InspireMD- A cure for the Broken Biotech Heart

"Be still, sad heart! and cease repining;
Behind the clouds is the sun still shining;
Thy fate is the common fate of all,
Into each life some rain must fall"-Henry Wadsworth Longfellow
The heart is one of the most complicated organs of the human body and by far one of the most useful. Without the heart, no other organ in our body would function. The heart is solely responsible for pumping oxygenated blood to every single organ, tissue and cell in your body. We now live in an age where we are no longer concerned with starvation but instead morbid obesity (at least in the US). In the past, humans were hunters and gatherers. We were constantly on the move for our next meal and had to stay alert for predators. In this day and age we rarely ever have to drive more than 5-10 minutes to get to our closest fast food restaurant.
As a Paramedic, I get to take care of these individuals when they are going through a medical crisis like having an heart attack, or scientifically known as an Acute Myocardial Infarction (AMI). For some bizarre reason the heaviest of these patients choose to live on the second or third floor of their apartment building. These patients are not only a physical burden but they are also a financial burden to the Medical community at large. Our Medical Community, for the most part, never makes a real issue out of these patients being morbidly obese. What is the reason for biting our collective tongues? We don't want to hurt anyone's feeling by calling them "fat". So, as a morbidly obese patient, when you go to your doctor; they will prescribe you a myriad of antihypertensive/hyperlipidemia/diabetes drugs instead of a strict diet and a gym membership. The obesity epidemic is continuing to grow in the United States at an alarming rate.
According to the AHA's most recent statistics (2013):

1.  23.9 million children ages 2 to 19 are overweight or obese. Of these children, 12.7 million are obese.
2.  Obesity is being defined as an epidemic (a widespread occurrence of a disease in a community at a particular time) in the United States.
3.  Among Americans age 20 and older, 154.7 million are overweight or obese (Body Mass Index greater than 25). Of these, 78.4 million are obese (BMI of 30 or higher). As of 2012, according to the United States Census Bureau, the US population is 313.9 million.
4.  According to the National heart forum analysis, the current cost of obesity-related health care costs is a staggering $147 billion.

If current trends in the growth of obesity continue, total healthcare costs attributed to obesity could reach $861 to $957 billion by 2030, which would account for 16% to 18% of the US health expenditures.
An analysis conducted by the National Heart Forum estimates that 50 percent of Americans are on track to become obese in the next 20 years. According to the report, 36 percent of Americans are obese. Why am I discussing obesity? The myriad of health problems related to obesity, which include:

1.  Type 2 diabetes (approx. 25 million Americans)
2.  Coronary heart disease and Stroke (27 million Americans). There are 795,000 strokes reported per year, as of 2012.
3.  Obesity-related Cancer, one in there cancer deaths is related to obesity, poor nutrition or physical inactivity. There are approximately 190,650 cases reported per year.

InspireMD is an innovative medical device company focusing on the development and commercialization of its proprietary stent system technology, MGuard™. The company intends to make its products the industry standard for stents and the in my opinion will become the standard of care for current stenting. InspireMD is pursuing applications of its stents in coronary, carotid and peripheral artery procedures.
MGuard provides embolic protection in stenting procedures by placing a micron mesh sleeve, which the company calls MicroNet™, over their stent,. InspireMD currently is marketing their stent for use mainly in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions (bypass surgery).
Before we continue further, let me take some time and explain a little bit of Cardiology. Now I have to warn you, that Cardiology is by no means a simple subject matter but I will try my best to try to explain it as clearly as I can. If you are in the medical field and familiar with Cardiology, you can skip this part or read through for a refresher.
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The Human heart and the blood vessels involved.
According to the CDC:

1.  Approximately 600,000 patients die of heart disease in the United States every year- this is 1 in every 4 deaths. Heart disease is the leading cause of death for both men and women.
2.  Every year about 715,000 Americans have a heart attack. Of these, 525,000 are a first heart attack and 190,000 happen in patients who already had prior heart attack.
3.  Coronary heart disease alone costs the United States $108.9 billion each year.

Risk factors for Cardiovascular Disease include:

1.  Diabetes,
2.  Hypertension (high blood pressure)
3.  Hypercholesterolemia (high blood cholesterol)
4.  Hyperlipidemia (an abnormally high concentration of fats or lipids in the blood)
5.  Obesity
6.  Cigarette smoking
7.  Oral contraceptive use
8.  Poor diet
9.  Sedentary life style
10.  Cocaine use, and even
11.  Stress

The Human heart weighs less than 1 pound (2.2 kg) and is about the size of a closed fist. The heart and the cardiovascular system are responsible for circulating blood throughout the body. The pericardial sac surrounds the heart. The heart can be thought of as a pump and consists of four chambers:

