Replies to post #23492 on CytoSorbents Corporation (CTSO)

[orangecat]

I think it was more of a tooling vendor merger/acquisition thing causing delays in fullfilling the work on the contract. It was mentioned in one of the 10-Ks a while back. With a lot of the CTSO patents related to the manufacturing process, I would imagine they would want to stick with a vendor that they have been working with rather than shopping the technology around. Pure speculation on my part though.

[techxen]

I believe we could see more than 20-30% of the Q2 revenues coming from Covid sales, as Mexico would have been on board a full quarter, Biocon received their regulatory approval for Covid and cases were exponentially increasing in that country, and we have seen sales are starting to trickle in from Latin America. This together with the 'pull-through' effect on other areas like critical care/sepsis and direct sales in Germany starting to run on all cylinders.

All these factors lead me to believe manufacturing will be pushed to the limit despite running multiple shifts. Management had the foresight to begin ramping up manufacturing before the storm hit (no pun intended and something Dr. Chan and team don't get much credit for), yet despite this manufacturing ramp they still had a backlog of orders they couldn't fulfill that they are carrying over to Q2. All these factors underlie my thinking of why we will see a fairly significant backlog in Q2 and why the company will be exploring options for their manufacturing situation.

Zacks is always pretty conservative in their assessment. Below was the last update from the company on the manufacturing situation and an assessment of the backlog:

"As of Q1, the company had backorders for roughly 3000 devices. While the company had established the production capacity to supply the near-term demand for the device, we think they will likely need to scale up and increase manufacturing capabilities in order to meet the growing demand in commercial and clinical testing. To meet this growing demand, we think management is likely to expand manufacturing capabilities by hiring additional staff to increase the hours of operation each day. In order to meet future demands, we think the company is likely to begin exploring new manufacturing sites that will help scale up their operations.

CEO Phillip Chan said the company has ramped up the production of CytoSorb and the manufacturing facility is running at near full capacity. The company had sales back order of approximately $2.7M. The company has rapidly scaled-up manufacturing with a goal to fulfill backorders by the end of Q2 2020. The ~$1.5M incremental revenue related to the surge in CytoSorb demand from the COVID-19 pandemic represents about 20% of the overall $8.2M revenue for Q1. Based on the estimate given by the company, we think that roughly 20-30% of the Q2 revenues could be directly related to the sales of CytoSorb to treat COVID-19 patients. While CytoSorb demand is likely to remain strong in the second quarter, we think the demand would likely weaken, extending through the rest of 2020, as the pandemic subsides resulting in lower revenues during this time. However, if there is a second and third resurgence from this virus, we could witness demand shooting up again for CytoSorb."