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What changed in ROCKWELL MEDICAL, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ROCKWELL MEDICAL, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+381 added−443 removedSource: 10-K (2024-03-21) vs 10-K (2023-03-30)

Top changes in ROCKWELL MEDICAL, INC.'s 2023 10-K

381 paragraphs added · 443 removed · 214 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

66 edited+91 added−80 removed41 unchanged
Biggest changeHEMODIALYSIS CONCENTRATES Rockwell's mission is to provide dialysis clinics and the patients they serve with the highest quality products supported by the best customer service in the industry. 5 Table of Contents 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.
Biggest changeHemodialysis 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. Our hemodialysis concentrates products are used to sustain a patient's life by removing toxins and balancing electrolytes in a dialysis patient’s bloodstream.
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 8 Table of Contents ISO 13485:2016. Dialysis products are manufactured and tested using validated equipment and defined process controls to ensure rigorous conformance to specifications.
We have established an organizational structure and quality system procedures to ensure our device products are 8 Table of Contents 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.
Other restrictions under applicable federal and state healthcare laws and regulations may include the following: 14 Table of Contents • the federal Physician Self-Referral Law, which prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, and prohibits the entity from presenting or causing to be presented claims to Medicare for those referred services; • the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, where one purpose is to induce either the referral of an individual for, or the purchase order or recommendation of, any item or services for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs.
Other restrictions under applicable federal and state healthcare laws and regulations may include the following: 15 Table of Contents • the federal Physician Self-Referral Law, which prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, and prohibits the entity from presenting or causing to be presented claims to Medicare for those referred services; • the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, where one purpose is to induce either the referral of an individual for, or the purchase order or recommendation of, any item or services for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs.
Sustaining Triferic commercially in the United States resulted in a 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.
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.
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 and Rockwell are the two major dialysis concentrate suppliers in the United States.
Fresenius services clinics owned by others with its products where it commands a market leading position in its key product lines. Fresenius manufactures its concentrates in its own regional manufacturing facilities. Fresenius and Rockwell are the two major dialysis concentrate suppliers in the United States.
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).
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).
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.
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 an acetic acid-based product.
We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company. BUSINESS OVERVIEW Rockwell Medical is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide.
We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company. BUSINESS OVERVIEW 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.
DaVita, the former Baxter customers, and Nipro Medical Corporation are important to our business, financial condition and results of operations. The loss of any significant accounts could have a material adverse effect on our business, financial condition and results of operations. See Item 1A “Risk Factors” for a discussion of certain risks related to our key customers.
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. See Item 1A “Risk Factors” for a discussion of certain risks related to our key customers.
In particular, please read our definitive proxy statement, which will be filed with the SEC in connection with our 2023 annual meeting of stockholders, our quarterly reports on Form 10-Q and any current reports on Form 8-K that we may file from time to time.
In particular, please read our definitive proxy statement, which will be filed with the SEC in connection with our 2024 annual meeting of stockholders, our quarterly reports on Form 10-Q and any current reports on Form 8-K that we may file from time to time.
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 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.
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.
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 an acetic acid-based product and is packaged in 55-gallon drums and in one-gallon jugs (sold in cases of four).
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 10 Table of Contents 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.
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 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 drums, bottles, caps, film/bags, boxes, and labels.
Triferic ® , CitraPure ® , Dri-Sate ® , RenalPure ® , and SteriLyte ® are registered trademarks of Rockwell. This Annual Report on Form 10-K contains references to our trademarks and trademarks belonging to other entities.
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.
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.
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 products. We operate under FDA regulations and place significant emphasis on providing quality products and services to our customers.
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.
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.
Clinics using our Dry Acid Concentrate products realize numerous advantages, including lower 6 Table of Contents 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.
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.
The majority of our international sales in each of the last two years were sales to domestic distributors that were resold to end users outside the United States. Our total international sales, including sales made through domestic distributors for resale outside the United States, aggregated 9% and 10% of our overall sales in 2022 and 2021, respectively.
The majority of our international sales in each of the last two years were sales to domestic distributors that were resold to end users outside the United States. Our total international sales, including sales made through domestic distributors for resale outside the United States, aggregated 9% and 9% of our overall sales in 2023 and 2022, respectively.
Human Capital As of December 31, 2022, we had 253 employees, substantially all of whom are full time employees. Our arrangements with our employees are not governed by any collective bargaining agreement. Our employees are employed on an “at‑will” basis. Our key human capital management objectives are to identify, recruit, integrate, retain and motivate our new and existing employees.
Human Capital As of December 31, 2023, we had 237 employees, substantially all of whom are full time employees. Our arrangements with our employees are not governed by any collective bargaining agreement. Our employees are employed on an “at‑will” basis. Our key human capital management objectives are to identify, recruit, integrate, retain and motivate our new and existing employees.
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.
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.
PATENTS, TRADEMARKS AND TRADE SECRETS 15 Table of Contents We have several trademarks and service marks used on our products and in our advertising and promotion of our products, and we have applied for registration of such marks in the United States and several foreign countries. Most such applications have resulted in registration of such trademarks and service marks.
PATENTS, TRADEMARKS AND TRADE SECRETS We have several trademarks and service marks used on our products and in our advertising and promotion of our products, and we have applied for registration of such marks in the United States and several foreign countries. Most such applications have resulted in registration of such trademarks and service marks.
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.
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 to enable directors, officers, senior and manager-level employees to share in the performance of the Company.
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.
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.
GOVERNMENT REGULATION 11 Table of Contents 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.
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 medical devices.
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.
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.
OUR STRATEGY 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.
OUR STRATEGY 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 is focused on growing the Company's revenue-generating business, which currently includes its portfolio of hemodialysis concentrates products.
As of December 31, 2022, we owned or had the rights to 30 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.
As of December 31, 2023, we owned or had the rights to 6 issued patents (4 U.S. 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 16 Table of Contents compositions, formulations and methods of making and parenteral nutritional compositions including Triferic.
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. customers.
Rockwell agreed to provide certain services to a group of Baxter customers until March 31, 2023. 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. customers.
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. 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.
This fee was paid in two equal installments on January 1, 2023 and April 1, 2023. 9 Table of Contents 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.
DaVita, accounted for 46% of our concentrate sales in 2022 and 47% of our concentrate sales in 2021. Our accounts receivable from this customer were $1.9 million and $1.0 million as of December 31, 2022 and 2021, respectively. In August 2019, we entered into the Products Purchase Agreement with DaVita, with an initial term expiring on December 31, 2023.
Our accounts receivable from this customer were $2.1 million and $1.9 million as of December 31, 2023 and 2022, respectively. In July 2019, we entered into the Products Purchase Agreement with DaVita, with an initial term expiring on December 31, 2023.
If we fail to maintain our 510(k) clearances, we may be required to cease manufacturing and/or distributing our products, which would have a material adverse effect on our business, financial condition and results of operations.
We cannot assure you that we will be able to maintain our 510(k) clearances from the FDA to manufacture and distribute our products. If we fail to maintain our 510(k) clearances, we may be required to cease manufacturing and/or distributing our products, which would have a material adverse effect on our business, financial condition and results of operations.
If any of our FDA clearances are denied or rescinded, sales of our products in the United States would be prohibited during the period we do not have such clearances. Drug Approval and Regulation The marketing of pharmaceutical products in the United States, such as Triferic, requires the approval of the FDA.
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.
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 dialysate can exchange bicarbonate, sodium, calcium, magnesium and potassium into the patient’s blood, while removing fluid and waste. Dialysate generally contains dextrose, sodium chloride, calcium, potassium, magnesium, sodium bicarbonate, and citric acid or acetic acid. The patient’s physician chooses the proper concentrations required for each patient based on such patient’s needs.
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.
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.
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.
A predicate device is a legally- 11 Table of Contents 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.
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. Market Opportunity: Rockwell's vision is to become the leading global supplier of hemodialysis concentrates.
Ancillary Products 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: 6 Table of Contents Rockwell's vision is to become the leading global supplier of all hemodialysis concentrates.
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.
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.
Applications under the BPCA are treated as priority applications, with all of the benefits that designation confers. Other Government Regulations The federal and state governments in the United States, as well as many foreign governments, from time to time explore ways to reduce medical care costs through health care reform.
Other Government Regulations The federal and state governments in the United States, as well as many foreign governments, from time to time explore ways to reduce medical care costs through health care reform.
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.
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 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.
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.
We are subject to routine inspection by the FDA and certain state agencies for compliance with cGMP requirements and other applicable quality system regulations. We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control, transportation and disposal of hazardous or potentially hazardous substances.
We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control, transportation and disposal of hazardous or potentially hazardous substances. Our hemodialysis concentrate products and other ancillary devices are subject the FDA 510(k) requirements.
Approximately 91.1% of our sales for the year ended December 31, 2022 were to distributors and customers for use in the United States. 7 Table of Contents Customers: We currently operate in one market segment, the hemodialysis market, which involves the manufacture, sale and distribution of hemodialysis products to hemodialysis clinics, including pharmaceutical, dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process.
Customers: We currently operate in one market segment, the hemodialysis market, which involves the manufacture, sale and distribution of hemodialysis products to hemodialysis clinics, including pharmaceutical, dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process. DaVita, accounted for 47% of our concentrate sales in 2023 and 46% of our concentrate sales in 2022.
Today, Rockwell is the second largest supplier of acid and 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.
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.
Most patients who have their dialysis treatment performed at a free-standing clinic have significant and irreversible loss of kidney function. These are commonly referred to as “chronic” dialysis patients. Patients who undergo dialysis in hospitals for temporary loss of kidney function are typically referred to as “acute” dialysis patients.
Our Products: Most hemodialysis patients receive dialysis treatment three times per week, or approximately 156 times per year. Most patients who have their dialysis treatment performed at a free-standing clinic have significant and irreversible loss of kidney function. These are commonly referred to as “chronic” dialysis patients.
