Cerus Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 20, 2025
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Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to Cirrus Corporation Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to Nupur Liffic, Sirius's Investor Relations Advisor. Ms. Liffic, you may begin.

Noopur Liffick
Noopur Liffick
Investor Relations Adviser at Cerus

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' President and Chief Executive Officer Vivek Jayaraman, Cirrus' Chief Operating Officer Kevin Greene, Cirrus' Chief Financial Officer and Carol Moore, Cirrus' Senior Vice President.

Noopur Liffick
Noopur Liffick
Investor Relations Adviser at Cerus

Syrus issued a press release today announcing our financial results for the fourth quarter and year ended 12/31/2024, and describing the company's recent business highlights. You can access a copy of this announcement on the company website at www.cerus.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 product revenue guidance, our expectations for bottom line and non GAAP adjusted EBITDA performance, our operating expense and gross margin expectations and our expectation for positive operating cash flows for 2025 expected future growth in our growth trajectory a potential new and enhanced CE Mark submission for INTERCEPT red blood cells and other statements that are not historical facts. These forward looking statements involve risks and uncertainties that could cause actual events, performance and results to differ materially.

Noopur Liffick
Noopur Liffick
Investor Relations Adviser at Cerus

They are identified and described in today's press release, in our slide presentation and under Risk Factors in our Form 10 K for the year ended 12/31/2024, which we will file in the coming days. We undertake no duty or obligation to update our forward looking statements. On today's call, we will also be discussing non GAAP financial measures, including non GAAP adjusted EBITDA. These non GAAP measures should be considered supplement to 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, please refer to today's press release and the slide presentation available on our website.

Noopur Liffick
Noopur Liffick
Investor Relations Adviser at Cerus

We'll begin today with opening remarks from Obi, 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 Obi. And now, it's my pleasure to introduce Obi Greenman, Syrus' President and Chief Executive Officer.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Thank you, Nippur, and good afternoon, everyone. I'd like to open the call by spending a few minutes reflecting on our strong performance in 2024, as well as our expectations for full year 2025 as as we continue to establish our INTERCEPT blood system as the standard of care into infusion medicine. Twenty twenty four was a milestone year for the company and its long history and that we successfully achieved positive adjusted EBITDA for the full year. Building off of this will allow us to invest in the continued growth of our business globally and our full intercept portfolio and product improvements. Our year over year double digit product revenue growth for 2024 was fueled by continued expansion in our global Playlist business along with the rising demand in our Intercept by Bridging Complex or IFC business in The U.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

S. Vivek will provide further insights into the strong demand we are experiencing in the IFC market where we are providing an important and timely intervention for patients with major bleeding complications. This momentum underscores the critical importance of INTERCEPT treated blood components and highlights the growing impact of our pathogen and activation technology across transfusion services in The U. S. And internationally for blood centers that manufacture pathogen and activated components to the hospitals and clinicians who transfuse them.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

For the fourth quarter and full year 2024, we executed our financial strategy effectively, delivering strong bottom line performance and robust operating cash flows. As Kevin will detail shortly, key year over year financial highlights include double digit growth and narrowed GAAP net loss attributable to the company and positive non GAAP adjusted EBITDA. With that strong foundation and in line with our 2025 product revenue guidance announced earlier this year, we anticipate year over year growth of 8% to 11% while focusing on the forward health of our bottom line results. On the development front, in Europe, we are continuing to collaborate closely with our notified body TUV SUD on a potential new and enhanced CE mark submission for INTERCEPT red blood cells or RBCs. We plan to have a more detailed update on these developments as those plans solidify in the coming months.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

I would like now to turn the call over to Vivek to discuss our commercial results and progress for the fourth quarter and full year 2024, along with color on the outlook for 2025.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

Thank you, Obi, and good afternoon, everyone. As we enter 2024, we committed to a return to top line growth. While at that time, we believe in our ability to deliver compelling growth, we were not without headwinds. We started the year with six month shelf life on platelet kits in The U. S.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

