Good morning. I'm Josh Jennings from the TD Cowen Medical Devices team, and we are in the presence of some West Coasters here. Thanks for making a trip across country and coming to Boston. We have Cerus CEO, William 'Obi' Greenman, CFO, Kevin Green, and Chief Operating Officer, Vivek Jayaraman. Gentlemen, thank you guys for participating once again in our conference. It's a pleasure, and looking forward to kind of digging into the Cerus story a little bit here over the next half hour. It's an underappreciated growth story. You know, I'd maybe just set the stage just to maybe review the 2025 guide and let investors know about the type of growth that you guys maybe review 2024 growth outlook off of a strong year in 2024. We'll start there.
Yeah, great. We guided this year about $194 million- $200 million in sales for product sales for 2025. And Vivek, I guess you can probably elaborate on sort of where we see the growth coming from.
Yeah, sure. I'd be happy to. You know, we grew last year 15% product revenue growth. That was driven largely on the backs of strength in our U.S. platelet franchise. We're about two-thirds of the market in the U.S. in trade penetration. We also saw strong performance in our international platelet franchise as well. We saw a normalization of donor trends in some geographies where we have majority share, in some cases 100% share. That all contributed. In addition to that, we have our growth platform in the US, our IFC business, Intercept Fibrinogen Complex. That performed really well in 2024, and we anticipate further growth in that business in 2025.
As we look forward to this calendar year, and it's hard to believe we're already in March, we're anticipating continued share capture in the U.S. platelet market, continued strong growth with the U.S. IFC. We continue to see in international markets, both in our established EMEA geography, Western Europe predominantly, but then also in some strategic growth areas, continued strengthening of the business. We'll also have the benefit this calendar year of a new illuminator approval internationally, a CE mark approval for our next generation illuminator. That's another opportunity to re-engage customers, provide new technology, show our commitment to the space. We anticipate that's going to allow us to further solidify and strengthen our franchise.
Excellent. I know, Kevin, you and your finance team have been driving some margin expansion, but you know, work your way through the path to profitability. I'd love to maybe just review the margin and EBITDA performance in 2024 and how sustainable living in positive EBITDA territory is for Cerus these days.
Yeah, thanks. Margins are right now in the mid-50s, so about 55% for the year. We expect that there's going to be several puts and takes that allow us to maintain stable margins for 2025. There's potential for upside if certain COGS reduction initiatives that we've been undertaking over the past several years come to fruition sooner than we anticipate. It is really for our business, it's an economies of scale play. As we produce more, we have economies of scale, and we get better pricing. In addition, we're continuing to see increases in our overall ASP. I think the LED illuminator gives us a fresh ability to re-engage customers and price for the value that we believe to our customer base.
Longer term, we expect that as the product profile continues to evolve, when we sell more double-dose kits, which is a high-margin product for us, and IFC evolves from a therapeutic business to more of a kit business, we'll see an elevation of our overall margin. Lastly, on EBITDA, we guided 2024 that for breakeven, we outperformed. We expect that that will be durable with top-line growth as we guide it to stable margins. I guess we'll talk about the leverage that we have in the business, and we expect that that will be durable.
Excellent. Maybe we can expand on just the leverage there, Kevin, if you do not mind, and break that down for us.
Sure. The markets that we sell into, the customer base, are fairly concentrated. We've been at this for a while in Europe and the US. The first dollar revenue is expensive, but we're now starting to see real evolution of customer adoption, both as Vivek mentioned in the U.S. and then IFC. We expect that we'll be able to continue to get a tremendous amount of leverage from the SG&A investments that we have as depth within existing accounts and as we expand.
Great. I'd love to dive into the Intercept platelet franchise and start in the US. I think, Vivek, you talked about 60 or two-thirds of market share approximately. Clearly, Intercept platelets are standard of care, accounting for the majority of the platelet dosages that are delivered in the US. I wanted to just talk about the market and some of the trends over the last couple of years and where we stand in 2025, just in terms of the donor pool and the platelet supply.
Sure. If you think about the market in total, as I mentioned, rough estimate is about two-thirds Intercept-treated platelets and one-third we'd call conventional platelets. We've talked historically about the fact that this is a fairly concentrated marketplace and that the Big Five blood center families represent about 75% of total platelets. If you take an even deeper cut, we realize the American Red Cross represents about 40% of the market, high 30s. They're at 100% Intercept adoption. You add that to OneBlood and another one of the Big Five blood centers that they're north of 90% plus. What you have is effectively a bit of a bimodal distribution. You have that 60, that sort of high 50, 60% of the market that is almost fully penetrated. The remaining 40-ish percent probably has about a third penetration.
