Good afternoon and welcome to CytoSorbents’ Fourth Quarter and Full Year 2021 Financial and Operating Results Conference Call. [Operator Instructions] Please be advised that the call will be recorded at the company’s request. At this time, I would like to turn the call over to our moderator, Terri Anne Powers, Vice President of Investor Relations and Corporate Communications. Please go ahead, Ms. Powers.

Thank you, Sherry and good afternoon. Welcome to CytoSorbents’ fourth quarter and full year 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; 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 March 8, 2022 and we assume no obligation to update these projections in the future. During today’s call, we will have an overview presentation covering the operating and financial highlights for the fourth quarter and full year 2021 by management. Following that presentation, we will open up the line to your questions with the management team. At this time, it’s now my pleasure to turn the call over to Dr. Phillip Chan. Phil, go ahead.

Thank you very much, Terri Anne. Despite pandemic headwinds, 2021 was a good year with sales growth driven by increased CytoSorb utilization and advancement of key objectives. Total revenue grew 5%. Product gross margins improved to 80%, and we ended the year with a strong balance sheet with approximately $54 million in cash and no debt. We made significant progress on our U.S. anti-thrombotic removal clinical programs with the launch of two pivotal randomized controlled trials, the STAR-T and the STAR-D trials, evaluating the intraoperative use of DrugSorb-ATR during urgent cardiothoracic surgery to remove certain blood thinners under two FDA breakthrough device designations. We also invested in key people and processes to ensure focus on our critical care and cardiac surgery application to position the company for sustained future revenue growth. Meanwhile, we continue to drive awareness of CytoSorb through company and investigator-initiated presentations and publications. And although it seems like we just recently celebrated the milestone of 100,000 cumulative devices utilized, as of the end of 2021, there have now been more than 162,000 cumulative CytoSorb devices utilized, up 34% over the end of 2020. Finally, we have been extremely focused on allocating our capital towards priority programs, which include our company-sponsored clinical trials, our sales and marketing infrastructure and our new manufacturing facility build-out. As we’ve done in prior earnings calls, I’d like to provide our view of the COVID-19 pandemic, given the ebb and flow of its impact on our business. As you can see from the world maps on the new COVID cases in November of last year on the top left and on the current map on the top right, the Omicron variant led to a dramatic surge in COVID-19 cases, particularly in the U.S., Europe and the northern parts of Asia. However, as you…

Thank you, Phil and hello to everyone on the call. Today, I will briefly review CytoSorbents fourth quarter and full year 2021 financial results. In addition, I will provide an update around our working capital and financial focus for 2022. Next slide, please. Total product sales were $9.7 million, a 16% decline over total product sales of $11.5 million in Q4 of 2020. Direct sales declined $475,000 or 6.2% and distributor sales declined $1.4 million or 35%. This decline in sales was due to decreases in sales to treat COVID-19 patients of approximately $900,000 as well as the impact of the imposition of hospital access restrictions, which impaired our sales force’s ability to meet with physicians in the hospitals, particularly in Germany, our largest territory, which accounts for more than 50% of our sales. Notably, in Germany, Q4 2021 product sales were $5.3 million, which is an increase of 45% over the third quarter sales in Germany – third quarter of 2021. Grant income was $1.1 million versus $425,000 for Q4 of 2020. And product gross margin for the fourth quarter of 2021 remains strong at 78%, but compared to 81% for Q4 2020. The slight decrease in product gross margin in Q4 2021 is due mainly to our scheduled manufacturing shutdown for planned maintenance and year-end inventory counts. Next slide, please. Next, we’ll examine Q4 2021 relative to our historical quarterly performance. And this chart of historical sales shows our core non-COVID-19 product revenues, that’s the blue part of the bar and our estimated COVID-19 revenues, the light green part of the bar. Revenue attributable to COVID-19 treatments was $9.4 million in 2020 and $6.3 million in 2021. Next slide, please. Turning to our annual results for 2021, product sales were $40.2 million, a 2% increase as compared to…

Thank you, Kathy. Good afternoon to America and good evening here in Europe. Economies and societies are still suffering from the global pandemic. It’s not over yet, though we are seeing light at the end of the tunnel. In Q4, several conditions have changed versus earlier in 2021. We were able to increase our sales meetings frequency and in-person meetings. We could also exhibit and promote CytoSorb therapy at a number of congresses and symposiums, which were canceled in the year before, although the number of attendees were significantly lower than what we were used to be to have before the pandemic. Based on that, we were able to significantly improve our sales compared to the Q3. Germany sales increased 45% compared to the Q3 numbers and represented 55% of our overall product sales. The other direct sales markets delivered their best results ever and the emergency use authorization COVID business in the United States was contributing as expected. Orders from our distribution partners were on a good level, but not the same volumes as a year ago since there was significantly less COVID business. However, approximately $1.7 million of revenues was COVID-related, either due to increased usage during the Delta wave or as preparation for the expected Omicron wave. Next slide, please. Phil already pointed out the macroeconomic factors or conditions that are impacting our business. COVID-related business will further decline due to lower severity of the disease, less ICU dependency of patients and a much lower mortality compared to previous waves. However, health systems are still being significantly impacted by the number of patients, infected healthcare professionals and otherwise limited capacity. This again leads to limited elective surgery programs, reserved or closed ICU beds, and we are still facing some restrictions in our ability to see our customers…