And most of our IFC production partners had yet to receive BLA clearance to enable them to transport IFC across state lines. Thanks to the solid performance of the cross functional Cirrus team combined with strong partnership with our blood center customers, we were able to successfully address many of these challenges and meet our commitment by delivering 15% top line growth compared to 2023. In addition, we made meaningful progress on key strategic commercial initiatives that will set the stage for compelling growth for the balance of this decade. We delivered strong results in the fourth quarter of twenty twenty four, driven primarily by growth in demand for our U. S.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

ISP business, as well as our global platelet franchise. In particular, we saw strong contributions from our international market. As an example, Canadian Blood Services is now at 100% PR adoption for their platelet production. Overall, our core platelet market stabilized and we witnessed the normalization in donor trends in 2024, which were previously headwinds in 2023. In addition, we made meaningful progress on several of our key growth initiatives.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

As we start 2025, we are seeing signs of strong platelet traction across our global franchise. As reported last quarter, we had an excellent showing at the annual AABB meeting, which took place in Houston, Texas in October. As we predicted, the interest we witnessed at AABB translated into a spike in inbound inquiries, both from hospitals and blood centers. During the quarter, a few of our blood center ISV production partners received BLA approvals and are in the process of ramping up manufacturing volumes to meet increased IFC demand. As real world experience with IFC grows, we are continuing to see that our assumed value proposition is being validated.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

Clinicians highly value earlier access to fibrinogen and hospital blood banks greatly appreciate the reduction in both product wastage as well as reduced time from order to availability. We exited 2024 with strong momentum in our ISP franchise and our acute focus is to ensure that production volumes ramp up in order to meet growing demand. As we began 2025 and as stated in our preliminary revenue guidance, we expect to continue to deliver compelling top line growth. This growth is expected to come from strength in our global PlayLift franchise as we anticipate share capture in The U. S.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

And further expansion internationally. We exited 2024 with real momentum in our U. S. IFC business and with line of sight into expanded manufacturing capacity, we are confident in our ability to meet the growing clinical demand we are experiencing in the IFC franchise. As we look forward in the year, we are excited to launch the new INT200ILUMINATOR in EMEA and reaffirm our commitment to new product innovation in this market.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

This project is a result of close collaboration with and input from our blood center partners and we can't wait to deliver this to them. The outlook for 2025 is exciting and we look forward to updating you on our progress during future quarterly calls. I'm grateful to the global and commercial and operational teams at Syrris for their strong performance in 2024. It is great to be back on a growth trajectory and we are poised to continue to do so moving forward. Most importantly, it's very rewarding that our efforts are helping to ensure that more patients around the world are gaining access to the Vapor blood products.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

I will now turn it over to Kevin to discuss our financial results and outlook in more detail.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

Thanks, Vivek, and hello to everyone listening. On today's call, I'll be discussing our financial results for the fourth quarter and full year 2024, as well as our product revenue guidance for 2025. Finally, I'll highlight some of the key success factors that we are focused on as we move forward, building off of 2024 solid base toward continued financial improvement over the long term. As pre announced in January, full year 2024 product revenues were $180,300,000 ahead of our latest 2024 product revenue guidance and representing 15% growth year over year. For the fourth quarter of twenty twenty four, we posted product revenue of $50,800,000 representing year over year growth of 9%.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

EMEA platelet sales as well as growth from U. S. Platelet sales drove the bulk of our product revenue increases this quarter. While our platelet franchise drove much of the growth, we also realized IFC sales expansion. The IFC business was up almost 30% when comparing the fourth quarter of twenty twenty four to the prior year.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

Full year 2024, North American product revenues were up 23% over 2023 levels and fourth quarter twenty twenty four product revenues exceeded prior year levels by 6%. This growth was driven largely by increased penetration at the top U. S. Blood center organizations, where we continue to see significant growth opportunities for INTERCEPT uptake. In EMEA, Fourth Quarter product revenues were up 16% year over year.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

