UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 3, 2016

CERUS CORPORATION
(Exact name of registrant as specified in its charter)

 
					
Delaware	 	000-21937	 	68-0262011	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	
2550 Stanwell Drive
Concord, California 94520
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (925) 288-6000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
 
☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

Item 2.02	Results of Operations and Financial Condition	
On November 3, 2016, Cerus Corporation (the “Company”) announced its financial results for its third quarter ended September 30, 2016. A copy of the Company’s press release, entitled “Cerus Corporation Reports Third Quarter 2016 Results,” is furnished pursuant to Item 2.02 as Exhibit 99.1 hereto.
The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by the Company, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.
 
Item 9.01	Financial Statements and Exhibits	
(d) Exhibits.
The following exhibit is furnished with this report:
 
 	99.1	Press release, dated November 3, 2016, entitled “Cerus Corporation Reports Third Quarter 2016 Results.”	
 
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	 		 	CERUS CORPORATION	
				
Dated: November 3, 2016	 		 	By:	 	/s/ Kevin D. Green	
	 		 		 	Kevin D. Green	
	 		 		 	Vice President, Finance and Chief Financial Officer	
 
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EXHIBIT INDEX

Exhibit
Number	  	Description	
		
99.1	  	Press release, dated November 3, 2016, entitled “Cerus Corporation Reports Third Quarter 2016 Results.”	
 
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Exhibit 99.1
Contact:
Stacey Leaños
Associate Director, Investor and Public Relations
Cerus Corporation
925-288-6171
Cerus Corporation Reports Third Quarter 2016 Results
CONCORD, CA, November 3, 2016 — Cerus Corporation (NASDAQ: CERS) today announced financial results for the third quarter ended September 30, 2016.
Recent developments include:
 
 	•	 	The U.S. Food and Drug Administration’s (FDA) revised recommendations for protecting blood components from Zika virus was expanded to recommend use of pathogen reduction technology and/or an investigational blood screening test to all U.S. blood centers.	
 
 	•	 	The first Cerus U.S. blood center customers have submitted biologics license applications to the FDA to request allowance for the interstate transport of INTERCEPT-treated platelet components.	
 
 	•	 	Hemolife Fundacion Banco Nacional de Sangre became the first blood center to enter into routine use with the INTERCEPT Blood System in Colombia.	
 
 	•	 	Cerus’ global commercial leadership was strengthened with the appointment of Vivek Jayaraman as chief commercial officer.	
“U.S. momentum continues to build, with the number of customers initiating INTERCEPT production accelerating from just three at the beginning of the year to 17 customers to date. With another 22 contracted customers slated to begin production, we are in a healthy position for growth,” said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. “Beyond platelets and plasma, we are also moving forward with activities related to our red cell program, with plans to submit for European CE Mark approval and to initiate a U.S. Phase III trial.”
Revenue
Product revenue for the third quarter of 2016 was $10.2 million, up 26% from the $8.0 million recognized during the same period in 2015. The increase in reported product revenue for the quarter was primarily driven by a year-over-year increase in INTERCEPT disposable kit demand of 30% in our EMEA and U.S. commercial regions. Product revenue for the first nine months of 2016 was $27.1 million, up 10% from the first nine months of 2015, driven primarily by increased kit sales in our EMEA region and sales to U.S. customers.

