Q2 2022 Cerus Corp Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Good day, ladies and gentlemen, thank you for standing by and welcome to the Cerus Corporation second quarter 2022 earnings Conference call. At this time, all participants are in a listen only mode.
After the Speakers' presentation there'll be a question and answer session. Please be advised that today's conference is being recorded I would now like to hand, the conference over to your Speaker, Mr. Matt No tour Jani Senior director of Investor Relations. Mr. Notarianni you may begin.
Thank you and good afternoon.
I'd like to thank everyone for joining us today today's webcast. We are simultaneously displaying slides that you can follow.
You can access the slides from the Investor Relations website at IR Dot Dot com.
With me on the call are Obi, Greenman, Cerus, President and Chief Executive Officer.
Kevin Green Chief Financial Officer.
Jai Robyn cirrhosis, Chief operating officer.
Dr. Nina Mufti, Pearson's, Vice President development, and Red Blood cell program leader Dr.
Dr. Richard Benjamin seriously Chief Medical Officer.
Carol Moore Senior Vice President of regulatory affairs, and quality and Jessica Hanover, Fearsome Vice President of corporate Affairs.
<unk> issued a press release today announcing our financial results for the second quarter ended June 32022, and describing the company's recent business highlights.
You can access a copy of this announcement on the company website at Www Dot <unk> 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 2022 product revenue guidance and goals operating expenses and anticipated cash used from operations gross profit and gross margin.
As well as commercial development effort.
Growth and growth strategy future product sales.
<unk> launches.
Ongoing and future clinical trials.
Ongoing and future product development, and our regulatory initiatives, 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.
Are identified and described in today's press release and under risk factors in our Form 10-K for the year ended December 31, 2021, and our Form 10-Q for the quarter ended June 32022, which we will file shortly.
We undertake no duty or obligation to update our forward looking statements.
On today's call. We will also be discussing non-GAAP financial measures, including non-GAAP adjusted EBITDA.
These non-GAAP measures should be considered a supplement to and not a replacement for measures presented in accordance with GAAP.
For a reconciliation of non-GAAP financial measures to comparable GAAP financial measures. Please refer to today's press release.
We will begin today with some opening remarks from Obi followed by moving to discuss some recent business highlights and Kevin to review our financial results.
We will conclude with commentary from Obi with an update on our pipeline and closing remarks.
Now, it's my pleasure to introduce Obi Greenman, <unk>, President and Chief Executive Officer.
Thank you, Matt and good afternoon, everyone reporting our second quarter of 2022, and I'm proud of the results. Our team has been able to deliver as we continue to expand patient access to blood components treated with our intercept blood system around the world.
The interest level and understanding of the value of pathogen reduction continues to increase.
Notably earlier this summer we were pleased to work on a study recently published in transfusion, which concluded that a robust rollout of pathogen reduction for all blood components, such as the intercept blood system could provide a way to increase donor retention and improved blood product availability.
The strong safety profile and track record of the intercept blood system Hasnt routine use in many regions continues to reinforce the utility of pathogen reduction as a definitive safeguard.
Earlier this summer, we eclipsed cumulative kit sales, which translates into more than 12 million intercept treated transferable units of platelets and plasma.
An increase of 2 million doses in less than a year.
The strong revenue growth as expediting, our pathway to cash flow breakeven as defined by our non-GAAP adjusted EBITDA metric.
We began providing on our Q1 call.
Our rapid growth over the last few years means that we're now selling in a single quarter, just slightly less than what we used to sell in an entire year as recently as 2017.
It is a remarkable achievement for the company yet there are significant growth opportunities for us in the quarters and years ahead as we seek to realize our mission of making intercept the standard of care in transfusion medicine globally.
After vivek and Kevin provide some color on the quarter and how we see the balance of the year shaping up I will wrap up with comments around some of our important product pipeline development efforts that will help us continue to realize our mission and the upside associated with the full intercept portfolio for all blood components.
We believe we have clearly established our leadership in the U S platelet market with North America product sales for the second quarter, implying a $100 million annualized run rate.
