CERS - Earnings call transcript Q1 2022

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Operator

Good day, ladies and gentlemen. Thank you for standing by. And welcome to the Cerus Corporation First Quarter 2022 Earnings Conference Call. At this time all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. today's being that advised be conference recorded. is Please hand over to would now speaker conference to like Mr. I your the host today, Senior Relations. Investor Director Notarianni, Matt of Mr. Notarianni, you may begin

Matt Notarianni

joining like and thank afternoon. you, I'd Thank everyone good for us today. to

part slides you displaying can are that today's we As of simultaneously webcast, follow.

Cerus' at Company's and Vice Kevin Officer; Regulatory a and Obi You of President Greenman, our Vice and first the President website recent and Cerus' the today March Operating Green, on the Financial me Chief President release Corporate Chief Investor Affairs from financial access With business Moore, Jayaraman, issued the Quality; Cerus Officer; Cerus' Carol highlights. ended Jessica the Cerus' for XXXX quarter Vivek Affairs. Chief can Relations Hanover, results announcing Executive Cerus' slides ir.cerus.com. of Officer; call are XX, press Senior describing

and today's product XXXX growth strategy, margins, future expenses, gross guidance profits clinical efforts, growth initiatives, and and financial today's and for website December like risks can historical as of events, These ongoing of development Form cause future forward-looking Factors future XX-K our ongoing future results, trials, timing can and product XXXX which a to discuss the those the are in materially. copy of including development include this some call We remarks than XX, and identified we or this results. begin update XX, press no and well use involve duty ended product from review we and performance, that future statements. Examples Kevin XX-Q some some financial forward-looking our on and activities. the operating and statements to quarter announcement the product we to differ uncertainties obligation related release our and operating gross you and relate events from and that undertake year cash by business On I'd Risk statements in highlights and our performance recent shortly. with goals, Form at Company will XXXX, March to the to are Vivek under our make for revenue on call, remind regulatory file anticipated described will operations, as these our They statements. rather You and facts, future www.cerus.com. launches, and will statements to followed of actual commercial including forward-looking Obi, access forward-looking to opening our results events sales, ended

with conclude financial We be update an considered supplement will EBITDA. today's These commentary including we also call non-GAAP non-GAAP accordance and for a not measures presented and to from Obi replacement should remarks. On GAAP. in on measures, a adjusted will with non-GAAP with measures pipeline our be closing discussing

Executive For Obi a now refer measures, and please President to GAAP Chief today's Cerus’ introduce reconciliation to Greenman, And of non-GAAP financial release. my financial pleasure measures it's Officer. to press comparable

Obi Greenman

Thank everyone. you, Matt. afternoon, And good

years ramping. has of we adoption, in quarter over is INTERCEPT momentum U.S. first continued past few Our seen XXXX particularly have the the the

on Our establishing a work safety standard focused is in transfusion medicine. new

for extensions quarter to treated discussing relevant and recent quarter centers the with Cerus with ensure history. components. Kabi. over and quarter and ever top significant the supply, the of patients is been Red blood will transfusion first as I for history. line and access the blood Fresenius Product In blood the has review of But patients plasma long-term world. that the services American time our to the for I the INTERCEPT Vivek first expanding let's the associated any first revenues discuss contract in highest our current of XXXX the After some protect both spend company's it platelets Cross risk So our around for means first quarterly availability pleased the and context results announcements are future am pandemic mission revenue growing can as today prospect highlights.

XXXX. all in As year-over-year in are we quarter major we report geographic demonstrating enduring economic growth of treated regions year-over-year XXth to phase geopolitical INTERCEPT blood our With access uncertainty. expand to an components, ability start growth, revenue and consecutive of even to the

up because led while a comply hospitals are also were guidance, basis. benefits. it on with bacterial provides and offsetting by the for pathogens Blood platelets FDA year-over-year spectrum once centers the to U.S., the beyond strong platelets was broad against again generating choosing costs a proactive INTERCEPT system growth safety protection results as Our for means bacteria, over in just which and XXX% operational blood

the As progress diversify and or the of our to we INTERCEPT U.S. we ongoing making solid with business growth U.S. look launch are across the platelet the globally, of INTERCEPT Complex, in IFC Fibrinogen nationwide

