Cytosorbents Corp Q2 FY2021 Earnings Call

Good afternoon and welcome to CytoSorbents 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 call over to our moderator, Terri Anne Powers, CytoSorbents' Vice President of Investor Relations and Corporate Communications. Please go ahead, Ms. Powers.

Thank you very much, Maria, and good afternoon and evening to everyone. Welcome to the CytoSorbents second quarter 2021 financial and operating results conference call. Joining me today from the company are Dr. Phillip Chan, Chief Executive Officer; Vincent Capponi, President and Chief Operating Officer; Kathleen Bloch, Chief Financial Officer; Dr. Efthymios Deliargyris, Chief Medical Officer; Dr. Christian Steiner, Executive Vice President of Sales and Marketing as well as Managing Director of CytoSorbents Europe; and Christopher Cramer, Vice President of Business Development. Before I turn the call over to Dr. Chan, I'd like to remind listeners that during the call management's prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions today. Therefore, the company claims protection under Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act 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 3, 2021 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 the second quarter by management. Following that presentation, we will open the line to your questions with the management team. At this time, it's now my pleasure to turn the call over to Dr. Phillip Chan. Phillip, go ahead.

Thank you, Terri Anne, and good afternoon, everyone. We had a busy and productive second quarter. As we mentioned during the last call, we received full FDA IDE approval for the U.S. STAR-T trial with the DrugSorb-ATR antithrombotic removal system, and we aim to start enrolling the first patient this quarter, with the study expected to be completed in 2022. We are very excited to begin this trial soon and are on track to do so. By the end of the quarter, we had delivered over 143,000 cumulative CytoSorb cartridges, which is a 43% increase from 100,000 a year ago, distributed across 68 countries. We’ve also treated over 6,500 COVID-19 patients in more than 30 countries since the pandemic started, including in the U.S. under the FDA Emergency Use Authorization granted in April 2020. CytoSorb has been registered and is commercially available in Singapore for all equivalent European Union indications, raising the total number of countries where CytoSorb is distributed to 68. Additionally, we appointed Terri Anne Powers as Vice President of Investor Relations and Corporate Communications in June. Despite being here for only two months, Terri Anne has quickly acclimated and made essential contributions to the company. She is currently proactive in reaching out to investors and stakeholders to enhance awareness of our company as we work to sustain significant sales growth internationally and prepare to enter the valuable U.S. market in the future. If you haven't had the chance to meet her yet, please don't hesitate to reach out. Lastly, as noted in last Friday's press release, thanks to many of you, we successfully completed the Mission 100,000 International Fundraising Campaign, raising $100,000 for the Global Humanitarian Organization, CARE, to combat COVID-19. We matched the generous donations from our friends, business partners, employees, and shareholders on a one-for-one basis. Last Friday in Times Square, New York City, Vince, Kathy, and I had the honor of presenting a $100,000 check to Chris Noble from CARE and ringing the Opening Bell at the NASDAQ's ceremony together. Financially, we also had a strong quarter. Total revenue for the second quarter was $12.0 million, compared to $9.8 million a year ago, which reflects a 23% increase. Product sales in the second quarter were $11.4 million, up from $9.5 million a year ago, indicating a 19% rise. Notably, our core non-COVID-19 sales grew a solid 38% year-over-year in the second quarter and represented 85% of our product sales. Our blended gross margins were 82% in the second quarter, compared to 70% a year ago. We ended the quarter with a robust balance sheet, totaling $65.6 million in cash with no long-term debt. Regarding COVID-19, we believe the following information will contextualize our guidance. The COVID-19 situation, particularly driven by the Delta variant, has been rapidly evolving with significant week-to-week changes. In the U.S., we're experiencing a fifth wave marked by a rapid rise in new cases in Southern central and Southeastern states. Florida and Texas currently account for about a third of all new cases in the country. Unsurprisingly, 97% of new severe infections are among the unvaccinated. While breakthrough cases in most vaccinated individuals have mostly been mild to moderate so far, reports indicate an increasing number of vaccinated people being hospitalized in hot spots like Florida. The Delta