On November 2, 2021 Cerus Corporation (Nasdaq: CERS) reported financial results for the third quarter ended September 30, 2021 (Press release, Cerus, NOV 2, 2021, View Source [SID1234594095]).
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Recent developments and highlights include:
Third quarter 2021 total revenue of $42.1 million, reflecting a 44% increase over the prior year period. Total revenue was composed of (in thousands, except %):
As of the date of this release, the Company is increasing its 2021 annual product revenue guidance range to $127 million to $129 million (from the prior guidance of $118 million to $122 million), representing an approximate 38% to 40% increase over full year 2020 reported product revenue.
On October 1, 2021, the U.S. Food and Drug Administration’s (FDA) final guidance document on bacterial risk control strategies for platelet collection and transfusion was made effective. This guidance for the industry identifies FDA-approved pathogen reduction as a means of compliance.
Cerus achieved cumulative sales for the INTERCEPT Blood System for platelets and plasma that have surpassed 10 million treatable doses globally since the products were first commercially launched.
Cash, cash equivalents, and short-term investments were $120 million at September 30, 2021.
"Cerus’ third quarter results represent a strong commercial achievement for the Company, in particular with regard to the U.S. platelet business. With quarterly product revenue of $36.1 million and sales momentum that continues into the fourth quarter, I am pleased that adoption of the INTERCEPT Blood System for platelets is establishing a new standard of care," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "With solid visibility to continued demand for the balance of the year, we are raising our product revenue guidance and look forward to finishing this breakout year for Cerus on a strong note."
Revenue
Product revenue during the third quarter of 2021 was $36.1 million, compared to $23.6 million during the same period in 2020. Product revenue growth during the quarter was driven by increased sales of INTERCEPT platelet products to blood center customers across the U.S.
Third quarter government contract revenue was $6.0 million, compared to $5.6 million during the same period in 2020. Third 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 for the third quarter 2021 was $18.5 million and was the highest in company history, reflecting a nearly $6 million increase over the same period in 2020. Product gross margin for the third quarter 2021 was 51.3% compared to 53.6% for the third quarter of 2020 and flat compared to the second quarter of 2021. The anticipated decrease in product gross margin compared to the third quarter of 2020 was tied to higher sales to U.S. customers during the quarter, who at present, primarily use the Company’s single dose platelet kits, which provide a lower product gross margin percentage compared to our double dose kits that are more frequently used internationally.
Operating Expenses
Total operating expenses for the third quarter of 2021 were $35.6 million compared to $32.2 million for the same period of the prior year. In general, the increase in operating expenses compared to the prior year period were driven by higher commercial expenses, due to sales incentive compensation and partially offset by lower R&D expenses.
Selling, general, and administrative (SG&A) expenses for the third quarter of 2021 totaled $20.4 million, compared to $16.3 million for the third quarter of 2020. The year-over-year increase in SG&A expenses was tied to increased sales costs and continued investments in our therapeutics business unit.
R&D expenses for the third quarter of 2021 were $15.3 million, compared to $15.9 million for the third quarter of 2020. Continued investments in a variety of R&D pipeline projects continued during the quarter, including those related to the Company’s LED illuminator, but were offset by lower R&D costs versus the prior year period associated with mature projects that have been completed.
Net Loss Attributable to Cerus Corporation
Net loss attributable to Cerus Corporation for the third quarter of 2021 was $12.4 million, or $0.07 per basic and diluted share, compared to a net loss attributable to Cerus Corporation of $14.1 million, or $0.08 per basic and diluted share, for the third quarter of 2020.
Balance Sheet
At September 30, 2021, the Company had cash, cash equivalents and short-term investments of $120.0 million, compared to $122.8 million at June 30, 2021 and $133.6 million at December 31, 2020. Despite continued investments in inventory to meet the anticipated growth in demand, cash used from operations continued to decline as the Company realized increased revenue contribution and significant leverage in SG&A spend.
As of September 30, 2021, the Company carried $55 million of notes due and a balance on its revolving line of credit of $10 million. The Company continues to have access to another $15 million under its term facility and capacity for an additional $10 million under its revolving line of credit.
Increasing 2021 Product Revenue Guidance
Based on the strong product revenue year to date and updated demand estimates heading into the remainder of the Company’s fourth quarter, the Company now expects 2021 product revenue to be in the range of $127 million to $129 million, compared to the prior range of $118 million to $122 million. The revised guidance range represents approximately 38% to 40% growth over 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 3970817. The replay will be available approximately three hours after the call through November 16, 2021.