Cytosorbents Corporation (CTSO) Earnings Call Transcript & Summary

Thank you very much, Alan. And allow me to take this moment on behalf of the management team and the company employees to thank the Board for their committed support of the company and its people and tremendous guidance through good times and bad. Also allow me to thank our many service providers, including those present here on the call today, including Morgan Lewis, our SEC counsel, WithumSmith+Brown, our accounting firm, and Broadridge. With that, allow me to cover this next slide on our leadership team. I'm very fortunate to serve with some of the most dedicated and talented people that I know of. And it's been a great journey thus far. But each of these people here will be actually be talking today, and I will give them an opportunity to actually introduce themselves as -- and say a little bit about themselves as they enter into their comments. So what I wanted to start with is the future of Cytosorbents. And I think as many of you know, who've been with our company for a long time that our opportunities abound. Cytosorbents is currently in 68 countries around the world, including all of the European Union, many, many countries in Asia, including Russia, India, South Korea, Singapore, Vietnam, Hong Kong, Middle East, Israel, Australia, New Zealand, South Africa, all of Latin America and also in the United States and in Canada under Emergency Use Authorization. CytoSorb is helping to target deadly conditions that afflict millions of people around the world every single year. And we have 2 major verticals, one in critical care, where CytoSorb is designed to try to treat the uncontrolled inflammation that can spiral out of control, leading to failure of vital organs and death in a wide range of life-threatening illnesses such as sepsis, influenza, COVID-19, lung injury, trauma, complications of surgery, burn injury, cytokine release syndrome and cancer immunotherapy, liver failure, pancreatitis and many others. And on the cardiothoracic surgery side, CytoSorb is helping to deal with highly invasive surgeries with -- that have a major risk of bleeding, have a risk of shock, severe inflammation, infectious sepsis and others, particularly in the area of removing blood thinners or antithrombotic agents that can cause potentially life-threatening perioperative bleeding in cardiac surgery. We're helping to control inflammation in high-risk cardiac surgery procedures. We're helping to deal with postoperative infection and shock. We're helping to stabilize patients who are suffering from infective endocarditis. And the reason why we do -- can do all these things is that CytoSorb is a very powerful instrument to help treat deadly inflammation and other life-threatening conditions. And that we're also riding many of the macro trends in health care, whether or not it be the aging population, the aging baby boomer population that has a high-risk of cardiovascular disease, one of the leading killers in the world, trauma, such as from falls and also from sepsis, which afflicts predominantly those over the age of 65. It is age agnostic, but those over the age of 65 are -- have a very high-risk of developing sepsis, which accounts for 1 in every 5 deaths around the world every single year. Or it could be because of the use of blood thinners, particularly in people who have had a history of heart attack or stroke or atrial fibrillation, who can be on these blood thinners chronically as blood thinners help prevent recurrent strokes and heart attacks. But when those people are in an emergency situation, such as a car accident or have to undergo the knife for cardiothoracic surgery, orthopedic surgery, neurologic surgery, et cetera, they can bleed very badly. And this is another area that we can help. Or if it's in the 1 in 11 people around the world who developed chronic liver disease from either alcoholism, obesity and fatty liver, often called NASH, or from viral hepatitis. Or if it's from influenza, which afflicts hundreds of thousands of people every year across the world, very similar to COVID-19, which we all are very familiar with. Or if it's a major trend like the opioid crisis in the United States that because of the use of dirty needles is leading to an epidemic of heart valve infections called endocarditis where CytoSorb can help stabilize those patients. So our results reflect our potential and hard work, whether or not it's the 131,000 cumulative treatments that we've now shipped to date or the 81% blended product gross margins or the 200-plus employees that we or the $68.5 million in cash that protect our future and allow and give us the capital to grow or if it's the $41.4 million in trailing 12-month sales of CytoSorb. We believe there's much more, however, that we can accomplish. And our confidence is reflected in our investment and expansion, and this includes Cytosorbents' new headquarters and manufacturing facility in Princeton, New Jersey on College Road. And it also includes Cytosorbents' new European Logistics Hub in Berlin, Germany, as you can see below, these are we were talking about how do we scale this business to exceed easily $100 million in sales or at least a target of more than $100 million in sales and even more in the future. And of course, we cannot do this without our people because it's these amazing people, these more than 200 people who are contributing every day to the success of this company, who will get us there. With that, let me turn it over now to Kathy Bloch, our Chief Financial Officer. Kathy?

