Cerus Corp Q2 FY2021 Earnings Call

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's President and Chief Executive Officer; Vivek Jayaraman, Cerus's Chief Operating Officer; Kevin Green, Cerus's Chief Financial Officer; Carol Moore, Cerus's Senior Vice President of Regulatory Affairs and Quality; and Jessica Hanover, Cerus's Vice President of Corporate Affairs. Cerus issued a press release today announcing our financial results for the second quarter ended June 30, 2021 and describing our 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 use from operations, gross profits 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 risk factors in our forms 10-K for the year ended December 31, 2020 and 10-Q for the quarter ended June 30, 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 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.

Thank you, Matt and good afternoon, everyone. Hopefully, you've had a chance to review our Q2 results from our earnings release, which we issued earlier today. We're excited to share these results with you. Before Kevin and I provide greater detail around the second quarter, I would like to begin with a few thoughts about our performance, how we see the second half of 2021 shaping up and what we are focused on in the near term to help make our INTERCEPT offering the new standard of care for platelet safety in the US. Our record second quarter results provide clear evidence that the INTERCEPT blood system for platelets has quickly become the preferred choice of both blood centers and the hospitals they serve for protecting the US platelet supply. With our second quarter performance, our product revenue over the last 12 months is now north of $100 million, a milestone for the company. As we strengthen our leadership position over other safety interventions for transfusion transmitted infections in the US, we expect to realize continued meaningful revenue growth through the second half of 2021 and into 2022 and beyond. Accordingly, we are raising our full year 2021 product revenue guidance to $118 to $122 million, up from our previous guidance of $110 to $114 million. The INTERCEPT adoption that we are seeing in the US is unparalleled and is happening faster than we initially anticipated. In this era of pandemic preparedness, our pathogen inactivation technology is creating a new standard of care with hospitals. At leading US blood centers like the American Red Cross, the use of INTERCEPT for platelet supply indicates a powerful endorsement of our technology that will help us continue to expand the reach of INTERCEPT. At the ARC, robust demand suggests their stated goal of moving toward a 100% pathogen-reduced platelet supply is achievable based on the fact that their current run rate is now well above 50%. Needless to say, we are thrilled with the level of INTERCEPT adoption we saw in the second quarter, and believe INTERCEPT treated platelets will soon be the standard of care in the United States. Outside the US, we have a long track record in some geographies like Switzerland, where the Swiss Red Cross was an early universal adopter of our technology. But significant Greenfield opportunities in certain geographies remain. As an example, during the second quarter, we announced a contract with Canadian Blood Services, which is the largest of two blood centers in Canada processing roughly two-thirds of the country's blood supply. As CBS has said publicly, its aim is to drive to full adoption of pathogen-reduced platelets. We are proud to partner with them over the next couple of years to make that a reality. With a global addressable market for the INTERCEPT blood system for platelets alone exceeding $1 billion, we believe the opportunity relative to our credit penetration remains significant, and we intend to continue this commercial momentum. As we stated previously, and because of our unique role in the blood component supply chain, we continue to prioritize our increase in production capacity and improve supply chain continuity. As regions around the globe look to increase the safety of their platelet supply and adopt the INTERCEPT Safety Standard, their reliance on Cerus is foundational for the operational excellence we are committed to demonstrate. With cumulus kit sales to treat over 9.4 million doses globally and thousands of patients transfused daily with INTERCEPT treated blood components, we realize the significance of this responsibility every day. It empowers our team with great purpose and pride and demands the investment we are making to sustain this critical technology for the long term. With the INTERCEPT Fibrinogen Complex product, we have also been hard at work on several fronts. We are positive about this rollout, which has continued to build momentum over the last several months. As we have stated previously, the hospital interest and engagement we have seen around the product is positive. To that end, we are pleased to report that we have several hospital customer contracts now signed and expect to begin ramping delivery of the product to these early adopters through the back half of the year. Among these initial accounts, we are pleased that one of the early adopters is a large integrated delivery network in one of our initial launch states. Additionally, we recently added Florida to our launch footprint with the announcement of LifeSouth as an IFC production partner. We continue to target a nationwide IFC launch in the second half of 2022, following our production partners' receipt of BLAs to enable sales of IFC across state lines. In addition to scaling up production of IFC, our production partners have also been preparing BLA submissions, which we anticipate being filed in Q3. Finally, on the reimbursement front, we were excited to announce this morning that we have received a positive final decision from CMS for our new technology Add-On Payment for IFC. We applaud CMS for their decision to provide this incremental payment for IFC, which has an effective date of October 1st. Before I turn the call over to Kevin for a discussion on our financials, I wanted to take a moment to talk about the blood shortage in the US, a topic that has been in the news and impacting hospitals and patients over the last few months. We have received some questions about how this shortage impacts our business. So I wanted to take this opportunity to provide perspective for our shareholders. Clearly, the supply of blood components is a critical cog in the health care delivery engine in any country, and we believe the INTERCEPT platform is capable of helping increase the availability of platelets and plasma in general. Our INTERCEPT technology can also improve donor eligibility by obviating the need for certain donor deferrals like travel-related deferrals designed to minimize the risk of malaria transmission. Historically, summer already tends to be a seasonally tight period for the blood supply. It appears to have started earlier and more severely than in years past, particularly in the shadow of the pandemic. As has been reported, demand for blood products in the US has rebounded. However, blood centers have struggled to keep up with this demand, particularly for red blood cells, leading to the deferral of certain elective surgeries. There's less flexibility for availability of platelet components since cancer patients are the most common recipients of platelet transfusions and delays in treatment is typically not a viable option. Additionally, platelet components have a very short shelf life relative to other blood components. Therefore, making these units available for as long as possible alleviates the potential burden and reduces the likelihood of waste in the system. With INTERCEPT, platelets are treated and can be made available much more rapidly after collection compared to bacterial testing methods, resulting in an effective increased shelf life duration that can reduce hospital waste. Collectively, these critical and logistical benefits have, for the first time in decades, provided blood centers with the opportunity to price for value. We’ve been confident that hospitals will be receptive. In summary, while we do not believe our business will be impacted by the blood shortage currently making headlines, we joined the American Hospital Association and our blood center and hospital customers in urging all who are able to donate to do so. The pandemic has altered many aspects of our daily lives, but what it has not changed is the need for donors to continuously provide lifesaving blood products to contribute directly to patient care. With the overall demand for blood components rebounding, a sustainable and resilient blood supply necessitates the financial health of US blood centers and their access to a solid donor pool. With that, let me turn the call over to Kevin for a more detailed review of our financial results.

