Cytosorbents Corporation (CTSO) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by and welcome to the CytoSorbents Corporation Annual Meeting. I would now like to hand the conference over to one of your speakers today, Mr. Dr. Phillip P. Chan. Sir, please go ahead.

Thank you, Michelle, and welcome. I am Dr. Phillip P. Chan, Chief Executive Officer of the company. Will the meeting please come to order? Let me take this opportunity to welcome all those present to this Annual Meeting of Stockholders of CytoSorbents Corporation. We're excited to be hosting our virtual meeting, which allows us to be more inclusive and reach a greater number of stockholders. Before proceeding to the business of this meeting, there are certain technical legal matters which we must dispose of in order to make certain that we are conducting a duly authorized meeting. But as soon as they are completed, I'd like to introduce you to the officers and directors of the company and also to describe to you the matters proposed for your consideration and action at this meeting. The company has designated [ Christopher Woods ] from Broadridge Corporate Issuer Solutions, Inc. to serve as the inspector of election. Will the inspector of election please present to the Secretary, his signed oath as inspector of election? If there are no objections, I will direct that such oath be filed with the minutes of the meeting. Any stockholder who has not yet voted or wishes to change their vote may do so by clicking on the Voting button on the web portal and following the instructions. Stockholders who have sent in proxies or have previously voted via telephone or internet and do not want to change their vote do not need to take any further action at this time. We'll pause for a moment while the inspector of election makes his final tabulation of stockholders present in person or by proxy.

Mr. Chairman, we are ready to proceed.

Will the inspector of election kindly submit his report of the number of shares of common stock of the company represented at the meeting, either virtually or by proxy?

Yes, there are represented at the meeting, either virtually or by proxy, 26,180,475 shares of common stock $0.001 par value per share out of the total number of 36,211,234 shares of common stock issued and outstanding and entitled to vote at the meeting. Each share of common stock is entitled to 1 vote. Accordingly, there are an aggregate of 36,211,234 votes entitled to be cast at this meeting, of which an aggregate of 26,180,475 are present virtually or represented by proxy.

The report of the inspector of election indicates that there are present at the meeting, virtually or represented by proxy, the holders of a majority of the total number of shares of stock of the company outstanding and entitled to vote at the meeting. There is, therefore, a quorum present at the meeting, and the meeting is competent to transact business. Will the inspector of election kindly execute his certificate as to stockholders present at the meeting? And if there are no objections, I will direct that the certificate be filed with the minutes of the meeting. Will the secretary of the meeting please report on the mailing of the proxy materials and availability of a list of stockholders?

Dr. Chan, this is Kathleen Bloch, secretary of the meeting. A copy of the notice of the Annual Meeting of Stockholders dated April 20, 2020, concerning the matters to be considered and acted upon at the meeting and a copy of the proxy statement, proxy card and annual report to shareholders for the fiscal year ended December 31, 2019, were made available electronically or by mail to each stockholder of record at the close of business on April 13, 2020, the date fixed by the Board of Directors as the record date for this meeting on or about April 20, 2020. An affidavit of distribution to that effect executed by an officer of Broadridge Corporate Issuer Solutions, Inc. will be filed with the minutes of the meeting. The inspector of election also has at the meeting, a list of the holders of record of the outstanding shares of common stock of the company, which list is certified by an officer of American Stock Transfer & Trust Company LLC, arranged in alphabetical order listing each stockholder of record at the close of business on April 13, 2020, the date fixed by the Board of Directors as the record date for this meeting. The affidavit of distribution will be filed with the minutes of this meeting and the list of stockholders is available for inspection via the web portal.

Now that the technical organizational phase of the meeting has been completed and before proceeding to the business to be transacted at this meeting, I'd like to take this opportunity to introduce you to the current directors of the company other than myself. Present are Al W. Kraus, Dr. Edward R. Jones, Michael Bator, and Alan D. Sobel. I would also like to introduce the officers and management of the company other than those officers who are current directors of the company or nominees for directors of the company. They include Vince Capponi, President and Chief Operating Officer; Kathleen Bloch, Chief Financial Officer; Dr. Efthymios Deliargyris, Chief Medical Officer; Dr. Christian Steiner, Senior Vice President of Sales and Marketing; and Chris Cramer, Vice President of Business Development. Finally, I would like to introduce Marc Silverman and Alex Dundara of WithumSmith+Brown, PC, the company's independent registered public accounting firm. The chair now deems the following matters to be properly before this meeting. A, the nominee for directors to serve until the 2021 Annual Meeting of Stockholders and until their respective successors have been duly elected and qualified or until such directors' earlier resignation, removal or death are Al W. Kraus, Dr. Edward R. Jones, Michael Bator, Dr. Phillip P. Chan and Alan D. Sobel. B, the proposal to ratify the appointment of WithumSmith+Brown, PC as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020. The polls are now open and will remain open for a reasonable time so that those of you who desire to cast your vote upon the nominations and proposals may now do so. Any stockholder who has not yet voted or wishes to change their vote may do so by clicking on the Voting button on the web portal and following the instructions there. Stockholders who have sent in proxies or voted via telephone or internet and do not want to change their vote do not need to take any further action. I will give stockholders an additional 15 seconds to vote. [Voting]

Thank you. The polls are now closed. Will the inspector of election please give his report concerning the votes upon the election of directors in the aforesaid proposal?

Ladies and gentlemen, the preliminary report of the inspector of election indicates that the following numbers of votes cast by the holders of common stock have been voted with respect to the election of each director nominee for the Board of Directors of the company: Al Kraus, 12,313,126 votes in favor, 553,948 votes against, 19,654 votes abstained; Dr. Jones, 9,744,617 votes in favor, 3,111,280 votes against and 30,831 abstaining; Michael Bator, 10,352,210 votes in favor, 2,498,725 votes against, 35,793 votes abstaining; for Dr. Phillip Chan, 12,286,461 votes in favor, 564,319 votes against, 35,948 votes abstaining. In regards to Mr. Sobel, 9,077,982 votes in favor, 3,762,286 votes against and 46,460 votes abstaining. In each Director case, 13,293,747 votes are represented as broker nonvotes. In regards to the ratification of the appointment of WithumSmith+Brown, PC as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020, we had 9,744,617 votes in favor, 3,111,280 votes against and 30,831 votes abstaining.

The report of the inspector of election therefore indicates that, one, Al W. Kraus, Dr. Edward R. Jones, Michael Bator, Dr. Phillip P. Chan, and Alan D. Sobel have been duly elected as directors of the company to serve for a term expiring at the 2021 Annual Meeting of Stockholders and until their respective successors have been duly elected and qualified or until such director's earlier resignation, removal or death. And two, the proposal to ratify the appointment of WithumSmith+Brown, PC as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020, has been approved. Will the inspector of election please execute his certificate as to the total number of votes passed on each of the matters considered at this meeting? And if there are no objections, I will direct that the certificate be filed with the meeting -- with the minutes of the meeting. If there is any further business to come before the meeting, please submit your questions or comments via the web portal. Since there is no further business, the meeting is now adjourned. At this time, the management team will provide a brief corporate update. Following this update, we will answer questions from shareholders. [Operator Instructions] Okay. With the formal remarks concluded, welcome, fellow stockholders and friends, to our first virtual annual meeting. As a publicly traded company, please let me remind you of our safe harbor statement for forward-looking statements. On the call today, we welcome CytoSorbents Board of Directors, including Chairman Al Kraus, Michael Bator, Dr. Ed Jones and Alan Sobel as well as our SEC counsel from Morgan Lewis, David Schwartz. Joining me to make the formal presentation as well as conducting the question-and-answer session is the CytoSorbents management team. Vince, do you want to make a short introduction? Vince, you may be on mute. Would you like to make a short introduction?

Okay, sorry. All right. Thanks so much, Phil. Well, welcome, everybody, to the 2020 Annual Shareholders Meeting. I've been with the company for over 18 years. I have 30 years of experience in pharmaceutical industry and medical device industry, spending about 1/3 of my career in the development of drug infusion pumps and high-volume syringe manufacturing. I've had the opportunity to lead the CE Mark for CytoSorb in 2011 with subsequently 4-label expansions and most recently in the U.S., had the opportunity to lead the EUA approval in ticagrelor, a Breakthrough Designation. Operationally, we've had a great couple of years here, taking the product from 60% to 76% gross margins and including one plant expansion. Most recently have done some very aggressive scale ups in manufacturing to address the COVID-19 pandemic and actually serving product worldwide, both the U.S. as well as Germany and rest of world, to address those COVID-19 -- situation. In R&D, have been working with Phil to develop the HemoDefend product and bring that to regulatory approval, hopefully beginning of Q1 or 2 next year. Then we'll follow by focusing on CytoSorb-XL as a next-generation product. Kathy, to you?

Well, thank you, Vince, and hello to everyone on the call. Thank you so much for joining us today. So I'm Kathleen Bloch. I'm a CPA and MBA. And I've had the privilege of serving as the Chief Financial Officer of CytoSorbents Corporation for the past 7 years. I've seen us make such significant progress over those years. But for me, really now is the most exciting and critical time we've ever experienced as a company. We've built a solid financial foundation, which is going to enable us to execute on our operating and clinical trial strategy. We continue to see robust growth in product sales, now treating patients in the United States, which has been so gratifying. And in addition, we are rapidly growing the body of clinical evidence to support CytoSorb becoming standard of care in many important indications. So I want all of you, our shareholders and friends, to know that I'm very excited to be part of this management team at CytoSorbents, and I'm really looking forward to all the good things in store for us in the future. With that, I'll turn it over to the newest member of our management team, Makis.