Thank you, Phil, and hello, everyone. Thank you for taking the time to be with us today. Thanks for your support, the shareholders on the call and those of you who are listening at home. I'd like to just start with a quick introduction. So just been the CFO of Cytosorbents for 8 years now. I joined just when we began to commercialize our product in the EU. So I've seen lots of growth in sales and in our structure and our organization over that time. I am a CPA and an MBA. And of course, my main job at the company is SEC financial reporting and compliance as well as maintaining and improving our systems of internal control. And in addition, I have the pleasure of working with Phil on investor outreach. Prior to joining Cytosorbents, I was a CFO for more than 20 years, immediately prior with Laureate Biopharmaceuticals, which is a Princeton, New Jersey based contract manufacturer. We successfully marketed that business, and it is now part of Thermo Fisher. And then prior to that, for 10 years, I was the CFO at the Silver Line Windows. We grew that business from $100 million to $750 million in the 10 years that I was there and ultimately sold that business to Andersen Windows. So today, I'll talk about how well positioned Cytosorbents is for growth. I'll provide a brief overview of our financial progress, including our growth in sales and other indicators of financial health and value, including the company's strong balance sheet. So this slide shows our product sales growth, and it continues to translate into strong trailing 12-month comparables. For the 12 months ended March 31, 2021, our trailing 12 months product sales were approximately $41.4 million, which is a year-over-year increase of 57%. Now the COVID-19 pandemic has increased the public's understanding of the problems associated with cytokine storm, and it has resulted in growing awareness of and interest in CytoSorb. And this awareness has helped fuel our growth in the trailing 12 months ended March 31, 2021, and it is expected to fuel future sales growth in our core markets. As the COVID-19 pandemic is contained, we expect to be able to return to in-person hospital selling, which we have had to suspend during the pandemic. And I know Christian will comment on this a little bit later on. I'd also like to point out the green bar on this slide, which represents our blended gross margins for the first quarter of each year. And as you can see, our gross margins continue to increase year-over-year as we achieve more and more manufacturing efficiencies. In fact, the first quarter of 2021, our blended gross margins, excluding onetime nonrecurring expenses, were 81%. The year-over-year improvements in our gross margins have been impressive, and we expect these to [ further improve ] especially once our new manufacturing facility is fully operational. Next slide, please. On this table, we'll take a look at some of our year-over-year key metrics of performance. And we've already talked about the top 3 rows, our trailing 12 months product sales and gross profit. But what I can say from my perspective as CFO is, we are a very different and a much stronger company than we were even just 1 year ago, especially with regard to our March 31, 2021, cash position of $68.5 million. Now to put this amount of money in context, if we did not have clinical trial expenses, we would be operating at a cash flow positive basis in each quarter of 2020 as well as the first quarter of 2021. The cost of our clinical trial activities is estimated to be approximately $3 million per quarter. So those are the only costs that are not yet covered by our operations. Therefore, we believe that our cash reserves are wholly adequate to meet our operating needs until we reach GAAP operating cash flow breakeven, which we expect to achieve within the next 2 years. We have no debt outstanding at the moment, having repaid our $15 million term loan in December 2020. We do have the ability to draw down on a new $15 million term loan with Bridge Bank, but it's unlikely that we would need this, given our current cash balances and expected operating needs. Our market cap grew substantially from 2019 to 2020 and has remained relatively stable from 2020 to 2021. While the overall market has been positive over the past year, small-cap growth stocks like ours may be negatively impacted by the expected higher interest rate environment, which makes discounted cash flow analysis value of these types of companies less today than it would be in a relatively lower interest rate environment. Next slide, please. And lastly, some conclusions about our working capital outlook. Given our strong cash position of $68.5 million at March 31, 2021, we believe the company is very well capitalized. Our reported operating losses are now a direct result of our investment in clinical trial activities, which, of course, if successful, will have their own return on investment in the future. Our cash on hand provides adequate funding to execute on our robust clinical and commercialization plans over the coming years and we believe we have enough cash to provide a runway to GAAP operating cash flow breakeven, and we expect to achieve that within the next 2 years. And once we achieve operating cash flow breakeven, given our 80-plus percent gross margins, we expect to then generate strong cash flows from operations, which will continue to increase as our sales continue to grow. And that concludes my remarks for today. And now I'd like to turn the call back to Phil. Thank you.

Thank you, Kathy. And now let me turn the floor over to Dr. Christian Steiner, Executive Vice President, Sales & Marketing. Christian?

