Earnings Call Transcript - CTSO Q3 2020

Operator, Operator

Good afternoon and welcome to the CytoSorbents' Third 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 our moderator, Jeremy Feffer. Please go ahead.

Jeremy Feffer, Moderator

Thank you, Stacy and good afternoon. Welcome to CytoSorbents' third 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; and Kathleen Bloch, Chief Financial Officer; Dr. Efthymios Deliargyris, Chief Medical Officer; Dr. Christian Steiner, Senior Vice President of Sales and Marketing and Managing Director of Cytosorbents Europe GMBH; 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 November 4, 2020, 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 third 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 welcome everyone to the third quarter 2020 earnings call for Cytosorbents Corporation. We had an outstanding third quarter marked by numerous accomplishments. First, third quarter 2020 total revenue grew 73% to $10.5 million, and product sales grew 79% to $10.2 million over the third quarter of 2019. Trailing 12-month product sales were $34.5 million. Secondly, we delivered more than 110,000 cumulative Cytosorbents today, up 51% from a year ago, and up 10,000 from our recently announced milestone of achieving more than 100,000 devices delivered. We also achieved blended product gross margins of 74% in the third quarter compared to 77% a year ago, but sequentially higher than the 70% in the second quarter of this year due to a higher percentage of lower margin distributor sales and higher cost of rents for COVID-19 production. In July, we completed a $57.5 million financing led by Cowen and SVB Leerink with co-manager B. Riley FBR, strengthening our cash balance to roughly $88 million at the end of the third quarter. The REFRESH 2 data monitoring committee also recommended resumption of the trial following a favorable review of safety data. In terms of COVID-19, we have now treated an estimated 2,800 COVID-19 patients in more than 30 countries around the world, including here in the United States, and are working to capture these data in the CTC COVID-19 registry. We also established collaborations to commercialize CytoSorb in the United States and 25 states with Terumo Cardiovascular, InvoSurg, and Surgical Partners, and are working to cover the other states as well currently. We also hosted a key webinar on the use of CytoSorb for Antithrombotic Drug Removal with key opinion leaders and users of CytoSorb for this application in July. We were also awarded a $4.4 million contract from the Department of Defense to complete HemoDefend-Blood Group Antibody pre-clinical development. And we also expanded distribution to include 66 countries, including Brazil. With our strong financial performance and solid cash position, coupled with a strong current and anticipated demand for CytoSorb, we are executing a number of key initiatives to drive growth. These are in two major areas: one is commercialization, and sales. And the second is clinical trials. On the sales growth strategy side, one of our first goals is to maximize the COVID-19 opportunity. We're well positioned in Europe and throughout the world to help in this next wave. We also have established collaboration in the United States, establishing key relationships throughout the country. Second of all, as COVID-19 fades, which is expected to happen next year with the approval of vaccines for COVID-19, we plan to return to our pre-COVID-19 growth strategy. This is detailed very extensively in our press release today. So I'll only cover this very briefly, but the key tenets of the strategy are the focus on driving both direct and distributor sales, to maximize the Ticagrelor and Rivaroxaban E.U. approvals, to expand into new applications such as liver disease, and also cardiac surgery, such as endocarditis and other applications, to expand our international team with a focus on commercialization, manufacturing, clinical and R&D. To expand our plan, to be able to get to the next level of scale, to be able to produce somewhere on the order of $300 million to $400 million in sales of products and thereby helping also to drive expansion of our blended product gross margins, to prepare for commercialization, which currently involves hiring a new VP of Sales for the United States to help manage COVID-19 sales, but to also prepare for potential future approved applications in the United States, such as the removal of Ticagrelor and other applications. And then finally, to streamline our balance sheet and in particular, to come up with a strategy, either refinancing or repayment of recurrent debt, and that process is underway. But with that, I'd like to focus more on the clinical program. And with that, I'd like to turn it over to Dr. Efthymios Deliargyris, our Chief Medical Officer. Makis, if you may be on mute.

