CytoSorbents Corporation (NASDAQ: CTSO), a leader in the treatment
of life-threatening conditions in the intensive care unit and
cardiac surgery using blood purification via its proprietary
polymer adsorption technology, today reported financial and
operating results for the quarter and year ended December 31, 2022
and provides its 2023 outlook.
Full Year 2022 Financial
Results
- 2022 Total Revenue, which includes
Product Sales and Grant Income, was $34.7 million
versus $43.2 million in 2021, a decrease of 20%
- 2022 Product sales were $29.4
million versus $40.1 million in 2021, which included $0.3
million and $6.3 million in COVID-19 related Product Sales,
respectively
- 2022 Core (non-COVID-19) Product
Sales were approximately $29.1 million versus $33.8 million in
2021. This reflects an 11% drop in the average Euro to dollar
exchange rate from 1.18 in 2021 to 1.05 in 2022. On a constant
currency basis, Core Product Sales in 2022 would have been
approximately $32.2 million versus $33.8 million in 2021, a
decrease of 4.6%
- The decrease in the average Euro to
US dollar exchange rate negatively impacted 2022 product sales by
approximately $3.1 million
- 2022 Product Gross Margin was
approximately 70%, compared to 80% in 2021 due to manufacturing
inefficiencies related to the relocation of our manufacturing
operations to our new facility
- We believe the Company remains
well-capitalized with cash and cash equivalents of $23.8
million (which includes $1.7 million in restricted cash)
at December 31, 2022
Fourth Quarter 2022 Financial
Results
- Q4 2022 Total Revenue, which
includes Product Sales and Grant Income, was $9.4 million versus
$10.8 million in Q4 2021, a decrease of 13%
- Q4 2022 Product Sales were $7.6
million versus $9.7 million in Q4 2021. COVID-19 related sales were
negligible in Q4 2022 and an estimated $1.7 million in Q4 2021.
- Core Product Sales in Q4 2022 were
$7.6 million compared to $8.0 million in Q4 2021. On a constant
currency basis, core Q4 2022 Product Sales would have been $8.5
million, a 6% increase over $8.0 million in Q4 2021
- The decrease in the average Euro to
US dollar exchange rate lowed Q4 2022 product sales by
approximately $0.9 million.
- Q4 2022 product sales of $7.6
million rose 18% sequentially from $6.5 million in Q3 2022
- Q4 2022 product gross margin was
approximately 75%, compared to 78% in Q4 2021 due to manufacturing
inefficiencies related to the relocation of our manufacturing
operations to our new facility, and other factors
Recent Operating Highlights
- Cumulative CytoSorb treatments
delivered exceeded 195,000 at the end of 2022, up 20% from the end
of 2021, and marking the 10th year of CytoSorb
commercialization
- The pivotal STAR-T randomized
controlled trial achieved its first milestone of 40 patients
enrolled, out of a target 120 patients, triggering a pre-specified
Data and Safety Monitoring Board (DSMB) review
- The STAR-T independent DSMB
conducted a review of unblinded data from the first 40 patients in
the study and recommended the trial continue as planned without any
modifications
- Announced that Health Canada has
approved the STAR-T protocol, allowing inclusion of Canadian sites
into the study
- Welcomed Dr. Richard Whitlock, MD,
PhD, Professor of Surgery at McMaster University Medical School,
and Canada Research Chair in Cardiovascular Surgery for the
Population Health Research Institute, as the Canada Principal
Investigator of the STAR-T trial, bringing an outstanding track
record of clinical trial execution and a superb network of Canadian
clinical trial centers specializing in cardiac surgery studies to
the program
- Hemoadsorption was included into
the European “Guidelines for the management of severe perioperative
bleeding” for the first time, based on published clinical data
using our hemoadsorption technology to remove antithrombotic agents
and reduce bleeding risk during cardiothoracic surgery
- Appointed Dr. Irina Kulinets as
Senior Vice President of Global Regulatory and newest member of the
senior management team. She will lead the DrugSorb-ATR regulatory
submission for marketing approval to the U.S. FDA and Health
Canada. She brings more than 30 years of experience in regulatory
affairs and clinical research, where she has had an extensive track
record of international regulatory success with the
approval/clearance of medical products, including many Class II
510(k) and Class III Premarket Approval (PMA) medical devices
- Strengthened our cash balance with
$5 million in a non-dilutive debt financing from Bridge Bank
Dr. Phillip Chan, Chief Executive Officer of
CytoSorbents, stated, “We are pleased to provide a brief update
from our Stockholder Letter issued on January 31, 2023. If you have
not already done so, we encourage you to review the letter, which
highlights what we believe is our unique and compelling value
proposition, and the proximity of major potential near-term
catalysts, including the expected completion of the pivotal STAR-T
RCT this year with the intent, with positive data, to submit for
U.S. FDA and Health Canada marketing approval, and an expected
return to Product Sales growth based on numerous growth
initiatives.
