On February 20, 2020 Cerus Corporation (Nasdaq: CERS) reported complete financial results for the fourth quarter and year ended December 31, 2019 (Press release, Cerus, FEB 20, 2020, View Source [SID1234554558]).

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Recent developments and highlights include:

Total fourth quarter revenue of $26.5 million.
Record fourth quarter product revenue of $20.9 million, a 27% increase compared to the prior year quarter.
Government contract revenue of $5.6 million.
Continued increase in worldwide demand for INTERCEPT kits during the fourth quarter with the calculated number of treatable platelet doses up 23% during the quarter compared to the same period in 2018.
Provided 2020 annual product revenue guidance of $89 million to $93 million, representing an approximately 20% to 25% increase over 2019 reported product revenue.
Strengthened balance sheet with an upsized public offering of common stock in January 2020 raising gross proceeds of $63.3 million.
Received CE mark approval for pathogen-reduced 5-day thawed plasma.
Entered collaboration with the National Trauma Institute to supply INTERCEPT plasma for the PROpOLIs clinical study, a U.S. Department of Defense funded clinical trial evaluating use of INTERCEPT plasma in traumatic burn resuscitation in 94 patients at 5 U.S. sites.
"We exited 2019 on a high note with record quarterly product revenue and anticipate the momentum that we experienced this past year will continue into 2020," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "We are looking forward to another successful year, as we expect many U.S. blood centers and hospitals to opt for INTERCEPT platelets as a strategy to comply with the final FDA guidance document on platelet safety. These institutions are on the clock and have just 13 more months to become compliant with the FDA Guidance."

The FDA guidance document on bacterial risk control strategies for platelets calls for all blood centers and hospitals to be compliant with new safety requirements by March 31, 2021.

"In addition to our commercial objectives goals for the year, we are looking forward to important regulatory milestones throughout 2020, led by our expected PMA-supplement submission for pathogen-reduced cryoprecipitate in the first half of the year," continued Greenman.

Revenue

Product revenue during the fourth quarter of 2019 was $20.9 million, compared to $16.5 million during the same period in 2018. Product revenue growth in the quarter benefited from strong continued demand for INTERCEPT platelet kits in the U.S. and platelet and plasma kit demand in EMEA, which were partially offset by the conversion to the double dose platelet kits in France and a 2% negative impact of foreign currency exchange rates. For the full year, product revenue totaled $74.6 million, an increase of 23% compared to the same period in 2018.

As a result of increased INTERCEPT red blood cell clinical and development activities, government contract revenue from the Company’s Biomedical Advanced Research and Development Authority (BARDA) agreement was $5.6 million during the fourth quarter of 2019, compared to $3.7 million during the same period in 2018. Full year 2019 government contract revenue totaled $19.1 million compared to $15.1 million in the same period the year prior. The total potential value of the current BARDA agreement is $201 million, with $44 million cumulatively recognized as government contract 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 fourth quarter of 2019 were 56%, compared to 49% for the fourth quarter of 2018. The increase in gross margin was tied to economies of scale realized for our cost of goods sold, favorable platelet product mix, namely the French conversion to double dose platelet kits and additional manufacturing efficiencies. Gross margins on product revenue for the full year 2019 were 55% compared to 48% reported in the same period the year prior.

Operating Expenses

Total operating expenses for the fourth quarter of 2019 were $33.6 million compared to $27.3 million for the same period the prior year. Full year 2019 operating expenses totaled $126.6 million compared to $99.4 million for the full-year 2018.

Selling, general, and administrative (SG&A) expenses for the fourth quarter of 2019 totaled $17.2 million, compared to $14.8 million for the fourth quarter of 2018. The year-over-year increase in SG&A expenses was tied to increased non-cash stock compensation, higher investments in our supply chain capabilities and focused investments on preparatory activities for our anticipated pathogen-reduced cryoprecipitate launch. Full-year 2019 SG&A expenses totaled $66.2 million compared to $56.8 million for the full-year 2018.

Research and development (R&D) expenses for the fourth quarter of 2019 were $16.4 million, compared to $12.4 million for the fourth quarter of 2018. The year-over-year increase in R&D expenses was due in part to product enhancements and initiatives for expanded label claims, development activities to support our planned PMA supplement for pathogen-reduced cryoprecipitate, as well as activities related to the development of our INTERCEPT red blood cell system. Full-year 2019 R&D expenses totaled $60.4 million compared to $42.6 million for the full-year 2018.

Net Loss

Net loss for the fourth quarter of 2019 was $16.9 million, or $0.12 per diluted share, compared to a net loss of $16.2 million, or $0.12 per diluted share, for the fourth quarter of 2018. Full-year 2019 net loss was $71.2 million or $0.51 per diluted share compared to $57.6 million, or $0.44 per diluted share for the same period in 2018.

Cash, Cash Equivalents and Investments

At December 31, 2019, the Company had cash, cash equivalents and short-term investments of $85.7 million, compared to $117.6 million at December 31, 2018.

At December 31, 2019, the Company had approximately $39.4 million in outstanding term loan debt and $5.0 million of borrowings under its revolving loan credit agreement, compared to $29.9 million in outstanding term loan debt at December 31, 2018.

In January 2020, the Company completed an underwritten public offering of its common stock for gross proceeds of $63.3 million, before deducting offering expenses payable by the Company.

2020 Product Revenue Guidance

The Company expects 2020 product revenue to be in the range of $89 million to $93 million. 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 at 4:30 P.M. ET 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 the Company’s website, or by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (international) and entering conference ID number 9268122. The replay will be available approximately three hours after the call through March 5, 2020.