CERUS CORP, 10-Q filed on 11/6/2015
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2015
Oct. 23, 2015
Document Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q3 
 
Trading Symbol
CERS 
 
Entity Registrant Name
CERUS CORP 
 
Entity Central Index Key
0001020214 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
97,138,029 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 50,795 
$ 22,781 1
Short-term investments
48,968 
28,513 1
Investment in marketable equity securities
7,684 
 
Accounts receivable
5,646 
5,493 1
Inventories
12,842 
14,956 1
Prepaid expenses
1,535 
1,210 1
Other current assets
953 
1,932 1
Total current assets
128,423 
74,885 1
Non-current assets:
 
 
Property and equipment, net
3,712 
3,781 1
Goodwill
1,316 
1,316 1
Intangible assets, net
991 
1,142 1
Restricted cash
623 
508 1
Other assets
123 
144 1
Total assets
135,188 
81,776 1
Current liabilities:
 
 
Accounts payable
6,813 
9,882 1
Accrued liabilities
8,108 
8,444 1
Accrued taxes
818 
 
Deferred revenue - current
306 
376 1
Debt - current
1,449 
 
Warrant liability
2,424 
10,485 1
Total current liabilities
19,918 
29,187 1
Non-current liabilities:
 
 
Debt - non-current
18,407 
9,872 1
Deferred income taxes
127 
115 1
Other non-current liabilities
1,215 
1,081 1
Total liabilities
39,667 
40,255 1
Commitments and contingencies
   
   1
Stockholders' equity:
 
 
Common stock
97 
80 1
Additional paid-in capital
673,653 
583,416 1
Accumulated other comprehensive income (loss)
4,827 
(31)1
Accumulated deficit
(583,056)
(541,944)1
Total stockholders' equity
95,521 
41,521 1
Total liabilities and stockholders' equity
$ 135,188 
$ 81,776 1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Revenue
$ 8,045 
$ 10,362 
$ 24,567 
$ 26,829 
Cost of revenue
5,560 
5,689 
17,302 
14,598 
Gross profit on revenue
2,485 
4,673 
7,265 
12,231 
Operating expenses:
 
 
 
 
Research and development
7,689 
7,250 
18,483 
16,614 
Selling, general and administrative
10,932 
8,724 
34,713 
27,040 
Amortization of intangible assets
50 
50 
151 
151 
Total operating expenses
18,671 
16,024 
53,347 
43,805 
Loss from operations
(16,186)
(11,351)
(46,082)
(31,574)
Non-operating (expense) income, net:
 
 
 
 
Gain from revaluation of warrant liability
1,109 
1,738 
4,698 
14,263 
Foreign exchange loss
(10)
(941)
(624)
(945)
Interest expense
(505)
(249)
(1,061)
(333)
Other income, net
52 
36 
106 
Total non-operating income, net
601 
600 
3,049 
13,091 
Loss before income taxes
(15,585)
(10,751)
(43,033)
(18,483)
Provision (benefit) for income taxes
95 
(1,921)
90 
Net loss
$ (15,680)
$ (10,759)
$ (41,112)
$ (18,573)
Net loss per share:
 
 
 
 
Basic
$ (0.16)
$ (0.14)
$ (0.43)
$ (0.25)
Diluted
$ (0.17)
$ (0.16)
$ (0.48)
$ (0.44)
Weighted average shares outstanding used in the calculation of net loss per share:
 
 
 
 
Basic
96,864 
75,194 
95,347 
73,407 
Diluted
97,605 
76,103 
96,340 
75,437 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Net loss
$ (15,680)
$ (10,759)
$ (41,112)
$ (18,573)
Other comprehensive (losses) gains:
 
 
 
 
Unrealized (losses) gains on available-for-sale investments, net of taxes of ($1,700) and $2,852 for the three and nine months ended September 30, 2015
(2,654)
(17)
4,858 
(18)
Comprehensive loss
$ (18,334)
$ (10,776)
$ (36,254)
$ (18,591)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2015
Unrealized (losses) gains on available-for-sale investments, taxes
$ (1,700)
$ 2,852 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Operating activities
 
 
Net loss
$ (41,112)
$ (18,573)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation and amortization
1,229 
989 
Stock-based compensation
4,912 
3,764 
Gain from revaluation of warrant liability
(4,698)
(14,263)
Non-cash interest expense
230 
65 
Deferred income taxes
12 
19 
Loss on disposal of fixed assets
 
Tax benefit from other unrealized gain on available-for-sale securities
(2,034)
 
Changes in operating assets and liabilities:
 
 
Accounts receivable
(153)
(1,241)
Inventories
1,970 
(632)
Other assets
802 
(2,860)
Accounts payable
(3,085)
(1,555)
Accrued liabilities
(375)
2,728 
Deferred revenue
(42)
379 
Net cash used in operating activities
(42,344)
(31,177)
Investing activities
 
 
Capital expenditures
(561)
(2,033)
Purchases of investments
(78,261)
(14,807)
Proceeds from maturities of investments
57,444 
17,305 
Proceeds from sales of certain other assets
 
50 
Restricted cash
(115)
 
Net cash (used in) provided by investing activities
(21,493)
515 
Financing activities
 
 
Net proceeds from equity incentive plans and warrants
6,609 
10,269 
Net proceeds from public offering
75,327 
6,849 
Proceeds from loans, net of discount
10,000 
9,848 
Repayment of debt
(85)
(3,446)
Net cash provided by financing activities
91,851 
23,520 
Net increase (decrease) in cash and cash equivalents
28,014 
(7,142)
Cash and cash equivalents, beginning of period
22,781 1
29,485 
Cash and cash equivalents, end of period
$ 50,795 
$ 22,343 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include those of Cerus Corporation and its subsidiary, Cerus Europe B.V. (together with Cerus Corporation, hereinafter “Cerus” or the “Company”) after elimination of all intercompany accounts and transactions. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring entries, considered necessary for a fair presentation have been made. Operating results for the three and nine months ended September 30, 2015, are not necessarily indicative of the results that may be expected for the year ending December 31, 2015, or for any future periods.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2014, which were included in the Company’s 2014 Annual Report on Form 10-K, filed with the SEC on March 16, 2015. The accompanying condensed consolidated balance sheet as of December 31, 2014, has been derived from the Company’s audited consolidated financial statements as of that date.

Use of Estimates

The preparation of financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates under different assumptions or conditions.

Reclassifications

Certain reclassifications have been made to prior period reported amounts to conform to the current period presentations. Previously the Company had presented the amortization of premium and accretion of any discount resulting from the purchase of fixed income securities as a component of “Interest expense” on the unaudited condensed consolidated statements of operations. For the three and nine months ended September 30, 2014, the Company has reclassified approximately $0.1 million and $0.3 million, respectively, of the amortization of premium resulting from the purchase of fixed income securities as a component of “Other income, net” on the unaudited condensed consolidated statements of operations. This reclassification had no impact on net loss, total assets or total stockholders’ equity.

Revenue

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 605-25, “Revenue Recognition – Arrangements with Multiple Deliverables,” as applicable. Revenue is recognized when (i) persuasive evidence of an agreement with the funding party exists; (ii) services have been rendered or product has been delivered; (iii) pricing is fixed or determinable; and (iv) collection is reasonably assured. The Company’s source of revenues for the three and nine months ended September 30, 2015 and 2014, was revenue from sales of the INTERCEPT Blood System for platelets and plasma (“platelet and plasma systems”).

Revenue related to sales is generally recognized when the Company fulfills its obligations for each element of an agreement. For all sales of the Company’s INTERCEPT Blood System products, the Company uses a binding purchase order and signed sales contract as evidence of an arrangement. The Company sells its platelet and plasma systems directly to blood banks, hospitals, universities and government agencies, as well as to distributors in certain regions. Generally, the Company’s contracts with its customers do not provide for open return rights, except within a reasonable time after receipt of goods in the case of defective or non-conforming product. Deliverables and the units of accounting vary according to the provisions of each purchase order or sales contract. For revenue arrangements with multiple elements, the Company determines whether the delivered elements meet the criteria as separate units of accounting. Such criteria require that the deliverable have stand-alone value to the customer and that if a general right of return exists relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company. Once the Company determines if the deliverable meets the criteria for a separate unit of accounting, the Company must determine how the consideration should be allocated between the deliverables and how the separate units of accounting should be recognized as revenue. Consideration received is allocated to elements that are identified as discrete units of accounting. Because the Company has no vendor specific objective evidence or third party evidence for its products due to the Company’s variability in its pricing across the regions into which it sells its products, the allocation of revenue is based on best estimated selling price for the products sold. The objective of best estimated selling price is to determine the price at which the Company would transact a sale, had the product been sold on a stand-alone basis. The Company determines best estimated selling price for its products by considering multiple factors, including, but not limited to, features and functionality of the system, geographies, type of customer, and market conditions. The Company regularly reviews best estimated selling price, as applicable.

Freight costs charged to customers are recorded as a component of revenue under ASC Topic 605, “Accounting for Shipping and Handling Fees and Costs.” Value-added-taxes (“VAT”) that the Company invoices to its customers and remits to governments are recorded on a net basis, which excludes such VAT from product revenue.

Research and Development Expenses

In accordance with ASC Topic 730, “Accounting for Research and Development Expenses,” research and development expenses are charged to expense when incurred. Research and development expenses include salaries and related expenses for scientific personnel, payments to consultants, supplies and chemicals used in in-house laboratories, costs of research and development facilities, depreciation of equipment and external contract research expenses, including clinical trials, preclinical safety studies, other laboratory studies, process development and product manufacturing for research use.

The Company’s use of estimates in recording accrued liabilities for research and development activities (see “Use of Estimates” above) affects the amounts of research and development expenses recorded and revenue recorded from development funding and government grants and collaborative agreements. Actual results may differ from those estimates under different assumptions or conditions.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be classified as cash equivalents. These investments primarily consist of money market instruments, and are classified as available-for-sale.

Investments

Investments with original maturities of greater than three months, primarily corporate debt, U.S. government agency securities and marketable equity securities of Aduro Biotech, Inc. (“Aduro”), are designated as available-for-sale and classified as short-term investments, in accordance with ASC Topic 320, “Accounting for Certain Investments in Debt and Equity Securities”. Available-for-sale securities are carried at estimated fair value. Unrealized gains and losses derived by changes in the estimated fair value of available-for-sale securities are recorded in “Net unrealized losses on available-for-sale securities, net of taxes” on the Company’s unaudited condensed consolidated statements of comprehensive loss. Realized gains (losses) from the sale of available-for-sale securities were recorded in “Other income, net” on the Company’s unaudited condensed consolidated statements of operations. The cost of securities sold is based on the specific identification method. The Company reports the amortization of any premium and accretion of any discount resulting from the purchase of debt securities as a component of interest income.

The Company also reviews its marketable securities on a regular basis to evaluate whether any security has experienced an other-than-temporary decline in fair value. Other-than-temporary declines in market value, if any, are recorded in “Other income, net” on the Company’s unaudited condensed consolidated statements of operations.

Restricted Cash

The Company holds a certificate of deposit with a domestic bank for any potential decommissioning resulting from the Company’s possession of radioactive material. The certificate of deposit is held to satisfy the financial surety requirements of the California Department of Health Services and is recorded in “Restricted cash” on the Company’s unaudited condensed consolidated balance sheets. The Company also has non-US dollar denominated deposits recorded as “Restricted cash” in compliance with certain foreign contractual requirements.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, short-term investments and accounts receivable.

Pursuant to the Company’s investment policy, substantially all of the Company’s cash, cash equivalents and non-equity short-term investments are maintained at major financial institutions of high credit standing. The Company monitors the financial credit worthiness of the issuers of its investments and limits the concentration in individual securities and types of investments that exist within its investment portfolio. Generally, all of the Company’s investments are investment grade and carry high credit quality ratings, which is in accordance with its investment policy. At September 30, 2015, the fair value of the Company’s marketable equity securities of Aduro is subject to the underlying volatility of Aduro’s stock price. At September 30, 2015, the Company does not believe there is significant financial risk from non-performance by the issuers of the Company’s cash equivalents.

 

Concentrations of credit risk with respect to trade receivables exist. On a regular basis, including at the time of sale, the Company performs credit evaluations of its significant customers that it expects to sell to on credit terms. Generally, the Company does not require collateral from its customers to secure accounts receivable. To the extent that the Company determines specific invoices or customer accounts may be uncollectible, the Company establishes an allowance for doubtful accounts against the accounts receivable on its unaudited condensed consolidated balance sheets and records a charge on its unaudited condensed consolidated statements of operations as a component of selling, general and administrative expenses. At September 30, 2015 and December 31, 2014, the Company had not recorded any reserves for potentially uncollectible accounts.

The Company had two and one customer that accounted for more than 10% of the Company’s outstanding trade receivables at each of September 30, 2015 and December 31, 2014, respectively. These customers cumulatively represented approximately 42% and 36% of the Company’s outstanding trade receivables at September 30, 2015 and December 31, 2014, respectively. To date, the Company has not experienced collection difficulties from these customers.

