Earnings Call Transcript - CTSO Q1 2020

Operator, Operator

Good afternoon and welcome to the CytoSorbents' First Quarter 2020 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 would like to turn the call over to your moderator, Jeremy Feffer. Please go ahead, Mr. Feffer.

Jeremy Feffer, Moderator

Thank you, Omar and good afternoon. Welcome to CytoSorbents' first quarter 2020 financial and operating results conference call. Joining me today from the company are Dr. Phillip Chan, Chief Executive Officer; Vincent Capponi, Chief Operating Officer; Kathleen Bloch, Chief Financial Officer; Dr. Efthymios Deliargyris, Chief Medical Officer; Dr. Christian Steiner, Senior Vice President of Sales and Marketing from Germany; 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 May 5, 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 first quarter by Dr. Chan and Ms. Bloch. Following their presentation, we will open the line to your questions, during the live Q&A session with the rest of the management team. At this time, it's my pleasure to turn the call over to Dr. Phillip Chan. Phil?

Phillip Chan, CEO

Thank you very much, Jeremy, and good afternoon, everyone. Before we get started, I'd like to congratulate Vince Capponi, who has now been promoted to President and Chief Operating Officer. As you saw from my comments in yesterday's press release, Chris has done an outstanding job here in his 18 years of service to the company. And I just want to thank him here publicly for all that he has done. Turning to the operational highlights for the first quarter. In the first quarter, we achieved over 88,000 CytoSorb treatments delivered, up from 61,000 a year ago. In the first quarter, total revenue grew 68% to $8.7 million and product sales grew 78% to $8.2 million over the first quarter in 2019. We ended the first quarter of 2020 with $2.7 million in CytoSorb order backlog and have ramped production to near full capacity with the ability and flexibility to go up or down with the current situation. We achieved blended product gross margins of 76% in the first quarter of 2020, up from 74% a year ago, but lower than Q4 2019 due to expenses of rapid scale-up to respond to the COVID-19 pandemic. CytoSorb is now EU approved ticagrelor during on-pump cardiothoracic surgery with an expanded CE Mark label and we have now treated the first 70 COVID-19 patients, including the very first patients treated in China with our partner China Medical Systems Holding Limited. Of now more than 750 patients treated, including 25 under the U.S. FDA Emergency Use Authorization. During the quarter, two case reports came out on the first successful CytoSorb treatments of Grade 4 or life-threatening cytokine release syndrome or CRS in two CAR T-cell immunotherapy patients. We also completed the 250 patient REMOVE endocarditis randomized controlled trial in Germany, which is expected to readout in 2020. That was done as an investigator-initiated study in 15 centers throughout Germany. We also achieved marketing approval of CytoSorb in Mexico with our partner Fresenius Medical Care. Now to talk a little bit more about ticagrelor and our recent breakthrough designation. I'd like to introduce you to our new Chief Medical Officer, Dr. Efthymios Deliargyris, who also goes by the name Makis. Makis, could you give a little background on yourself and give your thoughts as a subject matter expert in this area on this application?