Thank you, Obi and good afternoon, everyone. As Obi discussed, we recorded a record second quarter of 2021 product revenue of $31.5 million, a 46% increase from the $21.5 million recorded during Q2 of the prior year. This represents the largest product revenue quarter in the company's history. Global demand for INTERCEPT continues to increase. For Q2, the calculated number of treatable platelet doses increased 67% year over year. In terms of product mix for the quarter, kit sales represented 97% of our Q2 product sales. Of the total kit sales, platelet kits accounted for approximately 91%, while plasma kit sales accounted for the remaining 9%. I'd like to spend some time speaking about our second quarter product sales by geography, beginning with North America, which was up 128% versus the prior year period. The strength we saw in the region was driven by robust demand for our platelet kits in the US as blood centers across the country continue to ramp with INTERCEPT. Sales to the country's top five blood centers, which provide roughly three-quarters of the US platelet supply, grew 150% versus the second quarter of 2020. Similarly, North American sales to blood centers outside of the top five US blood centers were also up in the high double digits when compared to the prior year period. We are working alongside each of our blood center customers in the US as rapid scale-up efforts continued in Q2, approaching the FDA compliance deadline of October 1st. Moving to the EMEA region, sales in the region during the second quarter grew 12% versus the prior year. We saw strong demand from some of the larger accounts in the region during the quarter, as well as some timing differences in sales which should provide tailwind during the second half of 2021. In addition to our product revenue and not included in our guidance, government contract revenue totaled $6.3 million in Q2, compared to $5.3 million in the second quarter of 2020. For the second half of 2021, we continue to anticipate government contract revenue will increase with patient enrollment for BARDA reimbursed clinical trials and as activity associated with the whole blood pathogen reduction contract funded by the FDA ramps. Turning to product gross profit and gross margins, product gross profit during the quarter was $16.2 million compared to $11.8 million during the prior year period. The improvement in gross profit resulted from slightly less efficient product gross margins, which were 51.3% for the quarter compared to 54.9% in the prior year period. The lower gross margin percentage was driven primarily by the continued strength in our US platelet business. As we have previously stated, our US customers mainly use single-dose platelet kits, while our EMEA customer base has a higher mix of double-dose platelet kits. Since our single-dose platelet kits have a lower gross margin contribution compared to our double-dose platelet kits, this top line mix shift is driving the year-over-year variance. Looking ahead, we expect that as the US market matures, our double-dose kit sales in that market will also increase, which will contribute to gross profit percentage improvements. In addition, we have several capacity and margin expansion activities underway, which we anticipate will provide a return to economies of scale and overall margin expansion, which we expect to realize. I'd now like to discuss operating expenses, which totaled $36.8 million during the second quarter and included $5.8 million in non-cash stock-based compensation. Of the total Q2 operating expenses, SG&A expenses accounted for approximately $19.8 million and were higher by about $3.6 million compared to the prior year, driven by increased sales force expenses associated with the launch of IFC. Additionally, non-cash stock-based compensation costs and increases in certain vendor fees contributed to the year-over-year increase. Research and development expenses for the quarter totaled $17.1 million compared to $15.6 million during the prior year. During the quarter, we incurred increased research and development spending associated with the final two modules of our CE Mark submission for INTERCEPT red blood cells, as well as ongoing costs associated with the US red blood cell program and preliminary development efforts associated with our next-generation LED based illuminator and other new products. Reported net loss for the three months ended June 30, 2021 increased compared to the same period in 2020. Net loss for Q2 totaled $15.4 million or $0.09 per diluted share compared to $14.9 million or $0.09 per diluted share for the prior year period. In terms of our balance sheet, we ended the quarter in a strong position with approximately $122.8 million of cash, cash equivalents and short-term investments on hand. As we previously mentioned, the trailing 12-month revenue topped $100 million, allowing us to extend the interest-only terms of our debt facility for an additional year. In addition, we have achieved the predetermined milestone, unlocking the option that would provide additional capacity under our debt facility. Cash used from operations for the second quarter was $8.7 million, representing a sequential improvement from Q1 cash used from operations of $18 million. With the demand we are seeing, we have continued to invest in building inventory as we are focused on staying on top of product supply for our blood center customers around the globe. We are highly focused on supporting the robust demand for our products, with a continued emphasis on achieving cash flow breakeven. As we discussed on our Q1 conference call, we see significant operating expense leverage opportunities that we believe will move us towards this goal over the next several quarters. Moving on to product revenue guidance for 2021, we've clearly exceeded expectations thus far in the year relative to where we thought the business would be in our original plan. With the realized commercial traction in the US coupled with the visibility we feel we have heading into the back half of the year, we are raising our product revenue guidance range to $118 to $122 million. This new range reflects 28% to 33% growth when compared to 2020. Finally, this increase in guidance continues to reflect a modest contribution from INTERCEPT Fibrinogen Complex. With that, let me turn the call back over to Obi for some closing comments.

