Full Press Release Details
CytoSorbents Reports Second Quarter 2021 Financial
Total revenue increased
23% to $12.0 million. Core non-COVID-19 product sales increased 38% Y-Y, driving overall Q2 2021 product sales to $11.4 million versus
$9.5 million a year ago
MONMOUTH JUNCTION, N.J.,
August 3, 2021 - CytoSorbents Corporation (NASDAQ: CTSO), a leader in the treatment of life-threatening conditions
in intensive care and cardiac surgery using blood purification via its proprietary polymer adsorption technology, reports financial and
operating results for the quarter and six months ending June 30, 2021.
Second Quarter 2021 Financial Highlights
Recent Operating Highlights
Second Half and Full Year 2021 Product Revenue Guidance
Dr. Phillip Chan, Chief Executive Officer of
CytoSorbents stated, "We continue to prioritize the U.S. STAR-T trial as we believe it provides the lowest risk, fastest, and most
likely path to U.S. marketing approval. Following full FDA approval of our IDE application in July, we are ramping activities to begin
enrollment, with the first patient enrollment expected this quarter and trial completion targeted next year. We believe the STAR-T pivotal
trial is rigorously designed to generate the highest level of evidence and capture the full clinical and economic benefits of intraoperative
ticagrelor removal with our DrugSorb-ATR system in patients undergoing cardiothoracic surgery. If obtained, FDA marketing approval of
DrugSorb-ATR for this application would be the first step in a planned multi-phase growth strategy in the United States. We expect to
leverage the STAR-T trial infrastructure and trial design in future studies to secure other antithrombotic drug removal indications during
cardiothoracic surgery. Eventually, we plan to pursue the expanded use of DrugSorb-ATR as a pre-operative measure to reduce the risk
of bleeding in patients on antithrombotic drugs undergoing any type of high-risk surgical procedure. Overall, we believe the results
from these randomized, controlled trials, combined with real-world evidence from the STAR registry, will eventually support the use of
our technology as the new global standard of care for the acute hospital management of patients on antithrombotic drugs."
Dr. Chan continued, "Turning to quarterly
results, product sales in the second quarter of 2021 grew 19% to $11.4 million compared to the prior year, aided by 38% growth in core
non-COVID-19 product sales. These core sales reached a quarterly record of $9.7 million, or 85% of total product sales. We estimate that
COVID-19 related sales in the second quarter of 2021 were approximately $1.7 million. We continue to see improved access of our direct
sales force, distributors and partners to physicians and hospitals, though access is still significantly less than pre-pandemic levels.
With the increase in global vaccinations, offset by the rise of new cases and hospitalizations driven by new COVID-19 variants, including
the more contagious Delta variant, we are unable to predict what impact, if any, the COVID-19 pandemic may have on sales for the remainder
of the year. Overall, we expect second half 2021 product sales to exceed first half 2021 product sales, with limited contribution from
COVID-19 related sales in the second half of 2021."
"Our business remains healthy with strong
sales growth and 82% product gross margins achieved in the second quarter of 2021. We have maintained a robust cash balance, with $65.6M
at June 30, 2021, providing us a long runway to support investments in operations and clinical studies worldwide to drive future growth.
We also continue to expand our clinical team and other key talent to execute our strategy and believe we are well-positioned to grow
in both the short- and long-term."
Clinical Studies Update
Our research and development efforts are gaining
momentum despite the disruption brought on by the COVID-19 pandemic. Since the start of the year, internal and government grant funding
have supported the expansion of our R&D staff by approximately 30%, and we expect to increase headcount further by the end of the
year to support work associated with awarded grants and contracts. The revenue remaining to be earned on open grant contracts is $12.1
million. To facilitate this growth, we have relocated half the team to the new facility in Princeton, New Jersey where we were
able to occupy existing labs with minimal disruption to program timelines. Overall, grant funded programs, HemoDefend-BGA (Universal
Plasma), HemoDefend-RBC and K+ontrol , continue to progress and have been the beneficiary of ~$9.6 million, $4.7
million and $7.0 million in total funding, respectively, awarded to date.