Ethymios Deliargyris, Chief Medical Officer

Thank you, Phil. And good afternoon everyone. It is my absolute pleasure to be joining CytoSorbents at such an exciting time of incredible growth and tremendous potential. My background is as a triple board-certified physician in internal medicine, cardiology, and interventional cardiology. In the first part of my career, I had the opportunity to practice at a regional cardiology center in the United States and in Europe. About 10 years ago, I joined industry with a role at the Medicines Company and later on at PLx Pharma. Throughout my career, I have researched thrombosis and acute cardiac care, and I've been very lucky to be involved in the development and support commercialization of two of the most important antithrombotics in the market today, namely bivalirudin and cangrelor. In that light, I've been very excited with the developments that Phil has already shared and the two recent FDA milestones. First off, I would like to comment on the recent Emergency Use Authorization for critical COVID-19 cases. For many, this may seem like an opportunity to comment on developments, almost as a now-ha moment for the cytokine storm narrative. However, it is important to clarify that for CytoSorb, this is a validation of the long-standing thesis that quenching the uncontrolled surge of cytokines can be a lifesaving intervention for many critically ill patients. Now with COVID-19, this is also relevant for patients with septic shock, patients suffering acute trauma, or those on bypass undergoing cardiac surgery. The second development, which is particularly close to my heart, is the recent breakthrough designation for ticagrelor removal in patients requiring urgent or emergent cardiac surgery. Antiplatelet drugs are especially fundamental for patients with acute coronary syndromes, especially those that can receive stents as part of their treatment. Ticagrelor is viewed as the best agent in its class and its use is growing steadily around the world. It is estimated that today its market share in the United States is close to 50% among patients surviving a heart attack. However, there is one downside, an important one to ticagrelor and the rest of these antithrombotic agents, and that is that they put these patients at higher risk for bleeding. Now that risk can become life-threatening when these patients, while on treatment, require urgent or emergent surgery. In such scenarios, doctors struggle with the choice of sending these patients to the operating room at risk of serious bleeding or delaying the needed surgery until these drugs are washed out, a process that can take up to a week. This can create an impossible situation, unfortunately, and it's also pretty frequent. As you can see on the slide, it is estimated that one in five cardiac surgeries is either urgent or emergent. If we talk specifically about coronary artery bypass grafting operations, that is approximately 80,000 patients in the U.S. alone and about another 50,000 urgent or emerging cases in Europe. Among those on ticagrelor, they face the choice to either proceed to surgery while on therapy and risk having excess bleeding or to wait for the drug to wash out. Currently, many clinicians opt for bridging these patients with short-acting injectable agents that require hospitalization. However, we now have a new solution: CytoSorb effectively removes ticagrelor during cardiac surgery, thereby mitigating any excess risk of bleeding. The problem is solved. Patients can stay on ticagrelor until surgery or get bridged to surgery with ticagrelor if they were previously treated with other agents such as Plavix or Effient. This is a simple, effective, and safe solution. Furthermore, the value proposition of eliminating pre-operative hospitalization and post-operative bleeding complications is truly enormous. This indication, as Phil noted, has already been approved in Europe, and we plan to support all the necessary education that will make this approach the new standard of care. We plan to work closely with the FDA to determine the data required to leverage the recent breakthrough designation and get this indication approved in the U.S. in the near future. Thanks, and now I will turn it back to Phil.

Phillip Chan, CEO

Thank you very much, Makis. And just to give you a little bit of overview about CytoSorb and COVID-19, CytoSorb has now been used to treat more than 750 critically ill COVID-19 patients in Italy, China, Germany, U.S., and in many other countries, resulting in preliminary positive reports of a reduction in cytokine storm and inflammatory mediators. This has also improved respiratory function in acute respiratory distress syndrome with signs of improved oxygenation, improved PF ratios, improved lung compliance, and, most importantly, weaning from ECMO and mechanical ventilation. Last but not least, we have also heard many reports about improved hemodynamic stability of patients and a reversal of shock, one of the hallmark features of CytoSorb treatment. CytoSorb is now specifically recommended in Italy and Panama's COVID-19 treatment guidelines, and in the China COVID-19 guidelines as well. On April 10, 2020, CytoSorb received FDA Emergency Use Authorization, enabling CytoSorb to be commercially sold to all hospitals in the U.S. treating critically ill COVID-19 patients 18 years of age or older with imminent or confirmed respiratory failure. We are currently prioritizing nearly 200 inquiries that we've received in a very short period, with now 30 active hospital accounts where CytoSorb has shipped or is in use, in more than half of these with multiple reorders and approximately 25 patients treated to date in the United States. In Germany, which has treated the most COVID-19 patients to date, a major effort is underway to obtain clinical data at many centers, including randomized controlled trials, registry data, as well as case reports and case series. I think it's important to note that we are a COVID-19 play but not a COVID-19 company. As Makis mentioned, COVID-19 has spotlighted our company CytoSorbents and our role in treating cytokine storm, and we believe it can be a long-term catalyst for our business. Finally, I'd like to add - I would normally break out clinical activity at this point. However, in this unprecedented environment, most clinical trial activity around the world has been put on hold in favor of making room for potential COVID-19 patients and preventing the infection of non-essential personnel and patients. Because of this, there's not currently much to report. However, when activity begins to pick up, we will make sure to report that out to you. With that, I would like to turn the call over to Kathy for our financial overview. Kathy?