to robust blood we online through channels. XXXX. forward realize And beginning We sales are our of center accounts into direct-to-hospital bringing of combined and have and funnel look leverage we to a just XXXX the

and know round to enriched the blood a the IFC hospital clinical through reducing transfusion a Perhaps opportunity the example the prior product Hospital also and wastage. compelling seeing included product where the Red at from is XX% are compared the significant when time of frequent IFC across IFC Fibrinogen rates at be we next protocol to five been the clinical benefits have from to mid-teens new years, less most I an X.X%. quickly paradigm to in hand have the estimated Florida growing around conventional as Fibrinogen transfusion now are to the is product over to Hospitals that well over monitoring Cross conventional lower we of massive call than updates of With delay, both Shands American country institution's over delivery expected to Vivek from wasted has a reduced services two benefiting rolling while about Kabi. would cryoprecipitate. the numerous improve but in function and grow University Fibrinogen of patient into excited first for adopted changing administration transfusion are to the without interest As a like a coagulation treatment our improved demand strong early out Fresenius around product awareness bringing provide some our we now undertaking, of practice early the the launches, thresholds. is the partners, and been

Vivek Jayaraman

these good is results Thank to afternoon. you, It Obi. you today. be with to all able And share great

a commercially start and In us position the to long-term, want recent of the year, talking for addition the operationally. to both that spend strong moments few I about couple developments of a well

made week, announcement our exciting regarding with relationship American Red last an we Cross. First, the

honored to are contract platelets We American with INTERCEPT five-year extension have announced Cross. Red for a the

goal supplying a blood Red responsible is of FDA services patient largest blood components you guidance Cross of model platelet about production globally. Because at safety on system on the use XX products. As has INTERCEPT its affording This yet and extension represents other for Cross transfusion U.S. The transition help mitigation, platelet national toward become Cross' blood sites to availability, platelet the benefits contract bacterial treated reduced its them supply U.S. compliance is safety, Their customer. a Red the another and and of with platelet our of leadership across INTERCEPT now for in serves focus know, the like platelet XX% with to risk medicine, Red of routine validation and Blood pathogen in Red ability will with the timely producer when improve is an operational inventory. centers full the standardizing transfusion INTERCEPT as blood while their areas the each System largest Platelets stated for of Cross' realize and INTERCEPT

Fresenius contract for kits. a the Moving production also of on with to announcement, have Kabi extension another recent we assigned XX-year INTERCEPT

utilize ensure place the manufacturing very call related a for to which increasing In highlighted that at the forward improve the We Kabi a quarterly completing economies to help also are The volume, facilities bring continue look this additional now with as to agreement more cost for than obtaining next of approvals, We discuss as to capacity are more us the will of And for to profile well. this turn online. On rest years. INTERCEPT our Cerus I both last [indiscernible] redundancy this will manufacturing will about portfolio. able key anticipation regulatory new and our efforts in XX necessary we detail. this additional been partner in our excited capacity, to plan. in work, the we kit scale has decade. agreement, including Fresenius agreement track team Kevin in that results note, capacity as of are the this over ever allow production well our to it

Kevin Green

some we the reporting provide our to non-GAAP everyone. quarter today, Thanks, discussing time first Obi, to also and pleased are our good and you today. afternoon, update EBITDA adjusted spending all measure, results which recapping GAAP I’m our alongside following

first revenue $XX.X all posted world of of growth XXXX growth the our XX% Our and quarter. year-over-year North quarter rest importantly, million of product EMEA major reflects positive America, and regions up during

sales America year continues XXX% period. versus prior growth the As lead the saw to we anticipated in in the up North way

both a of America our blood the and as revenue to context, was global XXXX. more by our grew that America, U.S. million the total first of up than is quarter Within XXX% blood revenue sales North in quarter first North five, centers large nearly our centers of As during year-over-year. as the to of five top outside top the product the $XX.X sales a group

