Earnings Call Transcript - CERS Q2 2022

Operator, Operator

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Cerus Corporation Second Quarter 2022 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, Mr. Matt Notarianni, Senior Director of Investor Relations. Mr. Notarianni, you may begin.

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; Vivek Jayaraman, Cerus' Chief Operating Officer; Dr. Nina Mufti, Cerus’ Vice President, Development and Red Blood Cell Program Leader; Dr. Richard Benjamin, Cerus’ Chief Medical 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 second quarter ended June 30, 2022, 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, and our Form 10-Q for the quarter ended June 30, 2022, which we will file shortly. We undertake no duty or obligation to update our forward-looking statements. On today's call, we will also be discussing non-GAAP financial measures including non-GAAP adjusted EBITDA. These non-GAAP measures should be considered a supplement to and not a replacement for measures presented in accordance with GAAP. For a reconciliation of non-GAAP financial measures to comparable GAAP financial measures, please refer to today's press release. We’ll begin today with some opening remarks from Obi, followed by Vivek to discuss some recent business highlights and Kevin to review our financial results. We will conclude with commentary from Obi with an update on our pipeline and closing remarks. And now, it’s my pleasure to introduce Obi Greenman, Cerus’ President and Chief Executive Officer.

Obi Greenman, President and Chief Executive Officer

Thank you, Matt, and good afternoon, everyone. Reporting on our second quarter of 2022, I am proud of the results our team has been able to deliver as we continue to expand patient access to blood components treated with our INTERCEPT Blood System around the world. The interest level and understanding of the value of pathogen reduction continues to increase. Notably, earlier this summer, we were pleased to work on a study recently published in transfusion, which concluded that a robust rollout of pathogen reduction for all blood components such as the INTERCEPT Blood System could provide a way to increase donor retention and improve blood product availability. The strong safety profile and track record of the INTERCEPT Blood System in routine use in many regions continues to reinforce the utility of pathogen reduction as a definitive safeguard. Earlier this summer, we eclipsed cumulative kit sales, which translates into more than 12 million INTERCEPT treated transfusable units of platelets and plasma, an increase of 2 million doses in less than a year. The strong revenue growth is expediting our pathway to cash flow breakeven as defined by our non-GAAP adjusted EBITDA metric that we began providing on our Q1 call. Our rapid growth over the last few years means that we're now selling in a single quarter just slightly less than what we used to sell in an entire year as recently as 2017. It is a remarkable achievement for the company, yet there are significant growth opportunities for us in the quarters and years ahead as we seek to realize our mission of making INTERCEPT the standard of care in transfusion medicine globally. After Vivek and Kevin provide some color on the quarter and how we see the balance of the year shaping up, I will wrap up with comments on some of our important product pipeline development efforts that will help us continue to realize our mission and the upside associated with the full INTERCEPT portfolio for all blood components. We believe we have clearly established our leadership in the U.S. platelet market with North America product sales for the second quarter implying a $100 million annualized run rate. With our ability to continue to grow our presence in platelets in the U.S. and around the globe, and create further awareness and increased penetration for the INTERCEPT Fibrinogen Complex product in the U.S., we expect to deliver meaningful top-line growth from those opportunities. As we demonstrate this growth coupled with our financial discipline, we see a clear pathway toward cash flow breakeven, which we believe will afford us the flexibility to self-fund future growth, which marks a change from our history of tapping the equity markets, which helped us establish our commercial footprint and funded manufacturing capacity and supply chain activities, all of which have contributed to help us realize our unique position in transfusion medicine and secure our leadership in the field well into the future. I would now like to turn the call over to Vivek to discuss the second quarter revenue highlights.

