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Q1 2022 total revenue was $8.7 million , including product sales of $7.9 million . Core non-COVID-19 product sales were an estimated $7.6 million , and on a constant currency basis were comparable to core product sales a year ago. Product gross margins were 80%.
MONMOUTH JUNCTION, N.J. , May 3, 2022 /PRNewswire/ -- CytoSorbents Corporation (NASDAQ: CTSO), a leader in the treatment of life-threatening conditions in the intensive care unit and cardiac surgery using blood purification via its proprietary polymer adsorption technology, today reported unaudited financial and operating results for the quarter ended March 31, 2022 .
CytoSorbents Reports First Quarter 2022 Results and Revises 2022 Outlook
Dr. Phillip Chan , Chief Executive Officer of CytoSorbents stated, "A key takeaway from our first quarter results is that our core non-COVID-19 product sales were stable, on par with Q3 and Q4 2021, and comparable with Q1 2021 product sales on a constant currency basis. We did this despite the many business challenges and uncertainties created by COVID-19, the Russian-Ukraine war, inflation, currency exchange volatility, and other factors out of our direct control. As anticipated, COVID-19 related sales were nominal for Q1 2022 due to the low severity of recent COVID-19 infections, and primarily accounted for the difference in product sales from a year ago."
"During Q1 2022, CytoSorb sales in Germany , the Company's largest market, lagged as the country experienced its highest rates of COVID infections since the pandemic began. When we provided our 2022 outlook in early March, the Omicron wave appeared to be peaking, but was supplanted by a massive wave of BA.2 variant infections that drove a new peak of more than a half million new COVID-19 infections a day by the end of Q1 2022 - seven times higher than in the prior quarter and 21 times the peak seen a year ago. We have previously discussed how these high rates of COVID-19 indirectly reduce CytoSorb sales by impacting hospital budgets, staffing, elective procedure volumes, ICU capacity, and sale representative access due to visitation restrictions and illness. Fortunately, COVID-19 infection rates have dropped rapidly in the past several weeks. However, the BA.2 surge, which still accounts for nearly 100,000 new infections a day in the country, will likely delay the expected recovery in Germany . We are seeing a carryover of Germany Q1 sales trends to the current quarter, and although this may change, it has prompted us to conservatively revise our 2022 guidance (see "Revision of 2022 Outlook Guidance" below). That said, we are focused on the more important big picture where current trends portend an end to the global pandemic this year as COVID-19 is expected to morph into a much less virulent disease like seasonal influenza. When this happens, we want to be well-positioned to capitalize on what we expect will be a steady improvement and return to growth in our core business."
Dr. Chan continued, "We remain confident that the slowdown in our growth is mainly driven by reversible COVID-related issues, and expect that these too shall pass. In the meantime, we have a solid balance sheet anchored by $44.7 million in cash and no debt at the end of Q1 2022 to weather the current turbulence. We are also managing our business proactively, continuing to invest in key areas such as our U.S. pivotal STAR-T and STAR-D trials, while instituting tighter cost controls to reduce our cash burn by an additional $2 million per quarter against budget. Our goal is to end this year with more than $30M in cash, which exceeds our projected cash need in 2023 and importantly, is expected to provide adequate funds through the anticipated enrollment completion of both the pivotal U.S. STAR-T and STAR-D trials. We also have the additional financial flexibility from our $15 million Bridge Bank term loan commitment to add debt if desired."
"Meanwhile, we are not just waiting for conditions to improve. Rather, we are focused on building this company and solidifying our leadership as the treatment pioneer of life-threatening conditions using blood purification. We are laser-focused on four essential objectives that we believe are the key to driving sustainable, long-term value for shareholders:
To provide more color on our growth strategy, we highlight several examples of important initiatives that we have been executing upon during the pandemic that are expected to drive improved results as the pandemic abates, as well as future, longer-term growth.
Dr. Chan concluded, "We firmly believe we are a solidly financed company with a robust strategic and tactical plan that positions us well for both near-term and long-term success once the effects of the pandemic abate. Although we know it has been challenging, we thank you for your understanding and continued support."
