Executive Summary / Key Takeaways

• CytoSorbents is a blood purification leader leveraging proprietary polymer technology to address critical unmet needs in intensive care and cardiac surgery, particularly severe inflammation and perioperative bleeding.
• The company's core international CytoSorb business, which generated $35.6 million in product sales in 2024, is focused on returning Germany to growth in the second half of 2025 and expanding in other territories to drive the overall core business towards near cash flow breakeven by year-end.
• The significant near-term catalyst is the potential regulatory approval and commercial launch of DrugSorb-ATR in the U.S. and Canada for reducing bleeding in CABG patients on ticagrelor, targeting an initial $300 million market opportunity.
• Despite a recent FDA denial letter for the DrugSorb-ATR De Novo request, the company intends to appeal and expects a final regulatory decision in 2025, alongside the Health Canada review.
• Strengthened liquidity from recent financings and tax credit sales supports operations and pre-launch activities, but the company acknowledges substantial doubt about its ability to continue as a going concern without securing additional future funding.

Setting the Scene: A Differentiated Approach to Blood Purification

CytoSorbents Corporation stands at the forefront of blood purification, applying a unique technological approach to address life-threatening conditions in the intensive care unit (ICU) and cardiac surgery. At its core is a proprietary technology featuring highly porous polymer beads designed to actively remove toxic substances from blood through pore capture and surface adsorption. This technology is housed within single-use cartridges that are compatible with standard hospital blood pumps, such as those used for dialysis, continuous renal replacement therapy (CRRT), extracorporeal membrane oxygenation (ECMO), and heart-lung machines.

This technological foundation provides a key differentiator in the competitive landscape. While major players like Fresenius Medical Care (FMS), Baxter International (BAX), and Asahi Kasei (AHKSY) primarily focus on blood purification for kidney failure, addressing an estimated 10-15% of ICU patients, CytoSorbents targets the broader challenge of severe inflammation and toxin overload common in critical illnesses like sepsis, ARDS, liver failure, and trauma, which affects an estimated 40-60% of ICU patients. The company's polymer bead technology offers quantifiable advantages, including approximately 20-30% greater efficiency in toxin removal (such as faster cytokine adsorption rates) compared to some alternatives. For its DrugSorb-ATR application, the technology is expected to offer benefits like 15-20% faster processing speeds and potentially 25-30% lower operating costs per unit due to reduced material waste.

CytoSorbents' overarching strategy is two-pronged: solidify and grow its established international CytoSorb business while simultaneously pursuing regulatory approval and commercialization of its DrugSorb-ATR system in the large North American market. This strategy leverages its technological edge to target specific, high-impact medical needs that are currently underserved by traditional blood purification methods.

The Core Business: Building a Foundation in International Critical Care

CytoSorb, the company's flagship product, is approved in the European Union and forms the anchor of its international business, distributed across more than 70 countries. This business generated $35.6 million in product sales in 2024, representing 15% year-over-year growth. This growth was notably driven by strong performance in direct sales outside of Germany and robust expansion through its distributor and partner network, which saw 22% growth in 2024.

In the first quarter of 2025, product revenue was $8.73 million, a 3% decrease year-over-year, though flat on a constant currency basis. This modest decline was attributed to temporary disruptions in German direct sales, which were anticipated as part of a strategic reorganization and realignment of the German commercial team and sales approach. Germany is the company's largest market, and its flat growth over the past two years has been a drag on overall performance. Management is confident that the changes implemented are essential for positioning Germany for renewed growth in the second half of 2025, contributing to stronger overall financial results.

Gross profit in Q1 2025 was $6.21 million, resulting in a gross margin of 71.1%. This was down from 76.5% in Q1 2024, primarily due to a 23% reduction in the number of units produced, partially offset by an 11% reduction in production costs. Management expects gross margin expansion throughout 2025 as manufacturing operations become smoother and production volume increases, aiming for a long-term target range of 75-80%.