With our ability to continue to grow our presence in platelets in the U S and around the globe.
Create further awareness and increased penetration for our intercept fibrinogen complex product in the U S. We expect to deliver meaningful top line growth from those opportunities.
And as we demonstrated this growth and coupled with our financial discipline. Please.
Please see a clear pathway towards cash flow breakeven, which we believe will afford us the flexibility to self fund future growth it.
It is a mark change from our history of tapping the equity markets.
Which helped us establish our commercial footprint and funded manufacturing capacity and supply chain activities.
All of which have contributed to help us realize our unique position in transfusion medicine.
To secure our leadership in the field well into the future.
I would now like to turn the call over to Vivek to discuss the second quarter revenue highlights.
Thank you Obi and good afternoon to everyone joining today's call.
Product revenues for the second quarter of 2022 continued our trend of strong year over year performance.
30% for the quarter.
As has been the case over the last several quarters our product revenue growth was led by strong demand for our platelet product offering, particularly in North America, where sales increased 75% on a year over year basis and 15% sequentially.
Additionally, North American product sales in Q2 included a modest contribution from Canada, which continues to be a geography, we're excited to be finally surveying with Canadian blood services at their facility in Ottawa.
We look forward to expanding our presence in that market. Once we secured the necessary regulatory approvals from health, Canada as we have previously discussed.
Rounding out North America, we also recognized a modest contribution from inter satisfy brand energy complex, our IFC and our second quarter product revenue.
Discuss the status of our nationwide IFC launch that more shortly.
In EMEA, excluding some significant currency headwinds that Kevin will touch on in his remarks.
Is this a positive growth in the second quarter led by sales across the Middle East region.
Our ISP sales saw a sequential increase in the second quarter, but as expected its contribution to our overall top line was modest and will likely remain so for the balance of the year in launching this product. We continue to be pleased with the physician interest on the potential to improve outcomes in bleeding patients and our focus.
On increasing market awareness and early hospital experiences with that product.
Feedback to date from those using IFC has been uniformly positive as they see clear benefits associated with the product immediate availability and ability to reduce wastage rate.
With that said product uptake has been happening at a more measured pace than we initially expected due to the current challenging hospital environment, resulting from Covid related challenges such as short DAP hospital and the difficulties getting new products on board in patients.
Based on the clinician feedback our commercial team has received the hospital accounts, we continue to see this product addressing a critical unmet need related to early availability of fibrinogen to improve patient outcomes and ultimately help save lives in the case of the massive average.
Our ongoing effort to build a strong body of evidence around the Isps utility as a pathogen reduced longer shelf life surrogate for conventional Piper set the date remains one of our top commercial priorities and we're looking forward to seeing this business ramp in the back half of 2022 and beyond.
I will now turn it over to Kevin <unk> got our result and outlook in more detail.
Thanks, Vivek and good afternoon, everyone.
I'm pleased to walk through our second quarter results, which continued to demonstrate solid commercial execution and disciplined financial management.
These results move us closer to our goal of reaching cash flow breakeven in the near term.
And there are a testament to the commitment of the entire organization.
As <unk> noted in his remarks, we posted strong second quarter 2022 product revenue of $41 million.
Which reflected year over year growth of 30%.
By sales in North America during the quarter.
The majority of this increase was led by sales across our U S customer base with sales to the top five blood center customers growing over 70% on a year over year basis, and other U S customers also growing more than 50% year over year.
In EMEA for both the second quarter and first half of the year.
<unk> of the underlying business in these regions was offset by unfavorable foreign exchange rates, particularly with the recent move in the U S dollar versus the euro.
Clearly the persistence of the stronger U S. Dollar is a factor we and many other companies are having to grapple with.
However, the bulk of our manufacturing costs are also denominated in euros, creating a natural hedge that results in an offset to our Cogs as reported in U S dollars.
The impact on the rest of our P&L.
Moving onto our calculated platelet dose metrics.
Our second quarter growth in the calculated number of treatable platelet doses reflects a 65% year over year increase in the U S and a 22% increase internationally.