Clinical Studies and Data Publications Update
Results of Operations for the quarter ended March 31, 2022 compared to the quarter ended March 31, 2021
Revenues Total revenue, including product revenue and grant income, for the first quarter of 2022 was $8.7 million , down 18% from $10.6 million in the first quarter of 2021. Product sales in the first quarter of 2022 were $7.9 million , down 22% from $10.1 million in the first quarter of 2021 due to a decrease in direct sales, primarily from lower sales in Germany due to COVID-19 pandemic market conditions, as well as the impact of the decrease in the average exchange rate of the Euro to the U.S. dollar, which negatively impacted first quarter 2022 product sales by approximately $0.6 million . Due to a surge in COVID-19 case in the first quarter of 2022, many hospitals throughout Germany either maintained or reinstituted restrictions such as visitation rights to non-essential visitors. However, unlike prior waves in Germany , the rates of severe COVID-19 illness requiring ICU care, and death have been comparatively very low. This is being partly attributed to high rates of vaccinations that are associated with reduced severity of illness, reduced need for hospitalization, and risk of death. These factors led to a decrease in both COVID-19 and core non-COVID-19 CytoSorb sales in Germany . In aggregate, COVID-19 related sales in the first quarter of 2021 were estimated to be $0.3 million , compared to $1.8 million in the first quarter of 2021. Core, non-COVID-19 sales declined 9% from $8.3 million in the first quarter of 2021 to $7.6 million in the first quarter of 2022.
Cost of Revenues Cost of revenue for the first quarter of 2022 was $2.3 million compared to $2.8 million for the first quarter of 2021. Product gross margins were approximately 80% for the first quarter of 2022, compared to approximately 77% for the first quarter of 2021, due mainly to the impact of non-recurring costs of approximately $0.7 million in the first quarter of 2021 related to prior year tariffs following an audit by the German Customs Authorities that did not recur in 2022.
Operating Expenses Operating expenses for the first quarter of 2022 amounted to $14.2 million , a 33% increase from $10.7 million for the first quarter of 2021. Research and development expenses increased from $2.3 million in the first quarter of 2021 to $4.2 million in the first quarter of 2022 due primarily to an increase in clinical trial and related costs, rent expense on our new facility and other R&D costs. Selling, General & Administrative (SG&A) expenses increased 19% to $9.2 million in the first quarter of 2022 from $7.7 million in the prior year period due primarily to an increase in salaries, commissions, and related costs of $0.9 million , an increase in occupancy costs related to rent on our new facility in Princeton, NJ of $0.4 million , and an increase in sales and marketing costs, which include advertising and conference attendance of approximately $0.3 million , among other items. These SG&A expense increases were partially offset by lower non-cash restricted stock expense of $0.3 million , among other decreased expenses included within SG&A. Legal, financial, and other consulting expense increased from $0.7 million in the first quarter of 2021 to $0.8 million in the first quarter of 2022.
Liquidity and Capital Resources Since inception, our operations have been primarily financed through the private and public placement of our debt and equity securities. At March 31, 2022 , we had current assets of approximately $55.9 million including unrestricted cash on hand of approximately $43.0 million and had current liabilities of approximately $14.7 million . As of March 31, 2022 , $25 million of our total shelf amount was allocated to our ATM facility, all of which is still available. In addition, we have $15 million of debt availability, providing financial flexibility, if needed. In April of 2022, we received approximately $740,000 in cash from the approved sale of our net operating losses and research and development credits from the State of New Jersey .
We believe that we have sufficient cash to fund the Company's operations beyond twelve months from issuance of the financial statements for the quarter ending March 31, 2022 .
The macro environment in which we operate remains difficult to predict given the complex drivers of our business, the global nature of our operations, and external factors such as the COVID-19 pandemic, the Russia -Ukraine war, inflation, currency exchange volatility, and other factors that are not in our direct control.
As evidence of this, since our prior guidance on March 8, 2022 , where we anticipated growth of 20% or more in 2022 core product sales, Germany has since suffered a major surge in new COVID-19 cases, driven by the Omicron BA.2 variant. Although infection rates are now falling, we believe this has delayed the recovery of German hospitals and our German business. Given the importance of Germany to our financial results, and given that we see some Q1 sales trends carrying over to Q2 2022 (although this may change), we are revising our guidance to the following:
We expect COVID-19 cases and hospitalizations worldwide to continue to decline and expect to reach a more normalized operating environment as the year progresses. Because of this, we expect continued and progressive improvement in our underlying core non-COVID-19 business and expect growth in 2022 of core product sales on a constant currency basis. However, due to our limited visibility, we are removing specific growth targets with plans to revisit this later in the year. This expectation assumes:
For additional information, please see the Company's Form 10-Q for the period ended March 31, 2022 , filed today with the SEC on http://www.sec.gov.
The company will conduct its first quarter 2022 results call today at 4:30 p.m. Eastern time .
