Earnings call transcript Q1 2023

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Operator

Good day, and welcome to the Cerus Corporation’s First Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions].

As a reminder today’s conference is being recorded.

I would now like to turn the conference over to your host Jessica Hanover, Vice President of Corporate Affairs. ahead. go Please Jessica,

Jessica Hanover

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

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

ir.cerus.com. the You Relations slides access from can website the at Investor

and and of With me on Cerus’ Officer; Officer; Carol call Quality. Operating are Chief Financial Cerus’ Regulatory Scientific Green, Chief Vice Laurence Jayaraman, Moore, Chief Cerus’ Officer; Cerus’ Cerus’ Chief Obi Kevin Dr. Executive Greenman, the Affairs President President Corash, Officer; Senior Vivek and

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

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

no in obligation today’s will XX, XX-Q update we and revenue events anticipated duty are release sales, XXXX, those materially. related of could profit and financial of like that margins statements future described Form March clinical undertake cause call and make XXXX future include risks These for we forward-looking and remind our forward-looking goals, Factors statements. commercial development forward-looking product than actual statements activities. to growth product and trials, of performance future growth ongoing gross shortly. will and these our future are and operations, launches, uncertainties this initiatives, They and ended from our performance facts future We efforts, and historical events, expenses, results, our results statements. that strategy, operating and well used product I’d rather or to ongoing Examples file as including development future guidance regulatory events and our operating timing some under the year product involve differ to on the forward-looking as and to including to you gross identified press cash and related and Risk statements the in which

including presented for, will considered non-GAAP financial we GAAP. to, replacement measures with be adjusted EBITDA. accordance discussing supplement also non-GAAP measures, measures should be in non-GAAP These a a today’s On call, not and

measures measures, today’s For financial non-GAAP press a reconciliation comparable refer of please GAAP release. to to financial

We’ll and recent review remarks results XXXX. opening to followed our discuss highlights, and begin business some from by Vivek Kevin some expectations financial to today with for Obi,

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

Obi Greenman

cover you, as we anticipated revenue and Jessica, reiterating XXXX product confident begun ahead, year. our are completed In full-year position. range we cash Thank debt looking full we good the afternoon and for outlook of refinancing, a million. with our quarter successfully has which everyone. and we in first the ended are Accordingly, guidance previously Kevin greater $XXX to detail, strong million quarter, a $XXX we will later the in

managing disciplined the growth in commercial while We our we and remain this adjusted operating manufacturing year as manner. capacity, EBITDA committed grow allow breakeven our should to business, pipeline. expenses us top-line in This a reaching to self-fund the our

of this the year, plays XX and We over are the components ANSM, to safeguard Blood Authority, pleased million Earlier supply INTERCEPT-treated years blood acceptance in and subsequent continued France’s one from our journal platelet the in publication data see of the efforts growing Regulatory we Transfusion the INTERCEPT pathogen proud that and with activation hemovigilance annual covering analysis and over reported longitudinal transfused. System globally. role were by to

with were risk France’s health platelets. In transmitted during to with particular, stable with reduced patient effects conversion platelet INTERCEPT compared including adverse infections trends platelets shows reported of to bacterial XX conventional no deaths platelets. universal seven-day data infections, INTERCEPT utilization transfusion The coupled six

our strategy. APAC on We are also making progress

ongoing a a use Cross its now platelets. use of has INTERCEPT to supply agreement initiated into During Hong the plasma Red with quarter, complement which Kong Transfusion of new entered INTERCEPT we Service,

and our I our line with scale, platelet for the for China Board ZBK, year our larger have comments much platelet left Director, with and visited us JV China with the outstrip dossier China ZBK is NMPA. end submitted optimism in February, meeting our Shan. partner Hua At collaboration Dr. we availability high. the our of INTERCEPT in with safety Regulatory transfusion demand, supply new previous opportunities call in platelet a increased recently during to in where XXXX need ahead in Chinese I and Authority, the

year largest ZBK figure for blood of each market market grow digits this is a Over size to the to to There’s platelet in also globally. become next XXXX. by for partners INTERCEPT China, expected the our by interest opportunity low market double doses reduced red X.X million are in transfused China, the the growing and that expected is rapidly the U.S. double opportunity in pathogen strong cells in decade and