Inventories

At September 30, 2015 and December 31, 2014, inventory consisted of work-in-process and finished goods only. Finished goods include INTERCEPT disposable kits, UVA illumination devices (“illuminators”), and certain replacement parts for the illuminators. Platelet and plasma systems disposable kits generally have a two-year shelf life from the date of manufacture. Illuminators and replacement parts do not have regulated expiration dates. Work-in-process includes certain components that are manufactured before being sold to and ultimately incorporated and assembled by Fresenius Kabi Deutschland GmbH or Fresenius, Inc. (with their affiliates, “Fresenius”) into the finished INTERCEPT disposable kits. The Company maintains an inventory balance based on its current sales projections, and at each reporting period, the Company evaluates whether its work-in-process inventory would be sold to Fresenius for production of finished units in order to sell to existing and prospective customers within the next twelve-month period. It is not customary for the Company’s production cycle for inventory to exceed twelve months. Instead, the Company uses its best judgment to factor in lead times for the production of its work-in-process and finished units to meet the Company’s forecasted demands. If actual results differ from those estimates, work-in-process inventory could potentially accumulate for periods exceeding one year. At September 30, 2015 and December 31, 2014, the Company classified its work-in-process inventory as a current asset on its consolidated balance sheets based on its evaluation that the work-in-process inventory would be sold to Fresenius for finished disposable kit production within each respective subsequent twelve-month period.

Inventory is recorded at the lower of cost, determined on a first-in, first-out basis, or market value. The Company uses significant judgment to analyze and determine if the composition of its inventory is obsolete, slow-moving or unsalable and frequently reviews such determinations. The Company writes-down specifically identified unusable, obsolete, slow-moving, or known unsalable inventory that has no alternative use in the period that it is first recognized by using a number of factors including product expiration dates, open and unfulfilled orders, and sales forecasts. Any write-down of its inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest that the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded in “Cost of revenue” on the Company’s unaudited condensed consolidated statements of operations. At September 30, 2015 and December 31, 2014, the Company had $1.3 million and $0.1 million, respectively, recorded for potential obsolete, expiring or unsalable product.

Property and Equipment, net

Property and equipment is comprised of furniture, equipment, leasehold improvements, information technology hardware and software and is recorded at cost. At the time the property and equipment is ready for its intended use, it is depreciated on a straight-line basis over the estimated useful lives of the assets (generally three to five years). Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful lives of the improvements.

Capitalization of Software Costs

The Company capitalizes certain significant costs incurred in the acquisition and development of software for internal use, including the costs of the software, materials, and consultants during the application development stage. Costs incurred prior to the application development stage, costs incurred once the application is substantially complete and ready for its intended use, and other costs not qualifying for capitalization, including training and maintenance costs, are charged to expense as incurred. The Company capitalized costs for enhancement of the enterprise resource planning software system and other internal use software of zero and $1.8 million during the nine months ended September 30, 2015 and 2014, respectively. Capitalized software costs associated with the enterprise resource planning system are being amortized over the estimated useful life of five years.

Costs incurred in connection with the development of software products for sale are accounted for in accordance with the ASC 985—Costs of Software to Be Sold, Leased or Marketed. Costs incurred prior to the establishment of technological feasibility are charged to research and development expense. Software development costs are capitalized after a product is determined to be technologically feasible and is in the process of being developed for market.

 

Goodwill and Intangible Assets, net

Intangible assets, net, which include a license for the right to commercialize the INTERCEPT Blood System in Asia, are subject to ratable amortization over the estimated useful life of ten years. The amortization of the Company’s intangible assets, net, is recorded in “Amortization of intangible assets” on the Company’s unaudited condensed consolidated statements of operations. Goodwill is not amortized but instead is subject to an impairment test performed on an annual basis, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. Such impairment analysis is performed on August 31 of each fiscal year, or more frequently if indicators of impairment exist. The test for goodwill impairment may be assessed using qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, the Company must then proceed with performing the quantitative two-step process to test goodwill for impairment; otherwise, goodwill is not considered impaired and no further testing is warranted. The Company may choose not to perform the qualitative assessment to test goodwill for impairment and proceed directly to the quantitative two-step process; however, the Company may revert to the qualitative assessment to test goodwill for impairment in any subsequent period. The first step of the two-step process compares the fair value of each reporting unit with its respective carrying amount, including goodwill. The Company has determined that it operates in one segment and has one reporting unit and estimates the fair value of its one reporting unit using the enterprise approach under which it considers the quoted market capitalization of the Company as reported on the Nasdaq Global Market. The Company considers quoted market prices that are available in active markets to be the best evidence of fair value. The Company also considers other factors, which include future forecasted results, the economic environment and overall market conditions. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired and, therefore, the second step of the impairment test is unnecessary. The second step of the two-step process, which is used to measure the amount of impairment loss, compares the implied fair value of each reporting unit’s goodwill with the respective carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

The Company performs an impairment test on its intangible assets, in accordance ASC Topic 360-10, “Property, Plant and Equipment,” if certain events or changes in circumstances occur which indicate that the carrying amounts of its intangible assets may not be recoverable. If the intangible assets are not recoverable, an impairment loss would be recognized by the Company based on the excess amount of the carrying value of the intangible assets over its fair value. For further details regarding the impairment analysis, reference is made to the section below under “Long-lived Assets.” Also, see Note 5 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s impairment analysis and the valuation of goodwill and intangible assets, net.

Long-lived Assets

The Company evaluates its long-lived assets for impairment by continually monitoring events and changes in circumstances that could indicate carrying amounts of its long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the expected undiscounted future cash flows are less than the carrying amount of these assets, the Company then measures the amount of the impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company did not recognize impairment charges related to its long-lived assets during the three and nine months ended September 30, 2015 and 2014.

Foreign Currency Remeasurement

The functional currency of the Company’s foreign subsidiary is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are remeasured in United States dollars using the exchange rates at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are remeasured in United States dollars using historical exchange rates. Revenues and expenses are remeasured using average exchange rates prevailing during the period. Remeasurements are recorded in the Company’s unaudited condensed consolidated statements of operations.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation.” Stock-based compensation expense is measured at the grant-date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period, adjusted for estimated forfeitures. To the extent that stock options contain performance criteria for vesting, stock-based compensation is recognized once the performance criteria are probable of being achieved.

For stock-based awards issued to non-employees, the Company follows ASC Topic 505-50, “Equity Based Payment to Non-Employees” and considers the measurement date at which the fair value of the stock-based award is measured to be the earlier of (i) the date at which a commitment for performance by the grantee to earn the equity instrument is reached or (ii) the date at which the grantee’s performance is complete. The Company recognizes stock-based compensation expense for the fair value of the vested portion of the non-employee stock-based awards in its unaudited condensed consolidated statements of operations.

 

See Note 11 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s stock-based compensation assumptions and expenses.

Warrant Liability

In August 2009 and November 2010, the Company issued warrants to purchase an aggregate of 2.4 million and 3.7 million shares of common stock, respectively. The material terms of the warrants were identical under each issuance except for the exercise price, date issued and expiration date. In August 2014, all of the outstanding August 2009 warrants were exercised in full. The Company classifies warrants outstanding on the reporting date as a liability on its unaudited condensed consolidated balance sheets as the warrants contain certain material terms which require the Company to purchase the warrants for cash in an amount equal to the value of the unexercised portion of the warrants in connection with certain change of control transactions. In addition, the Company may also be required to pay cash to a warrant holder under certain circumstances if the Company is unable to timely deliver the shares acquired upon warrant exercise to such holder.

The fair value of outstanding warrants is calculated using the Black-Scholes model and was adjusted accordingly at the end of each reporting period.

Changes resulting from the revaluation of warrants to fair value are recorded in “Gain from revaluation of warrant liability” on the unaudited condensed consolidated statements of operations. Upon the exercise or modification to remove the provisions which require the warrants to be treated as a liability, the fair value of the warrants will be reclassified from a liability to stockholders’ equity on the Company’s unaudited condensed consolidated balance sheets and no further adjustment to the fair value would be made in subsequent periods.

See Note 10 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s valuation of warrant liability.

Income Taxes

The Company accounts for income taxes using an asset and liability approach in accordance with ASC Topic 740 “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. ASC Topic 740 requires derecognition of tax positions that do not have a greater than 50% likelihood of being recognized upon review by a taxing authority having full knowledge of all relevant information. Use of a valuation allowance as described in ASC Topic 740 is not an appropriate substitute for derecognition of a tax position. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax expense. To date, the Company has not recognized any interest and penalties in its unaudited condensed consolidated statements of operations, nor has its accrued for or made payments for interest and penalties. The Company continues to carry a full valuation allowance on all of its deferred tax assets. Although the Company believes it more likely than not that a taxing authority would agree with its current tax positions, there can be no assurance that the tax positions the Company has taken will be substantiated by a taxing authority if reviewed. The Company’s US federal and California tax years through 2014 remain subject to examination by the taxing jurisdictions due to unutilized net operating losses and research credits.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share gives effect to all potentially dilutive common shares outstanding for the period. The potentially dilutive securities include stock options, employee stock purchase plan rights and warrants, which are calculated using the treasury stock method. Diluted net loss per share also gives effect to potential adjustments to the numerator for changes resulting from the revaluation of warrants to fair value for the period, even if the Company is in a net loss position, if the effect would result in more dilution.

Certain potential dilutive securities were excluded from the dilution calculation for the three and nine months ended September 30, 2015 and 2014, as their inclusion would have been anti-dilutive.

 

The following table sets forth the reconciliation of the numerator and denominator used in the computation of basic and diluted net loss per share for the three and nine months ended September 30, 2015 and 2014 (in thousands, except per share amounts):

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2015      2014      2015      2014  

Numerator for Basic and Diluted:

           

Net loss used for basic calculation

   $ (15,680    $ (10,759    $ (41,112    $ (18,573

Effect of revaluation of warrant liability

     (1,109      (1,738      (4,698      (14,263
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net loss used for diluted calculation

   $ (16,789    $ (12,497    $ (45,810    $ (32,836
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator:

           

Basic weighted average number of shares outstanding

     96,864         75,194         95,347         73,407   

Effect of dilutive potential shares

     741         909         993         2,030   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average number of shares outstanding

     97,605         76,103         96,340         75,437   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss per share:

           

Basic

   $ (0.16    $ (0.14    $ (0.43    $ (0.25

Diluted

   $ (0.17    $ (0.16    $ (0.48    $ (0.44

The table below presents shares underlying stock options that are excluded from the calculation of the weighted average number of shares outstanding used for the calculation of diluted net loss per share. These are excluded from the calculation due to their anti-dilutive effect for the three and nine months ended September 30, 2015 and 2014 (in thousands):

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2015      2014      2015      2014  

Weighted average number of anti-dilutive potential shares:

           

Stock options

     7,068         12,032         6,223         11,737   

Guarantee and Indemnification Arrangements

The Company recognizes the fair value for guarantee and indemnification arrangements issued or modified by the Company. In addition, the Company monitors the conditions that are subject to the guarantees and indemnifications in order to identify if a loss has occurred. If the Company determines it is probable that a loss has occurred, then any such estimable loss would be recognized under those guarantees and indemnifications. Some of the agreements that the Company is a party to contain provisions that indemnify the counter party from damages and costs resulting from claims that the Company’s technology infringes the intellectual property rights of a third party or claims that the sale or use of the Company’s products have caused personal injury or other damage or loss. The Company has not received any such requests for indemnification under these provisions and has not been required to make material payments pursuant to these provisions.

The Company generally provides for a one-year warranty on certain of its INTERCEPT blood-safety products covering defects in materials and workmanship. The Company accrues costs associated with warranty obligations when claims are probable. The Company has not experienced significant or systemic warranty claims nor is it aware of any existing current warranty claims and did not carry a warranty claim liability at September 30, 2015 and December 31, 2014.

Fair Value of Financial Instruments

The Company applies the provisions of fair value relating to its financial assets and liabilities. The carrying amounts of accounts receivables, accounts payable, and other accrued liabilities approximate their fair value due to the relative short-term maturities of such instruments. Based on the borrowing rates currently available to the Company for loans with similar terms, the Company believes the fair value of its debt also approximates its carrying amounts. The Company measures and records certain financial assets and liabilities at fair value on a recurring basis, including its available-for-sale securities and warrant liability. The Company classifies instruments within Level 1 if quoted prices are available in active markets for identical assets. The Company classifies instruments in Level 2 if the instruments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. The available-for-sale securities are held by a custodian who obtains investment prices from a third party pricing provider that uses standard inputs (observable in the market) to models which vary by asset class. The Company classifies instruments in Level 3 if one or more significant inputs or significant value drivers are unobservable, which include its warrant liability. The Company assesses any transfers among fair value measurement levels at the end of each reporting period.

See Notes 2 and 10 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s valuation of financial instruments.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date, which defers by one year the effective date of ASU No. 2014-09 to annual reporting periods beginning after December 15, 2017 (including interim periods within those periods). Early adoption is permitted to the original effective date of December 15, 2016 (including interim periods within those periods). The ASU’s effective date for the Company will be the first quarter of fiscal year 2018, using one of two retrospective application methods. The Company has not selected a transition retrospective application method and is currently assessing the potential effects of this ASU on its consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and provide related disclosures. This ASU will be effective for the Company in fiscal year 2016. Early adoption is permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the corresponding debt liability rather than as an asset. This ASU will be effective for the Company in fiscal year 2016. Early adoption is permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory, which simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” This ASU will be effective for the Company in fiscal year 2017. Early adoption is permitted. The Company is currently assessing the future impact of this ASU on its consolidated financial statements.

