CytoSorbents Corporation (OTCBB: CTSO) Q2 2014 Earnings and Operating Results Conference Call

CytoSorbents Corporation (OTCBB: CTSO)

Q2 2014 Earnings and Operating Results

August 12, 2014 @ 4:15 pm Eastern

This official company transcript has been edited for clarity

and does not differ materially from the actual conference call. Slide numbers have been inserted to allow readers to follow along

with the associated presentation.

Good day, everyone and welcome to the CytoSorbents

2014 Second Quarter Financial Results Conference Call. Today's call is being recorded and at this time I'd like to

turn the conference over to Amy Vogel. Please go ahead.

Amy Vogel - Moderator:

Thank you operator and good afternoon. Welcome to CytoSorbents

Second Quarter 2014 Operating and Financial Results Conference Call. With us today are:

Before I turn the call over to Dr. Chan,

I'd like to remind listeners that during the call, management's prepared remarks may contain forward-looking statements which

are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions

today. Therefore, the Company claims protection under Safe Harbor for forward-looking statements contained in the Private Securities

Litigation Reform Act of 1995. Actual results may differ from results discussed today and therefore, we refer you to a more detailed

discussion of these risks and uncertainties in the Company's filings with the SEC. Any projections as to the Company's future performance

represented by management include estimates today as of August 12, 2014 and the Company assumes no obligation to update these projections

in the future as market conditions change.

During today's conference call, we

will first have an overview presentation covering the financial and operational highlights for the quarter by Dr. Chan and Ms.

Bloch. We again have taken everyone's submitted questions and will do our best to address them in the presentation, and

also in the Q&A session with management

to follow. Thanks everyone again for participating. If we do not answer your question, we would ask that you contact the Company

directly after the call today.

At this time, I would like to turn the

call over to Dr. Phillip Chan. Please go ahead Dr. Chan.

Thank you very much Amy and thank you to

everyone for submitting your questions and making time to join the call today. Welcome. Unfortunately Chris Cramer, our VP of Business

Development, is out sick, but I will cover some business development matters in my remarks.

Following a short introduction

for new and potential investors, Kathy will go over our financial progress for the second quarter of 2014, followed by a discussion

of our cardiac surgery trial, the potential application of CytoSorb in Ebola treatment, some case report studies, and then

I would also encourage

investors to visit our website at www.CytoSorb ents.com to obtain a copy of earlier transcripts and presentations. Also a recent

interview by The Wall Street Transcript will also be available on our website very shortly that covers some additional questions

today in greater detail.

Slide 4: With that let me turn to

slide four. CytoSorbents is an emerging leader in the $20 billion critical care immunotherapy space. We are leading the prevention

or treatment of life threatening inflammation in the intensive care unit.

Slide 5: Inflammation plays a major

role in nearly every known disease. This could be life threatening conditions like sepsis, trauma, burn injury, influenza, Ebola

virus infection, and others. It could also be autoimmune diseases like rheumatoid arthritis, inflammatory bowel disease, psoriasis

and lupus, heart disease, peripheral artery disease, cancer, cancer cachexia, graft versus host disease, neurodegenerative diseases

like Alzheimer's, multiple sclerosis, Parkinson's, and many, many others. The unfortunate part is that uncontrolled

inflammation wreaks havoc on the body and can be deadly.

Slide 6: The problem with severe,

uncontrolled inflammation is that it can cause cell death and organ injury, ultimately leading to organ failure. Organ failure

is when vital organs like the heart, the brain, the kidneys, the lungs or the liver stop working and that is incompatible with

life. Organ failure causes nearly half of all deaths in the ICU today, but little can be done to prevent or treat it. And this

is where our technology comes in.

Slide 7: CytoSorb removes the

"fuel to the fire" of inflammation. CytoSorb represents one of the most powerful immunotherapy tools to control

inflammation. It is approved in the European Union as the only specifically approved extracorporeal cytokine filter and is clinically

proven to reduce key cytokines in blood in critically-ill patients.

Its approved for use in any situation where

cytokines are elevated and has been used safely in more than 3,000 human treatments with no serious device related adverse events

Slide 8: The heart of the technology

is a highly porous polymer bead roughly the size of a grain of salt. These beads have millions of pores and channels in every single

bead allowing them to act like tiny sponges to remove harmful substances from blood, based on size as well as surface adsorption.

It is protected by 32 issued U.S. patents and multiple applications pending. It is manufactured at our ISO 13485 certified facility

in New Jersey, and it is one of the highest-grade medical sorbents on the medical market today.

Slide 9: The goal of CytoSorb

is to prevent or treat organ failure. Rather than letting patients spiral down the well of organ failure and inflammation, our

goal is to try to stabilize these patients when they come into the intensive care unit thereby reducing the severity of illness

and helping reduce the cost of ICU care. We believe that because of this and because of the many applications suitable for this

technology, we have the potential to revolutionize critical care medicine.

Slide 10: CytoSorb is currently

marketed in 19 countries around the world, in fact its available for sale in all 28 countries in the European Union but it's

currently sold today directly in Germany, Austria and Switzerland and with established distribution in 16 other countries including

the U.K., Ireland, Netherlands, Turkey, Russia, India, Taiwan and the Middle East covering approximately 1.7 billion lives. We

are currently expanding to other EU countries and countries outside the EU that accept the CE mark.

Slide 11: The technology has also

been the beneficiary of more than $15 million in U.S. Government support. This includes our almost $4 million five-year contract

with DARPA under the Dialysis-Like Therapeutics program to treat sepsis, $1.15 million in a Phase I and Phase II SBIR contract

with the U.S. Army for burn injury and trauma research and more than $3 million committed by the U.S. Air Force in funding a 30-patient

human pilot study in trauma that the FDA has approved to move forward with. Skipping down to the bottom here, NHLBI, or the National

Heart, Lung and Blood Institute, a division of NIH, is also supporting another product under advance development called HemoDefend

that is designed to purify blood transfusion products in order to reduce transfusion reactions.

So with that, let me turn it over to Kathy

to talk about our second quarter 2014 operating and financial highlights. Kathy?

Kathleen Bloch - CFO:

Thank you, Phil. Good afternoon everyone.

Slide 13: For today's call,

I will be providing an update regarding CytoSorbents' revenues and I will also comment on the Company's progress related

to up-listing to a national exchange, either NASDAQ Capital Market or NYSE MKT.

As you will see, our comparative financial

results demonstrate strong revenue growth.

For the first half of 2014, total revenue

was approximately $2.1M, which is an increase of 215% compared to total revenues of approximately $663K for the first half of 2013.

Product sales for the first half of 2014

were approximately $1.2M, which is an increase of approximately 300% over product sales for the first half of 2013 of approximately

Grant income and other income for the first

half of 2014 was approximately $854K, which is up 138% as compared to grant and other income of approximately $359K for the first

First half 2014 blended gross margins were

approximately 36%, while our CytoSorb product gross margins were approximately 63%.

Slide 14: Turning to the quarter

ended June 30, 2014, product sales for the quarter were approximately $663K, that's a 418% increase over product sales of

approximately $128K for the second quarter of 2013.