Yes. Thank you, Phil. Good morning, everyone, mainly in the United States, and good afternoon to the European investors. And of course, as well good evening to Asia. My name is Christian Steiner. I'm serving as -- the company as Executive VP, Sales and Marketing for the Corporation and as Managing Director for the commercialization of the other companies, Cytosorbents Europe, Cytosorbents Switzerland and Poland. I have joined Cytosorbents in 2011 and since then, have built a commercialization part of the company and developed the business to better visibility. So my first slide shows one thing, Cytosorbents is carrying an excellent true story. Having started with a totally unknown therapy, not to speak about the brand, we have achieved now an accumulated number of CytoSorb treatments of more than 131,000. This reflects also the strength of the last 12 months, which increased the number by almost 50% since April 1 last year. Next slide, please. If you look at the number of treatments per 12 months, you can see that the growth rate of performed CytoSorb treatments has almost doubled compared to the 12 months before. The last 15 months were characterized by the COVID pandemic, which has negatively impacted so many businesses, including ours. But the positive effects balance this for us, and we see an interesting growth picture when we separate the COVID-related business and our core business. Next slide, please. In total, we could accelerate revenue growth rate in the last 12 months to almost 60%, while the overall revenues of the medical device industry declined. COVID-related treatments and business helped in this development, but also the revenue growth rate of our core business in critical care, cardiovascular and in liver diseases, climbed from 21% to 31%. The Cytosorbents' revenue CAGR of more than 35% is significantly higher over the last 4 years compared to 46% of the medical device companies. And as you might have noticed before in the charts, the incline of the treatments and the product revenues were almost permanent. And that is because of very stable ASPs, and this, of course, can be translated into high gross margins. The current core business growth is mainly based on increasing penetration, supported by geographical expansion. Also, the COVID pandemic has impacted the business in certain ways. And there are quite a number of effects we have to look at when we discuss this. Next slide, please. So here, I have divided the different effect of the pandemic in the last 15 months on to 3 different slides. I'm going to start with the short term, the midterm and long term. And as you can see, we have treated in this pandemic more than 6,000 patients worldwide for this disease. And this obviously led to additional revenues, we would not have otherwise. On the other hand, restrictions in access to customers and hospitals as well as less patients because of down of elective program -- surgery programs has led also to loss of business in the core indications. CytoSorb therapy also was endorsed because of this COVID pandemic, different therapy guidelines for these patients in different countries. And based on this, also, we could achieve a number of additional registrations in countries like in the United States, in Canada, Israel and India, which were dedicated to COVID critical care patients. The next slide shows the midterm effects. As I already mentioned, we had a decrease of patients in our core indications. But as we see the pandemic fading, we can expect that there is a ramp-up of elective surgery programs, which were down in Europe, 30% to 40%. This, obviously, will lead to more patients for us. And also the usual incidences of pneumogenic sepsis, influenza and other lung diseases that was very low in this time because all the people were wearing marks. And last but not least, many of the ICU capacity of beds have been blocked for COVID patients. And as soon as the pandemic is fading, these ICU beds will be available for the core indication patients again. Then we had to suffer a lot from restricted access to our customers. So it was almost impossible to acquire new customers. This will reverse effect in midterm because when we have access again to our customers and potential customers, of course, we will be much more effective in expanding the business and also in expanding the business with existing customers. Last but not least, due to the pandemic, a lot of programs had to be stopped. This includes clinical programs as well as commercial programs. And in terms of commercial campaigns, we were kind of slowed down in the antithrombotic removal campaign as well as in the liver field. Next slide, please. I also see long-term effects of the COVID pandemic for our growth. So what we have seen there is a significant awareness increase for the CytoSorb therapy all over the world. Because cytokine storm as acknowledged target of therapy now, it has automatically led to CytoSorb therapy as one of the options to attack the cytokine storm. Based on this, we also got additional registrations, as I said before, and we expect that some of them will be effective even after the pandemic. And also because of the pandemic and we were stuck to home offices, the sales forces could not travel and so on, we had to organize our processes, but also our organizational structure to adapt to these changes. And some of these changes will stay even in the new normal. And because we had so many adaptations, I think we can benefit from this even after the pandemic. In the last slide, I summarize a number of points, which probably have been said already, but shows that the company is ready for more growth and further growth. We have an exceptional team in all different fields with lots of experience and skills. We have started to build a new production in Princeton, New Jersey. We have expanded our capabilities and logistics out of the U.S., namely in the Cytosorbents Logistic Hub in Berlin, Germany. And we have started to use a lot of different sales and marketing channels we have not so much used before. This includes, of course, social media. This includes net-based events and so on and so. And because we have more potential markets to come and to serve, there is a number of markets which are just in the beginning. And these includes very high-profile markets like Singapore, Brazil, South Korea, but also others. The campaigns we have started before the pandemic, but which were on hold during the pandemic, like an antithrombotic removal as well as liver support, will continue and will reach the results we are expecting. A number of other application fields are currently being prepared, and we will record about this when the time is right. Next slide, please. I show this slide always to my people and to our teams because it reflects what I think about the therapy. This therapy is really so amazing and is a gift. And we want to translate this gift for the patients and to welcome to save lives. Thank you very much. Back to Phil.

Thank you very much, Christian. And now to turn it over to Dr. Makis Deliargyris, Chief Medical Officer. Makis?

