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Questions remain for many shareholders who cannot fathom why shares of Ctyosorbents (OTCBB:  CTSO) remain trading for under twenty cents after a milestone year that saw the company realize its first regulatory approval, while making nice inroads into the European market with CytoSorb as a treatment for severe sepsis and other indications where high cytokines are present.

There's been little price action since the approval had the stock take a trip to the north side of forty cents last year, although there have been spurts of volume that appeared at various points during the ongoing CytoSorb road show.

This week, for example, saw CTSO jump by roughly ten percent after Doctor Phillip Chan, Cytosorbents CEO, issued a shareholder letter that outlined the successes of the previous year, while laying down the course ahead for 2012 and 2013, also expected to be looked upon as milestone years for the company. 

The ten percent spike was quickly dissipated, but that's not to say that the potential of this company should be considered lost by any means.  To the contrary, Cytosorbents - with continued support from the European medical market and now we know also from the US Defense Advanced Research Project Agency (DARPA) - may still be gearing up to make a huge splash in altering the standard of care for an unmet medical need.

Revealed in the shareholder letter released on Wednesday was that - among other items - Cytosorbents started to rake in revenue for CytoSorb on the German market during the closing months of 2011.  Although the revenue generated was admittedly modest, the gates are now open and the product and treatment can start making a name for itself on the open market, and not just in conjunction with a developmental trial.

The early results have CytoSorb looking like it could make an immediate impact.  In one 'success story', Dr. Chan noted that, "An extremely-ill middle aged man with documented H1N1 influenza infection developed septic shock requiring vasopressors, severe lung injury necessitating mechanical ventilation, and renal failure requiring hemodialysis.  His IL-6 level was more than 8,000 pg/mL. This occurred despite treatment with Tamiflu, the standard of care anti-viral treatment for influenza. While undergoing a full 7-day treatment course with CytoSorb™ and additional Tamiflu therapy, his blood pressure stabilized and vasopressor therapy was discontinued.  Within days of completing CytoSorb™ therapy, he was weaned from mechanical ventilation, left the ICU, and eventually made a full recovery."

Additional examples of early CytoSorb success include the treatment of a patient with severe pancreatitis who was thought to possibly die as a result of the condition, and another who suffered from the serious effects of E. Coli.

If these early results are an indication, then the late-2011 momentum built by CTSO could snowball into much bigger and better things for 2012.

Also noteworthy in terms of European sales - specifically in Germany, where the company has targeted its initial rollout - is that a process for reimbursement is now in place.  As seen with Dendreon (DNDN), concerns of reimbursement have the potential to pummel the commercial success of even the most high profile of product launches.

With eyes towards an eventual FDA approval in the United States, Cytosorbents plans to conduct additional, larger-scale trials that would then be used as justification for the additional approvals.  That's not to say, however, that the company is not already gaining a foothold and exposure on the American mainland.

A special grant was awarded by the US Army to Cytosorbents last month, and as announced in the latest shareholder letter, "The US Defense Advanced Research Projects Agency ("DARPA") recently notified us that it has selected our technology proposal for funding as part of its "Dialysis-Like Therapeutics" program to develop a blood purification device to treat sepsis, pending successful contract negotiations."

Both are significant milestones for the advancement of the CytoSorb technology and could help alleviate the need - along with growing sales revenue - of having to undertake any future financing deals that may dilute shareholder value.

Another variable in the CTSO equation is blood-purifying HemoDefend. 

Also announced last year and presented during the recent 'road shows', this product has the potential to bring in even more revenue for Cytosorbents, should a licensing partner be brought on board fully capitalize on the market potential of the product.

Dr. Chan referenced early interest in his letter, citing specifically, "Given that our goal is to out-license this technology, we are pleased with the ongoing discussions and continued interest we have been receiving."

As emphasized in a previous shareholder letter, patience should be emphasized with CTSO.

Barring the sporadic price runs here and there initiated by the day, swing and momentum traders, the company is taking a methodical approach to bringing its technology to full market integration.  The monetary resources are simply not there to make an initial huge splash in distribution, but the slower approach also allows CytoSorb to gain credibility on the market before distribution picks up.  Keep in mind that many investors, and maybe some medical professionals, still question the validity of the small European trial size and want to see success stories on the open market before allotting capital to the cause.

The European regulators, however, saw enough evidence in the trial to justify an approval before the full results were even released.  That should be considered as some serious validation, given that things like that don't happen too often.

The coast is not all clear just yet.

Financing will still be a concern until sales pick up enough to support the additional costs of growing commercialization - or until money from grants or licensing deals materialize - and there is always the threat that a new treatment - no matter how novel it may be - fails to catch on in the mainstream.

That said, the plan being undertaken by Dr. Chan and his team has thus far been highly successful.

With the milestone events of 2011 in the bag, look for CTSO to potentially make an even bigger splash in 2012 as the business plan develops.

Judging by the early CytoSorb results, there's every reason to believe that this treatment is going to make a significant impact in treating the conditions for which it is meant.

When dealing with small companies, however, you've got to expect a slower and more methodical approach than the instant distribution enjoyed by big pharma.

With that in mind, should CytoSorb continue to prove as successful as its been so far, look for a larger company to want a piece of the action.

Disclosure:  Long CTSO.

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