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 unaudited financial
and operating results for the quarter ended September 30, 2023.
Third Quarter 2023 Financial Results
- Total revenue for Q3 2023,
including product sales and grant income, was $8.8 million, an
increase of 9% compared to $8.1 million in Q3 2022
- Q3 2023 product sales were $7.8
million versus $6.5 million in Q3 2022, an increase of $1.3 million
or 20%
- Product gross margins were
approximately 72% in Q3 2023, compared to 55% in Q3 2022
- Total cash, including cash and cash
equivalents and restricted cash was $10.0 million as of September
30, 2023
Recent Operating Highlights:
- Completed the U.S. and Canadian
pivotal STAR-T trial in August 2023, following the last scheduled
patient follow-up. The trial remains blinded with database lock
nearing, with initial data analysis expected before year-end
- Highlighted the low rates of
perioperative bleeding observed in everyday practice and reported
by the International STAR Registry when CytoSorb® is used in
patients undergoing isolated coronary artery bypass graft (CABG)
surgery within 2 days of Brilinta®/Brilique® (ticagrelor,
AstraZeneca) discontinuation at the 2023 European Association for
Cardio-Thoracic Surgery (EACTS) meeting in Vienna, Austria
- As of the end of Q3 2023, more than
221,000 CytoSorb devices have been cumulatively delivered across
more than 75 countries worldwide since launch
- Expanded ANVISA registration of
CytoSorb to treat shock in Brazil, Latin America’s largest medical
device market, and the 7th most populous country in the world.
CytoSorb is commercialized in Brazil through Fresenius Medical Care
in critical care and by Contatti Medical in the field of cardiac
surgery
- Discussed how the use of CytoSorb
and ECOS-300CY with ex vivo organ perfusion are helping to
transform the future of solid organ transplantation, highlighting
newly published studies in lung transplantation that correlate the
use of our technology and ex vivo lung perfusion with improved
organ function, as well as improved hospital and 1-year
survival
- Announced that Kathleen Bloch
resumed duties as full-time Chief Financial Officer
Dr. Phillip Chan, Chief Executive Officer of
CytoSorbents stated, “Our core business is built upon our E.U.
approved flagship CytoSorb® blood purification therapy, used in
more than 221,000 human treatments with more than $205 million in
sales to date, including $31.4 million in the last 12 months alone.
CytoSorb addresses multi-billion dollar markets in critical care
and cardiac surgery in 75 countries worldwide by treating deadly
inflammation and other life-threatening conditions. These are
common everyday ICU conditions like sepsis, trauma, burn injury,
respiratory failure, liver failure, and complications of surgery
where mortality is high despite standard therapies. With the world
struggling in the aftermath of the pandemic with war, natural
disasters, and illness, we believe our life-saving therapy has
never been more relevant.
The DrugSorb®-ATR anti-thrombotic removal system
is our other focus, having completed the U.S. and Canadian pivotal
STAR-T (Safe and Timely
Antithrombotic Removal of
Ticagrelor) randomized controlled trial that was
designed to demonstrate a reduction in perioperative bleeding in
patients undergoing cardiothoracic surgery on Brilinta®
(ticagrelor, AstraZeneca). Brilinta is increasingly the
“super-aspirin” blood thinner of choice for patients suffering from
a heart attack, or receiving a cardiac stent. Should the data,
which currently remain blinded, support U.S. FDA and Health Canada
regulatory approval, it would open up an estimated $650 million
dollar total addressable market in these two countries alone, where
we expect rapid adoption and strong user demand, reflecting our FDA
Breakthrough Device designation.
We believe we have made excellent progress on
both of these programs so far this year and are specifically
pleased to report 20% product sales growth in Q3 2023 versus a year
ago, and nearing database lock of the STAR-T trial and final data
analysis before year-end.
1. The STAR-T Pivotal Trial Update
– What do we know?
Coronary artery bypass graft (CABG) surgery to
bypass blocked heart arteries is the most common type of open heart
surgery performed in the United States and worldwide. Approximately
300,000 CABG surgeries are performed each year in the U.S., often
triggered by a heart attack, with the vast majority operated on an
urgent basis during the index hospitalization. An estimated 100,000
of these patients are at risk of excessive bleeding due to blood
thinners with approximately half of them on Brilinta®. CytoSorb,
which uses an equivalent polymer technology to DrugSorb®-ATR, is
already approved and is increasingly used in the E.U. to remove
Brilinta®/Brilique® and reduce bleeding risk in this indication.
