Q3 2020 Cytosorbents Corp Earnings Call
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Ladies and gentlemen, the teleconference will begin momentarily.
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Good afternoon, and welcome to the Cytosorbents third quarter, 2020 financial and operating results conference call.
This time, all participants are in listen only mode.
Following the formal remarks, we will open the call for questions. Please.
Please be advised that the call will be recorded at the company's request at this time I would like to turn the call over to our moderator Jeremy Feffer. Please go ahead.
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Thank you Stacy good afternoon.
Come to Cytosorbents third quarter 2027 in 2000 and operating results conference call.
Joining me today from the company are Dr. Phillip Chan Chief Executive Officer.
Vincent Capponi, Chief operating officer and President.
We block Chief Financial Officer, Dr., the Neo Scalia Garrett Chief Medical Officer, Dr. Christian Steiner Senior Vice President of sales and marketing and managing director of Cytosorbents Europe Gmbh and.
Christopher Kramer, Vice President of business development.
Before I turn the call over to Dr. Chan I'd like to remind listeners that during the call management's prepared remarks may contain forward looking statements, which are subject to risks and uncertainties.
Management may make additional forward looking statements in response to your questions. Today. Therefore, the company claims protection under Safe Harbor for forward looking statements contained in the private Securities Litigation Reform Act at night United.
Actual results may differ from results discussed today, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the Companys filings with the US you see any projections as to the Companys future performance represented by management include estimates today as of November four 2020, and we assume no obligation to update these projections in the future as market can do.
Since change.
During today's call, we will have an overview presentation covering the operating and financial highlights for the third quarter by Dr. Chan and Ms. Bloch following that presentation. We will open the line to your questions. During the lives Q and a session with the rest of the management team.
At this time, it's my pleasure to turn the call over to Dr. Phillip Chan Phil.
Thank you very much Jeremy and welcome everyone to the <unk> third quarter 2020 pretty small for Cytosorbents Corporation.
We had an outstanding third quarter marked by numerous accomplishments first.
First third quarter 2020, total revenue grew 73% to 10.5 million.
Product sales were 79% to 10.2 million over the third quarter of 2019 trailing 12 months product sales were $34.5 million.
Secondly, we delivered more than 10000 children <unk> to date.
And 1% from a year ago and up 10000 from our recently announced milestone of achieving more than 100000 devices delivered.
We also achieved blended product gross margin of 74% in the third quarter compared to 77% a year ago, but sequentially higher than the 70% in the second quarter of this year due to higher percentage of lower margin distributor sales at higher cost if we're not hoping Nike production.
In July we completed a $57.5 million financing Cowan SVP learned what's called manager B. Riley FBR strengthening our cash balance at roughly $88 million at the end of the third quarter.
The refresh to <unk> data monitoring committee also recommended resumption of the trial on the favorable reviews safety data.
In terms of COVID-19, we've now excluding an estimated 2800 COVID-19 patients at more than 30 countries around the world, including here in the United States and are working to capture these didn't get in the CTC coping Nike registry.
You also establish collaborations to commercialize cytosorb in the United States 25 States with Trimble cardiovascular endless search surgical partners and are working to cover the other states as well currently.
We also hosted a key webinars on the use of Cytosorb thrombotic drug removal with key opinion leaders and users of Cytosorb for this application.
In July.
We were also awarded a 4.4 million dollar contract from the T. O D [laughter].
He much fat blood grouping on the body.
Clinical development.
We also expanded distribution to pull 66 countries, including Brazil.
With a strong financial performance and solid cash position, coupled with a strong current and anticipated demand for cytosorb.
We're executing a number of key initiatives to drive growth.
These aren't two major areas one is commercialization sales and the second is clinical trials.
On the sales growth strategy side.
Our one of our first goal is to maximize the carbonite can opportunity, we are well positioned in Europe and throughout the world to help this next wave.
We also have established collaboration in the United States.
Satellites in key relationships throughout the country.
Second of all as Coca 19 seats, which is expected to happen next year with the.
Approval of vaccines for Carbonite team, we plan to return to our pre coke, making profit strategy.
This is detailed very extensively in our press release today. So I'll only cover just very briefly but the key tenants of the strategy our focus on driving both direct and distributor sales.
Maximize the Ticagrelor blocks again, you approvals so.
To expand in new applications, such as liver disease.
And also cardiac surgery, such as Undercar Digest and other applications.
To expand our international team with a focus on commercialization manufacturing clinical and R&D.
Expand our plan to.
To be able to.
Get to the next level of scale.
To be able to produce somewhere on the order of $300 million to $400 million in sales of products.
Hi, thereby helping also to drive expansion of our blended product gross margins.
To prepare for U.S. commercialization.
Which currently involves hiring a new VP of sales for the United States help manage COVID-19 sales, but to also prepare for central feature approved.
Approved applications in the United States such as.
The removal of Ticagrelor and other applications.
And then finally to streamline our balance sheet.
And in particular to.
Come up with a strategy either refinancing or repayment of our current debt and that process is underway.
With that I'd like to focus more on the clinical program and with that I'd like to turn it over to Dr. liking study Curis, our chief Medical Officer I guess.
Mike as you maybe on mute.
Apologies thank you Phil.
