Earnings Call Transcript - CERS Q4 2021

Operator, Operator

Good day, ladies and gentlemen. Thank you for standing by. And welcome to the Cerus Corporation Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker host today, Mr. Matt Notarianni, Senior Director of Investor Relations.

Matt Notarianni, Senior Director of Investor Relations

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; 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 fourth quarter and year ended December 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 2022 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 initiatives, 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 Form 10-K for the year ended December 31, 2021, which we will file shortly. We undertake no duty or obligation to update our forward-looking statements. On today's call, we will begin with some opening remarks from Obi, followed by Kevin to review our financial results. We will conclude with commentary from Obi with an update on our pipeline, recent announcements, and closing remarks. And now, it's my pleasure to introduce Obi Greenman, Cerus' President and Chief Executive Officer.

Obi Greenman, President and CEO

Thank you, Matt, and good afternoon, everyone. In 2021, Cerus took a major step forward in realizing our goal to safeguard the global blood supply. Our success in deploying the INTERCEPT Blood System for platelets in the U.S. built on our solid international foundation of routine use and drove a breakout year for the Company. On the last few calls, we've spoken about the momentum the business has seen in the U.S., as blood centers and their hospital customers choose INTERCEPT as their preferred method for complying with the FDA guidance aimed at reducing the risk of bacterial contamination of platelets. We continued to see this trend play out in the fourth quarter and believe we are now the U.S. market leader for platelet bacterial risk mitigation under the FDA required guidance. Last month, we celebrated the Company’s 30th anniversary. Over the past three decades, Cerus has embarked on a bold strategy to develop and deploy a technology for the singular focus of safeguarding the global blood supply. Following the devastation of the HIV epidemic, at the time of the Company's founding, preparedness remains at the core of what we do every day at Cerus. And we are committed to bringing products to the market that safeguard blood components from known and future threats, and that enable sustained blood availability. While we have come a long way with over 10 million INTERCEPT doses transfused to date, there remains much opportunity for Cerus to lead a paradigm shift in transfusion medicine on the way to achieving a new global standard of care. With a continued broad adoption of our technology in the U.S. and globally, we look forward to delivering another year of strong double-digit growth. While we're not providing long-range guidance today, we see significant opportunity to grow our top line meaningfully over the next several years. We expect this growth to come from a combination of extending our leadership in our currently served markets, penetrating untapped geographies like China and commercial success of new products, like our INTERCEPT Fibrinogen Complex and later Red Blood Cells. Together with the organic growth of our total addressable markets or TAMs, the opportunities ahead for Cerus are significant and enduring. For instance, we have historically estimated the global TAM for INTERCEPT platelets to be about $1.3 billion with the U.S. opportunity representing about $150 million of this total market. With overall platelet demand growing in the mid-single-digits, we expect these TAMs to continue to grow, eclipsing $1.5 billion and $200 million for the global and U.S. opportunities, respectively, over the next five to seven years. Within INTERCEPT's rapid commercial uptake, we have placed a significant focus on our ability to supply product to our customers across the globe. To fulfill our market leadership role in supporting blood safety and availability, we continue working with our partners to expand manufacturing capacity in multiple facilities, to position us to continue to grow the INTERCEPT Blood System adoption in 2022, 2023, and well beyond. As Kevin will discuss in more detail shortly, we have planned for this in the near term by building our inventory, which we will utilize during this period to help continue to fulfill customer demand. As we bring additional manufacturing capacity online, the supply and demand dynamics will become more manageable. And we expect this excess manufacturing capacity will allow us to continue to grow well into the future. For INTERCEPT Fibrinogen Complex or IFC, 2021 was filled with several market development activities, and we plan to continue to position this product for long-term success. Some of these activities included sales to early adopters in our initial launch states, Medicare reimbursement secured with a New Technology Add-On Payment or NTAP, and supporting our blood center production partners to both come online to manufacture IFC units and to also submit Biologics License Applications or BLAs. Gulf Coast Regional Blood Center received its BLA approval just before year-end 2021. And more recently, Central California Blood Center also received its BLA approval. As we've been educating the marketplace about this new blood product, the benefits of IFC continue to resonate with blood centers and physicians, as they grapple with the challenges associated with conventional cryoprecipitate, which has several limitations in its availability for bleeding patients during the critical early phase of resuscitation. IFC addresses several of these limitations by enabling more immediate availability for transfusion physicians and reducing wastage as conventional cryoprecipitate has a limited post-thaw shelf life of four to six hours. In 2022, we are focused on gathering real-world experience data with our early customers to highlight the benefits of IFC for a variety of patient types. With our nationwide IFC launch commencing, we've also entered into commercial partnerships with Blood Centers of America or BCA and OneBlood to further deploy IFC across the U.S. We believe leveraging our combined sales efforts will provide more of the market with access to IFC as the industry continues to navigate the national shortage of conventional cryoprecipitate. I will now turn it over to Kevin to discuss our results and 2022 guidance in more detail. And then, I will return to provide some comments on our pipeline as well as some closing remarks.