variant now comprises 83% of new U.S. infections, but there have also been instances of the Lambda strain in Florida, which appears to evade immunity from current vaccinations. Furthermore, booster shots are not expected to enhance immunity against resistant strains like Lambda. In heavily affected areas like Florida and the South, hospital utilization rates are high, although death rates remain relatively low, anticipated to follow the trend of new cases. Globally, COVID-19 continues to cycle through countries, fueled by new variants among unvaccinated populations. We are observing surges elsewhere, including in the U.K., Spain, Portugal, France, Russia, the Middle East, Southeast Asia, and South Africa. On a positive note, vaccination rates continue to rise significantly, with full or partial vaccination numbers increasing by 2 to 3 percentage points recently in key countries. It's important to clarify that the approximately 50% vaccinated figure in the U.S. refers to the entire population, while the statistic often cited by President Biden of 70% pertains to the adult population. The growing vaccination rates are encouraging as they will aid in reducing the severity and occurrence of COVID-19 infections worldwide. However, a significant number of individuals remain unvaccinated and at high risk, which could potentially lead to additional waves of infection. If you haven't already, please consider getting vaccinated. The risk of contracting COVID-19 still stands at about 2%, meaning roughly 1 in 50 people may die from it, and many others might be hospitalized or seriously ill. With 4.2 million global deaths and approximately 200 million documented infections, this situation demands serious attention. Given the state of the COVID-19 pandemic and the contrasting effects of vaccinations on one side—decreasing infections allowing for a return to normal operations—and new infections from variants among unvaccinated populations causing regional spikes, we expect our product revenue in the second half of 2021 to exceed that of the first half. We anticipate strong growth in core non-COVID sales, projecting at least 30% year-over-year growth in the second half of 2021, as well as at least 30% for the full year. However, due to uncertainties surrounding the COVID-19 pandemic, including vaccination rates and viral trends, we cannot predict the level of COVID-19 sales for the latter half of 2021. To adopt a conservative stance, we expect COVID-19 related sales to be under $1 million in the second half of 2021. Now, let me explain why we believe our core sales will continue to grow. It's the one-year anniversary of our secondary public offering, where we raised $57.5 million. We have not been idle with this cash but have instead invested it in key areas to drive our business. We have significantly expanded our clinical team and capabilities to support company-sponsored studies, as we believe that data will promote adoption and increase sales. By the end of 2021, we project to enroll in seven different company-sponsored studies, including the crucial STAR-T trial in the U.S. We have been hiring extensively in the U.S. and Europe to support our current and future growth, now employing over 210 people company-wide, with most of the resources directed towards sales, marketing, and manufacturing, in addition to leveraging grant income for R&D. You can also see our new headquarters set to be located in Princeton, New Jersey, which will house our new manufacturing facility capable of producing enough product to support $350 to $400 million in sales. We are on track to have this facility operational by the end of 2022, if not sooner. This will significantly impact our scale and manufacturing efficiencies, further improving our already high blended product gross margins of 82% last quarter. To support sales, we have also invested in a new logistics hub in Germany for CytoSorbents, allowing us to continue delivering our products globally. Additionally, we have made substantial investments into our non-grant funded pipeline, including the ECOS-300CY cartridge for ex vivo organ perfusion for transplants that received EU approval last year, as well as other products like CytoSorb-XL and others. We also used our funds to retire long-term debt, eliminating our long-term interest expenses and providing us with considerable financial flexibility. Moreover, we have increased production and our inventory to quickly respond to surges in demand for our products. Lastly, we continue to expand internationally and are simultaneously progressing through the U.S. dual regulatory pathways for potential FDA marketing approval, steadily preparing for the U.S. commercialization of DrugSorb-ATR with key hires and initiatives. For further details on our clinical program, let me hand it over to our Chief Medical Officer, Dr. Efthymios Deliargyris, for more insights on our progress. Makis?