For the first half of the year the number of doses has grown by 94% year over year in the U S and 25% internationally.
In terms of product mix for the quarter sales of intercept disposable kits represented over 96% of our Q2 product revenue.
In addition to our product revenue and not included in our guidance.
<unk> contract revenue totaled $6 6 million in Q2 versus $6 3 million for the prior year period.
Turning now to our product gross profit and gross margins.
Our second quarter product gross profit was $21 3 million.
Compared to $16 $2 million during the prior year period.
An increase of over 30% year over year.
Our continued product sales growth has been the primary driver of our increased product gross profit from the past several quarters and Q2 saw a continuation of this trend.
Product gross margins for the quarter were 51, 9%, which increased 60 basis points when compared to the prior year period.
While our mix of products continues to be heavily weighted toward our single dose platelet kits, which has lower margins than our other product configurations. We.
We are also beginning to see a return to economies of scale as we grow.
Moving on our second quarter operating expenses, which totaled $34 7 million or $2 1 billion lower than the prior year period and included $5 million in non cash stock based compensation.
By specific expense type second quarter, R&D expense totaled $15 $2 million.
Third to $17 $1 billion during the prior year.
Second quarter SG&A expense was $19 5 million.
And it was roughly flat versus the prior year period.
Despite the inflationary macroeconomic environment, our business has continued to show its ability to grow while generating operating leverage.
Having said that we would expect to see some modestly higher expenses during the second half of the year drew.
Driven by higher labor costs increased travel for customer and marketing related activities and higher prices from certain vendors.
On the bottom line reported net loss attributable to <unk> for the three months ended June 32022, nearly halved when compared to the same period in 2021.
Net loss attributable to <unk> for Q2 totaled $8 4 million or.
<unk> <unk> per diluted share compared to $15 4 billion for nine cents per diluted share for the prior year period.
Moving onto our adjusted EBITDA metric second quarter non-GAAP , adjusted EBITDA totaled negative $2 4 million.
<unk> to negative $8 2 million during the second quarter of 2021 and negative $3 7 million during the first quarter of this year.
On a year to date basis, our non-GAAP adjusted EBITDA also improved in the first half of 2022 to negative $6 1 million.
Compared to negative $19 $7 million in the first half of 2021.
Now turning to the balance sheet and cash flows.
We continue to feel good about the strong and improving financial position, we are establishing driven.
Driven by our continued commercial execution and disciplined expense management.
We ended the second quarter with a strong cash position of $107 million of cash and cash equivalents on the balance sheet.
In terms of cash utilization I'm, especially pleased with the performance we delivered in Q2.
Our cash used from operations came in just shy of $350000 for the second quarter compared to $8 7 million during the prior year period.
We continue to drive this organization towards sustainable topline growth, while generating significant SG&A leverage, allowing us to invest in a deep pipeline.
To continue to expand and improve the intercept blood system over the long term.
However, we have also not lost sight of our goals around cash flow breakeven and believe that they will be achievable in the near term.
Wrapping up my prepared remarks, I'd like to spend a little time discussing our outlook for the back half of the year.
Throughout the first half of 2022, we've demonstrated strong commercial execution and fulfilling robust global demand. Despite the numerous economic and geopolitical headwinds around the globe.
We continue to expect to deliver double digit product revenue growth in the back half of the year. Despite the continued downward pressure being caused by the strengthening U S. Dollar.
As you know the dollar is roughly at parity with the Euro and we expect this headwind to continue for our EMEA revenues for the balance of the year.
Our team with strong demand for our products and FX headwinds today, we are reiterating our full year 2022 product revenue guidance range of $160 million to $165 million, which reflects year over year growth in a range of 22% to 26%.
With that let me turn the call back over to Obi to provide an update on our pipeline as well as a few closing comments.
Thank you Kevin before we open up to questions I wanted to provide a few updates on our product pipeline.
First our intercept red blood cell efforts continue to progress, especially with regard to the U S. AC three trials required for a future PMA submission to the FDA.
