Cerus Corporation

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Serious Corporation Second Quarter 2025 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Tim Lee, Serious Head of Investor Relations. Tim, you may now begin.

Thank you 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 ir.cirrus.com. With me on the call are Obi Greenman, Cirrus's President and Chief Executive Officer, Vivek Jayaraman, Cirrus's Chief Operating Officer, Kevin Green, Cirrus' Chief Financial Officer, and Carol Moore, Cirrus' Senior Vice President. Cirrus issued a press release today announcing our financial results for the second quarter ended June 30, 2025, and describing the company's recent business highlights. You can access a copy of this announcement on the company's website at www.cirrus.com. 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 and are forward-looking statements. Examples of forward-looking statements include those related to our future financial and operating results, including our 2025 revenue guidance, our expectations for operating cash flow, and non-GAAP adjusted EBITDA performance and our expected expense levels, expected future growth and our growth trajectory, the availability and related timing of data from clinical trials, planned regulatory submissions, product launches, product expansion prospects, and other statements that are not historical fact. These forward-looking statements involve risks and uncertainties that can cause actual events, performance, and results to differ materially. They are identified and described in today's press release, in our slide presentation, and under risk factors and our Form 10-Q for the quarter ended June 30, 2025, which we will file shortly. We undertake no duty or obligation to update our forward linking statements. On today's call, we will also be describing non-GAAP financial measures, including non-GAAP adjusted EBITDA. These non-GAAP measures should be considered as supplement two and not a replacement for measures presented in accordance with GAAP. For a reconciliation of non-GAAP financial measures to the most comparable GAAP financial measures to the extent reasonably available, please refer to today's press release and the slide presentation available on our website. We'll begin today with opening remarks from Obie, followed by Vivek to discuss recent business highlights, then Kevin to review our financial results and expectations for the rest of 2025, and lastly, closing remarks from Obie. And now, it's my pleasure to introduce Obi Greenman, Cirrus' President and Chief Executive Officer.

Thank you, Tim, and good afternoon, everyone. I would like to open the call with a review of the highlights from the second quarter, as well as our outlook for the duration of the year. As we continue to grow our business and advance our complete Intercept product portfolio, I am very happy to report to you all today another quarter of both solid commercial and product development executions. Guided by our mission to fundamentally transform the safety and availability of transfused blood components, we are realizing a growing foundation of clinical evidence that is helping to establish the intercept blood system as a standard of care in transfusion medicine in many countries around the world. The strong revenue growth we experienced during the first quarter continued through Q2, delivering record quarterly sales for the company and a near doubling of our IFC revenue quarter over quarter. In fact, our IFC revenue for the first half of 2025 nearly surpassed the full year IFC revenue for 2024. As a result, we are increasingly confident in our ability to exceed our full year 2025 product revenue guidance that we outlined in January. Accordingly, we are raising our full year 2025 product revenue guidance to a range of $200 to $203 million from our previous range of $194 to $200 