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Rockwell Medical- A Highly Undervalued Gem

|Includes: Rockwell Medical, Inc. (RMTI)

Disclaimer: I am not a certified analyst, I cannot predict the future, I do not have insider information and no one should ever listen to some random guy on the internet like me. You should always do your own due diligence and consult a financial adviser prior to making any investment decisions. I am just a Paramedic and my opinions are strictly that, opinions. I am long RMTI.

If you read my last little article/rant on RMTI, I may have somehow convinced you to actually buy shares of the company. If you did have the testicular fortitude to hold through Cruise II data, you are obviously in the green and very happy. This article outlines why I believe RMTI is a great long term hold.

FYI: I am not an author by any definition of the word. I merely write my little rants to give a few of my fellow investors/friends a glimpse as to why I think a certain company is a good investment.


  1. Explain the science of ESRD, anemia and the role of Rockwell Medical in the dialysis market.
  2. What is SFP? And let's review the clinical data.
  3. Discuss the differences between the Zerenex (ferric citrate) and SFP (Triferic)
  4. The reasons why SFP is set to become the Standard of Care Iron therapy for patients with ESRD (end-stage renal disease) who have anemia.
  5. The reason why the CMS (centers for Medicare and Medicaid cuts) will actually benefit Rockwell Medical and lead to an expedited review of SFP by the FDA.
  6. Is Calcitriol approved yet?
  7. Some other interesting information that investors may find useful…

RMTI- Rockwell medical is a fully-integrated biopharmaceutical company 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.

  • In the year 1997, according to the National Kidney Foundation, there were approximately 300,000 patients with ESRD that required maintenance dialysis.
  • In the year 2009, according to the National Institute of Health (NIH), there were a total of 398,861 patients being treated with some form of dialysis.
  • The National Kidney foundation predicts, by the year 2030, more than 2 million patients will be in need of dialysis or transplantation due to kidney failure. This increase will be attributed to an aging population and the prevalence of Type 2 Diabetes.
  • In the year 2009, it cost the United States $40 billion dollars in public and private funds to treat patients with ESRD. $29.03 billion was attributed to Medicare cost and $13.47 billion in non-Medicare costs.
  • Treating a patient with hemodialysis costs THREE times as much as treating a transplant patient.
  • According to the most recent statistics, there are approximately 430,000 patients with ESRD who are on dialysis and also in need treatment for anemia.

As you can clearly see from the aforementioned statistics; the number of patients with ESRD renal disease, in need of dialysis, continues to grow at an alarming rate.

End Stage Renal Disease (ESRD) means that there is total and permanent kidney failure. The kidney failure may be attributed to some disease, illness or injury. When the kidneys fail, the body retains excess amount of fluid and harmful toxins build up in the body. The kidneys are responsible for filtering out toxins from the body. Patients with ESRD need treatment to replace the work of the failed kidneys, typically through hemodialysis.

  • Besides removing toxins, the kidneys also produce a very important hormone called Erythropoietin. This hormone plays an integral role in the production of red blood cells. Erythropoietin stimulates the bone marrow to produce red blood cells in response to tissue hypoxia. During episodes of hypoxia, the patient lacks oxygen rich blood at the cellular level.
  • Iron deficiency anemia is the most common type of anemia worldwide. It is estimated that one fifth of the global population has iron deficiency. Iron is the essential component of hemoglobin (a protein responsible for transporting oxygen in the blood). Iron is an integral component for the process of erythropoiesis (the production of red blood cells).
  • For normal healthy males hemoglobin level are noted to be between 14-18 g/dL and females are noted to have hemoglobin levels between 11-16 g/dL. In patients with ESRD, hemoglobin levels are maintained between 9-11 g/dL. Excessive hemoglobin levels can cause patients to from clots in their blood stream and increase the risk of patients suffering a heart attack, stroke, or a pulmonary embolism (clot in the lung).

The current standard of treatment for patients with ESRD is hemodialysis. Patients are treated 3 days a week at dialysis centers around the country. Dialysis is not an optional treatment for patients with ESRD, without it, these patients would die.

ESRD patients, suffering from anemia, are currently treated with a combination of Erythropoietin stimulating agents (ESA's) and IV iron. The main drug used in these patients is called Epogen, which is marketed by Amgen.