1.  The right atrium
2.  The left atrium
3.  The right ventricle
4.  The left ventricle

The atria are smaller than ventricles and have thinner walls. The ventricles have a thicker myocardial layer and make up much of the bulk of the heart. The two atria have the thinnest walls because they are low-pressured chambers that serve as storage units and conduits for blood that is then emptied into the ventricles. The ventricles, on the other hand, are the muscular hard workers. The ventricles must propel blood all the way through the pulmonary (lungs) or systemic circulation. Since the ventricles are pumping against pressure, they must be strong enough to overcome the pressure/resistance of the pulmonary and systemic vessels.
Route of blood through the heart
The oxygen depleted blood enters the right atrium through the superior and inferior vena cava. The superior and inferior vena cava are the largest veins that connect back to the heart. Most of this blood passes from the right atrium into the right ventricle via the tricuspid valve. These valves are like a gate between the atria and ventricles that prevents backflow of blood. From the right ventricle, blood is pumped through the pulmonary arteries and into the lungs. While the blood is in the pulmonary circulation, Carbon dioxide is removed and Oxygen is added to the blood. After the blood has been oxygenated in the lungs, the blood goes through four pulmonary veins and into the left atrium. The blood passing from the left atrium to the relaxed left ventricle opens the bicuspid valve. From the left ventricle blood is pumped through the aortic valve and into the aorta. The aorta is the largest artery in the human body. After the blood reaches the aorta, it travels through the systemic circulation reaching smaller and smaller arteries, arterioles, goes to the capillaries, then into venules, veins and back into the superior and inferior vena cava. Then the process for oxygenating blood begins anew.
The Coronary Vessels
The blood within the heart does not supply oxygen and other nutrients to the cells of the heart. The branch of the systemic circulation that supplies the heart is called the coronary circulation. The coronary circulation consists of:

1.  Coronary arteries- which receive blood through openings in the aorta called the coronary ostia, and
2.  Cardiac veins- which empty into the right atrium through another ostium (a small opening or orifice), the opening of a large vein called the coronary sinus.

The major coronary arteries are the right coronary artery and the left coronary artery. These arteries cover the epicardium (outer layer of tissue that covers the heart) and branch several times.
The left coronary artery divides into two main branches:

1.  The left anterior descending artery (LAD) -delivers blood to portions of the left and right ventricles and much of the intraventricular septum. The intraventricular septum is the wall that separates the ventricles of the heart from one another.
2.  The left circumflex artery (LCX) - supplies blood to the left atrium, the posterior and lateral walls of the left ventricle and part of the anterior papillary muscle. In 40-50% of the hearts, the LCX supplies the artery to the Sino Atrial (SA) node. The SA node is the "pacemaker of the heart" and sets the rate.

The three main branches of the right coronary artery include:

1.  The Conus, which supplies blood to the upper right ventricle
2.  The right marginal branch, which traverses the right ventricle to the apex; and
3.  The posterior descending branch, which supplies smaller branches to both ventricles.

The anatomy and physiology of the heart is very complicated so I will have to leave some material out and focus on the pertinent information. Now that we have discussed the normal heart and its function, let us move on to the sick heart.
Pathophysiology of Atherosclerosis
Atherosclerosis is a disease process characterized by progressive narrowing of the lumen (inside space of a tubular structure) of medium and large arteries (e.g. coronary arteries). The process results in the development of thick, hard atherosclerotic plaque. Atherosclerosis occurs to some extent in all middle-aged and older patients. Associated risk factors include age, family history of heart disease, cigarette smoking, obesity, hypertension, and diabetes.
Atherosclerosis has two major effects on blood vessels.

1.  The disease disrupts the innermost lining of the blood vessels. This causes a loss of elasticity in the vessels and increases the formation of clots.
2.  The plaque reduces the diameter of the vessel lumen. This decreases the blood flow to the tissues and cells.

Both of these effects result in an insufficient supply of nutrients and oxygen to the tissues. The severity of this insufficiency is related to the extent of narrowing (stenosis) of the blocked artery. Severity also depends on how long it took to develop. If the development happened over a long period of time, patient may have developed collateral circulation to compensate for the occlusion. In contrast, a sudden onset of occlusion in a coronary artery (following an acute thrombus) almost always results in ischemia (decreased oxygen supply), injury (tissue damage), and necrosis (complete and irreversible tissue death) to the area of the myocardium supplied by the affected artery.
Courtesy www.cardiachealth.org/heart-information/atherosclerosis
Angina Pectoris
Angina pectoris is a symptom of myocardial ischemia (decreased oxygen supply to the tissues of the heart). The term literally means "choking pain in the chest". Angina occurs in patients when there is an imbalance between myocardial oxygen supply and demand. The ischemia results in a buildup of lactic acid and carbon dioxide in ischemic tissues of the heart. Think about what happens what happens to your muscles when you exercise without rest. The most common cause of angina pectoris is atherosclerotic disease of the coronary arteries. Myocardial ischemia can put patients at risk for cardiac dysrhythmias.
Angina is typically classified as stable and unstable.

1.  Stable Angina is usually precipitated by physical exertion or emotional distress. The pain usually does not last a very long time and is relieved by rest, nitroglycerin or oxygen. Nitroglycerin is a medication that in essence opens up the blood vessels of the heart and reduces the oxygen demand of the heart.
2.  Unstable angina, also called pre-infarction angina, is chest pain that can occur during periods of mild physical exertion or even at rest. Patients with unstable angina are at increased risk of an acute myocardial infarction (heart attack) and sudden death. Although majority of patients feel pain in their chest, other patients may describe the pain is in their shoulders, arms, neck, jaw or back. Patients may also present with anxiety, shortness of breath, nausea or vomiting and diaphoresis (profuse sweating).

