Q2 2021 Cytosorbents Corp Earnings Call
Good afternoon, and welcome to the site of service and second quarter 2021 financial and operating results Conference call. At this time all participants are in a listen only mode. Following the formal remarks, we will open the call for your questions. Please be advised that the call will be recorded at the company's request at this time I'd like to turn the.
The call over to our moderator, Carrie Anne powers Cytosorb and.
Vice President of Investor Relations and corporate Communications. Please go ahead Ms powers.
Thank you very much Maria and good afternoon, and evening for everyone wealth.
Welcome to the Cytosorb and second quarter 2021 financial and operating results Conference call. Joining me today from the company or a doctor and Phillip Chan Chief Executive Officer.
Vincent of Pony, President and Chief operating Officer, Jeff.
Kathleen Bloch Chief Financial Officer.
Dr Aphemia, Steelier Garris, Chief Medical Officer.
Dr. Christian Steiner executive Vice President and sales and marketing as well as managing director of Cytosorb in Europe and.
And Christopher Cramer, Vice President of business development.
Before I turn the call over to Dr. Chan and 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 and therefore, the company claims protection under Safe Harbor for forward looking.
Statements contained in the private Securities Litigation Reform Act of 1995.
Actual results may differ from results discussed today, and therefore, we refer you to a more detailed discussion of these risks and uncertainties and the company's filings with the SEC.
And your projections as to the Companys future performance represented by management include estimates today as of August 3rd 2021, and we assume no obligation to update these projections in the future.
During today's call, we will have an overview presentation covering the operating and financial highlights for the second quarter by management. Following that presentation. We will open the lines for your questions with the management team.
At this time, it's now my pleasure to turn the call over to Dr. Phillip Chan Phil go ahead.
Thank you Terry and good afternoon, everyone.
We had a busy and productive second quarter as we got it during the last call. We received full FDA IDE approval to begin the U F Star T trial with the drug for Herc and anti thrombotic removal system with the first patient enrollment target for this quarter and study completion expected in 2022, we're very excited to begin enrolling this trial soon.
And are on track to do so.
By the end of the quarter, we had delivered more than 143000 cumulative cytosorb cartridges to date up 43% from 100000, a year ago with distribution across 68 countries. We've also treated more than 6005 hundred COVID-19 patients across more than 30 countries. Since the pandemic began including here in the U S under FDA emergency use.
The recession granted in April of 2020.
Cytosorb was registered on the became commercially available and Singapore for all equivalent of European Union indications, bringing the total number of countries, where cytosorb is distributed now at the 68.
We also appointed Terry and powers, Vice President Investor Relations and corporate communications at the start of June although cure for just 2 months Korea has done a great job of getting up the speed and making the vital contributions for the company. She's now on the process of proactive investor and stakeholder outreach to build investor awareness and support of our company as we drive.
To continue significant sales growth abroad, and work to open up the valuable U S market and the future if you've not already met her please feel free to reach out to her and the near future.
Finally, as you saw from the cover slide and the last Friday press release because of many of you. We successfully completed the mission of 100000.
International fundraising campaign to raise of $100000 for the global humanitarian organization care for.
The fight the spread of COVID-19.
We matched your generous donations that of our friends and our business partners, our employees and our shareholders..1 for 1 and last Friday at NASDAQ and New York Times Square, Vince Cathy and I were proud to present at $100000 check the Chris noble from Kerr and simultaneously ringing the opening bell with Chris at the Nab.
And that's opening bell ceremony.
From a financial standpoint, we also had a strong quarter.
Total second quarter 2021 revenue was 12.0 million versus $9.8 million a year ago. The 23 per cent increase second quarter 2021 product sales were $11.4 million versus $9.5 million a year ago, a 19% increase importantly, our core non COVID-19 sales and the second quarter of 2020.
And 1 grew a very healthy 38% year over year and accounted for 85 per cent of our product sales blended.
Blended gross margins were also 82% and.
The second quarter of 2021 versus 70 per cent a year ago, and finally, we closed the quarter with a solid balance sheet.
Of $265.6 million of cash and no long term debt.
Turning to COVID-19, as we've done throughout this pandemic. We believe the following information will be helpful and putting our guidance into perspective.
COVID-19, driven recently by the Delta variant has been evolving very rapidly with significant changes week to week here.
And here in the United States, we are in the midst of a fifth wave and seeing a rapid rise of the new cases, and southern and central and South Eastern States for.
Florida, and Texas currently accounts for about a third of all the new cases in the United States.
Not surprisingly 97 per cent of new serious infections are on vaccinated.
And although breakthrough infections and most vaccinated people have been mild to moderate so far we are hearing that and some places like Florida, the new epicenter of the pandemic and the U S. There isn't an increasing number of vaccinate people were being hospitalized.
Currently the highly contagious Delta variant of accounts for 83 per cent of new U S infections and recently the Lambda stream has been found in Florida and can actually the immunity from current vaccination and even booster shots are not expected to improve immunity to resistant strains like lambda.