STAR-T Update
The pivotal, U.S. and Canadian STAR-T
(Safe and Timely
Antithrombotic Removal –
Ticagrelor) randomized controlled trial was
designed to support FDA and Health Canada marketing approval for
DrugSorb®-ATR to reduce the risk of perioperative bleeding in
patients undergoing cardiothoracic surgery potentially caused by
Brilinta® (ticagrelor, AstraZeneca). Our technology has received
FDA Breakthrough Device Designation for this application,
highlighting the major unmet medical need and lack of approved or
cleared therapies for this problem. After achieving the first
milestone of 40 patients enrolled in mid-November 2022, study
enrollment is now past the halfway point and we believe we will
achieve the second milestone of 80 patients enrolled this spring,
which will trigger the second pre-specified DSMB review of
unblinded data. Enrollment in the study has been accelerating,
aided by broad participation of U.S. centers and multiple patients
enrolled from initial Canadian centers as well. Because of the
current fast pace of the study, we expect to complete enrollment at
120 patients this summer, with database lock, final data analysis,
and DSMB closeout review to follow.
If the results of the study are positive, U.S.
FDA and Health Canada regulatory submissions are planned following
the completion of the study. This is a significant undertaking with
preparatory work already in process, now led by our new SVP of
Global Regulatory, Dr. Irina Kulinets. Meanwhile, we have developed
a detailed launch and commercialization strategy for DrugSorb-ATR,
led by COO and President, Vince Capponi, and our VP of US Sales and
Marketing, Jim Komsa, and are pursuing our pre-commercial
development in parallel to the study.
Other STAR Updates
Our decision to voluntarily pause the pivotal
STAR-D (Safe and Timely
Antithrombotic Removal –
Direct oral anticoagulants) clinical trial has
enabled us to focus our resources and those of our study centers on
the STAR-T study and to save an anticipated $4M in clinical trial
expense this year. That said, with the completion of the STAR-T
trial, we intend to resume the STAR-D trial, and leverage the
majority of clinical trial centers participating in STAR-T to
complete that study quickly. If the results are positive, U.S. FDA
and Health Canada marketing approval would double the total
addressable market in the U.S. and Canada to more than $1 billion
for DrugSorb-ATR as a “one-stop shop” for antithrombotic drug
removal in cardiothoracic surgery, and spur sales
internationally.
Meanwhile in Europe, the STAR registry that
collects real-world evidence on the use of our technology to remove
blood thinners during cardiothoracic surgery has now over 200
patients from 12 centers, well ahead of our projected enrollment.
Data readouts from the registry commence at the large
interventional cardiology conference, EuroPCR in Paris this May,
with additional analyses submitted to the European Society of
Cardiology (ESC) and the European Association for Cardio-Thoracic
Surgery (EACTS) conferences later this year.
Finally, as we discussed in the press release
earlier this week, we were pleased to see for the first time, the
inclusion and recommendation of hemoadsorption in the European
Guidelines to help manage perioperative bleeding risk in
cardiovascular surgery in patients on blood thinning medications,
based upon published studies with CytoSorb (a hemoadsorption
cartridge). We believe this is a good validating next step in
socializing our therapy to the broader surgery
community. Positive randomized controlled data from
STAR-T, STAR-D, and real-world evidence from the STAR registry are
expected to establish our technologies as the primary
standard-of-care therapy for these major unmet medical need in
treatment guidelines worldwide.
Return to Product Sales
Growth
In our Stockholder letter, we discuss at length
the “perfect storm” of geopolitical, economic, post-pandemic, and
company-specific factors that we had to navigate in 2022. Yet
despite these challenges, we sill managed to achieve $29.1M in core
product sales, that when adjusted for the 11% drop in the Euro,
would have been approximately $32.2M, within 5% of 2021 core sales
of $33.8M – our highest annual core sales to date, and greater than
30% higher than pre-pandemic product sales of $22.8M in 2019.
We were encouraged by progress in our sales
momentum in Q4 2022, which was 18% sequentially higher than Q3
2022, and actually 6% higher than core product sale in Q4 2021 on a
constant currency basis. Importantly, we are seeing a continuation
of this strength in Q1 2023 to date, which we believe is being
driven by strong support, enthusiasm, and receptiveness to new
clinical data, of CytoSorb at the customer level - which we believe
is a direct result of the long history of positive usage of the
therapy in the market. We also believe this has been augmented by
our increased ability to meet in-person with customers in hospitals
and our focused sales and marketing activities last year. Although
many of the macro factors we faced in 2022 still remain, we believe
a number of these have abated, and believe our own situation has
improved significantly, with many initiatives underway that are
expected to contribute to sales growth in 2023.
