Cytosorbents (CTSO) 2025 Conference June 05, 2025 09:20 AM ET Speaker0 Alright. Good morning, everyone. My name is Mike Sarcone. I'm an analyst on the US medical supplies and devices team, and this is day two of the Jefferies twenty twenty five New York Health Care Conference. This is a session with CytoSorbents. And from the company, we've got CEO Phil Chan and CFO Pete Mariani. Gentlemen, thank you for joining us. And Phil is actually going to kick it off with some prepared commentary, and then we'll get ...

Core Insights - CytoSorbents Corporation presented a real-world data analysis showing that its blood purification technology significantly reduces severe bleeding and transfusion needs in urgent CABG patients on ticagrelor [1][6] Study Details - The analysis compared two groups: 150 patients using CytoSorbents' device from the STAR Registry and 644 control patients who did not use the device [3][12] - The primary outcome measured was the incidence of severe bleeding as defined by the BARC-4 criteria, which includes intracranial bleeding, re-operation for bleeding, and large transfusion events [12] Results - The use of the device resulted in a reduction of BARC-4 severe bleeding rates to 10.7% compared to 33% in the control group, with a p-value of <0.001 [7][12] - Large transfusion events (≥5 units of blood) were reduced to 6% in the device group versus 27% in the control group, p<0.001 [7][12] - The need for re-operations to control bleeding was 4% in the device group compared to 9.6% in the control group, p=0.02 [7][12] Safety and Efficacy - No device-related adverse events or deficiencies were reported, indicating the device's safety and ease of use in clinical practice [4][12] - The findings support the routine use of CytoSorbents' device in urgent CABG surgeries for patients on blood thinners like ticagrelor [5][12] Company Overview - CytoSorbents Corporation specializes in blood purification technologies aimed at treating life-threatening conditions in intensive care and cardiac surgery [9] - The company's lead product, CytoSorb®, is approved in the EU and distributed in over 70 countries, with over 250,000 devices used to date [10] - CytoSorbents is also developing the DrugSorb™-ATR system for antithrombotic removal, which has received FDA Breakthrough Device Designations [11][13]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $8,700,000, a 3% decrease compared to $9,000,000 in Q1 2024, but flat on a constant currency basis [31][32] - Gross margin for the quarter was 71%, consistent with the full year 2024, but lower than 76% in Q1 2024 due to a 23% reduction in units produced [32] - Operating loss improved by 17% to $3,900,000 compared to $4,700,000 in 2024, driven by a 12% reduction in operating expenses [32][33] - Net loss for the quarter was $1,500,000 or $0.02 per share, compared to $6,100,000 or $0.11 per share in the prior year [33] Business Line Data and Key Metrics Changes - Core product sales for CytoSorb in Q1 2025 were $8,700,000, representing a 3% year-over-year decline, but constant currency sales were approximately the same as the previous year [9][10] - International distribution and other direct sales markets showed strong performance, offsetting temporary disruptions in the German direct sales segment [10] Market Data and Key Metrics Changes - Germany accounts for approximately 40% of the company's sales, and efforts are underway to return to growth in this critical market after two years of flat performance [16] - The company is focusing on expanding its presence in Dubai to access high-growth markets in the Middle East and Africa [17] Company Strategy and Development Direction - The company aims to achieve near breakeven by the end of 2025 while preparing for the anticipated launch of DrugSorb ATR in the U.S. and Canada [35][39] - Key growth catalysts include publicizing new clinical data, simplifying customer messaging, and returning German sales to growth [14][16] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of their submission for DrugSorb ATR and the potential for a positive outcome from the FDA appeal process [46][47] - The company is actively preparing for the potential commercial launch of DrugSorb ATR, emphasizing the importance of real-world data and clinical evidence [27][39] Other Important Information - The company raised $6,800,000 through a shareholder rights offering, which increased available liquidity and allowed for the release of $5,000,000 of restricted cash [33][34] - The company welcomed a new Vice President of Marketing for North