Thank you, everyone. It was less than a year ago that we disclosed our new clinical plan aimed at achieving two important goals. First, to secure FDA marketing approval quickly. Second, to generate clinical data that will support future growth across multiple applications. As mentioned, we have successfully accomplished both objectives by focusing on strong company-sponsored studies and significantly investing in resources to ensure timely and thorough execution. Over the past year, we have more than doubled our global clinical team and I am pleased to report that we are already seeing notable improvements in efficiency regarding both time and cost. In the next few minutes, I will provide an update on the progress we have made this year and outline key clinical milestones ahead. We are continuing with our dual path strategy toward FDA marketing approval. Our main focus is the STAR-T study, which is examining the DrugSorb-ATR system's ability to remove anti-thrombotics and reduce postoperative bleeding in patients undergoing cardiothoracic surgery on ticagrelor. Significant progress has been achieved with the STAR-T study, including receiving full FDA IDE approval in early July to conduct a double-blind, randomized clinical trial that will involve 120 patients across 20 U.S. sites. The primary goal of the study is to evaluate meaningful postoperative bleeding outcomes in patients undergoing surgery while on ticagrelor. For further information on the study design and endpoints, please check our listing on clinicaltrials.gov. We are fortunate to have Dr. Michael Mack, a cardiothoracic surgeon, and Dr. Mike Gibson, an interventional cardiologist, as our principal investigators. Together with them, we have collaborated with numerous sites and have successfully identified all necessary locations for executing the study. There is significant enthusiasm from U.S. institutions, as they recognize this as a crucial unmet medical need and are eager to participate in trials that may lead to a new breakthrough solution. We have started contracting and submitting to IRBs across these institutions and have made considerable progress, with many sites completing or initiating visits by the end of July. Our first investigator meeting took place on July 14, and we expect to enroll the first patient in the third quarter of 2021. A manuscript detailing the methods and design characteristics of the STAR study has been submitted for publication. We currently project that the STAR study will be completed in 2022. Moving to our second study under the dual path for FDA approval, the REFRESH-2 AKI study has also seen substantial progress in the second quarter. Activities have resumed successfully, with active patient enrollment at most study sites, and we anticipate that the remaining sites will be active by year-end. The next important milestone for REFRESH-2 is the interim analysis, expected in the second half of 2022. As previously stated, we believe that STAR-T represents the lowest risk and fastest route to FDA marketing approval, while also setting a precedent for future trials to expand anti-thrombotic removal opportunities beyond ticagrelor. This year has a wealth of clinical milestones ahead. We are adopting a complementary approach to data generation across our clinical programs, utilizing randomized trials like the STAR-T and REFRESH-2 studies, as well as registries or single-arm studies. The accompanying table summarizes all studies segmented by therapeutic areas (cardiovascular and critical care) and their milestones achieved thus far this year. Notably, in the first half of the year, we accomplished all previously announced milestones, including obtaining full FDA approval for STAR-T and actively enrolling patients in the REFRESH-2 study. We expect to proceed with the star registry, having already submitted to ethics committees in Germany and the U.K., with approvals anticipated soon for data entry in the third quarter. The randomized clinical study in Germany, evaluating the CytoSorb device's ability to stabilize hemodynamics in refractory shock, has received ethics approval, and all clinical sites have been identified. We expect to start enrolling patients towards the end of the third quarter or early fourth quarter of this year. For the HepOnFire single-arm study, we plan to submit to ethics committees in the third quarter and aim to activate sites and enroll our first patient before year-end. Finally, our CPC registry in COVID-19 has completed enrollment, and the top-line results have been submitted for publication, with an upcoming presentation at the International Symposium of Intensive Care and Emergency Medicine in Brussels, where those results will be released. Overall, our full clinical plan shows significant progress, with every study on track to actively enroll patients by the end of 2021. Now, I will turn it over to my colleague, Kathy Bloch.

