Yahoo Finance

Tim Varacek

Thanks, Eric. And thanks, everyone, for joining us today on the SeaStar Medical Call. I'd like to start by highlighting a couple of points about our QAL Immune Therapy. First, This therapy truly represents new hope for critically ill children, their families, and the medical community. The kids that are being treated with Coel-immune have a very poor prognosis, and their mortality rate is greater than 50 % when receiving the current best standard of care treatment of continuous renal replacement therapy, also known as CRRT plus antibiotics. Prior to the introduction of Coelamune, there was no approved therapy or drug to stop the cytokine storm that poses a great risk of multiple organ failure and loss of life for these young patients.
The clinical data of Coelamune that was reviewed by FDA in their decision to approve the product under humanitarian device exemption or HDE observed that almost eight in 10 patients with pediatric acute kidney injury and sepsis survive with QAL immune therapy on board versus only five in 10 patients on standard of care. That is a 60 % observed higher survival rate. And this data has fueled great interest from the most highly regarded children's medical centers through regional and community pediatric hospitals. Pediatric medical centers are truly interested in bringing QAL immune into their facilities.
And I'm pleased to report that the number of pediatric hospitals going through the adoption process has doubled from the third quarter to the fourth quarter of 2024. And that number increased further in the first quarter of this year as we continue to add new pediatric hospitals into the queue that want to adopt QoL Immune. As mentioned, we currently have five pediatric hospitals that are up and running, have been purchased, and utilize QoL Immune therapy. The process at these medical centers for the adoption of any new device can be lengthy, and it involves typical steps such as developing a product champion, going through a site's value assessment process, and getting set up as a qualified vendor. In the case of Coel-Immune, the post-approval registry requirement by the FDA adds an additional step to the process, and that typically takes more time.
Each hospital system does things a bit differently within the required regulatory framework, and we adjust to support them and complete the process as quickly and efficiently as possible. Ultimately, this boils down to time to activation, and that can vary from several months to eight to 10 months. We continually evolve our support for pediatric hospitals as we learn their specific processes and discover efficiencies. that we can often carry forward. To be clear, I have provided additional detail on the activation process because I want to emphasize the significant gap that we bridge between the desire to adopt our quality in therapy and the lengthy process of pediatric hospital activation. And to highlight the strong commitment in terms of championing this effort that the pediatric nephrology and ICU teams are delivering. as we go through the adoption process with them.
In other words, we believe adoption is not a matter of if, but when at these pediatric hospitals and our own internal tracking to date indicates that seven out of every 10 pediatric hospitals we approach the gauge interest ultimately commit to quality and therapy adoption. I am very pleased to state that our current activated pediatric hospitals are reporting good results. And we have seen a nice increase in Coel immune sales in our first quarter of 2025 compared to the fourth quarter of 2024.
As Eric said, sales will be lumpy until more pediatric hospitals are activated and we can gain an understanding of the cadence of patient presentation within these hospitals.
With that framework of our Coel immune launch efforts, I'll now discuss our commercial opportunity for the SCD therapy platform. As mentioned, the pediatric AKR market is small, but there is a very high unmet medical need for treatment. When we obtained approval for Coalimmune for this patient population, it was the realization of an incredibly important opportunity to deliver a therapy to treat children who so desperately need it. One that could literally save their lives or reduce or eliminate the need for long-term renal replacement therapy.
To put the market opportunity in perspective from the standpoint of SeaStar Medical's initial product launch, in our estimation and based on our internal assumptions, we believe the total addressable market is in the range of $100 million. Now, we won't capture the full market, of course, but given the serious unmet clinical need and lack of any treatments today, we believe that over time, we will penetrate a significant portion of this patient population with QoEL immune therapy, and that will lead to consistent initial revenue for SeaStar Medical. Our future indications address much larger markets, and we are on a solid development path to obtain additional approvals and build a presence in these markets.
Our technology is scalable across multiple indications, and our breakthrough device designations should enable a tight review process of the STD therapy by FDA. The adult AKI indication being studied in our pivotal trial, neutralized AKI, represents an opportunity approximately 50 times the size of the pediatric population, about 200,000 patients annually that face organ failure and potentially loss of life with no FDA approved treatment options beyond the current standard of care comprised of CRRT and antibiotics. Our current anticipated launch timeline in adult AKI is the second half of 2026, assuming positive clinical trial results and FDA approval.
We believe the time to adoption will be more favorable compared to pediatric AKI as we should be able to leverage the customer learnings and experience with quality immune in hospital systems where we already have a commercial presence combined with the fact that there are no other therapies to address this condition. At our current projected revenue per patient, this would present a total market opportunity of $4.5 billion. Even at modest market penetration projections, the revenue upside would be significant for SeaStar Medical. And for us, the adult AKI indication is just the beginning of a long line of indications that could follow.
We estimate a total market size of about 1 million patients that currently have no approved therapies to address conditions such as chronic dialysis, carniorenal syndrome, apatorenal syndrome, acute respiratory distress syndrome, and other indications that our FCD therapy may serve. So this is why we are so excited at SeaStar Medical. And now I will turn the call over to to our Chief Medical Officer, Kevin Chung. Kevin.

