Good afternoon and welcome to the CytoSorbents' First Quarter 2020 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 would like to turn the call over to your moderator, Jeremy Feffer. Please go ahead Mr. Feffer..

Thank you, Omar and good afternoon. Welcome to CytoSorbents' first quarter 2020 financial and operating results conference call Joining me today from the company are Dr. Phillip Chan, Chief Executive Officer; Vincent Capponi, Chief Operating Officer; Kathleen Bloch, Chief Financial Officer; Dr. Efthymios Deliargyris, Chief Medical Officer. Dr.

Christian Steiner, Senior Vice President of Sales and Marketing from Germany; and Christopher Cramer, Vice President of Business Development. 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 filings with the SEC.

Any projections as to the company's future performance represented by management include estimates today as of May 5, 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 first quarter by Dr.

Chan and Ms. Bloch. Following their presentation, we will open the line to your questions, during the live Q&A session with the rest of the management team. At this time, it's my pleasure to turn the call over to Dr. Phillip Chan.

Phil?.

Thank you very much, Jeremy, and good afternoon, everyone. Before we get started, I'd like to congratulate Vince Capponi, who has now been promoted to President and Chief Operating Officer. As you saw from my comments in yesterday's press release Chris has done an outstanding job here in his 18 years of service to the company.

And I just want to thank him here publicly for all that he has done. Turning to the operational highlights for the first quarter. In the first quarter we achieved 88,000 or more CytoSorb treatments delivered up from 61,000 a year ago.

In the first quarter total revenue grew 68% to $8.7 million and product sales grew 78% to $8.2 million over the first quarter in 2019. We ended the first quarter of 2020 with $2.7 million in CytoSorb order backlog and have ramped production to near full capacity with the ability and flexibility to go up or down with the current situation.

We achieved blended product gross margins of 76% in the first quarter of 2020, up from 74% a year ago, but lower than Q4 2019 due to expenses of rapid scale up to respond to the COVID-19 pandemic.

CytoSorb is now EU approved ticagrelor during on-pump cardiothoracic surgery with expanded CE Mark label and we have now treated the first - and in the first quarter we treated the first 70 COVID-19 patients, including the very first patients treated in China with partner China Medical Systems Holding Limited.

Of now more than 750 patients treated, including 25 under the U.S. FDA Emergency Use Authorization. During the quarter to case reports came out, on the first successful CytoSorb treatments of Grade 4 or life-threatening cytokine release syndrome or CRS in two CAR T-cell immunotherapy patients.

And we also completed the 250 patient REMOVE endocarditis randomized controlled trial in Germany, that is expected to readout in 2020. That was done as an investigator initiated study in 15 centers throughout Germany. We also have achieved marketing approval of CytoSorb in Mexico with our partner Fresenius Medical Care.

Now to talk a little bit more about ticagrelor and our recent breakthrough designation. I'd like to introduce you to our new Chief Medical Officer, Dr. Ethymios Deliargyris Ethymios Deliargyris, who also goes by the name Makis.

Makis, could you give a little background on yourself and give your thoughts as a subject matter expert in this area on this application..

Thank you, Phil. And good afternoon everyone. It is my absolute pleasure to be joining Cytosorbents at such an exciting time of incredible growth and tremendous potential. My background is a triple board certified physician and internal medicine, cardiology, interventional cardiology.

In the first part of my career I had the opportunity to practice at a regional cardiology and cardiology in the United States and in Europe and approximately 10 years ago I joined industry with a role at the Medicines Company and later on at PLx Pharma.

Throughout my career I had a research in thrombosis, an acute cardiac care and I've been very lucky to be involved in the development and support commercialization of two of the most important antithrombotics in the market today, namely by bilirubin and cangrelor [ph].

In that light, I've been very excited with the developments that Phil has already shared and the two recent FDA milestones. First off, I would like to comment on the recent Emergency Use Authorization, the critical COVID-19 cases. For many this may seem as an opportunity to pick developments, almost as a now ha moment for the cytokine storm narrative.

However what is important to clarify is that for CytoSorb’s this is a validation of the long standing thesis that quenching the uncontrolled surge of cytokines can be a lifesaving intervention for many critically ill patients.

Now it's COVID-19, but this is also relevant for patients with septic shock, patients suffering acute trauma or those on bypass undergoing cardiac surgery. The second development which is actually closer to my heart is the recent breakthrough designation for ticagrelor removal in patients requiring urgent or emergent cardiac surgery.

Anti-platelet drugs are especially fundamental for patients with acute coronary syndromes, especially those that can receive stents as part of their treatment. Ticagrelor is viewed as the best agent in its class and its use is growing steadily around the world.

It is estimated that today its market share in the United States is close to 50% among patients surviving a heart attack.

