Q1 2021 Cerus Corp Earnings Call
Ladies and gentlemen, please standby your Sirius Corporation's first quarter 2021 financial results conference call will begin momentarily. Thank you for your patience and please standby.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Sears Corporation's first quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. After the speaker presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone please be advised.
Today's conference is being recorded.
Any further assistance. Please press star zero. It is now my pleasure to turn to introduce Matt.
So towards the Ani senior director of Investor Relations. Please go ahead.
Thank you and good afternoon, I'd like to thank everyone for joining us today.
As part of today's webcast, we are simultaneously displaying slides that you can follow up.
You can access the slides from the Investor Relations website at IR Dot Sirius Dot com.
With me on the call are Obi Greenman, Cerus, President and Chief Executive Officer, Vivek, Jairam and Sirius as Chief operating officer.
Kevin Green Cirrhosis, Chief Financial Officer.
Carol Moore, senior Vice President of regulatory affairs, and quality and Jessica Hanover.
Since vice President of corporate Affairs.
Fear associated a press release today announcing our financial results for the first quarter ended March 31, 2021, and describing the company's recent business highlights.
You can access a copy of this announcement on the company website at Www Dot Sirius Dot com.
I'd like to remind you that some of the statements. We will make on this call relate to future events and performance rather than historical facts and are forward looking statements.
Examples of forward looking statements include those related to our future financial and operating results, including our 2021 product revenue guidance Ingalls operating expenses anticipated cash used from operations and gross margins as well as commercial development efforts future growth and growth strategy future Prada.
Sales product launches ongoing and future clinical trials ongoing and future product development, and our regulatory activities, including the timing of these events and activities.
These forward looking statements involve risks and uncertainties that could cause actual events performance and results to differ materially.
They are identified and described in today's press release.
And under the risk factors in our forms 10-K for the year ended December 31, 2020, and 10-Q for the quarter ended March 31, 2021, which we will file shortly.
We undertake no duty or obligation to update our forward looking statements.
On today's call will begin with opening remarks from Obi followed by Vivek to provide the commercial update and Kevin to review our financial results. We will conclude with commentary from Obi regarding recent announcements and update on our pipeline and closing remarks and now it's my pleasure to introduce Obi Greenman, Cerus, President and Chief Executive.
Oh, sorry.
Thank you, Matt and good afternoon, everyone I'm pleased to report our Q1 results.
I hope you've had a chance to review from our earnings release earlier today.
Before but they can Kevin discuss some of our commercial and financial updates for the quarter in greater detail I'd like to make a few remarks about the business and how we are thinking about the balance of the year.
As you can see from our results we are off to a strong start in 2021 building on the momentum of our business had exiting 2020.
Intercept platelet adoption in the U S continued to be the driving force behind our revenue growth during the first quarter of 2021.
The FDA compliance deadline five months away, we are pleased to see customers moving and in many cases more quickly than we had anticipated to ramp up production capabilities to provide intercept platelets to hospital customers across the country.
On the therapeutic front, our commercial team responsible for intercept fibrinogen complex product is making good progress on hospitals ahead of our first sales and we will share more details with you later on this call.
Our U S. Commercial team is executing well to support blood centers across the country as they prepare for compliance with the FDA guidance later this year.
Jason will provide more perspective in his prepared remarks.
Looking at a little more closely at the Q1 product revenue I am proud to report that we were able to continue a pattern of consistent year over year product revenue growth that goes back multiple years now.
Moving to our full year product revenue guidance the momentum we saw in the market at the start of 2021 has been strong and as a result, we are raising our 2021 product revenue guidance to a higher range of $110 million to $114 million.
Representing year over year growth of between 20, and 24% from our full year 2020 results.
Well as usual, we are not providing quarterly guidance. We continue to expect the momentum of hospital adoption to build each quarter over the course of this year.
We talk often about the global opportunity for intercept being close to $7 billion, which includes opportunities in geographies, where intercept has not yet approved in pipeline opportunities like intercept red blood cells.
When considering our current portfolio of licensed products alone. We believe the near term opportunity for our business is very significant in and of itself at about $1 4 billion.