Kevin Chung

Thanks, Tim. And thanks to our listeners for joining us today. I am pleased to report that our Neutralized API Pivotal Trial continues at a steady enrollment pace with 94 of our anticipated 200 subjects enrolled in the trial. As many of you know, Neutralized API is a randomized controlled pivotal trial. designed to determine whether up to 10 sequential 24-hour treatments with the SCD therapy will improve 90-day survival or recovery from kidney failure in patients with AKI requiring CRRT when compared to CRRT alone.
We plan to enroll approximately 200 patients in an intensive care unit setting in the trial. The primary endpoint is a composite of mortality or dialysis dependency of 90 days. We plan to conduct an interim analysis once we have reached the 90-day primary endpoint in the first 100 enrolled subjects. Pulled data will be analyzed and presented to our Data Safety Monitoring Review Board, or DSMB.
At that time, based on the differences in outcome between the treated subjects versus controls, the DSMB will provide a recommendation to SeaStar Medical and the neutralized API investigators as to how to proceed with the trial. While we can't be certain of the recommendation from the independent DSMB, we designed the interim analysis to ensure we powered the study properly. And if we did, the conclusion from the DSMB would be to continue the trial as planned towards our goal of 200. We know we will reach 100 patients and will come time in April.
Given our recent new site activations, we anticipate a steady, if not accelerated pace of enrollment through the rest of the year. we have faced some challenges recently through a national shortage of citric used in our CRT circuits along with the SCB. In spite of this, we managed to enroll 24 new subjects in just the past three months.
Thankfully, the shortage has now resolved. We are incredibly grateful to our fantastic investigators who jumped through many hoops to get subjects recruited. We have also added two new sites since the beginning of this year. most recently adding the University of Texas Southwestern in Dallas.
As Eric mentioned, we have many notable medical institutions, including Stanford, Cleveland Clinic, and Mayo Clinic that are now enrolling patients into the Neutralized AKI study. I highlight these sites because they and other prominent sites are the ones that we anticipate will be our early clinical champions when the time comes to roll this therapy out to the adult ICU market. you can be sure they will be armed with definitive outcomes data from our pivotal trial. Additionally, we know many of these champions will share their personal experience with the international critical care and nephrology communities with the eventual goal of including our therapy in clinical practice guidelines. A positive neutralized AKI trial will help elevate the current standard of care for all those suffering from life-threatening AKI.
We are very fortunate to have the right investigators at the right sites participating in our trial. Once we complete the trial and achieve 100 % data loss, we intend to rapidly analyze and report our data to the international medical community. Provided we meet our primary endpoint, we plan to complete our PMA filing and submit it to the FDA. The breakthrough device designation, which we hold for adult AKI, should help facilitate speedy communication between us and the FDA during the review and approval process. And as such, we hope to have this product available to patients sometime in the second half of 2026. Now looking into the future, our stepwise goal is to inspire wide clinical adoption of the STD therapy, first to treat as many of the approximate 200,000 patients with AKI in the United States. And when the time is right, expand beyond their US borders to treat as many of the millions of patients worldwide who could potentially benefit from our SCD therapy for this indication.
Our strategic goal as a company is to widen the addressable market rapidly to target other critical unmet medical needs. I would like to emphasize that the Neutralized AKI study is really three trials in one. We intend on analyzing and reporting the impact of the SCD in the cohort of patients with sepsis and ARDS as well.
Based on the mechanism of action of SCD, we have good reason to believe we will be able to show benefit in these two subpopulations. Beyond this indication, we have been awarded breakthrough device designation for three feathers, including the treatment of patients with cardiorenal syndrome, patients with papadorenal syndrome, and patients with end-stage renal disease. Given the organ and disease agnostic characteristic of our therapy, there are several more indications to come.
We believe that AKI is just the beginning. Additionally, we announced last year that the NIH provided a $3.6 million grant for a clinical trial to evaluate our SBD therapy in patients with Cardio-Renal Syndrome awaiting all-bad implantation. And in January, the FDA approved a feasibility study for this indication. The trial will be led by the inventor of the STD therapy, Dr. David Humes from the University of Michigan and one of our key scientific advisors. The neutralized CRS trial is expected to enroll 20 patients at up to five clinical sites. The results from this pilot study will help inform our next steps for this indication. Our medical affairs and research team is working closely with Tim and his commercial team to identify the most appropriate next best disease state to tackle with our disease and organ agnostic therapy. With that, as a summary of our clinical development efforts and goals, I'll turn the call over to our CFO, David Green.

