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40 patient retrospective study-Journal of Artificial Organs
Below is the abstract of a study which was published this past week in the Journal of Artificial Organs. Note the reductions in key measurements especially the 30 day mortality rate. I believe in the past the 28 day rate has been in the range of 60-78%.
Blood Purification With CytoSorb in Critically Ill Patients: Single-Center Preliminary Experience
Maria Grazia Calabrò, Daniela Febres, Gaia Recca, Rosalba Lembo, Evgeny Fominskiy, Anna Mara Scandroglio, Alberto Zangrillo, Federico Pappalardo
First published: 29 August 2018
https://doi.org/10.1111/aor.13327
Abstract
The CytoSorb adsorber, a blood purification therapy, is able to remove molecules in the 5–60 kDa range which comprises the majority of inflammatory mediators and some endogenous molecules. We aimed to evaluate CytoSorb therapy on clinical outcomes in critically ill patients. A retrospective case series study, from February 2016 to May 2017, was performed in 40 patients with multiple organ failure who received CytoSorb treatment. There were 28 patients with cardiogenic shock, 2 with septic shock, 9 with acute respiratory distress syndrome, and 1 with liver failure. Nineteen patients (47%) underwent extracorporeal membrane oxygenation, 11 (27%) had an intra-aortic balloon pump, 9 (22%) were implanted with Impella, 6 (15%) had a ventricular assist device, and 18 (45%) were treated with continuous veno-venous hemofiltration. After CytoSorb treatment, total bilirubin decreased from 11.6 ± 9.2 to 6.8 ± 5.1 mg/dL (P = 0.005), lactate from 12.1 ± 8.7 to 2.9 ± 2.5 mmol/L (P < 0.001), CPK from 2416 (670–8615) to 281 (44–2769) U/L (P <0.001) and LDH from 1230 (860–3157) to 787 (536–1148) U/L (P <0.001). The vasoactive-inotropic score after 48 h of treatment was reduced to 10 points, P = 0.009. Thirty-day mortality was 55% and ICU mortality was 52.5% at expected ICU mortality of 80%. Our study shows that CytoSorbTM treatment is effective in reducing bilirubin, lactate, CPK and LDH, in critically ill patients mainly due to cardiogenic shock. There is a need for randomized controlled trials to conclude on the potential benefits blood purification with CytoSorb in critically ill patients.
----------------
The significant difference in the mortality rate vs expected in this study has been something I had a difficult time reconciling with what was reported in the MedTech briefing that NICE published in 2016 having "found no differences in 30 to 60 day mortality" for 43 patients. (https://www.nice.org.uk/advice/mib87/chapter/clinical-and-technical-evidence). This is one of the reasons in my opinion that there has been limited sales in the UK (not to mention the pricing of the filter and the lackluster activity from the previous distributor).
Novartis Kymriah Product Information sheet.
Here is a link to Novartis product sheet on Kymriah. If you haven't seen it already you should download it and read it. Sprinkled all throughout it are very prominent warnings and precautions about CRS including treatment which points to tocilizumab as pretty much the only option.
https://www.hcp.novartis.com/globalassets/products37/kymriah---day-10/kym-1168047-kymriah-now-approved-referring-physician-guide-817_digital.pdf
Cytokine Release Syndrome:
Cytokine release syndrome (CRS), including fatal or life-threatening
reactions, occurred following treatment with KYMRIAH. In Study 1, CRS occurred in 79% (54/68) of patients receiving KYMRIAH, including Grade 3 or 4 (Penn grading system) CRS in 49% (33/68) patients. The median time to onset of CRS was 3 days (range: 1-22 days). Of the 54 patients with CRS, 27 (50%) received tocilizumab; 7 (13%) patients received two doses of tocilizumab, 3 (6%) patients received three doses of tocilizumab and 14 (26%) patients received addition of corticosteroids (e.g. methylprednisolone). The median time to
resolution of CRS was 8 days (range: 1-36 days).
WARNING: CYTOKINE RELEASE SYNDROME AND NEUROLOGICAL TOXICITIES
• Cytokine Release Syndrome (CRS), including fatal or life-threatening reactions, occurred in patients
receiving KYMRIAH. Do not administer KYMRIAH to patients with active infection or inflammatory
disorders. Treat severe or life-threatening CRS with tocilizumab
[see Dosage and Administration
(2.2, 2.3), Warnings and Precautions (5.1)].
• Neurological toxicities, which may be severe or life-threatening, can occur following treatment with
KYMRIAH, including concurrently with CRS. Monitor for neurological events after treatment with
KYMRIAH. Provide supportive care as needed
[see Warnings and Precautions (5.2)].
• KYMRIAH is available only through a restricted program under a Risk Evaluation and Mitigation Strategy
(REMS) called the KYMRIAH REMS
[see Warnings and Precautions (5.3)]
It is a very high probability the company has been in discussions with Novartis about using Cytosorb as a treatment option. This is supported by Dr. Chan's comments on the last quarterly call when asked about the pending Novartis EU approval: "Yes, I think that we're watching that very closely they've already been recommended for approval, and then we're just waiting for the final approval. And I think what we've been doing is positioning ourselves such that we are in a position to be used as a therapy to treat cytokine release syndrome in the CAR T cell immunotherapy space. So I think that's an active program that we have ongoing internally. In terms of any kind of business development efforts, we'll leave that for a future discussion."
It will be interesting to hear Dr. Chan's comments on the panel next week. Hopefully they will provide some insight as to the potential future usage of CytoSorb to treat cytokine release syndrome. There has been a hive of activity in the CAR-T space, with a half dozen companies including Novartis working out deals to become the leader in this space. I would think having Cytosorb as a part of their toxicity-mitigation strategy would be a differentiator for them.
Regional hospital job description
It may be a small sign that Cytosorb is starting to become the standard of care (SOC) in Europe, when you start seeing general job postings advertising Cytosorb in even smaller regional hospitals. This was a job posted yesterday for a Physician's Assistant in the Intensive Care (IC) department of Tjongerschans Hospital in Heerenveen.
