CytoSorbents Reports Record Third Quarter 2020 Financial Results
CytoSorbents Corporation (CTSO) reported impressive Q3 2020 financial results with total revenue reaching approximately $10.5 million, a 73% increase from Q3 2019. Product revenues surged by 79% to $10.2 million. The gross margin improved sequentially to 74%, despite a slight decrease year-over-year. The company ended September with $88 million in cash, a significant increase compared to June. Operational highlights included over 110,000 CytoSorb treatments and a contract worth $4.4 million from the U.S. Department of Defense, aimed at advancing blood transfusion safety.
- Total revenue increased 73% year-over-year to $10.5 million in Q3 2020.
- Product revenues rose by 79% to approximately $10.2 million.
- Cumulative CytoSorb treatments exceeded 110,000, representing a 51% growth.
- Cash reserves improved to approximately $88 million, significantly up from $35.1 million in June 2020.
- Awarded a $4.4 million contract by the U.S. Department of Defense for pre-clinical development.
- Product gross margins decreased from 77% in Q3 2019 to 74% in Q3 2020.
- Research and Development expenses decreased by approximately $1.4 million, reflecting a slowdown in clinical trials due to COVID-19.
- Selling, general and administrative expenses increased to $7.3 million, impacting the net profits.
MONMOUTH JUNCTION, N.J., Nov. 4, 2020 /PRNewswire/ -- CytoSorbents Corporation (NASDAQ: CTSO), a critical care immunotherapy leader using its CytoSorb® blood purification technology to treat deadly inflammation in critically-ill and cardiac surgery patients around the world, reports its full financial and operational results for the quarter ending September 30, 2020.
Third Quarter 2020 Financial Results:
- Total revenue for Q3 2020 was approximately
$10.5 million , a73% increase from$6.1 million in Q3 2019 - Q3 2020 product revenues were approximately
$10.2 million , an increase of79% from$5.7 million for Q3 2019 - Trailing twelve months product sales for the period ending September 30, 2020 were approximately
$34.5 million - Gross margin on total revenues grew to
$7.7 million in Q3 2020, an increase of$3.3 million or74% from Q3 2019 - Product gross margins for Q3 2020 were approximately
74% , compared to77% for Q3 2019, but up from70% from Q2 2020, primarily as a result of the increase in the percentage contribution of lower margin distributor sales as well as additional costs related to COVID-19 incentive payments to employees as a result of the continued rapid ramp-up of production during Q3 2020 - Cash balances at September 30, 2020 were approximately
$88.0 million , compared to approximately$35.1 million at June 30, 2020 as a result of the July 24, 2020 equity financing
Third Quarter 2020 Operational Highlights:
- More than 110,000 cumulative CytoSorb treatments have been delivered to date, up approximately
51% from a year ago - Completed a
$57.5 million equity financing, including the underwriter's overallotment, in July 2020 led by Cowen and SVB Leerink, with co-manager, B. Riley FBR, netting approximately$53.8 million in cash after fees - Initiation of healthcare analyst coverage by SVB Leerink analyst Danielle Antalffy and Jefferies analyst Anthony Petrone
- Undertook multiple activities in preparation to resume the REFRESH 2-AKI Trial, following the recommendation of the Data Monitoring Committee after a favorable review of safety data
- Awarded a
$4.4 million contract by the U.S. Department of Defense to complete HemoDefend-BGA adsorber pre-clinical development to enable "Universal Plasma" and safer whole blood transfusions - Established U.S. collaborations with Terumo Cardiovascular, InvoSurg Inc., and Surgical Partners to commercialize CytoSorb in a total of 25 states under the FDA Emergency Use Authorization allowing the use of CytoSorb in adult, critically-ill COVID-19 patients with imminent or confirmed respiratory failure
- Began actively enrolling patients in the "CytoSorb Therapy in COVID-19 ICU Patient" (CTC) Registry
- Hosted the webinar, "The Use of CytoSorb® for Antithrombotic Drug Removal" with presentations by Dr. C. Michael Gibson, Dr. Robert Storey, and Dr. Michael Schmoeckel.