Kathleen Bloch, CFO

Thank you, Phil. And good afternoon everyone. For today's call, I'll be providing an update regarding CytoSorbents March 31, 2020 financial results, and in addition an update around our working capital position and our cash runway. Starting with product sales for the first quarter of 2020, they were approximately $8.2 million, an increase of $3.6 million or 78% over the first quarter 2019 product sales of approximately $4.6 million. This increase was primarily driven by an increase in direct sales from both new customers and repeat orders from existing customers, as well as an increase in distributor sales. In the middle of March, sales demand rose as a result of the COVID-19 pandemic. Grant revenue was $551,000 in the first quarter of 2020, as compared to $615,000 in the first quarter of 2019, and our total revenues, which include product sales and grant income, increased by 68% to $8.7 million for Q1 2020, as compared to $5.2 million for the first quarter of 2019. Q1 2020 product gross margins were 76%, compared to 74% for Q1 2019. First quarter 2020 represents another record quarter with product sales of $8.2 million. On a constant currency basis, product sales for Q1 2020 would have actually been $8.4 million. Newly created demand for CytoSorb to treat COVID-19 patients in the ICU contributed to this increase in sales, though difficult to quantify, management estimates that approximately $1.5 to $1.7 million of first quarter 2020 sales were related to the COVID-19 pandemic. Additionally, we entered the second quarter with a sales order backlog of approximately $2.7 million, which we believe positions us well for sales growth in Q2 2020. In the second quarter of 2020, we note that excluding clinical trial expenses, we achieved our first quarter of positive cash flow from operations of approximately $332,000. As the impact of the COVID-19 pandemic eases, we may experience a decrease in revenue in the second half of 2020, as compared to the first half of 2020, as the impact of this catalyst for revenue growth is reduced. However, our core business remains strong and we believe that the underlying drivers of revenue growth remain robust. In fact, as Phil and Makis have already mentioned, as a result of the COVID-19 pandemic, there is a growing awareness of and interest in CytoSorb, and this is expected to fuel future sales growth even in our core markets once the pandemic passes. Next, we'll look at our trailing 12-month product sales and blended gross margins. As you can see from this chart, we continue to maintain strong year-over-year product sales growth. Our compound annual growth rate or CAGR was approximately 52% over the past four years and we are maintaining a very positive trajectory of sales growth. As sales grow, we continue to benefit from improvements in our gross margins as a result primarily of manufacturing efficiencies that we've been able to achieve. Lastly, we'll review our working capital position. As of March 31, 2020, we had approximately $26.4 million in cash. In addition, in April, the company received approximately $1.1 million in non-dilutive capital related to the sale of our New Jersey net operating losses and about $1.7 million from unsettled March ATM transactions, further bolstering our working capital position. In the first quarter of 2020, we raised approximately $17.7 million through our aftermarket equity facility with co-agents Jefferies and B. Riley. However, given our current strong cash position, we have not utilized the ATM since April 2, 2020. The company also intends to refinance its $15 million term loan facility with Bridge Bank with the goal of extending the interest-only period. Under the current loan agreement, principal payments are scheduled to begin in November 2020, and we believe we have a sound solid foundation which will enable us to execute on our operating plan and clinical trial strategy well into 2021. Management would like to remind our shareholders that we are shareholders as well and we strive to do what is in our collective best interests. Finally, at March 31, 2020, we had approximately 41.8 million common shares on a fully diluted basis. At this time, I'd like to turn the call back to Phil.

Phillip Chan, CEO

Thank you very much, Kathy. In terms of guidance, CytoSorbents has not historically given specific financial guidance on quarterly results until the quarter has been completed. However, provided that the current order pattern continues with strength in our core business and global demand for CytoSorb to treat COVID-19 patients, and our ability to continue to scale up and produce CytoSorb, we expect that second quarter 2020 product sales will exceed first quarter 2020 product sales. That concludes our current prepared remarks. I would like to now open it up for a live Q&A session. Moderator?

Operator, Operator

Thank you. [Operator Instructions] We will take our first question today from Andrew D'Silva from B. Riley & Company. You may proceed with your question.

Andrew D'Silva, Analyst

Thank you very much. And thanks for taking my questions. Also congrats on your great quarter and I'm glad to hear everyone sounds healthy too. So just to get started with me, I'm just talking about the CAGR, can you give a little color on what kind of trial or approval path we should think about PMA de novo 510(k). And can the study in the U.K. be relevant for the U.S? Also I'd be interested in your thoughts with the Portola acquisition and what that means for your company at least from your mindset?

Phillip Chan, CEO

Sure. Well, thank you very much, Andy. We certainly appreciate that. In terms of the regulatory path under the breakthrough designation for CytoSorb for the removal of ticagrelor in cardiac surgery, we are awaiting guidance from the FDA on that particular issue and we will give an update when we know. The second question in terms of the Alexion acquisition of Portola, this is a very interesting acquisition, as you know Portola has the only Factor Xa Inhibitor Reversal Agent on the market called Andexxa. This had sales of roughly $110 million, and Alexion, which is a company that focuses on orphan indications for antagonism of activated complement, acquired them for $1.4 billion today. So it's interesting that CytoSorb not only removes activated complement, but we also have the ability to remove Factor Xa Inhibitor such as rivaroxaban, as shown in the Hassan paper that we talked about last year that showed in an observational study that the removal of rivaroxaban and ticagrelor by CytoSorb could reduce post-operative bleeding events. So we don't quite have the revenue of Alexion just yet, but I think that shows - we don't have the revenues of - I am sorry Portola just yet. But I think it shows what the potential could be in this anti-thrombotic reversal agent space and it's just curious that our products, CytoSorb, do what their products do together as well.