There remains a lot of commercial upside to penetrating the current total addressable markets for intercept platelets plasma and fibrinogen complex.
In addition, with the organic growth of these end markets.
Our geographic expansion into Asia Pacific and Latin America, and ultimately product line extensions. We continue to believe there is significant runway for future revenue growth.
Before I turn the call over to Vivek for the commercial update I would like to highlight a few updates for intercept fibrinogen complex or IFC.
First last week, we were very pleased to see that CMS released its preliminary decision to approve IFC for a new technology add on payment or end tab.
This is another step forward in the early days of our commercialization of IFC and CMS is provision of N taps for breakthrough technologies like IFC will help providers in their Medicare patients gain access early.
We anticipate that Cms's final decision will be released in August ahead of the start of their fiscal year and the effective date for new and taps on October one 2021.
Additionally, I want to share some of the sales and marketing materials. Our team has developed and reviewed with the FDA to use in the field that underscores the benefits of intercept fibrinogen complex.
With a focus on improving timely access to quality of factors, including fibrinogen.
And correspondingly outcomes for critically bleeding patients we are preparing for a nationwide launch once our production partners receive BLA approval anticipated sometime next year.
Some of the key messages for intercept fibrinogen complex that resonate with prospective hospital customers included more immediate availability as well as its five day post thaw shelf life, which has the potential to meaningfully reduce the challenging wastage rates associated with the product exploration for conventional cramped precipitate.
We're looking forward to getting this product to physicians and patients to enable better management of critical bleeding events.
With that let me turn the call over to the day for a more detailed review of our commercial operations.
Thank you Avi and good afternoon, everyone.
As discussed 2021 is off to a strong start and I am pleased to discuss the results of our first quarter with you today.
And there'll be mentioned the commercial team in the U S is moving quickly and aggressively to offer the intercept blood system for platelets to blood centers ahead of the FDA compliance deadline in October.
Quarterly demand for intercept platelet kit during Q1 in North America grew 51% year over year.
Specific to the top five blood centers in the U S, which as you will recall are responsible for about 70 to 70 odd percent of the overall platelet supply on the domestic market. Our Q1 sales to these customers increased 59% year over year.
This is the third consecutive quarter of year over year growth above 50% and is clear evidence that we are building a significant presence in the U S. Platelet market ahead of the October one deadline.
For our largest customer in the U S. The American Red Cross intercept adoption continues to grow rapidly and over half of the platelets. They produce are now intercept treated.
<unk> continues to be a leader in the adoption of pathogen inactivation and is driving towards its stated goal of 100% pathogen reduced platelets.
<unk> will share some more detail regarding our efforts to expand the approved shelf life for intercept platelets to seven days from five days, but.
Even with the current five day shelf life.
And our blood Center partners clearly continue to see strong demand for intercept versus Earl Bds are large volume delayed sampling.
In the EMEA region first quarter reported product revenue increased 9% on a year over year basis.
During the quarter, we saw contributions from our major customers in established markets in Western Europe, as well as sales of illuminator and EMEA.
Offsetting this growth Q1 was impacted by unfavorable timing of orders in certain region, which we expect to normalize as the year progresses.
Additionally, our international business has benefited from sales of intercept plasma over the last year and this continued in the first quarter.
While not a significant driver of our business the demand we've seen from customers. During the COVID-19 pandemic is a reminder, that intercept platform as an important tool that can aid in the safety of the blood supply.
And on an epidemic when you pathogens emerge.
Moving to our therapeutics business the net as there'll be mentioned at the top of the call. Our teams have been making a lot of operational and commercial progress in advance of the price customers coming online shortly.
Our production partners are making strides towards operational readiness re partners have already initiated or completed product validation and are actively building inventory that would be ready to lease as new commercial agreements are signed at hospitals begin ordering.
Finally in addition to current production partners applying for BLA in support of the nationwide launch next year.
We're also in ongoing discussions with additional blood center production partners that will provide access to additional launch dates in 2021 and production capacity to meet expected demand.
On the commercial side of the therapeutics business I'm pleased that we have a strong funnel with multiple perspective customers either in evaluation or in contracting. So we look forward to updating you more on our success as we begin hospital contracting on a more broad basis throughout the year.
