Cerus (CERS) 28 Feb 232022 Q4 Earnings call transcript

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Cerus Corporation Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Joel Trujillo, Cerus' Senior Director of Investor Relations. ahead. go Please

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

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

Senior ir.cerus.com. the You Scientific Greenman, Obi Officer; President Cerus' Affairs Chief Financial and Vice Kevin Cerus' Relations slides Officer; access Officer; President on Operating from Vivek and Executive Carol Cerus' can website call Jayaraman, the Cerus' Moore, at Regulatory Officer; Chief Green, With Chief are Dr. me the Corash, Cerus' Investor of and Quality. Chief Laurence

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

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

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

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

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

with Officer. Chief Obi We from introduce and Obi And closing it's President Greenman, will commentary with remarks. Executive now my pleasure Cerus' conclude to

momentum we out expansion. progressing and our has the geographies, building INTERCEPT multiple business, see play an Thank last in continue in trend the safeguard and in the momentum you, everyone. the of sustained manage this standard driven about fourth the commercial U.S., evolving in excellent in spoken growth with we to operational afternoon, of the several the U.S. have execution quarter Joel, our platelet recently global most goal on and as as XXXX, by blood with our manufacturing good seen capacity business to establishing in assets growth kept supply, we care Cerus In efforts the calls, INTERCEPT On upon

past deploying in paradigm has Our a shift drove for lead the Cerus significant growth The for to platelets the transfusion success INTERCEPT over record the a the in year System realized U.S. company. the in enabling years medicine. Blood company is X

referenced our happy low business SG&A use XXXX a the to has expansion, January. remain the We with core expect prerelease driven addition that remainder built, leverage And that few upon a top with to I'm business report is the which very progress as foundation through balance operations quarters, of we and by over our sheet. a our the we results the franchise for investments for moderate our to prerelease line run sustained strong year ended the cash robust company year. line, top in in is near-term generated from and margin past the Here in several challenges encouraged from growth

plasma markets And and have beyond. growth. XXXX years. expected over in to of we necessary next facilities growth on standard being a currently line the have doses our INTERCEPT customers as We grow see work we This System to commercial mission, geographies the in and of and its many several adoption such date. extension of opportunity in top itself transfused the our new as supported capacity multiple the substantial new Germany, serving position is INTERCEPT to partners Canada, and that and including manufacturing to serve markets INTERCEPT complex. China leadership continue focus will with to success XX a expand now, our our to to million care the to in placed and fibrinogen in XXXX with national grow realize now a To be Cerus continues products, partner to significant reliable established INTERCEPT realize Blood over to platelet Having our capacity trusted by

in opportunities company's or significant. are market, organic context Cerus, TAMs, particularly the addressable ahead the of total The for the growth of

now opportunities, these the expect fourth TAMs over X to to would demand platelet driven the respectively, the years, like by over to and for $X.X We billion overall global call to highlights. continue $XXX U.S. to and surpassing X the grow, to turn I quarter revenue Vivek million growth. mid-single-digit platelet next discuss

our in EMEA, by afternoon again center year-over-year saw XXXX contribution revenues XX% good of and XX% for and a today's blood product with growth year-over-year basis, platelet North fourth customers from a joining ongoing a and continued sequentially. the everyone Obi, year-over-year we revenues call. U.S. In across adversely quarter to strong headwinds on In XX% growing Product America, impacted on basis platelet utilization currency U.S. XX% grew once you, franchise. results. driven Thank sequential

X% volumes quarter drove to However, of revenue sequential in increase growth a relative third the product X%.