However there is one downside, important one to ticagrelor and the rest of these antithrombotic agents and that is that they put these patients at higher risk for bleeding, now that risk can become life threatening when these patients while on treatment require urgent or emergent surgery.

In such scenarios the doctors struggle with the choice of sending these patients to the OR at risk of serious bleeding or delaying the needed surgery until these drugs are watch out. A process that can take up to a week. This can be an impossible situation. Unfortunately it's also pretty frequent.

As you can see on the slide, it is estimated that one in five cardiac surgeries is either urgent or emergent. If we talk specifically for coronary artery bypass grafting operations that is approximately 80,000 patients in the US alone and approximately another 50,000 urgent or emerging cases in Europe.

Among those in ticagrelor they have the choice to either proceed to surgery, while on therapy and risk having excess bleeding or to wait for this drug to wash out, and currently a lot of clinicians opt for bridging this patients with short acting injectable agents that require hospitalization.

However we now have a new solution, CytoSorb effectively removes ticagrelor during cardiac surgery, thereby mitigating any excess risk of bleeding. The problem is solved. Patients can stay on ticagrelor until surgery or get bridged to surgery with the ticagrelor if they were previously treated with other agents such as Plavix or Effient.

This is a simple, effective and safe solution. Furthermore, the value proposition of eliminating pre op hospitalization and post-operative bleeding complications is truly enormous. This indication as Phil noted has already been approved in Europe and we plan to support all the necessary education that will make this approach the new standard of care.

We plan to work closely with the FDA to determine the data required to leverage the recent breakthrough designation and get this indication also approved in the US in the near future. Thanks. And now I will turn it back to Phil..

Thank you very much Makis. And just to give you a little bit of overview about CytoSorb and COVID-19. CytoSorb is now been used to treat more than 750 critically ill COVID-19 patients in Italy, China Germany, U.S. and in many other countries, resulting in preliminary positive reports of a reduction in cytokine storm and inflammatory mediators.

This is [indiscernible] Also improve respiratory function in acute respiratory distress syndrome with signs of improved oxygenation, improved PF ratios, improved lung complaints and most importantly weaning from ECMO and mechanical ventilation.

And last but not least, we have also heard many reports about an improved hemodynamic stability of patients and a reversal of shock. One of the hallmark features of CytoSorb treatment.

CutoSorb is now specifically recommended in Italy and Panama COVID-19 treatment guidelines with blood purification to treat cytokine storm in the China COVID-19 guidelines as well. And on April 10th 2020, CytoSorb received FDA Emergency Use Authorization enabling CytoSorb to be commercially sold to all hospitals in the U.S.

producing critically ill COVID-19 patients 18 years of age or older with imminent or confirmed respiratory failure.

We are currently prioritizing nearly 200 inquiries that we've received in a very short period of time, but now 30 active hospital accounts with CytoSorb shipped or in use in more than half of these with multiple reorders and approximately 25 patients treated to date in the United States.

In Germany which has treated the most COVID-19 patients to date. A major effort is underway to obtain clinical data at many centers, including randomized controlled trials, registry data, as well as the report of case reports in case series. I think it's important to note that we are in COVID-19 play but not a COVID-19 company.

And as Makis mentioned COVID-19 has spotlighted our company CytoSorb, our company Cytosorbents, and our role in treating cytokine storm and believe it can be a long term catalyst for our business. And finally, I'd like to add - I'd normally break out clinical activity at this point.

However in this unprecedented environment most clinical trial activity around the world has been put on hold in favor of making room for potential COVID-19 patients and preventing the infection of non-essential personnel and patients. Because of this there's not currently much to report.

However when activity begins to pick up we will make sure to report that out to you. With that, I would like to turn the call over to Kathy for our financial overview.

Kathy?.

Thank you, Phil. And good afternoon everyone. For today's call, I'll be providing an update regarding Cytosorbents March 31 2020 financial results. And in addition update around our working capital position and our cash runway.

So starting with product sales for the first quarter of 2020 they were approximately $8.2 million which is an increase of $3.6 million or 78% over first quarter 2019 product sales of approximately $4.6 million.

This increase was primarily driven by an increase in direct sales from both new customers and repeat orders from existing customers, as well as an increase in distributor sales. And in the middle of March sales demand rose as a result of the COVID-19 pandemic.

Grant revenue was $551,000 in the first quarter of 2020, as compared to $615,000 in the first quarter of 2019 and our total revenues which include product sales and grant income increased by 68% to $8.7 million for Q1 2020, as compared to $5.2 million for the first quarter of 2019. Q1 2020 product gross margins were 76% compared to 74% for Q1 2019.

And let's look at our quarter-over-quarter product sales. First quarter 2020 represents another record quarter with product sales of $8.2 million. On a constant currency basis, product sales for Q1 2020 would have actually been $8.4 million.

