On May 3, 2016 Cerus Corporation (NASDAQ:CERS) reported financial results for the first quarter ended March 31, 2016 (Press release, Cerus, MAY 3, 2016, View Source [SID:1234511827]).

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Recent company highlights include:
Entered into long-term INTERCEPT platelet and plasma supply agreement with the American Red Cross, the largest U.S. supplier of blood components.

Entered into framework agreement with Blood Centers of America (BCA) as its pathogen reduction technology supply partner. Fifteen BCA members are now under contract for use of the INTERCEPT Blood System.

Received U.S. Food and Drug Administration (FDA) approval for use of the INTERCEPT Blood System for platelets suspended in 100% plasma, expanding the potential market for INTERCEPT in the U.S.

Pathogen reduction obviates the need for both primary and secondary bacterial screening under FDA’s revised draft guidance for controlling the risk of bacterial contamination of platelets.

Signed INTERCEPT supply agreement with Banco de Sangre de Servicios Mutuos to help sustain local platelet and plasma collections during the Zika epidemic.

FDA Zika guidance document recognizes pathogen reduction as a method to reduce transfusion risk and maintain local platelet and plasma collections in areas of active Zika transmission.

"Concerns about both the Zika virus and bacterial contamination are stimulating U.S. interest in INTERCEPT from both industry and regulators," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "We now have a significant portion of the U.S. market under contract for INTERCEPT and will be working diligently to support these customers as they begin their validation processes. Once customers have completed their validations over the next few quarters, we expect the revenue contribution from the U.S. to begin in earnest."

Revenue
Revenue for the first quarter of 2016 was $7.6 million and relatively flat compared to the prior year. Because revenue for the three months ended March 31, 2016 and 2015, was predominantly driven by Euro denominated markets, reported revenue was negatively affected by an approximate 2% weakening of the Euro compared to the U.S. dollar, the Company’s reporting currency. The Company continues to expect 2016 global revenue in the range of $37 million to $40 million.

Gross Margins
Gross margins for the first quarter of 2016 were 44%, compared to 39% for the first quarter of 2015. Margins for the first quarter of 2016 were positively impacted by the decline in the value of the Euro relative to the Company’s reporting currency, the U.S. dollar, lifting gross margins when comparing the first quarter of 2016 to the comparable period in 2015. In addition, product mix helped improve reported gross margins with higher margin platelet kits contributing proportionately more than in the prior year.

Operating Expenses
Total operating expenses for the first quarter of 2016 were $18.7 million, compared to $17.3 million for the first quarter of 2015. Selling, general and administrative expenses were relatively flat, driven by increased 2016 U.S. commercialization costs which were offset by lower accounting and other administrative fees. Research and development expenses increased as a result of activities to support our platelet label claim extension efforts, required post marketing platelet studies in the U.S. and preparation of the anticipated 2016 CE Mark submission for the red blood cell system.

Operating and Net Loss
Operating losses during the first quarter of 2016 were $15.3 million, compared to $14.4 million for the first quarter of 2015.
Net loss for the first quarter of 2016 was $16.9 million, or $0.17 per diluted share, compared to a net loss of $9.5 million, or $0.17 per diluted share, for the first quarter of 2015.

Net losses for the first quarter of 2016 were favorably impacted by approximately $1.0 million of lower foreign exchange losses during the first quarter of 2016, when compared to the corresponding prior period. Net losses in the prior year period were positively impacted by the mark-to-market adjustments of the Company’s previously outstanding warrants to fair value, which resulted in non-cash gains of $6.3 million during the first quarter of 2015. 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 March 31, 2016, the Company had cash, cash equivalents and short-term investments of $96.4 million compared to $107.9 million at December 31, 2015. The Company’s short-term investments include a marketable equity security which was valued at $5.1 million at March 31, 2016 and $11.2 million at December 31, 2015.

At March 31, 2016, the Company had approximately $20 million in outstanding debt under its loan agreement with Oxford Finance.