CytoSorbents Corporation (CTSO)

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Q2 2015 Earnings Call Transcript:

CytoSorbents Corporation (NASDAQ:CTSO)
Q2 2015 Results Earnings Conference Call
August 13, 2015, 04:45 PM ET
Executives
Lee Roth - Investor Relations, The Ruth Group
Phillip Chan - Chief Executive Officer and President
Kathleen Bloch - Chief Financial Officer
Christian Steiner - Vice President of Sales and Marketing
Analysts
Jonathan Aschoff - Brean Capital
R. K. Ramakanth - HC Wainwright
Andrew D’Silva - Merriman Capital
Jan Wald - Benchmark Company
Brian Marks – Zacks Investment Research
Presentation
Operator
Good day, everyone, and welcome to the CytoSorbents Second Quarter 2015 Financial Results Conference Call. As a reminder, today’s call is being recorded. And at this time I’d like to turn it over to our moderator, Lee Roth. Please go ahead, sir.
Lee Roth
Thanks, Aaron, and good afternoon everyone. And once again, welcome to the CytoSorbents second quarter 2015 operating and financial results conference call. Joining me today from the company are Dr. Phillip Chan, Chief Executive Officer and President; Kathleen Bloch, Chief Financial Officer; and Dr. Christian Steiner, our VP of Sales and Marketing from Germany.
Before turning the call over to Dr. Chan, I’d like to remind listeners that during the call, management’s prepared remarks as well as answers to your questions may contain forward-looking statements which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions today. Therefore, the company claims protection under Safe Harbor for forward-looking statements contained within the Private Securities Litigation Reform Act of 1995.
Our actual results may differ from those discussed today and therefore, we refer you to a more detailed discussion of the risks and uncertainties listed in the company’s filings with the SEC. Any projections as to future performance represented by management include estimates as of today, August 13, 2015 and we assume no obligation to update these projections in the future as market conditions change.
During today’s call, we will have an overview presentation covering the financial and operational highlights for the second quarter by Dr. Chan and Ms. Bloch. Following that presentation, we will open the line to your questions during the live Q&A session with the full management team.
At this time, it’s now my pleasure to turn the call over to President and CEO, Dr. Phillip Chan. Dr. Chan, go ahead, please.
Phillip Chan
Thank you very much, Lee, and thank you everyone for joining the call today. It’s a pleasure to be here and welcome. Following the presentation, we’ll have a live Q&A session and an official transcript of today’s call will be available within the next week on our website at www.cytosorbents.com. For those of you who like to learn more about our flagship product, CytoSorb, I would encourage you to visit www.cytosorb.com.
CytoSorbents is a leader in critical care immunotherapy and we are leading the prevention or treatment of life-threatening inflammation in the ICU and cardiac surgery using CytoSorb blood purification. Rather than go through some introductory slides on what we do, I’d like to show you a video that was produced independently of us, so we had nothing really to do with this, by one of the major television studios in Germany about a patient who is treated with CytoSorb at the University of Rostock. We did, however, have it tagged at the end.
But for those of you on the call today, there may be a slight wait time at the end of the video before we go back into the presentation, while others with slower internet speeds finish watching the presentation. [Advertisement] Great, I think we’re back. I apologize if anyone had some technical difficulties, there are no video controls for this particular platform, and so I think the video may have restarted for some. So apologize for that.
But I think hopefully you found this video interesting, because it really speaks to the complexity of the patients that we treat and shows how CytoSorb is being used to help regain control of the patient.
So as you saw from the video, CytoSorb removes the fuel to the fire of deadly inflammation and the purpose of controlling this deadly inflammation is to prevent or treat the organ failure that is often caused by the inflammation in order to improve patient outcome and survival, while decreasing the massive costs of these critical illnesses. We continue to advance as one of the most promising revolutions in critical care medicine.
So with that, I’d like to turn it over to Kathy to talk about our operating and financial highlights. Kathy?
Kathleen Bloch
Thank you, Phil, and good afternoon, everyone. For today’s call, I will be providing an update regarding CytoSorbents’ second quarter 2015 financial results, including product sales, as well as an update around our working capital and cash runway.
Turning to our financial results for the second quarter of 2015, our CytoSorb product sales were approximately $773,000, which is a 17% increase over second quarter 2014 product sales of approximately $663,000. The decrease in the euro had the impact of reducing sales in the second quarter of 2015 by approximately $147,000 or 19% of total product sales. In other words, if we eliminate the impact of the decline in the euro relative to the dollar, second quarter 2015 product sales would have been approximately $920,000.
Our grant and other income was $190,000 for the second quarter of 2015, as compared to approximately $361,000 for the second quarter of 2014 and that’s as a result of the conclusion of several significant grants.
We also note that we were able to achieve gross product profit margins of approximately 63% in the second quarter of 2015, compared to 65% for the second quarter of 2014, and this was despite the drop in the euro that we experienced.
Next, a quick review of our six-month revenue results. Our CytoSorb product sales for the six months ended June 30, 2015, were approximately $1.5 million, which is a 20% increase over the first half of 2014 product sales of approximately $1.2 million. In the first half of 2015, the value of the euro averaged $1.12 as compared to the first half of 2014 when the euro value averaged $1.37. The decrease in the euro had the impact of reducing sales in 2015 by approximately $259,000, or 19% of total product sales.
Trailing 12-month product revenue for the period ended June 30, 2015, was approximately $3.4 million, as compared to approximately $1.8 million for the 12-month period ended June 30, 2014.
Next, we’ll look at our chart of products sales by quarter, which shows an increase in sales in Q2 2015 over the first quarter of 2015. Comparing 2015 product sales to the third and fourth quarters of 2014, the single largest factor impacting 2015 product sales is the fact that there were no new significant distributor initial orders in the first or second quarter of 2015, which is simply a matter of the timing of bringing our new distributors onboard.
In the second half of 2015, we expect to potentially benefit from initial product rollouts in France, Poland, Sweden, Norway, Denmark and Finland by Fresenius and also rollouts in Saudi Arabia as well as Australia and New Zealand. The other factors that were impacting 2015 sales include, first, the impact of the restructuring of the sales force; the second quarter of 2015 represented the highest number of devices sold by our direct sales force in any quarter in our history and yet we will not realize the full impact of our newly expanded sales team until into the second half of 2015.
Secondly, the decline in the value of the euro to the dollar, which we will look at a little more closely. The impact of the decline in the euro can be significant and we really see that on this next graph where we have illustrated sales in the first and second quarters of 2015 as if the euro to dollar exchange rate was unchanged from the same periods in 2014.
