Cerus Corp Q1 FY2021 Earnings Call

Ladies and gentlemen, thank you for being here, and welcome to the Cerus Corporation's First Quarter 2021 Financial Results Conference Call. Please note that today's conference is being recorded. It is now my pleasure to introduce Matt Notarianni, Senior Director of Investor Relations. Please proceed.

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; Vivek Jayaraman, Cerus' Chief Operating Officer; Kevin Green, Cerus' Chief Financial Officer; Carol Moore, Cerus' Senior Vice President of Regulatory Affairs and Quality; and Jessica Hanover, Cerus' Vice President of Corporate Affairs. Cerus issued a press release today announcing our financial results for the first quarter ended March 31, 2021, and describing the company's recent business highlights. You can access a copy of this announcement on the company website at www.cerus.com. I'd like to remind you that some of the statements we will make on this call relate to future events and performance rather than historical facts and are forward-looking statements. Examples of forward-looking statements include those related to our future financial and operating results, including our 2021 product revenue guidance and goals, operating expenses, anticipated cash used from operations and gross margins as well as commercial development efforts, future growth and growth strategy, future product sales, product launches, ongoing and future clinical trials, ongoing and future product development and our regulatory activities, including the timing of these events and activities. These forward-looking statements involve risks and uncertainties that can cause actual events, performance, and results to differ materially. They are identified and described in today's press release and under the risk factors in our forms 10-K for the year ended December 31, 2020, and 10-Q for the quarter ended March 31, 2021, which we will file shortly. We undertake no duty or obligation to update our forward-looking statements. On today's call, we'll begin with opening remarks from Obi, followed by Vivek to provide the commercial update and Kevin to review our financial results. We will conclude with commentary from Obi regarding recent announcements and an update on our pipeline and closing remarks. And now it's my pleasure to introduce Obi Greenman, Cerus' President and Chief Executive Officer.

Thank you, Matt, and good afternoon, everyone. I'm pleased to report our Q1 results, which I hope you've had a chance to review from our earnings release earlier today. Before Vivek and Kevin discuss some of our commercial and financial updates for the quarter in greater detail, I'd like to make a few remarks about the business and how we are thinking about the balance of the year. As you can see from our results, we are off to a strong start in 2021, building on the momentum our business had exiting 2020. INTERCEPT platelet adoption in the U.S. continued to be the driving force behind our revenue growth during the first quarter of 2021. With the FDA compliance deadline five months away, we are pleased to see customers moving, in many cases, more quickly than we had anticipated to ramp up production capabilities to provide INTERCEPT platelets to hospital customers across the country. On the therapeutics front, our commercial team responsible for our INTERCEPT Fibrinogen Complex product is making good progress at hospitals ahead of our first sales, and we will share more details with you later on this call. Our U.S. commercial team is executing well to support blood centers across the country as they prepare for compliance with the FDA guidance later this year, and Vivek will provide more perspective in his prepared remarks. Looking a little more closely at the Q1 product revenue, I'm proud to report that we are able to continue a pattern of consistent year-over-year product revenue growth that goes back multiple years now. Moving to our full year product revenue guidance, the momentum we saw in the market at the start of 2021 has been strong. And as a result, we are raising our 2021 product revenue guidance to a higher range of $110 million to $114 million, representing year-over-year growth of between 20% and 24% from our full year 2020 results. While, as usual, we are not providing quarterly guidance, we continue to expect the momentum of hospital adoption to build each quarter over the course of this year. We talk often about the global opportunity for INTERCEPT being close to $7 billion, which includes opportunities in geographies where INTERCEPT is not yet approved and pipeline opportunities like INTERCEPT red blood cells. When considering our current portfolio of licensed products alone, we believe the near-term opportunity for our business is very significant in and of itself at about $1.4 billion. There remains a lot of commercial upside to penetrating the current total addressable markets for INTERCEPT platelets, plasma, and fibrinogen complex. In addition, with the organic growth of these end markets, our geographic expansion into Asia Pacific and Latin America and ultimately product line extensions, we continue to believe there is significant runway for future revenue growth. Before I turn the call over to Vivek for the commercial update, I would like to highlight a few updates for INTERCEPT Fibrinogen Complex or IFC. First, last week, we were very pleased to see that CMS released its preliminary decision to approve ISC for a New Technology Add-On Payment, or NTAP. This is another step forward in the early days of our commercialization of IFC, and CMS's provision of NTAPs for breakthrough technologies like IFC will help providers and their Medicare patients gain access early. We anticipate that CMS's final decision will be released in August ahead of the start of their fiscal year and the effective date for new NTAPs on October 1, 2021. Additionally, I want to share some of the sales and marketing materials our team has developed and reviewed with the FDA to use in the field that underscores the benefits of INTERCEPT Fibrinogen Complex, with a focus on improving timely access to clotting factors, including fibrinogen and correspondingly outcomes for critically bleeding patients. We are preparing for a nationwide launch once our production partners receive BLA approval anticipated sometime next year. Some of the key messages for INTERCEPT Fibrinogen Complex that resonate with prospective hospital customers included more immediate availability as well as its five-day post-thaw shelf life, which has the potential to meaningfully reduce the challenging wastage rates associated with product expiration for conventional cryoprecipitate. We're looking forward to getting this product to physicians and patients to enable better management of critical bleeding events. With that, let me turn the call over to Vivek for a more detailed review of our commercial operations.

