Full Press Release Details
CytoSorbents Reports Fourth Quarter and Full
Pivotal U.S. and Canada STAR-T Trial enrollment
passes halfway mark. Positive sales momentum from Q4 2022 continues in Q1 2023 to date, with expectation of sales growth in 2023
PRINCETON, N.J., March 9,2023 - 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 financial and operating results for the quarter
and year ended December 31, 2022 and provides its 2023 outlook.
Full Year 2022 Financial Results
Fourth Quarter 2022 Financial Results
Recent Operating Highlights
Dr. Phillip Chan, Chief Executive Officer of CytoSorbents,
stated, "We are pleased to provide a brief update from our Stockholder Letter issued on January 31, 2023. If you have not already
done so, we encourage you to review the letter, which highlights what we believe is our unique and compelling value proposition, and the
proximity of major potential near-term catalysts, including the expected completion of the pivotal STAR-T RCT this year with the intent,
with positive data, to submit for U.S. FDA and Health Canada marketing approval, and an expected return to Product Sales growth based
on numerous growth initiatives.
The pivotal, U.S. and Canadian STAR-T (Safe
and Timely Antithrombotic Removal - Ticagrelor) randomized controlled trial was designed to support
FDA and Health Canada marketing approval for DrugSorb -ATR to reduce the risk of perioperative bleeding in patients undergoing cardiothoracic
surgery potentially caused by Brilinta (ticagrelor, AstraZeneca). Our technology has received FDA Breakthrough Device Designation
for this application, highlighting the major unmet medical need and lack of approved or cleared therapies for this problem. After achieving
the first milestone of 40 patients enrolled in mid-November 2022, study enrollment is now past the halfway point and we believe we will
achieve the second milestone of 80 patients enrolled this spring, which will trigger the second pre-specified DSMB review of unblinded
data. Enrollment in the study has been accelerating, aided by broad participation of U.S. centers and multiple patients enrolled from
initial Canadian centers as well. Because of the current fast pace of the study, we expect to complete enrollment at 120 patients this
summer, with database lock, final data analysis, and DSMB closeout review to follow.
If the results of the study are positive, U.S.
FDA and Health Canada regulatory submissions are planned following the completion of the study. This is a significant undertaking with
preparatory work already in process, now led by our new SVP of Global Regulatory, Dr. Irina Kulinets. Meanwhile, we have developed a detailed
launch and commercialization strategy for DrugSorb-ATR, led by COO and President, Vince Capponi, and our VP of US Sales and Marketing,
Jim Komsa, and are pursuing our pre-commercial development in parallel to the study.
Our decision to voluntarily pause the pivotal
STAR-D (Safe and Timely Antithrombotic Removal - Direct oral anticoagulants) clinical trial has
enabled us to focus our resources and those of our study centers on the STAR-T study and to save an anticipated $4M in clinical trial
expense this year. That said, with the completion of the STAR-T trial, we intend to resume the STAR-D trial, and leverage the majority
of clinical trial centers participating in STAR-T to complete that study quickly. If the results are positive, U.S. FDA and Health Canada
marketing approval would double the total addressable market in the U.S. and Canada to more than $1 billion for DrugSorb-ATR as a "one-stop
shop" for antithrombotic drug removal in cardiothoracic surgery, and spur sales internationally.
Meanwhile in Europe, the STAR registry that collects
real-world evidence on the use of our technology to remove blood thinners during cardiothoracic surgery has now over 200 patients from
12 centers, well ahead of our projected enrollment. Data readouts from the registry commence at the large interventional cardiology conference,
EuroPCR in Paris this May, with additional analyses submitted to the European Society of Cardiology (ESC) and the European Association
for Cardio-Thoracic Surgery (EACTS) conferences later this year.
Finally, as we discussed in the press release
earlier this week, we were pleased to see for the first time, the inclusion and recommendation of hemoadsorption in the European Guidelines
to help manage perioperative bleeding risk in cardiovascular surgery in patients on blood thinning medications, based upon published studies
with CytoSorb (a hemoadsorption cartridge). We believe this is a good validating next step in socializing our therapy to the broader surgery
community. Positive randomized controlled data from STAR-T, STAR-D, and real-world evidence from the STAR registry are expected to establish
our technologies as the primary standard-of-care therapy for these major unmet medical need in treatment guidelines worldwide.
Return to Product Sales Growth
In our Stockholder letter, we discuss at length
the "perfect storm" of geopolitical, economic, post-pandemic, and company-specific factors that we had to navigate in 2022.
