MONMOUTH JUNCTION, N.J.,
May 8, 2017 /PRNewswire/
-- CytoSorbents Corporation (NASDAQ: CTSO), a critical care
immunotherapy leader commercializing its flagship CytoSorb® blood
filter to prevent or treat deadly inflammation and organ failure in
critically-ill and cardiac surgery patients around the world,
reports financial and operational results for the quarter ending
March 31, 2017.
First Quarter 2017 Financial Highlights:
- Total Q1 2017 revenues increased 72% to $3.1 million, which includes both product sales
and grant income, from $1.8 million
in Q1 2016
- Q1 2017 product sales were $2.6
million, an increase of $1.0
million, or 63%, compared to $1.6
million in Q1 2016, driven by record unit sales
- Product gross margins for Q1 2017 increased to 68%, compared to
62% for Q1 2016
- Trailing twelve month product sales at the end of Q1 2017 were
$9.2 million, compared to
$4.9 million a year ago
- In April 2017, the Company raised
$11.5M in an equity offering led by
Cowen & Company, netting $10.3M
after fees, increasing cash to $13.5M. Another $5M
in term loan debt is available to further extend our operating
runway
First Quarter 2017 Operational Highlights:
- More than 23,000 CytoSorb treatments are have been performed
worldwide in critical care illnesses and cardiac surgery
- The REFRESH I trial abstract was selected by the American
Association for Thoracic Surgery for podium presentation where
positive results demonstrating the safe and significant reduction
of toxic inflammatory mediators by CytoSorb during complex open
heart surgery were presented
- Entered into a partnership with Dr. Reddy's Laboratories, a
leading international pharmaceuticals firm, for expansion to
South Africa. Dr Reddy's is our
fourth major strategic partner
- Expanded our partnership with Fresenius Medical Care to include
a co-marketing agreement for CytoSorb across all current
territories
- Welcomed Dr. Carl June, cancer immunotherapy pioneer, to the
scientific advisory board to help guide new applications of
CytoSorb in the cancer field, including the treatment of cytokine
release syndrome in cancer immunotherapy
- Awarded a $1M Phase II SBIR contract for fungal toxin blood
purification
- Strengthened our intellectual property portfolio with the
issuance of a new composition of matter patent in the U.S.,
Japan, China, Russia, and Australia
- Hosted a full-capacity, successful 4th International
CytoSorb Users' Meeting in Brussels,
Belgium bringing together more than 120 users from 22
countries
- Launched VetResQ for the U.S. veterinary market
Dr. Phillip Chan, Chief Executive
Officer of CytoSorbents stated, "After a strong 2016 finish, we
began 2017 with continued solid year-over-year growth and healthy
68% product gross margins, while adding new catalysts that are
expected to accelerate sales through the remainder of 2017 and
beyond. Our trailing 12 month revenue is now $9.2 million, up from $8.2
million at the end of 2016. We continue to target
operating profitability before the end of 2018, based upon
increased visibility and key factors outlined in our recent annual
shareholder letter. These include 1) Continued direct and
distributor sales momentum of CytoSorb in key international markets
2) Significantly enhanced reimbursement in our largest market of
Germany and reimbursement progress
in other major markets 3) The ramp of our co-marketing agreement
with Fresenius Medical Care (FMC) 4) Continued progress by our
strategic partners, including FMC, Terumo Cardiovascular, Biocon,
and Dr. Reddy's in their exclusive sales territories, and 5) New
clinical data driving the use of CytoSorb in different
applications."
"In particular, we are pleased that many hospitals in
Germany, following first quarter
negotiations of their 2017 operating budgets with the government,
have reported solid increases in reimbursement for CytoSorb under
the new dedicated reimbursement code that includes the full cost of
the device as well as the procedure. Our sales force and
customers in Germany have been
eagerly awaiting the finalization of these rates, as these data are
very important to purchasing decisions. We expect many more
hospitals to post similar reimbursement rates soon."
"Meanwhile, we continue numerous initiatives throughout our
business that are expected to help us meet the growing demand for
CytoSorb. These include our recently announced financing that
gives us the capital for commercial expansion and to fund our
clinical strategy; our ongoing buildout of a new manufacturing
facility at less than 20% of our previously budgeted cost by
remaining on-site and leveraging our existing manufacturing
infrastructure; strengthening our U.S. clinical team with the
planned start of our REFRESH 2 trial later this year, pending FDA
approval; and the pending launch of our new therapeutic
extracorporeal membrane oxygenation (ECMO) kit that is designed to
accelerate this field beyond the 1,000+ treatments already
performed."
