Cytosorbents Corp (CTSO) 2021 Q1 法說會逐字稿

Good afternoon and welcome to the CytoSorbents First Quarter 2021 Financial and Operating Results Conference Call. At this time, all participants are in a listen only mode. Following the formal remarks, we will open the call for your questions. Please be advised that the call will be recorded at the company's request. At this time, I'd like to turn the call over to our moderator, Amy Vogel. Please go ahead, Ms. Vogel.

Thank you, and good afternoon. Welcome to the CytoSorbents First Quarter 2021 Financial and Operating Results Conference Call. Joining me today from the company are Dr. Phillip Chan, Chief Executive Officer; Vincent Capponi, President and Chief Operating Officer; Kathleen Bloch, Chief Financial Officer; Dr. Efthymios Deliargyris, Chief Medical Officer; Dr. Christian Steiner, Executive Vice President of Sales and Marketing and Managing Director of CytoSorbents Europe GMBH; and Christopher Cramer, Vice President of Business Development.

Before I turn the call over to Dr. Chan, I'd like to remind listeners that during the call management's prepared remarks may contain forward looking statements, which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions today. Therefore, the company claims protection under safe harbor for forward looking statements contained in The Private Securities Litigation Reform Act of 1995. Actual results may differ from results discussed today, and therefore we refer you to a more detailed discussion of these risks and uncertainties in the company's filings with the SEC. Any projections as to the company's future performance represented by management include estimates today as of May 4th, 2021, and we assume no obligation to update these projections in the future as market conditions change. During today's call, we will have an overview presentation covering the operating and financial highlights for the first quarter by Dr. Chan and Ms. Bloch. Following that presentation, we will open the line to your questions during the live Q&A session with the rest of the management team. At this time, it's now my pleasure to turn the call over to Dr. Phillip Chan.

Thank you very much, Amy, and good afternoon, everyone. We had another productive quarter in the first quarter of 2021 with CytoSorb sales at $10.1 million up 24% from $8.2 million a year ago, with the core underlying non-COVID business accounting for 82% of sales and 27% growth, year over year. We believe that sales would have been higher -- one moment. We believe that sales would have been even higher if not for broad restrictions and lockdowns throughout Europe and other countries that impacted sales activities and also rapidly declining new COVID-19 cases globally in the first two months of the quarter. Blended product gross margins were 77% in the first quarter of 2021 versus 76% in the first quarter of 2020. Excluding non-recurring one-time items in the first quarter of 2021 that Kathy will detail later on in her presentation, product gross margins were 81%. We also ended the quarter with a solid balance sheet with $68.5 million in cash and no long-term debt.

During the quarter, we delivered greater than 131,000 cumulative CytoSorb cartridges to date, which is up 49% from 88,000 a year ago with distribution across 67 countries. We also treated more than 5,750 COVID-19 patients cumulatively now in more than 30 countries, including here in the United States, under FDA emergencies authorization, granted in April of 2020. We also during the quarter entered into a global co-marketing agreement with B. Braun Avitum, the third largest dialysis company in the world, and a division of B. Braun with EUR 7.5 billion in worldwide sales. During the quarter, we also just recently we received FDA ID conditional approval to begin the U.S. STAR-T Trial with first patients targeted for the third quarter of this year.

In the first quarter, The Korean Ministry of Food and Drug Safety, KMFDS, also approved CytoSorb or for all equivalent EU approved indications in Korea. It has a population of 52 million in South Korea in collaboration with our partner Fresenius Medical Care. Health Canada also authorized CytoSorb for use in hospitalized COVID-19 patients in Canada with a population of about 38 million people. During the quarter, we also appointed two industry veterans with strong medical device backgrounds that will help us guide future success in the future. The first is James Komsa who was appointed Vice President of US Sales and Marketing, was formally a Vice President of The Restorative Therapies Group and Pain Group at Medtronic, and also formally a Vice President of the Northeast Cardiac and Vascular group at Medtronic, so knows the cardiac surgery area extremely well. Dr. David Cox joined us as Vice President of Global Regulatory Affairs. He was formally the Vice President of Regulatory Affairs for The Tissue Origin and Technologies Division at Integra LifeSciences.

We also started our clinical marketing of CytoSorb with in-depth webinars in a wide variety of different areas, most notably as a liver dialysis therapy in patients with liver disease and in cardiac surgery applications, particularly antithrombotic removal. Last but not least, we signed our lease for our new Princeton, New Jersey headquarters and began building out our new manufacturing facility that is expected to support sales of roughly $350 million to $400 million in sales and potential product gross margins in excess of 85%. During the quarter, we also opened the new CytoSorb logistics hub in Berlin, Germany, and expanded warehouse and distribution facility to accommodate our current and future growth.

