-
Q2 product revenue of $8.6 million; reiterating $38-40 million annual
revenue guidance for 2014.
-
Final module of premarket approval (PMA) application submitted to FDA
for INTERCEPT Platelets; expect approval decision as early as H1-2015.
-
Submitted application for regulatory approval of INTERCEPT Platelets
in Canada.
-
Phase III European acute anemia clinical trial fully enrolled; plan to
submit application for CE mark approval of INTERCEPT Red Blood Cells
in H2-2016.
CONCORD, Calif.--(BUSINESS WIRE)--
Cerus Corporation (NASDAQ:CERS) today announced financial results for
the second quarter ended June 30, 2014.
“First half results were in-line with our expectations and reflect the
impact of strategic changes in certain markets covered by distributors.
We believe the appropriate foundation is now in place to resume revenue
growth going forward, with the results of these transitions expected to
be fully realized in Q4. With the anticipated completion of these
transitions, as well as recent wins in territories such as Belgium, we
remain confident in our ability to meet our 2014 annual revenue guidance
of $38-$40 million,” said William 'Obi' Greenman, Cerus’ president and
chief executive officer. “We now have INTERCEPT Platelet applications
under regulatory review in both the U.S. and Canada, and plan to submit
for CE mark approval of INTERCEPT Red Blood Cells in the second half of
2016.”
Revenue
Product revenue for the second quarter of 2014 was $8.6 million, a 15%
decrease from the second quarter of 2013. Product revenue for the first
six months of 2014 was $16.5 million, and represented a 17% decrease
from the first six months of 2013. This decline in product revenue for
the second quarter and first half of 2014 was expected, and was a result
of the implementation of recent strategic changes in certain distributor
geographies. The effect of these strategic changes was incorporated into
the Company’s annual revenue guidance of $38-$40 million for 2014.
Gross Margins
Gross margins on product revenue for the second quarter of 2014 were
45%, compared to 43% for the second quarter of 2013. Gross margins on
product revenue were 46% for the first six months of 2014, compared to
45% for the same period in 2013. This is the second quarter operating
under the new terms of the amended agreement with Fresenius-Kabi, the
manufacturer of the Company’s disposable kits. The amended agreement is
expected to continue to provide more stability in per unit costs for the
INTERCEPT cost of goods sold.
Operating Expenses
Total operating expenses for the second quarter of 2014 were $14.9
million, compared to $11.5 million for the second quarter of 2013, and
$27.8 million compared to $21.1 million for the six months ended June
30, 2014 and 2013, respectively. The increase in operating expenses was
related to development costs incurred in connection with the support of
the PMA submissions for both the INTERCEPT platelet and plasma products,
selling, general and administrative expenses incurred in anticipation of
a potential U.S. launch of the INTERCEPT System and increased costs
associated with ongoing red blood cell clinical studies, both in Europe
and the U.S. The Company expects to continue making focused investments
throughout the remainder of 2014 as visibility into the PMA approval
process and subsequent possible commercial launch for the INTERCEPT
platelet and plasma products becomes more certain. The Company also
expects to commence activities to pursue an accelerated clinical and
regulatory pathway and to accelerate the license-enabling manufacturing
and development work needed to prepare for a potential CE mark
regulatory submission for INTERCEPT Red Blood Cells. Accelerating these
activities is expected to result in increased costs sooner than the
Company had previously anticipated.
Operating and Net Loss
Operating losses during the second quarter of 2014 were $11.0 million,
compared to $7.1 million during the second quarter of 2013, and $20.2
million compared to $12.1 million for the six months ended June 30, 2014
and 2013, respectively. The lower revenues and increased operating
expenses realized during the second quarter and first half of 2014
relative to the same periods in 2013 were the primary drivers for the
higher operating losses.
Net loss for the second quarter of 2014 was $7.6 million, or $0.16 per
share on a fully diluted basis, compared to a net loss of $6.7 million,
or $0.10 per share on a fully diluted basis, for the second quarter of
2013. Net loss for the first half of 2014 was $7.8 million, or $0.28 per
share on a fully diluted basis, compared to a net loss of $17.0 million,
or $0.26 per share on a fully diluted basis, for the same period of 2013.
Net losses were impacted by the mark-to-market adjustments of the
Company's outstanding warrant liability to fair value. These adjustments
resulted in a non-cash gain of $3.5 million during the second quarter of
2014 compared to $0.7 million during the second quarter of 2013, and a
non-cash gain of $12.5 million and compared to a non-cash loss of $4.4
million during the six months ended June 30, 2014 and 2013, respectively.
Cash, Cash Equivalents, and Short-Term Investments
At June 30, 2014, the Company had cash, cash equivalents, and short-term
investments of $49.7 million compared to $57.7 million at December 31,
2013 and $48.3 million at March 31, 2014. During the second quarter of
2014, the Company entered into a new loan agreement which provides up to
$30 million in term loans, issuable in three separate $10 million
tranches. On June 30, 2014, the Company borrowed the first $10 million
under the loan agreement. During the second quarter of 2014, the Company
also repaid the outstanding $3.4 million it had previously drawn under
its now expired revolving line of credit. The additional two $10 million
tranches of term loans available under the loan agreement are available
at the Company’s option during certain periods and subject to the
Company receiving FDA approval of the INTERCEPT platelet or plasma
products. The third tranche is also conditioned upon the Company
achieving consolidated trailing six months‘ revenue at a specified level.