And hard hit areas like Florida, and the South hospitalization utilization is high the death rates are still relatively low they are expected to follow the curve of the new cases.
Internationally of COVID-19 continues to cycle through countries driven by new variants like the Delta variant and on vaccinated people outside of the U S. Foreseeing the surges in the U K, Spain, Portugal, France, Russia, the middle East.
South East Asia, and South Africa.
And the good part is rates of vaccinations continues at a rapid clip the coupon.
On the lower left is the percentage of patients.
Were fully vaccinated percentage of the population who are fully vaccinated are partially vaccinated and the entire population of key countries as of last week and these numbers of actually increased by 2 to 3 percentage points as of this.
This week just to give you an idea of how fast the vaccinations are happening.
The roughly 50 per cent vaccine with the number of U S is the entire population, whereas the number of you often hear of president and biting quote is 70 per cent of the adult U S population, so 50% is as everyone.
And the increasing rates of vaccination of obviously the positive that will help reduce the severity and incidence of COVID-19 infections around the world. Therefore, those people who need ICU care. However, many many people are still not vaccinated and are at high risk and fuel further waves of infection.
So if you haven't already done so please get vaccinated against the risk of death of those getting COVID-19, and still about 2% roughly 1 and 50 people will die.
And many more of it will be hospitalized and seriously ill.
With now for 2 million deaths worldwide, and just about 200 million documented infections worldwide.
It's still the city taken very seriously.
With the state of Covid, 19, pandemic and mined and the and the countervailing.
Selling effect of vaccinations on 1 hand, decreasing infections, and allowing us to get back the business versus new infections by new variants and on vaccinated people, causing regional spikes and infection.
We expect second half 2021 product revenue to be greater than product revenue and the first half of 2021.
We expect continued strong growth and core underlying non COVID-19 sales with at least 30% year over year growth and the second half of 'twenty 'twenty 1.
As well as at least 30% year over year growth and the full year core underlying non COVID-19 product sales.
And lastly, due to the uncertainty regarding the course of the COVID-19, pandemic, including vaccination rates and virus and trends we are unable to predict the level of COVID-19, and sales in the second half of 2021 and to be Conservative. We expect COVID-19 related sales to be less than $1 million and the second half of 2021.
Turning to why we believe our core sales will continue to grow it's the 1 year anniversary of our secondary public offering where we raised 57 and a half million dollars, we've not been sitting idle on the cash rather using it to investing in key areas to drive our business for.
First as Mike will detail later, we have been significantly expanding our clinical team and capabilities to support our company sponsored studies as we know that data will drive adoption and sales at.
At the end of 2021, we expect to be enrolling 7 different company sponsored studies, including the key Star T trial here in the United States.
We've also been hiring and hiring aggressively both here and the U S and and also in Europe to support of current and future expected growth now with more than 210 people companywide with most of the resources focused on sales marketing and manufacturing as.
And as well as leveraging grant income to higher and for RMG.
Next you can see and these pictures of our new headquarters based on Princeton, New Jersey, and future home to our new manufacturing facility that will enable us to produce enough product to support $350 million to $400 million and sales and things are on track to have this facility up and running by the end of 2020.2 if not sooner.
This is expected to have a significant impact on increasing scale and manufacturing efficiencies and improving our blended product gross margins, which were already among the highest in the industry at 82% last quarter.
To support our sales, we've also invested and a new cytosorb and logistics hub and Germany that will enable us to continue serving the world with our products. We've also made significant investments into our non grant funded pipeline such as the coast 300, and see why cartridge for ex vivo organ perfusion for transplant.
That received EU approval last year as.
And as well as other products like Cytosorb XL debt rescue and others. We also used our funds to retire our launch of debt that has eliminated our long term interest expense and it has given us a lot of financial flexibility. We've also increased production and increased our inventory day.
Be able to respond rapidly to surgeries and demand for our product and.
And finally, we continued to expand internationally.
We're also moving currently in parallel with the U S tool regulatory paths the potential FDA marketing approval and have been steadily preparing for U S commercialization of the drugstore of HR with key hires and initiatives.
Now for more detail on the clinical program, let me turn it over to our CMO, Dr. Euthemia stellar theirs to give more detail on our progress.
Yes.
Thank you, Phil and good afternoon, and good evening everyone.
It was less than a year ago that we first disclosed on new clinical plan that was designed to deliver on 2 critical objectives.
First to obtain FDA marketing approval, and an extra debt and fashion and second the generate the clinical data that will drive future growth and multiple clinical applications.
As you heard from to the deliberate on both of these objectives, we're focusing on restaurants and robust company sponsored studies and we're investing heavily there.
But not in all of the necessary resources to ensure the timely and rigorous execution.
For example, just from the last year, we have more than doubled the size of the global clinical team and I'm happy to report that we're already observing significant execution of efficiencies in both time and cost.
And the next few minutes of review with you. The progress we have made of other programs. So far this year, but we also outlined the upcoming key clinical milestones for the remainder of the year.