Eliminating this change in the exchange rate, sales would be approximately $816,000 for the first quarter of 2015 and $920,000 for the second quarter of 2015, as illustrated in this graph. In fact, if we remove the impact of exchange rate fluctuations, the second quarter of 2015 would have been our second highest quarterly sales in CytoSorb’s history.
Adjusted for the change in the euro, our product sales for the first half of 2015 would be $1.7 million, which is a 41% increase in product sales as compared to the same period of the prior year, rather than the 20% increase actually reported.
Next, I’d like to provide some information on our working capital position and cash runway. As of June 30, 2015, we had approximately $11.2 million in cash and short-term investments. Our gross cash burn for the second quarter of 2015 was approximately $2.6 million. That was partially offset by the receipt of approximately $0.5 million in cash from the exercise of warrants.
Our working capital, excluding the warrant liability, which is a non-cash item, was approximately $11.9 million at the end of June 2015. We believe we have adequate funding to meet our objectives into 2016.
On July 23, 2015, we filed our S-3 shelf registration, which became effective on July 29. This registration gives the company the ability to raise up to $100 million to register offerings of our common stock, preferred stock, warrants, et cetera. This shelf registration is effective for three years.
Note that the company has no immediate plans to raise capital, but we believe it is in our best interest to have the shelf available to permit us to be able to raise capital with flexibility in the future.
And just briefly looking at our capital structure, on a fully diluted basis, we currently have approximately 29 million common shares outstanding.
One final note, I’d also like to mention a recently gained membership in the Russell Microcap Index, which will remain in place for one year. And this gives the company automatic inclusion in the appropriate growth and value-style indices. This is a significant corporate achievement that is expected to increase visibility and exposure of our company and our life-saving technology to the broader investment community.
Russell indices are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. An inclusion in the index complements our continued institutional investor outreach.
And now I’d like to turn the call back over to Phil. Phil?
Phillip Chan
Thank you very much, Kathy. As Kathy mentioned, if we disregard the effect of the euro, we had our second best quarter in terms of product sales in the history of our company. This was primarily driven by new orders and reorders in our direct sales territories, even with a sales force of four people. But we’re looking forward to an even stronger second half. As I mentioned in the press release, there are number of potential major catalysts coming up.
First, we’ve strengthened the direct sales team with the addition of Steffen Martens, who is covering North East Germany, and Andreas Pendleder, who is covering Western Germany. In addition, we’re working with a cardiac surgery contract sales representative and before the end of this year, we hope to increase our sales team back to nine people and add a medical science liaison, an MD [indiscernible] who will help give lectures, educational sessions and provide support to the sales team.
Another major catalyst is that we’re now selling in three new countries. We recently announced Saudi FDA approval and Medical Device Marketing Authorization, which enables sales in Saudi Arabia with a population of 29 million people via our partner Techno Orbits. Typically these orders are done through tenders and these tender orders can be substantial. It also potentially opens doors to the rest of the Middle East.
In addition, we signed with TekMed for Australia and New Zealand and this targets a collective population of 28 million people. CytoSorb is registered already, so sales can begin immediately.
In addition, Fresenius Medical Care looks to turn on in the second half of 2015. In fact, initial marketing to key opinion leaders in critical care plan in the third quarter of 2015 in France, Sweden, Norway, Finland, Denmark and Poland, with a total collective population of about 131 million people.
CytoSorb will not only be certified on the existing Fresenius multiFiltrate machine, but will also be certified on the newly-launched multiFiltratePRO dialysis machine as pictured on the left here. Sales training and preparation of marketing literature are ongoing and suffice it to say both sides are very eager to get started.
But what we’re doing here is selling the seeds of growth. Listed here in these tables are our 31 countries where we have currently either direct sales or distribution through independent distributors as well as strategic partners. On the left-hand side are those contributing to revenue and those on the right-hand side are not yet contributing to revenue for whatever reason it could be, the main reason is typically that they are still in the registration process.
But what you can see here is that with TekMed and Techno Orbits, we are adding 57 million people to the addressable markets that we target, with the Q3 start, so this quarter. And as I just mentioned, for Fresenius, they are planning a third quarter start, so this quarter, and that opens up a market of approximately 131 million people.
Russia has been in registration for quite some time, we anticipate that that registration will be completed hopefully within the next couple of quarters. We are also actively, with our authorized representative, working on registration in the other countries in the GCC, and in the Middle East. And last but not least, we announced also that we have distribution with AlphaMedix for CytoSorb in Israel critical care and cardiac surgery applications and they are actively pursuing Israeli registration of CytoSorb now.
I think it’s very important to note that we are just tapping into these major markets. We expect that the third quarter of 2015 to begin to reflect the initiation of selling in new markets covering approximately 188 million people or approximately 600,000 cases of severe sepsis or septic shock per year, using of a rough guidance – incidence of about 300 cases per 100,000 people.
And given that we obtain roughly $3,000 to $5,000 in CytoSorb treatment revenue per patient, these new territories enable us to target a $1.8 billion to $3.0 billion total addressable market for sepsis alone. If we talk about critical care applications, outside of sepsis, this doubles – effectively doubles this total addressable market and this does not even include the potential upside benefit of cardiac surgery.
This goes back to the slide that I presented in the last conference call, of how we look to grow our sales and it really is a layering of our current direct sales and expansion and organic growth of those direct sales with our current distributors, with our partners turning on like Biocon, one of the largest cardiac surgery companies in the world as well as Fresenius, as well as turning on of the Middle East and other countries around the world. You could see how the numbers could get big very, very quickly.
So with that, that leads me into an update for the cardiac surgery partner that we have been talking about and I’m pleased to say that the evaluation by our cardiac surgery partner in France, again one of the top four cardiac surgery companies in the world, continues to go well and although slower than anticipated should be completed in the next several months.
Meanwhile, two randomized, controlled studies, one at the University of Hamburg-Eppendorf and the other at the Medical University of Vienna using CytoSorb intra-operatively during cardiac surgery have both completed with data expected later this year. In fact, both principal investigators will be presenting at the Second Annual International CytoSorb Users Meeting in Berlin, Germany in October.
Last but not least, CytoSorb has been used safely now in more than 300 intra-operative cardiac surgery cases to date. We believe actually this number underestimates the true number that have actually been used for cardiac surgery.
