Hello, everyone. My name is Matthew Aspro. I'm with
our U.S. MedTech research team here at Jefferies. With me, we have CytoSorbents and the CEO, Dr. Phil Chan, as well as Pete Mariani, the CFO. We're going to start it off with a presentation, and then we'll end with some Q&A.
Thank you very much, Matt, and welcome. It's a pleasure to be here today, and thank you, everyone, for coming to this presentation. CytoSorbents is working to save lives together, and as a publicly traded company, please let me remind you of our safe harbor statement for forward-looking statements. At a glance, CytoSorbents is a platform blood purification technology for removing toxins and harmful substances from blood. It is a high-margin razor blade that we manufacture in the United States and is plug-and-play into the existing blood pump infrastructure in a hospital. Our flagship product, CytoSorb, treats life-threatening conditions in the intensive care unit as well as cardiac surgery, with record core product sales of $37 million on a trailing 12-month basis and 71% product gross margins. CytoSorb is EU-approved, with nearly 300,000 CytoSorb treatments delivered over 70 countries worldwide. Our second product is DrugSorb-ATR.
ATR is an investigational device used to reduce the severity of bleeding in patients undergoing CABG surgery on blood thinners. We have two FDA breakthrough device designations, and we're actively pursuing regulatory approval in the United States as well as Canada, in the United States through the De Novo application pathway, with a regulatory decision expected in mid-2026 and potentially sooner. Importantly, we are driving to cash flow break-even in Q1 of next year of 2026 and near-term profitability with a strengthened balance sheet as a key priority. The heart of our technology is a highly hemocompatible porous polymer bead, roughly the size of a grain of salt, that has the ability to remove harmful toxic substances from blood and other bodily fluids very easily through a combination of pore capture, surface adsorption, and concentration.
It has an excellent removal of a broad range of substances from whole blood and plasma. It is solid-state porous polymer chemistry that does not use affinity agents like ligands, antibodies, cells, or biologics, and it has 22 issued U.S. patents and multiple patents pending elsewhere in the world and has been the beneficiary of about $50 million in grants from the United States government, from places like NIH, DARPA, and DoD. Our technology, as I mentioned before, is plug-and-play into the existing blood pump infrastructure in a hospital, whether or not it's a dialysis or continuous renal replacement therapy machine, a hemoperfusion machine, an extracorporeal membrane oxygenation machine widely used in the intensive care unit, or a heart-lung machine in the operating room.
CytoSorb is helping to expand the dimension of blood purification as a powerful blood purification that does that removes a broad range of harmful substances that dialysis does not. You're very familiar that dialysis works like the kidney, removing small molecules and metabolic waste products, water-soluble substances, but we work like your other major detoxification organ, which is your liver, and we are capable of removing large molecules, fat-soluble substances, in particular cytokines, bacterial toxins, activated complement, proteins and peptides, and fat-soluble drugs. Dialysis, a membrane, typically has about 3/4 of a ping-pong table of surface area. We have seven football fields, U.S. football fields of surface area, or five European football fields of surface area in a single cartridge. Turning to our CytoSorb core business, CytoSorb controls massive inflammation, which is the heart of critical illness. Acute inflammation is the body's mechanism to fight injury and infection.
However, severe inflammation driven by cytokine storm can cause a chain reaction of problems that can end in organ failure and death. Massive uncontrolled inflammation can cause shock, can cause capillary leak, immune dysfunction, direct tissue damage, hypercoagulability, cell-mediated injury, microvascular dysfunction, just to name a few. Severe inflammation is the common thread amongst most critical illnesses that impact up to 60% of patients in the intensive care unit today and is directly correlated to increased severity of illness and risk of death. CytoSorb controls deadly inflammation by removing the fuel to the fire of inflammation and has demonstrated the reversal or prevention of many of these complications. CytoSorb targets deadly conditions that afflict millions of people all over the world.
In critical care, these are just some of them: sepsis, burn injury, pancreatitis, liver failure, acute respiratory distress syndrome, cytokine release syndrome from CAR T-cell immunotherapy, and then also in cardiac surgery, endocarditis, infected heart valves, aortic reconstruction, and importantly to our story, the removal of blood thinners that can cause potentially severe and unwanted bleeding. This is why CytoSorb continues to grow in ICU applications. Again, we have the potential ability to treat 40%-60% of patients in the ICU where severe inflammation plays a deadly role. If you're familiar with the blood purification industry, you recognize some of these players: Fresenius, Vantiv, B. Braun, and others. They're focused on chronic kidney disease that only typically impacts 10%-15% of patients in the intensive care unit, yet garner billions of revenue from this vertical.
