Cytosorbents Corporation

Good afternoon, and welcome to the SIDO Sorbent's second quarter 2023 financial and operating results conference call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call for your questions. Please be advised that the call will be recorded at the company's request. At this time, I'd like to turn the call over to our moderator, Taylor Devlin. Please go ahead, Taylor.

Thank you, and good afternoon. Welcome to Cytosorbent Second Quarter 2023 Financial and Operating Results Conference Call. Joining me today from the company are Dr. Philip Chan, Chief Executive Officer, Vincent Caponi, President and Chief Operating Officer, Kathleen Block, Interim Chief Financial Officer, Dr. Efthymios Deliogidis, Chief Medical Officer, Dr. Christian Steiner, Executive Vice President of Sales and Marketing and Managing Director of Cytosurbance Europe, GMBH, Christopher Creamer, Senior Vice President of Business Development, Dr. Irina Kulinic, Senior Vice President of Regulatory. Before I turn the call over to Dr. Chan, I'd like to remind listeners that during the call, management's prepared remarks may contain forward-looking statements which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions today. Therefore, the company claims protection under safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from results discussed today, and therefore, we refer you to a more detailed discussion of these risks and uncertainties in the company's filing with the SEC. Any projections as to the company's future performance represented by management include estimates today as of August 1, 2023, and we assume no obligation to update these projections in the future as market conditions change. During today's call, we will have an overview presentation covering the operating and financial highlights for second quarter of 2023 by Dr. Chan and Ms. Block. Following that presentation, we will open the line to your questions during the live Q&A session with the rest of the management team. And now it's my pleasure to turn the call over to Dr. Philip Chan.

