Rockwell Medical, Inc.

Good morning, and thank you for joining us. This morning I will cover second quarter operating results, and then update our clinical development progress.

Second quarter 2012 revenue was $12.1 million up from $11.8 million in the second quarter of 2011.

Gross profit was up 60% over the same period last year. Sales in the first 6 months of 2012 were $24.2 million compared to $25.1 million versus the same period in 2011.

Gross profit was up 23% over the same period last year. Net loss for the quarter was $11.9 million compared to net loss of $4.5 million in second quarter of 2011.

Loss was expected and was driven primarily by an increase in R&D investment as we move forward with 3 important pivotal trials for our lead drug candidate SFP. Cash and cash equivalents at the end of the second quarter were $20.4 million, up from $13.6 million at the end of the second quarter 2011.

We anticipate both domestic and international sales growth with our concentrate products over the remainder of 2012. We see continued momentum in our Dry Acid Concentrate product line facilitated by accelerated sales with a new concentrate product we launched last year.

Turning to SFP clinical progress; we achieved an important milestone last week when we completed patient enrollment in our Phase III clinical trials for SFP iron delivery in hemodialysis patients, while CRUISE-1 and CRUISE-2 have met full patient enrollment.

A combined total of 600 patients have been enrolled to demonstrate efficacy and safety of SFP-iron, delivered via dialysate to adult CKD patients requiring hemodialysis. The independent Data Safety Monitoring Board overseeing the CRUISE program has completed 3 reviews and recommended the continuation of both studies with no modifications after each review.

A fourth review is expected in December of this year. We are making solid progress, and I again want to congratulate the Rockwell clinical team, and all of our clinical investigator sites and participants for their dedicated effort.

We expect CRUISE program completion around mid-2013, and we plan to file our new drug application with the FDA in the fourth quarter of 2013.

A third important trial for SFP, the PRIME study is also ongoing. As you know, this study is designed to measure markers of inflammation and oxidative stress, and also to capture ESA-sparing data.

ESA best known as the drug Epogen or Epo is the most expensive drug in dialysis, and it is given to dialysis patients every treatment 3 times weekly, and any reduction of its use would provide a meaningful economic benefit to dialysis providers.

For example, just a 1.5% ESA reduction would equate to approximately $1 in cost reduction per treatment or approximately $150 per year per patient. This is a significant savings for the dialysis provider.

The PRIME study is a marketing study separate from the Phase III CRUISE study. And whether PRIME study data demonstrates ESA-sparing or not, we will have no bearing on SFP efficacy approval by the FDA.

However, if data from the PRIME study demonstrates ESA reduction, we expect it will have a positive impact on our revenues and margins once SFP enters the marketplace. We completed PRIME enrollment earlier in the year and top line results from PRIME are expected in February 2013.

You may recall, in April we hired Dr. Raymond Pratt as Chief Medical Officer.

Since then we have been building our clinical team, and we’ve made some additional key hires including Head of Regulatory Affairs and Senior Director of Clinical Research as well as a few other clinical project specialists.

As we continue to work to gain SFP market approval, we are bringing in the necessary depth to accomplish that important task, and to also develop other SFP indications of building a first-class drug company.

Now, moving to Calcitriol, our Active Vitamin D injection. This is a FDA approved generic drug, manufacturing stability data must be submitted to the FDA prior to our sales launch into the commercial market.

Based upon agency timelines, we believe Calcitriol product launch will occur in the first quarter of 2013. Calcitriol is an exciting opportunity for Rockwell.

Calcitriol is complementary to our existing operating business, and we expect to sell it to our existing customer base as well as the addressable $350 million U.S. market with minimal SG&A expense.

Calcitriol is a great opportunity for us to increase our sales and profit to strengthen our existing business and to provide considerable leverage to our planned offering of SFP upon FDA market approval. Regarding business development and ex-U.S.

licensing of SFP, we are having productive discussions with multiple companies. Our strategy is to market SFP in the U.S.

market ourselves, and partner with companies ex-U.S. that are already established in other major markets, including Europe and Japan.

To conclude, we made excellent progress in the second quarter. We executed well with our existing operating business, and we expect to see sales continue to grow going forward.

Our clinical development continues to advance, the CRUISE program has now completed enrollment and we expect the study to finish mid-2013. PRIME data is expected first quarter of 2013, and we expect to launch Calcitriol about the same time.

We have a lot of exciting milestones coming up quick.

I will now turn the call over to Tom for his comments on our second quarter financial results.

Thank you, Rob, and good morning. I’ll provide a financial review of the second quarter as well as our financial position into cash resources.

