Cerus Corporation (CERS) Earnings Call Transcript & Summary

Thank you for joining the annual meeting of Stockholders of Cerus Corporation. The speaker today will be Obi Greenman. Mr. Greenman, you may begin.

Good morning, and welcome to the Cerus Corporation 2020 Annual Stockholders Meeting. I'm Obi Greenman, Cerus' President and Chief Executive Officer. Today's meeting is being hosted through a virtual online platform hosted by Broadridge. We'll be recording today's meeting, and we'll have the recording available on our corporate website at www.cerus.com for the next 30 days. With that, the meeting will now officially come to order. The time is now, 9:02 on June 3, and the polls are now open for voting on all matters to be presented. Before we proceed with the formal business of the meeting, I'd like to introduce you -- to you some of the members of the Board and the business team who are with us today. The members of the Board with us virtually today are Gail Schulze, Frank Witney, Eric Bjerkholt and Jami Nachtsheim. The officers of the company with us virtually today are Kevin Green, our Vice President of Finance and Chief Financial Officer; Chrystal Menard, our Chief Legal Officer and General Counsel; Lori Roll, our Vice President of Administration and Corporate Secretary. We are also joined here by Rick Shunn and Jeff Score from Ernst & Young LLP, the company's independent registered public accounting firm, who are able to respond to appropriate questions. We will proceed with the formal business of the meeting in the order set forth in the notice of annual meeting and proxy statement. We'll first present the 5 proposals submitted for approval by our Board. We will take questions related to the proposals after all the proposals have been presented, after which we will announce the preliminary results of the voting. As mentioned earlier, the polls are open for voting on all matters to be presented. After I describe each item to be voted on, we will close the polls. We will not accept ballots, proxies, replications or changes after the closing of the polls. If you've already submitted your vote by proxy and do not wish to change your vote, you do not need to vote now and your shares will be voted as previously instructed. If you intend to vote and have not already done so, you must submit your vote online now in order for it to be counted. And if you've not voted, I encourage you to vote online now. [Voting]

After the formal part of our meeting has concluded, I will give a brief 2019 corporate overview. Vivek Jayaraman, our Chief Operating Officer, will then provide a review of the commercial business and 2020 outlook; followed by Dr. Larry Corash, our Scientific -- Chief Scientific Officer and Founder, who will provide an overview of convalescent plasma to treat COVID-19 patients. At the conclusion of the presentations, we will answer any appropriate questions you may have. You should now all have a copy of the rules of conduct for this meeting. In order to conduct an orderly meeting, we ask that you follow these rules. Stockholders who are attending this meeting with a valid 16-digit control number may submit questions or comments for the Q&A portion of this meeting through the designated field on the web portal. We will try to answer questions submitted that are germane to the proposals and/or this meeting as and if we have time. Chrystal Menard, our Chief Legal Officer; and Tim Lee, our Investor Relations Director, will screen incoming questions. And during the Q&A portion of the meeting, we will read germane questions out loud before I or the appropriate person responds. Please submit your questions now to make sure that they are received in a timely fashion for our review and response. Please note that our discussions today may include forward-looking statements, and our actual results may differ materially from those discussed here. Additional information concerning factors that cause such a difference can be found on our most recently-filed quarterly report on Form 10-Q. Lori, as our Corporate Secretary, will you please report at this time with respect to the mailing of the notice of the meeting and the stockholders list?

I have at this meeting a complete list of the stockholders of record of the company's common stock on April 9, 2020, the record date for this meeting. A list of stockholders of record is available for inspection by stockholders of records during this meeting and for any reason germane to this meeting. Please click on the appropriate link at the bottom of the screen on your online portal to view the list. I also have an affidavit certifying that on April 24, 2020, a notice of annual meeting of stockholders of the company was deposited in the United States Mail to all stockholders of record at the close of business on April 9, 2020.

At this time, I'd like to introduce Kris Veaco of Broadridge, who is present virtually. I'm appointing Ms. Veaco to act as inspector of election at this meeting. Ms. Veaco has taken and subscribed the customary oath of office to execute her duties with strict impartiality. We will file this oath with the records of the meeting. Her function is to decide upon the qualifications of voters, accept their votes and when balloting on all matters is completed, to tally the final votes. Lori, do we have a quorum?