  • Amgen has been the sole provider of Epogen in the US for the last 23 years. That is approximately $40 billion worth of sales.
  • The prices for Epogen were negotiated by dialysis providers and Amgen to determine their profitability. Since Amgen has been the sole provider, Amgen raised prices significantly over the years at the expense of dialysis centers nationwide, tax payers and patients.
  • In 2010, Amgen raked in $2.5 billion from the sales of Epogen. In 2011 the sales for Epogen were approximately $2 billion.
  • The average cost to treat a SINGLE anemic patient with ESRD disease is approximately $7,371 to $14,742 per year (
  • A short while back AMGEN finally got some competition on the ESA market. A company called Affymax (NASDAQ:AFFY) started marketing an FDA approved drug called OMONTYS. OMONTYS was a longer acting ESA drug, required significantly less dosages and was ultimately cheaper for dialysis centers. If you follow the market, you are well aware that earlier this year OMONTYS was voluntarily recalled by Affymax and its partner Japanese based TAKEDA; after reports surfaced of allergic reactions in patients leading to death.
  • The recall of OMONTYS by Affymax increased sales of Epogen by an additional 15% this year.
  • During the initial arrival of OMONTYS on the market, Amgen took steps to lock out Affymax from the market by signing contracts with the two largest dialysis companies.
  • Currently Davita has a contract with Amgen, in which the dialysis center has agreed to use Amgen's drugs for at least 90 percent of its needs through the year 2018.
  • Fresenius signed a three-year nonexclusive deal with Amgen for their drug Epogen in 2012.

SFP (Triferic) reduces ESA use by 35%! This will save Medicare, Patients, Insurance companies and Dialysis centers, approximately 700 million dollars per year.

EPOGEN- is a prescription medication given to patients with Anemia who are on dialysis to treat the lower than normal number of red blood cells.

  • Epogen is a black boxed drugs with a myriad of side effects including but not limited to:
  • Allergic reactions leading to Anaphylaxis and death
  • Increase risk of death and serious cardiovascular events if patients hemoglobin levels are greater than 11 g/dl
  • Increased Mortality and/or Tumor progression in cancer patients
  • Increases thromboembolic events in surgery patients.
  • Increases the chance of having a heart attack, stroke, Congestive heart failure, high blood pressure, shortness of breath, vascular access thrombosis, and the list goes on and on.

In June 2011, Dr. Robert C. Kane announced that the "FDA is recommending new, more conservative dosing recommendations for erythropoiesis-stimulating agents [ESAs] for patients with chronic kidney disease," and "These recommendations are being added to the drug label's black box warning and sections of the package inserts" during a press conference. He also stated "Hemoglobin levels greater than 11 grams per deciliter of blood increases the risk of stroke, heart attack, heart failure and blood clots and haven't been proven to provide any additional benefit to patients".

IV Iron- iron is an essential competent for the process of erythropoiesis (formation of red blood cells), along with erythropoietin. ESRD patients who are on dialysis lose 5-7 mg of iron during each dialysis treatment. Before a patient is started on ESA therapy, clinicians need to verify that patients are not iron depleted.

  • There are multiple IV iron therapies available in the United States. Examples include :
  • Iron Dextran (Dexferrum marketed by Watson Pharmaceuticals and American Regent)
  • Sodium ferric gluconate (Ferriecit by Sanofi-aventis) , and
  • Iron sucrose (Venofer by American Regent)
  • Most IV Iron drugs are BLACK BOXED by the FDA
  • IV iron supplements can cause anaphylactic reactions.
  • During an anaphylactic reaction, patients may exhibit:
  • Rash, hives, redness or complain of feeling itchy
  • Swelling to the tongue, lips or oropharynx
  • Angioedema
  • Bronchospasm leading to shortness of breath and hypoxia
  • Hypotension
  • If a patient with anaphylaxis is left untreated, they will most likely die.
  • You are probably wondering, why such dangerous drugs are allowed on the market.
  • The risks are outweighed by the benefits and there is no better alternative for these patients as of yet.
  • In the U.S. approximately $680M per year is spent on IV iron for ESRD patients; and $1.5B globally.
  • It is projected that by the year 2015, the global demand for IV iron will reach approximately $1.6 Billion.
  • This is quite the lucrative market for a small biotech company currently valued at a Market Capitalization of $374.82 million (09/21/2013) whose product will become the standard of care for IV Iron therapy.

SFP (soluble Ferric Pyrophosphate) is now Triferic, which sounds terrific!