And that provides another nice segue into a REFRESH update. Again, this is our one of the two pathways to seek US approval for CytoSorb in the United States and REFRESH stands for the reduction in free hemoglobin. The FDA has approved our amendment to expand the trial to a 40-patient randomized controlled study at eight centers. This differs from the original approval which was for a 20-patient three center study that was a single arm only study where we were going to compare that to a not non-interventional trial in a larger number of centers. This one study now consolidates those two studies together.
Led by our Chief Medical Officer, Dr. Robert Bartlett, we are in the process of negotiating and finalizing clinical trial agreements and obtaining IRB approvals with eight major cardiac surgery centers in the United States. We have obtained central IRB approval which is applicable in some of the sites, we’ve established our data safety monitoring board with some very well known key opinion leaders in the space of cardiac surgery and post-operative cardiac surgery care and we are on schedule to start enrolment in September 2015 with the goal of completing enrolment in either the fourth quarter of 2015 or in the first quarter of 2016.
We are also pleased to have added Steven Sisk as our Director of Clinical Operations. He was formerly at Medtronic and will oversee the day-to-day operations of the trial. He replaces Dr. Greg Di Russo who stepped down for personal reasons. And this trial is expected to support the REFRESH II registration trial for CytoSorb that we hope to begin in 2016.
For those of you who need a reminder of what the REFRESH trial looks like, it is a 40 patient eight-center randomized controlled feasibility study using CytoSorb intra-operatively in a bypass circuit during complex cardiac surgery, lasting more than 180 minutes. And this is elective non-emergent complex cardiac surgery.
There will be two arms, one arm will be the control arm, 20 patients standard of care, versus the second arm which would be the CytoSorb plus standard of care arm and there would be 20 patients in that arm as well. Our primary endpoint is safety; our primary efficacy endpoint is the reduction in plasma free hemoglobin and secondary endpoints include clinical outcomes as well as biomarker reduction outcomes as well.
Now, some have asked, well, what is it about plasma free hemoglobin and why are you interested in reducing it during cardiac surgery? Well, patients undergoing complex cardiac surgery typically are under cardiac bypass for long periods of time. And typically these are surgeries where they are cutting into the heart, like multiple valve replacement surgeries, congenital defect repair, all that implant patients and many others.
And what happens is that there is a lot of bleeding and hence there is also a need for a lot of cardiotomy suction where they are sucking blood from the field. Blood cells under negative pressure creates homolysis and homolysis of red blood cells release a large amount of plasma free hemoglobin into circulation.
Once the natural scavenging mechanism of the body, which include a molecule called haptoglobin is overwhelmed, plasma free hemoglobin can then cause its negative effects. And some of the major negative effects are causing a depletion of plasma nitric oxide. The nitric oxide is one of the most important molecules in your body that regulates blood vessel count and actually causes blood vessels [indiscernible] to expand.
Now, when free hemoglobin scavenges this nitric oxide, then the blood vessel start to clamp down, leading to high levels of systemic resistance in the body as well as the pulmonary hypertension. It can also cause the renal vascular clamp down causing renal ischemia and acute kidney injury as well as causing intestinal mucosal injury, organ failure and other complications. Plasma free hemoglobin, because it’s an iron-containing protein and iron radical containing protein can actually lead to the generation of oxygen radicals as well that can lead to oxidative injury to tissue. So plasma free hemoglobin is very dangerous.
And in this one slide, in this one figure, from a paper done by [Win San], a leader in this area of free hemoglobin and the negative effects of free hemoglobin, it is very clear that those patients who do not develop kidney injury have relatively low levels of free hemoglobin, while those who do develop acute kidney injury, or AKI, have much higher levels of free hemoglobin and this is highly statistically significant. There is actually a lot of science behind the dangers of plasma free hemoglobin.
And this is what we are looking to do with CytoSorb; we are looking to scavenge these inflammatory mediators and free hemoglobin during the cardiac surgery procedure while they are being generated to try to prevent these bad things from happening. So we are advised by a number of key opinion leaders in the field from places like the University of Kentucky, Dr. Robert Bartlett, our Chief Medical Officer from University of Michigan, Texas Children’s University of Michigan, Cleveland Clinic Foundation, Columbia University as well as the University of Pittsburgh Medical Center.
Now, the second pathway that we are looking to get approved is the Expedited Access Pathway and we have talked about this before. It’s essentially new guidance from the FDA that will allow medical devices that address major unmet medical needs and that are potentially life-saving to be approved in a much more rapid pathway, so in a fast track pathway similar to the breakthrough designation pathway for drugs and biologics.
And in doing so, the FDA has given guidance that they are willing to accept registration trials that lead to the early market approval of medical devices. They are willing to accept lesser endpoints in those trials in order to get the product to the market more quickly, provided that the devices are safe.
And then in the post-market period, they would require the sponsor, the sponsor in this case would be us, to then commit to the post-market study that would then prove out the much more stringent endpoints to stay on the market. And so we’ve been working very diligently on the EAP application for sepsis and expect to file it with the FDA in the coming weeks.
The application must be very thorough, including a data designation plan that details in very high detail the clinical trials that must be pursued in the premarket as well as the post-market periods. Once we submit the FDA response, an EAP designation is expected within 30 days of submission, but it could be delayed due to questions.
Now EAP is the first step in the EAP pathway that basically allies sponsors like us with the FDA and now come up with the clinical studies that are necessary to get the product approved in the most rapid way possible and then of course the studies that are needed in the post-market period to stay on the market. We are very excited by this pathway, because we believe that CytoSorb is well-suited to this pathway, given the many diseases, life-threatening diseases that we treat.
One of the reasons why we chose sepsis for this EAP pathway is unlike any other therapy that has been tried for the treatment of sepsis in the past, CytoSorb attacks sepsis from many different facets and attacks it very broadly. What we typically talk about is how CytoSorb reduces inflammatory cytokines that reduces the systemic inflammatory response syndrome to reduce organ failure, but it does much more than that.
In fact, we have data that it can remove immunosuppressive cytokines and re-establish immune responsiveness. This is particularly very important, because many people who developed sepsis get prone because of immune suppression to secondary infections like MRSA infections or other hospital-acquired infections, catheter-related infections and other things and wind up dying from those secondary infections. This is very important.
A third way is an underappreciated mechanism in the treatment of sepsis and this is in the removal of bacterial toxins. Through our work with DARPA and others, we have learned that CytoSorb removes many different bacterial toxins extremely efficiently. For example, we know that we can remove staph aureus alpha hemolysin, one of the most dangerous toxins and one of the reasons why MRSA and staph aureus are so virulent. We can remove that with our CytoSorb device.