We continue to focus on the dual path strategy to FDA marketing approval.
Our top priority and the start to study that the investigator the the ability of the drugs of ATR system ATR standing for anti thrombotic removal.
To reduce postoperative bleeding in patients undergoing cardio thoracic surgery on type of tag of award.
And I've made significant progress with the start the study so far including receiving the full SBA of IV approval in early July 2.
And to execute a double blind randomized clinical trial that will enroll 120 patients of 20 U S sites the.
The primary endpoint of the study will focus on measuring clinically meaningful bleeding outcomes.
Post operatively on patients undergoing surgery, while on the Tech Aguilar.
For more details on the study design and some of the study endpoints. Please.
If you are listening on the clinical trial of the Dot Gov.
The principal investigators of the study of 2 luminaries of cardiovascular medicine, Dr. Michael Mac, cardio thoracic surgeon and Dr. Mike Gibson and interventional cardiologists.
Together with our principal investigators who have engaged with the large number of sites and we are happy to state of the second quarter. We have identified all of the target sites that will be required to execute the study.
We have encountered a very high degree of enthusiasm by the.
The U S institutions seals and they view this as a major unmet medical need and are excited about participating in the trials that might produce and novel breakthrough solution.
We have began contracting and submitting to <unk> bees across all of these institutions with some of the Oh baked in a lot of progress and a lot of the size of already completed and beginning the site activation and the site initiation visits which happened.
And by the end of July.
We had the first investigator meeting on July 14th and win.
And on target and enrolled the first patient during this third quarter of 2021.
And the manuscript focusing on the methods and the design characteristics of the start of study has been submitted for publication.
And finally based on the current projections, we believe that the STAAR study, we'll be able to complete for 2022.
Okay.
Moving to our second.
Study for a dual path for the SBA approval for the refresh 2 Aki I study, we also made substantial progress and the second quarter.
The study successfully resumed its activities and is actively enrolling patients of the majority of the study sites and we believe that the many of these sites for the study will be active by the end of the year.
The next important milestone for the first who is the interim analysis and we anticipate that to take place and the second half of 2022.
As Phil has state of the previously and we have disclosed already.
The press releases, we believe the starchy represents the lowest risk and fastest path the FDA marketing approval.
And in addition, it also sets a precedent for the future trials to expand the anti somebody for Google opportunity beyond that kind of gorilla.
Yeah.
Next slide please.
2021 is the year rich and clinical milestones.
Across the board of our clinical programs, we're employing the complementary approach the data generation utilizing randomized clinical trial, just as the start to your refresh II studies of just reviewed but also registries and single arm studies.
On the stable, you'll see a summary of all the studies that of course.
All of Covid. According to the therapeutic area between cardiovascular and critical care and also according to the milestones we achieved during this year 2021.
You will note from the first half of this year, we executed on all of the previously announced milestones, including receiving the full FDA approval for it starts to resuming and actively enrolling patients and the refresh 2.
Enrolling the first patient and citation and the first quarter and continuing enrollment and site activation for citation and the second quarter, which is ongoing.
And we're moving forward of the Star Registry, we have already submitted to the ethics committees, and Germany, and the U K and we expect that soon we'll receive the approval it will be able to begin the data entry and the third quarter.
The process of randomized clinical study of Germany, and multi center study looking at refractory shock and the ability of of Cytosorb device to provide people with the Nymex Subluxation has received ethics approval all clinical sites have been identified with the process of contract from the and we believe it will be able to enroll patients towards the end of the third.
Quarter of the beginning of the fourth quarter of this year.
Moving on to the Hep on par of single arm study, which again and Multicenter study, Germany, we anticipate that we'll be able to submit 2 ethics committees during the third quarter get the sites activated and target of first patient and before the end of the year.
And finally, our CTC registry and COVID-19 has completed enrollment and the top line results have been submitted for publication and.
In addition have been accepted for presentation at the upcoming international symposium of intensive care and the emergency medicine that will be held between the August 31, and September 3rd and Brussels, where the topline results of the CPC will be released.
All in all the the full clinical plan all of the clinical programs have either achieved or are on track to hit the 2021 milestone and now as you see on the table every single study will be actively enrolling patients, but the and.
2021.
And with that I would like to turn it over to my colleague Kathy Bloch.
Thank you Mike Yes, good afternoon, and good evening, everyone for today's call I will provide an update regarding cytosorb into June 30th 2021 financial results as well as some comments around our working capital position and cash runway.
Next slide please.
Net sales for the second quarter of 2021 and were approximately $11.4 million and increase of $1.8 million for 19% over second quarter, 2020 product sales of approximately $9.5 million. This increase was primarily driven by an increase in direct sales.
<unk> of approximately $1.5 million as well as an increase and distributor sales of approximately $353000.
Grant revenue was $659000 in the second quarter as compared to $275000 in 2020 as execution on our grant contracts returned to normal patterns during 2021 as compared to 2020, when our R&D and place where test.