  • SFP is the companies (NASDAQ:RMTI) lead product that recently concluded Cruise I and Cruise II trials.
  • SFP is designed to effectively address the current challenges in anemia management by:
  • Maintaining hemoglobin (Hgb) levels within a safe range using moderate ESA doses. Per FDA guideline less than 11 g/dL.
  • Improving the response to ESA therapy, avoiding excessively high doses and the potential risks
  • Preventing iron from being stored in the liver, which can lead to liver toxicity
  • Reducing current administration costs
  • In contrast to current IV iron practices, where a patient is given bolus dosages of Iron; SFP is intended to deliver iron directly into the bloodstream in small continuous doses three times per week. During each visit, these patients lose approximately 5-7 mg of Iron.
  • This unique way of delivering iron maintains the patients Hemoglobin within a target range and results in reduction of ESA use and improved response to ESA drugs.
  • With current IV therapy, iron levels are not always adequate when patients are administered ESA's. These patients require higher doses of ESA drugs to increase hemoglobin levels, which lead to Hgb variability and unwanted side effects.
  • SFP is given in smaller doses and thus keeps the body from storing the iron in the liver. Avoiding iron storage in the liver eliminates liver toxicity that is associated with current IV iron drugs on the market.
  • It is believed that approximately 50 percent of the IV iron that is dosed to a patient never leaves the liver and over time may cause adverse consequences. (Source: Coyne DW, Kapoian T, Suki W, et al. Ferric gluconate is highly efficacious in anemic hemodialysis patients with high serum ferritin and low transferrin saturation: results of dialysis patients' response to IV iron with elevated ferritin (DRIVE) study. JASN. 2007;18:975-984.)
  • In the U.S. approximately $680M per year is spent on IV iron for ESRD patients; and $1.5B globally. SFP reduces ESA use by 35% and does not cause the side effects associated with IV Iron therapy.
  • SFP is delivered via dialysate, thus required supplies such as needles and syringes needed for current IV therapy are avoided and nursing time to deliver and manage IV iron is no longer needed.

Cruise I data for SFP

The primary objective of the study was to determine where regular administration of SFP via dialysate reduced the requirement for ESA dose by maintaining iron balance and optimizing iron delivery. The primary Endpoint was the percentage change in ESA dose from baseline to the end of treatment (measuring the cumulative effect). Baseline ESA dose was similar between SFP and Placebo group.

  • Cruise I study successfully met its pre-defined primary efficacy endpoint, which was a change in hemoglobin from baseline to end-of-treatment between the SFP and placebo group.
  • The mean difference between SFP and place was 3.6 d/dL, impressive statistical significance with a P value of 0.011.
  • At baseline the two groups had similar hemoglobin levels (109.6 g/L and 109.0 g/L)
  • Mean change after treatment for SFP group was 0.6 g/L
  • Mean change in placebo group was NEGATIVE (-) 3.0 g/L
  • The ESA sparing effect from SFP was observed without any increase in serum ferritin or pre-dialysis transferrin saturation.
  • Ferritin is an intracellular protein that stores and releases iron in a controlled fashion. It acts as a buffer against iron deficiency and iron overload. Excess iron inside the organs seriously affects their function and leads to the development of liver cirrhosis, heart disease, diabetes, arthritis and impotence.
  • The key secondary endpoints at the end-of-treatment showed statistically significant differences between the SFP and placebo groups, including the pre-dialysis reticulocyte hemoglobin (CHr) and serum ferritin.
  • CHr, an early index and the BEST MARKER of iron-delivery to the bone marrow, was maintained at baseline levels in the SFP group during the randomized treatment, compared to a significant decrease in the placebo group.
  • At the end-of-treatment, the CHr difference between groups was a statistically significant 2.1% difference in favor of SFP ( p value of less than 0.001)
  • Serum ferritin declined by 14.7% from baseline in the SFP arm, while the placebo group ferritin level declined by 28.2%. The difference between groups was statistically significant (p value less than 0.001)

These results clearly indicate that SFP delivers sufficient iron to maintain erythropoiesis and does not lead to tissue overload.

Cruise II data

Rockwell Medical announced positive data for Cruise II study on September 4, 2013. Rockwell stated that SFP meets primary and Key secondary endpoints in phase 3 Cruise-2 efficacy study. In dialysis patients not receiving IV iron, SFP effectively delivers Iron via dialysate and maintains hemoglobin without increase Ferritin levels. SFP has strong safety data which demonstrates that there were NO Anaphylactic Events and No increase in the prevalence of Infections or hypotension.