Thank you very much, Taylor, and good afternoon. Today I have the pleasure of being able to update you on our most recent operational progress. We recently announced that the Pivotal Start T trial completed enrollment ahead of internal projections with strong performance amongst our 30 clinical centers in the United States and Canada. This followed the second independent data and safety monitoring board evaluation in June on unblinded safety data on 80 patients where the DSMB recommended completion of the trial without modification. In the second quarter of 2023, We achieved total revenue of 9.4 million, including product sales of 8.1 million versus 7.3 million in product sales a year ago, representing the third consecutive quarter of sequential product sales growth. Product gross margins grew 700 basis points to 74% from 67% a year ago. And we have now exceeded 212,000 cumulative human treatments delivered across 75 countries worldwide. We announced the appointment of Alex D'Amico as new Chief Financial Officer to start next week, August 7th, 2023. Alex brings 20 years of broad finance, SEC reporting, M&A, fundraising, and accounting experience to the company. And our outgoing Chief Financial Officer, Cathy Block, will stay on as a consultant and help to manage the transition. We also introduced Michael Batar as the new chairman of the board at the annual meeting in June. Michael has been a board director since 2015 and currently serves as a founder and partner of Quartz Advisory Group, a capital markets investment bank. Michael was also the former managing director of healthcare research at Jenison Associates, a very large family of funds with more than $175 billion in assets under management. Last but not least, we announced the Theranostic collaboration with Humetics. Humetics is the manufacturer of the EU-approved LymeX liver function test that is used in liver patients to evaluate the functioning of the liver. We announced a one-year joint marketing agreement where their sales force and ours in respective territories will cross-market Cytosorb as a superior extracorporeal liver support technology and LymeX as a unique liver function test. for the treatment of liver disease. As we've discussed previously, we are focused on three major objectives for 2023. The first is opening the U.S. and Canadian markets with DrugServe ATR. The second is a return to sales growth of Cytosorb. And the third is to reduce our cash burn and to have tight control over expenses. In terms of opening the U.S. and Canadian markets with DrugServe ATR, I would like to note again that DrugServe ATR and START-T, which stands for the Safe and Timely Antithrombotic Removal of Ticagrelor Trial, remains the core focus of our clinical efforts and the vehicle expected to open the U.S. and Canadian markets. This leverages two FDA breakthrough device designations for DrugServe ATR to remove blood thinning medications in patients undergoing cardiac surgery. One of these breakthrough device designations is for the removal of Berlinta commonly known as ticagrelor. And also, the second one is for the direct oral anticoagulants, of which Eliquis and Xarelto are the leading ones in that category. In addition, following independent data safety monitoring board review of the first 80 patients' safety data in the START-T trial and recommendation to continue the trial without modifications, we were pleased to announce that START-T enrollment has now completed. This helps to validate the decision to forego the interim analysis at 80 patients that we discussed on the last earnings call. And we expect that the trial to complete imminently following the last 30-day patient follow-up. We believe this sets us up for near-term milestones that are rapidly approaching, which is why I have this picture of a mirror that says objects in the mirror are closer than they appear. First, we expect to get the database locked in the next several months. followed by statistical data analysis. This should hopefully lead to top-line data targeted by year-end, and if positive, regulatory submission to U.S. FDA and Health Canada to follow. We also expect to present data at a major cardiovascular conference next year, and pending visibility, we plan to begin executing on our pre-commercialization strategy and begin building a direct sales and marketing infrastructure in 2024. One thing that we really haven't discussed extensively in the past are the dynamics that may actually help expand ticagrelor market share in the United States and Canada, but particularly in the United States. And more ticagrelor use means potentially more drugs or ATR use should we get approved. As we've discussed in the past, patients with acute coronary syndrome who come into the emergency room with signs and symptoms of having a heart attack often get dual antiplatelet therapy. This consists of aspirin plus one of the P2Y12 platelet inhibitors, such as Berlinta or Ticagrelor, Plavix or Clopidogrel, or Effiant, also known as Prasugrel. Berlinta has superior antithrombotic efficacy to Plavix, but Plavix is generic and cheap, and Berlinta today is still a branded drug. However, this is expected to change as Berlinta will go generic in 2024 to become just generic Ticagrelor with multiple competitors with tentatively approved abbreviated NDAs that have already been approved by the FDA. The price of Ticagrelor is expected to fall, potentially enabling market share gains against Clopidogrel and the more expensive branded Effiant. A recent publication in the well-respected journal JAMA Network Open highlights U.S. prescribing physician preference for ticagrelor versus other antiplatelet agents following acute coronary syndrome and percutaneous coronary intervention. In other words, for example, stent placement in more than 62,000 patients that were studied between 2010 to 2019. And what you can see in the graph in the lower right is that during that period of 2010 to 2019, that ticagrelor has steadily gained in prescribing preference for physicians following acute coronary syndrome and PCI to the point where now, or at least in 2019, 60.4% of patients who were intervened upon in the cath lab got ticagrelor or berlinta. While the rates of Plavix prescription have been going down to only about 30%, in 2019, and Prasugrel is a distant third at 10% of prescriptions, leading the authors to conclude that, to quote, ticagrelor has emerged as the most commonly prescribed P2Y12 platelet inhibitor. In addition, the approval of drugs or ATR would make ticagrelor the only one of these antiplatelet drugs to be reversible during CABG surgery. a potentially powerful marketing advantage to take market share. One can imagine, given that 5 to 10 percent of patients are not eligible for stent placement and wind up in surgery, that being able to reverse the drug used in dual antiplatelet therapy would be an extremely valuable marketing advantage that we could confer to Ticagrelor, and we believe that this will come to pass and be true. Ultimately, this sets us up for an initial market in the United States for removal of Berlinta in cardiac surgery patients of approximately 250 million. And if you add Canada, this increases the total addressable market to roughly 300 to 350 million in additional share against Plavix and . The numbers of patients on Berlinta or Ticagrelor in the future could rise to give us an opportunity of about a $500 million total addressable market. As we told you in the past, once STAR-T completed, we are looking to resume the STAR-D trial, which is looking at the removal of the direct oral anticoagulants, the factor Xa inhibitors, Eliquis and Xarelto. And if we are able to add on that indication, this could double our total addressable market to a billion dollars. And if we can now open it up for not just cardiac surgery, but to all kinds of surgeries, and also potentially being able to be used in the emergency room, we estimate that that could, again, double the total addressable market here in the United States. So a second major goal for the company is a return to sales growth for Cytosur. Again, this has been the third consecutive quarter of sequential product sales growth with 10% quarterly product sales growth year over year in the second quarter. We're seeing continued gradual recovery of hospital markets post-COVID, with continued strong customer engagement and enthusiastic response to our new data and marketing strategies. Our product gross margins rose 700 basis points to 74%, reflecting volume production from our new Princeton manufacturing facility, a trend consistent with prior guidance of returning to 75% to 80% quarterly base year. The following messages. One, that we need to be able to treat the right patient with the right timing and the right dose. And we also need to hit hard and hit early. And this incorporates our evolving understanding of how best to treat patients with cytosol. In particular, when cytosol is used early and aggressively in documented hyperinflamed we have seen some outstanding results. This includes the recently published CTC therapy registry results in the journal Critical Care, detailing the clinical outcomes in 100 critically ill COVID-19 patients with severe inflammation and refractory lung failure using Cytosorb with ECMO to achieve enhanced lung rest. Overall 90-day survival was high at 74%. And in the post hoc analysis, patients who were treated before the median treatment time of 87 hours had even higher survival at 82% compared to 66% survival in patients treated after 87 hours. In addition, those treated in the early group had significantly shorter median duration times on mechanical ventilation, ECMO on the, in the blue lower left-hand graph, mechanical ventilation in red, and ICU stay in green. Overall, our results compare favorably to the approximately 50% survival reported by ELSO, or the Extracorporeal Life Support Organization, and their COVID-19 registry survival data, where they looked at ECMO use alone in this population. Our data support the strategy of early combined use to treat severe ARDS, or acute respiratory distress syndrome, and refractory lung failure, and is a prime example of our hit early, hit hard treatment philosophy. To this end, our current company-sponsored trials, such as the PERSIS Refract Receptive Shock Randomized Control Trial and the International COSMOS Critical Illness Registry, incorporate our evolving understanding of how to achieve better and more consistent results with Cytosorb. We've also been working to drive earlier usage of Cytosorb in the appropriate patients through a number of different ways, including, for example, pursuing a theranostic strategy In other words, using a diagnostic test to guide patient selection and timing of cytosurgery therapy, as we're doing in our collaboration with humetics in the field of liver disease. We're also using a hemoperfusion machine, as we're doing with the Pure Adjust platform from Nikiso, that can run cytosurgery without needing to wait for patients to develop kidney failure and go on to the analysis. So with that, I'd like to turn it over to Kathy. to now cover financial highlights for the quarter. Kathy.

