HispanicBusiness

Commercialization of CytoSorb®

We officially launched direct sales of CytoSorb® in Germany, Austria and Switzerland in the second half of 2012. CytoSorb® is approved in the E.U. as a first-in-class extracorporeal cytokine filter to be used in any situation where cytokines are elevated. We are positioning the device as a safe and powerful new tool to control cytokine storm, reduce uncontrolled inflammation, and potentially prevent or treat organ failure. The launch was the culmination of a significant effort to position CytoSorbents as a commercialization focused company.

•We recruited our Vice President of Sales and Marketing, Dr. Christian Steiner, and a direct sales force of 3 other sales representatives in Germany. We expect to increase the number of sales representatives this year, as needed, to take advantage of increased business opportunities •We established a European subsidiary in Berlin, Germany that has become the central point of direct commercialization in Germany, Austria and Switzerland •We manufacture CytoSorb® at our ISO 13485 certified manufacturing facility in New Jersey. We synthesize the polymer beads from raw chemicals and, today, CytoSorb® is one of the highest, ultra-pure, clinical-grade medical sorbents on the market. We are also vertically integrated -- assembling and shipping our CytoSorb® filters from this facility while instituting strict controls on quality and cost, with current gross margins greater than 50%. With economies of scale and increased volume, we have the potential to increase the profitability of CytoSorb® •Reimbursement has been established in both Germany and Austria at more than $500 per cartridge, reducing a major barrier to adoption •More than 60 key opinion leaders (KOLs) in our direct sales territories are now either using CytoSorb®, want to use it, or are planning to use it in clinical studies. These KOLs are frequently the chiefs of the critical care department and/or prominent and influential leaders in clinical and scientific research for both surgical and medical critical care. We are also in the planning stage for more than a half dozen investigator-initiated studies •In 2012, we exhibited at 10 major scientific meetings with research talks or symposia at three of these. As more studies are performed with CytoSorb®, we hope that our KOLs will begin to share these data with their peers at future conferences •We sponsored World Sepsis Day and participated in charity events in both New York and Berlin to help support non-profit organizations that are working to increase awareness of this significant unmet medical need •We recently welcomed a new Chief Financial Officer, Thomas Bocchino, an accomplished executive with relevant experience in European and international distribution.

Since the first commercial availability of the CytoSorb® cytokine filter in Q4 2011, through the end of 2012, we have generated product revenues in the range of $190-$200K. CytoSorb® sales in Q4 2012 (unaudited results) are expected to be nearly half this total figure, reflecting primarily the first full quarter that our direct sales team was active.

Going forward, we are implementing a multi-pronged strategy for CytoSorb® sales expansion. The first part focuses on direct sales in Germany, Austria and Switzerland, using our direct sales force. The advantage of direct sales is that we intimately control the sales process, have direct contact with the KOLs and end-users that facilitates feedback and planning, and can sell with higher gross margins. We are currently in the key opinion leader adoption phase, where there is naturally a lag between when a KOL first agrees to use or trial the CytoSorb® filter, to when we achieve first sales, to when we can achieve broader departmental usage with reorders. That said, as we have described before, KOL approval is one of the most important steps to driving adoption and greater usage. CytoSorb® has been generally met with enthusiasm by physicians, as little can be done today to help critically ill patients, and CytoSorb® attacks the well-known underlying causes of organ failure. This seeding of the market will hopefully help generate ongoing data and clinical usage in many different applications.