Thank you, Obi, and good afternoon, everyone. As discussed, 2021 is off to a strong start, and I'm pleased to discuss the results of our first quarter with you today. As Obi mentioned, the commercial team in the U.S. is moving quickly and aggressively to offer the INTERCEPT Blood System for platelets to blood centers ahead of the FDA compliance deadline in October. Quarterly demand for INTERCEPT platelet kits during Q1 in North America grew 51% year-over-year. Specific to the top five blood centers in the U.S., which, as you will recall, are responsible for about 70% to 75% of the overall platelet supply in the domestic market, our Q1 sales to these customers increased 59% year-over-year. This is the third consecutive quarter of year-over-year growth above 50%, and it's clear evidence that we are building a significant presence in the U.S. platelet market ahead of the October 1 deadline. For our largest customer in the U.S., the American Red Cross, INTERCEPT adoption continues to grow rapidly, and over half of the platelets they produce are now INTERCEPT treated. The ARC continues to be a leader in the adoption of pathogen inactivation and is driving towards its stated goal of 100% pathogen-reduced platelets. Obi will share some more detail regarding our efforts to expand the approved shelf life for INTERCEPT platelets to seven days from five days. But even with the current five-day shelf life, we and our blood center partners clearly continue to see strong demand for INTERCEPT versus LVDS or large volume delayed sampling. In the EMEA region, first quarter reported product revenue increased 9% on a year-over-year basis. During the quarter, we saw contributions from our major customers in established markets in Western Europe as well as sales of illuminators in EMEA. Offsetting this growth, Q1 was impacted by unfavorable timing of orders in certain regions, which we expect to normalize as the year progresses. Additionally, our international business has benefited from sales of INTERCEPT plasma over the last year, and this continued in the first quarter. While not a significant driver of our business, the demand we've seen from customers during the COVID-19 pandemic is a reminder that the INTERCEPT platform is an important tool that can aid in the safety of the blood supply, particularly in an epidemic when new pathogens emerge. Moving to our therapeutics business unit, as Obi mentioned at the top of the call, our teams have been making a lot of operational and commercial progress in advance of the first customers coming online shortly. Our production partners are making strides for operational readiness. Three partners have already initiated or completed product validation and are actively building inventory that would be ready to lease as new commercial agreements are signed and hospitals begin ordering. Finally, in addition to current production partners applying for BLAs in support of the nationwide launch next year, we are also in ongoing discussions with additional blood center production partners that will provide access to additional launch dates in 2021 and production capacity to meet expected demand. On the commercial side of the therapeutics business, I am pleased that we have a strong funnel with multiple prospective customers, either in evaluation or in contracting. So we look forward to updating you more on our success as we begin hospital contracting on a more broad basis throughout the year. With that, I will turn the call over to Kevin for a review of the first-quarter financials.

