Earlier this summer Cytosorbents Corp (CTSO) announced the official launch of CytoSorb in Europe.
CytoSorb had been approved last year in Europe for the treatment of conditions where high cytokines are present and the company has been taking a methodical and patient approach towards full commercialization in order to keep expenditures under control. In conjunction with the launch, CytoSorb also appointed Dr. Christian Steiner, MD, to its European sales subsidiary as Vice President of Sales and Marketing and Managing Director of CytoSorbents Europe GmbH. The official launch was an highly-anticipated event by investors who believe that CytoSorb could become the new standard of care for severe sepsis and other indications of high ctyokines once momentum into the intensive care market builds.
Although additional trials will have to be conducted before an approval in the US is considered by the FDA, data from a European trial were convincing enough for the European medical regulators that CytoSorb was approved before the full trial was completed. As a result CTSO shares tripled in price from the range of fifteen cents to nearly fifty.
Many are still unconvinced, however, with a US approval not in the immediate future. These investors, in addition to many others, will be watching closely over the next few quarters to see if Cytosorbents can transform what could be considered a breakthrough device for the treatment of sepsis into a revenue-generating sales platform for the company. According to the latest quarterly report filed by the company in August, the initial test phase of direct product sales to hospitals generated revenue of just under $50,000, but that was without an established sales force in place. That's where Dr. Steiner and the European subsidiary come into effect - to build that force.
As the company grows its commercial success, its blood-purification technology has also received validation from various government agencies. In August the company announced that it had been awarded nearly four millions dollars from the United States Defense Advanced Research Projects Agency (DARPA) Dialysis-Like Therapeutics (DLT) program to treat sepsis. The award was pending satisfactory achievement of key milestones, according to information contained within the associated press release.
Late last year Cytosorbents also received a Phase I SBIR (Small Business Innovation Research) grant by the US Army Medical Research and Materiel Command titled, "Investigation of CytoSorb Cytokine and Myoglobin Removal in the Treatment of Trauma." The grant was worth $100,000, with an available option to bring in another $50,000. The awarding of this grant was noted as a prerequisite for the Phase II and III levels, which could bring the total numbers received by Cytosorbents to over a million dollars.
On Monday of this week it was noted that Cytosorbents was awarded the Phase II portion of this grant, which had been submitted for following the completion of the Phase I portion (the planning phase, according to Monday's press release). The Phase II portion is worth up to a million dollars and will include animal studies, while Phase III - if also awarded - would include human studies.
If successful, the US Army grant and associated studies would provide the company with an "in" for further funding and sales. The US Air Force has already expressed interest in the technology following the Army's lead - also according to Monday's release - and other services could follow suit. Data from any associated studies would also be used to bolster the company's case in receiving additional approvals for its technology around the globe, including in the United States.
Cytosorbents shares were up by four percent on the news Monday, but the real short to mid term catalyst for the stock would be noticeably increasing sales numbers from the controlled roll-out in Europe. The grants, awards and additional studies are providing the building blocks for a potentially robust future, but with a sales force now established in Europe, the primary focus of investors will be sales and revenue. The more patient investor, however, will look at these other developments as another reason to accumulate for a potential mid to long term payoff.
Still a nice speculative story to watch, and one that has rewarded investors with at least triples in share price on numerous occasions before.
Disclosure: Long CTSO.
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