Vivek Jayaraman, Chief Operating Officer

Thank you, Obi, and good afternoon to everyone joining today's call. Product revenues for the second quarter of 2022 continued our trend of strong year-over-year performance, up 30% for the quarter. As has been the case for the last several quarters, our product revenue growth was led by strong demand for our platelet products offering, particularly in North America where sales increased 75% on a year-over-year basis and 15% sequentially. Additionally, North American product sales in Q2 included a modest contribution from Canada, which continues to be a geography we're excited to be finally serving with Canadian blood services at their facility in Ottawa. We look forward to expanding our presence in this market once we secure the necessary regulatory approvals from Health Canada, as we have previously discussed. Rounding out North America, we also recognized a modest contribution from INTERCEPT Fibrinogen Complex or IFC in our second quarter product revenues, I'll discuss the status of our nationwide ISV launch a bit more shortly. In EMEA, excluding some significant currency headwinds that Kevin will touch on in his remarks, the business saw positive growth in the second quarter led by sales across the Middle East region. Our ISV sales saw a sequential increase in the second quarter, but as expected, its contribution to our overall top line was modest and will likely remain so for the balance of the year. In launching this product, we continue to be pleased with physician interest in the potential to improve outcomes in bleeding patients, and our focus on increasing market awareness and early hospital experiences with this product. The feedback to date from those using IFC has been uniformly positive as they see clear benefits associated with the product's immediate availability and ability to reduce the wastage rate. With that said, product uptake has been happening at a more measured pace than we initially expected due to the current challenging hospital environment, resulting from COVID-related challenges such as short-staffed hospitals and the difficulties getting new products onboard and utilized. Based on the clinician feedback our commercial team has received at various hospital accounts, we continue to see this product addressing a critical unmet need related to early availability of Fibrinogen to improve patient outcomes and ultimately help save lives in cases of massive hemorrhage. Our ongoing efforts to build a strong body of evidence around IFC’s utility as a pathogen reduced, longer shelf-life surrogate for conventional cryoprecipitate remains one of our top commercial priorities and we're looking forward to seeing this business ramp in the back half of 2022 and beyond. I will now turn it over to Kevin to discuss our results and outlook in more detail.