Thank you, Phil, and good morning to everyone on the call. My name is Makis Deliargyris, and I joined Cytosorbents approximately a year ago to serve as Chief Medical Officer. My background is that of a physician. I'm triple board-certified in internal medicine, cardiology and interventional cardiology. And over the past 20 years, I've split my time between academic medicine and industry, always with a focus in acute cardiovascular and critical care and a particular focus in the development and commercialization of antithrombotic therapies. My job here at Cytosorbents is to set the scientific, medical and clinical standards for our global medical teams and to generate the clinical data that will lead us to FDA approval and to also drive the business worldwide. And I'd like to spend the next couple of minutes reviewing our important updates and generate some enthusiasm around our programs going forward. Next slide, please. We continue to maintain a dual path to U.S. FDA approval. As such, we have 2 pivotal studies. First, the REFRESH 2 study, which, again, is actively enrolling patients. We have enrolled 154 patients to date. The resumption of the study took place in the first quarter of this year, and we already have more than half the sites of the study actively screening and enrolling patients, and we expect the remaining sites to be activated by the end of the second quarter. The next milestone for that trial is a prespecified interim analysis. However, our top priority has shifted to ticagrelor removal STAR-T study. We developed an investigational plan and a clinical protocol in the spirit of the breakthrough designation that was granted for this application last year. We plan to generate the clinical data that will convincingly demonstrate that our device can address a very important unmet medical need. We submitted our investigational plan to the FDA and received conditional approval last April, which basically gave us the green light to initiate STAR-T study activities. We have already identified the sites in the United States that will enroll patients and have begun these initiation activities, including submission to IRBs and initiating the site contracting. We have selected the vendors that are going to help us execute this study, and we have established the study committees, including the Executive Committee, the data safety monitoring board, and the Clinical Events Committee. We expect that the FDA will grant us full ID approval imminently, and we plan to enroll our first patient in the upcoming quarter of this year. All in all, we believe that STAR-T represents the lowest risk and fastest path to FDA approval and will also set the precedent for upcoming trials to unlock the full antithrombotic removal opportunity. Next slide. We are very fortunate to have 2 luminaries in cardiovascular medicine leading the STAR-T trial, Dr. Michael Gibson, an interventional cardiologist, who's Professor of Medicine at Harvard Medical School, also the President and CEO of the nonprofit Baim Research Institute, formerly known as the Harvard Clinical Research Institute, and also the founder and Editor-in-Chief of Wikidoc.org, which is basically the Wikipedia version for health care professionals. Dr. Gibson has been instrumental in the development of novel antithrombotic agents and has served either as principal investigator or executive committee member in multiple pivotal studies leading to FDA approvals, including approvals of prasugrel, marketed as Effient; rivaroxaban, marketed as Xarelto; betrixaban, market as Bevyxxa; and also the reversal agent andexanet alfa, that's marketed as Andexxa. Joining him at the helm of the study is Dr. Michael Mack, the cardiothoracic surgeon. Dr. Mack is Chair of the Cardiovascular Service Line at Baylor Scott & White Health. He's also the President of the Baylor Scott & White Research Institute. And he's considered to be the pioneer of the heart team approach. This heart team approach reflects real-world care of cardiovascular patients that many times require the attention of an interventional cardiologist and a cardiac surgeon. And it's exactly that approach we're also taking for the STAR-T study. Dr. Mack has either served as principal investigator or executive committee member in multiple transcatheter valve device pivotal studies leading to FDA approvals, including the SAPIEN aortic valves -- the SAPIEN aortic valve replacement system from Edwards and also the mitral flip -- mitral repair system from Abbott. Next slide, please. 