Cytosorbents Corp
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
CTSO$4.80+4.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001410578-24-001368
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001410578-24-001795
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 88 previous paragraphs and 69 current paragraphs.
34 unchanged; 15 reworded; 20 added; 39 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 26 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
We are a leader in the treatment of life-threatening conditions in the intensive care unit and cardiac surgery through blood purification. CytoSorbents’ proprietary blood purification technologies are based on biocompatible, highly porous polymer beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. Cartridges filled with these beads can be used with standard blood pumps already in the hospital (e.g. dialysis, ECMO, heart-lung machines). CytoSorbents’ technologies are used in a number of broad applications. Specifically, two important applicatons are 1) the removal of blood thinners during and after cardiothoracic surgery to reduce the risk of severe bleeding and 2) the removal of inflammatory agents in common critical illnesses such as sepsis, burn injury, trauma, lung injury, liver failure, cytokine release syndrome, and pancreatitis that can lead to massive inflammation, organ failure and patient death. In these diseases, the risk of death can be extremely high, and there are few, if any, effective treatments.
Current report
CytoSorbents’ lead product, CytoSorb®, is approved in the European Union and distributed in 76 countries worldwide, with more than 250,000 devices used cumulatively to date. CytoSorb was originally launched in the European Union under CE mark as the first cytokine adsorber. Additional CE mark extensions were granted for bilirubin and myoglobin removal in clinical conditions such as liver disease and trauma, respectively, and for ticagrelor and rivaroxaban removal in cardiothoracic surgery procedures. CytoSorb has also received FDA EUA in the United States for use in adult critically ill COVID-19 patients with impending or confirmed respiratory failure, to reduce pro-inflammatory cytokine levels. CytoSorb is not yet approved in the United States.
Current report
In the U.S. and Canada, CytoSorbents is developing the DrugSorb™-ATR antithrombotic removal system, an investigational device based on an equivalent polymer technology to CytoSorb, to reduce the severity of perioperative bleeding in high-risk surgery due to blood thinning drugs. It has received two FDA Breakthrough Device Designations: one for the removal of ticagrelor and another for the removal of the direct oral anticoagulants (DOAC) apixaban and rivaroxaban in a cardiopulmonary bypass circuit during urgent cardiothoracic procedures. In September 2024, the Company submitted a De Novo medical device application to the FDA requesting marketing approval to reduce the severity of perioperative bleeding in CABG patients on the antithrombotic drug ticagrelor, which was accepted for substantive review in October 2024. In November 2024, the Company received its Medical Device Single Audit Program (MDSAP) certification and submitted its Medical Device License (MDL) application to Health Canada. DrugSorb-ATR is not yet granted or approved in the United States and Canada, respectively.
Current report
The Company has numerous marketed products and products under development based upon this unique blood purification technology protected by many issued U.S. and international patents and registered trademarks, and multiple patent applications pending, including ECOS-300CY®, CytoSorb-XL™, HemoDefend-RBC™, HemoDefend-BGA™, VetResQ®, K+ontrol™, DrugSorb™, ContrastSorb, and others.
Current report
Results of Operations:
Current report
Gross Profit:
Current report
For the three months ended September 30, 2024, gross profit decreased approximately $327,000 to $5,281,000 from $5,607,000 for the three months ended September 30, 2023. This decrease was due to a planned temporary slowdown in production to rebalance inventory levels coupled with a short-term manufacturing issue, which we believe is resolved, which resulted in a significantly lower number of CytoSorb devices produced in the quarter. As a result, product gross margins, which exclude the impact of grant income and related costs, were approximately 61% for the three months ended September 30, 2024 as compared to approximately 72% for the three months ended September 30, 2023.
Current report
Legal, financial, and other consulting expenses were approximately $824,000 for the three months ended September 30, 2024, as compared to approximately $1,104,000 for the three months ended September 30, 2023, a decrease of approximately $280,000, or 25%. This decrease is related to costs associated with the write-off of certain patent applications that were incurred in 2023 that did not recur in 2024 and a decrease in regulatory consulting costs related to DrugSorb-ATR.
Current report
Selling, general and administrative expenses were approximately $7,003,000 for the three months ended September 30, 2024, as compared to approximately $8,104,000 for the three months ending September 30, 2023, a decrease of approximately $1,101,000, or 14%. This decrease was primarily due to reduction in non-cash stock compensation expense, a reduction in salaries and related expenses related to headcount reductions and a reduction in royalty expense due to the expiration of the Purolite license agreement on August 6, 2024.
Current report
Interest Expense, Net:
Current report
Interest expense, net, was approximately $588,000 for the three months ended September 30, 2024, compared to approximately $34,000 for the three months ended September 30, 2023. The increase was due to interest incurred on the Avenue Capital Group debt that was closed during the second quarter of 2024, net of interest income received of approximately $121,000 on the total balance of cash and cash equivalents. This financing increased the principal amount of our debt to $15,000,000 from $5,000,000 and the interest rate increased to 13.5% from 8%.
Current report
Comparison for the nine months ended September 30, 2024 and 2023:
Current report
Total revenues were approximately $29,071,000 for the nine months ended September 30, 2024, as compared to total revenues of approximately $27,681,000 for the nine months ended September 30, 2023, an increase of approximately $1,390,000, or 5%. Changes in foreign currency impacted total revenue by 2% for each of the respective periods of 2024 and 2023, respectively. Revenue from product sales was approximately $26,444,000 in the nine months ended September 30, 2024, as compared to approximately $23,736,000 in the nine months ended September 30, 2023, an increase of approximately $2,708,000, or 11%. Distributor sales increased by 16% and direct sales increased by 8% for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.
Current report
Gross Profit:
Current report
For the nine months ended September 30, 2024, gross profit increased approximately $1,274,000 to $18,355,000 from $17,081,000 for the nine months ended September 30, 2023 due to increased revenue. Product gross margins were approximately 69% for the nine months ended September 30, 2024 as compared to approximately 71% for the nine months ended September 30, 2023. This decrease was due to a third quarter 2024 planned temporary slowdown in production to rebalance inventory levels coupled with a short-term manufacturing issue which resulted in a significantly lower number of CytoSorb devices produced.