And with assisting in the ramp up of production to meet the surge and demand for Cytosorb, resulting from the COVID-19 pandemic.
Total revenues, which includes product sales and grant income increased by 23 per cent to $12 million for the second quarter as compared to $9.8 million for the same quarter of 2020 and our second quarter 2021, gross profit rose to $9.3 million, which is.
And increase of approximately $2.8 million for 42% over gross profit of $6.5 million in 2022nd quarter product gross margins for 82% as compared to 70% in 2020 and this was due to manufacturing efficiencies achieved in.
2021, but also because of certain ramp up expenses incurred in 2020 did not recur in 2021 next slide please.
Turning to our 6 months financial reason and product sales for the first half of 2021 were approximately $21.5 million, which is an increase of approximately 22% of a product sales of $17.7 million for the first half of 2020 and total revenues were approximately.
Only $22.6 million for the first half of 2021 as compared to $18.5 million for the same period in 2020 and increase of approximately 22% next slide please.
So here, we will look at our quarterly product sales and we've broken this chart down into our core non COVID-19 product sales shown in the Blue and our COVID-19 product sales shown in the Green and this COVID-19 product sales began to occur in the first quarter of.
2020, we estimate the second quarter 2021 product sales related to COVID-19 were approximately $1.7 million compared to an estimate of approximately $2.5 million of COVID-19 sales in the second quarter of 2020.
And if we exclude our COVID-19, and south and look at our core non COVID-19 product sales for the second quarter of 2021. These for approximately $9.7 million, which represents our highest ever core quarterly sales results.
Second quarter 2021 core product sales of $7.9 million represents an increase of approximately $2.7 million for 38% over our core product sales of approximately $7 million in the second quarter of 2020, but most importantly, we are very pleased to be able to reap.
And for it and our core non COVID-19 product sales and demonstrate a pattern of continuous sustained gross throughout this period net.
Slide please.
And this is our trailing 12 months product sales and as you can see from this chart. We continue to maintain strong year over year product sales gross and also gross gross margin growth as of June 30th 2021, our trailing 12 months product sales were approximately 40.
$3.3 million, which is an increase of approximately $1$3.3 million for 44% over trailing 12 months product sales of $30 million 1 year ago.
Our gross margins grew to 82% in the second quarter of 'twenty 'twenty 1.
And we know that the company subject to adjustments for nonrecurring items has been able to achieve consistent year over year improvements to our gross product margins for each of the past 5 years and not only that but the second quarter of 2021 represents our third consecutive quarter.
Of 80% or higher.
Product gross margins.
We also note that our compound annual growth rate or CAGR was 35% over the past 3 years and we are continuing chubb's or a very positive trajectory here next slide please now turning to our working capital and cash runway.
As of June 32021, we had a robust cash balance of approximately $65.6 million and we have experienced a quarterly cash burn of approximately $3 million and each of the first 2 quarters of 2021.
Notably, excluding our clinical trial activities and non cash expenditures such as stock option expense second quarter of 2021 was our sixth consecutive quarter of generating positive EBITDA.
That means that were it not for clinical trials. Our operations are generating positive cash flow of course, we will continue to invest and clinical trials because they are expected to produce the substantial return on investment and drive our future product sales growth.
We believe we have sufficient liquidity to provide for the planned expansion of manufacturing capabilities. The continuing commercialization of Cytosorb and execution of our robust clinical trial strategy. We further believe we have adequate capital funding to allow us to continue to operate without any need for additional <unk>.
Capital right through to be achievement of GAAP operating cash flow breakeven and giving our outstanding business model with our 80 plus percent gross product gross margins.
Once we reach GAAP operating cash flow breakeven 40 to 50 cents of every incremental sales dollar is expected to fall to operating profit.
Our $150 million shelf registration was scheduled to expire in August 2021, and we filed a new $150 million shelf registration and that became effective with the SEC on July 27th 2021.
Our aftermarket or ATM facility also expired concurrently with the shelf registration and we will be renewing the ATM facility as well.
These actions simply represent good corporate governance practices, we have no need or intention to raise capital in the near term.
Briefly turning to our capital structure as of June 30th 2021, we have approximately $50.5 million common shares outstanding on a fully diluted basis.
And that concludes my remarks and at this time I'm pleased to turn the call over to Dr. Christian Steiner. So that he can provide some color on the product sales landscape Christian. Please go ahead.
Yeah. Thank you very much Kathy.
Cost of luxuries.
So good afternoon from Berlin, Germany to everyone on the call and in America.
Evening through Europe, and good morning to Asia Pacific.
And I want to give you a little bit more color on what has been presented in terms of numbers and international commercialization.
If you look at this chart again, we can see of constant incline of the call non COVID-19 related business represented by the blue columns with almost no on the matching the growth slow down during the pandemic.
This is a remarkable development despite and during the pandemic restrictions, which includes the restricted access to customers.
The stop of many of elective surgery programs and the fear of patients to go to hospitals.