Efthymios Deliargyris, Chief Medical Officer

Apologies. Thank you, Phil, and good afternoon to everyone on the call. On a personal note, it's been a very exciting six months for me with the Company. And I'm very pleased today to be able to present to you with the overview of our clinical activities and our clinical plan going forward. During these last six months, I've had the chance to spend extensive time with my colleagues within CytoSorbents, prioritize our targets and finalize our clinical plans. During that time, we faced significant challenges from COVID-19 across our clinical programs, but we also encountered significant opportunities, and we'll discuss with you a little later about the COVID-19 related clinical activities. And finally, as you heard already from Phil, and you're going to hear in more detail from Kathleen later, we have now the available funds to expand on our clinical capabilities and execute an ambitious clinical plan. As noted on this slide, we will focus on both areas of applications of Cytosorbents that we're seeing practice today in Europe, and that is in critical care, therapeutic area and cardiovascular disease, specifically cardiac surgery. We have identified six specific priority therapeutic areas that we will target with our clinical programs. In the critical care space, we will focus on shock reversal, where the CytoSorb device can be very effective by removing cytokines and providing rapid hemodynamic stabilization. We will also focus on acute liver failure and liver applications with the removal of liver toxins such as bilirubin or ammonia, coupled with cytokine removal can be extremely effective in reversing the clinical course in these patients. We will also continue to expand our clinical activities in the COVID-19 space, where again, quenching the cytokine storm with CytoSorb, especially in the setting of a combined therapy with ECMO, has shown substantial clinical benefits so far. In the cardiovascular arena, our three targets will focus on antithrombotic removal, where we have specific bench and clinical evidence demonstrating very efficient removal of these antithrombotic agents by CytoSorb in the operating room. We will also focus on endocarditis, where cytokine removal and hemodynamic stabilization could lead to substantial clinical benefits for this acutely ill patients faced with high mortality otherwise. And of course, we will continue our clinical program in preventing acute kidney injury in patients undergoing complex cardiac surgery. We will implement a complimentary approach. Although heavily focused on randomized company-sponsored clinical trials, we will also implement innovative designs to complement data generation, including therapy registries, and single-center or single-arm prospective trials. On this next slide, you will note the associated timeline with the execution of these programs. Programs like the CTC Registry in COVID-19, The REFRESH 2 trial in acute kidney injury prevention in cardiac surgery, the STAR Registry in antithrombotic removal, and the TISORB Study, also looking at Ticagrelor removal are already ongoing. Early into 2021, we plan to initiate three trials in Germany, including a randomized clinical trial in shock reversal, a multicenter trial in Germany, the HepOnFire, single-arm study in patients with acute on-chronic liver failure, again, initiated and executed in Germany. And finally, our second Ticagrelor removal study called CyTATION is a multicenter PK-PD study also executed in Germany. In the next 12 months after that, we plan to initiate substantial clinical programs in the U.S, including a large randomized shock trial in the U.S., a liver trial in the U.S., and then follow-up trials in both novel oral anticoagulant and ticagrelor reversal in multicenter randomized clinical trials in the United States.

Phillip Chan, CEO

Thank you very much, Makis for that overview. And now I'd like to turn the call over to Kathy for financial overview, Kathy?

