Cerus Corporation (Nasdaq: CERS) today announced financial
results for the second quarter ended June 30, 2023.
Recent highlights include:
- Second quarter 2023 total revenue of $47.7 million was
comprised of total product revenue of $38.9 million and government
contract revenue of $8.9 million.
- Received positive feedback for INTERCEPT Red Blood Cells CE
Mark submission in clarification meeting with EU competent
authority, the Dutch Medicines Evaluation Board (CBG), supporting
possible CE Mark approval decision under the EU Medical Device
Regulation (MDR) in the second half of 2024.
- Planned completion of Phase 3 ReCePI study enrollment in
cardiovascular surgery patients this year, with top-line data
readout expected in Q1 2024.
- Awarded an additional $8.7 million in funding from the U.S.
Department of Defense for continued development of lyophilized
INTERCEPT Fibrinogen Complex (LyoIFC), increasing total contract
value to $17.8 million.
- Adjusting full-year 2023 annual product revenue guidance to the
range of $160 million to $165 million from the prior range of $165
million to $170 million given the expected impact of a temporary
reduction in U.S. platelet kit shelf life on customer ordering
patterns, reduced platelet collections in key regions of EMEA, and
new Russia sanctions.
- Cash, cash equivalents, and short-term investments were $84.5
million at June 30, 2023.
“We are pleased with our recent progress for the INTERCEPT Red
Blood Cell program in both the EU and U.S.,” said William “Obi”
Greenman, Cerus’ president and chief executive officer. “During the
second quarter, we gained additional clarity to a potential CE Mark
approval decision in the second half of 2024 and a top-line data
readout from our U.S. Phase 3 ReCePI study expected in the first
quarter of next year. Given ongoing enrollment in RedeS, our second
U.S. Phase 3 study, we plan to begin a modular premarket approval
(PMA) application submission to FDA in the second half of 2025,
with a final PMA module submission planned for the second half of
2026.”
“On the commercial front, with many of the challenges of the
first half of the year behind us, we remain confident in our
expectations for growth during the rest of this year and into 2024.
We also continue to be committed to achieving adjusted EBITDA
breakeven this year,” continued Greenman. “Given some recent
ordering pattern modifications related to a temporary INTERCEPT kit
shelf-life change in the U.S. and platelet collection dynamics in
parts of Europe, along with the impact of recent Russia sanctions,
we are adjusting our full-year 2023 product revenue guidance down
to a range of $160 million to $165 million. Despite the adjustment,
we are not seeing a change in market share, and we believe new
customers and new geographies will fuel growth going forward.”
Revenue
Product revenue during the second quarter of 2023 was $38.9
million, compared to $41.0 million during the prior year period.
While the Company did not see a decline in market penetration in
the U.S., it did continue to see some inventory management at U.S.
customer sites during the second quarter. In addition, reduced
platelet collections in certain regions of Europe and new sanctions
in Russia provided headwinds during the second quarter.
Second-quarter 2023 government contract revenue was $8.9
million, compared to $6.6 million during the prior year period.
Reported government contract revenue in the second quarter 2023
increased versus the prior year period primarily due to funding
associated with development of LyoIFC. In addition to this funding,
the Company’s government contract revenue was comprised of funding
associated with research and development (R&D) activities
related to the INTERCEPT Blood System for Red Blood Cells as well
as efforts related to the development of next-generation pathogen
reduction technology to treat whole blood.
Product Gross Profit & Margin
Product gross profit for the second quarter of 2023 was $21.3
million, which is consistent with the prior year period. Product
gross margin for the second quarter of 2023 was 54.9% compared to
51.9% for the second quarter of 2022 and continues to represent the
expected benefit of the Company’s growth and efforts over the past
several years.
Operating Expenses
Total operating expenses for the second quarter of 2023 were
$41.9 million compared to $34.7 million for the same period of the
prior year, reflecting a year-over-year increase of 21%.
Selling, general, and administrative (SG&A) expenses for the
second quarter of 2023 totaled $20.5 million, compared to $19.5
million for the second quarter of 2022. The year-over-year increase
in SG&A expenses for the second quarter was tied to increased
sales personnel hired to accelerate adoption of INTERCEPT
Fibrinogen Complex and, to a lesser extent, inflation.
R&D expenses for the second quarter of 2023 were $19.2
million, compared to $15.2 million for the second quarter of 2022.