Thank you, Phil. And greetings to everyone on today's call. Let's start with our first slide on second quarter revenues. For the quarter ended June 30th, 2023, total revenue, which includes product sales and grant revenue, was $9.4 million. compared to total revenue of $8.5 million in the second quarter of 2022, which is an increase of approximately 11%. Product sales for the second quarter 2023 were $8.1 million, compared to approximately $7.3 million for the second quarter of the prior year. In our second quarter 2023, product growth margins were 74%. compared to 67% for the second quarter of 2022 and 68% in the first quarter of 2023. And this predicted improvement in gross margins is expected to continue throughout the year as we fully complete all the startup activities associated with our new manufacturing plant and continue to ramp up production. Our second quarter grant revenue was $1.3 million compared to $1.2 million in the same quarter of the prior year. Next slide, please. For the six months ended June 30, 2023, total revenue was $18.9 million, an approximately 10% increase over the $17.2 million in total revenue for the same period of 2022. First half 2023 product sales were $16 million, compared with $15.3 million in the same period of 2022. And grant revenue was $2.9 million in the first half of 2023, compared to $1.9 million in the prior year. Next slide, please. So, this next chart depicts our trailing 12-month product sales. And it's broken down into COVID-19 related and core non-COVID-19 related product sales. Our core product sales of $30.1 million in the trailing 12-month period ended June 30, 2023. They're just slightly behind core product sales of $30.7 million in the trailing 12-month period ended June 30, 2022. And this was due to the difficult market conditions, including a shortage of healthcare workers, fewer hospital beds, less surgical procedures, as well as other factors that we have discussed in prior earnings calls. As Phil mentioned, we are continuing to see improvements in the marketplace, including our sales team's ability to better access healthcare workers in the hospital and a return to face-to-face discussions with physicians in the market. Next slide, please. And this slide shows our quarterly product sales broken down again by COVID-19 related and non-COVID-19 related core product sales. And as you can see, over the past five quarters, there have been no COVID-19 related sales. The most recent three quarters have demonstrated sequential consecutive quarter over quarter growth in product sales. With $8.1 million in quarterly sales, Q2 2023 represents the highest quarter of core non-COVID-19 related sales since the COVID-19 pandemic was contained. Next slide, please. And I'd like to wrap up my remarks today with some comments about our cash position. As of June 30th, 2023, we had approximately 14.8 million in cash and cash equivalents, which includes 1.7 million of restricted cash. This includes 5 million of loan proceeds received from our debt facility in December 2022. And one of our key objectives for 2023 has been to reduce our cash burn. and maintain tight control over expenditures. And I'd like to elaborate on our progress on this. Over the past year, we took strong actions to reduce our quarterly cash burn, such that our quarterly cash burn over the first half of 2023 averaged approximately $4.5 million, which is down significantly from the average quarterly cash burn in the first half of 2022 which was approximately 11 million dollars. We continue to maintain tight control over cash, guided by a strict 2023 operating budget, prioritizing spend in key programs and pipeline products. Our spending is fully aligned with our strategic priorities, in particular, the completion of our STAR-T clinical trial designed to obtain U.S. FDA marketing approval. So that will conclude my remarks for today. And at this time, I would like to turn the call back to Phil for concluding comments. Phil?