Thank you, Kathy, and good morning to everyone. As Kathy mentioned, I am the most recent addition to the management team. My name is Makis Deliargyris. I'm an interventional cardiologist by training. I'm also board-certified in internal medicine and atopic cardiovascular disease. And for the past 20 years, I've spent my clinical time and also my time in industry advancing and optimizing the management of antithrombotic therapies in patients with cardiovascular disease. I can therefore tell you I am absolutely thrilled with my recent appointment as Chief Medical Officer at CytoSorbents and all the exciting possibilities going forward in treating critically ill patients with COVID, sepsis or ARDS, but also expanding the benefits of CytoSorb to cardiovascular patients on antithrombotic therapies. So it's an absolute pleasure to be part of this management team. And now I'm going to turn it over to Dr. Christian Steiner.

Thank you, Makis. Good morning to everyone in the U.S. and America, good afternoon to everyone in Europe and good evening to everyone in Asia. My name is Dr. Christian Steiner. I'm Senior Vice President of Sales and Marketing. I have roughly 20 years of experience in introducing marketing and selling medical device-based interventions. And I have joined Phil and Vince roughly 8 years ago, and I'm with the company since then. At that time, like 8 years ago, I was the first one here in Europe, and we got the CE Mark. I was traveling with my suitcase, a few [ absorbers ] and no real data. The only data we had were rat studies and that's how we started. Today, we have a commercialization team of 80 people here in Europe, and this includes more than 40 sales reps, sales managers and application staff. We have around 20 to 25 sales support team, including clinical and medical in Europe, marketing, product management and customer service. And we have service team members, around 10, which makes up the team of around 80 people here. So over the years, we have generated about -- accumulated USD 80 million. And as you have seen during the last earnings, we have $26 million over the last 12 months and $8.2 million in the last quarter. And I'm totally convinced, and I tell you this, this therapy would change medicine. And with this, I'm handing over to Chris.

Thank you, Christian, and good morning to everyone on the call today, and thank you for being part of this, this morning. This is Chris Cramer. I am the Head of Business Development. I'm responsible for identifying and bringing on new partners for CytoSorb, HemoDefend and our other pipeline programs. Like most of the rest of the team, I've been with the company for a long time, since 2013, and I've seen the company grow. It's been a fantastic journey. I also think that the best is still yet to come. So I'm very excited about being with the organization. I have over 20 years of industry experience with a background in sales, marketing and business development. And most recently, prior to CytoSorbents, I was with Johnson & Johnson, where I held various commercial leadership roles, with their minimally invasive surgery group as well as their corporate development new markets group. So happy to be here, and we'll turn this back to Phil.

Thank you very much, Chris. Since the beginning of the year, the world has drastically changed with the COVID-19 pandemic. To date, there have been approximately 6.4 million documented COVID-19 cases worldwide. So it's estimated that there are likely many more cases that have been reported because of inadequate testing and also asymptomatic or subclinical infection. Of these, nearly about 1/3 have been in the United States with 107,000 deaths alone out of 380,000 deaths globally. Although infections have slowed, it is not over. In the U.S. alone, we reported 22,000 new cases on a single day this past weekend. As you can see from this chart, however, social distancing has helped to flatten the curve of the disease spread, but these restrictions will be lifted soon in favor of moving world economies forward. However, without more widespread testing, a vaccine that is likely 6 to 12 months away, an oral antiviral therapy that can -- that people can take to treat mild-to-moderate disease, is not yet in existence. We should remain vigilant because the vast majority of us still do not have immunity against the virus, and this remains a very dangerous disease. If you look at the United Kingdom and France where 1 in every 6 to 1 in every 7 people die, who get infected, it is still a major problem. That said, a second wave over the summer is likely inevitable with the potential for a mixed influenza and COVID-19 fall and winter third wave as well. COVID-19 has been called the worst viral pneumonia many doctors have ever seen. What we have learned from COVID-19 is that little [indiscernible] were the worst, also have very severe inflammation driven by cytokine storm that often makes the damage to organs like the lungs even worse, leading to rapidly progressive respiratory failure and the acute respiratory distress syndrome, or ARDS, that requires weeks of mechanical ventilation as well as other complications such as shock, kidney failure, heart injury and death. In some studies, more than 2/3 of COVID-19 patients who require advanced respiratory support, such as mechanical ventilation and ECMO, die. The cytokine storm-driven attack on the body by the patient's own immune system is often what leads to organ failure and death, and is perhaps even more deadly than the virus itself. But it's been very gratifying to finally see the media pick up on this with the concept of cytokine storm making headlines in mainstream media, in the Wall Street Journal, the New York Times, CNN and other outlets. And with the efforts of our PR firm, Rubenstein PR, of whom Eric Kim is here today, we've been able to discuss our technology and company on Bloomberg, Fox Business News and others, and was most recently featured in an interview with FOX Business host, Neil Cavuto. Overall, the publicity over cytokine storm and the dangers of a runaway immune response has been significant, and we frankly could not buy this kind of publicity and validation for the concept to treat cytokine storm. But the underlying concept is why CytoSorb, one of the most advanced broad-spectrum treatment to cytokine storm, has continued to grow in usage and popularity to treat the serious organ failure complications of deadly inflammation. CytoSorb has today accumulated more than 88,000 human treatments since its launch in many life-threatening conditions such as septic shock, influenza, trauma, burn injury, liver failure and many others. That a literal pandemic was needed to finally drive the term cytokine storm into the common lexicon of journalists, government officials, investors, the lay public and even many health care experts underscores the challenges of being at the cutting-edge of medicine. That said, the pandemic has elevated the importance of our mission as a company and has put our technology in the spotlight as one of the key keys to controlling cytokine storm and deadly inflammation not just in COVID-19 infection, but in everyday life-threatening illnesses seen in the intensive care unit. CytoSorb has been used to treat more than 800 COVID-19 patients around the world. Now patient-level data supporting its use to reduce cytokine storm, improve lung function, getting patients off of mechanical ventilators and often off ECMO, and to also reverse dangerously low blood pressure, also called shocks. CytoSorb has been specifically recommended in the Italy and Panama guidelines on COVID-19 treatment, with blood purification to treat cytokine storm in the China COVID-19 treatment guidelines as well. And in mid-April, the U.S. FDA granted emergency use authorization to use CytoSorb in critically ill adult COVID-19 patients with imminent or confirmed respiratory failure, and we've now shipped nearly 500 devices to dozens of hospitals and hospital systems throughout the U.S. under both pre-EUA and EUA guidelines. This -- we have also received the comparable emergencies authorization in India as well. And this slide provides a recent link that many of you have seen, on Dr. Lucian Durham's Experience at Froedtert and the Medical College of Wisconsin on using CytoSorb to help stabilize and get 3 patients off of mechanical ventilation. That was highlighted on a local TV news network. Our priority is to gather as much data and experience as possible to successfully treat others and to emerge from this pandemic stronger than ever as a standard of care for treating cytokine storm in a wide range of life-threatening illnesses, not just COVID-19. And Makis will discuss some of these efforts in the presentation later. We believe that our business has never been as exciting as it is today. Unlike products that address a single problem, CytoSorb is riding the wave of multiple macro trends in health care. For example, CytoSorb is being used in the aging baby boomer generation that is prone to serious infections and sepsis, prone to trauma, cardiac arrest, need for cardiac surgery and bleeding in patients undergoing emergency cardiac surgery on blood thinners. Considered by many as the next-generation liver dialysis technology, CytoSorb is also being used to help treat acute exacerbations of chronic liver disease, a global crisis that afflicts 1 in every 11 people worldwide. CytoSorb is now being used to treat the potentially fatal cytokine release syndrome caused by cancer immunotherapy, such as CAR T-cell immunotherapy. The opioid crisis and the use of dirty needles has resulted in a devastating burden of critically ill patients with infected heart valves, also called infective endocarditis, that results in sepsis and acute heart failure where CytoSorb is being used to stabilize patients both intraoperatively as well as postoperatively. And last but not the least, it's a specter of new emerging infectious disease threats such as avian influenza and the next coronavirus, Ebola and many others where CytoSorb can be used. Critical care is a crushing economic burden on hospitals and health care systems due to the lack of effective therapies to treat patients. And CytoSorbents represents a paradigm shift in the treatment of critically ill patients that may dramatically improve the economics of ICU care. But the most exciting thing about this company, and one of the reasons no doubt that you are invested in our company, is that we are helping to save lives. Whether or not it was the COVID-19 patient with refractory respiratory failure and ARDS, who after 8 CytoSorb treatments was weaned off of ECMO and ultimately left the hospital alive; or the real-world case of a young pregnant woman who held her baby in her arms just hours after surviving complicated emergency surgery to not only deliver the unborn baby by C-section, but to also repair her rupturing aorta under the protection of CytoSorb; or it was the grandfather who will be there for his grandchildren after being rescued from massive organ failure and septic shock with CytoSorb following surgery for colon cancer; or the young man who collapsed to the ground in cardiac arrest, underwent nearly 2 hours of CPR in the field, followed by extra-corporeal CPR and CytoSorb therapy, and walked out of the hospital 2 weeks later, doing well without significant brain damage. These are real-life examples of how physicians are using our CytoSorb therapy to make a positive difference in the lives of patients and their families. We feel confident that we have the right product, the right strategy and, most importantly, the right people to make this company successful. I cannot begin to express my pride and gratitude to the outstanding men and women of this company who in the depths of the COVID-19 crisis came together, pitching in wherever needed even when doing so put themselves and their families at risk to ensure that we maintain the production, delivery and access of CytoSorb to patients around the world. A special thanks to all of you in the extended CytoSorbents family who have given your time, energy, hard work, expertise, trust and support to establish CytoSorb as a key therapeutic option for those in greatest need. Without you, none of this would be possible. And finally, to all of the health care workers globally who worked tirelessly on the front line during the COVID-19 pandemic, putting themselves directly into harm's way to save lives, with many making the ultimate sacrifice, the thankfulness, thoughts and prayers of a grateful world community. On behalf of the Board of Directors and the management team, we thank all of you for helping to make this a reality and for continuing to share this journey with us. Our best wishes to you and your loved ones, for continued good health, safety and success. Now with that, I will turn it over to Kathy to comment on our financial position. Kathy?

