Full Press Release Details
CytoSorbents Reports Full Third Quarter 2021
total revenue was $9.8 million, including product sales of $8.9
million. Core non-COVID-19 product sales increased 3% Y-Y to approximately
MONMOUTH JUNCTION, N.J.,
November 4, 2021 - 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, reports full
financial and operating results for the quarter ended September 30, 2021.
Third Quarter 2021 Financial Results
Recent Operating Highlights
Fourth Quarter and Full Year 2021 Product Revenue Guidance
Dr. Phillip Chan, Chief Executive Officer
of CytoSorbents stated, "As previously communicated in mid-October, third quarter product sales were negatively affected by a resurgence
in COVID-19 cases in Germany in August and a reversal of initially encouraging trends that we saw at the beginning of the quarter.
Increased hospital restrictions led to lower-than-expected core non-COVID-19 sales of CytoSorb with fewer elective surgical procedures
(where complications such as sepsis are often treated with CytoSorb), fewer ICU patients due to ICU capacity constraints from COVID-19
allocations and ICU staffing shortages caused by healthcare worker burnout, as well as decreased visitor access - impacting the ability
of our sales force to generate sales. Meanwhile, during this historically seasonal quarter due to European vacation schedules, the severity
of illness and deaths among hospitalized COVID-19 patients was unexpectedly low, resulting in fewer COVID-related CytoSorb sales."
Dr. Chan continued, "As a result, product
sales in the third quarter of 2021 were $8.9 million, reflecting lower sales in Germany and an expected decline in international COVID-related
sales, taking into account the evolving and migrating pandemic and increasing global vaccinations. Core non-COVID-19 product sales accounted
for approximately 88% of our overall product sales. Blended product gross margins were approximately 82% in the third quarter, a significant
improvement from approximately 74% in the prior year quarter and a strong result driven by manufacturing efficiencies. Today, the macro
environment remains challenging in Germany, but we are proactively working within the current constraints to find creative ways to increase
engagement with new and existing customers and to increase awareness of the benefits of CytoSorb in both COVID-19 and core applications.
We expect the macro environment to improve over time, though timing is difficult to predict."
Dr. Chan added, "Meanwhile, we are
pleased by the latest successes of our U.S clinical development program in pursuit of U.S. commercialization. We recently enrolled our
first patient in the pivotal STAR-T trial evaluating the use of DrugSorb-ATR for intraoperative ticagrelor removal during urgent cardiothoracic
surgery and are ramping up the number of active sites. In addition, in the span of approximately three months we received a second FDA
Breakthrough Device Designation for DrugSorb-ATR, this time to remove the direct oral anticoagulants apixaban and rivaroxaban during urgent
cardiothoracic surgery, filed an associated IDE, and received full FDA approval to begin the pivotal STAR-D trial for this application.
The successful execution of these activities in such a short timeline is a testament to the strength of the clinical and regulatory talent
we have hired over the past 18 months. By the end of this year, we expect to have seven active Company-sponsored studies underway that
are designed to generate robust clinical data to support our growth objectives. We continue to have a healthy balance sheet, with approximately
$61 million in cash and no debt, and we expect to continue funding activities to drive growth, including clinical development, sales and
marketing infrastructure, and our new, expanded manufacturing facility, which is on track to come online by the end of 2022."
Dr. Chan concluded, "Despite
the complexities of COVID-19 on our business, we believe we are well-positioned for long-term growth with an outstanding therapy, CytoSorb, that when
used on the right patients, at the right time, with the right dose, works to help save lives. We are boldly trying to solve some of the
most complex medical problems in medicine today that claim the lives of millions each year. It is not simple. But with every
study, we move closer to unlocking the key. In addition, we believe we have an excellent business model bolstered by strong product
gross margins, broad international physician and partner support, a growing body of clinical data, and a solid safety profile
with now more than 152,000 treatments utilized across more than 70 countries. We remain confident in our core business both
in Germany and internationally and are excited about our pivotal trials in the U.S. that have the potential to open the significant U.S.
market and make our therapies available to help even more people."
