Cerus Corporation (CERS) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Cerus Corporation conference call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Kevin Green, Chief Financial Officer.

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.cerus.com. With me on the call are Obi Greenman, Cerus' President and Chief Executive Officer; Carol Moore, Cerus' Senior Vice President; Dr. Richard Benjamin, Cerus' Chief Medical Officer; and Dr. Nina Mufti, Senior Vice President of Research and Development. Cerus issued a press release today announcing updates on the INTERCEPT red blood cell programs in the U.S. and Europe. 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 relating to the therapeutic and commercial potential of INTERCEPT red blood cells, the anticipated next steps for Cerus' red blood cell programs, the potential value of and funding opportunity under Cerus' new BARDA agreement and other statements that are not historical fact. These forward-looking statements involve risks and uncertainties that could cause actual events, performance and results to differ materially. They are identified and described in today's press release, in our slide presentation and under Risk Factors in our Form 10-Q for the quarter ended June 30, 2024. We undertake no duty or obligation to update our forward-looking statements. We'll begin today with opening remarks from Obi Greenman, followed by Carol Moore to discuss the status and next steps related to our CE Mark regulatory filing for INTERCEPT red blood cells, then Dr. Richard Benjamin to review the U.S. INTERCEPT red blood cell program, including data from ReCePI, our first U.S. Phase III clinical trial. And then back over to Obi to discuss the new BARDA agreement and to provide final remarks before the question-and-answer period. While we are not providing comments related to our quarterly performance on this call, we look forward to announcing our Q3 results in a few weeks. And now it's my pleasure to introduce Obi Greenman, Cerus' President and Chief Executive Officer.

Thank you, Kevin, and thank you all for joining us on this call today. At the close of market today, we issued a press release providing important updates regarding our INTERCEPT Blood System programs for red blood cells, or RBCs, in both the U.S. and Europe. I appreciate the opportunity to share these new developments with all of you today. First, in Europe, as noted in our press release, our INTERCEPT RBCs CE market review has now concluded without a product approval. Carol Moore will provide further details on our European efforts in a moment. However, I want -- first want to say that we anticipate the issues that were raised in the review cycle by the Competent Authority, CBG-MEB, are addressable. We are confident in the merits of INTERCEPT RBCs and remain steadfast in our commitment to make this product commercially available to protect the world's blood supply. With that mission in mind, we are collaborating with our notified body, TÜV-SÜD to determine our next steps to address the review issues that were raised, along with assessing the associated time line for a potential new regulatory submission. In the U.S., we are extremely pleased to announce that we have entered into a new agreement with our long-standing partner, the U.S. Biomedical Advanced Research and Development Authority, or BARDA. This new contract has a value of up to $248 million, providing further support for the INTERCEPT RBC program. As noted in the press release, this is intended to support the submission of a planned U.S. Food and Drug Administration modular premarket approval, or PMA application, and potential post-approval studies to accelerate development of an advanced version of the INTERCEPT RBC system and to scale up the chemistry, manufacturing and controls activities to enable a broad product launch, if approved. Later on this call, Dr. Richard Benjamin will discuss the positive top line data from the completed U.S. Phase III ReCePI trial as well as provide an update on our second ongoing U.S. Phase III RedeS trial. With both the AABB Annual meeting and the Anesthesiology 2024 meeting taking place this weekend, there will be a number of oral plenary sessions covering the ReCePI clinical trial outcome, so we are pleased to be able to share details from the study that furthers our enthusiasm for the INTERCEPT RBC program. I will now turn the call over to Carol Moore, Cerus' Senior Vice President to review the details of our European filing.