Acute Myocardial Infarction (heart attack)
Acute myocardial infarction occurs with a sudden and total blockage or near blockage of blood flowing through an affected coronary artery to an area of heart muscle. This blockage results in ischemia, injury, and necrosis to the area of the myocardium distal to the occlusion. AMI is most often associated with atherosclerotic heart disease.
AMI typically begins with the formulation of an atherosclerotic plaque involving the intimal (innermost) layer of the coronary artery. The plaque disrupts the smooth arterial lining and results in an uneven surface. This creates turbulent blood flow through the coronary artery/arteries. The plaque may rupture. If the rupture does occur, the injured tissue is then exposed to circulating platelets. This results in the formation of a thrombus that occludes the artery. As the thrombus becomes bigger, it further reduces the blood flow to the coronary vessel.

Courtesy http://www.nature.com/nm/journal/v17/n11/fig_tab/nm.2515_F4.html
The next thing to discuss is the Electrocardiography (ECG). Since explaining ECG would take an inordinate amount of time, I will keep it very simple.
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Courtesy http://www.ivline.info/2010/05/quick-guide-to-ecg.html
ECG records the electrical activity of the heart and prints it out for interpretation. All you really need to know is that the ST-segment is elevated in some patients suffering from an AMI and that is why doctors use the term STEMI. Not all patients having an MI will be having a STEMI but all patients with a STEMI are having a heart attack. The device was invented by Dr. Willem Einthoven in 1903 and received the Nobel Peace prize in medicine in 1924 for it.
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Courtesy http://www.ivline.info/2010/05/quick-guide-to-ecg.html
MGuard provides embolic protection in stenting procedures by placing a micron mesh sleeve over their stent. InspireMD currently is marketing their stent for use mainly in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions (bypass surgery).
Current stent technology targets the stable angina patient. Stable angina is classified as chest pain from poor blood flow through the coronary blood vessels.
Unstable Angina patients (patients suffering from an acute myocardial infarction) represent a complex clinical problem not addressed by current stent technology.
InspireMD's MGuard reduces mortality rate (measure of the frequency of death), reduces myocardial damage associated with acute myocardial infarction (AMI).

Current standard of care:
Minor heart attack treated with a Bare Metal Stent (BMS) or Drug Eluting Stent (DES)
Causes:
Potential for Debris (plague) to flow downstream, occluding small arteries "Distal Embolization"
Leading to:
Cardiac Mortality and Morbidity
Picture Courtesy InspireMD website:


The true genius of the MGuard device is that it combines the stent and embolic protection in a single device. Due to this unique approach, MGuard:

1.  Reduces risk for embolization by capturing potentially harmful debris, such as plaque, against the artery wall.
2.  These micro-particles then slowly reenter the artery in a non-harmful way over approximately 30 days.
3.  The MicroNet on the stent acts as a safety net by providing greater surface area coverage to prevent large debris flow in smaller arteries.
4.  The proprietary circular knitted mesh wraps around the stent to protect the patient from debris flowing downstream.
5.  MicroNet is made of a single fiber from a biocompatible polymer, which is widely used in medical implantations today. This material is also very flexible and it does not promote thrombosis (local coagulation or clotting of the blood in a part of the circulatory system)

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As you can clearly see from the figures above, that a potential standard of care treatment in the Coronary STEMI/AMI market is going to be highly profitable.
When a patient suffers from occlusion of the coronary artery, there are two main choices. Either place a stent or conduct bypass surgery. Stent placement is by far the safest choice. However, when placing stents, the Cardiologist risk dislodging plaque, which could cause thrombus formation or can travel down further and occlude the smaller coronary arteries causing tissue death. The two main types of stents used in the US, the Bare Metal and the Drug Eluting stent do not prevent the unstable plaque from heading downstream and causing blockage and tissue death. InspireMD has the solution to this problem and that is why I believe it is set to become the standard of care in this patient population.
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MASTER Trial Highlights
MGuard achieved primary end point

1.  Superiority in ST resolution- 57.8% vs 44.7%

Reduction in mortality (death) rate at 6-months:

1.  Occurred in 1/217 (0.5%) patients with MGuard
2.  Occurred in 6/216 (2.8%) patients with BMS or DES type stents

Reduced Infarct size

1.  17.1gm (MGuard) vs 22.3gm (BMS/DES)

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InspireMD (NSPR) some facts to keep in mind:

1.  The company was founded on February 29, 2008 and is headquartered in Tel Aviv, Israel.
2.  Market Cap of $98.36 Million (as of 10/05/13), 2.85/share.
3.  34.3 Million Shares Outstanding
4.  NSPR has a 52 Week high of 10.16 and a 52 Week Low of 1.80.
5.  As of 09/13/2013 has a 0.22% short interest (57,567)
6.  As of 06/30/2013, the company has 18.27% institutional stock ownership.
7.  ORBIMED Advisors reported 3,395,000 shares.
8.  JENNISON ASSOCIATES 1,750,000 shares.
9.  As of 07/31/13 the company has 5.1% Institutional Mutual Fund ownership
10.  In the last 12 months, there has been 17 open market buys by insiders. Insider ownership is 10% as reported on 06/30/2013.
11.  On April 16, 2013 the company diluted shares in a classic biotech fashion to raise funds. NSPR sold 12.5 million shares of its common stock at $2.00 per share. The company received $22.6 million, after deducting underwriting discounts and commissions and other offering-related costs. Following the offering the company does not have any indebtedness for borrowed money outstanding.
12.  InspireMD currently sells its proprietary stent system technology, MGuard, in 30 countries worldwide.
13.  InspireMD has 37 patents - 6 granted (1 USA), 31 pending.
14.  The intellectual property protects key attributes of MicroNet Technology which include anchoring, drug delivery, macro structure and fiber width.
15.  Pivotal 12-month clinical data to be released Oct 29th, 2013 for the MASTER trial
16.  NSPR achieved primary endpoint with sustained mortality benefit at 30 days and 6 months
17.  12 month MASTER data will provide clinical platform to accelerate sales activities in key international markets.
18.  Multiple Clinical Trials including the MAGICAL and iMOS studies. Multiple published clinical trails showing the efficacy of MGuard in reducing Major Adverse Cardiac Events (MACE). See resources for a link to those publications.
19.  Alan Milinazzo is President and CEO. Mr. Milinazzo has worked for Orhtofix, Medtronic, and Boston Scientific.
20.  Mr. Michael Berman is also part of the team and serving in the capacity of Director. Mr. Berman has an impressive track record. Mr. Berman was the president of the Cardiology Business of Boston Scientific and currently serves on a total of the board of 9 total companies.
21.  James Barry who was VP, Corporate Research and Advanced Technology Development at Boston Scientific is also a member of the Board.
22.  This list of other amazing leaders the company has brought on board includes Sol Barer, Campbell Rodgers, Craig Shore, Eli Bar and Chaim Lotan.

Financials

1.  Revenue for the twelve months ended June 30, 2013, is approximately $4.9 million, a decrease of 0.5 million (8.9%) from the same period in 2012.
2.  According to the company, the $0.5 million decrease in sales volume was largely due to the fact that the company is in the process of replacing certain third party distributors with direct sales channels. The company believes that this transition to direct selling will ultimately lead to greater sales.
3.  Gross Profit increased 3.6%, approximately $0.1 million, to approximately $2.6 million from $2.5 million during the same period in 2012.
4.  Gross margin increased from 46.7% in the 12 month ended June 30, 2012 to 53.2% in the twelve months ended June 30, 2012.
5.  Research and Development Expenses increased 4.2% or approximately $0.2 million, to approximately $4.2 million, from approximately $4.0 million during the same period in 2012.
6.  Selling and marketing expenses increased 66.3% or approximately $1.4 million, to approximately $3.6 million, from approximately $2.2 million during the same period in 2012.
7.  The company believes, with the recent dilution, they have sufficient cash to continue operations into 2015 but may "raise additional funds in 2015 to continue financing" their operations.
8.  As of June 30, 2103 NSPR had cash and cash equivalents of approximately $14.8 million.
9.  As of June 30, 2013, NSPR's assets exceeded their liabilities by a multiple of 4.68.
10.  NSPR repaid $8,787,234 in cash.

Conclusion
I believe that InspireMD is a company with huge potential. At the current share price of $2.85 per share, it is highly undervalued. This is just my analysis of the company but I am not an analyst or a financial advisor. Please do your own DD and never follow investment advice of random people on the internet, including me.
Sources:
http://www.heart.org/idc/groups/heart-public/@wcm/@sop/@smd/documents/downloadable/ucm_319588.pdf
http://www.usnews.com/opinion/blogs/robert-schlesinger/2012/12/28/us-population-2013-more-than-315-million-people
http://healthyamericans.org/assets/files/A.pdf
https://eresearch.fidelity.com/eresearch/evaluate/fundamentals/ownership.jhtml?stockspage=ownership&symbols=NSPR
http://finance.yahoo.com/news/inspiremd-closes-25-million-underwritten-152000063.html
http://biz.yahoo.com/e/130917/nspr10-k.html
http://www.cdc.gov/heartdisease/facts.htm
http://www.ncbi.nlm.nih.gov/pubmed/19937780
http://www.inspire-md.com/site_en/inspiremd-to-sponsor-satellite-symposium-breakfast-meeting-chaired-by-dr-gregg-w-stone-november-9th-at-tct-2011/
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Rockwell Medical- A Potential Sleeping Giant

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 consult a financial adviser, do your own due diligence and never place money into biotech stocks that you cannot afford to lose. Fortunes are made and lost everyday in biotech, play it safe and be smart. I am just a paramedic, my word means nothing. I have been long RMTI since before Cruise 1 data and holding through Cruise 2 data.

FYI: Due to my incessantly overbearing OCD this article will be very long, in fact it may seem more like a research report. If you are not a fan of thorough research, there are plenty of articles to peak your interest by various authors who describe their picks succinctly. I am not one of those authors, in reality I am no author at all, I'm actually a major nerd. Enjoy the read.

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.