Good afternoon to everyone on the call.
On a personal note it's been a very exciting for six months for me with the company.
And I'm very pleased today to be able to present to you with the overview of our clinical activities and the clinical plan going forward.
During this last six months I've had the chance to spend extensive time with my colleagues within Cytosorbents.
The words, I targets and finalize our clinical plans.
During that time, we face significant challenges for COVID-19, affirms our clinical programs, but we also encountered significant opportunities and will discuss with you a little later, but the COVID-19 related clinical activities.
And finally as you heard already from Phil and you're going to hear in more detail from calculator. We all know the available fan funds to expand on our clinical capabilities and executing the dishes chemical plant.
As noted on the slide we will focus on both areas of applications of Cytosorb and that we're seeing practice today in Europe and that is the critical care therapeutic area and cardiovascular disease specific in cardiac surgery we.
We have identified six specific priority therapeutic areas that we will target with a clinical programs.
The critical care space, well focus on shock reversal, where social device can be very effective by moving cytokine simple providing rapid she went on EPS civilization.
We will also focus on acute liver failure and liver applications with the removal of liver tox and supposed to believe rubin or ammonia coupled with cytokine removal can be extremely effective in reversing the clinical questions patients.
We will also continue to expand our clinical activities nickel that 19 space, where again crunching the cytokine storm cytosorb, especially in the setting of a combined therapy with EXL has shown substantial clinical benefits so far.
In the cardiovascular arena are three targets were focusing on thrombotic removal notices 80 on the slide where we have specific bench and already clinical evidence very efficient removal of these until thrombotic agents by cytosorb in the operating room.
We will also focus on as a card Titus, which side to kind of remove on human genetics abilities and could lead to substantial clinical benefits and it's acutely ill patients faced with high mortality otherwise and.
And of course, we will continue our clinical program in preventing acute kidney injury in patients undergoing complex cardiac surgery.
We will implement the complimentary approach, although heavily focused on randomized company sponsored clinical trials. We will also implement innovative other designs to complement data generation, including the therapy registries and single center or single arm prospective trials.
Well. This next slide you will note that type table associated with the execution of his programs.
Programs like the CPC registering COVID-19, the refresh two trial in acute kidney injury prevention in cardiac surgery, the star registry not that somebody removal and it ties or study also looking at the coghlan removal already ongoing.
Early in 220 21, we plan to initiate three trials in Germany, including the randomized clinical trial in shock reversal process multicenter trial in Germany.
The Hep on fire single arm study in patients with acute on chronic liver failure again initiated and executed in Germany and finally, our second Tocopilla removal study called Citation multi center a PK PD study also excuse in Germany.
And the next 12 months after that we plan to initiate substantial clinical programs in the U.S., including a large randomized shock trial in the U.S. liver trial in the U.S. and then that full up trials in both novel oral anticoagulant and that kinda reversal.
Multi center randomized clinical trials in the United States.
Looks like.
Next slide please.
There's a bit of a delay so.
In addition, we'd like to provide you some specific updates.
Relating to our path to FTC approval continues to be on a dual path with the refresh two pivotal trial and the breakthrough designation in fact goggle removal doing.
During the third quarter, we made progress on both fronts.
Specifically for refresh II as you already heard an interim safety analysis was completed with data from the first 152 patients enrolled in the trial that were reviewed by the data monitoring Committee and DFT eight who both recommended study continuation without major modifications.
The study resumption process has already been initiated.
Pending COVID-19 related delays, we believe that patient enrollment will commence again in the first quarter 2021.
In relation to the cognitive breakthrough designation, we believe that we have made significant progress in our discussions with the agency during a recent teleconference and though we are very close to a regulatory path forward, that's consistent with breakthrough designation status.
More specifically, we have learnt fully on the significant unmet medical need to remove the cargo doing urgent and emergent cardio thoracic surgery.
We also reviewed together and discuss additional data we believe support the very positive benefit risk profile of Cytosorb for this application, including data that will be provided by our studies in the UK, which is a type of study in Germany, which the citation study.
And finally, despite COVID-19 related to resource shortages and challenges are they FDA. They viewed team provided assurances that they will work with us with the necessary speed and urgency consistent with a breakthrough designation for this indication.
Moving on to the type of study, which is the UK technical removal study.
Normal COVID-19 related clinical activities continue to be challenging the UK either.
Either related to institutional already locked barrels or prioritization of COVID-19 related vaccine trials.
Regardless, our clinical team is working diligently with the types of sites to address these challenges and commenced enrollment as soon as feasible.
Moving on to the remove randomized clinical trial.
As we already discussed COVID-19 has been a challenge worldwide.
Also applies to this completed 250 patient German government funded investigator sponsored randomized controlled trial, but investigates the use of cytosorb in patients undergoing valve replacement surgery for infective Intercard died as well.
We remain in close contact with investigators were working diligently to have top line data from the study as soon as possible.
Despite suffering COVID-19 related delays in data monitoring and analysis.
We believe that the topline results may not be available as early as before years end and that deal data and results presented at the international scientific meetings and submitted for publication in the first half of 2021.
Next slide please.
On a positive note COVID-19 has also given us the opportunity to treat <unk> critically ill patients with corolla virus in nicely use in many countries around the world, including the United States.
