Cerus Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Cirrus Corp Q2 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. If anyone should require operator assistance, please press star then zero on your touchtone telephone. I'd now like to turn the conference over to Tim Lee, Investor Relations Director. Please go ahead.

Thank you, operator, and good afternoon. I'd like to thank everyone for joining us today. As part of today's webcast, we are simultaneously displaying slides that you can follow. You can access the slides from the investor relations website at www.sears.com. With me on the call are Obi Greenman, Sears' President and Chief Executive Officer, Dr. Nina Mufti, Sears' Vice President Development and Red Blood Cell Program Leader, Kevin Green, Sirius's Chief Financial Officer, Vivek Jayaraman, Sirius's Chief Operating Officer, Dr. Laurence Corash, Sirius's Chief Scientific Officer, and Carol Moore, our Senior Vice President of Regulatory Affairs and Quality. We issued a press release today announcing your financial results for the second quarter ended June 30th, 2020, and also describing the company's recent business highlights. You can access a copy of this announcement on the company website at www. I'd like to remind you that some of the statements we will make on this call relate to future events and performance rather than historical facts in our forward-looking statements. Examples of forward-looking statements include those related to our future financial and operating results, including our 2020 financial guidance and goals, operating expenses, and gross margins, commercial development efforts, future growth and growth strategy, future product sales, product launches, the impact of current and future products on blood center operations, ongoing and future clinical trials, ongoing and future product development, and other regulatory activities as well as the timing of these events and activities. These four linking statements involve risk and uncertainty that can cause actual events, performance, and results to differ materially. They are identified and described in today's press release and under risk factors and are Form 10-K for the year ended December 31st, 2019 and our form 10-Q for the quarter ended June 30, 2020 for which we will file shortly. We undertake no duty or obligation to update our forward looking statements. On today's call, we'll begin with opening remarks from Obi Greenman followed by Dr. Nina Mufti who will provide an update on our red blood cell program. Kevin Green will then review our financial results and finally, Obi will provide closing remarks. and now it's my pleasure to turn the call over to Obi Greenman, CSRS President and Chief Executive Officer.

Obi Greenman Thank you Tim and good afternoon. I'm pleased to report our highest quarterly product revenue performance to date at $21.5 million despite the Q2 challenges posed by the COVID-19 pandemic. These results are evidence of the resilience of our business during this time and the essential and growing role that pathogen inactivation plays in helping secure to supply chains for blood safety and availability. Dedicated team at Cirrus has also shown a great ability to adapt. I am grateful for their foresight in the crisis management planning that has allowed us to support our blood center customers throughout this period and also to help them initiate multiple COVID-19 convalescent plasma programs at the same time. The record product revenues in the quarter were driven by robust year-over-year platelet kit sales growth in the US coupled with strong plasma and illuminator sales increases in our EMEA region. In the US, with the March 31st, 2021 deadline for compliance with FDA guidance on playoff safety now less than eight months away, the US commercial organization continues to focus its efforts on helping our blood center customers and their hospital clients to meet the deadline. The American Red Cross, the largest blood provider in the US, continues to lead the transfusion medicine field forward with approximately 25% of their platelets now being intercept treated. 20 of the 23 Red Cross production sites are producing intercept platelets. Finalizing their strategies for bacterial safety guidance compliance remains a priority for US blood centers, despite the recent challenges of the COVID pandemic. Just recently, the Red Cross officially notified all of its hospital customers of its goal to convert to 100% pathogen reduced platelets. In preparation, the American Red Cross is directing all customers to begin updating their IT systems now to accommodate intercept treated platelets. With this step, alongside offering an interim bacterial testing option, the Red Cross is positioned to provide platelets compliant with the FDA guidance requirements to all customers by the deadline of March 2021. The four other large blood center customers in the U.S. that, in combination with the Red Cross, collectively represent 70 to 75% of the overall U.S. blood supply are all currently producing Intercept playlets and have acknowledged that Intercept is the preferred method to comply with the FDA guidance document. As a reminder, the overall market opportunity in the U.S. for Intercept playlets is approximately $150 million per year. Our goal is that Intercept becomes the standard of care for platelets in the U.S., and we aim to capture as much of this opportunity as possible during the next few years. One of the key factors that could drive even faster Intercept uptake is the extension of the shelf life for Intercept platelets from five days to seven days. This label claim already exists in other countries, including France and Switzerland, where the operational benefits and Ease of Use have been solidly documented and Intercept is used for 100% of the playlets supply. We continue to make progress on the recovery and survival study necessary for our planned FDA submission for a day seven shelf life on Intercept playlets. The submission is targeted by the end of this year, early next, and we anticipate possible FDA approval for this seven day claim in mid 2021. In the context of the FDA guidance for playlet safety, The potential for a day seven claim combined with the pandemic preparedness facilitated by pathogen reduction strongly favors the choice of intercept for both blood centers and hospitals. The security afforded by treating platelet units versus just testing them is a simple concept that resonates well during the COVID crisis. The need for coronavirus convalescent plasma and the desire to pathogen inactivate it helped drive plasma kit sales and new customer illuminator placements in EMEA, which helped fuel a solid Q2 performance in the region. We think the illuminator placements in the quarter bode well for additional kit sales downstream. While uncertainty about the COVID-19 impact on the global healthcare systems and economy persists in the second half of 2020, we are confident in our ability to deliver on our guidance of $89 to $93 million in product revenue this year. Looking beyond EMEA, we are excited about our recently announced five-year contract with the Hong Kong Red Cross for Intercept Playlets. The Hong Kong Red Cross is a member of the influential Asia Pacific Blood Network and a key opinion leader globally. This is a very strategic account and represents an important beachhead for Cirrus to expand its presence in Asia Pacific. In the coming quarters, we look forward to sharing with you our expanding initiatives in APAC. In parallel with our commercial activities, our product pipeline continues to advance and positions us well to sustain our revenue growth going forward. As previously announced, the PMA supplement application for a pathogen-reduced cryoprecipitated fibrinogen complex was submitted to the FDA at the end of May. Given the 180-day review clock on PMA supplements, we believe pathogen-reduced cryoprecipitated fibrinogen complex, or pathogen-reduced cryo, could receive FDA approval as early as the end of this calendar year. With the potential approval now less than five months away, we have expanded our prelaunch preparation, including incremental hires to the therapeutics team that will lead our commercialization efforts. We continue to be excited about the launch because of the potential clinical benefit for bleeding patients and the size of the overall market opportunity in the U.S. We are also on track to submit for a new technology add-on payment or NTAP with CMS in October to further support the economic utility of our pathogen reduced cryo product at the hospital. A possible receipt of the NTAP in 2021 could expand access of pathogen reduced cryo to bleeding patients subsequent to the launch and thereby accelerate overall product adoption. Let me now turn it over to Dr. Nina Mufti to provide a clinical and regulatory update on our red blood cell program, which remains our single largest opportunity given the volume of red cells transfused globally. Red cells are the most frequently transfused blood component, and we are the only company in the world developing a pathogen activation system for red cells and, correspondingly, the only company with a full pathogen activation portfolio. Dr. Mufti has been with Cirrus for 13 years and has been our vice president of development since 2012. During her tenure, she oversaw the program development for the PMA submission and subsequent FDA approvals for both intercept plants and plasma. With the increasing importance of the red cell launch, we appointed Nina to lead the intercept red cell team with two main goals, progress the CE mark approval and product launch, and advance to a PMA submission for the red cell product in the U.S.