Current report
For the nine months ended September 30, 2024, research and development expenses were approximately $5,619,000, as compared to research and development expenses of approximately $11,632,000 for the nine months ended September 30, 2023, a decrease of approximately $6,013,000, or 52%. This decrease was driven by a decrease in our clinical trial costs due to the completion of the STAR-T clinical trial in December 2023. Clinical expenses were approximately $3,525,000 in the nine months ended September 30, 2024 and approximately $8,153,000 for the nine months ended September 30, 2023, a decrease of approximately $4,628,000, or 57%. Non-grant related research and development costs decreased from approximately $3,479,000 in the nine months ended September 30, 2023 to approximately $2,094,000 in the nine months ended September 30, 2024, a decrease of approximately $1,385,000, or 40%. This reduction was a result of headcount reductions related to our cost saving initiatives. In addition, 2023 expenses included approximately $850,000 of costs incurred related to pre-production manufacturing activities required to bring the new manufacturing plant to a state of commercial readiness that did not recur in 2024.
Current report
Legal, financial, and other consulting expenses were approximately $2,325,000 for the nine months ended September 30, 2024, as compared to approximately $2,958,000 for the nine months ended September 30, 2023, a decrease of approximately $633,000, or 21%. This decrease is related to settlement costs of certain pending litigation matters in 2023 and a reduction of hiring fees in the nine months ended September 30, 2024 as compared to 2023.
Current report
Selling, general and administrative expenses were approximately $23,151,000 for the nine months ended September 30, 2024, as compared to approximately $24,358,000 for the nine months ending September 30, 2023, a decrease of approximately $1,207,000, or 5%. This decrease was primarily due to a reduction in salaries and related costs due to headcount reductions and a decrease in non-cash stock compensation. These reductions were offset by a reduction in grant spending that reduced the overhead absorption benefit to selling, general and administrative expense.
Current report
Interest Expense, Net:
Current report
Interest expense, net, was approximately $775,000 for the nine months ended September 30, 2024, compared to approximately $106,000 for the nine months ended September 30, 2023. The increase was due to interest incurred on the Avenue Capital Group debt that was closed during the second quarter of 2024, net of interest income received of approximately $270,000 on the total balance of cash and cash equivalents. This financing increased the principal amount of our debt to $15,000,000 from $5,000,000 and the interest rate increased to 13.5% from 8%.
Removed paragraphs (39)
Previous report
We are a leader in the treatment of life-threatening conditions in the intensive care (“ICU”) and cardiac surgery using blood purification via our proprietary polymer adsorption technology. We have a number of products commercialized and in development based on this technology platform. Our flagship product, CytoSorb®, is already commercialized, and is being used to reduce deadly uncontrolled inflammation and dangerous substances in hospitalized patients around the world, with the goal of preventing or treating multiple organ failure, bleeding, and other potentially fatal complications. Organ failure is the cause of nearly half of all deaths in the ICU, with little to improve clinical outcome. CytoSorb is approved in the European Union (“EU”) as an effective extracorporeal cytokine absorber, designed to reduce the “cytokine storm” or “cytokine release syndrome” that could otherwise cause massive inflammation, organ failure and death in common critical illnesses such as sepsis, burn injury, trauma, lung injury, liver failure, cytokine release syndrome due to cancer immunotherapy, and pancreatitis. These are conditions where the mortality is extremely high, yet few to no effective treatments exist. In May 2018, we received a label expansion for CytoSorb covering use of the device for the removal of bilirubin and myoglobin in the treatment of liver disease and trauma, respectively. In January 2020, we received CE-Mark label expansion for CytoSorb covering the use of the device for the removal of the anti-platelet agent, ticagrelor, in patients undergoing surgery requiring cardiopulmonary bypass. In April 2020, the FDA granted Breakthrough Device Designation to CytoSorb for the removal of ticagrelor in a cardiopulmonary bypass circuit during emergent and urgent cardiothoracic surgery. In April 2020, we announced that the FDA has granted EUA of CytoSorb for use in critically ill patients with COVID-19 infection and respiratory failure. In May 2020, we received a CE-Mark label expansion for CytoSorb for the removal of rivaroxaban during cardiothoracic surgery requiring cardiopulmonary bypass. In August 2021, the Company announced that it was granted a second Breakthrough Device Designation for its DrugSorb-ATR Antithrombotic Removal System by the FDA to remove the direct oral anticoagulants, rivaroxaban and apixaban. The Company has completed its pivotal randomized, controlled clinical trial in the U.S. and Canada, called the STAR-T trial, evaluating the use of DrugSorb-ATR during cardiothoracic surgery to prevent or reduce perioperative bleeding complications in pursuit of FDA and Health Canada marketing approval. We believe that the safety and efficacy results of the STAR-T trial will support regulatory submissions expected in the third quarter of 2024 for marketing approval by the FDA and Health Canada.
Previous report
CytoSorb is used during and after cardiac surgery to remove inflammatory mediators, such as cytokines, activated complement, and free hemoglobin that can lead to post-operative complications such as acute kidney injury, lung injury, shock, and stroke. We believe CytoSorb has the potential to be used in many other inflammatory conditions, including the treatment of autoimmune disease flares, cytokine release syndrome in cancer immunotherapy, and other applications in cancer, such as cancer cachexia. CytoSorb has been used globally in more than 248,000 human treatments to date in critical illnesses and in cardiac surgery. CytoSorb has received CE-Mark label expansions for the removal of bilirubin (liver disease), myoglobin (trauma) and both ticagrelor and rivaroxaban during cardiothoracic surgery. CytoSorb has also received FDA Emergency Use Authorization in the United States for use in critically-ill COVID-19 patients with imminent or confirmed respiratory failure, in defined circumstances. The EUA will be effective until a declaration is made that the circumstances justifying the EUA have terminated or until revoked by the FDA. CytoSorb has been used globally in more than 7,650 human treatments to date in COVID-19 patients. CytoSorb has also been granted FDA Breakthrough Designation for the removal of ticagrelor in a cardiopulmonary bypass circuit during emergent and urgent cardiothoracic surgery.
Previous report
CytoSorb was also granted a second FDA Breakthrough Device designation for the removal of the Direct Oral Anticoagulants (DOACs) apixaban and rivaroxaban in a cardiopulmonary bypass circuit to reduce the likelihood of serious perioperative bleeding during urgent cardiothoracic surgery.