America to lead the strategy for DrugSorb ATR [29][30] Q&A Session Summary Question: Can you talk about your level of confidence in getting clearance for DrugSorb ATR? - Management expressed strong confidence in the strength of their submission and the compelling data from the STAR T trial, believing the chances during the appeal process are good [46][47] Question: What happens if the appeal is denied? - Management indicated that if the appeal is unsuccessful, they could continue with a new de novo submission using a large portion of the original submission, which would result in a shorter review time [47][48] Question: Will the clinical data help with marketing or reimbursement in Europe? - Management confirmed that strong clinical data is crucial for supporting reimbursement and health technology assessment decisions in the EU [51] Question: Are there any updates on other products in development besides CytoSorb and DrugSorb ATR? - Management stated that the primary focus is currently on DrugSorb ATR, with other technologies like HemoDefend VGA being discussed for the future [60] Question: What is the visibility into the conditions in Germany for growth? - Management acknowledged the unique challenges in Germany but expressed optimism about the changes being implemented to drive operational efficiency and expected benefits in the second half of the year [66]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported revenue of $8,700,000, a 3% year-over-year decline, but flat on a constant currency basis compared to $9,000,000 in Q1 2024 [31][34] - Gross margin for the quarter was 71%, consistent with the full year 2024, but lower than 76% in Q1 2024, primarily due to a 23% reduction in units produced [33] - The operating loss improved by 17% to $3,900,000 compared to $4,700,000 in 2024, driven by a 12% reduction in operating expenses [34] Business Line Data and Key Metrics Changes - Core product sales for CytoSorb were $8,700,000 in Q1 2025, representing a 3% year-over-year decline, with strong performances in international distribution offsetting disruptions in the German market [8][10] - The company aims to return German sales to growth in the second half of 2025 after two years of flat performance [10][15] Market Data and Key Metrics Changes - Germany accounts for approximately 40% of the company's sales, and the company is focusing on optimizing its sales strategy in this critical market [15] - The company is also expanding its presence in the Middle East and Africa through its Dubai subsidiary, which is expected to enhance market access [16] Company Strategy and Development Direction - The company is focused on generating new clinical data to guide physicians in optimizing CytoSorb use, which is expected to drive broader adoption and revenue growth [39] - The strategic initiative includes a realignment of the German sales team and approach to improve execution and results [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential for growth in the second half of 2025, particularly in Germany, despite challenges from hospital reforms and pandemic-related issues [67] - The company is preparing for the potential commercial launch of DrugSorb ATR in the U.S. and Canada, with an initial market opportunity estimated at over $300,000,000 [27][41] Other Important Information - The company successfully executed a shareholder rights offering, raising $6,800,000, which strengthened its balance sheet and increased liquidity [34][36] - The company welcomed a new Vice President of Marketing for North America to lead the strategy for DrugSorb ATR [29] Q&A Session Summary Question: Confidence in FDA appeal and next steps if denied - Management expressed strong confidence in the strength of their submission and the compelling data from the STAR T trial, believing the chances during the appeal process are good [47][48] - If the appeal is unsuccessful, the company could pursue a new de novo submission using much of the original data, potentially shortening the review time [49] Question: Impact of clinical data on marketing and reimbursement in Europe - Management confirmed that strong clinical data will be leveraged to support reimbursement and health technology assessments across Europe [53] Question: Updates on European markets beyond Germany - The company is making good progress in major European markets, including the UK, and is seeing momentum in other EU countries [58][60] Question: Focus on other products in development - Currently, the primary focus is on DrugSorb ATR, with other technologies like HemoDefend VGA being considered for future discussions [62] Question: Visibility and confidence in reaccelerating growth in Germany - Management acknowledged the unique challenges in Germany but expressed optimism about the changes being implemented and early positive developments in Q2 [68]