Thank you, Mikas. Good afternoon and good evening, everyone. For today's call, I will provide an update regarding CytoSorbents' financial results for June 30, 2021, as well as comments on our working capital position and cash runway. Product sales for the second quarter of 2021 were approximately $11.4 million, an increase of $1.8 million or 19% over the second quarter of 2020 product sales of approximately $9.5 million. This increase was primarily driven by a rise in direct sales of approximately $1.5 million and an increase in distributor sales of approximately $353,000. Grant revenue was $659,000 in the second quarter, compared to $275,000 in 2020, as execution on our grant contracts returned to normal patterns during 2021. This contrasts with 2020, when our R&D employees were involved in ramping up production to meet the surge in demand for CytoSorb due to the COVID-19 pandemic. Total revenues, which include product sales and grant income, rose by 23% to $12 million in the second quarter compared to $9.8 million in the same quarter of 2020. Our gross profit for the second quarter of 2021 increased to $9.3 million, up by approximately $2.8 million or 42% from a gross profit of $6.5 million in 2020. Second quarter product gross margins were 82% compared to 70% in 2020, thanks to manufacturing efficiencies achieved in 2021 and the absence of certain ramp-up expenses from 2020. Looking at our six-month financial results, product sales for the first half of 2021 were approximately $21.5 million, marking a 22% increase over product sales of $17.7 million in the first half of 2020. Total revenues for the first half of 2021 were approximately $22.6 million compared to $18.5 million in the same period of 2020, also an increase of about 22%. If we exclude COVID-19 related sales and focus on our core, non-COVID-19 product sales for the second quarter of 2021, these reached approximately $9.7 million, representing our highest ever core quarterly sales results. Core product sales for the second quarter of 2021 were $7.9 million, which is an increase of approximately $2.7 million or 38% over our core product sales of around $7 million in the second quarter of 2020. Importantly, our core non-COVID-19 product sales have shown a pattern of continuous sustained growth throughout this period. As of June 30, 2021, our trailing 12-month product sales reached approximately $43.3 million, an increase of around $13.3 million or 44% compared to trailing 12-month product sales of $30 million a year ago. Our gross margins grew to 82% in the second quarter of 2021, and we have consistently achieved year-over-year improvements to our gross product margins for each of the past five years. The second quarter of 2021 also marks our third consecutive quarter with product gross margins of 80% or higher. Furthermore, our compound annual growth rate over the past three years has been 35%, and we continue to observe a very positive trajectory. Now turning to our working capital and cash runway, as of June 30, 2021, we had a strong cash balance of approximately $65.6 million. We experienced a quarterly cash burn of about $3 million in each of the first two quarters of 2021. Excluding clinical trial activities and non-cash expenditures like stock option expense, the second quarter of 2021 represented our sixth consecutive quarter of generating positive EBITDA. This indicates that, barring clinical trials, our operations are generating positive cash flow. We will continue to invest in clinical trials as they are expected to deliver substantial returns and drive future product sales growth. We believe we have sufficient liquidity to support the planned expansion of manufacturing capabilities, the ongoing commercialization of CytoSorb, and the execution of our clinical trial strategy. Additionally, we have adequate capital funding to continue operations without the need for additional capital until we achieve GAAP operating cash flow breakeven. Upon reaching breakeven, we expect that 40% to 50% of every incremental sales dollar will contribute to operating profit. We had a $150 million self-registration set to expire in August 2021, and we filed a new $150 million shelf registration that became effective with the SEC on July 27, 2021. Our at-the-market facility also expired with the shelf registration, which we will renew as well. These steps reflect good corporate governance practices; we have no immediate need or intention to raise capital. Lastly, as of June 30, 2021, we have approximately 50.5 million common shares outstanding on a fully diluted basis. That concludes my remarks, and now I'll turn the call over to Dr. Christian Steiner for insights on the product sales landscape. Christian, please go ahead.

Yes, thank you very much, Kathy. First slide please. So good afternoon from Berlin, Germany to everyone on the call and America. Good evening to Europe and good morning to Asia Pacific. 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 a constant incline of the core non-COVID related business represented by the blue columns. With almost no or only minimal growth slowdown during the pandemic. This is a remarkable development despite and during the pandemic restrictions which includes the restricted access to customers, the stock of many elective surgery programs and the fear of patients to go to hospitals. However, the COVID-related restrictions and changes for our commercialization forces have declined. The access to our customers has significantly improved. As an example, the appointment frequency of our direct sales forces has improved from less than 25% compared to the pre-pandemic times in Q1, to less than 50% in Q2 and is starting to approach the 75% mark since the beginning of Q3. We are experiencing a real surge of interest for CytoSorb Therapy with the improving situation and this includes interest for the size of CytoSorb and all information around it. But also for study and registry participation. We are starting to see momentum in the time-consuming new customer acquisition and especially also in the revitalization of pre-pandemic business relationships. Furthermore, we see a return to normal with elective surgery programs. This is especially significant in the very important cardiac surgery segment. More than 75% of the cardiac surgery centers in Germany have started their programs again from less than 40% during the pandemic. The waiting lists have become long so heart centers are striving to somehow manage, sometimes with massive expansion of their schedules. Other surgery segments are less aggressive due to the still limited ICU availability mainly because of some remaining restrictions. Additionally, the vacation time in European markets has also played a part. Last but not least, in general, the ICU capacities for non-COVID patients are returning to normal and patients are less afraid to go to hospitals in emergencies and also plan to undergo necessary elective surgical procedures. Summarizing, we can say that the situation to do business has significantly improved, and we hope that even new variants and increased infection numbers won't turn this back. I have to mention one more thing here. Of course, we do have differences in different geographies; however, everything said is representing our most important markets.