With that I will turn the call over to Kevin for a review of the first quarter financials.
Thank you Vic and good afternoon, everyone.
To recap what Obi mentioned, we reported first quarter 2021 product revenue of $23 $4 million of.
26% increase from the $18 6 million recorded during Q1 of the prior year.
Global demand for intercept continues to increase.
For Q1, the calculated number of treatable platelet doses increased 13% year over year.
In terms of product mix for the quarter.
Kit sales represented 95% of our Q1 product sales.
Of those total kit sales.
Platelet kits accounted for approximately 90%, while plasma kit sales accounted for the remaining 10%.
As Vivek mentioned in his remarks, Q1 again saw strong demand for intercept plasma outside of the U S.
In addition, we continue to see healthy placement of illuminator devices globally, which contributed about 3%.
In addition to our product revenue and not included in our guidance government contract revenue totaled $6 2 million on the Q1.
Comparatively government contract revenue totaled $6 million in the first quarter of 2020.
For the remainder of 2021, we expect government contract revenue to increase with patient enrollment for BARDA reimbursed clinical trials and.
And as activity associated with whole blood pathogen reduction initiatives funded by the FDA ramps.
Now, let's move the discussion to our reported gross margins.
Gross.
<unk> for the quarter were 52, 5% compared to 55, 3% from the prior year period.
The 280 basis point decline from the prior year was in line with our expectations and commentary we provided on our Q4 call in February.
As a reminder, this expected dip was driven by the outpaced growth in the U S relative to our other commercial markets.
As a general rule U S customers and in particular at the American Red Cross predominantly use our single dose platelet kits as opposed to EMEA customers, who use more of our double dose kits.
Our single dose platelet kits generally carry a lower gross margin contribution compared to our double dose platelet kits.
As a result, given the expected outperformance from the U S relative to the rest of the world.
We anticipate a similar dynamic to play out for the remainder of the year.
Due to the mix difference in kit configuration sold in the U S versus EMEA.
I would now like to discuss operating expenses, which totaled $34 9 million during the first quarter and.
And included $5 3 million and noncash stock based compensation.
Of the total Q1 operating expenses SG&A expenses accounted for approximately $19 2 million and were higher by about $3 $3 million compared to the prior year.
Driven by increased investments surrounding our intercept fibrinogen complex launch and increased noncash stock based compensation.
Research and development expenses for the quarter totaled $15 7 million compared to $15 8 million during the prior year.
During the quarter increased research and development spending associated with the Red blood cell CE Mark and.
In other intercept pipeline activities, such as our lead illuminator in development were more than offset by lower expenses elsewhere.
Reported net loss for the three months ended March 31, 2021 increased when compared to the same period in 2020.
Reported net loss for Q1 totaled $17 5 million.
Or <unk> 10 per diluted share compared to $16 5 million or <unk> 10 per diluted share for the prior year period.
In terms of our balance sheet, we ended the quarter on a strong position with approximately $132 million of cash cash equivalents and short term investments on hand.
Cash used from operations for the first quarter was $18 million compared to $19 8 million from the prior year period.
As our visibility for continued revenue growth increases.
We are leaning in to our investments in supply chain and inventory.
To ensure that we are able to deliver product to our customers without interruption.
Finally.
As we continue to see durable top line revenue growth as intercept adoption ramps globally.
We're focused on driving significant operating leverage on our path to profitability or cash flow breakeven.
While this is not intended to serve as long term guidance.
I mentioned it because it is a significant focus for us over the next few years and we look forward to showing our progress based on our upcoming quarterly results.
Moving on to guidance for 2021 as Obi mentioned earlier, we continue to believe that we have good visibility into the demand for our products.
Leading us to raise our 2021 product revenue guidance range from $106 million to $110 million to.
To the new range of $110 million to $114 million.
This new range reflects 20% to 24% growth when compared to 2020.
While the U S. Platelet business is the primary driver for the 2021 straight.
Launching our intercept fibrinogen complex product.
We remain enthusiastic for the product's potential but continue to expect relatively modest sales from this launch in the immediate term prior to a nationwide rollout.
