Cerus (CERS) 20 Feb 202019 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Cerus Corporation Fourth Quarter and Full Year 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker presentation, there'll be a question-and-answer session. [Operator Instruction] Please be advised that today's conference call is being recorded. [Operator Instruction]

the to turn today. host now will conference your over for I Mr. Lee. Tim Sir, you may begin.

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

announcing December Cerus and our XXXX press issued today financial quarter the ended release the describing highlights. full for also year business XX, results and fourth recent a Company's

announcement You like can historical facts access and on some will a the forward-looking you will our remind and this website copy of I event of lead www.cerus.com. on rather statements future we this make performance, at than that statements. the Company to call to

sales, forward-looking operating and strategy, and margins, Examples and future products future related financial and ongoing on of and as events results operating product timing growth and those regulatory ongoing trials, activities, blood commercial and expenses of our guidance product our future our the future and current future clinical products gross operations, as and XXXX efforts, goals, to financial include these center well development is future activities. putting impacted launches growth development

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

by review providing remarks will financial opening and of Kevin, remarks. who financial Obi a today's On provide we'll call, with closing with from resuls our detailed the Obi begin followed

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

afternoon on call. Tim. thank us you joining the and for Thanks, Good everyone

the the standout XXXX commercially. As a team, We XXXX efforts another Cerus with of million, highest XXXX. revenue up at quarter ever, result entire reported quarterly compared was of year $XX.X the fourth to of product finished the XX%

year, the the $XX of product at million $XX end full our $XX.X guidance For of revenue range million to million. revenue totaled top

Over the of more still adoption million But shipped platelets are past ramp. and revenue. they've global our even X importantly doubled approximately worldwide, we transfusable and product now been the years, INTERCEPT early three have units plasma in we

With guidance final platelet U.S. to procedures the safeguard on end year, bacterial implement of in to updated the hospitals until of of and supply. September their of centers safety the XXXX, platelets have the last issuance blood March

customers FDA well help positioned through documents. blood compliance to period the remaining our months guidance for center We're the the in XX the U.S. of

Beyond a conferred put compared also by options providing INTERCEPT earlier platelet the in blood forward products benefits these day technology, robust through other pathogen centers at allows a least guidance. the to the proactive reduction

codes By testing virus such minimizing strong certain to were CMV costs. eliminating hospitals, testing, radiation, number demonstrate streamlining serology the assays gamma cost making product as and specific able logistic to we the and by center processes and delivering platelet blood thereby products of redundant Zika savings to procedure

day proposition value FDA more the that be made for believe blood and our will set approvals even X platelets, extended we storage the anticipated For triple for INTERCEPT label cleaners for claims compelling.

in of a compared we XXXX revenue, on in terms penetration fourth that of XXXX. to approximately domestic based estimate In market product market U.S. quarter fourth XX% XX% our share, quarter at exited we

prior leads substantial the compliance period. XX% also the pathogen-reduced treatable the of continue XXXX, U.S. past ramp year. anticipated our the doses in to expect During the of product be defined to XXXX, we market the the to number compared untapped platelet U.S. us increased This opportunity. shipped U.S. U.S. even nearly in cryoprecipitate Through launch and meaningfully increase to penetration will our by XXXX market adoption

We a technology and the first the a year-end. translates pathogen reduced approval CMS. half tracking Centers cryo this of NTAP or This so Medicaid for by submit with year, add-on into on payment a which for in to Services are potential new submit for supplement PMA fall, our plan or we plan Medicare

hemorrhage that Given breakthrough facilitate the will FDA pathogen-reduced which cryo, we're device cardiovascular for clinical awarded to product's the patients. designation trauma, adoption NTAP outcomes XXXX, we on will believe and beyond impact approval receive an surgery, intended optimistic meaningfully we in maternal market

the market on about The bleeding it's for potential and Cerus to likely product incredibly team U.S. patient at critically pathogen-reduced cryoprecipitate outcomes, launch. our whole XXX plus impact anticipated survival excited million as

cell strides the to Mark and Phase with meaningful made context X U.S. the in we the last program regard of year in studies review clinical process red Finally, both CE our INTERCEPT the