You will recall that we have two phase III studies underway.
<unk> in acute anemia study enrolling complex cardiac surgery patients.
And <unk>, which includes both acute and chronic anemia patients.
Enrollments for both of these trials has been challenged by the COVID-19 impact on hospitals and procedures over the course of the pandemic.
But given some of the progress that we've been making so far this year I am pleased to be able to provide the following update today regarding our target for completing enrollment.
The recipe our study was initially based on an enrollment endpoint of 600 patients.
Set by FDA to assess the change in serum creatinine 48 hours after surgery.
However, following recent discussions with the FDA.
We have determined that a study size of more than 292 patient transfused would be sufficient based upon efficacy.
In light of the blinded assessment of the primary endpoint event rate.
Currently we are targeting enrollment of 340 patients for adequate power of the study and with enrollment ongoing across more than a dozen sites, we have enrolled and transfused more than 200 patients.
Assuming no further setbacks akin to what we saw with the COVID-19, we would expect to complete enrollment for recipe by the end of next year.
As a reminder, one of the main challenges in this study is that for about every two patients enrolled in this study only one is transfused with either test or control red cells.
Subsequent to the discussions with the FDA, we have reached agreement to fold in the Red cell exchange sickle cell patients and other chronically transfused patients into our <unk> study, eliminating the need for a separate phase III study.
While we're still activating new sites to participate in <unk>, specifically chronic anemia patient cohorts.
We believe that enrollment could be completed for this study in 2024.
As this trial is enrolling chronic anemia patients the duration of <unk> will extend beyond this timeframe as patient participation in the study can extend beyond 10 months.
In summary, we are pleased with the solid progress. These trials are making and the collaboration with the FDA and U S. BARDA to generate a robust data set for the anticipated PMA submission.
Turning quickly to our European regulatory submission for intercept red blood cells.
Earlier this summer our competent authority in the Netherlands.
G.
<unk> informed us that they have started their review of our submission.
You will recall, our notified body <unk> has reviewed our filing as well, which we submitted in four modules.
So while this review is taking longer than we initially thought we have seen good signs of progress over the last few months.
As we discussed previously the company had 40 backlog due to the MTR regulatory transition in Europe has resulted in a slower than expected time to begin the review.
With this process now underway, we look forward to working through any questions that arise and ultimately securing a CE mark approval under the new MBR to enable a product launch.
With regard to the development of our lead Illuminator. Our team is continuing to make progress over the course of the first half of 2022.
In partnership with our contract manufacturing partner.
For instance, we have recently placed orders for long lead time components for the led <unk> there'll be used to begin production of initial commercial led instruments.
Our led luminaire will mark the first major upgrade of our elimination device in our company's history as a key component of our future product portfolio, both new product iterations and new intellectual property.
We are very pleased with the feedback to date from the blood centers that are conducting the validation studies required for the upcoming regulatory submission and look forward to updating you in the coming quarters.
As many obstacles associated with the pandemic continue to wane. During 2022, we remain focused on expanding access to intercept blood components around the globe and are executing in the face of significant economic turmoil delivering strong growth and an improving financial profile for the business.
Before I wrap up my prepared remarks, I would also like to welcome Dr. <unk> to our board.
Dr. Shawn has been an advocate for blood safety and pathogen reduction for many years and is truly alumina area in the field of transfusion medicine.
We think Dr. Sean's expertise forward thinking and direct connection to the patients receiving blood components will make her a strong contributor to our board and to the fulfillment of our mission.
Specifically as we expect our global footprint to expand over the coming years, both geographically with our China JV and with the introduction of our first generation intercept red blood cell product.
I am confident that having Dr. <unk> unique perspective will provide us with invaluable guidance as we embark on these critical growth initiatives for the next decade.
With our two most recent additions to the board and Lucena and Dr Wash on.
We've added depth of expertise both in hospital operations and in transfusion medicine.
With that let me turn it back over to the operator for Q&A.
Thank you.
As a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
And today's first question will come from Mr. Blackman with Stifel. Please go ahead.
