Full Press Release Details
Reports First Quarter 2023 Results
and Canada STAR-T Trial enrollment enters the last third of the study. Strong customer demand from Q4 2022 continued into Q1 2023, with
current expectation of overall sales growth in 2023
May 2, 2023 - 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 March 31, 2023.
2023 Financial Results
Chief Executive Officer of CytoSorbents stated, "We believe we have started 2023 with favorable momentum and are pleased with the
continued execution of three key goals described in the shareholder letter earlier this year.
(Safe and Timely Antithrombotic Removal - Ticagrelor) pivotal, randomized controlled trial is
designed to support U.S. FDA and Health Canada marketing approval of DrugSorb-ATR with the goal of demonstrating that DrugSorb-ATR
reduces the risk of perioperative bleeding in patients undergoing cardiothoracic surgery on Brilinta (ticagrelor, AstraZeneca).
The STAR-T trial is enrolling well with recruitment by nearly all trial sites, both here in the U.S. and in Canada, and has recently
outpaced our own internal projections. Should these trends continue, we expect to enroll the final third of the study this summer
and have topline data by year-end that if positive, we believe would support the application for FDA and Health Canada marketing
approval of DrugSorb-ATR.
As discussed recently,
the rapid pace of enrollment of STAR-T led us to elect to forego a formal interim analysis on the first 80 patients. To fully understand
this decision, it is important to clarify that the original intent of this interim analysis was to provide the opportunity to stop the
trial early, an important option if enrollment was expected to be slow or delayed. However, the current enrollment pace is brisk and
our projections suggest that the trial will likely be completed by the time a formal interim analysis - that requires fully monitored,
cleaned, locked, and adjudicated data - would have been completed. Accordingly, a trial that is fully enrolled cannot be stopped early
and as such we are now focusing our efforts on the final analysis. We believe it is also important to emphasize that there are no other
considerations or information underlying this decision and that the STAR-T study data remain fully-blinded. The next milestone for the
STAR-T trial is the second independent Data and Safety Monitoring Board (DSMB) safety evaluation after the first 80 patients which we
expect to be completed in the next 2-3 months. As previously disclosed, the DSMB recommendation after the safety evaluation of the first
40 patients was to continue the study as planned without any modifications.
the clinical study, Dr. Irina Kulinets, Senior Vice President of Global Regulatory, is leading the execution of the regulatory strategy
for DrugSorb-ATR that at this stage includes strengthening her team, planning for future regulatory submissions, and driving interdepartmental
alignment and responsibilities to meet our regulatory objectives and timelines.
previously of a pending proposal from Centers for Medicare & Medicaid Services (CMS) for Transitional Coverage of Emerging Technology
(TCET) that could establish four years of U.S. Medicare coverage to breakthrough medical devices approved by the FDA. This proposal was
expected in April 2023, and is still expected imminently. We believe that DrugSorb -ATR, as an FDA Breakthrough Designated
Device that targets many patients in the Medicare population undergoing open heart surgery and at high risk of unwanted bleeding due
to blood thinners, could be well-suited for such a program.
achievement of sequential growth in Q1 2023 product sales from the prior quarter, and 8% quarterly core product sales growth
year-over-year on a constant currency basis, represent an encouraging sign towards our goal of returning to sales growth this year.
More important than this, however, is the general perception of our employees across each of our business segments of strong
customer engagement, excellent feedback on our most recent clinical and scientific data across multiple indications in our
therapeutic area verticals, and a trend of improvement in our hospital markets in core countries - though healthcare professional
staffing remains a key issue. For example, in Germany, the DIVI Critical Care Society is reporting an increase in regularly
operating adult intensive care units, and a concomitant sharp reduction in restricted ICUs - an important, non-quantitative
assessment of the supply situation, which is governed by availability of staff, rooms, materials, and other factors. This has
correlated with a major drop in COVID-related ICU admissions. If sustained, we believe it is likely that the mandate to have
emergency reserve ICU beds for COVID-19 will also likely be lifted, freeing additional ICU capacity throughout the country. We
expect this to translate into the ability to accept more non-COVID critically ill patients to the ICU and to do more surgical
procedures, such as cardiac surgery, that require ICU postoperative care, which are all drivers of our business. Among our many
growth initiatives, we are also seeing good progress in our strategy of expanding into German hospitals within private networks
based on our preferred supplier agreements, increasing our accounts in these German networks by 50% last year over 2021.
improvements are beginning to translate to our own results, where Q1 2023 demand was brisk, working down our finished goods inventory.
