MONMOUTH JUNCTION, N.J.,
Feb. 18, 2021 /PRNewswire/
-- CytoSorbents Corporation (NASDAQ: CTSO), a critical
care immunotherapy leader commercializing its
CytoSorb® blood purification technology to treat
deadly inflammation in critically-ill and cardiac surgery patients
around the world, issues a stockholder letter from Chief Executive
Officer, Dr. Phillip Chan.
Additional detail will be forthcoming in the Company's Q4 and Full
Year 2020 earnings press release and Form 10-K, expected
March 9, 2021.
CytoSorbents Focuses 2021 on Sales Growth and Path to U.S. FDA
Regulatory Approval and Commercialization for CytoSorb.
Goals for Future Growth in 2021 and Beyond
- Achieve solid growth in product revenue, while replacing
COVID-19 sales
- Prioritize path to U.S. regulatory approval of CytoSorb
based on ticagrelor removal in cardiothoracic surgery
- Build-out the U.S. commercialization team
- Execute on our new clinical trial strategy in the U.S. and
Europe
- Expand manufacturing facility to accommodate a peak capacity
of $350-400M in sales
- Roll out a new company look and perspective
Dear Stockholders and Friends,
Last month, we were pleased to pre-announce preliminary,
unaudited 2020 total revenue of $40.8
million and product sales of nearly $40 million, representing 73% growth from 2019,
and a healthy year-end cash balance of approximately $71 million, despite the COVID-19 pandemic - one
of the most serious debacles the world has faced in recent
history.
In 2020, COVID-19 was a force majeure that ground global
economic growth to a halt. Companies everywhere and in every
industry faced a host of unknowns, including the potential for a
precipitous drop in revenue, the risk of major losses and even
bankruptcy, the prospect of mass workforce lay-offs, and the risk
of true personal harm to their employees – especially those that
could not work remotely. Certainly for CytoSorbents, COVID-19
led to many unprecedented and complex challenges that
had a profound impact on nearly every part our company,
from sales to manufacturing to clinical trials. That said, we
believe the experience and resourcefulness of our leadership team,
including management and the Board of Directors, and the tenacity,
hard work, and dedication of our employees, enabled us to both
navigate safely through most of these obstacles and to have our
best year ever.
With so much uncertainty caused by the COVID-19 crisis, we moved
decisively in 2020 to embrace our opportunities, protect our
business, drive innovation, and importantly, lay the building
blocks for future growth.
Embracing Opportunity
Although COVID-19 has
disrupted many aspects of our business, it has also been a
catalyst, helping to bring the dangers of hyperinflammation,
and specifically the term "cytokine storm," into the collective
consciousness, while shining a spotlight on CytoSorb. This in
turn, led us to pivot quickly to maximize our sales of CytoSorb for
both COVID-19 and our non-COVID-19 core businesses in critical care
and cardiac surgery. Because of this, in a down year for many
companies, we continued to extend our scientific and commercial
leadership in these existing markets, and also in new applications
we helped to create. But our success did not happen by
chance. It was due to the dedicated effort and hard work from
our entire company to take advantage of every opportunity.
Even the increase in sales related to COVID-19 was only possible
because of the extensive prior use of CytoSorb to treat cytokine
storm. For example:
- We were one of the first companies to publicly highlight the
connection between cytokine storm, hyperinflammation, and severity
of COVID-19, and the potential of CytoSorb to help, early on in the
pandemic, setting the theme for the rest of the year and
generating publicity and major media coverage by the New York Times, Bloomberg, Fox Business News, and
others.
- We quickly established CytoSorb as a potential treatment option
in critically ill COVID-19 patients with our first treatments of
afflicted patients where the pandemic began in Wuhan, China.
