Cytosorbents Gets Bullish Commentary On European Outlook

Aegis Capital initiated coverage of Cytosorbents Corp CTSO with a Buy rating and $20 target price on strong outlook for European markets.

The company sells Cytosorb, which removes excess inflammatory cytokines from the blood that helps preventing organ failure and death in ICU patients.

Cytosorbents has a CE mark and broad labeling in Europe for any conditions in which cytokines are elevated, including sepsis, respiratory distress and trauma.

“Direct sales in Europe should represent about 50% of sales in 2016, but strategic partnerships with Fresenius Medical Care, Biocon Ltd, and most recently Terumo, just rolling out should drive growth in 2017,” analyst Jason Wittes wrote in a note.

Wittes also sees the company as a potential takeover target for one of its partners due to the high margin disposable growth opportunity.

In the US, the company just completed and met its safety endpoint for the REFRESH 1 trial for Cardiac Surgery patients. The analyst said this event clears the path for a pivotal trial, potentially leading to approval by 2019.

Though Cardiac Surgery represents about a $150 million opportunity in the US, and the regulatory path of least resistance, Wittes believes Sepsis remains the biggest opportunity.

“[B]ased on experiences in Europe, we expect CTSO or its partners to eventually fund a sepsis trial for US approval,” Wittes noted.

As of June 30, the company had $9 million in cash, and another $5 million available from a debt facility, sufficient to fund its one year operations.

At time of writing, shares of Cytosorbents remained flat at $5.90. The target of $20 implies potential upside of 239 percent from the current levels.