Under the terms of the agreement, Baxter will become the exclusive distributor of Rockwell’s hemodialysis concentrate and ancillary products in the U.S. and selected foreign countries for an initial term of 10 years.
Baxter can extend the agreement for two additional 5-year terms upon meeting certain sales targets, coupled with a $7.5 million payment related to the first extension. Baxter will purchase products from Rockwell at a pre-determined gross margin-based price per unit and is required to meet minimum annual purchase levels in order to retain their exclusive rights.
Baxter will leverage Rockwell’s unique distribution operations in order to provide specialized customer and delivery service for concentrates, covering Rockwell’s costs for these services. Rockwell will retain sales, marketing and distribution rights for its hemodialysis concentrate products in certain foreign countries in which it has an established commercial presence.
In consideration for the exclusive commercialization rights, Baxter will pay Rockwell $20 million in cash. Baxter will also purchase $15 million of Rockwell common stock.
The investment in Rockwell shares is being made at a price per share equal to the average closing price of RMTI shares over the last 12 months (or $11.39 per share). Rockwell is eligible for milestone payments totaling $10 million related to the expansion of its manufacturing capabilities to serve customers across the U.S.
"This long-term, strategic supply and distribution agreement enables Rockwell to expand and accelerate our hemodialysis concentrate business, while we continue to strategically build our drug pharma business in the U.S. and globally," stated Robert L. Chioini, Founder, Chairman and CEO of Rockwell.
"We are excited to be partnering with Baxter, a global market leader who has a proven track record in the field of dialysis and renal products. This agreement benefits dialysis patients and service providers by expanding access to our market leading products in new territories, while reducing future risk."
Jill Schaaf, Corporate Vice President and President of Baxter’s Renal business, added, "Baxter remains committed to addressing the needs of patients and healthcare providers with a comprehensive range of therapeutic options across home, in-center and hospital settings. This partnership enhances Baxter’s product portfolio with the addition of Rockwell’s high-quality hemodialysis concentrate products."