Also through work done by Dr. John Kellum, we now know that we can establish proper leukocyte trafficking to prevent cell mediated organ injury. That means that we are able to direct immune system to where it should go to fight infection and away from innocent organs that are not even infected to try to prevent cell-mediated organ injury and organ failure.
Now, another area that we are finding CytoSorb is having benefit in is in the improvement in human genomics and the stabilization of patients. In just a few moments, I’ll give you several examples of that.
If you don’t have high enough blood pressure to push oxygenated blood to your vital organs, those organs will die and this is a common problem in patients who are in septic shock or in shock for other critical care reasons, for other illnesses, like anaphylaxis for example or from trauma, et cetera.
Last but not least, another area that we are finding that the device is working well is in the reduction of capillary leak syndrome. It is well known that cytokines like tumor necrosis factor, Interleukin-1 beta and others disrupt the endothelial lining of blood vessels, the cell to cell interactions that maintain the patency – that maintain the integrity of these blood vessels. When cytokines disrupt those intercellular connections, all of a sudden now there is a direct pathway of fluid from the blood vessels into the surrounding tissues and that’s a bad thing.
When this happens in the lungs for example, the air sacks in the lungs then start filling up with fluid and the patient is essentially drowning himself/herself from the inside out. And so we’re finding that CytoSorb is helping reduce capillary leak syndrome. So we believe that there has been no other single therapy that has demonstrated this broad range of activity which is one of the reasons why we are very excited about moving forward in this path.
Now, one of the taglines that we have now is SIRS and SEPSIS: Regain control and I would like to, in addition to the case report study that we went over in the video, I have several case report studies that I’d just like to convey to you, just show you how the device is being used today.
So in one case report on septic shock, there was a 72-year-old man who was admitted with sepsis from a urinary tract infection. Now, despite the appropriate broad antibiotic coverage, his condition and human dynamics stability rapidly deteriorated with a concurrent elevation in plasma inflammatory mediators. Now, this is very common in sepsis, you can control or kill the bacteria, but if you don’t control the immune response these patients rapidly destabilize, that is the purpose of CytoSorb.
This patient developed full-blown multi-organ failure, developed septic shock, respiratory failure, coagulopathy, liver dysfunction and kidney failure and because of his kidney failure he was placed on standard CRR, continuous renal replacement, hemofiltration, but instead of using that alone, they used it with CytoSorb.
And they did three CytoSorb treatments in the subsequent days. And in the first and second consecutive sessions, it caused a massive reduction in inflammatory mediators as well as bilirubin which is produced by the liver, which can be toxic, and a marked reduced need for vasopressors, which are strong medicines like epinephrine and adrenaline to help boost your blood pressure, with a significant improvement in human dynamics, so a stabilization of blood pressure and reduced signs of capillary leak syndrome.
And then due to a recurring inflammatory second hit episode that the patient had undergone, another session of CytoSorb was run and he was a rapidly stabilized, yet the second time with CytoSorb. The treatment was safe and well tolerated and helped regain control of this very sick patient who survived.
In a second care report study, it was a 45 year old man who was admitted with a small intestinal obstruction due to torsion. This is when the intestine turn on themselves and basically like a sausage basically cut themselves off and cut off the blood supply to the intestines which can then go on to become ischemic and die.
He was immediately scheduled for surgical intervention, but unfortunately he aspirated during anesthesia induction and then rapidly developed one of the worse and most fatal forms of lung failure called acute respiratory distress syndrome or ARDS and he required ECMO therapy which is what Dr. Robert Bartlett, our Chief Medical Officer, have pioneered, to basically ensure he had sufficient oxygen supply.
But he developed a massive inflammatory response with shock and capillary leak syndrome, he was swell all over his body, he had massive organ failure. And CytoSorb was initiated on him and led to a very rapid decrease in IL6 and IL8, two major cytokines, paralleled by a marked clinical stabilization of the patient, including a significant reduction in vasopressors and a significant improvement in lung function, again reminiscent of the previous study, the previous case report.
And in this patient, again, CytoSorb helped to regain control of the patient over the initially dramatic hyper inflammatory response help stabilize the patient human dynamically ultimately leading to his full recovery. CytoSorb treatment again was safe with no serious device-related adverse events noted.
Last but not least, another case of rhabdomyolysis. This was a patient who is 55 years old, he was transferred from an outside hospital with sepsis from pneumonia and ARDS, but developed complications. And at the outside hospital, he had developed a complication called compartment syndrome, where high pressure builds up in a muscle compartment that cannot expand. So what happens is that the muscle tissue can’t get blood supply because of the high pressures and it becomes damaged and they die. They become necrotic, these cells, and they release a myoglobin which is an oxygen-carrying component protein within the muscle cell and that leads to something called rhabdomyolysis.
This myoglobin can [indiscernible] in the kidney and it can cause kidney failure. So in addition, his inflammatory markers were extremely elevated and he also developed acute liver dysfunction. This patient underwent four consecutive CytoSorb treatments 20 hours each and during the course of the treatment his plasma concentrations of IL6 procalcitonin, myoglobin and others decreased significantly with a simultaneous normalization of a lot of his normal laboratory parameters.
And with treatment, he had a strong improvement in his clinical situation, again they were able to regain control of this patient, helping stabilize his respiratory and liver function. And in this patient, CytoSorb resulted in many improvements, not just organ failure and organ function, but also reduction in inflammatory mediators, but also the additional benefit of treating rhabdomyolysis and preventing kidney failure. And again, this patient went on to a full recovery. And again, the treatment was safe with no serious device-related adverse events.
But there is much more to report and certainly much more than we can talk about today on this call. We’d like to get to the Q&A session. But CytoSorb is helping to save lives around the world. This is very clear. And more clinical data will be made public in October at three major upcoming events. One of them that we are very excited about is the Second International CytoSorb Users Meeting in Berlin, Germany on October 2 and we are expecting 100 to 150 attendees.
We have three keynote speeches; we probably have one of the most robust lineups in terms of clinical data that we’ve ever had. We have a total of 17 presentations and we have reports from the PIs from many of the investigator-initiated studies that are currently enrolling and including the ones that are completed at the University of Hamburg and Medical University of Vienna in cardiac surgery. We also have five to six case series, but these are not just case reports, but they are actually the hospitals’ clinical experience in specific areas like burn injuries, sepsis, post-op cardiac surgery, lung transplant, rhabdomyolysis and others where they are going to be presenting these data.