Financial Performance - Total product revenue for Q1 2025 was $8.7 million, a decrease of $0.3 million, or 3%, compared to Q1 2024[90] - Gross profit for Q1 2025 was $6.2 million, a decrease of $0.7 million, or 10%, with gross margins of 71.1% compared to 76.5% in Q1 2024[93] - Loss from operations improved by 17% to approximately $3.9 million in Q1 2025, down from $4.7 million in Q1 2024, driven by a 12% reduction in total operating expenses[97] Expenses - Research and development expenses decreased by approximately $0.5 million, or 26%, to $1.7 million in Q1 2025, due to reduced clinical trial costs[94] - Selling, general and administrative expenses decreased by approximately $0.9 million, or 9%, to $8.4 million in Q1 2025, primarily due to lower royalty expenses[95] Currency and Financial Position - The gain on foreign currency transactions was approximately $3.0 million in Q1 2025, compared to a loss of approximately $1.4 million in Q1 2024[96] - Current assets as of March 31, 2025, were approximately $25.4 million, while current liabilities were approximately $9.7 million[98] - As of March 31, 2025, the Company has approximately $13.1 million in cash, including $11.6 million in unrestricted cash[101] Capital Raising and Commitments - The company completed a shareholder Rights Offering in January 2025, providing $5.4 million in net proceeds, and an additional $1.4 million from the exercise of Series A Right Warrant in February 2025[90] - The Company raised $6.25 million in gross proceeds from its Rights Offering, with $5.4 million net of fees, by selling 6.25 million Units[100] - The Company has an effective shelf registration statement allowing it to raise up to $150 million, with approximately $149.6 million available as of March 31, 2025[99] - The Avenue Capital Commitment includes a loan of up to $20 million, with $15 million available in the first tranche and a second tranche of $5 million contingent on FDA approval[103] - Proceeds from the Avenue Capital Commitment were used to pay off existing debt and for working capital purposes[106] Regulatory and Market Developments - The DrugSorb-ATR application is under advanced review in Canada, with an estimated total addressable market of $300 million today, potentially exceeding $1 billion over time[88] - The Company anticipates regulatory approval and introduction of DrugSorb-ATR in the U.S. and Canada in 2025[102] - The FDA issued a denial letter regarding the De Novo Request for DrugSorb-ATR, with a formal appeal expected if issues are not resolved by June 25, 2025[105] Operational Efficiency - The Company has lowered its spending significantly over the past year while maintaining tight control over expenditures[100] - The Company is exploring additional sources of liquidity, including equity securities issuance and debt financing[102] - The Company’s financial statements are prepared on a going concern basis, indicating uncertainties regarding future capital requirements[102]

Financial Performance - Product revenue for Q1 2025 was $8.7 million, a decrease of 3% from $9.0 million in Q1 2024[2] - Gross margin decreased to 71% in Q1 2025 from 77% in Q1 2024[2] - Operating loss improved by 17% to $3.9 million compared to $4.7 million in Q1 2024, with a 12% reduction in operating expenses[2] - Net loss was $1.5 million or $0.02 per share, significantly improved from a net loss of $6.1 million or $0.11 per share in Q1 2024[2] - Gross profit for Q1 2025 was $6.21 million, down 9.7% from $6.87 million in Q1 2024[19] - Net loss attributable to common stockholders narrowed to $1.48 million in Q1 2025, compared to a net loss of $6.09 million in Q1 2024, reflecting a reduction of 75.7%[19] - The company reported a comprehensive loss of $4.21 million for Q1 2025, compared to a comprehensive loss of $4.87 million in Q1 2024, a decrease of 13.5%[19] - Cash flows from operating activities showed a net cash used of $3.46 million in Q1 2025, an improvement from $4.83 million in Q1 2024[22] - Adjusted EBITDA for Q1 2025 was $(2,700,000), compared to $(3,300,000) in Q1 2024, indicating a narrowing loss[23] - Loss per common share for Q1 2025 was $(0.02), improved from $(0.11) in Q1 2024[23] - Adjusted net income (loss) for Q1 2025 was $(3,674,000), slightly better than $(3,703,000) in