Previous report
We are focusing on three key objectives that we believe are the key to driving sustainable, long-term growth:
Previous report
Our purification technologies are based on biocompatible, highly porous polymer beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. The technology is protected by 22 issued U.S. patents and multiple international patents, with applications pending both in the U.S. and internationally. We have numerous other product candidates under development based upon this unique blood purification technology, including CytoSorb XL, K+ontrol, HemoDefend-RBC, HemoDefend-BGA, ContrastSorb, DrugSorb, DrugSorb-ATR and others.
Previous report
Our proprietary polymer technologies form the basis of a broad technology portfolio. Some of our products and product candidates include:
Previous report
In October 2021, we also received FDA approval of an Investigational Device Exemption (IDE) application to conduct a double-blind, randomized, controlled clinical study for up to 120 patients entitled, “Safe andTimelyAntithromboticRemoval –Direct Oral Anticoagulants (STAR-D),” in the United States to support FDA marketing approval. This was done under the previously announced 2nd FDA Breakthrough Device Designation granted for our DrugSorb-ATR Antithrombotic Removal System. This Breakthrough Device designation covers the removal of the Direct Oral Anticoagulants (DOACs) apixaban and rivaroxaban in a cardiopulmonary bypass circuit to reduce the likelihood of serious perioperative bleeding during urgent cardiac surgery. The STAR-D study was postponed to allow the Company to concentrate its clinical focus on STAR-T activities and associated regulatory filings.
Previous report
In January 2020, CytoSorb received European Union CE Mark label expansion to include the removal of ticagrelor during cardiopulmonary bypass in patients undergoing cardiothoracic surgery. In May 2020, CytoSorb also received European Union CE Mark label expansion to include rivaroxaban removal for the same indication. The international Safe and Timely Antithrombotic Removal (STAR)Registry is designed to capture real world clinical and health economic outcomes with intraoperative antithrombotic drug removal. The Registry is actively recruiting in the U.K., Germany, Austria, Belgium and Sweden and is planned to expand to additional countries in 2024. Data outputs from the STAR Registry have already been reported at the EuroPCR 2023 conference in Paris in May 2023 and at the European Association of Cardiothoracic Surgery conference in Vienna in October 2023. The Registry has been enrolling
Previous report
well and reported an updated analysis on ticagrelor removal during CABG at the 2024 EuroPCR conference. An additional updated analysis on DOAC removal has been accepted for presentation at the upcoming 2024 EACTS conference. Interim analyses from the Registry were also published in May 2024 in the internationally recognized peer-review Journal of Thrombosis and Thrombolysis. Additional results from the STAR Registry will also be submitted for publication in major cardiovascular journals on a rolling basis as enrollment progresses.
Previous report
In April 2020, we received FDA Emergency Use Authorization for the treatment of adult critically ill COVID-19 patients with confirmed or imminent respiratory failure. The U.S. CytoSorb Therapy in COVID-19 (CTC)Registry was launched to capture outcomes and device utilization patterns from multiple U.S. participating centers. Initial results on critically ill COVID-19 patients on extracorporeal membrane oxygenation (ECMO) treated with CytoSorb at participating U.S. centers showed high survival rates (73%) compared with the international benchmark Extracorporeal Life Support Organization (ELSO) Registry. The initial CTC results on the first 52 critically ill patients from five U.S. ECMO centers were presented at the International Symposium of Intensive Care Medicine conference in August 2021 in Brussels, Belgium, and published in the peer reviewed journal Frontiers in Medicine. The CTC registry completed enrollment with 100 patients from five centers, and the final results mirror the high survival (74%) seen in the previous analysis and have been published in the peer reviewed journal Critical Care. The data further demonstrate that earlier intervention with CytoSorb and ECMO was associated with shorter need for mechanical ventilation, ECMO, and ICU stay. These results lend support to our concept of “enhanced lung rest,” where ECMO helps the lungs rest by oxygenating blood extracorporeally and reducing the need for mechanical ventilation that can cause ventilator-induced lung injury, while CytoSorb reduces the circulating inflammatory mediators that cause continued capillary leak syndrome in the lungs. Together, the goal of this dual-therapy strategy is to give the lungs a chance to recover and heal, a pre-requisite for weaning off of mechanical ventilation and ECMO.
Previous report
The GermanPROCYSS multicenter, randomized controlled trial evaluating the ability of CytoSorb to restore hemodynamic stability in patients with refractory septic shock is now currently enrolling. The speed of enrollment has been slower than anticipated, impacted by COVID-19 related institutional research staff shortages, decreased ICU bed capacity leading to fewer patients, and other factors.
Previous report
The internationalCOSMOS Registry was designed to capture real world outcomes and device utilization patterns across multiple critical care indications including but not limited to sepsis, acute respiratory failure, postoperative vasoplegia, acute liver failure, and acute pancreatitis. The Registry is actively enrolling in Spain, Germany and Italy with plans to expand in more countries in 2024. The intent of the Registry is to report outcomes at international conferences and submit the results for publication on a rolling basis as enrollment progresses. The first analysis of the Registry on the results in the first 100 patients enrolled was presented at the ISICEM meeting in Brussels in March 2024 and will also be submitted to a peer reviewed journal for publication.
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Sales and Marketing Update
Previous report
The following are the key initiatives that we have been executing upon to drive product sales growth in the future.
Previous report
Near-term growth drivers
Previous report
“Expand the Dimension of Blood Purification®” in hospitals and to promote and market our respective kidney and liver replacement therapies around the world.
Previous report
Longer-term growth drivers
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COVID-19 Business Update
Previous report
COVID-19 patients develop life-threatening complications such as acute respiratory distress syndrome (ARDS), shock (i.e. a potentially fatal drop in blood pressure), kidney failure, acute cardiac injury, thromboses and emboli, and secondary bacterial infections. The underlying cause for these complications is often a massive, systemic inflammatory response, leading to the damage of vital organs such as the lungs, heart, and kidneys, and ultimately multiple organ failure and death in many cases. Hypercoagulability, thought triggered by inflammation, and resulting thromboembolic events such as pulmonary emboli and thrombotic microangiopathy, play another critical role in the pathophysiology of COVID-19 infection and severity of illness.
