NASDAQ: ICU
John Viglotti: Hello, and welcome to the Life Sciences Investor Forum. On behalf of OTC Markets and our co-host, Zacks Small Cap Research, we're very pleased you joined us for the first presentation of the day from SeaStar Medical. Their session will be moderated by David Bautz, Senior Equity Analyst with Zacks Small Cap Research. Please note, you may submit questions for the presenter, and you may view a company's availability for one-on-one meetings by clicking Book a Meeting. At this point, I'm very pleased to welcome Eric Schlorff. He's the Chief Executive Officer of SeaStar Medical (NASDAQ: ICU). Welcome, Eric and David.
Eric Schlorff: Thank you very much.
David Bautz: Thanks, John. Thanks for joining us today.
ES: Thank you for having me. Let's do it.
DB: Let's do it. All right. So, your company, I think, takes kind of a unique approach to treating hyperinflammation in critical care. So, for those that are in the audience who may not be as familiar with the story, why don't we start with a high-level overview and maybe the clinical problems that you're trying to solve?
ES: SeaStar Medical is focused on treating these critically ill patients who face basically organ failure or potential loss of life due to this destructive hyperinflammation. Whether this is acute kidney injury, cardiovascular disease, or surgical trauma, patients today have no FDA-approved options to stop the destruction from the body's own out-of-control immune system. SeaStar Medical, we have an FDA-approved product, which we can talk about, which is QUELIMMUNE for children, and a pipeline of other potential products that the FDA has awarded Breakthrough Device Designation for, which, for the audience, will help us speed up the potential path to approval for these therapies that treat these life-threatening conditions when no alternative treatments exist.
ES: Our opportunity is significant. The market opportunity is significant. The selective cytopheretic device, or SCD, which we'll talk about, is a first-in-class therapy that has broad applications for patients suffering from acute and chronic kidney diseases, as well as serious cardiovascular diseases, and other things around liver as well as lung. We estimate that there are approximately a million patients annually who are affected by conditions that SeaStar's SCD could address. Even capturing a modest percentage of this market would generate a significant revenue stream.
ES: You had asked a little bit about some of the clinical data, how it works. Really, what this is is a disease-modifying therapy, and we call it a therapeutic medical device because it's not a mechanical process. It's more of a therapeutic, much like a biologic or much like a drug. What we've been able to show is that the SCD can actually neutralize overactive immune cells, specifically the most activated neutrophils and monocytes, which are the first responders and really are producing these inflammatory cytokines that wreak havoc in the patients' bodies. And we've been able to show through various clinical studies throughout the years of reducing mortality and decreasing dialysis dependency compared to historical measures. So, it really has been able to show that not only conceptually how the therapy works, conceptually works, but also practically, we've been able to show that through clinical studies.
DB: Specifically, talking about how targeting the activated leukocytes, which the SCD does, how does that have the potential to change outcomes in these illnesses?
ES: Let's maybe talk a little bit about how we actually deliver the therapy today. If you think about a dialysis circuit, right, we're using a continuous one that's done in the intensive care units, where all the machines already are. What happens is that we are a simple addition to an existing circuit that's already on the patient. And the way that this works is through using an anticoagulant, which is called regional citrate anticoagulation, or RCA.
ES: The way that it does this is it actually reduces calcium levels. So, let's fast-forward. How is it that we do what we do? As the blood, whole blood, passes through, it goes into the selective cytopheretic device. The most activated neutrophils and monocytes actually present themselves with more protein. So, the angrier or more activated they are, which are also the ones that are causing the cytokine storm, they actually have more proteins. Those proteins stick inside, on the filter, or on our SCD. And inside that SCD, in a low-calcium environment, they're driven into apoptosis or cell death. They then shed their proteins and then go back into the body as a signal that the storm is over.
ES: And so, if you think about this, what we're really doing is we're telling the body that the storm is over, but doing it through a feedback mechanism, much like any other drug works, and those types of things. That's essentially how this is doing it: we're quelling the immune system very gently over time to allow the body to go back into normal homeostasis. All these diseases really are that we're targeting are where neutrophils and monocytes are a little bit out of whack. That's what's causing the cytokine storm.
DB: Okay. Let's kind of switch gears and talk a little bit about the clinical aspect here. We'll start with the pediatric indication. You guys have put out news recently on your pediatric registry, along with publishing some results in pediatric patients. I was wondering if you could cover that area and the key takeaways that clinicians and investors should understand from that data.
ES: Let's start with the registration study that we had done. So that was a 22-patient study. We showed that in normal historical control, for these patients, it's a coin flip whether they live or die, unfortunately. These are children. And what we were able to show in our clinical results is that not only did we improve survival by 50% to around 77%, but we also had no patients on dialysis long term. So, at day 60, no patients were on dialysis. A huge win for patients, for families, for clinicians, but also for the overall healthcare system.