We are pleased to report acceleration of our
HemoDefend-RBC filter development, which is designed to remove non-infectious contaminants in transfused packed red blood cells
that can cause transfusion reactions. We are currently producing devices for the required preclinical testing that is expected to start
this quarter, to support an investigational device exemption (IDE) application to run a small (<30 patient) human study to support
FDA marketing approval.
Results of Operations for the Quarter ended
Comparison for the three months ended
June 30, 2021, and 2020
Revenue from product sales was approximately
$11,365,000 in the three months ended June 30, 2021, as compared to approximately $9,520,000 in the three months ended June 30, 2020,
an increase of approximately $1,845,000, or 19%. This increase was driven by an increase in direct sales of approximately $1,492,000
resulting from sales to both new customers and repeat orders from existing customers and an increase in distributor sales of approximately
$353,000. Sales to hospitals in the United States under the EUA granted by the FDA amounted to approximately $362,000 for the three months
ended June 30, 2021. Though difficult to quantitate, we estimate that approximately $1.7 million of total product sales in the second
quarter of 2021 was due to the demand for CytoSorb to treat COVID-19 patients. In addition, as a result of the increase in the average
exchange rate of the Euro to the U.S. dollar, 2021 product sales were positively impacted by approximately $819,000. For the three months
ended June 30, 2021, the average exchange rate of the Euro to the U.S. dollar was $1.21 as compared to an average exchange rate of $1.10
for the three months ended June 30, 2020.
Grant income was approximately $659,000 for the
three months ended June 30, 2021 as compared to approximately $275,000 for the three months ended June 30, 2020, an increase of approximately
$384,000, or 140%. This increase was a result of the easing of the COVID-19 pandemic during the three months ended June 30, 2021 and
a corresponding increase in grant related work. During the three months ended June 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 $12,024,000
for the three months ended June 30, 2021, as compared to total revenues of approximately $9,795,000 for the three months ended June 30,
2020, an increase of approximately $2,229,000, or 23%.
For the three months ended June 30, 2021 and
2020, cost of revenue was approximately $2,710,000 and $3,250,000, respectively, a decrease of approximately $540,000. Product cost of
revenue was approximately $2,094,000 and $2,901,000, respectively, for the three months ended June 30, 2021 and 2020, a decrease of approximately
$807,000. This decrease was due to certain costs associated with the rapid ramp-up of production during the three months ended June 30,
2020 that did not recur during the three months ended June 30, 2021. Product gross margins were approximately 82% for the three months
ended June 30, 2021 as compared to approximately 70% for the three months ended June 30, 2020. The increase in the gross margin percentage
in 2021 was due manufacturing efficiencies achieved during the three months ended June 30, 2021 and the impact of the ramp-up costs incurred
during the three months ended June 30, 2020 that did not recur in 2021.
Research and Development Expenses
For the three months ended June 30, 2021, research
and development expenses were approximately $3,699,000, as compared to research and development expenses of approximately $2,406,000
for the three months ended June 30, 2020, an increase of approximately $1,293,000. This increase was due to an increase in our clinical
trial activities of approximately $452,000 due to pre-enrollment activities related to our STAR-T trial in the United States, an increase
in salaries related to our clinical trial activities of approximately $506,000 due to the hiring of clinical expertise, an increase in
rent expense of approximately $181,000 related to rent expense on our new facility and an increase in non-grant related research and
development labor and other costs of approximately $154,000.
Legal, Financial and Other Consulting Expenses
Legal, financial and other consulting expenses
were approximately $718,000 for the three months ended June 30, 2021, as compared to approximately $846,000 for the three months ended
June 30, 2020. The decrease of approximately $128,000 was due to a decrease in legal fees of approximately $98,000, a decrease in employment
agency fees of approximately $46,000, and a decrease in accounting and auditing fees of approximately $23,000. The decreases were offset
by an increase in consulting fees of approximately $39,000.
Selling, General and Administrative Expenses
Selling, general and administrative expenses
were approximately $9,821,000 for the three months ended June 30, 2021, as compared to approximately $6,591,000 for the three months
ending June 30, 2020, an increase of $3,231,000. Approximately $1,396,000, or 43%, of this increase was associated with non-cash related
expenses including restricted stock expense of approximately $884,000 related to restricted stock units granted to the Company's
executive officers and an increase in stock compensation expense of approximately $512,000. The remaining increases in selling, general