- Then, together with our distribution and strategic partners, we
responded quickly to growing global demand for CytoSorb due to
COVID-19. This led to the inclusion of CytoSorb, or blood
purification to treat cytokine storm, into the COVID-19 treatment
guidelines in many countries, the specific authorization for use in
COVID-19 patients in India,
Israel, and most recently
Canada, and the rapid registration
and distribution of CytoSorb throughout Latin America, including Brazil, Mexico, Colombia, and Argentina. We estimate that more than
5,000 COVID-19 patients have been treated with CytoSorb across more
than 30 countries, contributing to the more than 121,000 cumulative
CytoSorb treatments delivered across 67 countries worldwide to
date.
- We rapidly adapted to the new world of "virtual"
commercialization amidst widespread hospital lockdowns during the
COVID-19 pandemic, via dozens of webinars and
video-teleconferences, virtual symposia, and other creative
approaches.
- Meanwhile, we pursued COVID-19 related opportunities in the
U.S. In parallel discussions with BARDA, where CytoSorb was
deemed "Highly Relevant" in the response to COVID-19, we had active
discussions with FDA, where CytoSorb became one of the first blood
purification technologies to receive FDA Emergency Use
Authorization (EUA) for adult, critically-ill COVID-19 patients
with imminent or confirmed respiratory failure. With FDA EUA,
we launched U.S. commercialization from square one, rapidly
assembling a small dedicated internal team, and later establishing
multiple commercialization partnerships that included long-term
partner Terumo Cardiovascular, covering the majority of the
U.S.
- In addition to the growing number of positive data
presentations from international centers supporting the use of
CytoSorb during COVID-19, we are now collecting U.S. and
international patient-level data through our U.S./International
"CytoSorb Therapy in COVID-19 (CTC)" registry. The goal is to
evaluate CytoSorb as a key part of a more comprehensive "lung
resting" strategy to treat patients with acute respiratory distress
syndrome (ARDS) on mechanical ventilation or extracorporeal
membrane oxygenation (ECMO) therapy. The treatment of ARDS is
a very large market and remains a major unmet medical need in
critical care, carrying a high mortality despite steroids, prone
positioning, low tidal volume ventilation, and other conventional
treatments.
Protecting our Business
Not since the financial
crisis of 2007-2008 have we seen such a pervasive and devastating
threat to the global economy and our personal lives. The
COVID-19 pandemic didn't just create fear and uncertainty, it
wreaked universal havoc on governments, entire industry sectors,
companies, families, and individuals. To protect our
company:
- We moved quickly to a remote workplace for our office
personnel, while putting together frequent town hall meetings to
keep our employees informed, and to maintain team
connectivity.
- We put multiple safeguards in place to protect our
manufacturing staff, which helped keep our manufacturing facility
running, and resulted in our ability to ramp production 24/7 with
multiple shifts and lines fueled by record hires, with nearly
50,000 devices produced in 2020. To put that volume into
perspective, prior to starting 2020, we had cumulatively delivered
a total of 80,000 devices since our 2011 CE Mark approval.
- We secured the future of the company by solidifying our balance
sheet through exercises of our ATM facility and a secondary public
offering in July 2020 that increased
our cash balance to $89 million, grew
our institutional ownership to approximately 40%, added new analyst
coverage by SVB Leerink and Jefferies, and most importantly, gave
us the capital and optionality to invest in growth initiatives such
as clinical trials, a larger manufacturing facility, and our
commercial organization. After obtaining the Paycheck
Protection Program (PPP) loan, we repaid the loan to make the funds
available to companies in greater need, and ultimately repaid our
$15 million loan with Bridge Bank,
completely eliminating long-term debt from our balance sheet
- We also continued to manage our expenses carefully, exercising
fiscal discipline and staying within budget.