Kevin Green, Chief Financial Officer

Thanks, Vivek, and good afternoon, everyone. I'm pleased to walk through our second quarter results, which continue to demonstrate solid commercial execution and disciplined financial management. These results move us closer to our goal of reaching cash flow breakeven in the near term and are a testament to the commitment of the entire organization. As Vivek noted in his remarks, we posted strong second quarter 2022 product revenue of $41 million, which reflected year-over-year growth of 30% and was led by sales in North America during the quarter. The majority of this increase was led by sales across our U.S. customer base, with sales to the top five blood center customers growing over 70% on a year-over-year basis, and other U.S. customers also growing more than 50% year-over-year. In EMEA, for both the second quarter and first half of the year, growth of the underlying business in these regions was offset by unfavorable foreign exchange rates, particularly with the recent move in the U.S. dollar versus the euro. Clearly, the persistence of the stronger U.S. dollar is a factor we and many other companies are having to grapple with. However, the bulk of our manufacturing costs are also denominated in euros, creating a natural hedge that results in an offset to our COGS as reported in U.S. dollars, muting the impact on the rest of our P&L. Moving on to our calculated platelet dose metrics, our second quarter growth in the calculated number of treatable platelet doses reflects a 65% year-over-year increase in the U.S. and a 22% increase internationally. For the first half of the year, the number of doses has grown by 94% year-over-year in the U.S. and 25% internationally. In terms of product mix for the quarter, sales of INTERCEPT disposable kits represented over 96% of our Q2 product revenue. In addition to our product revenue and not included in our guidance, government contract revenue totaled $6.6 million in Q2 versus $6.3 million for the prior year period. Turning now to our product gross profit and gross margins. Our second quarter product gross profit was $21.3 million, compared to $16.2 million during the prior year period, an increase of over 30% year-over-year. Our continued product sales growth has been the primary driver of our increased product gross profit from the past several quarters, and Q2 saw a continuation of this trend. Product gross margins for the quarter were 51.9%, which increased 60 basis points when compared to the prior year period. While our mix of products continues to be heavily weighted toward our single dose platelet kits, which have lower margins than our other product configurations, we are also beginning to see a return to economies of scale as we grow. Moving on, our second quarter operating expenses, which totaled $34.7 million, were $2.1 million lower than the prior year period and included $5 million in non-cash stock-based compensation. Our specific expense type, second quarter R&D expense totaled $15.2 million, compared to $17.1 million during the prior year period. Second quarter SG&A expense was $19.5 million and was roughly flat versus the prior year period. Despite the inflationary macroeconomic environment, our business has continued to show its ability to grow while generating operating leverage. Having said that, we would expect to see some modestly higher expenses during the second half of the year, driven by higher labor costs, increased travel for customer and marketing related activities, and higher prices from certain vendors. On the bottom line, reported net loss attributable to Cerus for the three months ended June 30, 2022, nearly halved when compared to the same period in 2021. Net loss attributable to Cerus for Q2 totaled $8.4 million or $0.05 per diluted share, compared to $15.4 million or $0.09 per diluted share from the prior year period. Moving on to our adjusted EBITDA metric, second quarter non-GAAP adjusted EBITDA totaled negative $2.4 million, compared to negative $8.2 million during the second quarter of 2021 and negative $3.7 million during the first quarter of this year. On a year-to-date basis, our non-GAAP adjusted EBITDA also improved in the first half of 2022 to negative $6.1 million, compared to negative $19.7 million in the first half of 2021. Now, turning to the balance sheet and cash flows. We continue to feel optimistic about the strong and improving financial position we are establishing, driven by our continued commercial execution and disciplined expense management. We ended the second quarter with a strong cash position of $107 million of cash and cash equivalents on the balance sheet. In terms of cash utilization, I'm especially pleased with the performance we delivered in Q2 as our cash used from operations came in just shy of $350,000 for the second quarter, compared to $8.7 million during the prior year period. We continue to drive this organization towards sustainable top-line growth while generating significant SG&A leverage, allowing us to invest in the deep pipeline to continue to expand and improve the INTERCEPT Blood System over the long-term. However, we've also not lost sight of our goals around cash flow breakeven and believe that they will be achievable in the near term. Wrapping up my prepared remarks, I'd like to spend a little time discussing our outlook for the back half of the year. Throughout the first half of 2022, we have demonstrated strong commercial execution in fulfilling robust global demand, despite the numerous economic and geopolitical headwinds around the globe. We continue to expect to deliver double-digit product revenue growth in the back half of the year, despite the continued downward pressure being caused by the strengthening U.S. dollar. As you know, the dollar is roughly at parity with the euro, and we expect this headwind to continue for our EMEA revenues for the balance of the year. Balancing the strong demand for our products with the FX headwind, today we are reiterating our full-year 2022 product revenue guidance range of $160 million to $165 million, which reflects year-over-year growth in a range of 22% to 26%. 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 Chief Executive Officer