We expect gains from key programs such as our
therapy area focus and leaderhsip in critical care, cardiac
surgery, and liver & kidney diseases, our “Right patient, right
dose, right time” marketing campaign, our standalone blood pump
initiative, our global marketing agreement with Fresenius Medical
Care, and our preferred supplier agreements with the top two
largest private hospital networks in Germany, Asklepios and
Helios. Also, we expect a positive impact of new
clinical data and publications in the treatment of numerous
illnesses, including:
- External new publication by one of
the pioneers of early intervention with CytoSorb and ECMO to treat
severe acute respiratory distress syndrome (ARDS), this time in
COVID-19, supporting the findings of our CytoSorb Therapy in
COVID-19 (CTC) Registry data on “Enhanced lung rest”
- Acute liver disease, and
superiority of CytoSorb over the leading liver dialysis
platform
- Lower sepsis-related and overall
mortality in Staph aureus endocarditis
- Reduction in bleeding risk by
removal of the market leading blood thinner Eliquis® (apixaban,
Pfizer, BMS) during emergency cardiothoracic surgery
- Exacerbations of autoimmune
diseases with, for example, another published use of CytoSorb to
successfully treat complications of a severe exacerbation of the
autoimmune disease, systemic lupus erythematous (“Lupus”)
- Positive clinical results of the
final analysis of the International CytoSorb Registry (precursor to
the new COSMOS registry)
We also expect a restoration of product gross
margins back to more historic levels of 75-80+% as current demand
has worked down finished goods inventory and begun to drive volume
manufacturing out of the new manufacturing facility. As evidence of
this, our Q4 2022 product gross margins were 75%, up from a recent
low of 64% in Q3 2022 (55% with one time charges) primarily related
to manufacturing inefficiencies related to the relocation of our
manufacturing operations to our new facility. This improved gross
margin is expected to significantly reduce our cash flow
needs. Meanwhile, we expect to report more normalized
year-over-year comparisons in 2023, given that the Euro likely
bottomed in Q3 2022, and going forward, we will not need to
distinguish core versus COVID-19 related product sales, as COVID-19
sales in 2022 were nominal.
Finally, we expect more government-led economic
relief for hospitals throughout Europe to help avert a healthcare
crisis, and a gradual improvement in staffing shortages, which will
help hospitals generate more procedure-based revenue and open up
more hospital ward and ICU beds, which would help us as well. In
addition, we expect consolidation of smaller hospitals into the
larger hospitals where we conduct the majority of our business.
Reduced Cash Burn with Tight Control
Over Expenses
We ended the year with $23.8M in cash, including
restricted cash and $5M in debt at attractive terms. In 2023, we
expect to significantly reduce our cash burn through a combination
of:
- Improved sales
- Restoration of product gross
margins to 75-80+%
- No major capital expenditures
- Reduced fixed overhead following
consolidation of all U.S. operations to our new Princeton, NJ
headquarters and manufacturing facility last year
- Expected realization of annualized
cost savings from the impact of our 10% workforce reduction in
2022
- Monetizing our New Jersey net
operating losses
- Executing on our $11.5M grant
backlog to reduce R&D overhead, and
- Significantly reduced operating and
clinical trial expenses
Because of this, we believe our current cash
position is more than sufficient to drive our 2023 operating
plan.”
Dr. Chan concluded, “2023 is a very different
year from last year, and believe we are now well-positioned to get
to the two most important objectives we have as a company:
Successful and timely completion of the STAR-T RCT in the U.S. and
Canada and the potential to commercially open the vital U.S. and
Canadian markets, and a return to growth of our main commercial
CytoSorb business internationally. We thank you for your support
and look forward to the next update.”
Results of Operations
Comparison of the year ended
December 31, 2022 and 2021
Revenues:
For the year ended December 31, 2022, we
generated total revenue, which includes product revenue and grant
income, of approximately $34,689,000 as compared to revenues of
approximately $43,166,000 for the year ended December 31, 2021, a
decrease of approximately $8,477,000, or 20%. Revenue from product
sales was approximately $29,360,000 for the year ended December 31,
2022, as compared to approximately $40,109,000 in the year ended
December 31, 2021, a decrease of approximately $10,749,000 or 27%.
Direct sales decreased by approximately $8,983,000 and distributor
sales decreased by approximately $1,766,000 during the year ended
December 31, 2022 as compared to the year ended December 31, 2021.
Sales to hospitals in the United States under the EUA granted by
the FDA amounted to approximately $300,000 for the year ended
December 31, 2022, as compared to approximately $1,690,000 in 2021.