The emergency use authorization.
As listed on this slide we have launched a number of dedicated initiatives to capture data from an estimated 2800 Colby thinking patients have been treated with cytosorb worldwide.
As we recently announced the CTC registry is live and actively enrolling patients from U.S. centers within initial analysis planned for years end.
As a next step we're expanding the CPC registering to countries with large experienced internationally.
Additional data collection and pulled analyses are in progress to consolidate the experience from smaller countries and from single sites with a large number of patients.
The intent is that all these initiatives will generate high quality data both in clinical outcomes and best practices for the use of Satish will be called in 19 patients and lead to multiple publications.
In fact initial case reports and K series have already been published.
And with that I would like to turn it back to Phil.
Oh. Thank you very much my guess for that overview now I'd like to turn the call over to Cathy for a financial overview Kathy.
Thank you, Phil and greetings to everyone for today's call I'll provide an update regarding our third quarter 2020 financial results and in addition, I'll talk about our working capital and cash runway next flight.
So our cytosorb product sales for the third quarter, EPS 2020 were $10.2 million, which is an approximately 79% increase over product sales of $6.1 million for Q3 2019, and this increase was driven by an increase in direct sales of approximately two point.
$1 million, resulting from sales to both new customers and repeat orders from existing customers and also an increase in distributor sales of approximately $2.4 million now the euro to dollar exchange rate increased from an average rate of $1.11 cents in Q3.
Page 2019, <unk> dollar 17 cents in.
Q3, 2020, and this had a positive impact on our third quarter 2020 sales of approximately $428000.
No it's difficult to quantify we did estimate that approximately $2.7 million of total product sales in the third quarter of 2024 due to the demand for cytosorb to treat COVID-19 patients.
Our total revenue, which includes both product sales and grant revenue was approximately $10.5 million for the third quarter of 2020, that's compared to $6.1 million for the third quarter of 2019, which represents an increase of approximately 73% and importantly, our third quarter 2020.
Gross profit grew to $7.7 million, which is an increase of 74% or $3.3 million greater than our.
Gross profit for Q3, 2019, which was $4.4 million.
Our gross profit margins on product sales were approximately 74% for the third quarter of 2020 as compared to 77%. So.
Third quarter of 29 gene primarily due to an increase in the percentage contribution of lower margin distributor sales.
As well as due to some additional COVID-19 incentive payments to employees as a result of our continuing efforts to ramp up production next slide.
And then turning to our nine months financial results product sales for the first nine months of 2020 were $27.9 million, which is an increase of 73% over product sales of.
$16.2 million for the same period in 2019.
Sales to hospitals in the United States under the emergency use authorization granted by the FDIC were approximately $928000 for the nine months ended September Thirtyth 2020.
And once again, we had indicated difficulty quantities, but we estimate that approximately $6.9 million of our total product sales in the nine months ended September thirtyth sales.
2020 was due to demand for cytosorb to treat COVID-19 patients.
We do know that this increase in sales was offset to some extent by decreases in sales related to elective procedures, which were avoid it or postponed during nicole good 19 pandemic such as in cardiac surgery, where cytosorb may have otherwise been used.
The change in the Euro Q.U.S. dollar exchange rate did not have a significant impact on sales for the nine months ended September Thirtyth 2020, as compared to the same period in 2019.
Next slide.
Looking at our quarter over quarter product sales with the third quarter up 2020, and our product sales of $10.2 million. We achieved another record quarterly product sales growth with the third quarter of 2020, representing our fourth consecutive quarter over quarter.
Sales in product sales.
Sales in 2020 have been positively impacted by demand for Cytosorb to treat COVID-19 patients in the <unk> to use.
And given the order patterns that we are currently experiencing we expect that the COVID-19 pandemic well continue to have a positive impact on product revenue for the remainder of 2020. However, this may change in the future should the pandemic be can change.
Now next slide we look at our trailing 12 months product sales and as you can see from this chart overall, our annual product sales growth continues to be very very strong in.
In addition year over year gross margins adjusted for 20.
2020 for the COVID-19 related incentive payments to employees shops during the ramp up of production continue to rise and they would be 77%. If we didnt have those cope with 19 related ramp up costs and finally, let's take a look at our working capital liquidity and cash runway.
But still as previously mentioned at September Thirtyth 2020, we had approximately $88 million in cash which is the most that we've ever had and this increase in cash over the prior quarter was a direct result of our July 2020 equity raise which generated approximately $53.8 million in net proceeds to.
The company.
We believe we now benefit from a solid capital foundation and that the existing cash will provide a runway to beat our operating needs well into the foreseeable future with regard to our operating strategy, we intend to prioritize our stand around one generating clinical data and obtaining U.S. FDIC approval.
To securing and expanding our production capacity and three driving worldwide sales growth and acceptance of Cytosorb as standard of care and I also want to take a minute to mention our current position with regard to our $15 million term loan with bridge bank.
We are finalizing a comprehensive analysis of alternatives with regard to the debt financing and these alternatives include but are not limited to refinancing the existing debt and extending the interest only period.
Banding the amount of debt financing available to the company now and or in the future repayment of the current debt as well as repayment of the current debt now, but retaining a commitment for debt availability in the future and we have been in an extensive discussion with bridge bank, our existing bank as well.
