Cerus Corporation (NASDAQ:CERS) today announced financial
results for the fourth quarter and year ended December 31,
2016.
Recent developments include:
- The U.S. Food and Drug Administration's
Center for Biologics Evaluation and Research (CBER) intends to
release final guidance on bacterial contamination of platelets this
year, according to its recently published Guidance Document Agenda
for 2017.
- Cerus estimates that at least 7 U.S.
blood center customers, including the American Red Cross, have
submitted biologics license applications to the FDA to request
allowance for the interstate transport of INTERCEPT-treated
platelet components.
- Enrollment in SPARC, Cerus’ European
chronic anemia trial, reached its target of at least 70 evaluable
patients. Database lock is expected by the end of 2017 with data
readout expected in early 2018.
- Cerus’ planned INTERCEPT red blood cell
CE mark submission has been extended pending completion
of commercial lot release testing; optimization and
validation of the release assay method are in progress.
- Additional options totaling $10.8
million were exercised under Cerus’ contract with the Biomedical
Advanced Research and Development Authority (BARDA) for INTERCEPT
red blood cell development.
“We saw significant acceleration in U.S. blood center
illuminator installations in late 2016, with fourth quarter
installations accounting for roughly half of the total for the
year,” said William 'Obi' Greenman, Cerus’ president and chief
executive officer. “We are optimistic for our growth prospects over
the next several years based on the U.S. opportunity as well as
anticipated progress in major international markets such as France
and South Africa.”
Revenue
Product revenue for the fourth quarter of 2016 was $10.1
million, compared to $9.7 million recognized during the same period
in 2015. Revenue for the year ended December 31, 2016, was $37.2
million, compared to $34.2 million for the year ended December 31,
2015. The increase in reported product revenue was primarily driven
by a year-over-year increase in demand as U.S. blood banks began to
implement our INTERCEPT technology.
Revenue from our BARDA agreement was $1.8 million in the fourth
quarter and $2.1 million for the full year 2016. We did not
recognize any revenue from our BARDA agreement during the same time
periods in 2015.
Looking ahead, the Company expects 2017 global product revenue
in the range of $45 million to $50 million, with anticipated
product revenue growth contribution from both the U.S. and EMEA
markets. INTERCEPT disposable kit revenue is expected to be the
primary product growth driver, resulting from anticipated increased
penetration in EMEA markets and as U.S. customers who deployed the
technology in 2016 move into anticipated routine production and
product sales to their hospital customers.
Gross Margins
Gross margins on product revenue for the fourth quarter of 2016
were 45%, compared to 36% for the fourth quarter of 2015. Gross
margins for the year ended December 31, 2016, were 45%, compared
with 31% in the same period in 2015.
Gross margins on product revenue for the full-year 2016
increased due to the favorable impact of the Company’s disposable
kit manufacturing agreement with Fresenius Kabi AG, entered into
during the fourth quarter of 2015. In addition the Company realized
inventory management efficiencies, leading to lower losses and
period charges throughout 2016. Looking ahead, the Company expects
to achieve relatively stable and consistent gross margins on
product sales in 2017 relative to those it experienced in 2016.
Operating Expenses
Total operating expenses were $21.5 million and $80.4 million
for the quarter and year ended December 31, 2016, respectively,
compared to $18.5 million and $71.8 million for the quarter and
year ended December 31, 2015, respectively.
Selling, general and administrative expenses increased for the
three and twelve months ended December 31, 2016. The increase in
operating expenses was partially driven by selling, general and
administrative expenses incurred in support of the Company’s U.S.
commercialization efforts. In addition, research and development
costs increased as a result of activities under the Company’s BARDA
agreement, preparations for the planned CE mark submission for the
Company’s red blood cell system, and U.S. label claim expansion
activities.
Operating and Net Loss
Operating losses during the fourth quarter of 2016 were $15.1
million, compared to $15.0 million during the fourth quarter of
2015, and $61.4 million compared to $61.1 million for years ended
December 31, 2016 and 2015, respectively.
