CytoSorbents Corporation (CTSO)

[woodstock135]

Still not whet you are looking for; but still a good read with some of the stuff you are looking for such as projections on PPS and EPS.

Couldn't get the link to work so I copied and pasted everything.

Daegen View profile
More options Oct 19, 2:11 am

From: Daegen <[e-mail]>
Date: Sun, 18 Oct 2009 23:11:25 -0700 (PDT)
Local: Mon, Oct 19 2009 2:11 am
Subject: The rising of MedaSorb.

Guys, have a read on this one, looks pretty interesting from here
onwards. There were charts and pipeline stages that weren't included.
As such please go through this link to view all in completion. Thanks

http://tapebeat.com/News/medasorb-draws-closer-to-completion-of-human...


When it comes to investing, everyone familiar with the biotech sector
is keenly aware that stocks of cancer related companies can be
significant investment opportunities if you manage to get in at the
right time. It’s all about timing. Well, we would like to bring you
all along on our journey, one where we will be highlighting a company
with an enormous potential, yet has been hidden away with very limited
exposure … until now. Ironically, it isn’t a company developing a
product with its primary focus being the treatment of cancer, but for
severe sepsis or “Overwhelming Infection”. Despite all of today’s
modern technology and even with the best in medical care sepsis kills
more people each year than any single form of cancer. It kills more
people than heart attacks and strokes. Globally, about 20 million
people a year develop sepsis and 1 out of every 3 dies from it. Many
of us have friends or family members that have been affected by this
horrible condition, and unfortunately there has not been any effective
treatment to date, neither drug nor device, until now. We can finally
see the light at the end of the tunnel and MedaSorb Technologies Corp.
(MSBT.OB) is leading the way.


Tapebeat, a news and research portal for the bio-tech sector in
association with the Farseers Group is proud to profile one of the
most exciting up and coming biotech companies, MedaSorb Technologies,
which is perfectly poised to realize exponential growth. MedaSorb
Technologies is a medical device company that operates exclusively
through its wholly owned subsidiary, CytoSorbents Inc. Their flagship
medical device, the “CytoSorb™”, is a patented blood purification
device that uses state of the art resin technology to remove toxins
from the blood, allowing the recirculation of clean blood back into
the body. While the technology is on the cutting edge, it has a low
cost to manufacture, a long shelf life, is easy to use, and is very
compatible with standard dialysis equipment. Unlike a drug, which can
have many adverse side effects, this device is very low risk, which
will benefit the company greatly during the CE mark and FDA approval
process. Medical devices have a very high rate of approval and with
shorter timelines, especially ones with a need as great as this.


There are two processes that contribute to onset of severe sepsis.
First, is either a bacterial or viral infectious trigger which
typically is treated with antibiotics or antiviral medications. The
second, which is the more damaging process, is the body’s abnormal
immune response to the infection. The body undergoes a massive
production of cytokines which causes what is called “cytokine storm”.
Cytokines are protein messengers that work to help ensure proper
function of the body’s immune system. The problem though is that
severe sepsis causes the body’s immune system to over-produce
cytokines in the extreme which leads to a very toxic state in the body
causing damage to cells, tissues, and organs. It is this “cytokine
storm” that is responsible for organ failure, immune system failure,
and death in patients with severe sepsis. Cytokine storm has also been
linked as a major driver behind death associated with certain virulent
strains of influenza such as avian (H5N1) and swine (H1N1) flu.


Severe sepsis is rising due to an aging population, an increase in
conditions like cancer and diabetes, the spread of antibiotic
resistant bacteria, and an increasing use of medical devices that are
prone to infection, like artificial knees, elbows, and hips. The
current swine flu pandemic has highlighted the serious lack of
effective therapies for critically-ill septic patients. It is clear
that better treatments are needed, such as the CytoSorb™ device, even
without major pandemic outbreaks or the threat of biological attacks.
From a cost control perspective there is a tremendous need for the
CytoSorb™ technology as sepsis costs the U.S. healthcare system about
$18 billion every year, making it one of the most expensive diseases
to treat.