Conference Call Details: Toll free: 1-877-451-6152 International: 1-201-389-0879 Conference ID: 13728663
It is recommended that participants dial in approximately 10 minutes prior to the start of the call. There will be a simultaneous live webcast of the conference call that can be accessed through the following audio feed link: https://viavid.webcasts.com/starthere.jsp?ei=1541445&tp_key=979468cd12
An archived recording of the conference call will be available under the Investor Relations section of the Company's website at http://cytosorbents.com/investor-relations/financial-results/.
About CytoSorbents Corporation (NASDAQ: CTSO) CytoSorbents Corporation is a leader in the treatment of life-threatening conditions in intensive care and cardiac surgery using blood purification. Its flagship product, CytoSorb®, is approved in the European Union with distribution in more than 70 countries around the world as an extracorporeal cytokine adsorber designed to reduce the " cytokine storm" or " cytokine release syndrome" seen in common critical illnesses that may result in massive inflammation, organ failure and patient death. These are conditions where the risk of death can be extremely high, yet few to no effective treatments exist. CytoSorb is also being used during and after cardiothoracic surgery to remove inflammatory mediators that can lead to post-operative complications, including multiple organ failure. More than 170,000 cumulative CytoSorb devices have been utilized as of March 31 , 2022. CytoSorb was originally introduced into the European Union under CE-Mark as a first-in-kind cytokine adsorber. Additional CE-Mark label expansions were received for the removal of bilirubin and myoglobin in clinical conditions such as liver disease and trauma, respectively, and both ticagrelor and rivaroxaban during cardiothoracic surgery. CytoSorb has also received FDA Emergency Use Authorization in the United States for use in adult critically ill COVID-19 patients with imminent or confirmed respiratory failure. The DrugSorb™ -ATR Antithrombotic Removal System, which is based on the same polymer technology as CytoSorb, has also been granted FDA Breakthrough Designation for the removal of ticagrelor, as well as FDA Breakthrough Designation for the removal of the direct oral anticoagulant ( DOAC) drugs, apixaban and rivaroxaban, in a cardiopulmonary bypass circuit during urgent cardiothoracic surgery. The Company has initiated two FDA approved pivotal trials designed to support U.S. marketing approval of DrugSorb-ATR. The first is the 120-patient, 30 center STAR-T ( Safe and Timely Antithrombotic Removal-Ticagrelor) randomized, controlled trial evaluating the ability of intraoperative DrugSorb-ATR use to reduce perioperative bleeding risk in patients on ticagrelor undergoing cardiothoracic surgery. The second is the 120-patient, 30 center STAR‑D ( Safe and Timely Antithrombotic Removal- Direct Oral Anticoagulants) randomized, controlled trial, evaluating the intraoperative use of DrugSorb– ATR to reduce perioperative bleeding risk in patients undergoing cardiothoracic surgery on direct oral anticoagulants, including apixaban and rivaroxaban.
CytoSorbents' purification technologies are based on biocompatible, highly porous polymer beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. Its technologies have received non-dilutive grant, contract, and other funding of more than $39.5 million from DARPA, the U.S. Department of Health and Human Services (HHS), the National Institutes of Health (NIH), National Heart, Lung, and Blood Institute (NHLBI), the U.S. Army, the U.S. Air Force, U.S. Special Operations Command (SOCOM), Air Force Material Command (USAF/AFMC), and others. The Company has numerous marketed products and products under development based upon this unique blood purification technology protected by many issued U.S. and international patents and registered trademarks, and multiple patent applications pending, including ECOS-300CY®, CytoSorb-XL™, HemoDefend-RBC™, HemoDefend-BGA™, VetResQ®, K+ontrol™, DrugSorb™, DrugSorb™-ATR, ContrastSorb, and others. For more information, please visit the Company's websites at www.cytosorbents.com and www.cytosorb.com or follow us on Facebook and Twitter.
This press release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, future targets and outlooks for our business, expectations regarding the future impacts of COVID-19 or the ongoing conflict between Russia and the Ukraine , representations and contentions and are not historical facts and typically are identified by use of terms such as "may," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements in this press release represent management's current judgment and expectations, but our actual results, events and performance could differ materially from those in the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks discussed in our Annual Report on Form 10-K, filed with the SEC on March 10, 2022 , as updated by the risks reported in our Quarterly Reports on Form 10-Q, and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We caution you not to place undue reliance upon any such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, other than as required under the Federal securities laws.
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Investor Relations Contact: Terri Anne Powers Vice President, Investor Relations and Corporate Communications (732) 482-9984 [email protected]
U.S. Public Relations Contact: Eric Kim Rubenstein Public Relations 212-805-3052 [email protected]
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