View Filing Data

Document and Entity Information - shares	9 Months Ended
Sep. 30, 2018	Nov. 08, 2018
Document and Entity Information
Entity Registrant Name	ROCKWELL MEDICAL, INC.
Entity Central Index Key	0001041024
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		56,977,656
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
ASSETS
Cash and Cash Equivalents	$ 4,292,328	$ 8,406,917
Investments Available for Sale	13,410,151	24,648,459
Insurance Receivable	500,000
Accounts Receivable, net of a reserve of $7,800 in 2018 and $11,000 in 2017	7,581,699	6,355,566
Inventory	4,646,522	7,637,384
Prepaid and Other Current Assets	1,662,398	1,779,992
Total Current Assets	32,093,098	48,828,318
Property and Equipment, net	2,667,760	2,548,978
Inventory, Non-Current	1,865,834	5,986,752
Goodwill	920,745	920,745
Other Non-current Assets	536,605	494,847
Total Assets	38,084,042	58,779,640
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable	6,931,292	4,222,159
Accrued Liabilities	2,724,777	4,715,712
Settlement Payable	666,667
Current Portion of Deferred License Revenue	2,276,139
Customer Deposits	86,435	205,303
Total Current Liabilities	12,685,310	9,143,174
Deferred License Revenue	12,729,052	16,723,318
Total Liabilities	25,414,362	25,866,492
Commitments and Contingencies (See note 10)
Shareholders' Equity:
Common Shares, no par value, 51,769,294 shares issued and outstanding at September 30, 2018 and 51,768,424 shares issued and outstanding at December 31, 2017	275,634,848	273,210,907
Accumulated Deficit	(263,012,321)	(240,262,376)
Accumulated Other Comprehensive Income (Loss)	47,153	(35,383)
Total Shareholders' Equity	12,669,680	32,913,148
Total Liabilities And Shareholders' Equity	$ 38,084,042	$ 58,779,640

Condensed Consolidated Statements Of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Sales	$ 16,672,416	$ 14,626,904	$ 46,534,358	$ 42,462,265
Cost of Sales	14,703,606	13,555,853	49,303,048	37,535,454
Gross Profit (Loss)	1,968,810	1,071,051	(2,768,690)	4,926,811
Selling, General and Administrative	6,159,141	4,791,636	15,182,048	17,433,530
Settlement Expense, net of Reimbursement			1,030,000
Research and Product Development	808,192	1,304,658	4,033,494	4,195,003
Operating Loss	(4,998,523)	(5,025,243)	(23,014,232)	(16,701,722)
Interest and Investment Income (Loss)	(4,969,632)	(5,056,994)	(22,749,945)	(16,882,001)
Net Loss	$ 28,891	$ (31,751)	$ 264,287	$ (180,279)
Basic and Diluted Net Loss per Share	$ (0.10)	$ (0.10)	$ (0.44)	$ (0.33)
Basic and Diluted Weighted Average Shares Outstanding (in shares)	51,288,537	51,260,975	51,288,462	50,995,079

Condensed Consolidated Statements Of Changes In Shareholders' Equity - 9 months ended Sep. 30, 2018 - USD ($)	COMMON SHARES	ACCUMULATED DEFICIT	ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)	Total
Balance at Dec. 31, 2017	$ 273,210,907	$ (240,262,376)	$ (35,383)	$ 32,913,148
Balance (in shares) at Dec. 31, 2017	51,768,424			51,768,424
Increase (Decrease) in Shareholders' Equity
Net Loss		(22,749,945)		$ (22,749,945)
Unrealized Gain (Loss) on Available-for-Sale Investments			96,327	96,327
Foreign Currency Translation Adjustments			(13,791)	(13,791)
Exercise of Employee Stock Option, Net of Tax	$ (1,978)			(1,978)
Exercise of Employee Stock Option, Net of Tax (in shares)	870
Stock-based compensation	$ 2,425,919			2,425,919
Balance at Sep. 30, 2018	$ 275,634,848	$ (263,012,321)	$ 47,153	$ 12,669,680
Balance (in shares) at Sep. 30, 2018	51,769,294			51,769,294

