Cerus(US:CERS)2022-05-04 16:00Regulatory Approvals and Product Development - The INTERCEPT Blood System has received regulatory approvals, including FDA approval in the U.S. and CE Certificates for Class III products in the EU, and is marketed in multiple regions including the U.S., Europe, CIS, the Middle East, and Latin America [113]. - The INTERCEPT Blood System for Cryoprecipitation was approved by the FDA in November 2020, with the first sale to a hospital customer completed in 2021 [119]. - The red blood cell system is still in development, with CE Mark approval application resubmitted in June 2021, but a decision is not expected for at least another 12 months [115]. - The company has extended its agreement with BARDA through December 2023, which provides funding for the development of the red blood cell system and related clinical programs [118]. - The ongoing COVID-19 pandemic has caused delays in clinical trial enrollment for the RedeS and ReCePI studies, potentially affecting the timeline for regulatory approvals [117]. - The company may need to conduct additional randomized controlled clinical trials for existing or new products if funding from BARDA is insufficient [123]. Financial Performance - Product revenue for the three months ended March 31, 2022, was $37,444 thousand, a 60% increase from $23,379 thousand in the same period of 2021, primarily due to growth in disposable platelet system kit sales to U.S. customers [138]. - Total revenue for the three months ended March 31, 2022, was $43,020 thousand, up 46% from $29,566 thousand in the same period of 2021 [138]. - Cost of product revenue increased to $18,076 thousand for the three months ended March 31, 2022, a 63% increase from $11,095 thousand in the same period of 2021, driven by higher sales volume and foreign exchange impacts [140]. - Gross margin on product sales was approximately 52% for the three months ended March 31, 2022, compared to 53% in the same period of 2021, affected by product mix and increased freight costs [140]. - Government contract revenue for the three months ended March 31, 2022, was $5,576 thousand, a 10% decrease from $6,187 thousand in the same period of 2021, primarily due to reduced activity under government contracts amid the COVID-19 pandemic [139]. Operational Challenges and Costs - The company anticipates increased costs due to inflationary pressures, supply chain constraints, and rising transportation costs, which may impact liquidity and operational plans [121]. - The company is actively monitoring the impacts of the COVID-19 pandemic on its operations, which may affect product revenues and clinical trials [135]. - Selling, general, and administrative expenses increased by 8% to $20,735,000 for the three months ended March 31, 2022, compared to $19,170,000 for the same period in 2021, primarily due to increased hiring and stock-based compensation [147]. - Total non-operating expense, net rose significantly by 159% to $(2,360,000) for the three months ended March 31, 2022, compared to $(912,000) in the prior year, driven by increased interest expense and other losses [148]. - Interest expense increased by 42% to $(1,380,000) for the three months ended March 31, 2022, compared to $(972,000) in 2021, primarily due to a higher underlying balance from the Term Loan Credit Agreement [151]. Cash Flow and Funding - Cash and cash equivalents decreased to $38,372,000 as of March 31, 2022, from $48,759,000 as of December 31, 2021, reflecting ongoing operational cash usage [155]. - Working capital decreased to $106,153,000 as of March 31, 2022, from $108,546,000 as of December 31, 2021, primarily due to cash usage for product enhancements and commercial initiatives [160]. - Net cash used in operating activities increased to $(21,456,000) for the three months ended March 31, 2022, compared to $(17,455,000) in the same period of 2021, attributed to timing of payments and inventory purchases [156]. - The company expects to continue making investments in inventory to meet future demand and ensure component availability [156]. - The company has sold 0.4 million shares of common stock under a Sales Agreement for net proceeds of $3.1 million, with the potential to issue up to $100 million [164]. - The company’s ability to obtain expected funding under its agreement with BARDA is subject to various risks, including the potential for funding termination and the impact of the COVID-19 pandemic on clinical studies [165]. - The company may need to obtain additional funds for development activities related to the red blood cell system and other products if costs exceed expectations or delays occur [168]. Investment and Market Risks - The investment policy focuses on preserving principal and liquidity while maximizing returns on the marketable securities portfolio [171]. - Cash and cash equivalents are currently invested in money market funds and interest-bearing accounts with financial institutions [171]. - Money market funds are classified as Level 1 in the fair value hierarchy, indicating active market availability [171]. - Available-for-sale securities related to corporate debt and U.S. government agency securities are classified as Level 2 in the fair value hierarchy [171]. - No credit losses were recorded during the three months ended March 31, 2022, and 2021 [171]. - Adverse global economic conditions may negatively impact the market values of potential investments [171]. - There were no material changes to market risk disclosures during the three months ended March 31, 2022 [173].