Yeah, so thank you very much, Kathy. Apologize for that. Today, Cytosurf drives our growth. Cytosurf forms the foundation of our company with an EU-approved product that is sold around the world that has generated approximately 200 million in sales since launch in more than 200,000 human treatments around the world. It is a high margin razor blade business model with industry top tier 80 plus percent blended product gross margins. And it has had strong validation by customers, partners, and government agencies. With current sales that supports near break even, less clinical trial costs, which we believe helps to de-risk the company and the investment opportunity. We believe Cytosurf represents the fuel for strong future growth Anticipated growth targeting the $20 to $30 billion worldwide total addressable market of major unmet medical needs and critical care, cardiac surgery, as well as liver and kidney disease. And we believe this gives the potential upside of a biotechnology company with the lower risk profile of a high margin medical device company with sales. But soon, we believe that the story could change. with Cytosorb and DrugSorb ATR representing dual growth engines for the company. We are racing to the finish of STAR-T where we are rapidly nearing the completion of the study expected imminently, with top line data expected later this year. Should STAR-T be successful and DrugSorb ATR achieves US FDA and Health Canada regulatory approval, we intend to commercialize DrugSorb ATR in both the US and Canada a potentially major second engine of growth working in tandem with Cytosorb to drive sales. DrugSorb may open an expected initial U.S. and Canadian total addressable market at 300 to 350 million for Berlinta alone, which could expand should Berlinta go generic as Ticagrelor, where we expect significant penetration given the major unmet medical need indicated by our FDA breakthrough device designations. If successful, this could transform site assortments into a dual U.S. and international growth company that current and prospective institutional retail shareholders are excited about and have been waiting for, and that can create potentially significant value. With that, formal remarks. Operator, please open the Q&A session.

Please make sure your mute button is turned off to allow your signal to reach our equipment. One moment. Our first question, and our first question will come from Joshua Jennings of TD Cohen. Your line is open.

Joshua Jennings Hi. Good afternoon. Thanks for taking the questions, and congratulations on completing the enrollment for STAR-T. And Kathy, congratulations on your retirement. I was hoping to just get a refresher, and I apologize for this basic question. But just, Phil, if you could help us or remind us about the differences just in the devices, drug sorb, ATR, versus cytosorb. And the reason I'm asking the question is just the study, I think cytosorb absorption during emergency cardiac operations in patients at high risk of bleeding. I believe that cytosorb, it's EU approval or CMARC approval. for the indication to remove endothrombotics prior to cardiothoracic surgery. And just with that data that's out there and trying to kind of use that as a signal for the prospects of success for STAR-T, just want to be reminded of the differences of those two devices.

Yeah, thanks very much, Josh. So the drug sort of uses an equivalent polymer technology to Cytosorb. DrugSorb HR is more of a drug removal system with bloodlines and other things that allow it to connect to the heart-lung machine. So from a technical perspective, what Cytosorb can do, DrugSorb can do. So if that is helpful.