- In recognition of World Sepsis Day 2020 and Sepsis Awareness Month that highlight the need to prevent the 11 million lives lost each year due to sepsis, including the 1.2 million lives lost to COVID-19 related sepsis in this year alone, we sponsored the World Sepsis Meeting, the Sepsis Alliance's SEPSIS HEROES Gala and Sepsis Alliance Summit, and multiple COVID-19 webinars
- Achieved registration of CytoSorb in Brazil and expanded usage of CytoSorb throughout many countries in Latin America for COVID-19 and other critical illnesses
Dr. Phillip Chan, MD, PhD, Chief Executive Officer of CytoSorbents stated, "We believe we are in an excellent position for continued growth and success, with another outstanding quarter of record sales and cumulative treatments delivered. These results were driven by steady growth in our core markets of critical care and cardiac surgery, and robust global sales to help treat critically-ill patients stricken with COVID-19. Product gross margins also improved sequentially from Q2 2020 to
"With our strong financial performance and solid cash position, coupled with strong current and anticipated demand for CytoSorb, we are aggressively executing upon our clinical trial and sales growth strategy to continue our momentum into 2021 and beyond. These include the following multiple initiatives:
Clinical Strategy:
- Company Sponsored Clinical Trials: We have consolidated and expanded our U.S. and E.U. Clinical Development group under the leadership of Chief Medical Officer Dr. Efthymios Deliargyris to support a multi-year international clinical trial strategy (to be discussed further on today's earnings call) that is intended to drive data generation and usage in key clinical applications with large market opportunities. These include company-sponsored clinical studies that are either underway, or will be initiated over the next 12 months in:
- Critical care: Septic shock (PROCYSS), U.S. shock trial, and acute liver disease (HepOnFire)
- Cardiac surgery: REFRESH 2-AKI pivotal trial, and anti-thrombotic, or "blood thinner" removal including ticagrelor (Brilinta®, Brilique®, AstraZeneca) under the U.K. TISORB and German CyTATION studies, to be extended with the international STAR (Safe and Timely Antithrombotic Removal) registry and U.S. STAR trials for removal of novel oral anticoagulants (NOACs) such as rivaroxaban (Xarelto®, Janssen and Bayer) and apixaban (Eliquis®, BMS and Pfizer)
- FDA Breakthrough Designation: We believe we are very close to a regulatory path forward that is consistent with Breakthrough Designation status. In a recent meeting with FDA, we closely aligned around the pressing unmet medical need to remove ticagrelor during urgent and emergent cardiothoracic surgery, and discussed additional data that we believe support the very positive benefit-to-risk profile of CytoSorb for this application. This collaborative discussion was supplemented with the perspectives of invited experts in the field of cardiac surgery and antithrombotics, highlighting the clinical dilemma and serious consequences of blood thinners in cardiac surgery, with FDA assurances of a rapid review of some additional requested data that is being submitted
- REFRESH 2-AKI Trial: As mentioned, we are actively working to resume this study, pending a resolution of COVID-19 restrictions, with multiple activities, including for example, site re-training and a renewal of materials and certain documents. Our target is to resume patient enrollment in Q1 2021
- REMOVE Endocarditis Trial: Based upon recent discussions with the study investigators of this completed 250-patient, German government-funded, investigator initiated randomized controlled trial (RCT) in patients undergoing valve replacement surgery for infective endocarditis, they are working to have topline data from the study available before the end of this year, despite delays in data monitoring and analysis caused by COVID-19 at a number of trial sites. Full analysis of the study is expected in 1H-2021 with a publication submitted by mid-2021. If positive, we believe this can be a significant catalyst for growth
- CTC COVID-19 Registry: The CTC registry is actively enrolling patients, primarily from U.S. centers, with an initial analysis planned for the end of this year. The registry is being opened up internationally, with the goal of consolidating data from the more than 30 countries worldwide where an estimated 2,800 COVID-19 patients have been treated to date with CytoSorb
Commercialization
- Maximizing the COVID-19 opportunity: To date, there have been more than 48 million cases of COVID-19 worldwide, with 1.2 million deaths. New global cases have been rising rapidly, with approximately a half million new cases a day. COVID-19 cases are surging throughout Europe - with far more new daily cases than seen earlier in the pandemic, the Midwest United States, Russia, and many other countries. Unlike in the early pandemic, a greater percentage of patients are young, resulting in less severe disease and lower rates of hospitalization and deaths, for now. For example, mortality rates for critically-ill COVID-19 patients have been declining from a peak of approximately
