aibioRockwell Medical files to sell up to $25,000,000 of stock at market
Tickers RMTI
Rockwell Medical may sell up to $25,000,000 of stock through Cantor Fitzgerald, which takes a commission of up to 3.0%. At the assumed $4.43 price, the filing says new buyers would face an immediate dilution of $3.33 a share.
Key facts
- Company
- Rockwell Medical, Inc. (NASDAQ: RMTI)
- News type
- Financings
- Primary source
- Rockwell Medical, Inc. 424B5 (2024-11-13)
Rockwell Medical, Inc. (Nasdaq: RMTI) filed a prospectus supplement dated November 13, 2024 for an at-the-market offering of its common stock with an aggregate gross sales price of up to $25,000,000. The supplement sits under a prospectus dated October 21, 2024, and adds to a Controlled Equity Offering Sales Agreement that Rockwell signed with Cantor Fitzgerald & Co. on April 8, 2022. Cantor Fitzgerald would act as sales agent and sell shares from time to time at prevailing market prices.
The offering guarantees Rockwell nothing. Cantor Fitzgerald is not required to sell any specific number or dollar amount of securities. Rockwell can tell the agent not to sell below a price it sets, and either side can suspend the offering. The supplement says there is no minimum offering amount, so the total sold and the proceeds are not determinable at this time. It also says no escrow or trust arrangement will hold the money.
Commissions and use of proceeds
Cantor Fitzgerald is entitled to a commission of up to 3.0% of the gross sales price of each share it sells. Rockwell also agreed to reimburse the agent for specified expenses, including its legal counsel's fees, and to indemnify it against certain civil liabilities under the Securities Act. The supplement says Cantor Fitzgerald is deemed an underwriter under that Act.
The filing offers one illustration. If 5,643,340 shares were sold at $4.43, the last reported sale price on the Nasdaq Capital Market on November 8, 2024, the aggregate proceeds to Rockwell would be $24.10 million after commissions and estimated offering expenses. That is an assumption, not a sale.
Rockwell intends to use the net proceeds for general corporate purposes. It says it cannot yet specify all the uses and will keep broad discretion over the money, which it plans to invest in investment-grade, interest-bearing instruments until it spends it. The supplement does not give Rockwell's cash balance, its cash use or its debt.
Dilution and the share count
Rockwell had 32,318,806 shares outstanding as of September 30, 2024. The supplement also excludes 1,874,729 shares issuable on options at a weighted-average exercise price of $4.10, 3,984,484 shares issuable on warrants at a weighted-average exercise price of $5.11, and 1,391,045 shares issuable on convertible preferred stock. If the assumed 5,643,340 shares were sold, the count would rise to 37,962,146.
Net tangible book value per share was $0.55 as of September 30, 2024. On the assumed sale of $25 million of stock at $4.43, the as adjusted figure would be $1.10 per share, or approximately $41.97 million in total. Existing holders would see an increase of $0.55 per share on that basis, while new investors would take an immediate dilution of $3.33. The supplement warns that options priced below the offering price would add further dilution, and that future equity offerings could dilute holders again.
The business and the advisers
Rockwell makes and distributes hemodialysis products for dialysis providers. The company says it is the largest supplier of liquid bicarbonate concentrates and the second largest supplier of acid and dry bicarbonate concentrates in the United States. Its concentrates are made in Michigan, South Carolina and Texas, in facilities totaling approximately 175,000 square feet, with dry acid mixers made in Iowa and some concentrates made in Minnesota under a contract manufacturing agreement. Rockwell was incorporated in Michigan in 1996, re-domiciled to Delaware in 2019, and is based in Wixom, Michigan.
Gibson, Dunn & Crutcher LLP of San Francisco will pass on the validity of the shares for Rockwell. Cooley LLP of New York represents Cantor Fitzgerald. EisnerAmper LLP audited the balance sheet as of December 31, 2023. The supplement names no other underwriter, placement agent, lender or financial advisor.
The sales agreement was filed with Rockwell's annual report on Form 10-K, and the supplement sets no end date for the program. Rockwell says there can be no assurance it will sell any shares under the agreement or fully use it. Whether any of the $25 million arrives depends on whether Cantor Fitzgerald can sell stock at prices Rockwell accepts, and every share sold adds to the count described above.