雅虎香港財經 Cerus Corporation (NASDAQ:CERS) Q4 2023 Earnings Call Transcript
Cerus Corporation (NASDAQ:CERS) Q4 2023 Earnings Call Transcript March 5, 2024
Cerus Corporation reports earnings inline with expectations. Reported EPS is $-0.01 EPS, expectations were $-0.01. Cerus Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day ladies and gentlemen. Thank you for standing by and welcome to the Cerus Corporation's Fourth Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jessica Hanover, Cerus Vice President of Corporate Affairs. Dr. Hanover, you may begin.
Jessica Hanover: Thank you, and good afternoon. I'd like to thank everyone for joining us today. As part of today's webcast, we are simultaneously displaying slides that you can follow. You can access the slides from the Investor Relations website at ir.serus.com. With me on the call are Obi Greenman, Cerus' President and Chief Executive Officer; Vivek Jayaraman, Cerus' Chief Operating Officer; Kevin Green, Cerus' Chief Financial Officer and Carol Moore Cerus' Senior Vice President of Regulatory Affairs and Quality. Cerus issued a press release today announcing our financial results for the fourth quarter and year ended December 31, 2023 and describing the company's recent business highlights. You can access a copy of this announcement on the company website at www.cerus.com.
I'd like to remind you that some of the statements we will make on this call related 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 2024 product revenue guidance, our expectations for bottom line and non-GAAP adjusted EBITDA performance and our expected expense levels, expected future growth and our growth trajectory, the availability and related timing of data from clinical trials and other statements that are not historical facts. These forward-looking statements involve risks and uncertainties that could cause actual events, performance and results to differ materially.
They are identified and described in today's press release, in our slide presentation and under Risk Factors in our Form 10-K for the year ended December 31, 2023, 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 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 for the rest of 2024 and lastly closing remarks from Obi.
And now it's my pleasure to introduce Obi Greenman, Cerus' President and Chief Executive Officer.
Obi Greenman: Thank you Jessica and good afternoon everyone. I'd like to open the call by spending a few minutes reflecting on 2023 as well as our expectations for 2024. During the fourth quarter of 2023, we surpassed the 16 million mark for cumulative kits sold for transusible INTERCEPT platelet and plasma doses. It's a significant figure, particularly with respect to the absolute number of patients who receive INTERCEPT treated blood components on a daily basis across the globe, and it also represents the ever growing and significant role played by our pathogen inactivation technology in the evolving healthcare landscape. The importance and relevance of pathogen inactivation were also visible during a special webinar in January of this year, hosted by Yale University, the American Red Cross, and the Association for the Advancement of Blood and Biotherapies, or AABB.
The event was focused on addressing platelet insecurity with speakers from blood centers such as the American Red Cross and Canadian Blood Services, as well as from hospitals, the military, and government organizations. In addition to the recognition of the growing demand for platelets in the face of blood supply vulnerabilities, it is also clear that pathogen inactivation has become a foundational aspect of today's transfusion medicine landscape. It is this dynamic that drives our excitement about the continued potential for the INTERCEPT business, both in the U.S. and across the globe. We anticipate the near future to be driven by both international expansion of INTERCEPT platelets as well as an increasing growth trajectory for INTERCEPT Fibrinogen Complex, or IFC, in the U.S. Vivek will provide additional commentary on our commercial expectations following my introductory comments.
We ended 2023 on several high notes posting double digit sequential growth for the fourth quarter, narrowing GAAP net loss attributable to Cerus, and importantly, delivering positive non-GAAP adjusted EBITDA for the first time. Per our 2024 product revenue guidance announcement earlier this year, we expect to post year-over-year double digit growth along with sustaining, if not improving bottom line results. Kevin will provide more details in his comments following Vivek. I would now like to turn the call over to Vivek to discuss our commercial results and progress for the fourth quarter and full year 2023, along with color on the outlook for 2024.
Vivek Jayaraman: Thank you Obi and good afternoon everyone. As Obi indicated, we delivered strong sequential and year-over-year growth in the fourth quarter of 2023. This growth was driven by our platelet franchise globally as well as encouraging progress within our U.S. IFC business. With inventory levels at most of our blood center partners stabilized, we witnessed a return to more typical ordering, manufacturing and reordering patterns. Furthermore, we saw growth in both existing accounts as well as a meaningful step up in new account activation notably, in our IFC business. Our platelet franchise delivered strong growth across the globe. In the U.S. we believe that most of our customers have properly adjusted their INTERCEPT inventory in light of product dating issues and are now ordering at more consistent rates.