Newly created demand for CytoSorb to treat COVID-19 patients in the ICU contributed to this increase in sales, though difficult to quantify, management estimates that approximately $1.5 to $1.7 million of first quarter 2020 sales were related to the COVID-19 pandemic.

We also note that we entered the second quarter with a sales order backlog of approximately $2.7 million, which we believe positions us well for sales growth in Q2 – in the second quarter of 2020.

In the second quarter of 2020 we note that excluding clinical trial expenses, we achieved our first quarter of positive cash flow from operations of approximately $332,000 and as the impact of COVID-19 pandemic eases, we may experience a decrease in revenue in the second half of 2020, as compared to the first half of 2020, as the impact of this catalyst for revenue growth is reduced.

However, our core business remains strong and we believe that the underlying drivers of revenue growth remain robust.

In fact, as Phil and Makis have already mentioned, as a result of the COVID-19 pandemic there is a growing awareness of an interest in CytoSorb and this is expected to fuel future sales growth even in our core markets once the pandemic passes. Next we'll look at our trailing 12 month product sales and blended gross margins.

And as you can see by this chart, we continue to maintain strong year over year product sales growth. We note that our compound annual growth rate or CAGR was approximately 52% over the past four years and we are maintaining a very positive trajectory of sales growth.

And as sales growth, we continue to benefit from improvements in our gross margin as a result primarily of manufacturing efficiencies that we've been able to achieve. And lastly, we'll review our working capital position. So as of March 31 2020 we had approximately $26.4 million in cash.

In addition, in April the company received approximately $1.1 million in non-dilutive capital related to the sale of our New Jersey net operating losses and an additional approximately $1.7 million from unsettled March ATM transactions further bolstering our working capital position.

In the first quarter of 2020 we raised approximately $17.7 million through our aftermarket equity facility with co-agents Jefferies, and FBR B. Riley. However, given our current strong cash position, we have not utilized the ATM. since April 2nd 2020.

The company also intends to refinance its $15 million term loan facility with Bridge Bank with the goal of extending the interest only period. Under the current loan agreement, principal payments are scheduled to begin in November 2020.

And we believe we have a sound solid foundation which will enable us to execute on our operating plan and clinical trial strategy well into 2021. Management would like to remind our shareholders that we are shareholders as well and we strive to do what is in our collective best interests.

Finally, at March 31 2020 we had approximately 41.8 million common shares on a fully diluted basis. And at this time, I'd like to turn the call back to Phil.

Phil?.

Thank you very much Kathy. In terms of guidance CytoSorb has not - Cytosorbents has not historically given specific financial guidance on quarterly results until the quarter has been completed.

However, provided that the current order pattern continues with strength in our core business and global demand for CytoSorb to treat COVID-19 patients and our ability to continue to scale up and produce CytoSorb, serve we expect that second quarter 2020 product sales will exceed first quarter 2020 product sales.

That concludes our current prepared remarks. I would like to now open it up for a live Q&A session.

Moderator?.

Thank you. [Operator Instructions] We will take our first question today from Andrew D'Silva from B. Riley & Company. You may proceed with your question..

Thank you very much. And thanks for taking my questions. Also congrats on your great quarter and I'm glad to hear everyone sounds healthy too. So just to get started with me, I'm just talking about the CAGR, can you give a little color on what kind of trial or approval path we should think about PMA de novo 510(k). And can the study in the U.K.

be relevant for the U.S? Also I'd be interested in your thoughts with the Portola acquisition and what that - that means for your company at least from your mindset?.

Sure. Well, thank you very much Andy. We certainly appreciate that. In terms of the regulatory path under the breakthrough designation for CytoSorb for the removal of ticagrelor in cardiac surgery, we are awaiting guidance from the FDA on that particular issue and we will give an update when we know.

The second question in terms of the Alexion acquisition of Portola, this is a very interesting acquisition, as you know Portola has the only Factor Xa Inhibitor Reversal Agent on the market called Andexxa.

This had sales of roughly think of a $110 million and Alexion which is a company that focuses on orphan indications for antagonism of activated complement acquired them for $1.4 billion today.

So it's interesting that CytoSorb not only removes activated complement but we also have the ability to remove Factor Xa Inhibitor such as rivaroxaban, as shown in the Hassan paper that we talked about last year that showed in a observational study that the removal of rivaroxaban and ticagrelor by CytoSorb could reduce post-operative bleeding events.

So we don't quite have the revenue of Alexion just yet, but I think that shows - we don't have the revenues of – I am sorry Portola just yet. But I think it shows what the potential could be in this anti-thrombotic reversal agent space and it's just curious that our products CytoSorb does what their products do together as well..

Right.

And as it relates to rivaroxaban, you have an approval for a blood thinner but obviously the anticoagulant in this situation is there, like an in vitro studies that you can do to expand your label in Europe or is that even something that you're focused on right now? Portola’s product has a black box warning and be interesting to see how a device would comp up against it in the field?.

