Cerus(US:CERS)2022-08-03 16:00Regulatory Approvals and Product Development - The INTERCEPT Blood System has received regulatory approvals including FDA approval and CE Certificates for its platelet and plasma systems, allowing sales in multiple regions including the U.S. and Europe[107] - The red blood cell system is still in development, with a CE Certificate application submitted in December 2018, and a decision is not expected for at least another 12 months[109] - In June 2022, the company extended its agreement with BARDA through December 2025, providing funding for the development of the red blood cell system and related clinical programs[112] - The INTERCEPT Blood System for Cryoprecipitation received FDA approval in November 2020, with the first sale of IFC completed in 2021[113] Financial Performance - Product revenue for the three months ended June 30, 2022, was $40,999, a 30% increase from $31,484 in the same period of 2021, driven by sales volume growth in disposable platelet system kits[133] - Total revenue for the six months ended June 30, 2022, was $90,651, representing a 34.6% increase from $67,329 in the same period of 2021[133] - Government contract revenue for the six months ended June 30, 2022, was $12,208, slightly down from $12,466 in the same period of 2021, indicating stability in government contracts despite COVID-19 impacts[134] Cost and Expenses - Cost of product revenue for the three months ended June 30, 2022, was $19,718, a 29% increase from $15,323 in the same period of 2021, primarily due to increased sales volume and foreign exchange impacts[135] - Gross margin on product sales was 52% for both the three and six months ended June 30, 2022, consistent with the same periods in 2021[135] - Research and development expenses decreased by 11% to $15,216,000 for the three months ended June 30, 2022, compared to $17,083,000 for the same period in 2021[139] - Selling, general and administrative expenses remained relatively flat at $19,532,000 for the three months ended June 30, 2022, compared to $19,758,000 for the same period in 2021, but increased by 3% to $40,267,000 for the six months ended June 30, 2022, compared to $38,928,000 for the same period in 2021[142] Cash Flow and Liquidity - Total cash and cash equivalents decreased to $32,309,000 as of June 30, 2022, from $48,759,000 as of December 31, 2021[151] - Total short-term investments decreased to $74,738,000 as of June 30, 2022, from $80,600,000 as of December 31, 2021[151] - Net cash used in operating activities improved to $(21,801,000) for the six months ended June 30, 2022, compared to $(26,118,000) for the same period in 2021[154] - Working capital decreased to $85,393,000 as of June 30, 2022, from $108,546,000 as of December 31, 2021, primarily due to cash usage for product enhancements and inventory[156] Funding and Capital Needs - The company has borrowed capital and may seek additional funding through various agreements, which could involve restrictive covenants and potential dilution for shareholders[114] - The BARDA agreement could provide up to $246.5 million in funding through December 31, 2025, contingent on meeting certain milestones[126] - The company expects to receive significant funding under the agreement with BARDA, but this is subject to various risks, including the ability to achieve required milestones and potential termination of the agreement[163] - The company may need to obtain additional funds to complete development activities for the red blood cell system necessary for potential regulatory approval in the EU[168] Market and Economic Conditions - Economic conditions, including inflation and rising interest rates, may negatively affect the company's liquidity and operational costs[115] - The company faces potential cost pressures due to inflation, increased transportation costs, and supply chain inefficiencies, which could impact future gross margins[135] - The general economic environment and uncertainty associated with the COVID-19 pandemic have led to a decline in available government funding, impacting the company's revenue and cash flows[163] Operational Challenges - The company is facing potential delays in clinical trials due to the COVID-19 pandemic, which could impact the timeline for regulatory approvals[111] - The company is actively monitoring the impacts of the COVID-19 pandemic on its operations, which may affect product revenues and clinical trials[130] - The company continues to invest in inventory to meet future demand and mitigate supply chain disruptions[139] - The company may need to curtail planned development or commercialization activities if unable to raise additional capital due to volatile global financial markets[165] Shareholder Considerations - The company has sold 0.4 million shares of common stock under the Sales Agreement for net proceeds of $3.1 million, out of a potential $100.0 million[162] - The company may experience substantial dilution if it raises additional capital by issuing equity securities[161] Interest and Non-Operating Expenses - Interest expense increased by 18% to $(2,728,000) for the six months ended June 30, 2022, compared to $(2,310,000) for the same period in 2021[147] - Non-operating expenses increased by 114% to $(3,842,000) for the six months ended June 30, 2022, compared to $(1,795,000) for the same period in 2021[144] Foreign Exchange and Hedging - The company does not currently enter into any hedging contracts to mitigate foreign exchange fluctuations, which could materially affect future results[164]