Kevin Green, CFO

Thanks, Obi, and good afternoon, everyone. First, let me echo Obi's excitement for our strong results as we continue to expand access to INTERCEPT for patients globally and are paving the way towards financial independence, or more specifically, cash flow breakeven. I'll get back to that in greater detail later on. Our record Q4 2021 product revenue of $39.9 million reflected year-over-year growth of 41% and 10% sequentially. For the full year, 2021 product revenue of $130.9 million grew 42%, when compared to 2020. By geography, fourth quarter sales in North America grew 108% versus the prior year period, while EMEA was roughly flat when adjusting for foreign currency. Within North America, our sales to the top 5 U.S. blood centers grew by more than 120% year-over-year during the fourth quarter, while importantly, sales to U.S. blood centers outside of the top five also grew by more than 80% versus the prior year period. With the strong growth we experienced throughout 2021, for the first time in our history, the majority of product revenue was and is expected to continue to be derived from North American sales. Moving on to our calculated platelet dose metrics. Our fourth quarter growth in the calculated number of treatable platelet doses reflects a 132% year-over-year increase in the U.S. and a 4% decline internationally against a tough comparison. In terms of product mix in the quarter, sales of INTERCEPT consumable products represented nearly 97% of our Q4 product revenue. In addition to our product revenue and not included in our guidance, government contract revenue totaled $10.2 million in Q4 and $28.7 million for the full year. Comparatively, government contract revenue totaled $5.4 million and $22.3 million for the fourth quarter and full year 2020, respectively. The year-over-year and sequential increases in our fourth quarter government contract revenue comes following an agreement we reached with the U.S. BARDA on reimbursement for allowable costs that the Company has previously been deferring. This resulted in a one-time catch up of $3.3 million, a reversal of what had been an ongoing accrual. Going forward, we expect the agreement with BARDA will result in slightly higher government contract revenue than the prior several quarters, independent of any increases associated with ramping patient enrollment and other activities under the contract. Turning now to our product gross profit and gross margins. For the second consecutive quarter, our fourth quarter product gross profit was the highest in Company history at $20.4 million compared to $16 million during the prior year period. For the full year, product gross profit was $67.4 million, compared to $50.8 million in 2020. The increase in gross profit was primarily driven by the higher product sales. Product gross margins for the quarter were 51.1%, which was roughly flat relative to the prior two quarters in 2021. And for the full year 2021 product gross margins were 51.5% compared to 55.2% in 2020. As we've discussed previously and experienced throughout the year, our fourth quarter and full year product gross margins were impacted by the product mix associated with our higher sales volume of single dose kits to customers in the U.S., unfavorable foreign exchange rates, and increased freight costs. Despite pressure from elevated expenses in this rising cost environment, we continue to make progress with our ongoing margin expansion initiatives that we believe will position us for a gradual return to gross margin expansion over the coming years. Moving on to fourth quarter operating expenses which totaled $37.6 million and included $6.5 million in noncash stock-based compensation. For the full year 2021 operating expenses totaled $145 million, including $23.6 million in noncash stock-based compensation. On both, the quarterly and annual basis, we continue to deliver operating expense leverage. Our concerted efforts on financial discipline have resulted in slower expense growth compared to our increase in top line. We continue to believe that at the core, the business model will provide for much further leverage, particularly given the finite number of blood centers globally and our focused R&D efforts. By specific expense type, fourth quarter research and development expense totaled $15.6 