Thank you, Vivek, and good afternoon, everyone. To recap what Obi mentioned, we reported first-quarter 2021 product revenue of $23.4 million, a 26% increase from the $18.6 million recorded during Q1 of the prior year. Global demand for INTERCEPT continues to increase. For Q1, the calculated number of treatable platelet doses increased 13% year-over-year. In terms of product mix for the quarter, kit sales represented 95% of our Q1 product sales. Of those total kit sales, platelet kits accounted for approximately 90%, while plasma kit sales accounted for the remaining 10%. As Vivek mentioned in his remarks, Q1 again saw strong demand for INTERCEPT plasma outside of the U.S. In addition, we continue to see healthy placement of illuminator devices globally, which contributed about 3%. In addition to our product revenue and not included in our guidance, government contract revenue totaled $6.2 million in Q1. Comparatively, government contract revenue totaled $6 million in the first quarter of 2020. For the remainder of 2021, we expect government contract revenue to increase with patient enrollment for BARDA reimbursed clinical trials and as activity associated with the whole blood pathogen reduction initiative funded by the FDA ramps. Now let's move the discussion to our reported gross margins. Gross margins for the quarter were 52.5% compared to 55.3% for the prior year period. The 280 basis point decline from the prior year was in line with our expectations and commentary we provided on our Q4 call in February. As a reminder, this expected dip was driven by the outpaced growth in the U.S. relative to our other commercial markets. As a general rule, U.S. customers and in particular, the American Red Cross, predominantly use our single-dose platelet kits as opposed to EMEA customers who use more of our double-dose kits. Our single-dose platelet kits generally carry a lower gross margin contribution compared to our double-dose platelet kits. As a result, given the expected outperformance from the U.S. relative to the rest of the world, we anticipate a similar dynamic to play out for the remainder of the year due to the mix difference in kit configuration sold in the U.S. versus EMEA. I'd now like to discuss operating expenses, which totaled $34.9 million during the first quarter and included $5.3 million in noncash stock-based compensation. Of the total Q1 operating expenses, SG&A expenses accounted for approximately $19.2 million and were higher by about $3.3 million compared to the prior year, driven by increased investments surrounding our INTERCEPT fibrinogen complex launch and increased noncash stock-based compensation. Research and development expenses for the quarter totaled $15.7 million compared to $15.8 million during the prior year. During the quarter, increased research and development spending associated with the red blood cell CE Mark and other INTERCEPT pipeline activities, such as our LED illuminator in development, were more than offset by lower expenses elsewhere. Reported net loss for the three months ended March 31, 2021, increased when compared to the same period in 2020. Reported net loss for Q1 totaled $17.5 million or $0.10 per diluted share compared to $16.5 million or $0.10 per diluted share for the prior year period. In terms of our balance sheet, we ended the quarter in a strong position with approximately $132 million of cash, cash equivalents, and short-term investments on hand. Cash used from operations for the first quarter was $18 million compared to $19.8 million for the prior year period. As our visibility for continued revenue growth increases, we are leaning into our investments in supply chain and inventory to ensure that we are able to deliver products to our customers without interruption. Finally, as we continue to see durable top-line revenue growth as INTERCEPT adoption ramps globally, we're focused on driving significant operating leverage on our path to profitability or cash flow breakeven. While this is not intended to serve as long-term guidance, I mention it because it is a significant focus for us over the next few years, and we look forward to showing our progress based on our upcoming quarterly results. Moving on to guidance for 2021. As Obi mentioned earlier, we continue to believe that we have good visibility into the demand for our products, leading us to raise our 2021 product revenue guidance range from $106 million to $110 million to the new range of $110 million to $114 million. This new range reflects 20% to 24% growth when compared to 2020. While the U.S. platelet business is the primary driver for the 2021 strength, we are launching our INTERCEPT Fibrinogen Complex product. We remain enthusiastic for the product's potential, but continue to expect relatively modest sales from this launch in the immediate term prior to a nationwide rollout. With that, let me turn the call back over to Obi for some closing comments.

