CERS - Earnings call transcript Q2 2019

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Operator

Good day ladies and gentlemen, and welcome to the Cerus Corporation Second Quarter 2019 Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call will be recorded.

I would now like to introduce your host for today's conference, Lainie Corten. ahead. go Please

Lainie Corten

Officer; and Moore, everyone operator, Officer. Corash, the everyone. like Regulatory Chief Quality Chief I'd are Officer; and Chief Thank Green, Affairs Senior Kevin joining good Chief Vice us our thank Cerus' Executive and President for Greenman, Officer; on Larry Jayaraman, today. to Scientific our Obi Commercial Carol you, Financial Cerus' afternoon, Vivek our With and call of me President

announcing recent our ended today results issued for and quarter release Cerus a first financial June also the press describing business XXXX XX, the company's highlights.

access announcement on can the copy cerus.com. at You of a company this website

than remind guidance of future make that relate our commercial of financial events those call statements historical like ongoing growth of of current efforts, the including margins, XXXX are ongoing financial activities. rather and as regulatory impact include product operating blood on our activities, future you forward-looking goals, statements. facts on to forward-looking related and Examples this and and and statements future future we'll to to development, expenses future results I'd and performance timing the as strategy, operating operations, clinical product center and future sales, some the and trials, launches, and these gross our development events and product product future well and growth

undertake duty results statements. to release XX, ended They Factors risk involve press statements XX-K our our Risk update materially. file and XX-Q uncertainties December or performance that for the differ will forward-looking obligation in our and quarter actual no and to identified We we These which in under cause and could ended Form are year and for today's shortly. XXXX, June described Form events, XX, XXXX forward-looking the

it's Executive now Cerus' and Obi to Greenman, introduce pleasure Officer. President my And Chief

Obi Greenman

good and Lainie afternoon. you, Thank

$XX.X later detail abroad. his million. to INTERCEPT our this in further revenue highest in quarterly $XX increasing by Growth as execution, for to the at adoption pleased cover U.S. on specifics product we remarks. was provide the of platelets, quarter Vivek report raising will and ever to are guidance are delivered our revenue million fueled INTERCEPT, We another both strong commercial Kevin range prepared in $XX Based product call. million. demand will strong we the

FDA some of shared microscopic upper and reduce present I'd The call issued QX transmitted help borne a guidance we pathogen of Midwest acceptance the of final is safeguard by transfusion to -- we like of regions blood which our awareness strategies we document tick In clinical conference mid-May share on the U.S. to in the on QX supply, recent and our parasite activation conference shared growing to transfusion-transmitted-babesiosis. outlining since evidence seen the call. have the a the since on risk when babesiosis transmitted Northeast

using the Many blood pathogen DZR individuals to blood in donation The for to treat infected activation asymptomatic nucleic FDA or each test Washington babesiosis DC test, to have document and states in centers DZR component XX disease. approved either are to donations with collect donations documented requires technology. guidance an with transmit their each FDA the approved one acid been

utility components minimizing help within that associated infectious codes We The three think for blood simplicity guidance XX components one deadline has of all document having in of month INTERCEPT blood new meet of FDA can pathogen blood to and and underscores emerging system. improve potential safety this blood the diseases availability centers the inventory managing center requirements, a blood appeal. and prospectively intervention from applies that future Recommendation the of address for a and compliance. threats reduction unique that overall current has inclusion hospitals. potentially blood by It complexity can blood maintain the the also number of logistics the

The FDA of several the final on provides they due indicate year. actively important bi-annual AABB risk platelets, control The several that working observations. liaison the posted recent is bacterial for minutes website a XXXX, minutes is version including AABB which strategies meeting the out guidance note on FDA this documents in

In alternative the methods. the assurance director Reduction of and Universal the titled liaison elimination can has reduction Biologics important transfusion bring role, Thereby, play the of a this Supply. while in to article Research, of as coauthored tests. author note meeting participated addition, in the for in and safety, FDA of potentially costs testing June due has pathogen Center also an journal to editorial this an can In the Blood greater Towards traditional lowering Evaluation the Pathogen