In response, we have been ramping production of CytoSorb out of our new manufacturing facility with the goal of meeting demand and replenishing
inventory. Our product gross margins for Q1 2023 were 68%, in-line with the average product gross margin in 2022, reflecting the transition
from our old to new facility and a number of one-time start-up costs. However, we expect sequential improvements of our product gross
margin this year, and again reiterate our expectation of a return of product gross margins to at least 75-80% on a quarterly basis this
Last year, we implemented
numerous cost-cutting efforts, disciplined cash management, and a strict 2023 budget to significantly reduce operating expenses and to
optimize resource allocation to priority programs and pipeline projects. We are pleased that these changes, along with reductions in
capital expenditure spending, led to a significantly lower cash burn in Q1 2023 of approximately $3.1M versus $9.1M cash burn a year
ago. We currently do not expect any significant capital expenditures this year which could potentially further reduce our need for cash.
We closed Q1 2023 with $20.7M in cash, which is expected to fund our operations for more than a year."
"We believe we are on the path to significant growth of our business and are in a much stronger position now than in the second
half of last year. We believe we are making excellent progress on our major goals for 2023. In particular, we expect the completion of
the STAR-T trial enrollment this summer with topline data later this year, which could be a pivotal milestone for the Company. We are
seeing solid improvements and momentum in our core CytoSorb business, giving us optimism that our commercial business is continuing to
turn around. And we believe our cost-cutting initiatives are taking hold, leading to a low cash burn quarter and a solid cash position
going into Q2 2023. Between now and the end of the year, we expect many exciting developments and thank you for sharing the journey with
Results of Operations
the three months ended March 31, 2023 and March 31, 2022
Revenue from product
sales was approximately $7,910,000 in the three months ended March 31, 2023, as compared to approximately $7,924,000 in the three months
ended March 31, 2022, a decrease of approximately $14,000. As a result of the decrease in the average exchange rate of the Euro to the
U.S. dollar, 2023 product sales were negatively impacted by approximately $349,000. For the three months ended March 31, 2023, the average
exchange rate of the Euro to the U.S. dollar was $1.07 as compared to an average exchange rate of $1.12 for the three months ended March
31, 2022. Direct sales decreased approximately $202,000, or 4%. Distributor sales increased approximately $188,000, or 7%. There were
no sales to hospitals in the United States under the EUA granted by the FDA for the three months ended March 31, 2023, as compared to
sales of approximately $155,000 in the first quarter of 2022. There were no sales related to the demand for CytoSorb to treat COVID-19
patients during the three months ended March 31, 2023 as compared to approximately $300,000 in the first quarter of 2022.
approximately $1,539,000 for the three months ended March 31, 2023 as compared to approximately $767,000 for the three months ended March
31, 2022, an increase of approximately $772,000, or 101%. This increase was a result of a strategic decision to deploy our research and
development employees exclusively to grant related activities during the three months ended March 31, 2023. In addition, revenue earned
on new grant awards was approximately $312,000 during the three months ended March 31, 2023.
were approximately $9,449,000 for the three months ended March 31, 2023, as compared to total revenues of approximately $8,691,000 for
the three months ended March 31, 2022, an increase of approximately $758,000, or 9%.
For the three months
ended March 30, 2023 and 2022, cost of revenue was approximately $3,994,000 and $2,278,000, respectively, an increase of approximately
$1,716,000. Product cost of revenues increased approximately $976,000 during the three months ended March 31, 2023 as compared to the
three months ended March 31, 2022. This increase was due to start-up activities related to our new manufacturing facility. Product gross
margins were approximately 68% for the three months ended March 31, 2023, as compared to approximately 80% for the three months ended
March 31, 2022, also due to start-up activities related to our new manufacturing facility.
and Development Expenses:
For the three months
ended March 31, 2023, research and development expenses were approximately $4,214,000 as compared to research and development expenses
of approximately $4,243,000 for the three months ended March 31, 2022, a decrease of approximately $29,000. This decrease was due to
a decrease in clinical trial costs of approximately $807,000 related to the pause of our STAR-D trial in November 2022, and a decrease
in non-grant related research and development activities of approximately $72,000. These decreases were 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
and Other Consulting Expenses:
and other consulting expenses were approximately $669,000 for the three months ended March 31, 2023, as compared to approximately $801,000
for the three months ended March 31, 2022, a decrease of approximately $132,000. This decrease was due to a decrease in legal fees of
approximately $174,000 related to the abandonment of certain patent applications in 2022 and a decrease in accounting and other consulting