Thank you, Kevin. Beyond the commercial progress, I would like to provide you with some insight into our pipeline initiatives. First, with respect to our efforts around seven-day INTERCEPT platelets in the U.S., our team has been working to complete the ongoing study and remains on track to submit to the FDA later this quarter. Assuming a 180-day review window, we hope to have approval by the end of the calendar year. Moving on to a quick update on our red blood cell program. I am pleased to share with you that the third module of our four-part modular submission for a CE Mark was submitted last month, and we are on track to submit the fourth and final module by the end of Q2. As we have stated previously, based on our discussions with the regulatory authorities, we think a potential launch during the second half of 2022, focused on specific patient populations, is possible. In the U.S., we continue to enroll patients in our Phase III ReCePI and RedeS studies and anticipate the enrollment trend to ramp throughout the year, assuming COVID-19 disruptions continue to abate. Another effort I wanted to take a moment to highlight is a clinical trial in which we are collaborating with the Coalition for National Trauma Research. The study is called PROPOLIS or the Plasma Resuscitation Without Lung Injury study. The focus of this study is on the use of INTERCEPT plasma as part of the resuscitation plan in the initial 24 hours of treatment for burn injuries versus current standard of care methods. It is still early days for this study, but I mentioned it because it highlights a potential use case for INTERCEPT plasma in the burn market, which has treatment challenges today with fluid resuscitation using crystalloid solutions and associated safety concerns. We appreciate the support of the Coalition for National Trauma Research and look forward to updating you as this program moves forward at the six U.S. sites enrolling in the study. In closing, our first quarter was a solid start to this decisive year for Cerus. Our entire organization is aligned and focused on taking advantage of the unique opportunity we have with a truly differentiated product offering in a market that is rapidly adopting solutions against a near-term deadline. Our INTERCEPT fibrinogen complex launch continues to gain steam. The market reception for the product has been very encouraging as it relates to availability and operational ease of use for the transfusion service, and we are actively putting the various levers in place for this business to grow and succeed in 2021 and beyond. And finally, as I think about our results and the guidance we have updated on today's call, I am confident that the momentum is in our favor, coupled with the strong recurring revenue nature of our business, will translate into solid top-line growth for the full year. With that, let me turn the call back over to the operator for Q&A.

Our first question comes from Josh Jennings with Cowen.

Congratulations on a strong start to the year and the revised guidance. I wanted to inquire about the guidance, particularly regarding the $4 million increase at the midpoint, which surpasses our estimate by about $2 million. This indicates that trends are improving, and there is greater confidence at the beginning of the year, especially taking into account the procedure trends and your Q1 results. However, I would like to get a clearer picture of what is driving this enhancement in projected figures, especially compared to the Q1 guidance range of $4 million. Are you anticipating stronger adoption rates for INTERCEPT platelets in April? Is there any additional impact from the launch of the PR cryoprecipitate fibrinogen complex that you're including in the guidance? Any insights you can provide regarding the guidance revision would be greatly appreciated.

Yes. Thanks, Josh. So the guidance revision was largely driven off the performance of the business in the United States, but I'll turn it over to Vivek to provide maybe a little bit more context for that.

