Cerus (CERS) 8 May 182018 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Cerus Corporation First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Lee. Tim begin. may you Sir,

Officer; you, operator, describing everyone the like thank Chief Chief afternoon. are Officer, Chief Kevin Green, and joining us good Cerus' Executive and for President on Greenman, I'd Benjamin, today. our Obi Medical to Financial Cerus' Thank Richard With the call Vice me XXXX Officer; press our announcing release Senior Regularly Company's first ended and XX, President the for March quarter Carol also highlights. and our Quality. business Affairs and today financial of Moore, Cerus a recent results issued

our guidance rather margins, the to the website remind future future operating forward-looking are ongoing activities. You of our the on events related our gross, can expenses, as we materially. shortly. call, and under my now, access to review Form on of who development, and quarter update than December copy XXXX no Obi, They or Examples including pleasure provide our ended some file statements. and programs sales, future introduce operating Obi XX-K product performance, by that could Greenman, gross statements for relate timing that www.cerus.com. risk this statements and the statements will future conclude remarks. Form to identified historical financial followed cause statements. announcement remarks like our release XXXX And facts, call include Chief and March on product it's Kevin, Cerus' performance closing President forward-looking from will with XXXX obligation and risks XX, and an our statements make actual Obi in undertake for uncertainties future our financial results. will this Company Officer. growth update today's are and involve future events XXst, clinical differ will launches, in the finally I'd regulatory to these ongoing and we'll which of ended product and clinical begin we results Richard the well activities opening On financial factors will our and These forward-looking today's events results efforts, of Executive with trials, described and at growth to We you to development and forward-looking and duty commercial and press as XX-Q and strategy, and year

line XXXX, but line, XXXX than QX detail, with development made Kevin the first as quarter delivering started exiting strong quarter the Thanks, operating We results. Starting commercial product on fourth into commercial the the as areas our top in robust three call, Tim. the momentum note demand expected the continued sales progress our better with top key our the by coming saw solid of bottom growth, we team cash with expectations. experienced in pipeline burned. quarter ahead we further discussed provide will product measured first on line of and we a sales programs, in

XX document lack pipeline, XX and over guidance strategies range to collection million. platelets XX XX commercial our control FDA XX% more million platelets to range XX% our for full are doubled guidance product market than of final the regarding guidance INTERCEPT of raising new full demand risk the bacterial XXXX into visibility revenue. we represents current the In year of U.S. our million previous transfusion. despite for product Given to revenue range This compared growth to year million to

keeps FDA diseases from the about recent regulatory the and continues France, for the the buying ANSM, of strong to final storage the The French the for set should In blood the transfusion just recently us will set lead As INTERCEPT broader approval extension transfusions, days. INTERCEPT which to beyond in the interest expiry safety allow puts Furthermore, provide then a extended for that platelets dual Times recently supply, of result conferred five availability platelet safeguarding platelets a the regulatory inactivation. a septic storage bacterial in shelf-life reported we competitive believe York New fatalities will for and some product center guidance France. for from and we U.S. dual INTERCEPT to system. a lower efficiencies authority and in from non-treated due seven long-term believe have field benefits we article All medicine document. received vectorborne increase shelf-life to on incidence the in advantages platelet increased wastage which

to Canada hospitals. announced in allow -- pipeline Canada the in the cryoprecipitate a hours which transfusion hand. keep and market expiry services A the wastage, estimated care than on the physicians the control including the driver our is of six centers, the annually making of for transfusion and product post-thaw pathogen-reduced term. on bleeding available research April, represents or estimated mid conversations product programs, revenue cryo. continue shelf-life OB/GYN Transitioning operating XXX,XXX conventional to our in cryo cryo post-thaw INTERCEPT Health with development in of septic cyro time could of cryo of producing due availability cryo a platelets five longer incremental trauma an be the in and to room today. transfusion could trauma to to timely ongoing both of with shelf-life is physicians, for With to with four dealing to unknown free to to a pre-thawed to compared nano-physiologist, approved is days bleeding, As convention just XX% key and make conventional cryoprecipitate massive patient long Based on and reduce challenge platelets thawed challenges most progress cryo greater we surgeons pathogen-reduced targeted