million compared to $17.1 million during the prior year. For the full year, 2021 R&D expense totaled $63.7 million, compared to $64.4 million in 2020. Our total R&D spend includes continued investment in the U.S. red blood efforts, which are reimbursed by U.S. BARDA, as well as next generation INTERCEPT products, such as our LED illuminator, which is currently in development. Fourth quarter SG&A expense was $22 million and was up 18% versus the prior year period, driven primarily by commercial costs associated with our higher product sales. For the full year, SG&A expenses totaled $81.3 million, up 21% versus the prior year period. On the bottom line, reported net loss attributable to Cerus for both, the three months and full year ending December 31, 2021, both improved, when compared to the same periods in 2020. Net loss attributable to Cerus for Q4 totaled $9.1 million or $0.05 per diluted share, compared to $14.4 million or $0.09 per diluted share for the prior year period. For the full year net loss attributable to Cerus totaled $54.4 million or $0.32 per diluted share, compared to $59.9 million or $0.37 per diluted share in the prior year period. Turning to the balance sheet and cash flows. 2021 was an exceptional year for the Company in managing its cash while strategically investing in the business. As a result, we ended the year in a strong position with $129.4 million of cash and cash equivalence on the balance sheet. As our business grows, we continue to expand the use of our revolving line of credit, and during the quarter, we drew an additional $5 million from the facility and managed our working capital lines closely, despite continued investment in inventory. Accordingly, cash used from operations was $1.2 million for the fourth quarter and $33.9 million for the full year. In both instances, these are improved from prior historical periods and are an ongoing focus area of ours. As Obi mentioned, we are working with our manufacturing partners to scale capabilities and obtain necessary regulatory approvals for new capacity to come online, and continue to meet our strong customer demand. While we wait to obtain regulatory clearance for this capacity, we have grown our inventory levels to meet the anticipated demand growth. And despite increased production levels over 2021, we will likely draw inventory levels down in 2022 to continue to serve our customers and support our top-line growth aspirations. We expect this will be as seamless as possible for our customers and their hospital accounts. Consistent with the guidance provided for 2022 earlier in January, today, we are reaffirming our 2022 product revenue guidance, which is a range of $157 million to $164 million, reflecting year-over-year growth in a range of 20% to 25%. Similar to 2021, we expect the majority of our product revenue growth in 2022 to be led by INTERCEPT platelets in the U.S. Given the ongoing challenges associated with hospital access due to COVID, our guidance contemplates modest contribution from IFC in 2022, and we look forward to this product driving more meaningful top-line growth in 2023 and beyond. As we discussed on our third quarter call, our top-line growth and the financial discipline we are deploying at Cerus is helping drive us towards achieving cash flow breakeven. In order to highlight this progress over the course of 2022 and beyond, we plan to begin reporting non-GAAP adjusted EBITDA, beginning with our Q1 results this spring. To help with the modeling of this measure, I wanted to share with you exactly how we will be calculating our non-GAAP adjusted EBITDA. To start, we'll begin with our reported loss from operations, subtracting our government contract revenue and the related costs, which mainly reflect reimbursement from U.S. BARDA. From there, we will also back out non-cash stock-based compensation expense, depreciation and amortization, and the P&L impact from our Chinese joint venture. We believe this will provide us with the benchmark and insight into the cash flows at which our core business operates. We look forward to demonstrating progress against this important benchmark, and providing you with a tabular breakout beginning with our Q1 results. With that, let me turn the call back over to Obi to provide an update on our pipeline as well as a few closing comments.

