Cytosorbents (NASDAQ:CTSO) is something of a hit in Europe but is virtually unknown in the U.S.
Its blood-filtering technology, based on porous polymer beads that actively remove specific toxins from blood and other bodily fluids, is being built into a host of filtering products with names like CytoSorb-XL™, HemoDefend™, VetResQ™, K+ontrol™, ContrastSorb, and DrugSorb.
One of these, CytoSorb is already used to filter blood in 53 countries. and that led to a record $5.8 million in revenue for the second quarter of this year. European regulators seem pleased with its ability to filter toxins from blood. So far in 2018, CTSO stock has nearly doubled.
But Cytosorbents’ products are not yet sold in the U.S. As a result, the company has a market cap of only $409 million. Its 2017 sales were just $15 million, but it has $25 million of cash in the bank and debts of less than $10 million.
As baby boomers approach retirement, a surprising number are looking to companies like this for the home runs that may make the difference between caviar and cat food. Since executing a 1:25 reverse split in 2014, when it was a penny stock, CTSO stock has gained a second life over the last two years, up 151% from its opening price on Aug. 28 of slightly over $13.
If Cytosorbents can win U.S. regulatory approval, this could be a home run for investors. But it hasn’t done that yet.
The company recently collected $3 million in bridge funding in hopes of accelerating approval of a technology that could improve the safety of the blood supply, and this has increased hope that such approval will be coming.
Meanwhile, it continues to rack up sales overseas and positive recommendations from U.S. analysts. Cowen & Co., for instance, recently put the company on its buy list with a price target of $15. That’s important because few analysts follow the stock.
The stock also depends on positive media coverage, not just analyst reports, but blog coverage and even stories like this, from reporters who know business but find the science somewhat baffling.
What Cytosorb Does
Cytosorb is mainly aimed at reducing the level of cytokines in the blood, an inflammation response to severe infection sometimes called a “cytokine storm.” The product comes in a cartridge, and blood can be pushed through it for filtration over seven days before it’s replaced in cases of sepsis and septic shock.
In England, the cartridges sell for about $1,250 each, and it has been used to treat about 20 patients in that country’s National Health Service (NHS).
The NHS approval would seem to be a big deal, given how the country focuses on both the costs and benefit of new treatments. In the U.S., there are a million cases of sepsis a year, and 15-30% of those people die.
Adapting the technology to other blood-borne diseases, and getting it through regulatory hoops, has been an expensive and time-consuming process. CTSO stock rises on hope because it’s thinly traded but could fall quickly on any negative news. Right now it’s riding high as most of its analysts have a buy rating on the stock, and one just moved to a “Strong Buy.”
Bottom Line on CTSO Stock
Cytosorbents is not a drug company. It’s a device company. It still carries some of the regulatory risks of a drug company, but approval of the technology could lead to huge gains.
I suspect, however, that the company may not have the scale to succeed quickly. CTSO stock could, however, get a pop on takeover speculation, and that’s the catalyst investors may be looking for.
Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance, The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing, he owned no shares in companies mentioned in this story.