The technology safety and a as an availability, research budget for high in FDA field. blood to to requested continues as support priority position this and continued pathogen increased reduction

have engagement mid implications the over market As in pathogen for business encouraged are by of global the by will the and and world influence our to elevated the leader activation, FDA we other this regulators around it long-term. level believe

it let that, turn our update With commercial over Vivek for to an business. on me

Vivek Jayaraman

INTERCEPT Thank awareness We adoption persist. that options report continues detection bacterial bacterial contamination and of you, of the of I'm believe preferred pleased INTERCEPT as ramp. Obi. safety is challenges current strategies to global with platelets to associated increases, becoming the

in during in demand and the the quarter Europe, as kits strong for region, East INTERCEPT as Africa well our evidence, last U.S. As Middle experience we

we is U.S. platelet network the total previously, supply. the concentrated, market center fairly blood with the top XX% approximately platelet As of stated distributing five

and with engaged contracts centers all platelets. to have distribution of their them actively blood five with We these large place increase and in INTERCEPT production are of

pathogen the forefront Red American Cross reduction technology. Of note, at embracing in the is

organization. pathogen which XX fact, BLA XX for manufacturing Cross platelets state communicated priority is Red lines. a strategic is INTERCEPT of now sites. ship being that pathogen across had their have sites to Furthermore, broadly at allows a produced reduction reduced them In these they clearance,

value advantages give compelling they the platelets hospital infer. and Cross customers Red INTERCEPT clinical treated logistical

provide By contributor important platelets an safe, costs. supply. blood to certain For -- effective offsetting are restoring products, the while to sustainable pathogen reduction a blood pathogen collectors Red blood Cross, reduced allowing

FDA similar the realize the benefits they centers with increase the Red is follow Cross. anticipate we to blood our Once seek other and published to guidance engagement as major American

mentioned, to September proactively possible already final hospitals XXth. Obi year. of final year, provide patients. in that What’s a is Bill to ahead product reduction many this Department statement has ends curve recently A be there centers customers and blood be technology published which Agriculture issuance most embracing includes the independent and of document, reasons and encouraging that released safest As guidance order their the are the to a to many bacterial this fiscal it Appropriations safety guidance of expect of FDA during are pathogen

the engaging publication, guidance for organization potential actively guidance been of final driven a demand. we've anticipation In product the in acceleration

both are new then blood to documents and the and We hospitals Historically, guidance, requires prepared FDA to meet customer guidance in standard. in centers needs order for hospital move meet efforts XX scale of blood centers. the expeditiously all issued month U.S. which compliant specified to our the newly period to

Much progress. been time, on a customers their Within and platelets. work to with we made hospitals such be strong reduced production conversion underway the centers blood focus ramp, our on our collaboration use for pathogen this timeframe, will some assisting has of in have or their

several multiple year-over-year growth revenue in extends thrown geographies. Last Our driven story was we've the beyond by International been growth countries. and growth U.S. multiple quarter across factors

Dubai secured For wins Blood accounts, like in [ph]. Warsaw and Center Blood the key strategic Bank important example, we

will is increase plastic the witnessed kit Blood in Switzerland. plasma we most Transfusion the addition, Mark enable interest INTERCEPT to increasing INTERCEPT platelet demand International In Meeting plasma, growing our recent Basel, customer which DEHP-free with recent Society fulfill adoption the GE customer INTERCEPT for marked at for increases. in of Furthermore, as clearance us

In that continue summary, their our the are and hospital blood enthusiasm be ensuring can patients I safest the across committed globe blood to center partners encouraged for very customers to offer we customer possible. the by INTERCEPT and

provide to an turn over financial on let update results. call Now, the QX me to Kevin

