Cerus Corporation (Nasdaq: CERS) today announced financial
results for the third quarter ended September 30, 2023.
Recent highlights include:
- Third quarter 2023 total revenue of $47.3 million was comprised
of total product revenue of $39.8 million and government contract
revenue of $7.5 million.
- Completed Phase 3 ReCePI study enrollment in cardiovascular
surgery patients, with top-line data readout on track for Q1
2024.
- Attended first in-person AABB Annual Meeting since 2019, where
presentations from transfusion medicine leaders highlighted the
growing experience with the benefits of INTERCEPT-treated products,
including INTERCEPT platelets and INTERCEPT Fibrinogen Complex
(IFC).
- Cash, cash equivalents, and short-term investments were $79.0
million at September 30, 2023.
- Reaffirming commitment to achieve non-GAAP adjusted EBITDA
breakeven in the fourth quarter of 2023.
“We continued to make progress on multiple fronts in the third
quarter,” said William “Obi” Greenman, Cerus’ president and chief
executive officer. “We completed patient enrollment in our U.S.
Phase 3 ReCePI study and continue to plan for a top-line data
readout from the study in the first quarter of next year.”
“On the top line, product revenues in the quarter returned to
prior year levels, and we expect continued growth from here through
the end of the year, with the near-term growth trajectory
influenced by the system-wide roll-out of INTERCEPT platelets at
Canadian Blood Services,” continued Greenman. “Due primarily to the
timing of our recent execution of an IFC sales agreement with one
of the largest U.S. producers of cryoprecipitate, we are adjusting
our full-year 2023 product revenue guidance to a range of $155
million to $158 million. The growth we are expecting in the second
half of this year reflects the ongoing global demand for
INTERCEPT-treated blood components and the growing use of IFC by
blood center and hospital customers, as evidenced at the recent
AABB Annual Meeting.”
Revenue
Product revenue during the third quarter of 2023 was $39.8
million, compared to $39.6 million during the prior year
period.
Third-quarter 2023 government contract revenue was $7.5 million,
compared to $6.8 million during the prior year period. Reported
government contract revenue in the third quarter 2023 increased
versus the prior year period primarily due to funding associated
with development of LyoIFC as well as research and development
(R&D) activities related to the INTERCEPT Blood System for Red
Blood Cells. In addition to this funding, the Company’s government
contract revenue was comprised of funding associated with efforts
related to the development of next-generation pathogen reduction
technology to treat whole blood.
Product Gross Profit & Margin
Product gross profit for the third quarter of 2023 was $21.8
million, which is consistent with the prior year period. Product
gross margin for the third quarter of 2023 was 54.9% compared to
55.4% for the third quarter of 2022. The Company continues to
expect stability in gross margin percentage for the balance of the
year. The Company’s margin expansion efforts are ongoing with the
goal of realizing further margin expansion in the future.
Operating Expenses
Total operating expenses for the third quarter of 2023 were
$34.5 million compared to $36.1 million for the same period of the
prior year, reflecting a year-over-year decrease of 4%.
Selling, general, and administrative (SG&A) expenses for the
third quarter of 2023 totaled $16.2 million, compared to $19.9
million for the third quarter of 2022. The year-over-year decrease
in SG&A expenses for the third quarter was tied to decreased
headcount and decreased non-cash stock-based compensation.
R&D expenses for the third quarter of 2023 were $16.8
million, compared to $16.2 million for the third quarter of 2022.
The small year-over-year increase in R&D expenses in the third
quarter was tied to the development of our next-generation
illuminator and increased clinical research activities.
As previously described, the Company entered into a plan to
restructure certain functions and reduce its real estate footprint
during the second quarter of 2023. For the third quarter of 2023,
the plan resulted in an additional $1.6 million restructuring
charge. Of the $1.6 million, $1.1 million primarily relates to the
write off of operating lease assets* which will be paid down over
the course of the operating lease, and $0.5 million relates to
non-cash charges associated with leasehold improvements which were
written off. 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 third quarter
of 2023 was $7.3 million, or $0.04 per basic and diluted share,
compared to a net loss attributable to Cerus Corporation of $8.5
million, or $0.05 per basic and diluted share, for the third
quarter of 2022.