"Please join us on our previously announced earnings call today
at 4:45PM EST where we will cover our
progress. We will also respond to questions from the audience
during our live Q&A session. The investor presentation
and a written transcript of the conference call will be available
within a week of the webcast."
Conference Call Details:
Date: Monday, May 8, 2017
Time: 4:45 PM Eastern
Participant Dial-In: 1-719-325-4929
Live Presentation Webcast:
http://public.viavid.com/index.php?id=124222
It is recommended that participants dial in approximately 10
minutes prior to the start of the call. There will also be a
simultaneous live webcast of the conference call that can be
accessed through the following audio feed link:
http://public.viavid.com/index.php?id=124222
An archived recording of the conference call will be available
within a week under the Investor Relations section of the Company's
website at
http://www.cytosorbents.com/investor-relations/financial-results
Results of Operations
Comparison for the three months ended March 31, 2017 and 2016:
Revenues:
Revenue from product sales was approximately $2,596,000 in the three months ended March 31, 2017, as compared to approximately
$1,597,000 in the three months ended
March 31, 2016, an increase of
approximately $999,000, or 63%. This
increase was largely driven by an increase in direct sales from
both new customers and repeat orders from existing customers, along
with an increase in distributor sales.
Grant income was approximately $517,000 for the three months ended March 31, 2017 as compared to approximately
$213,000 for the three months ended
March 31, 2016, an increase of
approximately $304,000. This
increase was a result of revenue recognized from new grants and
billable milestones achieved on existing grants.
As a result of the increases in both product sales and grant
income, for the three months ended March 31,
2017, we generated total revenue of approximately
$3,114,000, as compared to revenues
of approximately $1,810,000, for the
three months ended March 31, 2016, an
increase of approximately $1,304,000
or 72%.
Cost of Revenues:
For the three months ended March 31,
2017 and 2016, cost of revenue was approximately
$1,254,000 and $819,000, respectively, an increase of
approximately $435,000. Product cost
of revenues increased approximately $228,000 during the three months ended
March 31, 2017 as compared to the
three months ended March 31, 2016 due
to increased sales. Product gross margins were approximately
68% for the three months ended March 31,
2017, as compared to approximately 62% for the three months
ended March 31, 2016.
This increase in gross margin was due to a favorable
mix of sales prices.
Research and Development Expenses:
For the three months ended March 31,
2017, research and development expenses were approximately
$470,000 as compared to research and
development expenses of approximately $856,000 for the three months ended March 31, 2016. The decrease of
approximately $386,000 was due to a
decrease in costs related to our various clinical studies and
trials of approximately $208,000, a
decrease in salaries related to non-clinical research and
development activities of approximately $26,000, and an increase in direct labor and
other costs being deployed toward grant-funded activities of
approximately $205,000, which had the
effect of decreasing the amount of our non-reimbursable research
and development costs. These decreases were offset by an
increase in our non-clinical research and development activities of
approximately $53,000.
Legal, Financial and Other Consulting Expense:
Legal, financial and other consulting expenses were
approximately $280,000 for the three
months ended March 31, 2017, as
compared to approximately $255,000
for the three months ended March 31,
2016. The increase of approximately $25,000 was due to an increase in employment
agency fees of approximately $31,000
related to the recruitment of senior level personnel and an
increase in legal fees of approximately $22,000 related to certain corporate
initiatives. These increases were offset by decreases in
auditing and other consulting fees of approximately $28,000 due to fees incurred related to the audit
of our internal controls as required by The Sarbanes-Oxley Act of
2002 in 2016 that did not recur.
Selling, General and Administrative Expense:
Selling, general and administrative expenses were approximately
$2,667,000 for the three months ended
March 31, 2017, as compared to
approximately $1,970,000 for the
three months ending March 31,
2016. The increase of $697,000
was due to increase in salaries, commissions and related costs of
approximately $320,000 due to
headcount additions and personnel related costs, an increase in
royalty expenses of approximately $94,000 due to the increase in product sales,
additional sales and marketing costs, which include advertising and
conferences of approximately $69,000,
an increase in travel and entertainment and other costs of
approximately $56,000, an increase in
stock-based compensation of approximately $89,000 related to restricted stock units awarded
to the Company's executive staff during the year ended December 31, 2016, an increase in rent expense of
approximately $17,000 related to the
new expanded office facility in Germany, an increase in office supplies and
related expenses of approximately $15,000 and other general and administrative cost
increases of approximately $37,000.
Interest Income (Expense):
For the three ended March 31,
2017, interest expense was approximately $120,000, as compared to interest income of
approximately $4,000 for the three
ended March 31, 2016. This increase
in interest expense of approximately $124,000 is directly related to interest expense
incurred and amortization of loan acquisition costs related to the
Company's financing facility with Bridge Bank on which $5,000,000 was drawn on June 30, 2016.
