Cerus (CERS) 5 Mar 242023 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 2023 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 Jessica Hanover, Cerus Vice President of Corporate Affairs. Dr. Hanover, you may begin.

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

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

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

that the on performance rather You to related risks of company December that and a measures, and forward-looking announcement can update and in at the non-GAAP materially. this accordance our expected future expense to future Form line a duty of cause and statements. On XXXX, statements and and events EBITDA a facts in are no undertake could release historical will call, those from for related our non-GAAP on and non-GAAP be year this our EBITDA. for forward-looking timing replacement statements. expectations involve copy statements we will uncertainties Risk not of Examples We our call These financial some forward-looking the presentation actual adjusted remind also considered presented related should today's be measures make www.cerus.com. I'd availability GAAP. XXXX are and performance the and shortly. or and today's measures statements access you and we than identified expected are website XX, obligation like that with in to supplement we trials non-GAAP of results, They file future bottom differ to trajectory, our guidance, financial clinical our levels, discussing growth under including for forward-looking and to results slide ended our which performance fact. These other and revenue to statements historical described XX-K adjusted not product operating our Factors press growth data include events, in including will

review of today to presentation the most from today's with For press remarks financial please by financial and on slide non-GAAP refer reconciliation opening measures, a our Vivek GAAP measures release begin to website. We'll now comparable Obi, expectations the and available discuss to recent lastly, of XXXX. followed to introduce business pleasure from Officer. Kevin the remarks and Greenman, it's for to my Cerus' Obi Obi. And our highlights, rest results then Executive President And financial closing Chief

and I'd on you, reflecting to afternoon, by expectations XXXX spending open for few our XXXX. Thank like everyone. a as Jessica, minutes as call well the good

in the Red Cross January relevance Advancement well Blood on American the Services special and And with the landscape. The the activation for we doses. to significant It's the the quarter Cross INTERCEPT-treated or platelet receive respect as of and inactivation During by visible AABB. pathogen a blood event and as American Canadian was the speakers year, such health million kits also absolute platelet number and for addressing significant pathogen focused for transfusable Biotherapies, and INTERCEPT ] also played by military cumulative surpassed in ever the a and the from hospitals, XXXX, daily organizations. who role of from growing a the technology figure, it as globe. care with of mark the government across blood of The centers Red during fourth patients security hosted on University, represents importance sold our basis Blood were webinar components this Yale and in XX evolving [ and plasma particularly of Association

We GAAP foundational and full line and EBITDA our improving on recognition for his In positive to XXXX excitement if is it our narrowing drives both inactivation continued today's details for this net growth dynamic for like about also fourth become year-over-year time. the and the addition for the progress that along It IFC the as in and ended Vivek the clear growth as demand commercial loss our fourth expect future following the we would several that post a potential posting of along business, anticipate the medicine Vivek is now call to not with XXXX. growth the commentary turn in pathogen to bottom of my of on expansion Cerus provide both face increasing the following results. U.S. to INTERCEPT introductory has blood Vivek. I INTERCEPT the sustaining provide results high announcement comments. We the outlook sequential an vulnerabilities, supply year driven importantly, earlier aspect platelets U.S. growing [indiscernible] transfusion of product will to color Per landscape. the guidance to discuss for by more this quarter near first revenue be INTERCEPT double-digit attributable across complex quarter, Kevin for the globe. international with in platelets and delivering year, additional will XXXX to comments well over trajectory on notes, adjusted XXXX double-digit expectations non-GAAP commercial the or our for in

Obi, afternoon, and everyone. Thank good you,

With growth of our ordering, IFC step-up we in to accounts as As platelet well This our Furthermore, quarter the at in growth and growth typical as manufacturing our we driven well witnessed saw year-over-year within blood was in strong more sequential a return both levels of as Obi patterns. by IFC stabilize, reordering activation, account encouraging fourth meaningful existing progress business. the globally XXXX. notably as franchise center most indicated, in delivered business. and new inventory U.S. we partners our

and light have at ordering our rates. INTERCEPT more adjusted Our of in platelet franchise globe. believe strong are In issues their the now customers delivered properly consistent growth inventory we that dating product across U.S., most the of

make shelf As in we extend real-time confident we on progress to platelet aging life. our ability remain studies, our kit

a with currently believe material hold in to uplift this we increased not assuming While we likely comfort inventory. will to lead center associated revenue blood more stating, do the at are

We believe continue leading traction INTERCEPT remains positive to blood safety customers our center for the the see and platelet technology at in U.S.