XX% in to region in quarter, in foreign Turning the to was broad headlines of in up region negative that Eastern up XXXX turmoil currency. and to the the capturing EMEA. the The during excluding based first XX% Europe, strong Growth been particular. impact has despite growth returned the quarter year-over-year

our Moving on dose metrics. to calculated platelet

reflects the Our year-over-year increase U.S. the XX% treatable growth in a doses platelet calculated increase internationally. quarter and XXX% a of number in first

nearly the of product of INTERCEPT product XX% QX kits In of terms revenue. disposable mix our represented quarter, for sales

not year million and In period. totaled addition in $X.X revenue contract for $X.X prior product versus the QX to revenue in guidance, our included million our government

gross to profit now our gross Turning and margins.

gross million prior driven XXXX margin. were was which higher quarter compared the for XX gross was product sales. an Our first to quarter points of QX the profit period, year-over-year. to XX% basis XX.X%, gross Product during The margins compared increased year primarily $XX.X profit product increase gross when increase the million, our in $XX.X by

were leveled noted product of margins dose course a single on out volume As U.S. kits sequential gross customers, but of over XXXX, we to throughout by higher the negatively year impacted sales basis. our the had

ongoing to as We are beneficial in with product on as COGS a return year basis the expect decline mix, in more XXXX, associated a impact headwinds elevated to the to resulting gross full be recent well from favorable offset by Euro. freight expected margin costs expansion as the

million, $XX.X in prior fairly totaled Moving which and non-cash included compensation. flat stock-based versus period were $X.X the quarter on, million our first operating expenses, year

As over generate you’ve expense heard real and we able again, our me expense to business significant to quarter time. that year. discipline pleased leverage. say $XX.X compared we development first I’m believe million operating to during is once the in $XX.X type, specific demonstrating And million, the financial our research totaled By are be structured years, prior

As R&D we’ve new in roll support the completion spend pipeline, invest our we reach associated and projects off, based the illuminator. of projects new seen LED in including continue to

$XX.X period. strong First as see existing sales to that prior our conviction the product commercial grow. have we continue quarter expense leverage million, our was will up With versus SG&A we operating X% infrastructure, year

March Cerus year attributable which million have out to compared now ended like for period. totaled per On Cerus or for per discuss period for diluted moments to $XX.X share first the XXXX, the the in attributable non-GAAP quarter. $X.XX the or few decreased this we XX, I Net $X.XX three to when loss to reported bottom to broken XXXX. $XX.X take share EBITDA months line, prior QX measure, for same our diluted time million compared loss the to for you adjusted a would net

focus intended of is flow and commercial is be has breakeven, measure view to cash business provide been you efficiently how the this which a entire recall to to organization. on continues our tracking You’ll critical with a

can you the we this of calculation measure prepared on As the current have five quarters. for see last the slide,

quarters a provided For XXXX, of of XXXX everyone remaining negative to this during with metric to compared first the the future historical for our quarter and modeling, a was first To continue adjusted $XX.X we’ve non-GAAP help report well. EBITDA negative the quarterly to XXXX. million quarter reconciliations plan $X.X in million, as

last a five we sequential the continued quarters, our improvement in Over adjusted have non-GAAP seen EBITDA.

and the to flows. Turning sheet balance cash

certain The and seasonal first year the liabilities. position due in sheet. accrued the each cash equivalents with variety payment we on typically burn ended million first largest $XXX.X of strong a cash items quarter as of a of Cash is balance quarter of to such said, With quarter our cash that

we the In in to Wrapping the new to terms year which cash my market of to today, million growth with range operations product first $XX.X our the full from from quarter, to guidance compared XX% demand of a used was $XXX us period. the prior and prepared for continued are range behind in year-over-year range million, cash XXXX million a to one million $XXX flows, up remarks in million $XXX now million $XXX revenue $XX.X quarter reflects of strong raising XX%.

inventory customer hand. we we closely quarter few are months we fourth demand existing the capacity on continued our and a As indicated ago, on against call strong our seeing to global manage manufacturing

the to this line our in in bottom change expectations neutral is the also Additionally, but the year, to rates modest the particular, a P&L down resulting currency our pressure dollar impact U.S. top results line. earlier offset to further in in recent Euro foreign a versus

demand, as our Taken goal. adoption be our our provide together, moving closing non-GAAP initiatives call and capacity shaping comments. a year, on to turn further in Europe to XXXX and launching for facilitating few targeted INTERCEPT manufacturing let growing as increasing update portfolio make executing another the of our nationwide, for our strong Cerus, R&D we adjusted towards as to breakeven over an Obi the of me U.S. back the With growth solid is key EBITDA pipeline on progress year including IFC on well meet the that, to product our up