ES: Fast-forward to September of this last year. We announced the initial 21 patients on the SAVE registry. SAVE is basically a post-approval study that was mandated by the FDA, as this falls under a humanitarian device exemption due to the small patient population. What we showed in that data was the same thing, which was confirming that the mortality, as well as dialysis dependency, was very consistent with what we saw in the registration study. Obviously, that's a big win that really shows in the real world; we're seeing similar results of what we had shown in a clinical study to get the registration, the approval.
ES: This is really obviously important because the patients that these physicians and hospitals have been treating have been very sick. We've actually had numerous patients who have had oncology, cancer. We've had others where they've literally had two or three kidney transplants already, and we're able to then help them, bridge them back into no more dialysis. And then fast-forward, we had announced that in December of last year that we were successful in negotiating with the FDA to reduce the number of patients required for the SAVE registry, which was from 300 down to 50.
ES: Tt the time, we had announced that we were at around 32 patients. We have announced here recently that we have achieved that 50-patient mark in the SAVE registry. And so now it really comes down to waiting for a 28-day safety, and then we'll be submitting data to the FDA subsequently after that, as we've finished collecting the data. It's really important to note that, as you think about the cycle, the sales cycle is probably where a lot of the SAVE registry is kind of hung up, because it's taken around eight months for us to actually get a site fully on or a customer fully on. We hope and anticipate that this will actually cut that time down, assuming that maybe the registry itself is optional or is taken away, and we'll have to see what the discussions are with the FDA.
DB: On the commercial side, for the pediatric indication, you mentioned now that the SAVE registry is kind of complete, is that going to be making onboarding at other pediatric centers easier? Maybe walk us through that.
ES: We believe that there's an opportunity for that to be an easier process, a slower process. We go through the investigational review boards or institutional review boards right at each of the hospitals. They approve the HDE or the humanitarian device, and then they also approve the registry. Those are two different approvals within the hospital system. The HDE usually takes less time. You get that approved, and then the registry takes a little bit longer. We believe that there may be an opportunity to be able to onboard customers much more quickly, and then obviously getting them to use the product in a much more effective manner as well. So that's really to be seen, but that is some of our hope, that we'll be able to actually cut down on the time needed to be able to bring these customers on, and then for them to be able to use it in the way that they want to be able to use it.
DB: And how many pediatric centers do you currently have the device in, and then what are your plans for expansion there?
ES: At the end of 2024, we announced we had around two customers, active customers. And then at the end of 2025, we had around 10 customers. Those were what we publicly disclosed. Our goal is to double that base by the end of this year, by the end of '26. It's also important for the audience to know that when you think about the market itself, there are only around 220 children's hospitals that are in the United States today. So, really, our target is the top 50. If you think about this from a concentration standpoint, 10 sites is really 20% of this target market of the top 50, which we believe is where half of the patients are residing today, that would be eligible.
DB: All right, sounds good. Let's turn to the adult program right now. You got the ongoing NEUTRALIZE-AKI trial. So why don't you just walk us through that, where that study stands right now, like what endpoints you're going to be looking at, those types of things?
ES: Yeah, so that is a randomized controlled study. It is a registration study, and it's 339 patients. In December, I think we had announced we were around 40% enrolled, and we'll give some updates on our next quarterly call or next annual when we announce our year-end financials. But we'll be giving the market an update on where we're at with that. But this is a very important study as well. This is again looking at mortality rates. Again, historical controls have been around 50% mortality, so very, very similar to that of children, and then also dialysis dependency. This is a composite endpoint that will take both of those two components to show that the product is working as anticipated.
ES: That's what the basis of the study is. It's a 90-day look, so 90-day mortality or dialysis dependency. The other thing to note is that once we get fully enrolled, we get the final treatment in, we wait 90 days, and then at that point, we can collate the rest of the data and then be able to get that data out from a top line, probably within 45 to 60 days after that 90-day period. We have other endpoints within it, as well as other subsets; that's also really important to note, that one of the subsets is sepsis. So, septic population, obviously, sepsis is something that has eluded people since the beginning of time as to how to actually address it.
ES: It turns out that we had anticipated about 50% to 60% of the patients will be septic or have a septic condition. I think that's going to probably hold true through this study. We are also looking at another pre-specified around ARDS, or acute respiratory distress syndrome. Obviously, these, when you think about the organs, the kidneys, the lungs, as well as the heart, are all kind of tied, right? They're kind of the triad of sorts. We’re looking at that as well as a one-year look, one-year basically a readout of mortality as well, and other things. It's not a requirement of getting it registered, but what we wanted to be able to show is that it's durable, right? We already actually know that, by definition, at 90 days, if your kidneys have recovered, then you don't have CKD or chronic kidney disease.