Yes, so some pioneering work on the removal of these anti-thrombotic agents has been done by a colleague and collaborator of ours Dr. George Angelou, who had published the initial in vitro data on the removal of a wide variety of these anti-thrombotics.

I believe just actually published another paper just recently, where he has also shown not only the removal of ticagrelor, but the removal of different Factor Xa Inhibitor, including rivaroxaban. So the interesting thing I think about Andexxa is, as you say, it has a pre-thrombotic risk as a black box warning. And it's a very expensive drug.

It is somewhere in the range of $15 to $20,000 for a single dose. Some have quoted higher numbers than that.

But that being said, to be used as a reversal agent in cardiac surgery doesn't make sense, particularly given the fact that you don't want to inject anything into the patient that has a pro-thrombotic effect because when you're dealing with the arterial system as you are in cardiopulmonary bypass it can potentially lead to a risk of stroke or risk of heart attack or risk of other embolic event, thromboembolic event to other organs.

So we think at CytoSorb as a easily installed, easy to use, fairly priced device that could remove these various agents from blood during cardiopulmonary bypass makes it a much better solution.

And that's one of the reasons why we feel confident that, should we be able to move forward with our marketing plans and data plans that we could become the de facto standard of care for these agents. And so in terms of the U.K. type TISORB study, we will have another study ongoing in Germany as well, called the citation study.

But that being said, these data would all be very helpful to helping support the market for this particular application in ticagrelor removal and hopefully we'll have some more news on other agents in the future..

Okay. Thank you very much for the update on that. I just have two more quick questions. You provided an update in an 8-K, I believe it was last month and at the end of the 8-K you referenced expanding your manufacture – or scaling your manufacturing capabilities. I was just a little bit curious on what we should be thinking about there.

Would you be looking to establish a new facility or just add capacity within the existing facility? Any color in that would be useful.

And also if you could just tie in where you are in your capacity utilization right now that would be interesting too?.

Sure. Let me turn over to Vince Capponi who's been doing a great job in terms of managing that up taking capacity.

Vince?.

Yes. Thank you, Phil. So just let me take that and just a couple of parts here. First, the capacity we're currently at, obviously with this surge in requirements related to COVID-19, we've really cranked up to seven days a week, 24 hours a day, right now in order to meet the demand as Cathy and Phil mentioned, we had a backlog at the end of Q1.

And obviously the orders are still coming in. So we're working very rapidly to fulfill that. We said we could supply essentially an $80 million business. We'll give exact percentages, but we're using a significant portion of the capacity of the plant. Obviously we're taking a look at potentially what the next level of expansion is going to be.

Given what we've just experienced now and the fact that Christ is continuing to drive sales in Germany in the core business and treating sepsis, et cetera, we need to take a look at that and we would probably not do it within this existing facility because it's starting to get pretty large from a scale standpoint and this is really not quite designed to do that kind of work here.

So we would be looking outside this facility. But we are currently evaluating that and obviously looking very closely what the trend is in the market for us to best determine what that path will be going forward..

Okay, great. And just last question for me, this relates to seasonality. Would you - would it be fair to assume that we shouldn't look at traditional seasonality in 2020, given just how tumultuous things are? Or do you believe that that should be a fair proxy for 2020, as far as seasonality in past years. Thank you very much.

And congrats on the quarter..

Thanks, Andy. I think that in terms of seasonality, it really depends on what happens with COVID-19.

As countries contemplate a reversal of social distancing that has been so effective in the recent past in preventing further infections, there is expected to be potentially a second surge of infections and potentially even a third surge of infections, particularly as we move into the flu season where flu and COVID-19 may coexist together and may just exacerbate the burden on hospitals and the risk to people all over the world.

So currently right now we're at the beginning of May. We are just starting to get back to thinking about getting back to normal way of life. I think some states in the United States have already tried to do that and have seen sharp upticks in new cases of COVID-19 infection, as well as an increase in mortality.

And - but I know that there is a pressing economic need to get back to work.

So you know, I think that in Europe and maybe we could get Christian's perspective on this, but you know everybody has been working remotely since mid-March and whether or not there will be a traditional Q3 slowdown in Europe, it remains to be seen, particularly if everyone winds up going back to work during that time after being at home for so long.

Maybe Christian, do you want to maybe give a little bit of color on what you're thinking in terms of the European business and seasonality that we typically see in Q3?.

Yes. Certainly, Phil. Thank you. And good afternoon to everyone. Good evening to those from Europe. I think there are a number of points have to be considered when we think about seasonality or not. Altogether I think that the business we have is very healthy and there might be a part which is a one-time effect.

But as Phil said, this will depend very much on how the situation with COVID-19 evolves. But also I think there's a number of very sustainable effects. So I think the experiences and the results we have in treating COVID-19 patients will be translated into other diseases.