million. While we are seeing growth across our entire Intercept product offering and in each region, the increase in our full-year revenue guidance range is largely driven by increasing customer demand for IFC. Its ready availability and positive impact on the complex hospital operations required to manage critically bleeding patients are being acknowledged across the U.S. broadly. Vivek will provide additional color on the exciting growth in our U.S. IFC business in his prepared remarks. Our core playlet franchise continues to be a key driver for revenue growth as well, both in the U.S. and abroad. In the U.S., we are expecting increasing adoption of pathogen-reduced platelets as hospital demand for 100% pathogen-inactivated platelet inventory increases because of the benefits associated with managing the logistics and inventories for platelet transfusion. In international markets, we continue to have a dialogue with many regulators, national blood services, and large blood centers about global platelet safety standards. and the important technological role that Intercept can play. Our portfolio products, including our next generation illuminator, the INT200, were recently showcased at the International Society of Blood Transfusion Congress in Milan. Having received CE mark at the end of the first quarter, this Congress served as a great forum to launch the product and to introduce it to our customers as well as our global distribution partners. Feedback on the INT200 continues to be very positive. We have begun deploying the first of these devices in the field and expect that the device will be a foundational component of blood center operations. We are now approved for commercial sale in approximately 40 countries, and the launch allows for new opportunities to engage with blood center customers and reinforces Cirrus' innovation in the field of transfusion medicine. Switching to our red blood cell program, in Europe, as we announced last month, The regulatory review is advancing ahead of plan. TUV SUD, our notified body, has completed their review of several modules of the submission, including the clinical module, and transferred the dossier to the State Institute for Drug Control, SUCL, in the Czech Republic for consultation. SUCL, our competent authority, has started the review of the active pharmaceutical ingredient, or API. The clinical module included the positive results from the Phase III Recipe clinical trial, thereby expanding our CE-MARC submission to cover all patient indications for red cell transfusion. The previous submission focused only on the chronic transfusion indication. We are looking forward to working collaboratively with both TUV, SUD, and Segal to facilitate the completion of the review process and expect a CE-MARC approval decision in the second half of 2026. We also recently just announced a significant award of $7.2 million from the U.S. Defense Department for the funding of a four-center study called CryoFirst that will evaluate the utility of early IFC in the treatment of major bleeding events in trauma patients. This study is meant to be a pilot clinical study for the future clinical development of a lyophilized version of IFC for potential use in austere environments and in pre-hospital and regional hospital trauma care. We believe that the data from CryoFirst will have potential future utility in defining the clinical benefits associated with early access to fibrinogen. Last but not least, switching to our financials, we continue to execute against our stated goals and remain steadfast in our goal to once again achieve positive non-gap-adjusted EBITDA Kevin will provide additional details on this and our full financial results in his prepared remarks. With that, I would now like to turn the call over to Vivek to discuss our second quarter commercial results along with color on our outlook for 2025.