  • The Cruise-2 study met its pre-defined primary efficacy endpoint, which was a change in hemoglobin from baseline to end-of-treatment between SFP and placebo groups.
  • Mean difference between SFP and placebo was 3.6 g/L (statistically significant p value of 0.011)
  • At baseline the two groups had similar hemoglobin levels (109.6 g/L SFP and 109.3 g/L placebo). The mean adjusted change from baseline hemoglobin at the end of the randomized treatment period in the SFP group was -0.5 g/L. In placebo there was a statistically significant decline of -4.0 g/L
  • The Cruise-2 study also met key secondary endpoints. There were significant differences between the SFP and placebo groups, including the pre-dialysis reticulocyte hemoglobin (CHr) and serum ferritin.
  • CHr was maintained at baseline levels in the SFP group during the randomized treatment, compared to a significant decrease in the placebo group.
  • At the end-of-treatment, the CHr difference between groups was a statistically significant 0.97% (p value of 0.017)
  • Serum ferritin declined by 11.6% from baseline in the SFP group, while the placebo group ferritin levels declined by 21.7%. This was a statistically significant p value of less than 0.001
  • There were NO events of ANAPHYLAXIS reported with dialysis administration of SFP. According to Dr. Raymond Pratt, Chief Medical Officer of Rockwell medical, they have not a single safety issue that is directly attributed to SFP administration.

ZERENEX and SFP, what's the story

It seems that almost daily, I have to explain the difference between these two drugs and how they differ even though they will be targeting the same patient population. I will take a few minutes to talk about the differences between the two drugs and the superiority of SFP in regards to Iron replacement.


Zerenex is the lead candidate drug of KERX biopharmaceuticals. According to their website, this is their only product. This year the company completed Phase 3 clinical trials for the treatment of Hyperphosphatemia in patients with end-stage renal disease. KERX is currently in phase 2 clinical trials of Zerenex in regards to management of serum phosphorus and iron deficiency in anemic patients with Stage 3 to 5 non-dialysis dependent chronic kidney disease patients.

Phosphorus is the sixth most abundant element in the human body. Phosphorus is critical for cellular structure, genetic coding bone mineralization, cellular structure and energy metabolism. The adult human body contains approximately 1000 g of phosphorus, of which 80-90% is in the bones. An additional 10-14% is in the intracellular environment and the remaining 1% is extracellular.

Hyperphosphatemia is considered significant when the patient's levels are greater than 5 mg/dL in adults. The normal adult range is 2.5 to 4.5 mg/dL. The kidneys maintain homeostasis via renal phosphorus excretion, matching the amount of daily phosphorus absorption through the GI tract. Hyperphosphatemia is prevalent in patients with renal insufficiency. Current medical standards dictate that if a patient has a glomerular filtration rate of less than 30, they must restrict their intake of dietary phosphorus. If the patient's levels are still high after diet control, patients are placed on oral phosphate binders to reduce absorption.

Hyperphosphatemia causes hypocalcemia by precipitating calcium, decreasing Vitamin D production and interfering with parathyroid hormone-mediated bone reabsorption. This can lead to severe life-threatening hypocalcemia. Prolonged Hyperphosphatemia can cause abnormal deposition of calcium phosphate in previously healthy connective tissues such as cardiac valves and in solid organ such as muscle. Hyperphosphatemia can also cause vascular walls to become calcified and artheriosclerotic leading to hypertension, increased tension on the heart and subsequent left ventricular hypertrophy. Patients may also present with calcific uremic arteriolopathy (calciphylaxis) which can induce necrotic ulcerations and gangrene in affected extremities.

The primary end point of the Zerenex study was to demonstrate the statistically significant difference in serum phosphorus between Zerenex and placebo during the efficacy assessment period of the study or the last four weeks of the study. The primary end point for the EMA was to show serum phosphorus non-inferiority at week 12 versus Renvela subjects in the active control. KERX met primary endpoints for both FDA and EMA with statistical significance. Net sales of Renvela are approximately $200,000 per quarter as reported by Sanofi.

KERX believes that Zerenex is the only phosphate binder that has the potential to transcend into another dialysis category, anemia management. In Phase III clinical trials Zerenex demonstrated increases in ferritin of 51%. The changes in ferritin occurred quickly, according to management, and peaked after four to five months.

  • Zerenex reduced IV iron use by approximately 52%
  • Zerenex reduced ESA use by 27%
  • The dropout rate in the study was 34% for Zerenex and 25% for the active control. The dropout rate in Renagel, in the long-term study for Renagel was 39%.

So clearly KERX and Zerenex will be providing a benefit for dialysis patients along with becoming the standard of care in regards to the treatment of Hyperphosphatemia. However, that being said, they will not be competitors of SFP (Triferic) by any definition of the word.