MedaSorb is currently engaged in human clinical trials in Germany, and
have ramped up the number of test sites from three to up to twelve
recently. Germany is the largest medical device market in the European
Union and third in the world. To help fund and ensure the successful
number of participants in the study, they recently received a cash
infusion of $1.3M through an investor, who will be able to convert
warrants to common shares up to one year from then. This added
liquidity will be instrumental to helping ensure they are able to
achieve their goal by year’s end, and position them perfectly to
obtain CE Mark European approval. The best part about the financing is
that there is no immediate dilution of stock. The share count remains
extremely low at only 42M shares outstanding, with almost 40% owned by
insiders and 5% owners. The very low market cap (approx. $6.5M) and
float make this an ideal opportunity for significant gains in both the
short and long term.


Investors are anxious to know how the human trials are going and we
are hopeful we will get some insight at the upcoming 2009
International Sepsis Symposium to be held in Amsterdam, November
11-14. We expect a continual upward movement in the share price in the
coming days in anticipation of an update on the progress so far. Those
that go long will should be handsomely rewarded over the coming
months. We expect this stock to continue to grow more and more with
large inflection points at news on the progress of the trials,
successful completion in a few short months, at CE Mark approval,
announcement of production commencing, and at FDA approval. 2010 will
be an exciting year for MedaSorb.


Pipeline


MedaSorb Technologies has a stable of promising products in various
stages of development, as well as 26 issued patents and several more
pending. They have a distinct competitive advantage and have set
themselves up with protectionary measures to limit competition. The
following is a chart illustrating MedaSorb’s promising and robust
pipeline:


It is clear that MedaSorb has a rich pipeline and with a technology
that can easily be transferable to treat other diseases and
conditions. The sky is the limit with this type of technology. The
companies near term focus is achieving regulatory approval of
CytoSorb™ which is expected to be used for the treatment of severe
sepsis, cardiopulmonary bypass surgery, organ donation and drug
overdoses, all of which have a common theme, blood borne toxins. Its
proprietary polymer bead technology can be used for filtering toxins
from blood and physiologic fluids while allowing large essential blood
proteins to pass around the beads through the filter, back into the
patient.


The advantages of the Cytosorb™ technology are numerous, some already
mentioned.


- High gross margins at volume


- Works with standard dialysis equipment


- Specifically designed to remove a broad range of cytokines and
toxins making this the most logical strategy to treat cytokine storm


- Capable of removing up to 90% of certain cytokines from blood in a
single treatment


- In animal studies, significantly improved short and long-term
survival, hemodynamic stability and cytokine removal


- Very easy to use with a minimal learning curve and easy set up


- Compatible with blood as resin can come into direct contact without
material negative effects


- Since the Cytosorb™ does not have biological components it has a
long shelf life


- Passed extensive animal safety and ISO 10993 biocompatibility
testing.


- No serious device-related adverse events in more than 460 human
treatments with good tolerability and safety


- Low manufacturing risk as CytoSorb™ is manufactured and packaged
under strict, reproducible, well-documented guidelines in compliance
with FDA IDE standards


- Limited Competition as only Xigris (Eli Lilly) has been approved to
treat sepsis, but has questionable efficacy and safety


Management Team


MedaSorb Technology is run by a very experienced and accomplished
management team that knows what they are doing. Their motto is direct
and to the point: “Working to save Lives Through Blood Purification”.
So far they have acted in the best interest of their investor
community, looking for strategic alternatives to raise capital without
immediate and sizable stock dilution.


Phillip Chan, MD, PhD – Chief Executive Officer – is a Board-certified
internal medicine physician trained at Harvard and Yale Medical
School, a former Partner at NJTC Venture Fund and a co-founder of the
privately-held medical device firm, Andrew Technologies.


