Cytosorbents Corp

NASDAQ:CTSO

Earnings Call Transcript 2024-Q1

[Operator]

Good afternoon, and welcome to Cytosorbents' First Quarter 2024 Financial and Operating Results Conference Call. [Operator Instructions] Following the formal remarks, we will open the call for your questions. Please be advised that the call will be recorded at the company's request. At this time, I'd like to turn the call over to our moderator, Eric Ribner. Please go ahead, Mr. Ribner.

[Eric Ribner]

Thank you, and good afternoon. Welcome to Cytosorbents' First Quarter 2024 Financial and Operating Results Conference Call. Joining me from the company are: Dr. Phillip Chan, Chief Executive Officer; Vincent Capponi, President and Chief Operating Officer; Kathleen Bloch, Chief Financial Officer; Dr. Makis Deliargyris, Chief Medical Officer; Dr. Christian Steiner, Executive Vice President of Sales and Marketing; Christopher Cramer, Senior Vice President of Business Development. Before I turn the call over to Dr. Chan, I'd like to remind listeners that during the call, management's prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions today. Therefore, the company claims protection under safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from the results discussed today and therefore, we refer you to a more detailed discussion of these risks and uncertainties in the company's filings with the SEC. Any projections as to the company's future performance represented by management include estimates today as of May 9, 2024, and we assume no obligation to update these projections in the future as market conditions change. During today's call, we will have an overview presentation covering the operating and financial highlights for the first quarter of 2024 by Dr. Chan and Ms. Bloch. Following that presentation, we will open the line to your questions during the live Q&A session with the rest of the management team. And now it is my pleasure to turn the call over to Dr. Phillip Chan.

[Phillip Chan, executive]

Thank you very much, Eric, and good afternoon, everyone. We are pleased to announce the achievement of $9 million in product sales in the first quarter of 2024, which is a 14% increase from $7.9 million a year ago and a 22% increase sequentially from $7.3 million in the fourth quarter of 2023. Another major accomplishment for the quarter was the expansion of our product gross margins to 76%, up 800 basis points from 68% in Q1 of 2023, excluding a onetime nonrecurring inventory adjustment recorded in the first quarter of this year. This is squarely within our previous guidance of achieving 75% to 80% product gross margins during this year and highlights the scalability and efficiency of our state-of-the-art manufacturing facility and processes. As you will hear from Makis later, our STAR-T data was presented for the first time by principal investigator, Dr. Michael Mack, at the 14th Annual Meeting of the American Association for Thoracic Surgery or AATS in Toronto, Canada, one of the most prestigious cardiothoracic surgery conferences in the world. We also hosted a virtual KOL an Analyst Investor Day earlier this week featuring a review of the STAR-T pivotal trial results and real-world experience with blood dinner removal in Europe with a replay available by clicking this link here. Based on our current status, we believe we are on track to submit marketing applications in parallel for the investigational DrugSorb ATR system to FDA as a de novo application and Health Canada in the third quarter of this year. We have now cumulatively delivered more than 237,000 devices and expect to reach 0.25 million devices this year. Later this quarter, we also expect to take delivery of and launch our purified hemoperfusion pump in select international countries. We already have strong interest from customers in many countries where dialysis is not well established and where an easy-to-use machine like PuriFi enables the treatment of patients with CytoSorb. In more established countries like Germany, the availability and simplicity of PuriFi is expected to spur early usage of CytoSorb in the disease process and may enable more types of treatment such as the treatment of chronic liver disease. We are seeing strong customer responses to the new positive data being published on CytoSorb in a wealth of applications such as acute liver disease, the first proof-of-concept randomized trial in heart transplant, the first use cases in hemorrhagic shock, septic shock and fluid balance, improved survival in burn patients with sepsis in kidney injury, and a review article summarizing the benefit of CytoSorb in the treatment of acute respiratory distress syndrome, just to highlight a few. One of the reasons we believe there's so much more room to grow is because CytoSorb addresses the core problem of severe uncontrolled inflammation in these life-threatening conditions that can otherwise lead to organ failure and death. At this time, I'd like to turn the call over to Kathy to cover financial highlights. Kathy?

