On August 1, 2019 Cerus Corporation (Nasdaq: CERS) reported financial results for the second quarter ended June 30, 2019 (Press release, Cerus, AUG 1, 2019, View Source [SID1234538069]).
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Recent developments and highlights include:
Total second quarter revenue of $22.5 million
Record quarterly product revenue of $18.2 million, an 18% increase compared to the prior year quarter
Government contract revenue of $4.3 million
Worldwide disposable kit demand increased 23% in the quarter compared to the prior year quarter
Raising 2019 full year product revenue guidance to a range of $72 million to $75 million from $71 million to $74 million given the strong demand for INTERCEPT
Cash, cash equivalents, and short-term investments of $96.2 million at June 30, 2019
Received European CE Mark approval for INTERCEPT plasma with DEHP-free plastic disposable kits
"We are pleased to report another strong quarter of commercial execution and record product revenues. Increasing customer adoption of INTERCEPT Blood Systems continues to be driven by the clinical, operational, and economic benefits conferred by our pathogen inactivation technology," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "Robust demand for INTERCEPT kits was reported across multiple geographies with the greatest volume increase in the U.S. as blood centers and hospitals implement pathogen reduction in advance of the expected FDA final guidance document on bacterial risk control strategies for platelet collection and transfusion. In the face of increasing demand for our products from blood centers, we are continuing to invest in working capital, particularly in inventory."
"Pathogen-reduced cryoprecipitate continues to be an exciting pipeline opportunity and a product which could have a meaningful impact on improving patient outcomes. We now believe that we will be able to optimize the availability of plasma in order to realize manufacturing efficiencies for cryoprecipitate production with our blood center partners, potentially affording us with improved economics," continued Greenman.
Revenue
Product revenue during the second quarter of 2019 was $18.2 million, compared to $15.4 million during the same period in 2018. Revenue growth in the quarter benefited from the higher INTERCEPT kit demand in the U.S. and select international markets, partially offset by product mix in France and the strengthening of the U.S. dollar relative to the Euro compared to prior year exchange rates. Year-to-date product revenue totaled $35.7 million, an increase of 23% compared to the same period in 2018.
Government contract revenue from the Company’s Biomedical Advanced Research and Development Authority (BARDA) agreement was $4.3 million during the second quarter of 2019, compared to $4.0 million during the same period in 2018, as a result of increasing INTERCEPT red blood cell clinical and development activities. Year-to-date government contract revenue totaled $8.7 million compared to $7.5 million in the first half of 2018. The total potential value of the current BARDA agreement is $201 million with $34 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 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 second quarter of 2019 were 55%, compared to 50% for the second quarter of 2018. The increase in gross margin was tied to economies of scale realized for our cost of goods sold and additional manufacturing efficiencies. Gross margins during the first half of 2019 were 54% compared to 48% reported in the first half of 2018.
Operating Expenses
Total operating expenses for the second quarter of 2019 were $31.2 million compared to $24.3 million for the same period the prior year. Year-to-date, operating expenses totaled $60.8 million compared to $47.4 million for the first half of 2018.
Selling, general, and administrative (SG&A) expenses for the second quarter of 2019 totaled $16.7 million, compared to $14.4 million for the second quarter of 2018. The year-over-year increase in SG&A expenses was tied to higher investments in our manufacturing and supply chain capabilities. Year-to-date SG&A expenses totaled $32.9 million compared to $28.0 million for the first half of 2018.
Research and development (R&D) expenses for the second quarter of 2019 were $14.4 million, compared to $9.9 million for the second quarter of 2018. The increase in year-over-year R&D expenses was largely due to additional activities tied to the development of our INTERCEPT red blood cell system, including BARDA activities and initiatives aimed at ensuring supply and compatibility for our platelet and plasma products. Year-to-date R&D expenses totaled $27.9 million compared to $19.3 million for the first half of 2018.
Net Loss
Net loss for the second quarter of 2019 was $17.6 million, or $0.13 per diluted share, compared to a net loss of $13.3 million, or $0.10 per diluted share, for the second quarter of 2018. Year-to-date net loss was $36.4 million or $0.26 per diluted share compared to $27.2 million, or $0.21 per diluted share in the first half of 2018.
Cash, Cash Equivalents and Investments
At June 30, 2019, the Company had cash, cash equivalents and short-term investments of $96.2 million, compared to $117.6 million at December 31, 2018.
At June 30, 2019, the Company had approximately $39.3 million in outstanding term loan debt and $4.5 million of borrowings under its revolving loan credit agreement, compared to $29.9 million in outstanding term loan debt at December 31, 2018.
Revised 2019 Product Revenue Guidance
The Company now expects 2019 product revenue to be in the range of $72 million to $75 million compared to our previous guidance range of $71 million to $74 million. The new guidance range represents 18% to 23% growth compared to 2018 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 access 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 the Company’s website, or by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (international) and entering conference ID number 2898719. The replay will be available approximately three hours after the call through August 15, 2019.