Robert Bartlett, MD - Chief Medical Officer - is world-renowned as the
pioneer in extracorporeal membrane oxygenation therapy (ECMO) and the
former Director of the Surgical Intensive Care Unit at University of
Michigan, with extensive experience in critical care medicine
including the treatment of sepsis and respiratory disease.


Vincent Capponi, MS - Chief Operating Officer - has more than 20 years
experience in the medical device, pharmaceutical and imaging fields at
Upjohn, Sims Deltec and Sabratek.


David Lamadrid, MBA - Chief Financial Officer - has over 17 years of
business experience in finance and management, previously at Chase
Manhattan Bank.


Valuation and Costing


At the recent 2009 Rodman & Renshaw conference, the company estimated
the severe sepsis market to be $8.8 Billion annually in the US and
Europe alone ($3.5B in US from 1 Million incidents (patients); $5.3 B
in Europe from 1.5 Million incidents annually). Clearly the worldwide
market would be significantly greater with about 20 Million incidents
annually. The CytoSorb™ blood purification process involves treating
for 6 hours a day for 7 days with a new CytoSorb™ cartridge each day
at a cost of $500 per cartridge for a total of $3,500. This is very
affordable for hospitals and patients, especially since sepsis patient
costs are normally more than $3,000 for each day in the intensive care
unit. If the CytoSorb™ treatment can speed recovery and get a patient
out of the intensive care unit just one day faster, it could
practically pay for itself. In addition to being a high profit margin
disposable, CytoSorb™ is compatible with standard hemodialysis
equipment found in any major hospital. This is very important in this
cost conscious environment, since hospitals won’t need to purchase any
additional equipment. The device can easily be run by a technician
familiar with dialysis, so no significant training is needed.


We have taken an extremely conservative approach and have only assumed
a small market penetration in just the US and EU in our valuation.


Expected PPS = ((Total Customer Base * Annual Revenue Per Customer *
Possible Market Penetration * Net Profit Margin) / Cost of Equity) /
Number of Outstanding Shares
Given the CEO of Medasorb stated that the incident(patients) rate is
approximately 2.5 Million/year with access to Cytosorb™ treatment.
The cost of the course of treatment per incident(per patient) as
explained above is $3,500
From the recent 10K filing and as of August 14, 2009 there were
41,520,427 common shares issued and outstanding.
At the time of this analysis the average Beta for MSBT is 1.35
The risk free rate is 0.0013. Used the 3 month T-bill rate from
Bloomberg.
The market’s historical excess return rate is 0.068.
Cost of Equity using the CAPM formula: (Beta * Market’s Historical
Excess Return Rate) + Risk Free Rate = Cost of Equity. The resulting
calculated Cost of Equity is 0.093
The Variables:
C: Total Potential incidents(US and Europe alone) = 2,500,000
R: Revenue Per Incident = 3,500
P: Potential Market Penetration = 0.03
(Just 3% Once again to err on the conservative side, note that there
are no therapies approved to specifically treat cytokine storm
directly because previous technologies have been inadequate)
N: Net Profit Margin = 0.25
(This is a very conservative percentage and the profit margins are
well around 40% on similar hemoperfusion charcoal cartridges used for
drug detoxification, which cannot efficiently remove cytokines)
E: Cost of Equity = 0.093
(The value of E at 0.093 can here be compared to a P/E ratio of 10.75
which is again very conservative number. P/E ratios historically
ranged between 10 to 20, 10 being undervalued)
S: Number of Shares = 41,520,427
The Formula:
Estimated PPS = ((C * R * P * N) / E) / S


Estimated PPS = ((2,500,000 * 3,500 * 0.03 * 0.25) / 0.093) /
41,520,427 = $16.98


Revenues= 2,500,000 * 3,500 * 0.03 = $262.5 M
EPS= 262.5*0.25 / 41.52 = $1.58


We believe these to be fair estimates based on real world information
for each of the variables in the equation. We then scaled the
variables to come up with a conservative estimate. This is not an
exact science, and some of the values could be quite different from
what we have decided to use. However, by making an effort to err on
the conservative side we can reduce the effect of errors that might be
introduced by potentially inflated numbers found in our research.
Again, this is just a conservative 3% of the market penetration from
the CEO’s forecast in the US and Europe markets, but we strongly
believe that this figure can easily be surpassed. Many of the EU
nations motivate and reward hospitals for expediting recuperation,
which enables savings for the Government.