We, on the other hand, again, have a much larger opportunity in critical care and aim to be the leader in this space. We continue to leverage a large amount of clinical data. Hundreds of publications have been published on our technology to date in a wide range of different applications in critical care as well as cardiac surgery. Sepsis, which accounts for roughly half of our treatments, and sepsis, which accounts for one in five deaths worldwide, is a massive market. For more than a decade, CytoSorb has collaborated with clinicians and scientists around the world to advance the treatment of sepsis and septic shock by complementing traditional antibiotics with the broad-spectrum capability of CytoSorb. Simply put, antibiotics treat the infection. CytoSorb helps treat the deadly inflammatory response by removing the fuel to the fire of inflammation that is causing the system crash.
Just a plug for a webinar that we had recently, feel free to, I'd encourage you to tune into this webinar that's been pre-recorded, and you'll have a better understanding of what it is and how we help treat septic shock patients. The second major opportunity that we have is DrugSorb-ATR, and this is an opportunity both in the United States and Canada, and this deals with the removal of blood thinners. Millions of people are on blood thinners to reduce their risk of heart attack and stroke. Particularly, acute heart attack patients commonly receive a super aspirin like Brilinta to improve clinical outcomes. Brilinta, or also known as ticagrelor, can cause serious and potentially life-threatening bleeding in patients that need to undergo urgent coronary artery bypass graft surgery.
The only antidote for this is to, just like you would do in elective surgery, wash out the drug for three- five days while you're still having a heart attack, right? Frequently, surgery can't wait, so patients now risk either bleeding during surgery, or they have to delay while they're having a heart attack, and that's not good either. They face complications like sudden cardiac arrest, for example. DrugSorb-ATR is a breakthrough designated device, FDA breakthrough designated device, intended to solve this pervasive and serious unmet medical need in the United States and Canada that puts tens of thousands of patients every year at risk and addresses a more than $1 billion total addressable market opportunity in the U.S. alone. Here's the use case of Brilinta in heart attacks. Patient has a heart attack. They go into the emergency room.
They get placed on aspirin and a super aspirin like Brilinta. All these patients will go to the cath lab. 90% will get a stent, but 5%-10% of patients will not be eligible for a stent and now need urgent or emergent open-heart surgery. If they do that, they will bleed. The only solution for this is to wait in the ICU at $6,000 a day for three-five days, step down or hospital ward to wash out the drug, and then to go to surgery. What we do is that we can bypass all of that, and we can eliminate that need to wait and help patients get the critical surgery that they need without delay while reducing or preventing bleeding complications. DrugSorb-ATR is a De Novo 510(k) eligible device. In the U.S., we ran a U.S.
and Canadian randomized controlled STAR-T trial that established DrugSorb-ATR as a De Novo eligible device. In doing so, DrugSorb-ATR must show that its probable benefits outweigh the probable risks to gain market clearance. Our initial De Novo submission that we had this year was reviewed and was denied primarily due to FDA's request for additional information to support efficacy and our proposed label indication. However, most of these issues have been resolved with three important outcomes from our discussions with FDA. The first one is that FDA recommended that we submit a new De Novo submission to provide robust analyses of real-world evidence demonstrating DrugSorb-ATR's effectiveness in clinical practice that were either not available at the time of submission, or not eligible for inclusion in the prior review and appeal due to FDA rules.
Secondly, FDA stated that there were no safety concerns, and this is very important because it significantly reduces the risk side of the De Novo equation. Under breakthrough device, as well as De Novo guidelines and least burdensome guidelines, FDA has established a precedence to provide market approval for safe to low-risk devices and allow post-market data collection, for example, a registry, to answer remaining questions on efficacy without holding up the marketing authorization. Third, FDA indicated agreement that a new De Novo review would be limited to the remaining open items from the first submission, which should help to streamline this process. From a regulatory timeline, last week, we submitted a formal pre-submission meeting request with supporting documentation. This is designed to drive a pre-submission meeting by the end of this year or early in Q1.
The idea of the pre-submission meeting is to get on the same page with FDA so that when we file the formal De Novo, that we're on the same page and we address FDA's concerns. We expect to file that new De Novo in the first quarter of 2026. That includes, again, robust analyses of real-world evidence that the FDA has not seen before. We anticipate mid-2026 regulatory decision, following a typical 150-day review process. However, that review may be expedited, because DrugSorb-ATR is still an FDA breakthrough device, and eligible for priority and interactive review. Again, FDA has already agreed that they would limit that review to open items from the first submission.