Kevin Green

afternoon, Today $XX.X compared Vivek of you, On QX XXXX. product the first compared million reported reported half totaled an a $XX.X quarter million, year-to-date the we to during revenue reported good $XX.X of million, million increase second the up XX% product to to revenue Thank $XX XXXX. basis, XX% of during everyone. and

strong, faster. recent even and number an growth revenue the year-over-year in to the revenues. FX been in compared in approximately foreign between headwind differential is reported XXXX has of which revenue reported platelet produced growth been doses demand for the has reason changes growing underlying resulted currency X% rates, INTERCEPT One Though of exchange QX

expansion French conversion dose demonstrate to to to in double INTERCEPT seeing I'd made another are share And we statistics available factor. like treated being some true platelets the patients. kits that is

increased from INTERCEPT QX for kits prior greatest the percentage demand the period, the Global to year XXXX, compared during of growth coming with U.S. XX%

of treated the compared doses prior the to account into year. double kits, approximately dose the number the shift XX% product second However, mix taking calculated increased French quarter to during platelet

for We're nearly looking half demand doses compared of XXXX the at INTERCEPT XX%. worldwide platelet first the roughly kits of increased XXXX, that treatable number increased XX%, calculated by to while of

of our prior compared to quarter period. basis, to $X.X On $X.X from contract revenue reported In government of million XX%. revenue our period. reported the product second million during year-to-date the the approximately mix quarter, a platelet $X.X during revenue, terms totaled accounted sold government $X.X for majority year during million kit sales product revenue contract Separately the the compared was at XXXX million product during

our seasonality, the over a want $XX business, product quarter of million the confidence impact to million. off EMEA gives raising Nevertheless, remind our to to summer that second as third and expected INTERCEPT seasonal U.S. from particularly new demand represents we FX XXXX. for to Europe, holiday. for quarter guidance continued growth range I $XX despite Before outperformance our see million guidance to months, in QX down range This donors $XX a discussing million headwinds, of which other us you financial of blood XX% revenue, often in XX% to potential in the results, potential the approximately $XX growing revenue previous in slows head and in historically,

which product Year-to-date, These increases our were the to XX% Gross XX% XX% move let's compared first the sales discussion past quarter margin were gross were margins XXXX. kits on for we economies compared on the sold. levels half gross to Now XX% reported realized costs for of margins. year-over-year, scale given during over the due to down primarily margins QX drove to of larger months, the production XXXX. six

like now $XX.X to during million to operating XXXX. QX which $XX.X totaled I'd of during the quarter, million expenses, compared discuss

the SG&A QX to compared $XX.X million, of XXXX. during $XX.X quarter Specifically, million for expenses during accounted

from of million, the preparatory compared first the totaled cryoprecipitate On to the half during increased of launch. oversight investments half in $XX.X a first spending the quality advance driven of manufacturing SG&A during investments With XXXX. million year-to-date basis in expected and made $XX production and

increase The in from Research and expenses development BARDA to compared Blood $XX.X expenses program, Red was for the million driven R&D our totaled year. for cell million, the quarter costs during activities. $X.X increased including related prior

label U.S. Investments PMA million plasma for and platelet our million for in prior compared supplements year-to-date totaled a anticipated our the On basis, period. cryoprecipitate submission R&D expansion $XX.X during $XX.X reduced and expenses to kits for year the pathogen

cell expect our and with tied to a increase revenue. to funded activities expenses accelerate, clinical U.S BARDA As increase R&D Red program in we progress corresponding

of share for prior $XX.X diluted the to to $XX.X Year-to-date per loss loss share diluted loss diluted totaled net a per second $X.XX or half million the compared diluted year or during share loss the for million $X.XX share Net net quarter a was $XX.X first per or $X.XX of $XX.X $X.XX million or per million XXXX. period. of net compared