So this is obviously septic shock patients, but this also involves or includes influenza patients. And because of this pandemic, we have got a number of new customers and also those who are treating quite a while with CytoSorb, they are treating patients earlier and using more absorbers. So all these effects I think will add to the normal business.

And number three, I think that we have a wider awareness of our therapy and of our company and also the listing of lockdown in the different countries leads to another phenomenon.

With the rise of the pandemic a lot of elective programs have been postponed and obviously those have to be started again and we see that the hospitals are starting their normal programs at the moment or within the next two or three weeks. So we expect a very robust business even after the pandemic has been solved..

Thanks again..

And our next question is from Josh Jennings from Cowen & Company. Please proceed with your question..

Hi. This is Bryan here for Josh. Thank you for taking my questions. I have two part question on COVID-19 to start. First, can you share the average number of cartridges used per COVID-19 patients in the first quarter and the trends you saw for stocking for COVID-19 specifically in the quarter.

And then regarding backlog, do you expect backlog to become a normal dynamic going forward where you'll exit each quarter with excess demand, specifically for COVID-19? And then I have a follow up question as well. Thank you..

Yes. So I think that you know, the usage of CytoSorb is varied from center to center. It's also varied based on the patients that they're treating.

I think where doctors and physicians have been having the most success is the early treatment of patients with COVID-19 infection soon after they're put on mechanical ventilation or soon after they develop shock.

I think that when they are far gone and patients have had long stays on mechanical ventilation it is much harder to bring those patients back.

We've seen the usage of CytoSorb vary – again, the numbers of cartridges vary all across the world in one of the case reports - case series that was published in - that was presented in our webinar several weeks ago for example. They only used one cartridge - they only use 24 hours of treatment.

We typically are recommending about four cartridges per patient with a flexibility to do more treatment if necessary if the patient is improving. I think that's how most physicians are looking at it.

You know, that if they are seeing an initial positive response they will continue until you know one of a number of different clinical outcomes that they're observing, happens either a reduction in inflammatory mediators, down to more normal levels or reversal of shock or you know an ability to get someone off of mechanical ventilation or other types of clinical outcomes.

In terms your question about the backlog. So I think that the demand for CytoSorb at the very - in the third month of our first quarter was actually quite robust and we were just scaling up at that time.

We had already - as I mentioned in the press release began to scale a process in the planning early in Q1 and we were just you know meeting the needs of our business and then trying to build an excess inventory to meet the needs of COVID-19 patients. And so in Q1 I think that the demand got a little ahead of supply.

I think that you know we've done - you know the team - you know just want to congratulate our production team quality, R&D and engineering that Vince has managed to really scale up this production, so that we can try to get ahead of the curve. But the good part about our manufacturing process is that you know it is very flexible.

We have the ability to scale up and scale down very quickly without incurring a lot of different fixed expenses. And we can be very flexible.

So I think that as we get ahead of the curve the likelihood of backlog would be less, but you know, that remains to be seen and of course our guidance is predicated upon our ability to continue to produce at the rate that we are. So I think the backlog is just an indicator.

I think that you know, there's a lot of demand out there and that backlog - and we're going to do whatever we can to meet that backlog because it means that this is you know, patients in need. And so obviously our goal is to be able to make sure that that need is fulfilled..

That's helpful. Thank you. And staying on the topic of COVID-19, a competitor recently discussed the possibility of seeking a permanent U.S. approval that would allow the product to remain in the market past the emergency use interval for COVID-19.

Is this something you're considering and if so can you discuss the clinical data you'd need to make this happen?.

Yes, I think it would be premature to be able to speculate on what the FDA review - willing or not willing to do, so I don't think that, that is something that I'd like to comment on at this time..

Okay. Thanks..

Sure..

Our next question is from Jason McCarthy from Maxim Group. Please proceed with your question..

Hi, everyone. It's Dave on line for Jason. Thanks for taking my question. Just wanted to kind of switch gears here briefly and just want to see if you can give us an update on where you were with respect to the REFRESH 2 AKI studies and where you were in meeting the recommendations outlined by the DMC? Thanks..

I apologize, I couldn't hear that last part, would you - could you please repeat that – part of your question..

Oh, just like where you were with respect to the REFRESH 2-AKI studies and where you were in terms of meeting the prior recommendation outlined by the DMC?.

Okay. Very good. Yes, I think that we are on track.

I think the one issue with the COVID-19 pandemic is that many hospitals, including all of our trial sites have excluded non-essential outside people, including people who work for our contract research organization from entering the building and from you know any non-essential activities within the hospital.