Thank you, Christian, and hello to everyone on the call. Next slide, please. As you heard already, the theme for 2022 CytoSorbents is execution and focus. Accordingly, our updated clinical plan is now streamlined and comprises of seven programs, that includes three randomized clinical trials, three registries and one pilot study. Three of the programs are executing in the United States, including our two top priority FDA randomized clinical study, the STAR-T and the STAR-D trials, and also the CytoSorb therapy in COVID-19 registry under the Emergency Use Authorization granted for use of CytoSorb in COVID-19. And the remaining four programs are executed in Europe, including the randomized PROCYSS clinical study in patients with refractory septic shock, the pilot study HepOnFire in patients with acute-on-chronic liver failure and our international Registry STAR and COSMOS Registry, respectively. As we’re engaging with institutions around the world, we note that they continue to struggle with personnel shortages and fatigue in the aftermath of the pandemic. However, we’re encouraged that we continue to see high levels of interest for participation in our clinical programs. There will be numerous data readouts in 2022, including data on COVID-19 from accepted abstracts from the CTC Registry that will be presented at the International Symposium of Intensive Care and Emergency Medicine, later this month in Brussels, and the EuroELSO International Conference in London in May. This data will follow-up on the original results presented and published last year, showing high survival with the use of CytoSorb in COVID-19 and now extending the observations to potentially additional valuable clinical benefits. We have also completed enrollment in the CTC Registry, and we plan to publish the final results in 100 patients later this year. Later this year, we also intend to submit the first ever in vivo antithrombotic drug removal…

Thank you, Makis. In summary, we strongly believe that CytoSorbents has the potential to become a highly profitable medical device company with industry-leading operating profit margins while helping to solve some of medicine’s most vexing problems. Our business is resilient. And while macro uncertainties continue, we remain well positioned to grow our core business in 2022 and beyond. We are heavily focused on being prepared to return to our normal sales and marketing activities with the goal of driving strong sustainable growth, not just in Germany but worldwide. We firmly believe that FDA marketing approval will be a key catalyst for growth, and the company expects to complete enrollment of both the U.S. STAR-D and STAR-T pivotal clinical trial programs for anti-thrombotic removal, as Makis mentioned, in the next 12 months to 18 months. Meanwhile, with our strong balance sheet, we have the ability to fund key investments in growth with a focus on clinical studies, sales and marketing and manufacturing capacity expansion. Thank you very much. That ends our formal remarks. Sherry, if you would, please open the call for the Q&A session.

[Operator Instructions] We will take our first question today from Zach Weiner with Jefferies. Please proceed.

Hi everyone. Thanks for taking the question. Two for me. First, just can you give some color on how things are trending in Germany through the first two months of 1Q access for your reps to surgeons and whatnot? And then second, I just wanted to confirm you guys will not be communicating any milestones on STAR-D and STAR-T with the Street, beyond your quarterly earnings calls, or will you provide updates intra quarter? Thanks.

Yes. Thanks, Zach. I think that as we spoke in our formal comments, the peak of COVID in Germany just recently passed. And so there is still high rates of COVID that has led to continued restrictions in German hospitals, increased difficulty in being able to see physicians by our sales reps, decreased ICU capacity, staffing shortages and other issues that we faced in the second half of last year. So, the quarter is not yet over. We are expecting that COVID cases – new COVID cases to drop significantly in the next month or two months and a lifting of restrictions in Germany by the government. So, I think that things will hopefully return to some new normal in the fairly near future. From a milestone perspective on clinical studies, I will let Makis comment. Makis?

Yes. Thanks, Phil. Well, as we noted, we are going to be communicating progress based on the pre-specified milestones that was shown on the slide previously. So, on earnings calls, we will be stating how the studies are tracking to those milestones. However, if any of those milestones are hit between earnings calls, obviously, we will be announcing that. We would not wait for the earnings call, but we will be announcing it as it happens.

Yes. That’s helpful. Thank you.

Thanks Zach.

Our next question is from Sean Lee with H.C. Wainwright. Please proceed.

Good afternoon guys. I just have two quick questions. First on anti-thrombotic removal, the company received the CE mark expansion, I think back in mid of 2020. So, I was wondering, how big of the indication is this for you guys right now? Maybe a bit of color on what proportion of sales is coming from this indication? And do you expect it to be a big revenue growth driver in 2022? And where do you think you can get to? Thanks.