And so it’s going to be very exciting. This will be followed by a very extensive coverage of where we will have a booth and sessions, clinical sessions and educational sessions at the ESICM meeting, European Society of Intensive Care Medicine meeting in Berlin, Germany as well as the EACS meeting, the European Association for Cardio-Thoracic Surgery meeting in Amsterdam, in the Netherlands that same week.
So with that, we are very excited about the second half of this year. We think that the first year turned out very well, but the second half we’re looking at even better things to come. And with that, that is the end of our prepared remarks and so Lee if you would like to start the Q&A session.
Lee Roth
Aaron, could you give the Q&A direction?
Question-and-Answer Session
Operator
[Operator Instructions] And we’ll take our first question from Jonathan Aschoff with Brean Capital.
Jonathan Aschoff
So after 2015, when you have the extra two in sales hired and a liaison, that will definitely be enough for your current direct sales territory and what will be the most likely next territory or territories if they are going to happen in a similar year or intermediate term and how many more sales people you think you need for that?
Phillip Chan
When you talk to a major dialysis companies in Germany, they typically have on the order of about 10 to 12 salespeople for the entire country. So in fact, even as a small company, having nine people hopefully by the end of the year we’ll be right up there with these major renal dialysis companies. So we feel comfortable that we will have enough people to cover our direct territories well.
And as you know, we have a mixed revenue model with both direct sales as well as sales through both partners and distributors. And we felt at the beginning and we continue to feel this that Germany, Austria and Switzerland represent a great market for us to target directly with our sales force and it allows us to have our own destiny in our own hands and again Germany is a multi-billion dollar market in critical care, it’s $1 billion to $1.5 billion market alone. So if we are successful nowhere else in the world, we could do very well by just being successful in Germany.
That being said, we are looking to leverage – because we are a small company, we cannot really have a direct sales force all over the world and that’s one of the reasons why we are leveraging the sales and marketing distribution network of our partners as well as our independent distributors. And really that is the strategy going forward. We are not looking to open up new territories for direct sales, but it will be a blend between Austria, Germany and Switzerland and the rest of the world.
Jonathan Aschoff
I was just wondering with the clear value inflection with the US approval and we are all looking forward to that, what could delay the start of the REFRESH beyond September?
Phillip Chan
Right now, we feel very good about where we are. Clearly, legal negotiations with universities can take some time. And that is one of the things that is a pent-looming factor, but I think we are in very good shape here and with bringing on – Steven Sisk has been with us for whole of two weeks, but has really taken up the reins and will be a major positive for us for the REFRESH trial. We feel very confident about starting the trial in September. Now, not necessarily all sites will start at the same time, but the way that we are progressing, they should all come on very shortly one after another.
Jonathan Aschoff
May I just have the cost for both of these REFRESH trials?
Phillip Chan
So the current REFRESH trial that we are looking to do here with 40 patients is under $2 million. The REFRESH II trial that we are looking at will be on the order of about $8 million to $10 million.
Operator
And we will go next to R. K. Ramakanth with HC Wainwright.
R. K. Ramakanth
The sales of $773,000 that you reported today, could you help us understand what part of it comes from [indiscernible] comes from India, which seem to be two major geographies at this point?
Phillip Chan
So we have not broken out the direct sales versus distributor sales in the past. Right now, these are very lumpy, they vary quarter to quarter. What I can say is and what I will reiterate is what I said in the prepared remarks, is that the strength was really in direct sales and despite having a small sales force of only four people, we were able to achieve our second strongest quarter in our history in terms of product sales.
But going forward, we expect that India will be a very important player. They have already sent us their plans for their clinical trials that they will be funding and they are expanding in Sri Lanka and also throughout all of India with their direct sales force. And so we expect that India will become – it already is an important partner, but Biocon will become an even more important partner going forward.
And so I think as Kathy mentioned, we did not have the benefit of initial orders from distributors, but we continue to have negotiations with independent distributors and as well strategic partners and look to help boost the distributor and partner side going forward.
R. K. Ramakanth
So as you said with four sales folks, you are doing quite good. So you should get to this sales team of nine that you are expecting in the second half. How directly coordinated will that be or how long will it take for the new folks to come in and learn the business before you can actually get to see the full potential of having the full team together?
Phillip Chan
Normally what we’ve seen in the past is that it takes salespeople roughly 3 to 6 months to get started. But I think the two sales people that we just added in July and August are well known to our team, they worked together before and they are veterans in critical care medicine. And so they have established networks, they’re very smart guys as well and they’ve come up to speed very quickly. We’ve also been preparing them ahead of time as well with materials and other things to help get them up to speed quickly. So we think that they will be productive very soon.
And I think that it’s important to note that we have talked previously about what is the potential value of a single hospital customer, right? And we have said that based on the incidents of sepsis and other critical care illnesses, a hospital, if we became standard of care, CytoSorb became standard of care for sepsis or for other critical care illnesses, could command potentially a revenue generation of $1 million to $2 million per hospital.
Now, there are more than 400 hospitals in Germany that are 400 beds or more. In fact, there are 2,100 acute care hospitals throughout the country. So you could see how the numbers could get very big very quickly and how hospitals within each of the individual salespeople’s territories can become much bigger than what we are even seeing now. One hospital could [for our] entire revenue – for our entire product revenue for this quarter as a matter of fact. So I think that there is still a lot more productivity that we expect out of the sales people, there are still a lot more that they can do individually and we expect the new sales people to come online very quickly.
R. K. Ramakanth
So even when you hire the sales folks, I don’t know sales folks are being with you for a while, so what is stopping you or what is stopping your sales force from getting to the point where you’re just discussing about getting like a full possible order?
Phillip Chan
I think Christian can comment on this as well. But I think what we’re seeing in the marketplace is that there is a tremendous amount of enthusiasm in the marketplace amongst physicians. I think that is very clear. We are with the major key opinion leaders in critical care medicine in Germany, Austria and Switzerland and in fact in many countries around the world. And I think that enthusiasm is really key to our visibility and our confidence going forward that this is a real business that will be successful.
I think sometimes where we get stuck is in reimbursement, so we are spending a lot of resources in achieving reimbursement in different countries. We are working heavily on targeting the hospital administration also. Sometimes the hospital administration will say, well, that’s fine that you want this product, but show me the data, show me something that says that this is helping save lives and improve outcomes?