we for to certification platelets BARDA. by work during the We I’m X manner, trials, for achieving of the a timely in cell Union milestone European enrollment quarter ReCePi our continue study the continued we respect the has across for continued to we our the questions well. funding completing our the received from enrollment received know EU sets next we’ve blood year in timeline track competent industry. our the particularly continued MDR the In supported INTERCEPT created from red on previously during team clinical blood the red the MDR proud of CBG. quarter to for Phase this first INTERCEPT this as processing as and With transition RedeS study to authority such in and Cerus U.S. communicated cell first challenges program, year

the $XX blood positive infections, remind the BARDA reduction and for Services strategy availability, U.S. cell to blood to falling with speakers recognize safeguard the efforts by development blood the additional of commentary red globe mitigate Multiple blood million. Canada. commitment pathogen evident for including Blood During supply. a important us the This an removal in clinical for is reduction been also BARDA experience of deferrals. the incorporated around partnership international a ongoing discuss on how blood of also donor transmitted an program, the in components Héma-Québec date the from Canadian pathogen to to few we weeks has into The safety of role transfusion again of quarter, received ago organized of symposium and risk

From utilized from to effective bacterial when pandemic and of have daily pathogens, continues emerging access the contamination ensure protection platelets be System to and Blood patients components safe INTERCEPT blood needed. preparedness recognized against to to

turn to call now commercial to Vivek, the to first like over would I highlights. quarter discuss the

Vivek Jayaraman

Obi, Thank afternoon good on call. today’s and you, everyone to joining

with results sales line expectations. were our quarter in First

period. both steps in the place platelet inventory as existing perspective, referenced the region, From a while some well opportunities. previously that future Given of the continued customer took unlocking the growth enjoyed also U.S. EMEA tangible towards reduction with as taking customers engagement measures during we

pathogen portion implement now platelet With seven Their We platelet have XXX% in hospitals to platelets, INTERCEPT. supply of protect XX with in Hospital INTERCEPT of in customers least of hospitals globe safeguard to resonate INTERCEPT are global centers across the top leaders reduction. supply. field transfusing their fortunate Berlin decided the at some blood the the as their transfusion with Charité to have utilize and of help world that decisions medicine new

to a partner our fortunate collaborate responsibility trusted seriously. are very with as world-leading We and institutions these take

to undergoing this presence pleased that and customer filled sales in expand in previously of caliber we optimize applicants. we’ve been report of of facing one our all, with noted, we to our our impressed positions. are significant U.S. hospitals. I’m restructuring but our As a Throughout efforts order open have commercial the organization process

for it for sales is facing we we activities, to professionals. IFC sales the experienced generation. hospital-based responsibility imperative especially more awareness transition important clinician is clinical As as we employ and retain demand rollout that This

the doubled We almost sales past staff have our year. hospital over

we product setting adoption. accelerating for the to are stage respect With IFC,

Medical working a are a Center initiated to will generate further privacy, value the data support [ph] proposition that Prominis in New York. We with use recently study case including Academic

to share of at forward experiences clinician clinical Anesthesiologists the meetings. Anesthesia to annual Cardiovascular Society looking Obstetric for are We Perinatology, the with conferences, continuing including and Society and IFC upcoming

broaden In access continue new to the international and push we markets patient markets, to to global INTERCEPT. enter

service in support CBS Canadian our engaged Services out continue or fully their of they to are we across Blood area. example, roll INTERCEPT platelets For as

CBS full in other for blood all partnership is months parallel, operation. evaluate we grateful our we described, months Héma-Québec, Canada, and As previously process are production across progressing the have we supplier In well XX CBS. for to with to anticipate with XX INTERCEPT This sites. study of initiated deployment in utility their validation a the platelet

to progress excited Canadian Transfusion month, are With with our in clinical a of Conference Society broader share we the upcoming news later Medicine audience. this of Canada

We ones. of and significant most making part facing help well accumulate we and to our business support customers In do strong XXXX products. by importantly, expanded presented safeguard to patient I’m team staff exited material push position positioned the clinical while headwinds, global the We existing supply. access as continuing we While the global drive our navigated the to the evidence sum, simultaneously way our enhanced while encouraged to the blood cultivating to INTERCEPT quarter strides, and grow in new a challenges. with hospital QX grew are

detail. now will our I in discuss to it turn results over and outlook to more Kevin

Kevin Green

to in Vivek, growth. I’d move financial outlining as also but and to the we Today place everyone. quarter, results blocks strategic return we’ve our some and for like the afternoon spend put discuss first good building financial time Thanks, health for ahead

