Richmond Brothers Issues Public Letter to Incumbent Directors of Rockwell Medical, Inc.

Disappointed that Rockwell Has Apparently Ignored Resounding Mandate from Significant Majority of Shareholders who Supported Change at 2017 Annual Meeting

Believes Rockwell is Actively Obstructing Mark H. Ravich’s Ability to Exercise Effective Oversight as a Board Member

Calls for Resignation or Removal of Rob Chioini as Chairman and CEO of Rockwell, as Richmond Believes Chioini Lacks Skills and Ability to Drive Value Creation

Intends to Pursue Any Means Possible to Ensure Rockwell Heeds Shareholder Voices, including Nominating Highly-Qualified Directors to Replace Chioini and Patrick Bagley on Board at 2018 Annual Meeting

JACKSON, Mich.--()--Richmond Brothers, Inc., a Michigan-based SEC registered investment advisor and wealth management firm that is the largest beneficial owner of Rockwell Medical, Inc. (NASDAQ:RMTI) (“Rockwell” or the “Company”), which together with its affiliates beneficially owns nearly 5.6 million shares, or 10.8% of the Company’s outstanding common stock, today issued a public letter to the incumbent directors of Rockwell.

The full text of the letter follows:

August 29, 2017

Dear Incumbent Directors,

Richmond Brothers, Inc. is the largest beneficial owner of Rockwell Medical, Inc. Together with our affiliates, we currently hold nearly 5.6 million shares, or 10.8% of the Company’s outstanding common stock. As you know, we ran a successful contest for the election of Mark H. Ravich to the only open seat on Rockwell’s Board at the 2017 Annual Meeting as an independent representative of the best interests of all shareholders.

Mark H. Ravich resoundingly defeated the Board’s nominee, David Domzalski, in this contest. In fact, Mark was elected to the Rockwell Board by a significant majority, with more than half of Rockwell’s outstanding shares – and 66% of all shares voted – cast in favor of Mark’s election. Holders of more than 26 million Rockwell shares voted for Mark, more than double the number of votes that Domzalski received. We believe this is a clear indication of the high level of discontent that shareholders harbor for Rockwell’s underperformance and poor corporate governance.

Despite this clear and indisputable victory, Rockwell’s incumbent Board members and management team have made almost no effort to reach out to shareholders and assure them that their voices have been heard with regard to monetizing Rockwell’s promising drug pipeline and improving its corporate governance. Rockwell issued no statement following the vote to indicate that it intends to heed the expression of discontent that we believe was obvious from the 2017 Annual Meeting vote results (including the defeat of the Company’s executive compensation plan and say-on-pay proposal) nor did Rockwell reach out to us privately – rather we were the ones that pushed for a dialogue after the meeting. And, inexplicably, Rockwell’s website still does not list Mark H. Ravich as a Board member, despite the fact that he was elected nearly three months ago.

Furthermore, Rockwell has continued its lawsuit against us and certain other shareholders, including Mr. Ravich, for which we believe there is no purpose other than to attempt to coerce support for the incumbents. We believe the continued pursuit of the lawsuit constitutes a waste of shareholder capital and we openly question why the incumbents are allowing this to persist.

The only thing emanating from the Company that could be read in even a remotely positive light was Rob Chioini’s statement on Rockwell’s recent Q2 2017 earnings call wherein he said “We welcome Mark to the board and know he will be a key contributor of overseeing our strategy and assisting the company to drive shareholder value.”1 This statement clearly rings false, however, considering recent events that we have become aware of.

On Thursday, August 24, 2017, Mark H. Ravich filed a countersuit against Rockwell indicating that Rockwell’s management has actively obstructed Mark’s ability to serve as a Board member of the Company. We have reviewed this countersuit, which is publicly available. Troublingly, Mark’s counterclaims allege the following:

  • Rockwell has engaged in “deliberate efforts to undermine Mr. Ravich’s effectiveness as a Director by excluding him from meetings, denying him access to Rockwell’s books and records and critical personnel, and engaging in improper transactions for the sole purpose of acquiring shareholder votes to thwart the wishes of a majority of Rockwell shareholders.”2
  • “In spite of the clear shareholder mandate in his favor, Rockwell has repeatedly undermined Mr. Ravich’s participation in Board affairs. The Company has done so while falsely advising shareholders that it was cooperating with Mr. Ravich.”
  • The Company has failed to respond in good faith to Mark’s repeated efforts to obtain and review important Company materials, noting that “To date, nearly every request by Mr. Ravich for documents, information, or access to Company personnel has been met with silence.”
  • The Company has acted to exclude Mark from a Board meeting, with various other Board members rescheduling a previously scheduled Board meeting and failing to inform Mark.
  • One day after the Board meeting from which Mark was excluded, the Company filed a Form 8-K announcing an amended investment agreement with Baxter Healthcare Corporation (a holder of more than 2.5% of Rockwell’s shares) which included a “highly unusual voting provision under which Baxter is required to vote its block as directed by the Board.”