You have these kind of, and that combined gets you to sort of mid-60s overall penetration. What that portends for us is there are still significant opportunities for growth. If you think about kind of how we got there, one thing that we've come to realize over time is the impact of COVID on our business. If you look at our top-line results during COVID, we posted pretty strong growth throughout that period. If you look a little bit deeper, what was happening was it was really depth within existing customers. Because those that had already started the process of adopting Intercept, sort of those initial activation activities, startup costs, what have you, they continued with that process. As we all know, whether it was at hospitals or blood centers, once COVID hit, it was really about triage.
People were manual labor, and blood centers are highly manual, intensive in terms of labor. They just did not have the bandwidth to take on a new project. If we had not started Intercept adoption yet, it really got kicked to starting really about now when they have, they are kind of coming up from COVID, they are fully staffed again, they have the bandwidth, hospitals are amenable to taking on new projects. You saw that with clinical trial enrollment, COVID as an example. That sort of was part of the underlying dynamic that created this overall market share situation that we are currently in. The encouraging thing, and I think our 2024 results are reflective of that, is we are continuing to capture share. Even at the beginning of this year, we are seeing those customers who are slightly later to the game expressing interest in adopting Intercept.
We continue to believe there's room for growth in the U.S. market. We have the benefit now of a tremendous volume of real-world experience domestically. Millions of Intercept-treated platelets have transfused in the U.S. Our story just continues to get stronger with time.
Thanks for that. I think one of the challenges for investors is just to understand how blood space, blood industry moves a little bit slower than, say, the cardiovascular industry where you have a new product like Boston Scientific's pulsed field ablation that has a strong clinical value proposition on the safety side, strongest, and they do a billion dollars in sales within a year. The Intercept platelet technology clearly has a strong clinical value proposition as well and improves the safety of the platelet supply. It's being recognized clearly as you guys take and share year in and year out and are now in such a dominant share position and looking to get even more dominant. Any other kind of elements like seven-day indication or kind of advancements of the Intercept? You got the new LED system.
Maybe just talk about other elements of kind of continuing to take share in the United States as the technology evolves and indications the label expands potentially.
To rephrase your question a little bit, but if you look at the overall TAMs for the platelet business, we're still sub 10% penetrated globally. Clearly, we have a dominant position in the U.S. market, but there's still growth opportunities that Vivek mentioned. Vivek and I had the opportunity yesterday to go visit Beth Israel, where they're 100% Intercept adopted for platelets and happy with the product. The seven-day claim did come up because we have globally a seven-day platelet shelf life, with the exception in the United States where it's day five, and also Germany are the two markets where we don't have that claim yet. The reason they asked about it was that they just don't get enough platelets. They are triaging platelet demand. That is another thing to think about when you look at the global TAM for platelets.
You have this sort of organic growth year in, year out of 4%-5% just because of the evolution of patient needs and aging of the population. That's you hear that all the time. Clearly, it's a seven-day product. Even though they do not have enough platelets, they just like to have more operational ease of use, if you will, to be able to maintain and never waste a platelet and move the products around. We are still looking at how we can address that with the FDA. We have sort of the near-term priority, as you alluded to, which is how do we get the new INT200 approved. We believe that the approval in Europe is imminent. That is great news. Be able to roll that product out over the next two to three years in Europe.
We're planning a PMA submission in the second half of next year for the US. Then sort of on the back of that, we'll be looking at what can we do to generate the data for that data set.
Great. You kind of already answered my next slide. No, no, no. It's perfect. Nice segue. Lead me up. Just on the international opportunity, I mean, low penetration rate, huge runway. I mean, Intercept platelets have become standard of care in numerous countries, but a lot more ground to cover. Maybe just talk about, as you have in the past, just the country that you already talked about, 10% global penetration. Where are the near-term and medium-term kind of access opportunities to new countries and driving deeper into countries like Germany? Sorry, it's a high-level question covering the whole international sphere, but I'll hand it over to you.
