On August 3, 2021 Cerus Corporation (Nasdaq: CERS) reported financial results for the second quarter ended June 30, 2021 (Press release, Cerus, AUG 3, 2021, View Source [SID1234585610]).

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Recent developments and highlights include:

Second quarter 2021 total revenue of $37.8 million, reflecting a 41% increase over the prior year period. Total revenue was composed of (in thousands, except %):

As of this release, the Company is increasing its 2021 annual product revenue guidance range to $118 million to $122 million (from the prior guidance of $110 million to $114 million), representing an approximately 28% to 33% increase over full year 2020 reported product revenue.
Submitted PMA supplement to U.S. FDA for 7-day storage of INTERCEPT platelets.
Announced collaboration with LifeSouth Community Blood Centers to manufacture INTERCEPT Fibrinogen Complex, expanding the initial launch footprint into the Florida market.
First hospital customer contracts signed in initial launch states for INTERCEPT Fibrinogen Complex.
Announced the U.S. Centers for Medicare & Medicaid Services (CMS) has granted a New Technology Add-On Payment (NTAP) for INTERCEPT Fibrinogen Complex.
Submitted fourth and final module (Manufacturing) of CE Mark application for INTERCEPT red blood cells.
Cash, cash equivalents, and short-term investments of $123 million at June 30, 2021.
"The second quarter of 2021 was exceptional for Cerus on numerous fronts. Our record quarterly product revenue of $31.5 million exceeded our expectations and was led by U.S. platelet adoption," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "This strong momentum gives us confidence in delivering significant top-line growth over the balance of the year, and we are raising our full year product revenue guidance accordingly."

"In addition to our strong commercial execution, I am also very proud of several other accomplishments we made as an organization during the second quarter. As planned, we made two important regulatory submissions, with our PMA supplement to the FDA for 7-day storage of INTERCEPT platelets, as well as the fourth and final module of our CE Mark submission for INTERCEPT red blood cells. In addition, for our therapeutics business, we have signed initial customer contracts with hospitals who plan to begin using INTERCEPT Fibrinogen Complex in the second half of 2021, expanded our initial reach into the state of Florida through our collaboration with LifeSouth and received the NTAP from CMS," Greenman continued.

Revenue

Product revenue during the second quarter of 2021 was $31.5 million, compared to $21.5 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., with broad-based demand from blood centers across the country.

Second quarter government contract revenue was $6.3 million, compared to $5.3 million during the same period in 2020. Second quarter government contract revenue was comprised of funding associated with research and development (R&D) activities related to the INTERCEPT Blood System for Red Cells as well as sponsored efforts related to the development of next generation pathogen reduction technology to treat whole blood.

Product Gross Profit & Margin

Product gross profit increased $4.4 million over the same period in 2020, however, product gross margins on product revenue during the second quarter of 2021 were 51.3% compared to 54.9% for the second quarter of 2020. The decrease in product gross margin was expected and was tied to increased sales to our U.S. customers, who typically use the Company’s single dose platelet kits, which provide a lower product gross margin percentage compared to our double dose kits that are used more broadly outside of the U.S. Additionally, increased freight costs also contributed to the decrease when compared to the prior year period.

Operating Expenses

Total operating expenses for the second quarter of 2021 were $36.8 million compared to $31.7 million for the same period of the prior year. In general, operating expenses were higher, in part due to the resumption of certain activities that had been suspended due to the effects of the COVID-19 pandemic.

Selling, general, and administrative (SG&A) expenses for the second quarter of 2021 totaled $19.8 million, compared to $16.1 million for the second quarter of 2020. The year-over-year increase in SG&A expenses was tied to incremental expenses associated with the launch of the Company’s INTERCEPT Fibrinogen Complex product, incentive compensation costs, as well as increases in certain vendor fees.

R&D expenses for the second quarter of 2021 were $17.1 million, compared to $15.6 million for the second quarter of 2020. Higher R&D expenses were driven in part by costs associated with the INTERCEPT red blood cell programs in the U.S. and Europe, including the submissions of the third and fourth modules of the Company’s CE Mark application during the quarter. For the most part, U.S. red blood cell efforts are reimbursed and recorded as Government Contract Revenue on the Company’s statement of operations. Additionally, R&D expense during the 2021 period also included elevated costs associated with the development of a next generation, LED-based illuminator.

Net Loss

Net loss for the second quarter of 2021 was $15.4 million, or $0.09 per basic and diluted share, compared to a net loss of $14.9 million, or $0.09 per basic and diluted share, for the second quarter of 2020.

Balance Sheet

At June 30, 2021, the Company had cash, cash equivalents and short-term investments of $122.8 million, compared to $133.6 million at December 31, 2020.

During the quarter, the Company continued its investments in inventory in response to the expected growth of its business. At the same time, the Company continued to manage its accounts receivable, maintaining healthy days sales outstanding and managed cash use from operations down to $8.7 million. The Company continues to have access to additional funds under its loan agreement and, separately, revolving line of credit. During Q2, the Company exercised its option to extend the interest-only duration of its term loans through 2023, in accordance with its loan agreement. At June 30, 2021, the Company had approximately $54.7 million in outstanding term loans and $9.3 million of borrowings under its revolving loan credit agreement, compared to $39.6 and $8.5 million, respectively, at December 31, 2020.

Increasing 2021 Product Revenue Guidance

Based on the strong first half revenue and expectations for the second half of 2021, the Company now expects 2021 product revenue to be in the range of $118 million to $122 million, as compared to the prior range of $110 million to $114 million. The revised guidance range represents approximately 28% to 33% 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 6554004. The replay will be available approximately three hours after the call through August 17, 2021.