Gain (Loss) on Foreign Currency Transactions:
For the three months ended March 31,
2017, the gain on foreign currency transactions was
approximately $153,000 as compared to
approximately $232,000 for the three
months ended March 31, 2016. The 2017
first quarter gain is directly related to the increase in the
exchange rate of the Euro at March 31,
2017 as compared to December
31, 2016. The exchange rate of the Euro to the U.S.
dollar was $1.07 per Euro at
March 31, 2017 as compared to
$1.05 per Euro at December 31, 2016.
Change in Warrant Liability:
We recognize warrants as liabilities at their fair value on the
date of the grant because of price adjustment provisions in the
warrants, then measure the fair value of the warrants on each
reporting date, and record a change to the warrant liability as
appropriate. The change in warrant liability resulted in other
income of approximately $147,000 for
the three months ended March 31, 2017
as compared to approximately $18,000
for the three months ended March 31,
2016. The change in warrant liability was a result of the
change in the fair value of the warrant liability from December 31, 2016 to March
31, 2017 and from December 31,
2015 to March 31,
2016. See Note 4 to the consolidated financial
statements for details related to the calculation of the fair value
of the warrant liability.
Liquidity and Capital Resources:
Since inception, our operations have been primarily financed
through the private placement of debt and equity securities. At
March 31, 2017, we had current assets
of approximately $6,281,000 including
cash on hand of approximately $3,240,000 and current liabilities of
approximately $6,183,000.
On June 30, 2016, the Company and
its wholly-owned subsidiary, CytoSorbents Medical, Inc., entered
into a Loan and Security Agreement (the "Loan and Security
Agreement") with Bridge Bank, a division of Western Alliance Bank,
(the "Bank"), pursuant to which the Bank agreed to loan up to an
aggregate of $10 million to the
Company, to be disbursed in two equal tranches of $5 million. We received the proceeds from the
first tranche on June 30,
2016.
In addition, on April 5, 2017, the
Company closed on the sale of an aggregate of 2,222,222 shares of
Common Stock pursuant to the Company's existing shelf registration
statement (File No. 333-205806) on Form S-3. The Company received
gross proceeds of approximately $10
million, based on a public offering price of $4.50 per share. On April
11, 2017, the Company closed the sale of an additional
333,333 shares of the Company's Common Stock, pursuant to the
underwriters' full exercise of an over-allotment option. The
Company received gross proceeds of approximately $1.5 million as a result of the exercise of the
option. As a result, the Company received total gross proceeds of
$11.5 million, and, after deducting
the underwriting discounts and commissions and estimated expenses
related to the offering, the Company received total net proceeds of
approximately $10.3 million.
2017 Second Quarter Revenue Guidance:
CytoSorbents has not historically given financial guidance on
quarterly results until the quarter has been completed. However, we
continue to expect our second quarter 2017 product sales to exceed
sales reported in the second quarter of 2016.
For additional information please see the Company's Quarterly
Report on Form 10-Q for the quarter ending March 31, 2017 filed on May 8, 2017 on http://www.sec.gov.
About CytoSorbents Corporation
(NASDAQ: CTSO)
CytoSorbents Corporation is a leader in critical care
immunotherapy, specializing in blood purification. Its flagship
product, CytoSorb® is approved in the European Union with
distribution in 43 countries around the world, as a safe and
effective extracorporeal cytokine adsorber, designed to reduce the
"cytokine storm" or "cytokine release syndrome" that could
otherwise cause massive inflammation, organ failure and death in
common critical illnesses such as sepsis, burn injury, trauma, lung
injury and pancreatitis, as well as in cancer immunotherapy. These
are conditions where the risk of death is extremely high, yet no
effective treatments exist. CytoSorb® is also being used during and
after cardiac surgery to remove inflammatory mediators, such as
cytokines and free hemoglobin, which can lead to post-operative
complications, including multiple organ failure. CytoSorbents has
completed its REFRESH (REduction in FREe Hemoglobin) 1 trial – a
multi-center, randomized controlled study that has demonstrated the
safety of intra-operative CytoSorb® use in a heart-lung machine
during complex cardiac surgery. In 2017, the company plans to
initiate a pivotal REFRESH 2 trial intended to support U.S. FDA
approval. CytoSorb® has been used safely in more than 23,000
human treatments to date.