[Kathleen Bloch, executive]

Thank you, Phil, and hello to everyone on the call today. I will be discussing our first for financial results, including revenue and gross margin, and I will also be providing an update on our working capital and cash runway. Next slide, please. CytoSorb product sales were approximately $9 million in the first quarter of 2024 compared to $7.9 million in the first quarter of 2023, an increase of approximately $1.1 million or 14%. Our first quarter 2024 grant revenue was approximately $797,000 as compared to $1.5 million in the first quarter of 2023, and this decrease was due to the conclusion of several grants which we completed in 2023. Our total first quarter 2024 revenue, which includes both product sales and grant revenue, was approximately $9.8 million as compared to $9.4 million in 2023. And product gross margin was 76% in 2024, an 800 basis point increase compared to product gross margin of 68% in 2023. We do note that first quarter 2024 product gross margin calculations exclude the impact of a onetime inventory adjustment recorded during the quarter. Next slide, please. The blue bars of this chart represent our annual product sales for the trailing 12-month period ended March 31 for each year, 2018 to 2024. We know that 2021 and 2022 product sales were favorably impacted because CytoSorb was used extensively to treat COVID-19 patients. And of course, this usage ceased following the containment of the pandemic in the years ending March 31, 2023 and 2024. If we take a look at the orange trend arrow, which tracks along core non-COVID-19 revenue, we can see that post-COVID-19 12-month period ending March 31, 2023 and 2024 continued to show positive growth in our core non-COVID-19 -- COVID-19 product sales. The post-COVID market has been challenging for reasons we've already articulated. However, we are seeing improvements in the marketplace. Our year-over-year growth for the trailing 12 months ended March 31, 2024, increased by 10% compared to the previous 12 months. Additionally, exclusive of the impact of the COVID-19 sales in 2021 and '22, our overall CAGR for the 6 years ended March 31, 2024, is a respectable 13.3%. Next slide, please. Go back to that slide, I apologize. I also wanted to point out the green line, which tracks our year-over-year gross margins. This indicates a decline in 2023. And this was, of course, due to transitioning of full manufacturing operations from our old facility over to our new facility. In the first quarter of 2024, gross margins were 76%, excluding the impact of the onetime inventory adjustment, and they are on par with our margin levels prior to the move to our new facility. And we believe that we will be able to show further improvement in the 2024 gross margins as we continue to scale up production and realize additional manufacturing efficiencies. Next slide, please. This next slide shows our quarter-over-quarter product sales results. We already noted that first quarter 2024 product sales increased to approximately 14% over first quarter 2023 product sales. We also want to point out here that first quarter product sales rose $1.6 million or 22% over the immediately prior quarter. Our first quarter 2024 product sales of $9 million represents the highest post-COVID-19 core product sales quarter in our history. Next slide, please. As of March 31, 2024, we have $10.1 million in cash, which includes $1.5 million of restricted cash. We believe that cash on hand is sufficient to fund the company's operations into the fourth quarter of 2024. We continue to work to strengthen our balance sheet and reduce operating expenses through tight control over working capital, in particular, management of accounts receivable and inventory levels. Conservation of cash is a top corporate priority. We have reduced our head count, adjusted our budgeted spending and taken other measures to reduce our quarterly cash burn in 2024. We have also instituted and continue to maintain tight controls over spending and these actions are all expected to help preserve our cash runway. In addition, the company is actively pursuing alternative sources of capital. Our immediate focus is on non-dilutive debt financing, and we are currently in active discussions with multiple debt lenders on this front. So that will conclude my remarks for today. And at this time, I'm pleased to be able to turn the call over to my esteemed colleague, our Chief Medical Officer, Dr. Makis Deliargyris. Makis?

