Good morning, and welcome to Rockwell Medical's Second Quarter 2022 Results Conference Call and Webcast. Please note, this event is being recorded. At this time, I would like to turn the conference call over to Heather Hunter, SVP and Chief Affairs Officer at Rockwell Medical. Heather please go ahead

Good morning, and thank you for joining us for this update on Rockwell Medical. Joining me on today's conference call are Dr. Mark Strobeck, Rockwell's new President and CEO; and Russell Skibsted, Rockwell's Chief Financial Officer and Chief Business Officer. During today's call, Mark will provide an update on Rockwell's second quarter achievements as well as an overview of the company's strategy going forward. Then Russell will discuss Rockwell's financial results. After that, we will open the lines to take your questions. . Before we begin, I would like to remind everyone that this conference call will be -- will contain forward-looking statements about Rockwell Medical within the meaning of the federal securities laws including, but not limited to, the types of statements identified as forward-looking in our annual report on Form 10-K and our subsequent periodic reports filed with the SEC which are all available on our website under the Investors section. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions and expectations only as of today. Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our periodic reports filed with the SEC. A recording of this conference call will be available on Rockwell Medical's website under the Investors section. At this time, I would like to turn the conference call over to Rockwell Medical's President and Chief Executive Officer; Dr. Mark Strobeck.

Thank you, Heather. Good morning, everyone, and thank you for joining us for Rockwell Medical's Second Quarter 2022 Results Conference Call and Webcast. My name is Mark Strobeck, and I am pleased to be presenting to you today as Rockwell's new President and CEO. Rockwell is a commercial health care company focused on providing life-sustaining products for patients suffering from blood disorders and diseases associated with the kidney. Rockwell is a revenue-generating business, We are the second largest supplier of acid and bicarbonate concentrates for dialysis patients in the United States. Our Ferric Pyrophosphate Citrate, otherwise referred to as FPC brings a potential opportunity to treat patients with iron deficiency anemia in the home infusion market and to treat patients suffering from acute heart failure. And we have the opportunity to unlock the value of our manufacturing and development expertise by potentially adding new and exciting product opportunities to our portfolio. I am aware that this isn't the first CEO transition the company has experienced, and I am mindful of the impact that this has had on the company its employees and its stockholders. While there is much work to be done, I'm incredibly impressed with the Rockwell team. Their deep expertise in our core business and the initial progress we have recently made to improve the financial health of the company. I look forward to working with our Board of Directors and the talented Rockwell team to continue to build upon this momentum. I believe that in order for us to stabilize and grow our business and be effective as an organization going forward. We need to drive profitability in our hemodialysis concentrates business and our business overall to continue to explore opportunities to develop FPC in alternative settings and support our international partners to develop and commercialize Triferic…

Thank you, Mark. During the second quarter of 2022, Rockwell raised a total of $30 million, which included $15 million from our long-time partner, DaVita. As a result, our cash and cash equivalents as of June 30, 2020, was approximately $30.8 million. This compared to cash and cash equivalents of $9.9 million at March 31, 2022, and $13.3 million at the end of 2021. As Mark mentioned earlier, the second quarter of '22 generated the highest quarterly revenue to date for Rockwell. Our revenue was $18.7 million for the 3 months ended June 30. This represented a 16% increase quarter-over-quarter compared to $16.1 million for the 3 months ended March 31, 2022, and a 24% increase year-over-year compared to the $15.1 million for the 3 months ended June 30, 2021. For the second quarter of 2022, we realized a gross profit of $1.7 million. This compared to a gross loss of $786,000 for the first quarter of 2022. The gross loss of -- I'm sorry, and a gross loss of approximately $262,000 for the second quarter of 2021. The gross profit increased during the second quarter of '22 due to improved performance of our business, including price adjustments with some of our customers to reflect the changes in expenses associated with materials and inflation. Our team's efforts to keep costs down during the second quarter of '22 is especially commendable in light of the fact that transportation costs during that quarter continued to increase at unprecedented rates nationwide. Cash used in operating activities for the 3 months ended June 30, 2020, was $5.8 million compared to $9.8 million for the 3 months ended March 31, 2022, representing a 40% decrease quarter-over-quarter. During the second quarter of '22 Rockwell Medical affected a 1-for-11 reverse split of the company's issued and outstanding common stock. The reverse split was primarily intended to bring the company into compliance with the minimum bid requirements for maintaining its listing on the Nasdaq capital market, which the company achieved on May 31, 2022. Finally, we are committed to delevering our business with the payments made to Novartis over the quarter have reduced our debt to $16.5 million. and we expect to continue to reduce this over the coming quarters. I will turn the call back over to Mark for his closing remarks. Mark?