approval partners cryo a the months market We We million still annually opportunity the storage model $XXX blood with cells supplement product. a With with make as and also Cerus, PMA Mark select than for believe plan on for completing directly our later. of in full our which biologic greater manufacturing hospitals potential are and and six in the INTERCEPT submission tracking progress centers to INTERCEPT for half U.S. first new continue business planning represent for finished that work red on the we commercialize we Europe. regard to associated XXXX CE file to the in extended portfolio, product to the launch

study look from customers, with of burn. plans bottom study well investments positive transfusion BARDA use We X clinical We cash reduce of regard results our on to our growth, by been are supply. the the thalassemia straightforward. for scale drive line, received U.S. with patients we will leverage have made to in platelet interest The continue product to the development revenue detail the blood community. INTERCEPT to program to our And and commercial in margins, and of expanding SPARC XXX% our in our Phase are a in hematology and that seeking especially services have initiatives to INTERCEPT red SPARC generate Phase of cells. economies regard to finally to medicine allocate their those long-term to resources progress routine are existing the provide to Richard in X more

to let first results. on over With the results, me to we Kevin deliver our our evidenced discuss call this As by are turn track to quarter QX that, on plan.

in afternoon of over when we million to totaled everyone. million compared QX and of to XXXX. first in $X.X to product and for $XX.X revenue demand million to than contract Obi, revenue for the In quarter XXXX. XX% compared platelet Thank you, compared XXXX, XXXX. during XXXX in Today, of strong disposable kits XXXX total compared led million platelet quarter QX approximately of kits good $X.X more the Worldwide by $X QX reported product accounted year, prior QX doubled QX revenue Government of of in of kits. XX% sales first

growth to demand our was kit EFS up INTERCEPT to from agreement for INTERCEPT that kits increase use geographically, in hospital region slightly at continue grow. In platelet tied well XXX% up much growth as was France. North expanded components XXX% the than demand America, in kit EMEA of of over with more with U.S. Looking

increasing QX year and revenue commercial range remarks, raising full product of Obi outperformance are As our our noted outlook, $XX revenue the a we to in in given guidance his in conviction million. million product $XX to

quarter exchange resulted high including tied pricing the margins product rates. Now Gross economies were turning on in first other XX% and consistent product results. mix, increased gross volume foreign of to of for scale the offsetting volumes year-over-year quarter to XX% manufactured, XXXX. A with QX revenue margins, in relatively associated from of sales compared to customers, variety factors

expenses SG&A million the QX Now of $XX.X during which let's for were expenses, accounted million during quarter quarter, results. $XX take during consistent a to QX XXXX. at look million the with XXXX compared XX.X operating

sales markedly were flat. SG&A year-over-year increased While expenses

prior. growth. overall the million program compared We development realize and the cell base in and investments with future to for to $X.X clinical with teams quarter $X.X development were the are red the associated both during INTERCEPT revenue and current blood that Expenses beginning U.S. and to relatively commercial Research expenses business leverage of designed our million are inherent increased. a deliver year the concentrated our in and EMEA customer

related to personnel to plan We BARDA are R&D continuing deliver activities. more on our on focus

U.S. an expanded rest and blood increasing the associated clinical underway. with INTERCEPT Our in with red programs cells trial are continental trial the of RedeS

for the of year $X.XX the net expand and activities quarter compared our $XX.X diluted anticipate compared first million prior program, during the clinical quarter Operating R&D first million of $XX.X quarter diluted were period. the for red share per XXXX enroll to or we $XX.X of losses the million $XX.X XXXX. million per expenses to or of continue for first the loss we totaled XXXX increase. BARDA loss to Net $X.XX a As cell related share to of

INTERCEPT cells the Mark storage commercial planned continued we including looking balance Europe U.S. well with we hand. in terms market development in $XXX reduced to in launch France deliver our products quarter In and in on INTERCEPT rollout of INTERCEPT adoption and of commercial U.S, pipeline cryoprecipitate pursuit of and bring approximately of throughout the the completion million of commercial the forward We pathogen and planned our to believe red cash ended strategy the are positioned of and the the extended CE on first investments sheet, launch Germany, in

to red you our Richard to over program. provide call the an turn cell on update I'll Now,