(translated from Dutch)
"...is part of the IC Region North-East Netherlands and the IC Network Friesland and meets the Quality Standard Intensive Care 2016. The department is an organizational part of the Acute Axis, together with the CCU and the SEH. In our department, 4 intensive professionals work according to closed-format model with corresponding daily MDO. An intensivist is available exclusively for Intensive Care seven days a week. In addition, an IC doctor works in our department on the basis of 36 hours. In addition, there is a team of FCCS trained physician assistants working within the acute axis 24/7. Currently, the Intensive Care has eight fully equipped artificial respiration beds and the department is supported by all common medical devices, such as PDMS, non- invasive ventilation, PICCO, ultrasound, CVVH and innovative techniques such as Cytosorb immunoadsorption and ECCO2R."
https://www.gezondheidszorgbanen.nl/vacatures/artsen/anios/arts-assistent-intensive-care-anios-141251.html
I believe that WMC Medical Supplies and Consultancy is still the distributor for the Netherlands.
Northern Trust and State Street
each upped their ownership to decent size positions on 8/14:
Northern Trust 48,114 -> 309,268 (+542%)and State Street must have seen something good 21,579 -> 434,632 (+1,914%).
Vanguard also continues to increase their position 998,726 -> 1,255,761 (+25.74%).
Cleveland Clinic connection
It's good that Martin seems to have been stabilized. There is a connection with Cytosorb in that Dr. Nicholas Smedira, M.D. who is a cardiothoracic surgeon affiliated with the Cleveland Clinic, is one of the company's advisors on cardiac surgery. There may be some level of awareness of the device at that hospital, at least among his colleagues.
An aside note, Dr. Smedira has participated in over 8,000 cardiac operations since 1995, which is pretty amazing.
Another tidbit about Romania
Romania has 20 million inhabitants and is the seventh most populous country in the European Union. It is classified as an upper-middle income country that provides universal healthcare to its citizens. There are 425 operational hospitals across the country, of which approximately 130 are private hospitals or clinics that are generally paid for by private insurance. Romania is a leader in solid organ transplantation in the E.U., with one of the highest surgical success rates in the European Union. Smart Medical Solutions is the distributor there who also has the country of Muldova as another territory.
New Cytosorb Tender Order - Romania
(Translated from Romanian), this tender order is for "Medicines and sanitary materials purchased for the treatment of critical patients who frequently associate renal dysfunction in the context of sepsis, acute pancreatitis, complex trauma, crush syndrome, complicated major surgery, intoxication." for Saint Spiridon County Hospital in Romania.
Part of this contract is for 24 month supply of Cytosorb filters 1,598,544.00 RON (Romanian Leu) - see section II. At a USD conversion rate of USD/RON = 0.24954 this equates to a single order for a single hospital for approximately $398,905.01 ~ $400k.
https://ted.europa.eu/TED/notice/udl?uri=TED:NOTICE:343872-2018:TEXT:EN:HTML&WT.mc_id=RSS-Feed&WT.rss_f=Materials+and+Products&WT.rss_a=343872-2018&WT.rss_ev=a
Romania has been one of the countries on the cutting edge and first to use the Cytosorb filter outside of Germany. Dr. Dana Temescu out of Bucharest has had authored several publications, spoke at several conferences, and has been very involved in the Cytosorb Registry. Romania was also the first reported case study of cytokine removal using CytoSorb® in severe noninfectious inflammatory syndrome after liver transplantation back in 2016.
COO turnover
Can you provide a link to where Vince Capponi, the current Chief Operating Officer resigned? I must have missed that announcement. He was answering questions on this latest conference call and is still listed as one of the executive management team on the web site.
Orangecat, I get your point on backing into the sales growth.
I guess I am looking at it from the other side of that coin. IMO I think the reference to the $80M was more around the perspective of how with the new facility they can expand the capacity with very little capital expenditure as it was in the context of describing the new plant's flexibility and in addressing some of the analyst's comments. You have been invested in this company as long as I have and we both know Dr. Chan is not going to imply on an investor conference call that they can it $80M in sales in a shorter time period - I think he hedged his comments and that they were more conservative, otherwise it could be construed as forward guidance.
Personally I think that if the direct sales force in Germany (now 38 people) keeps kicking butt like they did this past quarter, and with the other catalysts kicking in (e.g. expanded CE label, reimbursement, etc.), the company will get to that sales level much sooner. Btw, this was the first time I have heard that they are now seeing more pull through on the sales than push as well as how long the long lead time has been to get the initial sale.
If you haven't taken a look at this, CG on the Yahoo board keeps a spreadsheet updated with the latest quarterly product sales projections at different growth rates. The most recent sequential quarterly growth rate is 18.32%. CTSO is not consistently hitting any sequential growth rate, but the sheet illustrates what's possible. At a 17% sequential growth rate they will hit $80M in the next two years.
https://docs.google.com/spreadsheets/d/1rc_zFvSauYIspP3S-YBkYUOz19bu0PytXCMjUE-owdE
Totally agree Andy
I saw some of the comments in the transcript around that. The CE label expansion to include bilirubin will be huge. The current sales growth really doesn't reflect that yet so we will see this as an added sales driver starting in H2 I believe.
"The numbers of people with liver disease are staggering around the world. And, again, it's driven by 3 major problems. One is the development of either viral hepatitis from food contamination or through sexual contact. Second major driver is alcoholism. And the third major driver is fatty liver. And you've heard of a number of companies that have done very well in addressing, for example, NASH, or non-alcoholic steatohepatitis, or often called fatty liver. And we are being used in the acute exacerbations of chronic liver disease, when patients wind up in the hospital in a decompensated state with an acute exacerbation of their existing chronic liver disease and helping to stabilize those patients. And I think what we'll see in the future is a strong demand for our technology for the use liver support."
Thanks for bringing the focus back to the big picture.
There are not many CEO's that have taken a company from development stage into commercialization much less ones that kept the financial fundamentals of the company strong while maintaining minimum shareholder dilution. Comments and attacks about Dr. Chan seem to come out of the woodwork whenever there is an unexpected hit to the share price. I for one am glad that the management team remains focused on their strategy and is executing on it, albeit at what appears on the surface at the expense of 'exponential growth'.