Other extremely reputable lenders.
And with the best interest of our shareholders in mind, we are weighing all of our options and deliberating closely with our board of directors and we expect to finalize our decision with regard to the debt in the very near future.
Lastly, just turning to our capital structure as of September Thirtyth 2020, we have approximately 48.6 million common shares outstanding on a fully diluted basis and with that I'd like to turn the call back to Phil.
Thank you very much Kathy and in terms of guidance Cytosorbents is not historically given specific guidance on quarterly results until the quarter has been completed however provided that the current order pattern continues and notwithstanding uncertainty related to the coke unlocking pent up.
We expect that the fourth quarter 2020 sales will be one of the company's strongest corners to date.
That concludes our current prepared remarks, operator, please open up the call for <unk>.
Thank you as a reminder, if you do have a question. Please press star one on your Touchtone phone. Please make sure. Your mute button is turned off to allow your signal to reach our equipment.
Our first question comes from Anthony Petrone with Jefferies. Please go ahead.
Oh, hi, thanks, and congratulations on the good quarter I hope everyone is doing well.
Maybe pay 'em, Phil Hi, how are you maybe I could start a little bit with with Tobin just in light of where the recent case count sorry, you mentioned 2.7 million in the quarter you do have multiple regulatory clearances, whether its emergency use authorization or full clearance is at this point so.
So.
I'm just wondering how how much stocking is there geographically when.
When we see where case counts are going you know where ultimately do you think haas.
Hospitals will position themselves or with having cytosorb on the shelf to deal with severe cases.
In and sort of as we go forward on the regulatory front. It should we be expecting any additional authorizations endo clearances, and then I'll have one more follow up.
Yeah. So I think that in terms of building inventory ahead of what is expected to be a very difficult and been severe winter season for coking <unk> and flu.
We have seen centers order in the third quarter.
In advance of the fourth quarter. However, I think that most of the existing stock that has been taken has been designed for patients who are currently hill.
And ER and so it's a it's a mix of the two.
In terms of.
Potential other regulatory.
Approvals or or emergency use authorization throughout the world I think at the current moment, we are well.
Well positioned again, we have the ability to sell this in 66 countries around the world for the treatment of cytokine storm.
And because of that we can be used in any country today.
Oh that were currently registered in to be able to treat.
Copa 19, so they are not necessary, a we did get some approvals earlier or some authorizations earlier from Israel for example, and from India.
But again those are not necessary to be able to use our our therapy.
Ah encompassing 19.
And then maybe to follow ups here would be and I'll get back in queue. The first one would be just in terms of Germany and this was a a ramp year in terms of the sales force maybe just an update on how that process is going.
And really the time you expect it to take the additional sales reps really begin contributing the cytosorb sales in Germany in Germany, specifically.
And then you referenced plant expansion.
You know in the U.S., just maybe a little bit on timing as to when you'll begin to actually break ground on plant expansion.
You mentioned to support three to 400 million in sales, but you know what level of Capex will be.
We committed to that expansion plans. Thanks.
Sure Anthony or two good questions. Let me turn the first went over to Christian Steiner Dr. Christian Steiner <unk>, our senior VP of sales and marketing in Germany, and then the second one Vince pone or President and Chief operating officer, if you could take that when that would be great Chris.
Christian.
Thank you for that and thanks.
Thanks, you until then.
The question can you hear me right.
Yes, yes.
Okay very good job in terms of sales force a in a in Germany actually we have finished the the build up of the sales force or end of last year beginning of this year.
And also the training for all to sales.
Sales reps was finished and the trust for them.
I think the COVID-19 pandemic has led to the to the case that.
He also has a quite some time to expand the training for the sales reps and bring them on speed.
On the.
And I think everyone is a [noise].
This.
At the right pace from Q2.
Still we have a restricted access or regulations fulgent since reps into hospitals, but a swing of speech and expose the hospitals.
Hello, everyone. This ready to ready to go.
Yeah, I think that's a for the sales force.
Hi, crush and.
Vince if you could maybe take the question on manufacturing and Capex requirements for that and the timing for sure.
Alright, Thanks, Phil.
So regarding your question about starting in the Capex expenditure, we are intending to actually a zero in on the close of a pub potentially new building here in the first quarter of next year.
In which case, then it's going to take us roughly 12 months to to build that out and actually have it approved.
And capable of producing product Oh, we expect that that's going to be about.
With obviously, a landlord contribution as well as on around <unk> 5 million dollar build out to.
To be able to support about a $300 million business.
That's helpful. Thank you for your question, yes, absolutely. Thank you.
Great [laughter].
Next question comes from Andrew Dsilva with B. Riley. Please go ahead.
Hey, good afternoon. Thank you very much for taking my questions I just to follow up on the manufacturing question as it relates to the current manufacturing facility in two parts. One do you think as you close out the year, you'll be back at that 80% gross margin level.
77% without ramp up the incentive payments. So it seems like you're you're almost there and then have you reached the the ability to.
Do you produce at full capacity near that 80 million dollar annual number.
Yeah. So go ahead bill.
Sorry, no no I just want to pass along even.
Right.
