SeaStar Medical Holding Corporation

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the C-STAR Medical Second Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. To the speaker's remarks, there will be a question and answer session. To ask a question, simply press star followed by the number one on your telephone keypad. To withdraw your question, press star one again. It is now my pleasure to turn the call over to Jackie Cosman, You may begin.

Thank you, Tina. Good afternoon, and thank you for joining the Seastar Medical Second Quarter 2025 Financial Results Conference Call. I'm Jackie Kosman with Wheelhouse Life Science Advisors. Joining me from Seastar Medical today are Eric Schlarf, Chief Executive Officer, David Green, Chief Financial Officer, Dr. Kevin Chung, Chief Medical Officer, and Tim Barachek, Senior Vice President of Commercial and Business Operations. I would like to remind listeners that comments made during this call by management will include forward-looking statements within the meaning of federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from any anticipated results. For a list and description of these risks and uncertainties, please review Seastar Medical's filings with the Securities and Exchange Commission. Furthermore, the comments of this conference call contain information that is accurate only as of the date of the live broadcast, August 13, 2025. T-Star Medical undertakes no obligation to revise or update any statements to reflect events or circumstances as required by law. And now, I'll turn the call over to Eric. Eric?

Thank you, Jackie. Thank you, Jackie. And thank you for joining us today. Since the beginning of the second quarter, we've made great progress on several fronts. We enrolled 125 patients in total, 12 in the month of July into the neutralized AKI trial, reported three new Quell Immune customers from top-rated U.S.-based children's hospitals, announced positive survival results from the first 20 pediatric patients treated in a commercial setting with Quell Immune from the SAVE surveillance registry, and raised additional capital to shore up our balance sheet. With respect to our Quell Immune product launch, we predicted that sales would be lumpy in the first year, and that rings true of the first half of the year. The first quarter net revenue jumped up fourfold from the fourth quarter, and we saw a 15% increase in net revenue in the second quarter. So overall, we saw nearly a 370% increase in revenue in the first six months of 2025 compared to the first six months of launch. As such, we are pleased with our progress on the Quell Immune launch, and plan to continue to focus our efforts on new customer adoptions, which should translate to an upward trend in sequential quarter sales. Now, let me say a few words about the SAVE surveillance registry. We are especially pleased with the early data from the registry that continues to show life-saving benefits from the Quell Immune Therapy. Confirming the 75% survival data is decisive in our view and clearly demonstrates that the Quell Immune Therapy is benefiting patients in the real-world setting. As Tim will explain, we are already sharing these early results with existing and potential customers in hopes of expanding the use of Quell Immune in these critically ill pediatric patients with acute kidney injury or AKI. Before I turn the call over to Tim, I'd like to emphasize one last point. That is, we experience great reward when we hear that Quell Immune has helped another critically ill pediatric patient who in many cases have little hope of survival. With each of these cases, we realize that we may be able to do this again and again with adult patients who suffer the same destructive hyper-inflammation that shuts down organs and takes lives. The numerous stories that we have heard about the use of Quell Immune is why we at Seastar Medical are so eager to bring the SCD therapy to a much broader market than we serve today. And we believe we are well on our way. We look forward to reporting our upcoming milestone in progress in our neutralized AKI pivotal trial. And with that as an overview, I will turn the call over to Tim to discuss our commercial achievements and market opportunities.

Thanks, Eric. And thanks, everyone, for joining us today on the C-STAR Medical Call. I'm pleased to report that we've made good progress on our primary goal of new Quell Immune site adoptions. We secured three new customers since the start of the second quarter and continue to see strong enthusiasm for the Quell Immune Therapy by existing customers. Specifically, the addition of Texas Children's Hospital to the Quell Immune family is indicative of the belief in the clinical results that can be achieved and the conviction around this product. And it's notable that the premier pediatric hospitals across the country are adopting Quell Immune Therapy. Wellimmune net revenue for the second quarter increased 15% sequentially. And as Eric indicated, we still anticipate that sales will be lumpy until more pediatric hospitals are activated and we can gain a further understanding of the cadence of patient presentation within these hospitals. We have already started discussing the recent early save surveillance registry with our pipeline of customers. These data, And the more extensive data from the registry that we hope to present at a prominent pediatric nephrology meeting later this year will provide detailed real-world data to further support the use of the Qualimmune Therapy. Now, turning to our next potential product offering, the SCD therapy for adult patients with AKI requiring CRRT. We have begun our pre-commercialization efforts to support the potential launch of the adult SCD assuming positive clinical trial results and FDA approval. We estimate that the total U.S. market opportunity is approximately 50 times the size of the pediatric population or about 200,000 patients annually that face organ failure and potentially loss of life with no FDA approved treatment options beyond the current standard of care which is CRRT and antibiotics. At our current projected revenue per patient, this translates to a total addressable market greater than $4 billion annually in the U.S. With even a modest market penetration, we could deliver significant revenue for Seastar Medical. For this near-term potential market, we're also modeling a more favorable time to adoption than Quell Immune and Pediatrics, And that's based on factors such as increased clinical need due to the size of the population, the potential lack of post-market registry requirements, and our ability to leverage pediatric customer experiences with Quellimmune. And looking beyond the adult AKI indication, we have received FDA breakthrough device designation for five additional indications. We believe the market for our adult indications in the U.S. alone is hundreds of thousands of patients that currently have no approved therapies to address conditions where destructive hyperinflammation creates critical care issues, organ failure, and death. This is why we are so excited about the future prospects for Seastar Medical and the SCD therapy. And with that, I'll turn the presentation over to our Chief Medical Officer, Dr. Kevin Chung. Kevin?

