Cerus Corporation Price & Performance (CERS)

Examples of forward looking statements include those related to our future financial and operating results, including our 2025 product revenue guidance, our expectations for bottom line and non GAAP adjusted EBITDA performance, our operating expense and gross margin expectations, and our expectation for positive operating cash flows for 2025. Expected future growth in our growth trajectory, a potential new and enhanced CE Mark submission for 10 ks for the year ended December 31, 2024, which we will file in the coming days. 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 supplement to and not a replacement for measures presented in accordance with GAAP. For a reconciliation of non GAAP financial measures to the most comparable GAAP financial measures, please refer to today's press release and the slide presentation available on our website. We'll begin today with opening remarks from Obi, followed by Vivek to discuss recent business highlights then Kevin to review our financial results and expectations the rest of 2025, And lastly, closing remarks from Obi. And now it's my pleasure to introduce Obi Greenman, Cirrus' President and Chief Executive Officer.

Thank you, Nippur, and good afternoon, everyone. I'd like to open the call by spending a few minutes reflecting on our strong performance in 2024 as well as our expectations for full year 2025 as we continue to establish our intercept flood system as the standard of care in transfusion medicine. 2024 was a milestone year for the company and its long history that we successfully achieved positive adjusted EBITDA for the full year. Building off of this will allow us to invest in the continued growth of our business globally and our full Intercept portfolio and product improvements. Our year over year double digit product revenue growth for 2024 was fueled by continued expansion in our global Playlist business Vivek will provide further insights into the strong demand we are experiencing in the ISC market we are providing an important and timely intervention for patients with major bleeding complications. This momentum underscores the critical importance of INTERCEPT treated blood components, and highlights the growing impact of our pathogen and activation technology across transfusion services in The U. S. And internationally. For blood centers that manufacture pathogen and activated components to the hospitals and clinicians who transfuse them. For the fourth quarter and full year 2024, we delivering strong bottom line performance and robust operating cash flows.

As Kevin will detail shortly, key year over year financial highlights include double digit growth, and narrowed GAAP net loss attributable to the company and positive non GAAP adjusted EBITDA. With that strong foundation and in line with our 2025 product revenue guidance announced earlier this year, we anticipate year over year growth of 8% to 11% while focusing on the forward health of our bottom line results. On the development front, in Europe, we are continuing to collaborate closely with our notified body TUV SUV, on a potential new and enhanced CE Mark submission for INTERCEPT red blood cells or RBCs. We plan to have a more detailed update on these developments as those plans solidify in the coming months. I would like now to turn the call over to Vivek to discuss our commercial results and progress for the fourth quarter and full year 2024 along with color on the outlook for 2025. Thank you, Obi. Good afternoon, everyone. As we enter 2024, we committed to a return to top line growth.

While at that time, we believe in our ability to deliver compelling growth, we were not without headwinds. We started the year with six month shelf life on platelet kits in The U. S. And most of our IFC production partners have yet to receive BLA clearance enable them to transport ISV across state lines. Thanks to the solid performance of the cross functional Cerus team, combined with strong partnership with our blood center customers, we were able to successfully address many of these challenges and meet our commitment by delivering 15% top line growth compared to 2023. In addition, we made meaningful progress on key strategic commercial initiatives that will set the stage for compelling growth for the balance of this decade. We delivered strong results in the fourth quarter of twenty twenty four driven primarily by growth in demand for our U. S. ISP business, as well as our global platelet franchise. In particular, we saw strong contributions from our international markets. As an example, Canadian Blood Services is now at 100% PR adoption for their platelet production. Overall, our core platelet market stabilized and we witnessed the normalization in donor trends in 2024 which were previously headwinds in 2023.

In addition, we made meaningful progress As we start 2025, we are seeing signs of strong slate of attraction across our global franchise. As reported last quarter, we had an excellent showing at the annual AABB meeting which took place in Houston, Texas in October.