I think you're hearing a lot of hospitals now beginning to open up selected procedures and other things and you know at the time that this lockdown happened, our CRO was done through the majority of the data, the data scrubbing and qualification and validation of that data amongst the 150 plus patients that we've done to date and they have they've been also working remotely to try to scrub that data at certain centers remotely.

But again, it's not that much work that needs to be done. And I think that provided that centers are open - are able to open up to finish just some of that last data scrubbing, we should be able to get that done in fairly short order.

I think the goal would be sometime this summer that we would address the needs of the DMC in terms of data quality and data analysis and hopefully have the issue put to bed shortly thereafter..

Great. That's helpful. And just wanted to kind of quickly circle back here. You mentioned that you had a sort of an order backlog going into the second quarter, was that - it was that number again I think I missed it. All right..

It was $2.7 million..

Okay, $2.7. All right, great. Thank you. Appreciate it..

Sure..

And our next question is from Sean Lee from H.C. Wainwright. Please proceed with your question..

Hi, guys. Congratulations on a great quarter and thank you for taking my questions. I just have two quick questions. The first is on the U.S. commercialization. You mentioned that you already have 30 active hospital accounts in the U.S. and some facility has already started reordering the product.

So I was wondering how is that handled right now and do you plan on building a separate commercial structure for the U.S.

compared to your European operations?.

So we've developed what we call a COVID task force within the company. As you know all of our commercial operations are outside of the United States, primarily in Europe, but also spread out in 50 countries around the world.

In Europe, we have a full complement of a sales team with all of the necessary functions needed to effectively commercialize the product.

In the United States, it has been more focused on clinical studies and manufacturing and we did not have the infrastructure set up ahead of time to be able to meet this - the new demand from the United States based on the FDA Emergency Use Authorization.

That said, I think that we have had a multi-disciplinary effort at the company with people chipping in from all aspects of the company to help here in this commercialization effort that has been supported by the European operations, as well.

And so we've been working very hard to again prioritize the inquiries that have been coming in and to be able to start these sites up in a safe and responsible manner. So I think that we've been doing a good job so far.

We're not relying on the US obviously to drive sales, but what it does represent is a way to introduce the therapy to a hospital, major hospital systems throughout the country and to key opinion leaders throughout the country.

And I have to say that there's been a lot of excitement about the therapy, a lot of enthusiasm and in fact, some early cases of - with the therapy just getting here in United States, some early cases of success.

So I'm very excited about what's happening and you know - but I think that we will be able to manage without having to build a sales team here in the United States because we really don't need one at the moment. We're just you know, use it - utilizing what we have and making the most of it..

I see. My second question is on maybe a breakdown to sales. So I was wondering if you could provide a little bit more clarity on, since now CytoSorb being approved for septic shock for compact cardiac surgery and now for ticagrelor removal.

So maybe which indications are you seeing the biggest growth? And also, which areas, geographies are you also seeing the biggest growth?.

So I think that you know, of the 88,000 treatments that we've had to date, the split remains fairly stable, roughly two thirds in critical care, one third in cardiac surgery. Clearly the ticagrelor application is in the area of cardiac surgery and we were just getting started there before the COVID-19 pandemic hit.

So that being said, as I mentioned in the press release, we believe that this is a potentially very large growth area for CytoSorbents' and as Mike just mentioned, in terms of quantitative some of the initial demand for the product, that - this application alone could double the current revenues that we have in Europe over time, it won't be overnight, but we do believe that there is a very compelling case to be made for the therapy to become standard of care for this anti-thrombotic removal application.

And so I think that will - that market will become clearer as time goes by and hopefully that will translate into significant increases in revenue. And so I think that you know, direct sales continues to dominate our results.

However, international sales, particularly demand from COVID-19 has been very brisk and as Christian mentioned before, we think that - the need to pull from the market for COVID-19 will result in many, many more physicians using the therapy and in a post-COVID-19 environment we believe that if they are having good success with the therapy that can lead to potentially long term business, non-COVID business for our company..

Thank you for the additional color. And that’s all I have..

Thank you..

And our next question is from Anita lashing out from Ania Bocian [ph] from Zacks Investment Research. Please proceed with your question..

Hi, good afternoon. Congrats on the quarter and thank you for taking my questions..

Thank you..

First on maybe Dr. Makis can help me clarify this. As far as the ticagrelor trial goes, I know you mentioned that you would be able to give better guidance after meeting with the FDA.

In terms of the patient demographic, besides those who require the emergency surgery, what about patients who can actually wait for the elimination of ticagrelor, but they might be at risk of the ischemia complications.

Would they be possibly part of the study too?.

Yes. Makis, if you wanted to comment on that..

Great, thank you. Thank you for the questions. Great question. So the ability of the device to remove ticagrelor has been shown both in a model, in a laboratory experiment and you know, almost completely removed from circulation.