Driving Innovation
We believe innovation is the
lifeblood of our company, fueled by our own investment as well as
more than $38 million in government
contracts, grants, and other non-dilutive funding towards our
technology over the past many years. In 2020, we made
excellent progress in advancing our pipeline of potential
products. For example, we:
- Attained E.U. approval of the ECOS-300CY cartridge for the
ex vivo organ perfusion market. Today, there is a
growing market for keeping organs alive outside of the body, prior
to their transplant into someone who needs them, by continuously
circulating an oxygenated, temperature-controlled fluid called
perfusate through the organ. The ECOS-300CY cartridge can
reduce excessive cytokines and other inflammatory toxins in this
perfusate that can otherwise damage the organ. In doing so,
CytoSorb holds the promise of increasing the scarce availability of
solid organs for transplant by preserving the function of healthy
donated organs, and also rehabilitating dysfunctional ones that
would normally be discarded. We believe the ECOS-300CY could
become a valuable improvement to ex vivo organ perfusion
systems sold by other companies such as our partner Aferetica
(Italy), and open a market that
has recently garnered keen investor interest.
- Received $8.4M in grants and
contracts last year from the U.S. Army and the U.S. Department of
Defense to bring our HemoDefend-BGA universal plasma and whole
blood program technology, currently in advanced development and
validated by the military, to human clinical trials. In
addition to the military needs, there is a large civilian blood
transfusion market as well. In 2017, approximately three
million units of plasma were distributed in the United States
alone.
Laying the Foundation for Future Growth
For
most companies, 2021 will be a transition year as COVID-19
hopefully fades from dominance, and business returns to "the new
normal." We expect the same, but unlike our contemporaries in the
medical device industry that suffered revenue shortfalls from sharp
declines in elective surgeries, we were fortunate to actually see a
surge in sales, both from COVID-19 and its halo effect on our
underlying business. As such, our focus for 2021 is not on
recovery, but on progress and growth. Our overall projected
goals for this year are to:
- Achieve solid growth in product revenue, while replacing
COVID-19 sales – As we discussed a little more than a year ago,
we had already invested heavily for growth for 2020. We led a
significant build-out of our commercial teams – including our
direct sales force and our international distributor business, an
expansion of our existing manufacturing facility to an increased
capacity of $80M in sales, new and
more compelling clinical data, and a host of new exciting
applications, such as the new CytoSorb E.U. approvals obtained in
2020 to remove the blood thinners, ticagrelor
(Brilinta®, Brilique®, AstraZeneca) and
rivaroxaban (Xarelto®, Janssen and Bayer) during urgent
or emergent cardiothoracic surgery. This preparation allowed
us to rapidly respond to the surge in demand for CytoSorb from the
COVID-19 pandemic and our core businesses, resulting in a 73%
increase in sales from a year ago. Yet remarkably, we were
able to achieve these results with the proverbial one hand tied
behind our back. During the pandemic, hospitals restricted
visits from sales reps and non-essential personnel, overworked
physicians had no time for non-emergent meetings, medical
conferences went virtual and were poorly attended, and elective
surgery cases and non-COVID-19 admissions were down due to hospital
bandwidth and patient fears. We frequently observed that a
COVID-19 patient gained was also a "typical" patient lost – often
an elective surgery case that was cancelled to make room for a
COVID-19 patient. With an expected transition back to
business in the "new normal," we expect to benefit from the full
force of our investments in people, infrastructure, and new
applications, which we believe will help us to organically replace
COVID-19 revenue.
- Prioritize path to U.S. regulatory approval of CytoSorb
based on ticagrelor removal in cardiothoracic surgery
Last
April, we achieved FDA Breakthrough Designation of CytoSorb to
remove ticagrelor during urgent or emergent cardiothoracic
surgery. However, expectedly, the Agency focused on the
pandemic which significantly delayed the FDA's availability to
advance non-COVID-19 applications. That said, we recently
just met again with the Agency and believe that we are now aligned
on the positive benefit-risk profile of the therapy and the
additional clinical data needed to support approval.
Furthermore, we recently strengthened our team by hiring
David Cox as Vice President of
Global Regulatory Affairs, formerly VP of Regulatory Affairs at
Integra LifeSciences. David is a seasoned regulatory executive with
a long track record of regulatory successes at Integra, Terumo BCT,
and Medtronic, who will add the needed firepower and focus to our
regulatory efforts. There is another point that makes U.S.