Net loss for the fourth quarter of 2016 was $13.5 million, or
$0.13 per diluted share, compared to a net loss of $14.8 million,
or $0.15 per diluted share, for the fourth quarter of 2015. Net
loss for the year ended December 31, 2016, was $62.9 million, or
$0.62 per diluted share, compared to a net loss of $55.9 million,
or $0.61 per diluted share, for the same period of 2015.
Net loss for the fourth quarter of 2016 was positively impacted
by non-cash income tax benefit of $1.2 million. Net losses for the
quarter and year ended December 31, 2015, were positively impacted
by non-cash income tax benefits of $1.8 million and $3.8 million.
These tax items are largely the result of changes in the fair value
of our investments, primarily Aduro Biotech, Inc.
Net loss for the fourth quarter of 2015 was also negatively
impacted by the mark-to-market adjustments of the Company’s
previously outstanding warrants, which resulted in non-cash losses
of $1.1 million during the quarter ended December 31, 2015. Net
loss for the year ended 2015 was positively impacted by the
mark-to-market adjustments of the Company’s previously outstanding
warrants, which resulted in non-cash gains of $3.6 million. At
December 31, 2016, the Company has no remaining outstanding
warrants and as such, does not expect mark-to-market adjustments
going forward.
Cash, Cash Equivalents and Investments
At December 31, 2016, the Company had cash, cash equivalents and
short-term investments of $71.6 million compared to $107.9 million
at December 31, 2015.
At December 31, 2016, the Company had approximately $19.4
million in outstanding debt under its loan agreement with Oxford
Finance and $62.3 million of common stock available to be sold
under its Controlled Equity OfferingSM Sales Agreement, dated
August 31, 2012, as amended, with Cantor Fitzgerald & Co.
QUARTERLY CONFERENCE CALL
The Company will host a conference call and webcast at 4:15 p.m.
Eastern time today to discuss its 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 95465206. The replay will be
available approximately three hours after the call through March
21, 2017.
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’ expectation that CBER will release final guidance
on bacterial contamination of platelets in 2017; the potential
allowance for the interstate transport of INTERCEPT-treated
platelet components by U.S. blood center customers that have
submitted biologics license applications (BLAs) to the FDA; Cerus’
expectation for data readout on SPARC near the start of 2018;
Cerus‘ planned INTERCEPT red blood cell CE Mark submission; Cerus’
2017 annual product revenue guidance and its expectation that
INTERCEPT disposable kit revenue will be the primary product growth
driver in 2017; Cerus’ expectation for growth over the next several
years based on the U.S. opportunity as well as anticipated progress
in major international markets; Cerus’ expectations for future
gross margins; potential premarket applications supplemental
approvals for the platelet and plasma systems; Cerus’ expectation
for the lack of mark-to-market adjustments going forward; and
potential sales of common stock under its Controlled Equity
OfferingSM Sales Agreement, dated August 31, 2012 as amended, with
Cantor Fitzgerald & Co., or the Sales Agreement. 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 meet its revenue guidance for
2017, grow sales in its major international markets and/or realize
meaningful revenue contributions from U.S. customers for 2017 or
otherwise, 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 U.S. 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 U.S.,
including as a result of the potential inability of Cerus’ blood
center customers to obtain approvals of BLAs they have submitted to
the FDA allowing for interstate transport of blood components
processed using the INTERCEPT Blood System; risks related to Cerus’
ability to commercialize the INTERCEPT Blood System in the U.S.