As we predicted, the interest we witnessed at AABB translated into a spike in inbound inquiries both from hospitals and blood centers During the quarter, a few of our blood center production partners received BLA approvals and are in the process of ramping up manufacturing volume to meet increased ISV demand. As real world experience with ISP grows, we are continuing to see that our assumed value proposition is being validated. Clinicians highly value earlier access to Fibrenogen, and hospital blood banks greatly appreciate the reduction in both product wastage as well as reduced time from order to availability. We exited twenty twenty four with strong momentum in our ISP franchise and our acute focus is to ensure that production volumes ramp up in order to meet growing demand. As we began 2025, and as stated in our preliminary revenue guidance, we expect to continue to deliver compelling top line growth. This growth is expected to come from strength in our global platelet franchise as we anticipate share capture in The U. S. And further expansion internationally. We exited 2024 with real momentum in our U. S. ISV business and with line of sight into we are confident in our ability to meet the growing clinical demand we are experiencing in the IFP franchise.

As we look forward in the year, we are excited to launch the new IND200 Illuminator in EMEA and reaffirm our commitment to new product innovation in this market. This project is a result of close collaboration with and it's moved from our blood center partners and we can't wait to deliver this to them.

The outlook for 2025 is exciting, We look forward to updating you on our progress during future quarterly calls. I'm grateful to the global and commercial and operational teams at Cerus for their strong performance in 2024. It is great to be back on a growth trajectory and we are poised to continue to do so moving forward. Most importantly, it's very rewarding that our efforts are helping to ensure that more patients around the world are gaining access to vapor blood products. I will now turn it over to Kevin discuss our financial results and outlook in more detail.

Thanks, Vivek, and hello to everyone listening. On today's call, I'll be discussing our financial results for the fourth quarter and full year 2024, as well as our product revenue guidance for 2025. Finally, I'll highlight some of the key success factors that we are focused on as we move forward. Building off a 2024 solid base toward continued financial improvement over the long term, As pre announced in January 2024 product revenues were $180,300,000 ahead of our latest 2024 product revenue guidance. And representing 15% growth [indiscernible] For the fourth quarter of twenty twenty four, we posted product revenue of $50,800,000 representing year over year growth of 9%. EMEA platelet sales as well as growth from U. S. Platelet sales drove the bulk of our product revenue increases this quarter. While our platelet franchise drove much of the growth, we also realized IFC sales expansion The IFC business was up almost 30% when comparing the fourth quarter of twenty twenty four to the prior year. Full year 2024 North American product revenues were up 23% over 2023 levels and fourth quarter twenty twenty four product revenues exceeded prior year levels by 6%, This growth was driven largely by increased penetration at the top U. S. Blood center organizations, where we continue to see significant growth opportunities for INTERCEPT uptake.

In EMEA, fourth quarter product revenues were up 16% year over year.

When looking at Q4 twenty twenty four over the prior year, FX rates provided a slight headwind for the EMEA business of around 80 basis points.

On a full year basis, FX rates had little impact on our EMEA business. And on a consolidated basis, FX provided a headwind of around 20 basis points when comparing Q4 twenty twenty four to that of the prior year period, and little to no impact on the full year comparative results. Beyond our platelet and plasma franchises, for the full year, IFC sales were up over twenty twenty three levels by 42% to $9,200,000 For Q4 twenty twenty four, we posted IFC product revenue of roughly $3,000,000 up from $2,300,000 in the prior year period. Driven by more standing orders, and depth within existing accounts.

In addition to our product revenue, and not included in our guidance, government contract revenue totaled $21,100,000 for 2024, compared to $30,400,000 for 2023 and $5,900,000 in Q4 compared to $6,600,000 for the prior year period Consistent with dialogue in prior quarters, the completion of our U. S. Phase three RECIPE clinical trial was the primary driver for the decline. As we look ahead, we expect to continue delivering on our contracts with the federal government and advancing patient access to safe blood components. Turning now to our product gross profit and gross margins. For the full year, product gross profit was $99,500,000 up from the $86,400,000 for 2023.