Q1 2024[23] - Adjusted net income (loss) per common share for Q1 2025 was $(0.06), compared to $(0.07) in Q1 2024[23] Cash and Liquidity - Total cash and cash equivalents increased to $13.1 million as of March 31, 2025, up from $9.8 million at the end of 2024, reflecting proceeds from a Rights Offering[2] - Cash and cash equivalents increased to $11.59 million as of March 31, 2025, compared to $3.28 million at December 31, 2024, marking a significant increase of 253.5%[18] - The company raised $6.8 million from a Shareholder Rights Offering, enhancing liquidity by a total of $11.8 million[6] - The company raised $5.39 million from a rights offering in Q1 2025, contributing to a net cash provided by financing activities of $6.83 million[22] Assets and Equity - Total assets increased to $50.78 million as of March 31, 2025, up from $47.37 million at December 31, 2024, representing a growth of 5.1%[18] - Total stockholders' equity rose to $14.54 million as of March 31, 2025, up from $11.11 million at December 31, 2024, indicating a growth of 30.5%[18] Regulatory and Market Developments - The FDA issued a denial letter regarding the De Novo Request for DrugSorb-ATR, but the company plans to resolve the issues through a formal appeal process[7] - DrugSorb-ATR is under advanced review with Health Canada, with expectations for a regulatory decision in 2025[8] - The company opened a new regional sales subsidiary in Dubai, expanding its global footprint into the Middle East and Africa[6] Operational Metrics - Operating expenses decreased to $10.09 million in Q1 2025, down 12.5% from $11.53 million in Q1 2024[19] - Non-cash stock-based compensation expense was $818,000 in Q1 2025, down from $959,000 in Q1 2024[23] - Depreciation and amortization expense for Q1 2025 was $369,000, slightly lower than $397,000 in Q1 2024[23] - Interest expense increased to $605,000 in Q1 2025 from $7,000 in Q1 2024, indicating a significant rise in financing costs[23] Foreign Currency Impact - The company experienced a foreign currency translation loss of $3,014,000 in Q1 2025, compared to a gain of $1,426,000 in Q1 2024[23] Shareholder Information - Weighted average common shares outstanding increased to 60,731,929 in Q1 2025 from 54,262,790 in Q1 2024[23]

Core Viewpoint - CytoSorbents Corporation reported its financial results for Q1 2025, highlighting strong revenue growth in the EU despite temporary disruptions in Germany, and ongoing efforts to advance its product pipeline, particularly DrugSorb™-ATR, which aims to address life-threatening bleeding in cardiac surgery patients [1][4][5]. Financial Results - Product revenue for Q1 2025 was $8.7 million, a decrease of 3% from $9.0 million in Q1 2024, remaining flat on a constant currency basis [8]. - Gross margin decreased to 71% from 77% in Q1 2024 [8]. - Operating loss improved by 17% to $3.9 million compared to $4.7 million in Q1 2024, reflecting a 12% reduction in operating expenses [8]. - Net loss was $1.5 million or $0.02 per share, compared to a net loss of $6.1 million or $0.11 per share in Q1 2024 [8]. - Adjusted net loss was $3.7 million or $0.06 per share, compared to an adjusted net loss of $3.7 million or $0.07 per share in Q1 2024 [8]. - Adjusted EBITDA loss improved by 17% to $2.7 million compared to a loss of $3.3 million in Q1 2024 [8]. - Total cash, cash equivalents, and restricted cash increased to $13.1 million at March 31, 2025, from $9.8 million as of December 31, 2024 [8]. Business Highlights - The company is focused on bringing DrugSorb™-ATR to the North American market, addressing the unmet need for reducing life-threatening bleeding in patients on Brilinta® during CABG surgery [5][6]. - The FDA issued a denial letter regarding the De Novo Request for DrugSorb-ATR, but the company plans to resolve the outstanding items through a formal appeal process, expecting a final regulatory decision in 2025 [6][7]. - Real-world adoption of DrugSorb-ATR is increasing, with more heart centers incorporating the technology into standard care based on evidence from the international STAR Registry [7]. - The company completed a shareholder rights offering, raising $6.8 million, which increased liquidity and allowed for the release of $5.0 million of restricted cash [9]. Operational Developments - CytoSorbents opened a new regional sales subsidiary in Dubai, UAE, expanding its global footprint into the Middle East and Africa [9]. - The company appointed Thomas Shannon as Vice President of Marketing for North America to lead the marketing strategy for DrugSorb™-ATR [9].