And we also have now evidence from a study done in Hamburg in humans of very effective removal of the drug from the circulation. And in addition return of platelet function, while the patient is undergoing this therapy. So in that regard, the biological plausibility has already been proven.

Why people need to have the drug removed the indication for it now that can be variable.

And as you mentioned, in addition to the acute patients presenting to the hospital with an acute event and already on ticagrelor therapy, which would be a very, very important target population for this therapy, you can also have this so-called urgent, not emergent like the first case, but urgent cases where people are in the outpatient, they get diagnosed with a need for an cardiac operation and they opt to stop their drugs and wait for a week.

Within a week the drug is washed out, so the bleeding risk can be managed that way. The problem is when you take these patients of these drugs, there's a rebound increase in ischemic events.

So imagine how somebody who has a diagnosis, has a treatment plan in place, knows that they need an operation, however they have to stop their medication in the suffering event as they're waiting for the operation. So with this - with CytoSorb now and this indication this will not be necessary anymore.

They can march straight to the OR on ticagrelor therapy, thereby having zero access ischemic risk during the waiting period for the surgery and of course have the very effective removal during surgery and mitigate any bleeding risk.

Does that answer your question?.

Oh, yes. That was really helpful. Thank you.

And as a follow up, just wanted to - just curious to know if CytoSorb is being tested in clinical studies on other classes of anti-thrombotic agents besides the Factor Xa and P2Y12 antagonists?.

Yes, I think in the study that I mentioned before, the observational study from St. York Hospital in Hamburg, Germany authored by Hassan and colleagues studied a population - a mixed population of patients on ticagrelor, as well as rivaroxaban, which is Xarelto, one of the Factor Xa inhibitors.

So - and again, future studies have been done by George Angelou's showing the effective removal of rivaroxaban for example. And so I think that it represents a viable market for us going forward.

And as it relates to Portola and Alexion, I think it can show you what the potential of our product could be in that space, given that Factor Xa inhibitors, you know the top two Factor Xa inhibitors, apixaban and rivaroxaban have about 16 billion in worldwide sales and very widely used and these patients have a high risk of - because they are cardiac patients or vascular patients or clotting or they have other evidence of PE, pulmonary embolism or deep venous thrombosis.

There are higher risk for developing the need for emergency cardiac surgery or other cardiac surgery. and so I think that's a very viable population for us..

Fairly if I can add one more comment on this topic. I would have comment on the Andexxa discussion and the parallels here. There is a very different clinical need that's being addressed with Andexxa versus CytoSorb. Andexxa is used in after the occurrence of life threatening bleeding.

Think of Andexxa as being the airbag, right, is deployed after the accident. Think of CytoSorb as being the seat belt. CytoSorb will prevent any excess bleeding and therefore we will be using the standard approach to anyone who has the drugs circulating and they enter the operating room. So its very different size of the population.

And its also very different clinical application of the therapy, patients that will get the CytoSorb therapy will be preventing any bleeding from happening versus managing a catastrophic event which Andexxa is doing right now, it requires patients to be having a catastrophic bleed before it can be used..

That's a great. Markis, thank you..

Yes. Yes. That that distinction was very clear. Thank you for that. The other thing just relates to the approval that you recently got in Mexico.

Could you give us some color on how the initial order looks like from Fresenius? And also a follow up to that, like are you still waiting registration from South Korea?.

Sure. Let me turn that over to Chris Cramer, Vice President of Business Development.

Chris?.

Yes, hi. Thank you for the question. Yes, as you mentioned CytoSorb was officially approved by the Mexican Health Authority at the end of March. And just for some context Mexico is home to over 120 million people and is the second largest medical device market in Latin America after Brazil.

As previously announced, as well for seniors medical care FMC maintains the rights to distribute CytoSorb in Mexico and so with this approval they can import the product and commercial sales of CytoSorb may now officially commence in Mexico.

As we've also mentioned, they've got a very strong and motivated direct sales force in Mexico and this is a group that has been excited to work with us from day one. Their management has made CytoSorb a top priority as well.

And I think working with these guys we've noted that they've learned from their colleagues in Europe and they've come up to speed very quickly and they've partnered very closely with our international sales and medical teams to prepare the market and this includes promoting in several major medical conferences and building awareness and support amongst leading ICU docs in Mexico.

One of the things that's worth mentioning is that, they've recently brought in a new and dedicated head of sales to lead the CytoSorb Mexico business and this is the person that comes with extensive commercial experience and network connections specifically in ICU and hospital sales, which I think is really good and will help accelerate the introduction of the product.

To your question FMC has indeed already placed its first order, CytoSorb and the product has been shipped from our New Jersey warehouse and on top of that because of the work that they've been doing they already have some free orders in place from several major institutions.

And as you know Christian had mentioned, we also anticipate that they'll see increased demand for CytoSorb’s COVID-19 19 washes over Mexico, as it has everywhere else. So overall I'd say we're very pleased with how things are progressing and I believe FMC and CytoSorb are well positioned for success..

