Q2 2023 Cytosorbents Corporation Earnings Call

Good afternoon, and welcome to the Cytosorb in its second quarter 2023 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 call over to our moderator tailored Devlin. Please go ahead Taylor.

Thank you and good afternoon, welcome to satisfy Ben's second quarter, 2023 financial and operating results Conference call. Joining me today from the company are Dr. Phillip Chan, Chief Executive Officer, and Soccer Pony, President and Chief operating Officer.

Sure.

<unk> block interim Chief Financial Officer, Dr. <unk>, <unk>, Chief Medical Officer, Dr. Christian Steiner Executive Vice President of sales and marketing and managing director of Cytosorb in Thier G. M D H Christopher.

Christopher Cramer senior Vice President of business development, Dr Arena Colon, that's senior Vice President of regulatory.

Okay.

Before I turn the call over to Doctor 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 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 in the company's filings with the SEC.

Any projections as to the company's future performance represented by management include estimates today as of August 1st Tony 'twenty, three and we assume no obligation to update these projections in the future as market conditions change.

During today's call, we will have an overview presentation covering the operating and financial highlights for second quarter of 2023 by Doctor Chan unless block.

Knowing that presentation, we will open the line to your questions. During the live Q&A session with the rest of the management team and now it's my pleasure to turn the call over to Dr. Phillip Chan.

Thank you very much Taylor.

Afternoon.

Today I have the pleasure of being able to update you on our most recent operational progress.

We recently announced that the pivotal starchy trial completed enrollment ahead of internal projections with strong performance amongst our 30 clinical centers in the United States Canada.

This followed a second independent data safety monitoring board evaluation in June .

Safety data on 80 patients, whereas the DSM be recommended completion of the trial without modification.

In the second quarter of 2023.

We achieved total revenue of $9 4 million, including product sales of $8 1 million versus $7 3 million and product sales a year ago, representing the third consecutive quarter of sequential product sales growth.

Product gross margins grew 700 basis points to 74% from 67% a year ago and.

And we have now exceeded 212000 cumulative human treatments delivered across 75 countries worldwide.

We announced the appointment of Alex D'amico, Chief Financial Officer to start next week August seven 2023.

Alex brings 20 years of finance SEC reporting M&A fund, raising and accounting experience to the company.

And our outgoing Chief Financial Officer, Kathy Bloch will stay on as a consultant and help to manage the transition.

We also introduced Michael Bachelor as the New Chairman of the board at the annual meeting in June Michael has been a board director since 2015, and currently serves as a founder and partner of Quartz Advisory group capital markets investment Bank Mike.

Michael It's also the former managing director of healthcare research at Jennison Associates.

A very large family of funds with more than 175 billion.

And assets under management.

Last but not least we announced the third off the collaboration with <unk> <unk> is the manufacturer of <unk>.

Prove wimax liver function tests that is used in liver patients to evaluate the functioning of the liver.

We announced a one year joint marketing agreement, where their sales force and ours in respective territories.

<unk> market Cytosorb.

As a superior extra for a liver support technology.

And Linux as a unique liver function test.

For the treatment of liver disease.

As we've discussed previously we are focused on three major objectives for 2023. The first is opening in the U S and Canadian markets with drugs or HCR. The second is a return to sales growth of Cytosorb and the third is to reduce our cash burn.

<unk> tight control over expenses.

In terms of opening in the U S and Canadian markets with drugs, our ETR I would like to note again that drugs or ATR and start Chi which stands for the safe and timely anti thrombotic removal of Ticagrelor trial.

The core focus of our clinical efforts and the vehicle expected to open in the U S and Canadian markets.

This leverages two FDA breakthrough device designation for drugs, our HCR to remove blood thinning medications and patients undergoing cardiac surgery.

One of these breakthrough device designation for the removal of Brilinta.

Commonly known as <unk>.

And also the second one is for the direct oral anticoagulants of which <unk> <unk> are the leading ones in that category.

In addition, following independent data safety monitoring Board review of the first 80 patients safety data and start T trial and recommendation to continue the trial without modification where.

We are pleased to announce it start T enrollment has now completed.

This helps to validate the decision to forgo the interim analysis at 80 patients that we discussed on the last earnings call and.

And we expect that the trial to complete imminently following the last 30 days patient follow up.

We believe this.