Fair Value of Financial Instruments
Fair Value of Financial Instruments

Note 2. Fair Value of Financial Instruments

The Company determines the fair value of an asset or liability based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction between market participants at the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritized the inputs into three broad levels as follows:

 

  Level 1: Quoted prices in active markets for identical instruments

 

  Level 2: Other significant observable inputs (including quoted prices in active markets for similar instruments)

 

  Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain investments)

Money market funds and equity investments are highly liquid investments and are actively traded. The pricing information on these investment instruments are readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

To estimate the fair value of Level 2 marketable debt securities as of September 30, 2015, the Company’s primary service utilizes inputs from multiple industry-recognized pricing sources to determine the price for each investment. Corporate debt and United States government agency securities are systematically priced by this service as of the close of business each business day. If the primary pricing service does not price a specific asset, a secondary pricing service is utilized.

 

The fair values of the Company’s financial assets and liabilities were determined using the following inputs at September 30, 2015 (in thousands):

 

     Total      Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Money market funds (1)

   $ 42,169       $ 42,169       $ —         $ —     

Corporate debt securities (2)

     18,965         —           18,965         —     

United States government agency securities (2)

     30,003         —           30,003         —     

Marketable equity securities (3)

     7,684         7,684         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 98,821       $ 49,853       $ 48,968       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Warrant liability (4)

   $ 2,424       $ —         $ —         $ 2,424   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 2,424       $ —         $ —         $ 2,424   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheets.
(2) Included in short-term investments on the Company’s unaudited condensed consolidated balance sheets.
(3) Included in investment in marketable equity securities on the Company’s unaudited condensed consolidated balance sheets.
(4) Included in current liabilities on the Company’s unaudited condensed consolidated balance sheets.

The fair values of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2014 (in thousands):

 

     Total      Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Money market funds (1)

   $ 3,912       $ 3,912       $ —         $ —     

Corporate debt securities (2)

     26,088         —           26,088         —     

United States government agency securities (2)

     3,426         —           3,426         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 33,426       $ 3,912       $ 29,514       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Warrant liability (3)

   $ 10,485       $ —         $ —         $ 10,485   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 10,485       $ —         $ —         $ 10,485   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Included in cash and cash equivalents on the Company’s consolidated balance sheets.
(2) Included in short-term investments on the Company’s consolidated balance sheets, except for approximately $1.0 million of corporate debt securities that are included in cash and cash equivalents on the Company’s consolidated balance sheets.
(3) Included in current liabilities on the Company’s consolidated balance sheets.

 

A reconciliation of the beginning and ending balances for warrant liability using significant unobservable inputs (Level 3) from December 31, 2014 to September 30, 2015, was as follows (in thousands):

 

Balance at December 31, 2014

   $ 10,485   

Decrease in fair value of warrants

     (4,698

Settlement of warrants exercised

     (3,363
  

 

 

 

Balance at September 30, 2015

   $ 2,424   
  

 

 

 

See Notes 1 and 10 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s valuation techniques and unobservable inputs for warrant liability using significant unobservable inputs (Level 3).

The Company did not have any transfers among fair value measurement levels during the three and nine months ended September 30, 2015 or the year ended December 31, 2014.

Available-for-sale Securities
Available-for-sale Securities

Note 3. Available-for-sale Securities

The following is a summary of available-for-sale securities at September 30, 2015 (in thousands):

 

     September 30, 2015  
     Amortized
Cost
     Gross
Unrealized
Gain
     Gross
Unrealized
Loss
     Fair Value  

Money market funds

   $ 42,169       $ —         $ —         $ 42,169   

United States government agency securities

     30,000         3         —           30,003   

Corporate debt securities

     18,973         3         (11      18,965   

Aduro equity securities

     —           7,684         —           7,684   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 91,142       $ 7,690       $ (11    $ 98,821   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following is a summary of available-for-sale securities at December 31, 2014 (in thousands):

 

     December 31, 2014  
     Amortized
Cost
     Gross
Unrealized
Loss
     Fair Value  

Money market funds

   $ 3,912       $ —         $ 3,912   

United States government agency securities

     3,427         (1      3,426   

Corporate debt securities

     26,118         (30      26,088   
  

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 33,457       $ (31    $ 33,426   
  

 

 

    

 

 

    

 

 

 

Available-for-sale debt securities at September 30, 2015 and December 31, 2014, consisted of the following by original contractual maturity (in thousands):

 

     September 30, 2015      December 31, 2014  
     Amortized
Cost
     Fair Value      Amortized
Cost
     Fair Value  

One year or less

   $ 91,142       $ 91,137       $ 27,752       $ 27,727   

Greater than one year and less than five years

     —           —           5,705         5,699   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale debt securities

   $ 91,142       $ 91,137       $ 33,457       $ 33,426   
  

 

 

    

 

 

    

 

 

    

 

 

 

As of September 30, 2015, the Company considered the declines in market value of its marketable securities investment portfolio to be temporary in nature and did not consider any of its investments other-than-temporarily impaired. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s cost basis. During the three and nine months ended September 30, 2015 and 2014, the Company did not recognize any other-than-temporary impairment losses.

 

The Company did not record any gross realized gains from the sale or maturity of available-for-sale securities during the three months ended September 30, 2015 and recorded minimal gross realized gains from the sale or maturity of available-for-sale securities during the nine months ended September 30, 2015. The Company recorded minimal gross realized gains from the sale or maturity of available-for-sale securities during the three and nine months ended September 30, 2014. The Company did not record any gross realized losses from the sale or maturity of available-for-sale securities during the three and nine months ended September 30, 2015 and 2014.

Inventories
Inventories

Note 4. Inventories

Inventories at September 30, 2015 and December 31, 2014, consisted of the following (in thousands):

 

     September 30,      December 31,  
     2015      2014  

Work-in-process

   $ 3,859       $ 2,222   

Finished goods

     8,983         12,734   
  

 

 

    

 

 

 

Total inventories

   $ 12,842       $ 14,956   
  

 

 

    

 

 

 
Goodwill and Intangible Assets, net
Goodwill and Intangible Assets, net

Note 5. Goodwill and Intangible Assets, net

Goodwill

During the three and nine months ended September 30, 2015, the Company did not dispose of or recognize additional goodwill. The Company performed its annual review of goodwill on August 31, 2015, and noted no impairment as of that date. As of September 30, 2015, the Company has not identified any indicators of goodwill impairment.

Intangible Assets, net

The following is a summary of intangible assets, net at September 30, 2015 (in thousands):

 

     September 30, 2015  
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
 

Acquisition-related intangible assets:

        

Reacquired license - INTERCEPT Asia

   $ 2,017       $ (1,026    $ 991   
  

 

 

    

 

 

    

 

 

 

Total intangible assets

   $ 2,017       $ (1,026    $ 991   
  

 

 

    

 

 

    

 

 

 

The following is a summary of intangible assets, net at December 31, 2014 (in thousands):

 

     December 31, 2014  
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
 

Acquisition-related intangible assets:

        

Reacquired license - INTERCEPT Asia

   $ 2,017       $ (875    $ 1,142   
  

 

 

    

 

 

    

 

 

 

Total intangible assets

   $ 2,017       $ (875    $ 1,142   
  

 

 

    

 

 

    

 

 

 

The Company recognized $0.05 million and $0.15 million in amortization expense related to intangible assets for each of the three and nine months ended September 30, 2015 and 2014. During the three and nine months ended September 30, 2015 and 2014, there were no impairment charges recognized related to the acquired intangible assets.

At September 30, 2015, the expected annual amortization expense of the intangible assets, net is less than $0.1 million for the remaining three months of 2015, $0.2 million annually beginning with the year ending December 31, 2016 through the year ending December 31, 2019, and $0.1 million for the year ending December 31, 2020.

Marketable Equity Investments
Marketable Equity Investments

Note 6. Marketable Equity Investments

The Company held an investment in preferred shares of Aduro which it had historically accounted for under the cost method of accounting with a net carrying value of zero. In April 2015, Aduro’s common stock began trading on the NASDAQ Global Select Market, under the symbol “ADRO”. At the time of Aduro’s initial public offering (“IPO”), the Company’s preferred shares in Aduro converted to 396,700 shares of common stock, and the fair value of the Company’s investment became readily determinable and, as a result became a marketable equity security. Therefore, the Company no longer accounts for the investment in Aduro under the cost basis of accounting. The Company now reflects the investment in Aduro as an available-for-sale security included in investment in marketable equity securities on the Company’s unaudited condensed consolidated balance sheet (Note 2) and will adjust the carrying value of this investment to fair value each quarterly reporting period, with changes in fair value recorded within other comprehensive income (loss), net of tax.

Accrued Liabilities
Accrued Liabilities

Note 7. Accrued Liabilities

Accrued liabilities at September 30, 2015 and December 31, 2014, consisted of the following (in thousands):

 

     September 30,      December 31,  
     2015      2014  

Accrued compensation and related costs

   $ 4,046       $ 3,951   

Accrued professional services

     2,277         2,123   

Accrued inventory costs

     92         870   

Accrued customer costs and deposits

     413         385   

Accrued insurance premiums

     583         264   

Other accrued expenses

     697         851   
  

 

 

    

 

 

 

Total accrued liabilities

   $ 8,108       $ 8,444   
  

 

 

    

 

 

 
Debt
Debt

Note 8. Debt

Debt at September 30, 2015, consisted of the following (in thousands):

 

     September 30, 2015  
     Principal      Unamortized
Discount
     Total  

Loan and Security Agreement

   $ 20,000       $ (144    $ 19,856   

Less: debt - current

     (1,512      63         (1,449
  

 

 

    

 

 

    

 

 

 

Debt - non-current

   $ 18,488       $ (81    $ 18,407   
  

 

 

    

 

 

    

 

 

 

Debt at December 31, 2014, consisted of the following (in thousands):

 

     December 31, 2014  
     Principal      Unamortized
Discount
     Total  

Loan and Security Agreement

   $ 10,000       $ (128    $ 9,872   

Less: debt - current

     —           —           —     
  

 

 

    

 

 

    

 

 

 

Debt - non-current

   $ 10,000       $ (128    $ 9,872   
  

 

 

    

 

 

    

 

 

 

Principal and interest payments on debt at September 30, 2015, are expected to be as follows * (in thousands):

 

Year ended December 31,

   Principal      Interest      Total  

2015

   $ —         $ 349       $ 349   

2016

     3,050         1,352         4,402   

2017

     6,428         980         7,408   

2018

     6,892         517         7,409   

2019

     3,630         1,474         5,104   
  

 

 

    

 

 

    

 

 

 

Total

   $ 20,000       $ 4,672       $ 24,672   
  

 

 

    

 

 

    

 

 

 

 

* Unless interest only period extends to December 31, 2016, as described below.

 

Loan and Security Agreement

On June 30, 2014, the Company entered into a five year loan and security agreement with Oxford Finance LLC (the “Term Loan Agreement”) to borrow up to $30.0 million in term loans in three equal tranches (the “Term Loans”). On June 30, 2014, the Company received $10.0 million from the first tranche (“Term Loan A”). The second tranche of $10.0 million (“Term Loan B”) was drawn on June 15, 2015. On September 29, 2015, the Term Loan Agreement was amended to extend the period in which the third tranche can be drawn and the interest-only period for all advances under the Term Loan Agreement. The Company determined that the Term Loan Agreement Amendment resulted in a modification. As a result, the Term Loan will continue to be accounted for by using the effective interest method, with a new effective interest rate based on revised cash flows calculated on a prospective basis upon the execution of the amendment to the Term Loan Agreement. As amended, the third tranche of $10.0 million (“Term Loan C”) would be available, subject to the Company achieving consolidated trailing six months’ revenue at a specified threshold (the “Revenue Event”), from the date of the achievement of the Revenue Event, to the earlier of (i) June 30, 2016, and (ii) 60 days after the Revenue Event is achieved. Term Loan A bears an interest rate of 6.95%. Term Loan B bears an interest rate of 7.01%. Term Loan C will bear an interest rate calculated at the greater of 6.95% or 6.72% plus the three month U.S. London Interbank Offered Rate, or LIBOR in effect three business days prior to the funding date. All of the Term Loans mature on June 1, 2019. The Company is required to make interest only payments through June 2016 followed by thirty-six months of equal principal and interest payments thereafter; however, if the Revenue Event is achieved no later than May 31, 2016, then the interest-only period may be extended through December 31, 2016, and the amortization period will be reduced to thirty months. The Company is also required to make a final payment equal to 7% of the principal amounts of the Term Loans drawn, payable on the earlier to occur of maturity or prepayment. The costs associated with the final payment are recognized as interest expense over the life of the Term Loans. The Company may prepay at any time the Term Loans subject to declining prepayment fees over the term of the Term Loan Agreement. The Company pledged all current and future assets, excluding its intellectual property and 35% of the Company’s investment in its subsidiary, Cerus Europe B.V., as security for borrowings under the Term Loan Agreement. The Term Loan Agreement contains certain nonfinancial covenants, with which the Company was in compliance at September 30, 2015.

Commitments and Contingencies
Commitments and Contingencies

Note 9. Commitments and Contingencies

Operating Leases

The Company leases its office facilities, located in Concord, California and Amersfoort, the Netherlands, and certain equipment under non-cancelable operating leases with initial terms in excess of one year that require the Company to pay operating costs, property taxes, insurance and maintenance. The operating leases expire at various dates through 2020, with certain of the leases providing for renewal options, provisions for adjusting future lease payments, which is based on the consumer price index and the right to terminate the lease early. In June 2013, the Company entered into a new lease for additional space in Concord. The lease initially had a two-year term with four two-year options for the Company to renew, the first of which the Company exercised in March 2015 and obligates the Company to make rent payments for the remaining three months of 2015 of less than $0.1 million and $0.2 million and $0.1 million in 2016 and 2017, respectively. The Company’s leased facilities qualify as operating leases under ASC Topic 840, “Leases” and as such, are not included on its unaudited condensed consolidated balance sheets.

