On November 2, 2017 Cerus Corporation (NASDAQ:CERS) reported financial results for the third quarter ended September 30, 2017 (Press release, Cerus, NOV 2, 2017, View Source [SID1234521512]).
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Recent developments include:
Announced national German reimbursement for pathogen-inactivated platelets starting January 1, 2018. Germany is the largest platelet market in Europe with approximately 575,000 units manufactured each year.
Entered into a new supply agreement for the INTERCEPT Blood System for platelets with Centro de Transfusión de la Comunidad (CTCM), one of the largest blood banks in Spain.
Entered into new Italian distribution agreement for INTERCEPT with Kedrion, a global manufacturer and distributor of plasma derivatives, headquartered in Italy.
Announced first Biologics License Application (BLA) approval for U.S. blood center customer.
“I am encouraged by the commercial progress we are making as an organization. The highlight of the third quarter was clearly the rapid deployment of illuminators by the Établissement Français du Sang (EFS), the French National Blood Service,” said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. “With Illuminators now deployed at all French regional blood centers, it gives us greater conviction on our ability to potentially drive revenue growth in the coming quarters. Coupled with the recent national German reimbursement for pathogen-inactivated platelets, we believe we are gaining significant momentum in Europe’s two largest markets for platelets. In addition, with the continued market adoption of INTERCEPT in the U.S., we believe that we are well positioned to grow the business globally. We are also tightening our 2017 product revenue guidance to $41 million to $43 million compared to our previous guidance range of $40 million to $46 million.”
Product Revenue
Product revenue for the third quarter of 2017 was $10.8 million, up 6% compared to $10.2 million recognized during the same period in 2016. The increase in reported product revenue for the quarter was driven primarily by a 12% increase in worldwide demand for platelet kits and an increase in illuminator sales, which were partially offset by a decline in plasma kit sales.
Product revenue for the first nine months of 2017 was $27.3 million, up 1% compared to the first nine months of 2016 of $27.1 million. In addition to an increase in illuminator sales, year-to-date demand for platelet kits was up 15%. These increases were offset by declines in plasma kit sales.
Gross Margins
Gross margins on product revenue for the third quarter of 2017 were 50%, compared to 46% for the third quarter of 2016. Gross margins for the first nine months of 2017 were 51%, compared to 46% for the first nine months of 2016. Gross margins in the quarter benefitted from the increased demand for INTERCEPT platelet products which generate higher gross margins than plasma products, and favorable Euro foreign exchange rates quarter-over-quarter and year-over-year.
Operating Expenses
Total operating expenses for the third quarter of 2017 were $20.1 million, compared to $19.2 million for the third quarter of 2016. Total operating expenses for the first nine months of 2017 were $66.0 million, compared to $59.0 million for the first nine months of 2016. Selling, general and administrative expenses were flat in the third quarter compared to the comparable period in the prior year. Selling, general, and administrative expenses increased for nine months ended September 30, 2017, over the comparable period in 2016, primarily driven by increased commercial activity in the U.S. Research and development expenses increased in both periods primarily due to clinical development activities of our INTERCEPT red blood cell system, and in particular, activities related to our BARDA contract.
Operating and Net Loss
Operating losses during the third quarter of 2017 were $12.4 million, compared to $14.3 million for the third quarter of 2016, and $46.7 million compared to $46.3 million for the nine months ended September 30, 2017 and September 30, 2016, respectively.
Net loss for the third quarter of 2017 was $13.4 million, or $0.12 per diluted share, compared to a net loss of $14.4 million, or $0.14 per diluted share, for the third quarter of 2016. Net loss for the first nine months of 2017 was $49.1 million, or $0.46 per diluted share, compared to a net loss of $49.4 million, or $0.49 per diluted share, for the same period of 2016.
Net loss for the nine months ended September 30, 2017 was positively impacted by the gain of approximately $3.5 million, due to the sale of the Company’s marketable equity investment in Aduro Biotech, Inc (“Aduro”). This gain was offset by non-cash income tax expense of $3.9 million recorded in the nine months ended September 30, 2017, due to the sale of the Company’s shares of Aduro.
Cash, Cash Equivalents and Investments
At September 30, 2017, the Company had cash, cash equivalents and short-term investments of $59.6 million compared to $71.6 million at December 31, 2016.
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 View Source 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 82994688. The replay will be available approximately three hours after the call through November 16, 2017.