Thank you, Kevin. Before we open up to questions, I wanted to provide a few updates on our product pipeline. First, our INTERCEPT red blood cell efforts continue to progress, especially with regard to the U.S. Phase III trials required for a future PMA submission to the FDA. You will recall that we have two Phase III studies underway: ReCePI and an acute anemia study enrolling complex cardiac surgery patients; and RedeS, which includes both acute and chronic anemia patients. Enrollment for both of these trials has been challenged by the COVID-19 impact on hospitals and procedures over the course of the pandemic, but given some of the progress that we have been making so far this year, I'm pleased to be able to provide the following update today regarding our target for completing enrollment. For ReCePI, our study was initially based on an enrollment endpoint of 600 patients set by the FDA to assess the change in serum creatinine in 48 hours after surgery. However, following recent discussions with the FDA, we have determined that a study size of more than 292 patients transfused would be sufficient based upon efficacy in light of the blinded assessment of the primary endpoint event rate. Currently, we are targeting enrollment of 340 patients for adequate power of the study, and with enrollment ongoing across more than a dozen sites, we have enrolled and transfused more than 200 patients. Assuming no further setbacks similar to what we saw with COVID-19, we would expect to complete enrollment for ReCePI by the end of next year. As a reminder, one of the main challenges in this study is that for about every two patients enrolled in this study, only one is transfused with either test or control red cells. Subsequent to the discussions with the FDA, we have reached an agreement to include red cell exchange sickle cell patients and other chronically transfused patients into our RedeS study, eliminating the need for a separate Phase III study. While we are still activating new sites to participate in RedeS, specifically chronic anemia patient cohorts, we believe that enrollment could be completed for this study in 2024. As this trial is enrolling chronic anemia patients, the duration of RedeS will extend beyond this timeframe since patient participation in the study can extend beyond 10 months. In summary, we are pleased with the solid progress these trials are making and the collaboration with the FDA and U.S. BARDA to generate a robust dataset for the anticipated PMA submission. Turning quickly to our European regulatory submission for INTERCEPT red blood cells, earlier this summer, our Competent Authority in the Netherlands, CBG, informed us that they have started their review of our submission. You will recall our notified body TUV has reviewed our filing as well, which we submitted in four modules. While this review is taking longer than we initially thought, we've seen good signs of progress over the last few months. As we discussed previously, the Competent Authority backlog due to the MDR regulatory transition in Europe has resulted in a slower than expected time to begin the review. With this process now underway, we look forward to working through any questions that arise and ultimately securing a CE Mark approval under the new MDR to enable a product launch. Regarding the development of our LED illuminator, our team has continued to make progress over the course of the first half of 2022 in partnership with our contract manufacturing partner. For instance, we have recently placed orders for long lead time components for the LED illuminators that will be used to begin production of initial commercial LED instruments. Our LED illuminator will mark the first major upgrade of our illumination device in our company's history and is a key component of our future product portfolio, both new product integrations and new intellectual property. We are very pleased with the feedback to date from the blood centers that are conducting the validation studies required for the upcoming regulatory submission and look forward to updating you in the coming quarters. As many obstacles associated with the pandemic continue to wane during 2022, we remain focused on expanding access to INTERCEPT blood components around the globe and are executing in the face of significant economic turmoil, delivering strong growth and an improving financial profile for the business. Before I wrap up my prepared remarks, I would also like to welcome Dr. Hua Shan to our Board. Dr. Shan has been an advocate for blood safety and pathogen reduction for many years and is truly a luminary in the field of transfusion medicine. We believe Dr. Shan’s expertise, forward thinking, and direct connection to the patients receiving blood components will make her a strong contributor to our Board and to the fulfillment of our mission. Specifically, as we expect our global footprint to expand over the coming years, both geographically with our China joint venture and with the introduction of our first-generation INTERCEPT red blood cell product, I'm confident that having Dr. Shan’s unique perspective will provide us with invaluable guidance as we embark on these critical growth initiatives for the next decade. With our two most recent additions to the Board, Ann Lucena and Dr. Hua Shan, we've added depth of expertise both in hospital operations and in transfusion medicine. With that, let me turn it back over to the operator for Q&A.

Operator, Operator

Thank you. And today's first question will come from Mr. Blackman with Stifel. Please go ahead.

Mathew Blackman, Analyst

Good afternoon, everybody. Thanks for taking my questions. If I could have a couple for Kevin to start and then maybe I’ll follow up for Obi and/or Vivek. I think Kevin, could you give us a sense of what the FX impact was on the top line in the quarter? And any sense of how much incremental FX you're absorbing to keep the full-year guidance intact?