Financed Leasehold Improvements

In 2010, the Company financed $1.1 million of leasehold improvements at one of its facilities in Concord, California. The Company pays for the financed leasehold improvements as a component of rent and is required to reimburse its landlord over the remaining life of the lease. If the Company exercises its right to early terminate the Concord, California lease under which such improvements were made, which may occur at any time hereafter, the Company would be required to repay for any remaining portion of the landlord financed leasehold improvements at such time. At September 30, 2015, the Company had an outstanding liability of $0.5 million related to these leasehold improvements, of which $0.1 million was reflected in “Accrued liabilities” and $0.4 million was reflected in “Other non-current liabilities” on the Company’s unaudited condensed consolidated balance sheets.

Purchase Commitments

The Company is party to agreements with certain providers for certain components of INTERCEPT Blood System which the Company purchases from third party manufacturers and supplies to Fresenius at no cost for use in manufacturing finished INTERCEPT disposable kits. Certain of these agreements require minimum purchase commitments from the Company.

Stockholders' Equity
Stockholders' Equity

Note 10. Stockholders’ Equity

Public Offering of Common Stock

In January 2015, the Company issued 14,636,363 shares of its common stock, par value $0.001 per share, in an underwritten public offering. The price to the public in the offering was $5.50 per share. The net proceeds from this offering were approximately $75.4 million, net of the underwriting discount and other issuance costs totaling $5.1 million.

 

Common Stock and Associated Warrant Liability

In August 2009, the Company issued warrants to purchase 2.4 million shares of common stock, exercisable at an exercise price of $2.90 per share (“2009 Warrants”). In August 2014, all outstanding 2009 Warrants were exercised in full.

In November 2010, the Company issued warrants to purchase 3.7 million shares of common stock, exercisable at an exercise price of $3.20 per share (“2010 Warrants”). The 2010 Warrants became exercisable on May 15, 2011, and are exercisable for a period of five years from the issue date.

The fair value of the 2010 Warrants were recorded on the consolidated balance sheets as a liability pursuant to ASC Topic 480-10“Distinguishing Liabilities from Equity” and adjusted to fair value at each financial reporting date thereafter until the earlier of exercise, expiration or modification to remove the provisions which require the warrants to be treated as a liability, at which time, these warrants would be reclassified into stockholders’ equity. The Company classified the 2010 Warrants as a liability as these warrants contain certain provisions that, under certain circumstances, may be out of the Company’s control, and could require the Company to pay cash to settle the exercise of the warrants or may require the Company to redeem the warrants.

The fair value of the 2010 Warrants at September 30, 2015 and December 31, 2014, consisted of the following (in thousands):

 

     September 30,
2015
     December 31,
2014
 

2010 Warrants

   $ 2,424       $ 10,485   

The fair value of the Company’s 2010 Warrants was based on an option valuation model using the following assumptions at September 30, 2015 and December 31, 2014:

 

     September 30,
2015
    December 31,
2014
 

2010 Warrants:

    

Expected term (in years)

     0.11        0.86   

Estimated volatility

     61     55

Risk-free interest rate

     0.02     0.25

Expected dividend yield

     0     0

The Company recorded non-cash gains of $1.1 million and $1.7 million during the three months ended September 30, 2015 and September 30, 2014, respectively, and non-cash gains of $4.7 million and $14.3 million during the nine months ended September 30, 2015 and 2014, respectively, in “Gain from revaluation of warrant liability” on its unaudited condensed consolidated statements of operations due to the changes in fair value of the warrants. Significant changes to the Company’s market price for its common stock will impact the implied and/or historical volatility used to calculate the fair value the 2010 Warrants. Any significant increases in the Company’s stock price will likely create an increase in the fair value of warrant liability. Similarly, any significant decreases in the Company’s stock price will likely create a decrease in the fair value of warrant liability. During the three months and nine months ended September 30, 2015, 175,000 and 1,544,123 shares of common stock were issued, respectively, in connection with the exercise of outstanding 2010 Warrants. As of September 30, 2015, 2010 Warrants to purchase approximately 1.8 million shares of common stock were outstanding.

Sales Agreement

On March 21, 2014, the Company entered into Amendment No. 1 to the Controlled Equity OfferingSM Sales Agreement, dated August 31, 2012 (as amended, the “Amended Cantor Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) that provides for the issuance and sale of shares of its common stock over the term of the Amended Cantor Agreement having an aggregate offering price of up to an aggregate of $70.0 million through Cantor. Under the Amended Cantor Agreement, Cantor also acts as the Company’s sales agent and receives compensation based on an aggregate of 2% of the gross proceeds on the sale price per share of its common stock. The issuance and sale of these shares by the Company pursuant to the Amended Cantor Agreement are deemed an “at-the-market” offering and are registered under the Securities Act of 1933, as amended. During the nine months ended September 30, 2015, the Company had no sales of its common stock under the Amended Cantor Agreement. At September 30, 2015, the Company had approximately $22.5 million of common stock available to be sold under the Amended Cantor Agreement.

Stock-Based Compensation
Stock-Based Compensation

Note 11. Stock-Based Compensation

The Company maintains an equity compensation plan to provide long-term incentives for employees, contractors, and members of its Board of Directors. The Company currently grants equity awards from one plan, the 2008 Equity Incentive Plan (the “2008 Plan”).

 

The 2008 Plan allows for the issuance of non-statutory and incentive stock options, restricted stock, restricted stock units, stock appreciation rights, other stock-related awards, and performance awards which may be settled in cash, stock, or other property. The Company continues to have equity awards outstanding under its previous stock plans: 1998 Non-Officer Stock Option Plan and 1999 Equity Incentive Plan (collectively, the “Prior Plans”). Equity awards issued under the Prior Plans continue to adhere to the terms of those respective stock plans and no further options may be granted under those previous plans. However, at June 2, 2008, any shares that remained available for future grants under the Prior Plans became available for issuance under the 2008 Plan. On June 10, 2015, the Company’s stockholders approved an amendment and restatement of the 2008 Plan that increased the aggregate number of shares of common stock authorized for issuance under the 2008 Plan by 5,000,000 shares. At September 30, 2015, the Company had an aggregate of approximately 21.7 million shares of its common stock reserved for issuance under the Amended 2008 Plan and the Prior Plans, of which approximately 14.5 million shares were subject to outstanding options and other stock-based awards, and approximately 7.2 million shares were available for future issuance under the Amended 2008 Plan.

The Company maintains an Employee Stock Purchase Plan (the “Purchase Plan”), which is intended to qualify as an employee stock purchase plan within the meaning of Section 423(b) of the Internal Revenue Code. Under the Purchase Plan, the Company’s Board of Directors may authorize participation by eligible employees, including officers, in periodic offerings. Under the Purchase Plan eligible employee participants may purchase shares of common stock of the Company at a purchase price equal to 85% of the lower of the fair market value per share on the start date of the offering period or the fair market value per share on the purchase date. The Purchase Plan consists of a fixed offering period of 12 months with two purchase periods within each offering period. On June 10, 2015, the Company’s stockholders approved an amendment and restatement of the Purchase Plan that increased the aggregate number of shares of common stock authorized for issuance under the Purchase Plan by 1,500,000 shares. At September 30, 2015, the Company had 1.7 million shares of its common stock available for future issuance under the Purchase Plan.

Activity under the Company’s equity incentive plans related to stock options is set forth below (in thousands except per share amounts):

 

     Number of
Options
Outstanding
     Weighted
Average
Exercise
Price per
Share
 

Balances at December 31, 2014

     11,323       $ 4.13   

Granted

     3,628         4.57   

Forfeited

     (155      4.73   

Expired

     (41      6.57   

Exercised

     (308      2.91   
  

 

 

    

Balances at September 30, 2015

     14,447         4.25   
  

 

 

    

The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options and employee stock purchase plan rights. The Black-Scholes option pricing model is affected by the Company’s stock price, as well as assumptions regarding a number of complex and subjective variables, which include the expected term of the grants, actual and projected employee stock option exercise behaviors, including forfeitures, the Company’s expected stock price volatility, the risk-free interest rate and expected dividends. The Company recognizes the grant-date fair value of the stock award as stock-based compensation expense on a straight-line basis over the requisite service period, which is the vesting period, and is adjusted for estimated forfeitures.

Stock-based compensation recognized on the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014, was as follows (in thousands):

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2015      2014      2015      2014  

Stock-based compensation expense by caption:

           

Research and development

   $ 332       $ 281       $ 954       $ 740   

Selling, general and administrative

     1,402         1,197         3,958         3,024   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 1,734       $ 1,478       $ 4,912       $ 3,764   
  

 

 

    

 

 

    

 

 

    

 

 

 
Income Taxes
Income Taxes

Note 12. Income Taxes

Intraperiod tax allocation rules require the Company to allocate the provision for income taxes between continuing operations and other categories of earnings, such as other comprehensive income. In periods in which the Company has a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, such as other comprehensive income, the Company must allocate the tax provision to the other categories of earnings. The Company then records a related tax benefit in continuing operations. During the three months ended September 30, 2015, the Company recorded unrealized losses of $2.7 million, net of taxes, on its investments in available-for-sale securities in other comprehensive income. During the nine months ended September 30, 2015, the Company recorded unrealized gains of $4.9 million, net of taxes, on investments in available-for-sale securities in other comprehensive income. As a result, for the three months ended September 30, 2015, the Company recorded tax expense of $0.1 million and tax benefits of $1.9 million for the nine months ended September 30, 2015.

Development and License Agreements
Development and License Agreements

Note 13. Development and License Agreements

Agreements with Fresenius

The Company had an agreement with Fresenius that required the Company to pay royalties on future INTERCEPT Blood System product sales at royalty rates that vary by product: 10% of product sales for the platelet system and 3% of product sales for the plasma system. During the three months ended September 30, 2015 and 2014, the Company made royalty payments to Fresenius of $0.7 million and $0.6 million, respectively. During each of the nine months ended September 30, 2015 and 2014, the Company made royalty payments to Fresenius of $1.9 million. At both September 30, 2015 and December 31, 2014, accrued royalties due to Fresenius were $0.7 million.

Through December 31, 2013, the Company and Fresenius operated under a supply agreement (the “Original Supply Agreement”) for the manufacture of the Company’s platelet and plasma systems. Under the Original Supply Agreement, the Company paid Fresenius a set price per kit, which was established annually, plus a fixed surcharge per kit. In addition, volume driven manufacturing overhead was to be paid or refunded if actual manufacturing volumes were lower or higher than the estimated production volumes.

In November 2013, the Company amended the Original Supply Agreement with Fresenius, with the new terms effective January 1, 2014 (the “2013 Amendment”). Under the 2013 Amendment, Fresenius was obligated to sell, and the Company was obligated to purchase, up to a certain specified annual volume of finished disposable kits for the platelet and plasma systems from Fresenius for both clinical and commercial use. Once the specified annual volume of disposable kits was purchased from Fresenius, the Company was able to purchase additional quantities of disposable kits from other third-party manufacturers. The 2013 Amendment also provided for fixed pricing for finished kits with successive decreasing pricing tiers at various annual production volumes. In addition, the 2013 Amendment required the Company to purchase additional specified annual volumes of sets per annum if and when an additional Fresenius manufacturing site was identified and qualified to make INTERCEPT disposable kits subject to mutual agreement on pricing for disposable kits manufactured at the additional site. Fresenius was also obligated to purchase and maintain specified inventory levels of the Company’s proprietary inactivation compounds and adsorption media from the Company at fixed prices. During the three and nine months ended September 30, 2015, the Company sold $0.5 million and $1.5 million, respectively, of such components to Fresenius. During the three and nine months ended September 30, 2014, respectively, the Company sold $2.2 million and $6.0 million of such components to Fresenius. The Company maintains the amounts due from the components sold to Fresenius as a current asset on its accompanying unaudited condensed consolidated balance sheets until such time as the Company purchases finished disposable kits using those components. In October 2015, the Company entered into an Amended and Restated Manufacturing and Supply Agreement with Fresenius, which amends and restates the 2013 Amendment and Original Supply Agreement (see Note 15).

The Company made payments to Fresenius of $3.0 million and $4.3 million relating to the manufacturing of the Company’s products during the three months ended September 30, 2015 and 2014, respectively, and $12.5 million and $13.9 million during the nine months ended September 30, 2015 and 2014, respectively. At September 30, 2015 and December 31, 2014, accrued amounts due to Fresenius were $1.8 million and $5.1 million, respectively, for INTERCEPT disposable kits manufactured. At September 30, 2015 and December 31, 2014, amounts due from Fresenius were $0.4 million and $1.3 million, respectively.

Segment, Customer and Geographic Information
Segment, Customer and Geographic Information

Note 14. Segment, Customer and Geographic Information

The Company continues to operate in only one segment, blood safety. The Company’s chief executive officer is the chief operating decision maker who evaluates performance based on the net revenues and operating loss of the blood safety segment. The Company considers the sale of all of its INTERCEPT Blood System products to be similar in nature and function, and any revenue earned from services is minimal.

The Company’s operations outside of the U.S. include a wholly-owned subsidiary headquartered in Europe. The Company’s operations in the United States of America are responsible for the research and development and global and domestic commercialization of the INTERCEPT Blood System, while operations in Europe are responsible for the commercialization efforts of the platelet and plasma systems in Europe, the Commonwealth of Independent States and the Middle East. Product revenues are attributed to each region based on the location of the customer, and in the case of non-product revenues, on the location of the collaboration partner.