Recent Highlights
-
Signed five year agreement with Belgian Red Cross Flanders for the
INTERCEPT Blood System for platelets.
-
Secured a loan agreement for up to $30 million from Oxford Finance.
-
Final module of premarket approval (PMA) application submitted to FDA
for INTERCEPT Platelets in U.S.; expect approval decision as early as
H1-2015.
-
INTERCEPT Plasma PMA process ongoing; now expect approval decision as
early as Q1-2015.
-
Submitted application for regulatory approval of INTERCEPT platelets
in Canada.
-
Phase III acute anemia trial fully enrolled; plan to submit
application for CE mark approval of INTERCEPT Red Blood Cells in
H2-2016.
QUARTERLY CONFERENCE CALL
The Company will host a conference call and webcast at 4:15 p.m. Eastern
time today to discuss its financial results and provide a general
business overview and outlook. To access the live webcast, please visit
the Investor Relations page of the Cerus website at http://www.cerus.com/ir.
Alternatively, you may access the live conference call by dialing
866-235-9006 (U.S.) or 631-291-4549 (international).
A replay will be available on the company’s web site, or by dialing
855-859-2056 (U.S.) or 404-537-3406 (international) and entering
conference ID number 13514018. The replay will be available
approximately three hours after the call through August 13, 2014.
ABOUT CERUS
Cerus Corporation is a biomedical products company focused in the field
of blood safety. Cerus currently markets and sells the INTERCEPT Blood
System for both platelets and plasma in Europe, the Commonwealth of
Independent States, the Middle East and selected countries in other
regions around the world. In the United States, Cerus is seeking
regulatory approval of the INTERCEPT Blood System for plasma and
platelets. The INTERCEPT red blood cell system is in clinical
development. See http://www.cerus.com
for more information.
INTERCEPT and the INTERCEPT Blood System are trademarks of Cerus
Corporation.
Forward-Looking Statements
Except for the historical statements contained herein, this press
release contains forward-looking statements concerning Cerus’ products,
prospects and results, including statements concerning Cerus’
expectations regarding its 2014 revenue guidance and future sales
growth, the anticipated impact resulting from strategic changes to
Cerus’ distributor relationships, including Cerus’ expectation that
these changes will result in resumed revenue growth, the potential
approvals by the FDA of the PMA applications for the INTERCEPT Blood
System for plasma and platelets and the timing thereof, a potential CE
Mark regulatory submission for the red blood cell system, the timing
thereof and potential additional costs in support thereof, Cerus’ plans
to accelerate the activities needed to prepare for a potential CE Mark
regulatory submission for the red blood cell system, the potential
commercial launch in the U.S. of the INTERCEPT Blood System for plasma
and platelets and expenses in support thereof, future operating
expenses, research and development activity and expenses in support of
Cerus‘ regulatory submissions, the expected financial and other impacts
from Cerus’ amended agreement with its manufacturer of disposable kits,
and the availability and funding of the two remaining $10 million
tranches of term loans available under Cerus‘ new loan agreement with
Oxford Finance. Actual results could differ materially from these
forward-looking statements as a result of certain factors, including,
without limitation: risks associated with the commercialization and
market acceptance of, and customer demand for, the INTERCEPT Blood
System, including the risk that the negative sales impact from the
strategic changes to Cerus’ distributor relationships could last longer
or be more severe than anticipated and that Cerus may otherwise not
resume revenue growth in future periods; the uncertain and
time-consuming development and regulatory process, including the risks
that Cerus may encounter difficulties answering or remediating any
deficiency letters issued by the FDA in connection with its review of
Cerus’ PMA applications for the INTERCEPT Blood System for plasma and
platelets, which would delay any FDA approval decision, or that Cerus‘
PMA submissions might not be approved by the FDA in a timely manner or
at all, and the risk that additional investments and accelerated
development activities may not accelerate the timeframe in which Cerus
could potentially submit for CE mark approval of the red blood cell
system; adverse market and economic conditions, including adverse
fluctuations in foreign exchange rates; Cerus’ reliance on third parties
to market, sell, distribute and maintain its products; Cerus’ ability to
maintain an effective manufacturing supply chain; risks associated with
the satisfaction of the conditions to the funding of the two remaining
$10 million tranches of term loans available under Cerus‘ new loan
agreement with Oxford Finance and Cerus’ ability to maintain (and
otherwise comply with the covenants in) such loan agreement; as well as
other risks detailed in Cerus’ filings with the Securities and Exchange
Commission, including Cerus’ Quarterly Report on Form 10-Q for the three
months ended March 31, 2014 filed with the SEC on May 12, 2014. Cerus
disclaims any obligation or undertaking to update or revise any
forward-looking statements contained in this press release.