The primary indication for Zerenex is Hyperphosphatemia. SFP on the other hand will be marketed for anemia. In my personal opinion, I believe that these two medications used in conjunction with each other would provide the best cost cutting and patient health benefit. Also, the increased ferritin levels in ESRD patients can cause more harm than good due to liver toxicity and tissue inflammation. SFP has a much higher safety margin in regards to ferritin levels.

SFP (Triferic) is set to become the standard of care

If you have read any of the material above, it should be clear to you by the now why that statement is not some prediction but rather inevitability.

  • In 2009, it cost the United States over $40 billion in public and private funds to treat patients with ESRD. $29.03 billion was attributed to Medicare Costs and $13.47 billion in non-Medicare costs.
  • According to most recent statistics there are approximately 430,000 patients with End Stage Renal Disease who are on Dialysis and require treatment for anemia. The number of dialysis patients worldwide is a staggering 2.2 million.
  • SFP (Triferic) reduces ESA use by 35% and ELIMINATES the need for IV Iron, savings of approximately 700 million dollars per year.
  • SFP causes no allergic reactions. It does not increase the risk of hypotension, infections or cardiac events. In over 100,000 dosages there has been not a single adverse event directly attributed to SFP, according to the Chief Medical Officer.
  • SFP will be competing with black boxed drugs that increase serum ferritin levels which can lead to liver toxicity, liver failure and cardiac events.
  • SFP (Triferic) will substantially reduce the cost of current treatment practices for patients with anemia.

Medicare cuts will benefit Rockwell

On July 1st 2013, Centers for Medicare and Medicaid Services (NYSE:CMS) proposed a 9.4% cut to the Dialysis payment system. Medicare covers 85% of the cost for patients who are on dialysis in the US. Dialysis centers have been operating on low margins for decades now due to the expenses related with Epogen and now being shaken down even more. A drug that can save them 35% of the cost associated with ESA use alone would be a welcomed blessing.

Keep in mind that Rockwell is not a one hit wonder company. Rockwell has contracts with Davita and NXTM for the sale of their dialysis products, which include:

  1. Dri-Sate dry Acid Mixing system
  2. RenalPure liquid Acid
  3. RenalPure Powder Bicarbonate
  4. Sterilyte Liquid Bicarbonate
  5. Acetate free CitraPure
  6. Blood Tubing sets
  7. Fistula Needles
  8. Calcitriol (pending "MARKETING" approval from the FDA)
  9. SFP (Triferic) just completed phase 3 clinical trails


Rockwell is waiting on the marketing approval for Calcitriol. The market for Vitamin D is approximately 350 million dollars in the US. Rockwell filed for approval on April 1st and expects to hear from the FDA before October 1st. Calcitriol was given priority review by the FDA and historically dictates approval within 6 months.


In my opinion Rockwell Medical is a highly undervalued company at this time. This company has the potential to become the leader in dialysis supplies over the next 5 years. If you are looking for a strong long term prospect, this company has all the qualities. Standard of care therapies can be very lucrative for those long term investors who are willing to be patient. Amgen has brought in over $43 billion worth of sales in the last 23 years due to having the only patented ESA on the market. In my opinion, SFP will become the standard of care as Iron replacement therapy in the US and the world. It will save millions in dialysis costs per year and more importantly is a better treatment alternative in regards to current practices.

Rockwell has received several analyst upgrades in the last few weeks. Analysts are projecting peak sales of 195 million with Summer Street increasing their price target to $25. If you compare Rockwell to KERX, it is quite evident that this company is nowhere near fair valuation. The US market for IV iron is $600 million per year and I believe a standard of care treatment, which will be competing with black boxed drugs, will reach a much higher market penetration. As of 06/30/13, Rockwell Medical has insider ownership of 5.7% and institutional ownership of 56.29%. The updated numbers should be reported any day now as the end of the quarter is rapidly approaching on September 30th.

I sincerely hope that this little research is able to convince you to do your own due diligence of the company and make an informed decision. I am long RMTI and have no intentions of selling my position for peanuts in the near term. I wish you all good luck and in the most likely scenario I left something out, please let me know and I will address it. Thank you for taking the time to read this report.

Disclosure: I am long RMTI.

Additional disclosure: I have no business association with any of the companies mentioned in this article. I am a retail investor with a medical background. I do not advise anyone to buy or sell upon my recommendation. I am merely providing my one sided view. I am long RMTI and have no plans to sell my position within 72 hours.