Cerus Corporation Announces Record Fourth Quarter and Full Year 2018 Results

CONCORD, Calif.–(BUSINESS WIRE)–Cerus Corporation (Nasdaq: CERS) today announced complete financial
results for the fourth quarter and year ended December 31, 2018.

Recent developments and highlights include:

  • Record fourth quarter product revenue of $16.5 million.
  • Provided 2019 annual product revenue guidance of $70 million to $73
    million, representing a 15% to 20% increase over 2018 reported product
    revenue.
  • Filed CE Mark registration for the Company’s INTERCEPT Blood System
    for red blood cells (RBCs).
  • Initiated enrollment in ReCePI, Cerus’ U.S. Phase 3 study
    evaluating the safety and efficacy of the INTERCEPT Blood System for
    RBCs in patients undergoing complex cardiac surgery.
  • Expanded the executive management team with the appointment of
    William Moore as senior vice president of manufacturing operations and
    supply chain.
  • The recently issued annual planned FDA guidance agenda from CBER
    (Center for Biologics Evaluation and Research) indicates that a final
    platelet bacterial safety guidance document is planned for 2019.

“We believe we are entering a transformational period in the U.S., with
a final platelet bacterial guidance document now anticipated by the end
of this year,” said William ‘Obi’ Greenman, Cerus’ president and chief
executive officer. “Our recent momentum is expected to continue into
2019 as we push forward on our mission to establish INTERCEPT as the
standard of care for transfused blood components globally by executing
on our commercial strategy and advancing our pipeline opportunities.”

Revenue

Product revenue during the fourth quarter of 2018 was $16.5 million,
compared to $16.2 million during the same period in 2017. Strong gains
in fourth quarter platelet kit sales were partially offset by a
year-over-year decline in illuminator sales. During the fourth quarter
of 2017, total product revenue benefited from illuminator shipments
pursuant to the Company’s expanded supply agreement with EFS, the French
National Blood Service, and large plasma kit orders to distributors.
Full-year 2018 product revenue totaled $60.9 million, an increase of 40%
compared to 2017 product revenue.

Government contract revenue from the Company’s Biomedical Advanced
Research and Development Authority (BARDA) agreement was $3.7 million
during the fourth quarter of 2018, compared to $2.4 million during the
same period in 2017, as a result of increasing INTERCEPT red blood cell
clinical and development activities. Government contract revenue from
the Company’s BARDA agreement for the year ended December 31, 2018, was
$15.1 million compared to $7.8 million for the year ended December 31,
2017. The total potential value of the current BARDA agreement is $201
million with $25 million recognized as revenue to date.

BARDA is part of the Office of the Assistant Secretary for Preparedness
and Response within the U.S. Department of Health and Human Services.
The development of the INTERCEPT red blood cell program has been funded
in whole or in part with Federal funds from the Department of Health and
Human Services; Office of the Assistant Secretary for Preparedness and
Response; Biomedical Advanced Research and Development Authority, under
Contract No. HHSO100201600009C.

Gross Margins

Gross margins on product revenue during the fourth quarter of 2018 were
49%, compared to 44% for the fourth quarter of 2017. Gross margins in
the quarter benefited from a favorable product mix and higher average
selling prices for platelet kits. Gross margins on product revenue for
the full-year 2018 and 2017 totaled 48%.

Operating Expenses

Total operating expenses for the fourth quarter 2018 were $27.3 million
compared to $20.3 million for the same period the prior year. Full-year
2018 operating expenses totaled $99.4 million compared to $86.3 million
for the full-year 2017.

Selling, general, and administrative (SG&A) expenses for the fourth
quarter of 2018 totaled $14.8 million, compared to $12.6 million for the
fourth quarter of 2017. The year-over-year increase was primarily tied
to higher commercial activity in the U.S. Full-year 2018 SG&A expenses
totaled $56.8 million, compared to $52.6 million for the full-year 2017
with the increase primarily tied to higher headcount and compensation
related costs.

Research and development (R&D) expenses for the fourth quarter of 2018
were $12.4 million, compared to $7.8 million for the fourth quarter of
2017. The increase in year-over-year R&D expenses was primarily due to
additional activities and costs tied to the development of INTERCEPT red
blood cell system, including preparation for the CE Mark submission,
trials and activities in pursuit of a potential FDA approval of
INTERCEPT red blood cells and activities aimed at obtaining expanded
label claims for INTERCEPT platelets and plasma. Full-year 2018 R&D
expenses totaled $42.6 million, compared to $33.7 million for the
full-year 2017. The increase in full-year 2018 R&D expenses compared to
full-year 2017 R&D expenses was primarily due to costs associated with
clinical development of INTERCEPT red blood cell system, the pursuit of
supplemental approvals for the platelet and plasma systems, and
activities related to the BARDA agreement.