So let's talk a bit about what COVID-19 doing worldwide and how this relates to our business. As we presented in our last earnings call on the upper left-hand side, this was the activity of COVID in March of 2021. We were just starting to see a surge activity in Latin America, as well as in Europe. Fast forward that by two months you can see that the numbers of new cases have grown dramatically in south America, in Europe, in the Middle East, as well as we've all heard in India where they're experiencing roughly 350,000 new cases a day. On the lower right-hand side, you can see the numbers of new cases of COVID-19 worldwide. Within the green bars is the first quarter. And what you can see here is that in the first two quarters after peaking very early in January, the cases of COVID dropped quite dramatically in the first quarter to roughly 300 or so thousand cases a day.

I think that a lot of people had a lot of optimism regarding the availability of vaccines and did not think that COVID-19 would be much of a problem anymore, but as we cited in the last earnings call, we started to see a plateauing and sure enough, towards the end of the quarter, you can see the rapid rise in new cases of COVID-19 worldwide and that has helped fuel a strengthening of our CytoSorb business related to COVID-19 across our business areas. So, we expect the COVID-19 is expected to contribute to product sales in the second quarter of 2021 and likely for the remainder of the year. But the magnitude may depend on multiple factors, including rates of vaccination.

In the United States it's a very different story. As you can see in early March, there was a scattered low-level activity throughout the country. Even in early May, although there were some hotspots like Michigan and Oregon, and also Washington state, you can see, generally speaking, the rates of COVID-19 new cases have been relatively flat, and you can see that in the upper right-hand corner, in the red graph, where you can see that the numbers of new cases has kind of plateaued, but the rates of hospitalization and deaths fortunately have dropped dramatically. Although, it may not have been the case previously, it is likely the case now that vaccinations are having finally an impact with 32% of the US population fully vaccinated, or 106 million people with 45% or 148 million people with at least one dose, total of 247 million doses have been administered in the US states. This contrast to even large countries like Germany. One of the leading healthcare countries in the world with only 8% of their population fully vaccinated, or 6.6 million with 28% with at least one dose or roughly 23 million, 24 million people.

The numbers get even worse when you look worldwide, where only 3.6% of the world's population are fully vaccinated, and you can see that the United States accounts for more than a third of all of the patients fully vaccinated worldwide, and only 7.8% have at least had one dose or 609 million people. So, this next slide, coming back to the slide that I presented in the last earnings call, we can see if we say that we are not quite in the new normal yet. COVID continues to delay our pre COVID-19 growth strategy, but that being said, you can see what we've accomplished in the first quarter. We're certainly not standing still, and we were working diligently in the background on making sure that we returned to our non COVID-19 growth business, as soon as possible. To give you more color on our clinical activities, Let me turn it over now to our chief medical officer, Dr. Makis Deliargyris. Makis?

Thank you, Phil, and good afternoon, everyone. Over the next few minutes, we'll review some of the important updates on our clinical programs, but I also like to refer you to the press release we just issued that also has additional information. We are prioritizing the clinical programs that will lead us to USFDA approval. As we recently disclosed, we have received FDA conditional approval to execute the investigational device exemption study on ticagrelor removal during cardiac surgery. We're also resuming the REFRESH 2-AKI trial, and I'm happy to report that in addition to screening activity started in the majority of sites, we also have our first new patient enrolled.

We have also made significant progress on the remaining active studies and those that will be starting in 2021. CytoSorb therapy in COVID-19, or otherwise known as CTC Registry, has now accumulated sufficient data that we are progressing to a publication by the end of this quarter, focusing on critically ill COVID-19 patients requiring extra corporeal, mechanical oxygenation support, or otherwise known as ECMO. The STAR Registry, which has meant to capture real-world evidence with the use of our device for antithrombotic removal in patients undergoing cardiac surgery, is getting ready to begin with data entry this summer, the ethics submissions in at least two countries in Europe having completed. The two important trials we're launching in Germany, the PROCYSS trial in septic shock, refractory septic shock, and the HepOnFire trial in acute and chronic liver failure are making significant progress. Both of these trials have been submitted to ethics and we're waiting for their approval and we're on target for first patient before the end of this year for both trials.

We recently made the decision to close the TISORB study in the UK. This was driven by two main reasons. First of all, the significant delays that were encountered in the setting of the pandemic in the UK, and also with the prioritization of the STAR-T trial, which will now be the primary data, an evidence generation study for our FDA submission. CyTATION on the other hand, was able to begin and is actively enrolling patients in three German sites, as of the first quarter of this year. Finally, we'll remain steadfast on our clinical strategy in our executional plan.