When looking at Q4 twenty twenty four over the prior year, FX rates provided a slight headwind for the EMEA business of around 80 basis points. On a full year basis, FX rates had little impact on our EMEA business. And on a consolidated basis, FX provided a headwind of around 20 basis points when comparing Q4 twenty twenty four to that of the prior year period and little to no impact on the full year comparative results. Beyond our platelet and plasma franchises, for the full year, IFC sales were up over 2023 levels by 42% to $9,200,000 For Q4 twenty twenty four, we posted IFC product revenue of roughly $3,000,000 up from $2,300,000 in the prior year period, driven by more standing orders and depth within existing accounts. In addition to our product revenue and not included in our guidance, government contract revenue totaled $21,100,000 for 2024 compared to $30,400,000 for 2023 and $5,900,000 in Q4 compared to $6,600,000 for the prior year period.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

Consistent with dialogue in prior quarters, the completion of our U. S. Phase three recipe clinical trial was the primary driver for the decline. As we look ahead, we expect to continue delivering on our contracts with the federal government and advancing patient access to safe blood components. Turning now to our product gross profit and gross margins.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

For the full year, product gross profit was $99,500,000 up from the $86,400,000 for 2023. Our fourth quarter product gross profit was $27,400,000 compared to twenty six million dollars during the prior year period, an increase of 5.5% year over year. Product gross margins for the year as a whole were consistent at 55.2% within 10 basis points of 2023 levels. For the fourth quarter, product gross margins were down slightly to 53.9% from the 55.5% reported in Q4 of last year. The slight decline in gross margins was driven by a number of individually small items, including a stronger U.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

S. Dollar in Q4, freight costs to expedite product shipments into The U. S. And higher than expected discard rates for certain products. As we look ahead to 2025, we expect product gross margins will generally remain in the mid-50s.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

There are several factors that could drive quarterly variability, including, but not limited to, foreign exchange rates, product mix, production costs at IFC to meet increasing demand, economies of scale and production volumes and the timing of COGS reduction initiatives coming online. Moving on, for the year, operating expenses were down more than 8% to $134,800,000 compared to $146,900,000 for 2023. Our fourth quarter operating expenses, which totaled $34,800,000 were up from the $31,600,000 in Q4 of twenty twenty three. Q4 '20 '20 '4 operating expenses included $5,500,000 in non cash stock based compensation. By specific expense type, 2024 R and D expenses were down 13% to $58,900,000 from $67,600,000 in the prior year.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

Fourth quarter R and D expenses totaled $15,400,000 compared to $14,300,000 during the prior year period. The increase in our R and D expenses for the fourth quarter can be attributed to work on our LED based illuminator, including submission for CE marking, Rettis site ramp enrollment and activities covered under our new BARDA contract. 2024 SG and A expenses were relatively flat at $75,900,000 from $75,500,000 Fourth quarter SG and A expenses were $19,300,000 compared to $17,300,000 during the prior year period. During the quarter, we recognized a cumulative catch up of certain accrued expenses that had artificially distorted our SG and A expenses for the quarter. As we look ahead to 2025, we expect that SG and A expenses will go up modestly from 2024 levels, primarily as a function of cost of living and inflationary impact.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

With that said, we are not planning on significant new investments and expect that we will continue to see compelling leverage from our SG and A spend relative to the expected revenue growth. Let's now focus on the bottom line and non GAAP adjusted EBITDA results. On the bottom line, reported net loss attributable to Cerus for 2024 improved by 44% to $20,900,000 from $37,500,000 for 2023. For the three months ended 12/31/2024, net loss attributable to Syrris was $2,500,000 or $0.01 per share compared to $1,300,000 or also $0.01 per share for the prior year period. As a measure of the operating leverage we're generating, the net loss for Q4 and the full year was less than our non cash stock based compensation.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