Core Viewpoint - CytoSorbents Corporation has successfully converted its Net Operating Loss (NOL) and R&D tax credits into $1.7 million in cash through the New Jersey Technology Business Tax Certificate Transfer Program, which will bolster its cash reserves and support ongoing growth initiatives [1][2]. Group 1: Financial Impact - The company received $1.7 million in cash proceeds from the sale of its 2023 and amended 2022 NOL and R&D tax credits [1][2]. - This funding is aimed at strengthening cash reserves and supporting strategic initiatives, including the launch of DrugSorb™-ATR in the U.S. and Canada and scaling up manufacturing at its new Princeton facility [2]. Group 2: Tax Credit Program - The New Jersey Technology Business Tax Certificate Transfer Program allows approved technology and biotechnology businesses with NOLs to sell their unused NOLs and R&D tax credits for at least 80% of their value to profitable corporate taxpayers in New Jersey [3]. - The program enables companies to convert tax losses and credits into cash for various expenditures, enhancing their financial flexibility [3]. Group 3: Legislative Context - New Jersey enacted tax reform legislation on July 3, 2023, allowing taxpayers to immediately deduct R&D expenditures retroactively from January 1, 2022, which increased the NOL available for sale in the NJEDA Program for CytoSorbents [4]. Group 4: Company Overview - CytoSorbents Corporation specializes in blood purification technologies for treating life-threatening conditions in intensive care and cardiac surgery [5]. - The company's lead product, CytoSorb®, is approved in the EU and has been used in over 270,000 devices globally, with applications in critical illnesses such as sepsis and liver failure [6]. - CytoSorbents is also developing DrugSorb™-ATR, an investigational device aimed at reducing perioperative bleeding in high-risk surgeries [7].

Company Appointment - CytoSorbents Corporation announced the appointment of Melanie Grossman as Vice President and Corporate Controller, bringing over 25 years of finance and accounting experience in publicly-traded companies [1][2] - The Chief Financial Officer, Peter J. Mariani, highlighted Ms. Grossman's expertise in financial operations, planning, analysis, and regulatory compliance as beneficial for the company's growth and efficiency [2] Inducement Grants - The Compensation committee approved inducement awards for Ms. Grossman under Nasdaq Listing Rule 5635(c)(4), with terms subject to applicable award agreements and vesting conditions [3] Company Overview - CytoSorbents is a leader in treating life-threatening conditions in intensive care and cardiac surgery through blood purification technologies [4] - The proprietary technology utilizes biocompatible polymer beads to remove toxic substances from blood, applicable in various critical illnesses such as sepsis and liver failure [4] Product Development - The lead product, CytoSorb®, is approved in the EU and used in over 70 countries, with more than 270,000 devices utilized to date [6] - CytoSorb has received FDA Emergency Use Authorization for critically ill COVID-19 patients, although it is not yet approved in the U.S. [6] Future Products - CytoSorbents is developing DrugSorb™-ATR, an investigational device aimed at reducing perioperative bleeding in high-risk surgeries, which has received two FDA Breakthrough Device Designations [7] - The company submitted a De Novo medical device application to the U.S. FDA for DrugSorb-ATR, which is currently under substantive review [7] Intellectual Property - The company holds numerous patents and trademarks for its blood purification technologies, with multiple products under development [8]

Core Insights - CytoSorbents Corporation has appointed Thomas Shannon as Vice President of Marketing for North America to lead the marketing strategy for DrugSorb™-ATR in the U.S. and Canada, anticipating marketing approval [1][2] - DrugSorb-ATR is positioned to address perioperative bleeding in patients undergoing coronary artery bypass graft (CABG) surgery while on the blood thinner Brilinta® [2][3] - The company expects regulatory decisions from the U.S. FDA and Health Canada regarding DrugSorb-ATR in 2025, with the device currently classified as investigational [3][8] Company Overview - CytoSorbents Corporation specializes in blood purification technologies aimed at treating life-threatening conditions in intensive care and cardiac surgery [5][6] - The company's proprietary technology utilizes biocompatible polymer beads to remove toxic substances from blood, applicable in various medical scenarios including cardiothoracic surgery [5][6] - CytoSorbents' lead product, CytoSorb®, is already approved in the European Union and has been used in over 70 countries, with more than 250,000 devices utilized to date [7] Product Development - DrugSorb-ATR is an investigational device designed to reduce perioperative bleeding severity in high-risk surgeries due to blood thinners, having received two FDA Breakthrough Device Designations [8] - The company submitted a De Novo medical device application to the U.S. FDA for DrugSorb-ATR in September 2024, which is currently under substantive review [8] - CytoSorbents has a range of products under development based on its blood purification technology, protected by numerous patents [9]