Full Press Release Details
Reports Second Quarter 2024 Financial and Operational Results
PRINCETON, N.J., August 13, 2024
- CytoSorbents Corporation (NASDAQ: CTSO), a pioneer in critical care and cardiac surgery blood purification
technologies, today reported unaudited financial and operating results for the quarter ended June 30, 2024.
Second Quarter 2024 Financial Results
Recent Operating Highlights:
Dr. Phillip Chan, Chief Executive Officer
of CytoSorbents, stated, "This year, we have worked diligently to execute upon a broad turnaround strategy that is dependent on
attaining a number of key objectives. I am pleased to highlight our achievement or expected achievement of many of these goals."
We are rapidly nearing the expected completion
and submission of our marketing applications to the U.S. Food and Drug Administration (FDA) and Health Canada for DrugSorb-ATR this quarter,
based on the final results of our U.S. and Canadian pivotal STAR-T trial in patients on the blood thinner Brilinta undergoing
coronary artery bypass graft (CABG) surgery. We are leveraging the electronic Submission Template and Resource (eSTAR) platform used
for electronic medical device submissions to FDA and have completed 75% of our De Novo application to date. For Canada, we have now completed
our MDSAP site audit and are undergoing certification review by our notified body - a key requisite to Canadian medical device
commercialization. If we achieve marketing approvals in the U.S. as an FDA Breakthrough Device and Canada, we will have the potential
to unlock an unprecedented commercial opportunity for the Company, with an initial $325 million total addressable market estimate for
DrugSorb-ATR in these two countries alone, that could double in size as Brilinta goes off patent in 2024.
After completing our $10.3M equity raise in December
2023, we further strengthened our balance sheet by securing a $20M term-loan facility with Avenue Group providing an initial tranche of
$15 million in cash, including $10 million unrestricted, and $5 million contingent upon FDA acceptance of a De Novo application for marketing
approval of DrugSorb-ATR and certain liquidity requirements. Another $5 million will become available to the Company upon U.S. FDA approval
of DrugSorb-ATR. The loan facility is expected to help fund the Company through both Health Canada and U.S. FDA regulatory decisions.
We have also paid back our previous Bridge Bank debt.
We continue to actively reduce operating expenses
with a focus on improvements in productivity and the longer-term goal of being self-sustaining. Cost cutting measures taken in prior
periods have helped to reduce our Q2 2024 operating loss by 48% to $3.4 million, compared to $6.6 million a year ago. Last month, we
enacted additional cost cuts, designed to reduce the Company's cash burn by another $5 million on an annualized basis. Specifically,
over the past 5 months, we have streamlined our operations, and through a combination of attrition and layoffs, have decreased full-time
and part-time headcount by 17% from 186 to 155 as of today. These have been very difficult but necessary actions for the greater good
to ensure that we live within our means and can fund our critical programs.
Meanwhile, blended product gross margins that
combine higher margin direct sales with lower margin distributor and partner sales improved year-over-year to 75% with continued improvements
in manufacturing. With greater volumes, we believe we have direct line of sight to 80% blended product gross margins for our various
therapies. As high margin "razorblades" that are compatible with industry standard blood pump "razors", improvements
in product gross margin are expected to reduce our cash needs and accelerate future profitability.
We have now achieved a major company milestone
with more than a quarter million CytoSorb devices delivered across 76 countries to date, helping to save many lives worldwide. We thank
everyone who has contributed to this achievement, most importantly our employees, our customers and supporters around the world, and our
shareholders. This is our success.
Meanwhile, first half 2024 product sales were
$17.8 million, an increase of $1.8 million or approximately 12% compared to sales of $16.0 million in the same period of 2023. Although
good progress, there is more work we need to do to get back to historic growth rates, particularly in the post-pandemic hospital environment.
Among our many initiatives to achieve this objective, here are some quick updates.
Dr. Chan concluded, "Finally, we have been positioning CytoSorbents
for the next stage of growth, both our existing international franchise, as well as the potential to open the U.S. and Canadian markets.