David Green

Thank you, Kevin, and thank you all for joining us today. I'll start with a few comments about our fiscal year ended December 31st, 2024, and conclude with some of our expectations for 2025. First, for some housekeeping, please note that our Form 10-K will be filed with the SEC in the next 24 hours. You can find it at cstarmedical.com or at sec.gov. As you've heard from my colleagues, 2024 was a transformative year for SeaStar Medical. We made great strides in strengthening our financial position, gaining FDA approval to sell and launch Qoel Immune, our first commercial product for pediatrics, and pushing forward our neutralized AKI Pivotal Trial for adult AKI patients. From a financial perspective, I'm very pleased with our 2024 performance.
We substantially improved the balance sheet by adding new capital and reducing debt and other liabilities. We raised approximately $25 million and we were very careful with the use of the new capital. We used $16 million to fund operations which are focused largely on our adult clinical trials. and selling Coelamine for pediatrics. We extinguished approximately $6 million of debt. We reduced accounts payable by 1.3 million and ended the year with $1.8 million in cash. Further, as we reported last month, we also raised another $6 million in February of this year. In addition to strengthening the balance sheet, we overcame and addressed pre-existing material weaknesses and implemented much stronger controls over financial reporting. With all of that hard work behind us, we've positioned the company to build on the first two quarters of commercial revenue for QELE-MUNE and complete the adult AKI pivotal trial. From a commercial perspective, after receiving FDA approval for our pediatric product, Qelimmune, in Q1 2024 and launching in Q3 2024, we made a significant strategic change from a distribution network model to a direct sales model. This change allows us to fully manage the sales and distribution cycle and avoid costly distribution fees.
It also allows us to better leverage our product expertise and close relationships with ICU and nephrology clinicians that target hospitals. And this move has been paid off. As Tim noted earlier, a very large percentage of hospitals we approach to gauge interest ultimately commit to bringing coelomean therapy into their hospital for their pediatric patients. This will ultimately lead to a growing customer base and smooth out some of the initial uneven pace of orders, which is expected during an initial launch phase. With the sales model realignment completed, we are well positioned to build on the first two quarters of commercial revenue for QoEL Immune and complete the adult AKI pivotal trial.
Now for a few top-line comments on our income statement. With the launch of QoadMium in the third quarter, we booked our first product revenue in 2024 with net revenue of $134,000. This modest revenue reflects the timeliness for adoption by customers, as Tim described. And while we anticipate the sales will be choppy in the initial phases of the launch, we expect that we will see an overall trend of increases in revenue as we expand the total number of customers purchasing quality. In fact, I am pleased to report that with the continued addition of purchasing customers, we are seeing a nice uptick in sales so far in the first quarter.
Altogether, we are quite optimistic about the hospital, about new hospitals coming on as customers as we enable more children to benefit from our life-saving therapy. Moving on to our cost of goods sold, the current financial statements reflect no GAAP cost of goods sold from the sale of quality. GAAP accounting requires inventory to be expensed as research and development costs for that inventory which was built prior to our FDA approval to sell quality.
As we acquire, build, and sell new inventory as a commercial company, we will record those expenses as cost of goods sold, consistent with GAAP accounting. We anticipate these costs to hit the P &L later this year. Our operating expenses for 2024 increased by approximately $3.6 million compared to 2023, primarily due to increased spending at our commercial launch and growing enrollment in the neutralized AKI trial.
And finally, our net loss for the year declines to $24.8 million versus a loss of $26.2 million in 2023. Approximately 6.9 million of the 2024 loss from non-cash items. Looking forward, we expect to focus our resources at our top three objectives. One, commercial sales of quality. Two, completing a neutralized AKI pivotal trial for adults. And number three, preparing to file a PMA following the completion of the adult pivotal trial. We are very excited about serving the adult AKI population, which is estimated to be roughly 50 times larger than the pediatric population. And finally, as we move our strategic objectives forward, we expect the momentum to continue as we bring our lifesaving SCV therapy to more patients and clinicians, and as more investors notice the significant market opportunity developing for our products.
And with that, I'll hand the call back to Eric.