Kevin Green, Chief Financial Officer

Sure, Matt. So, we had about a 6% headwind from FX for the quarter to date and more than that when we think about the full year; we initially gave guidance at a higher rate. Certainly, the FX rates, as we expect them to be for the back half of the year, are going to put some pressure on at least the top end of our guidance, but we do feel that we have enough demand that we can harvest and cultivate to maintain guidance. So, we felt comfortable reiterating today.

Mathew Blackman, Analyst

And Kevin, if I were to sort of guesstimate somewhere in the back half of the year, is it a couple million dollars of incremental FX? I'm just trying to get a sense of through the strength of the underlying business as you're looking back to the second half of the year?

Kevin Green, Chief Financial Officer

Yes. I think if it's at parity, for sure, I think it could be more than a couple of million, probably 3 million to 4 million. Obviously, we don't know where things are, but if you look at the back half of last year, we were at rates of 117 to 114, and clearly, it's still a sizable portion of our business. When the rates move to parity, it's going to have an impact, but the business is growing. We continue to sell kits to treat more and more platelet doses, and as you know, the U.S. is the largest driver of our growth this year. From a bottom line impact, we're selling dollar kits to U.S. customers but sourcing those in euros. So, we'll have a beneficial effect on the bottom line in the back half of the year.

Mathew Blackman, Analyst

Got it. And then if I could follow up with you, just how we should be thinking about the third quarter and seasonality? Another way to ask, I think if I look at consensus, it's roughly flat product revenues versus what you just posted. Is that the right place to be?

Obi Greenman, President and Chief Executive Officer

Yes. Thanks for the question, Matt. I'll let Vivek handle that one.

Vivek Jayaraman, Chief Operating Officer

Hey, Matt. Thanks for the question. Appreciate your interest. As you look into the second half of the year, as I mentioned previously, there are whether it's currency or continued access issues related to the pandemic in hospitals, certainly some headwinds that we're facing. That being said, underlying product growth and the strength of the business continues to be robust. So, I know it’s a hard one for Kevin; we don’t really offer quarterly guidance, but I think the team is confident we can continue to see product adoption. However, there are some very real headwinds we faced as we end the second half of the year.

Kevin Green, Chief Financial Officer

The only thing I'd note, Matt, is just as we went into Q3 last year, just to remind you that was sort of going into the final guidance being issued. So, there was clear motivation by U.S. blood centers to act decisively in Q3. So that may be a little bit of pressure on Q3 seasonality, but I just wanted to highlight that.

Mathew Blackman, Analyst

Yes, I appreciate that. And while I have you, maybe sneak this in. I appreciated the update on the early IFC rollout, just curious what you can do to accelerate adoption? Is it just a question of continuing to raise awareness or evolve the go-to-market strategy, which is obviously a little bit different than you guys operate today? Just any thoughts on how to sort of get that business accelerating? Thank you.

Kevin Green, Chief Financial Officer

Yes. Thanks, Matt. I'll handle the first part of that question and then turn it over to Vivek on what’s happening in real time with the commercial team. As Vivek mentioned in the prepared remarks, there is clear interest from physicians and from our existing hospital customers. So, we're seeing hospital customers saying, 'This is fantastic. We don't have to worry about wastage and Cryo having it available for massive transfusion protocols.' A lot of the thesis that the product has developed around is playing out. I'll let Vivek speak to what's happening at the hospital level regarding staffing and things like that, but we're clearly seeing the interest in the clinical benefit of the product being able to provide fibrinogen early to bleeding patients who are being diagnosed with fibrinogen deficiency, as well as the operational benefits for blood centers and hospitals, like not having to worry about waste rates or having to thaw products in an expedited way to try and get into a coagulopathic patient. Vivek, any other commentary you'd like to provide?