The initial results from the International STAR Registry reporting
on this real-world experience have shown favorably low rates of
serious perioperative bleeding.
As we noted in August, we completed the STAR-T
trial ahead of our own internal expectations with follow-up on 100%
of the subjects, highlighting the excellent execution of the trial
by our 30 U.S. and Canadian trial centers, contract research
organization (CRO), and our clinical team.
We reported earlier this year in June, that
following the second scheduled Data and Safety Monitoring Board
(DSMB) data review of the first 80 patients enrolled in the pivotal
STAR-T study, no device-related safety issues were raised and that
the DSMB recommended to complete the study without modification.
The final DSMB review on the full STAR-T trial will occur after
database lock in the near future.
It is important to note the STAR-T study data
remains blinded to all parties and will not be unblinded until
after database lock, when the final statistical analysis will
occur. Because of this, the results of the study are currently
unknown.
We are working diligently to complete our
initial STAR-T data analysis before year-end. We intend to announce
whether we believe the results from STAR-T can support an FDA
marketing approval application thereafter. With supportive results,
our goal is to submit for U.S. FDA and Health Canada marketing
approval in early-2024. This process is currently being led in
parallel to our clinical activities by our SVP of Global
Regulatory, Dr. Irina Kulinets, who has an extensive track record
of U.S. and international regulatory success with the
approval/clearance of medical products in numerous therapeutic
areas, including many Class II 510(k) and Class III Premarket
Approval (PMA) medical devices. We believe our FDA Breakthrough
Device Designation for DrugSorb-ATR in this indication, which
highlights the major unmet clinical need for which no approved or
cleared alternatives exist in the U.S., will help to expedite the
regulatory review of our application. Although there can be no
certainty, based on published FDA review timelines, and dependent
on the timing of regulatory filing and a favorable review of our
data by FDA, we would anticipate potential U.S. marketing approval
of DrugSorb-ATR by late-2024 or early-2025.
Through many discussions with cardiothoracic
surgeons in the U.S., Canada, and abroad, we continue to confirm
the vexing and serious clinical and economic problem that blood
thinners cause patients, surgeons, and hospitals.
- For patients, delaying surgery to
wash out the drug puts those with active ischemic heart disease at
risk, while going to CABG surgery without waiting risks serious
perioperative bleeding associated with longer hospital stays and
increased risk of worsened clinical outcomes and even death
- For surgeons, excessive
intraoperative bleeding due to blood thinners is difficult and
unpredictable to manage, often complicating the surgery and
requiring significant additional operative time to achieve
hemostasis. Postoperatively, bleeding complicates and delays
recovery and disposition, and if rapid or persistent, may require
expensive and time-consuming re-exploratory surgery
- For hospitals, patients on blood
thinners consume scarce resources and complicate patient logistics.
Preoperatively, patients in the U.S. occupy hospital beds for 3 to
5 days to washout the drug, costing $6,000 to $30,000 to wait
depending on the severity of their condition, based upon an
approximate daily cost of $6,000 in the ICU, $4,000 in the ICU
step-down, and $2,000-$3,000 for a cardiac monitored ward
bedIntraoperatively, the inability to stop bleeding delays
completion of the case and is very expensive. Shorter overall
operative times have been cited in a previous study when CytoSorb
was used intraoperatively in patients undergoing cardiac surgery on
Brilinta. Based on average published operating room charges from
the Cleveland Clinic hospital system, each additional 30 minute
increment adds more than $4,000 in cost to the
operation.Perioperatively, bleeding complications are very
expensive as well, due to the need for blood transfusions,
reoperations, and longer ICU and hospitals stays. Recently, in a
study published in the American Journal of Cardiovascular Drugs,
Cohen et al. modeled the projected cost savings of less
perioperative bleeding that DrugSorb-ATR could provide in the U.S.
in patients undergoing surgery before completing washout of
Brilinta® – a similar cohort being evaluated in the STAR-T trial.
Using assumptions based on published studies, they found the use of
DrugSorb-ATR in these cases had a cost-dominant value proposition
based on delivering improved clinical outcomes for patients and
substantial cost savings (inclusive of the cost of the device) to
the hospital. Finally, outcomes in CABG surgery, the most common
cardiothoracic surgical procedure in the United States, such as
death rates, readmissions, and postoperative hemorrhage (classified
as a Serious Complication) reflect heavily in the Hospital’s
Quality Star Rating patient safety rating, as defined by the U.S.
