On March 8, 2016 Cerus Corporation (NASDAQ:CERS) reported financial results for the fourth quarter and year ended December 31, 2015 (Press release, Cerus, MAR 8, 2016, View Source [SID:1234509417]).
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Recent company highlights include:
U.S. Progress –
Signed INTERCEPT platelet and plasma supply agreements with the American Red Cross, Roswell Park Cancer Institute, Blood Systems, Inc., OneBlood, Inc., LifeShare Blood Centers, ARUP, Inc., Rhode Island Blood Center, Shepeard Community Blood Center, Mississippi Valley Regional Blood Center, Community Blood Center
Received CMS permanent P-codes for outpatient hospital billing of pathogen-reduced platelets and plasma
AABB authorized use of the INTERCEPT Blood System for platelets to reduce the risk of transfusion-associated graft versus host disease
Began enrollment in the Phase IV PIPER Study, which Cerus is conducting as its FDA-required post-approval haemovigilance study
Announced a collaboration agreement with Haemonetics for the use of Acrodose platelet kits with the INTERCEPT Blood System for platelets
International Progress –
Regulatory approval obtained for use of the INTERCEPT Blood System for platelets and plasma in Brazil, Peru, and Colombia
Appointed new leadership for the Europe, Middle East and Africa region
Signed INTERCEPT platelet and plasma supply agreement with the National Transfusiology Center of Mongolia
Recognition of pathogen reduction as a Zika intervention –
The U.S. Food and Drug Administration’s (FDA) guidance document regarding Zika allows for the use of pathogen reduction to reduce transfusion risk and maintain local blood availability
The World Health Organization (WHO) guidelines for maintaining a safe and adequate blood supply during Zika virus outbreaks includes pathogen reduction technology for safeguarding platelet and plasma supplies in areas with active transmission
"The current Zika outbreak highlights the need for a proactive solution to secure the safety and availability of national blood supplies. The FDA and WHO have now recognized that pathogen reduction is an integral component to ensure that patients are protected from possible transfusion transmission of Zika, as well as dengue and chikungunya viruses," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "Looking ahead, with over 60% of the U.S. market now under contract and a long term agreement with the American Red Cross, we expect to begin to transition these contracts into revenue in 2016, and in Europe, we seek to initiate our launch planning for our INTERCEPT red cell system pursuant to our planned CE Mark submission in the second half of the year."
Revenue
Product revenue for the fourth quarter of 2015 was $9.7 million compared to revenue for the same period in 2014 of $9.6 million. This reflects a 22% year over year increase in INTERCEPT disposable kit demand. Revenue for the year ended December 31, 2015 was $34.2 million, compared to $36.4 million for the year ended December 31, 2014. INTERCEPT disposable kit demand over the full year time period grew by 15%, in line with our expectations.
Looking ahead, the Company expects 2016 global revenue in the range of $37 million to $40 million.
Gross Margins
Gross margins for the fourth quarter of 2015 were 36%, compared to 31% for the fourth quarter of 2014. Gross margins for the year ended December 31, 2015, were 31%, compared with 42% in the same period in 2014.
The Company recorded period charges for expiring inventory and certain minimum contractual purchase commitments which negatively impacted margins by approximately 10% and 7% for the quarter and year ended December 31, 2015, respectively. These types of charges impacted margins by less than 1% during the same periods of 2014. In addition, margins for the year ended December 31, 2015 were negatively impacted by the decline in the value of the Euro relative to the Company’s reporting currency, the US dollar, negatively impacting reported gross margins by approximately 5% when comparing the year ended December 31, 2015 to the comparable period in 2014.
Operating Expenses
Total operating expenses were $18.5 million and $71.8 million for the quarter and year ended December 31, 2015, respectively, compared to $15.9 million and $59.7 million for the quarter and year ended December 31, 2014, respectively. The continued buildout of a U.S. based commercial team following December 2014 FDA approvals drove the increase in operating expenses throughout 2015. In addition, label claim expansion activities over 2015 drove increased costs which were offset by the decline in activities incurred in 2014 to obtain those December approvals.
Operating and Net Loss
Operating losses during the fourth quarter of 2015 were $15.0 million, compared to $12.9 million during the fourth quarter of 2014, and $61.1 million compared to $44.5 million for years ended December 31, 2015 and 2014, respectively.
Net loss for the fourth quarter of 2015 was $14.8 million, or $0.15 per diluted share, compared to a net loss of $20.2 million, or $0.26 per diluted share, for the fourth quarter of 2014. Net loss for the year ended December 31, 2015, was $55.9 million, or $0.61 per diluted share, compared to a net loss of $38.8 million, or $0.61 per diluted share, for the same period of 2014.
Net losses for the fourth quarter of 2015 were impacted by the operating losses discussed above and mark-to-market adjustments of the Company’s then outstanding warrants to fair value, which contributed to the Company’s net losses by $1.1 million during the quarter ended December 31, 2015, compared to a contribution of $6.6 million to net losses during the comparable period in 2014. Net losses for the fourth quarter of 2015 were also favorably impacted by approximately $0.2 million of foreign exchange gains during the fourth quarter of 2015, compared to losses of $0.4 million during the corresponding prior period.
Net losses for the year ended December 31, 2015 were impacted by the operating losses discussed above and mark-to-market adjustments of the Company’s then outstanding warrants to fair value, which reduced the Company’s net losses by $3.6 million during the year ended December 31, 2015 compared to a reduction to net losses of $7.7 million during the comparable period in 2014. Net losses for the year were also impacted by foreign exchange losses of $0.4 million during the year ended December 31, 2015, compared to $1.3 million of foreign exchange losses during the year ended December 31, 2014.
At December 31, 2015, the Company had no remaining outstanding warrants and as such, does not expect mark-to-market adjustments going forward.
Cash, Cash Equivalents and Investments
At December 31, 2015, the Company had cash, cash equivalents and short-term investments of $107.9 million compared to $51.3 million at December 31, 2014. Included in the 2015 short-term investments are approximately $11.2 million of marketable equity securities, which had no recorded value at December 31, 2014.
At December 31, 2015, the Company had approximately $20 million in outstanding debt under its loan agreement with Oxford Finance.