The analysis based on just 3% market penetration can be treated as our
base line case. We have also assumed both more and less optimistic
views at 4% and 2% penetration respectively. We added a conservative
25% sales growth for 2011 for continuing penetration in the EU as well
as FDA approval and penetration in the US. Realistically it would be
much higher with US acceptance.


Assumptions for the Forecast:


Company succeeds in getting the European CE Mark and FDA approvals
Company doesn’t dilute the existing shares
No strategic alliances or partnerships (can have a dilutive effect on
profitability)


Revenue Forecast:


EPS Forecast:


Bottom line, with extremely conservative assumption we estimate the
potential price per share of $16.98, which should be enough risk vs
reward to entice any investor to buy at today’s significantly
undervalued price of about $0.20 cents per share! In investor speak
that’s a 113 bagger, or said another way a 11,233% increase!


Financial Status:


The Company ended the second quarter of 2009 with $1.4 million in cash
and on October 5, 2009, certain investors exercised warrants to
purchase an aggregate of 13,357 shares of Series B Convertible
Preferred stock at a purchase price of $100.00 per share. As a result
of the exercise of the warrants, the company received net cash
proceeds of $1.3 million. Again, we believe the company is in a good
financial position to comfortably finish the necessary trails and
submit an application for the European CE mark approval process by
2010.


The Company has a decent balance sheet for being in this stage of
development, with a low amount of liabilities (less than $1M). Many
small cap Bio-tech companies in the same stages seeking regulatory
approval are often in much worse shape, being burdened by a heavy debt
load.


From the most recent 10Q:


Conclusion:


Medasorb Technologies (MSBT) undoubtedly has the potential to be one
of the biggest return on investment plays in a long time in the
biotech industry. Similar companies namely Renal Solutions and
NxStageMedical with less revenue potential have a market
capitalization of close to 200 Million and higher. Many biotech
investors witnessed the amazing run of Nephros (NEPH) (a comparable
situation with much less market potential) as its share price went
from a low of $0.05 to as high as $2.50 in 4 short months recently. It
is rare to see small cap BioPharma companies with promising products
and low numbers of outstanding shares, while also having a strategy of
providing investor confidence by looking for other alternative ways of
raising capital vs just using dilution. MedaSorb is one such rare gem,
a big diamond in the rough, having only 42M total outstanding shares
with almost 40% held by insiders and 5% owners. The recent $1.3
million investment should be very reassuring to investors as it will
enable successful completion of the trials on time and at the level of
participation they need for CE mark approval by 2010.


The stock has been slowly gaining momentum, visibility and has
recently reached a new 52 week high, but has since settled back
slightly. The current share price is a very favorable entry point. Now
is a good time to capitalize on this before it’s too late and the
proverbial ship has set sail. With the potential multi-billion dollar
market, little to no competition for its products, and the current
market cap being only about $6.5M, we strongly believe that MedaSorb
Technologies (Symbol: MSBT) is extremely undervalued and is an
excellent compelling investment opportunity. Again, we expect an
upward trend in the share price in the coming days in anticipation of
news from the upcoming 2009 International Sepsis Symposium to be held
in Amsterdam, November 11-14, 2009.


In this Context we would like to point our readers to the below blog
on MedaSorb written by Jospeh Krueger, who is a senior scientist at a
major pharmaceutical company. Jospeh has a Ph.D in Cancer Biology and
performed post doctoral studies at the Scripps Research Institute and
UC San Diego. He has 10-15 peer reviewed publications in the cancer
field and has received multiple competitive grants for his scientific
research. His current position familiarizes him with drug discovery
and drug development in the pharmaceutical industry. As an active
industry scientist and skilled investor, we value his opinion and
would invite you to read his recent article:


BLOG: http://seekingalpha.com/instablog/492120-jospeh-krueger/31738-medasor...