Sets us up for near term milestones that are rapidly approaching which is why I have this picture of a mirror objects in the mirror are closer than they appear.

First we expect to get to database lock.

In the next several months followed by statistical data analysis.

This should hopefully lead to top line data targeted by year end and if positive regulatory submission for U S FDA and health Canada to follow.

We also expect to present data at a major cardiovascular conference next year.

The visibility we again, we plan to begin executing on our pre commercialization strategy and begin building a direct sales and marketing infrastructure in 2024.

One thing that we really haven't discussed extensively in the past are the dynamics that may actually help expand <unk> market share in the United States, and Canada, particularly in the United States and more type CAGR use means potentially more drugs, our ATR use should we.

Get approved.

As we've discussed in the past patients with acute coronary syndrome.

We're coming to the emergency room with signs and symptoms of having a heart attack often gets dual anti platelet therapy. This consists of aspirin plus one of the two Y 12, platelet inhibitors, such as Brilinta, where tech CAGR lore, plavix or clopidogrel.

<unk> also known as profit growth.

Brilinta has superior anti thrombotic efficacy to plavix apply because it's generic and cheap and brilinta today, it's still a branded drug.

However, this is expected to change as Brilinta.

We will go generic in 2024 to become just generic type caldolor with multiple competitors with tentatively approved abbreviated NDA.

They have already been approved by the FDA.

The prices type CAGR floor is expected to fall potentially enabling market share gains against Clopidogrel.

Peter Grill, and the more expensive branded effient.

Recent public a recent publication in the well respected journal Jama network open highlights U S prescribing physician preference for <unk> versus other anti platelet agents falling acute coronary syndrome, a percutaneous coronary intervention in other words for example, stent placement.

And more than 62000 patients.

That were studied between 2010 to 2019.

And what you can see in the graph in the lower right is that during that period of 2010 to 2019.

<unk> has steadily gained in prescribing preference for physicians.

Following acute coronary syndrome and PCI.

To the point where now.

In 2019, 64% of patients.

Intervened upon in the Cath lab Scott.

Type CAGR of or Brilinta.

While the rates of Plavix prescription have been going down to only about 30% in 2019 and proxy grill is a distant third at 10 per script set of prescriptions.

Leading the authors to conclude that tech to quote Chicago bar has emerged as the most commonly prescribed <unk> platelet inhibitor.

In addition, the approval of drugs or ETR would make type card reward the only one of these anti platelet drugs.

Route to be reversed or altering cabbage surgery.

<unk> powerful marketing advantage to take market share.

You can imagine given that 5% to 10% of patients are not eligible for stent placed windup in surgery.

That being able to reverse the drug used in dual anti platelet therapy would be an extremely valuable marketing advantage that we could confer type CAGR of arc and we believe that this will come to pass and be true.

Ultimately this sets us up.

For an initial market in the United States, where removal of Brilinta in cardiac surgery patients of approximately $250 million.

And if you add Canada. This increases the total addressable market to roughly $300 million to $350 million.

In additional share against Plavix and <unk>.

The numbers of patients on Brilinta or type CAGR over in the future.

Could rise to give us an opportunity.

A $500 million total addressable market.

As we told you in the past.

Once star T depleted we.

We are looking to resume to start D trial, which is looking after removal of the direct oral anticoagulants.

Factor <unk> inhibitors, Alec questions wrapped up and if we are able to add on that indication. This could double our total addressable market to a $1 billion.

And if we can now open it up for not just cardiac surgery, but to all kinds of surgeries and also potentially being able to be used in the emergency room.

Estimate that that could again double the total addressable market here in the United States.

The second major goal for the company as a return to sales growth for Cytosorb again. This has been the third consecutive quarter of sequential product sales growth with 10% quarterly product sales growth year over year in the second quarter.

We're seeing continued gradual recovery of hospital markets post Covid with continued strong customer engagement and enthusiastic response to our new data and marketing strategies.

Our product gross margins rose 700 basis points to 74%, reflecting volume production from our new Princeton manufacturing facility, a trend consistent with prior guidance of returning to 75% to 80%.

Yeah.

Quarterly base year.

The following messages.

One is that we need to be able to treat the right patient with the right timing and the right dose.

And we also need to hit hard and hit early.

And this incorporates our evolving understanding of how best to treat patients with Cytosorb.

In particular with Cytosorb is used early and aggressively and documented hyper inflamed patients we've seen some outstanding results.