Andrew D'Silva, Analyst

Right. And as it relates to rivaroxaban, you have an approval for a blood thinner, but obviously the anticoagulant in this situation is there, like in vitro studies that you can do to expand your label in Europe or is that even something that you're focused on right now? Portola’s product has a black box warning, and it would be interesting to see how a device would compare against it in the field?

Phillip Chan, CEO

Yes, so some pioneering work on the removal of these anti-thrombotic agents has been done by a colleague and collaborator of ours, Dr. George Angelou, who had published the initial in vitro data on the removal of a wide variety of these anti-thrombotics. I believe he actually published another paper recently, where he showed not only the removal of ticagrelor but the removal of different Factor Xa inhibitors, including rivaroxaban. So the interesting thing I think about Andexxa is, as you say, it has a pre-thrombotic risk as a black box warning. And it's a very expensive drug, somewhere in the range of $15,000 to $20,000 for a single dose. Some have quoted higher numbers than that. But that being said, to be used as a reversal agent in cardiac surgery doesn't make sense, particularly given the fact that you don't want to inject anything into the patient that has a pro-thrombotic effect because when you're dealing with the arterial system as you are in cardiopulmonary bypass, it can potentially lead to a risk of stroke or heart attack or other embolic events to other organs. So we think at CytoSorb, as an easily installed, easy to use, fairly priced device, that could remove these various agents from blood during cardiopulmonary bypass makes it a much better solution. And that's one of the reasons why we feel confident that, should we be able to move forward with our marketing plans and data plans, we could become the de facto standard of care for these agents. In terms of the U.K. type TISORB study, we will have another study ongoing in Germany as well, called the citation study. But that being said, these data would all be very helpful to support the market for this particular application in ticagrelor removal, and hopefully we'll have some more news on other agents in the future.

Andrew D'Silva, Analyst

Okay. Thank you very much for the update on that. I just have two more quick questions. You provided an update in an 8-K, I believe it was last month, and at the end of the 8-K, you referenced expanding your manufacturing capabilities. I was just a little curious about what we should be thinking about there. Would you be looking to establish a new facility or just add capacity within the existing facility? Any color on that would be useful. And also if you could just tie in where you are in your capacity utilization right now that would be interesting too?

Phillip Chan, CEO

Sure. Let me turn over to Vince Capponi, who's been doing a great job in terms of managing that scaling capacity. Vince?

Vincent Capponi, COO

Yes. Thank you, Phil. So just let me take that and just a couple of parts here. First, the capacity we're currently at, obviously with this surge in requirements related to COVID-19, we've really cranked up to seven days a week, 24 hours a day right now in order to meet the demand. As Cathy and Phil mentioned, we had a backlog at the end of Q1, and obviously the orders are still coming in. So we're working very rapidly to fulfill that. We said we could supply essentially an $80 million business. We'll give exact percentages, but we're using a significant portion of the capacity of the plant. Obviously, we're taking a look at potentially what the next level of expansion is going to be. Given what we've just experienced now, and the fact that Chris is continuing to drive sales in Germany and the core business and treating sepsis, etc., we need to consider our options for that, and we would probably not do it within this existing facility because it's starting to get pretty large from a scale standpoint and this is really not quite designed to do that kind of work here. So we would be looking outside of this facility. But we are currently evaluating that and obviously looking very closely at what the trend is in the market for us to best determine what that path will be going forward.

Andrew D'Silva, Analyst

Okay, great. And just the last question for me, this relates to seasonality. Would it be fair to assume that we shouldn't look at traditional seasonality in 2020, given just how tumultuous things are? Or do you believe that should be a fair proxy for 2020, as far as seasonality in past years? Thank you very much. And congrats on the quarter.

Phillip Chan, CEO

Thanks, Andy. I think that in terms of seasonality, it really depends on what happens with COVID-19. As countries contemplate a reversal of the social distancing that has been so effective in the recent past in preventing further infections, there is expected to be potentially a second surge of infections and potentially even a third surge of infections, particularly as we move into the flu season where flu and COVID-19 may coexist together and may just exacerbate the burden on hospitals and the risk to people all over the world. So currently, right now we're at the beginning of May. We are just starting to think about returning to normal life. I think some states in the United States have already tried to do that and have seen sharp upticks in new cases of COVID-19 infection, as well as an increase in mortality. But I know that there is a pressing economic need to get back to work. In Europe, everyone has been working remotely since mid-March, and whether or not there will be a traditional Q3 slowdown in Europe remains to be seen, particularly if everyone goes back to work during that time after being at home for so long. Maybe Christian, do you want to give a little bit of color on what you're thinking about the European business and seasonality that we typically see in Q3?