Kathleen Bloch, CFO

Thank you, Phil. And greetings, everyone. So for today's call, I'll provide an update regarding our third quarter 2020 financial results. In addition, I'll talk about our working capital and cash runway. So our CytoSorb product sales for the third quarter of 2020 were $10.2 million, which is approximately a 79% increase over product sales of $6.1 million for Q3 2019. This increase was driven by an increase in direct sales of approximately $2.1 million, resulting from sales to both new customers and repeat orders from existing customers, and also an increase in distributor sales of approximately $2.4 million. Now, the Euro to dollar exchange rate increased from an average rate of $1.11 in Q3 2019 to $1.17 in Q3 2020, and this had a positive impact on our third quarter 2020 sales of approximately $428,000. Although it's difficult to quantify, we estimate that approximately $2.7 million of total product sales in the third quarter of 2020 were due to the demand for CytoSorb to treat COVID-19 patients. Our total revenues, which includes both product sales and grant revenue, was approximately $10.5 million for the third quarter of 2020 as compared to $6.1 million for the third quarter of 2019, which represents an increase of approximately 73%. Our third quarter 2020 gross profit grew to $7.7 million, an increase of 74% or $3.3 million greater than our gross profit for Q3 2019, which was $4.4 million. Our gross profit margin on product sales was approximately 74% for the third quarter of 2020 as compared to 77% for the third quarter of 2019, primarily due to an increase in the percentage contribution of lower margin distributor sales, as well as due to some additional COVID-19 incentive payments to employees as a result of our continuing efforts to ramp up production. And then turning to our nine months financial results, product sales for the first nine months of 2020 stood at $27.9 million, which is an increase of 73% over product sales of $16.2 million for the same period in 2019. Sales to hospitals in the United States under the emergency use authorization granted by the FDA were approximately $928,000 for the nine months ended September 30, 2020. Again, we indicate it's difficult to quantify, but we estimate that approximately $6.9 million of our total product sales in the nine months ended September 30, 2020, was due to demand for CytoSorb to treat COVID-19 patients. We note that this increase in sales was offset to some extent by decreases in sales related to elective procedures which were avoided or postponed during the COVID-19 pandemic, such as in cardiac surgery where CytoSorb may have otherwise been used. The change in the Euro to U.S. dollar exchange rate did not have a significant impact on sales for the nine months ended September 30, 2020, as compared to the same period in 2019. Looking at our quarter-over-quarter product sales, with the third quarter of 2020 and our product sales of $10.2 million, we achieved another record quarterly product sales growth, with the third quarter of 2020, representing our fourth consecutive quarter-over-quarter growth in product sales. Sales in 2020 have been positively impacted by demand for CytoSorb to treat COVID-19 patients in the ICU. Given the order patterns that we are currently experiencing, we expect that the COVID-19 pandemic will continue to have a positive impact on product revenues for the remainder of 2020; however, this may change in the future should the pandemic be contained. We look at our trailing 12-month product sales. Overall, our annual product sales growth continues to be very strong. Additionally, year-over-year gross margins adjusted for 2020 COVID-19 related incentive payments to employees during the ramp up of production continue to rise and would be 77% if we didn't have those COVID-19 related ramp-up costs. And finally, let's take a look at our working capital liquidity and cash flow. As previously mentioned, at September 30, 2020, we had approximately $88 million in cash, which is the most that we've ever had. This increase in cash over the prior quarter was a direct result of our July 2020 equity raise, which generated approximately $53.8 million in net proceeds to the company. We believe we now benefit from a solid capital foundation, and that the existing cash will provide a runway to meet our operating needs well into the foreseeable future. Regarding our operating strategy, we intend to prioritize our spend around generating clinical data and obtaining U.S. FDA approval, securing and expanding our production capacity, and driving worldwide sales growth and acceptance of CytoSorb as standard-of-care. I also want to mention our current position regarding our $15 million term loan with Bridge Bank. We are finalizing a comprehensive analysis of alternatives with regard to the debt financing. These alternatives include but are not limited to refinancing the existing debt, extending the interest-only period, expanding the amount of debt financing available to the company now, and or in the future, as well as repayment of the current debt while retaining a commitment for debt availability in the future. We have engaged in extensive discussions with Bridge Bank, our existing bank, and other reputable lenders. With the best interest of our shareholders in mind, we are weighing all of our options and deliberating closely with our board of directors. We expect to finalize our decision regarding the debt in the very near future. Lastly, turning to our capital structure, as of September 30, 2020, we have approximately 48.6 million common shares outstanding on a fully diluted basis.

