CytoSorbents maintains Buy rating from B.Riley with no change in target price

B.Riley has reaffirmed a Buy rating and a $3.00 price target on CytoSorbents (NASDAQ: CTSO), a medical device company.

The endorsement comes after the firm submitted its De Novo application for the DrugSorb-ATR medical device to the U.S. FDA on October 1.

This submission is significant as it seeks to expedite the review process due to the Breakthrough Device Designation granted for patients on ticagrelor undergoing coronary artery bypass graft surgery.

The regulatory application to Health Canada for DrugSorb-ATR is prepared and awaits submission, pending the Medical Device Single Audit Program certification, which is expected to be granted to CytoSorbents in the near future.

Decisions from both the FDA and Health Canada are anticipated in 2025. These submissions are informed by the results of the STAR-T trial, which achieved its primary safety endpoint but did not meet the primary effectiveness endpoint in the overall patient population. CytoSorbents has elected to proceed with the application by focusing on the subset of patients where DrugSorb-ATR showed a clear benefit.

CytoSorbents also released preliminary figures for third-quarter product revenue for 2024, projecting sales between $8.3 million and $8.5 million. This reflects a year-over-year growth of 7% to 10% from the third quarter of 2023, which reported $7.8 million in sales. Although the anticipated revenue aligns with B.Riley's estimate, it falls slightly short of the consensus estimate of $8.7 million.

The company encountered a manufacturing hiccup that led to a reduced production of CytoSorb devices in the quarter, resulting in lower product gross margin, estimated between 50% and 60%, compared to 71% in the same quarter the previous year. CytoSorbents has reported that the issue has been resolved and expects production levels and gross margins to normalize in the fourth quarter of 2024.

In other recent news, CytoSorbents Corporation reported a 5% increase in total revenue to $9.9 million in the second quarter of 2024 and a 10% rise in product sales to $8.8 million. The company also noted a 48% decrease in operating loss to $3.4 million compared to the same period last year.

CytoSorbents has initiated an "at the market" equity offering that could raise up to $20 million. The company also submitted a DrugSorb-ATR De Novo marketing application to the U.S. Food and Drug Administration (FDA) and is preparing to submit a Medical Device License application to Health Canada.

In other company developments, CytoSorbents amended its royalty agreement with ROKK, LLC, modifying the original contract concerning the perpetual royalty payments for the company's CytoSorb device.

The company also appointed Peter J. Mariani as its new CFO and implemented cost-saving measures that resulted in $5 million in annual savings.

InvestingPro Insights

CytoSorbents' recent developments align with several key metrics and insights from InvestingPro. The company's market capitalization stands at $73.48 million, reflecting its position as a small-cap medical device company. Despite B.Riley's optimistic outlook, InvestingPro Tips indicate that CTSO is "quickly burning through cash" and "not profitable over the last twelve months," which explains the company's focus on regulatory approvals to potentially boost future revenues.

The preliminary Q3 2024 product revenue growth of 7% to 10% year-over-year is consistent with InvestingPro data showing a revenue growth of 2.17% over the last twelve months. This modest growth, coupled with the manufacturing issue mentioned in the article, may contribute to the company's current financial position.

On a positive note, InvestingPro Tips highlight CTSO's "strong return over the last month" and "large price uptick over the last six months," with data showing a 28.57% 1-month price total return and a 41.36% 6-month price total return. These figures suggest that investors are responding favorably to the company's recent developments, including the FDA submission for DrugSorb-ATR.

For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into CytoSorbents' financial health and market position.

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