ES: That's actually the definition of chronic kidney disease: 90 days. So, if they are dialysis independent, meaning they do not require it, then we know that it's not coming back. Remember, this is not a lifelong therapy that people are taking. This is usually done over a five- to 10-day period. And so that's why it's disease-modifying, it really does fix the problem. At one year, we'll look at mortality rates, we'll look at subpopulations, etc. That really is the basis of the study. The goal really is to have this study enrolled fully by the end of this year, by the end of 2026, which would then put top line sometime in the end of the first half of this next year.
DB: Okay. And assuming the trial is successful, what does the regulatory pathway look like to get approval in adults?
ES: Yeah, so it's a medical device regulatory platform or pathway that we actually use, which is called a PMA or pre-market approval. We're actually overseen by the biologics division of the FDA, which is a really important distinction, even though they have to follow the guidance of the regulatory approval process. But the goal is to be able to then submit the final kind of clinical data over roughly the next year. As we're finishing this enrollment and waiting for data readout, we'll also be filing what they call modular pieces. So, you can do these in modules. There's about four different modules with each of these PMAs, but there's some things that you can get in beforehand for the FDA to review so that when we do get to the final data, it's not the entire voluminous amount of data, but it's actually a much smaller piece of data for the actual FDA to actually analyze and to move forward with.
DB: Before leaving the acute kidney injury indication, we have a question from the audience. So, what other treatments or devices are hospitals using today for AKI, and then basically how is the SCD better for patients and for payers?
ES: This is a great question. So, if you think about the standard of care today, it is what's known as continuous renal replacement therapy, or CRRT. And the way it works is much like dialysis. You're trying to help the kidneys. It's a supportive care, so it's not disease-modifying. It's literally trying to take toxins out to allow the kidneys to function, and you're hoping that the kidneys will kick back into gear and get that.
ES: Unfortunately, the success rate has still been about 50%, right? So, 50% survival or 50% mortality rate. That hasn't changed in 20 to 30 years. Many of the academics have gone out and talked about, do you do this earlier, later, all this, but at the end of the day, it doesn't make a difference, meaning whether and when you do certain of these types of therapies. The CRRT hasn't changed in 20 to 30 years, so there's not been any step change. There isn't anything else that's out there today, nothing that we see that's even kind of on the horizon, etc. From a payer standpoint and a hospital system, if you look at some of the healthcare economics data that we have for QUELIMMUNE for children, I think that probably illustrates what the value driver is within the hospital system. They go through a disease-related group, which is a DRG, which is about $400,000, right?
ES: So, when the hospital uses the QUELIMMUNE for six days at the various price points, the hospitals actually make money. They're actually making between $40,000 and $50,000 per patient. How is that done? Well, it's done because we actually have shown through this analysis that we can reduce the length of stay in the ICU by a few days, like three days, as well as reduce the mortality. And so all of those things contribute to the cost to the system. Now, I will tell you this: this doesn't even include the long-term cost to CMS and our healthcare system of not being on long-term dialysis, which we all know is an annuity stream of around $70,000 to $100,000 a year. So, if you can eliminate the need for somebody to be on long-term dialysis, the cost savings to the system are huge. And not just that, it's also the kids and the adults are going home, and they don't need to go to a dialysis center every three days a week.
DB: Yeah, absolutely. So, to follow up on the NEUTRALIZE-AKI study, what results are you going to consider a success? How is the trial going to be determined to be a success based on those primary endpoints that you've got?
ES: The primary endpoint is improvement in survival, and so it's this composite of survival as well as dialysis dependency. That's what we have agreed with the FDA as to what that needs to look like from a pre-specified kind of going into it. But again, we need to be able to show that we can reduce mortality rate as well as improve dialysis dependency. That's what success rate looks like. We may see success in subpopulations like sepsis or others. It'll be up, really, for when we get to that data analysis to really be able to show the broad nature of it.
DB: All right, sounds good. Let's turn to future potential opportunities for the SCD. One of them, I know you talked about, is cardiorenal syndrome. What makes the SCD particularly well-suited for that indication?
ES: Yeah. It's fascinating. What makes it really is neutrophils and monocytes in cardiorenal syndrome, bridging to LVAD or transplant. Guess what? A lot of problems that people have are that they're unable to be bridged to either LVAD (left ventricular assist devices) or transplant, because they're too sick. They have too much inflammation. That’s really what this is: what if you can actually reduce the amount of inflammation and let the body kind of go back into that reparative homeostasis to allow the patient, the providers, and the healthcare system the opportunity to be able to bridge that patient into an LVAD or to a transplant?