Thanks clinical program our Kevin. and for development pathway red continues. cell Progress in the

commercial have update Mark CE lots submission step our and assay is the An method. release contract for testing of material. we and the a the next that validated to development UPLC report the Ultra-Performance our testing is Let for anticipated validation successfully of laboratory UPLC transferred this I’m Mark support assay of required or which important later Liquid of year. me start Chromatography with an submission, the lot CE release in on pleased to our

We’re and UPLC improved assay. consistency new with seeing is The much assay the robust reproducible.

the submit of We are the ability Mark CE this in to with which our confident engaged year, end connection by assay. was the in filing

many approval new Mark As you of are in directive times as have been a EU. CE lengthening medical function device of the the aware, for

and in months to Europe except and other CE cell the could put anticipate the INTERCEPT red the us timeframe. in a Shifting blood launch That potentially approval we more. take such, countries Mark to that As gears Mark should or revenue approval position U.S. in XXXX CE program XX development the red process in cells

Florida. RedeS, the and in impacted weaker INTERCEPT blood sites area for our from We cells study have red clinical Phase Puerto into Rico X evaluating Texas expanded

post-hurricane expansion anticipate into of the via we to accelerate. the enrollment Puerto and revitalized With rate U.S. Rican continental the engagement sites,

in our complex of undergoing first is patients the U.S. we study the use is being cardiovascular red contracted surgery, INTERCEPT from are ReCePI, which the study Phase targeting to-date interest patient sites cells this participation summer. blood evaluating very X terms that treated been have second rolled substantial in In of and

from reported results we patients. As study Phase X study, our SPARC mentioned transfusion-dependent year, this in Obi early thalassemia top line

closing this an use consensus data. the and the Following patients particular. attendants cells brought SPARC and cells. study and thalassemia the presentations the of by findings, of discussed laboratory Transfusion Medicine about June. let presented some and transfusion mid Obi efficacy back patients study, to we conventional study respect review of release, next INTERCEPT Hematology general with ISPT safety for to With at efficacy U.S. Rheumatology Meeting Sweden red fall. in are the safety held It planned presented for the top data chronic results comparable at and and agreed that, importance turn the the in the safety in in meetings in the to was Processing line experts upon. the be inform for European Toronto, clinical red in hematology Plans meeting initial With the Further support at the profile future clinical results from Stockholm publications Meeting will the will clinical requiring of be investigated to and remarks. in and presentations we and it was report March study of the me month for

Thank mission, our safe components by as you, to transfused to of for customers close products globally Richard. and blood patients. center like care the everyone to standard corporate to do in everything reminding blood I’d INTERCEPT power blood establish enable to our to deliver their and effective of

in at Cerus. includes region we of supply the summer a from entire Rome. first I clear for plays Lazio, much if quarter we're great have order Italy. in our we in The were shut outbreak work of ahead our was of do mean during a Kedrion, success routine have not in just as partner we us the results. new return been down system. Italy of reminded with to it use INTERCEPT While platelet with realize our Last mission, evidenced INTERCEPT chikungunya seeing of fully I by what importance the meeting that evidence would sustained

INTERCEPT, Fortunately, a period. no during result the as transfusion of of a were typical implementation regional that patients platelet denied

Italy. Italy, represented groups we entire transfused are teams move Italian are and the chronically in advocacy launch cells there safeguarding patients the for many supply Cerus especially red excited thalassemia the of patient As blood in well towards that by about the Kedrion

call the combination teams' Before the of and the I globe. persistence we services enhance for transfusion The we share up with wanted our reported around of our remarks, an Cerus prepared teams' questions, to efforts, blood acknowledgment safety. supporting today the endeavor conclude results with open to the

please our the in have knowledge for unmatched team call the here open expertise is Company a Operator, the and questions. great We at and industry.