Beyond the achievement of double digit top line growth as Vivek mentioned and suggestive of the leverage we are generating, we are pleased to announce the achievement of another one of our stated 2024 objectives, positive adjusted EBITDA of $5,700,000 for the year. This represents a significant improvement over the negative $10,700,000 for prior year. Q4 twenty twenty four was the third straight quarter of generating positive adjusted EBITDA, which was $3,300,000 compared to a positive adjusted EBITDA of $4,700,000 for the prior year period. While we are thrilled with this achievement, we plan to build off of this strong foundation and expect our positive adjusted EBITDA will be durable. Underpinning our confidence, we expect that as suggested by our 2025 product revenue guidance coupled with planned gross margins in the mid-50s, close management and continued leverage of operating expenses, we will maintain or improve on this measure for 2025.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

On the balance sheet and associated cash flows, we ended the fourth quarter with $80,500,000 of cash, cash equivalents and short term investments on the balance sheet. Operationally, we posted our fourth consecutive quarter of positive operating cash flows. For the fourth quarter and full year 2024, we generated positive operating cash flows of $4,900,000 and $11,400,000 respectively, compared to cash used for the operations of $15,200,000 and $43,200,000 for the fourth quarter and full year 2023 respectively. Although we expect to make working capital investments in support of our growing business, namely finished goods inventory and receivables, we expect to generate continued positive operating cash flows for 2025. On that note, I'd now like to turn the call back over to Obi for some closing remarks.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Thank you, Kevin. With the first two months of twenty twenty five almost behind us, we remain positive about the rest of the year ahead of us. Our growth reflects the confidence and trust our customers place in Syrris and the Intercept technology, which addresses a significant unmet need in blood safety and availability with a total addressable market estimated to exceed $7,000,000,000 annually. While we have realized strong revenue growth for both our Playlet and IFC products, we are sub 10% penetrated in those markets globally, meaning there is a lot of runway for continued revenue growth for our existing license intercept product portfolio. With our first mover advantage, superior technology and strong barriers to entry, we are setting a new standard in transfusion medicine.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Our concentrated and expanding customer base allows us to drive significant leverage from our SG and A, generating a strong recurring revenue stream. With a solid financial profile and a mature pipeline, I believe Syrus is well positioned for continued success. Thank you for your continued interest in Syrus. I will now turn the call over to the operator for questions.

Operator

Thank you. Our first question comes from the line of Joshua Jennings with TD Cowen. Your line is now open.

Joshua Jennings
Managing Director at TD Cowen

Hi, good afternoon and thanks for taking the questions. Congratulations on the strong performance in 2024. I was hoping to just start on IFC, the foundation for that franchise continues to build. It seems like it's on the cusp or beginning to inflect just in terms of adoption and utilization, just customer demand. Hoping you could just walk us through the steps that are left before kind of full U.

Joshua Jennings
Managing Director at TD Cowen

S. Market access is unlocked. And then kind of secondary to that, just your state of optimism that Saris can capture up to 50% of a multi $100,000,000 U. S. Market opportunity in front of you with IFC?

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Thanks a lot, Josh for the question. Vivek, would you like to cover that question?

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

Sure. I'd be happy to. Good to hear from you, Josh. Thanks for the question. I think you categorized the state of the market well.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

I mean, we're excited about the increase in demand, the validation we received coming out of ABB, both on the podium and in peer to peer discussions was certainly, a strong boots and added to the momentum we saw at the end of the year and entering into 2025. In parallel, as we mentioned, we received BLAs at a couple of our production partner sites, which will enable them to transport product across state lines that will unlock demand in states where there wasn't previously an in state manufacturer. So in terms of thinking about how we unlock the market and continue to drive forward progress, the key things are making sure we constantly balance demand and supply. So as we're seeing demand spiking, it's nice to have avenues with which supply can grow. And I think as we add that with continued real world experience, maturing clinical evidence, those are the factors that are going to continue to allow us to penetrate this market.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

And certainly the user experience and what we're seeing where hospitals may bring it in into one clinical category and then it fairly quickly diffuses across the institution that gives us confidence that the broad market opportunity that IFC presents is in factory loss more.