[Efthymios Deliargyris, executive]

Thank you, Kathy. Next slide, please. And good afternoon to everyone on the call today. In the next few minutes, I will review the current state of our clinical and regulatory activities for the upcoming submissions to regulators in U.S. and Canada that will hopefully provide you the necessary visibility into our efforts to make DrugSorb ATR available to North American health care providers. First, I would like to remind everyone that DrugSorb ATR is a breakthrough device. In fact, the FDA has granted 2 separate breakthrough designations for DrugSorb ATR. First, for the removal of ticagrelor in patients undergoing urgent or emergent surgery. And the second one for the removal of the 2 market-leading anivaluants, apixaban or Eliquis and rivaroxaban or Xarelto, for the same intended applications. We believe that having breakthrough status is an important component of the DrugSorb ATR regulatory strategy, and let me explain why. First, the breakthrough program is specifically designed to provide timely access of novel devices addressing large unmet medical needs by speeding up both the development and the review phases of the process. The required criteria for a breakthrough device designation are listed on this slide. The first criteria is that the device provides for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions. For the second criteria, the device must meet at least one of the following considerations: that it represents a breakthrough technology, that there are no approved or cleared alternatives, that it offers significant advantages over existing approved or cleared alternatives, and that the device availabilities in the best interest of patients. Since 2015, the FDA has granted breakthrough device designation status to 192 cardiovascular and 83 GI and urology devices or diagnostics. This is relevant because the intended target population for DrugSorb ATR are cardiovascular patients, and GI urology will be the FDA review brands for our submissions. Finally, at breakthrough designation submissions undergo priority review and need to meet the FDA ever standards for safety and effectiveness. Next slide, please. As we have stated in our press release, and you just heard from our CEO, Dr. Phil Chan, the STAR-T results were recently presented at AATS and were also reviewed during our recent webinar, Key Opinion Leader and Analyst Investor Day by study principal investigator, Dr. Michael Mack. I urge you to listen to the webinar replay, that you can find on the link provided to you, that has presentations by all 3 STAR-T principal investigators and also an overview of the increasing adoption of antithrombotic removal in European cardiac surgical practice by the STAR-T registry transponder Dr. Michael Smoke. Let's now review the highlights of the STAR-T results. First of all, the study matrix. There were 140 subjects randomized in the study. However, 8 of these subjects did not receive a study device, and therefore, the overall population comprises of 132 subjects. Among them, underwent isolated coronary artery bypass grafting, or CABG surgery. While 8% under what other types of cardiac operators. The enrollment was split approximately 2/3 of the subjects came from United States investigative sites and approximately 1/3 from Canadian investigative sites. The study protocol was well executed with less than 10% of study subjects experiencing a major protocol deviation. Finally, study too was 100% complete with 0 patients lost to follow-up. Reviewing the safety in the overall population, the primary endpoint of -- the primate safety endpoint of the study was met as evidenced by 3 separate independent data safety monitoring board reviews that occurred after 40, 80 and 140 patients were entering the trial. In each one of those reviews, the DSMB recommended continuation of the study and invoiced no concerns around safety. Overall, adverse events were balanced between the device and the control arms in the trial. There were 0 device-related serious adverse events reported. There were 0 unanticipated device adverse events reported, and there were 0 device-related adverse events that led to discontinuation of the study. Turning now to efficacy. We assessed efficacy in the trial by looking postoperative bleeding. That was done via 2 composite endpoints that comprise of the universal definition of peribleeding events and also by the chested drainage collected from each of the patients in the study. In addition, we executed an exploratory assessment of major bleeding. As Luke had reported previously, the primary composite endpoint in the overall population was not met. However, in the isolated CABG population among patients who did not have any major protocol deviations in the so-called isolated CABG protocol population, we observed the following timing. The prespecified composite endpoint that included both moderate and severe bleeding events, demonstrated a win ratio of 