allows The that INTERCEPT announced out X-day rollout progress forward and quarter, This company Blood Services earnings Cerus been CBS we now Canadian System our This the fourth across approval I approval CBS, to will it or has Blood INTERCEPT in Canada ongoing, to about rolling secured future Kevin outlook is with to the diligently network working call. claim. providing during Health begin of I shelf look recall for to over in on and discuss quarterly more results deploy a life turn Canada blood will in more a You Ottawa. centers. detail. updates our to platelet their

you, good of cash Thank business the breakeven. continue substantial our everyone. revenue our and to to expenses, closer to in flow goal operating move XXXX With we and growth approach our disciplined afternoon, Vivek, ever

will dynamic this continue during expect XXXX. We

of reported product XX% impact This led year-over-year on quarter million XX% quarterly line, million, impacting We by XXXX $XX headwind an platelet in Full XX% the year. to our on center basis XXXX by with blood growth grew X% across annual basis. driven full posted XX% fourth North year-over-year growth on fourth offset on base, of XX% to also basis. quarter year-over-year, sales U.S. INTERCEPT year-over-year other and sales representing Meanwhile, and an by sales product up year-over-year continue negatively revenue the American X% year-over-year annual a top revenues of customer was quarterly the blood year the basis customers a centers growing sales for North to revenues sales. headwinds were $XXX XX%, for by FX America. and largest

year. mentioned, In the year-over-year strength dollars. anticipate EMEA, negatively our annual XXXX. as FX shares of we continue Accordingly, will as previously through to least the discuss I'll dollar in reported impacted U.S. and U.S. on the headwind revenue for comparable dollar continued further partially the at a XXXX, it parity impacted this U.S. in that based is guidance growth moment. This euro throughout

platelet growth XX% growth treatable on kits a on basis. internationally. full in the pure Full basis, sold. the in year-over-year XX% growth number in Looking year-over-year growth platelet XX% the reflects U.S. a internationally and calculated kit year-over-year Meanwhile, a year was increase year at doses a of while of U.S. increase X% was

disposable for approximately our XX% revenue. XXXX of product of revenue of year quarter, of our terms product full and In represented sales over the XX% QX mix INTERCEPT kits product

which from in in $X.X annual Government to the quarter. prior our included contract totaled our revenue, not up in million guidance, product million incremental is revenue QX, $X.X and is revenue

on work reminder, on BARDA Department from Defense the a miopolized the blood FDA. line IFC blood the contract, over whole will as this in contract LyoCryo, the of initiatives BARDA the of to and with have U.S. be that incurred award supported nonfrozen DoD cells the from differs with a The red which recognized As we addition FDA, a contracts our X is the with and for the by bill years. milestone-based next formulation

and gross to now gross Turning profit margins. our product

the XXX during points profit Our $XX.X was the fourth gross points product year-over-year. fourth an XX% prior period, of for year XX gross basis to compared million over increase prior was Product up XX.X%, compared year million more period sequentially. the than basis and to margin $XX.X quarter when quarter

before, the that margins, products to U.S. denominated. supportive sales are our we've gross for denominated is As dollar dollar with euros, the of our majority mentioned COGS in of strengthening particularly U.S.

take our reduction expect modest as COGS been margins. gross to effect, addition, but improvement In see have volumes efforts continued we our the that to have increased underway and

Moving on.

million totaled expense during year up R&D R&D. in operating type, $XX.X in period. million, investments million SG&A prior fourth million By primarily the prior driven expense quarter million Our expenses prior the compared quarter by year. period, to quarter was $XX $XX.X million to the compared $XX.X expense $XX.X $XX.X totaled from in year Fourth fourth

with deliver line operating remain are we order have in contend While driving on to and improve committed inflationary discipline leverage financial we to results. all and pressure, focused bottom

compared months $X.XX On for to million period, reported $X.X million attributable Cerus a December the year Cerus ago per X $XX.X was or to net share. XX, $X.XX net per for loss the ended line, XXXX bottom attributable totaling share or the loss to