Thank you, Kevin. I want to wrap up with a few additional business updates. In addition to the strong commercial results, the organization executed on several other fronts during the second quarter. First in June, we submitted the seven-day post-collection storage claim for INTERCEPT platelets to the FDA. We continue to assume a 180-day review window, which would set us up for potentially receiving approval by the end of the calendar year. We believe the seven-day claims strengthen our already advantageous value proposition for US blood centers and their hospital customers. We're hopeful that we will be able to add the additional two days of effective shelf life to INTERCEPT treated platelets later this year. With our ongoing red blood cell efforts, we continue to advance the programs, particularly in Europe where we submitted the final two modules for CE Mark during the second quarter. You may recall that in collaboration with our notified body last year, we opted to transition our submission made under the medical device directive to the medical device regulation. I'm very pleased with the way our team has executed on this submission. This is a significant accomplishment for the team, and we look forward to introducing this offering to the EU market. In the US, enrollment continues in our two Phase III trials. While trends are still below pre-COVID levels, they continue to recover from what we saw last year. Finally, looking ahead to the American Blood Conference in October, we were pleased to see that pathogen inactivation is featured prominently during this year's Plenary Oral Abstract Session, with half of the topics covered featuring presentations about INTERCEPT platelets, including a presentation of the PIPER Phase IV study, which is one of the largest studies ever conducted in transfusion medicine, with over 2,000 patients transfused during a four-year period. At a high level in this study, we did not observe any statistically significant differences in treatment-related mortality, pulmonary adverse events, or blood component utilization. In combination with the significant body of national data that continues to be collected by our European customers, we think studies such as PIPER help underscore the impressive safety profile for our INTERCEPT system. In closing, our second quarter performance has established a clear path towards market leadership for INTERCEPT and our company. Our commercial success is reshaping our growth trajectory at Cerus in 2021, accelerating our path to becoming a new global standard of care. As our top line continues to grow over the next several quarters, our team is focused on driving sustainable growth while also demonstrating our ability to achieve cash flow breakeven. I look forward to updating you more on our progress over the back half of this year. With that, let me turn it back over to the operator for Q&A.

