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12/10/2014

Rockwell Medical (RMTI) Speculative Buy as January PDUFA Date Nears

  January 24 PDUFA date set for patented, drug with large market potential = near term catalyst

  Shares may be coming off double bottom formation

  Completed capital raise in November by BofA Merrill Lynch at 9:00/share for net proceeds of $54.7 million

  $53 million in ttm revenue from existing operations

Overview/Share Structure

Rockwell Medical, Inc. (RMTI) is a biopharmaceutical company targeting end-stage renal disease (ESRD) and

chronic kidney disease (CKD) with products and services for the treatment of iron deficiency anemia, secondaryhyperparathyroidism and hemodialysis.

Founded in 1995 and headquartered in Wixom, MI, Rockwell Medical has 286 full time employees.

Shares outstanding: 46.6 million (following November capital raise)

Insider ownership: 18.6% with 420,000 shares purchased in last 4 months and zero insider sells

Institutional ownership: 22-28% (depending on source)

January 24 PDUFA Date for New Drug, “Triferic” 

For those new to pharma/biotech stocks, a critically important  day is the PDUFA date (pronounced puh-doo-fuh). It stands for “Prescription Drug UseFee Act” and the trading leading up to the PDUFA date is typically volatile. 

What’s at stake is huge, as the PDUFA date is the day the FDA votes to approve or reject a new drug. Sometimes, the FDA will rule before theannounced PDUFA date, but it's the day by which a decision is expected.

Triferic is Rockwell's late-stage investigational iron maintenance therapy for the treatment of iron deficiency in chronic kidney disease patients receiving

hemodialysis, and the PDUFA date set for approval or rejection by the FDA is January 24.

While this may not be as exciting as a cure for cancer, the market/revenue implications for Rockwell are big. End Stage Renal Disease (ESRD) is the

condition where a patient’s kidneys have completely failed. As a result, patients with ESRD require dialysis treatments several times/week (or a kidneytransplant) to survive. There is no cure. Unfortunately, ESRD affects 2.52 million patients globally and is growing 6-8% annually, exceeding populationgrowth rates in much of the world.

The key to understanding Triferic’s potential is that these 2.5 million dialysis patients also suffer from chronic anemia (low hemoglobin levels) and

serious (sometimes life-threatening) liver failure. Liver failure in this patient population is most often caused by iron toxicity resulting from the ironreplacement therapies currently used to treat the underlying anemia. It’s a real (and expensive) problem for hospitals and renal physicians to manage

hemoglobin and iron levels in these patients, and Triferic addresses the problem.

Triferic is administered during the patient’s dialysis treatment and in positive clinical trials has shown to be efficacious in preventing anemia and high ironlevels that can lead to liver failure. There were no adverse effects from the drug reported in the studies. Should the FDA approve Trifecta for use inESRD patients, then I can see widespread use of by physicians to more easily manage their patients

Moreover, hospitals nationwide have an increasing role in patient treatment modalities. Hospitals nationwide must be accredited by and follow “bes

practice standards” set by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). The JCAHO has enormous power in healthcareadministration nationwide. If a hospital loses accreditation from JCAHO, they lose their Medicare funding…a devastating blow.  While JCAHO may no

literally “prescribe” a drug, they can strongly influence its use by making hospitals prove they are using “disease-specific best practices” to lower cosand reduce the average patient length of stay. So a drug like Triferic can become a best practice protocol used by hospitals to demonstrate to JCAHOwhat they are proactive in reducing patient length of stay limiting expensive complications of anemia and liver toxicity in ESRD patients. These protocols

become part of a standard set of orders that physicians who are authorized to practice at a particular hospital must follow.

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