We continue to expand our internal clinical capabilities. We've added 10 new members to the team in the past year, and we'll continue to expand our teams to ensure that we have cost efficient and timely execution of a clinical plan. We're going to focus in generating data from rigorous powered multicenter company sponsored trials, and we're going to do that in partnership with a top academic institution and world renowned investigators. I will share some more detail later in this presentation about our academic leadership of the STAR-T trial. Finally, we're going to get this data by using a complementary approach of randomized clinical trials, registries, capture real world outcomes, and also health economic analysis to generate the value proposition associated with the use of our device.

In this slide, you will see the progress that we plan to make in 2021, and the milestones that we anticipating for this year. I guess you could say there's going to be a busy year since all of our programs are targeted to start enrolling patients before the end of 2021. On top of the lines the STAR-T study, as we discussed, ID approval has been obtained. We're right now gearing up on operational readiness and we expect to have the first patient enrolled in the third quarter. REFRESH 2, as I previously stated, we're happy to report that the first patient has been enrolled in the study resumption.

The TISORB study has effectively stopped. The CyTATION trial has begun enrolling early in Q1 and will continue to do so throughout the year, and the STAR Registry right now, is at the stage of ethics submission and review. We're gearing up to again, enroll -- start enrolling data, capturing real-world evidence in the middle of the summer. Importantly, in the critical care space, The PROCYSS substance trial has already been submitted. The protocol is finalized, and it has been submitted for review by the ethics committees in Germany. We anticipate despite the delays associated with COVID-19, that we will still be able to enroll patients towards the end of Q3 or beginning of Q4. Similar situation applies to our multicenter single arm, HepOnFire trial, which we again, expect to commence enrollment by the end of this year. Relating to the CTC registry as I stated, we have enough data collected in the U.S. and we plan to submit a publication by the end of this quarter. And we also plan to expand it now into the CytoSorb therapy and critical care registry to capture multiple applications in critical care and expand also to Europe.

Next slide, please.

Our clear priority is FDA approval and we maintain the dual path with our two studies, the REFRESH 2 and the STAR-T study. Relating to REFRESH 2, we now are up to 154 patients enrolled to date. The study resumption as I stated, has begun. And we have approximately half of the sites are active in screening, and we believe we'll have the remaining of the sites open and active and enrolling patients by the end of the second quarter.

The next milestone to look forward to is the interim analysis. Regarding the STAR-T study, we received our conditional approval of the ID in April of 2021, which effectively gave us the green light to start the study.

The sites that will participate have already been identified, and we have begun site initiation activities. The IRB submission process and the site contracting is currently in progress. And we have selected already the study vendors that will assist us in this study, including the contract research organization.

Most importantly, we'd like to disclose to you today the academic leaders of the trial. Two principle investigators are going to be Dr. Michael Mack, a cardiac surgeon for Baylor Scott & White, and Dr. Michael Gibson, an interventional cardiologist from Harvard. The study committees have been established including the data safety monitoring board and the clinical events committee. And as stated previously, we're targeting the first patient to be enrolled in the third quarter of this year.

It's important to take a minute to introduce to you in more detail, our two principal investigators. First of all, we're taking the heart team approach. It became very obvious doing the development programs for probably the most important innovation in our century in cardiovascular disease, and that of the transcatheter valve devices that a heart team approach was necessary.

When cardiovascular patients suffer an acute event, they require a multidisciplinary approach. And in our case, we're targeting acute coronary syndromes. It's a great opportunity to utilize the knowledge and the input from both interventional cardiologists and cardiothoracic surgeons. As such, we have selected two of the most world-renowned investigators in the setting. Dr. Gibson is a professor of medicine at Harvard Medical School. He's also the President and CEO of the nonprofit Baim Institute, formerly known as Harvard Clinical Research Institute. And he's also the founder and editor in chief of WikiDoc, which is the equivalent of Wikipedia but for physicians.

Dr. Michael Mack is a Chair of cardiovascular service line of Baylor Scott & White. He's also the president of the Baylor Scott & White Research Institute. However, what's important to note about Dr. Mack, he's also the pioneer of the heart team, and he was part of the leadership of the pivotal trials that brought the first transcatheter valve therapies to FDA approval and to clinical use.

Finally, I'd like to introduce to you our key hire on the clinical team. This is Ed Tumaian the Executive Director of Global Clinical Operations. Ed is coming in to fill a critical role to lead the global clinical teams, operational teams in CytoSorbents. He brings with him more than 25 years of experience in clinical development, clinical operations, and trial execution optimization. He has previously held global leadership roles at both CROs, such as Quintiles and Parexel, but also very large players in the life science industry, like Novartis, AstraZeneca, and Sanofi.