Vivek Jayaraman, Chief Operating Officer

Yes. The only thing I'd add to that, Matt, is you're familiar with this when you talk about launching new products in other sectors as well. Whether it's new product committees at hospitals or really influencing both the clinical decision-maker as well as the financial and purchasing administrators. The key for us is to keep getting opportunities to get in front of those committees as possible. Those meetings and so forth have certainly slowed down a bit just because hospitals have been chronically short-staffed, and many hospitals have put a freeze on new products for a while. But with that said, the single best thing we can do is continue to get the product in the hands of clinicians and create those experiences. This is a product with its clinical applicability and unmet need that it addresses once physicians start using it – that's where the peer-to-peer networking component and word-of-mouth become really powerful. So, it really is about continuing to maximize the opportunities to get in front of new product committees and drive that physician experience because every time a physician uses it, they really validate the power of the technology, and that's the best awareness generation we can have.

Mathew Blackman, Analyst

Thank you. I appreciate it.

Operator, Operator

Thank you. One moment for our next question. That will come from the line of Brandon Folkes with Cantor Fitzgerald. Please go ahead.

Brandon Folkes, Analyst

Hi. Thanks for taking my questions and congratulations on another very good quarter. Maybe just firstly on the financials. The OpEx discipline has obviously been impressive the last couple of quarters. It's actually a bit of a step down this quarter. So, just any color in terms of how representative this quarter's SG&A is of maybe a go-forward level?

Obi Greenman, President and Chief Executive Officer

Yes. Look, I think that's finished. The repeating theme that we've been highlighting is leverage in the business, and we expect that will continue. With that said, as we move into the back half of the year, the cost of labor has gotten more expensive, and certain vendors are asking for price increases in the inflationary environment; this isn't unique to Cerus, but we are managing it and don't feel like it's going to have a dramatic increase in our overall SG&A or R&D spend. With that said, I think in the prepared remarks, I mentioned that we did expect some modest increase in the back half of the year, but certainly muted relative to the top-line growth.

Brandon Folkes, Analyst

Great. Thanks. And maybe just for Vivek and following on from the earlier question, maybe just two-fold on IFC. Granted, it's still early, but what is resonating most in terms of uptake so far? Is it the sort of early availability, lower wastage; just any color there would be helpful? And then secondly, we’ve heard from a number of companies launching products in hospitals facing similar challenges with the lack of new adoption. What do you think changes that from your view? Is it just getting past COVID? Is it a return to a normalized staffing environment? What do you think is the biggest catalyst to getting past that challenge for IFC? Thank you.

Kevin Green, Chief Financial Officer

Yes. Thanks a lot, Brandon. I'll handle the last part of that question first and then turn the first part of that question over to Vivek. I think what is really going to drive momentum in the IFC business is awareness of other case studies at hospitals where you're saving lives with this product, and you understand the cost utility. That will play out as a function of registry studies that we have commencing right now, as well as institutional case studies. So, that's all very much in play right now. I think that will start moving the market more meaningfully. Vivek, any other perspective on the first part of that question?

Vivek Jayaraman, Chief Operating Officer

Yes. I think really for both parts of the question, the quick answer would be yes. I mean, depending on the audience with whom you're communicating, the earlier availability really resonates. Similarly, if you're talking to a financial or administrative decision-maker, having quantifiable information on reduction in wastage rates is definitely a very salient point for them as they are trying to handle increasingly challenging budgets. But I'd say the most visceral impact is any clinician who’s had a patient experience an untoward bleeding episode. Being able to intervene in a timely manner that ultimately is life-saving has a profound impact on them. You can't overstate the importance of that and how it resonates with clinicians and how they communicate that to their peers. That's probably the most powerful element we need to continue to drive into. Obi's point on having case studies, white papers at institutions that are starting to utilize the product, and ultimately registry-based data, that's all coming together to provide a compelling rationale for driving further adoption. In terms of some of the broader headwinds impacting new technology adoption beyond IFC, certainly, COVID winding down or moving towards a more endemic state will help; if hospitals get properly staffed so they have the bandwidth to take on new technologies through training, that will assist. Still, I believe we'll be able to overcome some of these things as the underlying clinical utility and value of IFC has been validated and strengthened during the course of our initial launch.

