Cytosorbents investors anxious for European data Print
By Patrick Crutcher   
Friday, 28 January 2011 14:12

icon_watchlistInvestors at CytoSorbents Inc.(OTC: CTSO) have been patiently waiting for an update on their severe sepsis trial in Europe. Trial was 90% complete, as of November 2010. Positive clinical data would materially boost their valuation by several multiples. We also recently picked up on some new developments surrounding a recently awarded patent. Specifically, the U.S. Patent and Trademark Office(USPTO) has granted them a patent for their "Size-selective hemoperfusion polymeric adsorbents". This is a key patent in their IP estate, as it deals directly with the underlying process by which their device works.

CytoSorbents is developing CytoSorb for the treatment of severe sepsis. CytoSorb is a hemoperfusion device(think, blood filter) that utilizes highly porous polymer beads designed to actively remove disease-causing substances from blood and physiologic fluids without reducing immune function. Specifically, the device is being used to reduce levels of cytokines, which can trigger dangerous inflammation and immune system responses. CTSO hopes that by reducing cytokines and other immunomodulators in sepsis patients, they can significantly improve their chances of survival. The device is highly compatible with standard hospital dialysis equipment.

Typically, sepsis is associated with some type of infenction that eventually triggers an immune response releasing large levels of cytokines. Cytokines are important biological mediators that regulate immune and inflammatory responses. Oversecretion of cytokines can trigger a dangerous syndrome known as a cytokine storm, where excess cytokines can potentially do significant damage to body tissues and organs. (Cytokine storms were seen in numerous cases associated with H1N1 several years ago.) Sepsis effects roughly 18 million worldwide(with roughly 1.5 million cases in the European Union) and mortality rates around 30%. There are very limited treatment options for sepsis, most of which are only treating the infection, not the potentially deadly immune response. Current dialysis techniques have very little impact on filtering most cytokines.

Investors are anxiously awaiting completion of their 100 patient study in the EU. This randomized-controlled study is comparing the standard of care(SOC) therapy versus SOC plus CytoSorb in the treatment of patients with severe infection and sepsis in the setting of respiratory failure. Management intends to use this data to support an application for CE Mark approval in the EU, which would allow them to market the device. Following CE Mark approval, they hope to work with the FDA in designing a study which would support marketing approval of CytoSorb in the US.

The last update from management noted that the study had enrolled 90 of 100 patients back in November 2010. We expect that this trial should be completed soon and for trial results to be made available soon after. To date, there has been no serious device-related adverse events in approximately 300 human treatments. They have seen very favorable trends in patients who were treated with their device. 

Another interesting development to consider is that Eisai’s sepsis drug, eritoran, had failed in Phase 3 trials. Some analysts had expected Eisai's eritoran to have estimated peak sales of $1-2 billion. Showing efficacy in sepsis has been extremely difficult for drug makers, with only Xigris being approved which has largely failed to gain traction due to questions over its’ cost and efficacy. Clearly, if CTSO can demonstrate CytoSorb’s efficacy in severe sepsis, they could have a game-changing device with little competition. We think it could potentially outperform previous therapuetic attempts because of the devices ability to filter a much broader range of cytokines and toxins.

The market for new treatment options is wide open, so success in this indication could attract a lot of outside interest. For the past several months, management has been seeking a strategic partnership for their device and has actively presented their device at US government  health conferences. Any non-dilutive development on this front would be highly beneficial to commercializing their product and exploring other areas where their approach could be potentially beneficial.

We look forward to seeing clinical results from their European study, as these results could map out a potentially bright future for this small company. We encourage investors to read a recent interview with CEO Dr. Phillip Chan and see their most recent corporate materials. Investors should consider the risk-reward profile here and position themselves accordingly. At $0.16, we like the potential for CTSO to demonstrate efficacy in severe sepsis.

Disclosure: Long CTSO

USPTO grants patent for their polymer technology. "Size-selective hemoperfusion polymeric adsorbents" -- http://bit.ly/gjl6Uv

“Eisai's Rollercoaster: Sepsis Drug Failure Overshadows Eventful Few Days” -- http://bit.ly/dSo99U

CTSO Investor Documents -- http://www.cytosorbents.com/invest.htm




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