qualification expected transition in our CE to the the be GMP studies news unifying quarter. With regulation second the labs from on pathway quarter, second medical new or to our MDR our device the in completed we plan suppliers submission, Mark

working CE continue compress from Mark to is and a more blood we event timeframe new believe the juncture, process. optimistic. this to approval that MDR At we We're diligently into XXXX red have until cells visibility are

me that, to review a Kevin of let it for detailed financials. full and our over With year QX turn

the XXXX from revenue up XXXX. QX Thank million, and million afternoon you, we XX% during good quarter of recorded everyone. Today, Obi, $XX.X recorded product fourth $XX.X

an January. unchanged totaled For for the in reported early to increase product preliminary $XX.X be announced million, the million results full from year compared XX% full $XX.X results of revenue These XXXX. year, are

platelet of approximately product quarter, sold kit for product the terms of sales In XX% accounted reported during revenue. mix

FDA U.S. full year be in of largely from to Looking Accordingly, ahead XX% XX%. utilization growth, comply INTERCEPT with will expect of we $XX expect million, million range growth XXXX, we guidance of to XXXX product take $XX to kit as robust document. the action revenue platelet our representing the approximately to they blood centers driven increased

billion for studies, vitro contract reported Increased December enrollment XXXX. $XX.X in well and are as preparatory activities during activity expected through XXXX. as clinical and continue and during increase CMC X-and drove this XX, the and of to in our and RedeS million development XXXX, period $X.X comparable additional $X.X ReCePI totaled million the from periods the revenue Government million XX-month respectively, $XX.X ended

Now, our to reported gross let's move margins. discussion the

the were scale to improvement lower quarter, manufactured kits period. products. meet and gross margins attributable of from compared was and prior current the growth to year XX%, for economies volume gross significant kit demand COGS, in The of XX% per For and increased for our margin the resulting to expected

margin mix gross Additionally, platelet to kits result France. double of as product the a favorable in shift those improved

were For full margins XX% the compared gross XX% XXXX. year, during to

to I'd be during the mid-XX% $XX.X We the operating stable expect relatively ahead now we which as during totaled discuss compared expenses QX XXXX. to in like range, $XX.X margins quarter look million will to gross XXXX. million

million full compared in beyond. year and the during $XXX.X QX The total made growth the XXXX million expenses $XX.X in SG&A quarter Of to operating to accounted XXXX. to compared $XX.X during totaled XXXX. expenses during For million $XX.X investments during and expenses, the R&D the XXXX SG&A opportunity allow we've XXXX, operating million maximize us for

compensation increase driven well continued preparatory we've non-cash in our chain as investments pathogen-reduced The higher as anticipated from made activities U.S. supply was launch for costs. cryoprecipitate capabilities. The

generating SG&A year, leverage million SG&A investment $XX.X $XX.X the in For to XXXX. spending that to committed expense in We're during to full discipline investments, billion revenue activities with balancing lead from compared our SG&A generation. totaled

to X in year. and our to as $XX.X set initiatives platelets million including expenses as was research to to expenses well tie due now million product enhancement our activities quarter for increase to The $XX.X development totaled and claims for claim. expenses, expansion, compared the the Turning days during label prior largely R&D legal triple X R&D

in for cryoprecipitate of anticipated In addition, development increase as blood our pathogen-reduced drove into activities of supplements activities portions support to tied cell the as well PMA our program red R&D. development

for million expense during the year, $XX.X totaled full the period. prior $XX.X million For R&D year

anticipate ongoing set in activities. spending to higher X-day in products. XXXX we the to ahead, MDR MDD X-to for market expected triple due label to development claim Looking U.S. the the of our R&D And in BARDA-related cutover increases our

reimbursed BARDA-related revenue. contract a as As expenses reminder, are government R&D

the net let's $XX.X per per also loss Net bottom compared to at line. are of $XX.X share, $X.XX million the totaled diluted to loss period. Now, year prior for diluted a million or the look share quarter $X.XX

compared loss loss $X.XX per net full year, or a the For billion share, $XX.X share per XXXX. or net for was million, $X.XX of $X.X to