Our fourth quarter product gross profit was $27,400,000 compared to $26,000,000 during the prior year period an increase of 5.5% year over year. Product gross margins for the year as a whole were consistent at 55.2% within 10 basis points of 2023 levels. For the fourth quarter, product gross margins were down slightly to 53.9% from the 55.5% reported in Q4 of last year. The slight decline in gross margins was driven by a number of including a stronger U. S. Dollar in Q4, freight costs to expedite product shipments into The U. S, and higher than expected discard rates for certain products. As we look ahead to 2025, we expect product gross margins will generally remain in the mid-50s. There are several factors that could drive quarterly variability. Including but not limited to foreign exchange rates, product mix, production costs of IFC to meet the increasing demand, economies of scale and production volumes, and the timing of COGS reduction initiatives coming online. Moving on, for the year, operating expenses were down more than 8% to $134,800,000 compared to $146,900,000 for 2023. Our fourth quarter operating expenses which totaled $34,800,000 were up from the $31,600,000 in Q4 of twenty twenty three.

Q4 twenty twenty four operating expenses included $5,500,000 in non cash stock based compensation.

By specific expense type, 2024 R and D expenses were down 13% to $58,900,000 from $67,600,000 in the prior year Fourth quarter R and D expenses, totaled $15,400,000 compared to $14,300,000 during the prior year period. The increase in our R and D expenses for the fourth quarter can be attributed to work on our LED based illuminator including submission for CE marking. Redis site ramp enrollment and activities covered under our new BARDA 2024 SG and A expenses were relatively at $75,900,000 from $75,500,000 Fourth quarter SG and A expenses were $19,300,000 compared to $17,300,000 during the prior year period. During the quarter, we recognized a cumulative catch up of certain accrued expenses that had artificially distorted our SG and A expenses for the quarter. As we look ahead to 2025, we expect that SG and A expenses will go up modestly from 2024 levels primarily as a function of cost of living and inflationary impact. With that said, we are not planning on significant new investments and expect that we will continue to see compelling leverage from our SG and A spend relative to the expected revenue growth.

Let's now focus on the bottom line and non GAAP adjusted EBITDA On the bottom line, reported net loss attributable to Cerus for 2024 improved 24 net loss attributable to Cirrus was $2,500,000 or $0.01 per share compared to $1,300,000 or also $0.01 per share from the prior year period. As a measure of the operating leverage we are generating, the net loss for Q4 and the full year was less than our non cash stock based compensation. Beyond the achievement of double digit top line growth, as Vivek mentioned, and suggestive of the leverage we are generating we are pleased to announce the achievement of another one of our stated 2024 objectives, positive adjusted EBITDA of $5,700,000 for the year. This represents a significant improvement over the negative $10,700,000 for the prior year Q4 twenty twenty four was the third straight quarter of generating positive adjusted EBITDA which was $3,300,000 compared to a positive adjusted EBITDA of $4,700,000 for the prior year period. While we are thrilled with this achievement, we plan to build off of this strong foundation and expect our positive adjusted EBITDA will be durable. Underpinning our confidence we expect that as suggested by our 2025 product revenue guidance, coupled with planned gross margins in the mid-50s, close management and continued leverage of operating expenses, we will maintain or improve on this measure for 2025.

On the balance sheet and associated cash flows, we ended the fourth quarter with $80,500,000 of cash cash equivalents and short term investments on the balance sheet. Operationally, we posted our fourth consecutive quarter of positive operating cash flows For the fourth quarter and full year 2024, we generated positive operating cash flows of $4,900,000 and $11,400,000 respectively. Compared to cash used for the operations of $15,200,000 $43,200,000 for the fourth quarter and full year 2023 respectively. Although we expect to make working capital investments in support of our growing business, namely finished goods inventory and receivables we expect to generate continued positive operating cash flows for 2025. On that note, I'd now like to turn the call back over to Obi for some closing remarks. Thank you, Kevin. With the first two months of 2025 almost behind us, Our growth reflects the confidence and trust our customers place in Cerus and the Intercept technology which addresses a significant unmet need in blood safety and availability with a total addressable market estimated exceed $7,000,000,000 annually. While we have realized strong revenue growth for both our platelet and IFC products, we are sub-ten percent penetrated in those markets globally. Meaning there is a lot of runway for continued revenue growth for our existing license INTERCEPT product portfolio.