EBITDA, adjusted operating gross Specifically, line completed focus expansion loan our expansion. of including revolving management and as initiatives achieving credit on term margin as refinancing breakeven and expenses, I’ll be well and our recently discussing on of

product that Consistent in quarter driven an normalized dynamic chains to decrease with that XX%. complete This levels is a We patterns their this our first XXXX by posted effort year-over-year of working and million, we we recalibrated order and growth. expectations, $XX return largely customers U.S. revenue that to will supply inventory was more understand see of representing primarily and their capital. expect manage a

prioritize to safety by rates year exclusively of rates. our quarter in X% compared down of $X.XX product was Euro EMEA bacterial prior compliance continue almost year-over-year and exchange sequentially. The INTERCEPT, XXXX the were inclusive during X% to In offerings. revenues year-over-year decline up first [ph] build the strategy approximately driven to a $X.XX U.S. FX averaged product Customers and dollar quarter.

revenue as period. our contract of million recognized QX revenues contract in reimbursement $X.X compared Reduced addition and product our $X.X are year in and recent U.S. revenue the agreement our prior Department the government not Pathogen our FDA guidance, pathogen blood in with to further totaled our to for million In the agreement BARDA, with Cryoprecipitate whole with government our to Lyophilized revenue Included contract included Defense. reduction more the under

profit Turning now to and our product gross margins. gross

million top-line. lower compared the driven Our gross during quarter by the prior profit $XX.X product first million to was year period $XX.X

a period year gross margin basis gross of quarter marks points meaningfully product consecutive the compared improved economies a ago margin XX.X%. the certain was at for This However, COGS reduction margin FX XXX fifth inventory to gross an are we quarter months by whereby initiatives recognize purchased revenue scale, over euro of providing FX up improvement when rates of benefit, that prior current the and in for XX.X% selling exchange driven at several to to lesser extent sell rates. EMEA by currently lower denominated and rates and

cost for include working additional completed initiatives to certain expansion margin lower several additional are over our time. with will We continued cost contribute expect which kits. closely sites and These expansion underway, manufacturing we and have components partners reduction into

non-cash specific our million stock R&D next-generation government totaled prior By talent period million, an retaining our and driven over on totaled million expenses year the illuminator Moving increase the by increase and year. in prior overall personnel, expense R&D quarter associated first of $XX.X quarter in of increased expenses $XX.X XX% was contract type, $X.X cost compared The included based during expense with and compensation. first million the work. to costs and attracting $XX.X additional operating

employees. in SG&A platelet fees First sales cost increased Legal the in The drive members to and the attracting to $XX.X retaining compared U.S. expense and overall period. sales. growth year cost was slight primarily expense SG&A million associated brought and IFC with team is of increase our million due $XX.X quarter and to prior on

to for to to bottom $X.X or by QX widened year diluted March the million Cerus or share share the ended Cerus $XX.X period for XXXX diluted period. $X.XX loss per $X.XX the XXXX. Net for XX, net reported in same prior totaled line, when compared three On $XX.X attributable attributable months million the per loss to compared XX% or million

to totaled negative first our to as million by a during losses, $X.X EBITDA, Our the quarter $X.X compared million adjusted reported quarter first non-GAAP of negative a XXXX.

the million strong sheet with $XX.X balance cash of quarter equivalents sheet. balance the we to and Turning and the cash flows, cash ended on in first cash position a

In terms period. of cash future and revenues in improvement operations million prior lower from year despite marked came a investment $X.X with This during to cash used utilization, the our the for compared million growth. inventory $XX.X

of revolving or our an principal years allow loan be must March, with In terms a before we revised credit and term The refinancing completed repaid. more line additional mid-cap. of for of three runway

In addition, in to we capital help have two additional us optional initiatives. and cost capacity for tranches reduction expansion invest

Additionally, allow business as in our us credit we’ve to to expanded working revolving of offset capital grow. the line investment continues to

with midcap our facility sufficient the and trust business, extremely market. amended difficult is future in As provide testament that an to capital despite foreseeable should a credit us for midcap the has

million and $XXX the reiterate impacted the In our closing, expect as we guidance U.S. of to challenges XXXX $XXX we through resolution of XXXX, year we million. product advance full that revenue our range

steady, and for remain to gross if of achieving year. this improving EBITDA operating adjusted our With business, the not management expenses, our growth we commercial contribution breakeven future margin in committed

With the back that, call over for Q&A. the operator me let turn to

Operator

Thank our open. the question right Please you. comes [Operator go from line ahead. of your with Instructions] Fitzgerald. Brandon line is Brandon, first Cantor And Folkes