I was traveling this past week and not able to listen to the conference call but in reading through the transcript today, there were so many great nuggets of information that they seemed to have gotten overlooked due to the drop in the stock price, including:
• Very well capitalized, with a healthy cash balance of $25.3 million (sufficient to fund operations and clinical needs into 2020)
• Expansion of the inclusion criteria for REFRESH II which should improve operational aspects of the patient screening process enhance (accelerate) the rate of enrollment
• Record sales quarter with annualized product sale run rate of approximately $21 million, as compared to approximately $12.2 million just 1 year ago
• Management (normally very conservative) is "very optimistic" about continuing sales growth, particularly with regard to the second half of 2018. (read into this what you will)
• Narrowed operating loss as defined to approximately $300,000 and very close to operating breakeven
• Sales are developing into "more of a pull market versus a push market" and seeing a lot of activity, a lot of interest from clinicians, not just in Germany but in other parts of the world (this point is important as reorders are not only accelerating but increasing, mostly due to clinical and real world evidence the device works)
• Blended gross margin of 74% based on old manufacturing facility, and is expecting to improved in Q3, then again in Q4 and into 2019 (Medtronic has one of the highest gross margins in the medical device space of 68% as of their latest quarter, compared to an industry average of 59%)
• Completed all the tooling for the Hemodefend project and have begun to do essentially the validation product builds. With those validation builds will start the clinical build for the product, which will be done later this year. (from what I have read in the past they can also start commercial manufacturing for Hemodefend in the new plant and if they are able to sign a licensing or distribution partnership they can always outsource the manufacturing of this product)
• Able to double manufacturing capacity to support a $80 million thresshold with less than a $100,000 additional capital investment (how many other companies have you seen build and get ISO-certified a brand new manufacturing plant and can do this?).
While sales growth is important, a lot of investors neglect to see what is happening on the cost side of things. Operating profitability is just as important to the management team and thus you have seen them be very strategic and excel at managing the growth and incurring cost only in areas where there is a direct benefit to that aspect of the business. This will ultimately make the company even more valuable. I posted a little about this "balanced growth approach" here: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=141425194
"Now, our interim target is to get the operating profitability. We think that that will be an important inflection point for our business, and we will significantly cut down on the cash needs of the Company, but also make our company much more attractive to a wide variety of different interested groups."
Cantor ATM was heavily used since Q1
Courtesy of CG on Yahoo board:
"Since the Q1 2018 call, they resumed using the Cantor ATM in a *BIG* way -- nearly doubled its total usage: they sold 679,439 shares to raise $7.523M. At least they're selling high. This calculation comes from subtracting the numbers in these two statements:
(1) From Q2 2018 10-Q: "In the aggregate, the Company has sold 2,067,735 shares at an average selling price of $8.66 per share, generating net proceeds of approximately $17,379,000 under the terms of the Sales Agreement."
(2) From Q1 2018 10-Q: "In the aggregate, the Company has sold 1,388,296 shares at an average selling price of $7.32 per share, generating net proceeds of approximately $9,856,000 under the terms of the Sales Agreement."
Fresenius has had a poor track record with acquisitions in the past. The whole Akorn fiasco - a $4.75B deal that Fresnius pulled back from after discovering fraud (Akorn chairman resigned as Chairman and was charged with engaging in conspiracies to commit racketeering, mail fraud and wire fraud in an indictment filed in federal court in Boston, plus he was arrested on charges he participated in a scheme to bribe doctors to prescribe a potent pain medication while he was at Insys.).
https://global.handelsblatt.com/companies/german-fresenius-medical-care-akorn-923437
Also, with the NxStage medical they probably overpaid for this company (5-6 x sales @ $2B acquisition price) and they were not yet profitable. However, as Dr. Chan pointed out on the call, Fresenius is agressively expanding into critical care and wants to expand it's foot print in that area as well as geographically here in the US. With the Next Stage, Novalung and Xenios acquisitions they "would now be squarely in neck-and-neck position with Baxter, Gambro, and be very well positioned to help gain market share in the U.S. market.". Cytosorb will work in this expanded installed base of dialysis machines owned by Fresenius plus Fresenius doesn't really have a product that reduces inflammation (ECMO he stated is more of a supported therapy).
Having said all this Fresenius will be more cautious and strategic about their next acquisition. Cytosorbents having a strong balance sheet with a hefty cash balance and little to no debt, along with increasing margins (some of the highest in the industry) along with operating profitability, will make it harder on Fresenius to strike any kind of deal. I agree with your assessment that an if an acquisition offer were to come, it would come much later after FDA approval, however in the interim we could see a substantial licensing agreement and investment coming from Fresenius.
Canimorsus from dog bites
There are not a lot of cases of infection by C. canimorsus - 484
between 1989 and 2014, but it has a mortality rate of about 25%. Cytosorb was used in the treatment of one patient, an 80 year old woman that was admitted to the hospital 2 days after a dog bite. Her condition was so severe and probably due to her age, she did not survive. This is a nasty bacteria.
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=2ahUKEwiD-LW00MncAhWnw1QKHctZCLsQFjAAegQIARAC&url=http%3A%2F%2Fdownloads.hindawi.com%2Fjournals%2Fcricc%2Faip%2F7090268.pdf&usg=AOvVaw0B8jdNWsZ3ls7ZKqCViTtC
University of Maryland added
This looks to be the fifth of the seven sites from REFRESH I, Baystate Medical (Massachusetts) and University of Kentucky are the only ones remaining that have not started recruiting.
Thanks for sharing.
I think you are correct, from the filing it appears the Term B loan (second traunche of $5M) if drawn down, will trigger a 6.37% success fee.