Absolutely. And just thinking about the interim analyses and getting through those, any changes in the study protocol, I mean, I think that's a clear positive signal on the safety side. But is there any, I guess, clinical signals you would put forward either from real world experience with Cytosorb for the syndication in Europe or clinical data, including that study that I just referenced, in terms on the efficacy side for the Starkey data, the signals that investors should be really considering as they're trying to analyze potential success of the STAR-T study.

I can turn that over to Micah. Micah, would you like to handle that, and I can call it?

Thanks, Phil, and thanks for the question. So, as Phil mentioned previously, we have announced in our LATERN Scholar that we're going to forego the interim analysis based on the speed of enrollment. The fact that we completed a study so soon would not have allowed significant amount of time, sufficient amount of time, for the interim analysis to be performed. However, by foregoing that, we did not have, not us nor the DSMB, any further insight into the efficacy side. And therefore, now the data remain fully blinded as they're being entered by the sites. They will undergo the process of being validated and cleaned, leading to database lock, as you heard earlier. And obviously after that, we will pursue the final analysis and the top line results of the study. So until then, we only have the DSMB review on the safety information of the trial, which we already reviewed today. We had two of those reviews that were both unremarkable without any findings and without any recommendations for changes in the trial. So that's a long way to tell you that as of now, the data remain blinded. but we do have the positive feedback for the safety of the study.

No, thanks, Ed. Sorry for misclassifying the safety reviews as interim analyses. And then maybe lastly, just thinking about, I mean, getting a little bit ahead of myself, but thinking about the plans for START-D and potentially kicking that study off for Geraldo and Eloquist removal. I mean, will the catalyst be, or I guess the thing about the decision tree, we need to to see success in STAR-T prior to thinking about or initiating the STAR-T trial. Thanks a lot.

Okay. So, let me try to respond to that one as well. So, the STAR-D trial is targeting an addressable population that's even larger than the tachyglob population. And we've seen that not just in our literature review of the numbers that are out there, but primarily from the direct feedback from the site. So, we believe that the opportunity for these two blockbusters, Xarelto and Eliquis, is even greater than for Berlinta. So, in that regard, it's definitely an opportunity worth pursuing. Now, in relation to STAR-D, you know, we are now in a very good position that we have the full apparatus to execute and study in place. You know, from our clinical team, our internal clinical team, all our vendors and our partners that we're working to execute the study, most importantly, the site network from STAR-T. These are highly performing sites. They did excellent in STAR-T, so we believe that STAR-D, once resumed, will actually be efficiently executed and be able to enroll fast. The results of STAR-D will be very helpful, of course, especially relating to the safety of the device since the application is very similar. As you know, the STAR-D trial is targeting the same use of the device intraoperatively for patients undergoing cardiac surgery. So there's a lot of similarities between the two trials that we've discussed previously, but more importantly now, we have the playbook, the right partners and the right sites to execute briskly the STAR-D trial.

Excellent. Thank you very much.

And one more question. And our next question will be from Yon Tsai of B. Reilly. Your line is open.

Thank you for taking my questions. Maybe I can start with the high-level question first and then have a follow-up. So first, during your market research field, can you remind us the trend of using antidotes for anticoagulants such as, you know, Andexa, Praxiband in the U.S. and the EU? Thank you.

Sure. And actually, Mike, this is an ideal question for you.

Sure. Thank you for the question. So the use of these reversal agents that are approved in the marketplace now, specifically Andexanet, that is indicated for the reversal of the drugs we referenced before, the direct oral anticoagulants like Xarelta and Eliquis, is approved in the presence of severe life-threatening bleeding. So those drugs are used when somebody has suffered a life-threatening bleed, The usual measures are not successful in stopping the bleeding, and then they applied. The population that we are addressing is actually much larger populations. These are patients at risk for bleeding. So if you can imagine, these are patients who are coming in with a heart attack. They have their cardiac angiogram. They see that they need surgery, but because they received these drugs, they're sitting waiting for the drug to wash out at risk for having a second heart attack, for example. But they're not bleeding. So in that population, as of now, there are no available solutions to help them have a timely operation, a safe and timely operation. So these patients now are waiting in the hospitals for a long time. The drugs that we're referencing would only be indicated if they were bleeding. In addition, some case reports where these drugs were used in the setting of patients heading into surgery, especially relating to Xarelta and Eliquis, the reversal agent, and Dexanet, can interfere with the necessary anticoagulation that are required when people are put on a hard lung machine. So it poses also a complicating factor that may put the operation at risk and therefore are not widely used in this setting, and they're certainly not approved for that application. The reversal agent for the bigotran, which has a very, very small piece of the pie of the market share for these anticoagulants, does carry an indication that can be used because it has been studied also in people heading to cardiac surgery. Having said that, there are so few patients on this drug, again, at least in our sites, we have not experienced any of the clinical teams using these drugs in this setting. They're all opting to just wait and let the drugs wash out, which is exactly the unmet need that we believe can target by allowing the surgery to proceed while at the same time removing the offending agent and reducing the bleeding risk.