Hi, good afternoon, everybody. Thanks for taking my questions. If I could a couple for Kevin to start and then maybe a follow up for Ob <unk> Vivek.
Maybe Kevin could you give us a sense of what the FX impact was on the top line in the quarter and any sense of how much incremental FX, you're absorbing to keep the full year guidance intact.
Sure Matt So we had about a 6% headwind from FX for the quarter to date and.
More than that.
We think about the full year.
We.
Gave guidance initially.
At a higher rate than certainly the FX rates as we expect them to be for the back half of the year are going to put some pressure on at least the top end of our guidance, but we do feel that we have enough demand that we can harvest and cultivate to maintain guidance.
So we felt comfortable reiterating today.
And Kevin if I were to sort of guesstimate somewhere in the back half of the year is that a couple of million dollars of FX incremental FX I'm, just trying to get a sense of sort of the strength of the underlying business as youre looking back to looking out to the second half of the year.
Yes, I think thats it.
Parity for sure I think it could be.
More than a couple of million probably $3 million to $4 million, obviously, we don't know where things are but.
It's certainly when we look at the back half of last year, we were at rates.
117 to $1 14, and clearly it's still a sizable portion of our business and when the rates move too.
To parity, it's going to have an impact but the business is growing we continue to sell kits to treat more and more platelet doses and as you know.
In the U S is the largest driver of our growth. This year, so from a bottom line impact we're selling.
Dollar kits to U S customers, but sourcing those in euro. So we will have a beneficial effect on the back half of the year as it pertains to the Bottomline.
Got it and then if I could follow up with you with it.
How we should be thinking about the third quarter and seasonality.
Another way to ask I think if I look at consensus it's roughly flat product revenues versus what you just posted is that the right place to be.
Yes, thanks for the question, Matt I'll, let vivek handle that one.
Hey, Matt Thanks for thanks for the question I appreciate your interest.
I think as you look.
Look into the second half of the year as I mentioned previously there are where they're at.
Current there continued access issues related to the pandemic and hospitals are certainly some.
With that we're facing into that being said underlying product growth and the strength of the business.
Continues to be robust.
Now I'll defer to Kevin we don't really offer quarterly guidance, but I think there is confidence in the team we can continue to.
<unk> product adoption, but there are some very real headwinds we face as we ended the second half of the year.
Yes that one of the thing.
I have known Matt is just went into Q3 last year is just to remind you that was sort of going into the final guidance being issued.
There was clear sort of motivation by U S blood centers to act decisively in Q3.
So that may be a little bit of pressure on Q3 seasonality, but just wanted to highlight that.
I appreciate that.
Maybe sneak this and I appreciate the update on the early IFC rollout I'm just curious what you can do to accelerate adoption is it just a question of continuing to Bang. The drum do you need to increase spend or evolve. The go to market strategy, which is obviously a little bit different than.
And then you guys operate in and then just any thoughts on how to sort of get that that business accelerating. Thank you.
Yeah, Thanks, Matt I'll handle the first part of that question, then turn it over Vivek on sort of what is happening in real time with our commercial team.
As Greg mentioned in the prepared remarks, there's clear interest from physicians and from our existing hospital customers. So.
Our hospital customers, saying this is fantastic we don't have to worry about.
Find cryo, having it available for massive transfusion protocols and so a lot of the thesis that the product was developed around is playing out.
Yes, I'll, let <unk> speak to sort of what's happening at the hospital level with regard to staffing and things like that but we're clearly seeing the interest in the clinical benefit for the product being able to provide <unk> in early two bleeding in patients who are being diagnosed with fibrinogen deficiency as well as the operational benefits.
Blood centers and hospitals are not having to worry about wastage rates and are having to thought product in an expedited way to try and get into a quango pathway patient because like any other commentary I'd like to provide.
Yes, the only thing I would add to that Matt you're familiar with that Tony talked about launching new products and other sectors as well, whether it's new product committee that hospitals are really influencing both the clinical decision makers of the financial and purchase them and Thats. The key for us to continue to get as many of those.