"In connection with the Restated Loan and Security Agreement, the Borrower simultaneously entered into a Success Fee Letter (the “Letter”) with the Bank which will only be effective if the Term B Loan is drawn. Pursuant to the Letter, the Borrower shall pay to the Bank a success fee in the amount equal to 6.37% of the funded amount of the Term B Loan (as defined in the Restated Loan and Security Agreement) (the “Success Fee”) upon the first occurrence of any of the following events (each a “Liquidity Event”)..."
http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=12668343-1093-15881&type=sect&TabIndex=2&companyid=629044&ppu=%252fdefault.aspx%253fsym%253dCTSO
Bridge Bank term debt still available
Also, don't forget the company restructured it's debt with Bridge Bank in March 2018. The Company replaced its existing $10 million term loan with $10 million of new debt.
Per Kathleen's comments:
"The new debt facility is structured as a four-year term loan with monthly payments of interest- only for the first 18 months, and this has reduced our cash needs over that same period by approximately $6 million. Another $5 million in term loan debt is available by March 2019 to further extend our operating runway should we choose to take it"
So from a cash perspective they should be fine with the Cantor ATM and debt facility, however I was really watching what was going to happen at the end of Q2. I was expecting another capital raise, especially after the dramatic stock price appreciation and knowing they still need to fund the US Hemodefend trial. That would have been an opportune time to raise money. My hopes are that they can get a partner for Hemodefend.
The third anniversary of the Cantor agreement
Here is the language from the original sales agreement dated 11/5/15:
"Unless earlier terminated pursuant to this Section 13, this Agreement shall automatically terminate upon (i) the issuance and sale of all of the Placement Shares through the Agent on the terms and subject to the conditions set forth herein, and (ii) the third (3rd) anniversary of the date of this Agreement; provided that the provisions of Section 8, Section 11, Section 12, Section 18 and Section 19 hereof shall remain in full force and effect notwithstanding such termination."
Orangecat is right, this seems to be an extension of the original agreement. I believe they have raised almost $15M of the original $25 with $10M alone coming between Q3 2017 and April of 2018. So they have about $10M left on the ATM to use in the future.
Here is the link to the original filings and supporting documents.
https://www.sec.gov/Archives/edgar/data/1175151/000114420415062877/0001144204-15-062877-index.htm
Medical device company milestones and exits
Orange, first of all I loved your comment "Until quite recently the CTSO market cap was probably the equivalent to the annual coffee budget for one of the big Pharmas.".
I think there are several reasons the company has not been bought out at this point, but a couple I will give my opinion on.
From what I have read about medical device companies and the stages they go through, there are some key milestones that venture capital or potential partners/suitors look for. For example pre-clinical validation, clinical validation, CE Mark, and 510(k)/Denovo/PMA, as well as commercialization milestones such as production ramp up, orders/sales, and cash flow break even. As you know the company had a strategy to attack both the commercialization and regulatory milestones in parallel and I think this was a great strategy, even though the growth has been slower, because it has limited shareholder dilution and built a great value story. My understanding is that typically FDA clearance has been perceived as the primary milestone to trigger an acquisition and that only about 25% of acquisitions in the medical device industry occur within 8-9 years of a company's inception. So even though the device has CE Mark approval, the progress that is being made on PMA trial here in the US is probably what a lot of investors are looking at - this and cash flow breakeven.
Another reason for an acquisition not occurring for a while is the valuation aspect. When you have a company that has this many billion dollar addressable markets and multiple products in the pipeline, it would be hard to place a valuation at this stage and one thing I am sure the management team is very aware of. I think what is more likely is a growth PE firm getting involved, something which Dr. Chan alluded to on one of the recent presentations. I posted something about this a while back https://investorshub.advfn.com/boards/read_msg.aspx?message_id=139376200
Being a long time holder an acquisition is appealing but I believe that holding out and continuing to watch the story unfold, a key event like an out-licensing agreement, PE investment or another partnership with upfront milestones would put this stock in a whole new price range.
Therapy for prescription drug overdose and opioids
Everyone is probably aware from the new of the increasing opioid epidemic here in the US, however prescription drug abuse is also a serious and growing problem in the United States. In the US alone, an estimated 54 million people over the age of 12 have used prescription drugs for nonmedical reasons.
This study which was conducted by the Fraunhofer Institute in Rostock Germany last year was published and recently uploaded, shows how Cytosorb can also help in the removal of some of these agents. Frauhofer has been one of the key study centers for Cytosorb for the last several years.
http://cytosorb-therapy.com/wp-content/uploads/2018/02/2017_Koertge_Poster_ESAO.pdf
Results:
Considerable removal of amitriptyline, diazepam, digoxin, quetiapine, and rivaroxaban was observed: 87.7 to 96.9 % of these administered drugs was rapidly removed from the blood, predominantly within 30 to 60 min of hemoperfusion, resulting in plasma levels near, within or below the respective therapeutic concentration range.
Paracetamol, ibuprofen, and amiodarone plasma concentrations were only decreased to a limited extent with 13.5, 45.4-59.5, and 50.2% removed mass, respectively. A decrease to and below the respective therapeutic concentration range could not be achieved for these substances.
Voting poison pill plan
When the company effected the 25:1 split this was put in place as part of the incorporation change from Nevada to Delaware. Below is from the lastest 10Q that might help shed some light on what is in place.
Our Board of Directors may, without stockholder approval, issue and fix the terms of shares of preferred stock and issue additional shares of common stock adversely affecting the rights of holders of our common stock.
On December 3, 2014, we effected a twenty-five-for-one (25:1) reverse split of our common stock. Immediately after the reverse stock split, we changed our state of incorporation from the State of Nevada to the State of Delaware pursuant to an Agreement and Plan of Merger, dated December 3, 2014, whereby we merged with and into our recently formed, wholly-owned Delaware subsidiary. Pursuant to the Agreement and Plan of Merger effecting the merger, we adopted the certificate of incorporation, as amended and restated, and bylaws of our Delaware subsidiary as our certificate of incorporation and bylaws at effective time of the merger. As a result, our certificate of incorporation, as amended and restated, authorizes the issuance of up to 5,000,000 shares of “blank check” preferred stock, with such designation rights and preferences as may be determined from time to time by the Board of Directors. Currently, our certificate of incorporation, as amended and restated, which was effective December 3, 2014, authorizes the issuance of up to 50,000,000 shares of common stock, of which approximately 20,026,000 shares remain available for issuance as of March 31, 2018 and may be issued by us without stockholder approval.