Condensed Consolidated Statements Of Cash Flow - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash Flows From Operating Activities:
Net Loss	$ (22,749,945)	$ (16,882,001)
Adjustments To Reconcile Net Loss To Net Cash Used In Operating Activities:
Depreciation and Amortization	466,994	384,835
Stock-based Compensation	2,425,919	6,033,436
Increase in Inventory Reserves	3,442,547
Loss on Disposal of Assets	4,030	4,084
Realized Loss on Sale of Investments Available-for-Sale	222,014	704,695
Changes in Assets and Liabilities:
(Increase) in Insurance Receivable	(500,000)
(Increase) Decrease in Accounts Receivable	(1,226,133)	(149,429)
Decrease (Increase) in Inventory	3,669,233	(2,391,191)
Decrease (Increase) in Other Assets	75,570	224,635
(Decrease) in Accounts Payable	2,709,133	(1,669,651)
Increase in Settlement Payable	666,667
(Decrease) in Other Liabilities	(2,109,802)	(863,034)
(Decrease) in Deferred License Revenue	(1,718,127)	(1,698,903)
Changes in Assets and Liabilities	1,566,541	(6,547,573)
Cash Used In Operating Activities	(14,621,900)	(16,302,524)
Cash Flows From Investing Activities:
Purchase of Investments Available-for-Sale	(18,483,694)	(34,235,347)
Sale of Investments Available-for-Sale	29,596,315	40,122,266
Purchase of Equipment	(589,541)	(706,346)
Proceeds on Sale of Assets		450
Cash Provided By Investing Activities	10,523,080	5,181,023
Cash Flows From Financing Activities:
Proceeds from the Issuance of Common Shares		116,105
Restricted Stock Retained in Satisfaction of Tax Liabilities		(2,287,231)
Stock Retained in Satisfaction of Tax Liabilities	(1,978)
Cash Used In Financing Activities	(1,978)	(2,171,126)
Effects of Exchange Rate Changes	(13,791)	(44)
Decrease In Cash and Cash Equivalents	(4,114,589)	(13,292,671)
Cash At Beginning Of Period	8,406,917	17,180,594
Cash At End Of Period	$ 4,292,328	$ 3,887,923

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2018

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

3. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

The accompanying condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States (“U.S.”) of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U. S. Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated balance sheet at September 30, 2018, condensed consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017, condensed consolidated statements of cash flows for the nine months ended September 30, 2018 and 2017, and condensed consolidated statement of changes in shareholder’s equity for the nine months ended September 30, 2018 are unaudited, but include all adjustments, consisting of normal recurring adjustments, that the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the three and nine months ended September 30, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018 or for any future interim period. The condensed consolidated balance sheet at December 31, 2017 has been derived from audited financial statements, however, it does not include all of the information and notes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2017 and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 as filed with the SEC (the “2017 Annual Report”). The Company’s consolidated subsidiaries consisted of its wholly-owned subsidiaries, Rockwell Transportation, Inc. and Rockwell Medical India Private Limited.

Certain reclassifications have been made to the 2017 financial statements and notes to conform to the 2018 presentation.

Revenue Recognition

The Company recognizes revenue under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when the company satisfies a performance obligation

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue.

Shipping and handling costs associated with outbound freight related to contracts with customers are accounted for as a fulfillment cost and are included in cost of sales when control of the goods transfers to the customer.

Nature of goods and services

The following is a description of principal activities from which the Company generates its revenue.

Product sales –The Company accounts for individual products and services separately if they are distinct (i.e., if a product or service is separately identifiable from other items and if a customer can benefit from it on its own or with other resources that are readily available to the customer). The consideration, including any discounts, is allocated between separate products and services based on their stand-alone selling prices. The stand-alone selling prices are determined based on the cost plus margin approach.

Drug and dialysis concentrate products are sold directly to dialysis clinics and to wholesale distributors in both domestic and international markets. Distribution and license agreements for which upfront fees are received are evaluated upon execution or modification of the agreement to determine if the agreement creates a separate performance obligation from the underlying product sales. For all existing distribution and license agreements, the distribution and license agreement is not a distinct performance obligation from the product sales. In instances where regulatory approval of the product has not been established and the Company does not have sufficient experience with the foreign regulatory body to conclude that regulatory approval is probable, the revenue for the performance obligation is recognized over the term of the license agreement (over time recognition). Conversely, when regulatory approval already exists or is probable, revenue is recognized at the point in time that control of the product transfers to the customer.

The Company received upfront fees under two distribution and license agreements that have been deferred as a contract liability. The amounts received from Wanbang Biopharmaceuticals Co., Ltd. (“Wanbang”) are recognized as revenue over the estimated term of the distribution and license agreement as regulatory approval was not received and the Company did not have sufficient experience in China to determine that regulatory approval was probable as of the execution of the agreement. The amounts received from Baxter Healthcare Corporation (“Baxter”), are recognized as revenue at the point in time that the estimated product sales under the agreement occur.

For the business under the Company’s distribution agreement with Baxter (the “Baxter Agreement”), and for the majority of the Company’s international customers, the Company recognizes revenue at the shipping point, which is generally the Company’s plant or warehouse. For other business, the Company recognizes revenue based on when the customer takes control of the product. The amount of revenue recognized is based on the purchase order less returns and adjusted for any rebates, discounts, chargebacks or other amounts paid to customers. There were no such adjustments for the periods reported. Customers typically pay for the product based on customary business practices with payment terms averaging 30 days, while distributor payment terms average 45 days.

Disaggregation of revenue

Revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.