FDA Breakthrough Designation even more meaningful. Last month, the
Centers for Medicare & Medicaid Services (CMS) announced the
Medicare Coverage of Innovative Technology pathway that will
provide national Medicare coverage as early as the same day as FDA
market authorization for breakthrough medical devices, where
coverage would last 4 years. This program is expected to
speed adoption of CytoSorb, if approved, across the U.S. for this
application. Finally, the United
Kingdom's internationally renowned National Institute for
Health and Care Excellence (NICE), viewed by most as the world's
leading authority in evaluating the cost-effectiveness of novel
therapies, just recently issued a Medtech Innovation Briefing on
CytoSorb for reducing risk of bleeding during cardiac surgery,
highlighting the unique potential of CytoSorb to improve clinical
outcomes and efficiency that can lead to substantial cost savings
to hospital systems.
- Build-out the U.S. commercialization team – In
anticipation of a potential U.S. approval in the future, and with
active U.S. sales related to our FDA Emergency Use Authorization of
CytoSorb for COVID-19, we added James
Komsa as Vice President of U.S. Sales and Marketing, an
18-year veteran at Medtronic with Vice President roles in the
Restorative Therapy (RTG), Spine, and Cardiac and Vascular (CVG)
groups. In the near-term, Jim has been working to optimize
COVID-19 sales amongst our commercialization partners in the U.S.
Longer-term, his main goal is to develop and build a comprehensive
commercialization strategy and team for a potential U.S. launch,
pending FDA approval, of CytoSorb for ticagrelor removal during
cardiothoracic surgery.
- Execute on our new clinical trial strategy in the U.S. and
Europe – We are building a
global team with core expertise in successfully designing and
executing rigorous clinical trials that will support regulatory
approvals and drive market adoption. In 2021, we will launch
numerous company-sponsored trials in cardiac surgery and critical
care including studies in antithrombotic drug removal, septic
shock, and acute liver disease. Meanwhile, the pivotal
REFRESH 2-AKI trial is resuming following the favorable interim
safety review and we continue to wait for topline data from the
REMOVE trial that are expected soon. We will discuss the
clinical strategy in greater detail in the upcoming Q4 and Full
Year 2020 earnings press release.
- Expand our manufacturing facility to accommodate a peak
capacity of $350-400M in sales - We estimate it will take
approximately 1.5 to 2 years to build-out, validate, and bring a
new facility on line, consistent with the timing of our growth
projections. Based on volume production and other manufacturing
efficiencies, we expect continued significant improvements in our
product gross margins, which were greater than 80% in Q4 2020.
- Roll out a new company look and perspective – We
have some exciting changes planned for this year with new branding,
new messaging, a revitalized look, and a strengthened focus on
building greater awareness of our Company and our accomplishments
in the investment community. Stay tuned.
What Next?
In 2021, we are still working to
manage the challenges of the COVID-19 pandemic, though fortunately
rates of new infection have been falling worldwide. With the
rollout of COVID-19 vaccinations, we are optimistic that the
COVID-19 pandemic will abate significantly, but not completely
disappear, by mid-summer. According to Bloomberg, more than
186 million vaccinations have been given across 82 countries, with
57 million doses already administered among 40 million people in
the U.S. Although an encouraging start, there are 7.8 billion
people worldwide, and in the U.S., only 20% have either been
infected or received a vaccine. At current reported
vaccination rates, it will take an estimated 9 months to vaccinate
75% of the U.S. population alone.
And even as the world races to vaccinate the masses, the virus
has not been standing still. Potentially more deadly variants
of the virus are now circulating with the highly contagious B.1.1.7
variant, first isolated in the United
Kingdom, now in more than 40 U.S. states and doubling in new
U.S. infections every 10 days. The U.S. Centers of Disease
Control and Prevention (CDC) expect B.1.1.7 to become the dominant
strain in the U.S. by March. Fortunately, the vaccines from
Pfizer and Moderna appear to protect against this strain.