Sure. I'd be happy to. Your sentiment is correct. We have growing confidence in the strength of our business in the U.S., but we are also seeing strong contributions internationally. As we look ahead for the rest of the year, several factors are coming together that we believe will create ongoing support for the business. In the U.S., the guidance compliance deadline is approaching, and we see an increase in production capability regarding PR platelets at the major five blood centers. As we've discussed before, our strategic focus has been on partnering with these blood centers, ensuring their operations team can produce PR platelets adequately, and assisting them as needed to engage their hospital customers. The American Red Cross has certainly taken the lead, but we have seen significant progress at the other four blood center families as well. This is a factor we expect to continue contributing throughout the year. We are also beginning to notice an increase in hospital access in the U.S. as the COVID pandemic hopefully winds down. Customer access issues seem to be improving. Additionally, while we don't expect significant contributions this calendar year, we will start to see cryo commercialization make an impact in the second half of the year, which will certainly boost the top line. It's really a combination of all these factors that gives us confidence in our ability to continue delivering strong results and, most importantly, providing these products and technologies to patients in need.

Thanks for those extra details. Maybe just one follow-up. It was great to see the NTAP proposal and the recommendation by CMS for pathogen reduced cryo fibrinogen complex. Just wanted to ask on the pricing that was mentioned in the document. It's around $3,900 per patient on average. Is that pricing kind of built into your TAM calculations of that $300 million plus TAM for PR CFC in the U.S.? Or is that a little bit of a stronger pricing level that's baked into that, TAM.

Yes, I'll start with the answer to that question, Josh, and then probably turn it over to Dr. Hanover, who's joined us on the call as well today. She's really the architect behind our global reimbursement strategy, but specifically around this New Technology Add-On Payment that we were happy to see the preliminary ruling on last week. So historically, I think the way we've talked about pricing on a per gram basis is that the INTERCEPT Fibrinogen Complex product would be somewhere at the midpoint between sort of conventional cryo, which on a price per fibrinogen, gram of fibrinogen is about $250 to $300 per gram versus the other end of the spectrum, which is fibrinogen concentrate, which is in the range of $800 to $900 per gram, that would be sort of somewhere in the middle of that. But Jessica can give you some more perspective on sort of what we put into the NTAP application and then sort of the implications of what that NTAP ruling, the preliminary ruling looks like. Jessica?

Yes, sure. I'm happy to. Thanks for the question. So following up on what Obi said, that is the pricing that we had proposed to CMS and our NTAP application. So we were pleased to see it reiterated at this preliminary stage of the decision. And that $3,900 per patient is the average based on what we anticipate Medicare patients would receive based on clinical studies that have been conducted in a similar patient population. Just a reminder that the Medicare population that we anticipate will be most applicable is more of a surgical population as opposed to a trauma population, which is usually in a younger patient group. So overall, the NTAP is applicable for Medicare patients and provides incremental reimbursement over a DRG-based payment rate, which is the typical inpatient payment system that Medicare uses. And that's something that is not currently available; that incremental reimbursement is not currently available for conventional cryoprecipitate. So that's something we see that will be quite positive for hospitals as they're looking at bringing the new product in-house.

Josh, this is Kevin, if I could. I just wanted to circle back on your guidance question. I'm not sure if it was clear or not, but our thinking around the cryo or IFC contribution this year hasn't changed. As a result, it's not the driver for the increased guidance. The increased guidance is really, as Vivek described, coming from the U.S. and EMEA.

Excellent. Are there any updates on the cryo total addressable market? I believe you have previously estimated it at over $300 million in the U.S. Has the pricing, or perhaps the early stages of gaining approval and discussing with customers, led you to feel more optimistic about that market or prompted you to revise your calculations upwards?