• According to the National Kidney Foundation in 1997, "approximately 20 million adults in the US are in various stages of CKD with more than 400,000 individuals with ESRD and more than 300,000 of those patients requiring maintenance dialysis".
• According to the National Institute of Diabetes and Digestive and Kidney Disease (NIDDK) and National Institute of Health (NIH) at the End of 2009, 398,861 ESRD patients were being treated with some form of dialysis: 172,553 ESRD patients had a working transplanted kidney.
• It has been projected, by the National Kidney Foundation that by the year 2030, more than 2 million patients will be in need of dialysis or transplantation for kidney failure due to an aging population and prevalence of Type 2 Diabetes in the US alone.
• More than 10 times as many ESRD patients receive hemodialysis (HD) treatments at a clinic as those who do peritoneal dialysis (PD) and home HD combined.
• At 85.5 percent, the 5-year survival rate for transplant patients is more than twice the 35.8 percent survival rate for dialysis patients.
• Treating ESRD patients cost the United States over $40 billion in public and private funds in 2009. $29.03 billion was attributed to medicare costs 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 approximately 430,000 patients with End Stage Renal Disease that are on dialysis and need treatment for anemia. The number of dialysis patients that need treatment for anemia world wide is a staggering 2.2 million.

Pathophysiology and some Definitions

Your kidneys are by far two of the most important organs in your body. They help maintain your overall health, filter waste products in your blood stream and remove excess fluids from your body.

Chronic Kidney Disease (CKD): reduced kidney function over a period of time caused by any condition . CKD is diagnosed when a patient's glomerular filtration rate remains below 60 milliliters per minute for greater than 3 months time or when the ratio of albumin-to-creatinine ratio is over 30 milligrams (mg) of albumin for each gram (g) of creatinine (30 mg/g) in the patients urine.

Glomerular Filtration rate (GFR)-is a test used to check how well the kidneys are working. Specifically it estimates how much blood passes through the tiny filters in the kidneys called glomeruli each minute.

According to the National Kidney Foundation, normal results range from 90-120 mL/min/1.73 m^2.

Stages of CKD:

• Stage 1- Kidney Disease noted in patients such as diabetes, high blood pressure, family history, older age and ethnicity (African Americans at higher risk). Patients with stage 1 CKD have some kidney damage, have protein in the urine and normal GFR. A normal GFR is defined as greater than 90.

• Stage 2- Patients have kidney damage along with a mild decrease in GFR. GFR in these patients is typically between 60 to 89.

• Stage 3- Kidney damage and Moderate decrease in GFR. GFR is noted to be 30-59.

• Stage 4- Patients have significant kidney damage and have a Severe decrease in GFR. GFR in these patients is between 15 to 29.

• Stage 5- Kidney Failure AKA End Stage Renal Disease. GFR is less than 15 and patients NEED dialysis or kidney transplant.

End Stage Renal Disease (ESRD): total and permanent kidney failure caused by some disease, illness or injury. When the kidneys fail, the body retains excess fluid. Also, Harmful wastes build up in the body since the kidneys cannot filter out the toxins from the body. A person with ESRD needs treatment to replace the work of the failed kidneys, typically through hemodialysis.

Some Causes of Renal Failure include:

• diabetic glomerulopathy- caused by diabetes
• Hypertension- Increased blood pressure over time damages the kidneys.
• glomerulonephritides- immunologically mediated glomerular diseases, often inflammatory in nature with various known and unknown causes.
• polycystic kidney disease- group of disorders that result from the formation and progressive enlargement of cysts in the kidneys without dysplasia. Affects both children and adults. Has genetic causes. Over 600,000 Americans are diagnosed with PKD
• chronic pyelonephritis- Caused by chronic infections of the kidney resulting from vesiculourethral reflex or obstruction. Responsible for 15% of ESRD
• lupus nephritis- inflammation of the kidneys caused by systemic lupus erythematosus (SLE), an auto immune disease.

Vitamin D-

is a hormone that can be obtained in the diet or synthesized by the action of ultraviolet radiation on cholesterol in the skin. That's right folks, a wee bit of sunlight is good for the body and soul (always wear sunscreen). However these forms of Vitamin D3 (cholecalciferol) are inactive and require two hydroxylations (organic chem term for a chemical process that introduces a hydroxyl (-OH) group into an organic compound) to establish a metabolically active form. The first step occurs in the liver and the second in the kidneys.

Vitamin D is vital for the absorption of calcium and phophate by the small intestine. Vitamin D is an important modulator of immune, renal and cardiovascular system.

The active hormone is called calcitriol. Disorders of Vitamin D metabolism have been linked to varied pathological conditions such as hypertension, congestive heart failure and hypertrophic cardiomyopathy, immune disease and cancer.

Erythropoietin-

EPO is produced by the kidneys in adults and is essential for normal erythropoiesis (erythro means red blood cell and poiesis means to make). Epo stimulates the bone marrow to produce red blood cells in response to tissue hypoxia (decreased oxygen levels). In patients with ESRD, the body lacks this essential hormone.

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 red protein responsible for transporting oxygen in the blood. It is a molecule comprised of four subunits, each containing an iron bound to a heme group). Iron is also essential in the process of erythropoiesis (RBC production).