Anti-takeover provisions in our charter documents and under Delaware law could prevent or delay transactions that our stockholders may favor and may prevent stockholders from changing the direction of our business or our management.
After giving effect to our merger into our wholly-owned Delaware subsidiary, provisions of our certificate of incorporation, as amended and restated, and bylaws may discourage, delay or prevent a merger or acquisition that our stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares, and may also frustrate or prevent any attempt by stockholders to change the direction or management of us. For example, these provisions:
• authorize the issuance of “blank check” preferred stock without any need for action by stockholders;
• eliminate the ability of stockholders to call special meetings of stockholders;
• prohibit stockholder action by written consent; and
• establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings.
New insights into CAR T-cell therapy
Detailed study of cytokine release syndrome and neurologic toxicities could help make emerging cancer immunotherapies safer.
https://www.fredhutch.org/en/news/center-news/2017/10/car-t-cell-side-effects-study.html
Obviously CRS is a major problem that Juno, Novartis, etc. have to solve even if it only effects 10% or less of patients (most severe). There were several points of interest from the Hutchinson findings:
1 - "One of the studies’ novel findings is that severe cases of both types of toxicities were associated with signs that endothelial cells — those lining blood vessels — were ramping up activity in response to injury." There was a Cytosorb case study in 2017 that they specifically noted the impact of cytokine removal on the vascular barrier breakdown on the endothelial surface. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5251288/
2. "Using that information, they developed a two-part method to identify the patients who would go on to develop severe CRS. Within the first day and a half after T-cell infusion, the red flags were a fever of at least 102 degrees Fahrenheit and high levels of one particular immune-signaling chemical, a cytokine known as MCP-1. The algorithm was relevant to all three cancer types included in the trial.". The use of Cytosorb in numerous cases have resulted in a decrease of both pro- and anti-inflammatory cytokines during and after each session, especially for IL-6, IL-10 and MCP-1. Here is one: http://cytosorb-therapy.com/case-report/first-use-hemoadsorption-device-cytosorb-continous-venovenous-hemofiltration-cvvh-patient-undergoing-retransplantation-abo-incompatible-graft-acute-graft-dysfunctio/
3. "While an effective therapy for CRS is FDA-approved — a cytokine-modulating drug and/or a steroid — it is unclear what the best protocol is for early intervention in the development of side effects. The data from their study could inform the design of a clinical trial to test the best strategy for blunting the development of the most serious cases, the researchers say.". I am assuming the drug they are referring to is tocilizumab, which Dr. Chan stated that this is not always effective.
The Hutchinson article did not mention the related disorder of HLH, of which Cytosorb has been used successfully to treat 10 patients with 3 published case reports. From this Cytosorbents press release it seems that the company's data they have gathered on these case studies is what will open the door possibly for using it to treat specifically CRS: http://cytosorbents.com/cytosorb-treatment-of-hlh-the-parallel-to-cytokine-release-syndrome-in-cancer-immunotherapy/
Lastly, it seems that since Juno is funding this work at Hutchinson they may be trying to leap frog others to solving the CRS problem. I would assume Novartis/University of Pennsylvania and Dr. June are also working towards this as well and leveraging these findings.
After hours down almost 11%
Any ideas why the price fell to $11.05 after hours? I cannot find any news or press releases that would have such an impact.
CytoSorb in a case of necrotizing fasciitis and septic shock
has been used successfully:
http://cytosorb-therapy.com/case-report/cytosorb-case-necrotizing-fasciitis-septic-shock/
'Flesh-eating disease', refers primarily to a form of invasive group A beta hemolytic streptococcal infection that leads to fascia and muscle necrosis.
Hyperbilirubinemia my understanding is difficult to cure by medication, surgery or interventional therapies. I am not a medical professional nor in health care, but from what I have read non-bioartificial liver therapies which include plasma exchange, hemoperfusion, hemodialysis, molecular adsorbent recycling system (MARS) are the main alternatives in the blood purification for hyperbilirubinemia right now. I don't think there is any one clear therapy for SOC for this condition, which means the door is wide open.
This has to be one of best case studies I have seen.
Pulseless electrical activity (PEA) is extremely difficult to manage as the patient is borderline dead or dying (the monitor will show electrical activity in the heart, but the patient will have no palpable pulse). Also from what I have read about infective endocarditis it is associated with substantial morbidity and mortality. Before the era of antibiotics it was always fatal and today in-hospital mortality is around 15 percent to 20 percent.
Also what stood out to me was the "dramatic and sustained reduction of bilirubin plasma levels to 5.6 mg/dl during the 7 treatments" and "according to the team of doctors, the rapid and marked reduction of bilirubin was particularly impressive, which is why the use of CytoSorb in the future, amongst other conditions, will be considered at an early stage in patients with liver dysfunction or failure".
This is a great example of why the recent announcement of the label expansion in the EU to include Bilirubin removal, has the potential to significantly increase the market and corresponding sales of Cytosorb.
http://cytosorbents.com/cytosorb-adds-bilirubin-and-myoglobin-reduction-to-european-union-approved-indications-for-use/
Thanks for sharing Andy. Happy Independence Day.
CAR-T Cell Cancer Therapy Opportunity
This excerpt was from Zacks November investment report. The Kymriah approval is something to keep an eye out for. It would be the catalyst to begin studies specifically for CRS.