Our first question comes from Matthew Blackman with Stifel.

I'm just going to start with two questions actually, both for Kevin. Maybe if we could start on how you would think about the shape of the second half? Obviously, had a big step up from Q1 to Q2, and I just want to make sure we're thinking about the cadence in the back half correctly. Should we assume sort of a similar Q2 to Q3 and then Q3 to Q4 sequential growth or, for some reason, it could be more front-end loaded in Q3, perhaps because of the timing of the guidelines? Just any help there would be appreciated. And then I've got one more follow-up for you, Kevin.

Historically, Q3, especially in Europe, has been one of the softer quarters just given the holidays, and I don't have any reason to believe it will be different. While we anticipate sequential growth, I do think that Q4 will be slightly stronger than Q3. This will be driven in part by US customers continuing to prepare for the compliance deadline, which is October 1st.

And I guess it also includes some cryo as well perhaps in the fourth quarter more so than the third. Is that also fair?

That's right. Although, in our prepared remarks, we continue to believe that the contribution from IFC will be modest, in the low single digits. So not a major driver of revenue, but certainly, we will see more transfusions with that product.

And then just wanted to touch on the SG&A leverage, and maybe this is not the best way to think about it. But if you just look sequentially, you grew revenues like $8 million, but SG&A only went up about $600,000. So is that all sort of pure leverage or is there still some lingering deferred spending because of the pandemic? And then, Kevin, I have to ask it. Could you expand a little bit on the comments you made. I think towards the end of that section, you were talking about progress towards breakeven. I don't recall the exact language but you mentioned something about over the next few quarters, I'm guessing you don't mean breakeven in that timeframe. But maybe just give us a sense of how we should be thinking about sort of the trajectory towards breakeven? Does it become more visible over the next few quarters? Is that what you're talking about, or any color on that would be helpful? Thanks.

So on the SG&A leverage component, there will be some residual deferrals. We've seen some residual deferrals due to COVID. We're starting to see increased travel, hospital access, and conference attendance more in line with what we had expected. At the same time, we've made some investments in the IFC business, which as that contributes should provide additional leverage. By and large, the team is largely built out, especially for the first five markets for platelets and plasma. We feel very confident that initial investment will result in a high degree of leverage, and that sustainable leverage for quite some time. As for your question regarding breakeven, what we had said was over the next several quarters, we'll gain visibility and move in that direction. It is a focus of ours, as we've discussed over the past several quarters. We're defining it as core adjusted EBITDA, which backs out depreciation, amortization, and also non-cash stock-based compensation. This allows us to isolate the core business. We're not providing guidance for 2022, but we expect that with continued SG&A leverage and a return to margin expansion with the growth we see—not just for the US platelet and plasma business but also with contributions from cryo—we'll be in a strong position to provide some clarity and achieve that milestone, which is again like cash breakeven or core adjusted EBITDA as we're calling it.

Our next question comes from Brandon Folkes with Cantor Fitzgerald.

Maybe just any commentary you can talk about what you saw in July this year? Was it similar to two years in the past, or are you seeing any disruptions at this stage? And then secondly, I think you called out that the blood centers are benefiting from pricing to the hospitals. Does that provide you potentially any kind of leverage around pricing for INTERCEPT down the line?

Would you mind repeating that last part of your question? I didn't quite hear it.

So I think you mentioned that blood centers, hospitals are kind of benefiting from pricing. Does that provide you any potential pricing flexibility around INTERCEPT at any stage?