$X.X our the EBITDA our on better losses, by breakeven. full and to quarter non-GAAP a steadfast as $XX.X total pleased full negative the front million million year fourth of our a XXXX. million $X.X narrowed by year the XX% this losses, XXXX. figure We're compared to very to goal quarter totaled negative our negative year remain XX% adjusted flow non-GAAP reaching for the totaling as $XX.X reported a by Full prior reported cash year to with to Our fourth EBITDA of and million stated than with a progress negative our XXXX efforts compared during in adjusted reach XXXX of were

on fourth Turning balance balance to We cash equivalents flows. quarter of million sheet and robust cash and cash the sheet. the with a cash balance $XXX.X ended the of

million $XX.X few my finish To million update cash In terms $XX.X of used compared cash the I'd year utilization, today, a confidence to wrap around during breakeven for areas year from period. product cash year prior operations commentary full our and to year. was achieving our the guidance, across our our with the like flow expectation during improvement key revenue up of in

XXXX announced moderate macroeconomic company throughout of we we we to reflecting range expects expect be As shorter-term a the the well as to January, as few the rest year of that product in to $XXX a revenue full challenging the million, $XXX in factors million move environment as year.

I previously we guidance. of are dollar the the parity As to assuming U.S. our mentioned, in euro

a we X.XX back you as comparison rates calls. future, provide predict high will half and where more rates rates creates XXXX, will around part X.XX. of low as of year the as with we at the X.XX, can't in And assumption on around had spot This rates continue which back XXXX, looking future to average updates when go seen early while with the FX are of difficult Today, as the X.XX.

remain areas sum, key a to in across confident plan, our gross our from and commercial improvement margin on during lower In increased expect ability we operating cash leverage. see the used operations including and year, few expense to execute we expansion,

measured cash as over As anticipate XXXX. our metric adjusted EBITDA to by in non-GAAP of Obi. our turn call With that, such, the achieving realizing we goal me flow back let breakeven

Thank you, Kevin.

of market achieving are outlined, development to milestones While looking related number we the we progress, towards Kevin just opportunities flow forward and as a breakeven, our cash make expansion portfolio. to to continue of

is JV. China First, global of one expansion strategy our component our

the update China the on the status finalizing are provide We preparation dossier and during of our will next an call. earnings

on regulatory required the diligently globally. illuminator. next-generation is is project developing for performing towards LED-based the completion and are Second, This advancing its submissions studies we working company

of questions, in Next, authority, with that Cerus reviewed which program CBG, and related our controls, blood Europe, cell to red sets or the list of respect CMC. chemistry, manufacturing INTERCEPT dossier company a the many to

is Cerus information process And gathering to the comprehensive data and in craft of collecting response. a

the second of RedeS, and III completion XXXX, on enrollment of ReCePi Finally, XXXX of end regarding BARDA-funded in half RBC study Phase the we progress clinical respectively. in anticipate and

Phase efficacy surgery. evaluate trial cells blood designed ReCePi safety to U.S. patients blood the for in loss INTERCEPT reminder, transfusion III red acute and requiring of during cardiac a As a complex is

study the Zika the cells a compared red III efficacy INTERCEPT-treated While to blood in cells safety RedeS blood is impacted Phase by red designed conventional evaluate virus. and to regions of

In commercial growth and our summary, globally. have solid foundation momentum upon we expect in to leverage build XXXX the built for future we

multiple have we look these We out us financial the focus few opportunities on And to will next us over cash flow breakeven before improving as our self-fund allow profile years. opportunities. and

to preparedness. the expanding access patients components definitive Q&A. INTERCEPT let in for transfused ahead that, to Importantly, it of safeguard for the for we look and blood With the forward provide turn products to operator further me name over in pandemic years back a

[Operator Instructions].