So we are for the very focused on generating that data. As I’ve talked to you already, there are going to be many case series that will be presented with a lot of data in many different areas in both cardiac surgery and critical care that will help address that concern. And so I think that’s one of the areas that we are heavily focused on and trying to fix.
But I think the message to hospital administrators is this. When you look – CytoSorb is not just another loss item on their P&L, right. CytoSorb is one of those therapies that has the ability to change the potential economics in that hospital, because it’s addressing such a big issue.
Now, if you read the literature and you talk to hospital administrators, somewhere on the order of 10% to 20% of a hospital’s operating expenses are due to critical care medicine and one of the reasons why critical care medicine is so expensive is that they lack effective tool to help these patients get better, they lack effective tools to help prevent organ failure and why did these patients stay in the ICU at a cost of $2,000 to $3,000 a day, it’s because they are stuck on a machine because their lungs don’t work. They are stuck on mechanical ventilation because their lungs don’t work or their stuck on dialysis because their kidneys don’t work. This is where the costs are for a hospital.
And this is where hospitals are losing billions of dollars both here in the United States as well as abroad. This is the message that we need to get to these hospital administrators that says this product CytoSorb has the ability to change the economics of your hospital and reduce significant cost in your hospital and that’s really where we are trying to go. And I think that’s really – if we can get there, that will open up a major – a significant bottleneck in the sales process. Christian, I don’t know if you wanted to comment on anything I said.
Christian Steiner
It’s like complex situation [indiscernible] like this, actually it’s a product shift what we help to bring to the hospitals and this is very difficult task to work on. As an example, [indiscernible] owning a Tesla motorcar, so I guess very few of you. Despite the message and the idea about this was really compelling and everyone can normally understand that this driving an electric car is good for the environment, so same is true in our situation. So a lot of those people are in the study, but they are obviously caught in a situation where they have to care about the cost, they have to care about the risk, and the data we have at the moment is limited. So the decision process in the hospital is very difficult and lot of stakeholders had to be convinced. I think that is describing best why it takes its time.
R. K. Ramakanth
One last one, with most of your revenue coming from euro-based, the dollar strengthening all the time, have you ever considered getting some of your manufacturing done in Europe either directly or through contract manufacturing so that it can help your contribution margin?
Phillip Chan
So let me say a few words and then turn it over to Kathy to talk about how we are hedging our currency risk currently. So there is a lot of know-how that goes into our technology. We have 32 issued US patents, multiple applications pending worldwide. And it’s very important for us to maintain that know-how, those trade secrets in terms of manufacturing to keep our competitive edge.
In the meantime, we continue to innovate beyond what even CytoSorb is to come up with the next generation technologies to move forward. So in order to best control that, it is being in our favor to and in our best interest to maintain US manufacturing, it also allows us very strict control over the quality of our product, which is very strong. But from that standpoint, talking about the euro and the dollar, let me turn it over to Kathy for some of her comments.
Kathleen Bloch
We have a couple of just naturally build in hedges with regard to the euro. One is that probably approximately half of our sales are in dollars. So even though we are selling to some of the countries that are outside of the US, some of the larger relationships, those sales are in dollars.
And then also we don’t see it in the revenue number which is what we are also focused on right now, but we still have substantial costs in Germany and while the revenues are coming down, the cost of doing business in Germany having our sales and marketing team and our support teams over there and our investigator-initiated studies, those costs are coming down as the euro comes down. Of course, since we are focusing on the revenue line, we don’t really see that benefit coming through.
Operator
And we will go next to Andrew D’Silva with Merriman Capital.
Andrew D’Silva
I just got a couple of quick questions. A lot of them have already been answered. First off, as far as Germany goes, or with some of the hospitals that you’ve had time to really have some historic data, how sticky are you seeing CytoSorb be with doctors that are already utilizing it in various therapies?
Phillip Chan
Christian, this would be a good one for you to comment on.
Christian Steiner
Can you repeat the question, because...
Andrew D’Silva
How sticky are you seeing the product in some of the hospitals that you had time historically to get that out of?
Christian Steiner
So I’m not a native speaker, so sticky means probably how good we are in these hospitals and have repeat business?
Andrew D’Silva
Yes. So with a physician, after they’ve utilized the product one time, do you have any data as far as are they coming back and utilizing it over and over again?
Christian Steiner
I got you. Actually if you look at our business, the whole business we are doing is actually based on this, because at the moment the data we can present is limited and so every business we are doing at the moment is based on experience. So our goal is for every of those potential customers to bring them to the first patient, to choose with them together the perfect patient to succeed and then bring them – this is a positive experience to repeated use. And that’s what we are doing and we are improving our processes in doing so. We have improved our recommendations regarding patient selection, how to treat, when to treat or who to treat and so this more and more is successful, actually the patients are repeating, absolutely.
Andrew D’Silva
So reused with doctors that have initially used the product is increasing, that’s the situation?
Christian Steiner
Absolutely.
Phillip Chan
I would say just as a comment to that, I mean the majority of our orders are actually pre-orders. One of the things that is interesting that we are seeing right now is in fact orders from smaller hospitals that’s around the big regional hospitals, the big major tertiary care hospitals and they’re curing word of mouth that the device is working, they are hearing from their colleagues in the larger hospitals how it’s being used and they are ordering now as well.
So we are actually getting a very nice mix now of both reorders from existing customers as well as direct customers as well. Those first-time users, those new users, those new user accounts are typically small that they are just using the product initially, but they are at the beginning of the process and as the as they grow, those accounts will become more significant as well. So I think there is a very nice ecosystem that we are seeing based upon the successes that clinicians are having with CytoSorb in the market today.
Andrew D’Silva
My next question is just around your sales process and trying to get a little bit more insight into what to expect out of some of the new markets like Australia and Saudi Arabia, first off, have sales began there and then if so are there any notable hospitals that are looking to utilize your product or utilizing your product? And if not, what is the step to get in the door with them so that they are aware of the potential that it offers?
Phillip Chan
I think when we choose distributors and when we choose strategic partners, we are very careful in trying to find players that have existing networks in critical care or cardiac surgery is very important. Relationships at this stage for whenever you introduce new products is really key. And so that has been a requirement of all the distributors that we have. And what we’ve seen is that they will take the product to their closest customers, to the main customers, to the big key opinion leaders at major hospitals. And that will start with them first and then it grows from there.