With our first mover advantage, superior technology and strong barriers to entry, are setting a new standard in transfusion medicine Our concentrated and expanding customer base generating a strong recurring revenue stream. With a solid financial profile and a mature pipeline, I believe Cirrus is well positioned for continued success. Thank you for your continued interest in Cirrus. I will now turn the call over to the operator for Thank you. Our first question comes from the line of Joshua Jennings with TD Cowen. Your line is now open.

Hi, good afternoon and thanks for taking the questions. Congratulations on the strong performance in 2024. I was hoping to just start on IFC the foundation for that franchise continues to build Seems like it's on the cusp beginning to inflect just in terms of adopt and utilization, just customer demand. Hoping you could just walk us through the steps that are left before kind of full U. S. Market access is unlocked? Kind of secondary to that, just your state of optimism that Cerus can capture up to 50% of the multi hundred million dollars U. S. Market opportunity in front of you with IFC.

Thanks a lot, Josh, for the question. Vivekva, would you like to cover that question?

Sure. I'd be happy to. To hear from you, Josh. Thanks for the question. I think you categorized the state of the market well. I mean, we're excited about the increase in demand this validation we received coming out of AABB both on the podium and in peer to peer discussions was certainly a strong boost and added to the momentum we saw at the end of the year and 2025. In parallel, as we mentioned, we received BLAs at a couple of our production partner sites, which will enable them to transport product across state lines that will unlock demand in states where there wasn't previously an in state manufacturer. So in terms of thinking about how we unlock the market and continue to drive forward progress, the key things are making sure we constantly balance demand and supply. So as we're seeing demand spiking, it's nice to have avenues with which supply can grow. And I think as we add that with continued real world experience maturing clinical evidence, those are the factors that are going to continue to allow us to penetrate this market. And certainly, the user hospitals may bring it in into one clinical category and then fairly quickly diffuses across the institution.

That gives us confidence that the broad market opportunity that IFC presents is in fact realizable.

Excellent. And maybe one just follow-up on Just the China opportunity, I know you have a JV I think we've talked a little bit about this earlier in January. Justin, but the next steps to unlocking that China TAM, which is a [indiscernible] piece of that $7,000,000,000 global TAM that you referenced and your prepared remarks. So it will be maybe just the outlook there and when Cerus could could start seeing the China franchise contribute revenues.

Yes. Thanks, Josh, for the question. Yes, we are expecting an NPA approval sometime this year. And subsequent to that, Chinese approval, there will be sort of a provincial reimbursement process that we estimate will take about a year to complete. So we are actively discussing with various provincial blood centers in China their interest. And that will continue on until the NMPA approval happens. And that's really just sort of how do we sequence the rollout once we have that provincial reimbursement in place. So going to contribute meaningfully to revenue this year, but once that provincial reimbursement is in place, once we have the approval and then the provincial reimbursement is in place, we do do see that being a very meaningful market opportunity for the company. And allows us to continue to penetrate the play that market that we mentioned in the prepared remarks is we're still sub 10% globally. So there's a lot of continued opportunity for the plate of business. Thanks, Josh.

Thanks, Otter.

Thank you. Our next question comes from the line of Jacob Johnson with Stephens. Your line is now open.

Hey, thanks. Good afternoon, everybody.

This one is probably for Vivek. Vivek, you mentioned on ISC bringing on additional supply to meet demand Can you just talk about that dynamic? And then as we think about the the outlook for $12,000,000 to $15,000,000 of IFC revenue this year, How much of that's predicated on additional supply coming online? And do we need to to is there any timing to that that we need to think about as we think about IFC revenues playing out throughout the year? Thanks.