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. Our Products: Most hemodialysis patients receive dialysis treatment three times per week, or approximately 156 times per year.
A key element of our dialysis business strategy going forward is to improve the strength of our concentrates business. 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.
Rockwell agreed to provide certain services to a subgroup of Baxter's customers until March 31, 2023. Triferic ® Our first two branded products from our FPC platform, Triferic ® (dialysate) and Triferic ® AVNU, are indicated to maintain hemoglobin in patients undergoing hemodialysis.
Rockwell agreed to provide certain services to a subgroup of Baxter's customers until March 31, 2023. Triferic 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.
Our hemodialysis concentrate products and other ancillary devices are subject the FDA 510(k) requirements. We have 510(k) clearance from the FDA to market hemodialysis concentrates in both liquid and powder form. In addition, we have received 510(k) clearance for our Dry Acid Concentrate Mixer.
We have 510(k) clearance from the FDA to market hemodialysis concentrates in both liquid and powder form. In addition, we have received 510(k) clearance for our Dry Acid Concentrate Mixer. We must comply with the FD&C Act and related laws and regulations, including cGMP, to retain 510(k) clearances.
We 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.
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 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.
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 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.
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 we believe Rockwell's products are well-positioned to meet the needs of patients.
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. A key element of our dialysis business strategy going forward is to improve the strength of our concentrates business.
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.
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").
Rockwell's products are vital to vulnerable patients with end-stage kidney disease. 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.
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.
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 Rockwell's mission is to provide dialysis clinics and the patients they serve with the highest quality products supported by the best customer service in the industry.
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. Our headquarters is located at 30142 Wixom Road, Wixom, Michigan 48393.
Rockwell was incorporated in the state of Michigan in 1996 and re-domiciled to the state of Delaware in 2019. Our headquarters is located at 30142 Wixom Road, Wixom, Michigan 48393. Our telephone number is (248) 960-9009 and our website is https://www.rockwellmed.com.
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.
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.
United States Foreign Description Issued Expiration Pending Issued Expiration Pending Triferic (IV and Dialysate) 3 2027 - 2036 (1), (3) — 27 (2) 2028 - 2034 (1) 4 Triferic (TPN) 1 2030 — — — Total 4 — 27 4 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.
United States Foreign Description Issued Expiration Pending Issued Expiration Pending Triferic (IV and Dialysate) 3 2027 - 2036 — 2 2028 - 2034 1 Triferic (TPN) 1 2030 — — — Total 4 — 2 1 See Item 1A “Risk Factors” for a discussion of certain risks related to our intellectual property.
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. Rockwell agreed to provide certain services to a group of Baxter customers until March 31, 2023.
Sales and Marketing: 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.
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. Sales and Marketing: Prior to the second quarter of 2022, Rockwell's concentrates business operated at a loss.
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.
Dialysate is pumped through an artificial kidney or filter (called a dialyzer) while the patient’s blood is pumped through a semi-permeable membrane inside the dialyzer in the opposite direction the dialysate is flowing. The dialysate can exchange bicarbonate, sodium, calcium, magnesium and potassium into the patient’s blood, while removing fluid and waste.
In each setting, a dialysis machine 5 Table of Contents dilutes concentrated solution, such as Rockwell’s concentrate products, with purified water. The resulting solution is called dialysate. Dialysate is pumped through an artificial kidney or filter (called a dialyzer) while the patient’s blood is pumped through a semi-permeable membrane inside the dialyzer in the opposite direction the dialysate is flowing.
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.
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.
Dialysate concentrates accounted for approximately 98.4% of our revenue for the year ended December 31, 2022.
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.
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.
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.
The IDE application must be supported by data, typically including the results of animal and laboratory testing.
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.
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.
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 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 resulting solution is called dialysate.
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 receive their treatment at home are referred to as “home” dialysis patients.
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.
Rockwell continues to support its partners outside the United States that have exclusive license agreements to develop and commercialize Triferic.
Removed
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.
Added
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.
Removed
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.
Added
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.
Removed
SIGNIFICANT 2022 HIGHLIGHTS Rockwell Medical's key developments from 2022 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.
Added
SIGNIFICANT 2023 HIGHLIGHTS Rockwell Medical's key developments from 2023 include: • In February 2023, we signed a three-year, multi-million-dollar supply agreement with the largest non-profit dialysis provider in the United States. 4 Table of Contents • 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.
Removed
("DaVita") through an amended supply agreement. 4 Table of Contents • 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.
Added
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.
Removed
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.
Added
("DaVita"). • 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.
Removed
("Baxter"). • 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.
Added
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).
Removed
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.
Added
On June 29, 2023, the Company announced that it entered into a three-year co-promotion services agreement with B. Braun Medical Inc. ("B. Braun"), a leader in renal therapies including innovative, high-quality products for hemodialysis. As part of the agreement, Rockwell designates B.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may not be able to obtain the raw materials or packaging components we need to supply our international partners, or the price of such materials or components may rise significantly, for a variety of reasons, including but not limited to: • a business interruption, including a force majeure, cyber-attack, labor strike at a supplier, a COVID-related halt or slowdown of supply of raw materials or production of components; • global supply chain delays or disruptions; • regulatory requirements or action by regulatory agencies or others against a supplier, including delays in receiving necessary approvals; • failure of a supplier to comply with cGMP standards, which could result in quality or product failures, adulteration, contamination and/or recall; • adverse financial or other strategic developments at or affecting a supplier; • termination or disagreement over the terms and conditions of the supply contract by a supplier or our inability to comply with the minimums in such an agreement; • unexpected demand for or shortage of raw materials or packaging components; and • unexpected increases in our product demand.
Biggest changeWe may not be able to obtain the raw materials or packaging components we need to supply our international partners, or the price of such materials or components may rise significantly, for a variety of reasons, including but not limited to a business interruption, increased costs of raw materials, a failure of a supplier to comply with cGMP standards, which could result in quality or product failures, adulteration, contamination and/or recall and other factors beyond our control.
Item 1A. Risk Factors. Investing in our common stock involves a high degree of risk and there can be no assurance that future results will meet expectations. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, before purchasing our common stock.
Item 1A. Risk Factors. Investing in our common stock involves a high degree of risk and there can be no assurance that our future results will meet expectations. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, before purchasing our common stock.
We do not anticipate paying dividends in the foreseeable future. Since inception, we have not paid any cash dividend on our common stock and do not anticipate paying such dividends in the foreseeable future.
Since inception, we have not paid any cash dividend on our common stock and do not anticipate paying such dividends in the foreseeable future.
These provisions, among other things: • establish a staggered board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; • authorize our board of directors to issue new series of preferred stock without stockholder approval and create, subject to applicable law, a series of preferred stock with preferential rights to dividends or our assets upon liquidation, or with superior voting rights to our existing common stock; • disallow our stockholders to fill vacancies on our board of directors; • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at our annual stockholder meetings; • permit our board of directors to establish the number of directors between three and fifteen; 32 Table of Contents • provide that stockholders can remove directors only for cause and only upon the approval of not less than a majority of all outstanding shares of our voting stock; • require the approval of not less than a majority of all outstanding shares of our voting stock to amend our bylaws and specific provisions of our certificate of incorporation; and • limit the jurisdictions in which certain stockholder litigation may be brought.
These provisions, among other things: • establish a staggered Board divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; • authorize our Board to issue new series of preferred stock without stockholder approval and create, subject to applicable law, a series of preferred stock with preferential rights to dividends or our assets upon liquidation, or with superior voting rights to our existing common stock; • disallow our stockholders to fill vacancies on our board; 29 Table of Contents • establish advance notice requirements for nominations for election to our Board or for proposing matters that can be acted upon by stockholders at our annual stockholder meetings; • permit our Board to establish the number of directors between three and fifteen; • provide that stockholders can remove directors only for cause and only upon the approval of not less than a majority of all outstanding shares of our voting stock; • require the approval of not less than a majority of all outstanding shares of our voting stock to amend our bylaws and specific provisions of our certificate of incorporation; and • limit the jurisdictions in which certain stockholder litigation may be brought.
Our Loan Agreement with Innovatus contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay the outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation.
Our A&R Loan Agreement with Innovatus contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay the outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation.
In the future, we may issue additional shares or warrants in connection with investments or for other purposes considered advisable by our Board of Directors. Any substantial sale of our common stock may have an adverse effect on the market price of our common stock and may dilute the economic value and voting rights of existing stockholders.
In the future, we may issue additional shares or warrants in connection with investments or for other purposes considered advisable by our Board. Any substantial sale of our common stock may have an adverse effect on the market price of our common stock and may dilute the economic value and voting rights of existing stockholders.
In addition, the market potential for new drug products or product candidates is highly uncertain and evaluation of such potential requires significant judgment and assumptions. There is a significant risk that any new drug product may not be able to be brought to market as profitably as expected or at all.
In addition, the market potential for new products or product candidates is highly uncertain and evaluation of such potential requires significant judgment and assumptions. There is a significant risk that any new product may not be able to be brought to market as profitably as expected or at all.
Upon the occurrence and continuation of an event of default, all amounts due under the Loan Agreement become (in the case of a bankruptcy event), or may become (in the case of all other events of default and at the option of Innovatus), immediately due and payable.
Upon the occurrence and continuation of an event of default, all amounts due under the A&R Loan Agreement become (in the case of a bankruptcy event), or may become (in the case of all other events of default and at the option of Innovatus), immediately due and payable.
In addition, a consolidation or restructuring of our business could lead to significant one-time costs related to exiting operations. Such a consolidation could have a material and adverse effect our business, financial condition and results of operations.
