On may 8, 2018 Cerus Corporation (Nasdaq: CERS) reported financial results for the first quarter ended March 31, 2018, and raised its full year guidance for product revenue (Press release, Cerus, MAY 8, 2018, View Source [SID1234526249]).

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First Quarter Highlights and Recent Events

First quarter product revenue of $13.6 million

Year-over-year Q1 worldwide disposable kit volume up over 100%

Raising full year product revenue guidance range to $53 million to $55 million from $51 million to $53 million

Cash and cash equivalents balance of $105.9 million at March 31, 2018

Received Canadian regulatory approval for INTERCEPT Blood Systems for platelets

Expanded enrollment sites for the phase 3 RedeS clinical trial of INTERCEPT-treated red blood cells into Texas and Florida
"The commercial momentum we experienced exiting 2017 continued into 2018 with first quarter product revenue of $13.6 million, exceeding our expectations. Global demand for platelet kits continued to be robust with first quarter platelet kit sales volumes more than doubling compared to the prior year, led by increased shipments in France and in the U.S.," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "Given the strong first quarter results and the current visibility into our commercial pipeline, we are raising our full year product revenue guidance range to $53 million to $55 million compared to our previous range of $51 million to $53 million."

"We continue to push forward with our mission to establish INTERCEPT as the global standard of care for transfused blood components," continued Greenman. "In the U.S., blood centers are continuing to increase production of INTERCEPT platelets to meet the ever growing hospital demand for pathogen-reduced platelets. In France, we gained additional regulatory approvals on our dual storage processing set for INTERCEPT platelets and shelf-life extension from five to seven days which should allow for increased blood center operational efficiencies and lower product wastage."

During the quarter, the Company’s development programs continued to progress with the Ultra-Performance Liquid Chromatography (UPLC) lot release assay achieving validation to support its anticipated CE Mark submission for INTERCEPT red cells, and the INTERCEPT cryoprecipitate program advancing the required stability studies for its planned premarket approval (PMA) supplement submission to the U.S. Food and Drug Administration (FDA).

Revenue

Product revenue for the first quarter of 2018 was $13.6 million, compared to $7.0 million during the same period in 2017. The increase in product revenue was driven by quarter-over-quarter increases in platelet kit demand, partially offset by declines in plasma kits and illuminator sales. Reported product revenue in the quarter also benefitted from favorable foreign currency exchange rates.

Government contract revenue from the Company’s Biomedical Advanced Research and Development Authority (BARDA) agreement was $3.5 million in the first quarter of 2018 compared to $1.4 million during the same period in 2017 as a result of increasing INTERCEPT red cell clinical and development activities. BARDA is part of the Office of the Assistant Secretary for Preparedness and Response within the U.S. Department of Health and Human Services.

Gross Margins

Gross margins on product revenue for the first quarter of 2018 were 46%, compared to 47% for the first quarter of 2017. Gross margins on product sales remained relatively stable due to a variety of factors including economies of scale and lower costs due to increased platelet production, pricing for high volume customers, and foreign exchange rates.

Operating Expenses

Total operating expenses were $23.0 million for the quarter ended March 31, 2018, compared to $22.8 million for the quarter ended March 31, 2017.

Selling, general, and administrative expenses for the first quarter of 2018 remained relatively flat at $13.6 million, compared to $13.7 million for the first quarter of 2017 as the Company continued to leverage its existing commercial and back-office infrastructure.

Research and development (R&D) expenses for the first quarter of 2018 were $9.4 million compared to $9.2 million for the first quarter of 2017. Expenses associated with the clinical development of the Company’s INTERCEPT red blood cell program increased while non-BARDA related R&D expenses declined as the Company re-allocated R&D personnel to the BARDA activities.

Operating and Net Loss

Operating losses during the first quarter of 2018 were $13.4 million, compared to $18.1 million during the first quarter of 2017.

Net loss for the first quarter of 2018 was $13.9 million, or $0.11 per diluted share, compared to a net loss of $18.6 million, or $0.18 per diluted share, for the first quarter of 2017.

Cash, Cash Equivalents and Investments

At March 31, 2018, the Company had cash, cash equivalents and short-term investments of $105.9 million compared to $60.7 million at December 31, 2017.

At March 31, 2018, the Company had approximately $29.8 million in outstanding debt under its loan agreement with Oxford Finance. The loan agreement provides for an additional $10 million term loan (and, if drawn, an extension of the interest only period) upon the Company achieving pre-determined revenue levels. The Company achieved the pre-determined revenue levels as of March 31, 2018, but has not currently exercised its option on the additional $10 million term loan and interest only extension. The option expires on May 14, 2018.

QUARTERLY CONFERENCE CALL

The Company will host a conference call and webcast at 4:15 p.m. Eastern time today to discuss its 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 2366225. The replay will be available approximately three hours after the call through May 22, 2018.