Conference Transcript - ICU 2026-02-05

Robert LeBoyer, Analyst — Noble Capital Markets

i'm robert leboyer senior biotechnology analyst at noble capital markets our next presenting company is c star medical a company working in modulation of the immune system and hyper response of immune reactions with us to present is eric schlorff the ceo please go ahead eric thanks robert and thank you noble for uh allowing us to share our story about cstar medical we're very passionate about saving the lives of critically ill patients as well as saving organs and we'll walk through that we are traded under nasdaq on nasdaq under the ticker symbol icu

Eric Schlorff, CEO

like the intensive care unit which you'll see that is one of the places that we actually work our our magic and our science obviously we have forward-looking statements uh please at your leisure go and review these. So our mission is very clear. It is to stop organ failure and save lives. You know, we've actually had many clinical studies that we've done in the past as well as ones that we're conducting currently, which is really demonstrating that ability to save and preserve organ function. It is also very clear that our goal is to expand indications. So this is a therapy that is much broader than just the kidneys. You will actually hear about the really the agnostic, not just to disease state, but also to organ. This is actually proven by six FDA breakthrough device designations that we've been awarded for the same selective cytophoreic device or SCD. And on the shareholder and stakeholder value, this has an unbelievable profit potential and margin. What you'll see is that it actually has a high gross margin of pharmaceutical like around 90 plus percent. So when we think about the initial indications that we're going after, it is acute kidney injury, or we call it AKI. And these are patients usually on some type of renal replacement therapy. So their kidneys have essentially failed and they're on supportive care. We're targeting, this is in the United States. The pediatrics is where we've launched initially in the United States. That's about 4,000 patients or about $100 million market potential in the united states and it is a really a kind of a we call it kind of an ultra rare or small patient population which we will kind of talk through how we actually got that approved uh through a kind of an orphan products uh uh kind of approval on the adult side which is the much larger market potential it's actually 50 times larger about four and a half billion that's about two hundred thousand patients in the united states annually and we are running a pivotal trial which is underway called neutralize AKI which we'll talk about the makeup of that study so the problem as as Robert kind of outlined in the beginning is around the hyper inflammatory response that can lead to this multi-organ damage and death you know the way that the actual immune cells and immune system works is usually there's an infection or injury so this can be a virus bacteria surgery trauma, something initiates this immune response. And our first responders are these activated monocytes and neutrophils. These are the first immune cells to get to that site of injury and to begin that healing process. Unfortunately, when the cycle comes out of control, which we call the cytokines, which are really being released from these activated neutrophils and monocytes, they become out of control and create this tornado, essentially, which becomes uncontrolled and then can lead to end organ damage or even to death. The way we deliver our therapy is really through a current standard of care, which is a continuous renal replacement therapy. So this is actually machines already set into the intensive care unit, so that they're already at the 5,000 plus intensive care units across the United States. We are literally a simple addition to this circuit, which you can see here, the SCD. The way that it works is that we use the anticoagulant, which we use as regional citrate anticoagulation, which actually reduces the calcium levels. This is actually part of the whole therapeutic package that we deliver. So if you think about what's actually happening here, the patient, well, the SCD gets the whole blood comes in. The most highly activated neutrophils and monocytes actually stick to the outside of the fiber that are in impact inside of our selective cytopheric device. They actually, we've created a flow that's very similar to a capillary bed where the neutrophils normally like to roll and so they they then bind like velcro essentially to the outside of those fibers in a low calcium environment they're driven into cell death or apoptosis they return back into the body all in real time this is actually a very elegant and powerful solution which will show you the clinical results that we have thus far we are overseen by the biologics division of the FDA as a medical device as well so this just gives you another depiction of you know kind of the cascade of how it works we are targeting the source which are the neutrophils and monocytes are the most activated ones of those most of your drug companies biologic companies out there are actually going after each one of these individual cytokines so things like il-6 or tnf-alpha they're going after those but what we have found and what we see in a lot of clinical studies is there's a high rate of failure really because one cytokine isn't usually driving the bus we believe that we actually have found a way to be able to drive that bus and to be able to neutralize that those effector cells we call them and restore the body into homeostasis and allow the body to heal and we'll walk through some of that clinical data this is our pipeline so as I explained, in pediatrics, Quellimmune is the brand name for the pediatric acute kidney injury product that we launched. We got approved in Q1 of 24, launched in Q3 of 2024, and then last year was our first full year of sales. It is under a humanitarian device exemption, which really means it's a patient population of less than 8,000 annually. What you'll also see in the pipeline is a very strong pipeline of additional studies and indications that we have all breakthrough device designations for. Neutralized AKI, which is the adult study for the same patient population as children. That study is being enrolled as we speak. Neutralized CRS, which is cardiorenal syndrome, bridged to LVAD. That is a study which we'll talk about as well. That one is actually