Opportunities to get in front of Npcs as possible in the queue.
Those meetings and so forth have certainly slowed down a bit just because hospitals have been chronically short staffed and then many hospitals they've put a freeze on new products for a little while but with the number of the single best.
Best thing, we can do is continue to get the product in the hands of clinicians and get those experiences and this is a product with its clinical applicability and the unmet need it.
Dresses once physicians start to you that the peer to peer.
Networking component and word of mouth is really powerful so it really is about continuing to put as many things in the queue as possible. So that we can get in front of new product committees and driving that physician experience because what we're seeing here is every time the physician use of it.
She really validate the power of the technology and its really the best sort of awareness generation, we can have.
Alright. Thank you appreciate it.
Thank you one moment for our next question.
That will come from the line of Brandon Folkes with Cantor Fitzgerald. Please go ahead.
Alright, Thanks for taking my questions and congratulations on another very good quarter.
Maybe just firstly on the financials.
Opex discipline has obviously been impressive the last couple of quarters.
Actually saw a bit of a step down this quarter is there just any color in terms of how representative.
This quarter's SG&A is maybe a go forward level.
Okay.
Yes.
Look I think thats been repeating theme that we've been highlighting this leverage in the business and we expect that we will continue with that said as we move into the back half of the year cost of labor has got more expensive certain vendors in.
In the inflationary environment are you asking for price increases not unexpected and not unique to service, but we are managing it and don't feel like it's going to have a precipitous increase and our overall SG&A or R&D spend.
That said I think in the prepared remarks, I mentioned that we did expect some modest increase in the back half of the year, but certainly.
Muted relative to the topline growth.
Great Thanks, and maybe just.
Following on from the earlier question.
Maybe just two fold in IFC.
Granted it's very early but what is it resonating most in terms of uptake. So far is it sort of early availability lower wastage, just any color there would be helpful.
Then secondly.
I'm, sorry from a number of companies launching.
Products in hospital, all these challenges and sort of the lack of new adoption. What do you think changes that from yoga is it just sort of getting past COVID-19 is it returning to normalized staffing environment. What do you think is the biggest catalyst.
To getting past that challenge for IFC. Thank you.
Yes, Thanks, a lot Brandon I'll handle the last part of that question first and then turn the first part of that question over to Vivek.
I think what is really going to drive momentum in the IFC business as awareness of other case studies at other hospitals, where you are saving lives with this product.
As you understand sort of the cost utility and so that will play out as a function of registry studies that we have commencing right now as well as institutional case studies.
So that's all very much in play right now and I think that'll that'll really start moving the market more meaningfully.
So like any other perspective on the first part of that question.
Yes.
I think really on both for both parts of that question. The quick answer would be yes, I mean, depending upon the audience.
With whom you're communicating the earlier availability really resonate. Similarly, if you are talking to a financial or administrative decision maker, having quantifiable information on reduction in wastage rates is definitely a very salient point for them as they are trying to handle increasingly challenging.
But I'd say, the most visceral impact at.
Any clinician pad.
Untoward bleeding of that staying with them really for the balance of their medical career and being able to intervene in a way that ultimately it like saving has a profound impact on them and so I mean, that's probably the real impact.
And part of being able to provide something to a patient in a timely manner that is in fact, a lifesaving you can't you can't overstate the importance of that and how that resonates with the clinician.
And then communicate that to their peers and so.
That's really what what jumped out at folks and one thing we need to continue to push into obese point, having case study white papers out of institutions that are starting to.
Utilize the product then ultimately registry data, that's all going to come.
Come together to provide that sort of compelling rationale to drive further adoption.
In terms of some of the broader headwinds that are impacting new technology adoption.
Beyond biopsy relate brother certainly COVID-19.
Sunsetting, if thats, the right word or moving towards more of an endemic state will help a bit.
Hospitals getting properly staff, so that they have the bandwidth to take on new technology to the training things of that nature more SaaS.
But I think for us fundamentally just given the power of the technology the more.