Now, unlike I think when we started off in Germany and really had no clinical experience, I think as we move forward with new territories and new distributors and new partners we have a much broader base of clinical understanding and clinical knowledge and clinical data to help support those launches in those countries. And so I think that what we will see from these new territories that are coming online is that they will kick off more quickly, benefiting from the data that is being generated elsewhere in the world both in the past and currently.
Andrew D’Silva
And then as far as Biocon and India goes, couple of quarters ago they were really increasing their investment in getting the name out of CytoSorb, has there been an update in some of their efforts and has that translated to any increased use?
Phillip Chan
What we’ve seen from Biocon is that Biocon is very excited about the product. I think that – what they are trying to move the market to is using CytoSorb earlier during critical illnesses. So when it’s being used too late as it often sometimes is, unfortunately in India because of the cost of the device, as you know, device costs – the pricing is different. What I would say is that the cost of medical care is a lot cheaper in India than it is elsewhere in the world. So to come in with a premium product like ours which is not being discounted by the way in India, but to come in with a premium product like ours there is that economic issue.
But I think what Biocon has been seeing is that when they get people to use it earlier as it is being used in other parts of the world, like Germany, Austria, Turkey, Netherlands et cetera, they are seeing much higher rates of success where they’re getting more comfortable in recommending the therapy earlier and recommending the therapy to patients’ families earlier.
And so I think things continue to develop at Biocon, they continue to put forth a lot of resources towards this. We just had a call with them very recently, everybody is very excited, the team over there is very excited about what they are seeing in the marketplace. So again, as I mentioned to R.K., we expect that India will become a significant player, it is already, but will become an even more significant player in the future.
Andrew D’Silva
Just a last question, will just Germany as proxy, what do you see as being the major catalyst for you to take CytoSorb in that region from a product that’s utilized from time to time or where you’ve got only in one hospital to a standard of care within the whole region? If you were to put a timeline window on how long it would be before it’s too long, could you maybe explain that and quantify that for me?
Phillip Chan
So I think that in Germany, I think of experience in Germany has been that – what we know is that there is nothing to help patients, nothing other than supportive care medicine to help patients who are critically ill. That means that for the markets that we serve which are severe sepsis and septic shock, trauma, burn injury, pancreatitis, severe liver disease, acute respiratory distress syndrome, complications of cardiac surgery, post-operative inflammation and many, many others, there is nothing that they can do.
So the bar actually is very low in terms of trying to become standard of care in these areas. Clearly, you need data, you need experience, but what we found is that and what we will hopefully see in these case series during our International Users Meeting is that people have seen it work, they been refining how to treat and when to treat and who to treat with people with specific illnesses. And that they have success and they have increasing success as they revise their treatment protocols and that is becoming standard of care without – at that institution without it ever having gone through a multiple site randomized controlled trial for that indication.
For example, we have some hospitals, a couple of hospitals right now that had so many experiences with rhabdomyolysis, that’s one of the case report studies that we talked about before, where it’s been used very effectively that they are telling us that they are using it on all of the rhabdomyolysis patients. We have some applications in cardiac surgery, for example, where the device is helping stabilize patients intra-operatively, some certain types of surgeries and they’re telling us that they are using it now on all those cases that involve this particular disease in cardiac surgery as well.
Interestingly, we are seeing this grassroots standard of care movement with CytoSorb therapy. Clearly, we look to accelerate that and augment that with company-sponsored as well as investigator-initiated studies that’s specifically in a randomized-controlled fashion prove this to be the case. And we are absolutely committed to doing that. But what we are seeing right now is that it’s such a major unmet medical need, they’re seeing the success in their our own hands with the product that it’s becoming standard of care in these pockets in different hospitals around Germany. So hopefully that answers your question.
Operator
And you will go next to Jan Wald with Benchmark Company.
Jan Wald
I guess I have a couple left. Phil, you talked in the call about registration and then reimbursement, how do we understand what was going to happen in the European countries and in Asia in terms of getting the registrations completed and then eventually having to get reimbursement?
Phillip Chan
So in terms of registration in Europe, technically the bar is very low to get registration in Europe because of our CE Mark approval. In fact, the registration process typically takes several months and so for example [indiscernible] case, all these countries are registered. So that’s not the issue.
Outside of the European Union, however, they will accept CE Mark approval, but typically the process of registration is longer. They require more documentation, they have their own – each individual country typically has its own requirements in terms of documentation and some are very detailed and some just require different documents that we need to produce and that kind of thing.
So from that standpoint, it’s a process that takes time. But the good part is that we are – with the Saudi FDA approval and the market authorization there, it’s a big leg up in the GCC countries and so we expect that those to continue to move very rapidly. In Russia, again, that’s taking a long time, but we do believe that we are nearing the end in terms of obtaining Russian registration. And then other countries, as they come along, Israel and others, I think we’re in the process now and will hopefully know that later.
Reimbursement is a separate issue and reimbursement is something that often requires some amount of data to obtain reimbursement. As you know, we have reimbursement in both Germany and Austria today, in certain parts of India and certain hospitals, certain patient populations, there is private pay as well as government reimbursement. In Turkey, there are tender orders and there is certain ways to bundle things to obtain reimbursement. And there are also – its different ways where in different countries they’re finding ways to get paid.
In the United States, of course, there’s the DRG which is one lump sum payment. So in the United States, for example, if we were to get approved here, we would just fall under that DRG. We could always apply for a separate code that would take time, but we would still be able to reimbursed under the DRG pretty much right away.
So I think we are spending a lot of resources in terms of seeking reimbursement in different countries and that’s just a process that takes time. I think that going to the second half of this year, I’ve just talked about all the kinds of data that we are looking to generate in these case series, these investigator initiated studies and other things, I think that will be extremely helpful in obtaining and accelerating the reimbursement process all over the world.
Jan Wald
And I guess one last question, if you don’t mind. When you talked about the opportunity to go through the expedited review, you talked about lesser endpoints and stronger endpoints or something along those lines. Would you just help me understand what’s the difference between lesser and a stronger endpoint might be that the FDA will value to use?
Phillip Chan
So for example, in the area of sepsis, the standard primary endpoint for all phase 3 pivotal clinical studies in the past has been 28-day all-cause mortality. And there has only been one company ever to achieve 28-day all-cause mortality improvement and that was Eli Lilly with their Xigris product that was the only product ever approved to treat sepsis. That has been subsequently taken off the market and there are currently no therapies that are approved to treat sepsis.