Yeah, got it. Thank you so much for the clarification there. The follow-up here I have is I'm curious about the U.S. market. When you have a third party or have third party distributors, can you clarify how will you split the responsibilities? Will you take on the responsibility of marketing and education And then they do the face-to-face interaction with surgeons. Thank you.

Vince, do you want to take that?

Sure, Phil. I'll take that. Thanks. In the U.S., we plan to use a blended approach of direct sales and distributors. We have some strong distributors that we developed during the COVID period when we were selling cytosorbents. or Cytosorb under the EUA. And we will use those distributors in those select regions since they have very, very close relationships with the cardiac surgeons. And so the rest of the US, we intend to focus on direct sales, specifically with probably a sales force of about 19 people.

Got it. Thank you for the clarification.

One moment for our next question. And our next question will come from Christopher Campbell of JEF. Your line is open.

Hey, thanks for taking the question. This is Chris on for Mike. I was wondering if you could elaborate a little more on the trends you're seeing in the core German market and how that's trended so far through the third quarter.

Yeah, we, thanks very much, Chris. We, Christian, would you like to comment on that? There's only so much we can say about third quarter results so far, but Christian, feel free to try.

Yeah, thank you, and thank you Christopher for the question. So as Chris said, we cannot obviously comment on the third quarter, but as you have seen already in the first and second quarter, significant improvement compared to last year. This is mainly because we have much better access to the hospital and also will be, I think, carried in the next half year by a number of complications we have received over the first half. So all this together has to balance the still critical or complicated situation in the hospitals there are still ICU capacities blocked because there's a shortage of staff and there's still less cardiovascular interventions compared to before the pandemic. But the charts which have been shown by Cathy show that we are already much higher with the core business compared to the the business before the pandemic, but also considering the core business during the pandemic. I think it's a stable improvement, and the second half will, I think, show further stabilization. One moment for our next question.

And our next question will come from Jim Molloy at Alliance Global Partners.

Hello, this is Laura Suriel calling in for Jim Molloy. Thank you for taking our questions. So with enrollment now complete for the STAR-T trial and, you know, top-line data set to be announced by the end of the year, what type of data are you specifically anticipating in order, you know, to submit your regulatory submissions to both the FDA and Health Canada?

Thank you, Laura. Micah and Irina, would you like to take that?

Yeah, I can take that. We consider that at this point we don't know the results of clinical study, start T, but it is randomized control study and data is blinded until the final analysis would be completed. This data would be sufficient to support regulatory filing in the United States and in Canada. This data also might be used in some other territories, but at this point, the United States and Canada would rely, regulatory submissions would be relying on this data.

Got it. And maybe, Mike, if you can talk about the, Mike, if maybe you could talk about the primary endpoint and some of the secondary endpoints as well.

Sure. Thanks for the question. So I think, like with any regulatory review, the agency will have to perform a benefit-risk analysis for this proposed new intervention. So the start team is designed to provide all that information. First of all, the safety, and we already talked about this on this call. We had some interim reviews, and we'll have a final review as well. So safety will certainly be supported by the data for STAR-T for the review by the agency. For efficacy, we are looking at two specific things in STAR-T. First of all, we want to establish the mechanism of action. So we're looking for the drug removal of the drug to actually be validated in vivo. We're going to be measuring the levels of the drug before surgery and after surgery. That's actually the key secondary endpoint of the trial to show that the drug is effectively removed from circulation compared to the control arm where the device is not used. The second piece of the efficacy, which is actually the primary endpoint of the trial, is a composite endpoint looking at various events that constitute bleeding, perioperative bleeding. So we're measuring things like transfusions, we're measuring things like the amount of blood that comes out of the chest after the operation, and that will give us a picture of the overall bleeding rates between the intervention arm and the control arm. So I think the overall information from the STAR-T trial will be sufficient for the agency to review, to come up with the benefit-risk analysis that's necessary during this process.

