Ladies and gentlemen, thank you for standing by, and welcome to the Rockwell Medical 2020 Second Quarter Results Call. [Operator Instructions]. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Claudia Styslinger, Investor Relations. Please go ahead.

Welcome to Rockwell Medical's Second Quarter 2020 Earnings Results Call. This is Claudia Styslinger of Argo Partners, the Investor Relations representative for Rockwell Medical. Joining me from Rockwell Medical on today's call are Dr. Russell Ellison, President and Chief Executive Officer; Tim Chole, Vice President of Marketing; and Paul McGarry, Vice President, and Corporate Controller and Principal Accounting Officer; Dr. Marc Hoffman, Chief Medical Officer, who will also be joining us for Q&A is on the line. Before we begin, I wanted to note that certain matters we will discuss may constitute forward-looking statements within the meaning of the federal securities laws, including, but not limited to, Rockwell Medical's intention to commercialize Triferic Dialysate and Triferic AVNU. Words such as may, might, will, should, believe, expect, anticipate, estimate, continue, could, potential, predict, forecast, project, plan, intend or similar expressions or statements regarding intent, belief or current expectations are forward-looking statements. While Rockwell medical believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release and which are subject to inherent uncertainty. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in Rockwell Medical's SEC filings, many of which are beyond our control and subject to change. Actual results could be materially different. Accordingly, you should not place undue reliance on these forward-looking statements. Rockwell medical expressly disclaims any obligation to update or alter any statements, whether as a result of new information, future events or otherwise, except as required by law. This conference call can be accessed on Rockwell Medical's Investor Relations web page. This call is being recorded on August 10, 2020, for audio rebroadcast and can also be accessed on the same web page. At this time, I would like to turn the conference call over to Rockwell Medical's Chief Executive Officer, Dr. Russell Ellison. Russell?

Thank you, Claudia. Good afternoon, everyone, and thank you for your time today. On today's call, we will address our commitment to the hemodialysis community, particularly in light of the COVID-19 pandemic. The progress on the commercialization of our first approved product, Triferic Dialysate, including updated hospitalization data from our ongoing real-world data retrospective analysis. Progress on our preparation for the launch of our second FDA approved product, Triferic AVNU, leading opportunities for new indications for our FPC platform, other pertinent corporate updates and a review of our financials, and then we'll open it up to Q&A. I've said before, and I'd like to take this opportunity to say again that I'm particularly excited about the potentially transformational attributes of our ferric pyrophosphate citrate, or FPC, technology platform. Triferic is the first commercial product from our FPC platform, unlike any other iron product on the market today. It delivers 100% immediately bioavailable iron to patients unimpeded by inflammation. By virtue of this mechanism of action, I believe our FPC platform has the potential to deliver meaningful clinical and pharmacoeconomic benefits for patients and health care providers, thereby transforming the way iron deficiency is managed across the globe in multiple therapeutic indications. My charge as CEO is to actualize the potential of our FPC technology for patients and for shareholder. And I see opportunity in 2 areas. The first is the ability to transform the way anemia is managed for hemodialysis patients. The second is through the development of the ferric pyrophosphate citrate molecule or FPC to treat other medical conditions with unmet clinical needs. To help accelerate the adoption of Triferic in the hemodialysis setting, we continue to build and leverage the medical capabilities that Rockwell Medical is establishing because decision-making in dialysis is underpinned by medical, scientific and pharmacoeconomic…

Thanks, Russell. In the second quarter, we continued to make important progress in the commercialization of Triferic Dialysate, despite the challenges of the COVID-19 pandemic. So as Russell mentioned, we had nearly 2,800 contracted patients on therapy at the end of June, representing more than 400,000 annualized treatments. The increase was attributable to the signing of commercial contracts with clinics that had started their 90-day evaluation programs in the first quarter. We continued to see a high success rate with our no-cost evaluation program approach as the majority of participants see positive results with Triferic in their own patients and subsequently transition to paying customers. In the second quarter, we signed 12 new contracts with dialysis clinics to adopt Triferic Dialysate. An additional 8 clinics affiliated with an MDO were trained and approved for adoption as of June 30, 2020. And substantially all clinics contracted within Q2 converted in June. The overall growth in Triferic sales was lower-than-expected in the quarter, primarily due to the restrictions dialysis clinics have levied on in person visits from field staff. However, we are pleased with the results our sales and our clinical nurse educator teams have produced by leveraging virtual engagement tactics to complete training programs,and close contracts. Late in the quarter, we saw a relaxing of restrictions in certain U.S. geographies, which has allowed us to reengage with more clinics and get back on track with planned in-person training programs. The 12 new clinics we added in the second quarter took our total number of clinics under contract up to 39. 26 clinics participated in evaluation programs during the quarter a decrease versus the previous period. The decrease was directly due to a number of clinics delaying Triferic evaluations while they focused on managing through the COVID-19 crisis. Evaluation programs have now…