Clinical Studies Update
Results of Operations for the Quarter ended
from product sales was approximately $8,902,000 in the three months ended September 30, 2021, as compared to approximately $10,246,000
in the three months ended September 30, 2020, a decrease of approximately $1,344,000, or 13%. This decrease was driven by a decrease
in direct sales of approximately $1,264,000 resulting primarily from lower sales in Germany due to COVID-19 pandemic-driven market conditions.
This was driven by a wave in new Delta variant-related COVID-19 cases in Germany, which
accelerated through August and has continued to date. This prompted many hospitals throughout Germany to reduce elective surgical
procedures, to reserve ICU beds, and to either maintain or reinstitute restrictions such as visitation rights to non-essential
visitors, in preparation of COVID-19 hospitalizations. However, unlike prior waves in Germany, the rates of severe COVID-19
illness requiring ICU care, and death have been disproportionately very low. This is being partly attributed to high
rates of vaccinations that are associated with reduced severity of illness, reduced need for hospitalization, and risk of death.
These factors led to a decrease in both COVID-19 and core non-COVID-19 CytoSorb
sales in Germany. Sales to hospitals in the United States under the EUA
granted by the FDA amounted to approximately $577,000 for the three months ended September 30, 2021. Though difficult to quantitate,
we estimate that approximately $1.1 million of total product sales in the third quarter of 2021 was due to the demand for CytoSorb to
treat COVID-19 patients. In addition, the change in the average exchange rate of the Euro to the U.S. dollar did not have a significant
impact on product sales during the three months ended September 30, 2021, as compared to the three months ended September 30,
Grant income was approximately $859,000 for the
three months ended September 30, 2021 as compared to approximately $301,000 for the three months ended September 30, 2020, an
increase of approximately $558,000, or 185%. This increase was a result of the easing of the COVID-19 pandemic in the United States during
the three months ended September 30, 2021 and a corresponding increase in grant related work. During the three months ended September 30,
2020, our research and development employees were either deployed to work-from-home status or reassigned to assist in activities related
to increasing the production of CytoSorb.
Total revenues were approximately $9,760,000 for
the three months ended September 30, 2021, as compared to total revenues of approximately $10,547,000 for the three months ended
September 30, 2020, a decrease of approximately $787,000, or 7%.
For the three months ended September 30,
2021, and 2020, cost of revenue was approximately $2,463,000 and $2,890,000, respectively, a decrease of approximately $427,000. Product
cost of revenue was approximately $1,642,000 and $2,622,000, respectively, for the three months ended September 30, 2021 and 2020,
a decrease of approximately $980,000. This decrease was due to lower sales and because certain costs associated with the rapid ramp-up
of production during the three months ended September 30, 2020 that did not recur during the three months ended September 30,
2021. Product gross margins were approximately 82% for the three months ended September 30, 2021 as compared to approximately 74%
for the three months ended September 30, 2020. The increase in the gross margin percentage in 2021 was due to manufacturing efficiencies
achieved during the three months ended September 30, 2021 and the impact of the ramp-up costs incurred during the three months ended
September 30, 2020 that did not recur in 2021.
Research and Development Expenses
For the three months ended September 30,
2021, research and development expenses were approximately $4,262,000, as compared to approximately $1,753,000 for the three months ended
September 30, 2020, an increase of approximately $2,509,000. This increase was due to an increase in costs associated with our clinical
trial activities, including increased employee costs to build out our clinical team, as well as higher rent expense, among other items.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were
approximately $7,777,000 for the three months ended September 30, 2021, as compared to approximately $7,282,000 for the three months
ending September 30, 2020, an increase of $495,000. This increase is related to an increase in salaries, commissions and sales and
marketing costs, increased travel and entertainment costs and an increase in non-cash restricted stock expense related to restricted stock
units granted to the Company's executive officers. These increases were partially offset by a decrease in non-cash stock option
compensation expense, lower royalty expense due to a decrease in sales, and a decrease in other general and administrative expenses.
Interest Income/(Expense), net
For the three months ended September 30,
2021, net interest income was approximately $13,000, as compared to net interest expense of approximately $261,000 for the three months
ended September 30, 2020. This decrease in net interest expense was the result of the payoff of our outstanding term loans with Bridge
Bank in December of 2020.
Liquidity and Capital Resources
Since inception, our operations have been primarily