On August 4, 2020 Cerus Corporation (Nasdaq: CERS) reported financial results for the second quarter ended June 30, 2020 (Press release, Cerus, AUG 4, 2020, View Source [SID1234562785]).

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Recent developments and highlights include:

Q2 2020 Total Revenue of $26.8 million – driven by robust year-over-year platelet kit sales growth in the U.S. and strong plasma and illuminator sales in our EMEA region. Total revenue comprised of (in millions, except %):

Reaffirming 2020 full year product revenue guidance range of $89 million to $93 million – an approximately 20% to 25% increase over 2019 reported product revenue.
Submitted a pre-market approval supplement (PMA-S) to the FDA for pathogen reduced cryoprecipitated fibrinogen complex with 5-day post-thaw storage.
Finalized INTERCEPT Red Cell CE Mark modular submission schedule, in agreement with our notified body, under new MDR submission pathway, providing clarity on the timing and pathway for red blood cells, the most frequently transfused blood component globally.
Reached agreement with FDA on chronic transfusion clinical data required for PMA submission and submitted clinical protocol amendment for the existing Phase 3 RedeS study to allow for enrollment of sickle cell and thalassemia patients.
Announced study results demonstrating that the INTERCEPT Blood System inactivates SARS-CoV-2, the causative agent for COVID-19, in plasma components intended for transfusion.
Awarded a five-year tender by the Hong Kong Red Cross Blood Transfusion Services for INTERCEPT Blood System for platelets.
Cash, cash equivalents, and short-term investments of $136.5 million at June 30, 2020.
"The benefits of pathogen reduced blood products have never been so prominent as they are now during the COVID-19 pandemic. Our Q2 results reflect the highest quarterly product revenue we have recorded to date at $21.5 million. This pandemic has made clear to us not only the resilience of our business during this time, but also the essential role that pathogen inactivation plays in helping ensure the security and safety of the blood supply chain. It has also resulted in greater focus on strategic planning and pandemic preparedness by blood centers," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "Demand for INTERCEPT platelet kits continued to be strong in the U.S. as blood centers and hospitals adopt pathogen reduction to be compliant with the FDA guidance document on platelet safety, which has a compliance deadline that is now less than 8 months away."

"Our development programs continued to make progress during the quarter. In May, we submitted our PMA-S for pathogen-reduced cryoprecipitated fibrinogen complex, which could result in potential FDA approval by the end of this year. In addition, meetings with the European and U.S. regulatory agencies in the quarter resulted in more expedited and clear pathways to potentially gain regulatory approvals of the INTERCEPT red blood cell system," continued Greenman.

Revenue

Product revenue during the second quarter of 2020 was $21.5 million, compared to $18.2 million during the same period in 2019. Revenue growth in the quarter benefited from robust year-over-year platelet kit sales in the U.S., in addition to strong plasma kit demand and an increase in illuminator sales in our EMEA region. Year-to-date product revenue totaled $40.1 million, an increase of 12% compared to the same period in 2019.

Government contract revenue from the Company’s Biomedical Advanced Research and Development Authority (BARDA) agreement was $5.3 million during the second quarter of 2020, compared to $4.3 million during the same period in 2019, as a result of increasing INTERCEPT red blood cell clinical and development activities. Year-to-date government contract revenue totaled $11.4 million, compared to $8.7 million in the first half of 2019. The total potential value of the current BARDA agreement is $214 million with $55 million recognized as revenue to date.

BARDA is part of the Office of the Assistant Secretary for Preparedness and Response within the U.S. Department of Health and Human Services. The development of the INTERCEPT red blood cell program has been funded partially with federal funds from the Department of Health and Human Services; Office of the Assistant Secretary for Preparedness and Response; Biomedical Advanced Research and Development Authority, under Contract No. HHSO100201600009C.

Gross Margins

Gross margins on product revenue during the second quarter of 2020 were 55% and consistent with the prior year period. Gross margins during the first half of 2020 were 55% compared to 54% reported in the first half of 2019.

Operating Expenses

Total operating expenses for the second quarter of 2020 were $31.7 million compared to $31.2 million for the same period the prior year. Year-to-date, operating expenses totaled $63.5 million compared to $60.8 million for the first half of 2019.

Selling, general, and administrative (SG&A) expenses for the second quarter of 2020 totaled $16.1 million, compared to $16.7 million for the second quarter of 2019. The year-over-year decline was due to lower travel and marketing related expenses as a result of the COVID-19 pandemic. Year-to-date SG&A expenses totaled $32.0 million compared to $32.9 million for the first half of 2019.

Research and development (R&D) expenses for the second quarter of 2020 were $15.6 million, compared to $14.4 million for the second quarter of 2019. The increase in year-over-year R&D expenses was due to higher expenses associated with initiatives to expand platelet label claims and development of our INTERCEPT red blood cell system. Year-to-date R&D expenses totaled $31.4 million compared to $27.9 million for the first half of 2019.

Net Loss

Net loss for the second quarter of 2020 was $14.9 million, or $0.09 per diluted share, compared to a net loss of $17.6 million, or $0.13 per diluted share, for the second quarter of 2019. Year-to-date net loss was $31.3 million, or $0.19 per diluted share, compared to $36.4 million, or $0.26 per diluted share, in the first half of 2019.

Cash, Cash Equivalents and Investments

At June 30, 2020, the Company had cash, cash equivalents and short-term investments of $136.5 million, compared to $85.7 million at December 31, 2019.

At June 30, 2020, the Company had approximately $39.5 million in outstanding term loan debt, compared to $39.4 million in outstanding term loan debt at December 31, 2019.

2020 Product Revenue Guidance

The Company expects 2020 product revenue to be in the range of $89 million to $93 million, unchanged from the guidance originally provided on January 13, 2020. The guidance range represents approximately 20% to 25% growth compared to 2019 reported product revenue.

QUARTERLY CONFERENCE CALL

The Company will host a conference call and webcast 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 and view the presentation slides, please visit the Investor Relations page of the Cerus website at View Source Alternatively, you may access the live conference call by dialing (866) 235-9006 (U.S.) or (631) 291-4549 (international).

A replay will be available on the Company’s website, or by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (international) and entering conference ID number 6681405. The replay will be available approximately three hours after the call through August 18, 2020.