Yeah, I'd be happy to answer that. Certainly, if you want to dive deeper into any particular geography, we can go there as well. As Obi indicated, there are significant growth opportunities for us internationally. Typically, when we think about international market access, the long pole in the tent tends to be regulatory clearance and/or reimbursement approval, and sometimes both. At this point in time, with our track record, with the number of geographies we're in, with the validation of the technology, both in the context of clinical studies as well as real-world clinical usage, our ability to submit strong dossiers, gain approval, and so forth has only gotten better.
As we think about the sort of put a timeframe of this calendar year through the next five years, so maybe the outlook for the balance of the decade, areas where we anticipate strong Intercept adoption and growth include but are not limited to China, where we've announced a joint venture partnership there. We anticipate our first regulatory approval this calendar year. That will start the clock for reimbursement, which is about an 18-month period, after which we'll move into a full commercialization phase. The clinical enthusiasm and desire for the product in China is extremely high. It is a relatively speaking concentrated market. We already know the initial centers that we plan to enter into. We're in the process of attempting to gain access to the public sector market in Brazil. The healthcare market in Brazil has both a private and a public arm.
The public arm is about 80% of the total marketplace. We have history in Brazil that dates back to efforts we made to stand up Intercept in advance of the 2016 Rio Olympics. You talk about sort of timeframe and these gestational cycles sometimes are measured in decades or half-decades, but those investments do bear fruit because you develop clinical champions in those markets. There was recently the annual Medlab Congress in Dubai. In the Middle East, as I think many of you see, a lot of these sovereign wealth funds, they're transitioning from natural resources as a driver of economic growth. They're looking at many different verticals to drive the economy, healthcare being one of them. We've seen in sports and other things as well, entertainment, tourism. Healthcare is a clear area of investment and focus.
We have some pretty ongoing strong partnerships in the Kingdom of Saudi Arabia, in other areas of the Middle East, and we're seeing solid growth there. They tend to mirror the AABB U.S. FDA standards. Having U.S. FDA approval, having these AABB standards in place, being a market share leader in the U.S. with the American Red Cross, who's really influential globally, being at 100%, that all has positive impact in terms of influence and adoption in what is a pretty high-growth area for us. Lastly, in terms of sort of meaningful opportunities in the near to midterm, we continue to make progress in Germany. That is a market that'll move a little bit slower. There's some concentration with the German Red Cross sites in terms of overall volume.
What we're seeing, we're in the process of contracting with the single largest site in Germany at present. They're surrounded by countries, whether it's Austria, Switzerland, Belgium, France, that are 100% Intercept adopters. There is certainly a decent amount of peer influence outside of their borders. We believe between those opportunities, and they're more of a stair step as opposed to gradual because we've got to get the regulatory approval first, but there's plenty of room for us to grow. Maybe further on, you have a geography like Japan where the Japan Red Cross is arguably the single largest customer in the world. They're currently adopting bacterial detection, but we have an opportunity to introduce our technology later on in the period.
Long answer to a short question, but it hopefully gives you some context as to why we feel there's plenty of opportunity for growth.
Absolutely. I wanted to just highlight just the stickiness of adoption and utilization. I mean, once you add that additional layer of safety with Intercept platelets, my understanding is, I mean, it's just an annuity model. Until you get to 100%, like in the U.S. where the American Red Cross, you're not going back. Maybe just to reemphasize my statement/question, Obi, and just help us understand how sticky Intercept platelet utilization is once the adoption and the decision to adopt is made.
I mean, it's clearly sort of the baseline for the business model we have. At the same time, we take that responsibility very seriously because if the technology were to go down for whatever reason, it's now been implemented into how blood components are processed in that country, then you can't release products. Part of the investment strategy and sort of our focus on customer service is that we really need to make sure we have supply chain security. We spent a lot of time and money on that because we realize the key role we play, and there's not alternatives. That being said, it maybe has historically been expensive to make sure that you have that kind of solid foundation upon which to grow the business. Now we have it, and it continues to expand.
I think we do pride ourselves on the deployment service that we have. As we mentioned, with the imminent approval of this LED Illuminator, now we have the opportunity to roll that out and deliver something that's actually a dramatic improvement upon the existing platform, which has been very reliable. Obviously, it was developed 20 years ago. Now we have the opportunity to refresh the brand with that. In answer to your question, I think we really are focused on making sure that we are the go-to technology for decades to come.