Iron deficiency is also present when the demand for iron exceeds the supply, developing slowly through three overlapping stages:

• Stage 1- body's iron stores are depleted but the erythropoiesis proceeds normally with the hemoglobin content of RBCs and remains normal.
• Stage 2- the iron transportation to the bone marrow is diminished resulting in iron deficiency erythropoiesis (body is working on over drive with less materials)
• Stage 3- begins when the small hemoglobin-deficient cells enter the circulation in appropriate numbers to replace the normal mature RBCs that have been removed from circulation. Manifestations of IDA appear in this stage, when iron stores are depleted and there is diminished hemoglobin production.
• Early symptoms include fatigue, weakness, shortness of breath, pale earlobes, palms and conjuctivae (pull the skin at the bottom of your eyes and look to see if its nice and pink, if its pale go to your doctor)
• Progression of IDA causes even more changes in the patients. The patients nail become brittle and thin due to impaired capillary circulation. The patients tongue may become sore, red and painful. Patients may experience dry mouth and difficulty swallowing.

What does all this mumbo jumbo have to do with RMTI in simple words?

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.

There are approx 430,000 patients with End Stage Renal Disease (ESRD) being treated with dialysis in the U.S., and estimated 2.2 million ESRD patients worldwide, who require treatment for anemia. Anemia is a common occurrence in patients with ESRD due to the fact that the kidneys have become damaged and no longer produce and vital hormone called Erythropoietin.

Currently patients with renal failure are treated with erythropoiesis-stimulating agents (ESA's) for anemia, primarily used in dialysis patients, most of whom have treatments MWF or TTHSAT. ESA's are used in conjunction with IV Iron Dextran to keep the patients hemoglobin levels elevated but can put them at risk for stroke or MI if their hemoglobin goes in the excess of 11g/dl (grams per deciliter). For normal healthy males the level is 14-18 g/dl, females 11-16 g/dl.

The current standard of treatment is Erythropoietin (EPO), a synthetic form of the hormone that is produced mainly by the kidneys (before they were damaged). EPO shots are given quite frequently and it can take a month or two before a significant enough rise in hemoglobin/hematocrit levels (greater than 5%) for the patient to start feeling any better.

When patients are administered ESA's during their dialysis visits it increases the bodies demand for iron, as it as precursor in the production of Red Blood Cells (RBC's). Also, the process of dialysis reduces the amount of iron in the blood stream (a patient loses an average of 5-7 mg during each dialysis treatment). To treat the low levels of iron in the blood stream, patients are given Intravascular (IV) Iron at the same time ESA's are given to start the production of RBC's. Since the levels of Iron are deficient, the clinicians have to administer higher doses of ESA's and this process is repeated several times throughout the month until Hemaglobin/Hematocrit levels increase and can sometime take several months.

Unfortunately, this repeated use of giving ESA's along with IV Iron supplements can cause the body to react in an unfavorable manner for the patients. The bodies reticuloendothelial system isolates the IV iron in the liver and releases a chemical called hepcidin, which blocks the release of the iron that is bound to the liver. This buildup of iron in the liver is not a benign event, it can lead to toxicity and not to mention leads to hypoxia (decreased oxygen being delivered) to organs, tissues, and cells; due to the decreased production of RBC's. When the patient returns to the dialysis center, labs are redrawn, pt is given more ESA's along with IV Iron supplements and this cycle may continue until liver toxicity occurs, pt becomes hypoxic at the cellular level or the patients H/H might actually improve.

RMTI is currently working on developing and marketing Soluble Ferric Pyrophosphate (SFP). SFP is the company's lead investigational product. The company has concluded Phase III cruise 1 and Crusie 2 studies just recently. The POSITIVE results of Cruise 1 were announced approximately 43 days after the announcement of completion of the study. SFP is an iron delivery therapy, designed to replace the current method of iron delivery to dialysis patients.

Here is an excerpt from the companies website:

"SFP has been designed to effectively address the current challenges in anemia management by:

• Maintaining hemoglobin (Hgb) levels within a safe range using moderate ESA doses
• Improving response to ESA therapy, while avoiding excessively high doses and potential risks
• Preventing iron from being stored in the liver thereby avoiding liver toxicity
• Reducing current drug administration costs

SFP is intended to deliver iron directly to the bloodstream in small, continuous doses three times per week and is designed to replace the 5-7 mg of iron that is lost during every dialysis treatment. This mode of delivery maintains patient Hgb within a target range resulting in moderate ESA dose and improved ESA response. With current IV iron therapy, iron levels are not always adequate when ESA's are dosed and therefore greater ESA doses are needed; this is believed to contribute to Hgb variability and related adverse consequences.

SFP's unique properties enable it to avoid storage in the liver upon dosing. Avoiding iron storage in the liver eliminates liver toxicity associated with current IV iron delivery. 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 addition to the potential to provide significant patient benefit and improved patient outcome, SFP is expected to reduce related healthcare costs considerably. Because SFP is delivered via dialysate, 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. Furthermore, because SFP is designed to continously maintain iron balance, as opposed to IV iron which is dosed infrequently to replenish iron after Hgb has dropped below a certain threshold, ESA dose is expected to be significantly reduced, which should result in considerable savings to the dialysis provider.

In the U.S. approximately $680M per year is spent on IV iron for ESRD patients; and $1.5B globally."

I am not trying to get into a political discussion here but if you happen to be in the field of medicine at the current time, you may have noticed some changes recently. Obama care has made changes to the decades old traditions that hospitals followed. At this time if a patient with COPD (chronic obstructive pulmonary disease), Congestive Heart Failure (CHF) or Diabetes returns to the hospital within 30 days of treatment for the same problem, Medicare/Medicaid may choose to not pay the hospital.