Now, turning to financial performance, just to give you a little bit of idea of our commercialization efforts abroad, we sell CytoSorb in more than 70 countries worldwide with nearly 300,000 treatments to date. We sell direct in Germany and nine other countries and through distributors and partners in the remainder of those countries. You can see here on the left-hand side that roughly 2/3 of our business are critical care. A 1/3 of our business is cardiac surgery. Roughly half of all of our uses is in the area of sepsis and septic shock. By geography, 42% is, this is trailing 12 months as of this last quarter, 42% is distributor and partner revenue, 24% is other direct, and 34% is Germany. The third quarter revenue was $9.5 million, a 10% increase from $8.6 million a year ago.
Performance was led by record sales in our distributor territories and strong sales in other direct markets. This was aided by a favorable euro- to -dollar currency exchange. We are currently undergoing a restructuring of our German sales team and processes to drive a return to growth and more consistent financial performance in 2026. Gross margins remained solid at 70% during the quarter, and we have a strong balance sheet with $9.1 million in cash as of the end of the third quarter. Recently, an amended credit agreement provides an additional $2.5 million in cash and a six-month extension of interest only to January of 2027, so a full year. On the left-hand side here, you can see our annual revenue. In blue is core CytoSorb sales. In purple are COVID-related sales.
And in green are trailing 12-month sales as of the end of the third quarter, $37 million versus $33.8 million in the comparable period a year ago. I want to note that our distributor and partner sales grew 14% to $15.6 million. Direct sales outside Germany grew 24% to $8.8 million, and Germany was roughly flat at $12.6 million. Importantly, with Germany, sales grew roughly 9%-10%. Without Germany, sales grew 17%. What we are focused on right now is returning Germany back to growth. It is one of our oldest markets. It has its own set of unique challenges, but with our restructuring, we anticipate that this will have a significant impact in 2026. We believe, in summary, that we represent a clear and compelling value proposition. We believe we are significantly undervalued with a sound plan to build and maximize shareholder value.
CytoSorb is an established international core business in critical care and cardiac surgery with $37 million in high-margin product sales and an excellent razor blade business model with expectations for strong future growth due to a significant critical care and cardiac surgery market worldwide targeting major unmet medical needs, a commitment to bring DrugSorb-ATR to the North American market with a near-term De Novo submission and hopefully market authorization, and active measures to restore Germany back to growth. Finally, our goal is to drive accelerated growth and drive the company to cash flow breakeven in the first quarter of next year, Q1 2026, and future profitability, and bring our lifesaving therapy to the rest of the world. With that, let me thank you very much for your attention, and we will now switch to a Q&A.
Okay, great, great.
I wanted to pull on a couple of threads that you mentioned probably later in your presentation, and we'll start with your journey of getting DrugSorb approved in the U.S. I think firstly, maybe can you elaborate on what gives you confidence that you will successfully get your product through the FDA submission this time around, and then maybe just reiterate those key timelines and milestones that we should look out for?
Yeah, so, I think what gives us confidence is the fact that we've been having a very collaborative discussion with FDA, and at every step of the way through the first submission process, we've been able to eliminate issues within the De Novo submission such that we only have a handful of open items left.
I think we're encouraged by the fact that FDA has recognized us as a breakthrough designated device addressing major unmet medical needs, this issue of perioperative bleeding due to blood thinners, and has determined that our device is safe, and has helped us have a path forward with a new submission to bring in new efficacy data to get them over the hump of efficacy. We are very excited to be able to bring new data that FDA has never seen before and new analyses, and I think that gives us confidence that we can drive this ultimately to approval.
Wonderful, thank you. Maybe now let's shift to, in the case that it is approved by the FDA, that it does receive FDA clearance, maybe can you talk about how you're thinking about your commercialization plans?
Is something direct versus distributors more applicable? And then I have a couple of follow-ups.
Yeah, sure, and Pete can talk about this as well, but why don't you go ahead and do that?
Yeah, we're going to go with a direct model. We're going to have a controlled market release initially. This is a De Novo device. We've got a lot of confidence with it, but we're going to spend the first three-six months focused on a core group of primarily clinical accounts and a handful of others that have shown interest, and where we think we have an opportunity to get in and learn very quickly about how to get this product through committee, on the shelf, and in use, importantly, on a regular basis. I think we can learn a lot in the first three-six months.
We'll be hiring reps once we get the approval, but we'll titrate the pace of that hiring based on the success that we see in the launch.
Okay, and I think just to add, as a breakthrough device, we're eligible for the NTAP program, which is a new technology add-on payment, which is reimbursement on top of the standard DRG. We feel that we have a very compelling case to do so and also qualify for CMS's TCET program, transitional coverage for emerging technologies as well.
