In early May I posted an article about the possibility that Bacterin International Holdings (BONE) and Rockwell Medical Technologies (NASDAQ:RMTI) would be added to the Russell index in June. The initial index additions were released on Friday night and both made the cut. Since the first article Rockwell Medical has gained over 30% and Bacterin has stayed about the same while the current Russell index has dropped 6.5%. The addition to the Russell index will cause funds to acquire a large number of shares of each security after the list has been finalized on June 24. Both companies are in the biopharmaceutical arena and besides being added to the index, both have some very positive catalysts going forward.
Rockwell Medical is a fully integrated biopharmaceutical company targeting end-stage renal disease, chronic kidney disease, and iron-deficiency anemia. The company has been in business more than 17 years and ranked # 2 with 40% market share. There are an estimated 2.3 million patients in the world with failed kidneys on dialysis. Every other day over a 4-hour session, a machine filters the patient’s blood of excess water and impurities, a regimen that must be maintained by the patient to live. As a result, Rockwell’s revenue is highly predictable and reoccurring and does not follow the cyclical ups and downs of the economy.
Rockwell owns the world-wide rights to water-soluble iron called SFP, which is simply added to its core product to treat iron deficiency anemia in kidney dialysis patients. Enrollment for the FDA Phase III trial began in April with expected FDA approval late 2013 and commercialization and market penetration quickly thereafter. The iron addressable market is $600 million in the US and estimated $3.3 billion world-wide growing 4-6% annually.
Since the previous article in early May the company announced that it has received notice from the U.S. Patent and Trademark Office for patent issuance that includes product claims that require ferric pyrophosphate dissolved in a bicarbonate solution held in a polyolefin container, such as an HDPE container; and method claims using the claimed product on its proprietary Soluble Ferric Pyrophosphate (SFP), the Company's lead-drug candidate for treating iron deficiency anemia in ESRD patients.
Bacterin consists of two divisions, which both have very large potentials. The Biologics division is a creator and developer of revolutionary bone graft material. The total market for products it addresses is over $8.5B. The other is the Medical Device and Coating division. Bacterin has developed a proprietary antimicrobial coating for orthopedic implants that prevent or reduce staph infections. A recent product launch in Q1 is the needleless connector with anti-microbial coatings. This market alone is over $240M.
Since the previous article on Bacterin (link above) it has entered into an equity purchase agreement with Lincoln Park Capital Fund, LLC ("LPC"), a Chicago based asset management firm. Under terms of the agreement, Bacterin received an initial investment of $1 million through the sale of shares of its common stock to LPC. In addition, LPC has committed to invest, up to an additional $30 million through the purchase of shares of Bacterin's common stock from time to time over the next three years. The transactions will be at Bacterin's sole option with no additional warrants granted.
Rockwell Medical Financial Statistics:
Share price (6/10/11): $16
Market Cap: $285M
Float: 14.7M shares
3 Month avg trading volume: 83,000
Bacterin Financial Statistics:
Share price (6/10/11): $3.71
Market Cap: $141M
Float: 22.4M shares
3 Month avg trading volume: 79,000
One thing is certain, there are 665 Russell index funds with over $500 billion in assets that will be buying stock in both these companies once the list is finalized in two weeks. It will be interesting to see over the next few weeks how companies like these that trade less than 100K shares per day respond to large volume buying. Both of these companies have very bright futures and being added to the Russell index is just one step into that future.