Joshua Jennings
Managing Director at TD Cowen

Excellent. And maybe one just follow-up on just the China opportunity. I know you have a JV. I think we talked a little bit about this earlier in January. Yes, but the next steps to unlocking that China TAM, which is a meaningful piece of that $7,000,000,000 global TAM that you referenced in your prepared remarks, it will be just the outlook there and when Saris could start seeing the China franchise contribute revenues?

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Yes. Thanks, Josh, for the question. Yes, we are expecting an NMP approval sometime this year and subsequent to that Chinese approval there will be sort of a provincial reimbursement process that we estimate will take about a year to complete. So we are actively discussing with various provincial blood centers in China, their interest and that will continue on until the NMP approval happens. And that is really just sort of how do we sequence the rollout once we have that provincial reimbursement in place.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

So it's not going to contribute meaningfully to revenue this year, but once that provincial reimbursements in place, once we have the approval and then the provincial reimbursements in place, we do see that being a very meaningful market opportunity for the company and allows us to continue to penetrate the play that market that we mentioned in the prepared remarks is we're still sub 10% globally. So there's a lot of continued opportunity for the play that business. Thanks, Josh.

Joshua Jennings
Managing Director at TD Cowen

Thanks, Alderby.

Operator

Thank you. Our next question comes from the line of Jacob Johnson with Stephens. Your line is now open.

Jacob Johnson
Managing Director at Stephens Inc

Hey, thanks. Good afternoon, everybody. This one is probably for Vivek. Just Vivek, you mentioned on IFC bringing on additional supply to meet demand. Can you just talk about that dynamic?

Jacob Johnson
Managing Director at Stephens Inc

And then as we think about the outlook for $12,000,000 to $15,000,000 of IFC revenue this year, how much of that's predicated on additional supply coming online? And do we need to is there any timing to that that we need to think about as we think about IFC revenues playing out throughout the year? Thanks.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

Great. Yes, thanks for the question. With respect to the benefit of having the BLA that impact on supply, what that enables us to do is it allows us to address demand that we have known for some time exists in states without an in state manufacturer. So now those hospitals have an avenue to access IFC and the blood centers that have the BLAs in hands are now operationalizing that license so that they can ramp up supply and meet that hospital demand. As we contemplated guidance for the year, we went into the year with line of sight into having sufficient manufacturing supply to meet demand, but we're going to continue to work on increasing supply because we continue to see demand increase as well.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

But we feel that with the progress we're making, we'll be in a good spot where supply shouldn't be a constraint on a going forward basis.

Jacob Johnson
Managing Director at Stephens Inc

Got it. That's helpful. And then maybe Kevin, one for you just on product gross margins. I heard kind of mid-50s for the year. You called out some kind of couple of items in 4Q that kind of bit you.

Jacob Johnson
Managing Director at Stephens Inc

Can you just talk about whether it's U. S. Dollar freight costs, discarding rates, IFC investments, just any of those that we should be monitoring or keeping in mind this year that could kind of repeat from 4Q or any that were kind of isolated to 4Q?

Jacob Johnson
Managing Director at Stephens Inc

Just how should we think about gross margins this year? Thanks.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

Yes, Jacob, thanks for the question. I think most of those items that I called out for 4Q were episodic. We don't expect them to last. The one watch out, I would say is FX rates, if the dollar continues to strengthen relative to the euro, obviously that's going to have an impact across our P and L. What I would say is, since most of our product is sourced in euro, as The U.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

S. Becomes a bigger and bigger contributor to the top line and the dollar strengthening, we actually see a bottom line benefit. But it does obviously have a negative impact on our revenue line. So that's the one watch out that obviously we don't have absolute control over. As far as shipping costs, the ancillary product that where we saw some discards, those are truly episodic.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

We don't expect those to continue.

Jacob Johnson
Managing Director at Stephens Inc

Okay. That's helpful. I'll leave it there. Thanks for taking the questions.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Thanks, Jacob.