This includes the recently published <unk>.

CTC therapy registry results in the journal critical care detailing the clinical outcomes and a 100 critically ill COVID-19 patients with severe inflammation and refractory lung failure, using cytosorb with ecmo to achieve enhanced lung breast or.

Overall 90 day survival was high at 74%.

And in a post hoc analysis patients who were treated before the median treatment time of 87 hours.

Even higher survival at 82% compared to 66% survival in patients treated after 87 hours. In addition, those treated in the early group had significantly shorter medium duration times on mechanical ventilation.

Ecmo.

Mkay ecmo on the in the Blue lower left hand graph.

Mechanical ventilation in Red.

An ICU stay in green.

Overall, our results compare favorably to the approximately 50% survival reported by also or the extra corporal life support organization.

And there are COVID-19 registry survival data, where they looked at Ecmo used alone in this population.

Our data support the strategy of early combined used to.

Merck to treat severe <unk> for acute respiratory distress syndrome, and refractory lung failure and is a prime example of our hit early hit hard treatment philosophy.

So this and our current company sponsored trials such as the <unk> refractory septic shock randomized control trial and the international caused less critical illness registry incorporate our evolving understanding of how to achieve better and more consistent results with cytosorb.

So been working to drive earlier usage of Cytosorb in the appropriate patient through a number of different ways, including for example, pursuing a fair and optics strategy.

Other words, using a diagnostic test to guide patient selection and timing of Cytosorb therapy as we're doing in our collaboration with <unk> in the field of liver disease.

Got it.

<unk> also local perfusion machine as were doing with the pure just platform from the key cell that can run cytosorb.

Well without needing to wait for patients to develop kidney failure and go on to dialysis.

So with that I'd like to turn it over to Kathy to now cover financial highlights for the quarter Kathy.

Thank you, Phil and greetings to everyone.

Today's call.

Let's start with our first slide on second quarter revenues.

For the quarter ended June 30th 2023, total revenue, which includes product sales and grant revenue was $9 4 million compared to total revenue of $8 5 million in the second quarter of 2022, which is an increase of approximately 11%.

Product sales for the second quarter, 2023 were $8 $1 million compared to approximately $7 3 million for the second quarter of the prior year and our second quarter 2023 product gross margins were 74% compared to 67% for the <unk>.

Quarter of 2022, and 68% in the first quarter of 2023 and this predicted improvement in gross margins is expected to continue throughout the year as we fully complete all the startup activities associated with our new manufacturing plant and continue to ramp up production.

Our second quarter Grant revenue was $1 3 million compared to $1 2 million in the same quarter of the prior year next slide please.

For the six months ended June 32023, total revenue was $18 $9 million and approximately 10% increase over the $17 2 million in total revenue for the same period of 2022 first half 2023 product sales were 16.

<unk>.

Compared with $15 $3 million in the same period of 2022, and grant revenue was $2 $9 million in the <unk>.

First half of 2023 compared to $1 9 million in the prior year.

Next slide please.

So this next chart depicts our trailing 12 months product sales and it's broken down into COVID-19 related and core non COVID-19 related product sales.

Our core product sales of $30 1 million in the trailing 12 months period ended June 32023. They are just slightly behind core product sales of $37 million in the trailing 12 month period ended June 32022.

This was due to the difficult market conditions, including a shortage of health care workers fewer hospital beds less surgical procedures as well as other factors that we have discussed in prior earnings calls.

Phil mentioned, we are continuing to see improvements in the marketplace, including our sales team's ability to better access to health care workers in the hospital and a return to face to face discussions with physicians in the market next slide please.

And this slide shows our quarterly product sales broken down again by COVID-19 related and non COVID-19 related core product sales and as you can see over the past five quarters there've been no COVID-19 related sales.

Most recent three quarters have demonstrated sequential consecutive quarter over quarter growth in product sales with $8 1 million in quarterly sales Q2, 2023 represents the highest quarter of core non COVID-19 related sales since the COVID-19.

Pandemic was contained next slide please.

And I'd like to wrap up my remarks today with some comments about our cash position as of June 32020, we had approximately $14 8 million in cash and cash equivalents, which includes $1 7 million of restricted cash.

This includes $5 million of loan proceeds received from our debt facility in December 2022.

