CytoSorbents CEO says outlicensing is a key strategy Print E-mail
By Patrick Crutcher   
Tuesday, 24 May 2011 06:57

CytoSorbents(OTC: CTSO)  intends to begin commercializing the product in select European territories before the end of 2011.
The company recently received European CE Mark approval for CytoSorbTM, as an extracorporeal cytokine filter. Assuming all goes as intended, CTSO intends to begin commercializing the product.


During their recent quarterly update, they announced that they had finally completed enrollment in their EU sepsis trial. The secondary endpoint results from this trial will be important for future marketing and labeling claims. Based on previous research done in Japan(with a similar device), it's possible that they could see a meaningful benefit in improving the Multiple Organ Dysfunction (MOD) score and 28-day all cause mortality. On a cautionary note, the development of therapeutic options for sepsis has been littered with many casualties, so investors shouldn't think success is assured.


Financially, it was good to hear that CytoSorbents ended March with about $2.43 million in cash. They raised $1.9 million(@$0.214/share, no warrants) via an existing purchasing agreement. This was one of my biggest concerns, so it's somewhat alleviated. It would be preferential for them to secure a commercial or government contract for their device, since it would be the validation a company this size needs.

We reached out to CEO Dr. Phillip Chan for some comments on their progress.


What is CTSO's commercialization plans for CytoSorb in the EU? What's the manufacturing capacity? How do you plan on getting this device into hospitals? Has there been significant interest already?


Chan: In anticipation of a broader European release in 2012, we are planning a controlled-market release later this year in certain territories in Europe, with a focus on Germany. Our goal is to put all of the pieces in place to be able to grow responsibly. We believe that our current manufacturing capacity in our New Jersey manufacturing plant is sufficient for up to the first two years of anticipated demand. As with all new products, driving market adoption is dependent on, amongst other factors, physician awareness, filling a critical market need, generating clinical data, and ensuring reimbursement. We plan to be visible at future critical care and other conferences in Europe and are working with a number of thought leaders in the area of critical care in Germany.


What's the EU stance on reimbursement for using your device? Cost of the device?


Chan: Reimbursement has different requirements in different countries. Germany is similar to the US because acute care medicine is reimbursed through the DRG (diagnosis-related group) system, where, based on a specific diagnosis, the hospital receives a fixed payment. To the extent that the patient recovers faster, the hospital has the opportunity to make a profit on the DRG. Conversely, if a patient does not recover quickly and lingers, the hospital will likely lose money on the patient. In Germany, we are pursuing additional ways to receive greater reimbursement, which involves DRG code modification to specifically include the use of our device. We have not disclosed product pricing.


Will the secondary endpoints be available later this quarter?


Chan: We will discuss these data at a future date.


Are you currently exploring partnership opportunities for the US? ex-US/EU? Are you looking for more of a distribution deal or pipeline deal? Also how have discussions with DARPA gone? I believe this was one avenue you were exploring to obtain more funding.


Chan: We have an active business development program covering our entire product portfolio, including CytoSorb for sepsis and other critical care applications. We firmly believe that outlicensing is a key strategy to unlocking the value of our technology. We also broadly seek government and military support for our technologies.


Will the trial in the EU provide sufficient evidence to run a big Phase 3 in the US? Have you communicated/met with the FDA recently to discuss your regulatory pathway in the US? Or do you believe that the design of the EU trial was sufficient to apply under the 510(k) rules?


Chan: We cannot predict what the FDA will or will not accept. However, the design and endpoints of the EU trial were partially based upon feedback that we received from the FDA. Coupled with our prior FDA IDE approval to run a small sepsis trial in the US and with the data from the current trial, it may be sufficient. In the US, CytoSorb is classified as a Class III 510(k) path device, however it may require pre-market approval (PMA) by the FDA.


Disclosure: No position


First Quarter 2011 results -

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