Thanks, Andrew for the question. So you know with respect to the gross margins as you could as you Kathy mentioned, we're roughly at the without the incentives et cetera around the 77% we expect to be a if you take those incentives out et cetera, we'll we'll expect to be close to the 80% gross margin.
You know our efficiencies are improving as we've now started to come up to a you know a full expansion. If you will we're not completely.
Completely there and again, we're balancing with the man. So we don't you know want to go to excessive here, but basically we are knocking on the door of that 80% gross margin as is the bottom line and again as you know I think our efficiencies. If approved now you know taking out the incentives et cetera, we should.
Be very close to that.
With respect to being at the full 80 million capacity. If you will a million dollar capacity, we're balancing again the operation relative to what we see as the orders and Christians, you know forecasting so certain parts of the operation we run more.
Sure if you will than other parts, but I will say between April.
April of this year and now we've actually added another production line to help increase if you will the velocity of product, which we could put out of the plant. So that has helped us keep up with the crushes demand and and be able to supply the market with this obviously with the scope of 19 situation.
So did you ever had.
Yeah, no you're two lines now or are there more.
More Oh, we're actually in three lines were actually three lines now.
Okay perfect. Thank you for that.
And then on the clinical side you know you are clearly investing a lot more now on that internally funded trials I know one notably stood out in your press release was relating septic shock.
That's been historically, a fairly challenging a BARDA.
BARDA had just curious if you could talk around why you believe now is the right time to pursue that and any differences that you see a weather with regulators or from a efficacy standpoint.
That that gives you confidence to go about that now versus before.
Hi, I'm I guess would you like to take that.
Thank you yes. Thank you for the question.
You know the academic community and the thought leaders in sepsis that for many years suggested that alternative outcomes be the measures randomized clinical trials and that the field should move away from just testing everything against mortality since that large too high to reach so in that regard we recently saw over the last.
Few years, some regulators fall into that line recently approved yet pres.
Based on blood pressure.
Stabilization in people with shock. So we believe that the ability to know executed clinical trials with innovative endpoints that are clinically meaningful and no more and more accepted by the regulators makes is an opportunity for us to do to execute clinical studies, especially because the consistent.
Message, we're getting from users in the field that one of the most.
He didnt benefit they see when they come et cetera, so to the septic shock patients is this immediate hemodynamic civilization with a reduction for the need evasive pressures or the additional drugs to maintain blood pressure.
The rapid return over the mean arterial pressure though.
Two two to levels that are considered to be now stabilized and then for the that can improve the other treatment.
That are necessary for these patients is getting rid of fluids and improving the ventilator setting. So so so its twofold. One we think the performance of Cytosorb in everyday practice is compelling and it's highly or a you know a for us. It makes us very confident that we can we can show that in a clinical trial. So.
Adding a second of all the evolution of both the academic community or regulators into looking into new innovative endpoints that we believe we can we can deliver a using sets new endpoints in these trials.
Okay, Great and just a last question for me and I get this from a client a lot its.
It's just related to human defend RBC versus Hemodefend BJ, a if you could just discuss where you are and the development path for both those and if there's any other opportunities we should be thinking about that product line.
So with the human if and Red blood cell product. This is a product that is designed to reduce noninfectious contaminants from packed red blood cells, such as cytokine antibodies bioactive lipids attach him and why wide variety of other contaminants that can cause.
Central transfusion reactions and so this is a program that subs subsidized by National Heart lung and Blood Institute.
And as Weve discussed in the past is making its way towards human clinical studies.
And then potentially for Oh, we would then apply for approval in the United States.
So because of COVID-19, it is a essentially slow that program significantly.
To the point, where because we need.
To conduct some additional a bench studies.
And also Ah Ah Ah.
Healthy volunteer studies.
Hi. This is has made limited progress over the past several months.
That being said it is very much still on in our pipeline and very much a one of the things that we will be moving forward a in a post covet and environment.
The second program is the Hemodefend BJ program and this is a product that is designed to remove anti aging and anti de antibodies from plasma as well as whole blood as a way to create a universal plasma product that is not blood type specific that can be used off the shelf rapidly and given to try.
On the patients are critically ill patients.
Or used in a positive apheresis and positive change for example.
Or used actually in a broad.
Abroad supply chain I guess in the area positive processing and production as a factor such as albumin and quite relation factors for example.
Where where they do not need to worry about.
The blood types specificity of that plasma unit, so that that's the value of universal plasma.
And then the second application is is one that has.
The ability to give whole blood transfusions, which the military believes is a superior alternative to giving rather than giving a component units such as Pac red blood cells, and platelets and plasma for example, a in terms of trying to stop hemorrhaging and bleeding related to.
Combat casualty injuries.
And so this is a program a this year actually that we have received now 8.5 million.
In funding to complete the preclinical development and advanced this product to human clinical studies and.
Eventually a approval and so.
This is a program we are well funded for and are moving aggressively. It's one of the priorities of the company outside of Cytosorb.
And ER and our goal is to you know get this too.
He he out of the preclinical realm or within the next a year and a half or so.
So I think that you know COVID-19 has.
As slowed everything down in terms of being able to work in the lab et cetera. So we lost some time, there, but that being said our our R&D folks are now back in the lab and we're continuing to move these programs forward.
