-The Company has 2 Pipeline Products with a Combined Market Potential >$1 Billion-
Report is Available for Download at: www.lifesciadvisors.com/clients/rockwell
Rockwell Medical (NASDAQ: RMTI) is a company that is developing/marketing products for the treatment of iron deficiency, secondary hyperparathyroidism, and hemodialysis. Here, we detail the market opportunity for the Company’s drugs (SFP and Calcitriol), and its base concentrate business. We believe the current valuation does not account for the upside potential in SFP and Calcitriol and that Rockwell is very attractive as a high reward/low risk investment.
Growing Base Business with $50MM in Annual Sales Provides Downside Investment Protection. More specifically, we discuss the investment case for Rockwell and the Upside vs. Downside potential. Currently, Rockwell is trading at $8.38, has 22MM fully diluted shares, and a market cap of $184MM. With $20MM in cash and no debt, Rockwell has an enterprise value of $164MM. We believe that Rockwell’s base dialysis business represents downside protection at around $5-$6 a share in a worst-case scenario, if SFP fails to meet the primary endpoint in its Phase III studies and if the Calcitriol launch fails. We view Calcitriol however as a low risk asset.
Rockwell is Not a Hit or Miss Single Product Company. The Rockwell risk/reward profile is much different from the profile of companies that have an average EV >$500MM with no revenue and valuations based almost entirely upon the clinical success of their late-stage clinical product in Phase III, such as Clovis Oncology (NASDAQ: CLVS), MannKind Corporation (NASDAQ: MKND), and Arqule Incorporated (NASDAQ: ARQL). Rockwell, in contrast, has a growing $50MM base business and a low-risk Calcitriol product opportunity, in addition to SFP’s blockbuster potential.