CytoSorbents' purification technologies are based on
biocompatible, highly porous polymer beads that can actively remove
toxic substances from blood and other bodily fluids by pore capture
and surface adsorption. Its technologies have received non-dilutive
grant, contract, and other funding in excess of $18
million from DARPA, the U.S. Army, the U.S. Department of
Health and Human Services, the National Institutes of Health (NIH),
National Heart, Lung, and Blood Institute (NHLBI), U.S. Special
Operations Command (SOCOM) and others. The Company has numerous
products under development based upon this unique blood
purification technology, protected by 32 issued U.S. patents and
multiple applications pending, including CytoSorb-XL, HemoDefend™,
VetResQ™, ContrastSorb, DrugSorb, and others. For more
information, please visit the Company's websites at
www.cytosorbents.com and www.cytosorb.com or follow
us on Facebook and Twitter
Forward-Looking Statements
This press release includes forward-looking statements intended
to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to,
statements about our plans, objectives, representations and
contentions and are not historical facts and typically are
identified by use of terms such as "may," "should," "could,"
"expect," "plan," "anticipate," "believe," "estimate," "predict,"
"potential," "continue" and similar words, although some
forward-looking statements are expressed differently. You should be
aware that the forward-looking statements in this press release
represent management's current judgment and expectations, but our
actual results, events and performance could differ materially from
those in the forward-looking statements. Factors which could cause
or contribute to such differences include, but are not limited to,
the risks discussed in our Annual Report on Form 10-K, filed with
the SEC on March 3, 2017, as updated by the risks reported in
our Quarterly Reports on Form 10-Q, and in the press releases and
other communications to shareholders issued by us from time to time
which attempt to advise interested parties of the risks and factors
which may affect our business. We caution you not to place undue
reliance upon any such forward-looking statements. We undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise, other than as required under the Federal securities
laws.
CYTOSORBENTS
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in
thousands, except per share data)
|
|
|
Three months ended
March 31,
|
|
2017
|
|
2016
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Revenue:
|
|
|
|
|
Sales
|
$
2,596
|
|
$
1,597
|
|
Grant
income
|
518
|
|
213
|
|
Total
revenue
|
3,114
|
|
1,810
|
|
Cost of
revenue
|
1,255
|
|
819
|
|
Gross
profit
|
1,859
|
|
991
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
Research and
development
|
470
|
|
856
|
|
Legal,
financial and other consulting
|
280
|
|
255
|
|
Selling,
general and administrative
|
2,667
|
|
1,970
|
|
Total
operating expenses
|
3,417
|
|
3,081
|
|
|
|
|
|
|
Loss from
operations
|
(1,558)
|
|
(2,090)
|
|
Other income
net
|
180
|
|
254
|
|
Loss before benefit
from income taxes
|
(1,378)
|
|
(1,836)
|
|
Benefit from income
taxes
|
--
|
|
--
|
|
Net loss available to
common shareholders
|
$
(1,378)
|
|
$
(1,836)
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
and diluted earnings per share
|
$
(0.05)
|
|
$
(0.07)
|
|
Basic
and diluted weighted average
|
|
|
|
|
shares
outstanding
|
25,503,757
|
|
25,401,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CYTOSORBENTS
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
(amounts in
thousands)
|
|
|
March 31,
2017
|
|
December 31,
2016
|
|
(Unaudited)
|
|
|
ASSETS:
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
3,240
|
|
5,245
|
Grants and accounts
receivable, net
|
1,732
|
|
1,433
|
Inventories
|
858
|
|
834
|
Prepaid expenses and
other current assets
|
451
|
|
316
|
Total current assets
|
6,281
|
|
7,828
|
|
|
|
|
Property and
equipment, net
|
588
|
|
569
|
Other
assets
|
1,420
|
|
1,297
|
TOTAL ASSETS
|
$
8,289
|
|
$9,694
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY/(DEFICIT):
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
1,660
|
|
$
1,330
|
Accrued expenses and
other current liabilities
|
1,608
|
|
2,115
|
Current maturities of
long –term debt, net of debt issuance costs
|
1,250
|
|
833
|
Warrant
liability
|
1,665
|
|
1,812
|
Total current liabilities
|
6,183
|
|
6,090
|
Long-term debt, net
of current maturities
|
3,677
|
|
4,078
|
TOTAL LIABILITIES
|
9,860
|
|
10,168
|
|
|
|
|
Total stockholders'
(deficit)
|
(1,571)
|
|
(474)
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT)
|
$
8,289
|
|
$
9,694
|
|
|
|
|
|
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Cytosorbents
Contact:
Amy Vogel
Investor
Relations
(732)
398-5394
avogel@cytosorbents.com
|
|
|
Public Relations
Contact:
Amy Phillips
Pascale Communications
412-327-9499
amy@pascalecommunications.com
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cytosorbents-reports-first-quarter-2017-financial-results-300453507.html
SOURCE CytoSorbents Corporation