Brandon Folkes, Analyst

Thanks very much to both of you, and thanks for taking my questions and congratulations again.

Kevin Green, Chief Financial Officer

Thanks, Brandon.

Operator, Operator

Thank you. One moment for our next question. That will come from the line of Jacob Johnson with Stephens. Please go ahead.

Unidentified Analyst, Analyst

Good afternoon, everyone. This is Mac filling in for Jacob. I have a couple of quick questions. I recall that last quarter you mentioned the Chinese lockdowns impacted the preparation to submit INTERCEPT Platelets to the regulatory agency. Has there been any update on this, and are your timelines still on track?

Obi Greenman, President and Chief Executive Officer

Thanks, Mac. So, the quick answer to your question is, we’re still on track for submitting to the NMPA before the end of the year. The Chinese lockdowns around COVID have made managing the JV completely virtually challenging. We would like to meet with them face-to-face at some point in the near term, but things are progressing.

Unidentified Analyst, Analyst

Good to hear. And then also can you talk a little bit more about the entire business as a whole in this current environment, what's being impacted, and your ability to pass on price to customers?

Obi Greenman, President and Chief Executive Officer

Yes. Kevin, do you mind handling that?

Kevin Green, Chief Financial Officer

No problem. Yes. Increasing prices is something we’ve talked about for quite some time. We've been on the market in Europe for over a decade, and we've seen fairly flat ASPs. We are providing blood centers and hospitals with real clinical and economic benefits. It’s natural that over time, we will need to increase prices for them, not only in EMEA but globally. As far as the rest of the P&L is concerned, we continue to work with our suppliers and vendors. We generally have language covering price increases, and we continue to manage it. Over time, we expect to see some impact, but not anything alarming or anything causing us to recalibrate the timing for reaching our adjusted EBITDA neutrality metric. We will see how long this persists, but for now, that's where our thinking is.

Unidentified Analyst, Analyst

Great. Thanks for taking the questions.

Obi Greenman, President and Chief Executive Officer

Thank you, Mac.

Operator, Operator

Thank you. Our next question will come from Josh Jennings with Cowen. Please go ahead.

Josh Jennings, Analyst

Hi, good afternoon. Thanks for taking the questions. I wanted to just ask about the reiteration of product revenue guidance; it seems like that still represents nice strong momentum in the business, as further illustrated with the 2Q results. You're absorbing a couple million in FX headwinds and maybe a slower start to IFC, but my question is really just thinking about the INTERCEPT platelet business momentum. Should we be thinking about that business exceeding internal expectations or the full-year range exiting the first half and a slower IFC rollout impacting the corporate-wide product revenue guidance, as well as FX?

Obi Greenman, President and Chief Executive Officer

Well, I'm trying to assess what your question is there, Josh, but maybe Vivek can provide a little bit more color on, sort of, the ongoing platelet demand for the second half?

Vivek Jayaraman, Chief Operating Officer

Sure. I'd be happy to. I mean, I guess – and thanks for the question, Josh. The first thing that I have to say, and I think you can attest to this knowing Obi, that no matter how well we do, I don't know that we exceed his internal expectations. So, I don't want that necessarily to be the benchmark. Joking aside, we do see continued strength in the platelets franchise, both in the U.S. and internationally. That continues to be the U.S. platelet business, the single largest growth driver. Given customer adoption and their feedback in terms of their satisfaction with the technology and process, as well as hospitals' receptivity towards PR platelets, we feel confident we can continue to post strong results there. Certainly, we acknowledge the headwinds related to currency and lower relative to IFC, but we still believe that the underlying technology adoption and ultimately the IFC adoption will propel us forward. So that really speaks to why we can maintain the current range, albeit there are some unanticipated headwinds that potentially compromise the top-end. However, our business results continue to be fairly solid. Hope that helps clarify?