Thank you, Obi, and good afternoon, everyone. As Obi mentioned, we delivered another strong quarter of commercial execution in Q2. Our record Product revenue underscores the progress we are making across multiple geographies and throughout our Intercept product portfolio. Product revenue growth of 16% for the second quarter was driven primarily by increasing customer demand for Intercept's fibrinogen complex, as well as continued platelet sales growth in both the U.S. and the Maya region. ISD demand continues to increase, reinforcing the growing adoption of this novel product hospitals and clinicians gained confidence in its clinical and operational benefits. Regionally, we saw solid momentum across EMEA, where deeper platelet penetration, incremental plasma contribution, and the launch of the IMT-200 illuminator all contributed meaningfully to solid first-half results. Canadian Blood Services has now fully transitioned to 100% routine use of intercept platelets, and we continue to expand our footprint in the Middle East. with Saudi Arabia, Kuwait, and the UAE leading platelet growth so far this year. On the plasma side, Red Cross, Flanders, and Madrid selected Intercept to replace the competing pass-through reduction technology, further validating the strength of our franchise. The INT200 Illuminator continues to resonate with customers and regulators alike. In addition to its CE mark approval, the device is now approved in France by the Anthem and in Switzerland by Qlikmedix. We successfully launched INT200 during the quarter and have been receiving highly encouraging feedback from customers who value its operational efficiency and user-friendly design. In Germany, the Paul Ehrlich Institute, the national agency regulating blood components, is considering new requirements to further minimize the risk of transfusion transmitted bacterial infections. These measures may include mandatory implementation of either pathogen reduction and or bacterial testing for all platelet units, similar to the FDA's bacterial safety standards in the U.S. While this process is still ongoing, we believe that such a regulatory shift could create a positive environment for broader intercept platelet adoption in Germany over time. In China, The NMPA requested additional patching and activation and in vitro platelet quality data tailored to local processing requirements for our submission. We believe that providing this China-specific data will strengthen our submission and better support market adoption at launch. As a result, the decision was made to withdraw the current submission temporarily in order to generate and include this new data set. China remains a very compelling market opportunity for Intercept, and there's a high degree of clinical interest in this product. Turning to the U.S., in the second quarter, we continued to build strong clinical advocacy for intercepts by region complex, with leading physicians from the University of Virginia and Vanderbilt University presenting their early adopter experience at major U.S. medical conferences. At the Society of Cardiovascular Anesthesiologists, Dr. John McNeil highlighted how IFC is being rapidly integrated into cardiac surgery workflows, enabling platelet and IFC delivery within minutes across both pediatric and adult populations. At the Society for Obstetric Anesthesia and Perinatology, Vanderbilt physicians shared compelling interim data showing ISD's role in avoiding unnecessary massive transfusion protocol activation in postpartum hemorrhage, reducing blood component utilization and eliminating wastage. These real-world insights are accelerating awareness and confidence among key clinical specialties, reinforcing ISD's potential to redefine transfusion support in critical care settings. For those of you interested in learning more about these presentations, the recording of Dr. McNeil's presentation is available under the resources section of the website at www.intercept-usa.com. Beyond the U.S., we maintained a strong international presence, engaging transfusion leaders at national seminars in Switzerland, Austria, Canada, and Spain, and also at the ISBT Regional Congress in Milan. As Obie previously mentioned, at the ISBT Congress, we had an opportunity to introduce the market to our new IAT 200 Illuminator and showcase extensive scientific data on interception platelets, ISB, and red cell programs, underscoring our commitment to advancing blood safety and operational efficiency. These targeted educational initiatives are designed to strengthen our brand, expand our reach within transfusion medicine communities, and support growing demand for intercepts-treated blood components. Looking ahead to our future growth prospects, we believe ISB will remain a key driver for Cirrus for years to come. We also believe our Platelet franchise has significant runway with continued adoption in the U.S., deeper penetration in existing international markets, and opportunities to open up new international geographies. Taken together, this quarter's results and the operational milestones we've achieved give us confidence that the growth trajectory we are on is sustainable. While we remain mindful of macroeconomic and geopolitical factors, the durability of our value proposition and the breadth of our pipeline position us well to continue delivering meaningful innovation and expanding access to safer blood products worldwide. With that, I'll now turn it over to Kevin to walk through our financial results and outlook in more detail.