I think I’ll defer that to Vivek, as the nature of your second part of your question was just around pricing for value. One of the key things Cerus has enabled blood centers to do, particularly here in the US, is realize a move away from commodity-based pricing, which has been challenging for them over the last decade, especially as demand for red cells has declined. As I mentioned in my prepared remarks, that's stabilized. We're starting to see demand increase for red cells. Platelets have an ongoing organic growth rate of 3% to 5% in any given year. What we are seeing is that with the adoption of INTERCEPT, blood centers are able to increase their pricing for platelet components, given the value conferred by the treatment with our technology. This is quite helpful for the overall financial viability of the blood banking industry in the United States, and our blood center business.

Just maybe for my own benefit, a little bit more clarification on the question regarding July. I knew there was something specific you were curious to understand about the past month, so I want to make sure I'm answering your question correctly.

I mean, I'm just trying to get some indication of the third quarter trends and how you are seeing trends? So just given we are one month into the quarter, just anything you think is worth highlighting in July?

That’s helpful, I can certainly take a stab at that, and feel free to ask clarifying questions should they come up. First, with respect to pricing, piggybacking a bit off of what Obi mentioned. One of the things that we encountered very early on in the INTERCEPT launch was a bit of reservation or hesitation on the part of the blood center questioning whether hospitals would be receptive to the idea of a higher price pathogen-reduced platelet relative to a conventional platelet. What I can state with conviction now is that the higher price pathogen-reduced platelet is very much accepted at the hospital level, and blood centers are seeing this really across the board. Oftentimes, when it comes to healthcare pricing, you get dominated by what I call the tyranny of the anecdote. You always hear about the customer pushing back on price, but you very rarely hear about many customers for whom price isn't the issue. They want value, safety, and to be proactive about offering their patients the best possible clinical outcome. With the pandemic, the idea of preparedness and providing the safest product has risen to the top. This unquestionably benefits pathogen reductions, and blood centers are seeing their ability to maintain a solid price on pathogen-reduced platelets, which I anticipate will continue to be the case. With respect to July and really the quarter in general, I think Kevin mentioned this. What was most encouraging is we saw continued adoption of INTERCEPT. The growth was driven by kit sales, not device placements. You’re witnessing our customers purchasing kits, producing INTERCEPT products, and those products are getting transfused at hospitals. We exited the quarter with momentum, and I anticipate that will carry forward through the third quarter as reflected in the increased guidance. The fundamental driving force behind this is the strong partnership at the blood center level. We're witnessing hospitals stating a clear preference for pathogen-reduced platelets to meet their guidance. Hospital demand continues to grow, and we have the compliance deadline coming up here on October 1st. I anticipate continued share growth and progress even after the deadline, so our enthusiasm about the second half of the year remains very high.

Our next question comes from Josh Jennings with Cowen & Company.

This is Eric on for Josh. I wanted to ask about the US platelet market. You're obviously seeing great progress in the market considering the results that you delivered here in Q2. But looking at US blood centers that fall outside of the big five, I believe they represent about 25% of the market. Could you talk about how traction has been getting those smaller players to adopt and utilize INTERCEPT? They're a little bit more difficult for us to track, so any detail you could share would be helpful.

Vivek, can I defer this one to you again?

We saw an increase in penetration and traction across all blood centers in the US. As we stated in prior calls, and as we have been executing in recent years, our focus has mainly been on the big five blood center families, which represent approximately 75% of nationwide platelet distribution. As the saying goes, you want to fish where the fish are, and that has been working well. What I mentioned earlier in response is we are seeing strong hospital preference for pathogen-reduced products. Therefore, even those non-big five blood center families are hearing from their hospital customers that they prefer pathogen reduction as the best way to address bacterial guidance documents. This is driving an increase in their adoption rate. We see growth really across all blood centers in the US. To the point I made earlier, we expect not only to see continued adoption in the US leading up to the October 1st deadline, but we anticipate ongoing share growth and capture beyond the compliance period that extends into the following year. We're seeing robust growth, but we continue focusing on the top five as getting them on board will allow us to capture a larger percentage of the market.

On the red cell opportunity, it was great to see that you submitted the final modules of your CE Mark application. Thinking about the US red cell program, can we get a quick refresh on where enrollment stands in the ongoing trials? Are you able to share any estimates on when those trials could be nearing complete enrollment?