Phillip Chan, CEO

Thank you very much, Kathy. In terms of guidance, Cytosorbents has historically given specific financial guidance on quarterly results until the quarter has been completed. However, provided that the current order pattern continues, and notwithstanding uncertainty related to the COVID-19 pandemic, we expect that the fourth quarter 2020 sales will be one of the company's strongest quarters to date. That concludes our current prepared remarks. Operator, please open up the call for the Q&A session.

Operator, Operator

Thank you. [Operator Instructions] Our first question comes from Anthony Petrone with Jefferies. Please go ahead.

Anthony Petrone, Analyst

Hi, thanks and congratulations on the good quarter, hope everyone's doing well. Maybe, hi, how are you? Maybe I can start a little bit with COVID just in light of where the recent case counts are I mentioned 2.7 million in the quarter you do have multiple regulatory clearances, whether it's emergency use authorization or full clearances at this point. So I'm just wondering how much stocking is there geographically, when we see where case counts are going, where ultimately do you think hospitals will position themselves with having CytoSorb on the shelf to deal with severe cases? And sort of as we go forward on the regulatory front, should we be expecting any additional authorizations and/or clearances? And then I'll have one more follow up.

Phillip Chan, CEO

I think that in terms of building inventory ahead of what is expected to be a very difficult and severe winter season for COVID-19 and flu, we have seen centers order in the third quarter in advance of the fourth quarter. However, I think that most of the existing stock that has been taken has been designed for patients who are currently ill, so it's a mix of the two. In terms of potential other regulatory approvals or emergency authorizations throughout the world, I think we are well positioned again; we have the ability to sell this in 66 countries around the world for the treatment of cytokine storm. Because of that, we can be used in any country today that we're currently registered in to treat COVID-19. As such, they are not necessary. We did get some approvals earlier, for example, from Israel and India. But again, those are not necessary to be able to use our therapy in COVID-19.

Anthony Petrone, Analyst

And then maybe the two thoughts, here would be, and I'll get back in queue. The first would be just in terms of Germany, this was a ramp here in terms of the sales force, maybe just an update on you know how that process is going. And really the time you expect it to take the additional sales rep to really begin contributing to the CytoSorb sales in Germany specifically. And then you referenced plant expansion, in the U.S. just maybe a little bit on timing as to when you'll begin to actually break ground on plant expansion. You mentioned to support $300 million to $400 million in sales, but what level of CapEx will be committed to that expansion plan? Thanks.

Phillip Chan, CEO

Sure, Anthony. Two good questions. Let me turn the first one over to Dr. Christian Steiner, our Senior VP of Sales and Marketing in Germany. And then the second one, Vince Capponi, our President and Chief Operating Officer, if you could take that one. That would be great. Christian?

Christian Steiner, Senior VP of Sales and Marketing

Thank you, Phil. Thank you, Anthony for the question. Can you hear me all right?

Anthony Petrone, Analyst

Yes, yes.

Christian Steiner, Senior VP of Sales and Marketing

Okay, very good. Yes, in terms of sales force in Germany, we have finished the build-up of the sales force end of last year and beginning of this year. Also the training for all the sales reps was finished in the first quarter. I think the COVID-19 pandemic has led to the case that we also had quite some time to expand the training for the sales reps and bring them up to speed, and I think everyone is at the right pace from Q2. Still, we have restricted access regulations for the sales reps in the hospitals. But as soon as we can access the hospitals 100%, everyone is ready to go.

Phillip Chan, CEO

Great, Christian. And, Vince, if you could maybe take that question on manufacturing and CapEx requirements for that and the timing.

Vincent Capponi, COO

Sure. Thanks, Phil. Regarding your question about starting and CapEx expenditure, we intend to actually zero in on the close of potentially new building here in the first quarter of next year, in which case, it's going to take us roughly 12 months to build that out and actually have it approved and capable of producing product. We expect that this is going to be about $5 million in build-out, with obviously, landlord contributions as well to be able to support about a $300 million business. Did I answer your question?