Thanks so much, Phil. Today, I'll provide a brief overview of our financial progress, including growth in product sales and other indicators of financial health and value as well as comments on the company's balance sheet. So when we look at our trailing 12 months product sales, our growth continues to translate into strong comparables for product sales. For the 12 months ended March 31, 2020, trailing 12 months product sales were $26.3 million, which is a year-over-year increase of 29%. In fact, the first quarter of 2020 was our best quarter ever with $8.2 million in product sales. Though difficult to quantify, management has estimated that approximately $1.5 million to $1.7 million of first quarter 2020 sales were related to the COVID-19 pandemic. And we also entered the second quarter of 2020 with our first-ever sales order backlog of $2.7 million, which positions us well for the second quarter. The COVID-19 pandemic has increased the public's understanding of the problems associated with cytokine storm, and this has resulted in growing awareness of and interest in CytoSorb, which is expected to fuel future sales growth in our core markets even after the pandemic subsides. One final note on this slide as well, the green bar representing our blended gross margins at March 31 each year. And as you can see, they continue to increase year-over-year as we achieve further manufacturing efficiencies. And in fact, in the fourth quarter of 2019, our blended gross margins reached a record high 80%. It came down a little in the first quarter as we were ramping up production, but we expect to get back on track to 80% blended gross margins later this year. Next slide, please. And here, we take a look at some year-over-year key metrics of performance. We've already talked about our product sales and gross profit. As of March 31, 2020, we had approximately $26.4 million in cash. And then 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 $1.7 million from unsettled ATM facility transactions, which further bolstered our cash position. And in addition, we've seen growth in our market cap this year, which now stands at $370 million, especially when we compare this year to last year. The growth is about 64% year-over-year, so pretty substantial. Next slide, please. And lastly, some comments on our working capital outlook. Given our strong cash position of $26.4 million at March 31, we believe the company is well capitalized. And as I previously mentioned, this was bolstered by the receipt of another $2.8 million in April. Furthermore, with $8.2 million in quarterly product sales in the first quarter of 2020, if we exclude clinical trial expenses, we reported our first quarterly operating cash profit from operations of $322,000. Our reported operating losses are now a direct result of our investment in clinical studies, which, of course, if successful, will have their own ROI in the future. And the company will seek to refinance its $15 million term loan with Bridge Bank. Currently, this loan requires payments of interest only, but the company will be required to make principal payments of approximately $833,000 per month beginning in November 2020. So it is our intention to refinance this loan before November. And in conclusion, we believe our strong balance sheet provides a solid foundation, which will enable us to execute on our operating plans and clinical trial strategy through 2021. This concludes my remarks. And now I'd like to turn the call over to our President and Chief Operating Officer, Vince Capponi. Go ahead, Vince.

Thank you, Kathy. I'd like to talk about what we're doing now to build our operational and regulatory foundation for the growth that Kathy has alluded to, and Christian is driving within the European Union. We have the CE Mark label. Most recently, as you know, we expanded both ticagrelor and rivaroxaban removal as a major new feature to provide additional marketing options for us with respect to applications of the product. Previously, it had been all in acute care. Now with the addition of ticagrelor and rivaroxaban that allows us now to address intraoperative removal of these drugs during cardiopulmonary bypass to mitigate bleeding incidents. This is a one-of-a-kind product, and we think this will provide great value for Christian as he starts to roll this out into the European market. Based on a long and clinical experience simplicity of the CytoSorb, again, we believe this will be very easy to integrate within cardiac surgery and has already started to be used within Europe already. In the U.S., under FDA emergency use authorization, we were granted the approval or -- yes, the approval to treat COVID-19 patients, specifically with CytoSorb. This will remain in effect until the FDA determines that the EUA is no longer required. We believe that this will probably be some time before this is removed. But in the meantime, Makis and his team is actually gathering data from the treatments here in the U.S. to allow us to leverage this information into what we hope will be a future regulatory activity to try and garner approval for CytoSorb. In addition to that, we just recently received the Breakthrough Designation for CytoSorb in the use of the removal of ticagrelor intraoperatively during CPB. This is the exact same indication that was just recently added within Europe, but now it's been designated as an unmet medical need here in the U.S. and giving us Breakthrough Designation, which basically means we'll have expedited review of the submissions within the FDA. The product development pipeline, HemoDefend, again, we have been working remotely on HemoDefend as much as we can, looking to drive to an IDE by the end of this year or -- and into the clinic first half of 2021. Following HemoDefend is actually CytoSorb-XL, which is actually the product to remove both cytokines as well as endotoxin. And we're looking, at this point, further optimization and then hopefully, preclinical testing in the very near future. I think it's important to note related to these clinical programs, both in HemoDefend as well as the preclinical testing within CytoSorb-XL, much of this is dependent upon the COVID-19 situation. As you know, many of the clinical trials have been shut down as a result of COVID-19 because of the inability to, one, enroll patients during this pandemic, but also the inability to actually get CROs into the sites to perform their functions. Moving on to operational excellence. As Kathy alluded, we've been having increasing gross margin. Again, from 2015 at 60%, we are now up to 76% blended gross margin. As Kathy mentioned, at the end of Q4 last year, we actually hit 80%. In addition to that, our annual volume increase, when you look at it as a percentage basis, we've now in 2020 estimate that we'll be up close to a 76% -- 7,600% increase in volume based on the growth that we see in the market. The most recent pandemic situation with COVID-19 has really driven a spike in increased product demand, requiring us to do a rapid scale-up at this end. We utilized our R&D folks to bring the process online as quickly as we can. And we are able to address back orders and new orders in a timely fashion. But again, within 8 weeks, we've been -- we've nearly run the plant at capacity to address this demand. As I mentioned, the cost increase, and Kathy alluded to, have really been the result of the rapid scale-up in all the R&D training, the personnel, that we had to experience during this period. That concludes my remarks. And with that, I'll hand it over to Christian Steiner.