Christian Steiner, SVP Sales and Marketing

Yes. Certainly, Phil. Thank you. And good afternoon to everyone. Good evening to those in Europe. I think there are a number of points to consider when we think about seasonality. Overall, I think that the business we have is very healthy, and there might be a part which is a one-time effect. But as Phil said, this will depend very much on how the situation with COVID-19 evolves. However, I think there are a number of very sustainable effects. The experiences and the results we have in treating COVID-19 patients will be translated into other diseases, such as septic shock patients, but also influenza patients. Because of this pandemic, we have gained new customers, and those who have been treating patients for a while with CytoSorb are treating patients earlier and using more absorbers. All these effects will add to the normal business. Additionally, the lifting of lockdowns in different countries leads to another phenomenon. With the rise of the pandemic, a lot of elective programs have been postponed. Those programs obviously need to be started again, and we see that hospitals are beginning their normal programs at the moment or within the next two or three weeks. So we expect a very robust business even after the pandemic has been resolved.

Andrew D'Silva, Analyst

Thanks again.

Operator, Operator

And our next question is from Josh Jennings from Cowen & Company. Please proceed with your question.

Unidentified Analyst, Analyst

Hi, this is Bryan here for Josh. Thank you for taking my questions. I have a two-part question on COVID-19 to start. First, can you share the average number of cartridges used per COVID-19 patient in the first quarter and the trends you saw for stocking for COVID-19 specifically in the quarter? And then regarding backlog, do you expect backlog to become a normal dynamic going forward where you'll exit each quarter with excess demand, specifically for COVID-19? And I have a follow-up question as well. Thank you.

Phillip Chan, CEO

Yes. I think that the usage of CytoSorb varies from center to center. It's also varied based on the patients that they're treating. The doctors and physicians have had the most success in the early treatment of patients with COVID-19 infection soon after they are put on mechanical ventilation or soon after they develop shock. When they are far gone and patients have had long stays on mechanical ventilation, it is much harder to bring those patients back. We've seen the usage of CytoSorb vary; the numbers of cartridges vary across the world. In one of the case series that was presented in our webinar several weeks ago, for example, they only used one cartridge for 24 hours of treatment. We typically recommend about four cartridges per patient with the flexibility to do more treatment if necessary, depending on the patient's improvement. In terms of your question about the backlog, I think the demand for CytoSorb in the third month of our first quarter was actually quite robust and we were just scaling up at that time. I think that we've done - the team - you know just want to congratulate our production team, quality, R&D, and engineering that Vince has managed to really scale up this production, so that we can try to get ahead of the curve. The good part about our manufacturing process is that it is very flexible. We have the ability to scale up and scale down without incurring a lot of different fixed expenses. As we get ahead of the curve, the likelihood of backlog would be less, but that remains to be seen, and of course, our guidance is predicated upon our ability to continue to produce at the rate we are. So I think the backlog is just an indicator. There's a lot of demand out there and that backlog means that patients are in need.

Unidentified Analyst, Analyst

That's helpful. Thank you. Staying on the topic of COVID-19, a competitor recently discussed the possibility of seeking permanent U.S. approval that would allow the product to remain in the market past the emergency use interval for COVID-19. Is this something you're considering and if so, can you discuss the clinical data you'd need to make this happen?

Phillip Chan, CEO

Yes, I think it would be premature to speculate on what the FDA would be willing or not willing to do, so I don't think that is something that I'd like to comment on at this time.

Unidentified Analyst, Analyst

Okay. Thanks.

Phillip Chan, CEO

Sure.

Operator, Operator

Our next question is from Jason McCarthy from Maxim Group. Please proceed with your question.

Unidentified Analyst, Analyst

Hi everyone. It's Dave on the line for Jason. Thanks for taking my question. Just wanted to kind of switch gears here briefly and just want to see if you can give us an update on where you are with respect to the REFRESH 2 AKI studies and where you are in meeting the recommendations outlined by the DMC? Thanks.

Phillip Chan, CEO

I apologize, I couldn't hear that last part. Could you please repeat that – part of your question?

Unidentified Analyst, Analyst

Oh, just like where you were with respect to the REFRESH 2-AKI studies and where you were in terms of meeting the prior recommendations outlined by the DMC?