Brandon Folkes

for Can of just that, you, progress. you how the it’s you comments I completed thanks taking work Inventory in hear down congratulations did but the XQ. much XQ? Red Cross that was questions on that perhaps of behind in end I largely behind largely on think, at the Hi, and my elaborate

just maybe opportunity in Thank about help secondly, you much. the very then you And China? revenue think us can

Obi Greenman

I’ll you take like? part, you’d second as of question, would you like jump or if can the part to Thanks, that China take Brandon. and first the Vivek, well to

Vivek Jayaraman

I’m to China. back regarding hand it I’ll happy that Sure. do on, and to you

issues we’re patterns in far order exiting QX, today So to I behind do management for on of the so are that feel what first seeing part, of by inventory we and that us is most think the terms forward QX. buffeted

are beginning of the that, and encouraged we contemplated provided we it really about so And year. when was here at guidance

that’s we us. so partner China, can year, the a that venture clinical visit to respect a is the a With bit detail, had opportunity to opportunity opportunity, tremendous potential has to more but the We a INTERCEPT. market there’s largest for and feel this in joint of in platelet for tremendous with interest our be provide world terms that market earlier market, like little in demand a

back it So Obi, I’ll hand you. to

Obi Greenman

really Chinese the thing think partner that only cells as I’d that, just thought, the validating market is see I Yes, I other say in red interest by given was the well our they opportunity.

plasma about Our plus pathogen partner XX% business. market there, activated share ZBK has the in

they are keyed with the across entire country. customers So have their in they and also presence strong really very a

it, NMPA we’re was really submission to think it recently. there, are the in progress I the with great So, and happy making get that we

Brandon Folkes

question. Great. Thank Appreciate taking you much. my very for

Obi Greenman

Brandon. Thanks,

Operator

comes [Operator open. from Okay. And is next ahead. your Instructions] question Stephens. Jacob from our Johnson go Jacob, right line Please

Unidentified Analyst

for on is Jacob. This Mac afternoon. Good

Just question. follow-up to the on last

for is there? approval Now in what timeline that China, you’ve the dossier submitted the

Obi Greenman

from data. we that did world is clinical there Mac from We whether to should in-country of that step of a the next they part is data need lot the around hear the additional NMPA as Yes, submit some submission. feedback

in a we an degree So trial the we submitted Hong required may additional sufficient the out whether is of that study as confidence into be until half we sometime study visibility of as what year. But additional some well did of have won’t the clinical Kong. clinical in there’s second

Unidentified Analyst

and seems commercial for particularly the And platelet mean but what Great. does this IFC, then important efforts? your reorganization for on clinician it focus

Obi Greenman

that? like you Vivek, a That’s great to would question. cover

Vivek Jayaraman

own clinicians Certainly It’s absolutely is generation, IFC talking ends. awareness to. and us. an for responsibility into an clinical so treating demand hospitals, happy beneficial we for to getting imperative on from and Yes, both standpoint,

lung those have U.S. well, opportunity they’re into into based if critical. standard is platelets PI. the as pathogen the So you It that because significant with for going has experienced expanding sales hospital team, that in the have benefits to care therapeutics who are now hospitals institutions platelets about reduced of similarity go think

that well. IFC as platelets there and the go stoke for interest also an and hospitals interest expressed earlier to curve can have in in [ph] We are adoption

it the critical in of with So, view certainly new therapy franchises, synergistic we IFC. impacting but is launching to both as terms

Unidentified Analyst

taking for the Thanks Great. questions.

Obi Greenman

No, thank you.

Operator

question [Operator Please of Stifel. right Instructions] line coming your the line is Matt open. go next Blackman from Our Matt, ahead. at

Matt Blackman

question. hopping thank you. been thank I’ve And for around Oh, you apologize. taking I my calls.

sort is whether adoption ramp, can clinical talked So in if metrics I’ve in where uptake? any a I’ve doing, beyond in or you something there to are asked provide addressed number to you we’ve in the else the up. comments of what which the me, Two And the on curious help a or anything got way Q&A it’s IFC, standpoint picture about selling better us then a apologies. prepared of for just to from provide I of accounts help questions any And the are just past, then, drive generation, follow curve. data you utilization, understand

Obi Greenman

thanks it to these you for Vivek, Yes, over questions. again. to answers I’ll Matt. turn