Ed, throughout his career, has used technology solutions to drive quality and efficiency, including implementing programs for remote monitoring and risk-based monitoring. He has successfully built and led global teams and clinical operations and portfolio management, and these activities were critical in driving life cycle management of blockbuster products like Prilosec, Nexium, Plavix, and Gleevec. We think Ed is a key addition to our team, and we're very excited about his contribution in the continued progress. Thank you. Back to you, Phil.

Thank you, Makis, for that overview. Now, Kathy, would you please give the financial overview?

Certainly. Thank you, Phil, and hello, everyone. For today's call, I will be providing an update regarding our March 31st, 2021 financial results and also an update around our working capital and cash runway.

So we'll start with our comparative quarterly revenue results. Product sales for the first quarter of 2021 was approximately $10.1 million, which is an increase of $2 million or 24% over first quarter 2020 product sales of approximately $8.2 million. And this increase was primarily driven by an increase in direct sales of approximately $608,000 and also an increase in distributor sales of approximately $1.4 million.

Grant revenue for the first quarter of 2021 was $455,000 as compared to $551,000 in the first quarter of 2020, and total revenues, which includes product sales as well as grant income, increased by 22% to $10.6 million for the first quarter of 2021 as compared to $8.7 million for the first quarter of 2020.

Our Q1 2021 product gross margins were 77%. Excluding the negative non-recurring impact of 2018, '19 and '20 tariff adjustments of approximately $732,000, and the offsetting non-recurring positive impact of the employee retention tax credit of $388,000, product gross margins were 81% in Q1, 2021. That compares to 76% in the first quarter of 2020. Next slide, please.

Now we'll take a look at our quarter over quarter product sales. Our first quarter 2021 was our third best quarter in terms of product sales. And as Phil already mentioned, we believe sales could have been even higher had it not been for the widespread lockdowns and restrictions throughout Europe, including Germany, Austria, the UK, Italy, and others, and for the rapid decline in COVID-19 new cases and hospitalizations for two thirds of that quarter. The lockdowns prevented our sales reps and distributors from accessing hospitals and delayed our return to what we're calling the new normal, non COVID-19 growth strategy that Phil previously discussed.

And though it's difficult to quantitate, we've been trying to do so every quarter. COVID-19 sales were estimated to be approximately $1.8 million in the first quarter of 2021, as compared to approximately $1.6 million in the first quarter of 2020 and lower than the $2.6 million in COVID sales, which we saw in the prior three quarters. With the resurgence of COVID-19 since March, we have seen a strengthening of COVID-19 related orders of CytoSorb. And just one final note on the first quarter of 2021: if we exclude clinical trial expenses and non-cash stock compensation expenses, our core operations generated a positive EBITDA of approximately $164,000. Next slide, please.

Now we'll take a look at our trailing 12 months product sales and blended gross margins. And as you can see by this chart, we continue to maintain strong year over year product sales and gross margin growth. As of March 31st, 2021, trailing 12 months product sales were $41.4 million, an increase of $15.1 million or 57% over trailing 12 months product sales of $26.3 million one year ago.

We also note that our compound annual growth rate, or CAGR, was 40% over the past three years, and we are continuing to observe a very positive trajectory in this regard. Year over year, gross margins also continue to climb with blended gross margins, adjusted for non recurrent charges and benefits, as I previously discussed, of 81% in the first quarter of 2021, compared to approximately 77% for the first quarter of 2020.

And lastly, we'll review our working capital position. As of March 31st, 2021, we had approximately $68.5 million in cash, which is a very healthy cash balance. And we experienced a quarterly burn of less than $3 million in first quarter of 2021. And that burn, by the way, is solely a result of spending associated with our clinical trial activities.

We believe we have sufficient liquidity to provide for the continuing commercialization of CytoSorb, as well as to execute on our robust clinical trial strategy. We further believe that we have adequate funding to allow us to continue to operate without the need for any additional capital right through to GAAP break even. And with our 80-plus percentage gross margins, once we reached GAAP break even, 40% to 50% of every incremental sales dollar is expected to fall to operating profits.

Lastly, as of March 31st, 2021, we had approximately 48.6 million common shares on a fully diluted basis. Thank you. And at this time I'd like to turn the call back to Phil. Phil?

Thank you very much, Kathy. In terms of guidance, CytoSorbents has not historically given specific financial guidance on quarterly results until the quarter has been completed. However, provided that the current order pattern continues, and not withstanding uncertainty related to the COVID-19 pandemic, the expected product sales per the second quarter of 2021 will exceed those in the second quarter of 2020. Because of the recent surge in COVID-19 activity, we expect COVID-19 to positively contribute to sales in the second quarter of 2021 and for the remainder of the year. So the magnitude of these sales will depend on multiple factors, including the rates of vaccination in major markets, as well as globally. We continue to expect that 2021 will represent another year of growth.