I have been informed by the inspector of election that proxies have been received for 139,629,331 of the 163,954,958 shares of common stock outstanding on the record date, which represents approximately 85% of the total number of shares of common stock outstanding. This constitutes a quorum for the meeting today, and we may now carry out the official business of the meeting.

We'll now proceed with the formal business of the meeting -- of this meeting. After all the proposals have been described, we will answer any questions related to the proposals submitted online. As a reminder, we ask that any comments or questions during this portion of the meeting pertain only to these proposals. Please submit any questions as soon as possible for our review. There are 5 proposals to be considered by the stockholders at today's meeting. The first item of business today is the election of 3 nominees for Director named in the proxy statement, to hold office until the 2023 annual meeting of stockholders and until their successors are elected. The nominees for Director are Timothy B. Anderson; myself, William M. Greenman; and Timothy L. Moore. The second item of business today is the amendment and restatement of the company's amended and restated 2008 equity incentive plan to increase the aggregate number of shares of common stock available for issuance thereunder by 5 million shares and to make certain other changes as described in the proxy statement relating to this meeting. The third item of business today is the approval of the amendment and restatement of the company's amended and reinstated employee purchase plan to increase the aggregate number of shares of common stock authorized for issuance thereunder by 1.5 million shares. The fourth item of business today is the advisory vote on the executive compensation of the company's named executive officers as described in the proxy statement. The stockholders have been asked to vote on an advisory basis on the following resolution: resolve that the compensation paid to Cerus Corporation's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation discussion and analysis, compensation tables and narrative discussion is hereby approved. The fifth and final item of business today is the ratification of the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as the independent registered public accounting firm of the company for the fiscal year ending December 31, 2020. That was the final proposal for today's meeting. We will now review if there are any questions submitted about the proposals before we close the polls. As a reminder, we will only review and answer questions at this time that pertain to the proposals. Chrystal, Tim, are there any questions?

There are no questions regarding the proposals.

Thank you, Chrystal. The time is now 9:10, and the polls are now closed for voting. May we have the results of the voting?

The preliminary results, as reported by the inspector of election are as follows: the election of the 3 nominees for Director named in the proxy statement to hold office until the 2023 annual meeting of stockholders is carried. The amendment and restatement of the company's amended and restated 2008 equity incentive plan to increase the aggregate number of shares of common stock available for issuance thereunder by 5 million shares and to make certain other changes is approved. The amendment and restatement of the company's amended and restated employee stock purchase plan is approved to increase the aggregate number of shares of common stock authorized for an issuance thereunder by 1,500,000 shares. The resolution concerning the advisory vote on the executive compensation of the company's named executive officers is approved. And the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as the independent registered public accounting firm of the company for the fiscal year ending December 31, 2020, is ratified.