The next 1 please.
However, on the Covid related restrictions and challenges for all commercialization forces have declined.
The access to our customers has significantly improved as an example, the appointment of frequency of on Toric sales forces has been less and 25 per cent compared to the pre pandemic times and Q1.
The improved to less than 50% and Q2 and the starting to go towards the 75 per cent months since the beginning of Q3.
The experience of reassurance of interest for Cytosorb therapy, with the improving situation and this includes interest for the sizes of itself.
And all the information around it.
But also for study and registry participation.
We are starting to see momentum and the time consuming and new customer acquisition, and especially also of the revision of utilization of pre pandemic business relationships.
Yeah.
Furthermore, receipt of back to normal with the elective surgery programs.
This is especially significant in the for us very import and conduct surgery segment.
More than 75 per cent of the cardiac surgery centers and Germany have started the programs again from less than 40% during the print on it.
The waiting this have become long so heart centers are striving to somehow manages sometimes was massive expansion of the schedules.
Other soldiers segments of less aggressive due to the still limited as you will be the booty, mainly due to some remaining restrictions and additionally, the vacation time and European markets.
And last but not least and general the ICU capacities for non COVID-19 patients of rising back to normal and patients are less afraid to go to hospitals and the emergencies and also plan and on the go elective surgical procedures they need.
Summarizing we can say that the situation to do business for <unk>.
Difficultly improved and we hope that even new variance and the increased infection numbers moving tons of spec.
I have to mention 1 more thing here of course, we do have differences and different geographies. However, everything said, it's representing on.
Most important markets and excellent place.
So this leads me to my last summers and slight we can conclude that the non COVID-19 related business is healthy and continues to exhibit strong growth. Despite all of the pandemic restrictions.
And <unk> 2021 represented a record quarter with a 38% year over year gross and control business, which included.
Indications and critical care.
Mainly of our bread and butter business with cytokines storm and septic shock patients.
And the cardiovascular segment with different indications and colleges, the rustic century, and cardiology and on the field of liver support therapy.
I personally I'm expecting a continued strong growth and this core non COVID-19 business, which might potentially be supported by some additional COVID-19 cases, but obviously the oil once this pandemic to be finished at 1 point. So we are ready to take the next steps and fight on possible challenges.
Thank you very much for your attention and with this I'm handing back to flow through.
Thank you Christian and finally to summarize we believe we have the appropriate strategy and team in place to drive this company to become 1 of the leading U S medical device companies and <unk>.
Of growth and profitability.
We have a strong experienced management team with the continued addition of key talent to support growth initiatives, we're well capitalized for support planned investments and manufacturing capacity clinical programs and commercialization efforts for the coming years, we expect to drive continued growth and ex U S markets driven by geographic expansion existing high growth applications such as.
Sepsis cardiac surgery and liver disease label.
The label additions and potential additional partnerships.
We plan to open and the U S market targeted dual path the U S. FDA marketing approval with many clinical milestones expected in 2020..1 our focus continues to be on the removal of Titanic and alert or cardio thoracic surgery as the initial targeted indication.
We continue to develop other product lines, utilizing cytosorb and proprietary polymer technology platform and we strive for operational excellence to support improved efficiency and profitability and finally, we are working to achieve our goal of rapid growth and GAAP operating cash flow profitability and the next 2 years.
That ends our formal prepared remarks, I would now like to open it up for Q&A operator.
Thank you as a reminder, if you do have a question that the star 1 on your Touchtone phone. Please make sure that your mute button is turned off to allow your signal to reach our equipment. We will take our first question today from Danielle.
And and healthy with SBB Leerink. Please proceed with your question.
Hey, good afternoon, everyone and thanks, so much for taking the question Perry and.
And then really looking forward to working with you more just a quick question on the commercialization update Dr. Steiner and thank you. So much for all of that color. I guess my question is and I'm not asking for specific guidance, but just directionally speaking I mean, obviously very strong core growth this year, albeit off of you know.
Arguably possibly somewhat suppressed faith and 2020, although it's hard to tell you. We're just launching so you know if you were talking about over 30% gross 38% growth and the quarter over 30% growth and the back half of the year. As we look ahead to 2022, I mean, it feels like with momentum building and you're still not even at 100% from an.
And then perspective it feels like you should be able to continue that growth momentum just curious about any comments you can make directionally on 2022, and then I have 1 follow up for cathie on on margins.
Sure. Thanks Daniel.
I believe that that is true and we believe collectively that the.
The pieces and are are in place to be able to drive that type of growth, including next year, maybe Christian is that.
Is there something else that you want to maybe out there.
Yeah, I think this was exactly the pond and wanted to bring the trust and the despite not we are not giving for.
Forward looking statements.
I think if you look at the charts and see what.
Could happen and what.
And what happened last year.
And that might be this conclusion.
And I guess another way to say it is there and there's no reason to think momentum would slow going into 2020.2 in Europe from a commercialization perspective.
Yeah, I mean, I think notwithstanding COVID-19 related issues, if they of course.