1.33. And for the audience, let me remind you that any win ratio above 1 suggests a treatment effect for the investigation in the device. However, that win ratio was not significant with a p-value of 0.202. The prespecified composite endpoint that only included severe bleeding events demonstrated a win ratio of 1.59, which was significant with a p-value of 0.041. Since the UDPB definition allows for events to be declared simply by transfusions, the principal investigators of the study wanted to ensure that only clinical bleeding events were included in the analysis and therefore, performance sensitivity, blinded review of the events where they identified a number of cases that were included in the original analysis simply on the basis of transfusions, but without any evidence of clinical bleeding. The results of the sensitivity analysis are shown at the bottom of the table where now the composite endpoint that includes the moderate or severe bleeding event has a win ratio of 1.65, which is also significant with a p-value of 0.026. You will note that the composite-only includes severe events was not impacted by the sensitivity analysis since all severe events would deem to be clinically meaningful events relating to significant bleeding. Finally, the exploratory major bleeding analysis looked at the total of major events that these subjects suffered either according to the UDPB definition or according to chested drainage by accounting for patients that ended up with more than 1 liter of blood in the chest that are placed in the chest after surgery. What we saw that there were 3 major UDPB events in the drug or bar, while there were 9 in the control arm. And when it comes to major chested drainage fleets over a leader that when one of those noted in the drugs or bar, there were 4 additional in the control arm for a total of 3 events with the DrugSorb and 13 in the control arm. That translated to rates of 6% versus 22% between the 2 arms, which was significant with a p-value of 0.028. The number needed to treat, to prevent the major bleed in the trial according to this exploratory analysis was 6. Otherwise said, for every 6 patients treated, there was 1 major bleeding event averted. Next slide, please. With STAR-T data available, we have worked closely with both internal and external regulatory experts to formulate our regulatory strategy leading up to submissions. Included on the top of the slide is a direct quote from one of our senior regulatory experts, Mr. Mark DuVal, J.D., President and CEO of DuVal & Associates. To state, "We have been working with CytoSorbents for the development of the regulatory strategy for the drug drove ATR device. Based on the data the company has shared with us and the extensive experience we have in preparation of de novo submissions. It is our opinion this device is appropriate for the de novo pathway." More specifically, the de novo pathway is for low to moderate risk devices for which special controls, for example, the availability of clinical data, provide reasonable assurance of safety and effectiveness, but there is no other approved predicate device. The de novo pathway puts heavy emphasis on the probable benefit and risk of the device in the intended population. Importantly, based on the priority review received by breakthrough devices, a recent analysis reported a 25% faster de novo application review times. Accordingly, we will be proceeding with parallel FDA de novo and health cannabis submissions in the third quarter of this year. And finally, FDA reviewed times for de novo applications are stated as 150 days. However, in the post-COVID era, such reviews are averaging approximately 1 year. Next slide, please. So to summarize, ticagrelor is an FDA-approved drug was widely used as standard of care in the U.S. and Canada, but does compare an increased risk of severe perioperative bleeding for patients who require urgent surgical treatment. DrugSorb ATR is an investigational device that has FDA breakthrough status for this application, highlighting the large unmet medical need and the lack of available alternatives. We believe that the STAR-T data inform the regulatory pathway by providing the necessary safety information; information on the proposed target intended population, which, in our case, will be CABG surgery; and information, the proposed indication for use, which would be for the reduction of bleeding severity. Based on the benefit to risk profile observed with STAR-T, regulatory experts recommend FDA submission for DrugSorb ATR use in CABG surgery under the de novo pathway. And finally, pending FDA agreement of the de novo pathway, Breakthrough designation status is expected to facilitate the priority review with a potential FDA decision between 6 to 12 months following in Q3 submission. In parallel, we'll be also submitting to health care. And that concludes my prepared statements. And now I would like to turn it over back to Phil for his concluding remarks.