We expect to report our preliminary voting results or if available to us on a timely basis, our final voting results on a current report on Form 8-K to be filed with the SEC within 4 business days after the end of the meeting. If not earlier reported, we expect to report our final voting results in an amendment to our Form 8-K within 4 business days after the final results are known to us. This concludes the formal portion of today's meeting, and the annual meeting is now adjourned. We will now proceed with the presentations and then entertain any appropriate questions from the stockholders. So I'll stay a few minutes here before we load the slides. I guess, here's the cover slide. So next slide, Kerry. Next slide? Okay. There we go. So I'll be making a number of forward-looking statements today, and I wanted to make sure that I referenced our risk factors in our forms 10-Q and 10-K that are filed with the SEC. As we look back on 2019 and then into this year in 2020, I think it's always important to come back to what the Cerus mission is. And clearly, during this pandemic, COVID-19 crisis that we're all facing, the Cerus mission is as important today as it was when the company was founded by Dr. Corash back in the early '90s during the HIV and hepatitis pandemics that affected the blood supply then. So our mission is to establish the INTERCEPT system as the standard of care for transfused blood components globally. And what that means is that we believe that a proactive solution for blood safety can safeguard blood supplies for the next pandemic and really help ensure our blood center customers are able to maintain their supply chains. They're doing a heroic job right now in standing up the blood supply during a time of incredible variability of supply and demand, and at the same time, they're also ramping up the collections of COVID convalescent plasma to treat acutely ill patients, as Dr. Corash will comment on later. Next slide, Kerry? And with this sort of reenergized mission at the company and looking back on the time frame of 2017 to 2019, we've made significant progress. And I really wanted to alert you all to sort of 4 key areas that were instrumental: the first is a change in sort of U.S. customer demand. Back in 2017, a couple of years after the FDA launch, there's still a lot of resistance to change and the transformation that we are trying to make in the blood supply chain in the United States. And there's also resistance to any kind of cost increase. What we saw over the course of last year, is that the FDA relief advocated for the use of pathogen activation to increase the safety of the platelet supply, but also blood centers were able to realize how they could increase the value proposition for their components along with our help. And so we really were able to work with blood centers to help them increase their pricing of their most valuable products sent to hospitals. I mentioned the FDA guidance and that really is a seminal change for the industry. The FDA guidance is essentially a mandate from the agency that all platelets in the United States by the end of March 2021 will need to be made safer for bacteria. And currently, in light of the pandemic crisis, I think it's very evident to blood centers and hospitals that the only technology that was proposed as an option in that guidance document that addresses future pandemic threats is the INTERCEPT system. We also saw an evolution with regard to key customer validations over the course of the last several years. The American Red Cross in 2017 had 0 BLAs, and we were sort of in early stages of implementation. By the end of last year, we had 15 BLAs with the American Red Cross, and they're moving towards having 20 -- all 22 of their production sites producing platelets by the end of this year. And also, it seems like a long time ago now, but the French has only treated 10% of their platelets annually in 2017, and they moved to 100% adoption of INTERCEPT in 2019. And then finally and probably most importantly is our revenue almost doubled during the time frame. As you can see on the next slide -- Kerry? We've had a cumulative annual growth rate of 26% from the period of 2016 to 2019. And guided this year, revenue growth of 20% to 25% or approximately $89 million to $93 million in sales for 2020. Next slide, Kerry? 2019 was also a year of solid progress with our development programs. We submitted our PMA-S for alternative plastics with the INTERCEPT plasma system, and that product now has subsequently been approved as of last -- as of Q2 of 2020. We made significant progress on our pathogen-reduced cryoprecipitated fibrinogen complex, and that submission happened in May of this year. We've also made a lot of progress on our red cell system, qualifying new suppliers for glutathione and maintaining the CE Mark submission pathway in Europe and transitioning that from the MDD pathway to the MDR pathway. And finally, we have multiple clinical -- Phase III clinical trials enrolling in the United States for the red cell program. 2019 also saw increased validation by our customers and regulatory agencies. I already mentioned the FDA final guidance document that occurred in September of last year. The American Red Cross has stated on the record that they believe INTERCEPT will be their -- or is their preferred method of choice for complying with the guidance document, and we're seeing growth in that -- from that customer -- meaningful growth in that customer this year. The Swiss Red Cross signed another 5-year contract term with Cerus based upon its historical success in implementing the technology in years and years of hemovigilance data now, supporting the safety and efficacy of that product. And finally, the French regulatory agency, ANSM, reported on the hemovigilance data from 100% routine use of INTERCEPT platelets in France and saw no increase in -- no transfusion transmitted septic cases and also no increase in utilization. So a very clean safety and efficacy [Technical Difficulty] for that product after a whole year of use in France. And then finally, as we move from 2019 to 2020, we're really focused on how do we strengthen the balance sheet to support our growth initiatives, specifically our continued development of our R&D portfolio and ultimate future launches, our commercial infrastructure to support our key customers and achieve the supply chain continuity that they are expecting, especially when they've adopted our technology at 100% and also geographic expansion. And the way we did that is we entered into a debt facility last year. We still have up to $45 million available on that facility to help support our growth. We did public offering in the first quarter of this year, and that has left us in a very strong position with $133 million at the end of Q1 2020 to be able to move forward towards our pathway to profitability. So with that, let me turn it over to Vivek Jayaraman who will cover our commercial business outlook for 2020.