Thank you. And just one more regarding the sales in the European region.

We know that Germany is a strong market, but what about Switzerland, like to do that territory do they have a dedicated procedure call for the CytoSorb reduction?.

Christian, would you like to take that question..

Yes, certainly. Thanks. Thank you for the question. In general I, think we can compare the two markets Germany and Switzerland in terms of infrastructure and also the rate of medical supply. As you know in Germany we have a dedicated reimbursement with the reimbursement code and in Switzerland this process is a little bit behind.

So we have a dedicated code but not yet the payments on it. And this is always like two years behind the code and has to be analyzed from the different health insurance data. But other than this, I think very comparable market..

Yes. Good. Thank you. And just one last question.

Are we to expect the data from the REMOVE study sometime in the summer?.

I think that notwithstanding any potential delays caused by COVID-19 at these hospitals again, most hospitals and throughout Europe and as you've seen in the United States have limited hostile workers to not essential personnel. And so you know, from all indications we believe that they're still on track.

And if we have an update on any kind of delays we'll make sure to let that known. But as for right now, I think - But as for right now, I think that the expectation is data by mid-year..

Okay. Great. Thank you for taking my questions. That will be all..

Sure. Thank you..

And our next question is from Keith Larose from Bradley Foster SRG Incorporate [ph] Please proceed with your question..

Hi. Thanks for taking my question and congratulations on recent developments with the quarter. So the COVID crisis, that of course, the emergency and around trying to save lives.

Can you give me some color on the process of how and when the filter is used and in a way that can support and protect your objectives around data collection that supports your story going forward? Thank you..

Sure. I think as I mentioned before as with our other business and critical care around the world, we find that early intervention with the therapy is better than late intervention. I have an analogy of organ failure being like walking away from home.

The further if you walk away from home, the longer it takes to get back and often bad things happen when that - when you're coming back. And so I think that the further out you go in organ failure, it's just very difficult to recover. No amount of cytokine reduction will bring back a necrotic cell, for example.

So I think that the goal here is to try to intervene early. And we are not trying to intervene on patients who are highly inflamed, but otherwise okay.

So some with fever, high white count, signs and symptoms of inflammation, fast heart rate, fast breathing et cetera, we're not intervening on those patients, but when they start to develop organ dysfunction and organ failure that is when we are intervening.

So in COVID-19, I think it's very similar when patients go on mechanical ventilation is often a trigger point for some hospitals, particularly in Germany where they're intervening early and seeing some very nice data I think.

But also you know, when mechanical ventilation begins to escalate that is another time when people are intervening with CytoSorb when patients are doing worse and rapidly deteriorating. So I think it runs the gamut. I think COVID-19 infection is so new and novel that we're learning a lot. Everybody is learning a lot as we are going forward.

The pathogenesis of the disease appears to be very unique compared to other viral pneumonias. In Italy they they've called this the worst viral pneumonia they've ever seen. And so I think it is a process of learning how best to use these various treatments whether or not they're anti-viral therapies or immuno modulator therapies..

Is there any type of comments you would make relative to how the application of CytoSorbents in that theater is can be controlled in a way or used in a way. Like I said to support efficacy and where do you think it's being.

Sounds like it's being used in a whole range of different ways at different interventions - intervention points and it might be difficult to draw significant conclusions from this COVID experiences. Is that fair? Or do you have a different view..

I think that the first treatments that have ever been done with CytoSorb and COVID-19 patients was the experience in China where they were really trying it on a wide variety of different patients. Some early suddenly, all of which had organ failure, so early is a relative term.

I think that in the early treatment and under the old emergencies under the expanded access pathway here in the United States for example kind of relegated CytoSorb to be used as a end of life therapy of last resort treatment.

However, the emergency authorization that we now have gives doctors the wide flexibility to treat when they think that it's important. And I think that to your point, I think a lot of our guidance has been to treat early, but there are also randomised controlled trials that are in process.

One is the University of Freiburg [ph] using CytoSorb with ECMO extracorporeal membrane oxygenation [ph] but there are other studies ongoing that are randomised control trials, trying to get at a more standardised way of treating patients based upon the collective wisdom of the investigators and in the most recent experience with CytoSorb in these COVID-19 patients.

So you know the answer to your question is data is coming. And the best data will be that those coming from randomized controlled studies and we are also looking to try to do such a study here in the United States..

Thank you very much, very helpful..

Sure..

And at this time, I would like to turn it back to management for any additional or closing remarks..

Okay. Well, thank you everyone for taking the time this afternoon to listen to this call. We certainly appreciate all of the support. If you do have any other questions, please feel free to reach out to Jeremy Feffer at LifeSci Advisors. Until next time, thank you everyone. Have a good night..

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