Now one of our key objectives for 2023 has been to reduce our cash burn and maintain tight control over expenditures and I'd like to elaborate on our progress on this over the past year, we took strong actions to reduce our quarterly cash burn such that our quarterly cash burn over the first half of 'twenty.

'twenty three averaged approximately $4 $5 million, which is down significantly from the average quarterly cash burn in the first half of 2022, which was approximately $11 million.

We continue to maintain tight control over cash guided by a strict 2023 operating budget prioritizing spend in key programs and pipeline products are spending is fully aligned with our strategic priorities in particular, the completion of our star key clinical trials designed to obtain U S F.

D a marketing approval.

That will conclude my remarks for today and at this time I would like to turn the call back to Phil for concluding comments.

Phil.

Okay.

Hello.

Okay.

Yeah.

Well Ed.

As a reminder, if you do.

I have a questions are one why not protect.

If we can make sure to mute, but I apologize right now.

I apologize thank you.

Yes, so thank you very much Cathy apologize for that.

Today Cytosorb drives our growth.

Cytosorb forms the foundation of our company with an EU approved product that is sold around the world that has generated approximately $200 million in sales since launch in more than 200000 human treatments around the world.

It is a high margin razor blade business model with industry top tier 80, plus percent blended product gross margins.

And it has had strong validation by customers partners and government agencies.

With current sales that supports near breakeven less clinical trial costs, which we believe helps to derisk the company and the investment opportunity.

We believe cytosorb represents the fuel for strong future growth.

<unk> growth targeting the $20 to $30 billion worldwide total addressable market of major unmet medical needs in critical care cardiac surgery, as well as liver and kidney disease and we believe this gives quite assortments, but potential upside of a biotechnology company with a lower risk profile of our high margin medical device company with sales.

But soon we believe that the story could change with Cytosorb and drugs Zorba HR, representing dual growth engine for the company where.

We are racing to the finish of Star key where we are rapidly nearing the completion of the study expected imminently with topline data expected later this year.

To start <unk> successful and drugs, our ETR achieved U S FDA and health, Canada regulatory approval, we intend to commercialized drugs, our ATR in both the U S and Canada, a potentially major second engine of growth working in tandem with Cytosorb to drive sales.

Drug stores May open an expected initial U S and Canadian total addressable market of $300 million to $350 million for Brilinta alone.

Which could expand should brilinta go generic <unk>.

Where we expect significant penetration given the major unmet medical need indicated by our FDA breakthrough device designation.

If successful this could transform site assortments into a dual U S and international growth company.

Prospective institutional retail shareholders are excited about and have been waiting for and that can create potentially significant value.

With that.

The formal remarks, operator, please open the Q&A session.

Okay.

Thank you Steve.

On your Touchtone telephone.

Please make sure your mute button is turned off to allow your signal to reach our equipment one moment.

Our first question.

And our first question will come from Joshua Jennings of TD Cowen Your line is open.

Hi, good afternoon, Thanks for taking my questions and congratulations on completing enrollment for <unk>.

And Kathy congratulations on your retirement.

Was hoping to just get a refresher and I apologize for this basic question, but just.

So if you could help us with.

And us about the differences just in the devices drug Zorba ETR versus Cytosorb and please I'm asking the question is just the.

The study I think cytosorb adsorption drink emergency Craig.

Cardiac operations in patients at high risk of bleeding.

I believe got got it.

St Assortments.

Sorry, EU approval or CE Mark approval.

The indication to remove.

Okay, that's robotics credit credit thoracic surgery, and just with that data that's out there and trying to kind of.

Use that as a signal for the prospects of success for <unk> I, just want to be reminded of the differences of those two devices.

Yeah, Thanks, very much Josh.

So the drug for uses an equivalent polymer technology to Cytosorb.

But.

Drugs are HR is more of a drug removal system with bloodlines and other things that allow us to connect to the heart lung machine.

So from a technical perspective, what Cytosorb can do drugs are can do so.

So if that is helpful.

Absolutely.

And just thinking about the interim analyses and getting through the Eddie.

Changes in <unk>.

The study protocol.

The clear positive signals on the.

The safety side, but is there any any I guess clinical signals you would put forward either from real world experience with Cytosorb for the syndication in Europe or clinical data, including that study that I just referenced in terms of on the efficacy side to start you did this signals that investors should be.

Really considering as they are.

Trying to analyze the potential success of our Star T study.

I can turn that over to Mike as Mike would you like to handle that and I can color.