Anthony Petrone, Analyst

Yes. Absolutely. Thank you.

Operator, Operator

Next question comes from Andrew D'Silva with B. Riley. Please go ahead.

Andrew D'Silva, Analyst

Hey, good afternoon. Thank you very much for taking my questions. Just to follow up on the manufacturing question, as it relates to the current manufacturing facility. Two parts: one, do you think as you close out the year, you'll be back at that 80% gross margin level? You noted 77% without ramp up incentive payments, so seems like you're almost there? And then have you reached the ability to produce at full capacity near that $80 million annual number?

Vincent Capponi, COO

Go ahead Phil. Sorry…

Phillip Chan, CEO

No, I just want to pass it on to you, Vince.

Vincent Capponi, COO

Thanks, Andrew, for the question. With respect to the gross margins, as Kathy mentioned, we're roughly at without the incentives, etc. around the 77%. We expect to be if you take those incentives out, close to the 80% gross margin. Our efficiencies are improving, as we've now started to ramp up. We're not completely there yet. Again, we're balancing with demand, so we don't want to go too excessive here. But basically, we are knocking on the door of that 80% gross margin, is the bottom line. Again, I think our efficiencies are improving, and taking out the incentives etc., we should be very close to that. With respect to being at the full $80 million capacity, we're balancing again, the operation relative to what we see as the orders and Christian’s forecasting. Certain parts of the operation, we run more than other parts, but I will say between April of this year and now, we've added another production line to help increase the velocity of product that we can put out of the plant. So that has helped us keep up with Christian's demand and supply the market. Does that address…

Andrew D'Silva, Analyst

Yes, you have two lines now, or are there?

Vincent Capponi, COO

We're actually at three lines now.

Andrew D'Silva, Analyst

Okay, perfect. Thank you for that. And then on the clinical side, you're clearly investing a lot more now in internally funded trials. One notable you stood out in your press release was related to septic shock. That's been historically a fairly challenging bar to hit. Just curious if you could talk around why you believe now is the right time to pursue that, and any differences that you see whether with regulators or from an efficacy standpoint, that gives you confidence to go about that now versus before?

Phillip Chan, CEO

Yes, Makis, would you like to take that?

Efthymios Deliargyris, Chief Medical Officer

Thank you for the question. The academic community and thought leaders in Sepsis have for many years suggested moving towards studies that focus on clinical endpoints other than mortality alone, since that bar is too high to reach. We have seen over the last few years that regulators are increasingly accepting innovative clinical endpoints for regulatory submissions. Additionally, we believe that the consistent feedback from users in the field showing substantial clinical benefits when using CytoSorb in septic patients gives us confidence in executing these clinical studies. It’s important to highlight that we aim to demonstrate effective shock resolution using clinical endpoints that are meaningful and acceptable to regulatory authorities.

Andrew D'Silva, Analyst

Okay, great. And just the last question for me and I get this from clients a lot. It's just related to HemoDefend-RBC, versus HemoDefend-VGA, if you could just discuss where you are, and the development paths for both those. And if there's any other opportunities, you should be thinking about that product line.

Efthymios Deliargyris, Chief Medical Officer

So with the HemoDefend red blood cell product, this is a product designed to reduce non-infectious contaminants from red blood cells, such as cytokines, antibodies, bioactive lipids, potassium, and various contaminants that can cause transfusion reactions. This program is subsidized by the National Heart, Lung, and Blood Institute and is making its way towards human clinical studies. However, due to COVID-19, progress has been significantly slowed for this program as we need to conduct additional bench studies and also healthy volunteer studies. That being said, it remains very much part of our pipeline. The second program is the HemoDefend BGA program. This product is designed to remove anti-A and anti-B antibodies from plasma as well as whole blood as a way to create a universal plasma product that is not blood type specific. This can be used off the shelf, rapidly given to trauma or critically ill patients, or used in plasmapheresis and plasma exchange. We have received $8.5 million in funding to complete the preclinical development and move this product toward human clinical studies and eventual approval. COVID-19 has presented challenges, but our R&D teams are back in the lab and continuing to advance these programs.