In reviewing our sales, sales in the second quarter of 2012 were $12.1 million compared to $11.8 million in the second quarter of last year. Sales increased 300,000 or 2.7% as a result of both domestic and international sales increasing over last year.

Sequentially, our sales increased 100,000 to $12.1 million from $12 million in the first quarter, while our gross profit margins were up 0.7 percentage points, and overall gross profit was up 5.7% versus the first quarter.

This increase was particularly positive for us as domestic sales were up nicely at 5.25%, we anticipate continued domestic and international growth momentum over the remainder of 2012.

Sales in the first 6 months of 2012 were $24.2 million compared to $25.1 million in the first 6 months last year, the 900,000 decrease in sales during the first 6 months was attributable to lower international sales that we experienced from one international distributor in the first quarter of 2011. Over the first half of the year, we continue to see product conversion to our Dry Acid Concentrate product line, which lowers customer’s cost and reduces our sales dollars, but also improves our gross profit margins by reducing shipping costs.

And our gross profit margins in the second quarter of 2012 were 14.2% compared to 9.1% in the second quarter of 2011. Gross profit margins increased 5.1 percentage points, and gross profit dollars were up $1.7 million this was a 61% increase or 600,000 compared to last year’s second quarter.

This increase in gross profit was due to improving product mix, increase sales of dry acid concentrate; reduced operating expenses and other new business compared to the second quarter of last year.

For the first 6 months ended June 30, gross profit was $3.3 million compared to $2.7 million in the first 6 months last year. Gross profit margins were 13.9% compared to 10.8% last year, gross profit increased by 600,000.

Net loss for the quarter was $11.9 million, compared to a loss $4.5 million in the second quarter last year. R&D expense for the quarter totaled $10.9 million reflecting the accelerated pace of enrollment in our Phase III clinical studies, and our other R&D efforts.

Increase in net loss was due to higher R&D expense.

Year-to-date loss for the first 6 months of 2012 was $22.5 million compared to a loss of $7.5 million last year. This $15 million increase in our loss was due to increased R&D expense of $14.6 million.

On liquidity and capital resources, we expect our R&D spending to peak in Q3 and to decline each quarter thereafter as our development spending begins to subside. We have adequate cash to fund our R&D needs in 2012.

Our cash position including our cash and short-term investments as of June 30 was $20.4 million.

Our cash and other prospective sources of cash, including the expiring in-the-money warrants are anticipated to bring in additional $8 million cash in the fourth quarter. We think that our current and prospective cash sources will be adequate to meet our requirements.

I will now turn the call back to the operator for some Q&A.

Just wanted to ask, can we get a kind of apples-to-apples comparison for the quarter, if we excluded the revenue from the one large distributor last year, what would the top line growth have been in the quarter?

I think, Mike, yes year-to-date it was about $1.4 million, and our sales were down $900,000 so we’ve had about a $500,000 increase for the first 6 months, which I guess that’s about 2%.

Okay. And then just a quick follow-up question, can you talk about now that the CRUISE trials are fully enrolled, so what other kind of pre-approval pre-submission steps that you are taking to get prepared to submit to the agency.

You mean as far as the SFP product goes?

Say again?

You mean as far as the SFP goes, right?

Yes. That’s correct.

I mean, there’s a handful of, I mean there’s a lot of stuff that’s going on simultaneously. So there is a lot of steps, we’re obviously putting together the NDA, and there’s just all kinds of steps surrounding the SFP process.

Was there some in particular you were interested in?

No. I was just looking in general while you wait for your data to read out.

And then one more quick follow-up on did you see any benefit in the quarter from negative publicity on the GranuFlo?

Yes. So, I wouldn’t say that we saw benefit in the quarter from the negative publicity on the GranuFlo.

As you know, there was an article published in New York Times in June, it focused on the Fresenius product, it’s a concentrate product. Rockwell has a product, all our products are different from that product, that product contains a certain ingredient that we do not have in our concentrate product.

We’ve been aggressive before the New York Times article and this negative publicity started for them, and we’ve been picking up business prior to that, we have certainly picked up business since, and we’ll move forward and continue to pick up business.

So, with the CRUISE trials, do you expect them to both read out at the same time?

So, the CRUISE-1 will actually read out sooner than the CRUISE-2, at least that’s the way it appears.

And you don’t have a specific timing on it?

Not yet. No.

Okay. And then, on the Calcitriol program, have you submitted the data to the FDA, and do we still expect the manufacturing approval this quarter?

The Calcitriol launch we expect in Q1, we were guiding towards a Q4 or a Q1. We believe based on now the agency’s timeline that Q1 is the likely scenario.

And to answer the first part of that question, stability data has not yet been submitted to the FDA.

Okay. And then, on the partnership overseas, can you help us at all with the timing of that?