So with that, this concludes our prepared remarks. I would now like to open up the call for a live Q&A session. Moderator?

(Operator Instructions)

We'll take our first question from Anthony Petrone of Jefferies. Please state your question.

Thanks. Hope everyone's well, and congratulations. Strong start to the year here. Maybe Phil and Kathleen, we could dig in a little bit to underlying product sales. When we back out COVID, approaching the 26% year on year growth level. And just wondering how to think about that in two buckets.

One being there certainly seems to be some reversal in underlying procedures one, but also CytoSorb uptake usage triggered by COVID in non-critical areas. You've seen a pickup there as well. So how do we think about recapture procedures driving that number versus share gains that were driven by COVID elsewhere in other surgical procedures? And then I'll have a couple of follow-ups.

Yeah, well, thanks very much, Anthony. I think that in the United States, the rates of non COVID-related procedures has been increasing, but in Europe, I think it's been touch and go because of the various lockdowns that are in countries around Europe, as well as Eastern Europe. Christian can probably comment a little bit on what the environment looks like right now, but what we're still continuing to see is reduced numbers of elective surgeries, that where often in the post-operative period, they're using CytoSorb. We're also seeing lower ability of our sales reps to be able to get into hospitals. And then also, the less effectiveness of scientific conferences, where that have been typically poorly attended. But let me turn it over to Christian to give a little bit more color of what he's seeing in Europe. Christian?

Yeah. Thank you, Phil. And thank you, Anthony, for the question. As Phil was pointing out, the corporate situation is still very much impacting our business and we have two kinds of halves of the situation. One is the COVID-related business was significantly lower compared to Q4, and you can see this Q4, USD 2.6 million and Q1 USD 1.8 million, but compared to Q1 2020, it's roughly the same considering the change of the exchange rate between the Euro and dollar. So what happened in Q1? The second big -- ICU patient has declined. So there were less ICU patients in the beginning of Q1. In Latin America, for example, the summer led to less COVID activity. And as Phil pointed out as well, there were less patients in the US which led to roughly stable business in the US. On the other hand, the COVID restrictions in our markets were still there and were the hardest throughout the whole pandemic. The hospital access for the sales reps and the distributors has got even harder. The doctors and the healthcare professionals, I have to say were totally exhausted, even if they would like to, they have not the time and energy to speak to industry representatives. And most important I have to say, elective surgery programs are down 40 to 60% all over our markets. And if you look at the growth we have shown Q1 to Q1 in 2020 to '21, there is a growth of 27%, despite this down of elective surgery programs. And I think one can imagine that without all the restrictions, we will do much better, even with all the positive impact of COVID related business. I put a little bit more detail if you want, but tell me if this is sufficient.

That's fine, two follow up questions for me. There would be one when we then consider that elective is still a headwind in key markets. Was there some stocking in the 27%? And then the last question for me, and I'll hop back in. It's just on the U.S. STAR-T. Give me a little bit more detail on how many sites are expected, patients, and end points to the extent that you can share this at this point. Thanks again.

So if I understand your question right, if there was any stocking of product with the customers or distributors, I can say no, there was no stocking. It's an in and out like the patients get treated. So there's no stocking we are aware of. Thank you.

And in terms of the STAR-T trial. What we've said is that once we get full approval of the IDE and know exactly what the FDA has agreed to, we'll get more detail on both the primary end points, the nature of the trial, the size of the study, the number of sites and all of that other detail.

Our next question is from Josh Jennings of Cowen. Please state your question

Good evening. Thanks for taking the questions and echo Anthony's comments on good, congratulations on this strong start to the year, despite all the challenges. Was hoping to just ask about, I know we've probably talked about this before, Phil, but we had an intra-quarter call with some [AdvaMed] executives, and they spoke about lobbying for -- with the FDA to streamline formal approvals of products that have achieved EUA approvals. And I was wondering if there's any discussions that are ongoing between CytoSorbents and the FDA about the CytoSorb EUA for COVID-19 and whether there could be a potential streamlined path for a critical care indication.

Yeah. Thanks very much, Josh. It's not something that we can comment on at this time, but we do have an interest. We have actually had a considerable amount of experience relative to the overall numbers in ECMO and COVID and its use to treat acute respiratory distress syndrome. So we do believe that there is a potential benefit of having CytoSorb approved in the United States for treating ARDS in general, but it's not something that we can comment on at this time.

Great. And just on the CTC COVID-19 Registry data, and then the interim analysis, I mean is that, could that be supportive of a potential streamlined path or what do you expect that data set to do? Clearly it could catalyze increased utilization in COVID patients in the US and globally, but then any future ramifications outside of that for the CTC COVID-19 Registry data?