line from from Blackman of first Mathew will Our the come Stifel. question

and successfully I'll And on explain I maybe multipart Is production view start demand. my doesn't Red question one just let's on management shouldn't to of something just over of, Red a you why Cross. need, couple sign and just the call that a sort the wanted going that call there follow-up. stock. back safety as then years, of it scaling perhaps with it, it Cross inventory we softer let's simply circle tell the words, like these are me after last --

of visibility we 'XX. contracts or are sort anything then as how be And up Just thinking and we this from about demand much -- Just be us have about? And the is that in I'll should Really think sense understand an any helps is, on going other you 'XX do that phenomenon for that 'XX demand platelet follow-up have on the we have just customers about there one should beyond? side. Red in considering a inventory of you Cross follow-up. what's concerned excluding

to I mind sort the you growth organic be that X-part it would platelet see of Vivek, question? an tackling cover the question, basis. Mat. on would part Thanks, good that And second annual think of typically we the

to. impact lines. those for of or as happy along should be think this indication you the I'd that any on sure, Mat, I demand sort Yes, thanks anything don't question. interpret about

have seeing reasonable influenced are to a We are broader there to levels. manage that need macroeconomic more the get and power factors inventory better

to with we right more be only all our I with Red think amount of but what on is ensure do, we've key basis. that to can the an Cross, supply been customers not able of to really provide nimble and as-needed

I anticipate an And to don't so has the need carry We 'XX. a lot mitigated. the been to be ongoing through inventory, think, of this of issue largely balance

I impact to would beginning the year. quarter and of but part in the of of first start in of had the then that the again think year at year see indicated first acutely first the the the the us normalize growth half this and back we half probably

in channel PR. where anticipate but terms And demand we, continued first managing this we Underlying share capture based continue the to our we see key demand issues. checks utilization to platelet really we level of and on continue, and platelet just and that through will grow, hospitals shipment see to it's continues quarter of

Germany. that's but then appreciate I the the were notice should it organic quarter I maybe Can just of you've internationally about at that thinking international? U.S. growth. I obviously quarter. the FX Obviously, doses, that. the had did representative in in if takes fourth treatable did Okay. you look some got some underlying more the we fourth business Canada, down talk outside like headwinds, about look And and of platelet And how in franchise? be puts the we they

the in I'm guidance specific trajectory we in to a check of us And data, 'XX? clinical going studies, IFC But help of the you're not the whether give on rollout understand sure thinking IFC any sort Just peer-reviewed that about, progress as like 'XX? be anything there should range. sort are case important we about it's international milestones of

I'll problem. issue. no an a perspective, bit talk international about little platelet you Maybe From and the first really tackle then Yes, growth. addressed IFC IP

cases lot we're you've good product take with centers . that that And they're and in for where you communicate a Continued users experience are influence to really clinicians. peers their experience account engage peer-to-peer use got of getting getting us sample, allowing marketing, to example, that are the and new on starting growth, getting now have of to other

you really as know, marketing experience a And the and aspect peer-to-peer long way. that sharing, goes

anticipate hospital-facing in to And develop case clinical going demand be pair generate and with starting So really to supply. experience investment who we continued that that's studies a can adoption champions, sales and, of grow. use case with ultimately, driver ongoing personnel, that coupled demand is

a being that certainly validation IFC. continued adoption clinical reason for we have able is of the for engage, utility heartening. get technology, need more the of to And and more of we lot we terms optimism So the in of folks which drive

From point an drive international you're near platelet to standpoint, Canada growth. and Germany some to opportunities to as correct

you at to call insignificant And If are your one thing distributors. is our would through the they bulk portion to sales do attention that those, I not look international orders. tend of

And in that, utilization there so more continue near the into little venture joint with we the term in but prepared not projected the to opportunity continue to are few only bit clarity then excited But as then marketplace the out, years our Obi China internationally, be remarks, a a as partner. the indicated opaque. having in -- about becomes drivers be we growth meaningful said there in dose

for stated through We significant need work and process. are markets there And clinical to internationally been there's the PR. regulatory where demand

platelets. for lot adoption still international penetration to opportunity a drive of faster markets in So and

at the breakeven or is of half year year? cross Can that one. breakeven full you'll territory the back sneak that. point flow one in at cash Kevin, 'XX, into breakeven the a I some appreciate really I quick