Thank you, Christian. And finally to summarize, we believe we have the appropriate strategy and team in place to drive this company to become one of the leading U.S medical device companies in terms of growth and profitability. We have a strong experienced management team with the continued addition of key talent to support growth initiatives. We are well capitalized to support planned investments in manufacturing capacity, clinical programs and commercialization efforts for the coming years. We expect to drive continued growth in ex U.S markets driven by geographic expansion, existing high growth applications such as sepsis, cardiac surgery and liver disease, label additions and potential additional partnerships. We plan to open in the U.S markets, targeted dual path to U.S FDA marketing approval with many clinical milestones expected in 2021. Our focus continues to be on the removal of ticagrelor during cardiothoracic surgery as the initial targeted indication. We continue to develop other product lines utilizing our proprietary polymer technology platform, and we strive for operational excellence to support improved efficiency and profitability. And finally, we're working to achieve our goal of rapid growth and GAAP operating cash flow profitability in the next 2 years. That ends our formal prepared remarks. I would now like to open it up for Q&A.

We will take our first question today from Danielle Antalffy with SVB Leerink. Please proceed with your question.

Hey, good afternoon, everyone. Thanks so much for taking the question. Terri, congratulations, and I'm really looking forward to working with you more. Just a quick question on the commercialization update. Dr. Steiner, thank you so much for all 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 arguably possibly somewhat suppressed phase in 2020, although it's hard to tell you we're just launching. So, if you're talking about over 30% growth, 38% growth in the quarter, over 30% growth in the back half of the year. If we look ahead to 2022, I mean, it feels like with momentum building, you're still not even at 100%. from an appointment 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 one follow-up for Kathy on margins.

Sure. Thanks, Daniel. I believe that is true. We collectively think that the elements necessary for driving that kind of growth are in place, including for next year. Christian, would you like to add anything else?

Yes, I think this is exactly the point I wanted to bring across and despite that we are not giving forward-looking statements. But yes, I think if we look at the charts and see what could happen and what has not happened last year, there might be this conclusion.

Got it. I guess another way to say, there's no reason to think momentum would slow going into 2022 in Europe from a commercialization perspective.

Yes, I mean, I think notwithstanding COVID-related issues, if this continues to trend in a positive way and we don't have multiple additional waves of resistant variants, 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 that the blue bar, the trend line, is very consistent. And I think that we expect that that core growth will continue.

Yes. Okay. Okay, perfect. Thank you for that. And, Kathy, just a quick follow-up for you on gross margins. I mean, another quarter of gross margins well ahead of our expectations, and I believe consensus the street as well. So just curious if you could talk about your view on how quickly you can ramp gross margins with the new manufacturing facility opening has changed. And even if you can sort of commit to a long-term margin target, I mean, it feels like above 80%, maybe even 85% is right, but we'd love to hear whatever you can tell us on that front. Thanks so much.

Sure, Danielle. Thank you. Yes, we are very excited. I pointed out today that our gross margins, it's not just a one-off, but they've exceeded 80% for three consecutive quarters now. So, we've I think we've gotten over the ramp-up pains, and we're doing very well operating at this capacity. We're not expecting large improvements in our gross margin until the new facility is up and running, which is expected to be fully operational by the end of 2022. Then, I think that we will see gross margins. Once that gets up and running and we start to get greater volumes through there. I think we'll start to see gross margins in excess of where we've been experiencing in the last three quarters. I won't commit on exactly where yet, but I think they'll be quite favorable.

Okay, thank you so much.

Thanks, Danielle.

Our next question is from Anthony Petrone with Jefferies. Please proceed with your question.

Thanks, and hope everyone's doing well. Congratulations on a strong first half here. We'll go back to Dr. Steiner's comments on at least 30% on the ex-COVID business heading into the second half of the year. The first half was up about 32%. So sort of in line with that trajectory, just trying to get an idea of the moving parts between rep productivity in Germany, how much of that is factored in their distributor purchasing, and maybe just the normalization of procedure volume trends. And then a quick follow-up on where the rep headcount was exit in 2Q, and where that's going to head in the back end of the year in terms of new additions? And then I'll have one follow-up on trials.