Thanks, Tim, and thank you, everyone, for joining us today. I am pleased to report steady progress in our neutralized AKI physical trial. As of today, we've enrolled 125 of our target 200 patients. That's 31 additional patients since the start of Q2, reflecting meaningful progress despite across the board low census during the summer months. For those newer to our story, neutralized AKIs are randomized, controlled, trial evaluating whether up to 10 24-hour treatments with our STD therapy can improve 90-day survival or renal recovery in patients with AKI requiring CRRT compared to CRRT alone. Our primary endpoint is a composite of mortality or dialysis dependency at 90 days, and the trial is powered for 200 patients. We also reached a key milestone in May. the 10th patient was enrolled, or 100th patient was enrolled, triggering our pre-specified interim analysis, and in early August, the 100th patient reached the 90-day follow-up. This analysis is being conducted independently by our Data Safety Monitoring Board, or DSMB, which will review pooled data to assess outcomes between treatment and control arms. Their recommendation will guide the next phase of the trial. We expect the DSMB to deliver its recommendation in Q3 2025. Possible recommendations include continuing the trial to 200 patients as planned, re-estimating the total number of patients needed, stopping early for overwhelming efficacy, or stopping for futility. While we are prepared for all outcomes, our current assumptions support continuation as planned towards full enrollment of 200 patients. To maintain scientific and regulatory integrity, only the DSMB's recommendation, not the underlying outcomes data, will be shared publicly. Now, regarding the pace of trial enrollment, we can ensure all of you that our sites are extremely motivated and are continuously screening patients daily When we find eligible patients, our sites are able to successfully consent and enroll a large proportion. In fact, more than 80% of eligible patients are successfully consented and randomized into our trial. This reflects highly on the site investigators and the incredibly professional research staff who are tactfully approaching family members during our patients' most desperate hours. We must re-emphasize that we are focused on enrolling the right type of patient. Our protocol includes strict criteria to exclude those who may not have any modifiable disease, as in patients unlikely to benefit from any intervention. This careful selection of the right patients is essential to demonstrating therapeutic effect in avoiding the pitfalls that have undermined many prior AKI and sepsis trials. One of those enrichment criteria is C-reactive protein, or CRP, level of 3.5 milligrams per deciliter. Patients who do not have a CRP greater than 3.5 are excluded. Why? Because this is a very sensitive marker of inflammation. And those patients who do not have a CRP greater than 3.5 do not have significant inflammation and are unlikely to benefit from our therapeutic device. Therefore, we are selecting these patients out. In past interventional sepsis or AKI trials directed at inflammation, many of these types of patients were included and have failed as a result. Still, in an effort to optimize our rate of enrollment, we've selectively added key sites. We have also shut down sites that have not performed to optimize efficiencies across the study while minimizing costs. We are not done adding sites. By the end of Q3, we aim to add at least three to four more strategically selected sites. Finally, in several of our already activated sites, we are working to expand screening into additional ICUs within the same site. This move will help us increase our enrollment pace, and we will do this without having to absorb any additional startup costs. Based on current projections, we believe we still have a decent chance of reaching full enrollment by the end of the year. Following enrollment completion and final data log, we will move swiftly to analyze the results and share them with the global medical community. Should we meet our primary endpoint we plan to file our pre-market approval or PMA application with the FDA. Our breakthrough device designation for adult AKI requiring CRT will support expedited regulatory review. In parallel, I'm proud to share top line data from our SAVE surveillance registry, recently announced in a July press release. Among the first 20 critically ill pediatric patients treated with Full Immune under our real-world registry, we observed a 75% survival rate at 28 days with no device-related safety events. These children were extremely ill, most receiving therapy as a last resort. And yet, three-quarters survived the immediate life-threatening phase strongly suggesting the possibility for more than a 50% reduction in mortality compared to historical benchmarks. As an ICU physician, these better than expected outcomes reinforce our conviction that Qualimmune is giving these extremely sick children a fighting chance. These encouraging results have given our clinical team at Seastar a major adrenaline boost for both the pediatric rollout as well as the adult trial. Our collective goal remains the same as it has always been. This is our true north, to accelerate pediatric clinical adoption, to save as many sick children as possible, and when the time comes, to do the same for the adult population. While neutralized AKI is our immediate focus, our broader strategy remains to expand the use of STD therapy across a range of hyperinflammatory conditions. We believe this platform has the potential to redefine treatment paradigms beyond AKI, pediatric and adults alike. With that, I'll hand it over to our CFO, David Green.

