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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from:              to             

Commission File Number 000-21937

 

CERUS CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

68-0262011

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

1220 Concord Avenue, Suite 600

Concord, California

 

94520

(Address of principal executive offices)

 

(Zip Code)

 

(925) 288-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class 

Trading Symbol

Name of Each Exchange on Which Registered 

Common Stock, par value $0.001 per share

CERS

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES      NO  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YES      NO  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

Non-accelerated filer

  

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES      NO  

As of July 22, 2019, there were 140,321,542 shares of the registrant’s common stock outstanding.

 

 

 

 


CERUS CORPORATION

FORM 10-Q

For the Quarterly Period Ended June 30, 2019

TABLE OF CONTENTS

 

PART I

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

1

 

Unaudited Condensed Consolidated Balance Sheets – June 30, 2019 and December 31, 2018

1

 

Unaudited Condensed Consolidated Statements of Operations – Three and six months ended June 30, 2019 and 2018

2

 

Unaudited Condensed Consolidated Statements of Comprehensive Loss – Three and six months ended June 30, 2019 and 2018

3

 

Unaudited Condensed Consolidated Statements of Stockholders’ Equity – Three and six months ended June 30, 2019 and 2018

4

 

Unaudited Condensed Consolidated Statements of Cash Flows – Six months ended June 30, 2019 and 2018

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

 

 

 

PART II

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

68

Item 3.

Defaults Upon Senior Securities

68

Item 4.

Mine Safety Disclosures

68

Item 5.

Other Information

68

Item 6.

Exhibits

69

 

 

SIGNATURES

70

 

 

 

 


PART I: FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

CERUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

23,543

 

 

$

28,859

 

Short-term investments

 

 

72,659

 

 

 

88,718

 

Accounts receivable

 

 

13,432

 

 

 

8,752

 

Inventories

 

 

17,447

 

 

 

13,539

 

Prepaid and other current assets

 

 

8,756

 

 

 

7,034

 

Total current assets

 

 

135,837

 

 

 

146,902

 

Non-current assets:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

15,345

 

 

 

8,130

 

Goodwill

 

 

1,316

 

 

 

1,316

 

Operating lease right-of-use assets

 

 

14,417

 

 

 

 

Intangible assets, net

 

 

233

 

 

 

334

 

Restricted cash

 

 

2,677

 

 

 

2,728

 

Other assets

 

 

4,802

 

 

 

4,050

 

Total assets

 

$

174,627

 

 

$

163,460

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

21,058

 

 

$

18,595

 

Accrued liabilities

 

 

16,654

 

 

 

19,800

 

Manufacturing and development obligations

 

 

6,198

 

 

 

5,928

 

Debt – revolving loan

 

 

4,496

 

 

 

 

Debt – term loan

 

 

 

 

 

7,857

 

Operating lease liabilities – current

 

 

1,711

 

 

 

 

Deferred product revenue – current

 

 

665

 

 

 

498

 

Total current liabilities

 

 

50,782

 

 

 

52,678

 

Non-current liabilities:

 

 

 

 

 

 

 

 

Debt – non-current

 

 

39,327

 

 

 

22,013

 

Operating lease liabilities – non-current

 

 

18,722

 

 

 

 

Other non-current liabilities

 

 

164

 

 

 

4,250

 

Total liabilities

 

 

108,995

 

 

 

78,941

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

140

 

 

 

136

 

Additional paid-in capital

 

 

880,622

 

 

 

863,531

 

Accumulated other comprehensive income (loss)

 

 

91

 

 

 

(281

)

Accumulated deficit

 

 

(815,221

)

 

 

(778,867

)

Total stockholders' equity

 

 

65,632

 

 

 

84,519

 

Total liabilities and stockholders' equity

 

$

174,627

 

 

$

163,460

 

 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1


CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Product revenue

 

$

18,209

 

 

$

15,420

 

 

$

35,713

 

 

$

28,984

 

Cost of product revenue

 

 

8,111

 

 

 

7,720

 

 

 

16,543

 

 

 

15,050

 

Gross profit on product revenue

 

 

10,098

 

 

 

7,700

 

 

 

19,170

 

 

 

13,934

 

Government contract revenue

 

 

4,266

 

 

 

4,047

 

 

 

8,727

 

 

 

7,502

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

14,417

 

 

 

9,881

 

 

 

27,857

 

 

 

19,318

 

Selling, general and administrative

 

 

16,740

 

 

 

14,437

 

 

 

32,901

 

 

 

28,044

 

Total operating expenses

 

 

31,157

 

 

 

24,318

 

 

 

60,758

 

 

 

47,362

 

Loss from operations

 

 

(16,793

)

 

 

(12,571

)

 

 

(32,861

)

 

 

(25,926

)

Non-operating expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange gain (loss)

 

 

105

 

 

 

(138

)

 

 

(57

)

 

 

(30

)

Interest expense

 

 

(1,150

)

 

 

(958

)

 

 

(4,074

)

 

 

(1,873

)

Other income, net

 

 

337

 

 

 

444

 

 

 

759

 

 

 

775

 

Total non-operating expense, net

 

 

(708

)

 

 

(652

)

 

 

(3,372

)

 

 

(1,128

)

Loss before income taxes

 

 

(17,501

)

 

 

(13,223

)

 

 

(36,233

)

 

 

(27,054

)

Provision for income taxes

 

 

61

 

 