Yes, so I'll let Christian comment on the first part of that. I think that from a sales perspective in Germany, we've kept actually the headcount the same, where we are making sure that coming out of just the increased restrictions in the March time period, when we had that last wave in Germany, that things are going to get back on track, the way that 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 that which includes not only sales reps, but also other resources to help drive sales and business activity. Christian, maybe, if you want to comment on the first part of Anthony's question?

Yes, Anthony, thank you for the question. Yes, I think if we look at the past year and the pandemic time, we can really see that, of course, big segments of our business has been negatively impacted, which obviously includes every surgical or post-surgical indication because all these elective surgery programs went down to secure ICU beds for COVID patients. So this comes online and we see momentum that especially in cardiac surgery, we come back to normal. This obviously will have a positive impact. Also, septic shock patients, there's a number of effects we cannot exactly foresee, but during the time when all the beds were reserved for COVID patients, there might have been fewer septic shock patients, what we normally see either past surgical procedures, or even due to bacterial pneumonia and so on. What has been stable through the pandemic was the product delivery business and we just have started to build this. And we are expecting good progress here. And also the emergency indications of course relatively stable. Those, for example, after trauma, burn accidents, and also those in cardiac surgery based on the anti-thrombotic removal indication. I don't know whether this is already satisfying you with the question.

Yes, that's very helpful regarding the follow-up on STAR-T. I was curious about the expected cartridge utilization in that trial and whether we should anticipate revenue from it as the trial enrolls and approaches the target of 120 patients. Additionally, considering the completion date for 2022, the short outcome windows are understandable, ranging from 48 hours to 2 weeks. I'm interested in knowing the targeted timeline for completing enrollment. Should we expect that to be finalized by the fourth quarter of this year? Thank you again.

Makis, would you like to take that?

Sure. Thank you, Anthony, for your question. The STAR-T study is an investigational device exemption trial, and we currently do not have FDA marketing approval in the U.S., only emergency use authorization for our COVID-19 related sales under the EUA. The devices for the STAR-T study will be supplied by us as part of this investigation, so it won’t impact our sales. This trial is specific to the U.S., and we plan to start enrolling patients within this quarter. We will notify you when we enroll the first patient. We aim to have all study sites active by the end of this year, which we believe will enable robust enrollment. However, we currently only have projections, and we will be able to provide a more accurate timeline once enrollment starts and we assess site performance. We also need to consider any potential delays due to COVID-19. Clinical research is recovering post-pandemic, although it hasn’t fully returned to pre-pandemic levels. We are hopeful for a positive trend that will aid in the study's enrollment, but for a precise timeline, we'll have to wait until the study is in motion and we understand the enrollment rates better.

Thank you.

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-2. Can you remind us of the possible outcomes associated with the interim analysis? I'm wondering whether this is primarily a test of whether the trial is appropriately sized? Or if it's more than that, can you just outline the outcomes that we could possibly see with that analysis? And then also, just in terms of the order of the data milestones between the two 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 STAR-T if I can.

Sure. Thanks, Brian. Makis, would you like to take that?

Yes, sure. Thank you. So the interim analysis for REFRESH-2 will inform both the ability of the study to continue at the current sample size; however, we will also inform potentially the option for stoppage according to what the data safety monitoring board will review, either for your efficacy or futility. The STAR-T study, again, will have a 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 2022, meaning both the interim analysis for REFRESH-2 and actually the study completion for the STAR-T study as well.

Okay, that's very helpful. And then on STAR-T, based on your conversations with the FDA to date, will the U.S filing likely consist solely of the results of STAR-T for the clinical component? Or will this submission include data from some of the other clinical efforts you're conducting now for ticagrelor removal?

The STAR-T study design is largely based on our discussions with the FDA. If you have seen our disclosures so far, the study will focus on clinically meaningful outcomes related to postoperative bleeding. We aim to provide a comprehensive assessment of the risk-benefit ratio, which is crucial for the marketing application. It is standard to include additional data gathered over the next year, which may offer further evidence of efficacy or safety. If we acquire additional permissions for STAR-T, we will include that information as well. The primary purpose of the study is to support a strong benefit-risk assessment.

Makes sense. Thank you.

Thanks, Brian.

Our next question is from Andrew D'Silva with B. Riley and Co. Please proceed with your question.

