Rockwell Medical, Inc. (RMTI) Earnings Call Transcript & Summary

Welcome to the 2020 Annual Meeting for Rockwell Medical, Inc. Our host for today's call is John McLaughlin, Chairman of the Board. [Operator Instructions] I will now turn the call over to your host, Mr. McLaughlin. You may begin, sir.

Thank you. Good morning, ladies and gentlemen. We welcome everyone to the 2020 Rockwell Medical Annual Meeting of Stockholders, which is being held as a virtual meeting. As mentioned, I'm John McLaughlin, Chairman of the Board for Rockwell Medical, and I'll act as Chairman of this meeting. I now call the meeting to order. A virtual meeting is one that takes place via an electronic format. An audio feed from this meeting is being webcast as we speak. This webcast incorporates stockholder validation capabilities, which allow stockholders to vote real time during the meeting until the polls are closed. We believe that holding a virtual meeting expands stockholder access. Our stockholders anywhere can attend this meeting and other interested parties can listen to this webcast over the Internet. If you are a stockholder and did not enter this meeting by using your 16-digit control number found on your proxy card, you will be unable to vote your shares unless you enter this control number. It is approximately 10:04 a.m. Eastern Time, and the polls are now open. Please note that the polls will close in a few minutes, so we urge you to vote your shares now if you have not already submitted a proxy or otherwise voted. If you have already submitted your proxy, you need not vote again. However, you may revoke your proxy by voting online at this meeting. Thank you very much for those who are participating in our meeting today. I am joined by the following members of the Rockwell leadership team; Dr. Russell Ellison, our President and Chief Executive Officer; and Angus Smith, our Chief Financial Officer. In addition, Neil Prasad, a representative from Rockwell's independent registered public accounting firm, Marcum LLP, is also present and will be available to respond to appropriate questions later in the meeting. Mike Costello will act as secretary of this meeting; and John Holewa from Broadridge will act as inspector of elections. Mr. Holewa has taken the customary oath of office, which will be filed with the permanent records of this meeting. At this time, we will commence the formal business of today's meeting. Now will the secretary please report on the notice and call of the meeting?

Mr. Chairman, the notice of meeting was mailed beginning on or about April 20, 2020, to all stockholders of record as of the April 8 record date of the meeting. Copies of the proxy materials that were mailed on or about April 20, 2020, were available to stockholders as well as were posted on our virtual meeting site. I will file -- file the list of stockholders with the records of the company and file the notice of meeting and proxy statement, proxy card, annual report and affidavit of mailing following the meeting.

Thank you, Mr. Secretary. The Notice of the Meeting and the affidavit as to its mailing shall be made a part of the minutes of this meeting. Will the secretary please report on stockholder attendance at the meeting?

Mr. Chairman, there were 69,049,102 shares of common stock issued and outstanding as of the record date of this meeting, each having 1 vote. The inspector of elections appointed for the meeting has provided a preliminary tabulation of written proxies received, which indicates that there are stockholders present by proxy representing approximately 57,448,757 shares of common stock or approximately 83% of the total number of shares eligible to vote at the meeting.

Legal Notice of the Meeting has been given and a quorum is present, and therefore, this annual meeting is properly, legally convened and ready to transact the legal portion of this meeting. This meeting has been called to consider and vote upon the following items of business, each of which is described in detail in the company's 2020 Proxy Statement of April 20, 2020. These items are election of our 2 Class II Directors, John G. Cooper and Mark H. Ravich, each to serve for a 3-year term expiring at the 2023 Annual Meeting of Stockholders; approval on an advisory basis, the compensation of our named executive officers; ratification of the selection of Marcum LLP as the company's independent registered public accounting firm for 2020; and approval of the amendment and restatement of the Rockwell Medical 2018 Long Term Incentive Plan to increase the number of shares of common stock issuable thereunder by 2.9 million shares. It is now 10:07, and the polls are officially closed. The first item of business for stockholder consideration is the election of John G. Cooper and Mark H. Ravich to 3-year terms as Class II Directors. Mr. Secretary will report on the number of votes cast for the election of Directors, Cooper and Ravich.

Mr. Chairman, a preliminary tabulation provided by the inspector of elections indicates that Director Cooper received 75% of the votes cast and Director Ravich received 89% of the votes cast.

As indicated by the vote, each of the Director nominees have been reelected. The second item of business to be presented for stockholder consideration at this meeting is a resolution approving, on an advisory basis, the compensation of our named executive officers as disclosed in the compensation of the executive officers section and the accompanying compensation tables and narrative contained in the proxy statement. Mr. Secretary, will you please report on the number of votes cast for the approval of compensation of our named executive officers?

Mr. Chairman, a preliminary tabulation provided by the inspector of elections indicates that the compensation of our named executive officers has been approved by over 84% of votes cast at the meeting.

As indicated by the vote, I hereby declare the stockholders have approved the compensation of our named executive officers on an advisory basis. The third item of business for stockholder consideration at this meeting is the ratification of the appointment of Marcum LLP to serve as the company's independent registered public accounting firm for 2020. Mr. Secretary, will you please report on the number of votes cast for the ratification of the appointment of Marcum LLP.

Yes, Mr. Chairman, a preliminary tabulation provided by our inspector of elections indicates that the ratification of the appointment of Marcum LLP to serve as the company's independent registered public accounting firm for 2020 has been approved by over 97% of the votes cast at this meeting.