Though difficult to quantify, we estimate that approximately
$300,000 and approximately $6,300,000 of total product sales during
the years ended December 31, 2022 and 2021 was due to the demand
for CytoSorb to treat COVID-19 patients. In addition, as a result
of the decrease in the average exchange rate of the Euro to the
U.S. dollar, 2022 product sales were negatively impacted by
approximately $3,127,000. For the year ended December 31, 2022, the
average exchange rate of the Euro to the U.S. dollar was $1.05 as
compared to an average exchange rate of $1.18 for the year ended
December 31, 2021.
Grant income was approximately $5,329,000 for
the year ended December 31, 2022 as compared to approximately
$3,057,000 for the year ended December 31, 2021, an increase of
approximately $2,272,000, or 74%. During the year ended December
31, 2021, our research and development employees were either
deployed to work-from-home status or reassigned to assist in
activities related to increasing the production of CytoSorb. In
2022, research and development employees were assigned primarily to
grant related activities.
Cost of Revenue:
For the years ended December 31, 2022 and 2021,
cost of revenue was approximately $13,956,000 and $11,047,000,
respectively, an increase of approximately $2,909,000. This
increase was due to an increase in grant cost of revenue of
approximately $2,210,000 due to the increase in billable hours
charged to our grant related projects. Product cost of revenues
increased approximately $698,000 during the year ended December 31,
2022 as compared to the year ended December 31, 2021. This increase
was primarily due to an equipment failure of a refrigeration unit
at our new manufacturing facility that caused a net write-off
(after insurance proceeds) of approximately $300,000 of
work-in-process inventory (see Note 2 to the financial statements)
and inefficiencies associated with lower production due to a
decrease in production volume and inefficiencies associated with
relocating our production activities to the new facility. Product
gross margins were approximately 70% for the year ended December
31, 2022 and approximately 80% for the year ended December 31,
2021.
Gross Profit:
Gross profit was approximately $20,733,000 for
the year ended December 31, 2022, a decrease of approximately
$11,385,000 or 35%, versus gross profit of $32,118,000 in 2021.
This decrease is attributed to lower sales, the inventory write-off
related to an equipment failure and inefficiencies associated with
the process of relocating our production activities to the new
facility as discussed above.
Research and Development
Expenses:
Our research and development costs were
approximately $15,119,000 and $16,381,000 for the years ended
December 31, 2022 and 2021, respectively, a decrease of
approximately $1,262,000, or 8%. This decrease was due to a
decrease in clinical trial related costs of approximately
$2,448,000, due primarily to the temporary pause of our STAR-D
clinical trial in the U.S. and the discontinuation of the
Hep-On-Fire clinical trial in Germany, a decrease in rent expense
to research and development of approximately $685,000 related to
our new facility and a decrease in non-grant related research and
development costs of approximately $187,000. These decreases were
offset by an increase in salaries related to our clinical trial
activities of approximately $1,694,000 due to the hiring of
additional clinical expertise and an increase in other research and
development labor costs of approximately $364,000 related to the
hiring of additional scientific expertise.
Legal, Financial and Other Consulting
Expenses:
Our legal, financial and other consulting costs
were approximately $2,848,000 and $2,732,000 for the years ended
December 31, 2022 and 2021, respectively, an increase of
approximately $116,000, or 4%. This increase was due to an increase
in legal fees of approximately $685,000 due to the abandonment of
certain issued patents and patent applications and an increase in
accounting fees of approximately $169,000. These increases were
offset by a decrease in consulting fees of approximately $396,000
and a decrease in hiring fees of approximately $342,000.
Selling, General and Administrative
Expenses:
Our selling, general and administrative expenses
were approximately $34,288,000 and $35,750,000 for the years ended
December 31, 2022 and 2021, respectively, a decrease of
approximately $1,462,000, or 4%. This decrease was due to a
decrease of salary and commission costs of approximately $594,000
due to a reduction in commissions due to lower sales, a decrease in
royalty expense of approximately $915,000 due to lower sales, a
decrease in non-cash restricted stock expense of approximately
$1,771,000 related to restricted stock units granted to the
Company’s executive officers, a decrease in non-cash stock
compensation expense of approximately $597,000 and a decrease in
other general and administrative expenses of approximately
$324,000. These decreases were offset by an increase sales and
marketing costs, which include advertising and conference
attendance, of approximately $797,000, an increase in travel and
entertainment costs of approximately $530,000 and an increase in
occupancy costs of approximately $1,412,000 related to the rent
expense on our new manufacturing facility.