COVID has made it challenging to enroll those studies over the last year and a half. However, we are witnessing a pickup in enrollment in both Phase III studies. As you may recall, we had a meeting with the FDA earlier in the year to discuss enrolling chronic transfusion patients in the RedeS study, which has been added to the RedeS study scope, and we are enrolling those patients as well. It would be great if we could actually have an in-person investigators meeting to really sort of establish a timeline, but that has been difficult. We had a virtual one last week, and there’s a lot of enthusiasm for how enrollment is picking up, but it's still a little too early to provide clarity on when we would complete enrollment in both those phase three studies.

Our next question comes from Mark Massaro with BTIG.

I wanted to ask about the timing of the CE Mark. Obviously, you submitted the fourth and final module for red blood cells in Europe. Can you give us a sense of just the planned rollout of red blood cells in Europe? I guess I'm asking if that could be early 2022 or might that be in the second half of the year? What are the puts and takes to the timing?

I think we're looking really at the second half of 2022, and here's the reason. It's a multi-group effort, so we have our notified body, which is TUV, and we have a competent authority, and they both have to review. They have parts that they need to handle, and I think that all the reviews and the question and answers we need to clarify any of their questions will take until the second half of 2022 to complete.

And then maybe Kevin, just to clarify, you raised the product revenue guidance by $8 million for the year, and you beat by almost $6 million in Q2. Is it fair you commented about typical seasonality in Q3 but the expectation for a strong Q4; is it reasonable for us to place the remaining $2 million for the year in each quarter, both Q3 and Q4, just roughly speaking?

As we know, Q4 will be slightly heavier than Q3. I don't know how you want to weigh that. We’re going to continue to see growth in the US just by way of blood centers increasing consumption in anticipation of the guidance document. We will probably see some softness due to vacations and all the usual seasonal effects. We’ll see sequential growth from Q2 to Q3 and anticipate slightly stronger growth from Q3 to Q4.

Congrats on the NTAP. I think NTAPs are great, but I think sometimes hospitals need a reminder that it exists. Can you give us a sense of any type of education efforts and whether that's you going direct? How do you communicate this update to your core customer group? Can you help us with the frame of impacts to your business, especially in 2022?

I'll handle the first part of that question and then turn it over to Dr. Jessica Hanover, who's also on the call today. She was really the architect for the NTAP submission on the back of our breakthrough device designation with the FDA. Jessica was also very involved with securing the P-code for outpatient reimbursement of INTERCEPT platelet products. I think she would be able to provide some color around how we plan to address that at the hospital level, helping them with billing, because that clearly is a focus of ours. Jessica, would you like to jump in and answer Mark's question?

Absolutely, education is key on the reimbursement side. We certainly know that hospitals have many ways that they can do things not in the best way. We have an active educational campaign with materials outlining how they need to use the coding instructions provided by Medicare in order to trigger payment of the NTAP for relevant patient populations. We have built a good infrastructure in the hospital setting already. So we have the people that we need who can provide that education. Much of the interactions have been virtual, but we're moving back to face-to-face, which will be essential, focusing not only on the blood bank within the hospital but also with the billing and the chargemaster department. We have a comprehensive effort to ensure that hospitals are doing it correctly.

I think you covered it well, Jessica. The only thing I would add is securing the NTAP has been part of our overall launch plan since the project's beginning. We're grateful to Jessica and the team for making this a reality. A critical element of our marketing campaign at the hospital level will be the NTAP because you're looking at not only a clinical value driver but also a potential cost-saving benefit to the hospital. This will help emphasize the value of the IFC product to both clinician and non-clinical decision-makers within hospitals.

I know it's early for you to comment on 2022 growth or guidance, but on the other hand, no one expected you to grow 46% year over year this quarter. So to some extent, you will be going up against really strong comps as we think about 2022. Consensus was looking for 15% revenue growth in 2022, which seems achievable to me. Can you just comment about how the difficult or strong comps might weigh into how you think about growth next year?

I'll start and then turn it over to Vivek for some additional context. One key focus for investors and shareholders should be the overall size of the US market, which is around $150 million and possibly growing larger due to the organic growth we are seeing in the platelet market. Marry that with the movement toward the standard of care, defined as greater than 50% market share, which we expect over the coming quarters, reveals many growth opportunities still ahead. The American Blood Conference released a survey in June asking hospitals about their compliance with the FDA guidance on bacterial safety of platelets. It was clear there that the strong preference was for pathogen-reduced platelets. We're observing those hospital customers enhancing their demand to reach 100%. I believe we have many opportunities for growth in 2022 to be realized. Vivek, do you want to add any additional remarks?