us as we down we've will that a investments made mentioned, feather the create activities. certain INTERCEPT for make standard will R&D previously to platform complete As and which care of

balance, I'd earlier completed like proceeds short-term this a common few balance that with we We equivalents hand. stock make cash XXXX ended to gross comments sheet. year, cash, $XX.Xmillion offering about $XX.X supplement raising of To million. on in public a investments our and of

is U.S. to extremely the a a allows blood that preferred launch and cryoprecipitate guidance on product, our Cerus us for centers to and document sheet executing With finalized balance to profitability. INTERCEPT focused make FDA choice

our in and front completion given recent planning believe can of the profitability the of we opportunities us, during period. strategic we With offering the attain

We SG&A our be costs, continued a programs not spend. increase are non-BARDA we and our near-term, R&D to supply development margin have ensure to quality gross the but of the expected and growing, to in confident and from our same our current the research At are the in completed only leverage course tremendous many lowering top to improvement. opportunity continue ability of time, line,

that, for back to With let Obi the comments. call closing some turn me over

Kevin. Thanks,

COVID-XX originated recent outbreak up China. in to which on I call, the Before Wuhan, I wanted wrap the comment the briefly of virus,

are COVID-XX virus like near only Some chikungunya one be more have real the MERS in like or West another Zika, The mosquito-borne would Nile. not to coronavirus SARS, and surprise future.

and monumental the have infrastructure. the scope. reverberation via and required frequently by or As witnessed, presence efforts morbidity address in known they make on of impact as pathogen would across and their providers healthcare these pathogens their mortality societal quickly emerging an globe the toll The human we

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can the infected impact have we Donor and out impact our on of potentially great a blood regional self-sufficiency rapidly, deferrals supply can pathogen They address donors. availabilities the all adequately help available an deploy tools must To the epidemics. at during on and emergent disposal. screen

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XXXX. to want a we to that standard for impossible Cerus things work determination I'm make will for take all hard many our INTERCEPT milestones their global in care. forward important made I and to success of continued moment together great employees XXXX looking thank mission who XXXX. closing, In make achieving the in and all Their passion the helped realize a to

open Operator, call for the please questions.

Stifel. you. Our Blackman [Operator Thank first comes of Instructions] question from Mathew

open. is line Your

didn't in there role It that like Tim Vivek the call sound was did.

that are know a all on questions I'm of how we And XXth? ahead curve, So in September been preparedness could follow-up. of say, detail more other I Cross curious the Obi, but checking got you couple then has also that? a big Red and couple the versus, of follow-ups four a tackle But the of level blood maybe about just general with if maybe, talk center today you could

Yes, for with final their compliant forefront with thanks to be FDA guidance the Mathew. Yes, Red being Cross strategy to document. the at continues the overall regards

be runner that of remaining there's working preparedness the just continue I of given With of four to the the regard to will plus they centers, with big a history think spectrum So, five on part. their sort front us. their of

the guidance with farther to I go that or versus what proposition say, to options we blood demand think, option to comes pathogen strategy down what's is put they really other will you trying get, are I the that reacting are, to their to and in along comes than final associated centers hospital having sort increased the and and customers will value Certain hospital preferred reduction really forth down that to, others of centers their a blood think hospital determine document. by is. which believe And customers here's are relative it our your price the

well actually to product? still how bank you and That drive you hospital platelet with conversations specifically lot talking was, are the guys And it, end about which blood How seeing mentioned approaching for itself But to also ability the premium you preparedness. of banks going? are a but follow-up, lends those pricing time engaging customers? Okay. are blood the the

I to Red and it Cross. given example their think Cross again, how regard far as going partnered Cerus with strategy, really American effort they along plan a between to is the are overall an Red the just

bringing the an pathogen customers INTERCEPT board by side conferred but for pricing, is the relative We we that as the platelets have the far America as a given why Cross, proposition believe dedicated hospital justification reduction works and and affairs those on team hospital to value discussing the adoptions. Red with with benefits on increasing economic

fewer a was transfusion the platelets those of increased the One platelets. ready thereby ability for And to product. hospitals hospital life easier a of via making standardize will that being have it codes, platelet the shelf components earlier receive to

central the with team then the to closely their how theme And a I Red treated deployment hospital not ramp on a we product. think there production, far as only quick the but INTERCEPT side handoff versus works as tested the they production having can customers. also also have product platelet American is that Cross, the

One Any update approved last BLAs the number quick on in of the question. U.S.?

