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 September 30, 2020

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 October 20, 2020, there were 167,141,975 shares of the registrant’s common stock outstanding.

CERUS CORPORATION

FORM 10-Q

For the Quarterly Period Ended September 30, 2020

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets – September 30, 2020 and December 31, 2019		1
	Condensed Consolidated Statements of Operations – Three and nine months ended September 30, 2020 and 2019		2
	Condensed Consolidated Statements of Comprehensive Loss – Three and nine months ended September 30, 2020 and 2019		3
	Condensed Consolidated Statements of Stockholders’ Equity – Three and nine months ended September 30, 2020 and 2019		4
	Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, 2020 and 2019		5
	Notes to 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	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	71
Item 6.	Exhibits	72
SIGNATURES		73

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CERUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30,			December 31,
	2020			2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	28,950		$	34,986
Short-term investments		106,174			50,732
Accounts receivable		16,236			16,882
Inventories		19,460			19,490
Prepaid and other current assets		6,479			6,018
Total current assets		177,299			128,108
Non-current assets:
Property and equipment, net		14,261			14,898
Goodwill		1,316			1,316
Operating lease right-of-use assets		13,470			14,122
Intangible assets, net		-			132
Restricted cash		2,522			2,435
Other assets		4,486			4,524
Total assets	$	213,354		$	165,535
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	19,244		$	22,185
Accrued liabilities		19,545			20,951
Debt – current		4,982			5,017
Operating lease liabilities – current		1,857			1,613
Deferred product revenue		561			570
Total current liabilities		46,189			50,336
Non-current liabilities:
Debt – non-current		39,545			39,414
Operating lease liabilities – non-current		17,263			18,406
Other non-current liabilities		1,122			327
Total liabilities		104,119			108,483
Commitments and contingencies
Stockholders' equity:
Common stock		167			144
Additional paid-in capital		1,003,748			906,905
Accumulated other comprehensive income		907			114
Accumulated deficit		(895,587	)		(850,111	)
Total stockholders' equity		109,235			57,052
Total liabilities and stockholders' equity	$	213,354		$	165,535

See accompanying Notes to Condensed Consolidated Financial Statements.

1

CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

(in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Product revenue	$	23,607		$	18,019		$	63,721		$	53,732
Cost of product revenue		10,953			7,583			28,978			24,126
Gross profit on product revenue		12,654			10,436			34,743			29,606
Government contract revenue		5,584			4,827			16,938			13,554
Operating expenses:
Research and development		15,921			16,081			47,349			43,938
Selling, general and administrative		16,299			16,140			48,324			49,041
Total operating expenses		32,220			32,221			95,673			92,979
Loss from operations		(13,982	)		(16,958	)		(43,992	)		(49,819	)
Non-operating expense, net:
Foreign exchange gain (loss)		490			(254	)		540			(311	)
Interest expense		(930	)		(1,031	)		(2,794	)		(5,105	)
Other income, net		351			336			962			1,095
Total non-operating expense, net		(89	)		(949	)		(1,292	)		(4,321	)
Loss before income taxes		(14,071	)		(17,907	)		(45,284	)		(54,140	)
Provision for income taxes		68			60			192			181
Net loss	$	(14,139	)	$	(17,967	)	$	(45,476	)	$	(54,321	)
Net loss per share:
Basic and diluted	$	(0.08	)	$	(0.13	)	$	(0.28	)	$	(0.39	)
Weighted average shares used for calculating net loss per share:
Basic and diluted		166,572			140,908			162,800			138,779

See accompanying Notes to Condensed Consolidated Financial Statements.

2

CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

UNAUDITED

(in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Net loss	$	(14,139	)	$	(17,967	)	$	(45,476	)	$	(54,321	)
Other comprehensive (loss) income
Unrealized (losses) gains on available-for-sale investments, net of taxes		(218	)		48			793			420
Comprehensive loss	$	(14,357	)	$	(17,919	)	$	(44,683	)	$	(53,901	)

See accompanying Notes to Condensed Consolidated Financial Statements.

3

CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

UNAUDITED

(in thousands)

	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balances as of December 31, 2019		144,291	$	144	$	906,905	$	114		$	(850,111	)	$	57,052
Issuance of common stock from public offerings, net of offering costs		17,867		18		67,094		—			—			67,112
Issuance of common stock from exercise of stock options,    vesting of restricted stock units, and ESPP purchases		1,803		2		1,191		—			—			1,193
Stock-based compensation		—		—		3,754		—			—			3,754
Other comprehensive loss		—		—		—		(237	)		—			(237	)
Net loss		—		—		—		—			(16,466	)		(16,466	)
Balances as of March 31, 2020		163,961		164		978,944		(123	)		(866,577	)		112,408
Issuance of common stock from public offering, net    of offering costs		1,471		1		9,428		—			—			9,429
Issuance of common stock from exercise of stock options and    vesting of restricted stock units		580		1		1,604		—			—			1,605
Stock-based compensation		—		—		4,706		—			—			4,706
Other comprehensive income		—		—		—		1,248			—			1,248
Net loss		—		—		—		—			(14,871	)		(14,871	)
Balances as of June 30, 2020		166,012		166		994,682		1,125			(881,448	)		114,525
Issuance of common stock from exercise of stock options,    vesting of restricted stock units, and ESPP purchases		1,062		1		4,220		—			—			4,221
Stock-based compensation		—		—		4,846		—			—			4,846
Other comprehensive income		—		—		—		(218	)		—			(218	)
Net loss		—		—		—		—			(14,139	)		(14,139	)
Balances as of September 30, 2020		167,074	$	167	$	1,003,748	$	907		$	(895,587	)	$	109,235

	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balances as of December 31, 2018		136,853	$	136	$	863,531	$	(281	)	$	(778,867	)	$	84,519
Issuance of common stock from exercise of stock options,    vesting of restricted stock units, and ESPP purchases		965		2		682		—			—			684
Stock-based compensation		—		—		2,878		—			—			2,878
Other comprehensive income		—		—		—		211			—			211
Net loss		—		—		—		—			(18,792	)		(18,792	)
Balances as of March 31, 2019		137,818		138		867,091		(70	)		(797,659	)		69,500
Issuance of common stock from public offering, net    of offering costs		1,978		2		9,834		—			—			9,836
Issuance of common stock from exercise of stock options and    vesting of restricted stock units		265		—		558		—			—			558
Stock-based compensation		—		—		3,139		—			—			3,139
Other comprehensive income		—		—		—		161			—			161
Net loss		—		—		—		—			(17,562	)		(17,562	)
Balances as of June 30, 2019		140,061		140		880,622		91			(815,221	)		65,632
Issuance of common stock from public offering, net    of offering costs		1,471		1		7,913		—			—			7,914
Issuance of common stock from exercise of stock options,    vesting of restricted stock units, and ESPP purchases		478		1		1,585		—			—			1,586
Stock-based compensation		—		—		3,595		—			—			3,595
Other comprehensive income		—		—		—		48			—			48
Net loss		—		—		—		—			(17,967	)		(17,967	)
Balances as of September 30, 2019		142,010	$	142	$	893,715	$	139		$	(833,188	)	$	60,808

See accompanying Notes to Condensed Consolidated Financial Statements.

4

CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(in thousands)

	Nine Months Ended
	September 30,
	2020			2019
Operating activities
Net loss	$	(45,476	)	$	(54,321	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,298			1,781
Stock-based compensation		13,306			9,612
Non-cash operating lease cost		962			1,224
Net loss on sale of available-for-sale securities		256