Yes. Thank you, Vince. So I want to speak about the next phase of growth. Although we have to say that phases of growth are in all the different application fields, but nevertheless, we are entering a new phase of growth because we are entering a market development where the first application field probably can enter into mass markets, that this is going to be the blood thinners. So when we speak about growth, we speak about 2 things. First, obviously, we speak about revenues and at one point also about profit growth. But also, secondly, we speak about the increase of the company valuation, which, of course, is very much dependent on the first, but not only. There are a number of factors which are driving the valuation of the company, and these include the following: this is, first, of course, the different application fields and the evidence we have in those. Secondly, it is the access to the different markets. For example, in U.S., we have a special hurdle, the FDA approval. Third factor is the ownership of the markets. That means the direct business versus sales partner business. And last but not least, a strong brand is a very big contributor to the valuation of the company. But all these factors also are driving the revenue growth. And now I come to this slide, you can see now. I will start with number one, the left-lower corner, clinical evidence. Clinical evidence is actually a prerequisite not only to access certain markets like, for example, the U.S., but also as a basis of marketing in the different application fields. The mass markets we want to enter require hard evidence, and this is true for each single application field. Clinical evidence is actually determining the potential market for those different application fields. And only clinical evidence will access -- will grant access to the medical guidelines. There are also basis for reimbursement, but the next speaker later on, Makis, will go much more into detail in this topic. The next, the sales forces on the left-hand side. As you know in the last year, we have increased the number of direct markets because in direct markets, we have 100% control of the sales forces. The sales forces are focused on the introduction of this therapy and this product, and they are, therefore, much more efficient in introducing this therapy. Also, the advantage is the revenues are higher and also the margins, but this at higher cost. So at the moment, the development of the 10 different direct markets will continue. And when we see proof-of-concept in other markets in Germany, we actually will add more direct countries, starting probably with 1 or 2 of the European big 5, but not necessarily only European markets. The next step for the company, obviously, is the commercialization in the United States, but this is very much dependent on the regulatory pathway. So we have to wait what the pathway will be. We will hear this, I think, later this year. And we have to be prepared when we get the approval. So on the left-hand side, in the upper corner, you'll see the growth driver is still the German market. The German market actually is bringing more than 60% at the moment. And it was from the beginning the model market for us. We have increased the sales forces last year or the end of last year, and we will see the impact of this higher manpower in the next few months. So one example for the progress in the German market is, for example, the penetration of the private hospital chains. Last year, we have said that we will penetrate those hospital chains, especially the Helios Group, which is owned by Fresenius. And at that time, we had 4 departments buying the product. Nowadays, we have more than 20 departments of Helios hospitals using the product. And the goal is obviously that they introduce it as standard of care for their hospitals. Number four, on the right-upper corner, we have the health economic analysis. Money talks, so even if there is an equal medical impact of any intervention and there's an economic benefit, this will decide what intervention is adopted. And so I have installed over the last year a little department, which is only concentrating on health economics. And there are already very encouraging developments. We have shown and also published already the superiority of using CytoSorb therapy in patients with ticagrelor and rivaroxaban in emergency cardiac surgery operations. We could show in the cardiac surgery field that in endocarditis patients, the use of CytoSorb intraoperatively has a positive impact on the cost of these patients. And there are other analyses ongoing, for example, in aortic surgery patients. But very interesting and very exciting data will be published later this year, which includes data in septic shock patients. For example, quality-adjusted life year gained, the cost for this, the number needed to treat for those patients and the impact of the shock reverse, which is the most profound clinical improvement we see in our patients on the mortality of these patients. So I will show you in a minute some details on this health economic analysis, but want to continue on this slide. So on the right-hand side, communications. Obviously, easier stories for customers as well as for investors will help to spread the word. We, already this year, have an increased presence in the social media, but we will strengthen this even more. And by building of -- through building a strong brand with high awareness, will push the business as well as protecting it. And this obviously significantly adds to the company valuation. For this, we will use a much broader approach, including increased efforts in public and investor relations. And the last box in the right lower corner, adding indication fields. As you know, the main indication fields for the therapy at the moment in the systemic inflammation, especially in septic shock patients and in cardiac surgery there and, intraoperatively, on the heart-lung machine as well as post-operatively, after operation, on the heart-lung machine. But the technology is so powerful and unique that we see a lot of other application fields. And obviously, we start with the aggressive marketing now that we have the CE approval for ticagrelor as well as rivaroxaban removal in cardiac surgery, but we will add a number of very exciting other fields such as liver disease, cardiogenic shock and also cancer-related treatments. We have seen last year the first treatments in cardio and cytokine release syndrome after CAR T-cell therapy. So all these different factors will add to the growth. And to summarize, the major factors for the next 2 years is, number one, increased access for direct sales forces, including the U.S. Number two, the growing body of evidence in clinical as well as health economic data and studies. Number three, we will add additional application fields, for example, the blood thinners, liver disease, cardiogenic shock and cancer-related therapy. And last but not least, spreading the word and speak about what we do. So this concludes this slide. And in the next slide, I just want to show you an example on how detailed these action plans are -- really are. So next slide, please. So the health economic team has analyzed the number needed to treat in septic shock patients. And this is calculated with [ time ]. The number needed to treat is very much used in the pharmaceutical industry and gives some value about the -- some characterization of the value of the therapy. So 5 patients have to be treated to save one additional life. And a similar low -- and this is a low NNT, similar low NNT in med tech, we only have in therapies or therapeutical interventions like ECMO, where we see an NNT of 6 to 9. Or for example, in transcatheter aortic valve replacement, which has an NNT of 5 and is nowadays a multibillion-dollar business. However, all these analyses, obviously, are based on clinical data, and how we are going to progress there will be discussed in detail by Makis. So I want to hand over to Makis. Thank you.

