Cytosorbents Corporation

Good day, ladies and gentlemen, and welcome to the Q2 2025 Earnings Conference Call for CITO Servants Corp. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require automated assistance, please press star zero for the operator. This call is being recorded on Wednesday. Please, sorry, I would like to return the conference over to Adana Alexander, Investor Relations Consultant. Please go ahead.

Thank you, Sergio, and good afternoon, everyone. Welcome to Finest Open's second quarter 2025 financial results and recent business highlights conference call. Joining me today from the company for the prepared remarks are Dr. Philip Chan, Chief Executive Officer, and Pete Mariani, Chief Financial Officer. Before I turn the call over to Dr. Chan, I'd like to remind listeners that during the call, management 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 the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from results discussed today. The forward-looking statements we make reflect our views and estimates as of today, August 7th, 2025. 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 the second quarter 2025. Following the presentation, we will open the line to analysts for questions. And now, it's my pleasure to turn the call over to Dr. Philip Chan.

Phil? Thank you very much, Adana, and good afternoon, and welcome, everyone, to our second quarter 2025 earnings call. As a quick summary for those who are new to the company, Cytosorbents is a leader in the treatment of life-threatening conditions and the intensive care unit in cardiac surgery through blood purification and the removal of harmful substances from blood with our proprietary Sorbent bead technology. Cartridges filled with these beads are high-margin, single-use disposables that are plug-and-play compatible with existing blood pump machines in a hospital, such as dialysis, ECMO, and heart-lung machines. Our technologies are used in a broad number of blood purification applications, Specifically, Cytosorb, our flagship product, which is approved in the European Union, is used primarily to treat life-threatening conditions in the intensive care unit in cardiac surgery such as sepsis and septic shock, acute respiratory distress syndrome, liver failure, blood thinner removal, and infective endocarditis, just to name a few. Cytosorb is the anchor of our core international business with nearly 300,000 devices utilized to date in more than 70 countries worldwide. which drove 35.6 million in core product sales last year. Our second product, DrugSorb ATR, is an investigational FDA breakthrough designated medical device intended to reduce the severity of perioperative bleeding in patients undergoing cardiac surgery due to blood thinning drugs. We're initially focused on the blood thinner Berlinta, also known as Ticagrelor, in patients undergoing CABG or coronary artery bypass graft surgery. Currently, we are navigating the appeals process with both FDA and Health Canada, with final regulatory decisions expected this year. Meanwhile, we continue conducting pre-market launch activities, and if approved or authorized, plan to quickly begin our controlled market release at hand-chosen cardiac surgery centers. Today, I will summarize our financial performance in the second quarter and follow that with a regulatory update on DrugServe ATR. Next is part of our activities surrounding Sepsis Awareness Month in September and World Sepsis Day on September 13th. We will talk about the leadership role that Cytosorbents and its collaborators are playing in the treatment of sepsis and septic shock and give you information on our World Sepsis Day global webinar on September 10th. Finally, Pete will provide a more detailed financial update and discuss our progress in driving our core business to near break even by the end of this year with sufficient cash to fund our company initiatives. In the second quarter of 2025, we reported product sales of 9.6 million, representing a 9% year-over-year increase and up 4% on a constant currency basis compared to the same period last year. We're making encouraging progress with our proactive reorganization and strategic realignment of our German commercial team, which grew 22% year-over-year and sequentially in the quarter. Our other direct territories also saw continued strength, and our distributor sales were among the best ever, second only to our record second quarter last year. With Q2 behind us, we are pleased with our initial progress with our German reorganization and remain confident it will lead to stronger execution, improved performance, and more robust sales growth in our overall business this year and beyond. Gross margin performance remains solid, holding steady at approximately 71%. And as Pete will review later, operating expenses were slightly higher in the quarter, due to a few unique operating and strategic charges, but we remain committed to reducing core business operating costs and driving operational efficiencies to manage our total core business towards near break-even as we exit 2025. Now for a quick update on DrugServe ATR. Acute heart attack patients are often given blood thinners like Berlinta to help improve outcomes and prevent further clotting events. However, while Berlinta can be lifesaving, It also creates a dangerous challenge for patients who require urgent coronary artery bypass or CABG surgery. Because Berlinta significantly increases the risk of serious, even life-threatening bleeding during surgery and after surgery, doctors must typically wait three to five days for the drug to wash out of the patient's system before operating. But in many cases, these patients simply can't wait. They are still having a heart attack, and delaying surgery increases the risk of severe complications including sudden cardiac death, for example. This also leads to higher costs, longer ICU stays, and inefficient use of hospital resources. This is the critical gap that DrugServe ATR is designed to fill. DrugServe ATR is a breakthrough-designated device that's specifically engineered to remove drugs like Berlinta from the blood during procedures such as CABG surgery, helping to reduce the risk of bleeding, enabling patients to get the surgery they need it when they need it. We believe DrugServe ATR addresses a serious and growing unmet medical need in the U.S. and Canada, impacting tens of thousands of patients each year. With an initial opportunity of more than 300 million and the potential to exceed a billion in sales as in total market opportunity as Berlinta becomes generic and DrugServe ATR expands to additional uses, this device represents a compelling opportunity to improve patient care and drive long-term growth. Our company and technologies continue to demonstrate and be recognized for our ability to reduce the severity of bleeding in CABG patients caused by blood thinners such as Berlinda that represents a major global unmet medical need. At the EuroPCR Congress in May of this year, the world leading course in interventional cardiovascular medicine with over 12,000 attendees, Professor Robert Story presented new comparative data from our STAR registry. The analysis included 150 CABG patients on Berlinta who were treated with Cytosorb compared to 644 control patients from a recently published meta-analysis who underwent CABG on Berlinta without Cytosorb. Key findings from the analysis showed that the use of Cytosorb was associated with a highly significant two-thirds reduction in the rates of severe CABG-related bleeding, 78% reduction in the need for large transfusion events that required five or more units of packed red blood cells, and a 58% reduction in the need to go back to the operating room to find out why the patient keeps bleeding. Also in May, at the 73rd International Congress of the European Society for Cardiovascular and Endovascular Surgery, Professor Matthias Tillmann received the Best Oral Presentation Award for his talk entitled Early Cavage with Intraoperative Hemoabsorption in Patients on Ticagrelor real-world data from the STAR registry. These presentations and the positive response by their peers reflect the growing clinical interest in the use of Cytosorb for managing perioperative bleeding risk in patients undergoing CABG surgery on blood thinners and continues to strengthen the value of our technology in real-world settings.