In addition, a consolidation or restructuring of our business could lead to significant one-time costs related to exiting operations. Such a consolidation could have a material and adverse effect on our business, financial condition and results of operations.
This may make us more vulnerable to takeovers that are completed without the approval of our Board of Directors and/or without giving us the ability to prohibit or delay such takeovers as effectively.
This may make us more vulnerable to takeovers that are completed without the approval of our Board and/or without giving us the ability to prohibit or delay such takeovers as effectively.
The trading market for our common stock may be impacted by the availability or lack of research and reports that third-party industry or financial analysts publish about the Company. There are many large, publicly traded companies active in the medical device and biopharmaceutical industry, which may mean it will be less likely that we receive widespread analyst coverage.
The trading market for our common stock may be impacted by the availability or lack of research and reports that third-party industry or financial analysts publish about us. There are many large, publicly traded companies active in the medical device and biopharmaceutical industry, which may mean it will be less likely that we receive widespread analyst coverage.
The Loan Agreement also includes customary events of default, including, among other things, a change of control or a failure to comply with certain of the covenants in the Loan Agreement.
The A&R Loan Agreement also includes customary events of default, including, among other things, a change of control or a failure to comply with certain of the covenants in the A&R Loan Agreement.
Before drug product candidates or medical devices, such as our concentrate products, can be commercially marketed in the United States, the FDA must give either premarket approval or 510(k) clearance. After a product is approved, regulatory authorities may impose significant restrictions on a product’s indicated uses or marketing or requirements for potentially costly post-marketing studies.
Before medical devices, such as our concentrate products, can be commercially marketed in the United States, the FDA must give either premarket approval or 510(k) clearance. After a product is approved, regulatory authorities may impose significant restrictions on a product’s indicated uses or marketing or requirements for potentially costly post-marketing studies.
Our results of operations could be adversely affected by general weather conditions, as well as conditions in the United States and global economy and in the global financial markets.
Our results of operations could be materially and adversely affected by general weather conditions, as well as conditions in the United States and global economy and in the global financial markets.
These covenants could also limit our ability to make needed capital expenditures or otherwise conduct necessary or desirable business activities. If we cannot maintain compliance with the covenants under our Loan Agreement, we may trigger an event of default. Our ability to comply with these covenants may be adversely affected by events beyond our control.
These covenants could also limit our ability to make needed capital expenditures or otherwise conduct necessary or desirable business activities. If we cannot maintain compliance with the covenants under our A&R Loan Agreement, we may trigger an event of default. Our ability to comply with these covenants may be adversely affected by events beyond our control.
If Medicare and Medicaid funding were to be materially decreased, dialysis providers would be severely impacted, increasing our risk of not being paid in full. An increase in our exposure to uncollectible accounts could have a material adverse effect on our business, results of operations, financial position and cash flows.
If Medicare and Medicaid funding were to materially decrease, dialysis providers would be severely impacted, increasing our risk of not being paid in full. An increase in our exposure to uncollectible accounts could have a material adverse effect on our business, results of operations, financial position and cash flows.
Furthermore, if one or more of the analysts who do cover the Company downgrade our stock, our stock price would likely decline. If we do not receive adequate coverage by reputable analysts that have an understanding of our business and industry, we could fail to achieve visibility in the market, which in turn could cause our stock price to decline.
Furthermore, if one or more of the analysts who do cover us downgrade our stock, our stock price would likely decline. If we do not receive adequate coverage by reputable analysts that have an understanding of our business and industry, we could fail to achieve visibility in the market, which in turn could cause our stock price to decline.
We face competition in the concentrate market and have a large competitor with substantial resources. The primary competitor in the market for our concentrate products is Fresenius, a large diversified company which has financial, technical, manufacturing, marketing, research and management resources substantially greater than ours. We may not be able to successfully compete with Fresenius.
We face competition in the concentrates market and have a large competitor with substantial resources. The primary competitor in the market for our concentrates products is Fresenius, a large, diversified company which has financial, technical, manufacturing, marketing, research and management resources substantially greater than ours. We may not be able to successfully compete with Fresenius.
If an event of default under the Loan Agreement should occur, we could be required to immediately repay the outstanding indebtedness. If we are unable to repay this debt, the lenders would be able to foreclose on the secured collateral, including our cash accounts, and take other remedies permitted under the Loan Agreement.
If an event of default under the A&R Loan Agreement should occur, we could be required to immediately repay the outstanding indebtedness. If we are unable to repay this debt, the lenders would be able to foreclose on the secured collateral, including our cash accounts, and take other remedies permitted under the A&R Loan Agreement.
Many dialysis providers receive the majority of their funding from the government and are supplemented by payments from private health care insurers. These providers depend on Medicare and Medicaid funding to be viable businesses. Changes to health insurance and reimbursement by Congress may have a negative impact on Medicare and Medicaid funding and on reimbursement protocols.
Many dialysis providers receive most of their funding from the government and are supplemented by payments from private health care insurers. These providers depend on Medicare and Medicaid funding to be viable businesses. Changes to health insurance and reimbursement by Congress may have a negative impact on Medicare and Medicaid funding and on reimbursement protocols.
On June 11, 2021, we received a notice from Nasdaq that we were not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Market and were unable to regain compliance in the time allotted by Nasdaq.
In 2021, we received a notice from Nasdaq that we were not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Market and were unable to regain compliance in the time allotted by Nasdaq.
If non-compliant inventory is sold or if a regulatory agency determines that we are not compliant with any applicable regulatory requirements, we may be subject to warnings from, or enforcement action by, state and federal government authorities, which may include penalties, fines, injunctions, recall or seizure of products, suspension of production, denial of future regulatory approvals, withdrawal or suspension of existing regulatory approvals, operating restrictions, injunctions and criminal prosecution.
If non-compliant inventory is sold or if a regulatory agency determines that we are not compliant with any applicable regulatory requirements, we may be subject to warnings from, or enforcement action by, state and federal government authorities, which may include penalties, fines, injunctions, recall or seizure of products, suspension of production, denial of future regulatory approvals, withdrawal or suspension of existing regulatory approvals, operating restrictions, injunctions and 25 Table of Contents criminal prosecution.
If approval for a CMO is not received or ongoing testing does not continue to meet approved standards and approval is withdrawn, the CMO’s production would be delayed or suspended, which could adversely affect our international partner’s Triferic commercialization efforts.
If approval for a CMO is not received or ongoing testing does not continue to meet approved standards and approval is withdrawn, the CMO’s production would be delayed or suspended, which could adversely affect our international partners’ Triferic commercialization efforts.
Pursuant to the Loan Agreement, we have pledged substantially all of our assets and the assets of our subsidiary, Rockwell Transportation, Inc., and have agreed that we may not sell or assign rights to our patents and other intellectual property without the prior consent of Innovatus.
Pursuant to the A&R Loan Agreement, we have pledged substantially all of our assets and the assets of our subsidiary, Rockwell Transportation, Inc., and have agreed that we may not sell or assign rights to our patents and other intellectual property without the prior consent of Innovatus.
Fresenius has historically used product bundling and low pricing as a competitive strategy to capture market share of concentrate products. We may be at a disadvantage in competing against these strategies to sell concentrate products.
Fresenius has historically used product bundling and low pricing as a competitive strategy to capture market share of concentrates products. We may be at a disadvantage in competing against these strategies to sell concentrates products.
In addition, our failure to comply with applicable regulations with respect to our concentrate products could constitute a breach of our Products Purchase Agreement, providing DaVita with various remedies that would be material and adverse to us.
In addition, our failure to comply with applicable regulations with respect to our concentrates products could constitute a breach of our Products Purchase Agreement, providing DaVita with various remedies that would be material and adverse to us.
If we infringe the rights of a third party, we could be prevented from manufacturing and selling products, forced to pay damages, compelled to license technology from the party claiming infringement and lose the opportunity to license our technology to others and collect royalty payments, any of which could have a material adverse effect on our business.
If we infringe the rights of a third party, we could be prevented from manufacturing and selling products, forced to pay damages, compelled to license technology from the party claiming infringement and lose the opportunity to license our technology to others and collect royalty payments, any of which could have a material adverse effect 26 Table of Contents on our business.
As is common in the medical device, biotechnology and pharmaceutical industry, we engage the services of consultants to assist us in the development of our drug products and product candidates. Many of these consultants were previously employed at, may have previously been, or are currently providing consulting services to, other biotechnology or pharmaceutical companies, including our competitors or potential competitors.
As is common in the medical device, biotechnology and pharmaceutical industry, we engage the services of consultants to assist us in the development of our products. Many of these consultants were previously employed at, may have previously been, or are currently providing consulting services to, other biotechnology or pharmaceutical companies, including our competitors or potential competitors.
We anticipate that dialysis providers will continue to seek ways to reduce their costs per treatment due to these reimbursement policies, which could reduce our sales and profitability and have a material adverse effect on our business, results of operations, financial position and cash flows.
We anticipate that dialysis providers will continue to seek ways to reduce their costs 22 Table of Contents per treatment due to these reimbursement policies, which could reduce our sales and profitability and have a material adverse effect on our business, results of operations, financial position and cash flows.
Similarly, the ongoing military conflict between Russia and Ukraine has created extreme volatility in the global capital markets and may have further global economic consequences, including disruptions of the global supply chain. Any such volatility and disruptions may adversely affect our business or the third parties on whom we rely.
Similarly, the ongoing military conflict between Russia and Ukraine and the conflict in the Middle East have created extreme volatility in the global capital markets and may have further global economic consequences, including disruptions of the global supply chain. Any such volatility and disruptions may adversely affect our business or the third parties on whom we rely.
Our businesses are highly regulated. The testing, manufacture, sale and delivery of the products we manufacture directly or through third party CMOs are subject to extensive regulation by the FDA and by other federal, state and foreign authorities, including, with respect to our transportation operations, the U.S. Department of Transportation.