Gain (Loss) on Foreign Currency
Transactions:
For the year ended December 31, 2022, the loss
on foreign currency transactions was approximately $2,449,000, as
compared to a loss on foreign currency transactions of
approximately $2,578,000 for the year ended December 31, 2021. The
2022 loss is directly related to the decrease of the exchange rate
of the Euro as of December 31, 2022 as compared to December 31,
2021. The exchange rate of the Euro to the U.S. dollar was $1.07
per Euro at December 31, 2022 as compared to $1.14 per Euro at
December 31, 2021. The 2021 loss is directly related to the
decrease in the exchange rate of the Euro as of December 31, 2021,
as compared to December 31, 2020. The exchange rate of the Euro to
the U.S. dollar was $1.14 per Euro at December 31, 2021 as compared
to $1.22 per Euro at December 31, 2020.
Benefit from Income Taxes:
Our benefit from income taxes was approximately
$1,093,000 and $736,000 for the years ended December 31, 2022 and
2021, respectively. These benefits were realized by utilizing the
New Jersey Technology Business Tax Certificate Transfer Program
whereby the State of New Jersey allows us to sell a portion of our
state net operating losses to a third party.
Comparison of the year ended December
31, 2021 and 2020
Revenues:
For the year ended December 31, 2021, we
generated total revenue, which includes product revenue and grant
income, of approximately $43,166,000 as compared to revenues of
approximately $41,005,000 for the year ended December 31, 2020, an
increase of approximately $2,161,000, or 5%. Revenue from product
sales was approximately $40,109,000 for the year ended December 31,
2021, as compared to approximately $39,453,000 in the year ended
December 31, 2020, an increase of approximately $656,000 or 2%.
Direct sales increased by approximately $361,000 and distributor
sales increased by approximately $295,000 during the year ended
December 31, 2021 as compared to the year ended December 31, 2020.
Sales to hospitals in the United States under the EUA granted by
the FDA amounted to approximately $1,690,000 for the year ended
December 31, 2021, as compared to approximately $1,341,000 in 2020.
Though difficult to quantify, we estimate that approximately $6.3
million and $9.4 million of total product sales during the years
ended December 31, 2021 and 2020 was due to the demand for CytoSorb
to treat COVID-19 patients. In addition, as a result of the
increase in the average exchange rate of the Euro to the U.S.
dollar, sales were positively impacted by approximately $1,207,000.
For the year ended December 31, 2021, the average exchange rate of
the Euro to the U.S. dollar was $1.18 as compared to an average
exchange rate of $1.14 for the year ended December 31, 2020.
Cost of Revenue:
For the years ended December 31, 2021 and 2020,
cost of revenue was approximately $11,047,000 and $11,052,000,
respectively, a decrease of approximately $5,000. Product cost of
revenues decreased approximately $1,447,000 during the year ended
December 31, 2021 as compared to the year ended December 31, 2020.
This decrease was related to certain costs associated with the
rapid ramp-up of production during the year ended December 31, 2020
that did not recur during the year ended December 31, 2021. These
decreases were offset by the negative impact of non-recurring costs
related to prior years tariffs as a result of an audit by the
German Customs Authorities of approximately $732,000 and the
offsetting non-recurring positive impact of the Employee Retention
Tax Credit of approximately $388,000, both of which were recorded
in the first quarter of 2021. Product gross margins were
approximately 80% for the year ended December 31, 2021 and
approximately 76% for the year ended December 31, 2020.
Gross Profit:
Gross profit was approximately $32,118,000 for
the year ended December 31, 2021, an increase of approximately
$2,166,000 or 7%, over gross profit of $29,952,000 in 2020. This
increase is attributed to the reasons discussed above.
Research and Development
Expenses:
Our research and development costs were
approximately $16,381,000 and $8,811,000 for the years ended
December 31, 2021 and 2020, respectively, an increase of
approximately $7,570,000, or 86%. This increase was due to an
increase in clinical trial and related costs of approximately
$4,670,000, due primarily to the start-up of our STAR-T and STAR-D
clinical trials in the U.S. and our PROCYSS and Hep-On-Fire
clinical trials in Germany, an increase in salaries related to our
clinical trial activities of approximately $1,620,000 due to the
hiring of additional clinical expertise, an increase in rent
expense of approximately $943,000 related to rent expense on our
new facility, an increase in other research and development labor
costs of approximately $294,000 related to the hiring of additional
scientific expertise and an increase in other research and
development costs of approximately $43,000.
Legal, Financial and Other Consulting
Expenses:
Our legal, financial and other consulting costs
were approximately $2,732,000 and $3,048,000 for the years ended
December 31, 2021 and 2020, respectively, a decrease of
approximately $316,000, or 10%. This decrease was due to due to a
decrease in hiring fees of approximately $319,000, a decrease in
legal fees of approximately $263,000, and a decrease in accounting
fees of approximately $28,000. These increases were offset by an
increase in consulting fees of approximately $294,000 related to
certain corporate initiatives.