ES: I can tell you that we have a case study, which we had done at the University of Michigan, which I think illustrates the point, where there was a 71-year-old male who, at the time, was trying to bridge to a transplant. They were too sick. They had too much inflammation. They tried to bridge him to an LVAD. Same thing. We treated the patient for six days for six hours a day. When they poured the elution out of the device, right, the SCD, it poured out like milk because there was so much inflammation in the patient. We successfully bridged that patient to an LVAD, and that's what success looks like for us, right, is to be able to do that. We are also conducting, with one of our partners, a clinical study, which is a pilot study, which we believe could be a potential regulatory study for another HDE in adults. This one is actually paid for by NIH, which is called NEUTRALIZE-CRS.
DB: All right, sounds good. I do want to talk a little bit about financing for a couple of minutes. When you think about advancing the AKI program, commercializing in pediatrics, how should investors think about the company's capital needs and your financing strategy?
ES: Let's start with what we have shared with the market. We shared that we will, in 2025, deliver a little over a million dollars in revenue for QUELIMMUNE, right? It's really our first full year where that actually will be at north of a 90% gross margin, right? The goal really is to double that this coming 2026. So, think around doubling of the million dollars. Obviously, that's one of the things we're pushing very hard on to be able to generate funds, obviously, to run the company. We had announced and shared that with the market back in Q3, September, and in November, we had announced that we had around just over $13.5 million in the bank of cash. And we're burning about a million to a million three a month, which is kind of where you kind of see that. We have access to things like ATM, which is not uncommon for companies like us, and we do have a $15 million equity line of credit that's out there that we can use as well.
ES: It's really a mix of things that we're using. But one of the other things obviously out there is that we're in discussions with potential BD partners and those types of things to also be able to bolster this. It's not just a need to raise money in more traditional ways, but what are the other ways that we can do this? Obviously, we've got plenty of opportunity. We've only focused on the United States today, but you could obviously see that there are opportunities outside of the United States because inflammation doesn't have a boundary, right? They don't have boundaries, geographic ones, that is.
DB: Right, right. Very true. So, a little bit about the commercialization aspect. We got a question here. How does physician education factor into the adoption of the device when you're going to new hospitals?
ES: I love this. That's a great question. There's a lot of education that comes in, but there's also a lot of peer education that comes in. How we have done this with the sites that we brought on, the customers that we brought on initially, they really were the ones that had conducted the clinical study for children, right? And so they obviously became our first key opinion leaders that saw it firsthand. They became, then, obviously customers, right? If it works, they want to become customers and make sure they have it in their hospital system. Our Chief Medical Officer, Dr. Kevin Chung, holds a QUELIMMUNE users meeting every month. It's a user group where it's current customers as well as prospective customers. So, we have all the folks, I think sometimes well over 80 to 90 people, that are on some of these calls, where they're talking about current cases. Like, what did they do? What was their criteria of why they put them on QUELIMMUNE?
ES: What was the outcome of it, and what did they learn? What that does is it also builds a community. That's really what the community has now embraced, "Hey, we can talk about these things, and this is maybe... Maybe we should put them on earlier. Maybe that isn't a candidate." Maybe all of these types of things can then be discussed very openly. Now we have peers that can talk about the processes, like the IRB process within their own hospital, and ways that they can also help others navigate within their own institutions.
ES: And then on top of that, with every site that we bring on, every new customer, we have a staff of ICU nurses that actually goes and trains the actual sites, the customers, to get them up to speed. And when the first patient is treated at that hospital, we fly one of the nurses out and actually make sure that they are there for that first patient. I call it like a white-glove service. We want to make sure that they have the best first experience so that they understand exactly how to do the therapy. Because if you don't do the therapy per the prescription, it's not going to have the same outcomes, clinical outcomes, which is just not acceptable, and so we have really put a lot around that piece of it to make sure that the customer has the most support that they ever feel like they need.
DB: Yeah, absolutely. That's good. I have time for another one here. So, what would you say are the top milestones that investors should look out for over the next, say, 12, 24 months?
ES: Yeah, I mean, for us it's pretty clear, which is enrollment of NEUTRALIZE-AKI, so completing that enrollment kind of by the end of this year. More customers within QUELIMMUNE, so doubling that customer base as well as tracking revenue, as the revenue kind of moves from quarter to quarter, which you'll be able to see. We are also looking at enrolling and bringing on more sites for NEUTRALIZE-CRS, which is the other NIH-supported, think of this as non-dilutive. And then there are other things around regulatory where we may need to apply for things through an HDE-type of application. So again, looking at ways to accelerate, maybe potential approvals for indications that may not be large enough, but the patient population clearly has a huge need, and there are just no options out there for them today.
DB: All right, sounds good. All right. Well, Eric, thank you for joining us today. This was a great overview.
ES: Thank you very much, David, and thank you for the conference for allowing us to kick this off.
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