Good afternoon. Thanks for taking my questions. A couple of quick ones for me. I'll start with CE Mark for ticagrelor and rivaroxaban. I was really just curious if you’re seeing any inadvertent marketing taking place with pharma either AstraZeneca or Bayer. Obviously, the benefit of having a reversal therapy, prophylactic provides an increased safety benefits for those drugs. So I'm curious if that's resonating with pharma in any way?

Christian, would you like to comment on that? It's my knowledge because of a variety of different factors, including the COVID-19 pandemic, we've not heard that yet. It hasn't been used in that kind of volume, have heard that yet. But Christian is closer. Christian?

Thank you, Andrew, for your question. What we observe is that users occasionally express interest in a closer collaboration. Additionally, feedback from representatives of various companies suggests that while there is interest, no deeper collaboration is taking place at this time. Users appreciate having the safety net now, and the use at major cardiac surgery centers is on the rise. We have several locations where this is regularly utilized to enhance safety and manage bleeding.

Thank you for that. I want to ask if there is a significantly higher level of confidence for STAR-T, not just regarding your capacity to produce positive safety and efficacy data, but also in your capability to enroll patients and complete the study more quickly than other studies, such as REFRESH-2. Can you share what is really contributing to that heightened confidence for this study and indication?

Makis, would you like to give some commentary?

Sure. Thank you. Yes. So, everything starts with the unmet need. This is something that is not a rare event as these anti-thrombotic drugs are increasingly being prescribed for a multitude of cardiovascular applications, the millions of patients out there that are on them. And when they present with an acute problem and they need an operation, it is literally a nightmare for surgeons. So they have been dealing with this their whole careers without a solution to help them dealing with this surgical bleeding 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 a drug causing this excess bleeding, they immediately become extremely enthusiastic about having such a solution in their hands. When we approach surgeons, and we talk to clinical centers, we routinely hear things like this would be a no-brainer in clinical practice if you guys can actually remove this drug during surgery. Now, that tells us that, first of all, for the clinical study, there will be excitement in enrolling patients. And as you know, that's one of the most important things that drives a successful clinical study, when the investigators, the principal investigators, and the site investigators are all enthusiastic behind the trial. And we see that when we engage with them. The second part of the confidence comes from the fact that this is a marketed application in Europe. This is being used every day in heart centers. We've seen data that are being published, but we are also talking to customers. They tell us that they see this incredible reduction in the bleeding associated with this anti-thrombotic drugs during cardiac surgery, they're telling us routinely the devices are working. So we have excellent feedback from users. We have some published data, not a lot yet, but more and more coming. And the STAR registry, which is another one of our programs, will contribute even more in the future. And then again, the interactions we are having, alongside the level of enthusiasm that we're encountering, gives us confidence that we'll execute the study and that the device will perform hopefully as well in the trial as it does in real-world use.

Perfect, thank you. Last two questions on the table together. First one, just how many patients have been enrolled in REFRESH-2 to date? And then in the U.S for various specialties, it seems like this summer is going to be busier than usual just due to the backlog of procedures that were delayed due to COVID. And I was curious, if you were seeing similar tailwinds in Germany and other key regions during the third quarter? Also, if you could just reference the massive amount of flooding in Germany if that's impacted anything in your opinion?

Yes, so when it comes to REFRESH-2, as of the last update we have enrolled 168 patients in the study.

And Christian, would you like to comment on the German floods?

I actually could not really understand the question. Can you please repeat?

Just as a relatively large scale disaster, has it impacted our operations or sales in any significant way?

Yes, I understand now. There are two different effects, or possibly more. You are correct that the surgical programs are coming back online, and there are long waiting lists from the time when those programs were paused. The centers are making efforts to handle that and maximize their capacity, which could positively influence our activities. However, there is also the impact of vacation time that we usually see in Europe, particularly in southern European countries, as well as in Austria, Switzerland, and Germany. Over the past 15 to 18 months, ICU doctors have been working continuously and are now experiencing burnout. They are taking the vacation time they rightfully deserve. So, various factors are at play, but I can definitely confirm your insights regarding the surgical programs.

Great. Thank you very much. I'll hop back in queue.

Thank you.

Okay. 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. If you do have any other questions, please feel free to reach out to Terri Anne Powers at tpowers@cytosorbents.com, 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.