You know, I think that what we've seen is that the early intervention with CytoSorb and ECMO is potentially a very promising lung rest strategy to treat acute respiratory distress syndrome. We've seen CytoSorb be used with ECMO in a lot of different cases. You know, patients -- not hyper inflamed patients, where it's being used as kind of a rescue therapy when they've been on mechanical ventilation for weeks and weeks. There it's hard to have a positive benefit in those patients. But when used earlier and used more aggressively, I think that -- and preventing mechanical ventilator induced lung injury, there may be actually a play here to use ECMO plus CytoSorb as a primary treatment of acute respiratory distress syndrome, which currently today, even in a non COVID environment still has a mortality of roughly 30%. So I think that in order to gain that application, it will require a larger scale multicenter study, but I think the registry data would be supportive of that concept.

Great. Well, thanks for taking the questions and I'll get back in queue.

Yeah. Thank you very much

Our next question is from Danielle Antalffy of SVB Leerink. Please state your question.

Hey, good afternoon everyone. Thanks so much for taking the questions. Just a question on Europe, and I appreciate that there's a lot of moving parts there. COVID is still a big issue in Europe, but I have to imagine a good portion of your competence in growth this year comes from being able to get back into European centers and really market the ticagrelor and rivaroxaban removal indications. And so, I just wanted to get a little bit more of a sense on sort of, are there centers where you're seeing ramping adoption there yet in Europe and sort of what gives you the confidence that in the adoption ramp, once you guys can actually get back in there? And I have one follow-up.

Sure. Yeah, I think that, as we said previously, that we really invested quite a bit in our infrastructure in sales and marketing and the commercial team overall in Europe to take advantage of this non-COVID core opportunity in critical care and cardiac surgery. So the business in sepsis and other critical illnesses, as well as in cardiac surgery is actually quite healthy. And as we mentioned, that core business grew 27% year over year. I think that moving forward here, we are looking to try to get back to this non COVID strategy and to tell you a little bit more about what we're doing, I think in particularly in cardiac surgery and in the blood thinner application, Christian might be able to provide some additional detail on how we're doing in Germany, for example, as a microcosm of the market. Christian?

Yeah, Thank you, Phil. And thank you Danielle for the question. Just to give you a little bit more flavor on what's happening in Europe. I think one has to see the whole development in perspective. As I have said before, the access to hospitals is very much restricted. Just to reflect this, so nowadays our sales reps have roughly 10% of the appointments that they have normally before the COVID pandemic. And taking this into account and also the decline of the elective surgical programs by 40% to 60%, the growth of 27% in the core indication I think has to be seen in this perspective. But you also have mentioned our new indication of the antithrombotic removal fears. And in this case, I mentioned last earnings call that more than 90% of the heart centers in Germany are our customers, and of those more than 50% are using CytoSorb in this application.

And we were able to, despite the restrictions, and also despite almost all heart centers in Southern Germany are closed, we could increase this even more. We have now 94% of the heart centers as our customers, and those who are using CytoSorb in this new application is more than 60% nowadays. So you can see despite all these restrictions, there's progress, and this progress, we see also in other markets outside of Germany. In our direct markets, for example, in Benelux, we had a number of new accounts started in this application, but once we use it also as a door opener, once we are in, this is then spreading also to other indications, maybe that is giving you a little bit more insight in the development.

Yeah, no, that's incredibly helpful. Thank you so much, Christian. Appreciate that. And then one quick followup on the STAR-T trial, and I mean congratulations on getting Dr. Michael Mack. I know of him very well. He's very highly regarded. So I think that's a big win for you guys. I guess, what are the sort of gating factors around the enrollment timing for STAR-T because that's really going to be, I think the inflection point for the company from a sales perspective is the US approval. So just want to make sure we're thinking about the enrollment timing and we're appropriately putting up barriers around the sort of bear case and bull case scenarios there. Thanks so much.

Yeah thanks, Danielle. Makis, would you like to take that?

Yes. Thank you, Phil. So yeah, that's a great point about Dr. Michael Mack, but also Dr. Mike Gibson has an incredible track record in development in antithrombotic, and is also very well-regarded. So with their help and with some additional network of sites that we had from REFRESH 2, and also from personal connections, we have been now in contact with a very, very large number of large US cardiac surgery centers. And we've seen a lot of interest. So we have a long list of high-performing sites that we're slowly going to start bringing them on. So we think that's probably the number one factor that can drive enrollment, right, getting the right sites. We vet them all about their ticagrelor usage and making sure they're actively using this drug as a top-line agent for acute coronary syndromes. And then obviously we have the resource capabilities to execute, but what's really important is the interest we're seeing from these sites. You know, this has been a longstanding, unmet need, literally a nightmare in clinical practice for the surgeons to deal with.