Centers of Medicare & Medicaid Services (CMS). The hospital’s
overall Star rating is critical as it helps to differentiate the
hospital on objective quality measures from others in the area,
important in driving patient traffic and procedure revenue to the
hospital, and with direct implications on overall
profitability.
Because of this, we believe DrugSorb-ATR could
represent a “win-win-win” for patients, surgeons and hospital
administrators by potentially allowing safe and timely surgery by
actively removing the drug from the bloodstream, while reducing the
serious bleeding risk and unnecessary costs in such patients. With
the appropriate approvals, we intend to commercialize CytoSorb in
the U.S. and Canada primarily with a direct sales force focused
regionally at high volume cardiac surgery centers, including our
clinical trial centers, and supplemented with cardiac
surgery-focused distributors or strategic partners.
We have extensive experience in manufacturing
and commercialization of our products abroad. Under the leadership
of our President and Chief Operating Officer, Vincent Capponi, our
Chief Medical Officer, Dr. Efthymios Deliargyris, and Vice
President of U.S. Sales and Marketing, James Komsa, who led the
Northeast Cardiac and Vascular Group (CVG) at Medtronic that
generated $310 million in annual sales at Medtronic, our goal is to
drive rapid awareness, adoption, reimbursement, and sales of
DrugSorb-ATR in the U.S. and Canada. We believe product gross
margins of DrugSorb-ATR will exceed 90% and based on revenue and
operating expense projections, we expect the U.S. operations to
achieve breakeven in the first year of commercialization.
Based on the above, we eagerly await the results
of the STAR-T trial, and the potential future initiation of the
STAR-D trial for the removal of the leading blood thinners,
Xarelto® (Bayer, Janssen) and Eliquis® (Pfizer, BMS), with the
ultimate goal of establishing DrugSorb®-ATR as the one-stop shop
for blood thinner removal, not just in cardiac surgery, but
hospital-wide.
2. CytoSorb – The Future of
Critical Care and Cardiac Surgery
In the third quarter of 2023, we achieved 20%
growth in product sales year-over-year in what is typically a
highly seasonal quarter where most European businesses slow due to
the summer holidays. Quarterly core (non-COVID-19 related) sales
grew for the third straight period year-over-year, with trailing
12-month product sales of approximately $31.4 million. Trailing
12-month total revenue was $37.1 million, which includes product
sales and grant income. Product gross margins were 72%, a
significant improvement from the 55% reported a year ago, despite
some continued manufacturing inefficiencies including overtime
shifts to increase CytoSorb inventory levels. In the near term, we
expect product gross margins to be more consistently in the range
of 75-80%.
From 2017-2021, our compounded annual growth
rate (CAGR) for core (non-COVID-19) sales was 26%. Following the
post-COVID-19 hangover in 2022 and a year of recovery in 2023, we
believe our core CytoSorb business has stabilized and project
returning to, and potentially even exceeding, these historic growth
rates in the future.
- We are riding major macro trends in
healthcare, such as the aging baby boomer population that are prone
to life-threatening conditions such as infection and sepsis,
trauma, structural and coronary heart disease, lung injury, and
organ failure, or the use of blood thinners to reduce stroke and
heart attack risk. Unfortunately, these conditions are so common
that most of us know someone who falls into one or more of these
categories
- Second, we have multiple
Company-specific initiatives underway that are helping to expand
our business opportunities. Examples include our standalone
hemoperfusion pump initiative that can enable earlier and more
frequent usage of our blood purification therapies - particularly
in countries that do not have a robust dialysis infrastructure;
additional new leadership in our therapy area verticals in critical
care, cardiac surgery, and liver/kidney applications that is
intended to foster more focused market development; preferred
supplier agreements with the largest private hospital networks in
Germany; and new direct and distributor territories that are
gaining market momentum
- Third, we are “Expanding the
Dimension of Blood Purification®.” Every person has two main blood
purification organs – the kidneys and the liver. Dialysis and
related techniques are the most common blood purification
technologies and are used to replace kidney function in the
approximately 10-15% of ICU patients who develop kidney failure.
