Cerus Corporation Reports Record Fourth Quarter and Year End 2017 Results
Recent developments and highlights include:
- Reported record fourth quarter product revenue of $16.2 million, an increase of 60% compared to the same period in the year prior.
- Established 2018 annual product revenue guidance of $51 million to $53 million, which would represent a 17% to 22% increase over 2017 reported product revenue.
- Successfully met primary safety and efficacy endpoints in SPARC, Cerus’ European Phase 3 clinical trial evaluating INTERCEPT red cell transfusions in thalassemia patients.
- Completed an underwritten public offering of common stock raising gross proceeds of $57.5 million.
- Advanced release assay for commercial manufacturing of the S303 compound used in the INTERCEPT red blood cell system to enable H2 2018 CE Mark submission.
“As we reported in our January 8, 2018 press release, we experienced a strong finish to 2017 with fourth quarter results exceeding our expectations. We saw robust sales activity in multiple geographies including France, the U.S., and the Middle East. In addition, we continue to make progress on the final CMC activities needed for the planned INTERCEPT red blood cell system CE Mark submission which will include data from the SPARC clinical study. In the U.S. we received IDE approval from the FDA to initiate our second Phase 3 RBC study,” said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. “With the $57.5 million of gross proceeds and the remaining borrowing availability under our growth capital facility, combined with BARDA funding, we believe we are now well capitalized to focus on commercial execution and on progressing our pipeline opportunities from late stage development to potential market launch.”
Product revenue for the fourth quarter of 2017 was $16.2 million, compared to $10.1 million during the same period in 2016. Product revenue for the year ended December 31, 2017 was $43.6 million, compared to $37.2 million for the year ended December 31, 2016. The increases in reported product revenue were driven by year-over-year increases in platelet kit demand, both in international and domestic markets, partially offset by declines in plasma kits and illuminator sales. Growth in sales from France and the U.S. were the primary drivers of the increased platelet kit sales in both periods. Demand for platelet kits was up more than 100% when comparing the fourth quarter of 2017 to the same period in 2016, and up almost 40% for the full year 2017 compared to 2016.
Government contract revenue from our Biomedical Advanced Research and Development Authority (BARDA) agreement was $2.4 million in the fourth quarter of 2017 compared to $1.8 million during the same period in 2016. Government contract revenue from our BARDA agreement for the year ended December 31, 2017 was $7.8 million, compared to $2.1 million for the year ended December 31, 2016.
Gross margins on product revenue for the fourth quarter of 2017 were 44%, compared to 45% for the fourth quarter of 2016. Gross margins for the year ended December 31, 2017 were 48%, compared to 45% in the same period in 2016.
Despite the more than a 100% increase in demand for platelet kits, gross margins on product revenue for the fourth quarter of 2017 was relatively consistent compared to the same period in 2016 due to fewer illuminator sales in the fourth quarter of 2017 compared to the same period in 2016, as well as the impact of pricing from higher volume platelet contracts. Gross margin on product revenue for the full-year 2017 increased due to the increase in demand for higher margin platelet disposable kits and favorable foreign exchange rates. Going forward, the Company expects to continue to realize economies of scale and lower cost of goods sold from its primary kit manufacturing agreement due to tiered pricing, which declines as production volume tiers are achieved.
Total operating expenses were $20.3 million and $86.3 million for the quarter and year ended December 31, 2017, compared to $21.5 million and $80.4 million for the quarter and year ended December 31, 2016, respectively.
Selling, general, and administrative (SG&A) expenses for the fourth quarter of 2017 were $12.5 million compared to $12.4 million for the fourth quarter of 2016. SG&A expenses for the year ended December 31, 2017 were $52.4 million compared to $48.8 million in the same period in 2016. The increase in SG&A expenses was due largely to increased commercial activity in the U.S.
Research and development (R&D) expenses for the fourth quarter of 2017 were $7.8 million compared to $8.8 million for the fourth quarter of 2016. R&D expenses in the quarter declined primarily due to the timing of activities related to the BARDA agreement. R&D expenses for the year ended December 31, 2017 were $33.7 million compared to $31.3 million in the same period in 2016. The increase in R&D expenses was primarily tied to increased headcount costs and costs tied to the clinical development of our INTERCEPT red blood cell program, the pursuit of supplemental approvals for the platelet and plasma systems, and activities related to our BARDA agreement.
Operating and Net Loss
Operating losses during the fourth quarter of 2017 were $10.9 million, compared to $15.1 million during the fourth quarter of 2016, and $57.5 million compared to $61.4 million for years ended December 31, 2017 and 2016, respectively.
Net loss for the fourth quarter of 2017 was $11.5 million, or $0.10 per diluted share, compared to a net loss of $13.5 million, or $0.13 per diluted share, for the fourth quarter of 2016. Net loss for the year ended December 31, 2017, was $60.6 million, or $0.56 per diluted share, compared to a net loss of $62.9 million, or $0.62 per diluted share, for the same period of 2016.
Cash, Cash Equivalents and Investments
At December 31, 2017, the Company had cash, cash equivalents and short-term investments of $60.7 million compared to $71.6 million at December 31, 2016.
At December 31, 2017, 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 an extension of the interest only period upon the Company achieving pre-determined revenue levels.
In January 2018, the Company completed an underwritten public offering of its common stock for gross proceeds of $57.5 million, before deducting offering expenses payable by the Company.
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 http://www.cerus.com/ir. 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 3395359. The replay will be available approximately three hours after the call through March 22, 2018.