Thank you, Russell. Operator, please open the phone lines for any questions.

[Operator Instructions]. Your next question comes from the line of Brandon Folkes.

Congratulations on the progress and congratulations, Mark. Maybe just 3 from me. Sort of high level, how should we think about the 3 pillars, I guess that's my term rather, but just being the concentrates business, maybe Triferic in the pipeline. In terms of driving value going forward, how should we think of each of those 3 contributing? And then maybe just can you just elaborate a little bit on the strong revenue we saw in the quarter. Is this sort of fruits of these renegotiated contracts coming through? Maybe just any color in terms of any maybe just remind us when those renegotiated contracts kicked in, if they did, otherwise, any color on volume there? And then maybe lastly, just can you just elaborate a little bit on the FDA concerns on the home infusion program and sort of what they need to see to kind of move forward there? And maybe what you need to see to move that program forward yourselves as well?

Great. Thanks, Brandon, for the questions. Yes, so let me address each one. So the way that we think about our business is really, as I mentioned earlier, we're trying to drive profitability of our overall business. And therefore, we're looking to maximize the value of our of our sort of 3 sort of areas of focus, right? First is the concentrates business, right? As you can see from the quarter, we're making significant improvements through the restructuring of that business. And we think on a short-term basis, that's what's going to help us drive profitability. In the near term, right, we're looking at Triferic as an opportunity, right? It's registered and being commercialized in the United States as well as our existing relationships with our international partners will. As that product is further developed and approved, will start to generate additional revenue for the company here in the near term. And then the longer-term opportunity is with the FPC platform in home infusion and acute heart failure. So that's how we're sort of thinking about it. And the next question, I think you've asked is around the increase in revenue over the quarter. So as you probably have seen through some of our public announcements, we've undertaken a path to restructure that business, right? We've renegotiated our supply arrangement with DaVita. We're continuing to work to improve our relationships with our existing customers. And as a result of that, we're seeing this meaningful improvement in revenue. This primarily results from a couple of things. Again, one is additional volume that is being sold as more and more clinics need our products. But secondly, and probably more importantly, is the adjustments that were made to these agreements to reflect price. As our material costs have increased as inflation has impacted our business as the cost of distribution has increased. We've altered our pricing scheme, and that has allowed us to adjust accordingly based on those changes. And then the last question, I believe, was around the FPC home infusion program. So we're taking this in a systematic way. The agencies question as it relates to this formulation because it's a new formulation and is generated effectively through a compounding strategy of our Triferic AVNU product, the agency has asked as it typically does in formulation situations like that for stability studies and microbiology studies. It's not unusual for the agency to request that. And so we're carrying out those studies based on the results of those studies. If this is a formulation that we can then move forward, we will then refile our IND application and seek to begin our clinical development work. If we are -- this formulation, obviously, is does not meet the standards that the agency requires then we're going to need to effectively reformulate and that could then potentially delay the start of our clinical work. So hopefully, that answered your questions, but I appreciate the questions, Brandon.

Your next question comes from the line of Ram Selvaraju.

I think we're having technical difficulties getting to Ram.

There are no further questions at this time. I now turn the call back over to Dr. Strobeck.

Thank you, operator, and thank you, everyone, for joining us on today's call. It was a pleasure to introduce myself and provide you with an overview of our second quarter achievements and the tremendous opportunity that lies ahead for Rockwell. I want to thank Rockwell's employees for their continued commitment and dedication during what has been a challenging time. We are in the business to make products that impact a patient's life. This is our passion, and we take this responsibility very seriously. We made a number of improvements in our business, but recognize that there is still a lot of work ahead of us. We are inspired by that challenge and look forward to sharing our progress along the way.

This concludes today's conference call, you may now disconnect.