Full Press Release Details
Reports Third Quarter 2022 Financial and Operational Results
expects to achieve first milestone of the U.S. pivotal STAR-T Trial this month
N.J., November 3, 2022 - 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
unaudited financial and operating results for the quarter ended September 30, 2022.
Third Quarter 2022 Financial Results
Recent Operating Highlights:
Chief Executive Officer of CytoSorbents stated, "Based upon the increased pace of enrollment, we are excited to be very close to
achieving the first of three milestones of the U.S. STAR-T pivotal randomized, controlled study, where we expect to have 40 patients
enrolled this month. Should the pace of the study continue, we expect to achieve the second milestone of 80 patients enrolled this Spring
2023, which would trigger a formal interim analysis, and if needed, expected potential completion of enrollment of all 120 patients by
Summer 2023. We expect that if the STAR-T study is successful, we would be in a position to submit for U.S. FDA marketing approval for
DrugSorb-ATR in the second half of 2023.
projections, and based upon the current macroenvironment, market conditions, and cash conservation imperative, we are taking a number
of proactive steps as we work towards the expected achievement of this key objective.
STAR-T randomized, controlled trial is a 120-patient, 30 center pivotal study designed to evaluate the ability of DrugSorb-ATR to reduce
perioperative bleeding by removing the antithrombotic agent, Brilinta (ticagrelor, Astra Zeneca) in patients undergoing cardiothoracic
surgery. Today, Brilinta usage is being fueled by the fact that, according to the U.S. Centers of Disease Control and Prevention (CDC),
heart disease is the leading cause of mortality in the U.S., accounting for 1 in every 5 deaths. Coronary artery disease is the most
common form of heart disease, killing nearly 400,000 people from heart attacks each year. The CDC states that someone in the U.S. has
a heart attack every 40 seconds, or more than 800,000 people annually. This is relevant for Brilinta because when patients have signs
and symptoms of having a heart attack and cannot get a stent placed or coronary artery bypass graft (CABG) surgery right away, they are
often placed on dual antiplatelet therapy (DAPT) in the hospital consisting of aspirin and a "super-asprin" like Brilinta,
to thin the blood and reduce the risk of a worsening heart attack and death. If they are not candidates for a stent, they may require
surgery but now face the risk of severe or uncontrolled bleeding because of DAPT intervention. The risk of bleeding depends on when the
surgery takes place, but the risk of major fatal or life-threatening CABG-related bleeding can be higher than 50% if the surgery
goal of DrugSorb-ATR is to allow patients to get the critical surgery that they need without delay, while reducing or preventing
this bleeding risk by actively removing the drug during the surgery.
indication has received FDA Breakthrough Device Designation, and is already approved in the European Union, with very positive published
data on a reduction in bleeding risk, which is the primary endpoint of the STAR-T trial. In addition to this, there are a number
of other reasons why we are excited about this study and believe it is the right time to primarily focus our resources on this trial.
U.S. STAR-D randomized, controlled trial is a 120-patient, 30 center pivotal study designed to evaluate the ability of DrugSorb-ATR to
reduce perioperative bleeding by removing the direct oral anticoagulants (DOACs), Xarelto (rivaroxaban, Janssen/Bayer) and Eliquis
(apixaban, Bristol-Myers Squibb/Pfizer), in patients undergoing cardiothoracic surgery. DOACs are used as chronic therapy to thin the
blood to reduce the risk of stroke and heart attack in patients with atrial fibrillation, or a history of stroke, heart attack, or vascular
disease, but uses a different mechanism of action than ticagrelor and are not directly interchangeable. However, like ticagrelor,
patients on DOACs who require urgent cardiothoracic surgery have a particularly high risk of perioperative bleeding. The goal of DrugSorb-ATR
in this population is identical to that for ticagrelor - remove the drug and reduce or prevent perioperative bleeding. In fact,
we believe DrugSorb-ATR will eventually become the "one-stop-shop" for the removal of all classes of antithrombotic agents
during cardiothoracic surgery, and potentially other surgeries such as orthopedic and neurosurgery, in the future.
STAR-D as the sister trial to STAR-T, that leverages many of the same study centers, trial design and user training, but trails STAR-T
by at least 6 months. Rather than run this study in parallel, we have decided to pause STAR-D to focus our internal resources on our
lead program, STAR-T, including opening new Canadian trial sites to potentially accelerate enrollment and drive STAR-T to completion.
This will save an estimated $4 million in expenses in 2023. We fully intend to return to STAR-D when either STAR-T nears, or is at, completion
or when we have the financial resources to do so.
believe that our commercial markets will recover, but it will take some time. To this point, 2022 continues to be a work-in-progress
as hospitals in our core markets continue to struggle to recover from the worst of the COVID pandemic, while grappling with macroeconomic
issues such as inflation and high energy costs. Internationally, many hospitals are operating in the red, with rising costs and decreased
revenue from issues such as healthcare workforce shortages that negatively impact bed capacity, scheduled operations and procedures,
and patient volume. Given our focus on critical care, cardiac surgery, and the hospital market, we are witnessing these issues firsthand.