Previous report
The use of CytoSorb in patients infected with COVID-19 in Italy, China, Germany and France began in March 2020. During the pandemic, CytoSorb has been used to treat dangerous inflammation and related life-threatening complications in more than 7,650 COVID-19 patients in more than 30 countries. Based upon initial data and reports from physicians treating these complications, CytoSorb use has generally been associated with a marked reduction in cytokine storm and inflammation, improved lung function, weaning from mechanical ventilation, decannulation from extracorporeal membrane oxygenation (ECMO), and a reversal of shock.
Previous report
The use of CytoSorb has not been approved in the U.S. by the FDA. However, under certain circumstances, investigational medical devices that have not yet been FDA-approved may be made available for emergency use in the U.S. under the FDA’s Expanded Access Program (“EAP”). On April 13, 2020, we announced that the FDA, in a different program than the EAP, granted U.S. Emergency Use Authorization (EUA) of CytoSorb for use in adult critically ill COVID-19 patients. Under the EUA, CytoSorbents was able to make CytoSorb available, through commercial sales, to all hospitals in the U.S. for use in patients, 18 years of age or older, with COVID-19 infection who are admitted to the intensive care unit with confirmed or imminent respiratory failure as a way to help treat acute lung injury or ARDS, severe disease, or life-threatening illness resulting in respiratory failure, septic shock, and/or multiple organ dysfunction or failure. The CytoSorb device has been authorized by FDA under an EUA. It has neither been cleared nor approved for the indication to treat patients with COVID-19 infection. The EUA will be effective until a declaration is made that the circumstances justifying the EUA have terminated or until revoked by the FDA. With the advent of vaccines, anti-viral therapies, and natural immunity, the numbers of critically ill COVID patients and the severity of illness has dropped dramatically. We currently anticipate little to no COVID-19 related CytoSorb sales, though this could change depending on the circulating strains of coronavirus.
Previous report
The U.S. CTC (CytoSorb Therapy in COVID-19) Registry was launched to capture outcomes and device utilization patterns from multiple U.S. participating centers treating critically ill COVID-19 patients according to the treatment recommendations of the FDA Emergency Use Authorization (EUA). Preliminary results on observed ICU mortality of COVID-19 patients with acute respiratory distress syndrome (ARDS) requiring extracorporeal membrane oxygenation (ECMO) and treated with CytoSorb according to FDA EUA criteria were presented at the International Symposium of Intensive Care Medicine conference in September 2021 in Brussels, Belgium. In December 2021 and published in the peer-reviewed journalFrontiers in Medicine. The CTC Registry has completed enrollment and the final results confirming high survival (74%) were presented at the European Society of Intensive Care Medicine conference October 2022 and also have been published in the prestigious peer-reviewed journal Critical Care.
Previous report
Revenue from product sales was approximately $8,842,000 in the three months ended June 30, 2024, as compared to approximately $8,072,000 in the three months ended June 30, 2023, an increase of approximately $770,000, or 10%. Distributor sales increased approximately $965,000, or 28%. Direct sales decreased approximately $196,000, or 4%. In addition, as a result of the decrease in the average exchange rate of the Euro to the U.S. dollar, 2024 product sales were negatively impacted by approximately $104,000. For the three months ended June 30, 2024, the average exchange rate of the Euro to the U.S. dollar was $1.08 as compared to an average exchange rate of $1.09 for the three months ended June 30, 2023.
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Cost of Revenues:
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For the three months ended June 30, 2024 and 2023, cost of revenue was approximately $3,392,000 and $3,402,000, respectively, a decrease of approximately $10,000. Product cost of revenue was approximately $2,411,000 and $2,093,000, respectively, for the three months ended June 30, 2024 and 2023, an increase of approximately $318,000 due to increases in sales in 2024. Gross margins on devices and device accessories were approximately 75% for the three months ended June 30, 2024 as compared to approximately 74% for the three months ended June 30, 2023. This increase was due to the achievement of greater operating efficiencies in 2024, which was partially offset by an increase in the percentage of lower margin distributor sales to total sales during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.
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Legal, financial, and other consulting expenses were approximately $821,000 for the three months ended June 30, 2024, as compared to approximately $1,185,000 for the three months ended June 30, 2023, a decrease of approximately $364,000. This decrease was due to a decrease in legal fees of approximately $314,000 due to the settlement of a legal matter in 2023, a decrease in employment agency fees of approximately $121,000 and a decrease in accounting fees of approximately $43,000. These decreases were offset by an increase in consulting fees of approximately $114,000.
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Selling, general and administrative expenses were approximately $7,581,000 for the three months ended June 30, 2024, as compared to approximately $7,724,000 for the three months ending June 30, 2023, a decrease of approximately $143,000. This decrease was due to a decrease in salaries, commissions, and related costs of approximately $543,000, a decrease in selling and distribution costs of approximately $468,000, a decrease in fees, licenses and permits of approximately $50,000, a decrease in commercial insurance of approximately $32,000, and a decrease in travel and entertainment expenses of approximately $20,000. These decreases were offset by increased non-cash stock compensation expense of approximately $623,000, a reduction in grant spending reduced the overhead absorption benefit to selling, general and administrative expense by approximately $136,000, an increase in network maintenance costs of approximately $81,000, an increase in transfer agent fees of approximately $49,000, an increase in royalty expense of approximately $46,000, and an increase in other general and administrative expenses of approximately $65,000.
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Comparison for the six months ended June 30, 2023 and 2022:
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Revenue from product sales was approximately $17,831,000 for the six months ended June 30, 2024, as compared to approximately $15,982,000 for the six months ended June 30, 2023, an increase of approximately $1,849,000, or 12%. Distributor sales increased by approximately $1,579,000, or 24%. Overall direct sales increased by approximately $270,000, or 3%. The change in the exchange rate of the Euro to U.S. dollar did not have a significant impact on product sales during the six months ended June 30, 2024.
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Total revenues were approximately $19,681,000 for the six months ended June 30, 2024, as compared to total revenues of approximately $18,870,000 for the six months ended June 30, 2023, an increase of approximately $811,000, or 4%.