Thank you, Christian. And once again, good morning, everyone. Over the next few slides, I would like to discuss the progress that's been made with some of our key clinical programs, give you an overview of some of the research activities and data-generation activities we have on the COVID-19 crisis and then close out my presentation by reviewing some important considerations on the new opportunities ahead of us, which is the antithrombotic removal with CytoSorb. Next slide, please. So reviewing the active clinical programs. On top of the list is the REFRESH II trial. I think a lot of you have been following the updates. This trial is under voluntary hold and continues to do so. However, we have taken advantage over the last few months to collect data from all enrolled patients which is approximately 153 subjects, and that data will be provided to the DSMB in the very near future, who will review the available information, provide us with a decision. We hope that it would be positive, and we expect it to be positive, and we anticipate that following the DSMB outcome, we can make further decisions regarding the future of REFRESH II. Regarding the U.K. TISORB and German citation studies, these are follow-up studies to our EU approval for the removal of ticagrelor. In these studies, we'll be able to contribute further information that will inform discussions hopefully with NICE in the U.K. and reimbursement discussions in Germany. We expect to have data now that extends not just to emergent, but urgent cases since we believe that's an even greater market size of patients compared to the true emergent cardiac surgery patients. Importantly, these 2 studies, performed in 2 different EU countries will mirror each other that would allow us to pool the data for some meaningful future analysis. A piece of exciting news from earlier this year, already reviewed by Vince, has to do with the FDA designation -- Breakthrough Designation for the ticagrelor removal. We're actively discussing with the agency on the regulatory path going forward that will dictate our clinical strategy. This is a conversation that is exciting and will determine, to a large degree, our ability to enter the U.S. market. It's also an area where I have been very fortunate to have had similar conversations with the FDA during the approval of cangrelor, the last anti-platelet agent to be approved. And also more recently about the designation of a new aspirin for marketing in the United States. So this is an anti-platelet field that's very well-known to us. And we're very optimistic that our discussions with the FDA will be very meaningful and productive. In addition, we plan to leverage the EU regulatory approval to remove rivaroxaban during cardiac surgery in addition to our commercial efforts with studies that now will show the economical benefit associated with that. So these are very important key priority targets in our clinical programs. Next slide, please. For the past many years, there's been some important investigator-initiated studies that have performed in Europe. These studies have contributed to our understanding about potential new indications. Many times there have been hypothesis-generating for larger studies and, more importantly, have informed clinicians on technical and logistical aspects of how to best use CytoSorb across a multitude of indications in intensive care. Two of them are particularly important and I would like to spend a little more time. First of all, the prospective CytoSorb registry. This registry, which was launched approximately 5 years ago, now includes more than 40 hospitals that are contributing patients in over 7 countries. And as of the last update, which is currently being reviewed for publication, more than 900 patients have been enrolled. You can imagine, with growing numbers, this registry will contribute especially meaningful data about the use and the benefits of CytoSorb in critical patients. Importantly, the REMOVE study will be reporting in the very near future. This is a study of the intraoperative use of CytoSorb in patients undergoing cardiac surgery for infective endocarditis. This study was funded by the German government. It's multicenter and it's randomized with a control group. This determines whether the hemodynamic instability usually seen due to the excessive inflammation associated with infective endocarditis can be, in large part, mitigated with the use of CytoSorb, thereby providing clinical benefit such as decreased base suppressor requirements and shorter lengths of stay in the intensive care unit. The primary endpoint will look at composite organ function, again, a very meaningful endpoint for people having circulatory shock under the circumstances. The enrollment is complete, actually exceeded the designated 250. 288 patients were finally enrolled, and we expect very soon, like stated before, the primary results of this trial. Next slide, please. Now a few words about the activities that are currently in progress to help us capture meaningful clinical data about the use of CytoSorb during the COVID-19 pandemic. First, the biggest one of these attempts is the COVID-19 study. This is going to be a company-sponsored study in the United States that is randomized in critically ill COVID-19 patients who suffer respiratory failure and ARDS, while requiring ECMO, extracorporeal membrane oxygenation. This is the exact population that we have been designated to treat under the emergency use authorization. The endpoints will be very important, both clinically but also economically, and have to do with the duration of supportive therapies such as ECMO or mechanical ventilation and of course mortality. Multiple centers in the U.S. have already been approached, recruited and are preparing, gearing up to participate in the study. We have approached BARDA for potential funding of this trial, and we're hoping to have a response again in the near future. The second activity, which is actually much closer to initiation is the CTC registry. Again, this is a company-sponsored program where we'll capture patient data level -- patient data from COVID-19 patients treated with CytoSorb and either with the use of a hemoperfusion pump, continuous renal replacement therapy or, again, ECMO. This will allow us to prospectively capture data at the patient level in order to be able to truly have an understanding of the clinical benefit contributed by CytoSorb in this complex population. The primary endpoint in the strategy would be ICU mortality according to the CytoSorb use and historic controls. Lastly, we have 2 randomized clinical trials that are investigator-initiated in Europe, the CYTOCOV-19, that's at the University of Hamburg with 24 patients. Here, the investigators are looking at hemodynamic stabilization in this population. And with the CYCOV trial, again in Germany, in Freiburg, 30 patients randomized, once again looking at the benefit of CytoSorb in severe ARDS on patients who require ECMO and now specifically looking at IL-6 cytokine reduction and of course as a secondary endpoint, mortality. Next slide, please. Now let's shift gears a little bit. It's a real pleasure for me to be able to communicate with you, as I have done with my colleagues inside the company, the growth opportunity ahead of us with the removal of antithrombotic agents. Let's look at ticagrelor first. For those of you who follow the cardiovascular space, you will know that ticagrelor, over the last many years, has emerged as the best-in-class agent for anti-platelet therapy. In fact, if you follow the market size of ticagrelor, it's continuously growing and gaining over prasugrel and Plavix, the 2 main competitors. Recent study suggests that ticagrelor is also -- can be lifelong therapy in people instead of aspirin. So we see ticagrelor as being the anti-platelet agent of the future. So what are the patients that require ticagrelor therapy? As you will see on this slide, on the top row, you see the indications that are currently available for the use of ticagrelor. By far, the most frequent use is with people with acute coronary syndromes and people requiring a percutaneous coronary intervention, which is a very complex way of getting a stent. These are the people receiving stents for blockages in the coronary arteries. However, additional studies after the approval of ticagrelor have demonstrated that it can also be used for people with distant history of MI for long-term protection. And more recently, with the THEMIS trial, the addition of ticagrelor to the standard of care in people with diabetes and history of heart attacks was -- showed significant benefit. Therefore, right now, in front of us, the opportunities in people with acute coronary syndromes and stents. However, in the future, this may further grow based on the addition of large pools of patients such as diabetics and people with history of a heart attack. There is right now no real competition to the CytoSorb solution for this population. Currently, in situations where urgent surgery is needed, doctors will traditionally hold these patients in the hospital and wait for the drug to wash out while administering what are called bridging strategies, meaning other alternate antithrombotic drug instead of ticagrelor that are short acting, intravenous in order for the patients to be protected until they can undergo the necessary cardiac operation. You can imagine that these strategies are cumbersome and costly and require multiple days in the hospital. This is to compare versus patients who will be able to have sites available for them, who would go straight into surgery and operate while the risk of bleeding is fully mitigated. PhaseBio is developing an antibody against ticagrelor for reversal, a similar situation with Andexxa. We hear this asset does not provide protection but rather try to reverse the damage from a major bleed that has already occurred, similar to Andexxa, which we will discuss on the next slide, please. Rivaroxaban is one of the key agents of the new class called novel oral anticoagulants. This is a massive global class of agents that currently has greater than $30 billion market share and is growing robustly at over 6% annual rate. They have been displacing warfarin, and they will continue to do so because they're the blood thinners of the future. Once again, importantly, we have to recognize the type of patients that are requiring these therapies. And you will see now even different indications of ticagrelor. In the first column, you see patients with atrial fibrillation. This is probably by far the biggest opportunity. These are patients that will require the therapy for lifetime. They will require lifetime protection against potential stroke with atrial fibrillation as market size is continuously growing as patients are aging, and it's estimated that just in the United States, we will have approximately 6 million people with atrial fibrillation, with that number continuously growing. However, there are additional indications for rivaroxaban-approved indication. And that's for the use of deep vein thrombosis, pulmonary embolism, coronary heart disease and peripheral arterial disease. But what's also important to recognize is that the doctors caring for these patients are primarily in the cardiovascular arena. In some special indications, they may be orthopedic doctors involved, in the case of DVT treatment, or pulmonologist for pulmonary embolism. But for the vast majority, just as it was the same exactly for ticagrelor, the doctors that are caring for patients on rivaroxaban are usually in the cardiovascular arena and include cardiac surgeons, cardiologists and interventional cardiologists. The competition for rivaroxaban, for CytoSorb is Andexxa. Andexxa is an approved reversal of anti-factor Xa inhibitors and has been in the market over the last couple of years. Once again, the clinical indication for use for Andexxa is very different than CytoSorb. Andexxa is designed to be used in the case of a life-threatening bleed to try to reverse or minimize the downside associated with that bleed. CytoSorb in this indication is used to prevent any excess bleeding happening during cardiac -- urgent or emerging cardiac surgery. Next slide, please. Just to give you an idea of the benefits that can be expected when using CytoSorb antithrombotic removal in patients requiring emergent or urgent surgery, we are presenting here the data from the public study from Hamburg, where the investigators looked at 55 patients requiring such an operation, and 43 of them were on ticagrelor and 12 of them were on rivaroxaban. What's important to note is that some of these patients, the vast majority of them, were able to undergo the surgery with CytoSorb removal of the offending agent. While some of the other ones, the historical controls in their institutions, had surgery with ticagrelor and rivaroxaban unopposed. If you look at the results, starting from technical characteristics, in blue are those patients that had ticagrelor or rivaroxaban removal. And in black, those that didn't. And you will see that the operations were significantly shorter when the drugs were removed, and that has to do exactly because there was no more management -- intraoperative management of bleeding. You can see the number of transfusions were also significantly reduced, including platelet transfusions that were universal for the groups that did not have removal of these drugs. [ Just 2 ] drainage, dramatically reduced. In fact, those numbers are consistent with patients not having any antithrombotic treatment. These are the numbers you would expect, therefore, a complete mitigation of the risk with CytoSorb. Most importantly, rethoracotomy, the need for these patients to return to the operating room and undergoing second operation simply to manage the bleeding inside their chest, was not seen with people receiving CytoSorb where it was fairly frequent, approximately 40% among patients who did not have removal of the antithrombotics. As expected, all these clinical benefits translated in shorter length of stay in the intensive care unit and overall shorter hospital stay. A dedicated separate analysis taking into consideration this clinical benefit, but in the context of care in the National Health System in the U.K. has demonstrated that the use of CytoSorb in this population can lead up to approximately $5,000 in cost savings during the care of these patients. When we look at the estimate of the size of the opportunity, we have to make -- take into consideration the indication of targeting and the population that potentially will be candidates for this therapy. When it comes to ticagrelor in the U.S., we have used recent data that suggest that there are approximately 1 million acute coronary admissions per year. With current indications that ticagrelor has approximately 50% market share in that population, we are estimating that approximately 37,000 patients will either undergo emergent surgery during the initial admission, or will undergo an attempted stent but will then require urgent or emergent surgery, a total of 37,000. Now if we continue with the current trends, that ticagrelor is increasing market share and with the ability of CytoSorb potentially allowing doctors to make it the mainstay of the treatment protocols compared to the other anti-platelet agents, that market size can grow to be 74,000 cases a year annually in the U.S. If we're able to expand beyond cardiac surgery, then people who have a stent and require opportunities such as orthopedic emergent operations, gastro urologic emergent operation, oncologic or even people who suffer an accident and trauma, then the market size grows dramatically to 150,000 patients a year. Doing similar exercises with rivaroxaban in the U.S. and also in the EU, we can see that the number of patients is substantial, and the market size associated with this new opportunity in removing antithrombotic agents can easily reach or exceed $200 million. So in conclusion, there -- in the last 20 years, I have spent my entire career trying to optimize management of antithrombotic agents. There's multiple unmet clinical needs and there are multiple agents trying to address that. However, in my career, I have never seen a better, more clean solution as the removal of these agents by CytoSorb. This can dramatically improve clinical outcomes while saving millions of dollars from these hospitals caring for these acute cardiovascular patients. I'm extremely enthusiastic about the potential here, and I'm very excited. Turning over now to my friend, Chris Cramer, Head of Business Development, for the next part of this presentation. Thank you.

