), a medical technology company pioneering a first-of-its-kind technology to reduce the cost and complexity of dialysis with its Tablo ® Hemodialysis System, which is FDA-cleared for use from the hospital to the home.

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 the primary distributor of our dialysis concentrates in certain countries in Latin America that were not covered under the Distribution Agreement.

Dialysate concentrates accounted for approximately 98.4% of our revenue for the year ended December 31, 2022.

Approximately 91.1% of our sales for the year ended December 31, 2022 were to distributors and customers for use in the United States.

Dialysate concentrates accounted for approximately 97 .2 % of our revenue for the year ended December 31, 2023, of which approximately 91.5% was to distributors and customers for use in the United States.

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.

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Our accounts receivable from this customer were $2.1 million and $1.9 million as of December 31, 2023 and 2022, respectively.

In August 2019, we entered into the 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.

Also on April 6, 2022, the Company and DaVita entered into a Securities Purchase Agreement (the “SPA”), which provided for the issuance by the Company of up to $15 million of preferred stock to DaVita (see "Preferred Stock" section in Note 12 below).

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 products that permitted assignment to Baxter without consent were assigned to Baxter.

As a result, for 2022 and 2021, our direct sales to Baxter aggregated approximately 29% and 26% of sales, respectively, and we had accounts receivable from Baxter of $2.3 million and $3.5 million as of December 31, 2022 and 2021, respectively.

As noted above, Rockwell reacquired its distribution rights to its hemodialysis concentrates products from Baxter and terminated the Distribution Agreement.

In July 2019, we entered into the Products Purchase Agreement with DaVita, with an initial term expiring on December 31, 2023.

On April 6, 2022, the Company and DaVita entered into a Securities Purchase Agreement (the “SPA”), which provided for the issuance by the Company of up to $15 million of preferred stock to DaVita (see "Preferred Stock" section in Note 12 below).

On September 18, 2023, we entered into the Amended Agreement with DaVita under which the Company supplies DaVita with certain dialysis concentrates.

See "Material Agreements" below for more information on the Amended Agreement.

No other customers accounted for more than 10% of our sales in any of the last three years.

Nipro Medical Corporation, accounted for 7% and 8% of our sales in 2022 and 2021, respectively.

DaVita, the former Baxter customers, and Nipro Medical Corporation are important to our business, financial condition and results of operations.

DaVita 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.

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Fresenius 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 manufactures its concentrates in its own regional manufacturing facilities.

Fresenius and Rockwell are the two major dialysis concentrate suppliers in the United States.

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.

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, Texas facility is certified to

ISO 13485:2016.

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 products.

We operate under FDA regulations 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, Texas 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 properties and microbial limits of each product lot comply 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 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.

Our concentrates are labeled per FDA's Labeling and Packaging Control Requirements, including a Unique Device Identifier ("UDI") code, to ensure traceability of distributed products.

Our quality program activities also include qualification and ongoing assessments of suppliers of raw materials, packaging components and finished goods, and quality management reviews 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.

The raw materials and packaging materials for our hemodialysis concentrates, the components for our hemodialysis kits and the ancillary hemodialysis products we distribute are generally available from several potential suppliers.

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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.

Key packaging components include drums, bottles, caps, film/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.

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Rockwell agreed to provide certain services to a subgroup of Baxter's customers until March 31, 2023.

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

Triferic (dialysate) and Triferic AVNU 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 addition, Rockwell established six international partnerships to develop and commercialize Triferic in China, India, Korea, Turkey, Peru and Chile.

In 2022, 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 NDAs for Triferic and Triferic AVNU in the United States in the fourth quarter of 2022.

Sustaining Triferic commercially in the United States resulted in a losses to Rockwell annually.

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 in the fourth quarter of 2022.

Sustaining Triferic commercially in the United States resulted in losses to Rockwell annually.

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

Triferic and its approved presentations were not discontinued for safety reasons.

