Cerus Corporation Reports Fourth Quarter and Year-End 2013 Results

  Cerus Corporation Reports Fourth Quarter and Year-End 2013 Results

  *2013 product revenue of $39.7 million; 8% annual growth year-over-year.
  *2014 revenue guidance of $38-40 million; reflects potential negative
    impact to H1 sales from planned changes to distributor relationships.
  *Final INTERCEPT plasma PMA module submitted; approval decision possible as
    early as H2 2014.
  *Two of three platelet PMA modules submitted; approval decision possible in
    2015.

Business Wire

CONCORD, Calif. -- February 25, 2014

Cerus Corporation (NASDAQ: CERS) today announced financial results for the
fourth quarter and year ended December 31, 2013.

"The coming year will be a pivotal one for Cerus, in which we anticipate a
possible second-half approval decision for INTERCEPT plasma in the United
States, and prepare for a possible INTERCEPT platelet approval decision in
2015,“ said William "Obi" Greenman, president and chief executive officer of
Cerus Corporation. "We are also pursuing strategic changes to certain
distributor relationships in order to improve future growth opportunities in
several existing commercial markets. As a result of these strategic changes,
we are providing 2014 revenue guidance of $38-40 million, reflecting our
expectation for a temporary negative sales impact during the first half of
2014.“

Revenue

Product revenue for the fourth quarter of 2013 was $9.2 million, a 12%
decrease from the fourth quarter of 2012. The decrease in product revenue was
driven by sales declines for both disposable kits and illuminators in several
key distributor markets.

Product revenue for the year ended December 31, 2013 was $39.7 million and
represented an 8% increase over product revenue recognized during the year
ended December 31, 2012. The year-over-year increase in product revenue was
driven primarily by growth in demand for INTERCEPT disposable kits, notably
plasma kits, as certain existing platelet customers began purchasing plasma
kits during 2013.

The Company did not recognize any government grant revenue during 2013, as
government grants in support of the Company’s red blood cell system had been
fully utilized by January 2012. Government grant revenue for the year ended
December 31, 2012 was $0.1 million.

Gross Margins

Gross margins on product sales for the fourth quarter of 2013 were 47%,
compared to 51% for the fourth quarter of 2012. Gross margins on product sales
for the year ended December 31, 2013 were 43%, compared to 44% for same period
in 2012. As of January 2014, we are operating under an amendment to our
existing agreement with Fresenius-Kabi, the manufacturer of our disposable
kits, which is expected to provide more stability in our cost of goods sold
going forward, compared with the quarterly volatility we previously
experienced. In addition, under the new terms, we expect a more efficient
supply chain as Fresenius-Kabi will be sourcing and purchasing work-in-process
for certain components from us.

Operating Expenses

Total operating expenses for the fourth quarter of 2013 were $12.1 million,
compared to $9.0 million for the fourth quarter of 2012. Total operating
expenses for the year ended December 31, 2013 were $45.4 million, compared to
$33.5 million for the year ended December 31, 2012. The increase in operating
expenses for both the fourth quarter and year ended December 31, 2013 was
related to increased costs incurred in connection with development efforts in
support of the PMA submissions for both our platelet and plasma programs,
increased selling, general and administrative expenses in anticipation of a
potential United States launch and increased clinical costs for our ongoing
red blood cell clinical efforts, both in Europe and the United States. We
expect operating expenses will increase during 2014 as we decide to bring on
additional resources with evolving insight into the United States approval
process and possible subsequent commercial launch for our platelet and plasma
products, and as we make decisions around the speed of enrollment for our
European red blood cell clinical trials and the license-enabling manufacturing
development work needed to obtain CE mark for our red blood cell product
candidate.

Operating and Net Loss

Operating losses during the fourth quarter of 2013 were $7.8 million, compared
to $3.6 million for the fourth quarter of 2012. Operating losses during the
year ended December 31, 2013 were $28.3 million, compared to $17.3 million for
the year ended December 31, 2012.

Net loss for the fourth quarter of 2013 was $5.9 million, or $0.10 per diluted
share, compared to a net loss of $1.7 million, or $0.07 per diluted share, for
the fourth quarter of 2012. Net loss for the year ended December 31, 2013 was
$43.3 million, or $0.64 per share, compared to a net loss of $15.9 million, or
$0.33 per diluted share, for the year ended December 31, 2012. Net losses were
impacted by the mark-to-market adjustments of Cerus’ outstanding warrants to
fair value, which resulted in non-cash gains of $1.7 million during the fourth
quarter of 2013 compared to $2.0 million during the comparable prior year
period, and non-cash losses of $15.1 million during the year ended December
31, 2013 compared to non-cash gains of $2.1 million for the comparable period
in 2012.

Cash and Investments

At December 31, 2013, the Company had cash, cash equivalents and short-term
investments of $57.7 million compared to $26.7 million at December 31, 2012.
Throughout 2013, the Company raised capital using a combination of equity
offerings and its revolving credit facility to support the ongoing European
business and to strengthen its balance sheet in support of the U.S. PMA
process for its platelet and plasma products.