The Company had the following significant customer that accounted for more than 10% of the Company’s total product revenue, which operates in a country outside of the United States of America, during the three and nine months ended September 30, 2015 and 2014 (in percentages):

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2015     2014     2015     2014  

Etablissement Francais du Sang

     27     30     26     26
Subsequent Event
Subsequent Event

Note 15. Subsequent Event

Agreement with Fresenius

In October 2015, the Company entered into an Amended and Restated Manufacturing and Supply Agreement (the “2015 Agreement”) with Fresenius, which amends and restates the 2013 Amendment and Original Supply Agreement. Under the 2015 Agreement, Fresenius continues to be obligated to sell and the Company is obligated to purchase finished disposable kits for the Company’s platelet and plasma systems and the INTERCEPT Blood System for Red Blood Cells (the “RBC Sets”). The 2015 Agreement permits the Company to purchase platelet and plasma systems and RBC Sets from third parties to the extent necessary to maintain supply qualifications with such third parties or where local or regional manufacturing is needed to obtain product registrations or sales. Pricing terms are initially fixed, and are subject to certain adjustments, including for market pricing, changes in the relevant producer price index (as published by the U.S. Bureau of Labor Statistics), cost increase or decrease in raw materials and other components and other relevant factors.

The 2015 Agreement also contemplates that the Company and Fresenius will jointly fund certain specified initiatives focused on the implementation of automation, installation of new equipment, capacity expansion and cost reduction. The Company is also required to make certain milestone payments, subject to achievement of certain contractually defined events. Fresenius has also agreed to identify and qualify a second manufacturing facility if production volumes under the 2015 Agreement exceed certain specified thresholds. In addition, under the 2015 Agreement, the Company is no longer required to make royalty payments to Fresenius (see Note 13) for the sale of products after June 30, 2015. The initial term of the Agreement extends through July 1, 2025 (the “Initial Term”) and is automatically renewed thereafter for additional two year terms (each, a “Renewal Term”), subject to termination by either party upon (i) two years written notice prior to the expiration of the Initial Term or (ii) one year written notice prior to the expiration of any Renewal Term.

Summary of Significant Accounting Policies (Policies)

Principles of Consolidation and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include those of Cerus Corporation and its subsidiary, Cerus Europe B.V. (together with Cerus Corporation, hereinafter “Cerus” or the “Company”) after elimination of all intercompany accounts and transactions. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring entries, considered necessary for a fair presentation have been made. Operating results for the three and nine months ended September 30, 2015, are not necessarily indicative of the results that may be expected for the year ending December 31, 2015, or for any future periods.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2014, which were included in the Company’s 2014 Annual Report on Form 10-K, filed with the SEC on March 16, 2015. The accompanying condensed consolidated balance sheet as of December 31, 2014, has been derived from the Company’s audited consolidated financial statements as of that date.

Use of Estimates

The preparation of financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates under different assumptions or conditions.

Reclassifications

Certain reclassifications have been made to prior period reported amounts to conform to the current period presentations. Previously the Company had presented the amortization of premium and accretion of any discount resulting from the purchase of fixed income securities as a component of “Interest expense” on the unaudited condensed consolidated statements of operations. For the three and nine months ended September 30, 2014, the Company has reclassified approximately $0.1 million and $0.3 million, respectively, of the amortization of premium resulting from the purchase of fixed income securities as a component of “Other income, net” on the unaudited condensed consolidated statements of operations. This reclassification had no impact on net loss, total assets or total stockholders’ equity.

Revenue

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 605-25, “Revenue Recognition – Arrangements with Multiple Deliverables,” as applicable. Revenue is recognized when (i) persuasive evidence of an agreement with the funding party exists; (ii) services have been rendered or product has been delivered; (iii) pricing is fixed or determinable; and (iv) collection is reasonably assured. The Company’s source of revenues for the three and nine months ended September 30, 2015 and 2014, was revenue from sales of the INTERCEPT Blood System for platelets and plasma (“platelet and plasma systems”).

Revenue related to sales is generally recognized when the Company fulfills its obligations for each element of an agreement. For all sales of the Company’s INTERCEPT Blood System products, the Company uses a binding purchase order and signed sales contract as evidence of an arrangement. The Company sells its platelet and plasma systems directly to blood banks, hospitals, universities and government agencies, as well as to distributors in certain regions. Generally, the Company’s contracts with its customers do not provide for open return rights, except within a reasonable time after receipt of goods in the case of defective or non-conforming product. Deliverables and the units of accounting vary according to the provisions of each purchase order or sales contract. For revenue arrangements with multiple elements, the Company determines whether the delivered elements meet the criteria as separate units of accounting. Such criteria require that the deliverable have stand-alone value to the customer and that if a general right of return exists relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company. Once the Company determines if the deliverable meets the criteria for a separate unit of accounting, the Company must determine how the consideration should be allocated between the deliverables and how the separate units of accounting should be recognized as revenue. Consideration received is allocated to elements that are identified as discrete units of accounting. Because the Company has no vendor specific objective evidence or third party evidence for its products due to the Company’s variability in its pricing across the regions into which it sells its products, the allocation of revenue is based on best estimated selling price for the products sold. The objective of best estimated selling price is to determine the price at which the Company would transact a sale, had the product been sold on a stand-alone basis. The Company determines best estimated selling price for its products by considering multiple factors, including, but not limited to, features and functionality of the system, geographies, type of customer, and market conditions. The Company regularly reviews best estimated selling price, as applicable.

Freight costs charged to customers are recorded as a component of revenue under ASC Topic 605, “Accounting for Shipping and Handling Fees and Costs.” Value-added-taxes (“VAT”) that the Company invoices to its customers and remits to governments are recorded on a net basis, which excludes such VAT from product revenue.

Research and Development Expenses

In accordance with ASC Topic 730, “Accounting for Research and Development Expenses,” research and development expenses are charged to expense when incurred. Research and development expenses include salaries and related expenses for scientific personnel, payments to consultants, supplies and chemicals used in in-house laboratories, costs of research and development facilities, depreciation of equipment and external contract research expenses, including clinical trials, preclinical safety studies, other laboratory studies, process development and product manufacturing for research use.

The Company’s use of estimates in recording accrued liabilities for research and development activities (see “Use of Estimates” above) affects the amounts of research and development expenses recorded and revenue recorded from development funding and government grants and collaborative agreements. Actual results may differ from those estimates under different assumptions or conditions.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be classified as cash equivalents. These investments primarily consist of money market instruments, and are classified as available-for-sale.

Investments

Investments with original maturities of greater than three months, primarily corporate debt, U.S. government agency securities and marketable equity securities of Aduro Biotech, Inc. (“Aduro”), are designated as available-for-sale and classified as short-term investments, in accordance with ASC Topic 320, “Accounting for Certain Investments in Debt and Equity Securities”. Available-for-sale securities are carried at estimated fair value. Unrealized gains and losses derived by changes in the estimated fair value of available-for-sale securities are recorded in “Net unrealized losses on available-for-sale securities, net of taxes” on the Company’s unaudited condensed consolidated statements of comprehensive loss. Realized gains (losses) from the sale of available-for-sale securities were recorded in “Other income, net” on the Company’s unaudited condensed consolidated statements of operations. The cost of securities sold is based on the specific identification method. The Company reports the amortization of any premium and accretion of any discount resulting from the purchase of debt securities as a component of interest income.

The Company also reviews its marketable securities on a regular basis to evaluate whether any security has experienced an other-than-temporary decline in fair value. Other-than-temporary declines in market value, if any, are recorded in “Other income, net” on the Company’s unaudited condensed consolidated statements of operations.

Restricted Cash

The Company holds a certificate of deposit with a domestic bank for any potential decommissioning resulting from the Company’s possession of radioactive material. The certificate of deposit is held to satisfy the financial surety requirements of the California Department of Health Services and is recorded in “Restricted cash” on the Company’s unaudited condensed consolidated balance sheets. The Company also has non-US dollar denominated deposits recorded as “Restricted cash” in compliance with certain foreign contractual requirements.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, short-term investments and accounts receivable.

Pursuant to the Company’s investment policy, substantially all of the Company’s cash, cash equivalents and non-equity short-term investments are maintained at major financial institutions of high credit standing. The Company monitors the financial credit worthiness of the issuers of its investments and limits the concentration in individual securities and types of investments that exist within its investment portfolio. Generally, all of the Company’s investments are investment grade and carry high credit quality ratings, which is in accordance with its investment policy. At September 30, 2015, the fair value of the Company’s marketable equity securities of Aduro is subject to the underlying volatility of Aduro’s stock price. At September 30, 2015, the Company does not believe there is significant financial risk from non-performance by the issuers of the Company’s cash equivalents.

 

Concentrations of credit risk with respect to trade receivables exist. On a regular basis, including at the time of sale, the Company performs credit evaluations of its significant customers that it expects to sell to on credit terms. Generally, the Company does not require collateral from its customers to secure accounts receivable. To the extent that the Company determines specific invoices or customer accounts may be uncollectible, the Company establishes an allowance for doubtful accounts against the accounts receivable on its unaudited condensed consolidated balance sheets and records a charge on its unaudited condensed consolidated statements of operations as a component of selling, general and administrative expenses. At September 30, 2015 and December 31, 2014, the Company had not recorded any reserves for potentially uncollectible accounts.

The Company had two and one customer that accounted for more than 10% of the Company’s outstanding trade receivables at each of September 30, 2015 and December 31, 2014, respectively. These customers cumulatively represented approximately 42% and 36% of the Company’s outstanding trade receivables at September 30, 2015 and December 31, 2014, respectively. To date, the Company has not experienced collection difficulties from these customers.

Inventories

At September 30, 2015 and December 31, 2014, inventory consisted of work-in-process and finished goods only. Finished goods include INTERCEPT disposable kits, UVA illumination devices (“illuminators”), and certain replacement parts for the illuminators. Platelet and plasma systems disposable kits generally have a two-year shelf life from the date of manufacture. Illuminators and replacement parts do not have regulated expiration dates. Work-in-process includes certain components that are manufactured before being sold to and ultimately incorporated and assembled by Fresenius Kabi Deutschland GmbH or Fresenius, Inc. (with their affiliates, “Fresenius”) into the finished INTERCEPT disposable kits. The Company maintains an inventory balance based on its current sales projections, and at each reporting period, the Company evaluates whether its work-in-process inventory would be sold to Fresenius for production of finished units in order to sell to existing and prospective customers within the next twelve-month period. It is not customary for the Company’s production cycle for inventory to exceed twelve months. Instead, the Company uses its best judgment to factor in lead times for the production of its work-in-process and finished units to meet the Company’s forecasted demands. If actual results differ from those estimates, work-in-process inventory could potentially accumulate for periods exceeding one year. At September 30, 2015 and December 31, 2014, the Company classified its work-in-process inventory as a current asset on its consolidated balance sheets based on its evaluation that the work-in-process inventory would be sold to Fresenius for finished disposable kit production within each respective subsequent twelve-month period.

Inventory is recorded at the lower of cost, determined on a first-in, first-out basis, or market value. The Company uses significant judgment to analyze and determine if the composition of its inventory is obsolete, slow-moving or unsalable and frequently reviews such determinations. The Company writes-down specifically identified unusable, obsolete, slow-moving, or known unsalable inventory that has no alternative use in the period that it is first recognized by using a number of factors including product expiration dates, open and unfulfilled orders, and sales forecasts. Any write-down of its inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest that the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded in “Cost of revenue” on the Company’s unaudited condensed consolidated statements of operations. At September 30, 2015 and December 31, 2014, the Company had $1.3 million and $0.1 million, respectively, recorded for potential obsolete, expiring or unsalable product.

Property and Equipment, net

Property and equipment is comprised of furniture, equipment, leasehold improvements, information technology hardware and software and is recorded at cost. At the time the property and equipment is ready for its intended use, it is depreciated on a straight-line basis over the estimated useful lives of the assets (generally three to five years). Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful lives of the improvements.

Capitalization of Software Costs

The Company capitalizes certain significant costs incurred in the acquisition and development of software for internal use, including the costs of the software, materials, and consultants during the application development stage. Costs incurred prior to the application development stage, costs incurred once the application is substantially complete and ready for its intended use, and other costs not qualifying for capitalization, including training and maintenance costs, are charged to expense as incurred. The Company capitalized costs for enhancement of the enterprise resource planning software system and other internal use software of zero and $1.8 million during the nine months ended September 30, 2015 and 2014, respectively. Capitalized software costs associated with the enterprise resource planning system are being amortized over the estimated useful life of five years.

Costs incurred in connection with the development of software products for sale are accounted for in accordance with the ASC 985—Costs of Software to Be Sold, Leased or Marketed. Costs incurred prior to the establishment of technological feasibility are charged to research and development expense. Software development costs are capitalized after a product is determined to be technologically feasible and is in the process of being developed for market.