Thank you. I hereby declare the appointment of Marcum LLP has been ratified. The fourth and last item of business for stockholder consideration at this meeting is the approval of the amendment and restatement of the Rockwell Medical 2018 Long Term Incentive Plan to increase the number of shares of common stock issuable thereunder by 2.9 million shares. Mr. Secretary, will you please report on the number of votes cast for the approval of the amendment and restatement of the Rockwell Medical 2018 Long Term Incentive Plan?

Yes, Mr. Chairman, a preliminary tabulation provided by our inspector of elections indicates that the amendment and restatement of the Rockwell Medical, Inc. 2018 Long Term Incentive Plan to increase the number of shares of common stock issuable thereunder by 2,900,000 shares has been approved by over 78% of the votes cast at the meeting.

As indicated by the vote, I hereby declare that stockholders have approved the amendment and restatement of the Rockwell Medical 2018 Long Term Incentive Plan. At this time, the meeting is hereby adjourned. I would like to turn the meeting over to our President and CEO, Dr. Russell Ellison, to address questions that you may have. We have allotted 10 minutes to answer questions. Before I turn the meeting over to Russell, I wanted to note that certain matters we have and will discuss may be forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified as such because the context of the statement will include words such as we believe, anticipate, expect or words of similar import. Similarly, statements to describe our future plans, objectives, strategies or goals are also forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect our anticipated results. Risks and uncertainties include, but are not limited to, the factors described in our annual report on Form 10-K for the year ended December 31, 2019, and our quarterly report 10-Q, the quarter filed March of -- 31 of 2020. Copies of our SEC filings are available on the SEC's website, which is www.sec.gov and through a link on our website located at www.rockwellmed.com. The forward-looking statements made at this meeting are made as of the date of this meeting, and we disclaim any obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances. Russell? Russell, if -- you may be on mute?

Pardon me, I'm off mute now. Thank you, John. We have 4 questions that have been submitted so far, and I'll read these out and answer them. The first question is, thank you for presenting the real-world data on the earnings call last week. It seemed very positive. How do you plan to use the data going forward? Well, first and foremost, we're looking at various options to get the data published or presented at prestigious industry conferences. These fora will enable us to get the data out to some of the thought leaders in the field. Second, we plan to use the data with key economic decision-makers within dialysis organizations to show the results of Triferic use in a real-world setting. This is one of the most frequently requested items in our interactions with dialysis organizations, and we're excited to have the first readout available. And we will, of course, continue to build on this as we get data from other clinics. The second question is, are you expecting to generate and present more real-world data? And the answer is, yes, we are. We have 12 clinics at various stages of Triferic adoption from whom we're getting data as we speak. As the clinics reach the point where we would expect the effect of Triferic to be meaningful, we'll look to do a similar analysis to what we presented last week and update the market accordingly. The third question is, where do you stand with penetrating the other medium-sized dialysis organizations, or MDOs? We have active dialogue with all of the MDOs, and we have several clinics in each of the major MDOs interested in starting evaluation programs. In fact, some of them are ready to start until COVID hit. And now we're reapproaching them as things have started to settle down in their regions, see if we can get them started. As part of the process, always, we need to get corporate sign-off from the MDOs. And again, that has been somewhat delayed by COVID, but we're confident it's going to get restarted. Lastly, we think the real-world data will be a key part of the discussion with the economic decision-makers at MDOs. Last question is you had a 260% increase in evaluation programs during the first quarter. What do you attribute that increase to? And that's a good question. In the early stages of our launch, we were primarily getting into single-site independent clinics to sign up for evaluations. In general, the sales cycle is more streamlined with these organizations. Now with the passage of time, as we work through the sales cycles with some larger organizations, we're getting better traction with larger clusters of clinics and we're picking up evaluations with organizations that represent 5 to 15 clinics. This will allow us to significantly scale our evaluation programs, and we hope it will help us accelerate the rate of adoption once the world reaches a new normal. And those are the 4 questions we have so far. Let's see, there's another one. And this is, am I correct that the real-world data took 6 quarters to achieve a 23% reduction in ECUs (sic) [ ESAs ]. How did this progress from quarter 1 through quarter 6? The percentage reduction seems low compared to the trial data released several years ago. That's actually a good question. And the reason for the 6 quarters, as I think we mentioned on our earnings -- our quarterly call is that, that clinic had switched to a long-acting form of an erythrocyte stimulating agent, a form where dose adjustments are infrequent. And in the first few quarters, they were stabilizing that. And typically, actually, when you switch to a long acting, the amount of EPO equivalent used tends to go up as you start titrating the dose more accurately and more effectively. So we're not surprised that in the clinic using a long-acting ESA that it took several quarters to see an effect. But once the dosing was stabilized and people could now start to manage the long-acting EPO accurately, you started to see the decline. And 23% is really from an economic point of view, in the clinic, fairly substantial. It's not a trivial difference. If we're in clinics that are using short-acting EPO or Epogen, we would expect to see this difference probably in a couple of quarters, maybe 3 max. In the clinical trials that were done, this was using short-acting EPO, and you could see the differences after a few months.

Thanks, Russell. As there are no more questions, I'd like to conclude by thanking everyone for participating in this year's Annual Meeting of the Stockholders of Rockwell Medical. All have a good day and be safe. Thank you.

Thank you.

This now concludes the meeting. Thank you for joining, and have a pleasant day.