2021 is going to be a rich year in clinical milestones. In addition to the pivotal U.S. FDA trials, the STAR-T and REFRESH 2, we have another list of important clinical studies that will all reach important milestones in 2021. We're continuing to take a complementary approach to data generation, utilizing randomized clinical trials, real-world registries, but also single arm studies. In regards to our cardiovascular vertical, in addition to the STAR-T and REFRESH 2 studies, we have recently begun enrolling patients in CyTation trial, a multicenter trial in Germany, meant to provide us additional information for the clinical value of removing ticagrelor in cardiac surgery patients. And we're planning to enroll the first patient in the third quarter in the STAR Registry, a real-world registry, international registry in Europe meant to capture clinical outcomes associated with the antithrombotic removal in cardiac surgery patients, but also establishing the true economic value that can be generated by removing those drugs in these high-risk situations. Importantly, we also have 3 high-profile programs in critical care, all 3 of which also have important milestones this year. PROCYSS, a large multicenter clinical trial -- randomized clinical trial in Germany, looking at the benefits associated with CytoSorb treatment in patients with sepsis. We are confident that we'll have patients enrolled before the end of this year in the PROCYSS trial. The HepOnFire trial, it's also a multicenter study in Germany, that's going to provide us the first level of clinical evidence associated with the potential benefits of CytoSorb in patients with acute liver failure. We believe that this study will provide the necessary framework to further develop this application in our clinical program. And finally, our CTC registry, which is about to report top line results from the use of CytoSorb under the EUA, the Emergency Use Authorization, for COVID-19 patients granted by the FDA last year, which will then transform into a global registry in critical care, beginning to enroll patients also before the end of this year. It's important to note that all these programs have either achieved their milestones or are on track to achieve their milestones in 2021. Next slide, please. In order to execute on our clinical plan and achieve our clinical goals, we have made some key clinical hires on the team this year. Let me introduce you to 3 of them. Dr. Victoria Lee, who's the Director of Clinical Affairs. Dr. Lee is a vascular surgeon that has previously served as Associate Medical Director in Syntactx, a cardiovascular device specific CRO, but also as a consultant with McKinsey. Mr. Ed Tumaian, our new Head of Global Clinical Operation. Ed came in as Executive Director, bringing in more than 25 years of experience in clinical development and operations, with leadership positions previously held both with CROs, such as Quintiles and Parexel, but also with large pharma companies such as Novartis, AstraZeneca and Sanofi. Ed's contributions were critical in the life cycle management of multiple blockbuster drugs such as Prilosec, Nexium, Plavix and Gleevec. And finally, Hans Kroger, our new Senior Director of Biostatistics and Data Management. Hans brings more than 19 years of experience in Biostatistics and Data Management, and has previously held leadership roles at Sun Pharma, PTC Therapeutics, Sunovion and PRA Health Sciences. Next slide. So I'd like to close with a summary that hopefully will generate as much enthusiasm to our investors already has in our internal teams here in the company. We have a robust clinical plan that will drive growth in the future. First, by unlocking the U.S. market with FDA approval for ticagrelor removal in cardiac surgery. We will do that by executing on the STAR-T study. We have a world-class team in place that will ensure they're efficient and fast trial execution. We plan to quickly follow with a second U.S. study, investigating ticagrelor removal that will leverage all the existing framework that STAR-T has in place. Importantly, we're already developing the health economic models that will validate the very large value proposition associated with antithrombotic removal and bleeding reduction in patients undergoing cardiac surgery in the U.S. practice. We're doing all that work in close collaboration with faculty from the Johns Hopkins University. We will also drive the business by generating important data in critical care and cardiovascular medicine. As previously stated, the CTC registry will be reporting multicenter data with the use of CytoSorb plus ECMO in COVID-19 patients. The PROCYSS trial will provide large randomized data from Germany in patient with septic shock. The HepOnFire will provide our first level clinical evidence of the benefits associated with CytoSorb in patients with acute liver failure; and our real-world registries, the CTC and STAR registries, will continue to generate evidence on real-world use in order to establish furthermore the broad adaptation of our therapies in those applications. We'll continue to expand our global clinical and medical capabilities and our footprint around the world. Our global clinical and medical team has doubled in size in 2021, and we will continue to grow with the intent of becoming more efficient and driving timely and superior execution of our clinical trials and our clinical goals. It's also very inspiring to see our global KOL advocacy continuously growing and endorsing our therapies and our clinical programs, both in critical care and cardiovascular medicine. So thank you. And with that, I will turn it back to Phil.