Okay. Thank you for the color and congrats on all the progress progress this year and best of luck closing out 2020.
Thanks, a lot any.
Next question comes from Josh Jennings with Cowen and company. Please go ahead.
Hi, good evening.
Secondly, congratulations on the strong results hi, Phil and thanks.
Thanks for all the details on the call.
I just wanted to ask about the star trials and.
Wanted to see if you had.
Could you help us think about.
Central primary endpoints or or secondary endpoints for this trial for those two trials I'm just to start with that I'm sure. Let me turn it over to Mike for some additional color like us.
Thank you Phil Thanks for the question.
So the acronyms star stands for safe and timely anything from Budick removal. So the idea is that the star program will be you know are comprised of a series of studies to look at different.
Important areas for this application.
The other one is the registry as a as you probably aware.
We have CE Mark approval in Europe for removal of Dot Com <unk> and we were oxygen.
So this is happening though in practice and we have actually now collected at a you know a users surveyed that suggest that over 400 cases have already been treated that way. So they tend to the star one program.
It would be to capture real world out clothes outcomes with its use and be able to obviously the publicist data, which we believe will be very compelling.
In informing other institutions.
To establish this as a standard of care and be approved regions. This.
The start to the star three programs are meant to complement with new information the start to specifically looking drug removal itself and us as per the F.D.A.'s own guidance you know the gold standard in clinical studies to detect measure removal of drugs and obviously reversal of the drug effect.
By doing PK PD studies, so we plan to utilize an extensive.
Program or looking at the PK PD parameters of using Cytosorb in patients with every one of the city of the direct oral anticoagulants. That's his remarks band or picks up and what are the biggest trend and that casual or as were doing in the citation and that ties all trials. So the startup program is meant.
Two to provide a definitive mechanistic PK PD data definitive drug removal by Cytosorb.
And then start three will be the late stage, where we're going to show those randomized clinical trials. The implementation of this approach as the standard of care and the associated clinical benefits when it comes to leading reductions obviously those are the most obvious ones, but also substantial economic benefits, we believe that supply.
Occasion has a tremendous value proposition.
Well just a reduction clinical outcomes is the improvement in the efficiency of care and the throughput of these patients that today in today's practice, they're basically sitting around in the hospital waiting for these drugs to wash out before they can have an assembly operation or intervention.
So the start the thought platform consists of many programs all of them designed to provide the full picture of real world use drug removal mechanistic evidence and then of course clinical outcomes and economic performance data.
Excellent and just to follow up on Star three will that include patients on no access as well as ticagrelor.
Yes, we believe that.
Sure. We believe that the application has the exact same benefits, including you know again the clinic the reductions in clinical indices of leading and also the increase in efficiency. So so we plan to to invest in generating data on both that Cogs <unk> and.
The NOAC class.
Great. Thanks for that and then just I had a question on the registries for critically old COVID-19 patients of the U.S. based registry CTC.
500 punishment to shoot a bunch of other industries worldwide.
Would you potentially use that data for a submission for specific Sars coke to indication in the United States.
So let me, let me turn that over to Phil, but Vince to provide you more of the regulatory side.
So Phil it Vince do you want to go.
Yeah, I think the the goal of the registering COVID-19 is really to generate clinical data on the treatment of complication to viral sepsis. So it turns out that cove in 19.
As a virus it just like the flu for example is causing a viral sepsis.
Leading to end organ injury, particularly lung injury.
Shock and kidney injury and these are common complications in a wide variety of different infections.
Including a viral infections, such as influenza and COVID-19.
So although the the data from the registry don't believe would be sufficient.
To drive U.S. regulatory approval it may be sufficient in other countries, but not in the United States are.
We do believe it will provide a key level of data to be able to begin studies in viral sepsis particular influenza, which is which is perennial that happens every year comes back every year and there are millions of.
Patients you know tens of millions of people, who get flu every year in the United States 40, 50 million last year alone leading to about 25000 400000 500000 hospitalizations.
And about 25 to 30000 death.
And so we think that you know any progress that we can make with COVID-19 will be potentially leverageable too.
You do have a definitive study in flu for example that could be a perennial source of revenue for us on an ongoing basis.
No. Thanks that makes sense I appreciate that and then my last question just you know the distributor.
Team or your distributors generated some nice sequential momentum I think 20% sequential revenue growth from that channel can you talk about the drivers I mean was it mostly cobra related or did you also see demand.
Revenue from the tug Lorne.
Rexam and removal indications in Europe, thanks for taking the questions guys.
Sure Josh let me turn it over to Chris when you give some color on the distributor sales and where that's coming from a Christian.
Yeah. Thank you [laughter] central Josh on the crushing.
Yes, I think Youre youre right a in a.
I'm, assuming that a quote would play through.
But that's not the whole story. So I think in a you know that we are currently in more than 60 countries.
And it takes quite a long time to present markets to build it was partners.
And in many countries. This.
Yes, being ER for the last few months and years.
And so to the country so markets are ready.
At the time been cold kicked in and this gave us the kind of have stopped that be clips quickly you will see the infrastructure in these countries.
And and cover the student demand. So it's both it's a long and a continuous drills on the.
Oh, it's still not indications and the kids was really by calling Monte.
Excellent and it doesn't make sense.
