New CFO Peter J. Mariani to succeed retiring CFO Kathleen P. Bloch On track for DrugSorb™-ATR U.S. FDA De Novo and Health Canada marketing submissions this quarter In Q2 2024, increased product sales by 10% and reduced operating loss by 48% Achieved more than a quarter million CytoSorb treatments cumulatively delivered to date – a major company milestone PRINCETON, N.J., Aug. 13, 2024 (GLOBE NEWSWIRE) -- CytoSorbents Corporation (NASDAQ:CTSO), a pioneer in critical care and cardiac surgery blood purification technologies, today reported unaudited financial and operating results for the quarter ended June 30, 2024.   Second Quarter 2024 Financial Results Total revenue for Q2 2024, including product sales and grant income, was $9.9 million, an increase of 5% compared to $9.4 million in Q2 2023 Q2 2024 product sales were $8.8 million versus $8.1 million in Q2 2023, a 10% increase Product gross margins on devices and device accessories were approximately 75% in Q2 2024, compared to 74% in Q2 2023 Q2 2024 operating loss decreased 48% to $3.4 million from $6.6 million a year ago, reflecting prior cost cutting efforts and increased sales Recently completed additional cutbacks, expected to save an additional $5 million in annual expenses going forward. Through attrition and layoffs over the past 5 months, we have decreased our headcount by 17% to 155 full-time and part-time employees Total cash, including cash and cash equivalents, and restricted cash was $14.9 million as of June 30, 2024 Recent Operating Highlights: Achieved more than a quarter million CytoSorb® treatments cumulatively delivered to date across more than 75 countries, helping to save many lives worldwide – a major company milestone Announced the retirement of Chief Financial Officer Kathleen P. Bloch effective today and the start of Peter J. Mariani as the new CFO tomorrow (see today's separate press release) Secured a $20 million credit facility with Avenue Capital Group, strengthening our financial position Launched a new, redesigned, unified company and product website highlighting our long-standing collaboration with the scientific and clinical community in "Working to Save Lives Together" Data from the STAR (Safe and Timely Antithrombotic Removal) registry was presented at the international EuroPCR 2024 conference in Paris, France, where it was also selected as a top 5 finalist in the best scientific abstract competition Launched the PuriFi™ hemoperfusion pump in the European Union following its E.U. MDR certification in June, with the first orders of 30 machines already placed Completed our Medical Device Single Audit Program (MDSAP) site audit and are undergoing certification review – a key requisite to Canadian medical device commercialization Obtained regulatory approval of CytoSorb in Taiwan CytoSorbents' #DidYouKnow social media campaign highlighting achievements in the world of medicine was a Gold Winner at the international 2024 dotCOMM Awards in July that celebrates excellence in web creativity and digital communications Dr. Phillip Chan, Chief Executive Officer of CytoSorbents, stated, "This year, we have worked diligently to execute upon a broad turnaround strategy that is dependent on attaining a number of key objectives. I am pleased to highlight our achievement or expected achievement of many of these goals." 1)   Submission of marketing applications to U.S. FDA and Health Canada for DrugSorb™-ATRWe are rapidly nearing the expected completion and submission of our marketing applications to the U.S. Food and Drug Administration (FDA) and Health Canada for DrugSorb-ATR this quarter, based on the final results of our U.S. and Canadian pivotal STAR-T trial in patients on the blood thinner Brilinta® undergoing coronary artery bypass graft (CABG) surgery. We are leveraging the electronic Submission Template and Resource (eSTAR) platform used for electronic medical device submissions to FDA and have completed 75% of our De Novo application to date. For Canada, we have now completed our MDSAP site audit and are undergoing certification review by our notified body – a key requisite to Canadian medical device commercialization. If we achieve marketing approvals in the U.S. as an FDA Breakthrough Device and Canada, we will have the potential to unlock an unprecedented commercial opportunity for the Company, with an initial $325 million total addressable market estimate for DrugSorb-ATR in these two countries alone, that could double in size as Brilinta® goes off patent in 2024.    2)   Strengthen our balance sheetAfter completing our $10.3M equity raise in December 2023, we further strengthened our balance sheet by securing a $20M term-loan facility with Avenue Group providing an initial tranche of $15 million in cash, including $10 million unrestricted, and $5 million contingent upon FDA acceptance of a De Novo application for marketing approval of DrugSorb-ATR and certain liquidity requirements. Another $5 million will become available to the Company upon U.S. FDA approval of DrugSorb-ATR. The loan facility is expected to help fund the Company through both Health Canada and U.S. FDA regulatory decisions. We have also paid back our previous Bridge Bank debt. 3)   Cut costs to drive efficiency, improve product gross margins, and be self-sustainingWe continue to actively reduce operating expenses with a focus on improvements in productivity and the longer-term goal of being self-sustaining. Cost cutting measures taken in prior periods have helped to reduce our Q2 2024 operating loss by 48% to $3.4 million, compared to $6.6 million a year ago. Last month, we enacted additional cost cuts, designed to reduce the Company's cash burn by another $5 million on an annualized basis. Specifically, over the past 5 months, we have streamlined our operations, and through a combination of attrition and layoffs, have decreased full-time and part-time headcount by 17% from 186 to 155 as of today.   