With that let me turn the call back over to Obi for some closing comments.
Thank you Kevin beyond the commercial progress I would like to provide you with some insight into our pipeline initiatives.
First with respect to our efforts around seven day intercept platelets in the U S. Our team has been working to complete the ongoing study and remains on track to submit the FDA to the FDA later this quarter.
Assuming a 180 day review window, we hope to have approval by the end of the calendar year.
Moving on to a quick update on our Red blood cell program I am pleased to share with you that the third module of our four part modular submission for a CE Mark was submitted last month and we are on track to submit the fourth and final module by the end of Q2.
As we have stated previously based on our discussions with the regulatory authorities, we think a potential launch during the second half of 2022 focused on specific patient populations as possible.
In the U S. We continue to enroll patients in our phase III recipe and rather studies and anticipate the enrollment trend to ramp throughout the year, assuming COVID-19 disruptions continue to abate.
Another effort I wanted to take a moment to highlight as a clinical trial in which we are collaborating with the coalition for National Trauma research.
Study is called propose for the plasma resuscitation without lung injury study.
The focus of this study is on the use of intercept plasma is part of the resuscitation plan and the initial 24 hours of treatment for burn injuries versus current standard of care methods.
It is still early days for this study, but I mentioned it because it highlights a potential use case for intercept plasma in the burn market, which has treatment challenges today with fluid resuscitation using crystalloid solutions and associated safety concerns.
We appreciate the support of <unk> and look forward to updating you as this program moves forward at the six U S sites enrolling in the study.
In closing our first quarter was a solid start to this decisive year for cerus arent.
Our entire organization is aligned and focused on taking advantage of the unique opportunity we have with a truly differentiated product offering and a market that is rapidly adopting solutions against a near term deadline.
Our intercept fibrinogen complex launch continues to gain steam.
The market reception for the product has been very encouraging as it relates to availability and operational ease of use for the transfusion service and we are actively put into various levers in place for this business to grow and succeed in 2021 and beyond.
And finally as I think about our results on the guidance. We have updated on today's call I am confident that the momentum in our favour coupled with a strong recurring revenue nature of our business will translate into solid top line growth for the full year.
With that let me turn the call back over to the operator for Q&A.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
Sorry, your question press the balance sheet, please stand bottle and compile the Q&A roster.
Our first question comes from Josh Jennings with Cowen You May proceed with your questions.
Thanks, Good afternoon, and congratulations on a nice start to the year on the guidance revision I wanted to ask about guidance to start off and.
$4 million raised at the midpoint.
Beat our estimate by about $2 million.
So it suggests that trends are improving and you have more confidence.
We had at the beginning of the year, which makes a ton of sense, just considering elective procedure trends in your results, but wanted to get a better understanding of what's driving that kind of.
Better than beat guidance is better than <unk> guidance range on that $4 million range is it just anticipation of stronger youre seeing stronger trends in April of intercept platelet adoption is there anything incremental on the PR precipitate fibers and complex launch that youre, adding into guidance, but anything you can parse out.
On the guidance revision would be would be fantastic.
Yeah. Thanks, Josh.
The guidance revision largely driven off the performance of the business in the United States, but I'll turn it over to Vic to provide maybe a little bit more context for that.
Sure I'd be happy to know Hey, Josh How're you doing.
Great. Thank you.
Year I think your sentiment is that correct. One we do have increasing confidence about the strength of our business in the U S. But we have also seen strong contributions internationally and so as we look out through the balance of the year. There are few factors that are starting debt converge.
That we think will create continued tailwind for the business.
First in the U S is the bad debt the guidance compliance deadline is approaching and we see an increase on the production capability with respect to EPS statements at the big five blood centers as we've discussed.
Numerous times before our focus strategically has been partnering with the big five blood centers, making sure their operations team can produce PR platelets efficiently and then.
<unk> net more needed to engage and get there on vault customers on board and the American Red Cross's, certainly led the way, but we've seen great progress at the other for blood centers to families as well and so that's a driver that we see continuing to contribute throughout the course of the year. We do we are starting to see a bit of an increase in terms of hospital access.
In the U S as the COVID-19 pandemic.