International Partnerships:

Rockwell continues to support its partners outside the United States who have exclusive license agreements to develop and commercialize Triferic in China, India, Korea, Turkey, Peru and Chile.

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.

We believe there is still potential 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.

Quality Assurance and Control

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.

We have engaged CMOs for the manufacture and packaging of Triferic.

We have one supplier for the active pharmaceutical ingredient (“API”) utilized in Triferic 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.

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 IND application with the 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 microbial challenge 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.

Rockwell conducted a pre-IND meeting with the FDA in 2022 and will determine the path forward for FPC in acute heart failure as the Company works toward profitability.

Rockwell continues to support its partners outside the United States that have exclusive license agreements to develop and commercialize Triferic.

MATERIAL AGREEMENTS

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In the fourth quarter of 2022, Rockwell reacquired its distribution rights to its hemodialysis concentrates products from Baxter and terminated the Distribution Agreement.

Rockwell is required to pay Baxter a fee for the reacquisition of its distribution rights.

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

Rockwell was required to pay Baxter a fee for the reacquisition of its distribution rights.

This fee was paid in two equal installments on January 1, 2023 and April 1, 2023.

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

Baxter and Rockwell are working closely together to transition customers’ purchases of Rockwell’s hemodialysis concentrates from Baxter to Rockwell.

Products Purchase Agreement with DaVita

In August 2019, we signed a Products Purchase Agreement (the "Products Purchase Agreement") with DaVita.

Pursuant to the Products Purchase Agreement, the Company supplies certain DaVita dialysis centers with dialysis acid concentrate (i.e., CitraPure (Liquid and Dry Acid), Dri-Sate Dry Acid or RenalPure Liquid Acid) and bicarbonate (i.e., RenalPure ® Bicarbonate Powder or SteriLyte Liquid Bicarbonate) through December 31, 2023 (the “Initial Term”), subject to certain terms and conditions.

The Products Purchase Agreement is a fixed price contract that allows for prices increases only under certain conditions and only after following procedures set forth in the Products Purchase Agreement.

In addition, the

Products Purchase Agreement requires us to maintain twenty-one days of inventory for DaVita and contains penalties if we fail to supply DaVita.

If, upon expiration of the Initial Term, the parties have not completed an extension or a new purchase agreement, the Purchase Agreement will continue in effect until terminated by either party with 90 days written notice or until the completion of an extension or new purchase agreement.

Certain costs are subject to a cap.

On September 18, 2023, Rockwell and our long-time partner, DaVita, a leading provider of kidney care, entered into the Amended Agreement.

Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment of $0.4 million to Rockwell on or after December 1, 2023.

The term of the Amended Agreement will expire on December 31, 2024.

DaVita will have the right, in its sole discretion upon written notice to the Company given no later than September 30, 2024, to further extend the term through December 31, 2025.

In the event of such an extension, product pricing will be increased for the extended term.

In addition, DaVita is required to provide the Company with nine-month purchasing forecasts and a commitment to purchase at least the forecasted amounts.

In the event that DaVita does not meet its forecasts, it is required to pay the Company for the amount forecasted, purchase additional product, or the Company may terminate the Amended Agreement.

Upon expiration or termination of the Amended Agreement, and upon request by DaVita, the Company has agreed to provide transition services to DaVita during a transition period.

Product License Agreements

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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 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.

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.

We hold several FDA product approvals including 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.

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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 have developed and are developing drug 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 three to six months from the date of submission to obtain 510(k) clearance, and 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.

Pursuant to its authority under the FD&C Act, the FDA has jurisdiction over medical devices.

The FDA regulates, among other things, the research, design, development, preclinical and clinical testing, manufacturing, safety, effectiveness, packaging, labeling, storage, recordkeeping, pre-market clearance or approval, adverse event reporting, marketing, promotion, sales, distribution and import and export of medical devices.

Unless an exemption applies, each new or significantly modified medical device requires either a premarket notification to the FDA requesting permission for commercial distribution under Section 510(k) of the FD&C Act, also referred to as a 510(k) clearance, or FDA approval of a premarket approval application ("PMA").