Thank you, Obi. Could move to the next slide, please. So earlier this year, in March, we announced an organizational transition, which really was designed to enable and facilitate greater focus on both our commercial and operational organizations and almost immediately upon implicating new organizational change, we encountered the pandemic and moved into a shelter in place and work from home disposition across really the entirety of our global organization. The impact of the pandemic was felt both in terms of the impact on our hospital and blood center customers, as well as in terms of our ability to engage with our customers today and then cultivate new customers on a going-forward basis. With that said, I'm pleased to report and want to offer my sincere thanks and appreciation to the entire global Cerus team. We've been able to -- we will continue to be focused on our mission, deliver strong results and ensure ultimately that patients do gain access to the safest possible blood products by virtue of supporting customers, implementation and further adoption of the INTERCEPT system on a global basis. Specifically, with respect to the impact that COVID-19 has been having and what we've been noticing is an acute and likely persistent, for a bit of time, reduction in blood and blood component donations. In fact, there was an article in The New York Times yesterday, quoting the Red -- American Red Cross stating that there is a severe shortage now in terms of blood donors and donations. And as elective procedures start to return in the U.S., we're seeing an increase in the need for blood products. Certainly, we will endeavor to do everything to play a role in terms of aiding in the situation. When we think about the longer term, we actually see an increased awareness and appreciation of the need for preparedness and to make sure that blood centers, hospitals and really, health systems across the globe are ready for whatever may come next. And we've been talking about the importance of adopting pathogen reduction as part of our preparedness protocol for sometime now. It's unfortunate that an event such as the coronavirus pandemic brings a more acute focus onto these issues. But certainly, being in a situation now where we can ensure that folks are better prepared not only for what's happening today but for what comes next is something that our team is strongly focused on. Please go to the next slide. Late last year, we announced that the FDA guidance on bacterial safety of platelets have been finalized. And there's an 18-month implementation period associated with guidance, which is scheduled to reach an end March 31, 2021. Been a key area of focus for us as we continue to march forward to make INTERCEPT the standard of care in the U.S. with regard to platelet bacterial safety. This slide that we've shared with you before indicates the different strategies to get into compliance with the guidance. And if you move to the next slide, what is encouraging for us is we continue to see strong progress across the big 5 blood centers, which has been our key area of focus. As you can see from this slide and as we talked about previously, the U.S. marketplace with respect to platelet products is fairly concentrated, with the top 5 blood center families accounting for about 70% of nationwide distribution. And within those top 5, the American Red Cross is far and away the nationwide leader. The Red Cross has stated now in several different forums that pathogen reduction and the adoption and implementation of the INTERCEPT system is a strategic imperative for them, and we are honored to be working with them on this important initiative, and we have dedicated quite a number of resources to ensure that they can be successful in quickly getting INTERCEPT platelets to their hospital customers. Furthermore, what we're seeing is the ability to continue to see leverage out of a relatively small commercial footprint in the U.S. by virtue of focusing on these large blood center families and leveraging the final guidance and ensuring that both hospitals and blood centers will be ready to be in compliance with the guidance by the end of the compliance period. We'll continue to update you on progress made in the U.S., but as we indicated when we announced our Q1 2020 results earlier this year, we're off to a strong start in terms of the U.S. adoption of INTERCEPT in this calendar year, and we anticipate that to continue as we move through the balance of Q2 and into the second half of 2020. So if we move to the next slide. In addition to the encouraging growth prospects and progress we're making in the U.S., I'm also pleased to report that our global business continues to gain momentum and strength. Part of our strong Q1 