The testing, manufacture, sale and delivery of the products we manufacture directly or through third party CMOs are subject to extensive regulation by the FDA and by other federal, state and foreign authorities, including, with respect to our transportation operations, the U.S. Department of Transportation.
Specifically, until DaVita owns less than 50% of its 18 Table of Contents investment, the Company may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5 million or to refinance existing debt, unless DaVita consents.
Specifically, until DaVita owns less than 50% of its investment, the Company may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5 million or to refinance existing debt, unless DaVita consents.
We may be subject to additional risks due to Triferic or any other drug product candidates being approved and marketed outside of the United States, including: • increased cost or resource requirements associated with measures required to support the registration and/or sale of the product or products, such as labeling changes, product changes, testing, provision of documents or production requirements; • unexpected changes in the safety profile; • reduced protection for intellectual property rights; • additional risk of litigation; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • anti-corruption laws, including the Foreign Corrupt Practices Act (the “FCPA”); • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; and • business interruptions resulting from disease outbreaks, including the recent coronavirus disease epidemic, geopolitical actions, including war and terrorism, or natural disasters, including earthquakes, typhoons, floods and fires.
Finally, we may be subject to additional risks due to Triferic being approved and marketed outside of the United States, including: • increased cost or resource requirements associated with measures required to support the registration and/or sale of the product or products, such as labeling changes, product changes, testing, provision of documents or production requirements; • unexpected changes in the safety profile; • reduced protection for intellectual property rights; • additional risk of litigation; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with anti-corruption laws, including the Foreign Corrupt Practices Act (the “FCPA”); • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; and • business interruptions resulting from disease outbreaks, including pandemics, geopolitical actions, including war and terrorism, or natural disasters, including earthquakes, typhoons, floods and fires.
Therefore, it is highly unlikely we will pay cash dividends. 31 Table of Contents If securities analysts do not publish research or reports about our business, or if they publish negative evaluations, the price of our common stock could decline.
Therefore, it is highly unlikely we will pay cash dividends. If securities analysts do not publish research or reports about our business, or if they publish negative evaluations, the price of our common stock could decline.
Even if any future 29 Table of Contents lawsuits are not resolved against us, the costs of defending such lawsuits may be material to our business and our operations. Moreover, these lawsuits may divert our Board and our management’s attention from the operation of our business.
Even if any future lawsuits are not resolved against us, the costs of defending such lawsuits may be material to our business and our operations. Moreover, these lawsuits may divert our Board and our management’s attention from the operation of our business.
GENERAL RISK FACTORS Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises such as the COVID-19 pandemic, political crises, geopolitical events, such as the crisis in Ukraine, or other macroeconomic conditions, which could have a material and adverse effect on our results of operations and financial condition.
GENERAL RISK FACTORS Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises, political crises, geopolitical events, such as the crisis in Ukraine and the Middle East, or other macroeconomic conditions, which could have a material and adverse effect on our results of operations and financial condition.
On November 10, 2022, the Company entered into the Second Amendment to Loan Agreement under which the Company (i) prepaid an aggregate principal amount of $5.0 million in outstanding term loans in one installment on November 14, 2022; (ii) agreed to make interest-only payments until September 2023 at which time the Company will resume scheduled debt payments in consideration for certain modifications to the financial covenants under the Loan Agreement.
For example, on November 10, 2022, we entered into the Second Amendment to Loan Agreement under which we (i) prepaid an aggregate principal amount of $5.0 million in outstanding term loans in one installment on November 14, 2022; (ii) agreed to make interest-only payments until September 2023 (at which time we resumed scheduled debt payments) in consideration for certain modifications to the financial covenants under the Loan Agreement.
The Company was subjected to a proxy contest at the 2017 Annual Meeting of Stockholders, which resulted in the negotiation of changes to the Board and the incurrence of substantial costs. A future proxy contest would require us to incur significant legal fees and proxy solicitation expenses and require significant time and attention by management and the Board.
We were subjected to a proxy contest at our 2017 Annual Meeting of Stockholders, which resulted in the negotiation of changes to the Board and the incurrence of substantial costs. A future proxy contest would require us to incur significant legal fees and proxy solicitation expenses and require significant time and attention by management and the Board.
If a third party believes that one of our drug products or product candidates infringes on the third party’s patent, it may sue us even if we have received our own patent protection for the technology.
If a third party believes that one of our products infringes on the third party’s patent, it may sue us even if we have received our own patent protection for the technology.
Even if we are able to enter into business development arrangements, they could have a negative impact on our business and our profitability. We may seek to make acquisitions or enter into business development arrangements in our concentrates business to expand our customer base or geographic footprint.
Even if we are able to enter into business development arrangements, they could have a negative impact on our business and our profitability. In addition to the Evoqua Acquisition, we may seek to make further acquisitions or enter into business development arrangements in our concentrates business to expand our customer base or geographic footprint.
Any future sales by us of substantial amounts of our common stock, or the possibility of such sales, could adversely affect the market price of our common stock and also impair our ability to raise capital through an offering of our equity securities in the future.
Shares eligible for future sale may affect the market price of our common stock. Any future sales by us of substantial amounts of our common stock, or the possibility of such sales, could adversely affect the market price of our common stock and also impair our ability to raise capital through an offering of our equity securities in the future.
Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs. We have experienced and may in the future experience disruptions as a result of such macroeconomic conditions, including delays or difficulties in manufacturing sufficient quantities of materials.
Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs. We have experienced and may in the future experience disruptions as a result of such macroeconomic conditions and the occurrence of natural disasters and public health crises, including delays or difficulties in manufacturing sufficient quantities of materials.
RISKS RELATED TO OUR BUSINESS Our agreement with our largest customer in our concentrates business is set to expire on December 31, 2023 and our inability to negotiate a new agreement would have a material and adverse effect on our financial condition and results of operations. Our Products Purchase Agreement with DaVita is set to expire on December 31, 2023.
RISKS RELATED TO OUR BUSINESS Our agreement with our largest customer in our concentrates business is set to expire on December 31, 2024 and our inability to negotiate a new agreement would have a material and adverse effect on our financial condition and results of operations.
Recently, our suppliers have experienced shortages in bicarbonate and acid, which are components of our dialysis concentrates, and parts needed for our equipment to make certain of our products. Diesel fuel has also been in short supply in the United States and our delivery trucks run on diesel.
For example, from time to time, our suppliers have experienced shortages in bicarbonate and acid, which are components of our dialysis concentrates, and parts needed for our equipment to make certain of our products. Diesel fuel has also been in short supply in the United States at times and our delivery trucks run on diesel.
We do not control the manufacturing processes of our CMOs and depend on them to comply with current good manufacturing practices (“cGMP”), and obtain and maintain regulatory approval.
We do not control the manufacturing processes of our CMO and depend on it to comply with current good manufacturing practices (“cGMP”) and obtain and maintain regulatory approval.
The market price of our common stock has fluctuated and is likely to be subject to further wide fluctuations in response to numerous factors, many of which are beyond our control, such as those in this “Risk Factors” section and others including: • the reporting of sales, operating results and cash resources; • announcements by commercial partners or competitors of new commercial products, clinical progress or the lack thereof, significant contracts, commercial relationships or capital commitments; • the entry into, or termination of, key agreements, including key commercial partner agreements; • changes in the structure of healthcare payment systems; • the loss of key employees; • changes in estimates or recommendations by securities analysts, if any, who cover our common stock; • our ability to obtain regulatory approvals for our product candidates, and delays or failures to obtain such approvals; • failure of any of our product candidates, if approved, to achieve commercial success; • issues in manufacturing our device products or product candidates; • the results of any future clinical trials of our product candidates; • the initiation of, material developments in, or conclusion of litigation to enforce or defend any of our intellectual property rights or defend against the intellectual property rights of others; and • the introduction of technological innovations or new therapies that compete with our products or product candidates.
The market price of our common stock has fluctuated and is likely to be subject to further wide fluctuations in response to numerous factors, many of which are beyond our control, such as those in this “Risk Factors” section and others including: • the reporting of sales, operating results and cash resources; • announcements by commercial partners or competitors of new commercial products, clinical progress or the lack thereof, significant contracts, commercial relationships or capital commitments; • the entry into, or termination of, key agreements, including key commercial partner agreements; • changes in the structure of healthcare payment systems; • the loss of key employees; • changes in estimates or recommendations by securities analysts, if any, who cover our common stock; • issues in manufacturing our products; 27 Table of Contents • the initiation of, material developments in, or conclusion of litigation to enforce or defend any of our intellectual property rights or defend against the intellectual property rights of others; and • the introduction of technological innovations or new therapies that compete with our products.
Additionally, the Loan Agreement contains customary representations and warranties and affirmative covenants, subject to customary carve outs, and includes financial covenants related to liquidity and actual concentrates revenue (measured on a quarterly basis).
Additionally, the Loan Agreement contains customary representations and warranties and affirmative covenants, subject to customary carve outs, and includes financial covenants related to liquidity and actual hemodialysis products revenue (measured on a biannual basis).
The manufacturing facilities and processes used by our CMOs must be approved by the FDA and foreign regulators, where applicable, before the drug products manufactured by such CMOs can be sold. After approval, CMOs must meet certain ongoing regulatory requirements for product testing and stability of commercially marketed products.
The manufacturing facilities and processes used by our CMO must be approved by the FDA before the products manufactured by such CMO can be sold. After approval, our CMO must meet certain ongoing regulatory requirements for product testing and stability of commercially marketed products.
RISKS RELATED TO OUR FINANCIAL POSITION We have limited capital resources and will likely need additional funding before we are able to achieve profitability . If we are unable to raise additional capital on attractive terms, or at all, we may be unable to sustain our operations.