funded through NIH by one of our partners. We also have chronic kidney disease or end-stage renal disease. We have a patorenal, as well as two indications in the systemic inflammatory response and cardiac surgery for both adults as well as pediatrics. All of these are under the breakthrough device designation, which does provide the company with timely access to the FDA, and it does allow us to speed up some of that development and assessment and review with the FDA. So what is Quellimmune? Again, for pediatrics, what is the problem that these patients and the system is experiencing? Well, about a quarter of the patients that come into the ICU experience acute kidney injury. Unfortunately, they stay twice as long in the ICU, i.e. cost. It's a coin flip whether the patients are going to live or die. And when I say that, that means it's not like they don't have years to live, it literally is in some cases days or, you know, as much as a week or two that they are going through this multi-organ process dysfunction. And those that are lucky enough to survive, you know, up to 30% of those patients are going to have long-term chronic disease. So they may be on dialysis for the rest of their life. What we were able to show in our registration data to the FDA, this was based on 22 patients. The standard of care, as I shared before, which was about 50% survival. What we were able to show with Quellimmune is a survival rate of about 50% greater or about 77% at day 60. We also showed that no patient was on dialysis or required dialysis at day 60 post-ICU discharge, and we saw no device-related immunosuppression, serious adverse events, or infections. Very clean bill of safety. Well, one thing is, you know, obviously a study is one thing, but what actually is happening in the real world? So the FDA actually mandated a post-marketing registry, which is what we call SAVE surveillance registry, as we track the safety of this product. We've reported this out in late September, the survival of the first 21 patients in that real-world setting, which you can see the survival is very consistent with what we saw in the registration data. But I will say what is very interesting, which is many of these patients are much sicker than what we actually saw and tested in the registration study itself. A lot of these patients actually have oncology. They may actually have kidney transplants. So many of these are much sicker than that initial patient population that we had first treated. And this just gives you, again, a summary of the previous clinical studies and really the safety profile of the selective cytopherotic device in both adults as well as in children. and really I would point your attention to here, which is no device-related SAEs or what we call serious adverse events or no device-related infections. We don't see immunosuppression. We don't see any of those even in this very sick patient population. And it's also important to note that the studies that we will be talking about from a historical standpoint, about 50% of those patients were septic or had a septic condition. So let's focus our attention. The initial attention here to the commercial adoption of Quellamune. So, this is pediatrics. As I mentioned, we first shipped the product in July of 2024, and really the target was the top, you know, the top 10 children's pediatric hospitals. We know there's about 200 plus children's hospitals in the United States that treat these patients, but we also know that really it's the top 50 that are likely to treat about 50% of those AKI patients. So we have focused on those top academic centers to create that brand recognition as well as treatment experience. Our target was the top 20% of those top five. We have achieved that and continue to march on to 25 sites by the end of this year. We are also working on the whole kind of adoption and bringing them into the hospitals we have to work through what we call the Institutional Review Boards. So the Institutional Review Boards will approve the HDE itself as well as this patient registry. Make a small note on the patient registry, we reported back in December of last year that we were able to successfully negotiate with the FDA to reduce the number of patients required for that registry from 300 down to 50. And then in that December press release, which you can refer to, we had already enrolled around 30 some patients into that. And so we're, you know, obviously marching down towards, you know, getting the full 50 patients and then being able to report that back to the FDA and with the goal of potentially not having a mandatory registry going forward. So here's a list of some of those children's hospitals that are current customers of ours. Obviously, these are very well-known hospitals throughout the United States. We continue to build this franchise out and we'll continue to report a list of some of those names as we bring them on this year. So obviously, you know, for a hospital to adopt and use this this type of therapy obviously there's one thing which is does it have probable benefit meaning does it work is it safe but then what about the economics so you know in our case uh the economics are actually quite clear um there if you look at this is a health care economics paper that was developed we fall under a drg which is about 400 000 and so the the real importance here is when you do this, the math and the modeling here, we are able to reduce length of stay by about three days, which obviously in the intensive care unit, that's a, that's a very expensive proposition, as well as reducing mortality. What we've been able to show is that even using six days, so this is a disposable, even using six days of our therapy, the, the, basically the savings the hospital receives is anywhere between 40 and $45,000 for each one of these patients that they're treated so obviously this actually drives dollars to the bottom line of each of the hospitals so you know we spent time talking a little bit about the the pediatric launch and where we're headed with that uh the adult you know if you look at the patient kind of the the survival that we've seen in previous studies the the adult scd or selective cytopheric device was very comparable to what we saw in children uh the the unfortunately the historical control, which is standard of care or continuous renal replacement therapy, has not changed in literally the last 20 to 30 years. This 50% mortality has been there. There has not been a step change or even, you