At Bath, we get we'll be able to overcome some of these things and then you do start to see that peer to peer impact where certain institutions are offering IFC, others will want to be fast followers.
But it's a unique challenging time right now in terms of new entrants new technology, just because of the overhang of KEPCO than inflationary issues in kind of the atypical employment environment, but I do think those things will subside and the thing. That's most encouraging to me is the underlying clinical utility and value of ISC has not only been.
Yes, really proven valid, but I think strengthened during the course of our initial launch.
Thanks, very much. Thank you and thanks for taking my questions and congrats again.
Thank you thanks, Brandon one moment for our next question.
That will come from the line of Jacob Johnson with Stephens. Please go ahead.
Good afternoon, everyone. This is back on for Jacob.
Just a couple of quick questions for me.
I believe it was last quarter, you had noted that the Chinese lockdowns and affected the preparation.
To submit the intercept platelets to as regulatory agency.
Has there any been any change to this and as your timeline still intact.
Thanks, Matt So quick answer to your questions. We are still on track for submitting to the NPA before the end of the year clearly.
Chinese lockdowns around Covid have made managing the JV.
The virtual virtually challenging really like to meet with them face to face at some point.
Our near term, but.
Things are progressing.
Great to hear.
And then also.
You talked a little bit earlier, but.
Some impacts from the current inflationary environment environment.
Can you talk a little bit more about.
The entire business as a whole in this current environment, what's being impacted and then also your ability to pass on price to customers.
Yes, Kevin do you mind handling that.
Probably.
Yes.
Increase in prices is something that we've talked about for quite some time, we've been on the market in Europe for over a decade.
We've seen fairly Friday asps.
We're supporting blood centers and hospitals.
Benefit both clinically and economically and so I think it's natural that over time, we're going to need to increase prices to them not only in EMEA, but globally.
As far as the rest of the P&L is concerned.
We do continue to work with our suppliers and vendors.
Generally have language in their covering price increases.
And we continue to manage it so I think it will have over time.
We will see some impact, but not anything that is alarming or causing us to recalibrate the timing for reaching.
Our adjusted EBITDA neutrality metric.
And we'll see what happens and how long that persists, but right now that's that's where.
Our thinking is.
Great. Thanks for taking the questions.
Thank you Mac.
Thank you as a reminder, if you have a question. Please press the star one one key on your telephone.
Our next question will come from the line of Josh Jennings with Cowen. Please go ahead.
Hi, good afternoon, thanks for taking the questions.
I wanted to just ask about the reiteration of product revenue guidance. It seems like that is.
Represents still by strong momentum in the business and the platelet business.
Displayed with the <unk> results.
So we're being a couple million dollars in FX.
FX headwinds and maybe a slower start to IFC, but I guess my question is really just thinking about the intercept platelet business and the momentum there, but it should be thinking about that.
That business exceeding internal expectations or the.
The full year range exiting the first half.
Slower IFC rollout kind of impacting the corporate wide product revenue guidance as well as FX.
Well I'm trying to assess what your question is there Josh but maybe they can provide a little bit more color on sort of the.
Ongoing platelet demand for the second half.
Sure I'd be happy to I mean, I guess.
And thanks for the question Josh the first thing.
I have to say and I think you can attach to that knowing that albeit that no matter, how well, we do I don't know that we exceed internal expectations.
I don't want that necessarily to be the benchmark, but but joking aside.
We do see continued strength in the platelet franchise, both in the U S and internationally and that continues to be the U S. Platelet business the single largest growth driver and <unk>.
Given customer adoption and their feedback in terms of their satisfaction with the technology and the process and also their hospitals receptivity of taking on PR platelets, we feel confident that we can continue to post strong results there.
And certainly we want to be sober to that to the headwinds that are represented by currency and a slower rollout ISC, but we still believe that the underlying technology adoption and then ultimately the oxy adoption will propel us forward. So that really speaks to why we can maintain the current range, albeit there are some unanticipated.
Dissipated headwind that potentially.
That served as potentially some compromise on the top end, but.