Well. What I mentioned on this call Carol was, we have multiple discussions right now with multiple companies, and they're all kind of based on the same thing, but a little bit different, and so there’s really no timing I can give you.

We could have something happen by year end or we could have something going and happen by going into the first quarter next year and possibly sometime sooner, there’s really no timeline I can give you on that.

This is Daniel Cheng in for Annabel Samimy. I had a couple of follow-ups from the previous questions.

Firstly, on Calcitriol, you said you hadn’t submitted the data yet, and I think previously there was talk that the FDA would either require a 30 days or 90 days of stability data. And I was just wondering, if you could just dig dipper into that and characterize that a little bit better, do you have a sense for what they will require, and what on your end needs to take place before that data gets submitted, before you get to that first quarter ’13 launch?

Sure. So we don’t have a sense of what that will require, we’ll submit for a 30 day, and if we are successful with that, then we’ll be out sooner.

If they require 90 days, then they’ll let us know, but we won’t know until we submit.

Okay, great. And then also just getting back to the GranuFlo question, can you just give us a little color of what you are hearing on the ground from doctors, physicians and users of the product, and maybe if you have a sense to be able to quantify what kind of impact you might be able to pick up in market share?

Yes, I mean, so here’s what I’ll say. I’m not going to, I won’t share details, I can tell you most of the things I hear in the field from doctors and accounts are more on the negative side, they’re obviously not happy with the situation if they are using the product.

As far as us going forward and gaining business, the negativity around this product certainly doesn’t occur to us. Like I mentioned earlier though, we’ve been aggressive and been doing business prior to that negativity starting.

I think as we move forward, we’ll continue to grow our sales, we’ve got a new product that we launched that’s doing real well, and we’ll continue to be aggressive going forward, and it is just hard to say really what kind of impact did it have on our sale.

Okay. And then finally another sort of on another topic I guess, as you know AMAG, they are developing Feraheme in Phase III, as we know it’s a little bit of a different setting maybe a different indication, but can you just tell us what you are seeing from the Phase III data that they’ve put out, and if you think that would impact the market anyway if SFP gets to market?

I can’t comment on the data that they’ve put out, I haven’t looked at it.

Okay.

At the data, but I can tell you what I’ve always felt, and what we believe here. We believe that once SFP is approved by the FDA, that it will take market share, almost all of the market share, because there is really not an IV iron product that can compete with it, that’s what we believe.

Hi, this is Whitney in for Ritu. A couple of quick questions on PRIME and the CRUISE trials, what’s the dropout rate that you’re seeing so far, and are you seeing any EPO based protocol violations?

I really can’t comment on that, on the details of the study at this point, Whitney.

Okay, and then I guess after the FDA dosing adjustment guidelines, are you seeing any different trends in EPO use that could impact the magnitude of EPO sparing that you might see?

I don’t think the EPO sparing since the FDA announcement, which was last June 24 of last year, not this year.

Or dosage of the Phase II trial, I am sorry, I didn’t specify.

Yes, you are talking about the June 24 announcement last year correct? Yes, we haven’t seen any impact to the studies based on EPO sparing, EPO sparing was already being reduced considerably, and I am sure it’s continued to be reduced, our understanding is, it looks like it’s kind of bottoming out at a certain level.

But we haven’t seen any effect of the actual ESA sparing on the study.

I wanted to get a little bit of clarity if you can on the new product you launched, which I’m assuming is CitraPure, and you were having some success with that even before the GranuFlo negative news started flowing. One of the benefits you said that, it had which I am sure has helped sales is lowering the cost for the dialysis centers, which is now key for them all with the bundling in effect.

Can you give us a little more clarity as to kind of what makes your product maybe a little bit better than other products out there on the market?

Without getting too complicated in one of our concentrate products, it’s one of the main products that’s used in every treatment. We’ve taken out one ingredient glacial acetic acid, and we’ve put in its place in this new product, CitraPure, citric acid.

And acetic acid promotes inflammation, and these patients are constantly inflamed, they’re chronically ill. And so when you remove the glacial acetic acid, you then remove some of the inflammation, and the patients start to have a better clinical outcomes.

They feel better they recover quicker after treatment.

The citric ingredient is also as you know citrate has anticoagulants properties. So the product also has some ability with some of the centers to lower their cost from a heparin standpoint.

The product isn’t indicated for lowering heparin, but the citrate access and anticoagulant that can also take effect. So it’s been a very good product, it delivers clinical outcomes that are improved over the glacial acetic product, and the CitraPure product that we market is the only one in the U.S.

that is 100% acetate free, so that’s why we are having success with that product.

Thank you for joining us today. We appreciate your time and your continued support.