Obi Greenman, President and CEO

Thank you, Kevin. While we continue to make progress, as Kevin just outlined, towards achieving cash flow breakeven in the near term, we’re also focused on advancing several R&D programs that we think will continue to provide runway for our future growth and global leadership position in transfusion medicine. Our R&D programs are focused on continuing to innovate pathogen inactivation to unlock new markets, incorporating next generation technologies to extend our IP, and developing enhancements to our offering that improve both customer experience and our cost profile. Regarding the INTERCEPT Red Blood Cell program, our U.S. efforts in enrolling patients for our two Phase 3 studies, RedeS and ReCePI are ongoing. While COVID-19 continues to present challenges with respect to the pace of enrollment of these studies, we plan on providing more detail later this year around our expected timeline for completion of these studies and subsequent PMA submission. In Europe, you'll recall, we completed the modular submission filing for CE Mark with TUV during the second quarter of 2021, and the Dutch Competent Authority, CBG, would be reviewing a portion of the submission. We anticipate dialogue with both entities in the coming months, but do not yet have an update on this submission today. We continue to plan for a launch of the INTERCEPT Red Blood Cell system in Europe in 2023. We also continue to work on a new LED illuminator, which represents the next generation of our INTERCEPT platelet and plasma product line. Over the next several quarters, we will be completing R&D workflows in preparation for regulatory submissions and look forward to introducing this product to the market with the expectation that this new device will serve as the backbone for future INTERCEPT product iterations as well. In summary, our commercial momentum in 2021 is positioned to continue in 2022 and beyond. Building on our platelet franchise, we have several additional growth opportunities laid out over the next several years that will also benefit from our improving financial profile. We look forward to further expanding access to INTERCEPT products for patients in the years ahead and realizing our important mission to be the standard of care in transfusion medicine. With that, let me turn it back over to the operator for Q&A.

Operator, Operator

Our first question comes from Josh Jennings with Cowen.

Josh Jennings, Analyst

Hi. Good evening. Thanks for taking the questions. And congratulations on the strong finish to the year. I appreciate you laying out the guidance parameters you are reiterating and helping us sort through some of the details. And I think the U.S. growth being the majority of the contribution to the guidance level makes sense. I just wanted to review just on the OUS growth opportunities. I know 2022, you're not forecasting significant contribution in growth from the OUS INTERCEPT platelet and plasma franchise. But thinking about into the out years, and you have China, you have approvals in Germany. Can you just help us walk through the opportunities to accelerate growth in EMEA, but especially in our ROW, because as we look at some of the charts you showed in your presentation, the Rest of the World seems like it's a very de minimis contributor today, but where can that go tomorrow and then in the future?

Obi Greenman, President and CEO

Yes. Thanks a lot, Josh. This is Obi. I'll take a shot at that first, and if Kevin, you want to add to it, let me know. But, we still see growth coming out of the European markets. I think a lot of times, it's been somewhat binary there. So, we've been reluctant to commit too much in any given year just until those binary events happen. But we definitely have growth in our guidance for 2022. As I mentioned in the prepared remarks, the overall TAM, historically said for platelets is globally about $1.3 billion, we think it's probably north of $1.5 billion now, just as a function of the overall growth and platelet demand over the last several years we’re seeing mid-single-digit growth in many geographies. And then, as you mentioned, if it's not already, it soon will be the largest market opportunity for INTERCEPT in China. And so, we're working diligently with our joint venture partner there, ZBK, to get a submission this year, hopefully going to have clarity on whether we need to do a study there this year as well. So, that study would start if we need to do it post submission, but still looking at an opportunity to start selling there in the next couple of years. And so, overall, just looking at where we currently are with our platelet market share penetration ex-U.S., there's a lot of room to grow, both in EMEA and in China, as well as other countries around the world.

Josh Jennings, Analyst

I wanted to ask about the IFC launch. You've mentioned that 2022 wouldn't see significant changes, but you're still laying the groundwork for commercialization. I'm curious about the commercial partnerships you announced with OneBlood and Blood Centers of America. Can you clarify how that business model works? It seems similar to your existing model with blood centers where you sell kits and they manage distribution. Could you elaborate on that? Also, are there any other partnerships in the works, perhaps with ARC or other major blood centers, that could be part of this collaboration? Thank you.