 

59

 

 

 

121

 

 

 

113

 

Net loss

 

$

(17,562

)

 

$

(13,282

)

 

$

(36,354

)

 

$

(27,167

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.13

)

 

$

(0.10

)

 

$

(0.26

)

 

$

(0.21

)

Weighted average shares used for calculating net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

138,281

 

 

 

131,352

 

 

 

137,698

 

 

 

128,101

 

 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

2


CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

UNAUDITED

(in thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss

 

$

(17,562

)

 

$

(13,282

)

 

$

(36,354

)

 

$

(27,167

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on available-for-sale investments, net of taxes

 

 

161

 

 

 

9

 

 

 

372

 

 

 

(320

)

Comprehensive loss

 

$

(17,401

)

 

$

(13,273

)

 

$

(35,982

)

 

$

(27,487

)

 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

 

 

3


CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

UNAUDITED

(in thousands)

 

 

 

Three Months Ended June 30, 2019

 

 

Three Months Ended June 30, 2018

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at beginning of period

 

 

137,818

 

 

 

138

 

 

 

867,091

 

 

 

(70

)

 

 

(797,659

)

 

 

69,500

 

 

 

130,545

 

 

 

131

 

 

 

821,081

 

 

 

(426

)

 

 

(735,188

)

 

$

85,598

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,562

)

 

 

(17,562

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,282

)

 

 

(13,282

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

161

 

 

 

 

 

 

161

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

9

 

Issuance of common stock from public offering, net

   of offering costs

 

 

1,978

 

 

 

2

 

 

 

9,834

 

 

 

 

 

 

 

 

 

9,836

 

 

 

1,780

 

 

 

2

 

 

 

11,908

 

 

 

 

 

 

 

 

 

11,910

 

Issuance of common stock from exercise of stock options,

   vesting of restricted stock units, and ESPP purchases

 

 

265

 

 

 

 

 

 

558

 

 

 

 

 

 

 

 

 

558

 

 

 

1,137

 

 

 

 

 

 

3,616

 

 

 

 

 

 

 

 

 

3,616

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,139

 

 

 

 

 

 

 

 

 

3,139

 

 

 

 

 

 

 

 

 

2,593

 

 

 

 

 

 

 

 

 

2,593

 

Balances at end of period

 

 

140,061

 

 

$

140

 

 

$

880,622

 

 

$

91

 

 

$

(815,221

)

 

$

65,632

 

 

 

133,462

 

 

$

133

 

 

$

839,198

 

 

$

(417

)

 

$

(748,470

)

 

$

90,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

Six Months Ended June 30, 2018

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balances at beginning of period

 

 

136,853

 

 

 

136

 

 

 

863,531

 

 

 

(281

)

 

 

(778,867

)

 

 

84,519

 

 

 

115,555

 

 

 

115

 

 

 

760,225

 

 

 

(97

)

 

 

(721,303

)

 

 

38,940

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36,354

)

 

 

(36,354

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,167

)

 

 

(27,167

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

372

 

 

 

 

 

 

372

 

 

 

 

 

 

 

 

 

 

 

 

(320

)

 

 

 

 

 

(320

)

Issuance of common stock from public offering, net

   of offering costs

 

 

1,978

 

 

 

2

 

 

 

9,834

 

 

 

 

 

 

 

 

 

9,836

 

 

 

15,819

 

 

 

17

 

 

 

69,155

 

 

 

 

 

 

 

 

 

69,172

 

Issuance of common stock from exercise of stock options,

   vesting of restricted stock units, and ESPP purchases

 

 

1,230

 

 

 

2

 

 

 

1,240

 

 

 

 

 

 

 

 

 

1,242

 

 

 

2,088

 

 

 

1

 

 

 

4,910

 

 

 

 

 

 

 

 

 

4,911

 

Stock-based compensation

 

 

 

 

 

 

 

 

6,017

 

 

 

 

 

 

 

 

 

6,017

 

 

 

 

 

 

 

 

 

4,908

 

 

 

 

 

 

 

 

 

4,908

 

Balances at end of period

 

 

140,061

 

 

$

140

 

 

$

880,622

 

 

$

91

 

 

$

(815,221

)

 

$

65,632

 

 

 

133,462

 

 

$

133

 

 

$

839,198

 

 

$

(417

)

 

$

(748,470

)

 

$

90,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

 

 

4


CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(in thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2019

 

 

2018

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(36,354

)

 

$

(27,167

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,908

 

 

 

788

 

Stock-based compensation

 

 

6,017

 

 

 

4,908

 

Non-cash interest expense

 

 

247

 

 

 

537

 

Loss on disposal of property and equipment

 

 

14

 

 

 

5

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(4,680

)

 

 

1,027

 

Inventories

 

 

(3,977

)

 

 

1,458

 

Other assets

 

 

1,817

 

 

 

(1,587

)

Accounts payable

 

 

3,229

 

 

 

154

 

Accrued liabilities and other non-current liabilities

 

 

(3,410

)

 

 

554

 

Manufacturing and development obligations

 

 

(38

)

 

 

(148

)

Deferred product revenue

 

 

167

 

 

 

216

 

Net cash used in operating activities

 

 

(35,060

)

 

 

(19,255

)

Investing activities

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(6,516

)

 

 

(145

)

Purchases of investments

 

 

(27,728

)

 

 

(75,462

)

Proceeds from maturities and sale of investments