That said, we recorded approximately $6.5 million in core non-COVID product sales in a historically weak seasonal quarter, which on a
constant currency basis, was approximately $7.2 million. Adjusting for currency effects, core sales were down 7% year over year, which
we view as a modest decline.
wait for these global headwinds to clear, we are actively pursuing new exciting growth initiatives and sales optimization strategies
to drive sales, despite the challenging environment. We have previously detailed a number of important programs that we are executing
upon, such as our standalone blood pump initiative with Nikkiso, our global marketing agreement with Fresenius Medical Care, our therapy
area focus in critical care, cardiac surgery, and liver & kidney, and our preferred supplier agreements with the top two largest
private hospital networks in Germany, Asklepios and Helios. We believe each of these initiatives has the potential for a tangible return
on investment and the ability to add significantly to our growth prospects. We also believe there are some exciting areas of growth in
the treatment of acute respiratory distress syndrome (ECMO and CytoSorb), liver dysfunction and failure (CytoSorb), blood thinner removal
(DrugSorb-ATR and CytoSorb), and ex vivo organ perfusion for transplant (e.g., ECOS-300CY and PerSorb ), some of which
we will discuss in more detail in the earnings call. In the meantime, we currently expect to return our product gross margins to historic
levels ( 80%) in 2023, once we consolidate manufacturing completely to the new Princeton, New Jersey facility and close the old
facility, and upon an expected resumption in CytoSorb sales growth, pending an improvement in market conditions.
expect to bolster our balance sheet and current cash position by drawing down a portion of the $15 million in debt under our existing
term loan facility before year-end. We believe this amount of debt is very manageable and will provide a suitable financial cushion for
us as we drive our clinical and commercial initiatives.
conservation is a priority and we continue to focus on controlling expenses. During 2022, we have already reduced our headcount by approximately
10% across our company, including full and part-time employees, and consultants, and shifted our R&D headcount to funded grant programs,
where we have an extensive $13.2 million backlog as of the end of Q3 2022. Some of the cost savings of our headcount reduction are not
yet visible in our results due to notice periods and labor laws in Europe, but will be reflected in our 2023 operating budget. Meanwhile,
we are working diligently to prioritize activities that we believe have a near-term return on investment and advance our strategic priorities,
while cutting non-core or non-essential activities and spend. Our goal is, through a combination of driving an increase in sales and
gross margin, and cutting costs, to significantly reduce our cash burn and to extend our operating runway with the resources we have.
"We are excited to rally around the progress of our U.S. STAR-T program and if successful, strongly believe this has the potential
to unlock significant value in our Company and open up a very important commercial growth opportunity for years to come."
Results of Operations
for the three months ended September 30, 2022 and 2021:
were approximately $8.1 million for the three months ended September 30, 2022, as compared to total revenues of approximately $9.8 million
for the three months ended September 30, 2021, a decrease of approximately $1.6 million, or 17%. Revenue from product sales was approximately
$6.5 million in the three months ended September 30, 2022, as compared to approximately $8.9 million in the three months ended September
30, 2021, a decrease of approximately $2.4 million or 27%. The decrease in the average exchange rate of the Euro to the U.S. dollar negatively
impacted 2022 product sales by approximately $.7 million. For the three months ended September 30, 2022, the average exchange rate of
the Euro to the U.S. dollar was $1.01 as compared to an average exchange rate of $1.18 for the three months ended September 30, 2021.
We estimate that demand for CytoSorb to treat COVID-19 patients was de minimis in the third quarter of 2022 as compared to approximately
$1.1 million in the third quarter of 2021. Overall direct sales declined by approximately $1,407,000 resulting primarily from lower sales
in Germany due to COVID-19 pandemic-driven market conditions, and unfavorable currency conversions. Although improved, continued staffing
shortages, reduction in ICU bed capacity, decreased elective surgical procedures, hospital budgets, and hospital restrictions which at
some hospitals continue to limit our access to hospital personnel, continue to impact the hospital market.
approximately $1.6 million for the three months ended September 30, 2022, as compared to approximately $859,000 for the three months
ended September 30, 2021, an increase of approximately $790,000, or 92%. During the three months ended September 30, 2021, 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. In 2022, research and development employees were assigned exclusively to grant and other research and development
For the three months
ended September 30, 2022 and 2021, cost of revenue was approximately $4.5 million and $2.5 million, respectively. Product gross margins
were approximately 55% for the three months ended September 30, 2022 as compared to approximately 82% for the three months ended September
30, 2021. The decrease in the gross margin percentage was due to an equipment failure of a refrigeration unit at our new manufacturing
facility that caused a write-off of approximately $0.6 million of work-in-process inventory and to inefficiencies associated with lower
production due to a decrease in sales and the process of relocating our production activities to the new facility. Excluding the write-off
of inventory related to the equipment failure, product gross margin would have been 64% in Q3 2022.