know, a significant change in any kind of mortality in this patient population. Also, no dialysis dependency in the previous studies as well. Very consistent based on the ability for the immune system to actually go back into more of a reparative mode rather than just a pro-inflammatory and destroying good, healthy tissue. So the pivotal trial that's going on, which is called Neutralize AKI, is a 339-patient randomized controlled study. It compares to the standard of care, which is CRRT alone. This is a study that we will talk a little bit about some of the sites, but the primary endpoint is a composite of all-cause mortality or dialysis dependency. So what does that mean? That means that at 90 days, we determine is the patient alive or dead and is the patient on dialysis or not. We then use a composite of that to create the final endpoint. We do have some other key secondary endpoints, which will be longer out, but from a PMA or pre-market approval standpoint, the primary endpoint will be what we submit that PMA data on. It is also important to note that we have two subpopulations that we're looking at in tracking, which are sepsis or septic patients, as well as ARDS or acute respiratory distress patients as well. Those are the two pre-specified kind of subpopulations that are in there. What we have seen so far and what we've shared is that we anticipate probably 60 to 70 percent of those patients that we'll be looking at in the study will be sepsis, will have sepsis or septic condition, and then around probably 40 percent will have acute respiratory distress syndrome. So the study itself, this was disclosed as of beginning of December, we had around a little over 40% of the study to date enrolled, 17 medical sites activated. You can see here the list on the right of some of those sites. We have the likes of Stanford, Cleveland Clinic, Mayo, Michigan. But, you know, it's also really important when we went in and designed this whole study was we didn't want to just keep it to just those kind of top institutions in those health centers in the world, we wanted to show that AKI or acute kidney injury does really occur at every type of institution, and that's why we actually added more community hospitals as well as one of the Department of Defense hospitals in Brook Army. And so we know that by showing that you can treat these patients not only at just the top institutions but also at community as well as DOD sites, it really does talk about the the potential then for the commercial adoption and the breadth of that at once once that once we're able to actually get the device the scd approved we are reimbursed from cms on on medicare and medicaid patients and so you know the goal right now the target is to have this fully enrolled up to 339 around the end of this year end of 2026 We then wait the 90 days for the last patient from a mortality and dialysis dependency standpoint, and then likely about 45 to 60 days after that should have the top line data. We do anticipate based on, you know, positive data, obviously, that we would be filing a PMA sometime in 2027. We are looking at using a modular PMA, which means, you know, these PMAs have several modules or pieces to them, and you can then submit those beforehand, certain pieces of those before, which will, we do believe that that may be able to actually expedite some of the approval on the back end as well. So, the other clinical study that's being run, which is really important, is neutralized CRS or cardiorenal syndrome. And this is basically for candidates who are looking to bridge into maybe an LVAD or left ventricular assist device. And this is really an important study. One is that it's going into the cardiac. So we're getting outside of renal, but really looking at the heart. Obviously, the heart is another large market potential. The second is really the feasibility of intermittent therapy. So if I go back to the neutralized AKI that study is designed for we replace the the SCD every 24 hours for up to 10 days okay so it's continuous in the case of neutralized CRS this is six hours daily for six days so why is that important well this actually starts to allow us to start to evaluate potential other outpatient settings and you could think of like end-stage renal or other types of you know outpatient settings that really allow this type of therapy regimen to be something that's more applicable. We also believe that with successful data, because this is a very small patient population, that we could file for another humanitarian device exemption. You know, when we look at then, how do we actually look at our pipeline and build it out? It becomes pretty important to have medical affairs driving much of how we actually expand into these indications, and this is how we do it. We're very active because we know that this isn't just relegated to the kidneys. It actually is multi or organ agnostic, and we use medical affairs to really drive that message home through many different venues. The team is here. This is the leadership team. One of the things that you'll notice is that the backgrounds of these leaders are very pharma-based. That's actually by intention because we actually see this as a therapeutic medical device not just a mechanical medical device from a financial position we've been we've considerably improved our financial position since we went public you can see here as of 9 30 we had a little over 13 and a half million of cash uh and a very strong shareholders equity of almost 11 and a half million the company has no debt as of september 30th 2025. So, as I said, we are traded under the ticker symbol ICU. Our market cap here is around $9 million. And so, we have disclosed that 2025 will have over a million of sales. So, it's trading at less than 10 times trailing kind of sales multiple with a pivotal study that's now getting closer and closer to 50% plus enrolled. and so you have put all these things together. It really does make it with some of the catalysts that we have a very interesting for our investor base. So our catalyst for 2026 are very clear. It is about doubling the customer base in Quellimmune for kids. It's completing the enrollment of neutralized AKI and then advancing the neutralized CRS as well as applying for other maybe breakthrough device designations or different types of approval pathways for the FDA so that we can really kind of advance this in rapid, more rapid fashion to get to the market. So with that, I will open it up to any questions.