RISKS RELATED TO OUR FINANCIAL POSITION We have limited capital resources and will likely need additional funding to operate and expand our business . If we are unable to raise additional capital on attractive terms, or at all, we may be unable to sustain our operations.
Our business operations may subject us to numerous commercial disputes, claims, lawsuits and/or investigations. Operating in the medical device and pharmaceutical industries involves numerous commercial relationships, complex contractual arrangements, uncertain intellectual property rights, potential product liability and other aspects that create heightened risks of disputes, claims, lawsuits and investigations.
Operating in the medical device and pharmaceutical industries involves numerous commercial relationships, complex contractual arrangements, uncertain intellectual property rights, potential product liability and other aspects that create heightened risks of disputes, claims, lawsuits and investigations.
A significant portion of our costs relates to chemicals and other raw materials and transportation, which such costs are out of our control, and we may not be able to recover a portion of such costs due to provisions in our material contract with DaVita.
A significant portion of our costs relates to chemicals and other raw materials and transportation, which such costs are out of our control, and we may not be able to recover a portion of such costs due to provisions in the Products Purchase Agreement with DaVita and other fixed price contracts.
In addition, we cannot entirely eliminate the risk of accidental injury or contamination from these materials or wastes. If one of our employees was accidentally injured from the use, storage, handling or disposal of these materials or wastes, the medical costs related to his or her treatment would be covered by our workers’ compensation insurance policy.
If one of our employees was accidentally injured from the use, storage, handling or disposal of these materials or wastes, the medical costs related to his or her treatment would be covered by our workers’ compensation insurance policy.
We may have significant legal expenses that are not covered by insurance. In addition, our reputation could be damaged by such sanctions or product liability litigation and that could harm our business reputation and marketing ability. Any such sanctions or litigation could also hurt our ability to retain product liability insurance or make such insurance more expensive.
In addition, our reputation could be damaged by such sanctions or product liability litigation and that could harm our business reputation and marketing ability. Any such sanctions or litigation could also hurt our ability to retain product liability insurance or make such insurance more expensive.
For example, the COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the capital markets. The Federal Reserve has raised interest rates multiple times in response to concerns about inflation and it may raise them again. Higher interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and affect consumer spending.
The Federal Reserve has raised interest rates multiple times in response to concerns about inflation and it may raise them again. Higher interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and affect consumer spending.
In addition, as part of our business strategy to expand our drug product portfolio, we may seek to acquire or in-license other drug products or product candidates that we believe are a complementary fit with our current product candidate portfolio, as well as other product or product candidates that we believe have substantial development potential.
In addition, as part of our business strategy, we may seek to acquire or in-license products or product candidates that we believe are a complementary fit with our business, as well as other product or product candidates that we believe have substantial development potential. We may not be able to identify such opportunities.
We have limited capital resources, a cumulative deficit of approximately $388.8 million since inception and we may incur further losses. As of December 31, 2022, we had approximately $21.5 million of cash, cash equivalents and investments available-for-sale, and working capital of $17.6 million. Net cash used in operating activities for the year ended December 31, 2021 was approximately $17.4 million.
We have limited capital resources, a cumulative deficit of approximately $397.2 million since inception and we may incur further losses. As of December 31, 2023, we had approximately $10.9 million of cash, cash equivalents and investments available-for-sale, and working capital of $12.1 million. Net cash used in operating activities for the year ended December 31, 2023 was approximately $9.4 million.
We have been and may continue to be affected materially and adversely by increases in raw material and transportation costs and may be unable to recover certain costs due to provisions in our material contract.
We have been and may continue to be materially and adversely affected by increases in raw material, labor and transportation costs and may be unable to recover certain costs due to provisions in our largest customer contract and other fixed price contracts and we may lose other customers due to price sensitivity.
In addition to Fresenius, we are aware of other large manufacturers potentially looking to increase their market share of the domestic concentrates market, which, if successful, could have an impact upon our profitability.
In addition to Fresenius, we are aware of other large manufacturers potentially looking to increase their market share of the domestic concentrates market, which, if successful, could have an impact upon our profitability. Our production and other processes are largely manual, which introduces risk of error and may result in rising production costs.
Even a voluntary Class III recall, which is a recall of products for a defect that is unlikely to result in adverse health consequences, can have an adverse impact on the Company due to the costs of the recall or the reactions of customers.
Even a voluntary Class III recall, which is a recall of products for a defect that is unlikely to result in adverse health consequences, can have an adverse impact on the Company due to the costs of the recall or the reactions of customers. Our failure to comply with applicable regulations could also result in product liability litigation against us.
These factors include, but are not limited to: • the timing of any restructuring of the contract with our largest customer in our concentrates business; • our ability to enter into new contracts and negotiate favorable terms with former Baxter customers; • our ability to increase our prices to keep up with inflation; • whether we experience significant input costs for, or disruptions to, the manufacturing or distribution of our products; and • our international partners’ commitment and ability to obtain regulatory approval for Triferic in their countries.
These factors include, but are not limited to: • the extension of the contract with our largest customer in our concentrates business; • our ability to enter into new contracts and negotiate favorable terms with our customers; • our ability to increase our prices to keep up with inflation; • whether we experience significant input costs for, or disruptions to, the manufacturing or distribution of our products; • whether we expand into new territories; and • whether we develop and launch new product offerings.
If we are unable to achieve one or all of these objectives, we may be forced to implement cost-saving measures that could have a negative impact on our activities.
If we are unable to achieve one or all of these objectives, we may be forced to implement further cost-saving measures that could have a negative impact on our activities. If we are unable to increase our revenues and decrease our expenses or raise any required capital, we may be forced to curtail our activities and, ultimately, cease operations.
Market dynamics in our concentrates business that have resulted in lower volumes could lead to the implementation of cost saving measures that would have a material and adverse effect on our business. Volumes have been decreasing in our concentrates business, due to the reduction in patient census caused by COVID-19 and cost saving measures by our customers.
Market dynamics in our concentrates business have resulted in fluctuating volumes that could lead to the implementation of cost-saving measures that would have a material and adverse effect on our business.
Such side effects may also result in litigation against us by private litigants. We maintain product liability insurance. We cannot be sure that such insurance would be sufficient to protect us against liabilities associated with any of these events in view of our expanding business or that such insurance will remain 28 Table of Contents available at economical levels.
Although we maintain product liability insurance, we cannot be sure that such insurance would be sufficient to protect us against liabilities associated with any of these events in view of our expanding business or otherwise, or that such insurance will remain available at economical levels. We may have significant legal expenses that are not covered by insurance.
These factors are subject to significant risks and uncertainties and there can be no assurance that we will be successful in raising additional capital, restructuring our contract with our largest customer and entering into new contracts with former Baxter customers.
These factors are subject to significant risks and uncertainties and there can be no assurance that we will be successful in raising additional capital, controlling costs and restructuring our customer relationships.
The loss of any of these customers could have a material and adverse effect on our business, results of operations, financial position and cash flows. Sales of our medical device products are highly concentrated in a few customers.
The loss of any of these customers could materially and adversely affect our business, results of operations, financial position and cash flows. 21 Table of Contents Sales of our medical device products are highly concentrated among a few customers.
We expect that if we continue to be subject to the limitations in the Products Purchase Agreement, the increasing costs and decreasing volumes may continue to negatively impact our profit margins and materially and adversely affect our financial position. A few customers account for a substantial portion of the end user sales of our concentrate products.
We expect that if we continue to be subject to the limitations in the Products Purchase Agreement and other fixed price contracts, the increasing costs and decreasing volumes may continue to negatively impact our profit margins and materially and adversely affect our financial position.
Regardless of whether we seek to raise additional working capital through the sale of equity securities or the incurrence of indebtedness, if we do not have sufficient funds available to run our concentrates business and pursue business opportunities, our business, results of operations, financial position and cash flows could be materially adversely affected.
If our operations require substantial cash resources in the future in excess of our liquid resources on hand and if our cash flows are not sufficient to support financing through unsecured indebtedness, we may not be able to obtain debt financing and our capital financing options may become limited. 19 Table of Contents Regardless of whether we seek to raise additional working capital through the sale of equity securities or the incurrence of indebtedness, if we do not have sufficient funds available to run our concentrates business and pursue business opportunities, our business, results of operations, financial position and cash flows could be materially adversely affected.
As a result, we have in the past been unable to fully recover our costs for the products we sell to DaVita (including transportation costs). This has had and could in the future have a material and adverse impact on our financial position.
As a result, we have in the past been unable to fully recover our costs for the products we sell to DaVita (including transportation costs). Continued rising costs and declining volumes have had and could continue to have a negative impact on our business.
Any such circumstance could significantly hamper our ability to supply our customers with our drug products in a timely manner, which may have a material adverse effect on our international business relationships.
Any such circumstance could significantly hamper our ability to supply our customers in a timely manner, which may have a material adverse effect on our financial condition and results of operations.
Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time due to the overall state of the labor pool and the difficulty finding the specialized skills 23 Table of Contents we require.
The loss of the services of our executive officers or other key employees could seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time due to the overall state of the labor pool and the difficulty finding the specialized skills we require.
As of December 31, 2022, the Company was in compliance with all reporting and financial covenants, but there can be no assurance that we will be able to maintain compliance in the future.
Although we are currently in compliance with all reporting and financial covenants, there can be no assurance that we will be able to continue to maintain compliance in the future.
If the results of any new drug product initiative are materially 21 Table of Contents worse than expected, it could have a material adverse effect on our business, results of operations, financial position and cash flows.
If the results of any new product initiative are materially worse than expected, it could have a material adverse effect on our business, results of operations, financial position and cash flows. Our international partnerships for Triferic involve risks that may materially impact those international relationships or our business generally.
We may fail to qualify for continued listing on Nasdaq, which could make it more difficult for our stockholders to sell their shares. We are required to satisfy the continued listing requirements of Nasdaq to maintain such listing, including, among other things, the maintenance of a minimum closing bid price of $1.00 per share.