Yes, Obi, you captured it well. Whatever the external expectations are, those expectations from Obi are always quite high. That said, there are untapped opportunities, both domestically and globally, when you consider further penetration of the INTERCEPT platelet technology and the ongoing launch process for IFC with the NTAP and eventual BLAs. There are fertile grounds for the continued promotion and penetration of INTERCEPT platelets. The influence of larger customers like the ARC will have significant impacts, both domestically and globally. We're confident we have the people, plans, and strategies in place to keep driving growth. I acknowledge that with strong performance comes challenging comps, but we feel confident in our capacity to continue posting solid growth numbers. Most importantly, we’re focused on ensuring access to safe blood products for patients around the world.

Our next question comes from Jacob Johnson with Stephens.

Maybe Kevin, just on the gross margin side. You talked about maybe some of the longer-term opportunities on the gross margin side or maybe medium-term. But as we think about the back half of this year, if the US is increasing as a percentage of your revenue mix, should we assume that maybe gross margins could be even softer than they were this quarter? Or is there some kind of operating leverage you'll see on the gross margin side, such that maybe this is a floor for gross margins for the back half of the year?

I don't think there's a ton of downside for normal operations. At the same time, I don't think we're going to see the margins where they were last year, but that was anticipated. We knew there would be some softness given the nature of early adopters in the US, which are predominantly single-dose. I expect that as the market matures, we’ll see more and more double-dose kits, which will help support it. Longer term, I expect to attain economies of scale and see cost of goods sold reduction initiatives as well. Similarly, we're witnessing rising commodity prices and costs across the board, so we might see our customers in certain geographies start to experience some modest price increases.

And maybe sticking with you, Kevin, just one other question I may have misheard or missed this. But you mentioned in your prepared comments some puts and takes in the EMEA region. Could you just speak to those? And maybe on the take side, can you talk about the opportunity that seems to hint in the back half of the year in EMEA?

It's not all that meaningful, which is why I characterized it as puts and takes. It's really timing of orders. As we've discussed in the past, certain distributors order in unpredictable patterns. Some orders that we thought would happen in Q1 slipped to Q2, and similarly, some that we thought would be in Q2 slipped into Q3. I don't want to focus too much on that as really, the US growth and preparation for the guidance documents are the central themes.

Our next question comes from Ram Selvaraju with H.C. Wainwright.

This is Balan calling in for Ram Selvaraju. I would like to discuss your collaboration with Canadian Blood Services. What are your initial thoughts and expectations regarding the Canadian blood transfusion market? How long do you anticipate their current services will take to fully implement INTERCEPT?

The Canadian market for platelets is roughly around 180,000 platelet doses annually, which is pretty significant. CVS produces roughly two-thirds of the overall market. The other major supplier in Canada is a group called Héma-Québec; both are excellent organizations focused on patient safety. The leadership there has started implementation with INTERCEPT but is looking to secure a seven-day label claim that we’re hoping to file for sometime next year. We've been working closely with Health Canada regarding that and in collaboration with Canadian Blood Services. They have a stated goal of reaching 100% once they secure that claim. I can’t give you specific timing, but over the next couple of years, we believe that this single organization will be a meaningful customer for us.

Just one more from me. What are your thoughts on platelet demand growth in Switzerland for the remainder of the year, and maybe expectations for 2022? Are there any particular trends catching your attention?

Switzerland has been a customer of ours for over a decade, driven by a pediatric septic fatality that motivated them to secure platelet safety. We've enjoyed a wonderful partnership, and it's extended into developing a whole blood pathogen inactivation technology for Sub-Saharan Africa through the Swiss Red Cross Foundation. The organic growth there has been static for over a decade. This is interesting because we've documented through the Swiss Red Cross haemovigilance system the safety of the INTERCEPT system, but it hasn't increased platelet utilization at all, indicating that the INTERCEPT platelets are working well.

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

Thank you again for joining us today and for your interest in Cerus. We look forward to speaking with you at the Cantor Fitzgerald Global Virtual Healthcare Conference next month, if you're attending. I really appreciate your ongoing support of the company.

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