[Phillip Chan, executive]

Thank you, Makis. We see tremendous opportunity fueled by important demographic trends such as the aging baby boomer generation who are prone to critical illness, expanding global use of blood thinners by millions of people all over the world for stroke and heart attack prophylaxis, and the chronic liver disease epidemic in 20% of the world population due to alcoholism, hepatitis and fatty liver. We are at the forefront in helping to fill the substantial treatment gaps that exist across a spectrum of critical conditions such as sepsis, shock, liver failure, acute respiratory distressed syndrome, infective endocarditis, serious bleeding due to blood thinners and organ transplant because of our ability to help control deadly inflammation and remove dangerous toxins in drugs that are often at the heart of life-threatening conditions. And in the future, with products and advanced development like HemoDefend-BGA for universal plasma, our contribution could be even greater. We are excited by our near-term progress with sales, product gross margins, potential catalysts like PuriFi, our strategic partnerships like Fresenius, our goal to obtain debt financing, new clinical data and importantly, the greatly increased visibility that we all now have on DrugSorb ATR. By continually pushing boundaries and driving innovation, we are committed to expanding the dimension of blood purification setting the stage for lasting transformation within the industry. And with that, this concludes our prepared remarks. So operator, please open the call up for the Q&A session.

[Operator]

[Operator Instructions] Questions now come in from the line of Yuan Zhi with B. Riley Securities.

[Yuan Zhi, analyst]

I have a couple of questions here. I'm curious about the decision to pursue this de novo applications versus premarket approval? What has changed since the last discussion?

[Phillip Chan, executive]

Yes. Thanks, Yuan. Maybe let me turn that over to Makis to discuss. Makis?

[Efthymios Deliargyris, executive]

Yes. Thank you for the question. The the simple answer is the availability of the STAR-T data that we believe are very informative when deciding what the appropriate regulatory pathway is as reviewed on the slides that we just looked at, the Novo pathway is specifically designed for devices of low to moderate risk, which, again, the STAR-T data provides a lot of visibility around that component as well, in addition, obviously, to the efficacy results. So that was the main determined in addition to, of course, input from both our internal regulatory resources and, of course, external regulatory experts.

[Yuan Zhi, analyst]

Got it. And then another follow-up here is for the targeted submission in 3Q. I'm curious, have you guys talked to FDA for this presubmission? And what's your confidence to have the submission on time as you are preparing the data package and the meeting business after the FDA meeting?

[Efthymios Deliargyris, executive]

So we are -- as you know, the trial completed last year in 2023. So we have used the last few months, obviously, in doing a lot of the necessary work requiring on closing, cleaning and analyzing the data that culminated in the presentation, obviously, a double ATS. So there's been a lot of work along the way to get ready for these submissions. And we're now entering the final phase, which is preparing the documents now that the regulatory pathway is more clear to have the exact necessary materials from the submission. Our FDA interactions have always been -- starting with the breakthrough designation applications have always been very collaborative and very productive. So we anticipate and hope that they continue that way now that we have also the STAR-T data available that will be the incentive piece on the submission.

[Yuan Zhi, analyst]

Maybe another clarification question here is, before you submit this de novo application, is FDA requiring a presubmission meeting to make sure everything is in line with their expectation?

[Efthymios Deliargyris, executive]

It is our understanding based on the discussions with our regulatory experts that the presubmission meeting is not required by the FDA.

[Operator]

Your next question now comes in from the line of Sean Lee with H.C. Wainwright.

[Xun Lee, analyst]

I just have two. My first is on the good product sales we saw this quarter. So could you just highlight what exactly was the push and pulls that helped you achieve the $9 million?

[Phillip Chan, executive]

Yes, Christian, would you like to answer that?

[Christian Steiner, executive]

Thank you for the question. Yes, we had a very positive development in the first quarter in sales. And as discussed at the last earnings meeting. There is a very positive development, especially in the direct sales in Europe. And in many of the distributor countries, we still see the market challenges in the Central European countries like Germany, Austria, Switzerland, but they have stabilized and we think the market stabilizes so that we can develop from here. But the major push, as I said, come from the direct sales in Europe and the distributor countries. Is that sufficient?

[Xun Lee, analyst]

Yes. I do expect this to sort of quick follow-up, then do you expect this growth to continue for the rest of the year?