As we make progress on our real-time aging studies, we remain confident in our ability to extend platelet kit shelf life. While we are not currently assuming material uplift in revenue associated with increased dating, we do believe this will likely lead to more comfort at the blood center to hold inventory. We continue to see positive traction at our blood center customers and believe INTERCEPT remains the leading technology for platelet safety in the U.S. Our early experience in 2024 suggests that our U.S. platelet franchise is poised for solid growth this calendar year.
Brampton:
apheresis: Q4 2023 was a strong quarter for our U.S. IFC business. We gained commitment from blood centers to distribute IFC while starting commercial use at a number of influential hospitals. Our field sales organization meaningfully increased their in-hospital engagement and we were able to host effective peer to peer educational forums at both key congresses and in one-off settings for hospitals. Real world use of IFC continues to grow, and it has been encouraging to see the clinical enthusiasm for the offering. This momentum has continued through the first two months of 2024 and we feel confident in our ability to deliver compelling growth with our IFC business. On a going forward basis, we will provide you with more detail on the progress we are making with IFC and I am confident you will gain a greater appreciation for why we are excited about this business. I will now turn it over to Kevin to discuss our results and outlook in more detail.
Hema Quebec: Q4 2023 was a strong quarter for our U.S. IFC business. We gained commitment from blood centers to distribute IFC while starting commercial use at a number of influential hospitals. Our field sales organization meaningfully increased their in-hospital engagement and we were able to host effective peer to peer educational forums at both key congresses and in one-off settings for hospitals. Real world use of IFC continues to grow, and it has been encouraging to see the clinical enthusiasm for the offering. This momentum has continued through the first two months of 2024 and we feel confident in our ability to deliver compelling growth with our IFC business. On a going forward basis, we will provide you with more detail on the progress we are making with IFC and I am confident you will gain a greater appreciation for why we are excited about this business. I will now turn it over to Kevin to discuss our results and outlook in more detail.
Kevin Green: Thank you Vivek, and hello to everyone listening. On today's call I will be discussing our financial results for the fourth quarter and full year of 2023, as well as our product revenue guidance for 2024. Beyond the line item components of our P&L, I'll be providing a breakdown on our important fourth quarter achievement of narrowed GAAP net loss attributable to Cerus, coupled with reaching our target of non-GAAP adjusted EBITDA breakeven. This achievement marks the first time in the company's history of delivering positive adjusted EBITDA and we are committed to sustaining, if not improving on this measure for the full year 2024 as well. As preannounced in January, we posted product revenue of $46.8 million for the fourth quarter of 2023, representing year-over-year growth of 6% and up 18% sequentially from Q3.
Full year 2023 product revenues of $156.4 million were, as expected, down 4% year-over-year and in line with our guidance. In the U.S. fourth quarter 2023 product revenues exceeded prior year levels. Importantly, fourth quarter U.S. product revenues were up sequentially by 22% from Q3. In EMEA fourth quarter product revenues were up 3% year-over-year and around 2% compared to the third quarter of 2023. Year-over-year FX rates provided a benefit for the EMEA business of around 430 basis points. On a consolidated basis, FX provided a benefit of around 1.3% when comparing Q4 2023 to that of the prior year period and little to no impact on the full year comparative results.
lyophilized: Let's turn now to our product gross profit and gross margins. Our fourth quarter product gross profit was $26 million compared to $24.5 million during the prior year period, an increase of 6% year-over-year. Product gross margins for the quarter were 55.5%, relatively stable when compared to the prior year, and up slightly from Q3. These results are consistent with our expectations and our previous remarks during prior quarter calls. Q4 2023 margins improved over 2022 levels, primarily due to increased volumes and lower inventory costs compared to the prior year, offset by net foreign exchange rate impact on our reported margins. Moving on, our fourth quarter operating expenses, which totaled $31.6 million, were over $10 million lower than the prior year period of the $41.8 million, a 24% decline.