2020 results were driven by the excellent performance in our EMEA region, that's in Europe, Middle East and Africa. And that comes on the heels of a strong 2019 result from our colleagues abroad. Increasingly, we're seeing growing awareness of the need for adoption of safety measures with respect to blood products and where the adoption of safety measures is occurring, pathogen and activation continues to be the preferred modality. Looking forward, it's our expectation that compelling growth opportunities abroad will continue to materialize. And I'm pleased to report that our teams internationally, both from a health policy, deployment and sales standpoint continue to uncover really compelling -- really compelling opportunities to further our technology. One thing I will point out and want to state explicitly and express gratitude is during the course of the pandemic, and in particular, in the early weeks of the pandemic, a number of our colleagues were traveling within some of the coronavirus hotspots, Italy, Spain, to support the activities of our blood center customers and hospital partners there. So I want to offer my sincere thanks to the members of the Deployment & Technical Services teams in our EMEA organization for continuing to put the needs of our customers, their patients up front and to really walk the talk with respect to meeting our mission which Obi spoke to at the beginning of this presentation. It's really heartening to see what we can do to play a small part in terms of improving overall human health. If you move to the next slide. Earlier this year, -- or in fact, late last month, we announced the submission of our PMA supplement for pathogen-reduced cryo. This represents a tremendously exciting opportunity for Cerus, but I think, more importantly, an exciting offering for patients in need and for clinicians who are looking for a way to ensure that they can address -- they can address these critical clinical conditions, whether it's maternal hemorrhage, trauma, as an example, we're looking forward to -- and the enthusiasm in the clinical community for receiving the PR cryo product that's quite high. And so we look forward to updating all of you on our progress on this initiative as we move towards FDA approval and ultimately, towards commercial and market release. It's great to be able to add a very clinically compelling product to our portfolio and take another step in terms of realizing our mission and offering, for the first time, a therapeutic intervention in addition to the core blood safety products that INTERCEPT represents that we're currently marketing. So more to come here as we move through the balance of this calendar year and into 2021, but certainly, I think this represents a significant milestone for our organization and one that's going to really allow us to greatly increase the number of patients that we can serve with our technology. So move to the next slide. In conclusion, I want to state that both our commercial and operations prospects truly are attractive. And if you think about everything that's taking place currently with the global pandemic impacting businesses across the world, we're fortunate and it's a responsibility to be an organization that is experiencing strengthening demand, does provide a product that is of material need to blood centers and patients around the world, and we're seeing growth opportunities as a result. As mentioned previously, the cryo submission is a significant milestone for the organization and if you add that to our red cell program, which is currently in development, and in clinical activity as well as in regulatory review, outside of the United States, there is significant pipeline opportunities that we believe will continue to enable us to deliver sustainable top line growth. The new operation structure that I referred to earlier, does allow for greater alignment from raw material sourcing all the way through the customer -- ongoing customer support, and I'm pleased and grateful for the efforts of the new team. It's been really heartening to see us come together as a cohesive unit even while we're principally working via Webex and Zoom and other remote work enablement tool. And then lastly and really in closing, I'm pleased with our strong start to 2020. It's going to require continued focus, execution and vigilance, but I firmly believe, and there is a high degree of confidence across our organization that we can sustain compelling growth, not only through the balance of the calendar year but for the foreseeable future. So with that, I will hand it off to Dr. Corash to give us an update on COVID-19 and our CCP efforts, and I want to thank all of you for your continued support of and interest in Cerus. Thank you.

