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Rockwell Medical (RMTI): Expectations for the 2013

Shares of Rockwell Medical (NASDAQ: RMTI) are still on the mend after a brief dip in November 2012 that caused shares to drop as low as $5.18 following the release of mixed third quarter results. While the company was able to report admirable 6% revenue growth (year-over-year), profits were a bit soft as a result of substantially higher expenses like SG&A which jumped 46% year-over-year. Investors were also unhappy about potential delays on the commercialization of their vitamin D product Calcitriol, although it is still expected to be launched early this year.

Dialysis patients are central to Rockwell’s business strategy. With calcitriol and soluble ferric pyrophosphate (SFP), the company will be providing two of the four essential treatments that are received by dialysis patients.

Although the market launch of calcitriol is imminent, investors are putting more emphasis on Rockwell’s soluble ferric pyrophosphate treatment for the prevention of iron deficiency in dialysis patients. The company believes that there is big potential for their soluble product, which offers a much easier and possibly more effective treatment relative to the traditional IV drip.

SFP is currently in two phase III trials called CRUISE 1 and CRUISE 2. CRUISE 2 is expected to end in May of this year, while CRUISE 1 is completion is expected in June 2013. These completed trials should provide the market with data to begin gauging the FDA approval chances, and will allow the company to submit an NDA before the end of the year and potentially hit the market in 2014.

Investors should also be ready for results from the now completed PRIME study, which was designed to further improve the SFP safety profile by demonstrating lower levels of ESAs relative to baseline for SFP-arm patients relative to placebo (iron through IV) patients. ESAs, short for erythropoiesis-stimulating agents, are approved treatments for anemia although consistent use has been associated with increased health risk. SFP would score another substantial victory over existing IV-based iron delivery systems if it could prove a statistically significant reduction in ESAs.

Iron delivery is quite straightforward with regards to its efficacy in mitigating the adverse effects of dialysis on blood concentrations of iron in patients, so expect investors to be very focused on the safety profile of SFP versus traditional IV iron delivery treatments. It was apparent that RMTI shareholders grew more optimistic about SFP’s safety after a press release issued by Rockwell on December 18th, which confirmed that their Data Safety Monitoring Board (DSMB) found no substantial safety concerns with any of the SFP trials.

Going forward, investors should anticipate the results of PRIME, and the two CRUISE trials later in the year. The launch of Rockwell’s vitamin d product, calcitriol should also be eyed carefully. If calcitriol can penetrate significantly into the $300-400 million market for vitamin d, Rockwell could move a lot higher. The company is currently valued at rough $170 million, which isn’t very high when you also factor in nearly $50 million in annual revenue from the sale of dialysate. Very important is also SFP, which could become very valuable after strong clinical trial results.