The year-over-year increase in R&D expenses in the second
quarter was tied to increased activity for our government
reimbursed programs. In addition, we realized increased costs
associated with development of our next-generation illumination
device and in conjunction with producing data, and regulatory
interactions with respect to our existing products.
In order to align operating expenses with the operating
environment and priority initiatives, the Company entered into a
plan to restructure certain functions and reduce its real estate
footprint during the most recently completed quarter. The plan
resulted in a $2.1 million restructuring charge for the second
quarter of 2023. As part of the plan, the Company expects to take
an additional future charge at the time it ceases use of leased
real estate contemplated under the plan. The Company estimates that
the cumulative actions taken will result in annualized operating
expense savings of approximately $10 million per year. The Company
excludes the restructuring charge from its non-GAAP adjusted EBITDA
measure presented below.
Net Loss Attributable to Cerus Corporation
Net loss attributable to Cerus Corporation for the second
quarter of 2023 was $13.3 million, or $0.07 per basic and diluted
share, compared to a net loss attributable to Cerus Corporation of
$8.4 million, or $0.05 per basic and diluted share, for the second
quarter of 2022.
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA for the second quarter of 2023 was
negative $4.7 million, compared to non-GAAP Adjusted EBITDA of
negative $2.4 million for the second quarter of 2022. For
additional information, please see definitions and the
reconciliation of this non-GAAP measure to net loss attributable to
Cerus Corporation accompanying this release.
Balance Sheet & Cash Use
At June 30, 2023, the Company had cash, cash equivalents and
short-term investments of $84.5 million, compared to $102.2 million
at December 31, 2022.
As of June 30, 2023, the Company had $55 million outstanding on
its term loan and $16.5 million drawn on its revolving credit
facility. The Company has access to another $20 million of term
debt and $18.5 million under its revolving line of credit.
For the second quarter of 2023, net cash used in operating
activities totaled $7.6 million as compared to $0.3 million during
the prior year period. The increase in operating cash use was
primarily related to increased operating expenses, including the
Company’s restructuring plan and increases in net production of
inventory. The Company expects to moderate production of inventory
in the second half of 2023 and sell down or reduce the net amount
of inventory it has on hand.
2023 Product Revenue Guidance
The Company is adjusting its previously stated product revenue
guidance range. The Company expects full-year 2023 product revenue
to be in the range of $160 million to $165 million, compared to its
previous range of $165 million to $170 million, due to a temporary
reduction in the U.S. platelet kit shelf life, a reduction in
platelet collections in parts of Europe, and new Russia sanctions
instituted during the quarter.
Quarterly Conference Call
The Company will host a conference call at 4:30 P.M. EDT this
afternoon, during which management will discuss the Company’s
financial results and provide a general business overview and
outlook. To listen to the live webcast, please visit the Investor
Relations page of the Cerus website at http://www.cerus.com/ir.
A replay will be available on Cerus’ website approximately three
hours after the call through August 16, 2023.
ABOUT CERUS
Cerus Corporation is dedicated solely to safeguarding the
world’s blood supply and aims to become the preeminent global blood
products company. Headquartered in Concord, California, the company
develops and supplies vital technologies and pathogen-protected
blood components to blood centers, hospitals, and ultimately
patients who rely on safe blood. The INTERCEPT Blood System for
platelets and plasma is available globally and remains the only
pathogen reduction system with both CE mark and FDA approval for
these two blood components. The INTERCEPT red blood cell system is
under regulatory review in Europe, and in late-stage clinical
development in the US. Also in the US, the INTERCEPT Blood System
for Cryoprecipitation is approved for the production of Pathogen
Reduced Cryoprecipitated Fibrinogen Complex (commonly referred to
as INTERCEPT Fibrinogen Complex), a therapeutic product for the
treatment and control of bleeding, including massive hemorrhage,
associated with fibrinogen deficiency. For more information about
Cerus, visit www.cerus.com and follow us on LinkedIn.
INTERCEPT and the INTERCEPT Blood System are trademarks of Cerus
Corporation.
