On May 4, 2021 Cerus Corporation (Nasdaq: CERS) reported financial results for the first quarter ended March 31, 2021 (Press release, Cerus, MAY 4, 2021, View Source [SID1234579071]).

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Recent developments and highlights include:

First quarter 2021 total revenue of $29.6 million, reflecting a 20% increase over the prior year period. Total revenue was composed of (in millions, except %):

Increasing 2021 annual product revenue guidance range to $110 million to $114 million (from prior guidance of $106 million to $110 million), representing an approximately 20% to 24% increase over full year 2020 reported product revenue.
Multiple blood center partners have completed validation efforts and are now manufacturing INTERCEPT Fibrinogen Complex, with inventory ready for release to hospital customers.
The Centers for Medicare and Medicaid Services (CMS) published the Fiscal Year 2022 Hospital Inpatient Prospective Payment System (IPPS) Proposed Rule, which recommended that Intercept Fibrinogen Complex be eligible for incremental payment via a New Technology Add-On Payment (NTAP) when performed in the hospital inpatient setting.
Third module (CMC Data) submitted for CE Mark for INTERCEPT red blood cells. Fourth and final module (Manufacturing) submission anticipated by end of Q2:21.
Cash, cash equivalents, and short-term investments of $132 million at March 31, 2021.
"On the heels of our strong 2020 performance, product revenue in the first quarter of $23.4 million exceeded our expectations," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "As our U.S. customers continue to prepare for compliance with FDA’s guidance around the bacterial safety of platelets, demand for the INTERCEPT Blood System continues to build. The momentum we have in the U.S. market in particular gives us confidence that 2021 will be another year of strong growth for Cerus and we are increasing our full year product revenue guidance accordingly."

Revenue

Product revenue during the first quarter of 2021 was $23.4 million, compared to $18.6 million during the same period in 2020. Product revenue growth during the quarter benefited from increased demand for INTERCEPT platelet products in the U.S., led by adoption from the top five blood center networks in the country.

First quarter government contract revenue was $6.2 million, compared to $6.0 million during the same period in 2020. First quarter government contract revenue is primarily comprised of funding from the Biomedical Advanced Research and Development Authority (BARDA) agreement for the development of the INTERCEPT Blood System for Red Cells. The total potential value of the current BARDA agreement is $214 million, with $72.7 million cumulatively invoiced to BARDA through March 31, 2021.

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 in whole or in part 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 first quarter of 2021 were 52.5% compared to 55.3% for the first quarter of 2020. The decrease in gross margin was tied to increased sales to our U.S. customers, who typically use our single dose platelet kits, which carry a less favorable gross margin contribution compared to our double dose kits, which are used more broadly outside of the U.S.

Operating Expenses

Total operating expenses for the first quarter of 2021 were $34.9 million compared to $31.7 million for the same period of the prior year.

Selling, general, and administrative (SG&A) expenses for the first quarter of 2021 totaled $19.2 million, compared to $15.9 million for the first quarter of 2020. The year-over-year increase in SG&A expenses was tied to incremental expenses associated with the launch of our INTERCEPT Fibrinogen Complex product as well as increased non-cash stock-based compensation expense.

Research and development (R&D) expenses for the first quarter of 2021 were $15.7 million, compared to $15.8 million for the first quarter of 2020. The Company continues to expect to incur costs associated with the development and testing of a new generation of INTERCEPT devices and disposable kits as well as the clinical development and pursuit of regulatory approval for the red blood cell system, among others.

Net Loss

Net loss for the first quarter of 2021 was $17.5 million, or $0.10 per basic and diluted share, compared to a net loss of $16.5 million, or $0.10 per basic and diluted share, for the first quarter of 2020. Non-cash stock-based compensation was higher by approximately $1.6 million during the first quarter of 2021 compared to the prior year period, contributing to the slightly higher net loss.

Balance Sheet

At March 31, 2021, the Company had cash, cash equivalents and short-term investments of $131.7 million, compared to $133.6 million at December 31, 2020.

Despite continued increased investments in inventory to meet customer demand, cash used for operations during Q1 2021 was narrower at $18.0 million compared to $19.8 million used during the prior year period. Offsetting this lower use were $15 million in term loan draws and $1.4 million in incremental draws from its revolving line of credit. At March 31, 2021, the Company had approximately $54.6 million in outstanding term loan debt and $9.9 million of borrowings under its revolving loan credit agreement, compared to $39.6 million in outstanding term loan debt and $8.5 million of borrowings under its revolving loan credit agreement at December 31, 2020.

Increasing 2021 Product Revenue Guidance

The Company now expects 2021 product revenue to be in the range of $110 million to $114 million, as compared to the prior range of $106 million to $110 million. The revised guidance range represents approximately 20% to 24% growth compared to 2020 reported product revenue.

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 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 Cerus’ website, or by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (international) and entering conference ID number 8668508. The replay will be available approximately three hours after the call through May 18, 2021.