I think the experience with the U.S. and international Intercept platelet launches and traction that you've garnered across the board is still a long runway ahead of you. Now you've got another product, Intercept Fibrinogen Complex or IFC, and you have launched in the United States. You've continued to expand that offering, a little bit of a change-up in the commercial model, but a long runway for that product as well and multi-hundred million dollar just U.S. opportunity. Maybe just talk about where you are today and your confidence that IFC can have similar success as Intercept platelets in the United States.
I think you categorized it well. It's still, relatively speaking, early days with IFC, but the clinical enthusiasm and the feedback and sort of the use cases that we're seeing at some of the leading institutions in the country, Stanford, Mount Sinai, University of Florida, Duke as an example, it really validates what our hypothesis going in was, which is that if you can help to cease bleeding earlier on in a clinical event, whether it's high-risk OB, trauma, CV surgery, whatever the case might be, that would have an absolutely visceral, immediate impact on the clinician. She or he would understand the value and importance and they would advocate for the product.
In addition, given some of the dynamics of the product, we knew we could garner a material reduction in wastage because you use it for five days, which we've certainly seen non-clinical decision-makers, purchasers, administrators, financial types say, "Okay, that's a real economic benefit for our institution." It is one of those rare situations where you have the win-win. You have the clear clinical utility that resonates with the treating physician, and you have the economic value proposition that resonates with those who are attempting to balance the budget within the hospital. The onus on us, especially at the outset, was to ensure clinical education and awareness building. That takes quite a bit of work if you think about the number of the thousands of hospitals there are here in the country.
That being said, we are now at a point, and I think it was most pronounced when we attended the AABB meeting last October and for the first time presented real-world data on IFC and in particular highlighted Washington University Barnes-Jewish Hospital went to 100%, huge center in the middle of the country. That really resonated. We saw a tremendous amount of inbound demand post AABB. We've always been somewhat measured in terms of making sure demand and supply grow at the same rate. As we start this calendar year, and part of what informed our guide is we have a good line of sight to continue strong growth in that franchise. We'll need to continue to be vigilant about increasing manufacturing capacity.
As Kevin mentioned earlier, we're transitioning from selling that product directly to hospitals to selling kits to blood centers who then sell the finished good into the hospital. All of those, I mean, it's always sort of a bit of a balancing act, but things appear to be going fairly well here as we move into the back half of the first quarter, actually the back third.
Just two quick follow-ups on, just two follow-ups on U.S. IFC franchise and the potential to expand internationally. One, I mean, is there a timeline where investors should think manufacturing will be at the level, or is it more? I mean, I think you may have just addressed it in your last answer. You guys are going to continue to build out manufacturing, your transition to blood center manufacturing, you guys supplying kits, but I guess, and that will go at the pace of adoption.
Yeah. I mean, I think that we announced, I think, in the fourth quarter that our production partner, a couple of our production partners received approval for their Biologics License Application, which enables them to transport product across state lines. Because a dynamic that was in place for a decent part of 2024 was that we would have a hospital in a state that would articulate an interest and a demand for the product, but there was not a production facility in that same state that was making IFC. So there was no mechanism to get them that product. Those restrictions now are pulled up, especially as one of our higher volume suppliers has received their BLA. I mean, ultimately, when you talk about the full market, you will need the country's largest blood center producing IFC. They do not do that yet, but that will come.
We do not feel like supply will be a constraint to delivering on our growth expectations for 2025. We are going to move like hell to make sure that supply can allow us to unlock even greater opportunity should demand continue to increase, which is what we are seeing.
Right. Just the plan for international expansion or ultimately launching IFC in countries outside the United States.
As you can imagine, the more traction we get in the US, the more success we have. I think I mentioned earlier that there are ones in the Middle East that really look to the US. There are some potential for international adoption with everything we have on our plate right now between the next-generation Illuminator launch, continued capture of platelet share both internationally and domestically, and then this U.S. IFC business. IFC international expansion isn't on the immediate horizon, but I can certainly see that being something that we feather into our growth portfolio over the balance of the decade.
Another layer of growth on tap is the Intercept red blood cell offering. You guys have been working methodically through the European regulatory process with some stops and starts, but you're on the cusp. Maybe just review one, any updates to timelines, and then two, just your outlook in terms of ultimately the international launch of Intercept RBCs and any pent-up demand that you can share.