Phillip Chan, CEO

Okay. Very good. Yes, I think that we are on track. I think the one issue with the COVID-19 pandemic is that many hospitals, including all of our trial sites, have excluded non-essential outside people, including people who work for our contract research organization, from entering the building and from non-essential activities within the hospital. I think you're hearing a lot of hospitals now beginning to open up selected procedures and other things. The time that lockdown happened, our CRO had done the majority of the data scrubbing and qualification and validation of that data amongst the 150-plus patients that we've done to date, and they have also been working remotely to scrub that data at certain centers. However, it's not much work that needs to be done, and I think that provided these centers are able to open up to finish some of that last data scrubbing, we should be able to get that done in fairly short order. I think the goal would be sometime this summer that we would address the needs of the DMC in terms of data quality and data analysis and hopefully have the issue put to bed shortly thereafter.

Unidentified Analyst, Analyst

Great. That's helpful. And just wanted to kind of quickly circle back here. You mentioned that you had a sort of an order backlog going into the second quarter. What was that number again? I think I missed it.

Phillip Chan, CEO

It was $2.7 million.

Unidentified Analyst, Analyst

Okay, $2.7. All right, great. Thank you. Appreciate it.

Phillip Chan, CEO

Sure.

Operator, Operator

And our next question is from Sean Lee from H.C. Wainwright. Please proceed with your question.

Sean Lee, Analyst

Hi, guys. Congratulations on a great quarter and thank you for taking my questions. I just have two quick questions. The first is on the U.S. commercialization. You mentioned that you already have 30 active hospital accounts in the U.S. and some facilities have already started reordering the product. So I was wondering how is that handled right now, and do you plan on building a separate commercial structure for the U.S. compared to your European operations?

Phillip Chan, CEO

So we've developed what we call a COVID task force within the company. As you know, all our commercial operations are outside of the United States, primarily in Europe but also spread out in 50 countries around the world. In Europe, we have a full complement of a sales team with all of the necessary functions needed to effectively commercialize the product. In the United States, it has been more focused on clinical studies and manufacturing, and we did not have the infrastructure set up ahead of time to be able to meet the new demand from the United States based on the FDA Emergency Use Authorization. That said, we have had a multi-disciplinary effort at the company with people chipping in from all aspects to help here in this commercialization effort that has been supported by the European operations as well. We've been working very hard to prioritize the inquiries coming in and to be able to start these sites in a safe and responsible manner. We’ve been doing a good job so far. We're not relying on the U.S. obviously to drive sales, but what it does represent is a way to introduce the therapy to major hospital systems throughout the country and to key opinion leaders throughout the country. I have to say there’s been a lot of excitement about the therapy, a lot of enthusiasm, and in fact, some early cases with the therapy just getting to the United States.

Sean Lee, Analyst

I see. My second question is on maybe a breakdown of sales. I was wondering if you could provide a little bit more clarity on since now CytoSorb being approved for septic shock, cardiac surgery and now for ticagrelor removal. So maybe which indications you're seeing the biggest growth? And also, which areas or geographies are you seeing the biggest growth?

Phillip Chan, CEO

So I think that, of the 88,000 treatments that we've had to date, the split remains fairly stable, roughly two-thirds in critical care, one-third in cardiac surgery. Clearly, the ticagrelor application is in the area of cardiac surgery, and we were just getting started there before the COVID-19 pandemic hit. That being said, as I mentioned in the press release, we believe that this is potentially a very large growth area for CytoSorbents, and as Mike just mentioned in terms of some of the initial demand for the product, this application alone could double the current revenues that we have in Europe over time. It won't happen overnight, but we do believe that there is a compelling case for the therapy to become the standard of care for this anti-thrombotic removal application. Direct sales continue to dominate our results; however, international sales, particularly demand from COVID-19, has been very brisk. As Christian mentioned before, we think the need to pull from the market for COVID-19 will result in many more physicians using the therapy, and in a post-COVID environment, we believe that if they are having good success with the therapy, that could lead to potentially long-term business, non-COVID business for our company.

Sean Lee, Analyst

Thank you for the additional color. And that's all I have.

Phillip Chan, CEO

Thank you.

Operator, Operator

And our next question is from Anita Lashing out from Ania Bocian from Zacks Investment Research. Please proceed with your question.

Unidentified Analyst, Analyst

Hi, good afternoon. Congrats on the quarter and thank you for taking my questions.

Phillip Chan, CEO

Thank you.

Unidentified Analyst, Analyst

First on maybe Dr. Makis can help me clarify this. As far as the ticagrelor trial goes, I know you mentioned that you would be able to give better guidance after meeting with the FDA. In terms of the patient demographic, besides those who require emergency surgery, what about patients who can actually wait for the elimination of ticagrelor but might be at risk of ischemic complications? Would they be possibly part of the study too?

Phillip Chan, CEO

Yes. Makis, if you wanted to comment on that.