And they're extremely excited about being part of this study. So, the kind of momentum we're seeing from the sites, the interest level, the kind of sites we're bringing on board, including a fair amount of our REFRESH 2 sites that want to continue to research with us, gives us a lot of confidence that we'll be able to enroll. Now, having said that, the patients who will require urgent or emergency surgery are limited compared to the total number of ACS patients. So that's why we intend to bring the right number of sites on board to support robust enrollment. And like Phil said earlier, a lot of the details around this study, we'll be able to disclose once we have the full approval from the FDA, once our ongoing discussions are completed, which should be very soon, so we will be disclosing more information then. Does that help?

Our next question is from Andrew D'Silva of B. Riley Securities. Please state your question.

Hey good afternoon. Thanks for taking my question. Sorry, If you mentioned any of these, I was jumping between calls. Just to start, as it relates to the uptick in COVID cases in India. Obviously you've been a long time strategic partner with Biocon. I was curious if you're seeing any increased traction in the region there. Biocon did reference CytoSorb couple of times in press releases as well as on their conference calls so seems like at least it's being well regarded given the current conditions.

Yeah. Thanks, Andy. Let me turn it over to Christian to give some color commentary on India and Biocon. Christian?

Yeah. Thank you Phil. Hi, Andrew. A little bit more color on India in general. We've been working with Biocon for a long time now, and as you know, over the last years, we also have expanded our fields of application and indications and so we are currently evaluating with Biocon that on how they can represent us in India, in all our relevant application segments, and of course, how to grow and speed up the growth in these areas. So we have, additionally, to the partnership, we have installed own manpower in the Indian market to support Biocon, and this has led to a number of developments. For example, now that the second wave in the COVID pandemic in India is growing so massively, we have organized a meeting last Friday. I don't know whether you were aware of this, with all the medical leaders of different specialities involved in the treatment of COVID patients. But also, with leaders of big hospital groups, like Apollo. And so our calibration with Biocon in this COVID situation is tight, and increasing, and obviously will also be reflected by several orders from their side. I think that's what we can reveal.

No, no. That was very useful context. So with that being said, obviously, kind of transient nature of COVID, and I know in the long-term, this isn't a COVID-19 company. But I would imagine that at least in some areas, when physicians start using CytoSorb, and then their amount of COVID-19 related cases drops, they realize that the indication CytoSorb can be utilized for goes far beyond COVID-19. So I'm kind of curious, has there been any sort of stickiness that you can identify thanks to the COVID utilization, but outside of COVID. And the reason I'm asking that is, obviously, India is such a large region. I'm curious if you see an analogous situation to that potentially developing as you're utilized there.

So, Phil, shall I continue with this?

Yeah, sure. Or I can comment as well.

Yeah. So maybe India is not the right example for this, because we have worked in India already with -- in all the different indications, including cardiac surgery, and also including liver disease. But India also has -- it's a very specific market as you might know this, a public sector and the private sector. So even in the public sector, customers, or patients in this case, have to pay lots of the treatments privately. So nevertheless, the market is big, with I think between 50 and 150 million people able to pay healthcare, as we know it from the Western world. But I think your question can be answered much better with territories where we just have started.

And we have started in the pandemic, which was the case, actually, in Latin America last year. So we have entered, as you know, 10 countries last year in Latin America. And most of them started with COVID-19 patients. And based on the successful treatments, they start also to treat other patients, including septic shock patients, including inflammatory shock statuses from other origin, but also including patients with liver disease. So we see absolutely what you were suggesting, that based on the experience with COVID that doctors get, let's say, inspired to treat other patients in other clinical pictures.

Okay. Very, very useful.

Yeah. I think just to add to that, I mean cytokine storm plays such a central role in so many different diseases, not just COVID-19. Again, CytoSorb use in COVID-19 is not to treat the viral infection, it's to treat the uncontrolled inflammation that gets generated by the infection that then leads to lung failure, kidney failure, shock, and all different types of organ injury. And those are the same complications that we see every day in trauma patients, in patients who are infected with a burst appendix, for example, or burn patients, or pancreatitis patients, or complications of cancer immunotherapy, and other things. And so it's a direct, if they see that it helps stabilize shock in COVID-19 patients, it's a very easy translation to think, "Hey, you know, in this non-COVID patient, who's also in shock, let me think about trying to use CytoSorb as well." Right? And that's kind of where we are in a lot of these new markets.