Vivek Jayaraman

in glad for Matt, but it’s peak Sure, off, us. busy season, of right nearly street, earlier concerted I’m the start of our a we’ve earning join organization. within hospital to to could feet we happy one the things with you the made on sales effort quite have professionals doubled based the to. the we’ve talked we sure about now call now and number you increase was

really their can use the educated, you’re time them So as fully and reduce product generating we productivity, diligently for start get trained so thing work do, they aware first need is to to cases.

of may clinical drive to sort a may long go intent institution now So and the process meetings on hospital awareness, to contracting and have generation clinical group separate what contract the initiation we to tracking then the nonclinical product committee, institutions process. pull visits the end, awareness have beyond to a front new upon then we or the to is decision engagements and to really right we’re and speak have Depending is demand maker. and of

it So something that we’re is really process varies institution, by tracking very but closely.

of a were be And terms then education and to contract now hiring initiation. high get, training, on really our while successful maintaining to of that in so, we able accelerating quality level focus

bulk so to team. if effort it follow I I’ll on the or And don’t Matt, know, you is the there’s a for the up where hand back really of that’s that. sales

Obi Greenman

around, besides comment just some can you doing sites second question I the, seeing of we are to in of are the part and, out that on think create studies the and the the awareness maybe of case was Matt the we’re what of that clinical studies use. sort routine coming

Vivek Jayaraman

standpoint institutions They’re about other out something certainly big Shands talked is whether area generating that IFC the we of study products or and in we of from and impact that relative on and credibility, the a associated the it’s reduction of interest, parties adoption a critical. used to information that’s generated the value University coming of and ultimately attendant share of focus. cost with terms and case We gaining case studies interested benefit recently can clinical a Hospital, wastage of Florida, IFC savings, dynamic the with really peer-to-peer

And so get controlled cases data. use of sort and papers white you those tend in of advance to clinical well

out there. focusing we’re getting on So that

Matt Blackman

apologies admittedly to but hurdles the if but smaller pretty that about we have of a the two two at this a expansion those mentioned to XXXX? some I then that I’m couple most I platelets. the just the are speaking “make where see Great. I appreciate extra we it’s And consistent having the don’t that were again, adoption. we’re label, were XXXX I’m to blood that feedback the and is the, items, days And and some there’s after that hearing often outset. going but label some banks, if could items potential, was you big with with in of two or difference” mentioned minus you, surprise we’re of some think conversations stuff ask, should about that. updated on seven-day

don’t to the for more those time, waiting maybe are understand similar you And can can anything I tackle, were documents I driven? and who Is really guard guidance is FDA something those. that guard I whether sets of is do, process what I favorably that or fully just, to modify nudge those And the harder over guess maybe the to bands? seemingly platelet Is we I it’s it’s for guess sort all guess And years? INTERCEPT. bigger it one it you it bands. the there

Just appreciate any would commentary on it. both things be really helpful. those I you. Thank

Obi Greenman

shot a we broadly But, at additional across the Matt, claim, on have if Vivek, please that on, claim Yes, have I’ll seven-day now. and in comments as Matt that label at in. jump Europe any least also and Canada take you

United event. believe underway how study. inform we is our recovery that. study out that be do our we definitely have that? that life. was at States we’re and What on It do XXXX shelf will we five a a are ability to that’s so to And, well post-approval in seven-day to six a survival or products really now a right that to perform And looking commitment focused get day And day need a we label do study. another do seven we to do But won’t the accelerate

to collection optimize American practices higher INTERCEPT as has even rate ever the I been to guard INTERCEPT. they’ve split after able largest seen with had As than our customer, a relates the really implementing their now Red it’s surprising think Cross bands, because, has it

operations comes Europe. to, in and team so center broadly across it sort our can the U.S. based of the but think do more to down upon And today folks with I blood the we we of that also really our operational know efforts experience

are centers limiting or? I there Vivek, that’s to think at commentary something a don’t any outset. overcome to but have additional When factor the INTERCEPT. it’s starting implement that So certainly blood we

Vivek Jayaraman

helpful. No, that was

Obi Greenman

other Thanks, Matt. Any questions?

Matt Blackman

set. No, I’m you. Thank Thanks.

Operator

it closing to would And to back Executive Officer Obi like Chief I for that Greenman, concludes our turn remarks. Q&A.

Obi Greenman

to today Thanks continuing the the you and joining us to for We our your joining rest thank look year. throughout today. update on for interest Well, again of for forward progress in you Cerus.

Operator

our conclude does program. This

now disconnect. may You

Cerus (CERS) 4 May 232023 Q1 Earnings call transcript