Thank you very much, Makis. Now let me turn it over to Vince Capponi, our President and Chief Operating Officer. Vince?

[Audio Gap] I'd like to give you a brief bit on my background. I'm a chemist by formal training. I've been with the company now for 18 years. I have 30-plus years' experience in medical device and pharmaceuticals and working with companies such as Baxter-Sabratek Pharmacy, Deltec and Upjohn. In the 18 years with Cytosorbents, I've had the privilege of leading this company through the CE marking of CytoSorb as well as the other add-on applications. I've had the privilege of leading both our manufacturing, regulatory and quality teams as well as our R&D group with Phil at my side. With the commercialization of CytoSorb, I've been tasked now with leading the commercialization activity as we look forward to bringing the ticagrelor application into the market. Next slide, please. 2020 was a transformative time for Cytosorbents receiving EUA authorization from the FDA for the treatment of COVID-19 and breakthrough designation for ticagrelor removal application. The EUA authorization represented our first commercial opportunity for CytoSorb in the U.S. while the near-term commercialization prospects for ticagrelor removal application created a need for additional infrastructure build in sales and marketing as well as regulatory focus on FDA strategy development. To support this infrastructure build, we brought on 2 seasoned executives, James Komsa, as VP, Sales and Marketing; and David Cox as our VP of Regulatory. Jim is a veteran of medical device sales and marketing with more than 25 years' experience in both startup and large established medical device companies such as Philips and Medtronic. At Medtronic, Jim was VP of Cardiac and Vascular Group. He was responsible for pacers, valves, stents and the cardiac surgery business. Given Jim's success in the cardiac business, he went on to lead the Interventional Spine and Restorative Therapy groups responsible for a number of products and we welcome Jim on board. In addition to Jim, we also brought on David Cox, who brings over 25 years of regulatory experience covering devices, drug and tissue products with most recent experience in Integra LifeSciences where he led regulatory approval in numerous tissue products. David has extensive experience with driving FDA regulatory approvals for Class II and Class III devices as well as CE Device Marketing for sales in the European Union. Class III -- in addition, David has led transitioning product lines from the medical device directive to the new MDR or Medical Device Regulation, which is -- which for side assortments, will become effective in 2024. Both Jim and David are key additions to the team to help drive the commercialization in the U.S. and we're thrilled to have these 2 executives as part of the team. Next slide, please. Moving on to the FDA Emergency Use Authorization for COVID-19. We lacked a commercial arm in the U.S., and we needed to build the infrastructure rapidly. We deployed personnel to create sales function, customer service function and clinical training as well as a clinical -- customer support team, providing 24/7 coverage for our customers. On the sales side, we created 5 distributor network within 3 months, covering more than 70% of the U.S. while in parallel, participating in a number of medical device symposia such as ELSO, AmSECT, ICC as part of our outreach program to build awareness of how CytoSorb can be used in COVID-19. Realizing the importance of data to drive sales with our clinical team, we launched the CTC registry to capture outcomes data, to support publications and ongoing FDA discussions. In addition, this registry provided us an opportunity to approach a number of users to participate and facilitated our initial development of a KOL network. The EUA presented a great opportunity but was also a challenge. And everyone rose to that occasion to make this happen, and we see the results today with our ability to distribute CytoSorb in the U.S. with just a short period to start up. Next slide, please. This represents some of the challenges that we ran into in the market in distributing CytoSorb. As Christian had mentioned, not only were they locked out from the clinics in Europe, we had the same issues here in the U.S. We needed to develop collateral materials, which were clear and concise and presented as much information as possible to -- in order to capture the physician's attention. And through our distributors, we were able to distribute this into their physician networks enabling us to contact physicians and convince many of them to try CytoSorb, and in some cases, we have many repeat users of CytoSorb in the treatment of COVID-19 patients. Next slide, please. The ticagrelor removal opportunity received a breakthrough designation in the U.S. This addresses an unmet medical need to minimize bleeding in patients undergoing cardiopulmonary bypass surgery. We believe the interoperative removal of ticagrelor during CPB represents the lowest regulatory bar and best near-term commercialization opportunity. The use of ticagrelor continues to grow the total addressable market estimated to be at roughly $250 million today, with an upside potential of $500 million based on continued growth and expected patent expiration in 2024, allowing lower-priced generics into the market and driving adoption. In addition to that, we've also adopted a market development strategy to add on additional applications similar to the ticagrelor removal, and this happens to be the removal of direct oral anticoagulant such as Factor Xas or more commonly known as Xarelto, over-doubling the market, provide market opportunity to more than $1 billion. With the recent FDA IDE approval for ticagrelor, we're on our way to this next stage of the strategy. Next slide. As we begin to be focused beyond COVID-19 onto the ticagrelor removal opportunity, we have brought on Jim Komsa, as I mentioned earlier, and taken on a number of initiatives. We're currently evaluating our direct sales and strategy and distributor blended model as a way to cover the U.S. in a cost-effective way, but in a very rapid way, by using some established distributors in this market. We are leveraging available programs through CMS and FDA to take advantage of programs aimed at breakthrough therapy devices for reimbursement and meeting with payers earlier in the process to understand what their expectations are from our clinical trials. With our clinical team, we're engaging with the health economic consultants to build the model that will be used to drive reimbursement discussions. As I mentioned in the previous slide, addition to the DOACs can add significant upside potential, and we are pursuing this in parallel with the ticagrelor opportunity. Moving on to the product pipeline, the next slide, please. We have a number of products that are currently in commercializations. We all know CytoSorb. The most recent one that occurred was the ECOS-300CY in the last half -- in the first half of 2020. This is related to ex vivo organ perfusion in -- ex vivo organ perfusion for transplant. This is a product that we are working with our partner in Italy, Aferetica to roll out in the later part of this year. In addition to that, VetResQ has received more interest from the vet community in the past year. And we're working with several veterinarians to develop data and several app -- critical care applications to support publications and build the story. We will be using additional resources in this area to determine the value of this market and to see how much we can drive sales. In the new products area, HemoDefend-RBC and BGA for universal plasma have garnered significant government support to nearly to the tune of $15 million. HemoDefend continues to move forward with we expect preclinical bench testing to start approximately Q3 of this quarter, followed by an IDE submission later this year as we prepare for the pivotal trial. HemoDefend-BGA has received strong government funding, as I mentioned previously, and we're in the early stages of development of this product, focusing on staff additions and early prototype development. CytoSorb-XL, K+ontrol, Contrast and DrugSorb are in various stages of development. CytoSorb-XL, we've advanced several prototypes into early clinical studies in animals, and we're looking at these results in the near future to determine next steps. K+ontrol has recently received additional support from the federal government to develop this product further. Next slide. This next slide represents some of the operational things that we've done through 2020, starting in 2015. You can see from 2019 through 2020, we actually doubled our output. This was based on the COVID surge as well as growth in our base business, as Christian mentioned. In addition to that, we've been aggressively reducing cost. From 2015 to 2020, we've actually reduced the cost roughly 35%. To address the COVID surge demand, we ramped production to a 7-day 4-shift operation over a 3-month period to address the COVID surge demand. That includes adding an additional production line in that time to address the need. We've also, as I mentioned, had aggressive cost reductions. And as Kathy mentioned, we've improved our gross margin significantly from 62% to 82%. With a new facility carrying on -- coming online, we expect further cost reductions and are looking forward to providing updates in the upcoming shareholders' meetings. Thank you. Phil, back to you.