[indiscernible] Our largest of closing early majority franchise included blood-derived in platelets INTERCEPT the complete activity units site platelet of is in to the our to [indiscernible] more is operation. that are U.S. Toronto issued on calendar this for [indiscernible] With the Greater other for in of Canada production than ] CBS area. this In fourth suggests hospitals [ its of in growth Brampton or hospitals whole completing XX% half In are this platelet INTERCEPT experience Services issued track XXXX completed year. Internationally, quarter, across Blood its solid words, XXX% its INTERCEPT-treated. transition first implementation CBS Canadian the which entire in its to platelets now treated. doses to CBS in now on CBS of INTERCEPT the remains platelet poised year.

at We commitment U.S. quarter IC of a advance blood ISC, of our are implements [indiscernible], X INTERCEPT business. centers of INTERCEPT platelet blood XX% platelets. QX from of which produces INTERCEPT already hospitals. was XXXX which [indiscernible] whole for number continues gained a commercial As distribute while producing to Canada its platelets strong approximately to X supply platelets. Meanwhile, to sites, influential use validation starting it

through greater IFC, growth we forward Our for educational been deliver sales encouraging and basis, to has and meaningfully compelling you it in inostral hospitals. one-off to business. On will we to with organization and of are excited ability grow, why peer-to-peer congresses [ use offering. detail. to the we first IFC feel you field and now increased making turn going able more outlook on engagement, we with the appreciation the will about a XXXX, at I'm both our confident for are enthusiasm to business. I will to Kevin progress Real-world more we has our it continues in continued this host ] IFC our results provide settings key momentum our were gain detail and of effective over in forums a confident the months clinical and X see with discuss for This

be to listening. fourth Thank well and our of you, full Vivek, for XXXX everyone year I and financial XXXX. the quarter as discussing for On guidance results will call, today's revenue as hello product our

the in well. This to committed are if adjusted adjusted of components item narrowed EBITDA GAAP our of measure achievement line time of providing reaching a not on our this important XXXX EBITDA, to and P&L, marks target full the I'll with on positive breakdown improving non-GAAP delivering the year achievement the company's quarter our attributable Cerus, coupled Beyond be net first breakeven. of we sustaining as for fourth loss history

growth product product XXXX, revenues January, XXXX up year-over-year million in and expected, of of with quarter down the product fourth preannounced were, year As $XXX.X we million Full of X% fourth prior quarter posted $XX.X year-over-year levels. the sequentially XXXX line our guidance. In as XX% revenue of exceeded revenues and U.S. for in year X% from QX. representing

the the U.S. product rates around the no X% comparing EMEA compared results. provided around prior up Year-over-year, product year-over-year provided comparative and that benefit impact a revenues on of third up were the period sequentially year Importantly, to of In at were for XXX XX% little to QX. from consolidated around revenues to fourth quarter X% EMEA, QX FX a FX quarter basis, a when by fourth points. On quarter basis business benefit of X.X% and year XXXX. of XXXX full

government our the in contract guidance, to agreement in our for lyophilized our the with IFC. the compared included further contract period. The for BARDA, million In milestone-based product totaled $X.X is decline. slight primary the our our the revenues reduction study to to QX [ contract driver ReCePI with revenue enrollment and Included our of are of under FDA Department in conclusion not as year revenue the ] Defense hold for prior in our addition blood $X.X and pathogen reimbursement agreement Government U.S. revenue with recognized million