In thousands of US dollars ($)		Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
Products By Geographic Area	Total		U.S.		Rest of World		Total		U.S.		Rest of World
Drug Revenues
License Fee – Over time	$	68	$	—	$	68	$	205	$	—	$	205
Concentrate Products
Product Sales – Point-in-time		16,099		13,208		2,891		44,815		38,536		6,279
License Fee – Point-in-time		505		505		—		1,514		1,514		—
Total Concentrate Products		16,604		13,713		2,891		46,329		40,050		6,279
Net Revenue	$	16,672	$	13,713	$	2,959	$	46,534	$	40,050	$	6,484

For the three and nine months ended September 30, 2017, license fee revenue was $556 and $1,655 respectively. For the three and nine months ended September 30, 2017 product sales revenue was $14,061 and $40,807 respectively.

Contract balances

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers.


In thousands of US dollars ($)	September 30, 2018		December 31, 2017
Receivables, which are included in "Trade and other receivables"	$	7,593	$	5,544
Contract liabilities	$	15,005	$	16,723

There were no impairment losses recognized related to any receivables arising from the Company’s contracts with customers for the nine months ended September 30, 2018.

For the three and nine months ended September 30, 2018 and 2017, the Company did not recognize material bad-debt expense and there were no material contract assets recorded on the consolidated balance sheet as of September 30, 2018. The Company does not generally accept returns of its concentrate products and no reserve for returns of concentrate products was established as of September 30, 2018 or December 31, 2017.

The contract liabilities primarily relate to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products.

Transaction price allocated to remaining performance obligations

For the three and nine months ended September 30, 2018, revenue recognized from performance obligations related to prior periods was not material.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, totaled $15,005,000 as of September 30, 2018. The amount relates primarily to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products. The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Baxter Agreement includes minimum commitments of product sales over the duration of the agreement. Unfulfilled performance obligations related to the Baxter Agreement are product sales of $11,732,000, which will be amortized through expiration of the agreement on October 2, 2024.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks, money market mutual funds and unrestricted certificates of deposit.

Fair Value Measurement

The Company applies the guidance issued with ASC 820, Fair Value Measurements, which provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

Level 3: Unobservable inputs which are supported by little or no market activity ad values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgement or estimation.

Deferred Revenue

In October of 2014, the Company entered into a 10 year distribution agreement with Baxter and received an upfront fee of $20 million. The upfront fee was recorded as deferred revenue and is being recognized based on the proportion of product shipments to Baxter in each period, compared with total expected sales volume over the term of the Distribution Agreement. The Company recognized revenue of approximately $0.5 million each of the three months ended September 30, 2018 and 2017, respectively, and $1.5 million for each of the nine months ended September 30, 2018 and 2017, respectively.

Research and Product Development

The Company recognizes research and product development expenses as incurred. The Company incurred product development and research costs related to the commercial development, patent approval and regulatory approval of new products aggregating approximately $0.8 million and $1.3 million for the three months ended September 30, 2018 and 2017, respectively, and $4.0 million and $4.2 million for the nine months ended September 30, 2018 and 2017, respectively.

Stock-Based Compensation

The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards. For stock-based compensation awards to non-employees, the Company re-measures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. Changes in the estimated fair value of these non-employee awards are recognized as compensation expense in the period of change. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgement. For the three and nine months ended September 30, 2018 and 2017, the Company recorded stock-based compensation expense on its options granted under the Company’s equity compensation plans to its directors and officers, and its employees.

Loss Per Share

ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share (“EPS”), with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issued common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Basic net loss per share of common stock excludes dilution and is computed by dividing the net loss by the weighted average number of shares outstanding during the period. Diluted net loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity unless inclusion of such shares would be anti-dilutive. The Company has only incurred losses, therefore, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share for the three and nine months ended September 30, 2018 and 2017 were as follows:


	As of September 30,
	2018		2017
Options to purchase common stock		8,048,105		7,326,501
Unvested restricted stock awards		-		480,000
Unvested restricted stock units		1,293,750		-
		9,341,855		7,806,501

Adoption of Recent Accounting Pronouncements

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), as modified by ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon the adoption approach. The Company adopted the new standard on January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10 and ASU 2018-11 (collectively, Topic 842). Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. Topic 842 is effective for the Company in its first quarter 2020, and earlier adoption is permitted. The Company is currently evaluating the impact of its pending adoption of Topic 842 on its condensed consolidated financial statements. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon its adoption of Topic 842, which will increase its total assets and total liabilities that the Company reports relative to such amounts prior to adoption.

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholder’s equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholder’s equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance and the ending balance of each period for which a statement of comprehensive income is required to be filed. This rule is effective on November 5, 2018. The Company is evaluating the impact of this guidance on its condensed consolidated financial statements.