Thanks so much, Vince. And now let me turn it over to Chris Cramer, our Vice President of Business Development. Chris?

Thanks, Phil, and thank you to all the investors on the call today. My name is Chris Cramer. I'm the Head of Business Development, and I make partnership efforts for Cytosorbents. I've been with the company now for over 8 years. Throughout my 20-plus years in medical devices, I've held various leadership positions in sales, marketing and business development. Prior to coming to Cytosorbents, most recently, I was with Johnson & Johnson where I held increasing levels of responsibility as a commercial leader in their minimally invasive surgical business, and later with J&J's Corporate Development Group. Over the course of my career, I've led and transacted a broad range of deal types, ranging from early-stage equity investments to various commercial stage partnerships and licensing to large scale M&A. I'm very proud to be with Cytosorbents. And today, I'd like to give you an overview of our partnering efforts and talk more about the exciting opportunities that are in front of us. Next slide, please. Phil can you advance the slide, please.

One moment, Chris.

Thank you. So in addition to advancing our commercial efforts, partners serve as a -- serve a valuable role to validate our company and technology. They extend our marketing and sales reach to customers, and they provide the potential for our future M&A exit. It's also in our best interest to maintain good relationships with partners due to their existing infrastructure machines that CytoSorb runs on. Today, Cytosorbents has partnered with 4 of the largest and most successful health care companies in the world. In acute care, we're working with 2 of the top players in B. Braun and FMC. As we announced earlier this year, B. Braun is the newest addition to our partner network via global co-marketing agreement. FMC remains a long-standing partner since 2014. They distribute CytoSorb in 7 countries, including Colombia, Ecuador, Czech Republic, Finland, France, Mexico and South Korea. We also have a co-marketing arrangement to promote the combined use of multifiltrate acute dialysis platform and CytoSorb. On the cardiac side, we're working with Terumo Cardiovascular. Terumo first signed with us in 2016 for the distribution rights in cardiac surgery in France and select Nordic countries. In 2020, we expanded our partnership with Terumo when they became our distributor in 10 states here in the U.S. under our Emergency Use Authorization for severe COVID-19 patients. And finally, Biocon was our first partner signing and one of the earliest distributors of [ CytoSorb in ] 2013. Biocon maintains the exclusive distribution rights for CytoSorb in India and Sri Lanka. Overall, as you can see, we're in a very good company with our strategic partners. In 2021 and beyond, we'll continue to invest in our partner relationships with the ultimate goal of driving commercial adoption of CytoSorb and creating value for the company. Next slide, please. In particular, I'm excited to welcome our newest partner, B. Braun. This co-marketing agreement represents a strategic win for the company by extending our marketing efforts for CytoSorb to a larger audience, ensuring ongoing access to the B. Braun omni platform and helping to differentiate CytoSorb versus competing technology. Privately held and based in Melsungen, Germany, B. Braun is one of the leading health care companies in the world. With operations in 64 countries and over 64,000 employees, B. Braun develops medical devices for users around the world. In 2019, it generated sales of EUR 7.5 billion. B. Braun Avitum, their renal therapies division, manufactures and distributes products for patients with kidney disease including continuous renal replacement therapy, dialyzers and chronic and acute hemodialysis systems like the OMNI and the OMNIset blood line, pictured here together with CytoSorb. The goal of this partnership is to leverage the world-class marketing and sales organizations of B. Braun and Cytosorbents to increase the awareness of CytoSorb and OMNI in the market, promote access-to-care for physicians using CytoSorb and OMNI and ultimately, to generate new sales leads. We're very excited about our new partnership, and we expect the relationship to advance our CytoSorb commercial efforts, and to promote access-to-care for patients and physicians worldwide. Next slide, please. CytoSorb maintains an active BD pipeline and the partnering opportunities for our technology are very promising. Stepping back for a moment, this slide shows the universe of potential partners by market segment, with our current partners highlighted with the red box. In the upper left-hand corner, you can see that Cytosorbents is currently partnered with leading players in acute care. We also believe new partnering opportunities are possible as we continually look for new and innovative ways to improve access-to-care for CytoSorb therapy. In the upper right-hand corner, advancements in our commercial and clinical development programs are driving partner interest, particularly in cardiac surgery and ECMO. New areas like ex vivo organ perfusion are emerging, and they represent new growth opportunities for CytoSorb. For example, we have been -- we have an ongoing collaboration with Aferetica, as Vincent had mentioned, our long-standing distributor in Italy, to promote the ECOS-300CY with their PerLife ex vivo organ Rehabilitation platform. Across all market segments, industry-wide M&A and new product launches are creating new partnership opportunities. And finally, we are exploring new collaboration models to expand our strategic partnership network. Turning to HemoDefend for just a moment. As Vince mentioned, we're moving towards the initiation of a U.S. pivotal trial. We're very excited about this program as it opens up valuable new partnership possibilities, as you can see from prominent names in the lower right-hand corner. In addition, HemoDefend is applicable for both commercial and government and military use. In closing, I've never been more excited to be part of this company as I am today. We're partnered with 4 world-class organizations, and we have ongoing dialogue with many other key players. Along with the clinical and operational advancements, Vince and Mike has talked about today and our BD-led efforts to expand our partnership collaboration model, the future has never looked brighter for Cytosorbents and our partnering efforts. With that, I'd like to say thank you for your time, and I'll hand it back to you, Phil.

Thank you very much, Chris. Then finally, I'd like to touch on building a best-in-class Investor Relations program. Although we don't comment on our stock price, we do realize that many shareholders equate stock price with progress. We believe share price is one measure of success, but a shortsighted one. For those of you who have followed the company for a while, you have seen the company grow from a precommercial preclinical company to a NASDAQ-traded company hitting $0.5 billion in market cap on occasion. All the while, building a sustainable business with more than $41 million in trailing 12-month sales and industry-leading product gross margins with the potential of economics more similar to biotech companies and far superior to most medical device companies. Also operating margins that once we hit operating profitability could be better than the vast majority of companies collectively in the medical device, pharmaceuticals space -- pharmaceutical companies and biotech spaces. That said, we believe that we are nearing the point where the positive operating results that may include U.S. regulatory approval will reflect itself in this price of the stock. That said, we are fully committed to supporting your investment and faith in us. And for that reason, I'd like to cover what we're doing on the IR front. For the past number of years, we've been making systematic progress on our IR strategy. First, to have continued operational outperformance in our core business. Two, to leverage PR and opportunities in COVID-19 to conduct more than 200 investor meetings last year via virtual non-deal roadshows and investor conferences to increase the awareness of Cytosorbents in its current and future potential. Three, to increase -- we increased institutional ownership to 40%, progressing towards a target of 60% to 65%. Our goal is to shift the supply-demand balance in our favor. Also, we increased sell-side analyst coverage with new coverage by Leerink and Jefferies, 2 well-known banks. We eliminated financing risk through our ATM and a $57.5 million secondary offering in July of last year that brought on board major long-term health care investors. And also the money that we needed to be able to subsequently retire $15 million in long-term debt from Bridge Bank with a current cash balance of $68.5 million. We also drove visibility on the planned U.S. approval with the pending launch of the STAR-T trial, as Makis has mentioned, the safe and timely antithrombotic removal of ticagrelor pivotal trial in the U.S. that gives us potential line of sight for approval in the United States. And importantly, today, we announced that we brought the IR role in-house after many years of outsourcing this function to try [indiscernible] focused outreach to institutional investor and improved investor communications. We're currently covered by 7 analysts in the industry, including Joshua Jennings with Cowen. I apologize. There's some feedback. If everyone could go on mute, please. Danielle Antalffy from SVB Leerink, Anthony Petrone from Jefferies, Andy D'Silva from B. Riley, Sean Lee from H.C. Wainwright, Jason Kolbert from Dawson James and Jason McCarthy from Maxim. And with that, it gives me great pleasure after actually a very extensive and long search to introduce to you our new Vice President of Investor Relations and Corporate Communications, Terri Anne Powers. Terri Anne?