Obi Greenman

Kevin. Thank you,

R&D we make to on progress wanted that our Before open to a updates questions, up to start continues I XXXX. touch good pipeline about few to quick

to First, ZBK our platelets work in sizeable INTERCEPT market. to to partner joint China, we venture bring with continue the

on imposed challenges submit filing recent the to to XXXX. regular together have of making end with the been goal with platelets INTERCEPT authorities the COVID this other and associated the the have interactions working to country, lockdowns virtually teams While in continue of meetings our regulatory Chinese plan a by

the completed an As in-country a determined filing. for reminder, study, need our after beyond by NMPA Kong will be clinical Hong study additional the regulators previously our

by to each all behind the constraints regard timeline minimize and patients our make MDD we uptick progress national crisis this entire to to U.S. and still IFC. to like where waning red MDR That European the continues a we the INTERCEPT CE to across mark III we globe Europe platelets, INTERCEPT red the with but addition And the expansion a impact with the the the a Authority and expect the our due CBG, In plasma, And has continued Cerus Finally, across transition during to INTERCEPT by In bit pandemic. the country Phase see of of support team COVID effort as availability to device, to been as to long-term, the there cells, some in continue the component the studies, in as submission for schedule current continues with portfolio regional available of devices. in medical near-term differences said, our Class over the through execute engagement, transfusions day. impacted function clinical more INTERCEPT China. fallen a for medical like others the seen markets large bandwidth hospital and cells remains with in BARDA geographic Competent blood have across blood U.S. continues across an sites. summary, of are enrollment to fund function who X

operator a INTERCEPT and back I’m us growth will to to future our to of With many INTERCEPT flexibility as R&D believe years strong provide the iterations flow cells turn the cash self-fund pipeline. Q&A. our for transfusion with break for over and pleased scale products; drive in to let which towards the field our with even, medicine we it business, product red Cerus approved We our position come. for that, initiatives the progress As currently leader me

Operator

Thank Folkes first Our comes you, question sorry. sir. [Operator – Brandon from Instructions]

from from comes Blackman Stifel. question Mathew first Our

open. is line Your

Mathew Blackman

question. Thanks for taking my

Just two start, for housekeeping just me Kevin, one. a maybe to

you’re the first I one. to impact That’s in to performance. sort a you this, we on dollars? Just get math I I’m If But the versus little was then the there $X hoping in in absorbing number touched without what’s FX you for guidance, more doing clearly bit quarter, want FX million if correctly, year, how started granularity. heard the that was right. And of new it see roughly the maybe

then the after where And is follow-up Just one started. in curious Delta what that. new just guidance the we versus

Kevin Green

Yes, you’re million X% about or the – Matt, impact. $X roughly was for year-over-year FX you’re right. quarter

On we customers. source most almost product a line, selling Euro U.S. of bottom wash it’s the or to that our given in that

procured begin U.S. product as benefit grow. to rates, some we lower we’ll as the that So FX at sell we continues see from to that

what’s As some said, But in end I is our like guidance do confident sure, top raising started QX felt the headwind and think, far for that where the and we to lower feel as both with end. relative we guidance, potentially year. there

we that knows new up, mind into a So like factored with the in it we’ve XXX adjusted had the down guidance anticipated but rate originally we bit, roughly ends range. who feel where year that

Mathew Blackman

too color on it. I and And how U.S. broader visibility, I’ll the the and market. that for Vivek first the layer contract just cross ability bit forecast, your And Okay. maybe serve then part But Kevin in red little Appreciate to to does guess, for just your Kevin. a your the follow-up to then and Vivek improve follow. maybe ability more question

this? all that incremental be should in P&L thinking there. or the just there at impact the I if about guess, assume customer. from Thanks. are really anything Red about as size impact on I price line would So tiers of we somehow Cross how question the top asking, do given margins the we So volume a think the

Kevin Green

handle think questions I can those you Why go you both ahead? don’t Vivek, Yes. for Matt.