Goodwill and Intangible Assets, net

Intangible assets, net, which include a license for the right to commercialize the INTERCEPT Blood System in Asia, are subject to ratable amortization over the estimated useful life of ten years. The amortization of the Company’s intangible assets, net, is recorded in “Amortization of intangible assets” on the Company’s unaudited condensed consolidated statements of operations. Goodwill is not amortized but instead is subject to an impairment test performed on an annual basis, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. Such impairment analysis is performed on August 31 of each fiscal year, or more frequently if indicators of impairment exist. The test for goodwill impairment may be assessed using qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, the Company must then proceed with performing the quantitative two-step process to test goodwill for impairment; otherwise, goodwill is not considered impaired and no further testing is warranted. The Company may choose not to perform the qualitative assessment to test goodwill for impairment and proceed directly to the quantitative two-step process; however, the Company may revert to the qualitative assessment to test goodwill for impairment in any subsequent period. The first step of the two-step process compares the fair value of each reporting unit with its respective carrying amount, including goodwill. The Company has determined that it operates in one segment and has one reporting unit and estimates the fair value of its one reporting unit using the enterprise approach under which it considers the quoted market capitalization of the Company as reported on the Nasdaq Global Market. The Company considers quoted market prices that are available in active markets to be the best evidence of fair value. The Company also considers other factors, which include future forecasted results, the economic environment and overall market conditions. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired and, therefore, the second step of the impairment test is unnecessary. The second step of the two-step process, which is used to measure the amount of impairment loss, compares the implied fair value of each reporting unit’s goodwill with the respective carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

The Company performs an impairment test on its intangible assets, in accordance ASC Topic 360-10, “Property, Plant and Equipment,” if certain events or changes in circumstances occur which indicate that the carrying amounts of its intangible assets may not be recoverable. If the intangible assets are not recoverable, an impairment loss would be recognized by the Company based on the excess amount of the carrying value of the intangible assets over its fair value. For further details regarding the impairment analysis, reference is made to the section below under “Long-lived Assets.” Also, see Note 5 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s impairment analysis and the valuation of goodwill and intangible assets, net.

Long-lived Assets

The Company evaluates its long-lived assets for impairment by continually monitoring events and changes in circumstances that could indicate carrying amounts of its long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the expected undiscounted future cash flows are less than the carrying amount of these assets, the Company then measures the amount of the impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company did not recognize impairment charges related to its long-lived assets during the three and nine months ended September 30, 2015 and 2014.

Foreign Currency Remeasurement

The functional currency of the Company’s foreign subsidiary is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are remeasured in United States dollars using the exchange rates at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are remeasured in United States dollars using historical exchange rates. Revenues and expenses are remeasured using average exchange rates prevailing during the period. Remeasurements are recorded in the Company’s unaudited condensed consolidated statements of operations.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation.” Stock-based compensation expense is measured at the grant-date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period, adjusted for estimated forfeitures. To the extent that stock options contain performance criteria for vesting, stock-based compensation is recognized once the performance criteria are probable of being achieved.

For stock-based awards issued to non-employees, the Company follows ASC Topic 505-50, “Equity Based Payment to Non-Employees” and considers the measurement date at which the fair value of the stock-based award is measured to be the earlier of (i) the date at which a commitment for performance by the grantee to earn the equity instrument is reached or (ii) the date at which the grantee’s performance is complete. The Company recognizes stock-based compensation expense for the fair value of the vested portion of the non-employee stock-based awards in its unaudited condensed consolidated statements of operations.

 

See Note 11 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s stock-based compensation assumptions and expenses.

Warrant Liability

In August 2009 and November 2010, the Company issued warrants to purchase an aggregate of 2.4 million and 3.7 million shares of common stock, respectively. The material terms of the warrants were identical under each issuance except for the exercise price, date issued and expiration date. In August 2014, all of the outstanding August 2009 warrants were exercised in full. The Company classifies warrants outstanding on the reporting date as a liability on its unaudited condensed consolidated balance sheets as the warrants contain certain material terms which require the Company to purchase the warrants for cash in an amount equal to the value of the unexercised portion of the warrants in connection with certain change of control transactions. In addition, the Company may also be required to pay cash to a warrant holder under certain circumstances if the Company is unable to timely deliver the shares acquired upon warrant exercise to such holder.

The fair value of outstanding warrants is calculated using the Black-Scholes model and was adjusted accordingly at the end of each reporting period.

Changes resulting from the revaluation of warrants to fair value are recorded in “Gain from revaluation of warrant liability” on the unaudited condensed consolidated statements of operations. Upon the exercise or modification to remove the provisions which require the warrants to be treated as a liability, the fair value of the warrants will be reclassified from a liability to stockholders’ equity on the Company’s unaudited condensed consolidated balance sheets and no further adjustment to the fair value would be made in subsequent periods.

See Note 10 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s valuation of warrant liability.

Income Taxes

The Company accounts for income taxes using an asset and liability approach in accordance with ASC Topic 740 “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. ASC Topic 740 requires derecognition of tax positions that do not have a greater than 50% likelihood of being recognized upon review by a taxing authority having full knowledge of all relevant information. Use of a valuation allowance as described in ASC Topic 740 is not an appropriate substitute for derecognition of a tax position. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax expense. To date, the Company has not recognized any interest and penalties in its unaudited condensed consolidated statements of operations, nor has its accrued for or made payments for interest and penalties. The Company continues to carry a full valuation allowance on all of its deferred tax assets. Although the Company believes it more likely than not that a taxing authority would agree with its current tax positions, there can be no assurance that the tax positions the Company has taken will be substantiated by a taxing authority if reviewed. The Company’s US federal and California tax years through 2014 remain subject to examination by the taxing jurisdictions due to unutilized net operating losses and research credits.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share gives effect to all potentially dilutive common shares outstanding for the period. The potentially dilutive securities include stock options, employee stock purchase plan rights and warrants, which are calculated using the treasury stock method. Diluted net loss per share also gives effect to potential adjustments to the numerator for changes resulting from the revaluation of warrants to fair value for the period, even if the Company is in a net loss position, if the effect would result in more dilution.

Certain potential dilutive securities were excluded from the dilution calculation for the three and nine months ended September 30, 2015 and 2014, as their inclusion would have been anti-dilutive.

 

The following table sets forth the reconciliation of the numerator and denominator used in the computation of basic and diluted net loss per share for the three and nine months ended September 30, 2015 and 2014 (in thousands, except per share amounts):

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2015      2014      2015      2014  

Numerator for Basic and Diluted:

           

Net loss used for basic calculation

   $ (15,680    $ (10,759    $ (41,112    $ (18,573

Effect of revaluation of warrant liability

     (1,109      (1,738      (4,698      (14,263
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net loss used for diluted calculation

   $ (16,789    $ (12,497    $ (45,810    $ (32,836
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator:

           

Basic weighted average number of shares outstanding

     96,864         75,194         95,347         73,407   

Effect of dilutive potential shares

     741         909         993         2,030   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average number of shares outstanding

     97,605         76,103         96,340         75,437   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss per share:

           

Basic

   $ (0.16    $ (0.14    $ (0.43    $ (0.25

Diluted

   $ (0.17    $ (0.16    $ (0.48    $ (0.44

The table below presents shares underlying stock options that are excluded from the calculation of the weighted average number of shares outstanding used for the calculation of diluted net loss per share. These are excluded from the calculation due to their anti-dilutive effect for the three and nine months ended September 30, 2015 and 2014 (in thousands):

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2015      2014      2015      2014  

Weighted average number of anti-dilutive potential shares:

           

Stock options

     7,068         12,032         6,223         11,737   

Guarantee and Indemnification Arrangements

The Company recognizes the fair value for guarantee and indemnification arrangements issued or modified by the Company. In addition, the Company monitors the conditions that are subject to the guarantees and indemnifications in order to identify if a loss has occurred. If the Company determines it is probable that a loss has occurred, then any such estimable loss would be recognized under those guarantees and indemnifications. Some of the agreements that the Company is a party to contain provisions that indemnify the counter party from damages and costs resulting from claims that the Company’s technology infringes the intellectual property rights of a third party or claims that the sale or use of the Company’s products have caused personal injury or other damage or loss. The Company has not received any such requests for indemnification under these provisions and has not been required to make material payments pursuant to these provisions.

The Company generally provides for a one-year warranty on certain of its INTERCEPT blood-safety products covering defects in materials and workmanship. The Company accrues costs associated with warranty obligations when claims are probable. The Company has not experienced significant or systemic warranty claims nor is it aware of any existing current warranty claims and did not carry a warranty claim liability at September 30, 2015 and December 31, 2014.

Fair Value of Financial Instruments

The Company applies the provisions of fair value relating to its financial assets and liabilities. The carrying amounts of accounts receivables, accounts payable, and other accrued liabilities approximate their fair value due to the relative short-term maturities of such instruments. Based on the borrowing rates currently available to the Company for loans with similar terms, the Company believes the fair value of its debt also approximates its carrying amounts. The Company measures and records certain financial assets and liabilities at fair value on a recurring basis, including its available-for-sale securities and warrant liability. The Company classifies instruments within Level 1 if quoted prices are available in active markets for identical assets. The Company classifies instruments in Level 2 if the instruments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. The available-for-sale securities are held by a custodian who obtains investment prices from a third party pricing provider that uses standard inputs (observable in the market) to models which vary by asset class. The Company classifies instruments in Level 3 if one or more significant inputs or significant value drivers are unobservable, which include its warrant liability. The Company assesses any transfers among fair value measurement levels at the end of each reporting period.

See Notes 2 and 10 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s valuation of financial instruments.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date, which defers by one year the effective date of ASU No. 2014-09 to annual reporting periods beginning after December 15, 2017 (including interim periods within those periods). Early adoption is permitted to the original effective date of December 15, 2016 (including interim periods within those periods). The ASU’s effective date for the Company will be the first quarter of fiscal year 2018, using one of two retrospective application methods. The Company has not selected a transition retrospective application method and is currently assessing the potential effects of this ASU on its consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and provide related disclosures. This ASU will be effective for the Company in fiscal year 2016. Early adoption is permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the corresponding debt liability rather than as an asset. This ASU will be effective for the Company in fiscal year 2016. Early adoption is permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory, which simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” This ASU will be effective for the Company in fiscal year 2017. Early adoption is permitted. The Company is currently assessing the future impact of this ASU on its consolidated financial statements.

Summary of Significant Accounting Policies (Tables)

The following table sets forth the reconciliation of the numerator and denominator used in the computation of basic and diluted net loss per share for the three and nine months ended September 30, 2015 and 2014 (in thousands, except per share amounts):

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2015      2014      2015      2014  

Numerator for Basic and Diluted:

           

Net loss used for basic calculation

   $ (15,680    $ (10,759    $ (41,112    $ (18,573

Effect of revaluation of warrant liability

     (1,109      (1,738      (4,698      (14,263
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net loss used for diluted calculation

   $ (16,789    $ (12,497    $ (45,810    $ (32,836
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator:

           

Basic weighted average number of shares outstanding

     96,864         75,194         95,347         73,407   

Effect of dilutive potential shares

     741         909         993         2,030   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average number of shares outstanding

     97,605         76,103         96,340         75,437   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss per share:

           

Basic

   $ (0.16    $ (0.14    $ (0.43    $ (0.25

Diluted

   $ (0.17    $ (0.16    $ (0.48    $ (0.44

The table below presents shares underlying stock options that are excluded from the calculation of the weighted average number of shares outstanding used for the calculation of diluted net loss per share. These are excluded from the calculation due to their anti-dilutive effect for the three and nine months ended September 30, 2015 and 2014 (in thousands):

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2015      2014      2015      2014  

Weighted average number of anti-dilutive potential shares:

           

Stock options

     7,068         12,032         6,223         11,737   
Fair Value of Financial Instruments (Tables)

The fair values of the Company’s financial assets and liabilities were determined using the following inputs at September 30, 2015 (in thousands):

 

     Total      Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Money market funds (1)

   $ 42,169       $ 42,169       $ —         $ —     

Corporate debt securities (2)

     18,965         —           18,965         —     

United States government agency securities (2)

     30,003         —           30,003         —     

Marketable equity securities (3)

     7,684         7,684         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 98,821       $ 49,853       $ 48,968       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Warrant liability (4)

   $ 2,424       $ —         $ —         $ 2,424   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 2,424       $ —         $ —         $ 2,424   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheets.
(2) Included in short-term investments on the Company’s unaudited condensed consolidated balance sheets.
(3) Included in investment in marketable equity securities on the Company’s unaudited condensed consolidated balance sheets.
(4) Included in current liabilities on the Company’s unaudited condensed consolidated balance sheets.

The fair values of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2014 (in thousands):

 

     Total      Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Money market funds (1)

   $ 3,912       $ 3,912       $ —         $ —     

Corporate debt securities (2)

     26,088         —           26,088         —     

United States government agency securities (2)

     3,426         —           3,426         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 33,426       $ 3,912       $ 29,514       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Warrant liability (3)

   $ 10,485       $ —         $ —         $ 10,485   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 10,485       $ —         $ —         $ 10,485   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Included in cash and cash equivalents on the Company’s consolidated balance sheets.
(2) Included in short-term investments on the Company’s consolidated balance sheets, except for approximately $1.0 million of corporate debt securities that are included in cash and cash equivalents on the Company’s consolidated balance sheets.
(3) Included in current liabilities on the Company’s consolidated balance sheets.