Thank you, Makis, and I would like to welcome everyone again to the call today. My name is Chris Cramer. I'd like to spend a little bit of time talking about partnerships. Partnerships have been a very important part of building CytoSorbents and helping create value for the company. Partnerships have been and will continue to be an important part of our strategy. They validate the company and the technology in the eyes of customers and investors, they help to drive growth and expansion of our products like CytoSorb, and they provide the potential for future M&A activity. Next slide, please. This chart represents the universe of potential strategic partners for CytoSorb. What you can see is that there are a lot of major players in different fields that have a very strategic interest in what we're doing. I think it goes to show the power and the versatility of the CytoSorb blood purification platform and how it has utility in so many different applications. I'm proud to say that we are currently working with 3 of the world's leading players in the acute care space. As you may know, we're working with Fresenius Medical Care, the largest dialysis company in the world. In cardiac surgery, we've been partnered with Terumo, the largest cardiac surgery disposable company in the world. And we've been working with Biocon in India, our longest-standing partner since 2013. So I'm very proud to say that we're working with some of the best companies in the world right now. And we'll talk more about this in just a second. But before we move on from this slide, I'd like to make one last point. As Phil and others have mentioned today, in addition to our core markets of acute care and cardiac surgery, we have partnership opportunities in new areas such as the removal of anti-platelet agents like ticagrelor and rivaroxaban and in CAR T-cells. So the future of this therapy and the partnership opportunities are very bright. Next slide, please. So I'd just like to take a moment to talk more about some recent partner developments. First, with FMC in Europe, as you know, about a year ago, we reconfigured the commercial territory that they were working in to really focus on driving CytoSorb sales growth in strategically important markets. That change, I think, has really paid off. We see today a really strong cooperation between us and the commercial teams in those 3 countries, so now that's Czech Republic, Finland and France. And that's paying off in terms of increasing customer interest, purchasing usage in both orders from customers and back to us. So we see a lot of good trends in how the business is developing with our partnership in Europe today. In addition to that, I think people know that we have a co-marketing agreement in place, which is available outside of this arrangement where we have a direct distribution agreement with FMC and something that we're doing in both Europe and actively in South America today. Next, we have FMC Mexico, one of our newest additions to our partnering network. As you may have seen a couple of weeks ago, we announced that CytoSorb has achieved market clearance in Mexico. And we're very excited about that because that allows FMC now to move to a full commercial launch. And they've been preparing the market now for almost a year, so they're really ready to go. They placed an initial stocking order, and the shipment has been received. So the product has cleared customs, and it's in the possession now of the FMC organization in Mexico. And they currently have orders from several major institutions and are reporting strong demand for the product, especially as COVID-19 cases continue to rise in the country. So we're expecting to see the FMC Mexico team get off to a fast start as they've recently achieved market clearance. The other group that we've also partnered with -- started partnering with around the same time as Mexico was FMC Korea. And we've been working very closely with them to prepare the market. They have not yet received market clearance from the KFDA, but we are expecting that clearance to come through very soon, potentially in Q3 2020 is when that -- the timing of when that is expected. But when that does, we expect to see FMC Korea get off to a fast start as well. They'll be focusing on leveraging their market-leading position and growing demand for CRT treatments in acute kidney injury in the intensive care. So we're very optimistic about where that can lead to as well. With Terumo, obviously, I talked about -- we've talked about this group in the past. We've been partnering with them for a couple of years now in cardiac surgery in France and in the Nordics. We've seen consistent improvements in that business. They've been especially propelled by the label expansion for removal of ticagrelor and rivaroxaban. It's been a door opener for them as well as the rest of our sales force in cardiac surgery. And we're seeing consistent use of CytoSorb in endocarditis cases and ECMO cases. Last, we have Biocon. And as I mentioned before, Biocon is our longest-standing partner since 2013. They're continuing to invest in market development in acute care and beyond. One of the more recent updates that people may have seen is that they've been granted approval under the new more stringent medical device regulations which went into place recently. The regulations that are in place now are more stringent and more like a drug approval. And what's interesting about this is that they came through that process with that approval, preserving the full label claim that we have under the CE Mark. So we still have the ability in India to broadly promote CytoSorb for many, many different applications. And in addition to that, they receive special clearance to promote CytoSorb for COVID-19. So this is all very important. I think that in addition to achieving this milestone, regulatory milestone, it also allows them to now apply for government tenders and also access funds that have been set aside specifically for COVID-19. Next slide, please. So as many people may know, we've also been working with China Medical Systems to bring CytoSorb to China for COVID-19. The first use of CytoSorb in COVID-19 anywhere in the world happened in China. 17 patients in 5 hospitals were treated under special approval for COVID-19. And those treatments included a variety of modalities, including CRT, hemoperfusion and ECMO. We're working with CMS and the doctors to write-up that experience and publish that data as quickly as we can. But anecdotally, what we heard from physicians is they described things like reduction in inflammatory mediators, reduction in vasopressors and improvements in oxygenation in patients treated with CytoSorb. These are some of the same benefits that we see on a daily basis throughout the world and very positive to hear from the usage from -- in China. In addition to that, I think one thing that was really positive as we spoke with physicians who had the chance to use both our product and competitive Chinese blood purification technologies, they are very clear in their preference for CytoSorb. They felt that our product was easier to set up and use, lasted longer and led to more consistent positive results. Next slide, please. So finally, I think there's a lot of positive things on the horizon for CytoSorb and the CytoSorbents pipeline. You've heard about the advancement on the clinical and commercial front here with the company. And all of that work is driving partner interest particularly in the areas of cardiac surgery and ECMO. In addition to that, industry-wide M&A and new product launches are creating new partnership opportunities and new reasons to discuss with different partners about how we can have a collaboration that benefits both sides. And then finally, one of the things that we're working on internally is exploring new collaboration models that allow us to work with more strategic partners in a more meaningful way, and we expect that to be something we talk about more in the future and that can help propel the growth of this company to the next level. And then finally, with HemoDefend, Vince had mentioned a little bit about this in his update, we are moving towards the initiation of a U.S. pivotal trial. And in doing so, we believe that we have the ability to monetize this in terms of a partnership with companies in this space as well. And we are talking to many at this point about how we can work together to collaborate. In addition to the initial indication, we think that there are label expansion opportunities to expand the use of this product in different areas. And we think that this product has use across both commercial and government and military uses. So we think there's a lot of value in HemoDefend as well as the other products that we have under development in the pipeline. In summary, we believe that the future of the company and the BD partnership efforts look very bright, and we look forward to talking about these on future calls with investors. Thank you. At this point, I'll turn it back to Phil.

Okay. Well, thank you very much, Chris. Well, we've been working closely with our Investor Relations firm, LifeSci Advisors. I think Jeremy Feffer and Alexandra Schuman are here today and multiple investment banks to get the story of CytoSorb out there amongst investors. We conducted more than 200 meetings now with investors in the past 12 months, and 11 non-deal road shows, multiple investor conferences and meetings with sell-side analysts. Our goal is to gain broader institutional sponsorship and analyst coverage going forward. The good news is that we are pleased that our message is being heard with a lot of fundamental operational progress this year that has been discussed today, with more plans translating into one of the best-performing medical device stocks in 2020 so far. COVID-19 has certainly been a catalyst for our company's stock. However, for the reasons that we gave, we are anticipating a multiyear growth cycle based on new opportunities such as our blood thinner removal program, but also the health of our underlying business, treating cytokine storm in a wide variety of critical illness and patients undergoing cardiac surgery. In terms of our near-term goals, we maintained guidance that product sales in Q2 2020 will exceed those from Q1 of 2020. Blended product gross margin should approach 80% in the second half of 2020. We expect the REMOVE trial to read out soon. Pending resolution of COVID-19 and the restrictions at hospitals, we expect to resume the REFRESH II and TISORB citation trials. We're also in communication with the FDA to obtain guidance on a forward regulatory path in the U.S., leveraging our CytoSorb breakthrough designation for ticagrelor removal during emergent or urgent cardiothoracic surgery. We have also begun active marketing of our new expanded label to remove ticagrelor and rivaroxaban in all countries we serve under EU approval. And finally, our ongoing goal is to save more lives from COVID-19 and other illnesses. So that ends our formal remarks. Jeremy Feffer from LifeSci Advisors will serve as the moderator for the upcoming question-and-answer session. Jeremy, please go ahead with the questions from analysts and shareholders.

Thank you, Phil. We have a number that have come in, including some that came in prior to today. So let me start with this one. Please clarify previous statements about manufacturing capacity. Can the current facility handle up to $80 million in revenue and with how much additional capital expenditure? Would HemoDefend manufacturing be in New Jersey or another facility, perhaps with a partner? In the years ahead, perhaps to better serve the European market would a lower tax closer facility in Ireland perhaps make sense?

Vince, do you want to take that?

Sure. With respect to the plant capacity and servicing up to an $80 million market, we do not need to add additional capacity. We have the plant already built out. If you recall some of the earlier quarterly meetings, I had mentioned we had put the second phase in. And so we've built the plant out. We're capable of handling the $80 million business. So with respect to HemoDefend, what I can say about that is we could initially launch out of here. But depending on volume, we would clearly either have to partner up with someone else to manufacture that for us or license it out. But again, this all depends on what the market opportunity is and who may have interest in that product. But we could initially launch from here, but we would not be able to do large volume production out of this existing facility and be running CytoSorb at a high volume as well. And with respect to Ireland and tax benefits, et cetera, those are all options that are out there for sure, and it's a good question. But as you may recall from, again, earlier discussions, our intent was always to start here in the U.S. to control the quality and ability to scale up quickly. We have all our technical folks here. So it makes most sense to do that out of the U.S., at least to have started it up here. I think the other point is with respect to the additional market growth that we expect from the U.S. We would probably continue to expand here in the U.S. to, again, be able to address the North American market. But again, those things will be further considered as we get better visibility to the approval here in the U.S. and then as well as the growth that we see in Europe.

Thank you, Vince. Next question, direct sales efforts seem to be much more manageable, controllable and more profitable than going through weak-performing and unpredictable distributors. Have you now permanently changed your strategy of relying on distributors? What are we learning about hiring, training and productivity of new direct salespeople?

Christian, would you like to take that?

Yes. Thank you, Phil. Actually, I have answered the first part of the question already in the presentation. So that is absolutely right, that of course the direct sales forces can be more efficient. Most of the cases is more efficient than with distributors. We have a number, though, of distributors who are really concentrating on our product. And in this case, they have similar results than direct sales forces. Obviously, the revenues and the margin is higher in direct sales. But also the costs are. So we are very cautious to how we build the structure and always balance the cost and return on investment. At the end of the day, obviously, direct sales force is the most -- the more efficient and also more value for the company. So second part of the question, hiring and training productivity of direct salespeople. Actually, we have a very clearly defined profile for our sales representatives. Most of them have a medical background, have worked as intensive care nurses before, but after that, have gained extended experience in introducing therapies or selling medical products. We have a defined onboarding program where they learn all the important things about the therapy, about the product -- the physical product, but also the therapy as the product we sell to the market. And yes, actually, it probably takes between 6 and [indiscernible] weeks until they get on a good speed. It's not full speed, but depending on the network also, they can perform quite quickly. Maybe that's [ fully ] for the question.

As a -- Christian, there's actually a follow-up to that. Any sense of how many new sales reps you plan to add for the remainder of 2020? And then perhaps in 2021?

We've not been...

[ We will give the answer only ] afterwards.

Yes, we have not -- well, it's not something that we will answer.

[indiscernible]

You covered this a little bit in the prepared remarks, but perhaps a little bit more. What anecdotes can you share as to how CytoSorb has worked on COVID patients in China and in New York City hospitals? What have we learned about how early and when to apply the filtration cartridge?