Q4 2023 operating expenses included $4.9 million in noncash stock-based compensation. By specific expense type fourth quarter R&D expense totaled $14.3 million compared to $18.6 million during the prior year period. The impact of our June 2023 restructuring continued to result in lower ongoing costs combined with lower costs associated with the ReCePI trial enrollment completion. Ongoing R&D expenses included, but were not limited to work under our government contracts, CE Mark pursuit for our red blood cell program, development work on our next generation Illuminator, ongoing change control work and interactions with regulatory agencies. Beyond R&D, fourth quarter SG&A expenses were $17.3 million compared to $23.2 million during the prior year period.
Similar to the R&D drivers, SG&A costs were lower year-over-year, in part due to the impact of our June 2023 restructuring as well as lower non-restructuring related compensation costs. We continue to expect that the financial benefit from our restructuring will provide at least $10 million in annual life savings relative to expense levels at the time of the restructuring. Let's focus on the bottom line and non-GAAP adjusted EBITDA results, which are perhaps the strongest financial results that we have to talk about on today's call. On the bottom line reported net loss attributable to Cerus for the three months ended December 31, 2023 improved significantly when compared to the same period in the prior year. Net loss attributable to Cerus for Q4 totaled $1.3 million, or a penny per diluted share, compared to $13.6 million, or $0.08 per diluted share for the prior year period.
These results are also directly reflected in our non-GAAP adjusted EBITDA measure. As you can see from the results, and which I'm happy to announce, we surpassed our goal of breakeven and in fact generated almost $5 million of positive non-GAAP adjusted EBITDA. When compared to negative $3.7 million for the fourth quarter of 2022 and negative $1 million during the third quarter of 2023, this result is an improvement of over $8 million and $5 million, respectively. This is a significant milestone in our history, and while we are clearly pleased with the results, we are committed to sustaining, if not improving upon it for 2024. As we had predicted, the combination of strong growth in our top line coupled with stable margins and closely managed operating expenses allowed us to surpass non-GAAP adjusted EBITDA breakeven in the fourth quarter.
While we may have some fluctuations from quarter-to-quarter this year, we expect that with our product revenue guidance coupled with stable and perhaps slightly improving gross margins, continued leverage from the business and close management of operating expenses will support potential improvement on this measure for 2024. On the balance sheet and associated cash flows we ended the fourth quarter with a cash position of $65.9 million of cash, cash equivalents and short-term investments on the balance sheet. In terms of cash utilization, our cash use from operations was $15.2 million for the fourth quarter compared to $1.8 million during the prior year period. As we've spoken about in the past, we saw significant increases in working capital use, specifically with increased inventory levels.
During Q4, we also made a conscious decision to pay down our payables due. As we now look to 2024 we expect that with the anticipated increase in revenues, we will work down our inventory balances, maintain payable levels near December 2023 levels and manage other working capital line items. We expect that these initiatives and results will translate into improvements in operating cash flows for 2024 and could potentially result in positive operating cash flows for the year. Turning to our guidance, as we preannounced in January, we expect full year 2024 product revenue guidance to be in the range of $172 million to $175 million reflecting double digit growth from 2023. We anticipate this growth to be fueled by continued expansion of the INTERCEPT platelet business both in North America and in Europe, as well as continued uptake of IFC in the U.S. As Vivek mentioned, we firmly believe in the prospects for IFC, evidenced by our commercial sales agreements with large national blood providers as well as the growing utilization and recognition of the product's benefit at an increased number of U.S. hospitals.
For the first time, we are now providing annual revenue guidance for IFC, which for 2024 we expect to be in the range of $8 million to $10 million. Going forward on a quarterly basis, we plan to breakout IFC revenue on a comparative basis to provide visibility into our progress towards our guidance. I'd now like to turn the call back over to Obi for some closing remarks.
Obi Greenman: Thank you, Kevin. With the first two months of 2024 in the rear view mirror, we remain positive about the rest of the year ahead of us. With respect to the ReCePI trial, the first of two BARDA funded U.S. Phase 3 trials for INTERCEPT red blood cells we continue to anticipate providing the top line readout after the data are unblinded in the near future. Between continued momentum in our commercial business and increased visibility into our pipeline, we look forward to providing you with updates throughout the year. Thank you for your continued interest in Cerus. I will now turn the call over to the operator for questions.
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