Andrew D'Silva, Analyst

Okay, thank you for the color and congrats on all the progress this year. Best of luck closing out 2020.

Efthymios Deliargyris, Chief Medical Officer

Thanks a lot, Andy.

Operator, Operator

Next question comes from Josh Jennings with Cowen & Company. Please go ahead.

Josh Jennings, Analyst

Hi, good evening. Secondly, congratulations on the strong results. Hi, Phil, and thanks for all the details on the call. I just wanted to ask about the STAR trials and wanted to see if you could help us think about potential primary and secondary endpoints for this trial. Just to start with that?

Phillip Chan, CEO

Sure. Let me turn it over to Makis just for some additional color.

Efthymios Deliargyris, Chief Medical Officer

Thank you, Phil, and thanks for the question. The acronym STAR stands for safe and timely antithrombotic removal. The STAR program will be comprised of a series of studies targeting different important areas for this application. STAR1 is the registry, and we have collected user's survey that suggests that over 400 cases have already been treated with the use of CytoSorb for antithrombotic removal. The STAR 2 will focus on drug removal, and STAR 3 will be late-stage studies showing the implementation of this approach as a standard-of-care along with clinical benefits, including reductions in bleeding and improvements in the efficiency of care for these patients.

Josh Jennings, Analyst

Excellent. And just a follow-up on STAR 3. Will that include patients on NOACs as well as Ticagrelor?

Efthymios Deliargyris, Chief Medical Officer

Yes, we believe that. Short, we believe that the application has the exact same benefits, including, again, the clinic’s reductions in clinical indices of bleeding, and also the increase in efficiency. So we plan to invest in generating data on both Ticagrelor and the NOAC class.

Josh Jennings, Analyst

Great, thanks for that. And then just had a question on the registries for critically ill COVID-19 patients of the U.S.-based registry CTC, 500 patient registry, a bunch of other registries worldwide. Could you potentially use that data for a submission for a specific CytoSorb indication in the United States?

Phillip Chan, CEO

Yes, the goal of the registry and COVID-19 is to generate clinical data on the treatment of complications of viral Sepsis, which includes organ injury, particularly lung injury, shock, and kidney injury. While we don’t believe the data from the registry will be sufficient for U.S. regulatory approval, it may be useful in other countries. However, any progress we make with COVID-19 can potentially be leveraged to inform studies in seasonal flu, which is a significant ongoing health challenge.

Josh Jennings, Analyst

Thanks. That makes sense. Appreciate that. And my last question, just the distributor team or your distributors generated some nice sequential momentum, I think 20% sequential revenue growth from that channel. Can you talk about the drivers? And was it mostly COVID-related? Or did you also see demand and/or utilization from the Ticagrelor and rivaroxaban removal indications and -- your thanks for taking the questions guys?

Phillip Chan, CEO

Sure, Josh, let me turn it over to Christian to give some color on the distributor sales, and where that's coming from.

Christian Steiner, Senior VP of Sales and Marketing

Thank you. Yes, you're right. It's both. We are currently in more than 60 countries, and in many countries, our presence has grown over the last few months and years, so the need for implementation was there as COVID-19 kicked in enhancing our opportunity for usage. The performance results from both the standard indications and the push-out from COVID-19 have allowed us to deploy infrastructure around the world.

Josh Jennings, Analyst

Excellent. Thank you for those details.

Operator, Operator

Next question comes from Danielle Antalffy with SVB Leerink. Please go ahead.

