Full Press Release Details
CytoSorbents Reports Record Quarterly Total Revenue and Product Sales in the Second Quarter 2017
JUNCTION, N.J., August 7, 2017 - CytoSorbents Corporation (NASDAQ: CTSO), a critical care immunotherapy leader commercializing
its flagship CytoSorb blood filter to prevent or treat deadly inflammation and organ failure in critically-ill and cardiac
surgery patients around the world, reports financial and operational results for the quarter ending June 30, 2017.
2017 Financial Highlights:
Second Quarter 2017 Operational Highlights:
"We are pleased to report our first
$3 million quarter in CytoSorb sales, driven by both record direct and distributor sales, and the continuation of our solid trajectory
of growth. Based upon our outlook, we continue to expect an expansion of sales and achievement of operating profitability
in 2018," said Dr. Phillip Chan, Chief Executive Officer of CytoSorbents.
"Meanwhile, we have delivered over
27,000 CytoSorb treatments to date, with ongoing success in treating many of the most complicated patients in medicine with diseases
such as sepsis, trauma, liver failure, complications from cardiac surgery, and many others, with new potential areas such as cancer
immunotherapy. These are markets that continue to proliferate, due to the aging population and lack of effective treatments.
Sepsis, for example, has been officially recognized by the World Health Organization (WHO) as a Global
Health Priority afflicting an estimated 30 million people
worldwide each year, killing 6 million despite the use of antibiotics. A recent Bloomberg feature declared, "America has
a $27 billion sepsis crisis", citing a new brief from the Agency for Healthcare Research and Quality (AHRQ), a federal agency
that studies clinical practices, which found that sepsis was the second most common reason for hospital stays. Sepsis is
a complicated disease that has defied either simple or complex solutions for decades and it is clear that multiple strategies will
be required to conquer it. We believe that CytoSorb, with its multi-modal attack on sepsis, is at the forefront of treatment."
"Under the leadership of our new
Chief Medical Officer, Dr. Eric Mortensen, we have refined our clinical trial strategy, optimizing the design of the U.S. REFRESH
2 cardiac surgery trial, expected to start later this year, and that of other company-sponsored randomized controlled trials.
These initiatives will be supplemented by the approximately 60 investigator-initiated studies in various stages of process, external
grant-funded and company-funded research, and new product development. In addition, there has been a tremendous amount of
reported clinical activity highlighting the benefit of CytoSorb treatment, with two dozen scientific and medical journal publications
in the past year, an interim analysis on nearly 200 patients from the CytoSorb International Registry accepted for publication,
more than 50 Case of the Week synopses,
and many presentations and posters given at major international scientific congresses. We expect the level of clinical activity
and reporting to remain strong in the future as we drive adoption of CytoSorb throughout the world."
Results of Operations
Comparison for the three months ended
June 30, 2017 and 2016:
Revenue from product sales was approximately
$3,041,000 in the three months ended June 30, 2017, as compared to approximately $1,853,000 in the three months ended June 30,
2016, an increase of approximately $1,188,000, or 64%. This increase was largely driven by an increase in direct sales from both
new customers and repeat orders from existing customers, along with an increase in distributor sales.
Grant income was approximately $525,000
for the three months ended June 30, 2017 as compared to approximately $370,000 for the three months ended June 30, 2016, an increase
of approximately $155,000. This increase was a result of revenue recognized from new grants.
As a result of the increases in both product
sales and grant income, for the three months ended June 30, 2017, we generated total revenue of approximately $3,566,000, as compared
to total revenues of approximately $2,222,000, for the three months ended June 30, 2016, an increase of approximately $1,344,000
For the three months ended June 30, 2017
and 2016, cost of revenue was approximately $1,482,000 and $873,000, respectively, an increase of approximately $609,000. Product
cost of revenues increased approximately $458,000 during the three months ended June 30, 2017 as compared to the three months ended
June 30, 2016 due to increased sales. Product gross margins were approximately 65% for the three months ended June 30, 2017, as
compared to approximately 68% for the three months ended June 30, 2016. This decrease in gross margin was primarily due to
the mix of direct sales and distributor sales.
Research and Development Expenses:
For the three months ended June 30, 2017,
research and development expenses were approximately $488,000 as compared to research and development expenses of approximately
$1,092,000 for the three months ended June 30, 2016. This decrease of approximately $604,000 was primarily due to a decrease in
costs related to our various clinical studies and trials.
Legal, Financial and Other Consulting
Legal, financial and other consulting expenses
were approximately $443,000 for the three months ended June 30, 2017, as compared to approximately $319,000 for the three months
ended June 30, 2016.
Selling, General and Administrative
Selling, general and administrative expenses
were approximately $3,484,000 for the three months ended June 30, 2017, as compared to approximately $2,625,000 for the three months
ending June 30, 2016. The largest contributors to this change were an increase in non-cash stock-based compensation expense primarily
based upon management's progress toward meeting the 2017 operating milestones, an increase in royalty expenses due to growth
in product sales, and an increase in salaries and commissions due to headcount additions and personnel-related costs.
Interest Income (Expense):
For the three months ended June 30, 2017,
interest expense was approximately $123,000, as compared to interest income of approximately $2,000 for the three months ended
June 30, 2016. This increase in interest expense of approximately $125,000 is directly related to interest expense incurred and
amortization of loan acquisition costs related to the Company's financing facility with Bridge Bank on which $5,000,000 was
drawn on June 30, 2016 and was outstanding for the three months ended June 30, 2017.
Gain (Loss) on Foreign Currency Transactions:
For the three months ended June 30, 2017,
the gain on foreign currency transactions was approximately $720,000 as compared to a loss of approximately $129,000 for the three
months ended June 30, 2016. The 2017 gain is directly related to the $0.07 increase in the exchange rate of the Euro into U.S.
dollars at June 30, 2017 as compared to March 31, 2017.
Comparison for the six months ended
June 30, 2017 and 2016:
Revenue from product sales was approximately
$5,637,000 in the six months ended June 30, 2017, as compared to approximately $3,450,000 in the six months ended June 30, 2016,
an increase of approximately $2,187,000, or 63%. This increase was largely driven by an increase in direct sales from both new
customers and repeat orders from existing customers, along with an increase in distributor sales.
Grant income was approximately $1,043,000
for the six months ended June 30, 2017, as compared to approximately $582,000 for the six months ended June 30, 2016, an increase
of approximately $461,000, or 79%. This increase was a result of revenue recognized from new grants.
As a result of the increases in both product
sales and grant income for the six months ended June 30, 2017, we generated total revenue of approximately $6,680,000, as compared
to total revenue for the six months ended June 30, 2016 of approximately $4,032,000, an increase of approximately $2,648,000, or
For the six months ended June 30, 2017
and 2016, cost of revenue was approximately $2,736,000 and $1,693,000, respectively, an increase of approximately $1,043,000. Product
cost of revenues increased approximately $687,000 during the six months ended June 30, 2017 as compared to the six months ended
June 30, 2016 due to increased sales. Product gross margins were approximately 66% for the six months ended June 30, 2017, as compared
to approximately 65% for the six months ended June 30, 2016 primarily due to the mix of direct and distributor sales.
Research and Development Expenses:
For the six months ended June 30, 2017,
research and development expenses were approximately $957,000, as compared to research and development expenses of approximately
$1,948,000 for the six months ended June 30, 2016, a decrease of approximately $991,000. This decrease was due to a reduction in
costs related to various clinical studies of approximately $672,000 and an increase in direct labor and other costs being deployed
toward grant-funded activities of approximately $356,000, which had the effect of decreasing the amount of our non-reimbursable
research and development costs.