Revenue from our Biomedical Advanced Research and Development Authority (BARDA) agreement for the three and nine months ended September 30, 2016, was $0.3 million. We did not recognize any revenue from our BARDA agreement during the three and nine months ended September 30, 2015.
The Company continues to expect 2016 global product revenue in the range of $37 million to $40 million with anticipated growth supported by new business opportunities in both its European and U.S. markets.
Gross Margins
Gross margins on product revenue for the third quarter of 2016 were 46%, compared to 31% for the third quarter of 2015. Gross margins on product revenue for the first nine months of 2016 were 46%, compared to 30% for the first nine months of 2015. Gross margins on product revenue for the three and nine months ended September 30, 2016, increased primarily due to the Company’s disposable kit manufacturing agreement with Fresenius Kabi AG, entered into during the fourth quarter of 2015 and efficiencies realized in 2016 related to inventory management.
Operating Expenses
Total operating expenses for the third quarter of 2016 were $19.2 million, compared to $18.7 million for the third quarter of 2015. Total operating expenses for the first nine months of 2016 were $59.0 million, compared to $53.3 million for the first nine months of 2015. Selling, general and administrative expenses increased for the three and nine months ended September 30, 2016, primarily due to increased spending related to selling and marketing activities associated with the commercialization of INTERCEPT in the U.S. market. Research and development expenses drove the majority of the reported increase for the nine months ended September 30, 2016, primarily due to activities associated with clinical development of the red blood cell system, the pursuit of potential premarket applications supplement approvals for the platelet and plasma systems and the initial activities under the BARDA agreement.
Operating and Net Loss
Operating losses during the third quarter of 2016 were $14.3 million, compared to $16.2 million for the third quarter of 2015, and $46.3 million compared to $46.1 million for the nine months ended September 30, 2016 and September 30, 2015, respectively.
Net loss for the third quarter of 2016 was $14.4 million, or $0.14 per diluted share, compared to a net loss of $15.7 million, or $0.17 per diluted share, for the third quarter of 2015. Net loss for the first nine months of 2016 was $49.4 million, or $0.49 per diluted share, compared to a net loss of $41.1 million, or $0.48 per diluted share, for the same period of 2015.
Net loss for the third quarter of 2015 was positively impacted by the mark-to-market adjustments of the Company’s previously outstanding warrants, which resulted in non-cash gains of $1.1 million and $4.7 million during the third quarter of 2015 and first nine months of 2015, respectively. The Company has no remaining outstanding warrants and as such, does not expect mark-to-market adjustments going forward.
 
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Cash, Cash Equivalents and Investments
At September 30, 2016, the Company had cash, cash equivalents and short-term investments of $81.2 million compared to $107.9 million at December 31, 2015.
At September 30, 2016, the Company had approximately $19 million in outstanding debt under its loan agreement with Oxford Finance.
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 63181301. The replay will be available approximately three hours after the call through November 17, 2016.
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.
Except for the historical statements contained herein, this press release contains forward-looking statements concerning Cerus’ products, prospects and expected results, including statements concerning the potential approval by the FDA of biologics license applications (BLAs) submitted to the FDA by certain Cerus blood center customers and the potential for such approvals to make Cerus’ pathogen-reduced blood products more available to patients; Cerus’ 2016 annual revenue guidance and its expectation for anticipated growth; and Cerus’ platelet label claim extension efforts. 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 2016, grow sales in its European markets and/or realize meaningful revenue contributions from U.S. customers for the remainder of 2016 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
 
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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 and (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; 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; risks related to future opportunities and plans, including the uncertainty of future product revenues 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 June 30, 2016, filed with the SEC on August 5, 2016. Cerus disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this press release.
Financial Tables Attached
 
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CERUS CORPORATION
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
(in thousands, except per share information)

 	  	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	  	2016	 	 	2015	 	 	2016	 	 	2015	 	
Product revenue	  	$	10,175	  	 	$	8,045	  	 	$	27,058	  	 	$	24,567	  	
Cost of product revenue	  	 	5,451	  	 	 	5,560	  	 	 	14,690	  	 	 	17,302	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit on product revenue	  	 	4,724	  	 	 	2,485	  	 	 	12,368	  	 	 	7,265	  	

