What happened
Shares in CytoSorbents (CTSO 4.72%) are surging 12% higher at 11:30 a.m. EDT on Wednesday after the company announced it will offer 5.3 million shares to the public at $9.50 per share. Management expects the offering will generate approximately $50 million for the company's balance sheet, before fees and other expenses.
So what
The influx of capital from this share offering will substantially improve CytoSorbents' liquidity, providing it with additional flexibility to support efforts to increase demand for its blood purification technology, CytoSorb.
Image source: Getty Images.
On June 30, the healthcare company reported preliminary second-quarter sales of $9.8 million, up 58% year over year, and cash and equivalents of $35.1 million. For perspective, total revenue increased 68% to $8.7 million in Q1.
Worldwide, CytoSorb has been used to purify blood to reduce the risk of complications in more than 1,200 patients in over 30 countries, including in the U.S., where the Food and Drug Administration (FDA) granted emergency use authorization for CytoSorb in COVID-19 patients in April. In Q2, CytoSorb COVID-19 sales to U.S. hospitals totaled $667,000.
The offering proceeds should help CytoSorbents match COVID-19 demand and execute plans to expand CytoSorb's use in more patients. For example, management is awaiting a regulatory OK to restart its Refresh 2-AKI trial as early as this quarter, and it hopes to eventually win its approval for removing the blood thinner Brilinta in certain patients undergoing cardiothoracic surgery, a market it pegs at up to $250 million per year.
Now what
In January, CytoSorb won European Union approval to remove Brilinta from patients during cardiothoracic surgery requiring cardiopulmonary bypass, and in May, the EU also approved it for removing the blockbuster anticoagulant Xarelto in the same indication.
Reducing the risk of life-threatening cytokine storm and perioperative bleeding in these patients represents a big market opportunity. CytoSorbents estimates the addressable market for removing Brilinta and oral anticoagulants like Xarelto could be as big as $500 million annually in the U.S. alone.
Of course, there's no guarantee the FDA will also approve CytoSorb in these indications or, if it does, that hospitals will use it. Nevertheless, the company's year-over-year growth suggests revenue could continue climbing throughout 2020, making it a stock worth watching.
