Despite the best efforts of CytoSorbents Corporation (OTCBB: CTSO) CEO Dr. Phillip Chan shareholders of the company have been dumping the stock in massive volume on Thursday, pushing beyond the 9.1 million mark in late day trading. Chan insisted that the European Sepsis Trial “exceeded our expectations” and went on to say, “we demonstrated the safe and effective use of CytoSorb as a powerful cytokine filter in critically-ill patients, obtained European regulatory approval for CytoSorb, and now have data that clinicians can use today to guide their real-world usage of the device” yet not every investor is buying into the enthusiasm.
A randomization issue related to the safety of the company’s CytoSorb treatment essentially forced CTSO to rely upon results from the last 43 patients to complete the trial to evaluate the clinical efficacy. While CTSO has insisted the use of CytoSorb plus standard of care therapy in patients with severe sepsis or septic shock in the setting of lung injury proved markedly more effective than standard of care therapy alone the general concern is that the medical community will not accept such limited information.
What CTSO is trying to impress upon investors is that the CytoSorb treatment has a protective benefit, particularly in those at highest risk for death in sepsis. Those at highest risk for death are those patients aged 65 years and older and according to the results of the European Sepsis Trial CytoSorb treatment resulted in a statistically significant improvement in 14-day mortality (0% vs 36% control, p = 0.04, n = 21) with trends to benefit in 28-day mortality (40% vs 45% control), fewer mechanically ventilated patients at 28 days (60% vs 73% control), and improvements in MODS and APACHE 2 organ failure scores during treatment.
According to CTSO the data suggests “that 7 days of CytoSorb™ treatment is protective for up to 14 days in this elderly population and that longer treatment with CytoSorb™, beyond the 7-day treatment limitation of the trial, could yield even greater benefit to these patients.”
In addition to this information CTSO pointed out “there is also a good correlation between CytoSorb™ cytokine reduction and outcome in patients with highly elevated IL-6 levels (greater than or equal to 1,000 pg/mL) or IL-1ra (greater than or equal to 16,000 pg/mL) which are both known, independent predictors of mortality in sepsis. In these patients, CytoSorb™ treatment showed positive trends to benefit in 28-day all-cause mortality (0% vs 62.5% control, n = 14), fewer patients on mechanical ventilation at 28 days (33% vs 88% control), and fewer days in the ICU (23.8 vs 27.5 days control).”
In their press release dated September 7, 2011 CTSO pointed out that “severe sepsis and septic shock afflicts more than 1 million people in the United States (U.S.), 1.5 million people in the E.U., and an estimated 18 million people worldwide each year, killing one in every three patients despite the best medical treatment. In the U.S., more die from severe sepsis than from either heart attacks, strokes or any single form of cancer.” Obviously there is a tremendous need for an effective treatment and CTSO has stood by their blood purification technology that can actively remove toxic substances from blood and other bodily fluids by pore capture and absorption.
Essentially what CytoSorb is being billed as is a means to modulate the immune system by removing excessive cytokines, often called “cytokine storm,” in critically-ill patients that can lead to deadly inflammation, multiple organ failure, immune dysfunction, and often death. What makes CytoSorb unique is the fact that it is designed to promote disease recovery rather than simply provide supportive care.
Back in March European regulatory approval was granted to CTSO for CytoSorb, allowing it to be sold throughout the European Union under the CE Mark to be used in cases where cytokines are elevated. CTSO is banking on this approval, hoping to use it as a means of an eventual FDA approval in the United States. But it should be noted that even with the EU approval CTSO is still a distance away from commercializing CytoSorb in Europe as they have recognized the need for “adequate and timely funding, and continued positive results from clinical studies.”
They could take a big step in that direction at the 5th International Congress of the German Sepsis Society taking place September 7-10 where CTSO will exhibit. Dr. Phillip Chan commented about the significance of the event saying it, “attracts approximately 1,000 participants each year” which “include many of the major physician thought leaders from Germany and elsewhere in Europe who treat patients and conduct clinical trials in sepsis and other critical care illnesses every day.” An impressive showing would obviously be a step in the right direction but again, the issues related to the most recent trial could prove problematic.
Problems are certainly not what CTSO needs at this point as they have seen their research and development costs jump from $352,888 for the three months ended June 30, 2010 to $854,827 for the same period 2011 as well as losses mount, moving from $676,278 for the three-month period 2010 to $1,341,182 during the same period 2011. These costs and losses were certainly expected but they are only palatable if the company is progressing toward commercialization. On that front Chan state dback in August that the company was “on track to begin our controlled market release of CytoSorb™ in Germany next month as we discussed in our shareholder letter in June.” He went on to say, “we expect this phase to take 3-6 months and currently plan an official launch in Germany in early 2012.”
It is certainly getting to the point where CTSO is feeling the pressure to deliver news that will build investor confidence. Right now the company’s cash reserves amount to $3.34 million while they continue to see their losses since inception mount, a figure that currently exceeds $80 million.
CTSO is currently trading around the 0.155 – 0.165 range with heavy trading volume. Back in April they hit their 52-week high of 0.48 but they haven’t been above the 0.30 mark since the middle of that month. Right now they are trailing their 50-day moving average of 0.1941 as well as their 200-day moving average of 0.1799.