Yes. Thanks, Josh. It really hasn't. I mean, sort of that was in the range that we considered when we've talked about the TAM for INTERCEPT Fibrinogen Complex. I think the challenge still is just sort of that market organically is growing roughly sort of high single digits on an annual basis. And so when we, I think, put that TAM out there a couple of years ago, using roughly 750,000 gram equivalents of fibrinogen annually, that's likely gone up, and we're attempting to get better sort of real-time information for how large that market is today. But I think the NTAP preliminary ruling certainly provides us with more confidence in the market opportunity. As Jessica mentioned, this does provide hospitals with a payment per patient that is incremental to the DRG, and that doesn't exist for the other products right now. So I think it's been very well received by customers thus far, even though it's only been a week.

Excellent. Well, congrats on the entrance of your first therapeutic product in the marketplace, but I appreciate taking all the questions.

Our next question comes from Mathew Blackman with Stifel.

I have a couple of questions. Obi, I was curious about your comments on U.S. platelet adoption. You mentioned that some customers are progressing faster than you expected. Can you elaborate on that? Are these customers already on the path to adopting INTERCEPT, similar to Red Cross, or are you noticing some acceleration among accounts that were previously hesitant? Any insights on this would be helpful. And I have one follow-up.

Yes. Thanks, Matt. I'll start with the answer to that question and then turn it back over to Vivek, as he really can provide the best sort of context for the U.S. market. But we are seeing beyond just the Red Cross, which is moving towards their 100% and really having a lot of success with their hospital or their key account discussions. But we're also seeing that translate to the other sort of four families of the big five. And a few of them moving sort of quickly like the Red Cross. So I guess I would say that was sort of unexpected starting the year. But Vivek, do you want to provide a little more color?

Sure, I’d be happy to. Hello, Matt. As Obi indicated, that certainly did play a role. I think another driver in terms of seeing accelerated growth is the COVID-19 pandemic did increase awareness of the need for safety and to be prepared. So a lot of the discussions we've been having about preparedness and being ready in front of an event started to really resonate because of what was going on. And you do start to see you have certain hospital customers that have multiple blood center suppliers. If one of the blood center suppliers moves to PR, they would start to put pressure on the other blood center supplier to offer PR products as well. So you started to see a bit of a network effect start to take place where the more certain blood centers and hospitals started to adopt the technology, you sort of see almost a 'keeping up with the Joneses' type of effect that starts to dissipate across both the blood center and hospital markets. So we still have plenty of headroom and way to go in the U.S., but certainly, the rate at which things are trending gives us all reason for encouragement.

Okay. I appreciate that. I was wondering if there was a fear of missing out sort of phenomenon that was playing out perhaps. And maybe, Vivek, while I have you, just curious a little bit on cryo. Can you maybe give us a little bit more color on some of these conversations you've had? I appreciate it's early days. I understand there's been significant interest. What's the pushback then, if any? And I guess, as you sort of work your way through this process, how quickly can these conversations turn into revenues? I'm just trying to understand how sort of long the lag or lead time, however you want to phrase it, would be sort of getting a new customer on board and generating revenues? Any sense of that turnaround time. That's it for me. Thanks.

Yes, of course, no, happy to answer that, Matt. And as you can appreciate seeing new product introductions in a variety of different markets, whether in med tech or pharma or other environments, there isn't a uniform answer necessarily to that question. What I can tell you is the preapproval market research that we did, customer sensing activity that gave us confidence that there would be strong clinical interest and reception. That has been validated by the conversations we've had with clinicians since approval. And so that was certainly very encouraging for us to hear, and that's been whether it's trauma docs or physicians who are cancer treaters who are responsible for blood center management within hospitals, that there's been uniform interest and enthusiasm for the product and recognition and understanding of its clinical value and application. The long pole in the tent, not surprisingly, is hospital contracting. And if a hospital is a standalone independent hospital or if it's part of the GPO or IDN or part of a larger family of hospitals, that really plays a role in terms of how long the process may take. A number of these things, candidly, were put on hold in terms of new product introductions during COVID because that was such a big second time in terms of dominating attention at the hospital level. We're starting to see that dissipate and starting to see a healthier level of engagement and interest in cryo, but there isn't sort of a cookie-cutter single answer in terms of how long it takes to translate clinical interest into product ordering. But what I can tell you is we have a few leading indicators that give us confidence that we're fairly close on that end. But it really is hospital by hospital in terms of getting that process, but they may give us confidence as there's consistent clinical enthusiasm and champions that we can identify in the individual institutions.

