Cerus(US:CERS)2019-08-02 01:51Financial Data and Key Metrics Changes - The company reported a record quarterly product revenue of $18.2 million for Q2 2019, an 18% increase from $15.4 million in Q2 2018 [26] - Year-to-date product revenue reached $35.7 million, up 23% compared to $29 million in the first half of 2018 [26] - Gross margins on product sales improved to 55% in Q2 2019 from 50% in Q2 2018, driven by economies of scale [34] - The net loss for Q2 2019 was $17.6 million, or $0.13 per diluted share, compared to a net loss of $13.3 million, or $0.10 per diluted share in the prior year [38] Business Line Data and Key Metrics Changes - INTERCEPT platelet kits accounted for approximately 90% of reported product revenue [31] - Global demand for INTERCEPT kits increased by 23% in Q2 2019 compared to the prior year, with a 40% increase in the number of treated platelet doses [29][30] - Government contract revenue for Q2 totaled $4.3 million, up from $4.0 million in the prior year [31] Market Data and Key Metrics Changes - The U.S. platelet market is concentrated, with the top five blood center networks distributing about 70% of the total platelet supply [16] - The American Red Cross is a significant customer, producing INTERCEPT at 17 sites, with 13 sites having BLA clearance [17] Company Strategy and Development Direction - The company raised its product revenue guidance for 2019 to a range of $72 million to $75 million, reflecting strong demand for INTERCEPT [8][33] - The company is focusing on expanding its product lines, including INTERCEPT plasma and pathogen-reduced cryoprecipitate, with anticipated market opportunities exceeding $200 million annually [44][47] - The company aims to double its product revenue base from existing product lines over four to five years, targeting a compound annual growth rate of 15% to 20% [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued adoption of pathogen reduction technology and its implications for global business growth [14] - The company anticipates increased engagement with major blood centers following the expected issuance of FDA guidance on bacterial safety [19][20] - Management acknowledged potential FX headwinds and seasonal impacts on revenue but remains optimistic about growth in the U.S. and EMEA markets [33][66] Other Important Information - The company ended Q2 with approximately $96.2 million in cash and short-term investments, utilizing a revolving line of credit to finance working capital [39] - The FDA has prioritized pathogen reduction technology, which is expected to influence regulatory approaches globally [14] Q&A Session Summary Question: Clarification on BLA clearance for American Red Cross sites - All manufacturing sites are receiving a BLA, with 17 sites currently manufacturing and 13 having a BLA while the other 4 are in process [49] Question: Timeline for red cell trials enrollment ramp-up - Enrollment is progressing well, with expectations for increased activity in the second half of the year [50][52] Question: Update on red blood cell review process in Europe - Qualifying a new GSH supplier is a priority, with expectations for completion by mid-next year, but timelines for CD Mark approval remain uncertain [54] Question: Distribution of revenue generation among U.S. blood centers - The American Red Cross is the largest customer, representing about 40% of the market, with the remaining centers at varying production levels [59] Question: Capacity to handle increased demand post-FDA guidance - The company is confident in its capacity to meet increased demand with additional capacity coming online in 2020 [60] Question: Next steps for INTERCEPT cryo submission and approval - Anticipated submission in the first half of 2020 with potential approval in the second half, expecting revenue contributions in 2020 [62] Question: Conversion of double dose kits in France - The current split is about 70-30 between double dose and single dose kits, with continued conversion expected [71] Question: Contributions from Germany - No contributions were seen in the quarter, but significant revenue is expected to start in 2020 [73]