Obi Greenman, President and CEO

That's a great question. We were pleasantly surprised to receive the BLAs in Gulf Coast and Texas, as well as from the Central California Blood Center, earlier than we anticipated. This has allowed us to start a nationwide launch in Q1 of this year, which is great not only for Cerus but also for patients and our transfusion physician customers. Previously, we viewed our business model as requiring significant direct access to hospitals to sell the product, so we aimed to sell finished biologics to those hospital customers. That remains true, but due to the demand from hospitals and our ability to leverage our current sales force in partnership with blood center customers, many major blood centers approached us in 2021 expressing their desire to sell this product directly to their customers. With the NTAP secured, the business model is somewhat akin to what we've seen with INTERCEPT platelets, allowing for a premium that enhances our profitability. The NTAP pricing has certainly influenced how blood centers perceive this product opportunity. We initiated discussions with OneBlood in Florida, recognized for their strong presence, as well as with BCA, which encompasses approximately 55 to 60 large blood centers across the U.S. They expressed a strong interest in this product to meet their members' needs for a differentiated, higher-value product. We partnered with them toward the end of last year. Overall, we are set for a nationwide launch starting in Q1, collaborating with our existing blood center customers and sales force for greater effectiveness, which should positively influence our overall SG&A model. As for the American Red Cross, they remain our most significant global customer, and we have a solid partnership with them. They were early supporters of creating value-added products in this field and receiving compensation for those products. There is a strong interest on their part, as they, along with other blood centers globally, are struggling to meet the high current demand for blood components. Their main focus now is to ensure they can supply their hospital customers, given the disproportionate demand relative to the last decade, and to strengthen their supply chain. Discussions with the Red Cross are ongoing, and we hope to collaborate with them as well.

Operator, Operator

Our next question comes from Jacob Johnson with Stephens.

Jacob Johnson, Analyst

Maybe following up on Josh's question around IFC, you've got a couple of partners with BLAs in hand, you've got blood centers coming to you wanting to sell this product. You're talking about modest contribution, as you have been talking about for 2022. Can you just talk about what you think the inflection point for this product is, and what makes that happen? Is this just your sales force getting out and talking to hospital customers? Is it kind of key opinion leaders highlighting the value proposition? And I assume, it's probably been somewhat impacted by hospitals dealing with COVID. But I'm just curious what drives ultimate adoption of IFC, do you think?

Obi Greenman, President and CEO

Thank you, Jacob. That's an excellent question regarding the key milestones for this product over the next few years. What we've observed, especially with platelets, is that having access to real-world experience data significantly boosts demand. In this case, we are focused on saving patients' lives from traumatic blood loss or internal hemorrhage. Once we have some of that data available in 2022 and into 2023, I believe it will greatly influence how physicians perceive this product and its usefulness. Additionally, we will have data on wastage rates in hospitals and whether the product truly affects those rates, which we are already beginning to see, but we need systematic documentation of that. We previously mentioned the CRYOSTAT-2 study completed last year in the UK, which examined the early use of cryoprecipitate for traumatic blood loss with a focus on mortality outcomes. The latest update on that study is expected to be released around September, which could significantly affect how physicians consider using IFC earlier in treating traumatic blood loss. This raises the question of whether it will be included with the supplies sent to operating rooms immediately or if its use has historically been delayed. There are several data points that I believe will drive overall demand for the product. Moreover, our existing partnerships with BCA, OneBlood, and others ensure that we have the capacity to meet the anticipated demand.

Jacob Johnson, Analyst

This is a follow-up, maybe for Kevin, just SG&A kind of took a little bit of a step up in 2021, as you prepare for this IFC launch. As we head into 2022, just any kind of commentary around SG&A trends, any areas for investment, just the outlook there in 2022?

Kevin Green, CFO

Yes. So, I think it has the potential to creep up slightly, but certainly at a much slower pace than the ramp in revenue. In 2021, our prepared remarks were really centered around variable compensation. And as we outperformed, our sales team, we want them to share that. And so, hopefully, we're in the same situation in 2022. But beyond that, we do expect it will return to more customer-facing travel, more in-person trade shows and marketing events. And so, that's where I think you're going to see some of the costs pick up slightly from 2021 levels.

Operator, Operator

Our next question comes from Brandon Folkes with Cantor Fitzgerald.

Brandon Folkes, Analyst

Congratulations on another strong quarter. Kevin, following up on the previous question, can you clarify whether the increase in SG&A was on an annual basis or compared to the Q4 run rate? Additionally, your cash position is robust, and you’ve mentioned a decreasing cash burn and a pathway to profitability, along with potential growth in these total addressable markets. How should we approach capital allocation moving forward? Specifically, how does the leverage in your business model factor into addressing the TAM expansion versus making additional investments? You've mentioned the joint venture in China, which seems to be capital light. Can you provide more insight into how this relates to addressing the TAM? Thank you.

