Rockwell Medical - Consensus Says It Goes Over $19

| About: Rockwell Medical, (RMTI)

Rockwell Medical (NASDAQ:RMTI) is a 2013 top performing biopharmaceutical company developing a pipeline of drug therapies targeting end-stage renal disease (ESRD) and chronic kidney disease (CKD) with innovative products and services for the treatment of iron deficiency, secondary hyperparathyroidism and hemodialysis. As one of the few major suppliers in the U.S., Rockwell's products are sold in the two largest dialysis centers, DaVita (NYSE:DVA) and Fresenius (NYSE:FMS) and used to improve the quality of life of patients with kidney failure on hemodialysis, by removing toxins and replacing critical nutrients in the dialysis patient's bloodstream. Currently, Rockwell has three manufacturing and distribution facilities located in the U.S. Its operating infrastructure allows for a ready-made sales and distribution channel that is able to provide seamless integration into the commercial market for its drug products, Calcitriol and Triferic™ upon FDA market approval. Rockwell's lead drug candidate is called Triferic™, previously known as Soluble Ferric Pyrophosphate (SFP), and has completed Phase 3 clinical development for the treatment of iron deficiency in dialysis patients.


During regular dialysis treatments, Triferic™ delivers iron to the bone marrow of a dialysis patient in a non-invasive, physiologic manner via dialysate. To date, in completed clinical trials, Triferic™ has demonstrated that it can safely deliver sufficient iron to the bone marrow and maintain hemoglobin without increasing iron stores (ferritin), while significantly decreases ESA use. Triferic™ has completed its Phase 3 clinical studies (CRUISE-1 and CRUISE-2) and is expected to address an estimated $600M U.S. market.

FDA Manufacturing Approval Calcitriol Vitamin D Injection Is Pending (Should Pass)

Rockwell is also preparing to launch its FDA approved generic drug called Calcitriol, a treatment for secondary hyperparathyroidism (a parathyroid disorder) in dialysis patients. Shown to significantly reduce elevated parathyroid hormone levels, Calcitriol's active Vitamin D injection is indicated in the management of hypocalcemia in patients undergoing chronic renal dialysis. As soon as Rockwell receives FDA manufacturing approval, it will be able to supply an estimated $350M U.S. market. I am expecting positive news here and a good bump in the stock again.

Some Prior DD:

Rockwell's Key Benefits

Rockwell's exclusive renal drug therapy pipeline supports disease management initiatives to:

1) Improve the quality of life and care of dialysis patients in a growing market
2) Deliver safe and effective therapy
3) Decreases drug administration costs
4) Improves patient convenience

Some Financials - Second Quarter Results

1) Sales increased 7.1% up to $13 million compared to $12.1 million in Q2 last year.

2) Multi-year contract with DaVita calls for increased business.

3) CitraPure sales climbed significantly - increasing 61% over the last quarter.

4) CitraPure is an innovative concentrate product that contains no acetate, the buffering agent used in a traditional concentrate product.

5) CitraPure completely removes acetate and replaces it with citrate.

6) CitraPure improves patient outcomes and actually makes patients feel better.

7) CitraPure lowers a providers cost of treatment.

8) Gross profit for the quarter was $1.7 million consistent with last year.

9) Research and development costs were $10.2 million.

10) Net loss for the quarter was $11.9 million and consistent with last year, $2.5 million loss in Q1.

11) Net loss is a result of the clinical development work for Triferic™ (SFP).

12) Company guidance: Sales and profits are expected to move higher looking forward, and investors should expect the R&D burn rate to continue to decrease upon completing its clinical development.

13) Cash on hand: Rockwell had $41 million in cash at the end of the quarter

14) Shares outstanding: Company has about 39.9 million shares outstanding.


Clinical Data Review

Now let's review the clinical data. Rockwell has completed two phase III studies CRUISE -1 and CRUISE -2. On July 1, 2013 Rockwell released positive clinical data from the pivotal CRUISE -1 study of Triferic™ its iron delivery drug for iron replacement in hemodialysis patients.

The CRUISE -1 study achieved primary endpoints and statistical significance with a p-value of 0.011. Triferic™ also met key secondary endpoints including maintenance of hemoglobin, maintenance of reticulocyte hemoglobin and an increasing serum iron pre-to-post treatment without an increase in ferritin.

Triferic™ data also demonstrated excellent safety endpoints. With respect to adverse events (AEs) or serious adverse events, there were no differences in frequency or severity between Triferic™ and placebo group. Overall, the AEs reported were successful and were reported as consistent with those that would be expected in the chronic hemodialysis population.

CRUISE -1 delivered extraordinary phase III efficacy and safety data. Given that the data was so successful the company felt confident that it would be able to obtain similar results from the CRUISE -2 study, which it did and looks to gain FDA market approval for Triferic™ too.