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Cost of Revenues:
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For the six months ended June 30, 2024 and 2023, cost of revenue was approximately $6,607,000 and $7,396,000, respectively, a decrease of approximately $789,000, primarily due to a reduction in the cost of revenue related to the Company’s grant related activities. Product cost of revenue was approximately $4,759,000 and $4,624,000, respectively, for the six months ended June 30, 2024 and 2023, an increase of approximately $135,000. Gross margins on devices and device accessories were approximately 74% for the six months ended June 30, 2024 compared to approximately 71% for the six months ended June 30, 2023. The increase in product gross margin is due primarily to greater efficiencies now being realized at our new manufacturing facility in Princeton, New Jersey.
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For the six months ended June 30, 2024, research and development expenses were approximately $3,768,000 as compared to research and development expenses of approximately $7,883,000 for the six months ended June 30, 2023, a decrease of approximately $4,115,000. This decrease was due to a decrease in costs associated with our clinical trial activities of approximately $2,753,000 related to the completion of the STAR-T clinical trial in December 2023. The six months ending June 30, 2023 included $919,000 of non-recurring start-up costs associated with our new facility which were not incurred in the six months ending June 30, 2024. Cost savings measures resulted in decreased research and development salaries of approximately $297,000, and decreased other spending of approximately $146,000 in 2024.
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Legal, financial, and other consulting expenses were approximately $1,501,000 for the six months ended June 30, 2024, as compared to approximately $1,854,000 for the six months ended June 30, 2023. The decrease of approximately $353,000 was due to a decrease in legal fees of approximately $285,000 and a decrease in employment agency fees of approximately $178,000. These decreases were offset by an increase in consulting fees of approximately $108,000 and an increase in accounting and auditing fees of approximately $2,000.
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Selling, general and administrative expenses were approximately $16,148,000 for the six months ended June 30, 2024, as compared to $16,187,000 for the six months ended June 30, 2023, a decrease of approximately $39,000. This decrease was due to a decrease in salaries, commissions and related costs of approximately $721,000, a decrease in advertising costs of approximately $192,000, a decrease in non-recurring facility start-up costs of approximately $176,000, a decrease in occupancy costs of approximately $140,000 and a decrease in other general and administrative expenses of $17,000. These decreases were offset by an increase in non-cash stock compensation expense of approximately $467,000, a reduction in grant spending reduced the overhead absorption benefit to selling, general and administrative expense by approximately $350,000, an increase in royalty expense of approximately $134,000, an increase in travel and entertainment expenses of approximately $112,000, an increase in network maintenance costs of approximately $95,000 and an increase in transfer agent fees of approximately $49,000.
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COVID-19 Impact on Financial Results
Previous report
For the first year and a half of the coronavirus pandemic, COVID-19 was generally a positive driver for CytoSorb sales and highlighted the use of CytoSorb to treat cytokine storm and hyperinflammation. Because of this, the pandemic was a catalyst for CytoSorb orders from existing customers and also from new hospitals in countries where CytoSorb was not previously sold. We believe this awareness of CytoSorb increased overall usage during the COVID-19 pandemic and may help to drive further CytoSorb sales in the future.
Previous report
However, starting in the third quarter of 2021, the protracted COVID-19 pandemic began to have a negative impact on our business, due to pandemic-driven adverse market conditions worldwide, especially in Germany which is our largest market. The excessive workload in hospitals due to COVID has led to an exodus of healthcare workers from acute care worldwide, leaving hospitals short-staffed, particularly nursing. This in turn has forced the reduction in ICU beds and allowable patient censuses, and reduced the scheduling of revenue generating surgical procedures, resulting in decreased revenue and economic weakness at hospitals. Meanwhile, in 2022 the rates of severe COVID-19 illness requiring ICU care, and COVID-related death have been disproportionately very low. This is mainly attributed to high rates of vaccinations, natural immunity, and the availability of anti-viral drugs that are associated with reduced severity of illness, reduced need for hospitalization, and risk of death. These factors, in turn, have decreased the numbers of patients treatable with CytoSorb.
Previous report
Additionally, COVID slowed our ability to generate clinical data to support our sales and marketing efforts. Currently, we are seeing an easing of the of the negative impacts of COVID-19. In 2024, we have generally good access to hospitals and physicians which should positively impact our product sales in the future. The lessened impact of COVID-19 has also had a positive impact on patient enrollment of our clinical studies.
Reworded paragraphs (15)
Previous wording
In July 2021, we received full FDA approval of an Investigational Device Exemption (IDE) application to conduct a double-blind, randomized, controlled clinical study in 120 patients entitled, “Safe andTimelyAntithromboticRemoval –Ticagrelor (STAR-T),” in the United States to support FDA marketing approval. This was done under the previously announced FDA Breakthrough Device Designation granted for the removal of ticagrelor in a cardiopulmonary bypass circuit to reduce the likelihood of serious perioperative bleeding during urgent cardiac surgery. In October 2021, the first patient was enrolled, with the STAR-T study actively recruiting at multiple U.S. sites. In November 2022, the first milestone was completed with the first one-third of patients enrolled, triggering the first Data and Safety Monitoring Board (DSMB) meeting. The DSMB recommended to continue the study as planned without any modifications. In 2022, we also received FDA approval to expand the study to Canada and subsequently received Health Canada approval allowing inclusion of Canadian sites into the STAR-T trial in January 2023. In early 2023, the study exceeded 50% enrollment and reached the 2nd milestone of 67% enrollment in the spring of 2023, triggering another DSMB safety review, which found no safety concerns and recommended completion of the trial. The study completed enrollment in July of 2023 triggering the final DSMB safety review following database lock in December 2023, which also reported no safety concerns thereby meeting the primary safety endpoint of the study. Based on the initial analysis of the STAR-T data, the study did not meet the primary effectiveness endpoint in the overall patient population that underwent different types of cardiac surgeries. However, the study did demonstrate evidence of reduced bleeding complications, including serious bleeding events, in patients in the pre-specified isolated coronary artery bypass graft (“CABG”) surgery population. Patients undergoing CABG surgery represented more than 90% of the overall study population. The topline results of 140-patient, double-blinded, multicenter, pivotal STAR-T randomized, controlled trial were presented as a late breaking presentation at the 104th Annual Meeting of the American Association for Thoracic Surgery (AATS) held in Toronto, Canada on April 28, 2024. The Company believes the safety and effectiveness data from STAR-T will support the parallel regulatory submission of DrugSorb-ATR to the FDA and Health Canada estimated to be filed in the third quarter of 2024.