Device Classification

Under the FD&C Act, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness.

Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be reasonably assured by adherence to General Controls, which require compliance with the applicable portions of the FDA’s Quality System Regulation ("QSR"), facility registration and product listing, reporting of adverse events and malfunctions, and appropriate, truthful and non-misleading labeling and promotional materials.

Some Class I devices also require premarket clearance by the FDA through the 510(k) premarket notification process described below.

Most Class I products are exempt from the premarket notification requirements.

Class II devices are those that are subject to the General Controls, as well as Special Controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device.

These Special Controls can include performance standards, patient registries, FDA guidance documents, and post-market surveillance.

Most Class II devices are subject to premarket review and clearance by the FDA.

Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process.

Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-sustaining devices, or implantable devices, in addition to those deemed novel and not substantially equivalent following the 510(k) process.

The safety and effectiveness of Class III devices cannot be reasonably assured solely by the General Controls and Special Controls described above.

Therefore, these devices are subject to the PMA application process, which is generally more costly and time-consuming than the 510(k) process.

Through the PMA application process, the applicant must submit data and information demonstrating reasonable assurance of the safety and effectiveness of the device for its intended use to the FDA’s satisfaction.

510(k) Pathway

To obtain 510(k) clearance, a premarket notification must be submitted under Section 510(k) of the FD&C Act demonstrating that the proposed device is “substantially equivalent” to a predicate device.

A predicate device is a legally-

marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was found substantially equivalent through the 510(k) process.

To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.

Clinical data is sometimes required to support substantial equivalence.

The FDA’s 510(k) clearance pathway usually takes from three to 12 months from the date the notification is submitted, but it can take considerably longer, depending on the extent of FDA’s requests for additional information and the amount of time a sponsor takes to fulfill them.

After a 510(k) is submitted, the FDA determines whether to accept it for substantive review.

If it lacks necessary information for substantive review, the FDA will refuse to accept the 510(k) submission.

If it is accepted for filing, the FDA begins a substantive review.

By statute, the FDA is required to complete its review of a 510(k) premarket notification within 90 days of receiving the 510(k) submission.

As a practical matter, clearance often takes longer, and clearance is never assured.

Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process.

If the FDA agrees that the device is substantially equivalent to a predicate device, it will grant clearance to commercially market the device.

If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is automatically classified into Class III, the device sponsor must then fulfill the much more rigorous premarketing requirements of the PMA process, or seek reclassification of the device through the de novo process.

After a device receives 510(k) clearance, any modification, including modification to or deviation from design, manufacturing processes, materials, packaging and sterilization that could significantly affect its safety or effectiveness, or that would constitute a new or major change in its intended use, may require a new 510(k) clearance or, depending on the modification, could require a PMA application.

The FDA requires each manufacturer to make this determination initially, but the FDA can review any such decision and can disagree with a manufacturer’s determination.

If the FDA requires a new 510(k) clearance or approval of a PMA application for any modifications to a previously-cleared product, the applicant may be required to cease marketing or recall the modified device until clearance or approval is received.

In addition, in these circumstances, the FDA can impose significant regulatory fines or penalties for failure to submit the requisite 510(k) or PMA application(s).

Medical device types that the FDA has not previously classified as Class I, II, or III are automatically classified into Class III regardless of the level of risk they pose.

The Food and Drug Administration Modernization Act of 1997 established a new route to market for low to moderate risk medical devices that are automatically placed into Class III due to the absence of a predicate device, called the “Request for Evaluation of Automatic Class III Designation,” or the de novo classification procedure.

The de novo classification procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA application.

Prior to the enactment of the Food and Drug Administration Safety and Innovation Act of 2012 (the "FDASIA"), a medical device could only be eligible for de novo classification if the manufacturer first submitted a 510(k) premarket notification and received a determination from the FDA that the device was not substantially equivalent.