Dialysis patients are chronically sick and have a myriad of other medical problems such as heart failure, diabetes, hypertension, etc. These multiple health problems along with being on dialysis (increased risk of infections) keeps the dialysis patients going in and out of the hospital on a consistent basis. Our culture has shifted in medicine from a culture of care and compassion to a culture of cost basis. I am not implying you can't have one without the other but its been a difficult change but "yes we can" right?

Here is the data from a meeting, prior to Cruise 1 data release, in which the company discussed their clinical data:

"The primary objective of the study was to determine whether 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 percent change in ESA dose from baseline to end of treatment (final two weeks of treatment period). Baseline ESA dose was similar between SFP (9483 U/wk) and placebo (9205 U/wk). In the modified ITT population, at the end of the study, ESA dose in the SFP arm was 9871 U/wk and placebo was 12628 U/wk. After adjusting for differences in baseline hemoglobin, the SFP arm required 35% less prescribed ESA compared to placebo. The difference between the two groups was statistically significant (p=0.045). The ESA sparing effect from SFP was observed without any increase in serum ferritin or pre-dialysis transferrin saturation. The PRIME study demonstrated that regular administration of SFP-iron via dialysate reduced the usage of erythropoietin stimulating agents (ESAs) during hemodialysis by 35% while maintaining iron balance and maximizing iron delivery."

If you consider the fact that the Market for ESA's in the US alone is approximately $2 billion and nearly $5 billion worldwide. Amgen recently paid $24.9 million dollars to settle some allegations for doing Pharmacy Kickbacks www.reuters.com/article/2013/04/16/us-us.... The company did not admit to being guilty, they just pleaded the fifth. Dialysis has been a very lucrative market for Big Pharma and especially AMGEN.

On July 1st 2013, Centers for Medicare and Medicaid Services (CMS) proposed a 9.4% cut to the Dialysis payment system. Medicare covers dialysis for 85% of the nations dialysis patients. Amgen has had a monopoly on ESA market for decades now with competition around the corner next year. Due to the company being the only one with the drug that these patients needed, AMGEN has raised prices to their hearts content over the years.

According to Blue Cross Blue Shield (www.bcbswny.com/content/bcbs_prov_guid_e...):

• For patients with ESRD, the average cost of treatment over a 12 month period is between $7,371 to $14,742 for continuous treatment.
• Amgen's revenue for Epogen sales have been between $2 billion to $2.5 billion and its only competitor (AFFYMAX) having their drug withdrawn from the market, increased sales of Epogen by an additional 15%.

A 35% reduction in ESA use would save patients/insurance companies/CMS approximately 700 million dollars a year.

A 35% reduction in the usage of ESA's is quite an achievement, IF THE RESULTS ARE REPRODUCED IN PHASE III; well they were certainly proven in cruise 1 results.

Cruise 1 results

The Cruise-1 study successfully met its pre-defined primary efficacy endpoint, which was a change in hemaglobin from baseline to end-of-treatment between the SFP and placebo group.

The mean difference between the SFP and placebo was 3.6 g/dL, impressive statistical significance, P value of 0.011.

At baseline the two groups had similar hemaglobin levels (109.6 g/L and 109.0 g/L placebo).

Mean change after treatment for SFP group was 0.6 g/L

Mean change in placebo group was negative 3.0 g/L

That is a huge margin, clearly indicates that SFP works

The company also reported that Cruise 1 met the secondary endpoints as well:

"The key secondary endpoints at 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 End-of-Treatment, the difference between groups was a statistically significant 2.1% difference in favor of SFP (p less than 0.001). Serum ferritin, a marker of tissue iron stores, 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 less than 0.001). These results indicate that hemodialysate containing 2 µM SFP iron delivers sufficient iron to maintain erythropoiesis and does not lead to tissue iron overload."

In my opinion the most impressive thing from the results was that there were no significant adverse effects reported. In ESA use, OMONTYS being a recent example, pt experienced anaphylactic reactions leading to death. According to the FDA, IV Iron and ESA drug such as EPOGEN come with a black box warning. SFP will be the first drug use in these patients without such a risk. As a patient or a clinician, which would you prefer? A drug that might kill you within minutes or a safer alternative with proven clinical benefits?

Here are some links for you to read up against the competition.

www.medpagetoday.com/ProductAlert/Prescr.../5231

www.fda.gov/Safety/MedWatch/SafetyInform....htm

www.medpagetoday.com/ProductAlert/Prescr.../16473

SFP does not eliminate the need for ESA drugs, only reduces it by approximately 35% ($700 million dollars in savings).

Interesting facts to keep in Mind:

• The company recently completed financing via classic biotech dilution. The first one was for $12.9 million on March 20th. The second for a total of $40.3 million in which the underwriters of the announced public offering exercised their over-allotment option to purchase an additional 1,721,311 shares of the companies common stock at $3.05.

• On June 14, 2013 the company also took out a $20 million loan in straight debt financing from Hercules Technology Growth Capital Inc. The terms of the agreement are basically such that RMTI must meet the primary endpoints for both Cruise 1 and Cruise 2 data or the loan becomes immediately due. Hercules has committed $3.6 billion to over 230 companies are not exactly known for picking losers. However; the terms of the agreement are beyond absurd.