Current wording
In July 2021, we received full FDA approval of an Investigational Device Exemption (IDE) application to conduct a double-blind, randomized, controlled clinical study in 120 patients entitled, “Safe andTimelyAntithromboticRemoval –Ticagrelor (“STAR-T”),” in the United States to support FDA marketing approval. This was done under the previously announced FDA Breakthrough Device Designation granted for the removal of ticagrelor in a cardiopulmonary bypass circuit to reduce the likelihood of serious perioperative bleeding during urgent cardiac surgery. In October 2021, the first patient was enrolled, with the STAR-T study actively recruiting at multiple U.S. sites. In November 2022, the first milestone was completed with the first one-third of patients enrolled, triggering the first Data and Safety Monitoring Board (“DSMB”) meeting. The DSMB recommended to continue the study as planned without any modifications. In 2022, we also received FDA approval to expand the study to Canada and subsequently received Health Canada approval allowing inclusion of Canadian sites into the STAR-T trial in January 2023. In early 2023, the study exceeded 50% enrollment and reached the 2nd milestone of 67% enrollment in the spring of 2023, triggering another DSMB safety review, which found no safety concerns and recommended completion of the trial. The study completed enrollment in July of 2023 triggering the final DSMB safety review following database lock in December 2023, which also reported no safety concerns thereby meeting the primary safety endpoint of the study. Based on the initial analysis of the STAR-T data, the study did not meet the primary effectiveness endpoint in the overall patient population that underwent different types of cardiac surgeries. However, the study did demonstrate evidence that DrugSorb-ATR reduced the severity of perioperative bleeding in patients undergoing isolated coronary artery bypass graft (“CABG”) surgery who represented more than 90% of the overall study population. The topline results of the U.S. and Canadian 140-patient, pivotal STAR-T randomized controlled trial were presented at the 104th Annual Meeting of the American Association for Thoracic Surgery (“AATS”) held in Toronto, Canada on April 28, 2024. The Company submitted the DrugSorb-ATR medical device De Novo marketing application to the FDA on September 27, 2024 and announced the acceptance of the application by FDA on October 22, 2024. On November 1, 2024, the Company received its Medical Device Single Audit Program (MDSAP) certification and submitted its Medical Device License (MDL) application to Health Canada.
Previous wording
We have historically been successful in obtaining technology development contracts from governmental agencies such as the National Institutes of Health and the U.S. Department of Defense, including the Defense Advanced Research Projects Agency (“DARPA”), the U.S. Army, U.S. Special Operations Command (“USSOCOM”), the U.S. Air Force, Air Force Material Command (“USAF/AFMC”) and others. Currently, we have ongoing projects funded, in part, by the U.S. Army Medical Research Acquisition Activity (“USAMRAA”), the NHLBI, and the USAF/AFMC. For a complete discussion of the various research grants we have obtained, please refer to the section entitled Government Research Grants included in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 14, 2024.
Current wording
We have historically been successful in obtaining technology development contracts from governmental agencies such as the National Institutes of Health and the U.S. Department of Defense, including the Defense Advanced Research Projects Agency (“DARPA”), the U.S. Army, U.S. Special Operations Command (“USSOCOM”), the U.S. Air Force, Air Force Material Command (“USAF/AFMC”) and others. Currently, we have ongoing projects funded, in part, by the U.S. Army Medical Research Acquisition Activity (“USAMRAA”), National Heart, Lung, and Blood Institute (“NHLBI”), and the USAF/AFMC. For a complete discussion of the various research grants we have obtained, please refer to the section entitled Government Research Grants included in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 14, 2024.
Previous wording
Our research and development work levels have returned back to pre-pandemic levels. As of June 30, 2024, the revenue remaining to be earned on open grant contracts is $3.9 million. Overall, grant funded programs, HemoDefend-BGA™ (Universal Plasma), HemoDefend-RBC™ and K+ontrol™, continue to progress and we have been the beneficiary of approximately $15.8 million, $4.7 million and $7.7 million in total funding, respectively, awarded to date.
Current wording
Our research and development work levels have returned back to pre-pandemic levels. As of September 30, 2024, the revenue remaining to be earned on open grant contracts is $3.2 million. Overall, grant funded programs, HemoDefend-BGA™ (Universal Plasma), HemoDefend-RBC™ and K+ontrol™, continue to progress and we have been the beneficiary of approximately $15.8 million, $4.7 million and $7.7 million in total funding, respectively, awarded to date.
Previous wording
Total revenues were approximately $9,895,000 for the three months ended June 30, 2024, as compared to total revenues of approximately $9,421,000 for the three months ended June 30, 2023, an increase of approximately $474,000, or 5%.
Current wording
Total revenues were approximately $9,390,000 for the three months ended September 30, 2024, as compared to total revenues of approximately $8,811,000 for the three months ended September 30, 2023, an increase of approximately $579,000 or 7%. Changes in foreign currency impacted total revenue by 1% and 6%, for respective periods of 2024 and 2023, respectively. Revenue from product sales was approximately $8,613,000 in the three months ended September 30, 2024, as compared to approximately $7,754,000 in the three months ended September 30, 2023, an increase of approximately $859,000, or 11%. This increase was driven by an increase in direct sales of approximately 21% in the three months ended September 30, 2024 as compared to 2023. In addition, distributor sales decreased by approximately 1% during the same period.
Previous wording
Grant income was approximately $1,053,000 for the three months ended June 30, 2024 as compared to approximately $1,348,000 for the three months ended June 30, 2023, a decrease of approximately $295,000, or 22%. This decrease was due to the completion of several grants during 2023.
Current wording
Grant income was approximately $777,000 for the three months ended September 30, 2024 as compared to approximately $1,057,000 for the three months ended September 30, 2023, a decrease of approximately $280,000, or 26%. This decrease was due to the completion of several grants during 2023.