CytoSorb, on the other hand, is compatible with dialysis and CRRT
machines, but functions like the liver and is capable of not just
removing liver toxins, but a broad range of cytokines and other
inflammatory mediators that drive severe or massive inflammation in
up to 40-50% of patients in the ICU. Left unchecked, this
uncontrolled inflammation destabilizes patients, worsens the
severity of critical illness, and can directly contribute to organ
failure and death. In addition to our core markets mentioned above,
with new data, we are now adding major new applications including
the treatment of liver disease, rhabdomyolysis, and acute
respiratory distress syndrome (ARDS)Fresenius Medical Care, the
largest dialysis company in the world and our strategic partner,
has publicly-disclosed that its critical care business, focused
primarily on kidney replacement therapy, is approximately €500
million to €1 billion worldwide and has both high strategic value
and growth potential for the company. Consistent with this
strategy, last year Fresenius and CytoSorbents entered into a
global marketing agreement where CytoSorb is helping to “Expand the
Dimension of Blood Purification” for both companies as the
“featured blood purification therapy for the removal of cytokines
(e.g. sepsis and inflammation), bilirubin (e.g. liver disease), and
myoglobin (e.g. trauma) on Fresenius’ critical care blood pump
machines worldwide (excluding the U.S.). The goal is to drive
growth of both companies by promoting concurrent utilization of
Fresenius’ machines and disposables with CytoSorb on a much larger
percentage of patients in the ICU. This partnership is expected to
launch formally next year.Similarly, Baxter, the second largest
dialysis company globally, has publicly-disclosed that it will spin
out its critical care Acute Therapies division and Renal Therapies
division into a new U.S. publicly-traded entity, Vantive, next
year. In public filings, Baxter has disclosed that its Acute
Therapies division generates roughly $700 million in annual revenue
worldwide mainly from dialysis, with roughly two-thirds of revenue,
or approximately $475 million, coming from outside the U.S., with
heavy overlap where we sell CytoSorb®.
The information above puts into perspective the
relevance of our high margin sales of CytoSorb, where $31.4 million
in trailing twelve-month sales already represents roughly 5-6% of
the non-U.S. critical care sales of these market leaders, with the
potential for even more growth ahead. It also highlights how
uniquely positioned we believe our Company is to open major new
avenues of growth in critical care and cardiac surgery, and how
this is directly synergistic with our partners in these fields.
3. Managing Cash and
Cash Burn
The last formal equity financing that we did was
in July 2020, where we raised $57.5 million, before fees. We
utilized that capital, together with other cash on hand, to:
- Meet international COVID-19 demand
for CytoSorb
- Retire our $15 million term loan
facility
- Build out our new state-of-the-art
manufacturing facility that has increased our sales capacity
five-fold while maintaining high product gross margins
- Fund to completion our U.S. and
Canadian pivotal STAR-T randomized controlled trial with strong
clinical and regulatory resources to lead it
- Buffer the impact of the
post-pandemic effects of COVID
- Invest in key positions throughout
the Company to support our future success
This spend has positioned us well, giving us a
stronger foundation for the future.
That said, the financing environment for
healthcare and life science companies has been challenging to say
the least for the past two years, exacerbated by the bear market in
small and microcap biotech and medical device stocks, the regional
bank financial crisis earlier this year, weak M&A activity,
rising interest rates, and many other factors. Even companies with
revenue and near-term catalysts like ours have struggled. We have
been working to strengthen our balance sheet to give us the
financial resources to pursue all of our growth opportunities
aggressively, while actively cutting costs across the organization,
eliminating non-core programs to focus on core activities. Like
many companies, we initiated an equity offering but terminated the
process after determining that current market conditions and terms
of an offering would not be in the best interests of our
shareholders. We are currently focused on a number of
alternative sources of capital, including less or non-dilutive debt
financing, royalty financing, strategic or direct investments,
equity financing, and/or combinations thereof. We believe we
benefit from having a valuable and strategic core business that
generates high margin sales, and the potential prospect of opening
the important U.S. and Canadian markets for DrugSorb-ATR with
supportive data. We hope to have an update on this front for
shareholders soon.
Back to the Future
As we look forward to 2024 and beyond, we remain
excited and confident about the growth prospects for CytoSorb and
the potential of opening the U.S. and Canadian markets with
DrugSorb-ATR. Either business would be good alone, but together, we
expect significant synergies on both sales growth and
profitability. Importantly, it represents a path to potentially
becoming a truly global leader in acute care blood purification. We
thank you for your continued support.”
Results of Operations
Comparison for the three months ended
September 30, 2023 and 2022:
Revenues:
Revenue from product sales was approximately
$7,754,000 in the three months ended September 30, 2023, as
compared to approximately $6,463,000 in the three months ended
September 30, 2022, an increase of approximately $1,291,000, or
20%. Direct sales increased approximately $586,000, or 16%.