Stock-Based Compensation

9 Months Ended

Sep. 30, 2018

Stock-Based Compensation

Stock-Based Compensation

8. Stock-Based Compensation

The Company recognized total stock-based compensation expense during the three and nine months ended September 30, 2018 and 2017 as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Restricted stock awards	$	20,222	$	564,854	$	1,292,125	$	2,751,239
Stock option awards		427,944		1,071,653		967,377		3,275,339
Restricted stock units		166,417		-		166,417		-
	$	614,583	$	1,636,507	$	2,425,919	$	6,026,578

Restricted Stock

A summary of the Company’s restricted stock awards during the nine months ended September 30, 2018 is as follows:


			Weighted Average
			Grant-Date
	Number of Shares		Fair Value
Granted at December 31, 2017	1,380,000	$	7.27
Granted	-		-
Forfeited	(333,200)		5.70
Granted at September 30, 2018	1,046,800	$	7.77

The fair value of restricted stock awards are measured based on their fair value on the date of grant and amortized over the vesting period.

During the nine months ended September 30, 2018, the Company granted 388,125 restricted stock units and 905,625 performance-based restricted stock units to an employee. The Company did not record stock-based compensation expenses related to the performance-based grants, because vesting is not probable as of September 30, 2018. The restricted stock units are priced at $4.70 per share and were unvested at September 30, 2018. The 388,125 restricted stock units have a three year time based vesting period and the 905,625 performance-based grants will be subject to the satisfaction of performance based conditions.

Stock Options

A summary of the Company’s stock option activity for the nine months ended September 30, 2018 is as follows:


				Weighted
			Weighted	Average
	Shares		Average	Remaining
	Underlying		Exercise	Contractual		Aggregate
	Options		Price	Term		Intrinsic Value
Outstanding at December 31, 2017	6,906,001	$	7.92	5.0
Granted	1,337,271		4.96	9.4
Exercised	(5,000)		6.59	-
Forfeited	(190,167)		6.59	-
Outstanding at September 30, 2018	8,048,105	$	7.46	5.2	$	365,135

Exercisable at September 30, 2018	6,248,160	$	7.90	4.1	$	365,135

The aggregate intrinsic value in the table above represents the total intrinsic (the difference between the Company’s closing stock price on September 30, 2018 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders, had all option holders been able to, and in fact had, exercised their options on September 30, 2018.

During the nine months ended September 30, 2018, the stock options granted consisted of 949,146 options granted to employees, and 388,125 performance-based options granted to an employee. The vested options were exercisable at an average price of $7.90 per share and the unvested options were exercisable at an average of $5.92 per share.

The fair value of the options granted for the nine months ended September 30, 2018 and 2017 were based on the following assumptions:


	Nine Months Ended September 30,
	2018		2017
Exercise price		$4.52 - $5.75		$6.09
Expected stock price volatility		67.5%		66.3%
Risk-free interest rate		2.7% - 2.9%		2.2%
Term (years)		5.0 - 6.5		5.5 - 6.5

In accordance with the original terms of their employment agreements of the former Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) and in accordance with the terms of the Settlement Agreement (defined below), the Company accelerated the vesting of 258,334 and 71,667 unvested stock options on the termination date. As a result of this acceleration of stock options, the Company recorded additional stock-based compensation of approximately $162,000.