• 12.5% interest rate
• $0.2 million at closing and is required to pay a fee of $1.1 million upon any prepayment or at maturity.
• the company granted Hercules a security interest in virtually all of the assets of the company other than certain intellectual property, motor vehicles, real property and certain other interests.
• Loan agreement also contains covenants that, among other undisclosed things, limit the company's ability to incur additional indebtedness, transfer asset, acquire assets of or merge with another entity.
• so basically either a really stupid move by management or they are very confident.

• In completed clinical trials to date, SFP has demonstrated that it can safely deliver iron to the bone marrow (where the production of Red Blood Cells takes place). SFP is currently in Phase 3 clinical study CRUISE-1 to address an estimated $600M U.S. and $1B global market.

• Rockwell is preparing to launch its FDA approved generic drug called Calcitriol. Calcitriol is active vitamin D injection and indicated for the treatment of secondary hyperparathyroidism in dialysis patients. Rockwell intends to enter the vitamin D market in 2013, addressing an estimated $350M U.S. market. I do not believe that company will reach high market penetration but still will be able to generate positive income from this endeavor.

• On March 8, 2013 RMTI announced that it has signed a contract with NxStage® Medical, Inc. to manufacture dialysate concentrate for the NxStage System One", the first and only truly portable hemodialysis system cleared for home use by the U.S. Food & Drug Administration. The contract term is for two years. You can research the company at www.nxstage.com/

• Current revenue of RMTI stands at approx $51 million and a market cap of $226 million, positive Phase III results could propel the stock to new highs. After the release of positive phase II data, the companies stock did surge to approx $8/share but being low on cash, that dissipated quickly.

• According to the WSJ, this company is only being covered by two analysts with an average consensus price of $15.50 quotes.wsj.com/RMTI/research-ratings

• The company has a short percentage of 16.77% (5.88 million shares) as of 08/15/13, a 31.54% increase from the previous report. If the company announced Vitamin D approval along with Positive Cruise data, this stock is a candidate for a serious short squeeze.

• According to Finviz, Institutional Holding shows to be at 33.90%, an increase of 125.66% from last update and an impressive insider ownership of 5.70% (55.70% increase from last update)

• The price movement as of late leading to data announcement has been from the high 4s to a recent high of $6.22.

Conclusion

In my opinion, I believe the stock will see a positive uptrend lead into data announcement and with positive data could propel the stock to new highs. KERX has been working on a similar drug that reduces ESA use by 25%. I can still recall the day that KERX announced their data, the stock jumped the first day, then the second and continued till the third to near 10 range before tapering off at approximately $8/share.

Cruise 2 data is due in september and Calcitriol manufacturing approval is also around the corner (FDA is just slow).

RMTI will be saving Medicare/Medicaid, patients and Insurance companies approximately 700 million dollars per year. SFP will the product of choice for these already low margin dialysis centers who are getting their funding slashed by CMS (center for medicare & medicaid services). If you also take into account that this drug has not killed a single patient due to anaphylaxis, compared to the black boxed drugs IV iron and Epogen, this product is going to be a game changer in the dialysis market. As a medical professional believe me when I say this, to the Healthcare Companies, saving money is just as important as saving patients lives and this drug (SPF) will certainly allow these vultures to find the morally correct balance; People over profit.

RMTI is not a one tricky pony as you see with several small cap biotech firms. The company has multiple other products in the pipeline including Citrapure, hemodialysis concentrates, etc. I am confident in my investment decision in regards to this company and expect the stock price to rise significantly from current levels. Good luck to you all and please do your own due diligence. If I left something out please let me know and I will address it. Thank you.

Sources:

kidney.niddk.nih.gov/kudiseases/pubs/kustats/

www.ncbi.nlm.nih.gov/pmc/articles/PMC2746982/

www.nlm.nih.gov/medlineplus/ency/article....htm

www.kidney.org/atoz/content/kidneydiscauses.cfm

www.kidneyfund.org/kidney-health/kidney-....html

faculty.stcc.edu/AandP/AP/AP2pages/Units....htm

www.pathology.vcu.edu/education/PathLab/....html

www.kidney.org/atoz/content/gfr.cfm

ir.rockwellmed.com/releasedetail.cfm?ReleaseID=772067

onlinelibrary.wiley.com/doi/10.1359/jbmr.../pdf

www.renalbusiness.com/news/2013/07/akf-u....aspx

secfilings.nasdaq.com/filingFrameset.asp...;FilePath=\2013\06\20\&CoName=ROCKWELL+MEDICAL%2C+INC.&FormType=8-K&RcvdDate=6%2F20%2F2013&pdf=

www.rockwellmed.com/dialysis-products-he....htm

secfilings.nasdaq.com/filingFrameset.asp...;FilePath=\2013\07\11\&CoName=ROCKWELL+MEDICAL%2C+INC.&FormType=8-K&RcvdDate=7%2F11%2F2013&pdf=

U.S. Renal Data System 2003 Annual Data Report: Atlas of End-Stage Renal Disease in the United States. National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases, Bethesda, MD, USA.

U.S. Renal Data System 2005 Annual Data Report: Atlas of End-Stage Renal Disease in the United States. National Institutes of Health, National Institute of Diabetes and Digestiveand Kidney Diseases, Bethesda, MD, USA