Thanks, Vivek. Hello, everyone. Thank you all for joining us. On today's call, I'll be discussing our financial results for the second quarter of 2025, our increased full-year product revenue guidance, and providing some thoughts on our key metrics as we close out the first half and move into the back half of the year. With the exception of revenue, I'll be limiting my commentary on historical results to Q2 rather than year-to-date results. I'll start off with product revenue. For the second quarter of 2025, we reported product revenue of $52.4 million, translating to a 16% year-over-year increase. For the full first half, product revenue increased 15% to $95.7 million compared to the first half of 2024. IFC sales in the U.S., as well as global platelet sales, were the principal drivers of product revenue growth this quarter. Breaking down product revenues by geography, we see that second quarter North American product revenues increased 17% compared to the same period from the prior year. Second quarter EMEA product revenues increased 21% compared to the same period last year due in part to the strength in Middle Eastern platelet sales and expansion of our plasma business from historical platelet accounts. On a non-GAAP basis, excluding the impact of foreign currency exchange rates, EMEA product revenue increased 15%. As we look ahead, we expect that the launch of our LED illuminator in Europe, which kicked off at the end of the first quarter, will add to EMEA's growth. IFC product revenue for the second quarter was $5.6 million, compared to $2 million during the prior year period. We did recognize approximately $800,000 of previously deferred IFC revenue during Q2. Our IFC product revenue is strengthening from increasing customer demand and product availability. With the production capacity currently available, we expect we will be able to supply the anticipated growth in demand for the back half of the year. Based on our strong year-to-date commercial execution and increasing conviction in our growth projections, we are raising our full year 2025 product revenue guidance range to $200 to $203 million compared to our previous guidance range of $194 to $200 million. Included in that, we now expect full year 2025 IFC sales to be in a range of $16 to $18 million compared to our previous guidance range of $12 to $15 million. In the near term, we continue to expect increasing IFC revenue to be a key contributor to our overall growth. Beyond product revenue and not included in our guidance, government contract revenue for the second quarter of 2025 was $7.7 million, compared to $5.4 million for the prior year period. Enrollment in our REDIS trial, as well as the commencement of new activities covered under our BARDA contracts, drove the increase in government contract revenue. While we continue to be actively engaged with our government sponsors, we are seeing some impact from the ongoing changes in Washington, including back office administrative delays and the timing of award modifications. Turning now to our product gross profit and gross margins. Our second quarter product gross profit was $29 million compared to $24.7 million during the prior year period, an increase of 17% year over year. Product gross margins for the second quarter were 55.2%, comparable to the 54.7% realized during the second quarter of the prior year. A number of offsetting factors drove the relatively stable margins. economies of scale with increased volumes fx rates and higher asps provided a tailwind while inflation and product mix temper those factors as we look ahead to the balance of the year we expect product gross margins will generally remain in the mid 50s but face some potential modest headwinds such as foreign exchange rates other factors that could drive quarterly variability include but are not limited to product mix production costs of IFC to meet increasing demand, economies of scale and production volumes, and the timing of COGS reduction initiatives coming online. Moving down the income statement, operating expenses for the second quarter totaled $40.1 million compared to $33.9 million for Q2 2024. Of the total operating expenses reported for the second quarter, R&D expenses totaled $18.9 million compared to $15 million during the prior year. The year-over-year increase in R&D expenses was primarily related to higher development costs of the INT-200, higher government contract costs, which in turn drove the increased government contract revenue, and higher employee compensation costs driven by the cost of living adjustments which became effective earlier in the year. SG&A expenses for the first quarter were $21.2 million compared to $19 million in Q2 2024. The year-over-year increase in SG&A expenses reflect the cost of living adjustments for our employees as anticipated and noted during our Q1 call. As with the past several years, We are driving the business forward with increasing levels of leverage from our SG&A investments. We expect that the second half of the year we'll see more of this dynamic, which is central to our strategic business model. Shifting our focus to the bottom line and non-GAAP adjusted EBITDA results. The bottom line for Q2 2025, net loss attributable to Cirrus was $5.7 million, or 3 cents per share, and essentially flat compared to the second quarter of 2024. On a non-GAAP adjusted EBITDA basis, we are pleased to report our fifth consecutive quarter of positive non-GAAP adjusted EBITDA, totaling $935,000 for the second quarter, compared to $779,000 for the prior year period. We remain steadfast in our goal of achieving full-year positive adjusted EBITDA and expect expansion of gross profit, stability of OPEX, and importantly, expanding leverage from our SG&A investments will all contribute to achieving this objective. Turning to the balance sheet and associated cash flows, we ended the second quarter with $78 million of cash, cash equivalents, and short-term investments on hand, compared to $80.5 million at the end of 2024. As you can see, we've continued to manage the growth in our business with a stable cash balance supported by our growing operations. Cash used from operations increased slightly on a sequential basis at $2.4 million. This was anticipated and was driven by investments in working capital, namely inventory to support expected growth. and an increase in our accounts receivable due to administrative delays and timing of payments from the US government for our development contracts. Despite the modest net use of operating cash and working capital investments, we believe we are still in a position to deliver annual positive operating cash flow to fuel our growth going forward. Furthermore, we expect to have increasing access to our revolving line of credit, should we choose to further use that facility and offset receivable or inventory-related working capital investments. With that, let me turn it back over to Obi for some closing remarks.

