On February 26, 2019 Cerus Corporation (Nasdaq: CERS) reported complete financial results for the fourth quarter and year ended December 31, 2018 (Press release, Cerus, FEB 26, 2019, View Source [SID1234533682]).

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Recent developments and highlights include:

Record fourth quarter product revenue of $16.5 million.
Provided 2019 annual product revenue guidance of $70 million to $73 million, representing a 15% to 20% increase over 2018 reported product revenue.
Filed CE Mark registration for the Company’s INTERCEPT Blood System for red blood cells (RBCs).
Initiated enrollment in ReCePI, Cerus’ U.S. Phase 3 study evaluating the safety and efficacy of the INTERCEPT Blood System for RBCs in patients undergoing complex cardiac surgery.
Expanded the executive management team with the appointment of William Moore as senior vice president of manufacturing operations and supply chain.
The recently issued annual planned FDA guidance agenda from CBER (Center for Biologics Evaluation and Research) indicates that a final platelet bacterial safety guidance document is planned for 2019.
"We believe we are entering a transformational period in the U.S., with a final platelet bacterial guidance document now anticipated by the end of this year," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "Our recent momentum is expected to continue into 2019 as we push forward on our mission to establish INTERCEPT as the standard of care for transfused blood components globally by executing on our commercial strategy and advancing our pipeline opportunities."

Revenue

Product revenue during the fourth quarter of 2018 was $16.5 million, compared to $16.2 million during the same period in 2017. Strong gains in fourth quarter platelet kit sales were partially offset by a year-over-year decline in illuminator sales. During the fourth quarter of 2017, total product revenue benefited from illuminator shipments pursuant to the Company’s expanded supply agreement with EFS, the French National Blood Service, and large plasma kit orders to distributors. Full-year 2018 product revenue totaled $60.9 million, an increase of 40% compared to 2017 product revenue.

Government contract revenue from the Company’s Biomedical Advanced Research and Development Authority (BARDA) agreement was $3.7 million during the fourth quarter of 2018, compared to $2.4 million during the same period in 2017, as a result of increasing INTERCEPT red blood cell clinical and development activities. Government contract revenue from the Company’s BARDA agreement for the year ended December 31, 2018, was $15.1 million compared to $7.8 million for the year ended December 31, 2017. The total potential value of the current BARDA agreement is $201 million with $25 million recognized as revenue to date.

BARDA is part of the Office of the Assistant Secretary for Preparedness and Response within the U.S. Department of Health and Human Services. The development of the INTERCEPT red blood cell program has been funded in whole or in part with Federal funds from the Department of Health and Human Services; Office of the Assistant Secretary for Preparedness and Response; Biomedical Advanced Research and Development Authority, under Contract No. HHSO100201600009C.

Gross Margins

Gross margins on product revenue during the fourth quarter of 2018 were 49%, compared to 44% for the fourth quarter of 2017. Gross margins in the quarter benefited from a favorable product mix and higher average selling prices for platelet kits. Gross margins on product revenue for the full-year 2018 and 2017 totaled 48%.

Operating Expenses

Total operating expenses for the fourth quarter 2018 were $27.3 million compared to $20.3 million for the same period the prior year. Full-year 2018 operating expenses totaled $99.4 million compared to $86.3 million for the full-year 2017.

Selling, general, and administrative (SG&A) expenses for the fourth quarter of 2018 totaled $14.8 million, compared to $12.6 million for the fourth quarter of 2017. The year-over-year increase was primarily tied to higher commercial activity in the U.S. Full-year 2018 SG&A expenses totaled $56.8 million, compared to $52.6 million for the full-year 2017 with the increase primarily tied to higher headcount and compensation related costs.

Research and development (R&D) expenses for the fourth quarter of 2018 were $12.4 million, compared to $7.8 million for the fourth quarter of 2017. The increase in year-over-year R&D expenses was primarily due to additional activities and costs tied to the development of INTERCEPT red blood cell system, including preparation for the CE Mark submission, trials and activities in pursuit of a potential FDA approval of INTERCEPT red blood cells and activities aimed at obtaining expanded label claims for INTERCEPT platelets and plasma. Full-year 2018 R&D expenses totaled $42.6 million, compared to $33.7 million for the full-year 2017. The increase in full-year 2018 R&D expenses compared to full-year 2017 R&D expenses was primarily due to costs associated with clinical development of INTERCEPT red blood cell system, the pursuit of supplemental approvals for the platelet and plasma systems, and activities related to the BARDA agreement.

Net Loss

Net loss for the fourth quarter of 2018 was $16.2 million, or $0.12 per diluted share, compared to a net loss of $11.5 million, or $0.10 per diluted share, for the fourth quarter of 2017. Net loss for the year ended December 31, 2018, was $57.6 million, or $0.44 per diluted share, compared to a net loss of $60.6 million, or $0.56 per diluted share, for the same period in 2017.

Cash, Cash Equivalents and Investments

At December 31, 2018, the Company had cash, cash equivalents and short-term investments of $117.6 million, compared to $60.7 million at December 31, 2017.

At December 31, 2018, the Company had approximately $29.9 million in outstanding debt under its loan agreement compared to $29.8 million at December 31, 2017.

2019 Product Revenue Guidance

The Company expects 2019 product revenue to be in the range of $70 million to $73 million, representing 15% to 20% growth compared to 2018 reported product revenue.

QUARTERLY CONFERENCE CALL

The Company will host a conference call and webcast at 4:30 P.M. ET this afternoon, during which management will discuss the Company’s financial results and provide a general business overview and outlook. To access the live webcast, please visit the Investor Relations page of the Cerus website at View Source Alternatively, you may access the live conference call by dialing (866) 235-9006 (U.S.) or (631) 291-4549 (international).

A replay will be available on the Company’s website, or by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (international) and entering conference ID number 2392137. The replay will be available approximately three hours after the call through March 12, 2019.