Yes. Thanks, Sean. So, as we have said before, COVID-19 has made it difficult to effectively market this particular application, which we just received approval on in 2020. And so I think that we continue to face similar challenges of getting out there. But I think as you heard from Christian, that new efforts to get out there with some new resources that we have, have been successful and have been able to generate some momentum in this space. We think that the market in Europe is comparable in unit numbers as we would see in the United States, although given the ASPs of CytoSorb in Europe, the dollar value is less. And so Christian, would you want to comment on that?

No, I think you have already described it very well. So as you said, the COVID pandemic has seen a lot of these developments, and there is still a lot of ground we have to make. But what we have seen over the last few months and also with the activities in the U.S. with the STAR-T and STAR-D studies, there is a lot of enthusiasm in the different cardiac surgery departments. And now we have to build it. And I think there is significant growth possible.

Great. Thanks for additional color.

Thanks Sean.

[Operator Instructions] Our next question is from Justin Walsh with B. Riley Securities. Please proceed.

Hi. Thanks for taking the questions. Your clinical trial efforts give some clarity related to the near and mid-term indication targets. And given the large markets you are looking at there, that makes sense. But I wanted to ask you a couple of questions about the published use case of CytoSorb to treat CAR-T-related neurotoxicity. My first question there is if you believe there is an opportunity for the company to leverage niche use cases to continue bolstering awareness of the product and that might benefit the company as well as patients?

Yes. Thanks. The CAR-T cell immunotherapy application is very interesting. When patients develop the complication of cytokine release syndrome and separately neurotoxicity from CAR-T cell immunotherapy, it can be quite devastating, I think to patients. It manifests very rapidly, often two days to three days after the CAR-T cell immunotherapy infusion. And when it happens, it can be a full-blown cytokine storm. Currently, it’s being managed with steroids and some anti-cytokine inhibitors like tocilizumab. And the rates of CRS, they are getting better at helping to manage CRS. However, neurotoxicity, which they often call icons or CRES is very difficult to control. And when it happens, it has been shown that steroids and cytokine blockers like tocilizumab, do not help and can actually make it worse. And that was the case for this publication, landmark publication actually as the first case of severe neurotoxicity caused by CAR-T cell immunotherapy, and this was the case published in the United States. And so the fact that we were able to rescue this patient and despite having failed many other interventions with our therapy, this patient was salvaged and actually was able to recover from that neurotoxicity. If you recall, there has been some major CAR-T cell immunotherapy trials where neurotoxicity has killed patients and has closed down the studies. So to your point, I think that our business is a lot like this. We have a lot of major indications, right, like sepsis and trauma and management of intra-operative and postoperative complications and other applications such as liver failure and treatment of pancreatitis. Now with the new data on ARDS, I think this will become a major application for us as well in the future. But what I think is so exciting about our therapy and what drives the interest globally is a lot of is just broad usage in a lot of little indications where the effect is often very dramatic. So, it is part of the reason why we have been able to drive really very strong growth in the usage and adoption of CytoSorb worldwide.

Got it. And maybe just a quick follow-up. I am just curious if you see other opportunities for expansion as the immunooncology and cell therapy fields advance. And as you know, there are sort of very limited number of patients who currently receive these therapies, but if there is potential for movement to earlier lines or beyond some niche indications. Wondering if you guys have sort of looked at that possibility and if there might be, I don’t know partnership opportunities there or investigators who are interested in running those types of trials? Thanks.

Yes, thanks. The data are limited right now for the use of our therapy in the cancer field. However, we do acknowledge that it’s potentially a very large market. One of the applications we had discussed previously and has kind of been on the back burner has been the complication of cancer cachexia. Cancer cachexia, as unfortunately many people are aware, is a wasting syndrome that happens in cancer patients that is actually caused by inflammation. In fact, the factor called cachexin, that was identified and is driving this muscle and fat wasting syndrome that depletes the patient of physical reserve is called cachexin. But the other name for it is tumor necrosis factor, which is a widely studied cytokine, for example. We have had a vision that perhaps CytoSorb could actually help treat cancer cachexia, which is often listed as the main cause of death for patients with cancer. It is an end-stage phenomenon in cancer, and it is a problem that prevents patients from being able to tolerate further immunotherapy or further cancer chemotherapy or radiation therapy for that matter. So, there is a vision that if we could potentially reverse cancer cachexia with our therapy, it may help buy patients’ time and give them reserve to be able to ultimately have more definitive therapy.

Got it. Thanks for taking the questions.

Sure.

And now I would like to hand the conference back over 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 Terri Anne Powers at tpowers@cytosorbents.com, as you can see on the screen here, and we will try to reply to your questions as soon as we can. Thank you, everyone.

Thank you. That concludes our conference for today. I would like to thank everyone for their participation. Have a great evening.