Robert LeBoyer, Analyst — Noble Capital Markets

Thank you, Eric. That was a very interesting presentation. And some of the, some of the things that you presented about the cost savings and the improvement in mortality show the value and not only for for cost savings to the system but also to the patient and significant benefits to everyone involved whether it's the payers the doctors looking for better outcomes or the patients who live longer and live better uh have is it too early to ask about guidance for revenues for the coming year or expectations

Eric Schlorff, CEO

for the longer term in terms of markets or any kind of guidance there yeah yeah so thanks that's a great question so yeah on the pediatric sales uh for quell immune you know i had mentioned that uh we have disclosed that we did we will do over a million of sales in 2025 uh the the guidance that we've given is that we'll about double that for the year uh so just under two million dollars for two for 2026. um and the other piece of that is that you know when we looked at our customers coming into 2025 we had two customers we ended with 10 and our goal for the end of this year 2026 is around 20 to 25 customers great okay and we have a question from the from the audience and someone would like to know if you can tell us the current enrollment numbers for the adult trial and the save registry yeah we we're we're going to be disclosing those in the near future some of those but we don't we don't we're not disclosing those at this time we'll be doing those on kind of a periodic basis as we kind of focus on really focuses on getting this these things enrolled as both both both to save as well as neutralize AKI okay great and another question are you planning to add more trial sites to the adult trial yeah so that we are planning on so we have 17 sites the goal really you know the actual approval is for up to 30 sites you know we're going to we're going to continue to push towards getting you know north of 25 sites plus still this year to continue to speed up that enrollment to really hit that target by the end of this year.

Robert LeBoyer, Analyst — Noble Capital Markets

Terrific. Okay. And there is another question just came in. And someone is asking if fireside chats can be started again.

Eric Schlorff, CEO

Well, I will take that back to our team and we can we definitely can discuss that.

Robert LeBoyer, Analyst — Noble Capital Markets

Okay. And will there be an effort to apply for humanitarian exemption for the adult AKI?

Eric Schlorff, CEO

Well, the adult indication neutralized AKI, that study, will be the basis of a PMA or pre-market approval. So it's a larger patient population, right? It's 200,000, so it goes through the normal process.

Robert LeBoyer, Analyst — Noble Capital Markets

Okay, great. And that concludes our questions from the floor. So just could you reiterate some of the milestones that are ahead in the next six to 12 months?

Eric Schlorff, CEO

Yeah, definitely. So the milestones that we have for 2026 are very clear. It is around doubling that Quell immune customer base, as well as the sales, completing enrollment of the neutralized AKI pivotal study, which that is the 200,000 kind of patient, annually $4.5 billion market opportunity US. We're also advancing the clinical development of neutralized CRS, which is expanding into cardiac indications, as well as this idea of intermittent therapy, and then continuing to advance on various FDA fronts of either new breakthroughs or different types of pathways.

Robert LeBoyer, Analyst — Noble Capital Markets

Great. So you have clinical, commercial, and regulatory milestones ahead.

Eric Schlorff, CEO

That's correct.

Robert LeBoyer, Analyst — Noble Capital Markets

That sounds terrific. Okay. Well, we may have another question from the floor. And someone is asking if the FDA could approve this early before the full 339 patients.

Eric Schlorff, CEO

Well, the data safety monitoring, which is an independent, has recommended the 339. And so we will need to enroll to the full 339.

Robert LeBoyer, Analyst — Noble Capital Markets

Okay. So one could say that you are planning for the full enrollment. We're planning for the full enrollment. Unless something, some statistical result justifies early.

Eric Schlorff, CEO

Yeah. But yeah, the assumption is we're going to go through the full to also make sure that it's sized properly. And so that from a physician adoption standpoint, people also see a larger study as more robust as well.

Robert LeBoyer, Analyst — Noble Capital Markets

So it's also on the commercial side has a has a huge benefit yeah i would agree that better larger numbers support the conclusions better than if you were to try to get approval based on the minimum in the long run the bigger number and the full trial that was recommended would be to your advantage that's correct okay well thank you very much this has been a very interesting presentation and I look forward to watching for those milestones coming up well thanks again Eric thank you