CAR-T Cell Cancer Therapy Opportunity
The feasibility of CytoSorb as a treatment for cytokine release syndrome (CRS) could soon become more clear given the recent FDA approvals of two CAR-T immunotherapies; Novartis Kymriah (tisagenlecleucel-T) and Gilead/Kite s Yescarta (axicabtagene ciloleucel). These novel CAR-T therapies have shown extraordinary efficacy in the treatment of certain cancers but have also been associated with certain severe side effects in some patients. Specifically, clinical studies have shown that severe CRS (i.e. severe inflammatory response with excessive and harmful levels of cytokines) effects about 47% of patients treated with these therapies. CRS can result in serious complications and lead to organ failure and death. While corticosteroids and tocilizumab have been used with some success in controlling CRS, there are drawbacks. This includes that corticosteroids are suspected of potentially comprising immunotherapy efficacy. Relative to tocilizumab, researchers have noted that its use should be avoided if macrophage activating syndrome (MAS) is suspected.1 Interestingly, CytoSorb has been used successfully in several patients with a condition called hemophagocytic lymphohistiocytosis (HLH) - one of these was the subject of a case report published in early March 2017 in the Journal of Clinical Immunology. Studies have shown that subjects with secondary HLH, which is often caused by virologic infection and characterized by a strong and sometimes uncontrollable immune response including CRS, can exhibit responses similar to cancer patients treated with certain immunotherapies. The similarity in CRS response in HLH and cancer patients treated with immunotherapies and CytoSorb's early success in treating HLH patients (via reduction in inflammatory markers) is encouraging, particularly as it may relate to mitigating the toxicity of CAR-T therapies. Another factor that could play in CTSO's favor is the fact that Dr. June Carter, who recently joined CytoSorbents' scientific advisory board, also led the CTL019 (i.e. Kymriah) program at the University of Pennsylvania.
Novartis and Gilead are also seeking approval in Europe, which could come in short-order. At that point, CytoSorb could be employed to treat CRS. CTSO would likely pursue investigator-initiated studies overseas, as they have done with other indications, in order to build the experience database which, assuming positive results, could drive adoption of CytoSorb for CRS. Given the extraordinary efficacy already seen with these two initial therapies and the recent and growing massive inflow of investment dollars targeting immunotherapy development, this is an application that we think, if validated, could hold enormous growth potential for CTSO.
Gross margins 70+%
One other aspect of the new plant that is also exciting is the continued improvement in gross margins. On that same call in Nov 2017 Kathleen had this to say:
"This past quarter we had product gross margins of 69%, which was very good, but does not yet reflect major reductions in our standard costs. We are still operating at the existing plant. What we do see going forward Sean, is real measurable improvements to those gross margins, especially once our new manufacturing plant starts up, which is expected to occur in the first quarter of Q1 2018. Then in early 2018, I think we will start to see blended gross margins in the 70%+ range and then growing from there."
Medtronic has one of the highest gross margins in the medical device space of 68% as of their last quarter, compared to an industry average of 59%.
This is another distinguishing factor that will get more attention once the company hits that break even point.
New capacity is around $70-80M annually
Capponi stated this during the Q&A from November 2017 call:
Q: [Sean Lee] In terms of capacity, how much is the new plant going to help you?
A: [Vincent Capponi] The plant is going to be capable of taking us well through operating cash flow breakeven. Right now with the first phase, we’ll be able to do about $35-40 million worth of business out of it and then we have the ability to do some additional modifications to take us up to roughly $70-80 million in sales annually. The new plant is about 80% complete right now and we have already notified our regulatory authorities about the expansion with the goal of putting everything in place to bring the plant online in the first half of 2018.
Reimbursement has a lot to do with adoption rate.
Even when registration is completed, reimbursement is not easy to obtain and can be a very lengthy process. After receiving a dedicated reimbursement code and inclusion in 2018 budgets, most German hospitals will have 2x the reimbursement rate right out of the gate in 2018 so you will probably see further disparity.
I believe CG over on the Yahoo Finance board has some eye opening details with regards to the impact of reimbursement. One of the points he made was "the hospital in Bad Oyenhausen, reached 1 million sales in 2016 without reimbursement. In Germany there are 400 hospitals whose initial situation is comparable, from 2017 with full health insurance. The application for reimbursement was made in 250 German hospitals. If the therapy can be established in this size in 100 German hospitals, then the market cap of Cytosorbents is already in the billion dollar range. Chan said that each of the major 400 hospitals in Germany could be a 1 million to 3 million account. That leads to a German market of $1 billion to $1.5 billion market alone. Only with sepsis!!"
So even without the other direct sales countries in the EU you can see the growth potential in Germany alone.
Tech, healthcare to get bumped up in Russell index remake
This article was published right before Friday's re-balancing and also describes what happens when stocks are added and removed from both the Russell 1000 Large Cap and 2000 Small Cap indexes on the 4th Friday in June:
https://www.reuters.com/article/usa-stocks-russell/tech-healthcare-to-get-bumped-up-in-russell-index-remake-idUSL1N1TM0SS
According to Nasdaq, last year’s rebalance resulted in more than 972 million shares, representing $28.9 billion, executed during its “closing cross” in 0.861 seconds. What was interesting is if a company 'graduates' to the largecap index it can be a negative for the stock price during the reconstitution - "since more money is actually held in smaller names in the Russell 2000 than the Russell 1000, a move to the largecap index generally results in some net selling".
Could be - fund managers attempt to make their balance sheets look pretty at the end of each quarter by buying stocks that have done well during that particular quarter.
From Q1 2016 slide Removal of bilirubin
"The liver is a major detoxification organ and patients with either chronic liver failure due to alcoholic cirrhosis, NASH, or non-alcoholic steatohepatitis,or viral hepatitis as well as those with acute liver failure due to fulminant infection, poisoning from mushrooms or from drugs like Tylenol, shock, or other causes, will have high levels of unconjugated bilirubin which can be neuro toxic."