Eric Schlorff

Yeah, thanks, David. Our goal today for our first financial results conference call was to provide you with a summary of our past successes in 2024 and into early 2025, and also provide a clear picture of why we believe the future opportunities for SeaStar Medical are significant. With a commercial product on the market and a near-term opportunity to capture a sizable portion of a large market for treating adult patients with AKI on CRT, We believe that SeaStar Medical is a highly differentiated company with de-risk assets and poised for growth. Beyond these indications, we believe our ability to bring life-saving products to patients in a commercial setting is accelerated by three key factors.
One, breakthrough device designations that enable the potential for a speedier pathway to approval. Two, the fact that our therapy is delivered through a device which requires only one pivotal trial for approval. And three, the fact that our existing device is applicable as is for multiple indications. In other words, we don't need to build specialized devices for each therapeutic indication that we seek approval for. We believe this offers reduced time to market and economies of scale that are not often achieved by companies in our industry.
In short, we believe we are continuing to create strong value for our investors and stakeholders, and we'll be looking to close what we see as a substantial gap in our current market cap and the outlook that we have for the company.
With that, I'll ask the operator to open the call for questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Anthony Vendetti, Maxim Group.

Anthony Vendetti

Thanks. Yes. So I wanted just to first start on the Neutralize AKI trial. I think maybe, Kevin, you said there's 94 of the expected 200 patients have been enrolled. And you're expecting to provide the interim analysis. after 100 of them, so you're close to getting them enrolled 90 days after that, right? After the 100th is enrolled, is that correct? And what's your best estimate for, since we're only six patients away from that, what's your best estimate for what quarter that's gonna occur or what month that will occur or expect?

Eric Schlorff

Yeah, so, yeah, hi Anthony, this is Eric. Thanks for joining today. Hey, I think Kevin did have to drop off. So, you know, let me take your question in a couple parts. So the first one is, yes, we are 94 patients. You know, we anticipate being able to get to that 100, sometime likely to be the beginning of April, somewhere in that first part of April. You know, as it relates to the timing of once we get to 100 patients, Yeah, it is 90 days. That's what the primary endpoint is. It's a 90 day, you know, to get out 90 days to either mortality and or dialysis dependency.
And then the data at that point will be collected and then presented to the IRB or to the DSMB for their review. And so, you know, we anticipate that, you know, shortly after we get to that 90 days that we'll be able to share some of the outcomes from. and the assessment from the DSMB or the Data Safety Monitoring Board. Okay, so if I was going to timeline this a little bit, Eric, it would be sometime in April, beginning of April, the 100 patients would be enrolled 90 days after that.
Let's say that gets us to beginning of July and then a couple weeks of analysis before you provide it. So end of July, beginning of August to provide an interim look or interim analysis.