Vivek Jayaraman

Sure. Happy to. Thanks the for Matt. question,

think relationship moralizing because large part, American get want puts to stated the place. to is contractual this extension XXX% we Red PR, they that off In I with just contract they the Cross critically important. the starting had – in explicitly

can the standpoint it be management few the sort operations enables next that planning of from demand confident and prompt years into step forecasting, will demand think accordingly. us I we a to very manufacturing machinery there

the go kind FK the glove. both of hand ARC agreements So in really and

progress, forecasting, have all of actually as of basis. visibility, part, note thing of manufacturing in that terms think those In online. on improved they’ve a going forward all us well those and brought Interesting materially centers large to their for I is

starting market some are increase market. We to of platelet underlying some and the see ARC in that the marketplace percentage growth in

And potential continue that, But terms both our and of of We level goes to PR accrued to and to It’s I’ll to the of factors just trends for obviously driver benefit. about still overall us our P&L but impact very defer Kevin, business. ARC for around to it in the days forward be that so those increases I margins. major say be confidence to certainly definitive a maybe step convictions. growth encouraging. are have initial early our discussion a

Obi Greenman

you do want add? Hey, Kevin, to

Kevin Green

add whole I there. lot to have don’t a

scale, geographically think confidence in with XXXX, agreement of certainly economies and new to Kabi didn’t I coupled with benefit to which admittedly from. gives expand Fresenius it we the and us return manufacturing

seminal are the two those combined so for [ph] And company. contracts think fairly I

Mathew Blackman

All right. everybody. Thanks again, Congrats.

Kevin Green

Thanks, Matt.

Operator

with comes question Fitzgerald. next from Our Cantor Brandon Folkes

open. is line Your

Brandon Folkes

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

should how in maybe others PR we following that Cross towards Cross’ Red there terms higher just precedent take lead that the memorialized or Red being So impactful towards be should may then think there about about in how follow maybe how think could contract, long contract levels. of how we others? Is that any driving on to the

Obi Greenman

But shot thanks carry U.S. maybe policy blood to for safety and as some blood and Cross is Yes, the Cross the that other American the safety at take operationally for Red as things Red a more Vivek Brandon. reasons either institutions, and fundamentally well. question, it field, a I’ll both leader globally. over does in the or add perspective to in does that the relates

where so demonstrate So or thanks increasing sort inadequate on to the with early life with I in pandemic irradiation. of need think early Cross and the the donor you that to SKU pathogen really availability you release testing will their supply for shelf what to it if are single to we’ve in platelets there's Red advocacy platelet or have the sense gamma it able the least show effect and to see the reduction benefits at actually accomplish a an albeit is that demand and of INTERCEPT and better products, operational of been the benefits able environment fact a do CMV or combined

you that thoughts So any around moved other efficiently. between – a on Vivek, could hospitals have code hospitals more have between that and be do single product you that?

Vivek Jayaraman

the What contract I even wrote would their respect the add leadership open distributed they move to the American opposed that they for is commodities. deliver, Red prior that to as the value products to that ensuring shown as has viewed and Cross to extension towards recognized are and blood the being letter industry the with

already a yet they in have of blood standardize on customers suppliers, product oftentimes to the and efforts All multiple particular the want those market U.S. are impacting hospital platform.

Red on other So to suppliers reduced a platelets pathogen harmonize pathogen the that's standard. Cross are as their creating the push reduced, their across from

terms all in getting of Obi reduction hospital cottage benefits their are know, is a we really but their resume multibillion there. in this so setting Cross other only seeing small and is start not and messaging them industry a to and pathogen industry. activity, as but with that is number And customers. interact we in each customers that to and dollar adoption their take provided indicated that's internally, even the person American also as a patients, Red as virtual of out story Congresses of start a They place the it's and There

influences but it across exact of blood takes of others have seeing influence and impact that how an they timing certainly U.S., is terms the exact not that the we're globally science, the but only the predicting in So from safety.

Brandon Folkes

both I the Great. you Thank congratulations from and appreciate color again. you. all

Obi Greenman

Yes. Thanks Appreciate Brandon. a lot, it.