Continues the trend in a positive way and we don't have multiple additional waves of the.
Perfect.
Resistant variants.
Variance I think that that's our expectation I mean, I think if you look at the graph that we presented earlier that combines core as well as COVID-19 sales you can see you got the Blue bar is the trend line is very consistent and I think that we expect that that core growth will continue.
Yeah, Okay, if not accrual and then kind of you.
Okay perfect. Thank you for that and Kathy just a quick follow up for you on the gross margins I mean, another quarter of gross margins well ahead of our expectations.
And I I believe consensus the street as well. So just curious if you could talk about how your if your view on how quickly you can ramp gross margins with the new manufacturing facility to opening has changed and even if you can sort of commit to and long term margin target I mean, it feels like above 80.
And maybe even 85 per cent is right, but would love to hear whatever you can tell us on on that front. Thanks, so much.
Oh sure Danielle. Thank you, yes. We're you know we're very excited and I pointed out today that our gross margins. It's not just the 1 off but they've exceeded 80 per cent for 3 consecutive quarters. Now. So we think we've gotten over the the ramp up pains and we're doing very well operating at this.
The paucity.
We're not expecting large improvements in our gross margin until the new facility is up and running which is expected to be fully.
<unk> fully operational by the end of 2020, 2 and then I think that we will see gross margin.
And once that gets up and running and and and we start to get greater volume through there I think we'll start to see gross margins in excess of where we've been experiencing and the last 3 quarters and I won't commit on exactly where yet, but I think there'll be quite favorable.
Okay. Thank you so much.
Thanks Daniel.
Our next question is from Anthony Petrone with Jefferies. Please proceed with your question.
Thanks, and I hope everyone's doing well congratulations on a strong first half here and.
And I'll go back to the Doctor signs comments on at least 30% on the ex coal.
All of the business heading into the second half of the year the.
The first half was up about 32% so sort of in line with that trajectory just try and get an idea of the.
And the moving parts between Rep productivity and Germany.
And how much of that is factored and their distributor purchasing.
And maybe just the normalization of procedure volume trends and then a quick follow up on where the Rep head count was exiting <unk>.
And where that's good and in the back end of the year in terms of new additions and then I'll have 1 follow up on trials.
Yeah, So I'll, let Christian comment on the first part of that I think that from a.
Sales perspective.
And Germany, we've kept the actually the head count the same.
And where we are making.
Making sure that are coming out of just the increased restrictions and the March time period. When we had the last wave in Germany that things are going to.
Get back on track on.
The way the Christian has predicted before making additional investments there, but I think our goal.
Has been to continue to put monies towards expansion of our direct sales forces in different countries and.
And that which includes not only sales reps, but also other resources to help drive our sales and business activity.
Christian maybe do you want to comment on the first part of that.
And of Anthonys questions.
Yeah, and Tony Thank you for the question.
And I think if you look of the of the past year and the pump the next time.
Can you see that of course.
The big segments of all of our core business has been negatively impacted which obviously includes the every surgical of post surgical and indication because all of these are elective surgery programs meant the 1.
To to secure ICU beds for non Covid patients.
So it was this comes on line and we see momentum.
Especially in the <unk> come back to a normal. This obviously will have a positive impact also septic shock patients.
That's in the malls and sex, we cannot exactly for for C. But during the time and all the best the resolved for Covid patients there might have been less septic shock patients what we normally see Eva past the subject of on procedures.
Or even due to material.
And the mono.
And so on.
And what has been stable.
Through the pandemic most of pound the deliberate business and we just have started to build this.
And the expecting the pro.
And so here and also the emergency indications of.
Of course, it relatively stable.
It's also like sandblast of trauma boomed.
Accidents and also those in cataract surgery and based on the on the on boarding.
Removing the indication.
I don't know whether this is already satisfying.
Yeah the question.
That's very very helpful and and the follow up on on Star T.
And I'm just wondering what the expectation is for cartridge utilization in that trial and should we expect to see that.
Show up and revenues actually as the trial is enrolling and and and.
And going through the 120 patient target enrollment and then when you look at the completion date for 2020 to the.
The short.
Sure the outcomes Windows makes sense, it's it's it's 48 hours to 2 weeks.
Just wondering what the targeted timing for completion.
For enrollment completion and should we expect that that would be done by the fourth quarter of this year. Thanks again.
My guess would you like to take that.
Sure the.
Thanks, Anthony for the question, so the start teas, and investigational device exemption trial and error.
As you know and don't have ft, and marketing approval in the U S. We only count the emergency use authorization, so our sales and the U S of relating to COVID-19 use under the EUA.
The the the the Star T study therefore, the devices will be provided.
But the sponsored by US as part of this investigational studies. So this would not kind of any of your collection on sales and this is the U S. Only trial starts you will be execute and the United States.
So relating to the enrollment of the study we're hoping that in this quarter, we will begin enrolling patients and the we'll certainly communicate that milestone and when we hit it the first patient and into the study.