Yes, thanks Mathew.

XX. that are got INTERCEPT their still XX Red blood Cross I around out think We've we're of XX. using centers total

at regards key XXXX. customers BLA approval So, our to don't expect this we most with the it process of is be rate-liming and point not to throughout

Our next question comes from Jacobs Johnson of Stephens.

Your line is open.

us questions. the you given you but saw I any about past for quarter interested think revenue, the product taking for thanks Kevin, be volume Hey, the in the growth color color share and core, on standout I'd some fourth the of in pretty you've quarter. trends volume clearly

Yes.

growth you kit volume the So quite compare XX%. for robust, quarter around QX, that if year the prior kit was to up was

dissimilar too full but year, close not the XX% For to

And just you. sticking then Kevin, with

the puts but by us year? can sounds this will On the platelet maybe probably the any driven the cryo does be through like towards should for from and be contribution to walk maybe U.S. it, particularly, you it contributing end then that of we year, And are largely back kits, of aware any takes guidance just countries this assume guidance? the of

be Yes, growth, platelets. the majority so driven of of the the will growth from U.S. most vast

our other in the areas, to no from assuming be modest. of expect any reasonable we have U.S. not the into year. of the this but guidance by do guidance. revenue end won't say questions could into growth modeled is that times not growth But first year be cryo We response the half we're cryoprecipitate. that's There expecting factor to that revenue our submit from in to did So will there in and relative and that approved the

from Thank from you. Cowen. [Operator comes Instructions] Josh Jennings Next question

Your is line open.

Can Josh. Hi, this is me? Eric for hear on you

Yes, we can.

your you at out in thinking XXXX. of are Germany looking contributions sort come Just what opportunity Europe, guys in could of

Yes.

right ramp what process slow the approved in in similar said of approved what of are be somewhat are that saw being essentially MAAs coming the blood to to biologics, methods products it's So, or are There blood of is Germany regulatory [by now called Paul-Ehrlich-Institute, approves manufacturing and by the those so we a the the Germany in pie], U.S. body that together. which to implement guess are regulators new are are continues centers the what we a German I to relative -- lot all

through in the mechanics do reimbursement discussion. center And of centers hospital that place have blood working there we're in translate We and the to for and hospitals they're how something -- existing the in that's into payments place today. blood actually products sorry, then, contracts

So, on there is team working dedicated Cerus this.

about that a XXXX but represents, think in not XXXX, it's Germany opportunities more are 'XX a of it's to We going is be context we the meaningfully, guidance, that optimistic delivering event. long-term of something

you. That's And have ongoing blood guys very looking Phase then two thank you Great, for helpful. the cell. at red X studies

a XX on wondering ends. would helpful? the Thanks previously And of any You has questions. that year I'm sites by for then mentioned ReCePI progress goal on be goal up and how just running for also having enrollment been? comment

Yes.

you mentioned, States. RedeS have in study called as United throughout will this Phase is ReCePI. year. continue and that enrolling the One So, enrolling the we are two The and quickly studies really is RedeS other X

ramp about in optimistic And we're study. So, to enrollment as ReCePI that is enrollment well. starting

the expanding have We quarters. plus in sites XXXX several number XX of actually enrolled and over sites next are

see of of additional think for we're XXXX. in this the are more rest coming sites We environment with for year. I the XX board, an study pace should the the that targeting So, than on increased

any back over conference you. like further remarks. to turn this Obi questions no showing at I'm I'd for Greenman the closing to Thank time.

for, interest Cerus. in us your joining Thank you for for again today and all

the conferences next participating We QX in will upcoming month. be in investor

Conference Cowen at next you be in look month. Boston be We XXth of person. Healthcare in forward at Annual Snowbird, we'll the Utah Conference seeing the there in BTIG to We'll many also March. First,

Thanks much. very

today's this gentlemen, concludes and conference. Ladies

disconnect. may You all Have day. a great