Yeah. I think also for example, Latin America, which as you know we just opened this year are.
We expect it actually in fact, a much longer ramp Q mark.
Market penetration in many countries within Latin America. However, the Coca 19 pandemic has really accelerated that usage and adoption you know places like Colombia.
And you know in many other countries throughout Latin America, and so I think.
You know that we see as going to have a lasting benefit even when COVID-19 goes away.
That the positive outcomes or the deposit outcomes that they've been seeing should help translate into usage and other applications as well.
Great. Thanks for those details.
Next question comes from Danielle Antalffy with SVB Leerink. Please go ahead.
Hey, good afternoon, everyone. Thanks.
Thanks, So much for taking the question on my my first call since initiating coverage I appreciate it.
Just to follow up on Josh Good question.
We think about that no lack indication contributing as they come out on the other end of coal bed I mean, it told that limited the number of elective procedures being done in Europe. So if we think about a ramp there like should we be thinking about in line with elective procedures ramping or help you could give us even quality of leasing.
Hi, there and I have one follow up.
Oh sure Thanks, Danielle and great to have you on the call.
Mike did you want to take that in terms of discussing some.
So how we feel that the market will will dissolve ticagrelor or mobile and also the no x.
Oh like you maybe on mute.
Oh apologies thanks, Danielle for the question.
And you know the this application as it relates both to Chicago and know the novel oral anticoagulants, it's an unmet need that's been around for a long time.
These drugs have been available on things robotics, you know for many years and are a cornerstone, though for most of the cardiac patients over the last couple of decades.
These new generations drugs like that cogdell or what is considered by many to be best in class and of course, the rivaroxaban picks a band that are replacing cooled and throughout the world are only increasing their penetration among cardiovascular patients. So frequently these patients requiring urgent care either in the sense of you know, having an accident or require.
I'm going to merge in operation and these doctors is this just clinicians are stuck with his management problem and have been stuck with it for many many years.
So the difference in this market is that you do not need to develop the unmet need the unmet need is very clear and there was no solution right. Now. So we can tell you that the most common response, we're getting some positions.
When we present the evidence for this application is that this is a no brainer for them to use.
So we feel now that we have an opportunity for education and communication or early clinical data and obviously as we're generating more clinical data even more so and then we view this as a rapid transition to the standard of care for these members of patients. We don't see a slow ramp up we see a rapid adoption of this.
As long as we continue to support it with the necessary for clinical information.
Great. Thank you for that and then.
Oh go ahead, sorry, sorry, sorry, you know I think that we are you know I've mentioned in the press release that.
That sales from our Ticagrelor and Riverwalk sedan.
Approvals that we received earlier this year have been.
Uh Huh have not really made major contributions yet and I think part of the issue. There is the fact that for those who don't know about it we need to get out there and bring them and educate them as Mike just mentioned and Ah that's been limited because of Coca 19 in terms of medical conferences in terms of being able to detail Haas.
Bundles and talk them about the technology and Howard Hughes and also in training as well so.
I think that once we come out of Coca 19, and aren't able to now leverage our.
Significant commercial resources to really bring this to clinicians all over the World. I think then that is when you will see a significant uptick in usage.
Those who know about it.
Really like it a lot and that's the feedback that we've been getting.
Yeah, just a follow up.
Let me think about that.
Humming U.S. indication and you know you're already presumably you're in some countries already given Nicole good you right. So just curious how to think about the go to market strategy or you have a good partner and trim out so you know.
How quickly should we be thinking about a U.S. ramp here is there a way to give us some color on the number of centers that already had this system and have experienced I. Appreciate during the critical care setting versus the cardiac setting, but you know still gives you an entre presumably into antares and maybe help even qualitatively give us some.
Hi, there.
Yeah, So I think that the exciting thing about COVID-19 is that.
You know the patients who are who are you.
It represents an opportunity to actually introduce the technology to cardiac surgery surgeons and profusion. This because one of the main modalities of rescuing patients who fail mechanical ventilation is a technology called Ecmo, where we've had thousands of uses over the years.
Using cytosorb with extra corporal membrane oxygenation machine that can oxygenate blood outside of the body when the lungs gets so disease that mechanical ventilation sales typically these patients will die and Ecmo, which was designed in fact, our former Chief Medical Officer.
Invented by our former Chief Medical Officer, Dr. Robert Bartlett.
That's one of the reasons why this is a growing modality in terms of artificial respiratory support throughout the world.
But that being said a you know we do not market Cytosorb off label to these centers. However.
What they are getting experience with is the concept of the use of cytosorb to reduce cytokine.
As a means to improve.
To reduce.
Deadly inflammation and.
And also how easy it is to hook up two extra corporal systems. So we believe that those centers will be primed and ready to go when a when we actually look to launch this if if if hopefully and and and when we get U.S. regulatory approval.
And I will be the basis of a you know that commercialization effort.
We also obviously run a clinical studies in cardiac surgery here in the United States refresh to for example is being done at 25 centers major centers throughout the country, particularly on the East coast and they also represent a targets for us in the initial commercialization us I focus.
One of the things that we're doing and and.
Yeah, you know Vince is actually leading this program, but is is we are actually working to begin.