However, there are even more worrisome strains, such as the B.1.351
variant that originated in South
Africa, and now the B.1.525 variant, found in 11 countries
including here in the U.S., with multiple mutations that may confer
a degree of resistance to some vaccines. For example, early
in vitro studies indicate that the Moderna and Pfizer
vaccines may be less effective, and the AstraZeneca vaccine is not
efficacious enough, against the B.1.351 variant. Time will
tell if these mutant viruses become major problems, but what is
clear is that the coronavirus, in some shape or form, will continue
to be with us for some time.
Regardless of what will happen, know that the same leadership
team that has successfully and responsibly led the Company through
a tremendous multi-year expansion with strong and consistent
growth, and through numerous complicated challenges such as the
COVID-19 pandemic, has only gotten stronger with our recent
additions, and remains committed to the future success of
CytoSorbents.
A Sincere Word of Thanks
In a time of crisis,
true heroes see the need and heed the call, without thought for
themselves. Our appreciation and gratitude to all of the
unsung heroes on the front lines of the pandemic - from the myriad
of healthcare workers and support staff, the first responders, and
researchers, to all of those in the background who kept the economy
running and kept our families fed and supplied, our houses warm and
connected, our children educated, and made it possible for the rest
of us to shelter in place. And on behalf of the Board of
Directors and the management team, a sincere word of thanks to all
of you in our extended CytoSorbents family – patients and their
families, physicians, nurses, perfusionists and other healthcare
workers, scientific and clinical researchers, hospital
administrators, distributors, strategic partners, service
providers, shareholders, and our amazing employees and their
families - for your tremendous dedication and effort in a
challenging year, and for your support, trust, and faith in
CytoSorb and our Company. Without you, this past year would
not have been possible. Wishing everyone a safe, healthy, and
prosperous 2021!
Dr. Phillip Chan, MD,
PhD
Chief Executive Officer
CytoSorbents Corporation
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 67 countries around the world, as an 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.
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
that can lead to post-operative complications, including multiple
organ failure. CytoSorb® has been used in more than 121,000 human
treatments to date. CytoSorb has received CE-Mark label
expansions for the removal of bilirubin (liver disease), myoglobin
(trauma), and both ticagrelor and rivaroxaban during cardiothoracic
surgery. CytoSorb has also received FDA Emergency Use
Authorization in the United States
for use in critically ill COVID-19 patients with imminent or
confirmed respiratory failure, in defined circumstances.
CytoSorb has also been granted FDA Breakthrough Designation for the
removal of ticagrelor in a cardiopulmonary bypass circuit during
emergent and urgent cardiothoracic surgery.
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 more than $38 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 products under development based upon this unique blood
purification technology protected by many issued U.S. and
international patents and multiple applications pending, including
ECOS-300CY™, CytoSorb-XL™, HemoDefend-RBC™, HemoDefend-BGA™,
VetResQ™, K+ontrol™, 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, including statements regarding our expectations
about our cash runway, the advancement of our trials, our plans to
initiate new trials, our goals to develop and commercialize
CytoSorb and the timing thereof, the potential impact of COVID-19
on our operations and milestones, 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, risks discussed in our Annual
Report on Form 10-K, filed with the SEC on March 5, 2020, as updated by the risks reported
in our Quarterly Reports on Form 10-Q, and Current Reports on Form
8-K, 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, particularly in light of the current
coronavirus pandemic, where businesses can be impacted by rapidly
changing state and federal regulations, as well as the health and
availability of their workforce. 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.
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Cytosorbents Contact:
Amy Vogel
Investor Relations
732-398-5394
avogel@cytosorbents.com
Public Relations Contact:
Eric Kim
Rubenstein Public Relations
212-805-3052
ekim@rubensteinpr.com
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