Previous wording
For the three months ended June 30, 2024, research and development expenses were approximately $1,520,000, as compared to research and development expenses of approximately $3,669,000 for the three months ended June 30, 2023, a decrease of approximately $2,149,000. This decrease was due to a decrease in our clinical trial activities of approximately $1,842,000 related to the completion of the STAR-T clinical trial in December 2023. The three months ended June 30, 2023 included $70,000 of non-recurring start-up costs associated with our new facility which were not incurred in the three months ended June 30, 2024. Cost savings measures resulted in decreased research and development salaries of approximately $170,000, and decreased consulting and other spending of approximately $67,000 in the second quarter of 2024.
Current wording
For the three months ended September 30, 2024, research and development expenses were approximately $1,851,000 as compared to research and development expenses of approximately $3,749,000 for the three months ended September 30, 2023, a decrease of approximately $1,898,000, or 51%. This decrease was driven by a decrease in our clinical trial costs due to the completion of the STAR-T clinical trial in December 2023. Clinical expenses were approximately $962,000 in the three months ended September 30, 2024 and approximately $2,837,000 for the three months ended September 30, 2023, a decrease of approximately $1,875,000, or 66%.
Previous wording
For the three months ended June 30, 2024, the loss on foreign currency transactions was approximately $544,000 as compared to a gain of approximately $415,000 for the three months ended June 30, 2023. The 2024 loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S. dollar at June 30, 2024 as compared to March 31, 2024. The spot exchange rate of the Euro to the U.S. dollar was $1.07 per Euro at June 30, 2024, as compared to $1.08 per Euro at March 31, 2024. The 2023 gain was directly related to the increase in the spot exchange rate of the Euro to the U.S. dollar at June 30, 2023 as compared to March 31, 2023. The spot exchange rate of the Euro to the U.S. dollar was $1.09 per Euro at June 30, 2023, as compared to $1.08 per Euro at March 31, 2023.
Current wording
For the three months ended September 30, 2024, the gain on foreign currency transactions was approximately $2,650,000 as compared to a loss of approximately $1,810,000 for the three months ended September 30, 2023. The 2024 gain was directly related to the increase in the spot exchange rate of the Euro to the U.S. dollar at September 30, 2024 as compared to June 30, 2024. The spot exchange rate of the Euro to the U.S. dollar was $1.11 per Euro at September 30, 2024, as compared to $1.07 per Euro at June 30, 2024. The 2023 loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S. dollar at September 30, 2023 as compared to June 30, 2023. The spot exchange rate of the Euro to the U.S. dollar was $1.06 per Euro at September 30, 2023, as compared to $1.09 per Euro at June 30, 2023.
Previous wording
Grant income was approximately $1,850,000 for the six months ended June 30, 2024 as compared to approximately $2,888,000 for the six months ended June 30, 2023, a decrease of approximately $1,038,000 or 36%. This decrease was due to the completion of several grants during 2023.
Current wording
Grant income was approximately $2,627,000 for the nine months ended September 30, 2024 as compared to approximately $3,945,000 for the nine months ended September 30, 2023, a decrease of approximately $1,318,000, or 33%. This decrease was due to the completion of several grants during 2023.
Previous wording
For the six months ended June 30, 2024, the loss on foreign currency transactions was approximately $1,970,000 as compared to a gain of approximately $1,076,000 for the six months ended June 30, 2023. The 2024 loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S. dollar as of June 30, 2024 as compared to December 31, 2023. The spot exchange rate of the Euro to the U.S. dollar was $1.07 per Euro as of June 30, 2024, as compared to $1.11 per Euro at December 31, 2023. The 2023 gain was directly related to the increase in the spot exchange rate of the Euro to the U.S. dollar as of June 30, 2023 as compared to December 31, 2022. The spot exchange rate of the Euro to the U.S. dollar was $1.09 per Euro as of June 30, 2023, as compared to $1.07 per Euro at December 31, 2022.
Current wording
For the nine months ended September 30, 2024, the gain on foreign currency transactions was approximately $680,000 as compared to a loss of approximately $734,000 for the nine months ended September 30, 2023. The 2024 gain was directly related to the increase in the spot exchange rate of the Euro to the U.S. dollar at September 30, 2024 as compared to December 31, 2023. The spot exchange rate of the Euro to the U.S. dollar was $1.11 per Euro at September 30, 2024, as compared to $1.10 per Euro at December 31, 2023. The 2023 loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S. dollar at September 30, 2023 as compared to December 31, 2022. The spot exchange rate of the Euro to the U.S. dollar was $1.06 per Euro at September 30, 2023, as compared to $1.07 per Euro at December 31, 2022.
Previous wording
We have experienced substantial operating losses since inception. As of June 30, 2024, we had an accumulated deficit of approximately $293,006,000, which included losses of approximately $10,501,000 and $13,479,000 for the six-month periods ended June 30, 2024 and 2023, respectively. Historically, losses have resulted principally from costs incurred in the research and development of our polymer technology, clinical studies, and general and administrative expenses.
Current wording
We have experienced substantial operating losses since inception. As of September 30, 2024, we had an accumulated deficit of approximately $295,340,000, which included losses of approximately $12,835,000 and $22,672,000 for the nine-month periods ended September 30, 2024 and 2023, respectively. Historically, losses have resulted principally from costs incurred in the research and development of our polymer technology, clinical studies, and general and administrative expenses.
Previous wording
Since inception, our operations have been primarily financed through the issuance of debt and equity securities. As of June 30, 2024, we had current assets of approximately $21,955,000 and current liabilities of approximately $10,336,000. As of June 30, 2024, $25 million of our total shelf amount was allocated to our ATM facility, of which approximately $20.3 million is still available. During the six months ended June 30, 2024, the Company sold 53,290 shares pursuant to the Sale Agreement, at an average selling price of $1.03 per share, generating net proceeds of approximately $53,200.
Current wording
Since inception, our operations have been primarily financed through the issuance of debt and equity securities. As of September 30, 2024, we had current assets of approximately $16,597,000 and current liabilities of approximately $8,430,000. As of September 30, 2024, $19.7 million of our total shelf amount was allocated to our ATM facility and remains available. During the nine months ended September 30, 2024, the Company sold 53,290 shares pursuant to the Sale Agreement, at an average selling price of $1.03 per share, generating net proceeds of approximately $53,200.
Previous wording
We are also managing our resources proactively, continuing to invest in key areas such as our planned regulatory submission of DrugSorb-ATR to U.S. FDA and Health Canada. We have also instituted and continue to maintain tight control over expenditures.