Anthony Vendetti

Yeah, that sounds about in the ballpark. In the ballpark, okay great. You know, as I guess, you continue to roll the Coel immune product out. What are your current plans in 25 to expand your Salesforce capabilities? Maybe just give a little bit of an update on that. Yeah.

Eric Schlorff

Tim, why don't you tackle that one?

Tim Varacek

Sure. So Anthony, mean, the first thing I would say is, you know, again, this is a small market and I would say we're right sized right now. We have field-facing staff and we also importantly have operational support internally. And it really is, it's a group effort. It's not just about the commercial team, we have skilled nurses that actually are on site that will train these accounts once they are ready for activation. They'll train them on how to use the product. So we have no shortage of new accounts that are interested in terms of our pipeline.
And we're working through the process with each of these folks. they really are unique by themselves, one account to the next in terms of the process they follow and the timeliness of that process. So I think right now we feel good about where we're at. We have a healthy pipeline and we're just working through the IRB process and the customer setup process with them as we go into 2025.

Anthony Vendetti

Okay, great. That's helpful. maybe just, I know each customer is different, but Maybe what have you learned from the first several hospital activations? And then what does a typical conversion look like from, you convert a customer from a pipeline to an activation? How long does that typically take? What does that look like? And like I said, what have you learned from the first hospital?

Tim Varacek

So, I mean, I think some of the biggest learnings are You know, the IRB itself, there's really a couple of components to it. There's our device. And then there is the patient registry, which we've talked about. So the device piece of this is really the simpler portion of IRB review. The more complex portion of it is really the registry. Because it, in some ways, is framework that's similar to, it's really a post surveillance registry. So there are more people involved in the hospital that will ultimately evaluate the patient. They'll take data that comes up with the initial profiling of that patient and all those things drive the whole administrative aspect of getting a registry set up within a hospital. And so that takes more careful review from an IRB standpoint.
What was the second part of your question there, Anthony?

Anthony Vendetti

Yeah, I guess from the first several activations, was there anything particular that you've learned that you would tweak in terms of your process or do differently?

Tim Varacek

I think what we, I would say, What we've learned is not really worth discussing on the call. It's more nuanced aspects of just creating more efficient process for the customer once we understand their behavior and how they do things and modifying ours and our support to get them there. in general, the process is the same for all hospitals at a high level. It just breaks down into different components once you get into an individual system. Some have a lot more support and resources than others. And so you just, you kind of play the hand you're dealt. You work with these people and we do everything we can on our end to move as quickly and efficiently as possible through the process with them.

Eric Schlorff

Okay, great. I would say the one thing Anthony to add on to all that is that, well, probably one of the biggest key learnings that we had was the decoupling of the IRB process. As Tim explained, there's the HDE approval process, which then could include things like the value assessment committee and the purchasing. And then you've got the registry. But I think what we've been able to do here lately is really start to be able to decouple those because through kind of our relationships with the FDA, they've also encouraged us that if we can treat patients. even though the registry isn't up and maybe going at that site, we should try to save a child's life. Which that's obviously, that's our primary goal. And that does allow us then to sell product directly to the hospital.

Anthony Vendetti

Okay, great. Yeah, you know, it's also which is very helpful that we've learned is getting the ICU docs and the nephrologists together in on the process early is also a big time saver. Okay, great. That's very helpful. Thanks. Thanks for all the color. I appreciate it. I'll hop back in the queue.

Operator

There are no further questions at this time. With that, I will turn the call back over to Jackie Cosman for final closing remarks. Please go ahead.

Jackie Cosman

Thank you, Calvin, and thank you all for joining us today for the SeaStar Medical Year-end Financial Results Conference call. If you have questions, please don't hesitate to contact us at IR at cstarmed.com or visit our website and see our latest news, product, pipeline, and company information. Thank you and goodbye.

Operator

Ladies and gentlemen, that concludes our conference call. We thank you for participating and ask that you please disconnect your lines.