Forward Looking Statements
Except for the historical statements contained herein, this
press release contains forward-looking statements concerning Cerus’
products, prospects and expected results, including statements
relating to Cerus’ updated 2023 annual product revenue guidance;
the potential completion of INTERCEPT Red Blood Cell CE Mark
submission review in 2023 and a possible CE Mark approval decision
under the MDR in the second half of 2024; the planned completion of
enrollment in the Phase 3 ReCePI study in 2023 and Cerus’
expectation of a top-line data readout in the first quarter of
2024; Cerus’ plan to begin a modular PMA submission to FDA for the
INTERCEPT Red Blood Cell system in the second half of 2025, with a
final PMA module submission planned for the second half of 2026;
Cerus’ expectations for growth during the rest of 2023 and into
2024, including its expectation that new customers and new
geographies will fuel growth going forward; Cerus’ ability to
achieve adjusted EBITDA breakeven in 2023; Cerus’ estimate that its
restructuring plan will result in annualized operating expense
savings of approximately $10 million per year; Cerus’ expectation
of an additional restructuring charge in the third quarter of 2023
related to its restructuring plan and the estimate thereof; Cerus’
inventory expectations for the second half of 2023; Cerus’ access
to another $20 million of term debt and $18.5 million under its
revolving line of credit; and other statements that are not
historical fact. Actual results could differ materially from these
forward-looking statements as a result of certain factors,
including, without limitation: risks associated with the
commercialization and market acceptance of, and customer demand
for, the INTERCEPT Blood System, including the risks that Cerus may
not (a) meet its updated 2023 annual product revenue guidance, (b)
effectively continue to launch and commercialize the INTERCEPT
Blood System for Cryoprecipitation, (c) grow sales globally,
including in its U.S. and European markets, and/or realize expected
revenue contribution resulting from its U.S. and European market
agreements, (d) realize meaningful and/or increasing revenue
contributions from U.S. customers in the near term or at all,
particularly since Cerus cannot guarantee the volume or timing of
commercial purchases, if any, that its U.S. customers may make
under Cerus’ commercial agreements with these customers, (e)
effectively expand its commercialization activities into additional
geographies and/or (f) realize any revenue contribution from its
pipeline product candidates, whether due to Cerus’ inability to
obtain regulatory approval of its pipeline programs, or otherwise;
risks associated with the ultimate duration and severity of the
COVID-19 pandemic and resulting global economic and financial
disruptions, and the current and potential future negative impacts
to Cerus’ business operations and financial results such as the
current and potential additional disruptions to the U.S. and EMEA
blood supply resulting from the evolving effects of the COVID-19
pandemic; risks associated with Cerus’ lack of longer-term
commercialization experience with the INTERCEPT Blood System for
Cryoprecipitation and in the United States generally, and its
ability to develop and maintain an effective and qualified
U.S.-based commercial organization, as well as the resulting
uncertainty of its ability to achieve market acceptance of and
otherwise successfully commercialize the INTERCEPT Blood System in
the United States, including as a result of licensure requirements
that must be satisfied by U.S. customers prior to their engaging in
interstate transport of blood components processed using the
INTERCEPT Blood System; risks related to the highly concentrated
market for the INTERCEPT Blood System; risks related to how any
future platelet additive solution (PAS) supply disruption could
affect INTERCEPT’s acceptance in the marketplace; risks related to
how any future PAS supply disruption might affect current
commercial contracts; risks related to Cerus’ ability to
demonstrate to the transfusion medicine community and other health
care constituencies that pathogen reduction, including IFC for the
treatment and control of bleeding, and the INTERCEPT Blood System
is safe, effective and economical; risks related to the uncertain
and time-consuming development and regulatory process, including
the risks that (a) Cerus may be unable to comply with the FDA’s
post-approval requirements for the INTERCEPT Blood System,
including by successfully completing required post-approval
studies, which could result in a loss of U.S. marketing approval(s)
for the INTERCEPT Blood System, (b) additional manufacturing site
Biologics License Applications necessary for Cerus to more broadly