They have a patent for "A method of reducing contamination by one or more toxins in a biological substance comprising: a. contacting the biological substance with an effective amount of a sorbent capable of sorbing the toxin..." and in the patent application you can read up on all the different toxins that can be addressed including
"The term "toxin" is used to mean a substance identified as an etiological agent linked to a negative clinical outcome. Toxins include toxin subunits, toxin precursors, and virulence factors. The toxin can be from a biological source such as bacteria, viruses, fungi, parasites, plants or animals. A toxin may be pre-formed or may only become toxic once in the presence of a biological substance. For example, botulinum toxin (one of 7 subtypes) is made by the bacterium, Clostridium botulinum, often under anaerobic conditions, such as in canned goods. When ingested, this pre-formed botulinum toxin is one of the most potent toxins known, blocking neuromuscular transmission by inhibiting acetylcholine release in the synapse, causing paralysis and respiratory failure. Ricin toxin, made from castor beans, is another example of a pre-formed toxin that when inhaled, injected, or ingested can be fatal. Amatoxins, from mushrooms, and aflatoxin, which are mycotoxins produced by strains of the fungus species, Aspergillus, are examples of other pre-formed toxins. A toxin may also be made within the body, often by microbes, but can be made by the patient's own cells, as occurs in viral infection. Examples include toxins TcdA and TcdB, made by Clostridium dificile bacterium and released into the intestinal lumen that kills cells in the gastrointestinal tract, leading to severe, potentially life-threatening diarrhea. Another example is Shiga-like toxin or verotoxin that is produced by certain strains of Escherichia coli that are frequently transmitted by contaminated undercooked meat, vegetables, or fruit and cause food-borne illness....." https://patents.google.com/patent/EP2866854A2/en
I do remember a specific case study of a patient in Eastern Europe that was treated after ingesting poisonous mushrooms but I was not able to readily find it.
Let's Talk About Sepsis
This article in The Journal of Critical Care Medicine by Dr. Dana R. Tomescu, was a good overview of the current state of sepsis and how the process and treatment of it are still to a large degree not fully understood and challenging:
https://www.degruyter.com/downloadpdf/j/jccm.2017.3.issue-4/jccm-2017-0031/jccm-2017-0031.pdf
Dr. Temescu is a leading proponent of Cytosorb at his hospital in Bucharest, Romania and in the sepsis community, and has chaired several Cytosorb panels and discussions. He has also authored and published several case studies including:
First Report of Cytokine Removal using CytoSorb® in Severe Noninfectious Inflammatory Syndrome after Liver Transplantation
http://journals.sagepub.com/doi/full/10.5301/ijao.5000489
Effects of a novel cytokine haemoadsorbtion system on inflammatory response in septic shock after cephalic pancreatectomy.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5505352/
NxStage comparison
Dr. Chan in the recent past began something that I don't believe he has done much of before which is give some insights into his thinking of how the company might be valued, in light of other related acquisitions and even opened the door for possible private equity investment (without coming right out and saying it).
On the Q2 2017 call when addressing one of the analysts questions regarding hitting critical mass in sales and driving revenue growth, he threw out the comments below regarding a comparison with NxStage - a recent Fresenius acquisition. He provides the context of a comparison against NxStage which was growing exponentially in sales but still losing money, with CTSO and it's current track to achieving operating profitability, leaving you to make the comparison of how the valuations might differ. Fresenius paid roughly 5-6 x sales ($2B) for NxStage.
I don't think he made this comparison for purposes of suggesting they were open to an acquisition, but more to show how it is smarter to grow in the right way building the company's enterprise value, which is much more attractive to larger investors.
"Now, our interim target is to get the operating profitability. We think that that will be an important inflection point for our business, and we will significantly cut down on the cash needs of the Company, but also make our company much more attractive to a wide variety of different interested groups. And so I think that 20 million sales we're guiding that we will hit that in 2018, representing a doubling of sales of trailing 12 month sales from this point, that's nice growth. So I think that if you track the sales growth of other medical device companies for other companies in general, that growth is led to significant increases in market awareness and ownership of stocks across the Board.
I mean with greater resources that -- what we're trying to do is have a balance of strong growth but also the ability to achieve operating profitability. Growth obviously is the primary concern, but it's not growth in all cost. I think that you may have seen NxStage medical today. They've grown at a tremendous rate over the years. They had about 375 million in sales. Fresenius just bought them for $2 billion, but they were still losing money as a company. It’s a fantastic company, fantastic products. We know them. We've collaborated with them in DARPA, but nearing profitability, they are on the verge of profitability and they were taken out for roughly five to six time sales. So, we think that there is a lot of premium to be based on hitting that point. And again after we get the operating profitability -- that breakeven point, we expect a $0.50 on every dollar will drop to the bottom line. This could be very profitable company. So, there was the balance that we're trying to achieve between growth as well as profitability, but certainly we're adding as we see fit -- while we're adding headcount in key areas where we think it will have the biggest bank for the buck in terms of driving future growth in the Company and we're not afraid to make those investments that we've been doing so."
Biventricular failure and giant-cell myocarditis: A case report
This case was just published in The International Journal of Artificial Organs. This is a perfect summary of why myocarditis and bilirubin removal will be huge.
Giant cell myocarditis, the most lethal form of myocarditis, which is characterized by rapid deterioration, the prognosis is less favorable than in other forms of myocarditis. It is a very rare disease that is difficult to diagnose. The symptoms vary from simple fatigue to sudden death. Once a diagnosis is made it is easy to look back and connect these symptoms with giant cell myocarditis. But these same symptoms could have been due to a variety of non-life threatening conditions. Even if someone were taken to a hospital with minor unexplained symptoms a proper diagnosis would most likely not be made.
Hemoadsorption in cardiac shock with biventricular failure and giant-cell myocarditis: A case report
Günes Dogan, Jasmin Hanke, Jakob Puntigam, ...
First Published May 30, 2018 Research Article
Abstract
Purpose:
Giant-cell myocarditis represents a rare and often fatal autoimmune disorder. Despite extracorporeal life support being a valid treatment option, alternatives to control the underlying inflammatory response remain sparse. A new hemoadsorption device (CytoSorb) has recently been introduced to treat patients with an excessive inflammatory response.
Methods:
A 57-year-old patient developed fulminant right heart failure, respiratory insufficiency, hemodynamic instability, and oliguric–anuric renal failure. An extracorporeal life support together with an Impella was implanted for circulatory support. Due to non-pulsatility, acontractility of the left ventricle and a heavily reduced right ventricular function, a left ventricular assist device implantation and change from extracorporeal life support to veno-pulmonary arterial extracorporeal membrane oxygenation was performed. Since adequate hemodynamic stabilization could not be achieved and due to increasing inflammatory mediators and bilirubin levels, the decision was made to additionally integrate a CytoSorb hemoadsorber into the system.