without infringing on the intellectual property rights of others;
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) related to Cerus’ ability to expand the label claims
and product configurations for the INTERCEPT platelet and plasma
systems in the U.S., which will require additional regulatory
approvals, (c) that Cerus’ blood center customers may be unable to
obtain approvals by the FDA of BLAs they have submitted to the FDA
allowing for interstate transport of blood components processed
using the INTERCEPT Blood System in a timely manner or at all,
which could significantly delay or preclude Cerus’ ability to
successfully commercialize the INTERCEPT Blood System to those
customers for the portion of their business involved in interstate
commerce, (d) that Cerus may be unable to file for CE Mark approval
of the red blood cell system in Europe in the anticipated timeframe
or at all, and even if filed, 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 and (e) that Cerus may be
unable to obtain data from or complete the SPARC trial in a timely
manner for at all; 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 sells 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; 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;
Cerus’ need for additional capital and its potential inability to
raise additional capital necessary to fund its operations,
including under the Sales Agreement; risks related to future
opportunities and plans, including the uncertainty of future
product revenues and growth, gross margins and other financial
performance and results, as well as other risks detailed in Cerus’
filings with the Securities and Exchange Commission, including
in Cerus‘ Quarterly Report on Form 10-Q for the quarter
ended September 30, 2016, filed with the
SEC on November 4, 2016. 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,
2016 2015
2016 2015
Product revenue $ 10,125 $ 9,656 $ 37,183 $ 34,223 Cost of product
revenue
5,605 6,162
20,295 23,464
Gross profit on product revenue
4,520
3,494 16,888
10,759 Government
contracts revenue
1,831
- 2,092
- Operating expenses: Research and
development 8,815 7,160 31,322 25,643 Selling, general and
administrative 12,439 11,276 48,753 45,989 Amortization of
intangible assets 51 51 202 202 Impairment of long-lived assets
150 -
150 - Total
operating expenses
21,455
18,487 80,427
71,834 Loss from operations (15,104 ) (14,993 )
(61,447 ) (61,075 ) Non-operating income (expense), net
399 (1,513 )
(1,284 ) 1,536
Loss before income taxes (14,705 ) (16,506 ) (62,731 )
(59,539 ) (Benefit) provision for income taxes
(1,204 ) (1,750
) 175
(3,671 ) Net loss
$
(13,501 ) $
(14,756 ) $
(62,906 ) $
(55,868 ) Net loss per share:
Basic $ (0.13 ) $ (0.15 ) $ (0.62 ) $ (0.58 ) Diluted $ (0.13 ) $
(0.15 ) $ (0.62 ) $ (0.61 ) Weighted average shares
outstanding used for calculating net loss per share:
Basic 103,470 98,209 101,826 96,068 Diluted 103,470 98,209 101,826
96,905
CERUS CORPORATION CONDENSED
CONSOLIDATED UNAUDITED BALANCE SHEETS (in thousands)
December 31, December 31, 2016
2015 ASSETS Current assets: Cash and cash
equivalents $ 22,560 $ 71,018 Short-term investments and marketable
equity securities 49,068 36,861 Accounts receivable 6,868 5,794
Inventories 12,531 10,812 Prepaid expenses and other current assets
3,078 5,921 Total current
assets 94,105 130,406 Non-current assets: Property and equipment,
net 2,985 3,549 Goodwill and intangible assets, net 2,054 2,256
Restricted cash and other assets
4,332
3,191 Total assets
$ 103,476
$ 139,402 LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and
accrued liabilities $ 19,805 $ 15,070 Manufacturing and development
obligations – current - 3,282 Debt – current 6,934 2,956 Deferred
product revenue – current
149
554 Total current liabilities 26,888 21,862
Non-current liabilities: Debt – non-current 12,441 16,848 Deferred
income taxes 150 122 Manufacturing and development obligations –
non-current 4,770 4,542 Other non-current liabilities
1,440 1,263 Total liabilities
45,689 44,637 Stockholders’ equity
57,787
94,765 Total liabilities and stockholders’
equity
$ 103,476 $
139,402
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version on businesswire.com: http://www.businesswire.com/news/home/20170307006309/en/
Cerus CorporationKevin Green, 925-288-6138Vice President,
Finance and Chief Financial Officer
Cerus (NASDAQ:CERS)
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