distribute the INTERCEPT Blood System for Cryoprecipitation may not
be obtained in a timely manner or at all, (c) Cerus may be unable
to complete enrollment in its ReCePI and RedeS studies in a timely
manner or at all, (d) Cerus may be unable to submit and complete a
modular PMA submission for the INTERCEPT Red Blood Cell system in a
timely manner or at all, (e) Cerus may be unable to obtain CE Mark
approval, or any other regulatory approvals, of the INTERCEPT Red
Blood Cell system in a timely manner or at all, and (f) Cerus may
be unable to obtain the requisite regulatory approvals to advance
its pipeline programs and bring them to market in a timely manner
or at all; risks related to product safety, including the risk that
the septic platelet transfusions may not be avoidable with the
INTERCEPT Blood System; risks related to adverse market and
economic conditions, including continued or more severe adverse
fluctuations in foreign exchange rates and/or continued or more
severe weakening in economic conditions resulting from the evolving
effects of the COVID-19 pandemic, rising interest rates, inflation
or otherwise in the markets where Cerus currently sells and is
anticipated to sell its products; Cerus’ reliance on third parties
to market, sell, distribute and maintain its products; Cerus’
ability to maintain an effective, secure manufacturing supply
chain, including the risks that (a) Cerus’ supply chain could be
negatively impacted as a result of the evolving impact of
macroeconomic developments, including the ongoing conflict in
Ukraine, rising interest rates, inflation and the evolving effects
of the COVID-19 pandemic, (b) Cerus’ manufacturers could be unable
to comply with extensive FDA and foreign regulatory agency
requirements, and (c) Cerus may be unable to maintain its primary
kit manufacturing agreement and its other supply agreements with
its third party suppliers; Cerus’ ability to identify and obtain
additional partners to manufacture the INTERCEPT Blood System for
Cryoprecipitation; risks associated with Cerus’ ability to access
additional funds under its credit facility and to meet its debt
service obligations, and its need for additional funding; the
impact of legislative or regulatory healthcare reforms that may
make it more difficult and costly for Cerus to produce, market and
distribute its products; risks related to future opportunities and
plans, including the uncertainty of Cerus’ future capital
requirements and its future revenues and other financial
performance and results, including with respect to expected
operating expense savings, as well as other risks detailed in
Cerus’ filings with the Securities and Exchange Commission,
including under the heading “Risk Factors” in Cerus’ Quarterly
Report on Form 10-Q for the quarter ended March 31, 2022, filed
with the SEC on May 4, 2023. Cerus disclaims any obligation or
undertaking to update or revise any forward-looking statements
contained in this press release.
Use of Non-GAAP Financial Measures
Cerus has presented in this release certain financial
information in accordance with U.S. Generally Accepted Accounting
Principles (GAAP) and also on a non-GAAP basis, including adjusted
EBITDA. We define adjusted EBITDA as net income (loss) attributable
to Cerus Corporation as reported on the consolidated statement of
operations, as adjusted to exclude (i) net income (loss)
attributable to noncontrolling interest, (ii) provision for
(benefit from) income taxes, (iii) foreign exchange (loss)/gain,
(iv) interest expense, (v) other income (expense), net (vi)
depreciation and amortization, (vii) share-based compensation,
(viii) goodwill and asset impairments, (ix) costs associated with
our noncontrolling interest in our joint venture in China, (x)
revenue and direct costs associated with our government contracts
and (xi) restructuring charges. We are presenting this non-GAAP
financial measure to assist investors in assessing our operating
results. Management believes this non-GAAP information is useful
for investors, when considered in conjunction with Cerus’ GAAP
financial statements, because management uses such information
internally for its operating, budgeting and financial planning
purposes. Non-GAAP information is not prepared under a
comprehensive set of accounting rules and should only be used to
supplement an understanding of Cerus’ operating results as reported
under GAAP. These non-GAAP financial measures should not be
considered in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. These non-GAAP
financial measures are not necessarily comparable to
similarly-titled measures presented by other companies. A
reconciliation between GAAP and non-GAAP financial information is
provided immediately following the financial tables.