These have been very difficult but necessary actions for the greater good to ensure that we live within our means and can fund our critical programs. Meanwhile, blended product gross margins that combine higher margin direct sales with lower margin distributor and partner sales improved year-over-year to 75% with continued improvements in manufacturing. With greater volumes, we believe we have direct line of sight to 80% blended product gross margins for our various therapies.   As high margin "razorblades" that are compatible with industry standard blood pump "razors", improvements in product gross margin are expected to reduce our cash needs and accelerate future profitability. 4)   Increase core CytoSorb sales growth beyond the Quarter Million devices delivered to dateWe have now achieved a major company milestone with more than a quarter million CytoSorb devices delivered across 76 countries to date, helping to save many lives worldwide. We thank everyone who has contributed to this achievement, most importantly our employees, our customers and supporters around the world, and our shareholders. This is our success. Meanwhile, first half 2024 product sales were $17.8 million, an increase of $1.8 million or approximately 12% compared to sales of $16.0 million in the same period of 2023. Although good progress, there is more work we need to do to get back to historic growth rates, particularly in the post-pandemic hospital environment. Among our many initiatives to achieve this objective, here are some quick updates. Our newly designed, modern, integrated corporate and product website is our public face to the world that now better reflects who we are as a company. An innovator. A collaborator. A global partner. A leader in acute care blood purification with more than 12 years of working together with the international medical and scientific communities to generate the knowledge of how best to use our therapies to help save lives Our launch of our MDR-certified, stand-alone hemoperfusion PuriFi® pump is going well, with our first opening order of 30 PuriFi pumps already placed at customers or distributors. We expect to take delivery of our second order of pumps from our OEM (Original Equipment Manufacturer) shortly We are actively working with Fresenius Medical Care (FMC) to co-market CytoSorb as the "featured solution for cytokine, bilirubin, and myoglobin removal" on their multiFiltrate® and multiFiltratePRO® machines at the upcoming Asia Pacific Intensive Care Symposium (APICS) in Singapore this week and the upcoming European Society of Intensive Care Medicine (ESICM) conference in Barcelona.   There is excellent synergy between our companies. While FMC is "Shaping the future of multi-organ support" with its machines and disposables, CytoSorbents is leading the application front in organ support with CytoSorb and its ability to help reverse shock and stabilize the circulatory system, enable "Enhanced Lung Rest" in lung injury, "Expand the Dimension of Blood Purification®" to extracorporeal liver support, and protect kidney function in diseases like sepsis and rhabdomyolysis. In addition, outside of the FMC partnership, ECOS-300CY® is helping to rehabilitate and recondition sub-standard hearts, lungs, livers and kidneys for organ transplant during ex vivo organ perfusion Dr. Chan concluded, "Finally, we have been positioning CytoSorbents for the next stage of growth, both our existing international franchise, as well as the potential to open the U.S. and Canadian markets. This is why it has taken us so long to find the right CFO candidate to replace our esteemed retiring CFO, Kathy Bloch. Kathy has gone above and beyond the call of duty, selflessly coming back from retirement last August to resume her former full-time CFO role, and in the intervening 12 months, helping to secure the future of the Company with two key financings and orchestrating our cash conservation strategy. With her retirement, announced today, she caps an outstanding CFO career and will continue as a consultant to help manage the smooth transition to our newly appointed CFO, Peter Mariani. On behalf of everyone at CytoSorbents, we thank Kathy for her more than 11 years of dedication and leadership at the Company as a trusted colleague and friend, with so many contributions that have helped us achieve the success we have today, and wish her an enjoyable, relaxing, and well-deserved retirement. Meanwhile, Pete is a seasoned and accomplished medical device CFO whose many successes at high growth publicly-traded companies such as Axogen, Hansen Medical, and Guidant Corporation, speak for themselves. Importantly, at Axogen, an innovator in peripheral nerve repair, he helped to manage rapid U.S. growth with a direct sales force and high margin sales from $27 million to nearly $160 million over the course of his seven-year tenure as CFO, while raising approximately $250 million in capital, overseeing a comprehensive investor relations program with institutional investors, and implementing a financial strategy to get to near-term profitability.   