Yes. going to that The continue latter, make we steady expect to progress. we're

we the in see and I of moderate line, FX, the as on early some we'll the in January et we half the think headwinds expect half we top rebound to the clearly, to that discussed of pre-released, restocking when back year cetera. first the But due year.

our prediction is time a So EBITDA at that point in meant reaching as on to XXXX. our by that breakeven defined suggest cash in flow adjusted

from line next question come Johnson the will Jacob of Our from Stephens.

the just end appreciate Maybe year. -- I breakeven by Kevin, commentary on kind around of of cash for flow just the the

OpEx how trend margin As we especially we about the on should side takes about puts those and as on gross throughout think year, of think maybe and gross any kind the throughout dynamics? year, the the FX margin

Yes.

going really think I as to mentioned see steady some gross remarks, -- we've margins, driven of but scale. improvement the we're modest from economies some in prepared to

to As on Offsetting you been will of to and not know, and environment, working cost immune which course, of that, initiatives, margin in we've we're that play number contribute inflationary to that. reduction expansion. out a continue an we're

we've had that have value years been But they the are several we also we for products pricing believe where our delivering.

we told, sight of XXX line or it, but all that improvement, that. call and modest improvement improvement of so we'll said, into beyond so basis expect continued steady see, I And like points

Okay. And then maybe for going back to Vivek Obi. or

things. Just on IFC side the of

said, key meaningful more get become for of -- the any for talk IFC there good product of in to you about you I out seeing milestones all? use working some pickup kind or to that become think peer-to-peer communication. Vivek, you from growth kind Can seeing some of us, you're kind more things cases just

point? publish? about an need you need Is to more how of of think sales to at hitting should kind IFC additional we hire drivers kind inflection data you of Do people? the any Just there

anything. I address in, certainly, Sure. if And weigh Happy to that. Obi, miss

initial the and to You adding new utilization. will on the there those hit feet on lead repeat which the get continuing point terms uses, of getting then street, right accounts contract to in

in we're or environmental an isn't of there terms waiting publication data that for. along those anything So of milestone lines

happens really getting getting And the about customers in at-bats customers out on by with getting into reps the box. but It's newer all our further batter's accounts. not hospitals, calling of that existing kind

been that process, them our the new -- team. have the we in training, terms great by the them out accounts. hiring new ability solid on And getting to made in I've getting new and bring the getting so quality been very personally sales candidates folks in encouraged applying of of talent strides organization that that's

product And so adoption. and continued progress there, ultimately we're that's will drive what seeing good

Instructions]. [Operator

next Our Folkes come Brandon will question of line from the Fitzgerald. from Cantor

Cross. January Maybe since February in this has commentary in what terms as year been work Any down? on just of coming guidance, in back of cells terms you've that in Europe. Maybe seen maybe of to And the and just just inventory red expected? the gave it then Red you

comprehensive putting talked response. about You a together

terms of timing in color when you responses. expect any we submit Just to may those

And take part Yes, I'll Red Vivek, last that of Brandon, or you can cover maybe the question. the -- first Cross.

regard of have raised. So process, CBG with red Mark questions to the responses in And underway. with we is dialogue process to the the we're CE drafting cell the they've that

the think answer be just I optimistic want Vivek, very to and too do Over it's about to But program timing. prescriptive that to our be ability early about Cross? to now the right questions we continue Red you substantively.

a be way guidance that and they've I'd adoption is fortunate partner but early to the would rolling those lead Conference. the as anticipation ARC are really path-reduced we of helped to. in What strong of Healthcare led JPMorgan the year-to-date, in the that out really around happy say of days, provided that And to driving time We're expected. the Sure, -- back have platelets. things terms it's I

far, to we that so it's -- continue So really partnership an to And the area that I'd say, made. incredibly by we've continues we important comforted feel be where progress us. to