As of September 30, 2018, total stock-based compensation expense related to unvested options not yet recognized totaled approximately $2.2 million.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2018
Commitments and Contingencies.
Commitments and Contingencies	10. Commitments and Contingencies Litigation Circuit Court for Oakland County, Michigan Following the Board’s termination of the Company’s former CEO on May 22, 2018, and in response to his continued assertion that he remained the duly appointed Chief Executive Officer of the Company, on May 23, 2018, the Company filed a complaint in the Oakland County Circuit Court in Michigan (“State Court”) seeking declaratory relief and a temporary restraining order. On May 24, 2018, the Board terminated its then-serving CFO. Following the State Court-ordered mediation, the Company, its former CEO, former CFO and a former and then current director, agreed to a term sheet (the “Term Sheet”) that outlined the terms of a withdrawal of the State Court proceeding while the parties continued to litigate their claims in the Federal Court actions described below. On July 11, 2018, the State Court entered a stipulated order permitting the Company to withdraw its complaint in accordance with the Term Sheet. On July 17, 2018, the lawsuit in the State Court action was dismissed and closed. United States District Court for the Eastern District of Michigan On June 13, 2018, the Company’s former CEO and CFO filed a complaint in the United States District Court for the Eastern District of Michigan (“Federal Court”) against the Company and certain directors (collectively, the “Defendants”). The complaint requested that the Federal Court reinstate the former CEO to his former position of Chief Executive Officer, reinstate the former CFO to his former position of Chief Financial Officer and order the Defendants to pay all costs associated with the matter. The complaint alleged that the Defendants possibly violated their duties of loyalty and care to the Company; rules under Regulation Fair Disclosure; and various federal securities laws, including Section 10(b) of the Exchange Act and SEC Rule 10b-5. On July 2, 2018, the Company filed an answer and counterclaim against the Company’s former CEO, former CFO, a former director and a then-serving director. On August 7, 2018, the parties entered into the Settlement Agreement by which the parties agreed to dismiss the Federal Court action with prejudice. Settlement Agreement On August 7, 2018, the Company, the Company’s former CEO, former CFO, a former director and a then-serving director and the Defendants, entered into the Settlement Agreement, pursuant to which the parties agreed to dismiss the Federal Court action with prejudice and to enter into a broad mutual release of claims. The Company agreed to: (i) pay the Company’s former CEO, former CFO, a former director and a then-serving director a total of $1,500,000, one-half of which was paid at execution and the remainder of which will be paid in nine equal monthly installments of $83,333, (ii) pay $30,000 to the then-serving director (who then agreed to resign as a director); (iii) accelerate the vesting of options held by the Company’s former CEO and former CFO as of the date of their terminations; and (iv) grant an extended option exercise period for vested options. The Company’s former CEO, former CFO, a former director and the resigning director agreed to certain standstill covenants for a period of approximately five years and agreed to forfeit a total of 313,600 unvested shares of restricted common stock. SEC Inquiry As a follow up to its prior inquiry letters, the Company received a subpoena from the SEC during the Company’s third quarter requesting, among other things, certain information and documents relating to the status of CMS’s determination of separate reimbursement status for Dialysate Triferic and the Board’s termination of our former CEO and CFO. The Company is actively cooperating and responding to these requests. State Court and Federal Court Actions As reported above, the State Court action was dismissed and closed on July 17, 2018 at the request of the parties. On August 7, 2018, the parties entered into the Settlement Agreement by which the parties agreed to dismiss the Federal Court action with prejudice. On August 15, 2018, the Federal Court action was dismissed and closed. Shareholder Class Action Lawsuits On July 27, 2018, Plaintiff Ah Kit Too filed a putative class action lawsuit in the United States District Court in the Eastern District of New York against the Company and former officers, Robert Chioini and Thomas Klema. The complaint is a federal securities class action purportedly brought on behalf of a class consisting of all persons and entities, other than Defendants, who purchased or otherwise acquired the publicly traded securities of the Company between March 16, 2018 and June 26, 2018. The Complaint alleges that the Company and Messrs. Chioini and Klema violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”). Specifically, the Complaint alleges that defendants filed reports with the Securities and Exchange Commission that contained purported inaccurate and misleading statements regarding the potential for the Company’s drug, Triferic, to quality for separate reimbursement status by the Centers for Medicare and Medicaid Services. On September 4, 2018, Plaintiff Robert Spock filed a similar putative class action lawsuit in the United States District Court in the Eastern District of New York against the Company and Messrs. Chioini and Klema. The Spock complaint is a federal securities class action purportedly brought on behalf of a class consisting of persons who purchased the Company’s securities between November 8, 2017 and June 26, 2018. This complaint alleges that the Company and Messrs. Chioini and Klema violated the Exchange Act in that the Company was aware the Centers for Medicare and Medicaid Services would not pursue the Company’s proposal for separate reimbursement for Triferic; misstated reserves in the Company’s quarterly report for the first quarter of 2018; had a material weakness its internal controls over financial reporting, which rendered those controls ineffective; Mr. Chioini withheld material information regarding Triferic from the Company’s auditor, corporate counsel, and independent directors of the Board; and, as a result of these alleged issues, statements about the Company’s business were materially false and misleading. On September 25, 2018, four Company stockholders filed motions to appoint lead plaintiffs, lead counsel, and to consolidate the Ah Kit Too v. Rockwell securities class action with the Spock v. Rockwell securities class action. On October 10, 2018, the court issued an order consolidating the two actions, appointing co-lead plaintiffs and co-lead counsel. The lawsuits seek damages sustained by the class and an award of plaintiffs’ costs and attorney fees.

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies)

9 Months Ended

Sep. 30, 2018

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Revenue Recognition

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when the company satisfies a performance obligation

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue.

Nature of goods and services

The following is a description of principal activities from which the Company generates its revenue.

Disaggregation of revenue

Revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.


In thousands of US dollars ($)		Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
Products By Geographic Area	Total		U.S.		Rest of World		Total		U.S.		Rest of World
Drug Revenues
License Fee – Over time	$	68	$	—	$	68	$	205	$	—	$	205
Concentrate Products
Product Sales – Point-in-time		16,099		13,208		2,891		44,815		38,536		6,279
License Fee – Point-in-time		505		505		—		1,514		1,514		—
Total Concentrate Products		16,604		13,713		2,891		46,329		40,050		6,279
Net Revenue	$	16,672	$	13,713	$	2,959	$	46,534	$	40,050	$	6,484

Contract balances

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers.