Hopefully starts to sunset until customer access issues appear to be improving.
And then we will while we don't anticipate.
Huge contributions this calendar year, we will start to see cryo commercialization and contribute in the second half of the year and debt that will certainly help the top line as well. So it's really a combination of all those factors that give us confidence in terms of our ability to continue to post strong results and most importantly provide this these products and technologies to patients.
That need.
Thanks for those extra details maybe just one follow up.
Wait to see the.
Untapped proposal on the recommendation by CMS for pathogen reduced.
Cryo Fibrogenesis complex.
Just wanted to ask on the pricing that was mentioned in the document.
$3900 per patient on average is debt pricing kind of built into your Tam calculations of that $300 million plus Tam for PR CFC and the U S or is that a little bit of stronger pricing level.
That's baked into that Tim Thanks for thanks for taking the questions.
Yeah, I'll start with the answer to that question, Josh and then probably turn it over to Dr. <unk>, who has joined US on the call is Walter day. She is really the architect behind our global reimbursement strategy, but specifically around this new technology add on payment that we were happy to see the preliminary.
Preliminary ruling on last week.
Historically I think the way we've talked about pricing on a per gram basis is that the intercept fibrinogen complex product would be somewhere at the midpoint between sort of conventional cryo.
<unk>.
Yeah on a price per fibrinogen.
Grandma fibrinogen is about 250 to $300 per Gram vs.
On the other end of the spectrum, which is fibrinogen concentrate which is in the range of 800 to $900 per Gram net would be sort of somewhere in the middle of that but.
Jessica can give you some more.
Our perspective on sort of what we put into the <unk> application.
Then sort of the implications of what that and tap ruling the preliminary ruling looks like.
Jessica.
Sure I'm happy to thank you for that question. So following up on what <unk> said that is.
The pricing that we had proposed to CMS NR and tap applications, though we were pleased to see it reiterated at this preliminary stages a day decision.
And that.
3900 per patient is the average based on what we anticipate Medicare patients would receive based on clinical studies that have been conducted on a similar patient population and just a reminder that.
The Medicare population that we anticipate will be most applicable.
Is more of a surgical population as opposed to chime on population, which is usually on a younger patient group. So.
Yeah.
Overall, the impact is applicable for Medicare patients and provides incremental.
On reimbursement over idea R&D based payment rate, which is the typical inpatient payment system that Medicare uses and that's something that is not currently available that incremental reimbursement is not currently available for conventional cryoprecipitate. So that something we see that will be quite <unk>.
The debt for hospitals etcetera, as Theyre looking at bringing the new product in house.
Hey, Josh this is Kevin if I could I just wanted to circle back on your guidance question.
Not sure if it was clear or not but our thinking around that.
The prior year or IFC contribution this year Hasnt changed and as a result, it is not the driver for the increased guidance. The increased guidance is really is the big described coming from U S and EMEA.
Excellent and then just any any recalculation of the cryo Tam I think you guys have been at 300 million plus in the U S.
Does this pricing or any of your.
Just the early days of getting approval in customer discussions.
Increased your optimism of that Tam or increased.
Taken a calculation up to a higher level.
Yeah. Thanks, Josh no it really hasnt I mean sort of that was in the range that we considered when we've talked about the Tam for intercept fibrinogen complex.
The challenge still is just sort of debt that market organically is growing.
Roughly.
Sort of high single digits on an annual basis and so when we.
Put that Tam out there a couple of years ago, using roughly is sort of 750000 gram equivalents, so fibrinogen annually.
That's likely gone up and we're attempting to get better sort of real time information for how large that market is today.
On the untapped preliminary ruling certainly provides us with more confidence in the market opportunity as Jessica mentioned this does provide hospitals with a payment per patient.
That is incremental to the DRG and that doesn't exist for the other products right now so I think it's really.
It's been very well received by customers, thus far even though it's only been a week.
Excellent well congrats on the day.
The entrance of your first therapeutic product and on the marketplace, but I appreciate taking all my questions.
Thanks, Josh.
Thank you. Our next question comes from Mathew Blackman with Stifel. You May proceed with your question.
Good afternoon, everyone. Thanks for taking my questions.
A couple from me.