Distributor sales increased approximately $705,000, or 25%. The
increase in the average exchange rate of the Euro to the U.S.
dollar positively impacted third quarter 2023 product sales by
approximately $508,000. For the three months ended September 30,
2023, the average exchange rate of the Euro to the U.S. dollar was
$1.09 as compared to an average exchange rate of $1.01 for the
three months ended September 30, 2022.
Grant income was approximately $1,057,000 for
the three months ended September 30, 2023 as compared to
approximately $1,649,000 for the three months ended September 30,
2022, a decrease of approximately $592,000, or 36%. This decrease
was a result of the conclusion of several grants during the three
months ended September 30, 2023.
Total revenues were approximately $8,811,000 for
the three months ended September 30, 2023, as compared to total
revenues of approximately $8,111,000 for the three months ended
September 30, 2022, an increase of approximately $700,000, or
9%.
Cost of Revenues:
For the three months ended September 30, 2023
and 2022, cost of revenue was approximately $3,204,000 and
$4,494,000, respectively, a decrease of approximately $1,290,000.
Product cost of revenue was approximately $2,161,000 and
$2,916,000, respectively, for the three months ended September 30,
2023 and 2022, a decrease of approximately $755,000. The decrease
is due primarily to inefficiencies associated with the relocation
of our production activities to our new manufacturing facility in
Princeton, New Jersey during the three months ended September 30,
2022 that did not recur in 2023. Product gross margins were
approximately 72% for the three months ended September 30, 2023 as
compared to approximately 55% for the three months ended September
30, 2022.
Research and Development
Expenses:
For the three months ended September 30, 2023,
research and development expenses were approximately $3,749,000, as
compared to research and development expenses of approximately
$3,290,000 for the three months ended September 30, 2022, an
increase of approximately $459,000. This increase was due to an
increase in our clinical trial activities of approximately $164,000
resulting from the costs related to our Star-T trial, approximately
$147,000 in commercial readiness activities related to DrugSorb ATR
and an increase in other non-grant research and development
activities of approximately $148,000.
Legal, Financial and Other Consulting
Expenses:
Legal, financial, and other consulting expenses
were approximately $1,103,000 for the three months ended September
30, 2023, as compared to approximately $610,000 for the three
months ended September 30, 2022, an increase of approximately
$494,000. This increase was due to costs related to the abandonment
of certain patent applications of approximately $183,000, other
increases in legal expenses of approximately $42,000, an increase
in consulting costs of approximately $152,000 related to regulatory
matters on DrugSorb-ATR, an increase in employment agency fees of
approximately $93,000 and an increase in accounting fees of
approximately $24,000.
Selling, General and Administrative
Expenses:
Selling, general and administrative expenses
were approximately $8,104,000 for the three months ended September
30, 2023, as compared to approximately $8,735,000 for the three
months ending September 30, 2022, a decrease of $631,000. This
decrease was due to a decrease in advertising costs of
approximately $683,000, a decrease in salaries, commissions, and
related costs of approximately $28,000, and a decrease in non-cash
restricted stock expense of approximately $105,000. These decreases
were offset by an increase in non-cash stock compensation expense
of approximately $81,000, an increase in travel and entertainment
costs of approximately $73,000 and an increase in other general and
administrative costs of approximately $31,000.
Loss on Foreign Currency
Transactions:
For the three months ended September 30, 2023,
the loss on foreign currency transactions was approximately
$1,810,000 as compared to a loss of approximately $3,230,000 for
the three months ended September 30, 2022. The 2023 loss was
directly related to the decrease in the spot exchange rate of the
Euro to the U.S. dollar at September 30, 2023 as compared to June
30, 2023. The spot exchange rate of the Euro to the U.S. dollar was
$1.06 per Euro at September 30, 2023, as compared to $1.09 per Euro
at June 30, 2023. The 2022 loss was directly related to the
decrease in the spot exchange rate of the Euro to the U.S. dollar
at September 30, 2022 as compared to June 30, 2022. The spot
exchange rate of the Euro to the U.S. dollar was $0.98 per Euro at
September 30, 2022, as compared to $1.05 per Euro at June 30,
2022.
Comparison for the nine months ended
September 30, 2023 and 2022:
Revenues:
Revenue from product sales was approximately
$23,736,000 for the nine months ended September 30, 2023, as
compared to approximately $21,718,000 for the nine months ended
September 30, 2022, an increase of approximately $2,019,000, or 9%.