Non-GAAP Adjusted EBITDA
Non-GAAP adjusted EBITDA for the third quarter of 2023 was
negative $1.0 million, compared to non-GAAP adjusted EBITDA of
negative $2.7 million for the third quarter of 2022. The Company
remains committed to achieving non-GAAP adjusted EBITDA breakeven
during the fourth quarter of 2023. 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 September 30, 2023, the Company had cash, cash equivalents
and short-term investments of $79.0 million, compared to $84.5
million at June 30, 2023, and $102.2 million at December 31,
2022.
As of September 30, 2023, the Company had $60 million
outstanding on its term loan and $18.8 million drawn on its
revolving credit facility. The Company has access to another $15
million of term debt and $16.2 million under its revolving line of
credit.
For the third quarter of 2023, net cash used in operating
activities totaled $10.5 million as compared to $2.1 million during
the prior year period. The increase in operating cash use was
primarily related to increased inventory balances in addition to
other working capital items. During the quarter the Company has
initiated actions that are designed to, over time, sell down and
reduce the amount of inventory on the balance sheet at September
30, 2023.
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 $155 million to $158 million. The revision is
due in part to the delay in signing the now executed IFC sales
agreement with one of the largest U.S. producers of
cryoprecipitate.
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 November 16, 2023.
*
Operating lease right-of-use assets to
conform to the pure balance sheet legend.
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;
Cerus achieving non-GAAP adjusted EBITDA breakeven in the fourth
quarter of 2023; Cerus’ expectations for a top-line data readout
from the Phase 3 ReCePI study in the first quarter of 2024;
expectations for revenue growth in the second half of 2023; Cerus’
development efforts for next-generation pathogen reduction
technology to treat whole blood and its next-generation
illuminator; Cerus’ expectation for stability in gross margin
percentage for the balance of 2023 and its goal of realizing
further margin expansion in the future; Cerus’ access to another
$15 million of term debt and $16.2 million under its revolving line
of credit; Cerus initiating actions that are designed to, over
time, sell down and lower the amount of inventory on the balance
sheet at September 30, 2023; 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 macroeconomic developments, including ongoing
military conflicts in Ukraine and Israel and 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 RedeS study and/or report data from its ReCePI
and RedeS studies in a timely manner or at all, (d) Cerus may be
unsuccessful in developing next-generation technology or products,
(e) 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, (f) 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 (g) 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 military
conflicts, 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 military
conflicts in Ukraine and Israel, 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 gross margin improvement and inventory efforts, 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 June 30,
2023, filed with the SEC on August 3, 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. Cerus has not
provided a reconciliation of its anticipated non-GAAP adjusted
EBITDA breakeven in the fourth quarter of 2023 to projected fourth
quarter 2023 GAAP net loss attributable to Cerus Corporation
because certain items such as share-based compensation that are
components of net loss attributable to Cerus Corporation cannot be
reasonably projected due to the significant impact of changes in
Cerus’ stock price and other factors. These components of GAAP net
loss attributable to Cerus Corporation could significantly impact
the reported GAAP net loss attributable to Cerus Corporation.