We are required to satisfy the continued listing requirements of Nasdaq to maintain such listing, including, among other things, the maintenance of a minimum closing bid price of $1.00 per share.
If any of these risks actually occur, our business, financial condition or results of operations would likely suffer. In that case, the trading price of our common stock could fall, and you may lose all or part of the money you paid to buy our common stock.
In that case, the trading price of our common stock could fall, and you may lose all or part of the money you paid to buy our common stock.
A weak or declining United States or global economy could also strain our suppliers, possibly resulting in supply disruption. In addition, due to macro-economic conditions in the global economy, there have been shortages in raw materials, parts and fuel that we need to run our business.
In addition, due to macro-economic conditions in the global economy (including inflation), there have been shortages in raw materials, parts and fuel that we need to run our business.
We may experience an ownership change in the future as a result of future changes in our stock ownership. The inability to use our NOLs to reduce federal taxable income could result in increased future tax liability to us and reduce the cash that would otherwise be available to our business.
The inability to use our NOLs to reduce federal taxable income could result in increased future tax liability to us and reduce the cash that would otherwise be available to our business. 28 Table of Contents We do not anticipate paying dividends in the foreseeable future.
The risk of a security breach or disruption, particularly through cyber-attacks, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
The risk of a security breach or disruption, particularly through cyber-attacks, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. From time to time, we are subject to phishing attempts. In the fourth quarter of 2023, we discovered a business email compromise caused by phishing.
We have in-licensed rights to certain patents that cover our FPC products. If we fail to remain in compliance with these license agreements, we could forfeit the rights to these patents, which could negatively impact our partners' ability to commercialize our products and our ability product candidates.
If we fail to remain in compliance with these license agreements, we could forfeit the rights to these patents, which could negatively impact our partners' ability to commercialize our products and result in our noncompliance with those partnership agreements. We have acquired rights to certain patents under license agreements, including from an affiliate of Dr.
These terms of the Loan Agreement could prevent us from taking certain actions without the consent of our lenders, which may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our stockholders, placing us at a competitive disadvantage compared to our competitors who have less leverage and who therefore may be able to take advantage of opportunities that our leverage prevents us from exploiting.
The A&R Loan Agreement also contains negative covenants that, among other things, restrict our ability to: • incur additional indebtedness; • grant liens; • make distributions, including dividends; • enter into a merger or consolidation; • alter the business of the Company; or • sell all or a portion of the Company’s property, business or assets. 18 Table of Contents These terms of the A&R Loan Agreement could prevent us from taking certain actions without the consent of our lenders, which may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our stockholders, placing us at a competitive disadvantage compared to our competitors who have less leverage and who therefore may be able to take advantage of opportunities that our leverage prevents us from exploiting.
In the past year, raw materials costs have increased significantly, due to short supply and excess demand. Transportation also comprises a significant portion of our costs. We have been adversely affected by a general shortage in commercial truckers in the United States and significant increases in labor and fuel costs.
Transportation also comprises a significant portion of our costs. We have been adversely affected by a general shortage in commercial truckers in the United States and significant increases in labor and fuel costs. In addition, there has, in the past, been a nationwide shortage of diesel fuel in the United States, which we use to run our delivery trucks.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe expect that we may need additional manufacturing capacity and distribution facilities to meet our business requirements.
Biggest changeWe expect that we may need additional manufacturing capacity and distribution facilities to meet our business requirements and anticipate they will be available on commercially available terms.
Added
We believe that our existing leased properties are adequate and suitable for the conduct of our business and that our capital resources are sufficient to purchase, lease or construct any additional facilities required to meet our expected long-term growth needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−1 removed1 unchanged
Biggest changeThe resolution of these pending proceedings is not expected to have a material effect on our operations or consolidated financial statements in the period in which they are resolved.
Biggest changeThe resolution of these pending proceedings is not expected to have a material effect on our operations or consolidated financial statements in the period in which they are resolved. Information pertaining to legal proceedings is provided under the heading “Litigation” in Note 15, Commitments and Contingencies, to the consolidated financial statements and is incorporated by reference herein. Item 4.
Removed
Information pertaining to legal proceedings is provided under the heading “Litigation” in Note 15, Commitments and Contingencies, to the consolidated financial statements and is incorporated by reference herein. 33 Table of Contents Item 4. Mine Safety Disclosures. Not applicable. 34 Table of Contents PART II
Added
Mine Safety Disclosures. Not applicable. 31 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+0 added−0 removed2 unchanged
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on The Nasdaq Capital Market under the trading symbol “RMTI”. Holders As of February 28, 2023, there were 37 holders of record of our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on The Nasdaq Capital Market under the trading symbol “RMTI”. Holders As of February 29, 2024, there wer e 37 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

41 edited+34 added−48 removed23 unchanged
Biggest changeNet cash used in financing activities was $2.2 million during the year ended December 31, 2021. The net cash used in financing activities was primarily due to payments on the Company's debt and short term note payable.
Biggest changeThe net cash provided by financing activities was primarily due to the net proceeds from issuance of equity securities of $14.9 million, primarily comprised of gross proceeds from the issuance of common stock of $13.8 million in connection with Armistice's exercise of the Prior Warrant, offset by payments on the Company's debt, short term note payable, and financing leases which aggregated $3.5 million during the year ended December 31, 2023 .
The net loss for this period was higher than net cash used in operating activities by $1.3 million, which was primarily attributable to non-cash expenses of $3.9 million, consisting primarily of $2.0 million of amortization of the right to use assets, $0.6 million of depreciation and amortization, $0.6 million of inventory reserves, $0.4 million of debt financing cost amortization and accretion of discount, $0.3 million of stock-based compensation, and a $2.6 million net change in assets and liabilities.
The net loss for this period was higher than net cash used in operating activities by $1.8 million, which was primarily attributable to non-cash expenses of $3.9 million , consisting primarily of $2.0 million of amortization of the right to use assets, $0.6 million of depreciation and amortization, $0.6 million of inventory reserves, $0.4 million of debt financing cost amortization and accretion of discount, $0.3 million of stock-based compensation, and a $2.1 million net change in assets and liabilities.
Based on the currently available working capital, expectation of the ability of management to execute on the Company's operational plans noted 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.
Based on the currently available working capital and expectation of the ability of management to execute on the Company's operational plans noted 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.
Cash Provided by (Used in) Investing Activities Net cash used in investing activities was $2.4 million during the year ended December 31, 2022 . The net cash provided was primarily due to the purchase of investments available-for-sale of $21.3 million, offset by $19.2 million sale of our available-for-sale investments and $0.3 million for the purchase of equipment.
Net cash used in investing activities was $2.4 million during the year ended December 31, 2022. The net cash used was primarily due to the purchase of investments available-for-sale of $21.3 million , offset by $19.2 million sale of our available-for-sale investments and $0.3 million for the purchase of equipment.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview 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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview 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 liquid and powder acid and bicarbonate concentrates for dialysis patients in the United States.
Impairment losses on long-lived assets, such as real estate and equipment, are recognized when events or changes in circumstances indicate that the undiscounted cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such carrying value may not be recoverable.
Impairment losses on long-lived assets, such as real estate and equipment and definite-lived intangible assets, are recognized when events or changes in circumstances indicate that the undiscounted cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such carrying value may not be recoverable.
As a result of these inflationary pressures, and in light of the fact that the Company's concentrates business operated at a loss in 2021, the Company sought to renegotiate certain terms of its supply contracts with the Company’s two largest customers in an effort to allow the Company to stabilize its concentrates business.
As a result of these inflationary pressures, and in light of the fact that the Company's concentrates business operated at a loss in 2022, the Company sought to renegotiate certain terms of its supply contracts with the Company’s two largest customers in an effort to allow the Company to stabilize its concentrates business.
Cash (Used in) Provided by Financing Activities Net cash provided by financing activities was $16.6 million during the year ended December 31, 2022. The net cash provided by financing activities was primarily due to proceeds from issuance of equity securities of $29.8 million offset by payments on the Company's debt and short term note payable of $13.2 million.
Net cash provided by financing activities was $16.2 million during the year ended December 31, 2022. The net cash provided by financing activities was primarily due to net proceeds from issuance of equity securities of $29.8 million offset by payments on the Company's debt and short term note payable of $13.2 million .
For the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expense on its options granted under the Company’s equity compensation plans to its directors and officers, and its employees.
For the years ended December 31, 2023 and 2022, the Company recorded stock-based compensation expense on its options granted under the Company’s equity compensation plans to its directors and officers, and its employees.
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.
Hemodialysis is the most common form of end-stage kidney disease treatment and is typically performed at freestanding outpatient dialysis centers, hospital-based outpatient centers, skilled nursing facilities, or in a patient’s home. This represents a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients.
Property and Equipment Property and equipment are recorded at cost and are depreciated using the straight‑line method over the useful lives of the assets, which range from three to ten years. Expenditures for routine maintenance and repairs are expensed as incurred.
Property and Equipment 37 Table of Contents Property and equipment are recorded at cost and are depreciated using the straight‑line method over the useful lives of the assets, which range from three to ten years. Expenditures for routine maintenance and repairs are expensed as incurred.
Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.
Unless otherwise discussed, we believe that the impact of 38 Table of Contents recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.
During the year ended December 31, 2022, the Company continued to experience significant inflationary pressures in its dialysis concentrates business, which has resulted in operating losses associated with this business line.
During the year ended December 31, 2023, the Company continued to experience inflationary pressures in its dialysis concentrates business, which has resulted in operating losses associated with this business line.
Certain accounting estimates, including those concerning revenue recognition, allowance for doubtful accounts, inventory reserves, share based compensation, impairments of long‑lived assets, and accounting for income taxes, are considered to be critical in evaluating and understanding our financial results because they involve inherently uncertain matters and their application requires the most difficult and complex judgments and estimates. These are described below.