Thanks.

Thanks, Phil and thanks for the question.

So the.

<unk> mentioned previously we have announced in our last earnings call that we're going to forego the interim analysis based on the speed of enrollment so the fact that we.

We completed the study so soon would not have allowed significant amount of time sufficient amount of time for the interim analysis will be performed.

However by foregoing that we did not have.

Not us northern D SMB any further insight into the efficacy side.

And therefore now the data remains fully blinded as they're being entered by the sites that will undergo that process.

<unk>.

Being validated and clean leading to database lock as you heard earlier and obviously after that we will pursue the final analysis of the topline results of the study so until then.

We only have the <unk> review of the safety information of the trial, which we already reviewed today. We had two of those reviews that were both unremarkable without any findings or without any recommendations for changes in the trial.

So that's a long way to tell you that as of now the data remain blinded, but we do have the positive feedback for the safety of the study.

No. Thanks Ed.

Crystal frankly.

Safety reviews as soon as the interim analysis and then maybe lastly, just yes.

Speaking about maybe getting a little bit ahead of what you.

Good thing about the plans for restart.

Potentially.

Kicking that study off bridger onto another question removal.

We'll be catalysts.

If you think about the decision tree, we need to see success in Star T.

Brian .

Prior to taking the matter, we're initiating the sturdy trial. Thanks a lot.

Okay.

Try to respond to that one as well.

So the start of the trial is targeting an addressable population, that's even larger on the deck cargo of population.

And we've seen that not just tomorrow literature review of the numbers that are out there by primarily from the direct feedback from the sites. So we believe that the opportunity.

These two blockbusters zero right now liquidity is even greater.

For Brilinta. So in that regard is definitely an opportunity worth pursuing.

In relations to start D.

We are.

Now in the in the <unk>.

Very good position that we have the full apparatus to execute and study in place from our clinical team our entire clinical team all of our vendors and our partners that we're working to execute the study. Most importantly, the site network from start Tvs are highly performing sites that did excellent and star T. So we believe that started D. Once resume.

We'll actually be efficiently executed.

And be able to enroll fast.

The results from start it will be very helpful of course, especially relating to the safety of the device. Since the application is very similar as you know the star trial is targeting the same use of the device intra operatively for.

For patients undergoing cardiac surgery, so theres a lot of similarities between the two trials that we discussed previously but more importantly, now we have the playbook the right partners and the right sites.

To execute.

<unk>.

Part of the trial.

Excellent. Thank you very much.

Okay.

And one.

Quick question.

Okay.

And our next question will be from Jan <unk> of B Riley Your line is open.

Thank you for taking my question, maybe I can start with the high level question first then.

A follow up so first during your market research sale can you remind us the trend of using antidote for anti coagulant such as Amdocs.

<unk>, perhaps the band in the U S and EU. Thank you.

Sure.

Actually Mike this.

This is <unk>.

Gil question for you.

Sure.

Yeah.

Thank you for the question. So the use of these reversal agents that are approved in the marketplace now spin.

Specifically andexanet that is indicated for the reversal of the drugs will referenced before the direct oral anticoagulants like they're relatively illiquid.

It's been approved in the in the presence of severe life threatening bleeding. So those drugs are used with somebody has suffered a life threatening bleed. The usual measures are not successful in stopping the bleeding and then they applied.

The population that we're addressing is actually much larger populations. These are patients at risk for bleeding. So if you can imagine these are patients who are coming in with a heart attack. They have their cardiac angiogram, they see that they need surgery, because they're receiving the drug that's sitting waiting for the drug to wash out.

At risk for having a second heart attack for example, but they are not bleeding.

So in that population.

As of now they are available solutions to help them harvest timely operation a safe and timely operation. So these patients now are waiting in the hospitals for a long time.

The drugs that were referencing would only be indicated if they were bleeding.

In addition to.

Case reports with these drugs were used in the setting of patients heading into surgery, especially relating to their health and eloquence the reversal agent Andexanet can interfere.

With the necessary anticoagulation that required when people are put at the heart lung machine. So it poses also a complicating factor that may put.

Put the operation of at risk and therefore are not widely used in that setting and they are certainly not approved for that application.

The reversal agent for the bigger trend, which has a very very small piece of the pie of the market share for these anticoagulants, thus carried indication.

That can be used because it hasn't been studied also in people heading to cardiac surgery.