Instructions] [Operator comes question Our Cantor Fitzgerald. Craig from first Bijou from

open. ahead. go is Please line Your

I on -- me start me congrats some see and orders with, was, wanted start Let in draw last kind would I on the growth. called know strong some stocking of to well just very the first that's you out there let of the quarter. quarter stocking, if

one-time parsed saw you So quarter? if impact what item wanted quarter well I see if the to and were then FX because maybe any you the there could above And in come did we was also out, it the coming that expecting? during

there or us. certain in behind that QX any distributors not expect been basis. Sure. QX, see last to distributors, signed orders In then France, QX, With production quarter seasonality largely QX up also Kedrion true some to you're orders for have on would and for first there's we some Craig, like that there did right. yes, that choppiness anomalies and In or the is may that’s said, of have are QX that not annualized we period and certain an that. may year the course we of of in seasonality

without is noise a the QX So, there. pretty solid number

reported came came XX% as look of growth, growth. FX, XX% and organic you from FX at as if XX% that growth its far year-over-year the As from

I North kit And U.S into dig said XXX%. maybe well you I kit could the believe the above America or the it's volume

in So the wanted that, what any North from kit U.S what little driving into you that there in is then volume America? to is Canada there? color know, seeing more revenue growth are really beyond maybe And and just

that all Canada regard production Thanks to growth dividends year out and going collections Craig, number a ramp customers that their last on we optimize any the this so sales U.S., processing out to it’s part with to with paying one, and an compatible have in the there we is our INTERCEPT effort we systematic year. platelet in the didn’t contract, and rolled really have and then under effort

platelets still of we that getting INTERCEPT So, that hospitals see the not they a are lot platelets, like. the

not mixed So, a don't carrying are like hospitals they typically at XXX%, inventories.

advances making in INTERCEPT realizing the working they they are so daily all some And right that are are routine of centers plays customers use marked basis on that now. Cross, American Red in specifically with our a overall output the

just And the that one guys maybe dollar squeeze Okay, if seasonally is revenue of one sort Kevin, you last amount in, just typically that’s lowest can QX I help. see.

our So X. side million you raised number you the product guidance by by beat roughly on guys and X

the see the comment So quarter the on, of maybe be, of to should maybe year, revenue to cadence just still X year? the what we for low quarterly rest you the the be something for expect below number QX

have had like on, of I smaller that or of think customer you you economies scale the of France we lot know now. with never a customers. We've sort had

with the have but these effect operating have that meaningful continue, with making does don't said, to of the contracts expect lot But that, we're would have I impacts effect So, in experience those don’t U.S., they but it volumes. top a positive a of overall the we that France customers committed previous the revenue, course line, in smoothing have of the excess that to dose progress we lastly, dose to we a certainly approval, and a In the to double what they plan do with move the volumes. us And double do platform say line. then about for bottom has is

from Sung next Our Ji comes from Nam BTIG. question

Your ahead. is open. Please line go

guess expansion. storage market with in with of be well that? I what market expansion shelf-life could percentage the dual as as France Or Is was wondering the that adjusted I opportunity?

will percentage don’t happen we platelets that there. to get that don't the ultimately So, top visibility quickly exactly. conversion will would on we what have that We know potentially how dose when of treated essentially, impact and overall are as they get line the see mentioned, just Kevin a double into to. would will But that that, also that percentage

their I as XX% And the ultimately, double remarks, they their you cost that the our we say able centers. overall improve configuration. platelets thing prepared conservatively be efficiencies operational just and I mentioned to for in good may it customers dose can in for blood because does have of the think structure do

And -- steps how expanding? what ramping are then us of just question that some market the, could you another on terms see that I again kind that you remind in of overtime? Is next of Canada, guess,

or Health market the BLA treated Blood we the the Héma-Québec services process to in approval blood two Canada, Canadian in INTERCEPT Well, even Germany and for Systems what components have to with in U.S., place similar of see file Canada. with

So there's that don’t especially advantages preparation term. the double and is in to see near-term extended Canada and CBS we ultimately shelf-life long than I so remarks, mid with think process the does configuration but there double to dose a Health an a take get as in real buffy-coat prepared mentioned while, dose the opportunity We into situation with more where platelet Canada. submission do

So, will something it's I immediate think happen it's do in not that timeframe. just the

wondering, was about one terms just able then how quarter? to might be any able progressing? And to I U.S. of And approvals we in American BLA be you or be incremental more, Cross? when you might at able if might And hear in the might comment -- the be on that in Red

the So, your think [indiscernible] were update. questions Cross BLA I Red

overall happen last filed are currently and And of likely that a in they Red of will five So, we have with that to regard we And it some are Cross. approvals given review but went XX time. I the BLA the think more it Those blood BLA discussions with on QX near other thoughts pending. year. eight American yet beyond centers, initial status, the we the have not months ongoing, in do BLA from term saw approval I think then