Hello, everyone. Thank you very much, Phil. I am excited to join Cytosorbents. Today is actually my first day and to have the opportunity to work with the leadership team and Board of Directors to increase the company's visibility with all key stakeholders. I spent the majority of my career in health care, and I'm excited to be able to leverage that experience in my new role and contribute to Cytosorbents' mission to help save lives. I have approximately 20 years of capital markets experience, with more than a dozen years serving as an Investor Relations professional for publicly traded companies as well as 7 years as a sell-side analyst. I also have more than 15 years' experience in health care across a variety of roles, including in R&D, market research as a sell-side analyst and as an Investor Relations officer. Most recently, I built the in-house Investor Relations program for Diplomat Pharmacy, the largest publicly traded independent provider biter of specialty pharmacy services prior to its acquisition by OptumRx last year. Prior to that, I served as Director of North American Investor Relations at Veolia Environnement, a publicly traded large-cap environmental services company based in Paris, France. In terms of educational credentials, I obtained my MBA in finance and strategic management from the University of Chicago Booth School of Business and my undergraduate degree in Chemistry from Alma College. Next slide, please. Going forward, we expect to implement a more focused IR strategy. We expect to communicate our story and progress, particularly on our dual path to U.S. regulatory approval to both investors and the broader stakeholder community. I expect to implement a proactive, focused, systematic and sustained outreach to current and prospective longer-term focused institutional investors, both in the U.S. and elsewhere in the world. I expect to develop relationships with covering analysts and support efforts to add analyst coverage and increase company visibility. We plan to develop more streamlined communications, including revised investor materials and sharpened messaging. Our goal is to increase visibility in the investor community via media conferences, webinars, Analyst Day, and other channels. And I hope to have a more targeted steady news flow and work closely with our public relations firm, Rubenstein PR, to drive greater visibility among investors and other stakeholders. Finally, in conclusion, I believe that there is a substantial long-term growth opportunity at Cytosorbents, not only based on the planned development of the company's flagship CytoSorb product but also other products in development, which, in my mind, contributes to an attractive long-term equity story for the company. I look forward to meeting and speaking with all of you that have joined us for today's annual meeting as well as those of you who weren't able to join in addition to meeting new investors to share Cytosorbents story. With that, I'd like to turn it back over to Phil.

Thank you very much, Terri Anne, and again, welcome on board. We believe that Cytosorbents is well positioned for growth. We have a strong, experienced management team with continued addition of key talent, as you've seen today, to support our growth initiatives. We're very well capitalized to support planned investments in manufacturing capacity, clinical programs and commercialization efforts for the coming years. We also expect continued growth in ex U.S. markets driven by additional partnerships, geographic expansion and label addition. And also, we have a targeted path to U.S. FDA approval. We know that this is going to be critical for U.S. investors, with several clinical milestones expected in the interim. We also have continued development of other product lines like HemoDefend-RBC, HemoDefend-BGA, VetResQ, CytoSorb-XL and others, ECOS-300CY, and we also have operational excellence to support improved efficiency and planned U.S. commercialization of CytoSorb with our new manufacturing facility that will drive our capacity from $80 million currently to $350 million to $400 million in potential sales as well as economies of scale. Finally, we are working to save lives, one patient at a time, and we invite you to view the video premiere of a CytoSorb patient story from a physician who became critically ill with COVID-19 and was saved with the help of CytoSorb, now premiering at www.cytosorbents.com as well as on our cytosorb.com websites. With that, I'd like to turn it over now to [ Peter Walsh from Q4 ] who'll serve as the moderator for the Q&A period. [ Peter ], please go ahead with the questions from our shareholders.

Wonderful. Thank you. At this time, there are no questions. And I can turn it back to you, Phil.

Well, thank you very much, [ Peter ]. Well, now that we have Terri Anne Powers, please feel free to reach out to her. Her contact information is here on the screen, tpowers@cytosorbents.com. Phone number there, 732-482-9984. But while she's getting her feet wet and drinking from the firehose, we'll also be able to help answer any questions that you have. So thank you very much, everyone, for your interest in Cytosorbents and for your attendance today at our annual meeting. We look forward to meeting in person in the future soon. Take care, and thanks again. Have a good day.

Thank you. The meeting has now officially come to a close, and you may disconnect your devices. Have a great day.