Well, I think that the -- as Chris mentioned, the experience in China was really the first time CytoSorb had ever been used on a COVID-19 patient. And what we found there was that the types of patients that they were using it on varied a lot. Some patients, they were using it very late. Other patients, they were using it on the earlier side. What we since found is that the earlier that you treat these patients with CytoSorb typically the better that they do. And I think this is true for most of the COVID-19 therapies that have been tried out there. I think once patients are so sick, it's very hard to reverse the course of their illness. So I think that in Germany, and Christian can comment a little bit on this as well, but in Germany, where there has been the most experience with CytoSorb treatment in non-COVID illnesses, that there's been a real trend towards earlier usage of CytoSorb. And I'll ask Christian to comment on that point in just a moment. In the United States where CytoSorb is relatively new and where sites are using it for the first time, they're typically using it similarly to how sites use our therapy for the first time. And it's typically on a very sick patient where they've tried everything, and nothing is -- has worked and trying it as a therapy of last resort. However, what we've seen is that, that rapidly progresses to treating -- to better selection of patients and treating on these patients earlier with the CytoSorb device. But maybe, Christian, you can comment a little bit on that point about early use of CytoSorb in COVID-19 patients in Germany?

Yes. Thank you, Phil. Yes, I have to say when this pandemic started, we knew exactly that this is also the field for us and opportunity to treat patients and learn about the disease and the therapy as well. As you know and this has been discussed earlier during this meeting that the combination of the ECMO therapy which is used in very sick patients with CytoSorb has certain advantages. And we have seen this in a number of sites in Germany as well as in Italy and Spain and France and so on that those patients really benefit. There is one study, which has been mentioned by Makis in the University of Freiburg. It was an ECMO study, which was already prepared for a different kind of patients. So we quickly changed the protocol toward the COVID-19 patients. And I think the recruitment already is more than 50% of the study. So in these kinds of patients, we have patients on ECMO with or without cardiovascular problems or shock. A little bit earlier in terms of respiratory support for patients on ventilators, but having systemic inflammation and so shock, we have treated a number of those patients with or without kidney failure, meaning with renal support, acute dialysis or without. In both types of patients, again, we have seen benefits for the patients and stabilization of the cardiovascular system and the whole shock situation. That's exactly what we see normally also in any of these systemic inflammation patients, including also, for example, in [ cancer ] patients. But over the time, this has been -- the doctors they are so much in need that they started the CytoSorb therapy even earlier in isolated ARDS. So one organ failure only, patients who have been intubated. And they have seen improvements of the oxygenation of the blood here. But even in patients who were not oxygenated, they have been treated with CytoSorb, and there has been an improvement of oxygenation of the blood. All of these anecdotal or case series results obviously need proof with real studies. But we can see that so many different severities or acute statuses of the disease can be treated and have different positive impacts or effects on the patient. Maybe this is answering the question.

Shifting gears, what kind of device competition exists in the U.S., such as from similar filtering devices or from ultrafiltration? Does our IP provide high barrier to entry for the planned indications?

Yes. In the United States, there are only a handful of extracorporeal blood purification technologies that have received FDA emergency use authorization with a similar concept in mind in terms of reducing cytokines and treating cytokine storm. One system is the Terumo BCT. So this is not Terumo Cardiovascular, the division that we partner with, but Terumo BCT, which produces apheresis equipment, primarily for the blood transfusion industry, but that apheresis equipment is sometimes used in the intensive care unit to treat patients with autoimmune diseases like Guillain-Barré syndrome and others. They received emergency use authorization of their product and coupled with a sorbent technology to cleanse the plasma of cytokines. This is a very similar concept to couple plasma filtration and absorption that was marketed by Bellco and Hemolife in the European Union. And Hemolife, actually went bankrupt. They -- despite having CE Mark approval, their system was not as easy to use or sophisticated as ours. And then in terms of Bellco, our work with Aferetica has essentially displaced CPFA throughout Italy because it is not unlike CPFA that was very device-specific that only worked on the Bellco or Infomed machines, CytoSorb could be used on any dialysis machine from any manufacturer in Europe, and our system was significantly simpler. Instead of using 3 cartridges -- a 3-cartridge system, our system only uses 1 cartridge, and its very simple blood in, blood out. So the interesting thing about CytoSorb as it relates to the Terumo apheresis machine is that CytoSorb is plug-and-play compatible with really the mainstream blood purification technologies and extracorporeal blood pumps found in the ICU today that are treating COVID-19 patients, which are typically continuous renal replacement therapy or dialysis machines and also extracorporeal membrane oxygenation machines used to help support patients with refractory respiratory failure. A second technology is one from a company called ExThera. It's a private company that has received EU approval for their solid polyurethane heparin-coated beads. And to remove bacteria and pathogens, actually, it's really to remove bacteria primarily in dialysis patients, but it has the ability to remove some cytokines and some toxins as well because of the heparin coating of these beads, and it is capable of binding other substances that have a heparin-binding domain. But it's definitely not as robust of a cytokine absorber as ours is. Our porosity is 7 football fields of surface area in a single cartridge where their product is really very limited on the order of single-digit square meters of surface area roughly in a single one of their cartridges. And so if you look at the data between ExThera's device and ours, ours is -- there are many, many, many papers, more than [ 100 and, I think, 40 ] peer-reviewed journal articles on the use of our therapy in critically ill patients versus not many at all in ExThera's case. And then the other product is really Baxter's oXiris product that recently received CE Mark label expansion to remove cytokines. This is a product that Baxter acquired through its acquisition of Gambro. oXiris was originally launched in 2009 as an endotoxin filter to treat gram-negative septic shock. It was not actually approved or intended to remove cytokines at that time. But they've since generated some data showing in vitro that it can remove cytokines. And now they're marketing it as a cytokine absorber. Baxter, I think, benefits from having a well-installed base of machines throughout the country. But we believe that CytoSorb, if you do a quick PubMed search on CytoSorb and oXiris, you'll see the difference in the kinds of uses of CytoSorb versus oXiris, and you can make your own judgment about that therapy. So that's generally -- and in terms of the intellectual property, we have a very strong 21 issued U.S. patent portfolio, helping to protect our underlying fundamental technology. And we believe that it is quite a formidable IP estate.

Staying on the topic of competition, how about relative to new drugs in development against cytokine storm? And also have you coordinated with any lab companies already testing cytokines, for example, Luminex?

Yes. So in terms of drugs and biologics, it really -- the immunomodulatory field is really focused on the biologic's drugs like Anakinra or tocilizumab or also called ACTEMRA, which is an IL-6 receptor antagonist. And the goal of these therapies is to try to reverse a single cytokine. And if used early enough, there have been certainly cases in both COVID-19 patients, for example, but where it got its first start was really in the treatment of cytokine release syndrome in CAR T cell immunotherapy. And where there's often a very significant turnaround of patients when used early enough. But in cytokine release syndrome, it's -- I'd liken it to watching the waffle iron light. You give a therapy.

I'd drink it. But I don't need it -- well, I wouldn't make more. Thank you, [ Sud. ]

Your -- I'm sorry, if everyone could go on mute there, that would be great. But in cytokine release syndrome, you're giving the CAR T cell immunotherapy, you know roughly when the cytokine release syndrome will take place. And that patient is hospitalized, and you're watching them very carefully to give the IL-6 receptor antagonist at the right time. However, as we see in sepsis and in COVID-19 patients, patients often have passed the window of where the active intervention with a single cytokine antagonist will help. And the nice thing about CytoSorb is that it is a broad-spectrum absorber of cytokine. So not only does it reduce IL-6, IL-2 and others very efficiently, it removes a broad range of other cytokines, dozens and dozens of cytokines that can contribute to cytokine storm. And interestingly, one of the hallmarks of COVID-19 therapy is a hypercoagulability and tendency to clot. Not only do they develop deep vein thrombosis and pulmonary emboli, so clots in the major vessels, but they're very prone to a thrombotic microangiopathy, which is the formation of tiny clots in the capillary beds of vital organs like the lungs, the kidneys, and others. And that clotting is often caused by endothelial injury. So injury to the blood vessel wall caused by cytokine storm activated complement and other factors that CytoSorb can actually remove. So these patients often show up in a hospital, very easy to ventilate, but profoundly hypoxic, meaning very low oxygen levels because they've clotted off a large part of their lung, and that's no longer contributing to gas exchange. And so the interesting thing is that CytoSorb, if potentially used early enough, may be able to help abort that process. And that is something that may contribute to why, as Christian mentioned, early use of the therapy even before one would typically consider usage, has been shown to be helpful, at least anecdotally. Yes. So hopefully, that has helped to answer the question.

Next question. Please give us a sense of R&D efforts in terms of the 2020 through 2022 budget and major efforts? Are new patents being filed to extend the technology? Will the bead technology be enhanced in the next few years? If so, how?

Yes, there's a lot of background noise. I think someone who's on the call is not on mute. If everyone could go on mute, that would be great. So we've not really detailed what that R&D expense will be. But primarily, it will be focused on clinical research and being put towards randomized controlled studies and small pilot studies to help advance CytoSorb as a standard of care. Most of our preclinical R&D is subsidized by the U.S. federal government with more than $30 million in grants and contracts and other nondilutive funding that have helped support the technology over the years. And so as Kathy mentioned before, most of our actually ongoing expense beyond operating breakeven is clinical trial expense. So -- but we have a goal of continuing to fund not only these clinical studies but, as was mentioned in the question, funding also an expansion of our intellectual property portfolio. Currently, we have a very broad patent -- pending patent application portfolio that is under prosecution all over the world in a variety of different applications, and we will continue to do so to invest in this area.

Okay. Next. Can you take us through the steps necessary to receive BARDA funding? I see there are about 35 companies that have received grants. Why does this take so long? And what is the process?