Maybe just one follow-up on the sales force or how you plan to tackle, will you go like a region-by-region basis? Do you plan to start with a certain size sales force? What's your glide path there?
Yeah, I think, focused on our clinical sites who have experience with the device already, and like I said, a handful of others that we think are larger or certainly impactful centers in evaluating this product and being able to get it going quickly. It probably will have a regional focus, initially. Again, I think it's important that we get good, consistent usage in these centers, as opposed to try to get a lot of centers started upfront without guaranteeing that follow-up, those follow-up procedures. I think that's the way we'll get started. Think of it as five plus reps initially and quickly ramping up once we get a sense of the pace of adoption.
You know, I think for those of you in the audience who know cardiac surgeons or know surgeons who have to operate on patients on blood thinners, ask them about how difficult it is to operate because they just ooze and bleed. It's very difficult to stop that bleeding. It's a major problem, not just in cardiac surgery, but for orthopedic surgery, for OB-GYN surgery, vascular surgery, neurosurgery as well. What we have heard from surgeons is that this is a no-brainer. This is actually actual words used by many cardiac surgeons saying they deal with this on a weekly basis, and it's always problematic.
By having a therapy like this, this is CytoSorb, but DrugSorb looks very similar to this in the heart-lung machine while they're operating, removing the blood- thinning drug during the surgery and helping to prevent both intraoperative and perioperative bleeding. That's very important. We believe it will hopefully be a pull market.
Great. Maybe shifting gears to the future, what are your plans or expectations or any low-hanging fruit you have for targeting other types of blood thinners that you think you can go after? I'm assuming the types of synergies that you can achieve in doing so.
Yeah, you know, the beauty of DrugSorb-ATR is that it is a one-size-fits-all cartridge, that it actually has demonstrated the ability to not only remove Brilinta that we talked about, but also another major class of blood thinners called the direct oral anticoagulants, which ELIQUIS and XARELTO are the leading drugs. ELIQUIS is top five non-COVID pharmaceutical in the world, for example, and also the direct thrombin inhibitor. Our goal is first to get an anchor in one of the blood purification blood thinner classifications and then expand that to other blood thinners and then to expand to other surgeries outside of cardiac surgery.
Great. That's very helpful. Maybe with the remaining few minutes we have, I wanted to shift to the balance sheet.
You recently talked about your credit agreement, which adds $2.5 million of cash to your balance sheet, but maybe you could talk about the cash runway and ability to get FDA clearance without adding any more capital.
Yeah, sure. We had a little over $9 million at the end of the third quarter. We're excited to have this amendment done. It does give us another $2.5 million of cash immediately. Importantly, it also extends our interest-only period another six months. It extends it beyond the third quarter of this year to the first quarter of 2027. Importantly, it also gives us another opportunity on DrugSorb-ATR approval. We get another $2.5 million of capital, plus an additional extension of the interest-only period for another six months. We put that on top of the restructuring.
We did a cost reduction program here in the fourth quarter that is going to bring us to cash flow break even as we, for the first quarter of next year. We think we can run the business very well, at break even next year, focused on our strategic priorities. Certainly, amongst that is the DrugSorb-ATR approval and initial launch.
Great. I know we only have two more minutes, but maybe wanted to get a little bit more information on highlighting your efforts in addressing sepsis and septic shock. Maybe tell us what you're most excited about in the next little while and what we can be looking forward to.
Yeah, I think that the data in sepsis and septic shock is fascinating. This is a major unmet medical need that, again, claims the lives of one in five people worldwide every year.
Antibiotics are just not enough. The mortality is still very high. The key to solving sepsis is solving that uncontrolled massive inflammatory response that we do extremely well. Important to the story has been the recognition that not only are we helping to control the inflammation, we're helping to control the instability, the shock, the acute respiratory distress syndrome, the kidney failure that happens, that really is what kills people, right? In particular, more recently, the understanding that we can reverse something called capillary leak syndrome in severe inflammation. If you've ever unfortunately known someone with critical illness, they swell up like a balloon. The fluid just leaves the intravascular space into the tissues, into the lungs, drowning the patient from inside out, into the kidney, shutting off urine production, into the tissues acting as a gas exchange barrier.
We remove the toxins that are causing that capillary leak and can help that heal. In doing so, help be able to get rid of that fluid, which all intensivists know is a problem, but which they have not been able to effectively, actively, proactively get it off. Because when they try to do that, patients typically drop their blood pressure and destabilize. By helping heal that capillary leak, actually our data are suggestive that is really the next step in how to think about using CytoSorb in the septic shock patients. We believe that it is a key part of treating these patients.
Wonderful. Thank you very much. That wraps up our time and appreciate you coming up.
Thank you very much [crosstalk].