Yet despite these challenges, we sill managed to achieve $29.1M in core product sales, that when adjusted for the 11% drop in the Euro,
would have been approximately $32.2M, within 5% of 2021 core sales of $33.8M - our highest annual core sales to date, and greater
than 30% higher than pre-pandemic product sales of $22.8M in 2019.
We were encouraged by progress in our sales momentum
in Q4 2022, which was 18% sequentially higher than Q3 2022, and actually 6% higher than core product sale in Q4 2021 on a constant currency
basis. Importantly, we are seeing a continuation of this strength in Q1 2023 to date, which we believe is being driven by strong support,
enthusiasm, and receptiveness to new clinical data, of CytoSorb at the customer level - which we believe is a direct result of the long
history of positive usage of the therapy in the market. We also believe this has been augmented by our increased ability to meet in-person
with customers in hospitals and our focused sales and marketing activities last year. Although many of the macro factors we faced in 2022
still remain, we believe a number of these have abated, and believe our own situation has improved significantly, with many initiatives
underway that are expected to contribute to sales growth in 2023.
We expect gains from key programs such as our
therapy area focus and leaderhsip in critical care, cardiac surgery, and liver & kidney diseases, our "Right patient, right
dose, right time" marketing campaign, our standalone blood pump initiative, our global marketing agreement with Fresenius Medical
Care, and our preferred supplier agreements with the top two largest private hospital networks in Germany, Asklepios and Helios. Also,
we expect a positive impact of new clinical data and publications in the treatment of numerous illnesses, including:
We also expect a restoration of product gross
margins back to more historic levels of 75-80+% as current demand has worked down finished goods inventory and begun to drive volume manufacturing
out of the new manufacturing facility. As evidence of this, our Q4 2022 product gross margins were 75%, up from a recent low of 64% in
Q3 2022 (55% with one time charges) primarily related to manufacturing inefficiencies related to the relocation of our manufacturing operations
to our new facility. This improved gross margin is expected to significantly reduce our cash flow needs. Meanwhile, we expect to report
more normalized year-over-year comparisons in 2023, given that the Euro likely bottomed in Q3 2022, and going forward, we will not need
to distinguish core versus COVID-19 related product sales, as COVID-19 sales in 2022 were nominal.
Finally, we expect more government-led economic
relief for hospitals throughout Europe to help avert a healthcare crisis, and a gradual improvement in staffing shortages, which will
help hospitals generate more procedure-based revenue and open up more hospital ward and ICU beds, which would help us as well. In addition,
we expect consolidation of smaller hospitals into the larger hospitals where we conduct the majority of our business.
Reduced Cash Burn with Tight Control Over
We ended the year with $23.8M in cash, including
restricted cash and $5M in debt at attractive terms. In 2023, we expect to significantly reduce our cash burn through a combination of:
Because of this, we believe our current cash position
is more than sufficient to drive our 2023 operating plan."
Dr. Chan concluded, "2023 is a very different
year from last year, and believe we are now well-positioned to get to the two most important objectives we have as a company: Successful
and timely completion of the STAR-T RCT in the U.S. and Canada and the potential to commercially open the vital U.S. and Canadian markets,
and a return to growth of our main commercial CytoSorb business internationally. We thank you for your support and look forward to the
Results of Operations
Comparison of the year ended December 31,
For the year ended December 31, 2022, we generated
total revenue, which includes product revenue and grant income, of approximately $34,689,000 as compared to revenues of approximately
$43,166,000 for the year ended December 31, 2021, a decrease of approximately $8,477,000, or 20%. Revenue from product sales was approximately
$29,360,000 for the year ended December 31, 2022, as compared to approximately $40,109,000 in the year ended December 31, 2021, a decrease
of approximately $10,749,000 or 27%. Direct sales decreased by approximately $8,983,000 and distributor sales decreased by approximately
$1,766,000 during the year ended December 31, 2022 as compared to the year ended December 31, 2021. Sales to hospitals in the United States
under the EUA granted by the FDA amounted to approximately $300,000 for the year ended December 31, 2022, as compared to approximately
$1,690,000 in 2021. Though difficult to quantify, we estimate that approximately $300,000 and approximately $6,300,000 of total product
sales during the years ended December 31, 2022 and 2021 was due to the demand for CytoSorb to treat COVID-19 patients. In addition, as
a result of the decrease in the average exchange rate of the Euro to the U.S. dollar, 2022 product sales were negatively impacted by approximately