Results:
The combined treatment resulted in a clear and steady improvement in hemodynamics and the inflammatory condition with marked reductions in all measured parameters throughout the treatment period. Metabolic acidosis resolved and liver function improved.
Conclusion:
Extracorporeal life support therapy represents a bridging approach to heart transplantation or to cardiac recovery and can be complemented by CytoSorb as an independent therapeutic option. The patient described herein with giant-cell myocarditis and fulminant cardiac failure who received substantial extracorporeal support in combination with CytoSorb hemoadsorption therapy benefited in terms of an improvement of organ function and his inflammatory situation.
http://journals.sagepub.com/doi/abs/10.1177/0391398818777362
Dr. June's collaboration with Novartis on Kymriah
As a reminder, here was Dr. Chan's response about how he sees things playing out as an
Brian Marckx
In terms of the potential CAR T-cell immunotherapy opportunity, Phil. Can you kind of give us sort of the -- what the near term looks like from CytoSorbents side in terms of next steps and then kind of the broader view? Is this something down the road that you think maybe potential collaboration opportunity assuming in the largest candidate is eventually FDA approved that you could potentially collaborate with Novartis?
Dr. Phillip Chan
What I would say that we’ve been invited by many of the leading cancer centers that have been conducting this cancer immunotherapy trial to give a talk on our therapy. And I think there is strong interest across the board to use therapy, but at the time mixing in a product that is not yet approved in the U.S. with another product that’s not yet approved in United States, just could not be done.
I think one of the reasons why we’re so excited by the pending likely approval of the Novartis program is that, that will likely happen in the next -- there has been wide speculation that, that will happen by the end of the year. And if that happens then we could potentially be used by them in post-market studies in looking at cytokine -- the treatment of cytokine release syndrome on an approved product.
But again, there is -- I think a lot of interest to do so just the timing in the past hasn't been right, but I think on a go forward basis, that represents a good opportunity for us. Now, from a collaboration standpoint with the cancer immunotherapy players, I think most actually know who we are and know our technology. But again in the past, the timing wasn’t right. We hope that on a go forward basis with Novartis and then likely Kite getting the next approval. There may be opportunities for us there. And certainly our association with Dr. June is very helpful.
Novartis received their initial approval for Kymriah in the fall of 2017 and just recently received their second FDA approval in May of this year. If the company could reach a partnership with Novartis for post-market studies this would be huge. Picture the device being listed on the Novartis Kymriah page for Treatment of CRS under the "Resistant CRS" category (No clinical improvement in 12 to 18 hours, or worsening at any time, despite prior management) where tocilizumab is listed as the solution.
https://www.hcp.novartis.com/products/kymriah/acute-lymphoblastic-leukemia-children/safety-profile/#cytokine-release-syndrome-treatment-algorithm
Speaking of Dr. June, did everyone see where he was named one of Time Magazine’s 100 most influential people in the world for 2018.
"Time selected Dr. Carl June, a University of Pennsylvania trailblazer in gene therapy, for his pioneering work in developing CAR-T treatments for cancer patients, including collaboration with Novartis AG on its approved CAR-T therapy Kymriah."
https://www.biospace.com/article/car-t-trailblazer-carl-june-who-collaborated-on-novartis-kymriah-makes-time-s-100-influential-list/
Cara-Fresenius licensing deal
Vifor Fresenius Medical Care Renal Pharma (VFMCRP) which is a strategic partnership between Vifor Pharma and Fresenius Medical Care (FMC), specializing in therapies to treat renal disorders. This past Thursday they struck a license deal with Cara Therapeutics, Inc. (CARA), and CARA shares surged to close up 43% to $16.56. The deal is to commercialize Korsuva for the treatment of chronic kidney disease-associated pruritus (CKD-aP) in dialysis patients.
Under the deal Cara receives an upfront payment of $50m in cash and an equity investment of $20m to acquire Cara stock at a price of approximately $17/share. Cara will also be eligible to receive additional payments of up to $470m in milestone payments and tiered royalties based on net sales of Korsuva.
I think a deal like this is more in the cards than being acquired at this stage of the company's growth path and would be a huge boost to the stock price.
"ATM or offering, good, do what needs to be done"
I share the same opinion and I think Ping is just pointing out this as well and is basing it on patterns from the past, just so shareholders don't get all giddy and blind to the recent run-up. In fact this is looking a little like the run up in 2015 after uplisting, the only difference is that there are more fundamentals and studies in place to support the valuation now.
Others cry foul just because someone points out the possibility of a raise. For crying out loud, even Microsoft raises money when they don't have to. This was from an article in Thinkgrowth.org. At the time Microsoft raised money it already had approximately $95 billion in cash and equivalents:
"In August of 2016, after just a year, newly appointed Microsoft CEO Satya Nadella had already made tremendous progress in helping Microsoft turn the corner. From the outside, it appeared the company had ample cash on hand to fund both current operations but also invest heavily to drive future growth. However, Microsoft decided to make a bold financial move and sell nearly $20 billion in Microsoft bonds. This happened to be the largest deal in their history and the fifth largest bond deal ever for the market. It was enough to make every financial publication sit up and take notice.
What followed was one of the most productive periods in the company’s history. Heavy investments paved the way for Azure, Microsoft’s cloud computing platform; HoloLens, one of the early-entrants in augmented reality technology; and an acquisition brought in Linkedin. Microsoft didn’t have to raise funds back in 2016. It was not life or death. It was not make or break. But they are a much different company today in part due to that decision."
For years it lagged behind the market and was stuck in a low trading range. Take a look at what Microsoft's stock did since then.
Thanks Ping for these insights. The signs do point this direction.
As the adage goes: startups raise money to gain traction, scale-ups raise capital to seize opportunity - raise money when you can and not wait until you need to.
I would rather see some overhang on the stock at these higher levels now as a result of using the ATM, if it gives the company more breathing room over the long haul and be able to take advantage of opportunities as they continue to grow. The Hemodefend trial however is still a head scratcher for me as to how they would fund this without a partner and an additional raise down the road.