Government contracts revenue	  	 	261	  	 	 	—  	  	 	 	261	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	  				 				 				 				
Research and development	  	 	7,033	  	 	 	7,689	  	 	 	22,507	  	 	 	18,483	  	
Selling, general and administrative	  	 	12,161	  	 	 	10,932	  	 	 	36,314	  	 	 	34,713	  	
Amortization of intangible assets	  	 	50	  	 	 	50	  	 	 	151	  	 	 	151	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	19,244	  	 	 	18,671	  	 	 	58,972	  	 	 	53,347	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations	  	 	(14,259	) 	 	 	(16,186	) 	 	 	(46,343	) 	 	 	(46,082	) 	
Non-operating (expense) income, net	  	 	(533	) 	 	 	601	  	 	 	(1,683	) 	 	 	3,049	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before income taxes	  	 	(14,792	) 	 	 	(15,585	) 	 	 	(48,026	) 	 	 	(43,033	) 	
(Benefit) provision for income taxes	  	 	(416	) 	 	 	95	  	 	 	1,379	  	 	 	(1,921	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	  	$	(14,376	) 	 	$	(15,680	) 	 	$	(49,405	) 	 	$	(41,112	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss per share:	  				 				 				 				
Basic	  	$	(0.14	) 	 	$	(0.16	) 	 	$	(0.49	) 	 	$	(0.43	) 	
Diluted	  	$	(0.14	) 	 	$	(0.17	) 	 	$	(0.49	) 	 	$	(0.48	) 	
Weighted average shares outstanding used for calculating net loss per share:	  				 				 				 				
Basic	  	 	102,769	  	 	 	96,864	  	 	 	101,273	  	 	 	95,347	  	
Diluted	  	 	102,769	  	 	 	97,605	  	 	 	101,273	  	 	 	96,340	  	
 
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CERUS CORPORATION
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
(in thousands)

 	  	September 30,
2016	 	  	December 31,
2015	 	
			
ASSETS	  	 	 	  	 	 	
Current assets:	  				  				
Cash and cash equivalents	  	$	12,880	  	  	$	71,018	  	
Short-term investments and marketable equity securities	  	 	68,326	  	  	 	36,861	  	
Accounts receivable	  	 	7,441	  	  	 	5,794	  	
Inventories	  	 	12,202	  	  	 	10,812	  	
Prepaid expenses and other current assets	  	 	7,180	  	  	 	5,921	  	
	  	 	 	 	  	 	 	 	
Total current assets	  	 	108,029	  	  	 	130,406	  	
Non-current assets:	  				  				
Property and equipment, net	  	 	3,206	  	  	 	3,549	  	
Goodwill and intangible assets, net	  	 	2,105	  	  	 	2,256	  	
Restricted cash and other assets	  	 	2,785	  	  	 	3,191	  	
	  	 	 	 	  	 	 	 	
Total assets	  	$	116,125	  	  	$	139,402	  	

LIABILITIES AND STOCKHOLDERS’ EQUITY	  				  				
Current liabilities:	  				  				
Accounts payable and accrued liabilities	  	$	17,029	  	  	$	15,070	  	
Manufacturing and development obligations – current	  	 	—  	  	  	 	3,282	  	
Debt – current	  	 	4,969	  	  	 	2,956	  	
Deferred product revenue – current	  	 	892	  	  	 	554	  	
	  	 	 	 	  	 	 	 	
Total current liabilities	  	 	22,890	  	  	 	21,862	  	
Non-current liabilities:	  				  				
Debt – non-current	  	 	14,382	  	  	 	16,848	  	
Deferred income taxes	  	 	140	  	  	 	122	  	
Manufacturing and development obligations – non-current	  	 	5,004	  	  	 	4,542	  	
Other non-current liabilities	  	 	1,396	  	  	 	1,263	  	
	  	 	 	 	  	 	 	 	
Total liabilities	  	 	43,812	  	  	 	44,637	  	
Stockholders’ equity	  	 	72,313	  	  	 	94,765	  	
	  	 	 	 	  	 	 	 	
Total liabilities and stockholders’ equity	  	$	116,125	  	  	$	139,402	  	

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