This is why it has taken us so long to find the right CFO candidate to replace our esteemed retiring CFO, Kathy Bloch. Kathy has gone
above and beyond the call of duty, selflessly coming back from retirement last August to resume her former full-time CFO role, and in
the intervening 12 months, helping to secure the future of the Company with two key financings and orchestrating our cash conservation
strategy. With her retirement, announced today, she caps an outstanding CFO career and will continue as a consultant to help manage the
smooth transition to our newly appointed CFO, Peter Mariani. On behalf of everyone at CytoSorbents, we thank Kathy for her more than 11
years of dedication and leadership at the Company as a trusted colleague and friend, with so many contributions that have helped us achieve
the success we have today, and wish her an enjoyable, relaxing, and well-deserved retirement.
Meanwhile, Pete is a seasoned and accomplished
medical device CFO whose many successes at high growth publicly-traded companies such as Axogen, Hansen Medical, and Guidant Corporation,
speak for themselves. Importantly, at Axogen, an innovator in peripheral nerve repair, he helped to manage rapid U.S. growth with a direct
sales force and high margin sales from $27 million to nearly $160 million over the course of his seven-year tenure as CFO, while raising
approximately $250 million in capital, overseeing a comprehensive investor relations program with institutional investors, and implementing
a financial strategy to get to near-term profitability. Pete is an outstanding fit for CytoSorbents and joins at an excellent time where
his deep domestic and international experience and insight is expected to be vital to our success. We are thrilled to have Pete join our
team and look forward to briefly introducing him to analysts and investors on today's earnings call."
Q2 2024 Earnings Conference Call
The Company will conduct its second quarter 2024
results call today at 4:30 p.m. Eastern time.
Call Webcast Details:
Tuesday, August 13, 2024
Time: 4:30 PM Eastern Time
Live Presentation Webcast:
Conference ID: 7567925
Participant Dial-In:
Participant Dial-in toll-free: (888) 596-4144
It is recommended that participants dial in approximately
10 minutes prior to the start of the call.
An archived recording of the conference call
will be available under the Investor Relations section of the Company's website at https://ir.cytosorbents.com/
Results of Operations
Comparison for the three months ended June 30,
Revenue from product sales was approximately
$8,842,000 in the three months ended June 30, 2024, as compared to approximately $8,072,000 in the three months ended June 30,
2023, an increase of approximately $770,000, or 10%. Distributor sales increased approximately $965,000, or 28%. Direct sales decreased
approximately $196,000, or 4%. In addition, as a result of the decrease in the average exchange rate of the Euro to the U.S. dollar,
2024 product sales were negatively impacted by approximately $104,000. For the three months ended June 30, 2024, the average exchange
rate of the Euro to the U.S. dollar was $1.08 as compared to an average exchange rate of $1.09 for the three months ended June 30,
Grant income was approximately $1,053,000 for
the three months ended June 30, 2024 as compared to approximately $1,348,000 for the three months ended June 30, 2023, a decrease
of approximately $295,000, or 22%. This decrease was due to the completion of several grants during 2023.
Total revenues were approximately $9,895,000
for the three months ended June 30, 2024, as compared to total revenues of approximately $9,421,000 for the three months ended June 30,
2023, an increase of approximately $474,000, or 5%.
For the three months ended June 30, 2024
and 2023, cost of revenue was approximately $3,392,000 and $3,402,000, respectively, a decrease of approximately $10,000. Product cost
of revenue was approximately $2,411,000 and $2,093,000, respectively, for the three months ended June 30, 2024 and 2023, an increase
of approximately $318,000 due to increases in sales in 2024. Gross margins on devices and device accessories were approximately 75% for
the three months ended June 30, 2024 as compared to approximately 74% for the three months ended June 30, 2023. This increase
was due to the achievement of greater operating efficiencies in 2024, which was partially offset by an increase in the percentage of
lower margin distributor sales to total sales during the three months ended June 30, 2024 as compared to the three months ended
Research and Development Expenses:
For the three months ended June 30, 2024, research
and development expenses were approximately $1,520,000, as compared to research and development expenses of approximately $3,669,000 for