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CERUS CORPORATION
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
(in thousands except per share information)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2014
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2013
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2014
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2013
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Revenue:
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Product revenue
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$
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8,601
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|
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$
|
10,150
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|
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|
|
|
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$
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16,467
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|
|
|
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$
|
19,883
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Cost of product revenue
|
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|
|
|
|
|
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4,752
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|
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5,747
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|
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8,909
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|
|
|
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10,837
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Gross profit on product revenue
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|
|
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3,849
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|
|
|
|
4,403
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|
|
|
|
|
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7,558
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|
|
|
|
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9,046
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|
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Operating expenses:
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Research and development
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4,722
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|
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3,506
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|
|
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|
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9,364
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|
|
|
|
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6,206
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Selling, general and administrative
|
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|
|
|
|
|
|
10,080
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|
|
|
|
|
7,954
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|
|
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18,316
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|
|
|
|
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14,807
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|
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Amortization of intangible assets
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|
|
|
|
|
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51
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51
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|
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101
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|
|
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|
|
101
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|
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Total operating expenses
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|
|
|
|
|
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14,853
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|
|
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|
|
11,511
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|
|
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|
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27,781
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|
|
|
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21,114
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|
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Loss from operations
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|
|
|
|
|
(11,004
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)
|
|
|
|
|
(7,108
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)
|
|
|
|
|
|
|
(20,223
|
)
|
|
|
|
|
(12,068
|
)
|
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Non-operating income (expense), net
|
|
|
|
|
|
|
|
3,459
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|
|
|
|
|
438
|
|
|
|
|
|
|
|
12,491
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|
|
|
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|
(4,803
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)
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|
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|
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Loss from operations before income taxes
|
|
|
|
|
|
|
|
(7,545
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)
|
|
|
|
|
(6,670
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)
|
|
|
|
|
|
|
(7,732
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)
|
|
|
|
|
(16,871
|
)
|
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Provision for income taxes
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|
|
|
|
|
|
|
44
|
|
|
|
|
|
54
|
|
|
|
|
|
|
|
82
|
|
|
|
|
|
105
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|
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Net loss
|
|
|
|
|
|
|
$
|
(7,589
|
)
|
|
|
|
$
|
(6,724
|
)
|
|
|
|
|
|
$
|
(7,814
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)
|
|
|
|
$
|
(16,976
|
)
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Net loss per common share:
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Basic
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|
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|
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$
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(0.10
|
)
|
|
|
|
$
|
(0.10
|
)
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|
|
|
|
|
$
|
(0.11
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)
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$
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(0.26
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)
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Diluted
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$
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(0.16
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)
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|
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$
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(0.10
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)
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|
|
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$
|
(0.28
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)
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|
|
|
$
|
(0.26
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)
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Weighted average common shares outstanding used for computing net
loss per common share:
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Basic
|
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|
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72,899
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|
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69,727
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|
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72,495
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|
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64,756
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Diluted
|
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|
|
74,517
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71,928
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|
|
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74,927
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|
|
|
|
|
64,756
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|
|
|
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|
|
CERUS CORPORATION
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
(in thousands)
|
|
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|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
|
|
|
|
December 31,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and short-term investments
|
|
|
|
|
|
|
|
|
|
|
$
|
49,696
|
|
|
|
|
|
$
|
57,676
|
|
Accounts receivable
|
|
|
|
|
|
|
|
|
|
|
|
4,478
|
|
|
|
|
|
|
6,125
|
|
Inventories
|
|
|
|
|
|
|
|
|
|
|
|
13,377
|
|
|
|
|
|
|
13,063
|
|
Prepaid expenses and other current assets
|
|
|
|
|
|
|
|
|
|
|
|
2,769
|
|
|
|
|
|
|
1,290
|
|
Property and equipment, net
|
|
|
|
|
|
|
|
|
|
|
|
3,615
|
|
|
|
|
|
|
2,189
|
|
Goodwill and intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
2,559
|
|
|
|
|
|
|
2,660
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
|
358
|
|
|
|
|
|
|
378
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
$
|
76,852
|
|
|
|
|
|
$
|
83,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
$
|
13,788
|
|
|
|
|
|
$
|
15,487
|
|
Deferred revenue
|
|
|
|
|
|
|
|
|
|
|
|
266
|
|
|
|
|
|
|
181
|
|
Debt - current
|
|
|
|
|
|
|
|
|
|
|
|
--
|
|
|
|
|
|
|
3,366
|
|
Warrant liability
|
|
|
|
|
|
|
|
|
|
|
|
7,653
|
|
|
|
|
|
|
20,390
|
|
Debt - long term
|
|
|
|
|
|
|
|
|
|
|
|
9,848
|
|
|
|
|
|
|
--
|
|
Other non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
1,089
|
|
|
|
|
|
|
1,162
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
|
|
32,644
|
|
|
|
|
|
|
40,586
|
|
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
44,208
|
|
|
|
|
|
|
42,795
|
|
Total liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
$
|
76,852
|
|
|
|
|
|
$
|
83,381
|
Source: Cerus Corporation