Net Loss

Net loss for the fourth quarter of 2018 was $16.2 million, or $0.12 per
diluted share, compared to a net loss of $11.5 million, or $0.10 per
diluted share, for the fourth quarter of 2017. Net loss for the year
ended December 31, 2018, was $57.6 million, or $0.44 per diluted share,
compared to a net loss of $60.6 million, or $0.56 per diluted share, for
the same period in 2017.

Cash, Cash Equivalents and Investments

At December 31, 2018, the Company had cash, cash equivalents and
short-term investments of $117.6 million, compared to $60.7 million at
December 31, 2017.

At December 31, 2018, the Company had approximately $29.9 million in
outstanding debt under its loan agreement compared to $29.8 million at
December 31, 2017.

2019 Product Revenue Guidance

The Company expects 2019 product revenue to be in the range of $70
million to $73 million, representing 15% to 20% growth compared to 2018
reported product revenue.

QUARTERLY CONFERENCE CALL

The Company will host a conference call and webcast at 4:30 P.M. ET this
afternoon, during which management will discuss the Company’s 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 website, or by dialing (855)
859-2056 (U.S.) or (404) 537-3406 (international) and entering
conference ID number 2392137. The replay will be available approximately
three hours after the call through March 12, 2019.

ABOUT CERUS

Cerus Corporation is a biomedical products company focused in the field
of blood transfusion safety. The INTERCEPT Blood System is designed to
reduce the risk of transfusion-transmitted infections by inactivating a
broad range of pathogens such as viruses, bacteria and parasites that
may be present in donated blood. The nucleic acid targeting mechanism of
action of the INTERCEPT treatment is designed to inactivate established
transfusion threats, such as hepatitis B and C, HIV, West Nile virus and
bacteria, as well as emerging pathogens such as chikungunya, malaria and
dengue. Cerus currently markets and sells the INTERCEPT Blood System for
both platelets and plasma in the United States, Europe, the Commonwealth
of Independent States, the Middle East and selected countries in other
regions around the world. The INTERCEPT red blood cell system is in
clinical development. See http://www.cerus.com
for information about Cerus.

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 expected results, including statements concerning Cerus’
2019 annual product revenue guidance; Cerus’ mission to establish
INTERCEPT as the standard of care for transfused blood components
globally by executing on its commercial strategy and advancing its
pipeline opportunities; the potential FDA approval of INTERCEPT red
blood cells; the potential for expanded label claims for INTERCEPT
platelets and plasma; and other statements that are not historical
facts. 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 risks that Cerus may not (a) meet its revenue guidance for
2019, (b) grow sales in its U.S. and European markets, including in
France, and/or realize expected revenue contribution resulting from its
U.S. and European market agreements, and/or (c) realize meaningful
revenue contributions from U.S. customers in the near term or at all,
particularly since Cerus cannot guarantee the volume or timing of
commercial purchases, if any, that its U.S. customers may make under
Cerus’ commercial agreements with these customers; risks associated with
Cerus’ lack of commercialization experience in the United States and its
ability to develop and maintain an effective and qualified U.S.-based
commercial organization, as well as the resulting uncertainty of its
ability to achieve market acceptance of and otherwise successfully
commercialize the INTERCEPT Blood System for platelets and plasma in the
United States, including as a result of licensure requirements that must
be satisfied by U.S. customers prior to their engaging in interstate
transport of blood components processed using the INTERCEPT Blood
System; risks related to Fresenius Kabi’s efforts to assure an
uninterrupted supply of platelet additive solution (PAS); risks related
to how any future PAS supply disruption could affect INTERCEPT’s
acceptance in the marketplace; risks related to how any future PAS
supply disruption might affect current commercial contracts; risks
related to Cerus’ ability to demonstrate to the transfusion medicine
community and other health care constituencies that pathogen reduction
and the INTERCEPT Blood System is safe, effective and economical; the
uncertain and time-consuming development and regulatory process,
including the risks (a) that Cerus may be unable to comply with the
FDA’s post-approval requirements for the INTERCEPT platelet and plasma
systems, including by successfully completing required post-approval
studies, which could result in a loss of U.S. marketing approval for the
INTERCEPT platelet and/or plasma systems, (b) that Cerus may be unable
to obtain CE Mark approval, or any other regulatory approvals, of the
red blood cell system in a timely manner or at all, (c) related to
Cerus’ ability to expand the label claims and product configurations for
the INTERCEPT platelet and plasma systems in the United States,
including for INTERCEPT-treated extended storage cryoprecipitate from
plasma, which will require additional regulatory approvals, and (d) that
applicable regulatory authorities may disagree with Cerus‘
interpretations of the data from its clinical studies and/or may
otherwise determine not to approve Cerus’ regulatory submissions,
including Cerus’ CE Mark submission, in a timely manner or at all; risks
associated with the uncertain nature of BARDA’s funding over which Cerus
has no control as well as actions of Congress and governmental agencies
which may adversely affect the availability of funding under Cerus’
BARDA agreement and/or BARDA’s exercise of any potential subsequent
option periods, such that the anticipated activities that Cerus expects
to conduct with the funds available from BARDA may be delayed or halted
and that Cerus may not otherwise realize the total potential value under
its agreement with BARDA; risk related to product safety, including the
risk that the septic platelet transfusions may not be avoidable with the
INTERCEPT Blood System; risks related to adverse market and economic
conditions, including continued or more severe adverse fluctuations in
foreign exchange rates and/or weakening economic conditions in the
markets where Cerus currently sells and is anticipated to sell its
products; Cerus’ reliance on third parties to market, sell, distribute
and maintain its products; Cerus’ ability to maintain an effective
manufacturing supply chain, including the ability of its manufacturers
to comply with extensive FDA and foreign regulatory agency requirements,
and Cerus’ ability to maintain its primary kit manufacturing agreement
and its other supply agreements with its third party suppliers; the
impact of legislative or regulatory healthcare reforms that may make it
more difficult and costly for Cerus to produce, market and distribute
its products; risks related to future opportunities and plans, including
the uncertainty of Cerus’ future capital requirements and its future
revenues and other financial performance and results, 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
quarter ended September 30, 2018, filed with the SEC on November 1,
2018. Cerus disclaims any obligation or undertaking to update or revise
any forward-looking statements contained in this press release.