Direct sales increased by approximately $716,000, or 6%.
Distributor sales increased by approximately $1,303,000, or 15%.
The increase in the average exchange rate of the Euro to the U.S.
dollar positively impacted product sales for the nine months ended
September 30, 2023 by approximately $404,000. For the nine months
ended September 30, 2023, the average exchange rate of the Euro to
the U.S. dollar was $1.08 as compared to an average exchange rate
of $1.06 for the nine months ended September 30, 2022.
Grant income was approximately $3,945,000 for
the nine months ended September 30, 2023 as compared to
approximately $3,580,000 for the nine months ended September 30,
2022, an increase of approximately $364,000 or 10%. This increase
is the result of the impact of new grants awarded during the nine
months ended September 30, 2023.
Total revenues were approximately $27,681,000
for the nine months ended September 30, 2023, as compared to total
revenues of approximately $25,298,000 for the nine months ended
September 30, 2022, an increase of approximately $2,383,000, or
9%.
Cost of Revenues:
For the nine months ended September 30, 2023 and
2022, cost of revenue was approximately $10,600,000 and
$10,322,000, respectively, an increase of approximately $278,000.
Product cost of revenue was approximately $6,785,000 and
$6,924,000, respectively, for the nine months ended September 30,
2023 and 2022, a decrease of approximately $139,000. The decrease
in product cost of revenue was due to a reduction in the cost per
device manufactured as we begin to realize production efficiencies
at our new manufacturing facility in Princeton, New Jersey. Grant
cost of revenue for the nine months ended September 30, 2023 was
approximately $3,815,000 as compared to $3,398,000 for the nine
months ended September 30, 2022, an increase of approximately
$417,000. This increase in cost of grant revenue was due primarily
to an increase in grant revenue. Product gross margins were
approximately 71% for the nine months ended September 30, 2023 and
approximately 68% for the nine months ended September 30, 2022. The
increase in product gross margin is due primarily to inefficiencies
associated with the relocation of our production activities to our
new manufacturing facility in Princeton, New Jersey during the nine
months ended September 30, 2022 that did not recur in 2023.
Research and Development
Expenses:
For the nine months ended September 30, 2023,
research and development expenses were approximately $11,632,000 as
compared to approximately $11,717,000 for the nine months ended
September 30, 2022, a decrease of approximately $85,000 . This
decrease was due to a decrease in costs associated with our
clinical trial activities of approximately $1,270,000 related to
the pause of our STAR-D trial in November 2022. This decrease was
offset by approximately $850,000 of costs incurred related to
pre-production manufacturing activities required to bring the new
manufacturing plant to a state of commercial readiness,
approximately $268,000 of costs related to commercial readiness
activities related to DrugSorb ATR and an increase of other
non-grant related research and development activities of
approximately $67,000.
Legal, Financial and Other Consulting
Expenses:
Legal, financial, and other consulting expenses
were approximately $2,958,000 for the nine months ended September
30, 2023, as compared to approximately $2,089,000 for the nine
months ending September 30, 2022. The increase of approximately
$869,000 was due to settlement costs of certain pending litigation
matters of approximately $280,000, and increase in legal fees of
approximately $205,000, an increase in employment agency fees of
approximately $174,000, an increase in consulting costs of
approximately $153,000 related to regulatory matters on
DrugSorb-ATR, an increase in costs related to the abandonment of
certain patent applications of approximately $45,000 and an
increase in accounting fees of approximately $12,000.
Selling, General and Administrative
Expenses:
Selling, general and administrative expenses
were approximately $24,358,000 for the nine months ended September
30, 2023, as compared to $26,335,000 for the nine months ended
September 30, 2022, a decrease of $1,977,000. This decrease was due
to a decrease in salaries, commissions and related costs of
approximately $712,000, a decrease in advertising costs of
approximately $643,000, a decrease in travel and entertainment
expenses of approximately $54,000, a decrease in non-cash stock
compensation expense of approximately $67,000, a decrease in
commercial insurance expenses of approximately $173,000, a decrease
in public relations costs of approximately $156,000, a decrease in
royalty expense of approximately $78,000, a decrease in occupancy
costs of approximately $83,000 and a decrease in other general and
administrative expenses of approximately $11,000.
