Cerus Corporation (NASDAQ: CERS) is a biomedical products company focused in the field of blood transfusion safety. Cerus currently markets and sells the INTERCEPT Blood System for both platelets and plasma in the United States, Europe, the Commonwealth of the Independent States, the Middle East and selected countries in other regions around the world. The INTERCEPT Red Blood Cell system is in clinical development.
The company had an incredibly strong start to 2018, and the commercial momentum CERS experienced in 2017 continued into 2018 with first quarter product revenue of $13.6 million, exceeding 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 the U.S.
Led by the strong first quarter results and the current visibility into its commercial pipeline, CERS is raising its full-year product revenue guidance range to $53 million to $55 million compared to previous range of $51 million to $53 million.
Analysts tracking the stock believes that Cerus’ Intercept Blood Systems is well poised to become the standard of care in transfusion medicine and blood safety. In fact, CERS started 2018 on an incredibly solid note as it made progress in all three key areas, the top line sales growth, the pipeline of development programs, and the bottom line as measured by its operating cash burned. The market believes that the company is at a critical inflection point right now and Intercept’s Blood System for plasma, platelets, and red blood cells, as well as its Cryoprecipitate product, could become major growth drivers over the near to medium term.
Other recent announcements:
Results of European Phase 3 Chronic Anemia Study at the 23rd Congress of European Hematology Association – On 15th June, the company announced that results from SPARC, the Company’s European Phase 3 study evaluating the efficacy and safety of INTERCEPT-treated red blood cells (RBCs) in thalassemia major patients, were presented at the 23rd Congress of European Hematology Association (EHA). As per management, the primary safety endpoint was achieved with no treatment-emergent antibodies with confirmed specificity to INTERCEPT-treated RBCs or RBC antigens. Adverse events were balanced between Test and Control periods. There were no deaths, grade 4 (life-threatening or disabling) adverse events, or events deemed certain or likely related to INTERCEPT-treated RBCs.
The management is aggressively focusing on establishing INTERCEPT as the global standard of care for transfused blood components. 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, the company gained additional regulatory approvals on its 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.
Additional BARDA funding to support development of Intercept Bood System for Red Blood Cells: On May 16th, the company announced an amendment to the Company’s contract with the Biomedical Advanced Research and Development Authority (BARDA). The expansion of the agreement provides an additional $15 million in funding for supplementary support of both the ReCePI acute anemia clinical trial and SCient chronic anemia clinical trial. The total potential value of the amended contract with BARDA is $201 million. Funding allocated to date now totals $103 million in support of clinical development activities, including two U.S. Phase 3 studies, and the further development of the INTERCEPT system design in order to enable expanded use and manufacturing scale-up of key components.
About the company: Cerus Corporation is a biomedical products company focused in the field of blood transfusion safety. The INTERCEPT Blood System is designed to reduce the risk of transfusion-transmitted infections by inactivating a broad range of pathogens such as viruses, bacteria, and parasites that may be present in donated blood.
Products, Product Candidates, and Development Activities:
Other program related updates:
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). Also, the company received Canadian regulatory approval for INTERCEPT Blood Systems for platelets. It also expanded enrollment sites for the phase 3 RedeS clinical trial of INTERCEPT-treated red blood cells into Texas and Florida.
Latest Quarter Financial position:
- 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.
- 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.
- 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.
Liquidity and financial flexibility:
- 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.
Key risk factors and potential stock drivers:
- Company’ ability to ramp up operations, sign distribution contracts internationally
- The company’ ability to meet its future commercial target while improving its pipeline position.
- Government regulations and its impact on company’ business risk profile.
- FDA’ interest in safeguarding the U.S. platelets supply, which will lead to a final guidance document.
- Upcoming financial results and company’ ability to leverage the commercial investments it made to drive long-term revenue growth, to generate economies of scale and expanding margins, to allocate resources to BARDA initiatives and to continue to reduce cash burn.
- On Wednesday, June 20th, 2018, CERS is trading at $7.10, on an above average volume of 1.05 M shares exchanging hands. Market capitalization is $926.862 million. The current RSI is 73.60.
- In the past 52 weeks, shares of CERS have traded as low as $2.10 and as high as $7.31
- At $7.31, shares of CERS are trading above its 50-day moving average (MA) at $6.14 and significantly above its 200-day moving average (MA) at $4.43
- The present support and resistance levels for the stock are at $6.52 & $7.32 respectively.