"Rockwell tests product that may take it beyond chemicals."
When Robert Chioini started Rockwell Medical Technologies Inc. in 1995, the medical equipment he packaged and sold seemed out of place in a corner of a Ferndale office that was part of his father's 50-year-old commercial cleaning business.
Selling nearly $1 million worth of dialysis kits that first year left him feeling as if he'd hit the big time. Happy just to be working for himself, he said, achieving revenue of more than $20 million seemed unfathomable.
Not anymore.
Ten years later, Chioini expects Wixom-based Rockwell (Nasdaq: RMTI) to be Southeast Michigan's next pharmaceutical company and post annual revenue of more than $50 million within the next two years.
If Rockwell receives FDA approval for phase III testing of a proprietary chemical used in dialysis treatment, it will give the company a foothold in a $300 million market. Testing is expected to begin before year's end.
The company reported Nov. 8 that revenues were up 61 percent for the first nine months of the year, increasing from about $13.2 million last year to $21.2 million for the same period this year. But Chioini isn't satisfied with what Rockwell has done.
"If you say, 'OK, you started here and now you're here,' I guess that looks pretty good," Chioini said. "But honestly, there's so much going on in the industry right now that I don't really feel that we're over the hump. I haven't really had a moment to sit back and say, 'Hey, this is great. We made it.' I don't think we've made it yet."
Rockwell sells chemicals used in dialysis treatment, including powdered and liquid acid concentrate and bicarbonate products. The chemicals are sold under the brand names Dri-Sate, Renal Pure and SteriLyte. The purpose of each is to clean the blood and restore nutrients such as potassium. Patients need three treatments a day or they could die.
"That's the beauty of what Rockwell sells," said Ronald Aubrey, an investment manager in Chicago. "Patients have to have their treatments or they pass."
Chioini, 41, started the company in 1995 after working in the industry for a few years after graduating from Michigan State University. The company moved out of the small Ferndale office a year after he started it, and Rockwell went public in 1998.
This year has been Rockwell's most significant after years of struggling to gain traction in the market and attention from Wall Street.
For the third quarter ending Sept. 30, Rockwell reported net income of $156,177 or 2 cents a share on revenue of about $7.8 million. That compares with net income of about $65,000 or 1 cent a share on revenue of about $4.5 million for the same year-ago period.
For the first nine months of the year, Rockwell reported net income of about $351,000 or 4 cents a share on revenue of about $21.2 million. That compares with net income of about $200,000 or 2 cents a share on revenue of about $13.2 million.
The stock price has risen from 67 cents a share Oct. 31, 2002, to a 52-week high of $5.09 on Nov. 3.
Rockwell opened its second manufacturing plant in Grapevine, Texas, in 2001. A third plant opened in Hodges, S.C., in March to serve the southeastern U.S. The company maintains its headquarters and another manufacturing plant in Wixom.
Rockwell was named to the Nasdaq Health Care Index and landed a new distributorship deal in the northeastern U.S. in August.
In June, Chioini was named Ernst & Young Entrepreneur of the Year in the emerging companies category for the Central Great Lakes region.
Rockwell could raise as much as $13.8 million under terms of a warrant exchange offer approved by the U.S. Securities and Exchange Commission in October.
Much of the money will be used to fund Rockwell's phase III FDA trials of iron-dialysate. If approved, Rockwell would have the only dialysis product that incorporates iron into treatment, helping patients avoid taking pills or receiving injections. The benefits, Chioini said, are that patients have a more steady level of iron in their systems.
"We would truly become a pharma company then," he said.
The country of Venezuela, which ordered $6.5 million worth of Rockwell products in April, is expected to order at least double that soon, Chioini said.
One need not go to Venezuela to find happy customers, however.
"They have quality products and bend over backward when it comes to customer service," said Gloria LaFond, supply support coordinator at Bingham Farms-based Greenfield Health Systems. "Just today I received some product that shipped from a third party, and it was all beat to heck. You wouldn't get that from Rockwell."
Chioini said that's just one way Rockwell tries to set itself apart from competition and one reason the company is growing.
Rockwell handles transportation of its product from the point of manufacturing to the dialysis clinics and hospitals. The company has about 30 trucks.
Rockwell drivers help customers unload and set up products, such as pumping liquid acid concentrate from the 55-gallon drums into holding tanks. To offset transportation costs, empty Rockwell trucks are used as common carriers on their way back to Rockwell manufacturing plants.
There are other reasons for Rockwell's growth.
An estimated 350,000 patients need dialysis in the U.S., the number of people needing treatment has increased 6 percent annually during the past decade and the market is valued at about $165 million.
Market opportunity grows, too, as the number of competitors and customers continues to consolidate, giving Rockwell a chance to work with just a few customers that would likely place larger orders, Chioini said.
Chioini owns 18 percent of the company, according to a proxy report filed with the U.S. Securities and Exchange Commission in April. Other large investors include Perkins Capital Management, UBS Warburg L.L.C. and the California Public Employees' Retirement System.
"They're a money manager's dream," Aubrey said. "They are experiencing organic growth through their recurring revenue, and their iron product is the pot of gold at the end of the rainbow."