The Intercept red cells is an important product to complete the portfolio. It's the largest TAM that we have, sort of the highest volume blood component that's transfused in the hospital. And our existing customers in Europe are interested in sort of having the complete portfolio to safeguard the blood supply. It has been a priority for a long time at Cerus to get that product across the goal line. We had a hiccup last year, as you referred to, going through the MDR process. At the 11th hour, our competent authority decided that there was some disagreement around how to characterize the impurity profile in the medicinal substance, which was what they were reviewing.
To remind you all, the process is you go through the notified body, they review all the dossier, and then it gets transferred to a competent authority to review the medicinal substance, basically a drug. There are new ICH M7 guidelines that exist for all pharmaceuticals, and this sort of rolled into that, looking at the impurity profile and how you characterize that. This was something that we had an ongoing discussion with them, but it was a single-cycle review process. At the 11th hour, as I mentioned, they sort of said, "Well, we disagree on how you're classifying this compound." It was a discussion we had with multiple other regulators, including the FDA, that sort of agreed with our position. Needless to say, that led to essentially a negative opinion.
We're going back and looking or in discussions with our notified body, TÜV SÜD, to outline the pathway for it for a refile. That will be happening sometime this year. Clearly, we are focused on this. Once we have clarity on the timeline, that's when we'll discuss it more openly. I think there's an ongoing need for the product. We believe it's an approvable product. I think last year, you also saw the readout of the U.S. phase III ReCePI study in cardiovascular surgery patients. We showed there was no difference from a non-inferior endpoint between test and control red cells. That was a really important clinical study outcome that leads to an ultimate PMA. We plan to start filing in 2026 after the completion of the phase III RedeS study this year.
Maybe we can just review the global TAM for Intercept red blood cells. And just maybe at AABB, I mean, we've captured on the periphery just over the years increased enthusiasm by the physician community and American Red Cross executives as well about Intercept red blood cells, the clinical value proposition. So maybe just share with us some of the pent-up demand that's building and how you would classify it.
Yeah. I think once you have pathogen inactivation for platelets, plasma, and IFC like we have today, sort of the logic is, well, where's red cells? And does this allow us to fundamentally revisit the safety paradigm for transfused blood components? What comes with that is can you remove certain tests? Like Babesia testing here in the Northeast is a big problem as far as donor deferrals. Malaria is another one. If you're traveling to a country that has endemic malaria, you're not allowed to donate blood for a period of time after that. There are a lot of other donor deferrals that with an Intercept red cell approval that would really allow more donors to come into the blood supply. That's foundational for blood centers who are trying to bring donors in and maintain the blood supply.
There is a really important segment, which is the irradiated red cell segment of the red cell transfusion market. Red cells are irradiated today to prevent what's called transfusion-associated graft versus host disease. It's basically you're inactivating the white cells in a transfused red cell product so it doesn't attack the recipient. The white cells from the donor don't attack the recipient. In order to address that today, certain countries like Japan irradiate 100% of their red cells because of sort of the genotypic similarities in the population. In other patient populations, like pediatric hospitals, really have a concern around pediatric transfusion-associated graft versus host disease. They will irradiate 100% of the units just so they don't have to worry about which products go into which patient.
We really sort of see an opportunity with our product because it just leads to a better red cell product. The in vitro function of Intercept red cells relative to gamma-ray red cells is just night and day and ongoing concern about the damage that irradiated components cause. We think that's a logical segment, whether it ends up being 10% of the market or 20% or in certain markets, like I mentioned, 100%. How do we sort of show the value proposition there? I think we'll work through it. I mean, as you said earlier, this is not a field that moves quickly. They will be very focused on real-world experience. I think, fortunately, we have a lot of funding historically from U.S. BARDA to support the ongoing collection of that data.
This technology is a safeguard for pandemic preparedness as you look at emerging infectious disease in general.
Yes.
Of all our products, it's roughly a $7 billion TAM, $5 billion of that's red cells. Segmenting it to 10%, it's a pretty big.
Absolutely. I think this discussion just highlights the numerous layers of growth that you guys have in store, everything from continued penetration of the U.S. platelet market, OUS regional expansion, and for Intercept platelets, you got IFC in the U.S. with a long runway, potentially even IFC internationally, and then this massive US, sorry, global Intercept RBC opportunity. We are looking forward to tracking you guys for years to come. You guys are likely to post continued strong growth. Great to have you guys out east and great to see you in person.