CytoSorbents Clarifies Q3 2012 Earnings Press Release
MONMOUTH JUNCTION, N.J., Nov. 26, 2012 /PRNewswire/ -- CytoSorbents Corporation (OTCBB: CTSO), a critical care-focused company using blood purification to reduce inflammation as a means to prevent or treat organ failure caused by life-threatening illnesses, issued a clarification to its corporate update and third quarter earnings press release issued November 21, 2012.
Dr. Phillip Chan , Chief Executive Officer, stated, "Based upon numerous shareholder inquiries, there appears to be some misinterpretation concerning our cost of revenue for Q3 2012, our grant income, and our guidance on interim Q4 2012 CytoSorb® sales."
"As reported in our income statement for Q3 2012, our overall cost of revenue includes both 1) cost of goods associated with the sale of CytoSorb® and 2) cost of grant income as well. Our CytoSorb® gross margins for Q3 2012 were in excess of 50% and our expected CytoSorb® gross margins in Q4 2012 are also expected to exceed 50%."
Dr. Chan continued, "It is critical for shareholders to understand the importance of our $3.8 million contract with DARPA and our $1 million U.S. Army Phase II SBIR award, the latter which has been granted and is currently under contract negotiations. These awards, totaling approximately $5 million, represent:
- Critical third-party validation of our technology by leading research organizations of our U.S. government. This validation has already led to significant interest from other branches of the U.S. military, including the U.S. Air Force and U.S. Navy
- A means to reduce our cash burn (due to payments for both direct and indirect or fixed costs related to achieving milestones under these contracts), while subsidizing the Company as sales of CytoSorb® begins to ramp. As evidence of this, our operating loss for Q3 2012 was only $601K, compared to $1.2 million in the year ago quarter. This is a significant positive for our Company and shareholders, as it potentially reduces the amount of money we will need to raise while simultaneously offsetting shareholder dilution
- A direct funded path to generate data in the fields of sepsis, burn injury and trauma, that if positive, can be leveraged to help support the commercialization effort of CytoSorb® in Europe
- A means to accelerate the next generation of our cutting edge blood purification technologies, helping us to maintain our leadership in this area."
"Finally," stated Dr. Chan, "to clarify my comments about Q4 2012 revenue. In the time period between October 1, 2012 and November 21, 2012, we have recorded approximately $70K in CytoSorb® sales. From January 1, 2012 to November 21, 2012, we have recorded a total of $134K in CytoSorb® revenues. That we have booked more revenue in the first 52 days of the fourth quarter than we did in the first 9 months of 2012, is a reflection of the increased effectiveness of our sales efforts and interest in our technologies. There is naturally a delay between when a key opinion leader (KOL), who is frequently the department chairman, agrees to use any new technology, to when it is being used on a regular basis by other physicians in the department, driving recurring and increased revenue. There is no question, however, that having the approval of the KOL is a critical initial step in the process. This lays the groundwork to have the hospital administration approve the purchase of the technology, facilitates reimbursement, and provides the requisite approval for physicians in the department to use the product. The value of having a direct sales force is that we can now work to accelerate this process and convert this KOL commitment into meaningful sales."
Dr. Chan concluded, "We continue to be very encouraged by the reception of CytoSorb® in the market. We plan to have new items to report in the weeks ahead and look forward to the shareholder report in early January to summarize our progress and plans for the future."
About CytoSorbents, CytoSorb®, and HemoDefend
CytoSorbents Corporation is a critical care focused therapeutic device company using blood purification to modulate the immune system and fight multi-organ failure in life-threatening illnesses. Its purification technology is based on biocompatible, highly porous polymer beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. In 2011, CytoSorb®, the Company's flagship product, achieved European regulatory approval as an extracorporeal cytokine filter, allowing it to be sold throughout the European Union (E.U.) under the CE Mark, to be used in clinical situations where cytokines are elevated. The goal of CytoSorb® is to modulate the immune system by reducing "cytokine storm" in critically-ill patients that could otherwise lead to deadly inflammation, multiple organ failure, immune dysfunction, and often death in common illnesses such as sepsis, trauma, burn injury, acute respiratory distress syndrome, and pancreatitis. CytoSorb® has demonstrated statistically significant reductions in mortality in septic patients at high risk of death in early studies and is now being sold in Germany, Austria and Switzerland for the treatment of critical care illnesses, with availability in other E.U. countries planned in the future, assuming adequate and timely funding, and continued positive results from clinical studies.
HemoDefend is a development-stage blood purification technology platform for the blood transfusion industry intended to reduce transfusion reactions and safeguard the quality and safety of the blood supply. The HemoDefend technology utilizes the Company's polymer bead technology to remove many substances, such as antibodies, free hemoglobin and inflammatory mediators that can cause potentially serious and sometimes fatal transfusion reactions.
CytoSorb® and HemoDefend are just two of a number of different polymers the Company has designed for various medical applications, including improved dialysis, reduction of post-surgical complications in cardiac surgery, treatment of inflammatory and autoimmune disorders, radio-imaging contrast removal in imaging and interventional radiology procedures, and the treatment of rhabdomyolysis, drug overdose, and others. Additional information is available for download on the Company's website: http://www.cytosorbents.com.
This press release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release are not promises or guarantees and are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. These statements are based on management's current expectations and assumptions and are naturally subject to uncertainty and changes in circumstances. We caution you not to place undue reliance upon any such forward-looking statements. Actual results may differ materially from those expressed or implied by the statements herein. CytoSorbents Corporation and CytoSorbents, Inc believe that its primary risk factors include, but are not limited to: obtaining government approvals including required FDA and additional CE Mark approvals; ability to successfully develop commercial operations; dependence on key personnel; acceptance of the Company's medical devices in the marketplace; the outcome of pending and potential litigation; compliance with governmental regulations; reliance on research and testing facilities of various universities and institutions; the ability to obtain adequate and timely financing in the future when needed; product liability risks; limited manufacturing experience; limited marketing, sales and distribution experience; market acceptance of the Company's products; competition; unexpected changes in technologies and technological advances; and other factors detailed in the Company's Form 10-K filed with the SEC on March 30, 2012, which is available at http://www.sec.gov.
Dr. Phillip Chan
Chief Executive Officer
(732) 329-8885 ext. *823
SOURCE CytoSorbents Corporation
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