Thank you, Vivek. I want to thank our shareholders for their support and for attending today, and for the opportunity to talk to you about pathogen-inactivated INTERCEPT convalescent plasma to treat COVID-19. In the words of the philosopher, the great Gretzky, "Skate to where the puck is going," and I think that's what we're doing with convalescent plasma. This pandemic presents a unique opportunity to demonstrate the value of the INTERCEPT technology. Our technology was designed for dealing with pandemics to ensure the safety of blood transfusion, but in addition, especially with convalescent plasma, we have the opportunity to improve patient outcomes, and this pandemic really focuses on that ability to go beyond just preventing transfusion transmitted infections but to actually change other patient outcomes. If I can have the next slide, please? What is INTERCEPT convalescent plasma? Well, COVID-19 convalescent donor plasma contains neutralizing antibodies, that is antibodies that can inactivate the infection of SARS-CoV-2, the virus that causes COVID-19. INTERCEPT-treated plasma from COVID-19 donors retains the neutralizing antibody activities, several groups have now reported on this. INTERCEPT importantly reduces the risk of transfusion-transmitted infections from this plasma and INTERCEPT plasma with the alternate plastic kits is FDA approved, and so it's an available technology. As illustrated in this slide, convalescent patients donate their plasma, it's treated with INTERCEPT to inactivate any contaminating viruses, including the possibility of residual SARS-CoV-2, and we have pathogen-inactivated plasma available for transfusion. On this slide, what you see is that we were fortunate to have experience with convalescent plasma during the Ebola outbreak in a study that was funded by the Gates Foundation, and we learned that the neutralizing antibody activity against Ebola was retained in the INTERCEPT plasma, and that gave us a very important experience. If I can have the next slide, please. What's the rationale for INTERCEPT pathogen-reduced convalescent plasma in COVID-19? Well, as we said before, convalescent plasma with neutralizing antibodies is an available therapy. So we don't have to wait for it to be developed. It's rapidly deployable in a distributed format at blood centers that are already making INTERCEPT platelets because they use the same platform. Now we need to consider that recovered patients from COVID-19 as convalescent plasma donors are not normal blood donors. They may be first time blood donors, and that means that they could be at higher risk for transmitting other viruses. We have to remember that COVID-19 patients have damaged immune systems that make them more susceptible to unrecognized bloodborne pathogens that may not be detected by routine donor testing. But most importantly, COVID-19 donors are valuable and motivated donors to help other patients with the same disease and so we have to optimize their donations. Other therapies, such as vaccines, immunoglobulins antiviral drugs take time to develop and have unknown safety profiles. For example, hydroxychloroquine, which turned out to not have a good safety profile in COVID-19. But INTERCEPT plasma has a 15-year established safety profile, and neutralizing antibodies in this plasma were demonstrated to be safe in the Ebola virus clinical trial experience. Most importantly, we believe the early use of convalescent plasma treated with INTERCEPT could potentially prevent COVID-19 disease progression, and I'll show you some data to support that. The first day in an ICU on a ventilator costs more than $10,000. INTERCEPT convalescent plasma costs substantially less. So the strategy to treat early, avoid ventilators, avoid the ICU, reduce patient deaths and reduce care costs makes good sense. If I could go to the next slide. So what we've observed is that COVID-19 convalescent plasma, yes, it's investigational, but the early results are very promising. Pandemics are always unexpected. Diagnostic and therapeutic resources are generally limited and we have certainly experienced that. But there's a history for the use of convalescent plasma to treat infectious diseases going back to the Spanish influenza pandemic of 1918, where convalescent plasma demonstrated efficacy. It's been used for a disease caused by a virus that results in Argentine hemorrhagic fever that has very high mortality, and it's been used successfully. It was used for SARS-CoV-1 in 2003 to demonstrate decreased time in the hospital. And as I said before, it was used in the Ebola virus epidemic of 2013 to demonstrate safety and some limited efficacy. There currently are now 82 clinical trials with COVID-19 convalescent plasma registered on clinicaltrials.gov and some of those are using INTERCEPT convalescent plasma. If I can go to the next slide, please. So what do we know about the efficacy? What do we know about the efficacy of this plasma? This is a CT scan of a patient from China who was treated with convalescent plasma. And what you're looking at, the black areas of the lungs filled with air, but the red arrows, those gray blotches, that's pneumonia in the lungs of this patient on both sides. And the patient got convalescent plasma, and then on the right-hand side, you see after the plasma, within a few days, the pneumonia clears. So we have some evidence that convalescent plasma actually clears pneumonia. And yesterday, we had a clinical trial report from Italy showing a very substantial reduction in mortality with a case match controlled series of patients not treated with convalescent plasma and this study showed us that convalescent plasma really impacted and reduced mortality. So we have some evidence of efficacy. So what's the role of Cerus in COVID-19? Well, early on, in the beginning of March, we formed a research consortium to define the key characteristics that influence the potential and efficacy of the plasma, to measure the types of antibodies and their activity, timing of dosing and collection, we've collaborated with the American Association of Blood Banks, AABB, to establish a website and support the collection of convalescent plasma, and we're supporting multiple blood centers and hospitals to quickly implement and process INTERCEPT treated convalescent plasma. If we can go to the next slide. So what's the future? Well, we want a national platform that is developing to enable rapid production of optimized pathogen-inactivated convalescent plasma. We think that COVID-19 is going to be a persistent epidemic, and until there's a highly effective vaccine, convalescent plasma treated with INTERCEPT is a very viable therapeutic option. Currently, and this is already a little bit behind, there are 2,300 clinical sites that are collecting convalescent plasma for patients, there are almost 7,000 registered physicians treating those patients, there are more than 20,000 patients that have been registered, and 16,000 patients have been transfused with convalescent plasma, some of it INTERCEPT treated. However, in the United States, we have 5,600 hospitals, we now have more than 1.8 million patients who've been infected with COVID-19 that we know about, we have more than 100,000 deaths, and so we're behind in the game. We haven't made enough plasma available yet, but we know that pathogen-inactivated plasma is an available therapy with a characterized safety profile, and we've seen important indications of efficacy. So there's an opportunity here for us to improve patient outcomes. I believe that is my last slide. Thank you for your attention, and we'll turn it over to questions.