In cash, terms cash million ended approximately equivalents on sheet, second $XX.X of the hand. short-term with of investment and balance quarter our we

we quarter in advance to the notably of began working ourselves capital, in inventory During of revolving supply finance growth. anticipated to demand line credit in utilizing as customers our we position investments

turn With over to the that, let me call Obi. back

Obi Greenman

pathogen-reduced I Thanks, blood wanted including key these to opportunities red be also exciting able It approval. INTERCEPT projects, an time as provide on and is plasma, update an significant potential discuss cryoprecipitate. Kevin. Today they development progress to INTERCEPT three to cells towards

in submission year for interest potential DEHP Vivek approval an platelets. universal hospitals We already plasma U.S. CE a end plastic. who use a significance recent noted of an kit Mark to heard First the with the plan intercept have free and are of pathogen I converting from by similar already reduced

filing TUV Products Health our body our Mark cells blood submission. still Irish under CE the the arising with review authority red and and we’re questions Second from Authority frequently our is accurate engaging our and Regulatory notified INTERCEPT competent on

cells red key blood device regulation the a with medical transition addressed by INTERCEPT We’ve already our questions the dialog to TUV responded as around the and the subset for directive TUV framework to new the from be medical of continues of constructive site and we device for cells of online a with study for XXXX. INTERCEPT U.S and enroll, III are continuing end of the number submission additional year. our all active studies the our in Further to red the two coming in products through sites Phase

Finally, patients we continue our opportunity. given participated Society these Feedback and To for meetings help crowd Perinatology. cryoprecipitate and of cryo as the potential utility very of in the clinicians clinicians a size Obstetric excited has benefit over the have of be such Anesthesiologists, for Anesthesia at increase year been program pathogen-reduced to the about past number conferences about day on of awareness market a five the broad Society from encouraging. we the Cardiovascular bleeding

responsive, FDA monitoring coagulation $XXX our the the opportunity and annually have with and reduced the cryo. We through and for transfusion by production label believe million transfusion allow with we a been designation recent to potentially helpful. Owing are for timing business allow market important hospitals. been We given engaging increasing more be specifications to physicians been break criticality could the that for encouraged of feedback than growing the device that deliver could pathogen in timely use FDA cryo the has dose that efficiencies the agency potential both and improved the final

to We're data expected conventional in in the which allow we label, will ourselves to process our looking our meaningfully support crowd product forward product us of are to generating that U.S from think addition launch XXXX. differentiate anticipated

deliver I plasma five we plan lines the at in everyone product our with existing We're October. our to into revenue the we years, reported growth. operator our Before investor questions, want over outlined translates turn XX% to about well into given goal XX% that a and guidance provided XX% base institutional it At targeted we on I our we on double INTERCEPT time back platelets last framework that way prospects XXXX how year. on XX% remind a growth for meeting this from this compound to which to our for product translates that annual our XX% increase growth to four today and and to

into annual in further and product can we we plasma revenue. platelet our think translate well EMEA America alone of $XXX ahead, and North As product over lines million

prospects. geographies product New and blood add as INTERCEPT cells new pathogen-reduced our cryoprecipitate red such and lines to growth further

team an INTERCEPT of of while multiple standard team like the the to centers. out a closing, transfusion to I'd at being in great number the to stands Cerus of National acknowledge efforts priorities large blood required managing In global Blood maintaining on Cerus Services transform partner make the expanding care. The for medicine, a focus and

operator call the open for please questions. that, With

Operator

Nam [Operator question instructions] of And with the BTIG. from first Sung Ji line comes our

Sung Ji Nam

the Hi, on few thanks for taking have the quarter. I congratulations questions. quick question just a and

correct? are that Cross Red of American receiving Is pretty BLAs. XX BLA the the all much clearance that sites First, the that sites constitutes that pursuing

Vivek Jayaraman

them other have X are XX are All the process. are XX manufacturing there BLA, BLA sites a that of in a manufacturing sites are receiving currently so the

Sung Ji Nam

like it in cell red enrollment about for progressing nicely trials the Okay. are then -- secondly, U.S. just the sounds And curious the

get when that might see a the you to it that do Is that that something ramping the I'm you -- of timeframe? trying Or a XXXX could happen the year. get think of sense up? just do Just in kind of you ramp up remainder second half year? think product of in of -- to would better revenue for over recognition of that's more the trying sense kind when