Operator

Our next question comes from the line of Ross Osborne with Cantor Fitzgerald. Your line is now open.

Ross Osborn
Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald

Hey guys, thanks for taking our questions. So maybe just one clarifying question on the SG and A guidance. I believe you said slightly up in '25 relative to '24. Does slightly up include the one time item that occurred during the fourth quarter or is it slightly up versus an adjusted number?

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

Yes, I think it's Ross, sorry, I was going to take that over if that's okay.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Yes, no

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

please, sorry.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

Yes, so we're really talking about 2024 as a whole. I think clearly we saw this cumulative catch up. I'd characterize it as probably roughly a $2,000,000 impact for the quarter that was anomalous. Where we're going to see continued growth is really from inflationary pressures.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

We're not making significant investments as we mentioned incremental investments, but we expect it will be able to generate continued leverage with those investments relative to the top line growth. So it's really a comment that was predicated on 2024 as a whole rather than a specific quarter.

Ross Osborn
Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald

Okay. Sounds great. And then sorry, jumping around a bit. I heard the comments around China, but with regards to Brazil, can we walk through that commercialization timeline, the steps you need to take there?

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Yes, Vivek, would you like to cover that?

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

Sure. So as you're aware, we currently are commercial in the private sector on the zone, but that's a small portion of the market. We're in the process of applying to gain access to the public sector and that's really a combination of health ministry, our distributor partner and us putting together a dossier and then receiving approval from the government agencies to gain access to public sector. That process is ongoing and we would anticipate getting hearing from them later this year. From there, it really becomes about operationalizing both the rollout.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

So working with our distributors employment organization, getting devices into the market and kind of rolling it out there and not dissimilar from what happened in France. But the first step really is awaiting decisions from the government which we anticipate would happen at some point later this calendar year.

Ross Osborn
Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald

Got it. Thanks for taking our questions.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Thank you, Ross.

Operator

Our next question comes from the line of John Wilkin with Craig Hallum. Your line is now open.

John Wilkin
Associate Analyst at Craig-Hallum Capital Group LLC

Hey guys. I just wanted to ask, it looks like platelet growth in North America started to slow down pretty meaningfully in the quarter. I was just wondering if that's is that due to just tougher year on year comps now after some very easy ones early in the year? Or are there other reasons driving that?

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Yes. Kevin or Vivek, would you guys like to take that?

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

Sure. I'd be happy to jump in and Kevin certainly weigh in if you have any other thoughts. So, it's a little bit to do with comps. We also one of the things that we had talked about potentially addressing when we came towards we knew we were going to have a shelf life issues through the balance of this year. We knew that there was some stocking taking place at the end of last year and so that we would seek to get more normal inventory levels through the course of 2025.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

We potentially thought we might do that towards 2024, but we did not. But we continue to capture share in the North American market through the course of 2024 and anticipate doing so in 2025. So if you think about underlying adoption trends and where our business is heading that continues to be a strengthening business for us. But there was no beyond that there was sort of really no underlying issue within our North American platelet franchise. We certainly benefited from a full year of 100% with Canadian blood services.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

So you'll see that as Hemiclova comes on board, you'll see a little bit of growth in Canada, but fundamentally we anticipate The U. S. Market will continue to capture share.

John Wilkin
Associate Analyst at Craig-Hallum Capital Group LLC

Got it. Thanks. That's helpful. And then any other updates around other specific countries or geographies that are maybe in the early stages or potentially adopting Interceptor in the near future?

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

Sure. As we've talked about previous on this call, we've got a joint venture partnership in China. There are some steps that need to walk through there, but we're encouraged by not only the progress we're making, but the caliber of our partner as well as the level of clinical interest and enthusiasm in that marketplace. I think we've mentioned previously that's early days for us in terms of progress in Germany that represents the single largest remaining market in Western Europe. And then we recently had a number of our folks at the annual MedLab Congress in Dubai and the market opportunity for us in The Middle East in particular and Saudi Arabia continues to be quite strong.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

There's quite a bit of investment in healthcare happening in the kingdom and they tend to mirror off of AABB and FDA standards. So there's a lot of awareness of interest in enthusiasm to adopt INTERCEPT. So those would be some examples of geographies where we feel there's a reasonable path towards growth and that could represent growth drivers to the balance of really over the course of the next couple of years.