Yes. So BARDA and the joint COVID task force that includes agencies like HHS, the FDA, CDC and other major organizations that are helping to manage the COVID-19 pandemic have basically solicited proposals through a broad agency announcement that we responded to. We also submitted to the main mechanism for the -- that would allow for the evaluation of technologies by BARDA and the joint COVID task force. We were actually invited to present at a corona watch at which we were notified that our technology was classified as highly relevant for the treatment of COVID-19. This is a very specific term that BARDA uses that enables companies to be eligible for funding. And this was prior to getting FDA emergency use authorization. So I think what BARDA has rightly done is to focus a lot of their efforts on the development of vaccines and antiviral therapy, which are really the mainline therapy needed to prevent millions and millions of people from getting sick in the first place and thereby helping prevent them from getting so sick that they wind up in the hospital then incurring huge financial and personnel cost. So -- but what we would note is that vaccines and antiviral therapy are not the whole solution. Certainly, in influenza, that's seasonal influenza I'm talking about, just this past season alone, 40 million people, according to the CDC, were infected by flu despite the wide availability of antiviral and vaccines for flu. This also led to approximately 400,000 hospitalizations and 24,000 deaths alone from seasonal flu this year. And the number of deaths in the United States can be upwards of 80,000 to 100,000 deaths for very bad cases of seasonal influenza like we saw in a number of different epidemics in the past. The numbers of people who die every year of seasonal influenza worldwide has been estimated by World Health Organization to be upwards of 600,000 to 1 million patients who die every year around the world. So if you compare that with COVID-19, you see that they are fair -- that COVID-19 still is only a shadow of what seasonal influenza can do. So -- but coming back to BARDA, they've rightly focused on the use of vaccines and antiviral therapy. But we -- because of what I just mentioned in influenza, these people who get viral pneumonia get very sick. And there really needs to be technologies funded and developed that can treat life-threatening illnesses and complications of these life-threatening illnesses. And that's where CytoSorb plays, and I think that it's just a -- BARDA's response so far has been one of prioritization, but I think that there's still plenty of opportunity here to have something funded by BARDA, and hopefully, we'll hear soon.

Can you take us through the steps for gaining approval for ticagrelor in the U.S.? What does the timeline look like?

So I think as Makis mentioned earlier, we are in active discussions with the FDA. We're expecting to have feedback from the FDA on the regulatory path forward, and we'll have more detail on that in the future when we have more information.

And then as a follow-up to that, I guess, for Chris, what are the partnership opportunities you're seeing for ticagrelor, both in the U.S. and outside the U.S.?

Phil, do you want me to take that? Or do you want to?

Okay. Go ahead.

Yes. Thank you. I think that, as you know, we've -- of course, now ticagrelor is on label. And it is a -- represents a blockbuster drug right now for AstraZeneca. We believe that there would be potential interest for the same people that prescribe ticagrelor to have a product like ours at their disposal. So I think that we are looking at ways to connect with the right people at the organization to potentially look at how we might work together to better get that message out to potential customers. So I think there would be mutual support for that kind of idea.

Yes. But I also think that this is a great application for cardiac surgery companies, and we know that the major companies have been following our progress in this given how much of a pain point the use of blood thinners in this population are. And the fact of the matter is that ticagrelor will go up patent in -- just in 2024 and will become -- and there are currently probably 9 or 10 companies that have ANDAs for generic ticagrelor, pending the expiration of these patents. And so I think there's going to be a lot of opportunity here with ticagrelor. It's been limited to date because of the cost compared to Plavix. Plavix is generic and cheap, and one of the reasons why it's used widely despite being an inferior drug based upon clinical data outcomes to ticagrelor. But I think going forward, as the cost differential decreases, as ticagrelor goes off patent, it is a trend that will only benefit, we believe, CytoSorb as ticagrelor is likely to take over as the only truly reversible antiplatelet agent out there because of CytoSorb.

Does the filter have to be specially treated to remove antiplatelet and anticoagulants? How can the filter be monitored for excessive removal of needed cytokines for normal function?

So no. The CytoSorb cartridge is -- just works out of the box to remove ticagrelor and rivaroxaban very rapidly and easily during cardiac surgery. The technology typically works based on 3 principles. One, you have to be the right size and are removed by pore capture. Two, we only remove primarily hydrophobic substances of which many proteins have a hydrophobic nature to them. But the third principle is one based on concentration, and it's a law of physics. The greater the concentration something is, the greater the diffusion force pushing molecules into the pores of our beads and, therefore, the more we remove and that when cytokines, for example, drop in concentration, the therapy often just by law of physics self-titrates itself and turns itself essentially off, not quite. But -- so at lower levels, it is reducing not much of cytokines at all. And so it's a very important inherent safety feature in the technology because you don't want to ablate the cytokine response because your cytokine response is helping keeping your immune system functioning, which is very important in healing, important in fighting hospital-acquired infections like MRSA and ventilator-acquired pneumonias and catheter-related infections. And it's your immune system that's helping keeping you alive. So having an even elevated amount, but not toxic amounts of cytokines on board is very helpful. So -- and thankfully, CytoSorb when used in most therapies works in that manner.

Here's actually one I received by e-mail. Please comment on the research and use of the filter to remove hydrophobic molecules in a poison situation. Also any research on fentanyl removal from blood?

What was the last question, the removal of sentinel?

Any research -- fentanyl.

Sentinel?

Fentanyl, the opioid.

Fentanyl. Fentanyl. I apologize. All right. So the therapy because of its ability to remove hydrophobic drugs has been used actually in a number of very successful cases of treatment of drug overdose, particularly when those drugs have been hydrophobic, and these include overdoses related to, for example, antidepressive medication and others. And so in terms of opiates, we do not have good data on the removal of opiates like synthetic, opioids like fentanyl and other -- morphine and other things. And it is not clear that we remove it. So for the treatment of opiate overdose, for example, the standard therapy is to give Naloxone as an opioid antagonist, and that is really the mainstay of treatment. The removal -- the -- as long as you can antagonize the effects, the opioids will wear off over time. And -- but you can reverse the respiratory depression and the other potentially life-threatening complications of opiates with Naloxone. So it's really not necessarily a therapy that is -- it is not an overdose that is in need of a therapy such as ours. But it's a good question.

How about the sales situation for the veterinary use of the filter, also organ harvesting in Italy?

So we'll have an update on the organ harvesting application in Italy soon. In terms of VetResQ, the therapy is actually in use by a number of veterinarians throughout the country and actually showing very good success in the treatment of animals with specific types of illnesses, particularly dogs. And so we generate a small amount of revenue from the sales of that, but it is not really consequential in terms of our overall revenue base.

Then there's a follow-up here. On the subject of BARDA, what is the expected cost of the [ check ] COVID trial in the U.S.? If BARDA decides not to fund, would the company still likely proceed with the trial on its own?

So the trial is actually designed to potentially support up to hundreds of patients enrolled into that study. And so we've made a proposal to BARDA on what that would cost. Now one of the conundrums that companies have in investing in COVID-19 is that if you have a -- if you have a therapy, for example, like a vaccine that is being developed or an antiviral therapy that is being developed specifically for COVID-19, once COVID-19 ends, there's no more commercial market for that application. And because of that, then all the money that have been spent are wasted essentially. Certainly, there's an opportunity to potentially repurpose that drug for something else, but there's no guarantee that, that will work in the future. And so using CytoSorb for the treatment of COVID-19 patients is a risk in terms of spending a lot of our own company money to do that, which is one of the reasons why we've requested BARDA funding. And this is really a public health emergency, and we believe that this is a -- the patients on -- who wind up on ECMO are extremely sick with a very high mortality, and if -- and there are no real effective treatments to help these patients. And if we can get them off ECMO, which we've already in anecdotal experience have many patients who have actually come off of ECMO that have been treated with CytoSorb, we believe that it could have profound health implications for not only U.S. citizens but patients worldwide. So we'll wait to see what BARDA decides, and then we'll make our decisions accordingly.

Has the filter been used in Israel? And is there a reimbursement code in Israel for the use?

Christian, could you answer that question?

Yes. Thank you, Phil. Yes, the absorber has been used in Israel, and the reimbursement situation is being discussed at the moment with the authorities. And there will be actually steps throughout this year. That's what we can say at the moment.

I think the thing just to point out is that COVID-19 is very recent. Just in the United States, it's only a few months really old. And people are -- and companies are having to try to cram what would normally be years of development into a very short time frame. And so the fact that we have data at all is quite remarkable, but the goal here is to get as much data as possible through a number of the means that Makis had talked about earlier.

As I scan through the questions here, it looks like the remainder are variations of questions that have already been asked and answered. So it doesn't look like there are any other new topics here.

Okay. Well, any -- do you want to wait just for a few moments to try to get some additional comments?

Sure.

Well, what we can do is that if you have -- I'm sorry. Was there another question?

Yes, sir. Go ahead. No, no new questions yet.

Okay. Well, if there are any additional questions, we'd be happy to try to answer them. So please funnel those through Jeremy at Jeremy Feffer -- the e-mail address is on screen here and just reach out to him, and he'll get those questions to us. But thank you, everyone very much for your interest in Cytosorbents and for your attendance today at our annual meeting. We hope to catch up with all of you soon in person. Hopefully, that will happen in the near future. Take care, everyone. Have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.