Loss on Foreign Currency
Transactions:
For the nine months ended September 30, 2023,
the loss on foreign currency transactions was approximately
$734,000 as compared to a loss of approximately $6,967,000 for the
nine months ended September 30, 2022. The 2023 loss was directly
related to the decrease in the spot exchange rate of the Euro to
the U.S. dollar as of September 30, 2023 as compared to December
31, 2022. The spot exchange rate of the Euro to the U.S. dollar was
$1.06 per Euro as of September 30, 2023, as compared to $1.07 per
Euro at December 31, 2022. The 2022 loss was directly related to
the decrease in the spot exchange rate of the Euro to U.S. dollar
which was at September 30, 2022 as compared to June 30, 2022. The
spot exchange rate of the Euro to the U.S. dollar was $0.98 as of
September 30, 2022, as compared to $1.14 as of December 31,
2021.
Liquidity and Capital
Resources:
Since inception, our operations have been
primarily financed through the issuance of debt and equity
securities. As of September 30, 2023, we had current assets of
approximately $19,261,000 and current liabilities of approximately
$11,972,000. As of September 30, 2023, $25 million of our total
shelf amount was allocated to our ATM facility, of which
approximately $22.8 million is still available. In April of 2023,
we received approximately $1,000,000 in cash from the approved sale
of our net operating losses and research and development credits
from the State of New Jersey.
We are also managing our resources
proactively, continuing to invest in key areas such as our U.S.
pivotal STAR-T trial and we have instituted tight cost
controls.
At September 30, 2023, we have approximately
$10.0 million in cash, including approximately $8.4 million and
$1.7 million in unrestricted and restricted cash, respectively. We
believe this is sufficient to fund the Company’s operations through
the first quarter of 2024. The Company had commenced a confidential
marketing process for an underwritten public offering of its common
stock and decided to terminate such process. The termination
resulted from an assessment by the Company’s Board of Directors and
management team that current market conditions were not conducive
for the offering on terms that would be in the best interests of
the Company’s stockholders. The Company continues to pursue
alternative sources of capital, which may include debt financing,
royalty financing, strategic or direct investments, equity
financing and/or combinations thereof."
Q3 2023 Earnings Conference
Call
The Company will conduct its third quarter 2023
results call today at 4:30 p.m. Eastern time.
Conference Call Details:Date:
Thursday, November 9, 2023Time: 4:30 PM Eastern TimeLive
Presentation Webcast:
https://edge.media-server.com/mmc/p/9egdsb9a
Participant Dial in:United
States - New York +1.646.968.2525USA & Canada - Toll-Free
+1.888.596.4144Conference ID: 5576338
For either the webcast or conference call, it is
recommended that participants log or dial in approximately 10
minutes prior to the start of the call.
An archived recording of the conference call
will be available under the Investor Relations section of the
Company’s website at
https://ir.cytosorbents.com/financial-results
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 Q3 2023, more than 221,000 CytoSorb devices
had 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 has
completed enrollment in the FDA-approved, randomized, controlled
STAR-T (Safe and Timely Antithrombotic Removal-Ticagrelor) study of
140 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 $50 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™, 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 X (fka 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, statements about potential exposures
resulting from our cash positions, 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)
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
Revenue: |
|
|
|
|
|
|
|
|
|
|
CytoSorb sales |
|
$ |
7,709 |
|
|
$ |
6,271 |
|
|
$ |
23,681 |