In thousands of US dollars ($)	September 30, 2018		December 31, 2017
Receivables, which are included in "Trade and other receivables"	$	7,593	$	5,544
Contract liabilities	$	15,005	$	16,723

There were no impairment losses recognized related to any receivables arising from the Company’s contracts with customers for the nine months ended September 30, 2018.

The contract liabilities primarily relate to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products.

Transaction price allocated to remaining performance obligations

For the three and nine months ended September 30, 2018, revenue recognized from performance obligations related to prior periods was not material.

Use of Estimates

Cash and Cash Equivalents

Fair Market Value Measurements

Fair Value Measurement

The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

Deferred Revenue

Research and Product Development

Share Based Compensation

Stock-Based Compensation

Loss Per Share


	As of September 30,
	2018		2017
Options to purchase common stock		8,048,105		7,326,501
Unvested restricted stock awards		-		480,000
Unvested restricted stock units		1,293,750		-
		9,341,855		7,806,501

Recent Accounting Pronouncements

Adoption of Recent Accounting Pronouncements

Recent Accounting Pronouncements

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Tables)

9 Months Ended

Sep. 30, 2018

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Disaggregation Of Revenue


In thousands of US dollars ($)		Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
Products By Geographic Area	Total		U.S.		Rest of World		Total		U.S.		Rest of World
Drug Revenues
License Fee – Over time	$	68	$	—	$	68	$	205	$	—	$	205
Concentrate Products
Product Sales – Point-in-time		16,099		13,208		2,891		44,815		38,536		6,279
License Fee – Point-in-time		505		505		—		1,514		1,514		—
Total Concentrate Products		16,604		13,713		2,891		46,329		40,050		6,279
Net Revenue	$	16,672	$	13,713	$	2,959	$	46,534	$	40,050	$	6,484

Contract Balances


In thousands of US dollars ($)	September 30, 2018		December 31, 2017
Receivables, which are included in "Trade and other receivables"	$	7,593	$	5,544
Contract liabilities	$	15,005	$	16,723

Summary of potentially dilutive securities


	As of September 30,
	2018		2017
Options to purchase common stock		8,048,105		7,326,501
Unvested restricted stock awards		-		480,000
Unvested restricted stock units		1,293,750		-
		9,341,855		7,806,501

Stock-Based Compensation - (Tables)

9 Months Ended

Sep. 30, 2018

Stock-Based Compensation

Schedule of stock-based compensation expense recognized


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Restricted stock awards	$	20,222	$	564,854	$	1,292,125	$	2,751,239
Stock option awards		427,944		1,071,653		967,377		3,275,339
Restricted stock units		166,417		-		166,417		-
	$	614,583	$	1,636,507	$	2,425,919	$	6,026,578

Schedule of restricted stock activity


			Weighted Average
			Grant-Date
	Number of Shares		Fair Value
Granted at December 31, 2017	1,380,000	$	7.27
Granted	-		-
Forfeited	(333,200)		5.70
Granted at September 30, 2018	1,046,800	$	7.77

Schedule of stock option activity


				Weighted
			Weighted	Average
	Shares		Average	Remaining
	Underlying		Exercise	Contractual		Aggregate
	Options		Price	Term		Intrinsic Value
Outstanding at December 31, 2017	6,906,001	$	7.92	5.0
Granted	1,337,271		4.96	9.4
Exercised	(5,000)		6.59	-
Forfeited	(190,167)		6.59	-
Outstanding at September 30, 2018	8,048,105	$	7.46	5.2	$	365,135

Exercisable at September 30, 2018	6,248,160	$	7.90	4.1	$	365,135

Schedule of assumptions used in stock option valuation


	Nine Months Ended September 30,
	2018		2017
Exercise price		$4.52 - $5.75		$6.09
Expected stock price volatility		67.5%		66.3%
Risk-free interest rate		2.7% - 2.9%		2.2%
Term (years)		5.0 - 6.5		5.5 - 6.5

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
CONDENSED CONSOLIDATED BALANCE SHEETS
Allowance for reserve, accounts receivable (in dollars)	$ 7,800	$ 11,000
Common Shares, par value (in dollars per share)	$ 0	$ 0
Common Shares, shares issued	51,769,294	51,768,424
Common Shares, shares outstanding	51,769,294	51,768,424

Condensed Consolidated Statements Of Comprehensive Income (Loss) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net Loss	$ (4,969,632)	$ (5,056,994)	$ (22,749,945)	$ (16,882,001)
Unrealized Gain on Available-for-Sale Securities	143,868	248,628	96,327	860,752
Foreign Currency Translation Adjustments	(6,402)	132	(13,791)	(142)
Comprehensive Loss	$ (4,832,166)	$ (4,808,234)	$ (22,667,409)	$ (16,021,391)