Current wording
We are also managing our resources proactively, continuing to invest in key areas such as our regulatory submissions of DrugSorb-ATR to U.S. FDA and Health Canada. We have also instituted and continue to maintain tight control over expenditures.
Previous wording
As of June 30, 2024 we have approximately $14.9 million in cash, including approximately $8.4 million and $6.5 million in unrestricted and restricted cash, respectively. With our cost cutting efforts, we believe this is sufficient to fund the Company’s operations into the second quarter of 2025. The Company continues to pursue additional milestones related to its recently announced Avenue debt facility that would increase its unrestricted cash position by up to $10 million. If these milestones are not achieved, we will need to raise additional capital to support our ongoing operations in the future. Meanwhile the Company continues to evaluate other traditional and alternative sources of capital, including additional less or non-dilutive debt financing, royalty financing, strategic or direct investments, equity financing, and/or combinations thereof. There can be no assurance that management will be successful in these endeavors.
Current wording
As of September 30, 2024 we have approximately $12.2 million in cash, including approximately $5.7 million and $6.5 million in unrestricted and restricted cash, respectively of which the unrestricted portions not expected to fund the Company’s operations beyond the next twelve months from the issuance of these consolidated financial statements. Our Avenue Capital Group debt facility provides for the release of between $3 million and $5 million of restricted cash upon the achievement of two milestones: 1) the receipt of the FDA’s acceptance of our DrugSorb-ATR submission, and 2) the raise of between $3 million and $5 million of additional equity financing. Achievement of both milestones would provide an additional $6 million to $10 million of unrestricted cash. With our cost cutting efforts, we believe this is sufficient to fund the Company’s operations through 2025. On October 22, 2024, the Company announced the FDA acceptance of the DrugSorb-ATR marketing submission. If these milestones are not achieved, we will need to raise additional capital to support our ongoing operations in the future. Meanwhile the Company continues to evaluate other traditional and alternative sources of capital, including additional less or non-dilutive debt financing, royalty financing, strategic or direct investments, equity financing, and/or combinations thereof. There can be no assurance that management will be successful in these endeavors.
Previous wording
In March 2021, the Company entered into a lease agreement for a new operating facility at 305 College Road East, Princeton, New Jersey, which contains office, laboratory, manufacturing and warehouse space. The commencement date of the lease was April 1, 2021. The Initial Early Term began on the commencement date (April 1, 2021) and lasted two months. The Early Term commenced on June 1, 2021 and lasted until September 30, 2021. The lease also contains two five-year renewal options. Commencing on September 30, 2021, the remaining lease term will last for 15.5 years. The lease requires monthly rental payments of $25,208 for the Initial Early Term, $88,254 for the Early Term and initial monthly payments of approximately $111,171 in the first year of the remaining term. Following the first year of the remaining term, the annual base rent will increase by approximately 2.75% annually over the remaining term. The lease also contains six months of rent abatement. In addition to the base rent, payments of operating expenses and real estate taxes will be required. These payments are to be based on actual amounts incurred during 2021, multiplied by the Company’s share of the total building space (92.3%). The landlord also provided an allowance of approximately $1,455,000 related to certain building improvements as outlined in the lease. In April 2021, the Company provided the landlord with a letter of credit in the amount of approximately $1,334,000 as security.
Current wording
In March 2021, the Company entered into a lease agreement for a new operating facility at 305 College Road East, Princeton, New Jersey, which contains office, laboratory, manufacturing and warehouse space. The commencement date of the lease was April 1, 2021. The Initial Early Term began on the commencement date (April 1, 2021) and lasted two months. The Early Term commenced on June 1, 2021 and ended September 30, 2021. The lease also contains two five-year renewal options. Commencing on September 30, 2021, the remaining lease term will end in 15.5 years. The lease requires monthly rental payments of $25,208 for the Initial Early Term, $88,254 for the Early Term and initial monthly payments of approximately $111,171 in the first year of the remaining term. Following the first year of the remaining term, the annual base rent will increase by approximately 2.75% annually over the remaining term. The lease also contains six months of rent abatement. In addition to the base rent, payments of operating expenses and real estate taxes will be required. These payments are to be based on actual amounts incurred during 2021, multiplied by the Company’s share of the total building space (92.3%). The landlord also provided an allowance of approximately $1,455,000 related to certain building improvements as outlined in the lease. In April 2021, the Company provided the landlord with a letter of credit in the amount of approximately $1,334,000 as security.
Previous wording
As of June 30, 2024, the Company’s cash, cash equivalents and restricted cash balances were approximately $14.9 million, including approximately $8.4 million in cash and cash equivalents and approximately $6.5 million in restricted cash, the unrestricted portion of which is not expected to fund the Company’s operations beyond the next twelve months from the issuance of these consolidated financial statements. This matter raises substantial doubt about the Company’s ability to continue as a going concern. As a result, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company continues to pursue additional milestones related to its recently announced Avenue debt facility that would increase its unrestricted cash position by up to $10 million. If these milestones are not achieved, we will need to raise additional capital to support our ongoing operations in the future. Meanwhile the Company continues to evaluate other traditional and alternative sources of capital, including additional less or non-dilutive debt financing, royalty financing, strategic or direct investments, equity financing, and/or combinations thereof. There can be no assurance that management will be successful in these endeavors.
Current wording
As of September 30, 2024, the Company’s cash, cash equivalents and restricted cash balances were approximately $12.2 million, including approximately $5.7 million in cash and cash equivalents and approximately $6.5 million in restricted cash, of which the unrestricted portion is not expected to fund the Company’s operations beyond the next twelve months from the issuance of these consolidated financial statements. This matter raises substantial doubt about the Company’s ability to continue as a going concern. As a result, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company continues to pursue additional milestones related to its recently announced Avenue Capital Group debt facility that would increase its unrestricted cash position by up to $10 million. If these milestones are not achieved, we will need to raise additional capital to support our ongoing operations in the future. Meanwhile the Company continues to evaluate other traditional and alternative sources of capital, including additional less or non-dilutive debt financing, royalty financing, strategic or direct investments, equity financing, and/or combinations thereof. There can be no assurance that management will be successful in these endeavors.