Ethymios Deliargyris, Chief Medical Officer

Great, thank you. Thank you for the questions. Great question. The ability of the device to remove ticagrelor has been shown both in a model, in a laboratory experiment, and we now have evidence from a study done in Hamburg in humans of very effective removal of the drug from circulation and in addition, a return of platelet function while the patient is undergoing this therapy. In that regard, the biological plausibility has already been proven. Why people need to have the drug removed can vary. In addition to urgent cases presenting to the hospital with acute events and currently on ticagrelor therapy, you can also have urgent cases where patients are outpatient, diagnosed with a need for a cardiac operation, and they opt to stop their drugs and wait for a week. Within a week, the drug is washed out, so the bleeding risk can be managed that way. The problem is that when you take these patients off these drugs, there's a rebound increase in ischemic events. So, someone with a diagnosis, treatment plan in place, who knows they need an operation, however, must stop their medication in the wait for the operation. With CytoSorb, this will no longer be necessary. They can proceed directly to the operating room on ticagrelor therapy, thereby having zero ischemic risk during the waiting period for surgery and, of course, effective removal during surgery to mitigate any bleeding risk. Does that answer your question?

Unidentified Analyst, Analyst

Yes. That was really helpful. Thank you for that. As a follow-up, I was curious to know if CytoSorb is being tested in clinical studies on other classes of anti-thrombotic agents besides Factor Xa and P2Y12 antagonists?

Phillip Chan, CEO

Yes, I think in the study that I mentioned before, the observational study from St. York Hospital in Hamburg, Germany, authored by Hassan and colleagues, studied a population of patients on ticagrelor as well as rivaroxaban, which is a Factor Xa inhibitor. And again, future studies have been done by George Angelou showing the effective removal of rivaroxaban for example. That represents a viable market for us going forward. As it relates to Portola and Alexion, I think it can show you what the potential of our product could be in that space, given that Factor Xa inhibitors, you know, the top two Factor Xa inhibitors, apixaban and rivaroxaban, have about $16 billion in worldwide sales and are widely used, and these patients have a high risk of needing emergency cardiac surgery or other surgeries.

Ethymios Deliargyris, Chief Medical Officer

If I can add one more comment on this topic. There is a very different clinical need being addressed with Andexxa versus CytoSorb. Andexxa is used after life-threatening bleeding occurs. Think of Andexxa as an airbag, deployed after an accident. Think of CytoSorb as a seatbelt. CytoSorb prevents excess bleeding, and therefore we will be using standard approaches to anyone who has the drugs circulating as they enter the operating room. It's a very different patient population and also a very different clinical application of the therapy. Patients receiving CytoSorb therapy will prevent bleeding from happening versus managing a catastrophic event, which Andexxa is doing right now, and requires patients to have a catastrophic bleed before it can be used.

Phillip Chan, CEO

That's great. Makis, thank you.

Unidentified Analyst, Analyst

Yes. Yes, that distinction was very clear. Thank you for that. The other thing just relates to the approval that you recently got in Mexico. Could you give us some color on how the initial order looks like from Fresenius? And also as a follow up to that, are you still waiting registration from South Korea?

Phillip Chan, CEO

Sure. Let me turn that over to Chris Cramer, Vice President of Business Development. Chris?

Christopher Cramer, VP of Business Development

Yes, hi. Thank you for the question. Yes, as you mentioned, CytoSorb was officially approved by the Mexican Health Authority at the end of March. For some context, Mexico is home to over 120 million people and is the second largest medical device market in Latin America after Brazil. As previously announced, Fresenius Medical Care maintains the rights to distribute CytoSorb in Mexico, and with this approval, they can import the product, and commercial sales may now officially commence in Mexico. They've got a very strong and motivated direct sales force in Mexico, and this is a group that has been excited to work with us from day one. Their management has made CytoSorb a top priority as well. I think working with these guys, we've noted that they've learned from their colleagues in Europe and they've come up to speed very quickly. They partnered closely with our international sales and medical teams to prepare the market, and this includes promoting at several major medical conferences and building awareness and support among leading ICU doctors in Mexico. They've recently brought in a new dedicated head of sales to lead the CytoSorb Mexico business, a person with extensive commercial experience and network connections specifically in ICU and hospital sales, which I think is really good and will help accelerate the introduction of the product. To your question, FMC has indeed already placed its first order, and the product has been shipped from our New Jersey warehouse. On top of that, because of the work they've been doing, they already have some backorders in place from several major institutions. As you know, Christian had mentioned, we anticipate that they'll see increased demand for CytoSorb’s COVID-19 applications in Mexico as it has everywhere else. So overall, I'd say we're very pleased with how things are progressing, and I believe FMC and CytoSorb are well positioned for success.