Understood. And may you also go over the joint marketing agreement that you entered with Humetics and, you know, their LIMAX diagnostic tool? And then what might you expect in terms of, you know, increased customer awareness and use for both of the products involved?

Yeah. Chris, why don't you take that one?

Yeah. Thank you, Phil. Yeah, thank you for the question. As Phil had mentioned, Umetics has a really innovative non-invasive liver function test, and basically what it helps physicians do is to assess how much liver function a patient may have. And they got their start with pre-surgical planning, but I think ideally what we hope to do is to leverage the test and, as Phil had mentioned, use this as a diagnostic test to help stratify and identify the right patients who would ultimately be best suited for our treatment. So I would categorize that as maybe a mid to later objective of the partnership. But today, we're leveraging the commercial organizations to get in front of key customers for our products. customers like hepatologists, hepatic surgeons, and others. And I think the real near-term benefit of this is that the partnership could be valuable because it'll help introduce this to customers who may not yet be familiar with Cytosaur, but could be good buyers of the product. So I think this is just another way for us to accelerate our commercial efforts in the field of liver therapy.

Got it. Thank you for taking the questions.

One moment for our next question. And our next question will come from Sean Lee of HC Wainwright. Your line's open.

Good afternoon, guys, and thanks for taking my questions. My first one is on the U.S. market, potential U.S. market for drug swap ATR. So you mentioned a currently a $250 million opportunity. So I was wondering how many of these cardiac surgeries per year that are sort of using Ticego or new patients using Ticego or that you believe could be a benefit from drug-sorbed ATR?

Thanks, Sean. Micah, would you like to take that one? Sure.

So what Phil showed you today is that these acute coronary syndrome patients, which is about a million or more admissions as such in the U.S. every year, require the use of antiplatelet drugs. Aspirin is one, but they also require one of these P2Y12 inhibitors. The position of Ticagrelor within that marketplace is constantly improving based on the very good efficacy data, especially over Plavix. So the numbers of patients on Ticagrelor have been growing over the past few years, and we believe that trend will continue to go up with the generic availability of the drug, and obviously, hopefully, potentially, the availability of drugs. So from all those patients, about 100,000 of them, out of this 1 million, about 10% when they present with ACS will require surgery. And that surgery takes place in the hospital. These are not patients that are stable enough to be sent home, to be allowed to stop the drugs and then come back for surgery without risk of bleeding. They are staying in the hospital, being monitored, and currently these hospitals are waiting, are waiting multiple days until they can be operated. The amount of patients from those 100,000 that are on ticagrelor, we estimate, like I said before, we have estimated in the past that the market surface archival is approximately half of that market and may potentially grow even more in the future. So those are the assumptions behind the number that Phil has quoted previously about the total addressable market with this device. So to summarize, about 10% of patients presenting with acute coronary syndrome need to go to surgery. These patients are on P2Y12 inhibitors and aspirin, dual anti-plagiarity therapy, and the percentage of ticago patients within that population is high and will continue to grow, we believe, with the generic availability of the drug.

Great. Thank you. Thank you for that. My second question is on your commercial planning in the U.S. and Canada. So you mentioned that you expect to start building out a direct sales team starting next year. So I was wondering, would you be pursuing a entirety through direct sales or a hybrid model where, you know, you have some direct sales territories and some other distributors? And in terms of personnel, what's the size of this sales team that you're looking at?

Yeah, Vince, would you like to cover that?

Sure. Thanks, Sean, for the question. So we do plan to do a hybrid model, Sean. You know, we have some good distributors from the COVID EUA program that actually are specialists in cardiopulmonary bypass equipment. And so we will combine that with a direct sales force of about 19 people. I think with the distributors, they have the established relationships And so we would obviously leverage their Rolodex to get into those counts quickly to establish the use of DrugSorb ATR. And then in the rest of country, we will go in with a direct sales force, and that will be roughly about 19 people. Does that answer your question?