Thank you, Obi. As we've shared before, our CE Mark dossier for INTERCEPT RBC was submitted under European Medical Device Regulation, or MDR, pathway. This process includes both a notified body and a competent authority playing different roles in the assessment of our product candidate under review. As we noted in our last earnings call, we've been waiting for some time for the response to our submission earlier this year from our Competent Authority, the Dutch Medicines Evaluation Board, known as CBG-MEB. For purposes of today's call, I will refer to them as CBG. Our Notified Body, known as TÜV-SÜD, or TUV, has already completed the major sections of their review of our regulatory filings and found them to be satisfactory. Let me expand a little further on the role of the competent authority. The competent authority acts independently from our notified body and looks at the scientific and technical information supporting the medicinal product, sometimes referred to as an Active Pharmaceutical Ingredient, or API. Cerus' pathogen inactivation products are reviewed as a drug device combination since we have a technology to inactivate pathogens in blood products, and we produce a transfusable biological product. Thus, the MDR procedure requires the notified body to provide the medicinal product information to a qualified competent authority for this specific review. In the case of the INTERCEPT Blood System for RBCs, Cerus presented extensive data and characterization of the medicinal product in the dossier, which CBG reviewed. After a review of the Cerus file, CBG and Cerus engaged in a question-and-answer exchange, through which Cerus felt confident that all of CBG's questions have been addressed. However, in a recent communication from CBG late last month, they indicated to us that some of the information Cerus provided regarding the characterization of some impurities, which may be found in the final transfused RBC was insufficient. Based on their review, CBG decided they cannot recommend the file for approval. Unfortunately, CBG policy is to limit the review cycles and the number of interactions that a sponsor can have with them to resolve open issues. Given the technical nature of the new questions from CBG and the limited ability for follow-up, Cerus, in consultation with TUV, will now work to close the CE Mark file. It's important to note that CBG's concern did not reference any kind of a signal from our nonclinical data or clinical trials. Rather, we believe that CBG raised the concerns from a theoretical perspective based on their interpretation of risk. We would note that FDA asked similar questions 2 years ago, which Cerus successfully addressed by providing data, literature references and a risk assessment. As you know, health authorities may take different approaches to interpretation of scientific data in making risk assessments. In addition to how we plan to address the issues CBG has raised, we want to take this opportunity to be thoughtful about leveraging the additional data that we have accumulated since our original CE Mark submission. For example, we believe the positive results from our U.S. Phase III ReCePI trial substantially expand the data available to evaluate the clinical safety and efficacy of the INTERCEPT red cells. We will be assessing how these data could allow us to propose a broader clinical indication in a potential new regulatory submission in consultation with TUV. I will now turn the call over to Dr. Richard Benjamin for further discussion of INTERCEPT RBC clinical data.

Thank you, Carol. Cerus continues to make progress in its BARDA-funded clinical studies designed to support a planned modular PMA application. In March 2024, Cerus announced positive top line results for the ReCePI study, a pivotal U.S. Phase III clinical trial, demonstrating non-inferiority for INTERCEPT red cells compared to conventional red cells when transfused to complex cardiac surgery patients. These data will be presented in plenary and other presentations at this weekend's AABB and Anesthesiology 2024 meetings. AABB abstracts were recently published in the Journal TRANSFUSION,, allowing me to present some highlights of the upcoming talks. You will recall that the Phase III ReCePI trial enrolled elective cardiovascular surgery patients to receive either pathogen-reduced or conventional red cells during and for 7 days after surgery. 581 patients were enrolled and 321 patients were transfused, constituting the modified intention to treat, or mITT population as defined in the statistical analysis plan. The primary endpoint was acute kidney injury, or AKI, and the safety endpoints were related adverse events and treatment-emergent antibodies to pathogen reduced red cells. ReCePI met its predetermined non-inferiority margins robustly in both the mITT and per protocol populations. We can now add that the test and control groups were well balanced demographically in baseline characteristics, in types of surgery performed and in surgical outcomes, including bleeding during and for 7 days after surgery. Patients in both groups had near identical hemoglobin levels at baseline and for 28 days after surgery, an indicator of red cell transfusion efficacy. While the median number of red cells transfused was 3 in both study arms, the control group were more likely to require 5 or more red cells in the 7-day transfusion period than the test arm and the absolute amount of red cell hemoglobin required was significantly less, about 10% less in patients who received pathogen-reduced red cells. These data speak to the utility of pathogen-reduced red cells. We previously reported that related adverse events were not different between the test and control arms of the study. We can now report similar outcomes for cardiac surgery-related adverse events, all adverse events, serious adverse events and deaths on study. Finally, we previously reported that 5 test patients made treatment-emergent antibodies specific for pathogen reduced red cells. We can now report that none of these antibodies caused clinically significant hemolysis and that flow cytometric analysis demonstrated persistent circulating pathogen reduced red cells, further supporting the opinion that these antibodies were not clinically significant. Turning to our second U.S. pivotal trial. Cerus is currently enrolling patients in the ongoing BARDA-funded RedeS clinical trial in patients requiring red cell transfusion for acute and chronic anemia. With 2 new sites recently initiating enrollment, including a Turkish site with access to a large thalassemia population and 2 additional sites starting this quarter, progress is being made, although these new sites began enrollment later than previously anticipated. We are still assessing the potential impact of this delayed start of the new sites to the RedeS study completion time line. With that, I'd like to hand over the call back to Obi for final remarks.

