CytoSorbents(CTSO) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics - Total revenue increased 5% to $9.9 million in Q2 2024, with product sales up 10% to$ 8.8 million [4] - Gross product margins remained strong at 75% in Q2 2024, compared to 74% in Q2 2023 [4] - Operating loss decreased by 48% to $3.4 million in Q2 2024 from$ 6.6 million in Q2 2023 [5] - Cash balance at the end of Q2 2024 was $14.9 million, including$ 8.5 million in unrestricted cash and $6.5 million in restricted cash [5] - Annualized cost savings of$ 5 million expected from recent cutbacks, with a 17% reduction in workforce over the past five months [5] Business Line Data and Key Metrics - CytoSorb product revenue increased by 10% to $8.8 million in Q2 2024 compared to$ 8.1 million in Q2 2023 [7] - Grant revenue decreased to $1.1 million in Q2 2024 from$ 1.3 million in Q2 2023 due to the conclusion of several grants [8] - Cumulative delivery of CytoSorb devices surpassed 0.25 million units [4] - The PuriFi hemoperfusion pump received positive reviews and all 30 pumps from the initial order were placed, with the next order expected soon [6] Market Data and Key Metrics - Core non-COVID-19 product sales showed positive growth, with a 9.5% year-over-year increase in trailing 12-month sales ending June 30, 2024 [10] - The STAR registry data was presented at the EuroPCR 2024 Conference and selected as a top five finalist in the best scientific abstract competition [6][16] - The company completed its MDSAP audit, a key requirement for Canadian commercialization [6] Company Strategy and Industry Competition - The company is on track to submit marketing applications for the DrugSorb-ATR system to the FDA and Health Canada in Q3 2024 [6][15] - The company secured a $20 million credit facility with Avenue Capital Group to strengthen its balance sheet [5] - Cost-cutting measures and operational efficiencies are expected to further reduce cash burn and improve margins [13][25] - The company is focusing on expanding its core CytoSorb sales and preparing for potential U.S. and Canadian market entry [26] Management Commentary on Operating Environment and Future Outlook - Management expects gross margins to approach 80% with 15-20% year-over-year growth [36] - The company anticipates FDA and Health Canada regulatory decisions within 6-12 months following the submission of the DrugSorb-ATR application [15] - Management remains committed to cost reduction and operational efficiency to achieve self-sustainability [25] Other Important Information - The company announced the retirement of CFO Kathleen Bloch and the appointment of Peter Mariani as the new CFO [5][29] - The company launched a redesigned corporate and product website [6] - The company received MDR certification for the PuriFi pump and completed registration in Taiwan [24] Q&A Session Summary Question: Update on FDA and Health Canada submission for DrugSorb-ATR - The company is on track for Q3 2024 submissions and believes the STAR-T trial data supports a robust benefit/risk analysis [33][34] Question: Gross margin outlook and factors driving improvement - Gross margins are expected to approach 80% with 15-20% year-over-year growth, driven by volume increases and operational efficiencies [36][39] Question: Revenue growth drivers in Q2 2024 and outlook for Q3 - Revenue growth in Q2 was driven by strength in the distributor and partner channel, particularly with the launch of the PuriFi pump [42][43] Question: Impact of PuriFi pump on revenue growth - The PuriFi pump is expected to drive CytoSorb device sales rather than generate significant hardware revenue [45][46] Question: Timing of Canadian submission for DrugSorb-ATR - The company aims to submit to Health Canada in Q3 2024, prioritizing the FDA submission first [48] Question: R&D expenses and future outlook - R&D expenses decreased to$ 1.5 million in Q2 2024 due to the completion of the STAR-T trial and focus on grant-funded activities [50] Question: Potential of the Taiwan market - Taiwan represents a significant opportunity due to its large market and strong interest in blood purification, though it remains to be seen how it will develop [51] Question: Status of the $15 million loan - The loan was closed on the last day of Q2 2024 [52] Question: Major grant-supported R&D projects - The company is focusing on HemoDefend-BGA, with progress toward human testing and potential military and civilian applications [53][54]