42% in the early pandemic, where lack of resources such as mechanical ventilators, personnel, and anti-viral therapies, and a predominantly older, high-risk patient population, contributed to poor outcomes. The use of dexamethasone in mechanically ventilated patients has reduced mortality to about29% , though the risk of death remains high, as is the need for more effective therapies. However, as the numbers of new cases grow, hospital and ICU bed occupancy has been steadily rising across Europe and in newly hit U.S. states in the Midwest, with the expectation that death rates could spike significantly. That said, new case series data received from multiple institutions on the use of CytoSorb in critically-ill COVID-19 patients on mechanical ventilation with or without extracorporeal membrane oxygenation, suggest positive outcomes in treated patients with hyperinflammation, with survival rates exceeding80% . We believe we are well-positioned in Europe to help with the current COVID-19 crisis. Meanwhile, in the U.S., we have already established a commercialization network for CytoSorb in half of the United States and are actively establishing a network in many of the currently hard-hit areas of the Midwest. All of these activities are in preparation for what is expected to be a difficult and busy winter season for COVID-19 infection throughout the U.S. and around the world. We believe COVID-19 will continue to be a significant contributor to revenue in Q4 2020 and potentially in Q1 2021 - Returning to the Pre-COVID-19 Growth Strategy: Prior to COVID-19, we were already executing on an ambitious plan for growth. As COVID-19 declines in importance in 2021 with the expected approval of multiple vaccines early in the year, we plan to return to this growth strategy
- Focus on Driving both Direct and Distributor Sales: We believe 2020 product sales to date have demonstrated the power of this dual engine for growth in our underlying business of critical care and cardiac surgery. However, we believe there is substantial room for growth. COVID-19 has opened doors and accelerated usage of CytoSorb in our international distributor and strategic partner network. We believe this momentum will continue post-COVID-19. In our direct territories, COVID-19 has been a significant driver of growth, but has also slowed our normal business due to fewer surgical procedures, hospital restrictions on sales representative access to physicians, and decreased effectiveness of major scientific conferences. We believe the significant investments made in our direct sales force has only begun to reflect in our overall product sales and will become much more apparent in a post-COVID world
- Maximizing the Ticagrelor and Rivaroxaban E.U. approvals: We believe these applications can be significant drivers of sales growth for CytoSorb in 2021 and beyond. Due to the recent approvals earlier this year, and COVID-19 restrictions on access to hospitals and physicians, we have only begun to see a glimpse of what we can potentially achieve in this field. Our goal is for CytoSorb to rapidly become a de facto standard of care for this application worldwide
- Expand in New Applications: CytoSorb has the potential to be a leader in many different fields, including cardiac surgery, with pending results from the REMOVE endocarditis trial, the blood thinner applications, and management of vasoplegic shock, as well as new applications in acute-on-chronic liver disease, and many other indications. We are committed to driving the data to support usage in many of these areas
- Expansion of the International Team: We have continued to invest in our organization, increasing headcount to approximately 175 full-time and part-time employees, up from 153 earlier this year, focused primarily in commercialization, manufacturing, clinical development, and R&D. This reflects our confidence in our growth potential
- Plant Expansion: We are evaluating potential options for plant expansion to achieve the next scale, capable of supporting
$300 -400M in sales of CytoSorb each year, which once operational is expected to expand blended product gross margins to well beyond80% - Preparing for U.S. commercialization: We are in the process of recruiting a Vice President of U.S. Sales to help develop the strategy and lay the groundwork to commercialize CytoSorb in the U.S. for potential applications such as ticagrelor removal and to support COVID-19 sales in the interim
- Streamlining the Balance Sheet: We believe we are in a strong financial position. After the expiration of our interest-only period, we have begun both interest and principal payments this month on our
$15 million term loan with Bridge Bank, a division of Western Alliance Bank. We are finalizing an extensive evaluation of different options amongst an excellent network of lenders, exploring either refinancing or retiring the debt."
Dr. Chan concluded, "I am extremely proud of our CytoSorbents team, executing very well in a challenging healthcare environment dominated by COVID-19, and am grateful to the medical community for continuing to embrace CytoSorb for many different applications. We are very excited about the potential for continued growth in 2021."
"Please join us on our earnings conference call today, details for which are below."
Conference Call Details:
Date: Wednesday, November 4, 2020
Time: 4:45 PM Eastern Time
Participant Dial-In: 877-451-6152
Conference ID: 13705996
Live Presentation Webcast: http://public.viavid.com/index.php?id=141897
It is recommended that participants dial in approximately 10 minutes prior to the start of the call. There will also be a simultaneous live webcast of the conference call that can be accessed through the following audio feed link: http://public.viavid.com/index.php?id=141897
An archived recording of the conference call will be available under the Investor Relations section of the Company's website at http://cytosorbents.com/investor-relations/financial-results/.