Selling, General and Administrative
Expenses:
Our selling, general and administrative expenses
were approximately $35,750,000 and $28,464,000 for the years ended
December 31, 2021 and 2020, respectively, an increase of
approximately $7,286,000, or 26%. This increase is related to an
increase in salaries, commissions and related costs of
approximately $4,476,000, an increase in non-cash restricted stock
expense of approximately $989,000 related to restricted stock units
granted to the Company’s executive officers, an increase in
non-cash stock option compensation expense of approximately
$507,000, an increase in commercial insurance of approximately
$280,000, an increase in sales and marketing costs, which include
advertising and conference attendance of approximately $1,152,000
and an increase in travel and entertainment costs of approximately
$121,000. These increases were offset by a decrease in contracted
public relations costs of approximately $210,000 and a decrease in
other general and administrative expenses of approximately
$29,000.
Interest Expense, Net:
For the year ended December 31, 2021, interest
income, net was approximately $28,000, as compared to interest
expense, net of approximately $1,201,000 for the year ended
December 31, 2020. This decrease in net interest expense of
approximately $1,229,000 was the result of the payoff of our
outstanding term loans with Bridge Bank in December of 2020.
Gain (Loss) on Foreign Currency
Transactions:
For the year ended December 31, 2021, the loss
on foreign currency transactions was approximately $2,578,000, as
compared to a gain on foreign currency transactions of
approximately $2,607,000 for the year ended December 31, 2020. The
2021 loss is directly related to the decrease of the exchange rate
of the Euro at December 31, 2021 as compared to December 31, 2020.
The exchange rate of the Euro to the U.S. dollar was $1.14 per Euro
at December 31, 2021 as compared to $1.22 per Euro at December 31,
2020. The 2020 gain is directly related to the increase in the
exchange rate of the Euro at December 31, 2020, as compared to
December 31, 2019. The exchange rate of the Euro to the U.S. dollar
was $1.22 per Euro at December 31, 2019 as compared to $1.12 per
Euro at December 31, 2019.
Benefit from Income Taxes:
Our benefit from income taxes was approximately
$736,000 and $1,127,000 for the years ended December 31, 2021 and
2020, respectively. These benefits were realized by utilizing the
New Jersey Technology Business Tax Certificate Transfer Program
whereby the State of New Jersey allows us to sell a portion of our
state net operating losses to a third party.
Liquidity and Capital
Resources
Since inception, our operations have been
primarily financed through the private and public placement of our
debt and equity securities. At December 31, 2022, we had current
assets of approximately $33,760,000 including cash, cash
equivalents and restricted cash on hand of approximately
$23,832,000 and had current liabilities of approximately
$9,715,000. All of the $25 million of our total shelf amount
allocated to our ATM facility was available as of December 31,
2022. On December 27, 2022, we drew down the first $5
million tranche of the Term C loans available under the terms of
our Amended Loan and Security Agreement with Bridge Bank. Also, we
expect to receive approximately $1,093,000 in cash from the
approved sale of our net operating losses and research and
development credits from the State of New Jersey in the first half
of 2023.
As of December 31, 2022, cash, cash equivalents
and restricted cash were $23.8 million compared to $53.8 million as
of December 31, 2021. After taking into account the $5 million
related to our debt drawdown, our 2022 cash burn was approximately
$35.0 million. This cash burn was due to lower-than-expected sales
volumes, product gross margins that were lower due to decreased
production volumes and operating efficiencies associated with the
move to our new manufacturing facility, capital expenditures of
approximately $6.3 million related to our new facility and other
factors (e.g. a delay in realizing savings from cost cutting due to
notice periods and labor laws in Europe). A reduction in product
gross margins from 80% in 2021 to 70% in 2022, unfavorably impacted
our cash burn by approximately $2.9 million. We expect product
gross margins to return to previous levels as we transition
production fully to the new facility by the end of this year, end
the lease at our Deer Park Drive facility, and begin to capture
anticipated manufacturing efficiencies driven by expected
improvement in market conditions and increased product demand.
We are also managing our resources proactively,
continuing to invest in key areas such as our U.S. clinical
program. while driving cost-cutting throughout our Company. At the
beginning of Q2 2022, we began instituting tighter cost controls
and have reduced our headcount (including full and part-time
employees and consultants) internationally by 10%, with the goal of
reducing our cash burn. In addition, we have shifted our R&D
headcount to funded grant programs, where we have an $11.5 million
backlog as of December 31, 2022. Some of our costs savings of our
headcount reduction are not yet visible in our results due to
notice periods and labor laws in Europe but will be reflected in
our 2023 operating budget. Meanwhile, we are working diligently to
prioritize activities that we believe have a near-term return on
investment and advance our strategic priorities, which cutting
non-core or non-essential activities and spend. Our goal is,
through a combination of driving an increase in sales and gross
margin, and cutting costs, to significantly reduce our cash burn
and to extend our operating runway with the resources we have.