Thanks, Tim. We accessed the United States Renal Disease System, or USRDS, to compare important measures of hospitalization and mortality in the center we analyzed and presented on our last quarterly call. And we compared this with all other dialysis centers during the same time period, which was the first year that clinic use Triferic Dialysate as part of the sample program in 2017. As you can see from the slide in that center, hospitalizations per year declined substantially as did in-patient days, infectious hospitalization, infectious in-patient days and even death, while in all other U.S. dialysis centers taken together, these parameters changed very little during this period. We have continued to add new centers to our real-world data program. And once each site is completed a year of use, we will start the analysis of IV iron use, hemoglobin and EPO use. In addition, we have commenced an analysis of multiple clinics using the USRDS database and expect to have these results towards the end of this year. Now turning to our new indications. As I mentioned earlier in the call, I believe that there is potential for important value creation through the development of the FPC platform for new indications outside of the hemodialysis setting where there are a significant needs to transform the way iron deficiency is managed. In the past few months, we've been evaluating multiple potential opportunities for our FPC platform to treat iron deficiency or anemia in new indications. Based on our analysis of factors such as development considerations, economics and pricing and regimen ergonomics, we have identified 2 leading opportunities. The top priority is FPC for patients receiving drugs or nutrients through an IV at home as we believe that this is an attractive market opportunity and the cost of the clinical program…

Thanks, Russell. Turning now to our second quarter results. A more fulsome description of our results can be accessed in both the press release we issued this afternoon as well as our 10-Q filing for the quarter. And I would encourage investors to read our detailed disclosures for a more complete understanding of our financial results. I'd like to start by highlighting our strong liquidity position as of the end of the second quarter. We ended the quarter with cash, cash equivalents and investments available for sale of $40 million compared to approximately $48.9 million on March 31, 2020. Cash used in operating activities was $16.2 million for the 6 months ended June 30, 2020. The balance sheet was strengthened by the sale of 987,716 shares of our common stock through our at the market equity offering facility for proceeds of $2 million, net of issuance costs. We have approximately $32.6 million remaining under this facility. Turning to the income statement. Net sales for the second quarter of 2020 were $15.9 million, an increase of 7.1% compared to net sales of $14.8 million from the second quarter of 2019. The increase was primarily due to the increased sales in our dialysis concentrates products. Triferic net sales for the second quarter of 2020 were approximately $0.2 million compared to net sales of approximately $0.1 million for the second quarter of 2019. The increase was mainly due to an increase in product sales as our international licensing fees remained constant. Cost of sales for the second quarter of 2020 was $15 million, resulting in a gross profit of $0.9 million compared to cost of sales of $14.1 million and a gross profit of $0.7 million during the second quarter of 2019. Gross profit increased by $0.2 million in the second quarter of…

Thank you, Paul. With that, I would like to open up the call to others to ask questions. Operator?

[Operator Instructions]. And our first question comes from the line of Ram Selvaraju from H.C. Wainwright.

This is Blair Cohen on for Ram. A couple of questions for me. Can you give us a little bit of update on how the early stage commercial efforts are progressing for AVNU? What is the reception -- the reception been like from the initial customer outreach? And how many evaluation programs are you targeting for the third quarter?

Thanks, Ram. Tim, I think, you can best reply to this.

Yes, thank you for the question. So we actually have just started the evaluation programs here in the third quarter for Triferic AVNU. Again, we had to wait until we had ramped up sample inventory enough to support those programs. We'll officially launch them in September. Initial response has been good. Customers that have expressed interest in Triferic in the past were excited to see that this new IV formulation is coming. And so we expect to be some enthusiasm amongst those customers. And early indication is that, that there will be many customers interested in starting evaluations as soon as the product is available. And we are targeting a minimum of 100 sites for the evaluation programs before the end of the year and as a goal for us. Though, we certainly are excited about the product and have had good responses to date.

Okay. Great. And if you could just provide an update on partnership discussions in Europe, Japan and Korea. That's it for me.

Yes, I'll take that. So in Europe, we're engaged in partnership discussions, particularly supported by our real-world data. And the same goes for Korea. And the same also goes for Japan. And in Japan, a key issue is, of course, pricing because of the pricing regime there, but discussions are active and ongoing in those markets.

Our next question comes from the line of Brandon Folkes from Cantor Fitzgerald.

Congratulations on all the progress in the quarter. It's kind of a 2-part question. So can you just elaborate on the drivers of patient growth in the quarter? I found this to be very impressive. So just, were these small, midsize or large facilities? And then was this patient growth driven by new facilities or facilities you had already contracted within the past and actually saw increased usage within those facilities? And then secondly, the second part of my question is just how long does it take from the signed contracts up until sort of a conversion of significant revenue pull-through. Is it as the evaluation program ends, they convert the whole clinic? Or how should we think about that sort of ramp-up to a solid run rate for these clinics after you signed these contracts?

Those are great questions. Tim?

Yes. Thank you for the questions. So to your first question, when clinics finished the evaluation program and transfer over to purchasing customers on contract, they're ready right away to have all patients in the clinic on Triferic Dialysate at one time. So there really isn't a ramp-up period with that product. Because the product is mixed in the central loop and all patients that are on the central loop received the product. So that's a nice feature of Triferic Dialysate is that there isn't a ramp-up once the evaluation is done, the contract is signed and the customer's purchasing. So really, the growth that we've had in patients and sort of our new milestone of 400,000 annualized contracted treatments is due to the new clinics coming on board. And the majority of those that were in the second quarter were clinics that had finished the evaluation period that they had started in the first quarter. So hopefully, that gives you a sense of how that growth occurs. And we expect, again, a high rate of conversion for the evaluation programs that we have ongoing today.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Dr. Ellison for any further remarks.

Well, thank you all very much for participating in this quarterly call. I appreciate your attention and your support, and we look forward to communicating with you again. Thank you so much.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.