Danielle Antalffy, Analyst

Hey, good afternoon, everyone. Thanks so much for taking the question on my first call since initiating coverage. I appreciate it. So just to follow up on Joshua's question, how do we think about the NOAC indication contributing as they come out on the other end of COVID? I mean, it's hoped the number of elective procedures being done in Europe. So if we think about a ramp there like, should we be thinking about it in line with elective procedures ramping? Or hope if you could give us even qualitatively some color there? And I have one follow-up.

Phillip Chan, CEO

Certainly, Danielle. Makis, do you want to take that in discussing the potential market for the Ticagrelor and NOAC?

Efthymios Deliargyris, Chief Medical Officer

Thank you for the question. The unmet need of Ticagrelor and novel oral anticoagulants such as rivaroxaban has existed for a while, and they are increasingly popular treatment options for patients. The messaging we're currently receiving from clinicians points toward the immediate need for this solution. Therefore, the ramp-up period is not likely to be slow; we expect to see rapid acceptance correlated with the dissemination of our clinical data and training for healthcare professionals.

Danielle Antalffy, Analyst

Great... Thank you for that.

Phillip Chan, CEO

Yes. I want to emphasize that once we move out of the current constraints imposed by the pandemic, those who are already aware of and familiar with the technology are likely to adopt it rapidly. The efficacy and utility of the product are well-regarded amongst those users.

Operator, Operator

Next question comes from Sean Lee with HC Wainwright. Please go ahead.

Sean Lee, Analyst

Good afternoon guys. Congratulations on a great quarter and thanks for taking my questions.

Phillip Chan, CEO

Sure. Hey, Sean.

Sean Lee, Analyst

I have just two quick questions on the clinical programs. So first, could you provide a bit more color on your strategy for tackling the Sepsis? I see that you have both the German study planned and a future U.S. study, so maybe you can tell us a bit more about the design of these studies and what the potential endpoints are and whether there are any differences between the German study and the U.S. study?

Phillip Chan, CEO

Sure, Makis, would you like to take that or I can take it as well?

Efthymios Deliargyris, Chief Medical Officer

Either or Phil, your call.

Phillip Chan, CEO

Sure. Why don't you go ahead?

Efthymios Deliargyris, Chief Medical Officer

Great. So the PROCESS trial is a multi-center trial, aimed at septic shock patients. The focus here will be on achieving hemodynamic stabilization, and we aim to create a time-dependent primary endpoint focused on the speed of stabilization. The regulators are starting to accept this innovation in clinical trial endpoints. Concurrently, we will work on the U.S. trial and align with the FDA to confirm these endpoints are meaningful.

Sean Lee, Analyst

Great, thank you for the additional color. My second question is on the ongoing TISORB and CyTATION studies. Now, with the flare-up of COVID in Europe, I was wondering what's the impact on those -- on the timeline of those studies and whether you can update on maybe when we can potentially see the results from those?

Vincent Capponi, COO

The TISORB study was activated and enrolled its first patient right before the COVID shutdowns took effect. We have seen a slight easing of the COVID-19 related restrictions in the last few weeks, and we've had active sites looking to enroll patients in TISORB. However, we are keeping a close eye on the progression of the second wave throughout Europe, which can impact timelines. The CyTATION study is preparing to start, with recent regulatory and Institutional Review Board approvals in Germany. We're optimistic about progress in Germany, even as we remain cautious regarding the current pandemic trends.

Sean Lee, Analyst

Got it. That's all I have. Thanks for taking my questions.

Phillip Chan, CEO

Great, Sean. Thank you.

Operator, Operator

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

Phillip Chan, CEO

Thank you everyone for your participation today. If you do you have any other questions that we did not answer today, please feel free to reach out to Jeremy Feffer at [email protected] and we'll try to reply to your questions where possible. We look forward to the next quarterly call. Thank you everyone very much. Have a good night.

Operator, Operator

Thank you. That concludes our conference for today. I would like to thank everyone for their participation.