Based upon the foregoing, we believe that we
have sufficient cash to fund the Company’s operations beyond twelve
months from the issuance of the consolidated financial statements
included elsewhere in this Annual Report on Form 10-K
Conference Call Details:
Date: Thursday, March 9, 2023Time: 4:30 PM
Eastern TimeParticipant Dial-In: 1-201-389-0879 Conference ID:
13736064
Live Presentation Webcast:
https://viavid.webcasts.com/starthere.jsp?ei=1596520&tp_key=3635996201
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: :
https://viavid.webcasts.com/starthere.jsp?ei=1596520&tp_key=3635996201
An archived recording of the conference call will be available
under the Investor Relations section of the Company’s website at
http://cytosorbents.com/investor-relations/financial-results/.
For additional information, please see the Company’s Form 10-K
for the period ended December 31, 2022, filed on March 9, 2023, on
http://www.sec.gov.
About CytoSorbents Corporation (NASDAQ:
CTSO)
CytoSorbents Corporation is a leader in the
treatment of life-threatening conditions in the intensive care unit
and in cardiac surgery through blood purification. Its lead
product, CytoSorb®, is approved in the European Union and
distributed in 75 countries worldwide. It is an extracorporeal
cytokine adsorber that reduces "cytokine storm" or "cytokine
release syndrome" in common critical illnesses that can lead to
massive inflammation, organ failure and patient death. In these
diseases, the risk of death can be extremely high, and there are
few, if any, effective treatments. CytoSorb is also used during and
after cardiothoracic surgery to remove antithrombotic drugs and
inflammatory mediators that can lead to postoperative
complications, including severe bleeding and multiple organ
failure. At the end of 2022, more than 195,000 CytoSorb devices
have been used cumulatively. CytoSorb was originally launched in
the European Union under CE mark as the first cytokine adsorber.
Additional CE mark extensions were granted for bilirubin and
myoglobin removal in clinical conditions such as liver disease and
trauma, respectively, and for ticagrelor and rivaroxaban removal in
cardiothoracic surgery procedures. CytoSorb has also received FDA
Emergency Use Authorization in the United States for use in adult
critically ill COVID-19 patients with impending or confirmed
respiratory failure. The DrugSorb™-ATR antithrombotic removal
system, based on the same polymer technology as CytoSorb, also
received two FDA Breakthrough Device Designations, one for the
removal of ticagrelor and another for the removal of the direct
oral anticoagulants (DOAC) apixaban and rivaroxaban in a
cardiopulmonary bypass circuit during urgent cardiothoracic
procedures. The Company is currently conducting the FDA-approved,
randomized, controlled STAR-T (Safe and Timely Antithrombotic
Removal-Ticagrelor) study of 120 patients at approximately 30
centers in U.S. and Canada to evaluate whether intraoperative use
of DrugSorb-ATR can reduce the perioperative risk of bleeding in
patients receiving ticagrelor and undergoing cardiothoracic
surgery. This pivotal study is intended to support U.S. FDA and
Health Canada marketing approval for DrugSorb-ATR in this
application.
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 of
approximately $48 million from DARPA, the U.S. Department of
Health and Human Services (HHS), the National Institutes of Health
(NIH), National Heart, Lung, and Blood Institute (NHLBI), the U.S.