Our business results continue to be fairly solid.
Helps clarify our thinking.
It does it doesn't sorry awarded that question poorly is really just trying to get at the strength of the platelet franchise kind of absorbing this slow ish IFC rollout.
And the FX headwinds.
And so it sounds like that is the case.
I also wanted to just think about the.
Platelet business.
So platelets and whether youre seeing.
A benefit and hospital staffing shortages just another is there is always a labor crunch, particularly in blood banks, but just with the incremental labor required for long.
Our funnel of delayed sampling and that that approach.
Have you guys are benefiting from that and any updates on just the national platelet supply and how that's impacting the business as well.
Yes. Thanks for the question Josh So in general we continue to see strong hospital demand for pathogen activated players because.
Essentially you've got a early early surf product.
Hudson our level they have a single inventory that they got to manage manage towards so that really does have a residents both at the blood center and at the hospital level and we continue to see that play out going.
Going forward basis.
I think as you look at the overall platelet supply there are sort of.
There is ongoing volatility there from a demand and supply standpoint, and so we do see some fluctuations from month to month.
In general, though we don't see the demand for overall players demand.
Being that impacted in the U S. At the moment, but it is sort of variable I mean, I don't know if you donate platelets.
Constantly getting requests to go out and donate players yet again, so that's always my sort of barometer for.
What's going on with the planned supply at any given.
Any given week or month.
So I hope over that provides you some perspective, but I think in general.
What's unique about the U S still as compared to the European business, where we have sort of a very binary adoption curve is that we have that in certain blood centers and hospitals and yet.
Turning to evolve and others.
And I think over time, just the overall safety and simplicity of intercept platelets will went up.
Thank you Obi and just one last question.
Theres a transfusion article published in the American Red Cross.
Representatives from the office.
Suggesting that there is a signal that pass through reduction could.
Good.
Replace the deferrals.
And some of them and that testing for two foreign packages, but just with.
With that as a backdrop I guess my real question is.
Just wanted to maybe think of just the whole blood.
The initiative that you guys are pursuing I think getting funded.
Any updates there and then just any thoughts on this signal from the transfusion journal publication. Thanks, a lot.
Yes, Thanks, a lot Josh so I guess on the whole blood pathogen activation effort that we have.
We're pursuing a partnership with the FDA and their funding.
It continues to progress.
But I think what was really exciting about.
The update on this call is from my perspective, and then Richard can comment on this a little bit further it's just the progress that we're making on the intercept red cell studies in that overall program any additional comment you'd like to providers are there. Thanks, Savi, yes, I think.
Red cell clinical trial has faced headwinds seems to be the financial term, but COVID-19 was certainly a headwind for clinical trials in general.
We are happy to be seeing in the back of that and seeing enrollment pick up.
We encourage that we now think we can get the recipe trial done in 2023 and later in 2020 full and it's nice to be able to have some vision post COVID-19 in.
And that really speaks to the what the article was covering in transfusion from doctors, who streamer about the potential utility of pathogen activation to address donor deferral criteria our future.
And transmitted infections.
I don't know Richard any other thoughts on sort of.
What that article was trying to convey.
I think it's very supportive I think the general tone in the community I believe that there is a community within transfusion medicine that is.
Seeing the future within pathogen reduction.
Seeing the need.
To extend to red cells hold that as a.
In the future but.
Maybe a bit further off.
But IFC folds in there too.
Pathogen reduced.
And don't forget plasma.
In the U S is something Thats been forgotten part of the equation for too long.
Thanks, Richard Alright, Thank you Josh.
Excellent.
Thank you and I'm showing no further questions in the queue. At this time I would now like to turn the call back over to management for any closing remarks.
Well. Thank you all for joining us today and for your interest in Cerus, our employees across the globe have continued to execute at a high level with a shared goal of making intercept the standard of care.
We look forward to continuing to update you on our progress as our team continues to fulfill our mission expand our future pipeline in order to continue improving our financial profile. Thanks, very much for joining us today.
This concludes today's conference call. Thank you for participating you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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