And then by having you know the the next few months all of the sites active and we target all of the sites study size to be active by the end of the share. We believe the enrollment will continue you know and a robust pace. However, we only have projections right now on the more accurate.
The timetable will be able to provide for your warrants the enrollment begins and we actually see how the site.
Performing and of course, notwithstanding any additional and new.
The or worsening COVID-19 related delays.
Overall clinical research is coming back.
On the post pandemic, but it's not quite to pre pandemic levels yet.
So we're hoping that the positive trend will continue with that will help the study enrolled but I think for more accurate timetable will have to wait for us the studies up and running and we have a better idea of of the.
The enrollment rates.
Thank you.
Okay.
Our next question is from Josh Jennings with Cowen. Please proceed with your question.
Hi, This is Brian here for Josh. Thank you for taking my questions I wanted to start with a few on refresh to can you remind us of the possible outcomes associated with the interim analysis I'm wondering whether this is primarily of a test of whether the trial is appropriately sized or if it's more than that can you.
Just outlined the outcomes.
And that we could possibly see with that analysis and then also just in terms of the.
Order of the data milestones between the 2 U S trials are we likely to get the interim analysis of refresh 2 before the star T results and I have a separate question on start to you if I can.
Sure. Thanks, Brian Mike would you like to take that.
Yes sure. Thank you so the the interim analysis for refresh 2 will inform you.
You know.
The the ability of the study to continue at the current sample size. However will also inform potentially the option for stoppage of according to what the unblinded results, but at the SMB will be reviewed or you know for you the efficacy.
Or the utility.
The the start of <unk> study again, we'll have the much better idea of the projected timelines.
Once the study is up and running but what we have communicated today is that we would expect both of those milestones to complete in 2020.2 meaning both the interim analysis for the fresh dough and actually the study completion for.
For the start of 2 study as well.
Okay. That's very helpful. And then on Star T based on your conversations with the F. D. A to date with the U S filing likely consist solely of the results of Star T.
For the clinical component or will the submission of include data from some of the other clinical efforts are your you're conducting now for Takira law removal.
So so yeah. So so the start to study and is due in large part the design of the study.
Is the output of the discussions we've been having with the FDA already and.
And I don't know if you had the chance to review what we've disclosed so far but he would be focusing on clinical outcomes.
Which as you know clinically meaningful outcomes and postoperative bleeding, we should be able to provide a pretty thorough assessment of risk benefit, which basically is the most important aspect of the marketing application.
Having said that it is routine practice to include supplementary.
The data that May have generated during the course of the next year and also provide additional.
Evidence of either efficacy or safety.
And in that regard you know if we really that we have additional commission and start T. We will be providing that to the agency as well however, the study itself.
It was meant to be able to support the robust benefit risk assessment.
Makes sense. Thank you.
Yep.
Thanks, Brian.
Our next question is from Andrew Desilva with B Riley and company. Please proceed with your question.
Good afternoon, and thanks for taking my questions for a couple of quick ones for me.
Start.
With the the CE Mark for it to have the tabular worry and Rivaroxaban.
And I was really just curious if youre seeing any and any of certain marketing and taking place with pharma and either astrazeneca on there obviously, the the benefit of having a reversal of therapy.
Prophylactic provides and increase safety benefit for those drugs. So I'm curious if that's resonating with pharma on anyway.
Chris what would you like to comment on that.
And it's my knowledge.
Cause of.
A variety of different factors, including the COVID-19, pandemic not heard that yet and hasn't been used and that kind of volume.
And have heard that yet, but Christian was closer.
Krishna.
Thank you Andrew for the question.
Dennis.
We see actually is occasionally that are that are the users I'm, suggesting that there might be a closer collaboration and are of course also on from the few people from different companies, but there's a.
Problems and you know no deep the collaboration at the moment.
So yeah I mean, the the uses of happy that they have the safety safety nets now and the year.
And the big cardiac surgery center is increasing.
We have and number of sites and that this is.
Used regularly.
And to have the safety and 2 of 1 meetings.
Okay useful thing for you and I.
And just sort of listening to everyone and there just appears to be of much higher degree of confidence.
For Star T and not just in and your ability to generate a positive safety and efficacy data, but the ability to.
Enrolled patients complete the study faster than the day other studies like refresh 2 and.
And I was curious and your own words, what was really driving debt increased confidence.
For the study and indication.
My guess would you like to give some commentary.
Sure and thank.
Thank you yeah. So you know the.
Everything starts with the with the the unmet need.
This is something that is not a rare event as the anti thrombotic drugs are increasingly being prescribed for the multitude of cardiovascular applications, the millions and millions of patients out there that are on them and what the.
They present with an acute problem and the need and operation is literally the nightmare surgeons. So they have been dealing with this the whole careers without a solution to help them dealing with the surgical bleeding and that's very very difficult to manage.