Developing our commercialization efforts here in the United States and maybe what that Vince if you want to talk about her I can keep going or.
Phil you had not been going Oh go ahead, sorry, then yeah. Okay, yeah, okay, well too. So we are actually in the process of hiring a VP of sales and marketing for the United States.
And that person is the goal is that person is two one.
Help managed to COVID-19 opportunity while it lasts.
And we believe again that COVID-19 will continue.
Continue to play out.
Dominant role in U.S. health care through Q4, and also well into Q1.
But because it takes time you know, we we are not a commercialization or organization in the United States.
We are a you know.
This is where our headquarters is this is where we do our manufacturing all of our quality, our clinical and Nonclinical R&D, but we are not a commercialization organization in the U.S. and so it takes time to build that as you know and so that is going to be a one of the goals of the you know coming up with a strategy of a rolling out and whether or not it's a direct or partner strategy.
And then and then building that infrastructure here in the United States to be able to support that effort.
So vince's will be leading that is leading that effort right now and.
You know Youre I guess, a it'll be just a short time now until we can give you a little bit more detail on that strategy.
That's helpful. Thanks.
Sure.
Next question comes from Sean Lee with H.C. Wainwright. Please go ahead.
Hi, Good afternoon, guys, congratulations on a great quarter and thanks for taking my questions.
Oh sure I have just two quick questions on the clinical programs. So first could you provide a bit more color on your strategy for tackling be a sepsis I see that you have people in the <unk>.
German study plan and as well as a future duet study. So maybe you can tell a little bit more about the design of these studies and what the potential endpoint.
And whether there are any differences between the German three the USA.
Sure.
Mike This would you like to pick out or I can take it as well.
Either or Phil.
Cool.
Sure why don't you go ahead.
Okay, great. So Sean Thanks for the question. So the process trial is a multi center trial, that's going to be executing Germany targeting septic shock patients and the idea here is that we will.
Tempted demonstrate shock reversal and by shock reversal, that's another term to what I mentioned earlier on the call. We'll just see what an m. externalization, which tends to be the number one you know treatment goal in these patients with when they present themselves in the intensive care units. The first thing you need to do stabilize or human dynamics to be able to apply all the other.
Oh therapies. So we have implemented a you know a primary endpoint specifically detecting.
The time to get these patients stabilized.
So is it time dependent matter because we know just like an acute cardiac event, where every minute count. It's a very similar situation in sepsis been longer. These organs are hyper shoes, the higher the likelihood that will progress to organ failure. So we believe it's a very meaningful endpoint, it's a kind of an innovative endpoint, but as I say.
Presented earlier today on the call. The regulators are believing too are starting to believe that this is a kind of endpoints we need to be looking at simply because you know previous studies that were negative using mortality have kind of remove the interest of executing clinical studies in setting.
So that's a German trial, that's meant to have an interim analysis halfway through and we believe that's going to be a very informative. A initial you know have provided information for us for the progression of that trial and the next trials.
U.S. trial, we're in the early process of creating the executive committee identifying the P. eyes in discussing the relevant issues. We feel based on the experience that we are seeing with a commercial use of cytosorb in septic patients and always getting to a consistent report. He went and then stabilization that we would again.
Focus on some similar endpoints and we plan to do engage you know with the agency to make sure that whatever endpoints will use their consider meaningful by the FDA as well. So we do anticipate this trial to be able to launch before 2021 and we're currently in the early stages of planning.
Oh, great. Thank you for the additional color.
My second question is on the ongoing I spoken citation studies now with the flare up of Cold in Europe I was wondering what's the impact on those on the timing of those studies and whether you can update on maybe when we can potentially see to your results from dose.
Yeah. Great question, you know the type or the study was actually activate and enrolled the first patient right before the covert shutdowns took effect. So that's an active study and basically the teams both our internal clinical team and to see auto related team I'm happy to walk.
Working on navigating the COVID-19 related R&D restrictions that have been imposed both in the UK in Scotland.
We have seen over the last six to eight weeks some easing of these requirements and we already have active sites now that are looking to enroll patients and ties are having said that we were also seeing the second wave now starting to play out throughout Europe, including the UK. So we don't know how exactly this will impact our <unk>.
Sites, but we do expect that there is a possibility that additional restrictions make in the near future.
Regarding the citation citations about to get started we recently have made some progress regarding regulatory and I'd be approvals in the study.
That is being executed as a multicenter study in Germany.
Germany did have a little lighter kind of impact of Cobiz on the first wave, we don't know exactly how the second wave will impact, Germany, but as you know, Germany has a much more what's higher numbers of intensive care beds and a much greater capacity to manage a surge in critical.
Cases, so a we we are progressing both trials, but at the same time you know we're looking carefully at what COVID-19 may impose as the second wave plays out.
Oh got it that's all I have thanks for taking my questions.
Great. Thank you.
At this time I would like to turn it back to management for any additional or closing remarks.
Well. Thank you everyone for your participation today and if you do you have any other questions that we did not answered please feel free to reach out to Jeremy Feffer had Jeremy at lifestyle advisors Dotcom and we'll try to reply to your questions where possible. We look forward to the next quarterly call. Thank you everyone very much have a good night.
Thank you that concludes our conference for today I'd like to thank everyone for their participation.
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