Based on the allegations contained in Mark’s counterclaims about the Company’s behavior, we can only believe that Rockwell does not intend to change its ways and will continue to engage in its typically egregious disregard for shareholders’ rights.

Given the Company’s inertia and continued actions to trample on the rights of shareholders, we intend to take action.

Specifically, we call for Rob Chioini to resign from his position as Chairman and CEO, and, if that does not happen, we demand that the Board remove him.

  • We strongly believe that Chioini has shown his inability to make progress on any of the paths to value creation that are available to Rockwell, let alone acting on multiple fronts at once.
  • We believe that all of Rockwell’s paths to value creation have remained stagnant. These include launching Triferic, launching Calcitriol, pursuing a pipeline for additional uses, and pursuing business development deals.
  • Instead, the Company has no meaningful sales for its two drugs, has a slow pipeline without major studies, and has only one business development deal in more than two and a half years.
  • Additionally, there are 30 countries that accept FDA data and approval for selling drugs, yet Rockwell is not selling in any of them.
  • Rockwell’s shareholders have waited long enough for Chioini to successfully bring the Company’s promising iron replacement drug Triferic to full commercial launch, as well as bringing its Vitamin D drug, Calcitriol, to market in a meaningful way.
  • Rockwell needs a leader with proven expertise at a global level in the biopharmaceutical space.
  • Furthermore, if Rockwell is fortunate enough to receive transitional add on pricing for Triferic shareholders should not be fooled into thinking that getting lucky is the same as having the skills needed to drive value creation at Rockwell.
    • For example, while under the Trump administration we believe that Triferic has a better chance of being granted transitional add on reimbursement pricing – as opposed to under the Obama administration or a hypothetical Clinton administration – Chioini made the decision to pursue this pricing nearly two years ago and then failed.
    • If Hillary Clinton had won the presidency, many of the same regulators would likely have remained in place.
    • The appointment of Dr. Tom Price as head of the Department of Health and Human Services is a positive development for Triferic’s chances of being granted outside the bundle pricing, as Dr. Price has been a proponent of competition, innovation and patient choice, and has begun dismantling the bundle in some areas of the healthcare system.
  • In another positive sign, recently The Centers for Medicare & Medicaid Services of the Department of Health and Human Services (CMS) indicated that it would seek to cancel bundled payments for heart attacks and bypass surgeries and eliminate this bundling for hip and femur fracture treatment. We believe this could signal further willingness to allow outside the bundle pricing for drugs in other areas.

We also once again call for Rockwell to pursue the monetization of Triferic and Calcitriol through whatever means possible. The science has shown that Triferic works, and feedback from clinics that are using samples of the drug has been very positive with most of the patients lucky enough to receive Triferic having better outcomes. Rockwell owes it to all dialysis patients to bring this drug to market as soon as possible, and it owes it to shareholders to drive greater value for their investment.

We further call on the Board to pursue discussions with potential strategic partners in the biopharmaceutical space, as well as potential private equity partners. We believe that the Board should be pursuing all possible paths to value creation. To the extent there is strategic interest in Rockwell, we encourage potential strategic acquirers to contact us.

We sincerely hope that you, the incumbent directors of the Rockwell Board, take seriously your fiduciary duty to ALL of the Company’s shareholders and act to (1) permit Mark H. Ravich to fully exercise his duties as a Board member, (2) pursue all possible means of creating value for shareholders and (3) stop squandering shareholder capital and what we believe to be a frivolous lawsuit.

If the current woeful situation does not improve, we are fully prepared to pursue the options available to us, including nominating directors to replace Rob Chioini and Patrick Bagley as directors when their Board seats come open for election at the 2018 Annual Meeting.


David Richmond

President, Richmond Brothers, Inc.

For more information, and to see other communications and filings from Richmond Brothers, visit this link:

About Richmond Brothers, Inc.

Richmond Brothers, Inc. is an SEC registered investment advisor and wealth management firm founded in 1994.

1 8/9/17 Rockwell Medical, Inc. Q2 2017 earnings call transcript
2 United States District Court for the Eastern District of Michigan, Case No. 17-cv-10757


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