Cytosorbents issued their 10-Q this week, which proved to be the first in-depth follow-up to the milestone news that CytoSorb had received CE Mark approval in the European Union to treat conditions where high cytokine levels exist in the blood.
The approval came as a surprise to many, since the company had never even announced that the full 100 patients had been enrolled (only 98 were enrolled at the time of approval). The 10-Q, however, clued us in that full enrollment of 100 has been met, meaningthat results are most likely being compiled now, and the secondary endpoints that everyone is waiting on should be forthcoming.
It's safe to assume, in my opinion, that the data put forth to the European medical authorities must have been pretty convincing, otherwise the early approval would have been unjustified. That said, many believe that the secondary endpoints also need to come in solid in order for CytoSorb to meet full market potential.
According to the 10-Q, the company is gearing up for a targeted commercial launch in Europe, although a word of caution should be noted:
"Assuming availability of adequate and timely funding, and continued positive results from our clinical studies, the Company intends to begin commercializing its product in Europe."
This statement means that the company will need money to accomplish the task of a commercial launch (which should have been assumed as a given anyway), but it also hints that market potential may be limited without solidly convincing results; hence the investor anticipation in waiting for the secondaries.
The company also emphasized the point that just because an approval was granted in the EU, doesn't mean that the same outcome should be expected from the US FDA. A good point to make, as many investors might get ahead of themselves and salivate at the thought of a quick US approval, but the FDA is known to not be much of a supporter of a small company such as a Cytosorbents, but it's also unlikely - in my opinion - that the clinical trial of 100 subjects would convince the FDA to approve.
Maybe after some more data is collected from patients that will be treated in Europe, in addition to those already treated in the trial.
Given that the CE Mark approval grants Cytosorbents the leeway to expand use outside of only severe sepsis, it's conceivable that additional data can be collected in quicker fashion than the pace of the trial enrollment, but again - that's assuming solid secondaries and, as the company mentioned, proper funding.
The funding is the interesting part - will dilutive financing be in the works, or will Cytosorbents land a partner?
It's my guess that if the data is that good, a partnership will materialize; but we must be prepared for the dilutive financing, because it's always a possibility.
Many are still squeamish after CTSO quickly dropped back to the twenty cent mark after flying on the approval news, but as I've mentioned before, the drama has been overdone. Naked shorting took this baby down again, along with bouts of profit taking, but the fact remains that Cytosorbents has an approved product in Europe, with no real competition on the market, at least not for the condition of severe sepsis.
Again, it's worth remembering that the European regulators approved before the trial was concluded, so one's got to believe that they were convinced it works.
I think a rebound will be in store, and I also believe that results are going to be released pretty soon, given that we now know full enrollment has been met.
If the approval news is to be an indicator, any additional news might just materialize out of the blue.
Expect anything, and count on nothing, but I like the twenty cent add-price for shares of CTSO.
Disclosure: Long CTSO.