The FDASIA streamlined the de novo classification pathway by permitting manufacturers to request de novo classification directly without first submitting a 510(k) premarket notification to the FDA and receiving a not substantially equivalent determination.

Under the FDASIA, the FDA is required to classify the device within 120 days following receipt of the de novo application, though in practice the process may take significantly longer.

If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for Special Controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device.

In addition, the FDA may reject the reclassification petition if it identifies a legally marketed predicate device that would be appropriate for a 510(k) or determines that the device is not low to moderate risk or that General Controls would be inadequate to control the risks and Special Controls cannot be developed.

A PMA must be submitted if a device cannot be cleared through the 510(k) clearance or de novo process.

A PMA must be supported by extensive data, including, but not limited to, technical information, preclinical data, clinical trial data, manufacturing data, and labeling, to demonstrate to the FDA’s satisfaction the safety and efficacy of the device for its intended use.

Following receipt of a PMA, the FDA conducts an administrative review to determine whether the application is sufficiently complete to permit a substantive review.

If it is not, the agency will refuse to file the PMA.

If it is, the FDA will accept the application for filing and begin the review.

The FDA, by statute and by regulation, has 180 days to review a filed PMA, although the review of an application more often occurs over a significantly longer period of time.

During this review period, the FDA may request additional information or clarification of information already provided, and the FDA may issue a major deficiency letter to the applicant, requesting the applicant’s response to deficiencies communicated by the FDA.

The FDA considers a PMA or PMA supplement to have been voluntarily withdrawn if an applicant fails to respond to an FDA request for information ( e.g.

, major deficiency letter) within a total of 360 days.

Before approving or denying a PMA, an FDA advisory panel may review the PMA at a public meeting and provide the FDA with the committee’s recommendation on whether the FDA should approve the submission, approve it with specific conditions, or not approve it.

The FDA is not bound by the recommendations of an advisory panel, but it considers such recommendations carefully when making decisions.

Prior to approval of a PMA, the FDA may conduct a bioresearch monitoring inspection of the clinical trial data and clinical trial sites, and a QSR inspection of the manufacturing facility and processes.

The FDA can delay, limit, or deny approval of a PMA for many reasons, including:

• the device may not be shown safe or effective to the FDA’s satisfaction;

• the data from preclinical studies and/or clinical trials may be found unreliable or insufficient to support approval;

• the manufacturing process or facilities may not meet applicable requirements;

• changes in FDA approval policies or adoption of new regulations may require additional data.

If the FDA evaluation of a PMA is favorable, the FDA will issue either an approval letter or an approvable letter.

The latter usually contains a number of conditions that must be met in order to secure final approval of the PMA.

When and if those conditions have been fulfilled to the satisfaction of the FDA, the agency will issue a PMA approval letter authorizing commercial marketing of the device, subject to the conditions of approval and the limitations established in the approval letter.

If the FDA’s evaluation of a PMA or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter.

The FDA also may determine that additional tests or clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are conducted and data are submitted in an amendment to the PMA, or the PMA is withdrawn and resubmitted when the data are available.

The PMA process can be expensive, uncertain, and lengthy and a number of devices for which the FDA approval has been sought by other companies have never been approved by the FDA for marketing.

New PMAs or PMA supplements may be required for modifications to the manufacturing process, equipment or facility, quality control procedures, sterilization, packaging, expiration date, labeling, device specifications, components, materials or design of a device that has been approved through the PMA process.

PMA supplements often require submission of the same type of information as an initial PMA, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMA and may or may not require as extensive technical or clinical data or the convening of an advisory panel, depending on the nature of the proposed change.

In approving a PMA, as a condition of approval, the FDA may also require some form of postmarket studies or postmarket surveillance, whereby the applicant follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional or longer term safety and effectiveness data for the device.

The FDA may require postmarket surveillance for certain devices approved under a PMA or cleared under a 510(k) notification, such as implants or life-supporting or life-sustaining devices used outside a device user facility, devices where the failure of which would be reasonably likely to have serious adverse health consequences, or devices expected to have significant use in pediatric populations.