Army, the U.S. Air Force, U.S. Special Operations Command (SOCOM),
Air Force Material Command (USAF/AFMC), and others. The
Company has numerous marketed products and products under
development based upon this unique blood purification technology
protected by many issued U.S. and international patents and
registered trademarks, and multiple patent applications pending,
including ECOS-300CY®, CytoSorb-XL™, HemoDefend-RBC™,
HemoDefend-BGA™, VetResQ®, K+ontrol™, DrugSorb™, DrugSorb™-ATR,
ContrastSorb, 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, future targets
and outlooks for our business, including our future sales goals and
targets, expectations regarding the future impacts of COVID-19 or
the ongoing conflict between Russia and the Ukraine,
statements about our growth opportunities, statements regarding the
expected impacts of our cost cutting measures, statements about the
anticipated timing for completion of our STAR-T clinical trial and
regulatory submissions, 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 9, 2023, 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)
|
Year ended December 31, |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
CytoSorb sales |
$ |
28,573 |
|
$ |
39,997 |
|
$ |
39,342 |
|
Other sales |
|
787 |
|
|
112 |
|
|
110 |
|
Total product sales |
|
29,360 |
|
|
40,109 |
|
|
39,452 |
|
Grant income |
|
5,329 |
|
|
3,057 |
|
|
1,552 |
|
Total revenue |
|
34,689 |
|
|
43,166 |
|
|
41,004 |
|
Cost of revenue |
|
13,956 |
|
|
11,048 |
|
|
11,052 |
|
Gross profit |
|
20,733 |
|
|
32,118 |
|
|
29,952 |
|
|
|
|
|
|
|
|
|
|
|
Other Expenses: |
|
|
|
|
|
|
|
|
|
Research and development |
|
15,119 |
|
|
16,381 |
|
|
8,810 |
|
Legal, financial and other consulting |
|
2,848 |
|
|
2,732 |
|
|
3,048 |
|
Selling, general and administrative |
|
34,288 |
|
|
35,750 |
|
|
28,464 |
|
Total expenses |
|
52,255 |
|
|
54,863 |
|
|
40,322 |
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(31,522 |
) |
|
(22,745 |
) |
|
(10,370 |
) |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest income (expense),
net |
|
133 |
|
|
28 |
|
|
(1,201 |
) |
Gain (loss) on foreign currency
transactions |
|
(2,449 |
) |
|
(2,578 |
) |
|
2,607 |
|
Miscellaneous income |
|
(67 |
) |
|
--- |
|
|
--- |
|
Total other income (expense),
net |
|
(2,383 |
) |
|
(2,550 |
) |
|
1,406 |
|
|
|
|
|
|
|
|
|
|
|
Loss before benefit from income
taxes |
|
(33,905 |
) |
|
(25,295 |
) |
|
(8,964 |
) |
Benefit from income taxes |
|
1,092 |
|
|
736 |
|
|
1,127 |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(32,813 |
) |
$ |
(24,559 |
) |
$ |
(7,837 |
) |
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
common share |
$ |
(0.75 |
) |
$ |
(0.57 |
) |
$ |
(0.20 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
of common stock outstanding |
|
43,573,215 |
|
|
43,359,186 |
|
|
38,818,990 |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(32,813 |
) |
$ |
(24,559 |
) |
$ |
(7,837 |
) |
Other comprehensive income
(loss): |
|
|
|
|
|
|
|
|
|
Currency translation
adjustment |
|
1,804 |
|
|
2,260 |
|
|
(2,260 |
) |
Comprehensive loss |
$ |
(31,009 |
) |
$ |
(22,299 |
) |
$ |
(10,097 |
) |
|
|
|
|
|
|
|
|
|
|
CYTOSORBENTS CORPORATIONCONDENSED CONSOLIDATED
BALANCE SHEETS(amounts in thousands)
|
|
December 31, 2022 |
|
|
December 31, 2021 |
|
|
ASSETS: |
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
22,145 |
|
$ |
52,138 |
|
|
Grants and accounts
receivable, net |
|
5,665 |
|
|
4,523 |
|
|
Inventories |
|
3,461 |
|
|
4,766 |
|
|
Prepaid expenses and
other current assets |
|
2,489 |
|
|
2,872 |
|
|
Total current assets |
|
33,760 |
|
|
64,299 |
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net |
|
10,743 |
|
|
5,151 |
|
|
Restricted Cash |
|
1,687 |
|
|
1,687 |
|
|
Right of use
asset |
|
12,604 |
|
|
13,423 |
|
|
Other assets |
|
4,438 |
|
|
4,959 |
|
|
TOTAL ASSETS |
$ |
63,232 |
|
$ |
89,519 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
1,655 |
|
$ |
2,805 |
|
|
Lease liability -
current portion |
|
109 |
|
|
571 |
|
|
Accrued expenses and
other current liabilities |
|
7,951 |
|
|
10,314 |
|
|
Total current
liabilities |
|
9,715 |
|
|
13,690 |
|
|
Lease liability, net
of current portion |
|
13,142 |
|
|
13,251 |
|
|
Long-term debt |
|
5,000 |
|
|
---- |
|
|
TOTAL LIABILITIES |
|
27,857 |
|
|
26,941 |
|
|
|
|
|
|
|
|
|
|
Total stockholders’
equity |
|
35,375 |
|
|
62,578 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
$ |
63,232 |
|
$ |
89,519 |
|
|
|
|
|
|
|
|
Please Click to Follow Us on
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Twitter
U.S. Company Contact:Kathleen Bloch, CFO305
College Road EastPrinceton, NJ 08540+1 (732)
398-5429kbloch@cytosorbents.com
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