our gross profit turn Let's product to and gross margins. now

$XX X% relatively These prior were levels year primarily our impact the prior quarter QX. $XX.X lower Product from compared our and year-over-year. fourth rate margins. the up year, are gross volumes to our year increase results million profit to Our QX by the consistent during quarter prior with the inventory to an due product XX.X%, of compared increased when quarter foreign reported period, over previous margins slightly and calls. improved to XXXX gross net was on compared costs remarks for XXXX offset million expectations margins exchange during and prior stable

on. Moving

R&D prior $XX.X expenses operating expense XXXX totaled compensation. $XX.X included of Our fourth quarter the By $XX.X quarter the expenses, of stock-based million million expense prior operating compared million million $XX decline. million million, year $X.X which were lower during noncash QX impact to period. $XX.X XX% over type, period year associated combined blood XXXX totaled cell June continue than under lower pursuit limited specific a fourth costs trial in our ongoing red R&D result for with restructuring work completion. Ongoing regulatory CE to development on with costs with work expenses illuminator, included, enrollment ongoing contracts, ReCePI our next-generation interactions and but the were our work change to, agencies. government in program, Mark our not lower control The

Beyond year-over-year impact well expenses R&D, to restructuring lower were XXXX in SG&A year $XX.X $XX.X the prior lower were June million quarter nonrestructuring-related to as during compared compensation the million our Similar due costs. as R&D period. SG&A to drivers, the part of fourth costs

at from benefit expense least to relative continue financial the We the the our $XX time restructuring. provide of million at savings restructuring to in that levels will annualized expect

on the non-GAAP have to we EBITDA results adjusted focus strongest financial on results, talk perhaps call. are line about today's that and the Let's bottom which

the per totaled EBITDA $XX.X QX same loss diluted significantly share our $X.XX ] net measure. attributable for for to $X.X reported Cerus Cerus These XXXX, million to also for loss non-GAAP directly results million to XX, period are improved or share line, or in per prior bottom compared compared attributable adjusted [ year year. ended diluted the the X the to December period. On months the when prior $X.XX Net in reflected

pleased is is $X we of in XXXX, with our for and of announce, generated and $X results quarter we the the in respectively. result million adjusted from clearly When XXXX, fourth history. happy quarter sustaining, surpassed see improvement not for our to are third negative fact, which can I'm compared $X EBITDA. This breakeven of to during goal million positive and milestone And of results, an we and of to million if million, the over you committed $X a As $X.X negative significant while improving it non-GAAP million upon the are XXXX. almost this

As managed coupled to margins in breakeven expenses line allowed we growth EBITDA in surpass non-GAAP fourth the the quarter. had predicted, combination operating of closely stable adjusted us our strong top and with

may and product year, this margins, we this operating improving coupled expenses leverage our have guidance, quarter-to-quarter perhaps support XXXX. of with from While revenue will on and slightly gross business expect from some the we fluctuations that for continued close measure with stable potential improvement management

On the of cash with sheet short-term the cash and ended million cash, associated we a on balance the flows, $XX.X sheet. equivalents balance of quarter fourth investments cash position and

terms In our quarter period. from the used utilization, prior during of compared operations for million year million fourth $XX.X to cash cash $X.X was the

As use, levels. increased we specifically capital with past, in about we've working spoken saw the in increases significant inventory

pay due. During down our decision payables QX, we conscious also made to a

levels in increase maintain capital XXXX As revenues, will we that manage look other payable items. down expect we balances, levels inventory work anticipated the to December XXXX, now and working near line our we with

results these operating that year. improvements result flows potentially operating flows and will expect the XXXX in for for translate and cash into in initiatives We could cash positive

Turning to our guidance.

