Cerus(CERS) - 2022 Q3 - Quarterly Report

Regulatory Approvals and Product Development - The INTERCEPT Blood System has received regulatory approvals including FDA approval in the U.S. and CE Certificates of Conformity in the EU, allowing marketing in multiple countries[105] - The company plans to commercialize the INTERCEPT Blood System for red blood cells, which is currently under development, with a CE Mark application resubmitted in June 2021[107] - 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[110] - The INTERCEPT Blood System for Cryoprecipitation received FDA approval in November 2020, with the first sale of IFC to a hospital customer completed in 2021[111] - The company is facing potential delays in clinical trials for the red blood cell system due to the COVID-19 pandemic, which could impact regulatory approval timelines[109] - The company is working with blood centers to produce and sell finished IFC, which requires site-specific licenses from the FDA for broader distribution[111] Financial Performance - Product revenue for the three months ended September 30, 2022, was $39,571,000, a 10% increase from $36,131,000 in the same period of 2021, driven by sales volume growth in disposable platelet system kits[132] - Total revenue for the nine months ended September 30, 2022, reached $136,994,000, reflecting a 25% increase compared to $109,430,000 for the same period in 2021[132] - Government contract revenue for the three months ended September 30, 2022, was $6,772,000, a 13% increase from $5,970,000 in the same period of 2021[132] - The company anticipates continued growth in product revenue for INTERCEPT disposable kits due to expected expansion of U.S. sales and increased market acceptance[132] Funding and Capital Requirements - The total potential funding opportunity under the BARDA agreement could reach up to $245.9 million through December 31, 2025, contingent on meeting certain milestones[124] - The company has a five-year agreement with the FDA for the development of next-generation compounds, with a total potential contract value of $11.1 million[125] - The company entered into a two-year agreement with the U.S. Department of Defense for the development of pathogen-reduced, lyophilized cryoprecipitate, with a total potential contract value of $9.1 million[125] - The company has borrowed capital and may seek additional funding through various agreements, which could include restrictive covenants and potential dilution for shareholders[112] - Economic conditions and the COVID-19 pandemic have created uncertainty regarding the availability of additional capital, potentially affecting liquidity[113] - The company may need to obtain additional funding to complete development activities for the red blood cell system necessary for regulatory approval in the EU[115] - The company anticipates significant funding under its agreement with BARDA, but this is subject to risks including potential termination of the agreement and funding availability[161] - The company may need to obtain additional funds for development activities related to the red blood cell system if costs exceed expectations or delays occur[163] Cost Management and Expenses - The company is focused on managing growth and associated cost increases while transitioning to a direct sales model in certain international markets[102] - The company faces potential increases in business costs due to rising labor rates, transportation costs, and global supply chain constraints[115] - Research and development expenses increased by 6% to $16,220 for the three months ended September 30, 2022, compared to $15,288 in 2021, but decreased by 5% for the nine months to $45,493 from $48,119[139] - Selling, general and administrative expenses were $19,908 for the three months ended September 30, 2022, a slight decrease of 2% from $20,357 in 2021, while for the nine months, expenses increased by 2% to $60,175 from $59,285[142] - Total non-operating expense, net, was $(1,007) for the three months ended September 30, 2022, a 19% improvement from $(1,238) in 2021, while for the nine months, it increased by 60% to $(4,849) from $(3,033)[144] - Interest expense rose by 10% to $(1,406) for the three months ended September 30, 2022, compared to $(1,279) in 2021, and increased by 15% for the nine months to $(4,134) from $(3,589)[146] Cash Flow and Working Capital - Cash and cash equivalents, short-term investments, and restricted cash totaled $105,825 as of September 30, 2022, down from $131,644 as of December 31, 2021[150] - Net cash used in operating activities decreased to $(23,859) for the nine months ended September 30, 2022, from $(32,700) in 2021, attributed to increased product sales and gross profit[152] - Net cash provided by investing activities was $1,081 for the nine months ended September 30, 2022, a significant decrease from $52,978 in 2021, due to higher investment purchases[153] - Net cash provided by financing activities decreased to $3.735 million for the nine months ended September 30, 2022, down from $22.196 million in the same period of 2021[154] - Working capital decreased to $69.712 million as of September 30, 2022, compared to $108.546 million on December 31, 2021, primarily due to cash usage for product enhancements and inventory increases[154] Investment and Market Risk - The investment policy focuses on preserving principal and liquidity while maximizing returns on marketable securities[165] - There were no material changes to market risk disclosures during the nine months ended September 30, 2022[166] - The company expects to incur additional research and development costs for regulatory approvals and new product development, influenced by inflationary pressures and macroeconomic factors[140] - The company expects to continue investing in capital purchases and manufacturing capacity expansion to support ongoing and proposed studies[155] - Long-term capital requirements will depend on the success of sales efforts and the timing and costs of clinical trials and development activities[155] Shareholder Information - The company has sold 0.4 million shares of common stock under a Sales Agreement for net proceeds of $3.1 million, out of a potential $100 million[160] - The company did not record any credit losses during the three and nine months ended September 30, 2022, and 2021, respectively[165]