Thank you, Richard. Millions of RBC transfusions occur every year across the globe, and we believe that patients who rely on them should have access to a safe and available RBC supply. While we determine the next steps and timing for advancing the INTERCEPT RBC program in Europe, we continue to make strong progress on our late-stage INTERCEPT RBC development program in the U.S., including the new BARDA contract we announced today. Our mission remains the same: to establish INTERCEPT as the standard of care for transfused blood components globally and enable our customers to do everything in their power to deliver safe and effective blood products to patients. We are proud to be expanding our partnership with U.S. BARDA. This new $248 million, 6-year contract with BARDA is exciting in many ways and is designed to provide Cerus with the resources we need for our planned modular PMA submission and to enable a possible product launch. Coupled with our first BARDA agreement, this new agreement brings the partnership to a total potential value of over $400 million. As we advance towards our planned modular PMA submission, that is expected to conclude with the clinical module going in upon completion of the RedeS study, we are also focused on accelerating the development of an advanced version of our INTERCEPT RBC system designed to scale the processing of red cells at blood centers more efficiently after an initial product launch. Fortunately, BARDA recognizes the importance of pathogen inactivation technology for pandemic preparedness with its potential for adoption upon FDA approval. BARDA is supporting this program with meaningful funding, not only for the advanced device, but also post-licensure studies. While we are disappointed in the CE Mark outcome, we remain confident in the potential of our system to support safe and effective RBC transfusions around the world, and we look forward to solidifying our path to a potential approval in Europe. We remain energized by the continued adoption of our licensed INTERCEPT products, both in the U.S. and across many other geographies. In addition to the numerous INTERCEPT red blood cell abstracts and oral presentations at the AABB Meeting this coming weekend, the expanded use of INTERCEPT Fibrinogen Complex, or IFC, is leading to a significant increase in the case studies presented by hospitals and blood centers that are realizing the unique operational and clinical benefits of the product. We look forward to updating you on our Q3 earnings call in a few weeks. Today's news does not change our current strategy for achieving our financial goals for 2024. I will now turn the call over to the operator for questions.

[Operator Instructions] Our first question comes from Josh Jennings with TD Cowen.

I appreciate the time here and the update. I guess, one, I just wanted to better understand the controversy or there's a decision around, I think, in the press release, you said that insufficient to support the proposed classification of the impurity profile of the final product. I mean, are there high-level concerns just that some of the preclinical data that was generated? I mean my understanding is that for S-303, there's extensive preclinical testing in, in vitro and in animal models and genotoxicity and reproductive toxicity studies were completed. Is that really what they're concerned about? And any kind of more detail just in terms of that concern would be helpful to understand.

Yes. Thanks a lot, Josh. I'll take a quick shot at it and then turn it over to Carol for maybe some more context. So essentially, there's a lot of publications about INTERCEPT red cell system and the tox profile, so we can refer you to that and send that out after the call. But it really came down to the impurity profile for the product and Carol can sort of speak to that and sort of how that sort of risk assessment was done versus other health authorities.