Tobey I was curious you said and this is in relation to I think U S platelet adoption.
Some customers that perhaps are moving faster than you had anticipated could you expand on that a little bit on the accounts that works on heading down the intercept path already yes similar trajectory.
Red Cross or are you seeing some acceleration on some of the accounts that may have been hedging of debt and dragging their feet a bit just any color there would be helpful. And then one follow up.
Yeah, Thanks, Matt I'll start with the answer to that question, then turn it back over to event because you really can provide.
The best sort of context.
For the U S market, but we are seeing beyond just the Red cross which is moving towards.
Towards that 100% and really having a lot of success with their hospital or their key account discussions, but we're also seeing that translate to the other sort of four families of the big five and.
Few of them moving sort of quickly like the Red Cross. So I think that's what we I guess would sales sort of unexpected starting the year on <unk>.
You want to provide a little more color.
Sure I'd be happy day, Hey, Matt.
There'll be indicated that certainly did play a role I think another.
Driver in terms of.
Seeing accelerated growth is the.
The COVID-19.
COVID-19 pandemic did increase awareness.
Good for safety and to be prepared as a lot of the discussions we've been having about preparedness and being ready and in front of an event starting to really resonate because of what was going on and you start to see certain hospital customers that have multiple blood.
On our suppliers and if one of the blood center suppliers on the debt.
Are they would start to put pressure on the other blood center supplier to offer PR products as well and so you started to see a bit of a network effect start to take place where the more certain blood centers and hospitals started to adopt the technology sort of.
Almost keeping up with the Jones day.
That starts to dissipate across the blood Center and hospital market. So we still have plenty of headroom and waiting on the U S. But certainly the rate at which things are trending gives us all.
The reason for encouragement.
Okay. I appreciate that I was wondering if there was a fear of missing out set a phenomenon that was playing out perhaps.
And maybe as I think while I have you just curious a little bit on cryo.
Can you maybe give us a little bit more color on some of these conversations you've had I appreciate its early days.
I understand there has been significant interest.
The pushback, if any and I guess as you sort of work your way through this process. How quickly can these conversations turn into revenues as I'm, just trying to understand how sort of a longer lag or lead time. However, you want to phrase it would be sort of getting a new customer on board and generating revenues any sense of that debt turnarounds.
That's it from me. Thanks, Yes, Yes of course, now happy to answer that Matt and debt.
As you can appreciate.
Seeing new product introductions on a variety of from markets leather.
In med tech or.
From a their environments there isn't a uniform answer necessarily to that question. What I can tell you is the pre approval market research that we did customer sensing activity that gave us confidence that there would be strong clinical interest and reception that has been validated by the conversations we've had with clinicians since.
Approval and so that was certainly very encouraging and price to here and thats been whether it.
Trauma docs or physicians, who are cancer treaters, who are responsible for blood center management within hospitals that debt.
Theres been uniform interest and enthusiasm for the product and recognition and understanding of its clinical value.
Location.
The long pole in the 10, not surprisingly as hospital contracting and if a hospital as a standalone independent hospital on part of that.
<unk> on a part of a larger family of hospitals.
That really plays a role in terms of how on the process May may <unk> and a number of these things candidly were put on hold in terms of new product introductions. The rest during COVID-19 because that was such.
Such a big effect on sound in terms of dominating attention at the hospital level, we're starting to see that dissipate and starting to see their level of engagement and interest in glad but there isn't sort of a cookie cutter single answer in terms of how long it takes to translate clinical interest in product ordering but what I can tell you is we haven't.
Leading indicators that give us confidence that we're fairly close on that end, but it really is hospital by hospital in terms of getting that process.
And it gives us confidence is consistent clinical enthusiasm and champions that we can identify individual.
Makes sense.
Got it thanks again.
Thanks, Matt.
Thank you. Our next question comes from Jacob Johnson with Stephens. You May proceed with your question.
Hey, good afternoon, congrats on a nice start to the year. Maybe just first question can you just remind US you called out $1 $4 billion Tam today can you just roughly break that out between price.
Platelets and plasma on as you sit here today.
Yeah, I mean, I wish I had that slide up that we have all the times, so maybe Kevin or adjusted correct.
