CytoSorbents Corporation (NASDAQ:CTSO), a medical device company, announced on Monday that it has entered into an Amended and Restated Letter Agreement with ROKK, LLC. The agreement, effective August 16, 2024, modifies their original contract from August 11, 2003, concerning the perpetual royalty payments for the company's CytoSorb device.
Under the original terms, CytoSorbents was obligated to pay ROKK a royalty equal to three percent of all gross revenues from the sale of CytoSorb. The Amended and Restated Agreement clarifies the definition of "gross revenue" for the calculation of royalty payments. Gross revenue is now defined as the total revenue recognized in accordance with generally accepted accounting principles from the sale of the Covered Product in specified fields, minus certain deductions.
It also includes payments received from third-party licensees or sub-licensees and net proceeds from the disposition of intellectual property related to CytoSorb.
The Covered Product encompasses CytoSorb, its commercialized versions VetResQ and ECOS-300CY, and the versions of DrugSorb and DrugSorb-ATR that have undergone human clinical trials, as of the agreement date. These products are used in various medical applications, including sepsis, cardio-pulmonary bypass, organ donation, chemotherapy, and inflammation control.
CytoSorbents plans to provide a complete text of the Amended and Restated Agreement in its upcoming Quarterly Report on Form 10-Q for the quarter ending September 30, 2024. This announcement is based on a press release statement.
In other recent news, CytoSorbents Corporation posted a 5% rise in total revenue to $9.9 million in the second quarter of 2024, with a 10% increase in product sales to $8.8 million. The company also reported a 48% decrease in operating loss to $3.4 million compared to the same period last year.
Notably, CytoSorbents has delivered over a quarter million CytoSorb devices to date and secured a $20 million credit facility with Avenue Capital Group. The company also implemented cost-cutting measures, resulting in $5 million in annual savings, and ended the period with a cash balance of $14.9 million.
The recent developments include the appointment of Peter J. Mariani as the new CFO and the forthcoming regulatory submissions for their DrugSorb-ATR system to the FDA and Health Canada in the third quarter of 2024.
CytoSorbents anticipates the DrugSorb-ATR system to receive FDA breakthrough designation for a faster review process and expects high gross margins, potentially reaching 80% with volume growth and approval of DrugSorb-ATR. These developments are part of CytoSorbents' steady progress both financially and in its product development pipeline.
InvestingPro Insights
As CytoSorbents Corporation (NASDAQ:CTSO) revises its royalty payment structure with ROKK, LLC, investors may find the company’s financial health and stock performance to be of particular interest. According to InvestingPro data, CytoSorbents has a market capitalization of $57.15 million and has experienced a significant return over the last week, with a 1-week price total return of 17.32%. Despite these gains, analysts remain cautious, as indicated by an InvestingPro Tip that highlights the company is not expected to be profitable this year. Furthermore, the company's P/E ratio stands at -2.05, reflecting its current lack of profitability.
On a positive note, another InvestingPro Tip suggests that CytoSorbents' liquid assets surpass its short-term obligations, which could provide some financial stability in the near term. The company's revenue growth over the last twelve months has been modest at 2.17%, and it does not pay a dividend, which may influence investment strategies focused on income generation. For those interested in a deeper analysis, InvestingPro offers additional tips on CytoSorbents, providing a broader perspective on the company's outlook. Visit https://www.investing.com/pro/CTSO for more InvestingPro Tips on CytoSorbents Corporation.
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