Having said that there is some few patients on this drug again at least in our sites, we have not experienced any of that.

Clinical teams using these drugs in the setting there are opting to just wait.

And let the drug's washout, which is exactly unmet need that we believe can target by allowing the surgery to proceed while at the same time, removing the offending agent and reducing the bleeding risk.

Yes got it. Thank you so much for the clarification are there as a fall off.

I'm curious about the U S market value, how a third party all third party distributor can you clarify how you used blades the responsibility where you take on the responsibility of marketing and ICU patients and then they do their face to face interaction with surgeon. Thank you.

Okay.

Vince do you want to take that.

Sure Phil I'll take that thanks.

In the in the U S. We plan to use a blended approach of direct sales and distributors. We have some strong distributors that we developed.

And during the Covid period, when we're selling cytosorb ins for Cytosorb under the EUA.

We will use those we will use those distributors are no select regions.

Since they have very very close relationships with the cardiac surgeons.

And so.

The rest of the of the U S. We intend to focus on direct sales, specifically with probably a sales force of about 19 people.

Got it thank you for the clarification.

Okay.

One moment for our next question.

And our next question will come from Christopher Campbell of Jeff J F. Your line is open.

Hey, Thanks for taking the question. This is Chris on for Mike I was wondering if you could elaborate elaborate little more on the trends youre seeing in the core German market and how that's trended so far through the third quarter.

Yes.

Thanks, very much Chris.

Christian would you like to comment on that.

Only so much we can say about a.

Third quarter results, so far by Christian.

Feel free to trial.

Okay. Thank you and thanks for the question.

So as Kurt said.

We cannot obviously.

Comment on the third quarter.

But a few.

As seen already in the.

Second quarter nicely.

Significant improvement compared to last year.

This is mainly because we have a much better access to the hospital and also will be will be.

Terry.

The next half year.

By a number of applications, we have received the first half.

So all this together.

As to balance those two critical complicated integration in the hospitals.

Still ICU capacities blocks.

Because there's a shortage of stock.

Thats true.

Yes.

Vascular interventions compared to before.

Pandemic.

But.

The charts.

<unk> shown by Kathy show that we are already.

Much higher with the core business compared to the.

Uh huh.

The business before the pandemic, but also considering the coal business during the pandemic.

It's a stable.

Improvement.

And the second half.

Sure <unk>.

<unk>.

Boss Orange color.

Okay.

Yeah.

For a moment our next question.

Okay.

And our next question will come from Jim Molloy with Alliance Global Partners. Your line is open.

Hello. This is <unk>, calling in for Jim Loree. Thank you for taking my questions.

With enrollment now complete for the <unk> T trial on top line data set to be announced by the end of the year. What type of data are you specifically anticipating in order to submit your regulatory submissions to both.

<unk>, Canada.

I think you are.

<unk> Arena would you like to.

Hey, Ken.

Yes, I can take that.

Oh, we'll come to the.

We can see that the.

At this point, we don't know the results of our clinical study Scotty, but oh. It is randomized control study and data blinded until the final analysis.

The completed.

These data would be sufficient to support regulatory filings in the United States and in Canada.

This data also.

<unk> might be used in some other territories, but at this point are the United States and Canada.

Our regulatory submissions with the novel do rely on that data.

And maybe Mike you can talk about the.

Mike is maybe you could talk about the primary endpoint in the <unk>.

The secondary endpoints as well.

Sure.

Thanks for the question.

So I think like with any regulatory review the agency will have.

Two performer benefit risk analysis for this proposed new.

Intervention, so starting designed to provide all that information so.

First of all the safety and we already talked about this on this call. We had some interim reviews and we have a final review as well so safety will certainly be some.

Appointed by the data Star T.

For the business for review by the agency for efficacy. We are looking at two specific things and start T. <unk>.

First of all we want to establish the mechanism of action. So we're looking for the drug removal.

The drug to actually be.

Validated in vivo, we're going to be measuring the levels of the drug before surgery. After surgery Thats actually the key secondary endpoint of the trial.

To show that the drug is effectively removed from circulation compared to the control arm. What the device is not used the second piece of the efficacy, which is actually the primary endpoint of the trial is a composite endpoint looking at various <unk>.

The cost of the bleeding perioperative bleeding. So we're measuring things like transfusions are we measuring things like the amount of blood that comes out of the chest. After the operation and that will give us the picture.