Disclosure: This report is written and submitted by Farseers
Investment Group (www.farseers.com) members M. Rogaliner and V.
Nukala, who hold a Long Position in MSBT.


Press Releases:


MedaSorb Technologies Corporation to Present at the Rodman & Renshaw
Global Investment Conference


Tuesday August 18, 2009, 8:30 am EDT
Monmouth Junction, NJ--(August 18, 2009)--MedaSorb Technologies
Corporation (OTCBB:MSBT) and its wholly-owned subsidiary,
CytoSorbents, Inc., announced that Dr. Phillip Chan, Chief Executive
Officer, will present at the 11th Annual Healthcare Conference at the
Rodman & Renshaw Global Investment Conference in New York City. The
conference will take place at the New York Palace Hotel from September
9 to 11. http://www.rodmanandrenshaw.com/conferences?id=30


An audio webcast of the slide presentation will be available for 90
days after the event at http://www.wsw.com/webcast/rrshq15/msbt.ob


CytoSorbents, Inc. Comments on CytoSorb(TM) and the Swine Flu Outbreak


Wednesday May 6, 2009, 8:30 am EDT
MONMOUTH JUNCTION, NJ--(MARKET WIRE)--May 6, 2009 -- CytoSorbents,
Inc. comments on the current swine flu outbreak and highlights the
urgent need for improved therapies for influenza and other respiratory
viruses. In particular, potentially virulent pathogens such as avian
flu (H5N1 subtype), swine flu (H1N1 subtype), and the SARS virus can
quickly kill a large percentage of those infected. According to the
Centers for Disease Control, normal seasonal influenza afflicts 15-60
million people in the United States each year, hospitalizing more than
200,000, and directly contributing to the deaths of 36,000 people
annually. Although these numbers are significant, in contrast, the
1918 Spanish influenza pandemic infected an estimated one third of the
world population, killing nearly 50 million people. Highly virulent
flu strains have the ability to evade neutralization by the immune
system, leading to a prolonged and intense infection that can lead to
severe sepsis and death. Although the virus itself has destructive
capability, the body's own aggressive immune response and "cytokine
storm" are recognized as leading drivers of mortality in these
patients. Cytokines are normally helpful proteins that control the
immune system. In severe sepsis due to influenza, however, cytokines
are often produced in excessive, toxic quantities leading to acute
respiratory distress syndrome (severe lung inflammation), organ
failure, and numerous complications that often result in death. Anti-
viral therapy such as Tamiflu(TM), Relenza(TM) and amantadine may slow
viral infection if used early enough and if resistance is not an
issue. But given the major role that cytokine storm is believed to
play in the pathogenesis of these deadly viruses, more options are
needed to directly address this critical issue now.


CytoSorbents, Inc. Recognized as "Company Most Likely to Succeed" at
the 2009 New Jersey Venture Conference and Provides Clinical Update


Monday March 30, 2009, 1:13 pm EDT
MONMOUTH JUNCTION, NJ--(MARKET WIRE)--Mar 30, 2009 -- CytoSorbents,
Inc., the wholly-owned operating subsidiary of MedaSorb Technologies
Corporation (OTC BB:MSBT.OB - News), announced it was chosen as
"Company Most Likely to Succeed" by independent judges at the 2009 New
Jersey Technology Council Venture Conference on March 27, 2009. The
Company was one of 60 healthcare and technology companies presenting
at the conference who were eligible for this coveted all-around award.
"We feel extremely honored to have received this award, particularly
against such solid competition," stated Dr. Phillip Chan, CEO. "It is
especially gratifying that others recognize the significant value we
are building and the potential of our technology to treat severe
sepsis, one of the top medical causes of death in the world. We are
committed to increasing shareholder value by making significant
progress on key milestones and objectives, including our European
Sepsis Trial. Among other means, we will continue to foster increased
awareness of our Company through venues such as the New Jersey
Technology Council Venture Conference and the In3 West Conference that
we presented at in early March. Our story has been getting stronger
and has been well-received because it is based on compelling science
and our unique CytoSorb(TM) blood purification technology."