     

CERUS CORPORATION
CONDENSED CONSOLIDATED UNAUDITED
STATEMENTS OF OPERATIONS

(in thousands, except per
share information)

 
Three Months Ended Twelve Months Ended
December 31, December 31,
2018   2017 2018   2017
Product revenue $ 16,525 $ 16,240 $ 60,908 $ 43,568
Cost of product revenue   8,442     9,129     31,634     22,531  
Gross profit on product revenue   8,083     7,111     29,274     21,037  
Government contract revenue   3,713     2,378     15,143     7,758  
Operating expenses:
Research and development 12,421 7,783 42,564 33,710
Selling, general and administrative   14,833     12,557     56,841     52,615  
Total operating expenses   27,254     20,340     99,405     86,325  
Loss from operations (15,458 ) (10,851 ) (54,988 ) (57,530 )
Non-operating (expense) income, net   (687 )   (709 )   (2,347 )   832  
Loss before income taxes (16,145 ) (11,560 ) (57,335 ) (56,698 )
Provision (benefit) for income taxes   60     (74 )   229     3,887  
Net loss $ (16,205 ) $ (11,486 ) $ (57,564 ) $ (60,585 )
 
Net loss per share:
Basic $ (0.12 ) $ (0.10 ) $ (0.44 ) $ (0.56 )
Diluted $ (0.12 ) $ (0.10 ) $ (0.44 ) $ (0.56 )
 
Weighted average shares outstanding used for calculating net loss
per share:

 

 

Basic 136,006 114,342 131,663 108,221
Diluted 136,006 114,342 131,663 108,221
 
     

CERUS CORPORATION
CONDENSED CONSOLIDATED UNAUDITED
BALANCE SHEETS

(in thousands)

 
December 31, December 31,
2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ 28,859 $ 13,683
Short-term investments 88,718 47,013
Accounts receivable 8,752 12,415
Inventories 13,539 14,457
Other current assets   7,034   2,330
Total current assets 146,902 89,898
Non-current assets:
Property and equipment, net 8,130 2,119
Goodwill and intangible assets, net 1,650 1,852
Restricted cash and other assets   6,778   4,375
Total assets $ 163,460 $ 98,244
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 38,395 $ 22,686
Debt – current 7,857
Manufacturing and development obligations – current 5,928
Deferred product revenue – current   498   445
Total current liabilities 52,678 23,131
Non-current liabilities:
Debt – non-current 22,013 29,798
Manufacturing and development obligations – non-current 5,766
Other non-current liabilities   4,250   609
Total liabilities   78,941   59,304
Stockholders’ equity   84,519   38,940
Total liabilities and stockholders’ equity $ 163,460 $ 98,244
 

Contacts

Tim Lee – Investor Relations Director
Cerus Corporation
925-288-6137

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