Great. Yes, thanks for the question. With respect to the the benefit of having the BLA that impact on What that enables us to do is it allows us to address demand that we have noticed for some time exists in states without an in state manufacturer So now those hospitals have an avenue to access IFC and the blood centers that have the BLAs in hands are are now operationalizing that license so that they can ramp up supply and meet that hospital demand As we contemplated guidance for the year, we went [indiscernible] went into the year with line of sight into having sufficient manufacturing supply to meet demand, but we're going to continue to work on increasing supply because we continue to see demand increase as well. But we feel that with the progress we're making, we'll be in a good spot where supply shouldn't be a constraint on a going forward basis. Got it. That's helpful. And then maybe Kevin, one for you just on on product gross margins. I heard kind of mid-50s for the year. You called out some kind of couple of items in 4Q that kind of bit you. You just talk about whether it's U. S. Dollar, freight costs, discret rates, IFC investments, just any of those that we should be monitoring or keeping in mind this year that could kind of repeat from 4Q or any that were kind of isolated to 4Q?

Just how should we think about gross margins this year? Thanks.

Yes, Jacob. Thanks for the question. I think most of those items that I called out for 4Q were episodic. We don't expect them to last The one watch out I would say is FX rates if the dollar continues to strengthen relative to the euro, Obviously, that's going to have an impact across our P and L What I would say is since most of our product is sourced in euro, as The U. S. Becomes a bigger and bigger contributor to the top line and the dollar strengthening, actually see a bottom line [indiscernible] But it does obviously have a negative impact on our revenue So that's the one watch out that obviously we don't have absolute control over. As far as shipping costs, the ancillary product that where we saw some discards, those are truly episodic. We don't expect those to continue.

Okay. That's helpful. I'll leave it there. Thanks for taking the questions. Thanks, Jacob. Our next question comes from the line of Ross Osborne with Cantor Fitzgerald. Your line is now open.

Guys. Thanks for taking our questions. So maybe just one clarifying question on SG and A guidance.

I believe you said slightly up $25,000,000 relative to 24 Does slightly up include the one time item that occurred during the fourth quarter or is it slightly up versus an adjusted number?

Yes, I think it's Ross, sorry, I was going to take that over if that's okay.

Yes. [indiscernible] Yes. So we're really talking about 2024 as a whole.

Think clearly we saw this Q1 of catch up. I'd characterize it as probably roughly a $2,000,000 impact for the quarter that was anomalous. Where we're going to see continued growth is really from inflationary pressures. We're not making significant investments As we mentioned, incremental investments, but we expect it will be able to generate continued leverage with those investments relative to the top line growth. So it's really a comment that was predicated on 2024 as a whole rather than a Okay. Sounds great. And then sorry, jumping around a bit. I heard the comments around China. But with regards to Brazil, can you walk through that commercialization timeline? The steps you need to take there?

Yeah, Vivek, would you like to cover that?

Sure. So as You're aware, we currently are commercial and private sector in Brazil, but that's a small portion of the market. We're in the process of applying to gain access to the public sector and that's really a combination of Health Ministry, our distributor partner and us, putting together a dossier and they're receiving approval. From the government agencies to gain access to public sector. That process is ongoing and we would anticipate getting hearing from them later this year. From there, it really becomes about operationalizing of the rollout. So working with our distributors, deployment organization, getting device into the market and rolling it out there and not dissimilar from what happened in France, but the first step really is awaiting decisions from the government, which we intend Got it. Thanks for taking our questions.

Thank you, Ross. Our next question comes from the line of John Wilkin with Craig Hallum.

Your line is now open.

Hey guys. I just wanted to ask, it looks like platelet growth in North America started to slow down pretty meaningfully in the quarter. I was just wondering if that's is that due to just tougher year on year comps now after some very easy ones early in the year? Or are there other reasons driving that?

Yes. Kevin or Vivek, would you guys like to take that?

Sure. I'd be happy to jump in and Kevin certainly weigh in if you have any other thoughts. So it had a little bit to do with comp. We also one of the things that We had talked about potentially addressing when we came towards when you were going to have a shelf life issues through the balance of this year. We knew that there was some stocking taking place at the end of last year and so that we would seek to get more normal inventory level through the course of 2025. We potentially thought we might do that towards 2024, but we did not. But we continue to capture share in the North American market.