[Christian Steiner, executive]

So I think that the stabilization and the big markets in Central Europe will continue. Of course, the underlying market situation versus postpandemic situation is not clearing overnight, but there's a lot of very strong initiatives from our side where we address new customer groups, and expand to different indications. So I think that we can create growth out of this. And the growth we have seen in the direct sales countries in Europe and also distributor countries I very much expect to continue to develop nicely.

[Xun Lee, analyst]

I see. My last question is on the PuriFi system. So with the launch imminent, I was just wondering what -- how is the commercial structure for that setup? And what sort of impact can we expect in this year or in the next several quarters?

[Phillip Chan, executive]

I think that the PuriFi pump is really a means to an end, right? As I mentioned in my comments, is meant to help to build an infrastructure of blood purification in distributor territories where they don't have an existing strong infrastructure in dialysis or dialysis technicians for that matter. This is a pump that we're actually using for the vet market in the United States, and we've got lots of feedback that it's a very easy-to-use pump that requires very little in the way of maintenance. So we're very excited about this because what it's intended to do is to drive more sales of CytoSorb obviously, in places that have plenty of critically-ill patients, but does not have that infrastructure. The other thing that it's intended to do, as I mentioned, is to really drive earlier usage and more frequent usage of our technologies because what we have found is that when you treat people early and you try to catch this deadly inflammation more rapidly before it has time to cause destruction to vital organs, outcomes are typically much more reliable and much better. And so again, we think that having this purified pump out there will be able to really -- is actually a major key driver of growth hopefully going forward. We haven't made our expectations public on what we expect that pump to be to do. But again, the goal here is an enabling technology to sell more CytoSorb devices, it's very similar to the printer or printer cartridge model.

[Operator]

Your last question now comes in from the line of Tom Kerr with Zacks Investment Research.

[Thomas Kerr, analyst]

A quick question on the drug short submissions. I understand you will be submitted roughly at the same time to FDA and Health Canada, but are the approvals independent? Or they done in conjunction? Or put another way, is the Health Canada approval time line also 6 months to a year?

[Phillip Chan, executive]

Vince, maybe you would like to try to answer that.

[Vincent Capponi, executive]

Sure. So -- this is vision. So the approvals are independent. They're not dependent. The Canada -- Health Canada is not dependent upon the U.S. approval. We'll use the same data but we will structure the submission is slightly different as required by Health Canada than what U.S. FDA requires. So they can be done in parallel and independently.

[Thomas Kerr, analyst]

So it's possible you could start in Canada in 6 months and U.S. in a year, and they were to be just different time frames in that region?

[Vincent Capponi, executive]

Yes, that's correct. I mean, Health Canada has time lines as well. I mean they follow closely to the U.S., but they are generally faster than the U.S., but it is possible that it could be introduced in the U.S. or could be introduced, excuse me, in Canada sooner than the U.S.

[Thomas Kerr, analyst]

Great. And one more on that topic. I think you had said in the past, the addressable market is about $325 million for both countries. Is that still a good number? Can you break that down between U.S. and Canada?

[Phillip Chan, executive]