Thank you, Kevin, and thank you all for joining us today. I'll describe our second quarter financial results and conclude with some of our expectations for the remainder of 2025. First, for some housekeeping, please note that our Form 10-Q will be filed with the SEC in the next 24 hours. You can find it at cstarmedical.com or at sec.gov. And before I turn to our financial results for the second quarter, Let me also say that since the beginning of the second quarter, we have achieved a number of key milestones for the company. We've positioned the company to build on the first three quarters of commercial revenue for Quell Immune and pushed forward the adult neutralized AKI pivotal trial. We've made good progress on our priorities as reported in our press release today. To highlight three of these accomplishments, First, we've advanced our neutralized AKI pivotal trial for adults, adding 31 new patients through today, bringing total enrollment to 125 of the 200 patient total targeted to complete the trial. Second, we've increased Quell Immune adoption, adding three new customers since the beginning of the second quarter. And third, We raised $12.4 million of new equity capital through a public offering and two registered direct offerings, each priced at the market. And with that, I'll turn to our second quarter 2025 financial results. We recorded our highest quarterly revenue to date, achieving a 15% increase in sequential quarter revenue through sales of Quell Immune Therapy. Revenue for the second quarter of 2025 was $338,000 compared to approximately $293,000 in the first quarter of 2025 and $0 in the year-ago second quarter. Year-to-date revenue was $631,000. We attribute Q2 revenue growth to existing customers expanding their usage of Quell Immune and the addition of new hospital customers purchasing Quell Immune Therapy. Moving to gross profit, the Q2 financial statements reflect a gross profit margin of approximately 92%. As I indicated last quarter, Q2 was a transition quarter where we began to recognize COGS. This is consistent with GAAP and due to sales of Quell Immune units, that had been previously recognized as research and development expense. As we build and then sell new inventory as a commercial enterprise, we will record additional cost of goods sold matching sales from inventory. Operating expenses declined to approximately $2.1 million in the second quarter of 2025 compared to $4.7 million in Q2 of 2024. The decline was primarily due to a reduction in personnel costs and clinical trial expenses, as most of our new clinical trial site activations occurred in 2024, which carry upfront initiation expenses. We also experienced decline in preclinical research, audit fees, and professional services expenditures. And finally, our net loss for the second quarter of 2025 declined to $2 million compared to a loss of $3.2 million in Q2 of 2024. We ended the quarter with $6.3 million of cash and no debt. Also of note, subsequent to June 30th, and therefore not reflected in the Q2 balance sheet, we raised $8.6 million through two registered direct offerings and a warrant exercise. Looking forward, we will focus our resources on our top three objectives. Number one, completing the neutralized AKI pivotal trial for adults. Number two, preparing to file a PMA following the completion of the adult AKI pivotal trial. And number three, new customer acquisition for Quellebune. In wrapping up, as we drive our strategic objectives forward, we expect momentum to continue as we bring our life-saving therapy to more patients and clinicians, and as more investors become aware of the significant market opportunity developing for our SCD therapy. And with that, I'll hand the call back to Eric. Eric?

Thanks, Dave. Our goal today for our second quarter financial results conference call was to provide you with a summary of our progress as well as a clear picture of why we believe the future opportunities for Seastar Medical are significant. We are passionate about our ability to provide a lifesaving therapy to critically ill patients who today have no alternative treatment for calming the cytokine storm caused by an overreactive immune system. We have a number of upcoming milestones, and as we complete the neutralized AKI pivotal trial enrollment, we look forward to reporting the results. Provided the data are supportive, we plan to file a PMA in 2026. If approved, we believe we have a significant opportunity to capture a sizable portion of the adult AKI market. In short, we believe we are continuing to create strong value for our investors and stakeholders, And we'll be looking to close what we see as a substantial gap in our current market cap and the outlook that we have for the company. With that, I'll ask the operator to open the call for questions. Operator?

Thank you. As a reminder, to ask a question, simply press star followed by the number one on your telephone keypad. And we'll pause for just a moment to compile the Q&A roster. I will now turn the call back over to Jackie Cosman for closing remarks.

Thank you, Tina, and thank you all for joining us today for the Seastar Medical Second Quarter Financial Results Conference Call. If you have questions, please contact us at ir.seastarmed.com or visit our website to see our latest news, product, pipeline, and company information. Thank you all, and goodbye.

Thank you again for joining us today. This does conclude today's presentation. You may now disconnect.