CytoSorbents Corporation (CTSO)

[techxen]

Something brewing with AstraZeneca ?

I was in the airport coming back from a business trip and could not hear all of the analyst comments, but thought the interactions between Dr. Chan and the analyst from B. Riley were very interesting in regards to his questions regarding PhaseBio and their drug for removing Ticagrelor (Brilinta). After reading the transcript and doing a little research this morning I can see why the question came up from the analyst and the strange tight-lipped response from Dr. Chan.

PhaseBio got a $90 million investment from SF J Pharma for development expenses through the end of 2021 and up to an additional $30 million based on PhaseBio meeting specific, pre-defined clinical milestones for their ticagelor removing drug PB2452.

https://www.benzinga.com/general/biotech/20/01/15105863/phasebio-rallies-on-funding-agreement-for-early-stage-anticoagulant-reversal-agent

So basically we have a potential competitor in the removal of Ticagrelor. However here is where it gets interesting in the comments.

Dr. Chan stated that "with Ticagrelor going off patent, it's believed by 2024, the cost differential between Ticagrelor and clopidogrel should also decrease significantly. Because of that the ability to be used with Ticagrelor is a major advantage for us."

…. Translation: More Ticagrelor use -> more Cytosorb use

Dr. Chan then states "it's a biologic that is that - well, I think, at the end of the day, is not very cost competitive with our product, given that it is a biologic and that it will expire on the shelf, and will have to be repurchase at high cost by the hospital. And so we'll see how the dynamics work out." and "for cardiac surgery, we believe that our product which is easily installed into the cardiopulmonary bypass machine, and has a relatively reasonable and cost effective cost, as we've demonstrated in a study that came out last year, showing that even taking into consideration the cost of the device that use of the device per patient would save hospitals a projected $5,000. We believe that CytoSorb would actually be a very easy therapy to be able to use for this application in cardiac surgery patients. And so we'll see how that turns out"

The analyst then remarks: "AstraZeneca for example, while PhaseBio is still in clinical trial, …..has a small window left to be able to recapitalize before generics start coming into the market. Just from where I'm standing, make a lot of sense for them to work with you to help with their adoption."

Dr. Chan's response: "Well, I think that the goal of a lot of pharmaceutical manufacturers is to maximize the revenue opportunity further for their drugs, particularly ones that are very key to their pipeline. And so the ability to dominate a market or the potential to dominate a market should be very attractive and to be able to eliminate competitors from that market. So that's all I can say at this time. "

So in summary you have a compelling case of one of the largest pharma companies AstraZeneca with a drug that is generating for them over $1B annually with a 2-3 window left for sales before generics start whittling that down. In order to maximize sales they need to offset those risks from bleeding events and extra costs when used during cardiac surgery. So partnering with CTSO makes sense in this light. And in light of the $120M in funding that PhaseBio received you can see how big a deal this is and why Dr. Chan seems to think this is also the company's ticket finally into the U.S.

Thoughts?