Thank you, Kevin. The strong commercial results and progress in product development that we announced today has allowed us to deliver one of the strongest quarters in the company's history. We delivered $52 million in quarterly product revenue led by robust IFC sales, We raised our full-year 2025 product revenue guidance due to expected continued revenue growth, and we realized our fifth consecutive quarter of positive non-GAAP-adjusted EBITDA. I'd like to express my deep gratitude to the Sears team and our blood center partners around the globe for their steadfast commitment to improving blood safety and availability for patients and enabling the Intercept blood system to become the standard of care in many countries. With more than 20 million intercept-treated components transfused into patients now, the scale of our impact daily on the field of transfusion medicine is really remarkable and expected to increase meaningfully by the end of the decade. The recent launch of our INT200 LED illuminator facilitated an unconstrained platform placement, the continued progress of our IFC business, and the anticipated regulatory approval of our intercept red blood cell program in Europe. are expected to deepen our relationships with our existing and future customers. With that, let me turn it over to the operator for questions.

Thank you.

At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. The first question comes from the line of Josh Jennings of TD Callen. Josh, please go ahead.

Hi, this is Eric on for Josh. Thank you guys for taking the question. Maybe to start on revenue guidance for the year. That was a great update with the raise. I was just wondering if you could touch on the expected cadence of revenue through the remainder of the year. Maybe should we perhaps look at 2024 as a precedent? Just curious there.

Yeah, thanks a lot, Eric. Kevin, you want to handle that? Sure.

Thanks, Eric. We expect, obviously, as implied by our revenue guidance, continued growth in the back half of the year relative to the first half. What we've seen historically in EMEA, and I think that'll play out again, is somewhat of a flattening from Q2 to Q3, just given the summer holiday season. And then, as we pointed out in the prepared remarks, we did have some deferred revenue that was recognized in Q2 that obviously won't be recognized in the back half of the year. So we expect that, again, we'll see growth, but it'll be somewhat tempered in Q3. And then historically, we've seen a pretty robust jump in Q4.

Okay. That's helpful. Thank you. And then maybe looking at the EU red blood cell opportunity, With the expanded CE mark submission that you have now to cover all patient indications for red blood cell transfusion, is there a way to possibly quantify how that changes the way you're viewing the TAM that you could be addressing relative to that initial submission for chronic transfusion patients?

Yeah, thanks a lot, Eric. I'll take that. And I think basically what we saw when we were going through the initial indication for just chronic transfusion recipients was that there would be a period of time in which we have sort of a mandatory HV requirement. In discussions right now with TUV, still TBD, but it looks like that is no longer a requirement, and we'd be able to access all patient populations receiving red cell transfusions. So as we sort of think about the initial years post-CE mark approval, it just opens up all the opportunity to us and has fewer restrictions on the blood centers from how they choose to operate. So I think that's still TBD as far as how we'll roll the product out and then evolve the product offering post-approval. But it is a welcomed reprieve, if you will, on sort of what the initial limitations would be on the launch.

Excellent. Thanks so much.

One moment. Thanks a lot, Eric. Apologies. One moment for your next question. The next question comes from the line of Ross Osborne of Cancer Fitzgerald. Ross, please go ahead.

Hey, guys. This is Matt Park. I'm for Ross today. Thanks for taking the questions. I guess starting with the IFC guide, given the strong ramp in the first half and increased guidance, can you walk us through the key drivers in hitting the revised guide? If I'm not mistaken, the updated range implies a slight deceleration, half over half at the midpoint. We're trying to better understand the puts and takes as we've been about quarterly cadence.

Thanks for the question, Matt. Vivek, do you want to handle this?

Sure, I'd be happy to. Thanks for the question. As Kevin indicated earlier on the call, we had some catch up in the first half of the year associated with burning through some of the backlog and backorders we had that really started in the end of 2024. We're fully through that backlog at this point, and then we also had some Q1 revenue that, from an accounting standpoint, was recognized in the second quarter. That being said, the underlying growth we saw in Q2 and the increase in both supply of product and demand, both with existing hospitals wanting to increase their penetration of ISC as well as new hospitals onboarding, it's quite a strong pipeline, and so that's what led us to raising the guidance for the full year and our belief and confidence that we'll continue to see both an inflow of new hospital customers in Q3 and Q4, as well as increasing depth with existing customers. Probably the biggest driver of that being now that we have a much more comfortable supply position entering the back half of the year.

Got it. Super helpful. And then I guess one more from me on OpEx. I guess, Can you kind of parse out how much of the step-up reflects durable investment growth versus, I guess, any one-time related spend? And I guess who should be thinking about expense cadence in the back half of the year?

Yeah, Matt, not so much one-time related spend. I think we are seeing an increase in government contract activity underwritten by BARDA, FDA, and DOD, and you'll see that corresponding increase in government contract revenue. So certainly that's a component of the increase in R&D expense. And then, as mentioned on the prepared remarks, we did see cost of living adjustments for our employees consistent with what you see with other companies, just given the inflationary environment that we've had to operate in the last few years.

Got it. Super helpful. Congrats on the quarter, guys.

Thanks, Matt.

Thank you. This concludes the question and answer session. I would now like to turn it back over to Mr. Greenman for closing remarks.

Thank you again for joining us today and for your interest in Cirrus. We look forward to keeping you informed of our progress throughout the rest of 2025 through quarterly calls and investor conferences. Thanks again.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.