Jennings And from line of Cowen. from next Joshua question our come will the

X. the to Red would kind other Or get to how or manufacturing smaller platelet XXX%, some to kind other the big I maybe States. the just in off X run major and any Obi, as wanted X just And American commitment of centers and similar of a kind has those and of stepped start blood about United focus ones up progress? the the ask Maybe maybe really on big other Cross made they rate? Maybe

additional start turn some I'll it maybe Yes. detail. to and Vivek Thanks, for over Josh. then

at all of they're So levels. various sort

what the hospital is. function And some of see of demand that's sort a of they

can Some what operationally of deliver it time. at given they they any against is just believe sort of

So it's of approaches. mix I different guess a

I'd with well their to operationally is Cross probably to closest that offer say product overall to probably -- importantly, possible the would patients. it's then and just around most that regard provide? easy one like additional blood Red as And safest Vivek, as for have the you'd you believe spectrum. use desire is to a any to a context other, American product the they

Yes. mean No, we the the PR points. we I production perspective, captured to center blood continue Josh, ensure think you is key to for and big I want right enable to what from families provide optimize to our their distribution. do the that X technology

of governed what that organically. by seeing that's demand hospital they're Some

And demand us they at generating times themselves the are some the driven partnership at with that by hospital of level. that's of

see And good share really with seen that it's in The they're going But I the happening ARC progress and well. perspective, we at there. as We've from lead came certainly seeing the time. that here. encouraging. right supply right continued the provide which about we're others way stated to capture, out ensuring is our can explicitly that

XXXX you're also where XXXX? will type catching Can capacity in to speak at beginning, about days a capacity today rate of capacity asking what of terms of something in revenue the support will 'XX up where sorry, early run versus I'm be I'm and bit. on already buildout. be in just I about I'm able the manufacturing to Excellent. ask we stated wanted call, if here little

Josh. question, Thanks Yes. for the

So still sort we clearly, in an multiple sort the sites. and management active in were mode, of manufacturing of XXXX, we're inventory capacity expanding at

goal. be opportunities. we it by nonconstrained should potential that sales And was to the relates So as really XXXX,

so we center important are role that I reliable they our it's that supplier play. and a role think blood really to the dependable in an -- this given critical market, customers

XXXX really deliver that we exceptional to throughout an want heart continue to for so have our that done future. think and and goal I to against And job took

that and on XXXX. won't XXXX, capacity it have in And believe so place be throughout that constraint we'll we a in really growth

But news an may pathway Excellent. And lastly, is submit to China update then to prepared be China that. did I'll direct accelerated there This ask now, about you remarks. maybe your just old And JV leave the your an without provide data. if with wondering if partner in open that's submission. at it just

Thanks, Josh.

the we final remarks, the putting mentioned of the process we prepared So together submission. that in are

and plan call. to underway, the we'll that's give update on an QX So well

As will We whether to in-country still just did We're data, or will just TBD. with need Hong be sufficient whether the to necessary we it Kong. we data out yet -- for are don't of clinical relates planning that's for final know -- coming be that not submit data a approval.

And with then there? is thoughts you Do approach around our what have pathway me approval -- going ventures any to on here. or expedited joint Carol's the be

a help conversation is the application they the and and do content on product. we can the the Well, into the gauge my in once we dossier with at based don't in line have get of time we which body conversation experience the us can review can with to we a gauge NMPA, get it's clearly identified an interest expedited the approach the there get reaction, this China, time. FDA-like once the interest, them, certainly But into that then the accelerate lot filed

going we're it So do to all filed. we get to can leverage considerations once we those

call questions not like for over I'm showing to Obi remarks. in And to closing back the turn queue. any the I'd further any

next in joining March Cowen's and again throughout look interest Conference forward to Healthcare at Thanks you We the for sharing week with today and remainder Cerus. Annual thank Well, for again. XXrd speaking progress in of you our your us the year.

for you conference participating. call. today's concludes This Thank

great Everyone, a have now may disconnect. day. You