Our next question comes from Jacob Johnson with Stephens.

Congrats on the nice start to the year. Maybe Obi, this first question. Can you just remind us, you called out $1.4 billion TAM today? Can you just roughly break that out between cryo, platelets, and plasma, as you sit here today?

Yes. I mean, I wish I had that slide up that we have all the time. So maybe Kevin or Jessica can correct me if I get this wrong, but it's roughly $300 million we identified for the TAM for fibrinogen concentrates. Then the platelet and plasma opportunities are roughly equivalent in the markets where we currently sell. So I think the main point of that comment in the prepared remarks was we're right now providing guidance of $110 million to $114 million, but there's a lot of room to grow the business in the markets where we're currently approved and with the current product portfolio. That being said, once we get red cells approved and once we start expanding geographically into APAC and LATAM more aggressively, that really opens up the full $7 billion TAM.

No, I think that's right. I mean, when we had the Q4 call, we kind of predicted this was going to happen. It's really a function of the growth coming from the U.S. and to the extent that it's overweight from the Red Cross, that's going to have an impact since they are single-dose consumers. So we expected 200 to 300 basis points from last year's results, and that's what we're seeing. We have no reason to believe that it's going to be different as we move forward, given our commentary on the revised guidance.

Our next question comes from Mark Massaro with BTIG.

This is Vivian on for Mark. So on cryo, I believe you mentioned a broad national launch post-BLA approval sometime in 2021. Should we be expecting a Q1 2022 launch there? Or is it too early to call? And if you could also walk us through some of the steps involved in securing the BLA approval?

The BLA submissions are expected to occur around the middle of this year, and we believe this process will take approximately 12 months, unless it accelerates with the FDA's input. Our production partners, the blood centers we've collaborated with, will be handling the submission with our assistance. This process is already in motion, but they have not yet submitted their BLAs. This timeline suggests a nationwide rollout around the middle of 2022. Additionally, to reach certain important states with a clear unmet need for this product, we are currently in advanced discussions with other production partners to include these states ahead of the nationwide launch in mid-2022.

And then if I could also ask how the partnerships in the LATAM region as well as China have been progressing, with ZBK specifically? And if you could provide an update on the NMPA in China?

Yes. I'll start there and maybe Vivek or Kevin can add because you guys are participating in these joint venture discussions more frequently than I am. But ZBK has proven to be a great partner thus far, and we're really excited to be working with them. Right now, the discussion really is what's the scope of a clinical trial that's required in China to provide that data that the NMPA is looking for regarding transfusion in Chinese patients. To remind you, we did do a study historically in Hong Kong, it was a relatively large study in stem cell transplant recipients. Just looking at sort of the aggregate of not only our clinical data, our hemovigilance data from all the years that we've been on the market in Europe and the U.S. now, and that's significant, combined with that Hong Kong study and then what, if any, additional studies are required for that NMPA submission. Vivek, any other context you'd provide?

I believe that summarizes the situation in China. There was also a question regarding Latin America. Recently, we announced securing a couple of tenders in Brazil. The impact of COVID in Latin America, especially in Brazil, has been quite significant, presenting a challenge for our further penetration in that market. Despite this, we are still progressing by opening blood centers throughout Latin America. However, we are definitely experiencing COVID-related challenges in Brazil. I believe we have adequately addressed the points regarding China.

I'm not showing any further questions at this time. I would now like to turn the call back over to Obi Greenman for any closing remarks.

Well, thank you all for joining us today. It's an exciting year for Cerus, and we look forward to updating you further on our Q2 call, which will likely be at the end of July. Thanks very much.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.