|
|
$ |
21,176 |
|
Other sales |
|
|
45 |
|
|
|
191 |
|
|
|
55 |
|
|
|
542 |
|
Total product sales |
|
|
7,754 |
|
|
|
6,462 |
|
|
|
23,736 |
|
|
|
21,718 |
|
Grant income |
|
|
1,057 |
|
|
|
1,649 |
|
|
|
3,945 |
|
|
|
3,580 |
|
Total revenue |
|
|
8,811 |
|
|
|
8,111 |
|
|
|
27,681 |
|
|
|
25,298 |
|
Cost of revenue |
|
|
3,204 |
|
|
|
4,494 |
|
|
|
10,600 |
|
|
|
10,322 |
|
Gross profit |
|
|
5,607 |
|
|
|
3,617 |
|
|
|
17,081 |
|
|
|
14,976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
3,749 |
|
|
|
3,290 |
|
|
|
11,632 |
|
|
|
11,717 |
|
Legal, financial and other consulting |
|
|
1,104 |
|
|
|
609 |
|
|
|
2,958 |
|
|
|
2,089 |
|
Selling, general and administrative |
|
|
8,104 |
|
|
|
8,735 |
|
|
|
24,359 |
|
|
|
26,335 |
|
Total expenses |
|
|
12,957 |
|
|
|
12,634 |
|
|
|
38,949 |
|
|
|
40,141 |
|
Loss from operations |
|
|
(7,350 |
) |
|
|
(9,017 |
) |
|
|
(21,868 |
) |
|
|
(25,165 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income/(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense),
net |
|
|
(34 |
) |
|
|
47 |
|
|
|
(106 |
) |
|
|
79 |
|
Gain (loss) on foreign
currency transactions |
|
|
(1,809 |
) |
|
|
(3,231 |
) |
|
|
(734 |
) |
|
|
(6,967 |
) |
Miscellaneous Income
(Expense) |
|
|
----- |
|
|
----- |
|
|
|
35 |
|
|
|
7 |
|
Total other income (expense),
net |
|
|
(1,843 |
) |
|
|
(3,184 |
) |
|
|
(805 |
) |
|
|
(6,881 |
) |
Loss before benefit
from income taxes |
|
|
(9,193 |
) |
|
|
(12,201 |
) |
|
|
(22,673 |
) |
|
|
(32,046 |
) |
Benefit from income taxes |
|
|
---- |
|
|
---- |
|
|
|
---- |
|
|
---- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(9,193 |
) |
|
$ |
(12,201 |
) |
|
$ |
(22,673 |
) |
|
$ |
(32,046 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
common share |
|
$ |
(0.21 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.52 |
) |
|
$ |
(0.74 |
) |
Weighted average number of
shares of common stock outstanding |
|
|
44,373,969 |
|
|
|
43,606,980 |
|
|
|
44,024,483 |
|
|
|
43,552,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(9,193 |
) |
|
$ |
(12,201 |
) |
|
$ |
(22,673 |
) |
|
$ |
(32,046 |
) |
Other comprehensive income
(loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment |
|
|
1,656 |
|
|
|
2,659 |
|
|
|
655 |
|
|
|
5,675 |
|
Comprehensive loss |
|
$ |
(7,537 |
) |
|
$ |
(9,542 |
) |
|
$ |
(22,018 |
) |
|
$ |
(26,371 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CYTOSORBENTS CORPORATIONCONDENSED CONSOLIDATED
BALANCE SHEETS(amounts in thousands)
|
|
September 30, 2023 |
|
|
|
December 31, 2022 |
|
ASSETS: |
|
|
|
|
|
|
|
Current
Assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
8,359 |
|
|
$ |
22,145 |
|
Grants
and accounts receivable, net |
|
6,179 |
|
|
|
5,665 |
|
Inventories |
|
2,977 |
|
|
|
3,461 |
|
Prepaid
expenses and other current assets |
|
1,746 |
|
|
|
2,489 |
|
Total current assets |
|
19,261 |
|
|
|
33,760 |
|
|
|
|
|
|
|
|
|
Property
and equipment, net |
|
10,282 |
|
|
|
10,743 |
|
Restricted Cash |
|
1,687 |
|
|
|
1,687 |
|
Right of
use asset |
|
12,196 |
|
|
|
12,604 |
|
Other
assets |
|
4,149 |
|
|
|
4,438 |
|
TOTAL ASSETS |
$ |
47,575 |
|
|
$ |
63,232 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
$ |
3,442 |
|
|
$ |
1,655 |
|
Current
maturities of long-term debt |
|
833 |
|
|
|
---- |
|
Lease
liability - current portion |
|
117 |
|
|
|
109 |
|
Accrued
expenses and other current liabilities |
|
7,580 |
|
|
|
7,951 |
|
Total current liabilities |
|
11,972 |
|
|
|
9,715 |
|
Lease
liability, net of current portion |
|
12,892 |
|
|
|
13,142 |
|
Long-term debt, net of current maturities |
|
4,199 |
|
|
|
5,000 |
|
TOTAL LIABILITIES |
|
29,063 |
|
|
|
27,857 |
|
|
|
|
|
|
|
|
|
Total
stockholders’ equity |
|
18,512 |
|
|
|
35,375 |
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
47,575 |
|
|
$ |
63,232 |
|
|
|
|
|
|
|
|
|
Please Click to Follow Us on
Facebook and X (fka Twitter)
U.S. Company Contact:Kathleen Bloch, CFO305
College Road EastPrinceton, NJ 08540+1 (732)
398-5429kbloch@cytosorbents.com
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