Through the course of 2024 and anticipate doing so. In 2025. So you think about underlying adoption trends and where our business is heading that continues to be a strengthening business for us, but there was no Beyond that, there was sort of really no underlying issue within our North American platelet franchise. We certainly benefited from a full year of 100% with Canadian Blood Services So you'll see that as HematQUELVAC comes onboard, you'll see us little bit of growth in Canada, but fundamentally we anticipate The U. S. Market will continue to capture share.

Got it. Thanks. That's helpful. And then any other updates around other specific countries or geographies that are maybe in the early stages or potentially adopting Interceptor in the near future?

Sure. As we've talked about previously in the call, we've got a joint venture partnership in China. There are some steps need to walk through there, but we're encouraged by not only the products we're making, but the caliber of our partner as well as level of clinical interest and enthusiasm in that market I think we've mentioned previously that's early days for us in terms of progress in Germany that represents a single largest remaining market in Western Europe. Middle East in particular and Saudi Arabia continues to be quite strong. There's quite a bit of investment in healthcare happening in the kingdom and they tend to mirror off of AABB and FDA standards. There's a lot of awareness of interested and enthusiasm to adopt INTERCEPT. So those would be some examples of geographies where we feel there's a reasonable path towards growth and that could represent growth drivers to the balance of really over the course of the next couple of years. [indiscernible] Yes. Thank you, John. Thank you. Our next question comes from the line of Mark Massaro with BTIG. Your line is now open. Hey guys. This is Vivien on for Mark Thanks for taking the questions and congrats on a nice quarter.

Could you just discuss in terms of the major the five major blood centers in The U. S. I think I heard you call out that you drove some increased penetration there. So could you just walk us through what the level of penetration stands at currently and just how you're thinking about that remaining opportunity?

Thanks, Vijay. Vivek, there's another one for you, I think. Thanks, Avin. Thanks for the question, Vivien.

There continues to be upside with U. S. Blood centers, in particular with the as we see consolidation in the market, some of the larger Bliss Center families, [indiscernible] share levels at those centers with the exception of the American Red Cross. Announced their own volition publicly their intention to move to 100% PR. So really out of respect for those centers where you sort of keep that information internal, but what I can say is if you just look at our overall penetration in The U. S, and where the opportunities exist as well as what we're seeing in terms of continuing maturity of our real world evidence in support of Intercept is not only in the context of compliance with the bacterial guidance and the FDA, but more importantly in terms of pandemic preparedness and other financial and operational benefits We're seeing continued inbound inquiries from blood centers to adopt Intercept which is why even long past the guidance compliance period, we're seeing share capture and increased PR penetration in the total market. So was a big contributor to 2024 performance and we anticipate that being the case as well in 2025.

Perfect. Thanks for the color there. And then just one on government contract revenue. I understand you guys don't guide to this I think it came in a little bit above our model in the quarter. Do you think that $5,900,000 would be a good run rate for 2025? Or were there any one timers in that Thanks. Thank you. Kevin, do you want to cover this one?

Yes, sure. Yes, Vivien.

I don't know that it's a good baseline for 2025. As you'll recall, we were awarded 2024 BARDA agreement late in the year Some of those activities have started, but they're not really contributing meaningfully towards the overall government contract revenue. We do expect in 2025 that all of the awards will be running concurrently and that we'll see a bump up in the overall government contract revenue and the initiatives that we're we're spending on those contracts. So I wouldn't model it off of Q4. I think it's going to continue to grow as those initiatives kick away and contribute.

Okay. Great. Thanks so much for taking the questions.

Thank you.

Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call over to Obi Greenman for closing remarks. Well, thank you all again for joining us today and for your interest in Cirrus.

Next month, we will be participating in the forty fifth Annual TD Cowen Healthcare Conference We look forward to sharing our progress with you throughout 2025 Should be a great year.

This concludes today's conference call. Thank you for your participation. You may now disconnect.