A reconciliation of the beginning and ending balances for warrant liability using significant unobservable inputs (Level 3) from December 31, 2014 to September 30, 2015, was as follows (in thousands):

 

Balance at December 31, 2014

   $ 10,485   

Decrease in fair value of warrants

     (4,698

Settlement of warrants exercised

     (3,363
  

 

 

 

Balance at September 30, 2015

   $ 2,424   
  

 

 

 
Available-for-sale Securities (Tables)

The following is a summary of available-for-sale securities at September 30, 2015 (in thousands):

 

     September 30, 2015  
     Amortized
Cost
     Gross
Unrealized
Gain
     Gross
Unrealized
Loss
     Fair Value  

Money market funds

   $ 42,169       $ —         $ —         $ 42,169   

United States government agency securities

     30,000         3         —           30,003   

Corporate debt securities

     18,973         3         (11      18,965   

Aduro equity securities

     —           7,684         —           7,684   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 91,142       $ 7,690       $ (11    $ 98,821   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following is a summary of available-for-sale securities at December 31, 2014 (in thousands):

 

     December 31, 2014  
     Amortized
Cost
     Gross
Unrealized
Loss
     Fair Value  

Money market funds

   $ 3,912       $ —         $ 3,912   

United States government agency securities

     3,427         (1      3,426   

Corporate debt securities

     26,118         (30      26,088   
  

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 33,457       $ (31    $ 33,426   
  

 

 

    

 

 

    

 

 

 

Available-for-sale debt securities at September 30, 2015 and December 31, 2014, consisted of the following by original contractual maturity (in thousands):

 

     September 30, 2015      December 31, 2014  
     Amortized
Cost
     Fair Value      Amortized
Cost
     Fair Value  

One year or less

   $ 91,142       $ 91,137       $ 27,752       $ 27,727   

Greater than one year and less than five years

     —           —           5,705         5,699   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale debt securities

   $ 91,142       $ 91,137       $ 33,457       $ 33,426   
  

 

 

    

 

 

    

 

 

    

 

 

 
Inventories (Tables)
Inventories

Inventories at September 30, 2015 and December 31, 2014, consisted of the following (in thousands):

 

     September 30,      December 31,  
     2015      2014  

Work-in-process

   $ 3,859       $ 2,222   

Finished goods

     8,983         12,734   
  

 

 

    

 

 

 

Total inventories

   $ 12,842       $ 14,956   
  

 

 

    

 

 

 
Goodwill and Intangible Assets, net (Tables)
Summary of Intangible Assets

The following is a summary of intangible assets, net at September 30, 2015 (in thousands):

 

     September 30, 2015  
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
 

Acquisition-related intangible assets:

        

Reacquired license - INTERCEPT Asia

   $ 2,017       $ (1,026    $ 991   
  

 

 

    

 

 

    

 

 

 

Total intangible assets

   $ 2,017       $ (1,026    $ 991   
  

 

 

    

 

 

    

 

 

 

The following is a summary of intangible assets, net at December 31, 2014 (in thousands):

 

     December 31, 2014  
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
 

Acquisition-related intangible assets:

        

Reacquired license - INTERCEPT Asia

   $ 2,017       $ (875    $ 1,142   
  

 

 

    

 

 

    

 

 

 

Total intangible assets

   $ 2,017       $ (875    $ 1,142   
  

 

 

    

 

 

    

 

 

 
Accrued Liabilities (Tables)
Accrued Liabilities

Accrued liabilities at September 30, 2015 and December 31, 2014, consisted of the following (in thousands):

 

     September 30,      December 31,  
     2015      2014  

Accrued compensation and related costs

   $ 4,046       $ 3,951   

Accrued professional services

     2,277         2,123   

Accrued inventory costs

     92         870   

Accrued customer costs and deposits

     413         385   

Accrued insurance premiums

     583         264   

Other accrued expenses

     697         851   
  

 

 

    

 

 

 

Total accrued liabilities

   $ 8,108       $ 8,444   
  

 

 

    

 

 

 
Debt (Tables)

Debt at September 30, 2015, consisted of the following (in thousands):

 

     September 30, 2015  
     Principal      Unamortized
Discount
     Total  

Loan and Security Agreement

   $ 20,000       $ (144    $ 19,856   

Less: debt - current

     (1,512      63         (1,449
  

 

 

    

 

 

    

 

 

 

Debt - non-current

   $ 18,488       $ (81    $ 18,407   
  

 

 

    

 

 

    

 

 

 

Debt at December 31, 2014, consisted of the following (in thousands):

 

     December 31, 2014  
     Principal      Unamortized
Discount
     Total  

Loan and Security Agreement

   $ 10,000       $ (128    $ 9,872   

Less: debt - current

     —           —           —     
  

 

 

    

 

 

    

 

 

 

Debt - non-current

   $ 10,000       $ (128    $ 9,872   
  

 

 

    

 

 

    

 

 

 

Principal and interest payments on debt at September 30, 2015, are expected to be as follows * (in thousands):

 

Year ended December 31,

   Principal      Interest      Total  

2015

   $ —         $ 349       $ 349   

2016

     3,050         1,352         4,402   

2017

     6,428         980         7,408   

2018

     6,892         517         7,409   

2019

     3,630         1,474         5,104   
  

 

 

    

 

 

    

 

 

 

Total

   $ 20,000       $ 4,672       $ 24,672   
  

 

 

    

 

 

    

 

 

 

 

* Unless interest only period extends to December 31, 2016, as described below.
Stockholders' Equity (Tables)

The fair value of the 2010 Warrants at September 30, 2015 and December 31, 2014, consisted of the following (in thousands):

 

     September 30,
2015
     December 31,
2014
 

2010 Warrants

   $ 2,424       $ 10,485   

The fair value of the Company’s 2010 Warrants was based on an option valuation model using the following assumptions at September 30, 2015 and December 31, 2014:

 

     September 30,
2015
    December 31,
2014
 

2010 Warrants:

    

Expected term (in years)

     0.11        0.86   

Estimated volatility

     61     55

Risk-free interest rate

     0.02     0.25

Expected dividend yield

     0     0
Stock-Based Compensation (Tables)

Activity under the Company’s equity incentive plans related to stock options is set forth below (in thousands except per share amounts):

 

     Number of
Options
Outstanding
     Weighted
Average
Exercise
Price per
Share
 

Balances at December 31, 2014

     11,323       $ 4.13   

Granted

     3,628         4.57   

Forfeited

     (155      4.73   

Expired

     (41      6.57   

Exercised

     (308      2.91   
  

 

 

    

Balances at September 30, 2015

     14,447         4.25   
  

 

 

    

Stock-based compensation recognized on the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014, was as follows (in thousands):

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2015      2014      2015      2014  

Stock-based compensation expense by caption:

           

Research and development

   $ 332       $ 281       $ 954       $ 740   

Selling, general and administrative

     1,402         1,197         3,958         3,024   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 1,734       $ 1,478       $ 4,912       $ 3,764   
  

 

 

    

 

 

    

 

 

    

 

 

 
Segment, Customer and Geographic Information (Tables)
Customer that Accounted for More Than Ten Percent of Total Product Revenue

The Company had the following significant customer that accounted for more than 10% of the Company’s total product revenue, which operates in a country outside of the United States of America, during the three and nine months ended September 30, 2015 and 2014 (in percentages):

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2015     2014     2015     2014  

Etablissement Francais du Sang

     27     30     26     26
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
Share data in Millions, unless otherwise specified
3 Months Ended 9 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended 9 Months Ended
Sep. 30, 2015
Customer
Sep. 30, 2014
Sep. 30, 2015
Segment
Customer
Sep. 30, 2014
Dec. 31, 2014
Customer
Sep. 30, 2015
Computer Software, Intangible Asset
Aug. 31, 2009
2009 Unit Offering
Nov. 30, 2010
2010 Unit Offering
Sep. 30, 2014
Other income, net
Sep. 30, 2014
Other income, net
Sep. 30, 2015
Trade Accounts Receivable
Customer Concentration Risk
Dec. 31, 2014
Trade Accounts Receivable
Customer Concentration Risk
Sep. 30, 2015
Minimum
Sep. 30, 2015
Maximum
Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reclassified amortization of premium from purchase of fixed income securities
 
 
 
 
 
 
 
 
$ 100,000 
$ 300,000 
 
 
 
 
Reserves for uncollectible accounts
 
 
 
 
 
 
 
 
 
 
 
Number of major customers representing outstanding trade receivables
 
 
 
 
 
 
 
 
 
 
 
Concentration risk, percentage
 
 
 
 
 
 
 
 
 
 
42.00% 
36.00% 
 
 
Life of inventory
 
 
2 years 
 
 
 
 
 
 
 
 
 
 
 
Protracted length of inventory
 
 
1 year 
 
 
 
 
 
 
 
 
 
 
 
Inventory valuation reserves
1,300,000 
 
1,300,000 
 
100,000 
 
 
 
 
 
 
 
 
 
Estimated useful life of property and equipment
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
5 years 
Capitalized costs for enhancement of enterprise resource planning software system and other internal use software
1,800,000 
1,800,000 
 
 
 
 
 
 
 
 
 
 
Enterprise resource planning system, estimated useful life
 
 
 
 
 
5 years 
 
 
 
 
 
 
 
 
Estimated useful life of intangible assets
 
 
10 years 
 
 
 
 
 
 
 
 
 
 
 
Number of reportable segments
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment charges on long-lived assets
 
 
 
 
 
 
 
 
 
 
Warrants to purchase an aggregate shares of common stock
 
 
 
 
 
 
2.4 
3.7 
 
 
 
 
 
 
Tax year subject to examination
 
 
The Company's US federal and California tax years through 2014 remain subject to examination by the taxing jurisdictions due to unutilized net operating losses and research credits. 
 
 
 
 
 
 
 
 
 
 
 
Period of warranty
 
 
1 year 
 
 
 
 
 
 
 
 
 
 
 
Warranty claim liability
$ 0 
 
$ 0 
 
$ 0 
 
 
 
 
 
 
 
 
 
Reconciliation of Numerator and Denominator Used in Computation of Basic and Diluted Net Income Loss per Share (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Numerator for Basic and Diluted:
 
 
 
 
Net loss used for basic calculation
$ (15,680)
$ (10,759)
$ (41,112)
$ (18,573)
Effect of revaluation of warrant liability
(1,109)
(1,738)
(4,698)
(14,263)
Adjusted net loss used for diluted calculation
$ (16,789)
$ (12,497)
$ (45,810)
$ (32,836)
Denominator:
 
 
 
 
Basic weighted average number of shares outstanding
96,864 
75,194 
95,347 
73,407 
Effect of dilutive potential shares
741 
909 
993 
2,030 
Diluted weighted average number of shares outstanding
97,605 
76,103 
96,340 
75,437 
Net loss per share:
 
 
 
 
Basic
$ (0.16)
$ (0.14)
$ (0.43)
$ (0.25)
Diluted
$ (0.17)
$ (0.16)
$ (0.48)
$ (0.44)
Shares Underlying Stock Options, Excluded from Calculation of Weighted Average Number of Shares Outstanding used for Calculation of Diluted Net Loss Per Share (Detail) (Stock Options)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Stock Options
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Weighted average number of anti-dilutive potential shares
7,068 
12,032 
6,223 
11,737 
Fair Values on Financial Assets and Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Fair value of financial assets and liabilities
 
 
Total financial assets
$ 98,821 
$ 33,426 
Total financial liabilities
2,424 
10,485 
Money market funds
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
42,169 1
3,912 2
Corporate debt securities
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
18,965 3
26,088 4
United States government agency securities
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
30,003 3
3,426 4
Aduro equity securities
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
7,684 5
 
2010 Warrant Liability
 
 
Fair value of financial assets and liabilities
 
 
Total financial liabilities
2,424 6
10,485 7
Level 1
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
49,853 
3,912 
Level 1 |
Money market funds
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
42,169 1
3,912 2
Level 1 |
Aduro equity securities
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
7,684 5
 
Level 2
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
48,968 
29,514 
Level 2 |
Corporate debt securities
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
18,965 3
26,088 4
Level 2 |
United States government agency securities
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
30,003 3
3,426 4
Level 3
 
 
Fair value of financial assets and liabilities
 
 
Total financial liabilities
2,424 
10,485 
Level 3 |
2010 Warrant Liability
 
 
Fair value of financial assets and liabilities
 
 
Total financial liabilities
$ 2,424 6
$ 10,485 7
Fair Values on Financial Assets and Liabilities (Parenthetical) (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Sep. 30, 2014
Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
$ 50,795 
$ 22,781 1
$ 22,343 
$ 29,485 
Corporate debt securities
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
 
$ 1,000 
 
 
Reconciliation of Beginning and Ending Balances for Warrant Liability Using Significant Unobservable Inputs (Detail) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
Beginning balance
$ 10,485 
Decrease in fair value of warrants
(4,698)
Settlement of warrants exercised
(3,363)
Ending balance
$ 2,424 
Summary of Available for Sale Securities (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
$ 91,142 
$ 33,457 
Gross Unrealized Gain
7,690 
 
Gross Unrealized Loss
(11)
(31)
Fair Value
98,821 
33,426 
Money market funds
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
42,169 
3,912 
Fair Value
42,169 
3,912 
United States government agency securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
30,000 
3,427 
Gross Unrealized Gain
 
Gross Unrealized Loss
 
(1)
Fair Value
30,003 
3,426 
Corporate debt securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
18,973 
26,118 
Gross Unrealized Gain
 
Gross Unrealized Loss
(11)
(30)
Fair Value
18,965 
26,088 
Aduro equity securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Gross Unrealized Gain
7,684 
 
Fair Value
$ 7,684 
 
Available for Sale Debt Securities by Original Contractual Maturity (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
 
 
One year or less, amortized cost
$ 91,142 
$ 27,752 
Greater than one year and less than five years, amortized cost
 
5,705 
Total available-for-sale debt securities, amortized cost
91,142 
33,457 
One year or less, fair value
91,137 
27,727 
Greater than one year and less than five years, fair value
 