Josh Jennings, Analyst

It does. I'm sorry. I worded that question poorly. I really just wanted to get at the strength of the platelet franchise as it absorbs the slower IFC rollout and the FX headwinds. It sounds like that is the case. I also want to think about whether you're seeing a benefit in hospital staffing shortages, knowing there's always a labor crunch, particularly in blood banks. With the incremental labor required for large volume delayed sampling—has that been a benefit for you guys? Any updates on the national platelet supply and how that's impacting the business as well?

Obi Greenman, President and Chief Executive Officer

Yes. Thanks for the question, Josh. In general, we continue to see strong hospital demand for pathogen-inactivated platelets because essentially, you've got an earlier release of product, and at the blood center level, they have a single inventory that they can manage towards. So, that resonates both at the blood center and at the hospital level, and we continue to see that play out moving forward. I think as you look at the overall platelet supply, there is ongoing volatility from a demand and supply standpoint. We do see fluctuations from month to month. In general, we don't see the demand for overall platelet demand being that impacted in the U.S. at the moment, but it is variable. I often get requests for platelet donations, which serve as my barometer for what's going on with the platelet supply. Hopefully, that provides you with some perspective, but I think in general, what's unique about the U.S. compared to our European business is that we have that in certain blood centers and hospitals, but it continues to evolve in others. Over time, just the overall safety and simplicity of INTERCEPT platelets will further establish their position.

Josh Jennings, Analyst

Great. I want to thank you, Obi, and just have one last question. There was an article published by the American Red Cross suggesting that there could be evidence that pathogen reduction might replace the deferrals and testing for vector-borne pathogens. With that in mind, my real question is about the whole blood initiative you’re pursuing; do you have any updates on that? Additionally, what are your thoughts on the signals from the transfusion journal publication?

Obi Greenman, President and Chief Executive Officer

Yes. Thanks a lot, Josh. On the whole blood pathogen activation effort that we're pursuing in partnership with the FDA, that continues to progress, but I think what was really exciting about the update on this call, at least from my perspective, is just the progress we're making on the INTERCEPT red cell studies in that overall program. Richard, do you have any additional comments?

Richard Benjamin, Chief Medical Officer

Yes. Thanks, Obi. I think our red cell clinical trials faced headwinds, which seems to be the financial term. COVID was certainly a headwind for clinical trials in general, but we are happy to see enrollment pick up. We encourage that we now think we can get the ReCePI trial done in 2023 and RedeS in 2024; it’s nice to have visibility on things post-COVID.

Obi Greenman, President and Chief Executive Officer

That really speaks to what the article was covering in the transfusion literature about the potential utility of pathogen activation to address donor deferral criteria or future transfusion-transmitted infections. Richard, any other thoughts on what that article was trying to convey?

Richard Benjamin, Chief Medical Officer

I think it's very supportive. I believe there's a community within transfusion medicine that is seeing the future within pathogen reduction, particularly looking toward the need to extend to red cells. All this is something that might be in the future, but perhaps a bit further off. However, IFC falls in there too; it's pathogen-reduced, and we shouldn't forget about plasma. In the U.S., it's something that's been a forgotten part of the equation for too long.

Obi Greenman, President and Chief Executive Officer

Thanks, Richard. Thank you, Josh.

Operator, Operator

Thank you. And I'm showing no further questions in the queue at this time. I would now like to turn the call back over to management for any closing remarks.

Obi Greenman, President and Chief Executive Officer

Well, thank you all for joining us today and for your interest in Cerus. Our employees across the globe have continued to execute at a high level with a shared goal of making INTERCEPT the standard of care. We look forward to continuing to update you on our progress as our team continues to fulfill our mission, expand our future pipeline, and work to continue improving our financial profile. Thanks very much for joining us today.

Operator, Operator

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