CTSO 2018 Call

Ein paar Zitate zu den gängigen Fragestellungen aus dem Call gestern.

Kathleen Bloch, Chief Financial Officer, zum Thema operativer Break-Even:

„I also want to say a few words about the achievement of operating break even on a quarterly basis, which we have defined as operating results excluding non-cash expenses and clinical trial costs. And in fact we came very close last year with a couple of quarters missing by only a few hundred thousand dollars.

And at the point, the reason that we are always talking about operating breakeven was that we want to demonstrate just how profitable our business could be at a relatively low revenue number. In Q4 2018 however, we began to shift to a more aggressive growth mode, because we believe with faster top line growth and the high profit margins we are experiencing, which are expected to further improve in 2019, we can expect improvement in operating results and increased generation of cash. One such example of this investment strategy was a recent expansion of our direct sales efforts from 5 to 10 countries with the addition of the direct sale territories of Poland, the Nordics and the Netherlands.

Please be assured however that we will continue to manage our spend in a very responsible and deliberate manner.

And then finally turning to working capital and our cap table. As of the end of 2018, we remain very well capitalized with approximately $22.4 million in cash, which we believe provides a solid foundation for the company.

During 2018, we were able to generate capital through the use of our at-the-market equity facility with Cantor Fitzgerald. We sold approximately 1.5 million shares at an average sales price of $9.61, with net proceeds generated of approximately $14.1 million.

The ATM does provide an efficient and cost effective way for us to raise funds for the company. We believe that this existing cash runway will allow us to meet our operating and clinical needs into 2020. And just briefly on our capital structure as of December 31, 2018, we have approximately 36 million common shares on a fully diluted basis.“

Anderes Thema: Lebererkrankungen. Chan erklärt kurz, warum der Adsorber hier wichtig sein könnte.

In terms of the label expansion that included the removal of bilirubin, as well as the reduction in myoglobin for the treatment of acute liver disease and severe trauma. The value of having this particular label expansion is really on reimbursement.

And that being said, we have seen a lot of interest in the use of CytoSorb as the next generation liver dialysis therapy, unlike existing liver dialysis therapies that exist on the market today that typically just remove bilirubin and bile acids and some other liver toxins, CytoSorb is very unique, because it not only removes those, but it also removes cytokines and other inflammatory mediators that are often the root cause of acute on chronic liver disease, these acute exacerbations that chronic liver disease patients often run into during the course of their illness.“

Dann noch: direct vs indirect sales

Chan: „I think that the direct sales benefit from the fact that we as a company have a singular focus, which is the sale of CytoSorb. We have a lot of resources and a lot of experience from our direct sales territories to be able to bring to bear on those markets. And of course those – the margins are significantly higher in our direct sales territories than they are in our indirect and distributor and partner territories.

That being said, distributors, we benefit from that – from distributors and by leveraging their infrastructure, their contacts within various countries, and of course, give up some margin for that benefit. But there we do not have direct contact with the customers and distributors often have multiple products in their product line that they are also trying to sell. So, we typically don’t have the singular focus that we benefit from indirect sales.

That being said, we are actively working to make sure that that channel is humming along and we do a lot of training. We have a lot of communication with these sites, with these distributors and we work actively to make sure that the data that we have is available to them for their sales process. So we don’t ever expect them to perform the same way as our direct sales territories, but it is a way to blanket the world, so to speak, again, we are now in 55 countries around the world without incurring the massive infrastructure costs that are associated with that type of coverage.“

Unterm Strich: nachwievor weiß niemand, wie sich der Umsatz entwickelt. Die Risiken sind erheblich. Und ich bleibe positiv und long.

2 Kommentare zu „CTSO 2018 Call“

  1. 36 Mio shares outstanding as of ye 2018?
    Im 10k filing sehe ich auf Seite 99 und 101 31,77 Mio.
    Sind leider auch +10%, aber irgendwoher muss das Geld für das Wachstum ja herkommen so lange der break even noch nicht erreicht ist.


  2. Hi, Nils.

    Studien und Direktvertriebsaufbau kosten leider Geld. Ein reiner Direktvertriebler scheint aktuell für rund 500 kUSD Umsatz zu stehen. Da würde ich auch noch ein paar einstellen. Ich persönlich vertraue darauf, dass der Adsorber funktioniert, dass die Bestandskunden „safe“ sind und dass man sukzessive Neukunden einfängt, wobei die Widerstände ohne randomisierte Studien relativ brutal sind.

    Dafür sind Umsatzpotential und Margen auch brutal. Wenn wir mal davon ausgehen, dass CTSO so 15 (aktuelles Loss of Operations) bis 30 Mio (mit bisschen Puffer) p.a. im Defizit ist und Chan davon spricht, dass etwa 50 % Gesamtmarge fürs EBITDA übrig bleiben, wäre man bei einem Umsatz von 50 bis 70 Mio USD profitabel. In meinen Modellen wäre das etwa 2022 der Fall.

    Da muss sich jeder Investor die Frage stellen, ob er da jetzt schon investiert sein will.

    Viele Grüße


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