Cerus(US:CERS)2021-05-03 16:00Regulatory Approvals - The INTERCEPT Blood System has received FDA approval for Cryoprecipitation, which is intended for the treatment of massive hemorrhage associated with fibrinogen deficiency [122]. - The platelet system is approved in the U.S. for ex vivo preparation of pathogen-reduced apheresis platelet components, reducing the risk of transfusion-transmitted infection [118]. - The company is currently developing the red blood cell system, which has not yet been commercialized, with CE Mark approval expected in 2022 [119]. - The company has extended its agreement with BARDA through December 2021, providing funding for the development of the red blood cell system and related clinical programs [121]. - The BARDA agreement has committed up to $116.9 million for reimbursement of expenses related to the clinical development of the red blood cell system, with potential total funding reaching $213.9 million if additional option periods are exercised [134]. - The company has entered into a five-year agreement with the FDA for the development of next-generation compounds, with a total potential contract value of $11.1 million [135]. Financial Performance - Product revenue for the three months ended March 31, 2021, was $23.4 million, a 26% increase from $18.6 million in the same period in 2020, driven by sales volume growth in disposable platelet system kits in the U.S. and increased plasma system kit sales in Europe and the Middle East [142]. - Total revenue for the three months ended March 31, 2021, was $29.6 million, up 20% from $24.6 million in the same period in 2020 [142]. - Government contract revenue recognized during the three months ended March 31, 2021, was $6.2 million, compared to $6.0 million in the same period in 2020, reflecting ongoing activities under the BARDA agreement [143]. - Cost of product revenue increased by 33% to $11.1 million for the three months ended March 31, 2021, compared to $8.3 million in the same period in 2020, primarily due to increased sales and foreign exchange impacts [145]. - Gross margin on product sales decreased to 53% for the three months ended March 31, 2021, down from 55% in the same period in 2020, attributed to unfavorable product mix and currency exchange effects [147]. Operational Challenges - The company faces risks related to the COVID-19 pandemic, which may delay clinical trial enrollment and regulatory approvals [121]. - The company is actively monitoring the impacts of the COVID-19 pandemic on its operations, which may affect product revenues and clinical trials [139]. - The company expects to incur additional research and development costs for post-approval studies and regulatory approvals, but the costs are uncertain due to various risks including government regulations and the impact of the COVID-19 pandemic [151]. - The company may need to raise additional capital to support the development and regulatory approval of the red blood cell system [119]. - The company may need to obtain additional funds for the development of the red blood cell system for potential regulatory approval in Europe if costs exceed expectations or delays occur [175]. Sales and Marketing Strategy - The company plans to transition distribution of the INTERCEPT Blood System from third parties to a direct sales model in certain international markets [114]. - The company anticipates potential pricing pressures and competition for hospital business due to its strategy of selling INTERCEPT Blood System for Cryoprecipitation kits to strategic blood centers [122]. - The company plans to begin a limited launch of PRCFC to U.S. hospital customers within the year, anticipating increased product revenue from this initiative [142]. Financial Position - Cash and cash equivalents increased to $57,607 thousand as of March 31, 2021, from $36,594 thousand as of December 31, 2020 [162]. - Total debt increased to $64,554 thousand as of March 31, 2021, compared to $48,104 thousand as of December 31, 2020, with current debt at $9,938 thousand and non-current debt at $54,616 thousand [164]. - Working capital increased slightly to $126,508 thousand as of March 31, 2021, compared to $123,457 thousand as of December 31, 2020, mainly due to borrowing under the Term Loan Credit Agreement [167]. Expenses - Research and development expenses remained relatively flat at $15,748 thousand for the three months ended March 31, 2021, compared to $15,810 thousand for the same period in 2020, reflecting a change of (62) thousand or (0%) [150]. - Selling, general, and administrative expenses increased by 20% to $19,170 thousand for the three months ended March 31, 2021, up from $15,913 thousand in the same period in 2020, primarily due to stock-based compensation and investments for the commercial launch of PRCFC [153]. - Total non-operating expense, net decreased by 9% to $(912) thousand for the three months ended March 31, 2021, compared to $(1,007) thousand for the same period in 2020 [156]. - Foreign exchange loss increased by 78% to $(396) thousand for the three months ended March 31, 2021, compared to $(223) thousand for the same period in 2020, primarily due to unfavorable foreign exchange variations [156]. Investment and Market Risk - The investment policy focuses on preserving principal and liquidity while maximizing returns on marketable securities to fund operations [178]. - Money market funds are classified as Level 1 in the fair value hierarchy, with a reasonable estimate of fair value due to their short maturity [178]. - Available-for-sale securities related to corporate debt and U.S. government agency securities are classified as Level 2 in the fair value hierarchy [178]. - No credit losses were recorded during the three months ended March 31, 2021 and 2020 [178]. - There were no material changes to market risk disclosures during the three months ended March 31, 2021 [180].