The overall bleeding rates between the integration on the control arm, So I think.

The overall inflammation from the start that trial will be sufficient to for the agency to review to come up with the benefit risk analysis if necessary.

This process.

Understood and you also go over the joint marketing agreement that you entered with Humira <unk> and you know that landmark diagnostic tool and then what might you expect in terms of be now increased customer awareness and use for both of the products involved.

Yes, Chris.

Chris why don't you take that one.

Yes, Thank you Phil.

Thank you for the question as Phil had mentioned <unk> has a really innovative noninvasive liver function test and basically what it helps physicians do is to assess how much liver function.

Ah patient may have an.

They got their start with pre surgical planning, but I think ideally what we hope to do.

Is to leverage the test and as Phil had mentioned use this as a diagnostic test.

To help stratify and identify the right patient to wood.

Ultimately be best suited for our treatment. So that's I would categorize that as maybe.

Our mid to later objective.

<unk>.

The partnership but today.

We're leveraging the commercial organizations.

To get in front of key customers for our product customers like Herpetologist, hepatic surgeons and others and I think the.

The real near term benefit of this is that the partnership can be valuable because it will help introduce this to customers who may not.

Yet be familiar with cytosorb, but could be.

Good buyers of the product. So I think this is just another way for us to.

Accelerate our commercial efforts in the field of liver therapy.

Got it thank you for taking the question.

One moment for our next question.

Yes.

And our next question will come from Sean Lee of H C. Wainwright. Your line is open.

Okay.

Good afternoon, guys and thanks for taking my questions.

My first one is on the U.

The U S market.

Potential U S market for drug swap ETR, So you mentioned <unk>.

Currently of $250 million opportunity I was wondering how many of these cardiac surgeries.

That are using <unk> in patients you can take <unk>.

You bet.

It could be a benefit from drugs of ETR.

Yes.

Hi, Thanks, Sean Mike would you like to take that one.

Sure.

So what still showed you today is that these acute coronary treating.

Syndrome patients, which is about the.

$1 million.

Admissions are such in the U S every year.

<unk> the use of anti platelet drugs Aspen is one but they also require why don't you speak to why 12 inhibitors.

The the position like Angola within that marketplace is constantly improving based on <unk>.

Very good efficacy data, especially over Plavix.

The number of patients on <unk>.

Have been growing over the past few years, and we believe that trend will continue.

Two.

To go up with the generic availability of the drug and obviously hopefully potentially the availability of drugs or.

So from all those patients about a 100000 of this amount of this $1 billion about 10% when they presented with Acs will require surgery.

And that surgery takes place in the hospital. These are not patients that are stable enough to be central to be allowed to stop the drugs and then come back for surgery.

Risk of bleeding they are staying in the hospital being monitored and currently.

Hospitals are waiting awaiting multiple days until they can be operated.

The amount of patients from those 100, thousands that are in fact high galore.

We estimate like I said before we have estimated in the past that the markets are for that cargo was approximately half of that market.

It may potentially grow even more in the future.

So that's those are the assumptions behind the number that Phil has quoted previously about the total Mike.

Total addressable market with this device so.

So just so to summarize about 10% of patients presenting with an acute coronary syndrome need to go to surgery. These patients are.

On July 12 inhibitors, and aspirin dual antiplatelet therapy, and the percentage of a cargo of patients within that population is high and we will continue to grow we believe with the generic availability of the drug.

Great. Thank you thank you for that.

Second question is on your.

Commercial planning in the U S and Canada. So you mentioned that you expect to start building out.

Direct sales team starting next year. So I was wondering would you be pursuing a <unk> sales or.

The hybrid model where some.

Direct sales essentially been some market with distributors and in terms of personnel.

The size of the sales team that Youre looking at.

Okay.

Yes. This would you like to cover that.

Sure. Thanks, Sean for the question. So we do plan to do a hybrid model Sean.

We have some good distributors from the Covid EUA program that are actually our specialist in.

Cardiopulmonary bypass equipment and so we will combine that with a direct sales force of about 19 people I think with the distributors they have the established relationships.

And so we would obviously leverage their rolodex to get into those counts quicker.

Quickly to establish the use of drugs or ATR and then in the rest of the country.

We'll go in with a direct sales force and that will be roughly about 19 people.

Does that answer your question I think.