Description of Business	9 Months Ended
Description of Business	Sep. 30, 2018
Description of Business
Description of Business	1. Description of Business Rockwell Medical, Inc. and subsidiaries (collectively, “we”, “our”, “us”, or the “Company”), is a specialty pharmaceutical company targeting end-stage renal disease and chronic kidney disease with products for the treatment of iron deficiency, secondary hyperparathyroidism and hemodialysis. We are also a manufacturer of hemodialysis concentrates/dialysates for dialysis providers and distributors in the United States and abroad. We supply approximately 25% of the United States domestic market with dialysis concentrates and we also supply dialysis concentrates to distributors serving a number of foreign countries, primarily in the Americas and the Pacific Rim. Substantially, all of our sales have been concentrate products and ancillary items. Our business strategy is developing unique, proprietary renal drug therapies that we can commercialize or out-license, while also expanding our dialysis products business. These renal drug therapies support disease management initiatives to improve the quality of life and care of dialysis patients and are designed to deliver safe and effective therapy, while decreasing drug administration costs and improving patient convenience and outcome. Triferic® is a registered trademark of Rockwell Medical, Inc.

Liquidity and Financial Condition	9 Months Ended
Liquidity and Financial Condition	Sep. 30, 2018
Liquidity and Financial Condition
Liquidity and Financial Condition	2. Liquidity and Financial Condition As of September 30, 2018, the Company had approximate balances of $4.3 million of cash and cash equivalents, $13.4 million of investments available-for-sale, working capital of $19.4 million and an accumulated deficit of $263.0 million. Net cash used in operating activities for the nine months ended September 30, 2018 was approximately $14.6 million. On October 15, 2018, the Company raised $22.0 million in capital from the offering and sale of 5,541,562 shares of common stock at a price of $3.97 per share, along with warrants to purchase up to an additional 2,770,781 shares of common stock at a price of $4.96 per share. (See Note 11 – Subsequent Events). Based on the additional capital raised from the October 2018 offering, management currently believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of report filing. The Company will require additional capital to sustain its short-term operations and make the investments it needs to execute its long-term business plan, including the commercial launch of Dialysate Triferic and IV Triferic (if approved). If the Company is unable to generate sufficient revenue from its existing long-term business plan, the Company will need to obtain additional debt or equity financing. If the Company attempts to obtain additional debt or equity financing, the Company cannot assume that such financing will be available on favorable terms, if at all.

Investments in Available For Sale Securities	9 Months Ended
Investments in Available For Sale Securities	Sep. 30, 2018
INVESTMENTS IN AVAILABLE FOR SALE SECURITIES
INVESTMENTS IN AVAILABLE FOR SALE SECURITIES	4. Investments - Available-for-Sale Investments available-for-sale are short-term investments, consisting of investments in short-term notes and bonds and are stated at fair value based upon observed market prices (Level 1 in the fair value hierarchy). The portfolio generally consists of high credit quality short-term debt instruments. These instruments are subject to changes in fair market value due primarily to changes in interest rates. The fair value of these investments was $13,410,151 and $24,648,459 as of September 30, 2018 and December 31, 2017, respectively. Unrealized holding gains or losses on these securities are included in accumulated other comprehensive income (loss). Realized gains and losses, including declines in value judged to be other-than-temporary on available-for-sale securities are included as a component of other income or expense. Gross unrealized losses for the three months ended September 30, 2018 was $157,982. There were no unrealized gains for the three months ended September 30, 2018. Gross unrealized gains for the three months ended September 30, 2017 $248,628. There were no unrealized losses for the three months ended September 30, 2017. Realized gains were $2,411 and $57 for the three months ended September 30, 2018 and 2017 respectively. Realized losses were $99,439 and $199,758 for the three months ended September 30, 2018 and 2017 respectively. There were no gross unrealized losses for the nine months ended September 30, 2018 and gross unrealized gains were $96,591 as of September 30, 2018. Gross unrealized losses were $76,399 and gross unrealized gains were $35,274 for the nine months ended September 30, 2017. There were realized gains of $6,050 and $57 for the nine months ended September 30, 2018 and 2017 respectively. There were realized losses of $228,064 and $704,752 during the nine months ended September 30, 2018 and 2017 respectively. The Company has evaluated the near term interest rate environment and the expected holding period of the investments along with the duration of the portfolio assets in assessing the severity and duration of potential impairments. Based on our evaluation, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2018.

Stockholders' Equity	9 Months Ended
Stockholders' Equity	Sep. 30, 2018
Stockholders' Equity
Stockholders' Equity	7. Shareholders’ Equity Preferred Stock As of September 30, 2018 and December 31, 2017, there were 2,000,000 shares of preferred stock authorized and no shares of preferred stock issued or outstanding. Common Stock On September 19, 2018, an employee of the Company exercised 5,000 stock options at an exercise price of $15,450 or $3.09 per share. The Company withheld 4,130 of these common shares at a cost of $17,428 or $4.22 per share, to cover the employee withholding taxes and other expenses related to this exercise.