Supplemental Tables
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023 vs. 2022
2023 vs. 2022
Platelet Kit Growth
North America
(6
%)
(12
%)
International
(2
%)
(6
%)
Worldwide
(5
%)
(11
%)
Change in Calculated Number of
Treatable Platelet Doses
North America
(6
%)
(13
%)
International
(5
%)
(9
%)
Worldwide
(6
%)
(12
%)
*
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
Nine Months Ended
September 30,
Change
September 30,
Change
2023
2022
$
%
2023
2022
$
%
North America
$
25,983
$
26,079
$
(96
)
0
%
$
67,077
$
73,856
$
(6,779
)
-9
%
Europe, Middle East and Africa
13,614
13,115
499
4
%
41,175
42,815
(1,640
)
-4
%
Other
175
377
(202
)
-54
%
1,347
1,343
4
0
%
Total product revenue
$
39,772
$
39,571
$
201
1
%
$
109,599
$
118,014
$
(8,415
)
-7
%
CERUS CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands,
except per share information)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Product revenue
$
39,772
$
39,571
$
109,599
$
118,014
Cost of product revenue
17,956
17,662
49,158
55,456
Gross profit on product revenue
21,816
21,909
60,441
62,558
Government contract revenue
7,479
6,772
23,856
18,980
Operating expenses:
Research and development
16,783
16,220
53,351
45,493
Selling, general and administrative
16,155
19,908
58,247
60,175
Restructuring
1,600
—
3,728
—
Total operating expenses
34,538
36,128
115,326
105,668
Loss from operations
(5,243
)
(7,447
)
(31,029
)
(24,130
)
Total non-operating expense, net
(1,965
)
(1,007
)
(4,976
)
(4,849
)
Loss before income taxes
(7,208
)
(8,454
)
(36,005
)
(28,979
)
Provision for income taxes
78
67
253
221
Net loss
(7,286
)
(8,521
)
(36,258
)
(29,200
)
Net loss attributable to noncontrolling
interest
(19
)
(39
)
(97
)
(45
)
Net loss attributable to Cerus
Corporation
$
(7,267
)
$
(8,482
)
$
(36,161
)
$
(29,155
)
Net loss per share attributable to Cerus
Corporation:
Basic and diluted
$
(0.04
)
$
(0.05
)
$
(0.20
)
$
(0.17
)
Weighted average shares outstanding:
Basic and diluted
180,938
177,236
179,950
176,231
CERUS CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands)
September 30,
December 31,
2023
2022
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
17,389
$
35,585
Short-term investments
61,617
66,569
Accounts receivable
24,546
34,426
Inventories
42,661
29,003
Prepaid and other current assets
4,723
4,561
Total current assets
150,936
170,144
Non-current assets:
Property and equipment, net
9,252
10,969
Operating lease right-of-use assets
11,029
12,512
Goodwill
1,316
1,316
Non-current inventories
21,287
15,494
Restricted cash and other assets
12,024
7,657
Total assets
$
205,844
$
218,092
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$
58,139
$
58,205
Debt – current
18,779
56,159
Operating lease liabilities – current
2,268
2,105
Deferred product revenue – current
936
589
Total current liabilities
80,122
117,058
Non-current liabilities:
Debt – non-current
59,789
13,644
Operating lease liabilities –
non-current
14,083
15,329
Other non-current liabilities
2,827
3,499
Total liabilities
156,821
149,530
Stockholders’ equity:
48,168
67,610
Noncontrolling interest
855
952
Total liabilities and stockholders’
equity
$
205,844
$
218,092
CERUS CORPORATION UNAUDITED
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA (in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net loss attributable to Cerus
Corporation
$
(7,267
)
$
(8,482
)
$
(36,161
)
$
(29,155
)
Adjustments to net loss attributable to
Cerus Corporation:
Net loss attributable to noncontrolling
interest
(19
)
(39
)
(97
)
(45
)
Provision for income taxes
78
67
253
221
Total non-operating expense, net (i)
1,965
1,007
4,976
4,849
Loss from operations
(5,243
)
(7,447
)
(31,029
)
(24,130
)
Adjustments to loss from operations:
Operating depreciation and
amortization
1,143
987
3,313
3,083
Government contract revenue (ii)
(7,479
)
(6,772
)
(23,856
)
(18,980
)
Direct expenses attributable to government
contracts (iii)
4,991
4,734
16,800
14,010
Share-based compensation (iv)
3,979
5,768
15,368
17,201
Costs attributable to noncontrolling
interest (v)
37
54
210
66
Restructuring(vi)
1,600
—
3,728
—
Non-GAAP adjusted EBITDA
$
(972
)
$
(2,676
)
$
(15,466
)
$
(8,750
)
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/20231102695620/en/
Jessica Hanover – Vice President, Corporate Affairs Cerus
Corporation 925-288-6137
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