Certain accounting estimates, including those concerning revenue recognition, allowance for doubtful accounts, inventory reserves, share based compensation, impairments of long‑lived assets, and accounting for income taxes, are considered to be critical in evaluating and understanding our financial results because they involve inherently uncertain matters 36 Table of Contents and their application requires the most difficult and complex judgments and estimates.
Impairment 40 Table of Contents losses are then measured by comparing the fair value of assets to their carrying amounts. For the years ended December 31, 2022 and 2021, there were no impairments of long-lived assets. Goodwill and Intangible Assets Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired.
Impairment losses are then measured by comparing the fair value of assets to their carrying amounts. For the years ended December 31, 2023 and 2022, there were no impairments of long-lived assets. Goodwill and Intangible Assets Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired.
As of December 31, 2022, the Company is in compliance with all financial covenants (See Note 16 to the consolidated financial statements included elsewhere in this Form 10-K for more information on our debt facility).
As of December 31, 2023, the Company is in compliance with all covenants (See Note 17 to the consolidated financial statements included elsewhere in this Form 10-K for more information on our debt facility).
General 38 Table of Contents The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to the costs associated with our manufacturing and transportation operations related to our concentrate business.
The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to the costs associated with our manufacturing and transportation operations related to our concentrate business.
The net loss for this period was less than net cash used in operating activities by $0.9 million, which was primarily attributable to non-cash expenses of $4.0 million, consisting primarily of $1.8 million of amortization of the right to use assets, $0.7 million of depreciation and amortization, $0.9 million of stock-based compensation, $0.1 million of inventory reserves, $0.4 million of debt financing cost amortization and accretion of discount, and a $4.8 million net change in assets and liabilities.
The net loss for this period was less than net cash used in operating activities by $1.0 million, which was primarily attributable to increases of non-cash expenses of $6.3 million , consisting primarily of $2.0 million of changes to the right to use assets, $1.4 million of depreciation and amortization, $1.1 million of inventory reserves, $0.9 million of stock-based compensation, $1.1 million of debt financing cost amortization and accretion of discount and premium, and a $7.2 million net change in assets and liabilities.
Research and Product Development Expense Research and product development expenses were $3.1 million for the year ended December 31, 2022 compared with $6.8 million during the year ended December 31, 2021.
Research and Product Development Expense Research and product development expenses were $1.1 million for the year ended December 31, 2023 compared with $3.1 million during the year ended December 31, 2022.
Cost of Sales and Gross Profit Cost of sales during the year ended December 31, 2022 was $68.7 million, resulting in gross profit of $4.1 million, compared to cost of sales of $64.4 million and a gross loss of $2.4 million during the year ended December 31, 2021.
Cost of Sales and Gross Profit Cost of sales during the year ended December 31, 2023 was $74.9 million, resulting in gross profit of $8.7 million, compared to cost of sales of $68.7 million and a gross profit of $4.1 million during the year ended December 31, 2022.
Additionally, the Company's operational plans also include raising capital, if needed, by using our ATM facility or other methods or forms of financings, subject to existing limitations.
Additionally, the Company's plans include raising capital, if needed, by using the $11 million remaining on its ATM facility or other methods or forms of financings, subject to existing limitations.
Changes in estimates are 39 Table of Contents reflected in our financial statements in the period of change based upon on‑going actual experience, trends, or subsequent realization depending on the nature and predictability of the estimates and contingencies. Interim changes in estimates are generally applied prospectively within annual periods.
Changes in estimates are reflected in our financial statements in the period of change based upon on‑going actual experience, trends, or subsequent realization depending on the nature and predictability of the estimates and contingencies.
In addition, the global macroeconomic environment is uncertain, and could be negatively affected by, among other things, increased U.S. trade tariffs and trade disputes with other countries, instability in the global capital and credit markets, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine and other political tensions, and lingering effects of the COVID-19 pandemic.
Global Economic Considerations The global macroeconomic environment is uncertain, and could be negatively affected by, among other things, increased U.S. trade tariffs and trade disputes with other countries, instability in the global capital and credit markets, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, the Israel-Hamas conflict and other political tensions, and the occurrence of natural disasters and public health crises.
Even if we are able to raise sufficient capital, such financings may only be available on unattractive terms, or result in significant dilution of stockholders’ interests and, in such event, the market price of our common stock may decline. Cash Used in Operating Activities Net cash used in operating activities was $17.4 million for the year ended December 31, 2022.
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.
Net cash used in operating activities was $33.5 million for the year ended December 31, 2021.
Net cash used in operating activities was $16.9 million for the year ended December 31, 2022.
Our policy is to reserve for our drug product inventory that we determine is unlikely to be sold to, or if sold, unlikely to be utilized by our customers on or before its expiration date.
Inventory that is not expected to be converted to cash over the next year is classified as non-current. Our policy is to reserve for our drug product inventory that we determine is unlikely to be sold to, or if sold, unlikely to be utilized by our customers on or before its expiration date.
Net sales of hemodialysis concentrates to dialysis providers and distributors in the United States and abroad were $71.7 million for the year ended December 31, 2022 comp ared to $60.8 million f or the year ended December 31, 2021. Net sales of Triferic (dialysate) were $1.2 million and $1.1 million for the years ended December 31, 2022 and 2021, respectively.
Net sales of hemodialysis concentrates to dialysis providers and distributors in the 33 Table of Contents United States and abroad were $81.3 million for the year ended December 31, 2023 comp ared to $71.7 million f or the year ended December 31, 2022.
Results of Operations The following table summarizes our operating results for the periods presented below (dollars in thousands): For the Year Ended December 31, 2022 % of Revenue 2021 % of Revenue % Change Net Sales $ 72,810 $ 61,931 17.6 % Cost of Sales 68,733 94.4 % 64,351 103.9 % 6.8 Gross (Loss) Profit 4,077 5.6 (2,420) (3.9) (268.5) Research and Product Development 3,119 4.3 6,835 11.0 (54.4) Selling and Marketing 2,094 2.9 5,733 9.3 (63.5) General and Administrative 15,644 21.5 15,348 24.8 1.9 Operating Loss $ (16,780) (23.0) % $ (30,336) (49.0) % (44.7) % Net Sales During the year ended December 31, 2022, our net sales were $72.8 million compared to net sales of $61.9 million during the year ended December 31, 2021 .
Results of Operations The following table summarizes our operating results for the periods presented below (dollars in thousands): For the Year Ended December 31, 2023 % of Revenue 2022 % of Revenue % Change Net Sales $ 83,612 $ 72,810 14.8 % Cost of Sales 74,908 89.6 % 68,733 94.4 % 9.0 % Gross Profit 8,704 10.4 % 4,077 5.6 % 113.5% Research and Product Development 1,107 1.3 % 3,119 4.3 % (64.5) % Selling and Marketing 2,125 2.5 % 2,094 2.9 % 1.5 % General and Administrative 12,142 14.5 % 15,644 21.5 % (22.4) % Operating Loss $ (6,670) (8.0) % $ (16,780) (23.0) % (60.3) % Net Sales During the year ended December 31, 2023, our net sales were $83.6 million compared to net sales of $72.8 million during the year ended December 31, 2022 .
All accounts or portions thereof deemed to be uncollectible are written off to the allowance for doubtful accounts. Inventory Inventory is stated at the lower of cost or net realizable value. Cost is determined on the first‑in first‑out (FIFO) method. Inventory that is not expected to be converted to cash over the next year is classified as non-current.
All accounts or portions thereof deemed to be uncollectible are written off to the allowance for credit losses and credit loss expense. Inventory Inventory is stated at the lower of cost or net realizable value. Cost is determined on the first‑in first‑out (FIFO) method.
As of December 31, 2022, we had approximately $21.5 million of cash, cash equivalents and investments available-for-sale, and working capital of $17.6 million. Net cash used in operating activities for the year ended December 31, 2022 was approximately $17.4 million.
At December 31, 2023, we had an accumulated deficit of approximately $397.2 million and stockholders’ equity of $21.3 million. As of December 31, 2023, we had approximately $10.9 million of cash, cash equivalents and investments available-for-sale, and working capital of $12.1 million. Net cash used in operating activities for the year ended December 31, 2023 was approximately $9.4 million.
Due to the rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect the Company's liquidity and capital resources in the future.
Due to the 35 Table of Contents rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect the Company's liquidity and capital resources in the future. Cash Used in Operating Activities Net cash used in operating activities was $9.4 million for the year ended December 31, 2023.
Shipping and handling costs associated with outbound freight related to contracts with customers are accounted for as a fulfillment cost and are included in cost of sales when control of the goods transfers to the customer. Accounts Receivable Accounts receivable are stated at invoice amounts.
Shipping and handling costs associated with outbound freight related to contracts with customers are accounted for as a fulfillment cost and are included in cost of sales when control of the goods transfers to the customer. Deferred License Revenue - Upfront fees received under distribution and license agreements have been deferred as a contract liability.
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 its dry acid concentrate mixers at its facility in Iowa.
Rockwell manufactures hemodialysis concentrates at its facilities in Michigan, South Carolina, and Texas totaling approximately 175,000 square feet, and manufactures its dry acid concentrate mixers at its facility in Iowa. In addition, the Company manufactures the former Evoqua product line in Minnesota under a contract manufacturing agreement with a contract manufacturing organization.
Selling and Marketing Expense Selling and marketing expenses were $2.1 million during the year ended December 31, 2022 compared with $5.7 million during the year ended December 31, 2021.
General and Administrative Expense General and administrative expenses were $12.1 million during the year ended December 31, 2023 compared with $15.6 million during the year ended December 31, 2022.