Drew Stephens. question ahead. comes Jones go Our from next from Please

of on question for right feel running they now? level have France. a Do quick are utilization A you what

a there assume believe France their we think [indiscernible]. point Yes, been being time I being that from with the INTERCEPT but mean this in And at at treated platelets think we are that platelets basis, on in still time whether I perspective. there should are fully some all realized that’s I all the sales uncertainty quarterly

today. then, And footprint as statement? that consent the a are fair sound Is like commercial it with it pretty you exit organization, guys commercial

leverage the clearly to I from see. incremental then and investment the of think something we’re we made having starting scaling revenue historically without headcount is that to add see we

but we'll that we focused and of selling may called with I launch commercial of effort of infrastructure there and well a product something the a existing obviously more lot out think the leverage in cryo, in add folks, few Intercept hospitals that have hospitals. is commercializing both we have We the a also get [indiscernible]

Drew, more approval these cells that if even so the I true comment Just get and team is and on is we're for a globally, already comment not to EMEA, previous our add leverage it U.S in and or the that just out Mark probably red that on think able customers to CE calling there. all built

we leverage, pure get. if almost that's So

Thank you.

question Cowen. comes Josh next Our from from Jennings

ahead. Your now go Please line is open.

we've I with and But was the converse U.S have The is way and early, inherent on cryo adoption you in launch that cryo accelerated trajectory approval York, New with we also value proposition events cryo be just hoping learned provide? very opportunity, centers just start the understanding the product investor that appreciate there and need very and decrease the XXXX. path the it's about seen of high for seems potential by more cryo a because off perhaps so proposition and to the here anticipating would a that like that available blood to more in ramp but thinking reduced I the lot held but should platelets, wastage that. guys value utilization in that

are to Josh. you've think as the products I compelling So heard, specifications physicians, transfusion

With regard partner. the states product many have And where the be of demand readily for our on available in will term need and be revenue because just patients I the and ramp focus the having think the to address near so, will there factoring something we bleeding today. not a those

about the in to So central for There is California partner the Fresno. in up trauma we with XX signed California Blood California. manufacturing in example, centers Center

coverage you we'll look to we're going to to manufacturers need optimize in up key those the able would states And cryo the other looking and to US, as imagine, shift to of like So be we X the states like to X the get to BLA be in the one. to that's of to state and then launch get year signing states. can additional out one target to

ramp. see And we'll will the be more states we're partners. limited one accelerated to a so year cryo the two Year and three, our where manufacturing with

we're and in And the update the inherent tick-up, that that here QX. I with to the sounds Those you revision. really the guidance into experiencing be strengthens just anything are there positive particularly that, in on America, guidance just like drivers assumed? it the tick guidance EMEA that two or guidance of were the and clear and wanted France Is in else and North up also baked

so France said real for U.S. where you and the drivers QX as No,

any countries point any 'XX, any or contributors not potential Canada, -- could in and see be of close the maybe congratulations a there XXXX are other other tipping countries approval? in but to are but that that positive in other And on approvals that on terms tipping point at we a

Nothing, I critical Europe to not multiple some out like increased we fact and lot contamination would seeing of awareness rates. of think seeing and those knowing that but will we of in of the mass technology, countries we platelet driven when just adopting history interest the as in the the by make exactly just given a call are are that convert,

to planning, driving transfusion seem guess, the much be really national by I say greater services. So, and I’d those interest things two

INTERCEPT. cautious up discussions about multiple go, national exactly think I with when in of about somewhat they we're but services implementation transfusion broad nationwide So, will we're

[Operator further Instructions] showing timem, this I'm at no questions sir.

in for interest you and your thank today us Great, again thank you, joining for Cerus. and

Conference We the at in tomorrow forward to Annual seeing presenting you be Deutsche look Bank many there Boston. will Healthcare person. We in XXrd of

call very early quarter and second that forward Our to will August, you much. Thanks be at time. look updating in we

gentlemen, participating This Ladies in event. today's program. concludes for and you thank our

disconnect a wonderful and day. have You may all