As this be we range as platelet reflecting from in anticipate be year double-digit We by to we INTERCEPT North of the well $XXX in growth IFC full continued preannounced fueled Europe in to guidance $XXX U.S. uptake the to and continued in expansion growth XXXX million million, of of product January, revenue XXXX. both business, as America the expect

the firmly providers and and IFC, our products hospitals. prospects sales as As Vivek of an by of evidenced growing agreements believe well benefit mentioned, we the increased U.S. utilization in large for national recognition the number with blood as commercial

million. annual For the providing expect now we for $XX first we the for XXXX, be in time, guidance IFC, of range revenue are million which to $X to

to now plan a IFC quarterly call provide we some break revenue guidance. I'd forward, to the turn visibility back like towards closing a out our progress to for to Going Obi our over on into comparative on remarks. basis, basis

you, Thank Kevin.

the [ X the Thank BARDA-funded year, Cerus. I continue in we remain Phase year the we respect momentum turn updates rearview X of continued operator ] cells, red ahead to For ReCePI in trials after about blood the first the With line us. months for trial, top anticipate of the visibility [indiscernible] of of unblinded positive we the near data readout continued XXXX to first U.S. INTERCEPT providing over rest and for the forward for commercial your questions. you with the throughout call our in increased the the providing Between in our into pipeline, business the year. you look now future. to interest to will III

will Jacob come Our question Instructions] with of [Operator from the Stephens. Johnson first line

could on Maybe the kind offering ramp? to just hit potential what can you think us then should And X-year this continues we the its Maybe to as the about XXXX? for $X see Congrats for million IFC, $XX remind TAM this stride, reference, us IFC for quarter. to X- how in and outlook the to million starting XXXX. was the on good you give that just expectation in of off

Thanks, let this. I'll him Jacob. Vivek, take

the guidance -- for range rate XX% growth the Thanks, a to year. XXXX questions. versus We assumes XX% prior Jacob, for

going business on centers. at product to million. order in to sell blood think obviously, blood the the of we've And we're talked also direct months new those what I the through of TAM the blood past, of up then in last through is hospital seeing million it orders come a the Part us It's is encouraging picks year. first to the about $XXX being continued the and X and large announced our activation. we going of We partners. collaboration hospitals pickup saw to combination the be and with is of $XXX first through. channel center XXXX, sales sales as for the end function, we a for be But think most I [indiscernible] through centers

we're So encouraged growth franchise. I all about for this think prospects the

quarter. it. Kevin, Got to Good maybe, And then in the the EBITDA positive you. for see

see kind not we're XQ? be us improving if kind things. could a EBITDA XXXX about is I of quarterly the that positive year, EBITDA If of kind for could of entire of on like mentioned help assumption, kind we you basis? on a guess, You even positive sustaining, Or reasonable thinking of that, side as

Yes.

our top suggest -- line doesn't our So guidance necessarily linearity.

it. least of there do the to for is at year, chop are neutrality, QX if expect some balance But improvement we So targeting the from the and not, level.

balance So lot chop the some I right of direction very I that, there. a while the may we think doable got think we're reasons for believe and in moving see we've to year, that is of quarter-to-quarter, the

line Emily will question of from next Our with Christy Stifel. the come

business. the a transparency IFC appreciate the great. on Just for I me. That's couple

like Just then there. you other from on situation expectations. XXXX, talk that from might to And track an Canada meaningful from we sounds like contribution there's if it should Germany? in update Can is the if on geographies maybe notable with expect international, any be China regulatory

Thanks, part Great. one. take the I'll answer Emily. of that let question, I'll and China the first then Vivek

for Sure. Emily. the Thanks question,

that a the their geographies combination depth is we're and already We lot are of growth this continued year expecting we've -- started. where of existing growth opportunities customers, with a

you referenced we Germany. So continued in are Canada, certainly progress got anticipating

There the ] draft was the of the off tend Middle We in that community great and are the blood Dubai. banking terms of believe at U.S. that opportunities also what growth does [ FDA to East MedLab in there they recently Congress region. in

growth there will the earlier like driver growth as feel as pools terms across meaningful globe business meaningful well. in IFC the then be U.S. our of the business. And we referenced call, a of to in are So platelet start

kick significant still headroom it's of with seeing you for regarding and But we're what growth. is a back to combination factors. we're fundamentally, there's I'll Obi, So it China. customers deeper really going