Other expense consisted of interest expense related to our debt facility (see Note 16 to the financial statements for more information on our debt facility) totaling $1.9 million and $2.4 million for the years ended December 31, 2022 and December 31, 2021, respectively.
Other Expense Total other expense for the years ended December 31, 2023 and December 31, 2022 was $1.8 million and $1.9 million, respectively, which was primarily related to interest expense incurred on our debt facility of $2.3 million and $1.9 million for the years ended December 31, 2023 and December 31, 2022, respectively.
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.
("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.
Liquidity and Capital Resources Since inception, we have incurred significant net losses and have funded our operations primarily through revenue from commercial products, proceeds from the issuance of debt and equity securities and payments from partnerships. At December 31, 2022, we had an accumulated deficit of approximately $388.8 million and shareholders’ equity of $14.1 million.
See Note 17 to the consolidated financial statements for more information on our debt facility. Liquidity and Capital Resources Since inception, we have incurred significant net losses and have funded our operations primarily through revenue from commercial products, proceeds from the issuance of debt and equity securities and payments from partnerships.
The increase of $10.9 million is primarily related to the amendment of our supply agreement with DaVita and increased pricing to other customers. During 2022, the Company made a strategic decision to discontinue its NDAs for Triferic and Triferic AVNU in the United States.
During 2022, the Company made a strategic decision to discontinue its NDAs for Triferic and Triferic AVNU in the United States.
Intangible assets subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable.
Intangible assets subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Definite-lived intangible assets consist of our customer relationships intangible asset recorded in connection with the Evoqua Acquisition, which is being amortized over 20 years.
We review outstanding trade accounts receivable balances and based on our assessment of expected collections, we estimate the portion, if any, of the balance that may not be collected as well as a general valuation allowance for other accounts receivable based primarily on historical experience.
The Company reviews outstanding trade accounts receivable balances and based on its assessment of expected collections, the Company estimates the portion, if any, of the balance that may not be collected based on future forecasts, historical loss information, and current economic conditions.
Net cash provided by investing activities was $0.3 million during the year ended December 31, 2021. The net cash provided was primarily due to the purchase of investments available-for-sale of $26.1 million, offset by $26.9 million sale of our available-for-sale investments and $0.5 million for the purchase of equipment.
The net cash used was primarily due to the $12.4 million of cash paid in connection with the Evoqua acquisition, $5.7 million in purchases of our available-for-sale investments and $0.3 million for the purchase of equipment, offset by proceeds from the sale of our available-for-sale investments of $15.3 million .
Removed
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.
Added
Rockwell provides the hemodialysis community with products controlled by a Quality Management System regulated by the U.S. Food and Drug Administration ("FDA"). Rockwell is ISO 13485 Certified and adheres to current Good Manufacturing Practices ("cGMP") and Association for Advancement of Medical Instrumentation ("AAMI") standards.
Removed
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.
Added
(See Note 4 of the accompanying consolidated financial statements for further detail). On February 12, 2024, the Company entered into an amendment to its contract manufacturing agreement to extend the term to December 31, 2024.
Removed
Additionally, Rockwell continues to evaluate the viability of its FPC platform and FPC's potential to treat iron deficiency, iron deficiency anemia, and acute heart failure. Reverse Stock Split 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.
Added
The Company plans to transfer the manufacturing of the former Evoqua product line to one of its own manufacturing facilities by the end of 2024, which the Company believes will reduce production costs for these products.
Removed
The Board of Directors subsequently approved the implementation of a reverse stock split at a ratio of one-for-eleven shares, which became effective on May 13, 2022. The Company’s outstanding stock options were also adjusted to reflect the one-for-eleven reverse stock split of the Company’s 35 Table of Contents common stock.
Added
On July 10, 2023, the Company executed and consummated the transactions contemplated by the Evoqua Acquisition.
Removed
Outstanding stock options were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased. 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.
Added
Subject to the terms and conditions of the Purchase Agreement, at 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.
Removed
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 periods ended December 31, 2022 and 2021, respectively.
Added
Total consideration was $17.4 million, comprising a cash payment at Closing of $12.4 million (inclusive of transaction costs) and two $2.5 million 32 Table of Contents deferred payments, the first to be paid on the first anniversary and the second to be paid on the second anniversary of the Closing. See Note 4 for further detail.
Removed
Gross profit increased by $6.4 million during the year ended December 31, 2022 compared to the year ended December 31, 2021 due to price increases for all business during the year including the amended products purchase agreement with DaVita, offset by volume reductions and increased distribution costs.
Added
On August 7, 2023, Rockwell was informed by Wanbang, the Company’s commercialization partner in China for Triferic, that the main efficacy results of Wanbang’s clinical trial for Triferic (dialysate) compared with placebo were not obtained and Wanbang will not will not bring the product forward to registration.
Removed
The decrease of $3.7 million is related to headcount reductions and the decision to put all research related to our FPC for Home Infusion program on hold due to the significant capital expenditure and resources to support additional re-formulation work and conduct a Phase 2 study.
Added
As a result, the remaining $2.1 million of deferred license revenue was recorded into revenue, and the related portion of long-term inventory of $1.1 million was reserved for. On September 18, 2023, Rockwell and our long-time partner, DaVita, Inc.
Removed
The decrease of $3.6 million is du e to a decrease in marketing spend for our Triferic products and a headcount reduction. 36 Table of Contents General and Administrative Expense General and administrative expenses were $15.6 million during the year ended December 31, 2022 compared with $15.3 million during the year ended December 31, 2021.
Added
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.
Removed
The $0.3 million increase was driven primarily by increases in executive severance expenses of $1.4 million, legal costs of $0.2 million and travel expense of $0.1 million, offset by decreases in employee incentives of $0.6 million, various cost cutting measures of $0.5 million, and FDA fees of $0.2 million.
Added
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.
Removed
Other Income (Expense) Other income consisted of interest income of $33,000 and $22,000 for the years ended December 31, 2022 and December 31, 2021, respectively.
Added
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.
Removed
These factors raised substantial doubt about the Company’s ability to continue as a going concern and depended, in part, on the degree of success in addressing inflationary pressures affecting the Company’s concentrates business, as well as the Company’s ability to contain costs, raise additional working capital, if needed, and remain in compliance with financial and reporting covenants under the Company’s secured loan.
Added
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. Additionally, during the year ended December 31, 2023, Rockwell entered into several long-term product purchase agreements, which include supply and purchasing commitments from certain parties.
Removed
Under the Amendment, the Company and DaVita agreed to certain price increases, effective May 1, 2022, as well as the pass-through of certain inflationary costs, determined on a quarterly basis. The Amendment also requires the Company to implement certain cost containment and cost-cutting measures.
Added
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.
Removed
The Amendment contains certain covenants with respect to the Company’s ongoing operations, including a minimum cash covenant of $10 million, or the Company will be in default under the Products Purchase Agreement. An event of default could result in termination of that agreement.
Added
On January 2, 2024, the Company's Loan Agreement was amended to include, among other things, an interest-only period for 30 months, or up to 36 months if certain conditions are met, and extend the maturity date to January 1, 2029. (See Note 19 for further detail).
Removed
On April 6, 2022, the Company and DaVita entered into the SPA, pursuant to which the Company issued $15 million of preferred stock to DaVita in two separate tranches.
Added
Net sales of Triferic (dialysate) were $2.3 million and $1.2 million for the years ended December 31, 2023 and 2022, respectively. The increase in net sales of Triferic (dialysate) was due to Wanbang's decision to not bring the product forward to registration.
Removed
The Company initially issued 7,500 shares of a newly designated series of preferred stock, which is designated “Series X Convertible Preferred Stock” (the “Series X Preferred Stock”) for gross proceeds of $7.5 million.
Added
The increase of $10.8 million in net sales is primarily due to the restructuring of our products purchase agreement with DaVita, the reacquired rights to commercialize and distribute our products, the asset acquisition of Evoqua, onboarding of new customers and increased pricing to other customers.
Removed
On June 15, 2022, the Company issued to DaVita an additional 7,500 shares of Series X Preferred Stock in a second closing (the “Second Tranche”) for an additional $7.5 million. The Second Tranche was conditioned upon the Company raising an additional $15.0 million in capital within a certain timeline, which took place on June 2, 2022.
Added
Gross profit increased by $4.6 million during the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to the restructuring of our supply contract with DaVita in 2022, lower distribution costs, onboarding of new customers, increased pricing to other customers and net impact of recording the remaining deferred license revenue associated with Wanbang and the associated inventory reserve as described above.
Removed
On April 8, 2022, the Company entered into a sales agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (the “Agent”), pursuant to which the Company may offer and sell from time to time up to $12,200,000 of shares of Company’s common stock through the Agent.
Added
The decrease of $2.0 million is due to a reduction in wages and project costs resulting from the decision to pause all research related to our FPC for Home Infusion program. Approximately 37% of research and development expenses for the year ended December 31, 2023 were comprised of severance costs.
Removed
During the quarter ended December 31, 2022, no sales were made pursuant to the Sales Agreement. Subject to restrictions under General Instruction I.B.6 to Form S-3, approximately $12.2 million remains available for sale under the ATM facility.
Added
Selling and Marketing Expense Selling and marketing expenses were $2.1 million during the year ended December 31, 2023 compared with $2.1 million during the year ended December 31, 2022. We continue to evaluate marketing spend and focus on target opportunities for greater return on investments.
Removed
On May 30, 2022, the Company entered into a Securities Purchase Agreement (the “RD Purchase Agreement”) with the purchaser named therein (the “Purchaser”), pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Offering”), 844,613 shares of its common stock at price of $1.39 per share, and prefunded warrants to purchase up to an aggregate of 7,788,480 shares of common stock (the “Pre-Funded Warrants” and the shares of common stock underlying the Pre-Funded Warrants, the “Warrant Shares”).

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