Thanks, Larry. I'll now address the questions that were submitted by our stockholders that are germane to this meeting. So I believe, Tim, you'll be reading them off?

Yes, Obi. The first question from our shareholders is, pathogen inactivation is never mentioned in the numerous media reports and tutorials on convalescent plasma, the most recent example being in a segment devoted to CP on 60 Minutes. Why has the company not been able to get the CP story linked to PI as the one-two therapeutic punch option for COVID sans a vaccine?

Thanks, Tim, and thanks for the question. I'll take the first part of that question and then probably turn it over to Larry. I think our focus right now over the course of the last 3 months has really been what can we do to help stand up blood centers around the world. And I think now there's north of 50 centers in Europe now that are using INTERCEPT to treat convalescent plasma. And so as Vivek alluded to, early on during the hot zone issues in Northern Italy and Spain, we were sending Cerus employees into those hospitals and blood centers at the height of the crisis to try and help stand up programs to save patients. So I think that's been our focus all along. Larry also alluded to the efforts that were underway in the U.S. I think one of the things that we've noticed as far as sort of media and communications outreach is that, most of the media sites or opportunities are really focused on patients, physicians and blood centers. You hardly ever see any kind of story around the suppliers that are supporting convalescent plasma initiatives. And that's different than what you'd see for vaccines or testing for that matter. So it is a lot, but I think it will evolve with time as the use of INTERCEPT is increasing in the United States and as the efficacy of convalescent plasma is established through randomized controlled clinical data. Larry, would you have anything else you'd like to add?

Well, I will say that, number one, we have reached out to the media, and so we are educating them and informing them as to the importance of INTERCEPT convalescent plasma. They are very focused on the human interest segment. But we have developed a relationship with Survivor Corps, which is a patient oriented organization. One of our colleagues, Anil Bagri, who's VP for Research at Cerus is on the Advisory Board of the Survivor Corps, which has more than 45,000 members. And so we are now educating patients who are the focus of the media's human interest on the importance of INTERCEPT plasma because these are not normal blood donors, they're not normal patients, and we believe that they will come to appreciate the value of pathogen-inactivated convalescent plasma.

Thanks, Larry. Tim, Next question?

Okay. Our next question from one of our shareholders is what is Cerus' plan for profitability? And when do you expect to show a profit?

That's clearly a focus of the entire company, especially the leadership team at Cerus. As we look to the future and with the revenue growth coming out of the United States and globally, combined with increasing margin profile for our systems, we believe that we're on track for that through the strategic planning period. I won't give you a specific data on this call today, but we do expect that the past SG&A investments we've made can be highly leveraged given that we've got a fairly tight or concentrated customer base, and so we don't need to add incremental -- incrementally to expand our revenue there. Also, a lot of the key R&D initiatives that we have underway as it relates to either sustaining the current business, increasing capacity, expanding our label claims for our products, so they're easier to use and -- offer more value to our customers, a lot of those activities will feather off over the course of the next couple of years as they're completed. And that leaves the red cell program, which is funded largely by U.S. BARDA. We just increased that contract in the tune of $214 million, and that funding supports not only Phase III clinical studies but also the commercial scale-up -- or sorry, the commercial manufacturing scale-up that we need for the product launch. Tim, Next question?

Good. Thanks. So before our next question, how close are you to getting approval for red blood cells in the U.S. -- U.S.A.?

Yes. So I think the approval is -- the first approval is clearly going to be in Europe, it is under regulatory review there. We have multiple Phase III studies underway in the United States, supported by BARDA. We did see somewhat of an impact on the enrollment timing for those Phase III studies as a function of the COVID-19 pandemic but have also seen recently that those sites are continuing to enroll patients. And I think that the challenge we have right now is just be able to provide credible guidance around when those studies will be completed. The RedeS study, which is sort of an open-label study looking at safety, is enrolling rapidly, whereas the ReCePi study that is enrolling cardiovascular surgery patients, it's been slower to enroll just as a function of trying to identify patients that are needing red cell transfusions as a result of acute cardiovascular surgery or bypass procedures. We are looking to expand the number of sites significantly in 2020, and that is underway and we're making solid progress on that. So once we have a little more clarity around the enrollment timing, we'll be able to give better guidance around when the PMA submission will happen in the United States. I think, fortunately, a lot of the activity that we have underway around the CE Mark submission, supports the PMA submission as it relates to CMC activities, manufacturing, et cetera. Tim, next question?