Supplemental Tables
Three Months Ended
Six Months Ended
June 30,
June 30,
2023 vs. 2022
2023 vs. 2022
Platelet Kit Growth
North America
(4%)
(15%)
International
(12%)
(9%)
Worldwide
(7%)
(13%)
Change in Calculated Number of
Treatable Platelet Doses*
North America
(6%)
(17%)
International
(14%)
(11%)
Worldwide
(9%)
(15%)
* Dose treatable calculation based on the number of kits sold
and the product configuration (single, double, and triple dose
kits)
CERUS CORPORATION
REVENUE BY REGION
(in thousands, except
percentages)
Three Months Ended
Six Months Ended
June 30,
Change
June 30,
Change
2023
2022
$
%
2023
2022
$
%
North America
$
24,477
$
25,579
$
(1,102
)
-4
%
$
41,094
$
47,777
$
(6,683
)
-14
%
Europe, Middle East and Africa
13,533
14,898
(1,365
)
-9
%
27,561
29,700
(2,139
)
-7
%
Other
843
522
321
61
%
1,172
966
206
21
%
Total product revenue
$
38,853
$
40,999
$
(2,146
)
-5
%
$
69,827
$
78,443
$
(8,616
)
-11
%
CERUS CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per
share information)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Product revenue
$
38,853
$
40,999
$
69,827
$
78,443
Cost of product revenue
17,515
19,718
31,202
37,794
Gross profit on product revenue
21,338
21,281
38,625
40,649
Government contract revenue
8,875
6,632
16,377
12,208
Operating expenses:
Research and development
19,184
15,216
36,568
29,273
Selling, general and administrative
20,541
19,532
42,092
40,267
Restructuring
2,128
—
2,128
—
Total operating expenses
41,853
34,748
80,788
69,540
Loss from operations
(11,640
)
(6,835
)
(25,786
)
(16,683
)
Total non-operating expense, net
(1,593
)
(1,482
)
(3,011
)
(3,842
)
Loss before income taxes
(13,233
)
(8,317
)
(28,797
)
(20,525
)
Provision for income taxes
98
78
175
154
Net loss
(13,331
)
(8,395
)
(28,972
)
(20,679
)
Net loss attributable to noncontrolling
interest
(56
)
(6
)
(78
)
(6
)
Net loss attributable to Cerus
Corporation
$
(13,275
)
$
(8,389
)
$
(28,894
)
$
(20,673
)
Net loss per share attributable to Cerus
Corporation:
Basic and diluted
$
(0.07
)
$
(0.05
)
$
(0.16
)
$
(0.12
)
Weighted average shares outstanding:
Basic and diluted
180,611
176,944
179,449
175,718
CERUS CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
June 30,
December 31,
2023
2022
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
20,635
$
35,585
Short-term investments
63,868
66,569
Accounts receivable
22,175
34,426
Inventories
40,608
29,003
Prepaid and other current assets
3,650
4,561
Total current assets
150,936
170,144
Non-current assets:
Property and equipment, net
10,254
10,969
Operating lease right-of-use assets
12,268
12,512
Goodwill
1,316
1,316
Restricted cash and other assets
24,086
23,151
Total assets
$
198,860
$
218,092
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$
54,999
$
58,205
Debt – current
16,542
56,159
Operating lease liabilities – current
2,176
2,105
Deferred product revenue – current
1,361
589
Total current liabilities
75,078
117,058
Non-current liabilities:
Debt – non-current
54,838
13,644
Operating lease liabilities –
non-current
14,454
15,329
Other non-current liabilities
2,800
3,499
Total liabilities
147,170
149,530
Stockholders’ equity:
50,816
67,610
Noncontrolling interest
874
952
Total liabilities and stockholders’
equity
$
198,860
$
218,092
CERUS CORPORATION
UNAUDITED RECONCILIATION OF
NON-GAAP ADJUSTED EBITDA
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Net loss attributable to Cerus
Corporation
$
(13,275
)
$
(8,389
)
$
(28,894
)
$
(20,673
)
Adjustments to net loss attributable to
Cerus Corporation:
Net loss attributable to noncontrolling
interest
(56
)
(6
)
(78
)
(6
)
Provision for income taxes
98
78
175
154
Total non-operating expense, net (i)
1,593
1,482
3,011
3,842
Loss from operations
(11,640
)
(6,835
)
(25,786
)
(16,683
)
Adjustments to loss from operations:
Operating depreciation and
amortization
1,164
1,017
2,170
2,096
Government contract revenue (ii)
(8,875
)
(6,632
)
(16,377
)
(12,208
)
Direct expenses attributable to government
contracts (iii)
6,633
5,017
11,809
9,275
Share-based compensation (iv)
5,720
5,007
11,389
11,433
Costs attributable to noncontrolling
interest (v)
130
12
173
12
Restructuring(vi)
2,128
—
2,128
—
Non-GAAP adjusted EBITDA
$
(4,740
)
$
(2,414
)
$
(14,494
)
$
(6,075
)
i. Includes interest income/expense and foreign exchange
gains/losses.
ii. Represents revenue related to the cost reimbursement
provisions under our government contracts.
iii. Represents the direct expenses attributable to work
supporting government contracts, which are reimbursed and reflect
under government contract revenue in the condensed consolidated
statement of operations.
iv. Represents non-cash stock-based compensation.
v. Represents costs associated with the noncontrolling interest
in Cerus Zhongbaokang (Shandong) Biomedical Co., LTD.
vi. Represents costs associated with the Company’s restructuring
plan implemented in June 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802522450/en/
Jessica Hanover – Vice President, Corporate Affairs Cerus
Corporation 925-288-6137
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