The FDA may also approve a PMA with other post-approval conditions intended to ensure the safety and effectiveness of the device, such as, among other things, restrictions on labeling, promotion, sale, distribution, and use.

Clinical Trials

Clinical trials are almost always required to support a PMA and are sometimes required for a 510(k) premarket notification.

In the United States, these trials often require submission of an application for an investigational device exemption ("IDE") if the investigation involves a significant risk device.

Some types of studies deemed to present “non-significant risk” are deemed to have an approved IDE—without affirmative submission of an IDE application to the FDA—once certain requirements are addressed and institutional review board ("IRB") approval is obtained.

The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.

The IDE must be approved in advance by the FDA for a specified number of patients, unless the product candidate is deemed a non-significant risk device and is eligible for more abbreviated IDE requirements.

Clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and

appropriate IRBs at the clinical trial sites.

Submission of an IDE will not necessarily result in the ability to commence clinical trials, and although the FDA’s approval of an IDE allows clinical testing to go forward for a specified number of subjects, it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria.

All clinical trials must be conducted in accordance with the FDA’s IDE regulations that govern investigational device labeling, prohibit promotion, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.

Clinical trials must further comply with the FDA’s Good Clinical Practices ("GCP") requirements for IRB approval and for informed consent and other human subject protections.

Required records and reports are subject to inspection by the FDA.

The results of clinical testing may be unfavorable, or, even if the intended safety and efficacy success criteria are achieved, may not be considered sufficient for the FDA to grant marketing approval or clearance of a product candidate.

Postmarket Requirements—U.S.

After the FDA permits a device to enter commercial distribution, numerous regulatory requirements continue to apply.

These include:

• establishment registration and device listing with the FDA;

• the FDA’s QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process;

• labeling regulations, unique device identification requirements and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label uses;

• advertising and promotion requirements;

• Restrictions on sale, distribution or use of a device;

• PMA annual reporting requirements;

• PMA approval or clearance of a 510(k) for certain product modifications;

• medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur;

• medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act that may present a risk to health;

• recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death;

• an order of repair, replacement or refund;

• device tracking requirements;

• post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.

Additionally, manufacturers are subject to unannounced inspections by the FDA to determine compliance with the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.

The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files.

Manufacturers are subject to periodic scheduled or unscheduled inspections by the FDA.

A failure to maintain compliance with the QSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of products.

The discovery of previously unknown problems with products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or approval or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.

In addition, the FDA can issue warning letters or untitled letters, impose injunctions, suspend regulatory clearance or approvals, ban certain medical devices, detain or seize adulterated or misbranded medical devices, order repair, replacement or refund of these devices, and require notification of health professionals and others with regard to medical devices that present unreasonable risks of substantial harm to the public health.

The FDA may also initiate action for civil penalties and/or criminal prosecution of such violations.

There are also certain requirements of state, local, and foreign governments that we must comply with in the manufacturing and marketing of our products.

We will need to maintain customer complaint files, record all lot numbers of disposable products, and conduct periodic audits to assure compliance with applicable regulations.

We place special emphasis

on customer training and advise all customers that device operation should be undertaken only by qualified personnel.

In addition to laws and regulations in the United States, we are subject to a variety of laws and regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our product candidates.

Postmarket Requirements—EU

The regulatory review process varies from country to country and may in some cases require the submission of clinical data.

Our international sales are subject to regulatory requirements in the countries in which our product candidates are sold.

In addition, the EU has adopted the EU Medical Device Regulation (EU 2017/745) (the “EU MDR”) which imposes stricter requirements for the marketing and sale of medical devices than in the United States, including in the area of clinical evaluation requirements, quality systems and post-market surveillance.

The transition period provided for in the EU MDR for existing CE certifications issued under the previous Medical Devices Directive will end on May 26, 2024.

For certain medical devices, the transition period was extended, ending between December, 31, 2026 and December 31, 2028, depending on the class of the device and the fulfillment of certain additional conditions.

