Maxim Group analyst Gabrielle Zhou raised her price target Buy-rated CytoSorbents (NASDAQ: CTSO) to $10.00 (from $8.00) as VetResQ launches into the U.S. vet market.
Zhuo highlighted:
CytoSorbents announced the launch of the VetResQ sorbent cartridge for the U.S. veterinary market. VetResQ was showcased at the American College of Veterinary Emergency and Critical Care (ACVECC) Post-graduate Review Course from Jan. 20-21 in Honolulu, Hawaii.
Similar to CytoSorb, VetResQ is a broad spectrum blood purification adsorber designed to help ameliorate deadly inflammation and toxic injury in animals with critical illnesses such as septic shock, toxic shock syndrome, severe systemic inflammation, toxin-mediated diseases, pancreatitis, trauma, liver failure, and drug intoxication.
We also note that on January 10, CytoSorbents pre-announced 4Q16 and 2016 full year results. The company expects gross product sales of $2.6M in 4Q16, and $8.2M in 2016. Full year blended gross margins are expected to exceed 65%, and total human CytoSorb treatments are surpassed 20,000 vs. 9,000 in 2015.
Model revisions: We now include a very modest revenue line for VetResQ. We expect the sales will be nominal for the first few years as it will take time to build a presence for a product like this in the critical care veterinary market. As such, we assume annual revenues in year 1 of ~$100K and in year three, just $300K. Unrelated to VetResQ we adjust our 2016 revenue estimates to reflect the new guidance of $8.2M from $7.9M. In addition, we roll our valuation metrics a year forward. The net effect of these changes is our price target climbs to $10 from $8.
Conclusion. We see the launch of VetResQ into the U.S.veterinary market as positive, and CytoSorbents' continued efforts in driving sales growth. Our focus remains on the U.S. REFRESH pivotal study for intraoperative use during complex cardiac surgery, which is expected to begin in 2Q17.
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