So when you provide a solution that can actually remove what is at the center of the problem, which is the drug causing this excess bleeding the immediately become extremely enthusiastic about having such the solution in the hands. When we approach surgeons and we approach clinical centers what would routinely here. It seems like this would be of new.
No brainer and clinical practice, if you guys can actually remove the struck during surgery no that tells US the first of all for the clinical study there will be excitement and enrolling patients and as you know that's 1 of the most important things that drives the successful clinical study when the investigators the principal investigators at the <unk>.
And this committee of the site investigators and their old enthusiastic behind the trial and we see that when we engage with it.
The second part of the confidence comes from the fact that this is the market application in Europe and this is being used everything and heart centers. We've seen data that are being published but we also talking to customers and they tell us that they see this incredible reduction and the bleeding associated.
With the Sundance thrombotic drugs during cardiac surgery, they're telling us routinely the devices working so we have excellent feedback from real world use we have some published data not a lot yet, but more and more of coming of the star of registry, which is another 1 of our programs will contribute even more on the future and then again the interactions with having the besides and the investigators.
The level of enthusiasm that we're encountering make us confident that we will execute the study and the other device the the drugs already T. Our system will perform hopefully as well in the trial as it doesn't really both of us.
Yeah.
Perfect. Thank you have less debt 2 questions always loved them together a first 1 on just how many patients have been enrolled and and refreshed you are to date and then.
In the U S.
For various specialties. It seems like the summer is going to be busier than usual due to the backlog of procedures that were delayed due to COVID-19 and I was curious if you're seeing similar tailwind and Germany and other key regions during the third quarter.
And also if you could just you referenced the.
A massive amount of flooding and Germany, if that's impacted and thing in your opinion.
Mike do you want to take the first part.
Yeah. So when it comes to refresh to as of on the last update we have enrolled 168 patients.
And the study.
Thank you.
And Christian would you like to comment on the the German floods.
And I actually could not really understand the Christian 1 of those can you. Please repeat just the S. A.
And a relatively large scale disaster has it impacted our.
Our operations for sales in any significant way.
And also just in the U S. A.
There seems to be a lot of specialties debt that.
And that are gonna be busier during the summer just because of the backlog of procedures.
And were delayed due to Covid and and I was just wanted to know if that if that's the same tailwind with the scene and Germany and other relevant regions for you.
Okay, and if I.
If I understood correctly that.
Whether the elective surgery decline over the Covid is now compensated as this is my question.
That's very.
For the third.
Okay typically are low right.
Yes, I'll until the spin.
Just on the.
The holidays, and everything and take place and the summer and in Europe. So I was curious absolutely.
There's a lot more opening reopening is going on and people are getting vaccinated and if you're seeing the summer are turning out to be more busy than it would typically be because of those dynamics and then just tying in the weather related aspects and Jeremy.
And it's important market for you.
And it goes no. So there's 2 there's 2 different effects or maybe even more 1 that's absolutely right and you're right with the subject of programs. They get online again, they have long waiting list and from this time from the programs some of it down and the.
The science of the center of trying to really cope with it and and I'm trying.
Trying to maximize the throughput as much as possible for this is obviously could have a positive effect on won't be of doing on the other hand of there's also a and the fact additionally to the vacation time, we normally see in Europe, mainly and and the South European.
European countries, but also on the Austin, the Switzerland and Germany.
On behalf the situation debt.
You know over the last 15 to 18 months. The ICU doctors have a kind of worked like a 24.7 and the it's a certain exhaustion of the doctors and personnel not just of those of course and.
And they really take the vacation and do the full of vacation.
And what they deserve so there's a number of different effects coming into place, but hum yawn a judgment on the surgical programs I can absolutely come from.
Great. Thank you very much and I'll hop back in queue.
Thank you.
Our next question is from Arthur he with H C. Wainwright. Please proceed with your question.
Hey, good afternoon, everyone on the the author for surely.
Thanks for taking my question on most of them a question of being answered and I, just curious regarding and congrats on the product launch in Singapore, and just curious if you guys sort of given us.
More color on your business strategy.
<unk> brought more broadly in the region and that'll be helpful. Thank you.
Hum Arthur and I think that Oh.
What we've demonstrated in the past has been the registration of the product and the number of different South Asia, and South East Asian countries.
And in Malaysia and.
And Vietnam, and South Korea and <unk>.
Singapore and Hong Kong.
And we are slowly moving into that area.
I think that we have a broader strategy of of obviously going after some of the big countries.
Particularly like Japan, and China et cetera, those are.
The ongoing and it's part of our strategy.
Thank you for that.
Sure.
Okay and I have another.
Yes.
At this time it appears that there are no other questions. So I'd like to turn it back to management for any additional or closing remarks.
Well. Thank you everyone for joining us today on today's earnings call. We appreciate your participation.
Do you have any other questions. Please feel free to reach at the Terry on powers of T powers at the height of certain stock comp and we'll try to reply to your questions. As soon as we can thank you everyone have a good night.
Thank you that concludes our conference for today I'd like to thank everyone for their participation have a great evening.
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