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In three short months, Rockwell Medical (RMTI -2.33%) shares have dropped 40%, regained most of those losses, then lost most of the rebound again. The stock is now down around 30% year-to-date. It's not surprising that investors would be wondering what's going to happen next for the beleaguered biopharmaceutical company. Will Rockwell Medical sink or swim? 

That sinking feeling
Rockwell Medical's management has talked up the potential of iron replacement drug Triferic for a long time. Despite doubts by some, the FDA ultimately approved Triferic in January 2015. But then another eight long months ticked by before Rockwell actually launched the drug. 

In November, CEO Rob Chioini stated that the company had signed a supply contract with one of the largest dialysis providers. Was Triferic about to take off? Nope. Rockwell Medical's revenue during the fourth quarter decreased slightly compared to the prior-year period. CFO Thomas Klema admitted that "net sales of Triferic were immaterial for 2015." The supply contract referred to by Chioini turned out to be for some type of pilot program. The large dialysis provider remains anonymous. 

Jonathan Aschoff, an analyst with Bream Capital, expressed pessimism about the prospects for Triferic even before the drug was approved by the FDA. He continues to maintain that Triferic will likely attain very limited commercial success.

Like sharks smelling blood in the water, multiple legal firms have announced investigations into potential misrepresentations by Rockwell Medical to investors. Over 23% of the company's shares available for trading have been sold short. With all of the negativity surrounding Rockwell Medical, it's not surprising if some shareholders have experienced a sinking feeling lately.

Forward strokes
Is everything gloomy for Rockwell? No. There are a few bright spots for the company.

On the Triferic front, Rockwell hopes that a couple of initiatives will pay off. First, the company is working with the Centers for Medicare and Medicaid Services (CMS) to improve the reimbursement picture for Triferic. The drug is currently part of a bundled payment for end-stage renal disease (ESRD). Rockwell's team hopes to convince CMS to allow Triferic to be granted a transitional add-on payment, which should have a positive impact on adoption by dialysis providers.

Second, Rockwell has developed new packaging for Triferic. Currently, the drug is sold as a liquid solution in an ampule. Rockwell now has the capability to ship Triferic as powder in a packet. This benefits customers by reducing storage space requirements, and helps Rockwell by lowering its costs. The company expects to receive FDA approval for the new packaging in April.

Rockwell also has lined up two solid distribution partners. It forged a deal with Baxter International (BAX 1.28%) in late 2014 giving Baxter exclusive rights to distribute Rockwell's hemodialysis concentrate products for 10 years in exchange for an up-front payment of $20 million. The larger company also bought $15 million worth of Rockwell's stock as part of the deal.  

Baxter is a major player in the renal treatment market -- its renal products generated $3.8 billion in sales last year. It's important to note, though, that the deal did not include distribution of Triferic.

The other distribution partnership could have more far-reaching potential. In February, Rockwell announced a deal with Wanbang Biopharmaceutical to distribute Triferic and vitamin D injection Calcitriol in China. An estimated 2 million Chinese patients need dialysis, but only 300,000 are currently receiving it. The dialysis market in China could grow by as much as 20% annually.

This deal was great news for Rockwell because of the tremendous growth potential in China. However, both Calcitriol and Triferic are at least a couple of years away from being made available in China. 

Treading water
Where does all this leave Rockwell Medical? For now, the most likely scenario for the company is treading water.

It's fair to say that many investors have become highly skeptical since the delayed launch of Triferic was followed by dismal initial sales results. To reassure those skeptics, Rockwell will need to be able to point to decent sales results for Triferic.

Maybe the new packaging and a favorable CMS reimbursement decision could help. If Triferic takes off in a major way, Rockwell's stock will swim to success. If not, Triferic might become the renal drug equivalent of the Titanic.