Obi Greenman

I'll that Thanks handle question. second the Sung let part Kevin Ji. of

do at have the to of the to two still funding the throughout comment add really study recipe routing. you faster remainder BARDA sites performing RedeS about of a you seeing with year. anything want a has enrolling are clip We Kevin, number well, sites

Kevin Green

I increase a Well, right. expect enrolling of We that's think patients effect. the more more and are do that as sites kind and cumulative has

are expect sites rolling to sites, we not so additional up. off, adding So just it go

Sung Ji Nam

love hear review the of last And any then terms additional update red in of the is you blood process great. could Thank cell in of Europe, and Okay, you. any -- provided you there thoughts in we'd give that timeline to lastly, me, there. quarter, from kind guys us terms just

Obi Greenman

Yes, Ji. Sung thanks,

actually is priority qualifying of of moment. to the Switzerland, top and are at a for that new new GSH one a middle with looking suppliers, the have next I trip doing encouraged So we obviously supplier year. to out We're by just really supplier a of came the us. meeting by engagement their those are founded GSH

Mark give CD timelines timeline I last and timeline. try we versus as at But the on the compress overall little to and that what for think try As it's far compressed call. to are premature we still us ways looking a for approval, gave multiple a

Sung Ji

you Great, so much. thank

Obi Greenman

Thanks.

Operator

comes of Thank Cowen. you. And from Josh the our Jennings next question line with

Your line open. is now

Josh Jennings

record Hi, on another the questions thanks taking congratulations and for quarter.

just really but the and five five, level? where to make blood you from U.S. in revenue volumes a to evenly franchise hoping start is of five a to speak ramp try are the with And the Just them, manufacturing just of the couple centers by off think contracts all have XX% is all on questions XX% driven you -- distributed generation with U.S. you about can to platelet one how up those you that sit with of high represent throughout have facility with then up guys started those them about two or it contracts? those

Obi Greenman

is Vivek answer Yes, I that place think question. to best

Vivek Jayaraman

Hey, Josh.

way priority that Cross earlier is is call, indicated Red I strategic really leading reduction we had the the the As mentioned the them. determined and in for pathogen in the American past they've

varying securing out they're remaining in about four of started represent of producing of they're single BLAs and U.S. in of front customers take are the intercept certainly in degrees of by all the in and market, is customer of front process largest largest have they five, of in INTERCEPT some the the The our and of the adoption. the out there terms and five, the terms the production. distributing the So, present hospital far ARC, But rest. the XX% level largest name of terms the which

Josh Jennings

thanks, the I Vivek clearly document coming Great, just here. guidance mean follow-up, one is I risk -- FDA soon. bacterial And of the

over us been from have just standpoint of years. idea up where are you an in ramping XXXX. a sit capacity you manufacturing Can you guys give where will and You two last

increased the be In demand document? terms forecast guidance will that we post handling of the there

Obi Greenman

Yes, online in with spot in I coming XXXX. now additional really we're a capacity good think

think Kevin's really guidance once on that take finalized. of is it some we're inventory right the as as advantage the prepared of the I our getting comments during to remarks able as focused to well, be in far position

all-in-all, I assuming of think compliance some are So period. months very and XXXX into on we confident XX feel going where we kind

Josh Jennings

Great.

Just should the like there's just just through about work one models? on our had you are the we burgeoning there interest couple about cryo, a can INTERCEPT with next be U.S. you FDA. seeing constructive so potential societies we a sounds the think steps? just submission in last what some -- us when revenues help just Thanks can in some approval discussions And Can when follow-up and thinking cryo start we and lot. within

Obi Greenman

Thanks, Josh.

with -- sterility about product next. really call, love level. the We to and so to data on encouraged final to studies that the be of the with a on forward that early readout some mentioned these stability topics some sort this the label. we're are possible the I going that and towards in as end what's of do Does discussion discussion that and do the require So and will things had year of there incorporate we last subsequently regard on FDA to looking

with in the So of the second in we're XXXX. looking half submission at half XXXX approval of first an a

revenue we're the it's think looking contributions for see timeframe in still the product. I cryoprecipitate So to -- XXXX

Josh Jennings

Thanks, again.