John Wilkin
Associate Analyst at Craig-Hallum Capital Group LLC

Great. Thanks guys.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Yes. Thank you, John.

Operator

Thank you. Our next question comes from the line of Mark Massaro with BTIG. Your line is now open.

Vidyun Bais
Equity Research - Vice President at BTIG

Hey, guys. This is Vivien on for Mark. Thanks for taking the questions and congrats on a nice quarter. Could you just discuss in terms of the major the five major blood centers in The U. S?

Vidyun Bais
Equity Research - Vice President at BTIG

I think I heard you call out that you drove some increased penetration there. So could you just walk us through what the level of penetration stands at currently and just how you're thinking about that remaining opportunity? Thanks.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Thanks, Vijayan. Vivek, this is another one for you, I think.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

Thanks, Oveen. Thanks for the question, Vijayan. There continues to be upside with U. S. Blood centers in particular with the and as we see consolidation of market, some of the larger blood center families.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

I think we today we've provided share levels at those centers with the exception when the American Red Cross announced their own volition publicly their intention to move to 100% PR. So really out of respect for those centers, we sort of keep that information internal. But what I can say is if you just look at our overall penetration in The U. S. And where the opportunities exist as well as what we're seeing in terms of continuing maturity of our real world evidence in support of INTERCEPT is not only in the context of compliance with the bacterial guidance in the FDA, but more importantly in terms of pandemic preparedness and other financial and operational benefits that confers to blood centers.

Vivek Jayaraman
Vivek Jayaraman
Chief Operating Officer at Cerus

We're seeing continued inbound inquiries from blood centers to adopt INTERCEPT, which is why even long past the guidance compliance period we're seeing share capture and increased PR penetration in the total market. So it was a big contributor to 2024 performance and we anticipate that being the case as well in 2025.

Vidyun Bais
Equity Research - Vice President at BTIG

Perfect. Thanks for the color there. And then just one on the government contract revenue. I understand you guys don't guide to this. I think it came in a little bit above our model in the quarter.

Vidyun Bais
Equity Research - Vice President at BTIG

Do you think that $5,900,000 would be a good run rate for 2025 or were there any one timers in that? Thanks.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Thank you. Kevin, do you want to cover this one?

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

Yes, sure. Yes, Vivian, I don't know that it's a good baseline for 2025. As you'll recall, we were awarded a 2024 barter agreement late in the year. Some of those activities have started, but they're not really contributing meaningfully towards the overall government contract revenue. We do expect in 2025 that all of the awards will be running concurrently and that we'll see a bump up in the overall government contract revenue and the initiatives that we're spending on those contracts.

Kevin Green
Kevin Green
VP of Finance & CFO at Cerus

So I wouldn't model it off of Q4. I think it's going to continue to grow as those initiatives kick away and contribute.

Vidyun Bais
Equity Research - Vice President at BTIG

Okay, great. Thanks so much for taking the questions.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Thank you.

Operator

Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call back over to Obi Greenman for closing remarks.

Obi Greenman
Obi Greenman
President and Chief Executive Officer at Cerus

Well, thank you all again for joining us today and for your interest in Syrris. Next month, we will be participating in the forty fifth annual TD Cowen Healthcare Conference, and we look forward to sharing our progress with you throughout 2025. It should be a great year. Thank you.

Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Executives
    • Noopur Liffick
      Noopur Liffick
      Investor Relations Adviser
    • Obi Greenman
      Obi Greenman
      President and Chief Executive Officer
    • Vivek Jayaraman
      Vivek Jayaraman
      Chief Operating Officer
    • Kevin Green
      Kevin Green
      VP of Finance & CFO
Analysts
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Cerus Q4 2024
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