Now, when we talk about lesser endpoints, we are talking about things like days in the intensive care unit, days on the ventilator, hemodynamic stability, use of vasopressors, these types of softer endpoints where we are clearly seeing benefit of CytoSorb today in our clinical usage throughout the world.
And so we believe that if the FDA is willing and this is really the purpose of the EAP is that they are saying that they’re willing to accept these lesser endpoints. That means that these trials, because of the higher rate of efficacy in these lesser endpoints, it means that these trials can be smaller, they can be cheaper, they can be faster, thereby helping accelerate market approval.
Operator
And we will go next to Brian Marks with Zacks Investment Research.
Brian Marks
Since we are on the subject of a potential EAP success trial, so can you talk about what you are thinking in terms of size of the trial and length of the trial and size in terms of potential enrollment?
Phillip Chan
Right now, the data designation plan is being set and it would be premature for me to talk about that right now. But suffice it to say, what we are – our aim in this data designation plan is that we are not looking to do an all-commerce trial, meaning we are not looking to take every step that patient that walks through the door or that’s in the ICU. I think that has been a major stumbling block and a major failure, a major problem in most of the success trials that have been done in the past.
The heterogeneity of the success population is quite immense. It depends on what kind of bacteria that they are infected with, the site of infection, so you could have gram-positive, gram-negative bacteria, anaerobic bacteria, you have fungal infections, you got all sorts of viral infections et cetera, right, you can have, the site of infection is very important such as the lungs, the kidneys, the urinary tract, the abdominal cavity, cellulitis on the skin, and others, meningitis in the CNS, central nervous system, and others things, you can have the age of the patient which plays a major role in the prediction of mortality in these patients.
There is patients also with high levels of cytokines versus those with lower levels of cytokines, that predicts mortality. So as you can imagine, a very complex set of variables and very complex to actually design clinical studies in sepsis. So that being said, we do believe that we have ideas based upon our clinical data, based upon the clinical usage in the marketplace, et cetera, we do have ideas on the particular trial design and that is what we are going with the FDA.
Brian Marks
Just wanted to step back to REFRESH and assuming that you go that way, can you talk about what the potential variety of biomarkers that you might be interested in looking at in REFRESH and are some of those potentially similar to the biomarkers that were in the small Germany trial, I think that was done or was published last year?
Phillip Chan
Yes, so there was a study done at the University of Munich, a 40-patient retrospective study 2020 using CytoSorb intra-operatively during complex cardiac surgeries and what they showed was that intra-operative treatment with CytoSorb led to a reduction in inflammatory mediators in the post-operative period compared to the control. And that was statistically significant for things like procalcitonin, interleukin-6, there were some statistical significance with fibrinogen and others.
So we do know that in cardiac surgery, there is a number of things that are activated during cardiac surgery. So there is the activation of complement, complement is part of your body’s immune system that helps fighting section, but it forms porous, activated complement forms porous in cells and causes them to explode, if a cell is infected by something that they can actually kill the cell. So that’s just for example one mechanism.
And so it is well known that complement is activated and can lead to adverse outcomes. It can actually cause increased mortality. It is very clear that a number of different cytokines are elevated, interleukin-6 being one of them, for example. It is very clear that free hemoglobin is elevated caused by hemolysis and the mechanism that we talked about before. And then there are all sorts of different inflammatory mediator markers like CREC protein, fibrinogen which is acute phase reactant and others that are indicative of an inflammatory response. And these are really the types of inflammatory mediators that we would be looking at in the REFRESH trial.
Brian Marks
And with REFRESH in European Union, is that something what is done in assuming it’s positive, the results are positive, is that something that you think is publishable?
Phillip Chan
Absolutely. The ability to remove free hemoglobin has not been possible before intra-operatively during cardiac surgery or even post-operatively during cardiac surgery, nothing out there can remove free hemoglobin, except for the administration of haptoglobin, but that still doesn’t reduce the effects of free hemoglobin in the body.
So that being said, we do believe that this would be actually a very important discovery linking the reduction of free hemoglobin with improvement in clinical outcomes and in this REFRESH study it’s about safety, it’s about free hemoglobin reduction, but in the pivotal study it could potentially be about free hemoglobin reduction alone or could be about free hemoglobin reduction and improvement in clinical outcomes as well.
But I think it’s a very – it was interesting, the FDA in our conversations with them have said that it’s been well known that free hemoglobin has its dangerous problems and if we could show that it can actually improve clinical outcomes that would be a major advance in cardiac surgery. So we are very excited about what we are doing. I think it’s well acknowledged by a lot of the clinicians who are involved in this study. They all see these complications after complex cardiac surgery. So I think there is a lot of support there. If we were able to show benefit, it would be a very impactful study.
Brian Marks
Let’s say that REFRESH comes out positive, you go to REFRESH II, can you talk about what REFRESH II that you envision entails in terms of the scope and enrolment size and number of sites? And then in terms of endpoints, is there additional endpoints that you layer on top of that or is it kind of the same endpoints in initial REFRESH?
Phillip Chan
What we have said before, I don’t think has changed. I think the FDA is looking at the results of this initial REFRESH I trial, looking at the values of free hemoglobin and other things, before we agreed to a trial protocol for REFRESH II. Now, it could be – they have left the door open for de novo 510(k) potential filing, which – where the endpoints would be a reduction in free hemoglobin, for example, and that would be a small trial. That would be less than 100 patient trial that we could execute upon very quickly. And that is using CytoSorb intra-operatively during cardiac surgery and just looking at free hemoglobin reduction.
Now, the other trial that we would do would be a PMA trial and where we would be looking at clinical endpoints. So we would be looking at the incidence of acute kidney injury, or the time it took someone to get off of ventilator after cardiac surgery with or without our product. And that study would be roughly a 300 to 400 patient study, but it would be exactly the same design. It would be treating the patient intra-operatively, that’s all you do, right, and then you’re just following the patient post-operatively to look at clinical outcomes as well as free hemoglobin and other biomarkers. In the de novo trial, the primary endpoint is you’re just flipping the primary and secondary endpoints around in the two studies.
Operator
And that does conclude the Q&A portion of today’s call. I’d like to turn it back over to Dr. Chan for any comments and closing remarks.
Phillip Chan
Great. Thank you everyone for taking the time today to get on this call and to get an update on the company. We certainly appreciate your participation and shareholder support. If you have any other questions, please feel free to reach out to Amy Vogel at [e-mail] and we will try to get you answers to some of your questions as needed. In the meantime, we look forward to the next update on the next quarterly call. Thank you guys very much and good night.