Yes. lot, a Vivek. Thanks Yes.

because and we've you the NNPA don't this indication any from [indiscernible] little but review we're To of the in just and we questions process start So New feedback the of to FDA. year, of clinical underway. last have at year not but a is [indiscernible] with date, recall, submitted the receiving being the was I yet. China, necessary, as are the complete of delayed regarding Year, trial

sneak And in wondering markets but thinking talk pricing Great. you don't those where new penetration a how pricing, Okay. in should just we already? lot if I'm in. more power and about one both be rates I can about high have We

over to turn Thanks, back Yes. Emily. I'll Again, Vivek. that

slightly stable good and Sure. Yes. that global pricing been to on of We've seen feel a things. the to basis. discipline about pricing we've inflation I really light other increasing in able execute

blood think I So given more the of utility benefits constraints IFC, disciplined has for benefits discussion around are in to and able the team the price. and hospitals banks in and think certainly global offering [indiscernible] ensuring sales mean, terms clinical bringing. I have certainly reduction of value than going we're budgetary but pressure, realizing of against been that I and value have we're competing we've the under clinical been

will next is open. of Our question now your Massaro line with come line BTIG. Mark from the Mark,

for This on Mark. is [indiscernible]

just the bounce XXXX in U.S. back in business. platelets So like it looks it calls a the on for guide,

I should in touch you're any want then seasonality And from just guide sources could potential we be So on modeling also where to for you confirm if upside? and what's of that. excluded the seeing maybe

[indiscernible]. Yes. a Thanks lot,

to [indiscernible] to question. your I'm best that back place but to over turn sorry answer So you, it

I'm Yes, no problem. sorry.

cut Obi repeat you maybe that that? Could that? on you my of question paraphrase Or end. if part first The out could

to... do you [indiscernible], want

'XX in seasonality takes as guidance and the well. puts the just Yes,

Fair enough. Okay.

the in across a in, think seeing not and of in leads have sort we business. centers embedded accelerated But modeled in strengthening of of which the nor around see of I as blood inventory mentioned as and terms we in overall shelf improved at modeled platelet any recovery growth donors example, we have to platelet our Europe U.S., as assumptions restocking the an earlier, we life the in in market. guidance stabilization levels we're U.S. our

we're the we kind a that focusing and clinical you of seeing continued there. then in operations center hospitals. And then hospital pass discipline, of an hospitals when us the clinicians seeing are new example. we're INTERCEPT hand the through platelet glove in IFC [indiscernible] side, in we see deployment with ove on teams, high continued blood see a production the a hospitals. in fairly And on we ramp-up strong methodical as what work as folks So depth other and get being product particular our couple and in ramp-up really product, into we Once the with clinical get in adopted with risk experience centers say and

that I few we've and be. the the those think of sort our really tried the historically the now current at challenges which we've tailwinds got is good But our year. to a for place assumptions modeling are to full silver So the assumptions recognize growth a right guidance some to we had back, but underpin

then a And follow-up. perfect. That's Okay. just

there study, As us I should how that's just far shortly reading your which be as could just here, out what the you remind and are ReCePI think expectations tracking?

Yes. Thanks a [indiscernible]. lot,

database data locked be near the the ReCePI that So we study, unblinding should is in term. so for the

who all that As bunch the just remind were surgery you whom And study is an the as kidney test range non-inferiority injury modeled study transfused, was for had XX%. design in it's AKI to XX%. getting in rate study acute who bypass after XX% AKI cardiovascular control many typically surgery in and on the of far that publications an the with endpoint, who of of cardiovascular a rates and to of it's non-inferiority typically recipients patients, had design, are between margin

like to call I'd for the to turn That concludes session. question-and-answer closing Greenman today's Obi remarks. back

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

be tomorrow and Healthcare to you TD presenting sharing Annual Cowen's with XXXX. Conference, forward look will we at throughout We our progress XXth the

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

may You now disconnect.