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By Brian Marckx, CFA

CTSO Scores Gov't Grant for HemoDefend
CytoSorbents (OTC BB:CTSO) announced today (9/9/2013) that they have been awarded a $203k Phase I grant from the National Heart, Lung, and Blood Institute (NHLBI) to further develop their HemoDefend platform. The project will encompass both the in-line filter and "beads in a bag" configurations and will focus on increasing the number of blood contaminants that can be captured by the technology as well as determining the quality of the blood following treatment. Dr. Larry Dumont, from the Geisel School of Medicine at Dartmouth, will be working with CytoSorbents on the grant.

As we have noted in our coverage of CTSO, we had yet to model any financial contribution from HemoDefend given the relatively early stage of development of the product and little visibility as to potential commercialization timelines. CytoSorbents had not spoken much about HemoDefend in the recent past, although had noted that they had experienced some interest in the technology since introducing it at the October 2011 American Association of Blood Banks conference. With their main focus on the roll-out of CytoSorb, HemoDefend was relegated to somewhat of a back-burner project that CytoSorbents had noted they have been looking for a partner to further develop.

And while today's announcement does not provide substantially more insight into probabilities of eventual commercialization or related timelines, we do view the grant as meaningful as it potentially may accelerate development, potentially aids in finding a partnership(s) for further development and commercialization, and lends a vote of confidence in the technology from the NHLBI, a division of the National Institutes of Health.

Relative to potential partners, CTSO most recently noted (on the August business update call) that they are in active discussions with about 20 companies for commercialization of CytoSorb and Hemodefend, combined. For HemoDefend, CTSO is looking at companies involved in blood collection and transfusions. As an example, they had previously mentioned blood bag manufacturers as one type of potential partner (for the "beads in a bag" configuration).

HemoDefend HemoDefend, with expected applications in purification of blood used for transfusions, uses a new optimized version of CytoSorbents' polymer technology designed to capture contaminants in blood that can cause adverse events and transfusion reactions. Blood can become contaminated either from the donor or during storage as the blood ages. HemoDefend is designed to safeguard the quality and safety of the blood supply by removing contaminants such as antibodies, free hemoglobin, cytokines, and bioactive lipids in whole blood, packed red blood cells, and platelets that can cause transfusion reactions such as life-threatening Transfusion Related Acute Lung Injury (TRALI) and lethal allergic reactions. The technology uses a mixture of different beads and can be tailored to remove specific substances of interest.

According to the World Health Organization (WHO), there are more than 80 million blood donations each year worldwide with each donation generating multiple blood transfusion products such as packed red blood cells (pRBCs), platelets, fresh frozen plasma, and cryoprecipitate. Every year there is an estimated 150 - 200 million transfusions administered worldwide with, according to the American Red Cross, more than 30 million in the U.S. alone. CytoSorbents target market for the technology are pRBCs, platelets, and whole blood, which represent more than half of all blood transfusions annually. HemoDefend can be configured either as an in-line filter design or what the company has termed "Beads in a Bag".

With "Beads in a Bag" the beads are placed directly into a blood storage bag during bag manufacturing and blood or separated blood components are then later added to the bag. Purification begins instantly and continues throughout the duration of storage, maximizing removal efficiency. The beads are neutrally buoyant, eliminating the need for mixing and simplifying the purification process. An integrated filter in the bag prevents beads from leaving the bag during the transfusion process. The polymer beads meet ISO 10993 standards for biocompatibility, hemocompatibility, genotoxicity, cytotoxicity, acute sensitivity and complement activation and can therefore directly contact blood for extended periods of time. In addition, the beads are inert and stable at a wide range of temperatures, and do not contain any antibodies, recombinant proteins, ligands, or drugs. Because of this, they have a very long shelf life that is consistent with blood storage bag manufacturing standards. No special equipment or handling is required, making it ideal for mainstream and military applications, as well as for use in less developed countries.

Applicability in Transfusions
CytoSorbents has cited the occurrence of potentially lethal adverse reactions during blood transfusions as a clear unmet need for a technology that can effectively remove toxins from the blood prior to transfusion. The incidence of transfusion reactions is roughly 3 - 5%, ranging from mild fever and itching, to potentially life-threatening reactions such as TRALI and anaphylaxis. Specifically, CytoSorbents notes that HemoDefend may be effective against preventing TRALI, which is associated with the transfusion of donor antibodies to the recipient and can result in the rapid development of acute respiratory distress. TRALI is one of the most serious transfusion-related reactions, occurring in about 1 in every 2k - 5k transfusions and with a mortality rate of about 10%.

Applicability in Blood Freshness
CytoSorbents has also noted that they believe that HemoDefend may also have applicability in preserving the shelf-life of blood and in reducing potential toxicity of older blood. They have cited a growing number of studies that have suggested administration of aged blood can lead to adverse outcomes, including increased mortality. Older blood accumulates many substances during storage such as free hemoglobin, bioactive lipids, cytokines, and others that can increase the risk of problems - HemoDefend could potentially be used to remove these substances and reduce the risk of adverse reactions.

About one-half of all transfusions use "packed red blood cells" (pRBC) - the refrigerated shelf-life of which is up to 42 days. There is some debate, however, about whether the use of older blood can increase the risk of transfusion reactions - a number of studies have indicated that this is the case. Two currently ongoing pivotal studies (RECESS in the U.S. and ABLE in Canada) are also attempting to determine whether aged blood may potentially be more toxic. If these studies do indeed indicate that older blood is associated with an increase in patient adverse events, this could provide significant demand for HemoDefend (assuming eventual regulatory approval).

A copy of the full research report can be downloaded here >> CytoSorbents Report

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