Operator

Your Instructions] from Jennings is question Josh [Operator next Cowen. with

open. line is Your

Eric Anderson

Thanks the Hi, Josh. this taking Eric for question. is on for

the way near- business, later could opportunities go excuse that that about get to the update the Cerus' year. that's I thinking there China international update in XX Just next months set medium-term? appreciate Platelet so? me. But on any an decisions other we international market this potential any O-U.S. Are INTERCEPT on your submission for adoption could the or could materialize in

Obi Greenman

lot, sort I'll start and and to Thanks just a for perspective. completed again seven Vivek that evolve to We in I'll submission are Yes. see have additional Eric. deployment days the quickly. for of happy turn Canada

And the the XXXX. think in it's speculate into around the a business running of that some little hoping just real transfusion there's countries. sort maybe that's there. and a key I transfusion to play. this the of of given oftentimes to when And Vivek questions medicine and always are later these obviously the there're difficult to to add more is turn in so always one of so see number some And business single market, progress given size – these key context that – on these a service that Germany, we're year always I'll But there's markets in

Vivek Jayaraman

progress past the XXXX. single the to we interest next we into over impact start this up and made that's a and out and just Similarly, later initial start avoidance these show we've Europe materialize pandemic which you and are been a we've seeing of of forward, in watch Obi. the of ways largest done. the couple geographies going the Germany about really where think there, years. course of Also, has major well, the Canada is some should here key said look spade but year anticipate I work if it any Western I lot we with talked to and market just believe in there, you one of we're customer at the good mean,

a other is there a So of a fruition are ongoing, it's to on are have always to – push markets forward. we when matter continuing some There speculating activity tender come may where but risky. bit some tender

meaningful our we So haven't on those banged in three we our just that progress. years, over what's line necessarily to in compelling of can of course the of pretty past terms forecast. goal the sufficient quiver, growth have such continue or But off our is to underlying been materialize are when on arrows things layer top

geographies basis So be to strength continuing going for continue critically forward will a U.S. the franchise. important our be complimented in international those will and by us on

Eric Anderson

that? great right to thinking be a IFC launch, When you're Understood. country. Okay. early And with the on the the picking and IFC it's for way to your point see thinking potential about should making our be of progress, models across partners BLA up inflection we about is here, kind XXXX

Obi Greenman

made It's here and a Eric. launch that we've see great nationwide been really the in opening the to on progress thanks, up Yes, BLS QX.

really again, perspective I we're contracting Vivek, Vivek the hard sort I access the some COVID that and to same clinician the progress closest at interest the that of and, thoughts? it's to like is you do make, give additional think that's with have just headwinds of by think about maybe time been underway. just you'd But certainly but have to presented the and make to this; any hospitals excited additional too

Vivek Jayaraman

and up go held those committee that need with to new Sure. We've than meetings all and frequently hospitals where networks in brings less a unmet utility clinical of we I'd meaningful unique of the product ramp to is that supply ability previously. fronts. validation It's a I their group or having purchasing to end progress the our de so product to say on clinicians. committees made progress you're the think probably new been coupled what product novo with IFC and partners that have COVID production those

crisis about the of all occurred think systems hit. platelet the on on of contract, IT into COVID side, that things before terms work nature. you the a hospital, incorporated That we of If did the getting lot work getting in foundational

deep. COVID hit, driving store sales when going same So were we and really

Here we're preparatory COVID. initial of trying that of midst the do in work a lot to

Now front been those and to C-Suite into parts evidence of little reps our get up as what the key hospitals, access by starting of We, a generate have is initial starting in to we're executives U.S. able open to hospital bit seen and influencers customers in key networks, we've get more. at

are a beyond few top next things course And and over driver and the And that so line overall strong years being really a lot lead of to pretty we're up, addition the XXXX to in the our I think optimistic. progress. should business opening IFC of

Obi Greenman

Thank great. the questions. That's you for

Kevin Green

lot, a Eric. Thanks

Operator

time. am Instructions] conference to this the and I like our President CEO, no back Greenman. to turn now further [Operator I would Obi questions showing at

Obi Greenman

very thanks continued on your updating and our QX in interest on to summer the you throughout Thanks joining for and the Cerus. looking very our forward progress results. us much. later Well, today remainder We're of year for the much

Operator

Thank this again much have participation Ladies conference. you wonderful for concludes gentlemen, day. a so today's and and presenters. Thank you your

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Cerus (CERS) 6 May 222022 Q1 Earnings call transcript