Okay. Okay, great. And I just want to make sure I'm understanding or characterizing this correctly. Is it fair to say that during the first quarter, it was still very stringent COVID lockdowns in areas such as Germany, where you generate a significant portion of revenue from; however, the types of COVID cases maybe weren't as severe, meaning the amount of critically ill COVID-19 patients likely dropped sequentially, or at least relative to the state that you were seeing for the majority of 2020? So basically your legacy business, non-COVID related, you were impacted because of lockdowns, but you didn't get as much of a benefit from treating critically ill COVID-19 patients, because they weren't necessarily as many as a percentage of the total volume of patients that had COVID-19.

Yeah, that's correct. And I think all the numbers support that. If you look at the numbers of hospitalizations, the numbers of deaths, the ICU capacity utilization, they all dropped when the numbers of cases precipitously dropped in January and February after having hit that peak in late December and early January. A lot of countries had instituted lockdowns because of that, but those lockdowns continued, even though the cases of COVID-19 worldwide began dropping very rapidly. So, it was a little bit of a transition for us as we look to manage that drop in COVID cases and getting back to business as usual, or back to the new normal.

Okay. Yeah. No, that makes a lot of sense. I just wanted to make sure I was understanding that correctly. Last question for me, any updates on additional candidates, HemoDefend-RBC or BGA? And then, what was it? There was another CytoSorb-XL that you referenced previously. I'm just curious how the pipeline outside of CytoSorb is developing.

Yeah. I think that COVID-19 certainly slowed a little bit of our development work in these various programs, but last year, as you saw, we received about $8.6 million in government grants, mainly from the U.S. Army to drive the development of HemoDefend-BGA, which has actually been making a very nice progress, particularly very recently. And so, in terms of these programs, our research and development folks have been back in the lab. And in fact, they're actually at the new facility at the moment in the new labs with a lot more space, and able to stay socially distanced, and get work done. And so they've been making some really great progress in all of our programs, including the CytoSorb BGA program, the CytoSorb-XL -- I mean, the HemoDefend-BGA program, the CytoSorb-XL program. And the HemoDefend-RBC program is slightly delayed, but we are still making some progress on that as well.

Okay, perfect. Thank you very much. Best of luck going forward.

Thanks very much, Andy.

Our next question is from Sean Lee of H.C. Wainwright. Please state your question.

Good afternoon, Phil, and thanks for taking my questions. My first question, I think, in the prepared remarks, you guys mentioned that you saw quite a bit of growth from distributor sales. So I was wondering if you could provide a little bit more color on that. For example, which geographies and which distributors are you seeing the biggest growth from and where do you think that's going to go this year? Thanks.

Yeah, I think that as Christian mentioned, COVID-19 has been a catalyst for distributor sales given how prevalent COVID is around the world. We saw strength in Latin America, for example. We saw strength in the Middle East. Certainly in some of our non-direct territories, as well, in Europe, and particularly Eastern Europe. So, we expect that, that activity will continue going forward in a COVID or even a non-COVID environment. There's been a lot of positive responses from physicians from all those territories.

Thanks. And also, on the clinical side, it's great to hear that the REFRESH 2 is resuming. So I was wondering, have you had to modify or call any of the previous data that you've collected? Are you making any changes to the study protocol compared to before? And what's the expected timeline for the study now?

Let me turn it over to Makis to answer some of those questions. Makis?

Thank you, Phil. And thanks for the question. So we did not have to make any major modifications to the protocol. If you recall, the voluntary hold on REFRESH, it was triggered by the quality of the data that was being captured. And we greatly improved that, and you probably remember the whole saga. We changed the CRO and everything. So, following the review by the DMC, they suggested that we add a couple of additional data points to be collected with the same protocol procedures, meaning we didn't change, at all, how patients are treated or -- throughout the trial. Study-related procedures remained the same, we're just capturing some additional data points. So those were the sole differences in the protocol, but we had to resubmit, obviously, during the resumption process. Regarding timelines, I think what we're looking to do now for the next few months, is get all the sites up and running, and evaluate the rate of enrollment with a study resumption.

We're hoping that the ramp up will be a little faster than usually in the beginning of the initial start of a trial, where sites are not very familiar. Because a lot of the sites, probably, are familiar with the study base of the previous involvement enrollment. So I think for us to be able to give you a better idea of the timeline, we probably should observe how enrollment is performing over the next quarter, or so. And then we should be able to provide better guidance.

Thanks for that. And that's all the questions I have.

Great. Thanks, Sean.

We have reached the end of the question and answer session. At this time, I would like to turn it back to management for any additional or closing remarks.

Well, thank you everyone for joining us today on today's earnings conference call. We appreciate your participation. If you do have any other questions, please feel free to reach out to Amy Vogel at avogel@cytosorbents.com, and we'll try to reply to your questions where possible. In the meantime, hopefully you'll join us for our virtual annual meeting on June 1st. Thank you everyone very much for joining today. Take care.

That concludes our conference for today. I'd like to thank everyone for their participation. Have a great evening.