On September 4, 2013 its CRUISE-2 study successfully met its pre-defined primary efficacy endpoint, which was a change in hemoglobin from Baseline to End-of-Treatment between the Triferic™ and placebo groups. The mean difference between Triferic™ and placebo was 3.6 g/L (95% CI 0.8, 6.3) in favor of Triferic™, and was statistically significant (p=0.011). This second Phase 3 study produced identical results to the first in demonstrating statistical significance and meeting the primary efficacy endpoint. The data again shows that in place of IV iron, Triferic™ appears safe and effective as an iron replacement therapy that consistently maintains hemoglobin levels without increasing iron stores. The demonstrated efficacy and excellent safety data from each of the two Phase 3 CRUISE efficacy studies gives Rockwell's management great confidence in obtaining FDA regulatory approval. These successful results, coupled with the recent positive PRIME study data demonstrating SFP's ability to significantly reduce ESA use, support its belief that Triferic™ will establish a new paradigm in iron therapy treatment for hemodialysis patients. We believe that upon FDA approval, Triferic™ will become the new standard of care in iron therapy.

The intent of Rockwell as I understand it is to package these two trials with other Triferic™ clinical data and then submit the new drug application (NDA) to the FDA. This would take a few months to complete the process.

Significant Cost Reduction Goals

The CRUISE -1 and CRUISE -2 results combined with the recent positive PRIME study data demonstrate that Triferic™ can effectively deliver iron and maintain hemoglobin without increasing iron stores, while significantly reducing ESA use. The PRIME study demonstrated a statistically significant 35% reduction in ESA use for patients receiving Triferic™ compared to the patients receiving placebo. ESA sales are costing taxpayers billions each year. Epogen, Procrit and Aranesp have ranked among the top selling drugs in the U.S., generating more than $8 billion a year for two companies, Amgen (NASDAQ:AMGN) and Johnson & Johnson (NYSE:JNJ). Amgen alone has one of the most lucrative monopolies of all time, yielding the biotechnology company over $40 billion in sales over the past 20 years.

Triferic™ has demonstrated that it is able to deliver both significant clinical and economic benefit to patients. Beyond the clinical data the additional key component is the company's claim that it could reduce dialysis treatment costs by $700MM. This is a significant savings and one solution to Medicare's cost reduction agenda.

Institutional Holders

1) 26% and increasing

2) Number of Holders: 75

3) New Positions: 21

4) Increased Positions: 57

5) Decreased Positions: 10


Within The Next Several Months:

Rockwell expects that the great majority of its customers will be purchasing CitraPure, where sales have climbed significantly by increasing 61% over the last quarter. I also expect Calcitriol to enable Rockwell to increase sales and profit margins considerably while strengthening its existing business. Rockwell's data also supports my strong belief that Triferic™ (formerly SFP) will set a new standard, and significantly raise the bar in the current IV iron therapy market for dialysis patients.

Additional growth and leverage will come online with its planned offering of Triferic™ once it becomes FDA approved. The FDA may even accelerate the approval process under the FDA Fast Track Development Program due to its effectiveness and favorable cost savings benefits.

The PRIME study demonstrated that regular administration of SFP-iron via dialysate reduced the usage of erythropoietin stimulating agents (ESAs) during hemodialysis by 37.1% while maintaining iron balance and maximizing iron delivery. Also, remember that there was favorable data included in the DRIVE plus DRIVE-II studies, which shows that patients in the ferric gluconate group required significantly less epoetin usage.

In early September EXP told followers:

In reviewing all of the pertinent data and research on the company, I along with the company's enthusiasm for success, believe that we could achieve a significant run-up into and subsequently following the release of favorable data. This is not usual either. With the anticipation of positive CRUISE -1 data that was released on July 11, 2013, RMTI stock moved from about $3.40 to over $5.90 following the announcement, or a 73.50% move on heavy short interest. Shorts stand at about 6,564,900 shares or about 20% today.

EXP also stated that it was quite possible that shareholders could see a move from the mid-$5s up to the mid-$6 level and then a pop to between $11 - $12 (70% - 100%) upon and shortly after approval just like we experienced with the CRUISE -1 data release. If the data is not successful you can expect a significant hair cut in the stock. It would be entirely up to your discretion to hold, though and/or following the data. Also, let's not discount that Rockwell's recent guidance suggested that sales and profits are expected to move higher looking forward.

Now see the chart.

Click to enlarge

Upgrade Summary -

RMTI has been the subject of a number of other recent research reports:

  • Summer Street raised their price target on shares of Rockwell Medical from $20.00 to $25.00 in a research note to investors on Thursday, September 5th. They currently have a "Buy" rating on the stock.
  • Craig Hallum initiated coverage on shares of Rockwell Medical in a research note to investors on Friday, September 13th with a "Buy" rating and a $16.00 price target on the stock.
  • Last Friday, September 27, Stifel Nicolaus increased their target price on shares of to $18.00.
  • The company presently has a consensus rating of "Buy" and a consensus average price target of over $19 based on the last three upgrades from Craig Hallum, Summer Street and Stifel.

Disclosure: I am long RMTI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.