Pete is an outstanding fit for CytoSorbents and joins at an excellent time where his deep domestic and international experience and insight is expected to be vital to our success. We are thrilled to have Pete join our team and look forward to briefly introducing him to analysts and investors on today's earnings call." Q2 2024 Earnings Conference Call The Company will conduct its second quarter 2024 results call today at 4:30 p.m. Eastern time. Earnings Call Webcast Details:Date: Tuesday, August 13, 2024Time: 4:30 PM Eastern Time Live Presentation Webcast:https://edge.media-server.com/mmc/p/smuwcy9aConference ID: 7567925 Participant Dial-In:Participant Dial-in toll-free: (888) 596-4144Passcode: 7567925 It is recommended that participants dial in approximately 10 minutes prior to the start of the call. An archived recording of the conference call will be available under the Investor Relations section of the Company's website at https://ir.cytosorbents.com/  Results of Operations Comparison for the three months ended June 30, 2024 and 2023: Revenues: Revenue from product sales was approximately $8,842,000 in the three months ended June 30, 2024, as compared to approximately $8,072,000 in the three months ended June 30, 2023, an increase of approximately $770,000, or 10%. Distributor sales increased approximately $965,000, or 28%. Direct sales decreased approximately $196,000, or 4%. In addition, as a result of the decrease in the average exchange rate of the Euro to the U.S. dollar, 2024 product sales were negatively impacted by approximately $104,000. For the three months ended June 30, 2024, the average exchange rate of the Euro to the U.S. dollar was $1.08 as compared to an average exchange rate of $1.09 for the three months ended June 30, 2023. Grant income was approximately $1,053,000 for the three months ended June 30, 2024 as compared to approximately $1,348,000 for the three months ended June 30, 2023, a decrease of approximately $295,000, or 22%. This decrease was due to the completion of several grants during 2023. Total revenues were approximately $9,895,000 for the three months ended June 30, 2024, as compared to total revenues of approximately $9,421,000 for the three months ended June 30, 2023, an increase of approximately $474,000, or 5%. Cost of Revenues: For the three months ended June 30, 2024 and 2023, cost of revenue was approximately $3,392,000 and $3,402,000, respectively, a decrease of approximately $10,000. Product cost of revenue was approximately $2,411,000 and $2,093,000, respectively, for the three months ended June 30, 2024 and 2023, an increase of approximately $318,000 due to increases in sales in 2024. Gross margins on devices and device accessories were approximately 75% for the three months ended June 30, 2024 as compared to approximately 74% for the three months ended June 30, 2023. This increase was due to the achievement of greater operating efficiencies in 2024, which was partially offset by an increase in the percentage of lower margin distributor sales to total sales during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Research and Development Expenses: For the three months ended June 30, 2024, research and development expenses were approximately $1,520,000, as compared to research and development expenses of approximately $3,669,000 for the three months ended June 30, 2023, a decrease of approximately $2,149,000. This decrease was due to a decrease in our clinical trial activities of approximately $1,842,000 related to the completion of the STAR-T clinical trial in December 2023. The three months ended June 30, 2023 included $70,000 of non-recurring start-up costs associated with our new facility which were not incurred in the three months ended June 30, 2024. Cost savings measures resulted in decreased research and development salaries of approximately $170,000, and decreased consulting and other spending of approximately $67,000 in the second quarter of 2024. Legal, Financial and Other Consulting Expenses: Legal, financial, and other consulting expenses were approximately $821,000 for the three months ended June 30, 2024, as compared to approximately $1,185,000 for the three months ended June 30, 2023, a decrease of approximately $364,000. This decrease was due to a decrease in legal fees of approximately $314,000 due to the settlement of a legal matter in 2023, a decrease in employment agency fees of approximately $121,000 and a decrease in accounting fees of approximately $43,000. These decreases were offset an increase in consulting fees of approximately $114,000. Selling, General and Administrative Expenses: Selling, general and administrative expenses were approximately $7,581,000 for the three months ended June 30, 2024, as compared to approximately $7,724,000 for the three months ending June 30, 2023, a decrease of approximately $143,000. This decrease was due to a decrease in salaries, commissions, and related costs of approximately $543,000, a decrease in selling and distribution costs of approximately $468,000, a decrease in fees, licenses and permits of approximately $50,000, a decrease in commercial insurance of approximately $32,000, and a decrease in travel and entertainment expenses of approximately $20,000. These decreases were offset by increased non-cash stock compensation expense of approximately $623,000, a reduction in grant spending reduced the overhead absorption benefit to selling, general and administrative expense by approximately $136,000, an increase in network maintenance costs of approximately $81,000, an increase in transfer agent fees of approximately $49,000, an increase in royalty expense of approximately $46,000, and an increase in other general and administrative expenses of approximately $65,000. Gain (Loss) on Foreign Currency Transactions: For the three months ended June 30, 2024, the loss on foreign currency transactions was approximately $544,000 as compared to a gain of approximately $415,000 for the three months ended June 30, 2023. The 2024 loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S. dollar at June 30, 2024 as compared to March 31, 2024. The spot exchange rate of the Euro to the U.S. dollar was $1.07 per Euro at June 30, 2024, as compared to $1.08 per Euro at March 31, 2024. The 2023 gain was directly related to the increase in the spot exchange rate of the Euro to the U.S. dollar at June 30, 2023 as compared to March 31, 2023. The spot exchange rate of the Euro to the U.S. dollar was $1.09 per Euro at June 30, 2023, as compared to $1.08 per Euro at March 31, 2023. Comparison for the six months ended June 30, 2024 and 2023: Revenues: Revenue from product sales was approximately $17,831,000 for the six months ended June 30, 2024, as compared to approximately $15,982,000 for the six months ended June 30, 2023, an increase of approximately $1,849,000, or 12%. Distributor sales increased by approximately $1,579,000, or 24%. Overall direct sales increased by approximately $270,000, or 3%. The change in the exchange rate of the Euro to U.S. dollar did not have a significant impact on product sales during the six months ended June 30, 2024. Grant income was approximately $1,850,000 for the six months ended June 30, 2024 as compared to approximately $2,888,000 for the six months ended June 30, 2023, a decrease of approximately $1,038,000 or 36%. This decrease was due to the completion of several grants during 2023. Total revenues were approximately $19,681,000 for the six months ended June 30, 2024, as compared to total revenues of approximately $18,870,000 for the six months ended June 30, 2023, an increase of approximately $811,000, or 4%. Cost of Revenues: For the six months ended June 30, 2024 and 2023, cost of revenue was approximately $6,607,000 and $7,396,000, respectively, a decrease of approximately $789,000, primarily due to a reduction in the cost of revenue related to the Company's grant related activities. Product cost of revenue was approximately $4,759,000 and $4,624,000, respectively, for the six months ended June 30, 2024 and 2023, an increase of approximately $135,000. Gross margins on devices and device accessories were approximately 74% for the six months ended June 30, 2024 compared to approximately 71% for the six months ended June 30, 2023. The increase in product gross margin is due primarily to greater efficiencies now being realized at our new manufacturing facility in Princeton, New Jersey. Research and Development Expenses: For the six months ended June 30, 2024, research and development expenses were approximately $3,768,000 as compared to research and development expenses of approximately $7,883,000 for the six months ended June 30, 2023, a decrease of approximately $4,115,000. This decrease was due to a decrease in costs associated with our clinical trial activities of approximately $2,753,000 related to the completion of the STAR-T clinical trial in December 2023. The six months ending June 30, 2023 included $919,000 of non-recurring start-up costs associated with our new facility which were not incurred in the six months ending June 30, 2024. Cost savings measures resulted in decreased research and development salaries of approximately $297,000, and decreased other spending of approximately $146,000 in 2024. Legal, Financial and Other Consulting Expenses: Legal, financial, and other consulting expenses were approximately $1,501,000 for the six months ended June 30, 2024, as compared to approximately $1,854,000 for the six months ended June 30, 2023. The decrease of approximately $353,000 was due to a decrease in legal fees of approximately $285,000 and a decrease in employment agency fees of approximately $178,000. These decreases were offset by an increase in consulting fees of approximately $108,000 and an increase in accounting and auditing fees of approximately $2,000. Selling, General and Administrative Expenses: Selling, general and administrative expenses were approximately $16,148,000 for the six months ended June 30, 2024, as compared to $16,187,000 for the six months ended June 30, 2023, a decrease of approximately $39,000. This decrease was due to a decrease in salaries, commissions and related costs of approximately $721,000, a decrease in advertising costs of approximately $192,000, a decrease in non-recurring facility start-up costs of approximately $176,000, a decrease in occupancy costs of approximately $140,000, and a decrease in other general and administrative expenses of approximately $17,000. These decreases were offset by an increase in non-cash stock compensation expense of approximately $467,000, a reduction in grant spending reduced the overhead absorption benefit to selling, general and administrative expense by approximately $350,000, an increase in royalty expense of approximately $134,000, an increase in travel and entertainment expenses of approximately $112,000, an increase in network maintenance costs of approximately $95,000, and an increase in transfer agent fees of approximately $49,000. Gain (Loss) on Foreign Currency Transactions: For ...