I think the other thing to note is that at the price points that we're talking about in the United States.

<unk>.

Talked about a number of about $5000 per cartridge compare Q1 thousand dollars for Cytosorb and European Union, our product gross margins for drug serve HR expect it to be.

Well above 90%.

So with a highly profitable high margin disposable device such as drugs are ATR.

Payback on sales of that product is.

Is very quick and I think I was telling.

Someone the other day that.

We have a lot of experience in terms of.

Commercialization experience based upon our what we've been doing in Europe . We again have been in the market for now 11 years with Cytosorb and have a full fledged fully operational sales and marketing commercialization team that has the Canada.

Sales and marketing folks, but also product support clinical support clinical and medical affairs and.

Application specialists.

Service et cetera et cetera.

We hope to replicate that here in the United States and know how to do this cost effectively.

And so we're looking forward to the opportunity to do that here in the U S.

Okay, Great. That's very helpful and thanks again for taking my questions.

Again, if you can help me thanks.

Again, if you do have a question. Please press star one one on your Touchtone telephone again, Please press star one on your telephone. Our next question will come from Tom occur of Zacks FBR. Your line is open.

Hi, guys.

Most of my questions have been asked just a couple quick ones on some financial ones.

You guys don't talk about those programs under development much any more any comment on that.

T mobile phone and the contrast, and that sort of stuff are you still working on those efforts.

Absolutely the hemoglobin PGA program is the beneficiary of more than 15 million government Grant funding, particularly from the department of defense.

It is the priority actually car R&D program outside of the work that we're doing on Cytosorb and other other key programs.

And it is well funded.

And so if you are seeing a lot of the press releases, we put out on these <unk>.

Technologies.

We have funding to really bring it to clinic.

Clinical studies and potentially in commercialization.

No.

We are active on that I think we're making some outstanding progress.

We are looking to address multiple different markets.

Including military markets, including.

Okay.

Civilians transfusion market as well as plasma processing markets with our technology, because we believe that universal plasma has a place in each of those verticals.

We really look forward to the day when.

A bag of freeze driving of our suppliers is on every or multiple bags the freeze dried plasma.

And every ambulance for example in the World.

Given that plasma is a lifesaving product with.

Lots of beneficial.

Components, such as quite relationship bankers and other things that are very useful for trauma patients and are much better at resuscitating patients than what theyre using today, which is simple failing and so you can imagine how large this opportunity could be worldwide and it's one of the reasons why we're very excited about that.

Program, which I'll talk about it much but be very clear that we are making some nice progress.

Okay, great. Thanks, a couple of quick financial questions, though.

Burn rate expected to remain around $4 5 million.

Cause you guys stated in the press release finally through 2023, but.

We have substantially more liquidity than that.

Just trying to.

Get that delta and figure that out.

Kathy did you want to.

Got that.

Yeah, I'll take that thanks, Phil and thank you for the question.

Our cash burn moving forward it is estimated to be around $4 million a quarter.

Okay.

That's just what we're expecting is as we move into 'twenty.

Out of 2023 and into 2024 of course.

Beginning with when we begin to have sales in the U S of drugstore of ATR. So.

I already mentioned that it's a very quick payback.

And it is and we're targeting average selling prices of around $5000 versus the $1000 that we sell cytosorb for currently.

So what are now up to 80% gross margins will be very high 90% gross margins on those products. So so there'll be very profitable. We do have an ATM in place we do have the ability.

To borrow additional debt if need be to extend the.

Cash runway.

Okay, I think I understand but it seems like a fair amount of liquidity and a $4 million burn rate you'll be funded beyond 2023, instead of through 2023.

But maybe I'm reading into that too much.

You are reading it right it will be beyond 2023.

Okay.

That's all that's all I have for today.

Thanks, Tom.

Okay.

Okay.

Well.

If there are no.

Operator, Sir I'm sorry, there are no further questions I would like to turn the call back to you Phil for closing remarks.

Okay.

Thank you Tanya.

Well. Thank you everyone for joining the call today and a special thanks to the analysts who have some excellent questions.

You do have any other questions. Please feel free to reach out to Kathy Bloch.

This week at K block it quite Assortments dot com or me at Pecan and Cytosorb is dot com and we will reply to your questions where possible. We look forward to our next quarterly call. Thank you everyone very much have a great evening.

Thank you that concludes our conference for today I'd like to thank everyone for their participation.

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