Sure. Thank you, Obi, and thanks for the question. Let me answer that at a high level first to say that characterization of impurities is a general requirement for pharmaceutical products. So what the CBG did to look at our product was a standard review. And there are ICH guidance documents, which are harmonized between the U.S. and the EU that gives some guidance to regulatory authorities with regard to how to look at things like impurities and other things, how to look at the quality of the product and there's a variety of ICH-type documents. The difference in really how CBG might have looked at the document is really according to their own standards. They may set their own policies with regard to how to look at impurities, how to assess them, how to assess risk. So we believe that we had a very robust presentation of our product and its characterization. And as in my prepared remarks, I indicated that FDA also had asked us similar questions, which we had answered. So we believe that this is really an individual interpretation of the characterization of the product. And in -- from the CBG, just a general interest in having some additional information to perhaps help them further their own understanding of our product characterization. So that's the best we understand at this point, and yet we believe that we have prepared a complete dossier and that remains the base source of the kind of information that we would continue to rely on for a successful response to the types of questions that we could be asked.

Excellent. Maybe just to clarify my thinking and understanding. When you refer to final product, you're referring to the kit and S-303 pre kind of treatment of a red blood cell unit? Or is this the final product after kind of running that red blood cell unit through the INTERCEPT system? And is that the final product?

Yes. So it's the red cell. So it's -- that's what I mentioned before, we have the technology to inactivate the pathogens, but the interesting element in our product to health authorities is also the transfusable component, which in this case, is the red cell.

Great. And then I wanted to -- congratulations on the BARDA contract. I was just hoping to better understand, I guess, the path to where you are today? And was there a catalyst? Was it the ReCePI data that kind of opened this store? Or has this just been kind of the conclusion of all the efforts of the Cerus team to continue to engage BARDA and BARDA recognizing the potential kind of clinical value proposition of INTERCEPT red blood cells?

Yes. Thanks a lot, Josh. Fortunately, we have Dr. Nina Mufti here today, who has really led the program for many years, and it's been a very productive and constructive relationship with U.S. BARDA over the last several years, but she can give you a little bit more context about sort of how this evolved and where we're going.

Yes. Josh, happy to answer the question. And yes, we've had an 8-year relationship with BARDA. There were several catalysts involved in this having the second contract. One was definitely the positive outcome of the ReCePI trial. And then the second is the continued support of pandemic preparedness and being able to see this product through licensure any potential post-approval studies required and then really developing the technology further for broad commercialization when approved.

And Josh, one last thing I'd say is that the origin of the initial BARDA agreement was around the Zika virus epidemic and then the vertical transmissions that were happening at the time. And even today, obviously, post COVID, but we're also seeing the evolution of a new virus called Oropouche that also has similar characteristics to Zika. And so I think the need doesn't go away.

Absolutely. I mean -- and then the last question, sorry to sneak one more in here on the -- just the RedeS progress. Any -- I'm not sure if you shared an update on this call or recently, just remind us where does enrollment stand today? I know there's new centers opening and there's some assessments to be made before you can give timelines. But just how deep are we in enrollment and how many more patients, that would be great just to have that kind of baseline here as you guys move forward?

Thanks a lot, Josh. So I think we are very deep into enrollment from an overall numbers. We haven't provided those numbers to date. And -- but I think Richard can give you a little bit more context around why we're excited about these new sites that are coming up and specifically the site in Turkey that we historically had used in our SPARC study and the ability of that site to really deliver. Richard, do you want to?

Yes. Thank you, Obi, and thanks, Josh, for the question. We are really very encouraged with where we are. The whole RedeS trial has been a long road from the Zika epidemic through COVID when things were really held back. We brought on a number of sites and over the last year, brought on and planning on new sites that have taken a little time to come up. However, we've now brought on the Turkey site. You remember that in the SPARC study that we published, the Turkey site was really the backbone of that study and that we're able to enroll many thalassemia patients. Well, it took a while longer than we expected for them to get up to speed, but they now are online and are enrolling patients at a pace -- at an encouraging pace. And we brought on a second site in the U.S., and we're planning on 2 other sites in the next quarter. And we believe that we now have the sites we need to take the trial to completion. The only dependency is how quickly they can get up to the speed we need them to be enrolling at. And that's what we're judging at the moment. So we're being a little cautious at giving end points, but we are very encouraged by -- after a lot of hard work to be where we are.

Our next question comes from Emily Christy with Stifel.