Okay. Now our next question is, if the company is fortunate to get approval from the FDA by year-end for cryoprecipitate, can we expect rapid material ramp-up in sales for cryo, unlike the slow uptake for PI in the U.S. after its approval in December 2014?

Well, I'll let Vivek handle that question. Yes, we're very excited about the opportunity, as Vivek mentioned during the presentation. And given that, that product is under breakthrough device designation, because of the clear unmet clinical need, we believe that the physician enthusiasm for that product will drive sales growth meaningfully. But I think the main limitation, before I turn it over to Vivek to answer the details of the launch, it really comes down to the number of manufacturing sites we'll have in year 1 of the launch, and we'll need to get BLAs at those manufacturing sites to be able to ship products across the U.S., and our typical expectation is that process takes about a year or so. A nationwide launch won't likely take place until the end of 2021 or early 2022. Vivek, you want to expand on that?

Thanks, Obi. I think you covered the material point, which is given the regulatory environment and the need for our manufacturing partners through CPLA in order to transport cryo across state lines. The initial focus for our launch will be in those states where we have manufacturing partnership agreements in place. I think that's going to provide us with an excellent understanding of the logistics and the mechanics of selling directly to hospitals because just to remind everyone, on this call, we are going to be going directly to hospitals with this product offering as opposed to how we transact with our INTERCEPT platelets, plasma and red cells. And so as we understand and build those hospital relationships, we can also use this time where we're awaiting BLAs to be approved to negotiate broader hospital systems' contracts to develop KOL networks, and I think that will allow Cerus to accelerate adoption as we look to 2022 and beyond. But for that first year, really we're all going to be gathering learnings in the geographies -- in the states, excuse me, that have -- where we have established manufacturing partnerships and collaborations. That being said, the volume of clinical interest and the level of physician need is quite high, and that's why we have a lot of confidence in our ability to provide something that ultimately will be favorably adopted by the clinical community. I'll hand it back to you, Obi.

Yes. Thanks, Vivek. Tim, next question?

And we have time for just one more question, and that is, has the Cerus experience with Ebola, MERS and SARS, given in a proprietary leg up in knowing antibody levels that can be used to determine dosage levels which lead to better outcomes for COVID-transfused patients, can this be monetized or served as a catalyst to PI plasma revenues?

Yes. I'll probably turn most of this question over to Larry. But before I do, one of the things that I think investors should really -- I mean shareholders should really understand is that, when we look at the relative size of the convalescent plasma opportunity compared to the size of our overall market opportunity for platelets, plasma and red cells, it's really -- pales in comparison. So a lot of the work we're doing here is because we want to do what we can and do our part in support of COVID-19 patients. And ultimately, it does serve as an important validation of the utility of pathogen activation, especially, as Larry mentioned, for first-time blood donors and the inherent risks associated with that. Larry, do you want to expand on sort of the opportunity that's in front of us as it relates to better characterizing -- characterizing and standardizing convalescent plasma, not only for this pandemic, but for future pandemic threats?

Thank you, Obi. Yes. As I mentioned earlier, we formed a research consortium with several academic institutions in California, the California Department of Public Health and also another biotechnology company here in the Bay Area, to fully characterize the antibodies against the SARS-CoV-2 virus, to optimize the use of INTERCEPT convalescent plasma. And we've published one paper, we have 2 more that have been submitted for publication. We have used a very novel and powerful protein chip array technology in collaboration with the vaccine research laboratory at the University of California Irvine to really characterize and optimize these plasmas. This technology was not available to us at the time of the Ebola outbreak or the earlier SARS-CoV-1 outbreak. And so I think that we have taken this to a new level. And as I indicated in my slide, changing a patient outcome and avoiding an ICU ventilator is a very, very attractive proposition for the patients, but also for health care resources and health care costs. And that's where demonstrating the real value of INTERCEPT plasma lies, and the market opportunity for INTERCEPT plasma as a general proposition is healthy.

Great. Thanks, Larry. It looks like that's all the time left for questions today. I want to thank you all for joining the call and for your long-term support of the company. We're certainly at a pivotal time in the company's history, and it's been great as a team to be able to do our small part during this pandemic, COVID-19 crisis and helping blood centers and patients globally. Thanks very much for your attendance in today's meeting and for your continued support of the company.

Ladies and gentlemen, this concludes your call. You may now disconnect.