Cerus(US:CERS)2021-11-01 16:00Product Development and Approvals - The INTERCEPT Blood System for Cryoprecipitation received FDA approval in November 2020, and sales began in Q3 2021, primarily targeting hospitals [125]. - The red blood cell system is currently in development, with CE Mark application resubmitted under the new European Medical Device Regulation as of June 2021, but approval is not expected within the next twelve months [124]. - The company has extended its agreement with BARDA through December 2023, which provides funding for the development of the red blood cell system and related clinical programs [124]. - The platelet system is approved in the U.S. for ex vivo preparation of pathogen-reduced apheresis platelet components, with two post-approval studies required by the FDA [122]. - The plasma system is approved for ex vivo preparation of pathogen-reduced plasma, aimed at reducing the risk of transfusion-transmitted infection [122]. - The company may need to generate additional safety data from commercial use to achieve broader market acceptance for the red blood cell system [124]. Financial Performance - Product revenue for the three months ended September 30, 2021, was $36,131,000, a 53% increase from $23,607,000 in the same period of 2020 [146]. - Total revenue for the nine months ended September 30, 2021, was $109,430,000, representing a 36% increase from $80,659,000 in the same period of 2020 [146]. - Government contract revenue for the three months ended September 30, 2021, was $5,970,000, a 7% increase from $5,584,000 in the same period of 2020 [147]. - Cost of product revenue for the three months ended September 30, 2021, was $17,582,000, a 61% increase from $10,953,000 in the same period of 2020 [149]. - Gross margin on product sales for the three months ended September 30, 2021, was 51%, down from 54% in the same period of 2020 [151]. - The company anticipates increased product revenue from INTERCEPT disposable kits due to expanded U.S. sales and market acceptance [146]. Expenses and Cash Flow - Research and development expenses for the three months ended September 30, 2021, decreased by 4% to $15,288, compared to $15,921 for the same period in 2020, while expenses for the nine months increased by 2% to $48,119 from $47,349 [154]. - Selling, general, and administrative expenses increased by 25% to $20,357 for the three months ended September 30, 2021, compared to $16,299 in the same period of 2020, and increased by 23% to $59,285 for the nine months from $48,324 [158]. - Total non-operating expense, net for the three months ended September 30, 2021, was $(1,238), a significant increase of 1,291% compared to $(89) in the same period of 2020 [160]. - As of September 30, 2021, cash and cash equivalents totaled $78,460, short-term investments were $41,501, and total liquidity amounted to $122,239, compared to $135,903 as of December 31, 2020 [167]. - The company incurred a net cash used in operating activities of $(32,700) for the nine months ended September 30, 2021, which remained relatively flat compared to $(32,910) for the same period in 2020 [168]. - Net cash provided by investing activities was $52,978 for the nine months ended September 30, 2021, compared to $(57,160) for the same period in 2020 [169]. - Net cash provided by financing activities decreased to $22,196 for the nine months ended September 30, 2021, from $83,496 in the same period of 2020 [171]. Capital and Funding - The BARDA agreement could provide up to $223.5 million in funding through December 31, 2023, contingent on meeting certain milestones [138]. - The company is responsible for co-investment of approximately $5.0 million under the BARDA agreement, with potential additional responsibilities if further options are exercised [138]. - The company expects to meet its capital requirements for at least the next 12 months based on available cash, cash equivalents, and short-term investments [175]. - The company has the potential to issue and sell up to $100.0 million of common stock under a Sales Agreement, but has not yet sold any shares [177]. - The company may need to borrow additional capital from institutional and commercial banking sources, which could include restrictive covenants and high effective interest rates [176]. - The company’s ability to obtain expected funding from BARDA is subject to risks, including the potential for funding to be reduced or delayed due to the COVID-19 pandemic [178]. Market and Economic Conditions - The company is actively working to identify additional manufacturing partners for the INTERCEPT Blood System for Cryoprecipitation, which may create pricing pressures and competition for hospital business [125]. - The company is facing risks related to the COVID-19 pandemic, which may impact trial enrollment and regulatory approvals [124]. - The COVID-19 pandemic continues to affect business operations, potentially delaying research and development activities and impacting overall financial projections [143]. - The company faces potential impacts on product revenues due to fluctuations in the Euro relative to the U.S. dollar, as a significant portion of revenue is expected from Euro-denominated markets [146]. - Foreign exchange losses were reported at $(164) for the three months ended September 30, 2021, compared to gains of $490 in the same period of 2020, primarily due to unfavorable currency variations [161]. - The general economic environment and uncertainty from the COVID-19 pandemic may limit the company’s ability to access capital, negatively affecting liquidity [182]. Risk Management - The company does not currently enter into hedging contracts to mitigate foreign exchange fluctuations, which could materially affect future results [181]. - The company may need additional funds for the development of the red blood cell system in Europe if costs exceed expectations or delays occur [183]. - The company has not recorded any credit losses during the three and nine months ended September 30, 2021 [185]. - The company’s investment policy focuses on preserving principal and liquidity while maximizing returns to support operations [185]. - The company has no off-balance sheet arrangements as of September 30, 2021 [184].