Unidentified Analyst, Analyst

Thank you. Just one more regarding sales in the European region. We know that Germany is a strong market, but what about Switzerland? Like does that territory have a dedicated procedure call for the CytoSorb reduction?

Phillip Chan, CEO

Christian, would you like to take that question?

Christian Steiner, SVP Sales and Marketing

Yes, certainly. Thanks. Thank you for the question. In general, I think we can compare the two markets, Germany and Switzerland, in terms of infrastructure and also the rate of medical supply. In Germany, we have a dedicated reimbursement code, and in Switzerland, this process is a little bit behind. We have a dedicated code but not yet the payments on it. This is always two years behind the code and has to be analyzed from the different health insurance data. Other than this, I think it is a very comparable market.

Unidentified Analyst, Analyst

Yes, good. Thank you. And just one last question. Are we to expect the data from the REMOVE study sometime in the summer?

Phillip Chan, CEO

I think that notwithstanding any potential delays caused by COVID-19 at these hospitals, most hospitals and throughout Europe and as you've seen in the United States have limited outside workers to non-essential personnel. From all indications, we believe that they're still on track, and if we have an update on any kind of delays, we'll make that known. But as for right now, I think the expectation is data by mid-year.

Unidentified Analyst, Analyst

Okay, great. Thank you for taking my questions. That will be all.

Phillip Chan, CEO

Sure. Thank you.

Operator, Operator

And our next question is from Keith Larose from Bradley Foster SRG Incorporated. Please proceed with your question.

Unidentified Analyst, Analyst

Hi. Thanks for taking my question, and congratulations on recent developments with the quarter. So the COVID crisis, of course, is an emergency around trying to save lives. Can you give me some color on the process of how and when the filter is used in a way that can support and protect your objectives around data collection that supports your story going forward? Thank you.

Phillip Chan, CEO

Sure. I think as I mentioned before, in our other business and critical care around the world, we find that early intervention with the therapy is better than late intervention. I have an analogy of organ failure being like walking away from home. The further you walk away from home, the longer it takes to get back, and often bad things happen when that happens. The further you go in organ failure, it’s just very difficult to recover. No amount of cytokine reduction will bring back a necrotic cell, for example. The goal here is to try to intervene early. We are not trying to intervene on patients who are highly inflamed but otherwise okay. Some may have fever, high white count, signs and symptoms of inflammation, fast heart rate, or fast breathing, but we’re not intervening on those patients. We are intervening when they start to develop organ dysfunction and organ failure. In COVID-19, it’s very similar; when patients go on mechanical ventilation is often a trigger point for some hospitals, particularly in Germany, where they’re intervening early and seeing nice data. Treatment also escalates when patients are doing worse. I think it runs the gamut; COVID-19 infection is so new and novel that we’re learning a lot, and everyone is learning as we go. The pathogenesis of the disease appears to be very unique compared to other viral pneumonias.

Unidentified Analyst, Analyst

Is there any type of comments you would make relative to how the application of CytoSorbents can be controlled or used in a way to support efficacy? It sounds like it's being used in a whole range of different ways at different intervention points, and it might be difficult to draw significant conclusions from this COVID experience. Is that fair, or do you have a different view?

Phillip Chan, CEO

I think that the first treatments ever done with CytoSorb and COVID-19 patients was the experience in China, where they were trying it on a wide variety of different patients. Some were early, but all had organ failure; so, early is a relative term. The old emergencies under the expanded access pathway in the United States kind of relegated CytoSorb to be used as an end-of-life therapy. However, the emergency authorization we now have gives doctors the flexibility to treat when they think it's important. To your point, we've guided to treat early, but there are also randomized controlled trials that are in process. One is the University of Freiburg using CytoSorb with ECMO, but there are other studies ongoing that are randomized control trials to try to get a more standardized way of treating based on the collective wisdom of the investigators and in the most recent experience with CytoSorb in these COVID-19 patients. The best data will come from randomized controlled studies, and we are also looking to try such a study in the United States.

Unidentified Analyst, Analyst

Thank you very much, very helpful.

Phillip Chan, CEO

Sure.

Operator, Operator

And at this time, I would like to turn it back to management for any additional or closing remarks.

Phillip Chan, CEO

Okay. Well, thank you everyone for taking the time this afternoon to listen to this call. We certainly appreciate all the support. If you do have any other questions, please feel free to reach out to Jeremy Feffer at LifeSci Advisors. Until next time, thank you everyone. Have a good night.

Operator, Operator

Thank you. That concludes our conference for today. I'd like to thank everyone for their participation. Have a great evening.