Obi Greenman

you. Thank

Operator

line Thank Abrams you. the And Cantor our next question of Fitzgerald. with comes from Jordan

Your line is now open.

Jordan Abrams

-- the slowdown? at questions. guys. product is typical half growth. midpoint, product or for below half taking Guidance conservatism? growth first of Thanks. Hi, the second the which just and Thanks for implies Is the What reasons are it XX%

Obi Greenman

handle Kevin, to you that. want

Kevin Green

we closer were to and headwinds down FX to and mean, the as continue level FX level. rates look, there's XXX we which commented, XXX the I saw

think the we So has to that persist. potential

suggest given -- if I our million still guidance. quarter nonetheless. $XX will look a It they we certainly And growth think loaded, for of strong the seasonality you think, midpoint at for we but of be would that roughly kind QX. backend the

Jordan Abrams

that you have there thanks. Mark there Europe. you rerun GE in your spoke mentioned Is have. that red any is is approval still believe or or only to trials? last of a chance And we repackaging post requirements clinical The require information would for cells new Great, that yield you'll already clinical

Obi Greenman

let will the Caro I handle here. details

we I to think regard will never put we're that we confident in, what ultimate the know questions submission with but the be.

are the all-in-all, that’s be we’ve So with that, any doing those time submission confident through feel in put But additional on ASPRA with we we'll that? so and, data think working about in I [ph]. real we Carol, questions, TUV and that color that. and closing

Carol Moore

think I that's right. exactly No,

way. lot together those We and think, -- a of for in need in now We good position. put and have we a think and questions I convincing reviews wait a we're data to we I just it

Obi Greenman

Thanks.

Operator

question Catherine Thank of you. Instructions] [indiscernible] And line the our comes Baird. [Operator with from next

is Your open. line now

Unidentified Analyst

Thanks Peterson Catherine. questions. is Tom taking the actually This on for for

the of guys conversion in quarter on mentioned you France. kits the dose double think last I

just are are XX-XX overall still we something looking conversion ramping that? what's the we So of wondering, mix at like the towards terms or in

Obi Greenman

want Okay. that? Vivek, handle you to

Vivek Jayaraman

and a were single last NSD We quarter estimating that Sure. exiting for about DS split at XX-XX between at France. we’re

few increased steady fairly we We are a they've that think this state to continue conversion. getting DS need last So at to But sites conversion point. since we're their reported. the close there

Unidentified Analyst

in, contributions the contribution I you you maybe any kicking sort moving of for thanks. revenue in revenue you expecting larger the are know half. to still that in are some small quarter? second expecting maybe Great, But And minute, of do XXXX? then sort see a in Germany,

Vivek Jayaraman

Yes, we didn't quarter. see the in contributions Germany from

with the in calendar to being year noticeable Germany kick-in end real anticipate the top of start we a before line XXXX. mentioned towards we to impact As this on

we securing view marketing authorizations good to clearances. continuing really a XXXX see growth continue But and regulatory as progress get story. Germany with We

Unidentified Analyst

thanks. Great,

Obi Greenman

Thank you.

Operator

And that session. to question and turn call for remarks. conclude Thank to Greenman the now Obi back answer today's you. any like further does I would

Obi Greenman

Thank you.

month Morgan and thank New you of Healthcare in and Baird's XXXX to will York. interest for Conference forward in we Cerus. Stanley's there again Next Conference And be for you joining Global many person. in in us Global participating Look Healthcare seeing today your

Operator

gentlemen, Ladies and in does conference. you conclude thank today's program. participating for This today's

You a day. may have all disconnect. great Everyone

Cerus (CERS) 1 Aug 192019 Q2 Earnings call transcript