Other Recent Highlights

  *North America sales team leadership hired in Q4 2013.
  *INTERCEPT plasma and platelet applications expected to be filed with
    Health Canada in H1 2014.

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 web site, or by dialing
855-859-2056 (U.S.) or 404-537-3406 (international) and entering conference ID
number 29781713. The replay will be available approximately three hours after
the call through March 10, 2014.

ABOUT CERUS

Cerus Corporation is a biomedical products company focused in the field of
blood safety. Cerus currently markets and sells the INTERCEPT Blood System for
both platelets and plasma in Europe, the Commonwealth of Independent States,
the Middle East and selected countries in other regions around the world. In
the United States, Cerus is seeking regulatory approval of the INTERCEPT Blood
System for plasma and platelets. The INTERCEPT red blood cell system is in
clinical development. See http://www.cerus.com for more information.

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
results, including statements concerning Cerus’ expectations regarding its
2014 revenues and future growth opportunities, the anticipated impact
resulting from strategic changes to Cerus’ distributor relationships,
including the negative sales impact and the length thereof, the potential
approval of the modular PMA by the FDA for the INTERCEPT Blood System for
plasma and the timing thereof, the potential approval of the modular PMA by
the FDA for the INTERCEPT Blood System for platelets and the timing thereof,
potential CE Mark approval for the red blood cell system, the potential launch
in the United States of the INTERCEPT Blood System for plasma and platelets,
future operating expenses, research and development activity and expenses in
support of Cerus‘ regulatory submissions, the expected financial and other
benefits from Cerus’ amended agreement with its manufacturer of disposable
kits, and the future development of the INTERCEPT Blood System for red blood
cells. 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 risk that the
anticipated negative sales impact from the strategic changes to Cerus’
distributor relationships could last longer or be more severe than
anticipated; the uncertain and time-consuming development and regulatory
process, including the risks that Cerus may be required to complete additional
clinical trials in order to obtain approval of its modular PMA submissions,
that Cerus may otherwise encounter unanticipated difficulties complying with
the prescribed submission timing or other modular PMA requirements related to
the INTERCEPT Blood System for plasma or for platelets or that Cerus‘ PMA
submissions might not be approved by the FDA in a timely manner or at all;
adverse market and economic conditions; adverse fluctuations in foreign
exchange rates; Cerus’ reliance on third parties to market, sell, distribute
and maintain its products; Cerus’ ability to maintain an effective
manufacturing supply chain; intellectual property protection; 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, 2013 filed with the SEC on November 1, 2013. 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,
                            2013      2012       2013       2012    
Product Related:
Product revenue            $ 9,232      $ 10,528     $ 39,657      $ 36,695
Cost of product revenue     4,939      5,117      22,602      20,616  
Gross profit on product      4,293        5,411        17,055        16,079
revenue
                                                                   
Government grant and
cooperative agreements       --           --           --            91
revenue
                                                                   
Operating expenses:
Research and development     4,618        2,164        15,187        7,603
Selling, general and         7,430        6,794        29,965        25,665
administrative
Amortization of             51         51         202         202     
intangible assets
Total operating expenses    12,099     9,009      45,354      33,470  
Loss from operations         (7,806 )     (3,598 )     (28,299 )     (17,300 )
Non-operating income        1,999      1,993      (14,820 )    1,625   
(expense), net
                                                                   
Loss from operations         (5,807 )     (1,605 )     (43,119 )     (15,675 )
before income taxes
Provision for income        53         111        218         242     
taxes
Net loss                   $ (5,860 )   $ (1,716 )   $ (43,337 )   $ (15,917 )
                                                                   
Net loss per common
share:
Basic                      $ (0.08  )   $ (0.03  )   $ (0.64   )   $ (0.29   )
Diluted                    $ (0.10  )   $ (0.07  )   $ (0.64   )   $ (0.33   )
                                                                   
Weighted average common
shares outstanding used                                         
for computing net loss
per common share:
Basic                        70,882       55,663       67,569        54,515
Diluted                      73,887       55,912       67,569        55,061
                                                                             

CERUS CORPORATION

CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS

(in thousands)
                                                               
                                                   December 31,   December 31,

                                                   2013           2012
                                                                  
Cash, cash equivalents, and short-term             $   57,676     $   26,696
investments
Accounts receivable, net                               6,125          4,444
Inventories                                            13,063         10,180
Prepaid expenses and other current assets              1,290          2,676
Property and equipment, net                            2,189          1,698
Goodwill and intangible assets, net                    2,660          2,862
Other assets                                          378           363
Total assets                                       $   83,381     $   48,919
                                                                  
Accounts payable and accrued liabilities           $   15,487     $   14,805
Deferred revenue                                       181            77
Debt - current                                         3,366          4,828
Warrant liability                                      20,390         5,903
Debt - non-current                                     --             2,896
Other non-current liabilities                         1,162         1,303
Total liabilities                                      40,586         29,812
Stockholders’ equity                                  42,795        19,107
Total liabilities and stockholders’ equity         $   83,381     $   48,919

Contact:

Cerus Corporation
Kevin D. Green, 925-288-6138
Vice President, Finance & CFO
 
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