5,699 
Total available-for-sale debt securities fair value
$ 91,137 
$ 33,426 
Available-for-Sale Securities - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Other-than-temporary impairment losses
$ 0 
$ 0 
$ 0 
$ 0 
Gross realized gains from the sale or maturity of available-for-sale investments
Gross realized losses from the sale or maturity of available-for-sale investments
$ 0 
$ 0 
$ 0 
$ 0 
Inventories (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Inventory [Line Items]
 
 
Work-in-process
$ 3,859 
$ 2,222 
Finished goods
8,983 
12,734 
Total inventories
$ 12,842 
$ 14,956 1
Goodwill and Intangible Assets Net - Additional Information (Detail) (USD $)
0 Months Ended 3 Months Ended 9 Months Ended
Aug. 31, 2015
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Dispose, impair or recognition of additional goodwill
 
$ 0 
 
$ 0 
 
Impairment charges on goodwill
 
 
 
Amortization of intangible assets
 
50,000 
50,000 
151,000 
151,000 
Impairment losses recognized related to the acquired intangible assets
 
Annual amortization expense of the intangible assets, 2016
 
200,000 
 
200,000 
 
Annual amortization expense of the intangible assets, 2017
 
200,000 
 
200,000 
 
Annual amortization expense of the intangible assets, 2018
 
200,000 
 
200,000 
 
Annual amortization expense of the intangible assets, 2019
 
200,000 
 
200,000 
 
Annual amortization expense of the intangible assets, 2020
 
100,000 
 
100,000 
 
Maximum
 
 
 
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Annual amortization expense of the intangible assets, 2015 (remaining three months)
 
$ 100,000 
 
$ 100,000 
 
Summary of Intangible Assets Net (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 2,017 
$ 2,017 
Accumulated Amortization
(1,026)
(875)
Net Carrying Amount
991 
1,142 1
Reacquired license - INTERCEPT Asia
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
2,017 
2,017 
Accumulated Amortization
(1,026)
(875)
Net Carrying Amount
$ 991 
$ 1,142 
Marketable Equity Investments - Additional Information (Detail) (Aduro)
1 Months Ended
Apr. 30, 2015
Aduro
 
Investment [Line Items]
 
Preferred shares converted to common stock
396,700 
Accrued Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Schedule of Accrued Liabilities [Line Items]
 
 
Accrued compensation and related costs
$ 4,046 
$ 3,951 
Accrued professional services
2,277 
2,123 
Accrued inventory costs
92 
870 
Accrued customer costs and deposits
413 
385 
Accrued insurance premiums
583 
264 
Other accrued expenses
697 
851 
Total accrued liabilities
$ 8,108 
$ 8,444 1
Debt (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Debt Instrument [Line Items]
 
 
Less: debt - current, Principal
$ (1,512)
 
Less: debt - current, Unamortized Discount
63 
 
Less: debt-current
(1,449)
 
Debt - non-current, Principal
18,488 
10,000 
Debt - non-current, Unamortized Discount
(81)
(128)
Debt-non-current
18,407 
9,872 1
Cerus Term Loans
 
 
Debt Instrument [Line Items]
 
 
Total debt, Principal
20,000 
10,000 
Total debt, Unamortized amount
(144)
(128)
Total debt
$ 19,856 
$ 9,872 
Debt - Principal and Interest Payments on Debt (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Debt Instrument [Line Items]
 
2015, Principal
$ 0 1
2016, Principal
3,050 1
2017, Principal
6,428 1
2018, Principal
6,892 1
2019, Principal
3,630 1
Total, Principal
20,000 1
2015, Interest
349 1
2016, Interest
1,352 1
2017, Interest
980 1
2018, Interest
517 1
2019, Interest
1,474 1
Total, Interest
4,672 1
2015, Total
349 1
2016, Total
4,402 1
2017, Total
7,408 1
2018, Total
7,409 1
2019, Total
5,104 1
Total
$ 24,672 1
Debt - Additional Information (Detail) (Cerus Term Loans, USD $)
0 Months Ended 9 Months Ended
Jun. 30, 2014
Tranche
Sep. 30, 2015
Jun. 30, 2014
Line of Credit Facility [Line Items]
 
 
 
Maximum borrowing limit
 
 
$ 30,000,000 
Term of agreement
5 years 
 
 
Number of loan tranches
 
 
Interest rate, description
 
Term Loan A bears an interest rate of 6.95%. Term Loan B bears an interest rate of 7.01%. Term Loan C will bear an interest rate calculated at the greater of 6.95% or 6.72% plus the three month U.S. LIBOR rate in effect three business days prior to the funding date. 
 
Maturity period
 
Jun. 01, 2019 
 
Principal and interest payments
36 months 
 
 
Final payment term percent
7.00% 
 
 
Terms of required periodic payments of interest and principal
 
The Company is required to make interest only payments through June 2016 followed by thirty-six months of equal principal and interest payments thereafter; however, if the Revenue Event is achieved no later than May 31, 2016, then the interest-only period may be extended through December 31, 2016, and the amortization period will be reduced to thirty months. The Company is also required to make a final payment equal to 7% of the principal amounts of the Term Loans drawn payable on the earlier to occur of maturity or prepayment. 
 
Securities Pledged as Collateral
 
 
 
Line of Credit Facility [Line Items]
 
 
 
Percentage of investments made in subsidiary
35.00% 
 
35.00% 
First Tranche (Term Loan A)
 
 
 
Line of Credit Facility [Line Items]
 
 
 
Loan and security agreement
10,000,000 
 
10,000,000 
Interest rate
6.95% 
 
6.95% 
Second Tranche (Term Loan B)
 
 
 
Line of Credit Facility [Line Items]
 
 
 
Loan and security agreement
10,000,000 
 
10,000,000 
Borrowing conditions
 
The second tranche of $10.0 million ("Term Loan B") was drawn on June 15, 2015. 
 
Interest rate
 
7.01% 
 
Third Tranche (Term Loan C)
 
 
 
Line of Credit Facility [Line Items]
 
 
 
Loan and security agreement
$ 10,000,000 
 
$ 10,000,000 
Borrowing conditions
 
As amended, the third tranche of $10.0 million ("Term Loan C") would be available, subject to the Company achieving consolidated trailing six months' revenue at a specified threshold (the "Revenue Event") 
 
Interest rate, minimum
 
6.95% 
 
Interest rate plus the three month U.S. LIBOR
 
6.72% 
 
Commitments and Contingencies - Additional Information (Detail) (USD $)
9 Months Ended 12 Months Ended
Sep. 30, 2015
Dec. 31, 2010
Commitments and Contingencies Disclosure [Line Items]
 
 
Minimum term of non-cancellable operating leases
1 year 
 
Expiration of non-cancellable operating leases maximum year
2020 
 
Financing for leasehold improvement
 
$ 1,100,000 
Outstanding liability related to leasehold improvements
500,000 
 
Accrued liabilities
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
Leasehold Improvements reflected in Accrued liabilities
100,000 
 
Other non-current liabilities
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
Leasehold Improvements reflected in Other non-current liabilities
400,000 
 
Additional Concord Lease
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
Initial term of operating lease
2 years 
 
Number of renewal options
 
Renewal period of operating lease
2 years 
 
Future rent payment, 2016
200,000 
 
Future rent payment, 2017
100,000 
 
Additional Concord Lease |
Maximum
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
Future rent payment, remaining three months of 2015
$ 100,000 
 
Stockholders Equity - Additional Information (Detail) (USD $)
1 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended 3 Months Ended 9 Months Ended
Jan. 31, 2015
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Aug. 31, 2009
2009 Unit Offering
Sep. 30, 2015
2010 Unit Offering
Nov. 30, 2010
2010 Unit Offering
Nov. 30, 2010
2010 Unit Offering
Warrants
Sep. 30, 2015
2010 Unit Offering
Warrants
Sep. 30, 2015
2010 Unit Offering
Warrants
Sep. 30, 2015
Cantor
Sales Agreement
Stockholders Equity Note [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, number of shares issued
14,636,363 
 
 
 
 
 
 
 
 
 
 
Common stock, par value
$ 0.001 
 
 
 
 
 
 
 
 
 
 
 
Public offering, price per share
$ 5.50 
 
 
 
 
 
 
 
 
 
 
 
Estimated Net proceeds from public offering
$ 75,400,000 
 
 
 
 
 
 
 
 
 
 
 
Underwriting discounts and other issuance costs
5,100,000 
 
 
 
 
 
 
 
 
 
 
 
Warrants to purchase an aggregate shares of common stock
 
 
 
 
 
2,400,000 
 
3,700,000 
 
 
 
 
Warrant exercise price
 
 
 
 
 
$ 2.90 
 
$ 3.20 
 
 
 
 
Warrants exercisable date
 
 
 
 
 
 
 
 
May 15, 2011 
 
 
 
Exercisable period
 
 
 
 
 
 
 
 
5 years 
 
 
 
(Loss) gain from Revaluation of warrant
 
1,100,000 
1,700,000 
4,700,000 
14,300,000 
 
 
 
 
 
 
 
Common stock issued from the exercise of outstanding warrants
 
 
 
 
 
 
 
 
 
175,000 
1,544,123 
 
Common stock warrants to purchase outstanding
 
 
 
 
 
 
1,800,000 
 
 
 
 
 
Maximum common stock offering price
 
 
 
 
 
 
 
 
 
 
 
70,000,000 
Percentage of proceeds payable as compensation to underwriter
 
 
 
 
 
 
 
 
 
 
 
2.00% 
Common stock available for sale
 
 
 
 
 
 
 
 
 
 
 
$ 22,500,000 
Fair Value of Warrants Outstanding (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Class of Warrant or Right [Line Items]
 
 
Warrant liability
$ 2,424 
$ 10,485 1
2010 Warrant Liability
 
 
Class of Warrant or Right [Line Items]
 
 
Warrant liability
$ 2,424 
$ 10,485 
Fair Value of Warrants Using Valuation Model (Detail) (2010 Warrant Liability)
9 Months Ended 12 Months Ended
Sep. 30, 2015
Dec. 31, 2014
2010 Warrant Liability
 
 
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
 
 
Expected term (in years)
1 month 10 days 
10 months 10 days 
Estimated volatility
61.00% 
55.00% 
Risk-free interest rate
0.02% 
0.25% 
Expected dividend yield
0.00% 
0.00% 
Stock-Based Compensation - Additional Information (Detail)
0 Months Ended 9 Months Ended
Jun. 10, 2015
Sep. 30, 2015
Period
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Aggregate number of shares of common stock reserved for future issuance
 
21,700,000 
Outstanding options and other stock based awards
 
14,500,000 
Employee Stock Purchase Plan
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Aggregate number of shares of common stock reserved for future issuance
 
1,700,000 
Increase in shares of common stock authorized for issuance
1,500,000 
 
Employee Stock Purchase Plan, offering period
 
12 months 
Number of purchase periods within each offering period
 
Stock-based compensation, option to be granted at percentage of fair value of common stock
 
85.00% 
2008 Equity Incentive Plan
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Aggregate number of shares of common stock reserved for future issuance
 
7,200,000 
Increase in shares of common stock authorized for issuance
5,000,000 
 
Stock-Based Compensation Recognized on Condensed Consolidated Statements of Operations (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Stock-based compensation expense
$ 1,734 
$ 1,478 
$ 4,912 
$ 3,764 
Research and Development Expense
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Stock-based compensation expense
332 
281 
954 
740 
Selling, General and Administrative Expenses
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Stock-based compensation expense
$ 1,402 
$ 1,197 
$ 3,958 
$ 3,024 
Income Taxes - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Income Tax Disclosure [Line Items]
 
 
 
 
Net unrealized gain (loss) on available-for-sale securities
$ (2,654)
$ (17)
$ 4,858 
$ (18)
Provision (benefit) for income taxes
$ 95 
$ 8 
$ (1,921)
$ 90 
Development and License Agreements - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Licenses Agreements [Line Items]
 
 
 
 
 
Royalty payments on products
$ 0.7 
$ 0.6 
$ 1.9 
$ 1.9 
 
Revenue from sale of components
0.5 
2.2 
1.5 
6.0 
 
Payments made relating to the manufacturing of the products
3.0 
4.3 
12.5 
13.9 
 
Amounts due from Fresenius
0.4 
 
0.4 
 
1.3 
Royalty
 
 
 
 
 
Licenses Agreements [Line Items]
 
 
 
 
 
Royalties owed
0.7 
 
0.7 
 
0.7 
Royalty |
Platelet system
 
 
 
 
 
Licenses Agreements [Line Items]
 
 
 
 
 
Royalty rate applied towards sale of products
 
 
10.00% 
 
 
Royalty |
Plasma system
 
 
 
 
 
Licenses Agreements [Line Items]
 
 
 
 
 
Royalty rate applied towards sale of products
 
 
3.00% 
 
 
Manufacturing Costs
 
 
 
 
 
Licenses Agreements [Line Items]
 
 
 
 
 
Accrual for manufacturing of entity products
$ 1.8 
 
$ 1.8 
 
$ 5.1 
Segment, Customer and Geographic Information - Additional Information (Detail)
9 Months Ended
Sep. 30, 2015
Segment
Segment Reporting Information [Line Items]
 
Number of operating segments
Significant Customer that Accounted for More than Ten Percentage of Total Product Revenue (Detail) (Customer Concentration Risk, Sales Revenue, Goods, Net, Etablissement Francais du Sang)
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Customer Concentration Risk |
Sales Revenue, Goods, Net |
Etablissement Francais du Sang
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
Concentration risk, percentage
27.00% 
30.00% 
26.00% 
26.00%