Results of Operations
Comparison for the three months ended September 30, 2020 and 2019:
Revenues:
Revenue from product sales was approximately
Grant income was approximately
Total revenues were approximately
Cost of Revenues:
For the three months ended September 30, 2020 and 2019, cost of revenue was approximately
Research and Development Expenses:
For the three months ended September 30, 2020, research and development expenses were approximately
Legal, Financial and Other Consulting Expenses:
Legal, financial and other consulting expenses were approximately
Selling, General and Administrative Expenses:
Selling, general and administrative expenses were approximately
Interest Expense, net:
For the three months ended September 30, 2020, net interest expense was approximately
Gain (Loss) on Foreign Currency Transactions:
For the three months ended September 30, 2020, the gain on foreign currency transactions was approximately
Comparison for the nine months ended September 30, 2020 and 2019:
Revenues:
Revenue from product sales was approximately
Grant income was approximately
Total revenues were approximately
Cost of Revenues:
For the nine months ended September 30, 2020 and 2019, cost of revenue was approximately
Research and Development Expenses:
For the nine months ended September 30, 2020, research and development expenses were approximately
Legal, Financial and Other Consulting Expenses:
Legal, financial and other consulting expenses were approximately
Selling, General and Administrative Expenses:
Selling, general and administrative expenses were approximately
Interest Expense, net:
For the nine months ended September 30, 2020, interest expense was approximately
Gain (Loss) on Foreign Currency Transactions:
For the nine months ended September 30, 2020, the gain on foreign currency transactions was approximately
Liquidity and Capital Resources
Since inception, our operations have been primarily financed through the issuance of debt and equity securities. At September 30, 2020, we had current assets of approximately
On July 31, 2019, the Company executed an Amendment to its Loan Agreement with Bridge Bank and, simultaneous with this Amendment, received
We believe that we have sufficient cash to fund our operations well into the future.
COVID-19 Impact on Financial Results
The COVID-19 pandemic has, on the whole, been a positive driver for the Company's financial performance during the past several quarters. Though difficult to quantitate, we estimate that approximately
For a more detailed discussion on the impact of the COVID-19 pandemic on our financial results, please see the Company's Q3 2020 Form 10-Q, filed today with the Securities Exchange Commission.
Fourth Quarter 2020 Revenue Guidance
CytoSorbents has not historically given specific financial guidance on quarterly results until the quarter has been completed. However, notwithstanding uncertainty related to the COVID-19 pandemic, based upon current order patterns, we expect that Q4 2020 will be one of the Company's strongest quarters to date in terms of product sales.
For additional information, please see the Company's Form 10-Q for the period ended September 30, 2020 filed with the Securities Exchange Commission on November 4, 2020 and available at http://www.sec.gov.
About CytoSorbents Corporation (NASDAQ: CTSO)
CytoSorbents Corporation is a leader in critical care immunotherapy, specializing in blood purification. Its flagship product, CytoSorb® is approved in the European Union with distribution in 66 countries around the world, as an extracorporeal cytokine adsorber designed to reduce the "cytokine storm" or "cytokine release syndrome" that could otherwise cause massive inflammation, organ failure and death in common critical illnesses. These are conditions where the risk of death is extremely high, yet no effective treatments exist. CytoSorb® has been used in more than 110,000 human treatments to date. CytoSorb has received CE-Mark label expansions for the removal of bilirubin (liver disease), myoglobin (trauma) and both ticagrelor and rivaroxaban during cardiothoracic surgery. CytoSorb has also received FDA Emergency Use Authorization in the United States for use in critically-ill COVID-19 patients with imminent or confirmed respiratory failure, in defined circumstances. CytoSorb has also been granted FDA Breakthrough Designation for the removal of ticagrelor in a cardiopulmonary bypass circuit during emergent and urgent cardiothoracic surgery.
CytoSorbents' purification technologies are based on biocompatible, highly porous polymer beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. Its technologies have received non-dilutive grant, contract, and other funding of more than
Forward-Looking Statements
This press release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions, including statements regarding our expectations about our cash runway, the advancement of our trials, our plans to initiate new trials, our goals to develop and commercialize CytoSorb and the timing thereof, the potential impact of COVID-19 on our operations and milestones, and are not historical facts and typically are identified by use of terms such as "may," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements in this press release represent management's current judgment and expectations, but our actual results, events and performance could differ materially from those in the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, risks discussed in our Annual Report on Form 10-K, filed with the SEC on March 5, 2020, as updated by the risks reported in our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We caution you not to place undue reliance upon any such forward-looking statements, particularly in light of the current coronavirus pandemic, where businesses can be impacted by rapidly changing state and federal regulations, as well as the health and availability of their workforce. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, other than as required under the Federal securities laws.