Yes, that is still a good number. I think that although, as you heard from Makis that our focus will be on the isolated CABG population. Recall that isolated CABG is the most common cardiac surgery in the world, right? This is being driven by coronary artery disease and people having heart attacks, which is one of the leading diagnosis in hospitals amongst any illness. And so the major use case is not to go in for one of these more severe surgeries, right? If you think -- if a person is thinking that they're having a heart attack, most of them are really having a heart attack and will need -- if they don't qualify for a stent, they will need CABG surgery. And far fewer will be actually having a different diagnosis like a ruptured valve or a dissecting aorta. So the fact that we're going after the isolated CABG market is and we have data that we believe supports a favorable benefit to risk assessment in that population is a really positive thing for us and positive for the overall market opportunity. Now from a U.S. to Canada split, it's roughly a 10:1 split. The U.S. market is 10x larger than the Canadian market. However, what is very fascinating about the Canadian market and what you may have heard Dr. Whitla say on the call on the KOL analyst call on Monday is that in the guidelines, the -- and the -- you again reiterate how data-driven the Canadian physicians are. So in the official guidelines for blood thinner treatment in people having a heart attack, it is recommended that they only be placed on Brilinta and not on the major competitor in the United States, which is Plavix. And we've also understood that Effient, the only other major competitor in the United States to Brilinta and people having a heart attack is actually not distributed anymore by its manufacturer in Canada. So pretty much everybody is on Brilinta in Canada. And Canada has some very interesting dynamics. One of the major reasons why you put someone on dual antiplatelet therapy is because you're trying to temporize them and trying to prevent that heart attack from getting worse by thinning the blood and trying to prevent that clot from propagating and getting bigger. And in Canada, the dynamics are such that there are far fewer major cardiac centers in Canada. And you find that many people are in far-flung areas of Canada that require transportation for intervention for heart attack either PCI or CABG to these major cardiac surgery centers. And so are out there suffering from these cardiac symptoms for a long time while they're in transit. And this is one of the reasons why the use of dual anti-platelet therapy in these heart attack patients is so high because they need to be protected as they get transported to these major cardiac surgery centers. So Canada is a -- we believe, will be actually a very strong market for us. And maybe with that, maybe, Makis, if you had any other color that you wanted to give. That might be helpful.

[Efthymios Deliargyris, executive]

Thanks, Phil. No, I completely agree with the remarks that you made already. Canada has a very uniformed treatment paradigm that they actually have implemented on a national level, where they try to adopt best therapies, they quickly come with the national guidelines and the AP met them. And Taca is a great example. And again, I urge everyone to listen to our webinar and to hear directly from Dr. Whitlock. But there's a very, very systematic approach to care in Canada. And what we're hearing is that one of the major issues is a bottleneck that is created in some of these large volume institutions. So yes, they're very enthusiastic about a solution that can potentially alleviate that congestion that patients are just sitting there, waiting are causing in their care pathways. Now in regards to the total addressable market and the number that you quoted, I mean if you want, you can take the discount similar that we saw in the breakdown of surgeries in STAR-T where 92% of patients were isolated CABG, which obviously will be the target intended population in our submissions. But on the other hand, you may want to counter that with the fact that this is the year that exclusivity ends for that CAG rule, which will -- an ongoing reduction in price, which has been on of the reasons why Pacadar -- I'm sorry, while clopidogrel, Plavix and older generation, not as effective medication still in use in some places due to a much more favorable price with clopidogrel being generic now for a long time. So we think it's going to be fluid, but probably the upside will be greater due to the greater adoption that's happening anyway and the availability of generic ticagrelor going forward after 2024. So it's probably a solid number for you to anchor yourself on right now.

[Thomas Kerr, analyst]

Great. One more quick financial question for me, and then I'll jump back in the queue. How do we think about grant income the rest of the year? Is that sort of the grant income sort of the steady state you received this quarter? Or we did we get back up $1 million in the rest of the year or for the quarter for the rest of the year?

[Phillip Chan, executive]

Kathy, would you like to answer that?

[Kathleen Bloch, executive]

Yes, I'd be happy to. So I think we can expect to see similar quarterly results for the rest of the year as to what we saw in the first quarter. However, I will point out that we are applying for new grants. And the reason that the grant income is lower is just because we completed 3 grants last year. So backlog is still strong at $5 million and we are expecting to build to that backlog. So we'll see with more success on gaining some new grants, we would see that number likely come up again.

[Operator]

At this time, I would like to turn the call back to management for any additional or closing remarks.

[Phillip Chan, executive]

Well, thank you, and thank you, everyone, for joining the call today. If you do have any other questions, please feel free to reach out to Kathy at KBloch, K-B-L-O-C-H, @Cytosorbents.com, and we will reply to your questions where possible. We look forward to our next quarterly call. Thank you, everyone, very much. Good night.

[Operator]

That concludes our conference for today. I'd like to thank everyone for their participation.