(Regulation (EU) 2023/607).

Complying with these regulations may require us to incur significant expenditures.

Failure to meet these regulatory requirements could adversely impact our business in the EU and other regions that tie their product registrations to the EU requirements.

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.

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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.

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.

NDA applicants are required to submit to FDA information about any adverse event associated with the use of an approved drug, whether or not the adverse event is considered drug related.

If a marketed drug is found to be potentially harmful or does not comply with applicable requirements, the manufacturer 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 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

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We do not expect that compliance with these regulations, including environmental laws, will have a material adverse impact on our financial condition.

In August 2022, Congress passed the Inflation Reduction Act (“IRA”), which for the first time authorizes Centers for Medicare & Medicaid Services ("CMS") to negotiate Medicare reimbursement rates for certain high-cost prescription drug products, which may put limits on prices paid for drugs by government health programs.

Additionally, the IRA requires drug manufacturers to pay rebates to Medicare if their drug prices increase faster than the rate of inflation.

Effective in 2024, another provision will also eliminate 5% coinsurance for catastrophic coverage under Medicare Part D;

while in 2025, the IRA will cap beneficiary annual out-of-pocket expenditure at $2,000 USD.

These efforts to reduce aggregate beneficiary spending are expected to shift some costs to drug manufacturers.

In August 2022, Congress passed the Inflation Reduction Act (“IRA”), which authorizes the U.S.

Department of Health and Human Services to negotiate prices of certain drugs with participating manufacturers in federal healthcare programs.

The IRA provides Centers for Medicare & Medicaid Services ("CMS") with significant new authorities intended to curb drug costs and to encourage market competition.

For the first time, CMS will be able to directly negotiate prescription drug prices and to cap out-of-pocket costs.

Each year, CMS will select and negotiate a preset number of high-spend drugs and biologics that are covered under Medicare Part B and Part D that do not have generic or biosimilar competition.

These price negotiations began in 2023.

The IRA also provides a new “inflation rebate” covering Medicare patients that took effect in 2023 and is intended to counter certain price increases in prescriptions drugs.

The inflation rebate provision will require drug manufacturers to pay a rebate to the federal government if the price for a drug or biologic under Medicare Part B and Part D increases faster than the rate of inflation.

Notwithstanding these provisions, the IRA’s impact on commercialization and competition remains largely uncertain.

Other restrictions under applicable federal and state healthcare laws and regulations may include the following:

23 unchanged sentences

As of December 31, 2023, we owned or had the rights to 6 issued patents (4 U.S.

and 27 foreign) and 4 pending foreign applications.

Patents and patent applications owned or licensed by us include claims to FPC in both dialysate and IV compositions, formulations and methods of making and parenteral nutritional compositions including Triferic.

and 2 foreign) and 1 pending foreign application.

Patents and patent applications owned or licensed by us include claims to FPC in both dialysate and IV

compositions, formulations and methods of making and parenteral nutritional compositions including Triferic.

We have allowed several Charak-licensed and Company-owned patents and applications that are not material to our business to lapse.

United States Foreign

1 unchanged sentence

Triferic (IV and Dialysate) 3 2027 - 2036 — 2 2028 - 2034 1

(3) — 27 (2) 2028 - 2034 (1) 4

Triferic (TPN) 1 2030 — — —

Total 4 — 2 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.

One granted European patent validated in 20 European states.

US patent for solid particulate composition for use in IV and dialysate will expired in 2036.

See Item 1A “Risk Factors” for a discussion of certain risks related to our intellectual property.

7 unchanged sentences

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, senior and manager-level employees to share in the performance of the Company.

Additionally, we grant equity awards to enable directors, officers, senior and manager-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 additional cleaning and protective measures.

In response to the COVID-19 pandemic, we continue to follow the CDC protocol for safe return-to-work for affected employees and remain steadfast in our efforts to keep employees healthy and protected.

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

What changed 10-K

Item 1. Business