I think the other thing to note is that at the price points that we're talking about in the United States, we've talked about a number of about $5,000 per cartridge compared to $1,000 for Cytoserve in the European Union. Our product gross margins for DrugServe ATR are expected to be well above 90%. So with a highly profitable, high margin disposable device such as DrugServe ATR, the payback on sales of that product is very quick. And I think I was telling, someone the other day that we have a lot of experience in terms of commercialization experience based upon what we've been doing in Europe. We, again, have been in the market for now 11 years with Cytosorb and have a full-fledged, fully operational sales and marketing commercialization team that has a gamut of sales and marketing folks, but also product support, clinical support, clinical and medical affairs, and application specialists, customer service, et cetera, et cetera. We look to replicate that here in the United States and know how to do this cost-effectively, and so are looking forward to the opportunity to do that here in the U.S.

Great. That's very helpful, and thanks again for taking my questions.

Again, if you do have... Absolutely.

Thanks.

Again, if you do have a question, please press star 1-1 on your touchtone telephone. Again, please press star 1-1 on your telephone. Our next question will come from Tom Kerr of Zacks SCR. Your line is open.

Hi, guys. I think most of my questions have been asked. Just a couple quick ones and some financial ones. You guys don't talk about those programs under development much anymore. Any comment on that, you know, the Hemodephen and the contrast and that sort of stuff. Are you still working on those efforts?

Absolutely. The Hemodephen BGA program is the beneficiary of more than $15 million in government grant funding, particularly from the Department of Defense. It is a priority, actually, for our R&D program outside of the work that we're doing on Cytosorb and other key programs. And it is well-funded. And so, if you've seen a lot of the press releases we put out on these technologies, we have funding to really bring it to clinical studies and potentially even commercialization. We are active on that. I think we're making some outstanding progress. We are looking to address multiple different markets, including military markets, including civilian transfusion markets, as well as plasma processing markets with our technology, because we believe that universal plasma has a place in each of those verticals. We really look forward to the day when a bag of freeze-dried universal plasma is on every, you know, or multiple bags of freeze-dried plasma is in every ambulance, for example, in the world, given that plasma is a life-saving product with lots of beneficial components in it, such as coagulation factors and other things that are very useful for trauma patients. and are much better at resuscitating patients than what they're using today, which is simple saline. And so you can imagine how large this opportunity could be worldwide. And it's one of the reasons why we're very excited about that program. We don't talk about it much, but be very clear that we are making some nice progress.

Okay, great. A couple quick financial questions. The burn rate expected to remain around 4.5 million. As you guys stated in the press release, you're funded through 2023, but you have substantial more liquidity than that. Just trying to get that out there and figure that out.

Bill Meyer. Kathy, did you want to address that?

Yeah, I'll take that. Thanks, Bill. And thank you for the question. So, our cash burn moving forward is estimated to be around $4 million a quarter. That's just what we're expecting as, as, as we move into 20. Out of 2023, and into 2024, of course, beginning with when we begin to have sales in the US of drugs or ATR. Phil already mentioned that it's a very quick payback and it is, and we're targeting average selling prices of. around $5,000 versus the $1,000 that we sell Cytosorb for currently. So what are now up to 80% gross margins will be very high 90% gross margins on those products. So they'll be very profitable. We do have an ATM in place. We do have the ability to borrow additional debt if need be to extend the cash runway.

Okay, I think I understand, but it seems like with that amount of liquidity and a $4 million burn rate, you'd be funded beyond 2023 instead of through 2023. But maybe I'm reading into that too much.

No, you're reading it right. It will be beyond 2023. Okay.

That's all I have for today. Thanks. Thanks, Tom.

Thank you.

Well, if there are no Okay, operator, sorry.

I'm sorry, there are no further questions. I'd like to turn the call back to you, Phil, for closing remarks.

Thank you, Tanya. Well, thank you, everyone, for joining the call today, and a special thanks to the analysts who asked some excellent questions. If you do have any other questions, please feel free to reach out to Kathy Block this week at kblock at siteofservants.com or me at pchan at siteofservants.com, and we'll reply to your questions where possible. We look forward to our next quarterly call. Thank you everyone very much. Have a great evening.

Thank you. That concludes our conference for today. I'd like to thank everyone for their participation.