Correct me, if I get this wrong, but.
Roughly $300 million, we identified four.
The Tam for fibrinogen concentrates and then the platelet and plasma opportunities are roughly equivalent in the markets, where we currently sell so I think the main point of that comment in the prepared remarks was we're right now providing guidance of 110 to 140.
$10 million, but theres a lot of room to grow the business in the markets, where we're currently approved and with the current product portfolio.
That being said once we get red cells approved and once we start expanding geographically into APAC and Latam more aggressively.
That really opens up the full $7 billion Tam.
Got it thanks, Toby and then Kevin you said two expense I expect a similar dynamic for gross margins for the remainder of the year.
Should we just assume kind of 52, 5% or so from product gross margins throughout the rest of the year or any caution against that.
No I think Thats right I mean, when we have the Q4 call. We kind of predicted this was going to happen, it's really a function of.
The growth coming from the U S and to the extent that it's.
Overweight from the Red Cross Thats going to have an impact since they are single those consumers. So we expected you know two to 300 basis points from last year's results and Thats what were seeing and we have no reason to believe that's going to be different as we move forward given our commentary on.
On the revised guidance.
Great I'll leave it there thanks.
Thanks Jacob.
Thank you and as a reminder to ask a question you will need to press star one on your telephone. Our next question comes from Mark Massaro with BTG. You May proceed with your question.
Moving on from Mike Thanks for taking the question.
Hi, everyone.
Okay.
Yes.
Michael You mentioned, a broad national launch.
Approval from timing in 2021.
Michelle.
Q1, 2022 lines, there or is it too early to call on.
And if you could also walk us through some of this capex involved in securing the BLA approval.
Yes, so the.
BLA submissions will take place sort of in the middle of this year and we still anticipate that that will take 12 months unless it moves more quickly on that with the.
On the FDA and again this is the production partners to blood centers that we've partnered with theyre going to be making that submission with our with our support so that's underway right now as far as the submission process, but it hasnt havent submitted their deal is yet.
So that would sort of predict a middle of 2022 nationwide rollout.
In parallel with that in order to access some additional states that are significant and where patients. There's obviously a clear unmet need for this product.
We are looking and are in advanced discussions with additional production partners to add additional states over the course of the next.
Quarters, so that allow us to access those states in advance of the nationwide rollout in mid 2022.
Okay, great. Thank you.
I mean, if I could also ask how the partnership from the Latam region.
China has been progressing with BB case, specifically.
If you could provide an update on the NPA Duffy on China.
Yeah, I'll start there and maybe the bank or Kevin can add because you guys are participating in this joint venture discussions more frequently than I am.
Z BK has proven to be a great partner.
Thus far on rule excited to be working with them right now the discussion really is around us.
What's the scope of our clinical trial, that's required in China to provide that data that <unk> is looking for.
With regard to transfusion in Chinese patients to remind you we did do a study.
Historically in Hong Kong relatively large study in stem cell transplant recipients and just looking at sort of the aggregate of not only our clinical data.
<unk> data from all the years, we've been on the market in Europe, and the U S. Now and that's significant combined with that Hong Kong study and then what if any additional studies are required for that and MPA submission.
Any other context, you can provide.
I think that covers are by and large from China I think that there was a question about Latam as a biologic.
On that yet announced.
Fairly recently, securing a tender a couple of tenders in Brazil, the COVID-19 impact in Latin America, particularly Brazil.
Brazil has been pretty significant so we have seen that as a bit of a headwind in terms of further penetration having said that we continue to add price have been blood centers online across Latin America, but theres certainly been a headwind COVID-19 related that we are facing in Brazil, but I think the China Punjabi capture while.
Okay, great. Thanks for taking the questions.
Thanks, a lot.
Thank you and as a reminder to ask a question you will need to press star one on your telephone.
Please stand volume compile the Q&A roster.
And im not showing any further questions at this time I would now like to turn the call back over to Obi Greenman for any closing remarks.
Well. Thank you all for joining us today, it's an exciting year for serious and we look forward to updating you further on our Q2 call.
Which will likely be at the end of July thanks, very much.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
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Okay.
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