CytoSorbents provides the following clinical update on its current
European Sepsis Trial: -- Twenty-two patients have been enrolled to
date from three trial sites. -- Recruitment is now expected to
accelerate with a current total of ten initiated clinical sites. --
The CytoSorb(TM) treatment has been well-tolerated by patients and
easily administered by hospital staff on standard dialysis equipment.
-- There have been no serious device related adverse events associated
with CytoSorb(TM) treatment in more than 450 human treatments,
approximately 90 of which have been in septic patients. -- The Company
continues to expect trial completion in 2009 with the goal of CE Mark
approval and initial commercial sales in Europe next year.


MedaSorb Technologies Corporation Improves Balance Sheet


Tuesday February 3, 2009, 12:24 pm EST
MONMOUTH JUNCTION, NJ--(MARKET WIRE)--Feb 3, 2009 -- MedaSorb
Technologies Corporation (OTC BB:MSBT.OB - News) and its wholly-owned
subsidiary, CytoSorbents, Inc., announced that it was approved to
participate in the New Jersey Emerging Technology and Biotechnology
Financial Assistance Program and sold its net operating loss, netting
approximately $248,000 to the Company. This is in addition to the
$840,000 raised in the second close of the Series B financing in
August 2008, bringing the total amount of capital raised by the
Company to $5.5 million over the past 7 months.


"This further bolsters our balance sheet to facilitate the completion
of our European Sepsis Trial -- evaluating the treatment of patients
with severe sepsis and respiratory failure with our CytoSorb(TM) resin
cartridge," commented Dr. Phillip Chan, CEO. "Severe sepsis, often
called 'overwhelming infection,' is so prevalent that most people
unfortunately know someone who has died from this terrible disease.
CytoSorbents hopes to significantly impact the outcome of sepsis with
its unique treatment approach


About CytoSorbents and CytoSorb™


CytoSorbents, Inc, with its parent MedaSorb Technologies Corporation,
is in clinical trials to treat severe sepsis, often called
"overwhelming infection," with a novel blood purification device
called CytoSorb(TM). Severe sepsis is typically caused by bacterial
infections like pneumonia, or viral infections like influenza. It
afflicts more than 1 million people in the United States and an
estimated 18 million people worldwide each year, killing one in every
three patients despite the best treatment. In the United States, more
die from severe sepsis than from either heart attacks, strokes or any
single form of cancer. Much of the organ failure and mortality in
severe sepsis is caused by the abnormal massive production of
cytokines by the immune system, often called "cytokine storm." CytoSorb
(TM) is a cartridge containing highly porous polymer beads that are
designed to filter cytokines and treat potentially fatal cytokine
storm. As blood is pumped through the CytoSorb(TM) cartridge using
standard dialysis equipment, the beads bind and remove cytokines and
other toxins from blood. The treated blood is then returned to the
patient. The Company is currently conducting its European Sepsis Trial
-- a multi-center, randomized, controlled clinical trial using its
flagship CytoSorb(TM) device to treat up to 100 patients with severe
sepsis in the setting of respiratory failure. Pending a successful
trial, the Company will seek CE Mark approval and commercialization of
CytoSorb(TM) in the European Union in 2010. CytoSorb(TM) is one of a
number of different resins designed for different medical
applications, including improved dialysis, the potential treatment of
inflammatory and autoimmune disorders, treatment of rhabdomyolysis in
trauma, drug detoxification and others.


ADDITIONAL BACKGROUND INFORMATION ON SEPSIS IS AVAILABLE IN OUR
RESOURCE LINKS TAB AT THE TOP OF THE PAGE





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