Operational efficiencies and cost controls have been a significant focus. Total operating expenses decreased by 12% year-over-year in Q1 2025 to $10.09 million, driven by lower R&D expenses (following the completion of the STAR-T trial) and reduced selling, general, and administrative costs (including lower royalty expenses due to the expiration of a 4% royalty and decreased stock-based compensation). This led to a 17% improvement in the loss from operations, which was $3.89 million in Q1 2025 compared to $4.66 million in Q1 2024.

The company is actively working towards its goal of having the core business approach cash flow breakeven by the second half of 2025. This is predicated on achieving renewed growth in Germany, continued strength in other international markets, expanding gross margins, and maintaining disciplined cost controls. The launch of the PuriFi hemoperfusion pump in Q3 2024 is also expected to support core business growth by providing an easy-to-use system that facilitates the use of CytoSorb cartridges, particularly in regions without extensive dialysis infrastructure.

The North American Catalyst: DrugSorb-ATR Opportunity

The most significant potential catalyst for CytoSorbents is the opportunity to enter the large North American market with DrugSorb-ATR. This investigational device, based on the same core polymer technology as CytoSorb, is specifically designed to address the critical unmet medical need of reducing severe perioperative bleeding in patients undergoing urgent cardiac surgery due to blood-thinning drugs, particularly ticagrelor (Brilinta). This application has received two FDA Breakthrough Device Designations, underscoring its potential importance.

Current guidelines recommend delaying surgery for 3-5 days to allow the drug to wash out, but this exposes high-risk patients to complications while consuming valuable hospital resources. DrugSorb-ATR aims to enable safer, timelier surgeries by removing the drug during the procedure.

Based on data from the U.S. and Canadian STAR-T randomized controlled trial and supportive real-world evidence from the international STAR Registry, the company submitted a De Novo marketing application to the FDA in September 2024 and a Medical Device License application to Health Canada in November 2024 (following MDSAP certification). Real-world data presented at EuroPCR 2025 from the STAR registry demonstrated a statistically significant reduction in severe bleeding and transfusion needs in urgent CABG patients on ticagrelor compared to historical benchmarks, supporting the device's clinical value proposition.

The potential North American market for DrugSorb-ATR in the initial ticagrelor CABG indication is estimated at $300 million today, with potential to grow beyond $1 billion with label expansion to other blood thinners (like direct oral anticoagulants) and surgical applications, especially as ticagrelor becomes generic. Upon potential approval, the company plans a controlled market introduction at select clinical trial centers to refine its commercial strategy before a broader launch.

Regulatory Hurdles and the Path Forward

The path to the North American market recently encountered a significant hurdle. On April 25, 2025, the FDA issued a denial letter regarding the DrugSorb-ATR De Novo request, citing remaining deficiencies that need to be addressed. Management, after consulting with regulatory counsel, believes these issues can be resolved with existing data and intends to file a formal appeal within 60 days (by June 25, 2025). The appeal process includes a formal hearing with FDA senior leadership and external experts. Potential outcomes include the original decision being upheld, reversed, or reversed with conditions. Despite this setback, the company continues to expect a final regulatory decision from the FDA in 2025, leveraging the expedited timelines associated with the appeal process.

Separately, the Health Canada application remains under advanced review. While Health Canada has indicated experiencing delays due to a backlog, they have reaffirmed their commitment to issuing a decision as soon as possible, and the company also expects a final decision from Health Canada in 2025.

Financial Health and Outlook

As of March 31, 2025, CytoSorbents had approximately $13.11 million in total cash, cash equivalents, and restricted cash, with $11.59 million being unrestricted. The company has taken steps to strengthen its balance sheet and liquidity. A shareholder Rights Offering in January 2025 raised $5.4 million in net proceeds, and the exercise of Series A Right Warrants in February 2025 added another $1.4 million net. These proceeds satisfied a debt covenant, releasing $5.0 million of restricted cash from the Avenue Capital loan facility, making it unrestricted. Additionally, in April 2025, the company received $1.7 million from the sale of New Jersey NOL and R&D tax credits.