Settlement Agreement and Related Director and Officer Insurance Receivable	9 Months Ended
	Sep. 30, 2018
Settlement Agreement and Related Director and Officer Insurance Receivable
Settlement Agreement and Related Director and Officer Insurance Receivable	9. Settlement Agreement and Related Director and Officer Insurance Receivable On August 7, 2018, the Company entered into a confidential settlement agreement and mutual release (the “Settlement Agreement”) with its former CEO, former CFO and a former and then current director. For more details see Note 10. The Company accrued approximately $1.5 million related to this Settlement Agreement and as of September 30, 2018, the Company has paid $0.8 million. The Company is also entitled to a partial reimbursement for this accrual from the Company’s insurance company of approximately $0.5 million which was collected in October 2018. This resulted in a net settlement expense of approximately $1.0 million for the nine months ended September 30, 2018.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2018
SUBSEQUENT EVENT.
Subsequent Events	11. Subsequent Events Related-Party Transaction On October 7, 2018, the Company entered into a Master Services and Intellectual Property (“IP”) Agreement (“MSA”) with the Charak, LLC and Dr. Ajay Gupta (collectively “Charak”), who serves as the Company’s Executive Vice President and Chief Scientific Officer. Pursuant to the MSA, the parties entered into three additional agreements related to the license of certain soluble ferric pyrophosphate IP owned by Charak, as well as an employment agreement with Dr. Gupta. The MSA provides for a payment of $1,000,000 to Dr. Gupta, payable in four quarterly installments of $250,000 each on October 15, 2018, January 15, 2019, April 15, 2019 and July 15, 2019, and reimbursement for certain legal fees incurred in connection with the MSA. Securities Purchase Agreement On October 15, 2018, the Company entered into a Securities Purchase Agreement with an institutional investor (the “Purchaser”), pursuant to which the Company sold 5,541,562 units, with each unit (the “Units”) consisting of one share of common stock of the Company (the “Common Stock”) and a warrant to purchase 50% of a share of Common Stock (the “Warrant”). The Units were sold at $3.97 per Unit, which was equivalent to the closing price of the Company’s common stock on October 12, 2018, the last trading day prior to entering into the Securities Purchase Agreement. The Warrants, which are not exercisable for six months from issuance, have an exercise price of $4.96 per full share of Common Stock and have a five-year term from issuance. The Purchaser had the right to purchase up to an additional $8.0 million in Units at the same price and on the same terms as set forth in the Securities Purchase Agreement. This additional purchase right expired unexercised on October 26, 2018. As a result, no additional Units were sold and the total gross proceeds for the offering were $22.0 million. CMS Reimbursement Guidance Also on November 1, 2018, the Centers for Medicare & Medicaid Services (“CMS”), issued interpretive guidance on the availability of Medicare reimbursement for certain products indicated to treat renal disease (the CMS Guidance. As set forth in the CMS Guidance, Dialysate Triferic would not be eligible for add-on reimbursement under the CMS Traditional Drug Add On Pricing Adjustment (“TDAPA”) program. Accordingly, the Company is continuing its previously announced plans to commercially launch Dialysate Triferic “within the bundle,” with commercial launch for this product planned for the first half of 2019. However, based on the CMS Guidance, the Company believes that, if approved by the FDA on or after January 1, 2020, IV Triferic would be eligible for separate sole source payment with a separate J-Code for a two-year timeframe. In accordance with the current guidance, separate TDAPA payments would last for two years following launch, after which IV Triferic would be priced inside the bundle. The Company is working with outside experts to optimize its New Drug Application (“NDA”) filing and PDUFA action dates to realize the benefits of separate payment, and is targeting a launch of IV Triferic in the first half of 2020, subject to receipt of FDA approval.

Description of Business (Details)	9 Months Ended
Description of Business (Details)	Sep. 30, 2018
Description of Business
Percentage of supply in domestic market	25

Liquidity and Financial Condition (Details) - USD ($)		9 Months Ended
Liquidity and Financial Condition (Details) - USD ($)	Oct. 26, 2018	Sep. 30, 2018	Sep. 30, 2017	Oct. 15, 2018	Oct. 05, 2018	Sep. 19, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash and Cash Equivalents		$ 4,292,328	$ 3,887,923				$ 8,406,917	$ 17,180,594
Investments Available for Sale		13,410,151					24,648,459
Working Capital Net		19,400,000
Accumulated Deficit		(263,012,321)					$ (240,262,376)
Net cash used in operating activities		$ (14,621,900)	(16,302,524)
Proceeds from the Issuance of Common Shares			$ 116,105
Common Shares, shares issued		51,769,294					51,768,424
Issue Price of Unit						$ 4.22
Securities Purchase Agreement \| Purchaser \| Subsequent event
Proceeds from the Issuance of Common Shares	$ 22,000,000
Common Shares, shares issued	0				5,541,562
Issue Price of Unit					$ 3.97
Number of additional shares available				2,770,781
Warrants exercise price (in dollars per share)					$ 4.96