Kevin Green, CFO

Yes. Why don't I get a stab, and Obi, if there's something you want to contribute, please feel free. So, there's a lot there. Let me start with the first question about SG&A quarterly versus year-to-date. I think it's really both. As we fine-tuned our forecast and as we saw sales continuing to elevate beyond our guidance, we continue to increase the overall compensation accruals. So, that's certainly something you saw in Q4 and for that matter for the full year. As it pertains to leverage going forward and with the increase in TAMs, the business really is extremely leverageable. So, if you think about our existing commercial footprint in EMEA and the U.S., with the TAMs increasing organically, we really don't need to add a lot of SG&A costs to realize the revenue opportunity there. When we talk about our joint venture in China, it's really incumbent on our joint venture. It's not a Cerus sales effort, it's the joint venture and it's an independent, standalone operation. And so, we will certainly consolidate and record our share of revenue, COGS and expenses, but we expect that that will largely be accretive soon after commercialization. But again, we are a few years away from that becoming a reality. So, in short, it's a highly leveragable business model. We've got a fairly solid balance sheet. We continue to invest in the future and likely we'll continue to invest in the future, both on working capital, but also capacity expansion and quality concerns.

Obi Greenman, President and CEO

Yes. The last thing I would add, Brandon, is just the sort of evolving R&D portfolio. So, we've got a lot of exciting things there. We mentioned today, the progress on the LED illuminator, and that's really a platform for future growth and product iterations, not only to really address customer needs or delight them, if you will, having something that's a lot easier to use, but ultimately, that leads to a change in our cost profile for our business as well. And so, that's something we clearly would like to accelerate. But to Kevin's point, I think that the main takeaway is that, as we see adoption of INTERCEPT globally, this is a highly leverageable business. And the footprint that we need to be able to address the market doesn't need to grow that materially, even with the ultimate launch of the red blood cell system.

Operator, Operator

Our next question comes from Mark Massaro with BTIG. Your line is open.

Unidentified Analyst, Analyst

Hey guys. This is Vivian on for Mark. Thanks for taking the question. So, could you discuss some of the puts and takes that went into the 2022 guide, how that accounts for COVID and the blood shortage in the U.S. we've been witnessing? And if you could also touch on some of the drivers that make that strong growth sustainable. Thank you.

Obi Greenman, President and CEO

Yes, I'll begin. Much of the growth we've discussed in our prepared remarks is primarily fueled by growth in the United States. We still find that INTERCEPT platelets are the preferred choice based on FDA guidance. We have seen a reasonable market share, and the adoption rate among major customers in the U.S. has been substantial, although there remains considerable opportunity for growth. Our focus for 2022 will largely revolve around managing the balance between supply and demand in light of our current capacity. We also noted that we expect to see growth from the EMEA region, but much of our guidance suggests that most of our production capacity will be allocated to support growth in the U.S. Kevin, do you have anything else to add?

Kevin Green, CFO

No. I don't think so. I don't think so. I think you covered it sufficiently.

Unidentified Analyst, Analyst

Okay, awesome. Just a quick follow-up. If you could provide any color on the goal of getting the Red Cross move to a 100% INTERCEPT by 2023. And if you could speak to whether or not any progress there is also swinging other blood centers as well? Thanks.

Obi Greenman, President and CEO

Yes. Thank you for the question. Historically, the Red Cross has expressed a desire to reach a 100% goal. They made significant progress towards this in 2021 and are continuing that trend in 2022. This effort is partly due to their focus on providing the safest single blood component available, meaning they prefer not to manage multiple inventories and aim for the safest platelet component. Therefore, their ability to reach 100% will depend on whether all their hospital customers are on board, and from what we understand, they are. Additionally, our capacity to meet this demand will also play a crucial role.

Operator, Operator

There are no further questions. I’d like to turn the call back over to Obi Greenman for any closing remarks.

Obi Greenman, President and CEO

Thank you again for joining us today and for your interest in Cerus. We look forward to speaking with you at Cowen’s 42nd Annual Virtual Healthcare Conference next month, and sharing our progress throughout this year. Thanks very much.

Operator, Operator

This concludes the program. You may now disconnect. Enjoy the rest of your day.