CYTOSORBENTS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands, except per share data) | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Revenue: | ||||||||||||||||
CytoSorb sales | $ | 10,246 | $ | 5,648 | $ | 27,.853 | $ | 16,009 | ||||||||
Other sales | -- | 80 | 69 | 146 | ||||||||||||
Total product sales | 10,246 | 5,728 | 27,922 | 16,155 | ||||||||||||
Grant income | 301 | 367 | 1,127 | 1,364 | ||||||||||||
Total revenue | 10,547 | 6,095 | 29,049 | 17,519 | ||||||||||||
Cost of revenue | 2,891 | 1,696 | 8,525 | 5,269 | ||||||||||||
Gross profit | 7,656 | 4,399 | 20,524 | 12,250 | ||||||||||||
Other Expenses: | ||||||||||||||||
Research and development | 1,754 | 3,185 | 6,125 | 8,533 | ||||||||||||
Legal, financial and other consulting | 580 | 733 | 1,945 | 1,887 | ||||||||||||
Selling, general and administrative | 7,282 | 6,108 | 20,190 | 15,373 | ||||||||||||
Total expenses | 9,616 | 10,026 | 28,260 | 25,793 | ||||||||||||
Loss from operations | (1,960) | (5,627) | (7,736) | (13,543) | ||||||||||||
Other income/(expense): | ||||||||||||||||
Interest expense, net | (261) | (302) | (840) | (721) | ||||||||||||
Gain (loss) on foreign currency transactions | 1,381 | (956) | 1,417 | (1,052) | ||||||||||||
Total other income(expense), net | 1,120 | (1,258) | 577 | (1,773) | ||||||||||||
Loss before benefit from income taxes | (840) | (6,885) | (7,159) | (15,316) | ||||||||||||
Benefit from income taxes | -- | -- | -- | -- | ||||||||||||
Net loss | $ | (840) | $ | (6,885) | $ | (7,159) | $ | (15,316) | ||||||||
Basic and diluted net loss per common share | $ | (0.02) | $ | (0.21) | $ | (0.19) | $ | (0.48) | ||||||||
Weighted average number of shares of | 41,593,218 | 32,365,700 | 37,350,564 | 32,189,430 | ||||||||||||
Net loss | $ | (840) | $ | (6,885) | $ | (7,159) | $ | (15,316) | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Currency translation adjustment | (1,047) | 812 | (1,044) | 868 | ||||||||||||
Comprehensive income (loss) | $ | (1,887) | $ | (6,073) | $ | (8,203) | $ | (14,448) | ||||||||
CYTOSORBENTS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands) | ||||||
September 30, 2020 (Unaudited) | December 31, 2019 (As adjusted) | |||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | 87,978 | $ | 12,233 | ||
Grants and accounts receivable, net | 5,797 | 4,467 | ||||
Inventories | 2,025 | 2,114 | ||||
Prepaid expenses and other current assets | 1,002 | 2,088 | ||||
Total current assets | 96,802 | 20,902 | ||||
Property and equipment, net | 2,078 | 1,925 | ||||
Right of use asset | 1,132 | 1,071 | ||||
Other assets | 4,270 | 3,485 | ||||
TOTAL ASSETS | $ | 104,282 | $ | 27,383 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||
Current Liabilities: | ||||||
Accounts payable | $ | 2,386 | $ | 2,039 | ||
Current maturities of long-term debt | 9,167 | 1,667 | ||||
Lease liability – current portion | 433 | 428 | ||||
Accrued expenses and other current liabilities | 5,371 | 5,802 | ||||
Total current liabilities | 17,357 | 9,936 | ||||
Long-term debt, net of current maturities and debt issuance costs | 5,993 | 13,386 | ||||
Lease liability, net of current portion | 699 | 643 | ||||
TOTAL LIABILITIES | 24,049 | 23,965 | ||||
Total stockholders' equity | 80,233 | 3,418 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 104,282 | $ | 27,383 | ||
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Cytosorbents Contact:
Amy Vogel
Investor Relations
(732) 398-5394
avogel@cytosorbents.com
Investor Relations Contact:
Jeremy Feffer
LifeSci Advisors
917-749-1494
jeremy@lifesciadvisors.com
U.S. Public Relations Contact:
Eric Kim
Rubenstein Public Relations
212-805-3052
ekim@rubensteinpr.com
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SOURCE CytoSorbents Corporation
FAQ
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