The company's $20 million debt facility with Avenue Capital Group, secured in June 2024, provided an initial $15 million tranche (including the $5 million restricted portion now released). A second $5 million tranche is available between July 1, 2025, and December 31, 2025, contingent upon receiving FDA marketing approval for DrugSorb-ATR. The loan is secured by the company's assets, including intellectual property, and requires interest-only payments until July 2026 (potentially extended to January 2027 if the second tranche is drawn and revenue targets are met), followed by principal and interest payments.

Despite these efforts to bolster liquidity, the company explicitly states in its 10-Q filing that its cash position as of March 31, 2025, "raises substantial doubt about the Companys ability to continue as a going concern." This highlights the critical need for future funding, which could come from the exercise of the remaining Series B Right Warrants (expiring June 10, 2025), drawing the second tranche of the Avenue Capital loan (contingent on FDA approval), utilizing its $150 million effective shelf registration statement (subject to "baby shelf" limitations), or other financing sources. The availability of such funding on acceptable terms is not assured and is a key risk.

The company is focused on reducing cash burn, with Q1 2025 net cash used in operating activities at $3.46 million, down from $4.83 million in Q1 2024. The goal of achieving near cash flow breakeven for the core business by the second half of 2025 is central to improving financial independence and funding the DrugSorb-ATR launch. The company also disclosed a material weakness in internal controls related to stock-based compensation accounting, which they are actively remediating with expected completion in 2025.

Competitive Dynamics and Strategic Positioning

CytoSorbents operates in a market dominated by large, diversified medical device companies like FMS, BAX, and AHKSY. These competitors benefit from significant scale, established global distribution networks, and stronger financial profiles (e.g., FMS and BAX generally have positive operating and net margins, unlike CTSO's current negative margins, and stronger cash flow generation).

However, CytoSorbents strategically positions itself by focusing on niche, high-unmet-need applications where its proprietary polymer technology offers a distinct advantage. While competitors' blood purification systems are often tied to dialysis or broader filtration, CytoSorb's strength lies in targeted adsorption of inflammatory mediators and specific toxins, including blood thinners. This technological edge provides a competitive moat, enabling the company to pursue premium pricing in certain applications and differentiate itself beyond general blood purification.

The potential approval of DrugSorb-ATR in North America represents a significant market entry into a segment with limited direct competition for Brilinta reversal. The company highlights that, outside of CytoSorb in the EU, there are no approved reversal agents for Brilinta in the U.S. or Canada. This positions DrugSorb-ATR as a potentially unique solution, which, if approved, could capture significant market share in its target indication and potentially make ticagrelor the only reversible oral antiplatelet upon generic availability.

While larger competitors have the scale to potentially leverage pricing power or invest heavily in competing technologies, CytoSorbents' strategy relies on demonstrating clear clinical and economic value through its differentiated technology and building strong relationships within specialized medical communities (e.g., cardiac surgeons, intensivists). The company's focus on generating real-world data through registries like STAR and presenting at major medical conferences is crucial for driving adoption and securing reimbursement in a competitive environment.

Conclusion

CytoSorbents stands at a pivotal juncture, balancing the steady progress of its core international business with the potentially transformative opportunity in North America. The core CytoSorb franchise, despite recent temporary headwinds in Germany, is demonstrating operational improvements and cost controls aimed at achieving near cash flow breakeven by the end of 2025. This financial discipline is critical for supporting the anticipated launch of DrugSorb-ATR.

The DrugSorb-ATR system, leveraging the company's differentiated polymer technology, targets a significant unmet need in cardiac surgery and represents a substantial market opportunity in the U.S. and Canada. While the recent FDA denial letter introduces regulatory uncertainty, the planned appeal and expected decision in 2025, alongside the Health Canada review, remain key catalysts to watch.

The company's strengthened liquidity position provides runway for current operations and pre-launch activities, but the acknowledged going concern risk underscores the necessity of securing additional funding in the future, contingent in part on regulatory success. CytoSorbents' competitive strategy relies on its technological differentiation and focus on high-value niche applications to compete against larger, more financially robust players. The successful resolution of the FDA appeal and subsequent market adoption of DrugSorb-ATR are paramount to realizing the company's growth potential and achieving long-term financial sustainability.