Ladies and gentlemen, thank you for standing by and welcome to the Cerus Corporation’s Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. It is now my pleasure to introduce Investor Relations Director, Tim Lee. Please go ahead.

Thank you, operator. Good afternoon. I'd like to thank everyone for joining us today. As part of today's webcast we are simultaneously displaying slides that you can follow. You can access the slides from the Investor Relations website at www.cerus.com/ir. With me on the call are Obi Greenman, Cerus' President and Chief Executive Officer; Vivek Jayaraman, Cerus' Chief Operating Officer; Kevin Green, Cerus' Chief Financial Officer; and Carol Moore, Cerus’ Senior Vice President of Regulatory Affairs and Quality. Cerus issued a press release today announcing our financial results for the third quarter ended September 30, 2020 and describing the Company's recent business highlights. You can access a copy of this announcement on the Company website at www.cerus.com. I’d like to remind you that some of the statements we will make on this call relate to future events and performance, rather than historical facts, and are forward-looking statements. Examples of forward-looking statements include those related to our future financial and operating results, including our 2020 financial guidance and goals, operating expenses, anticipated cash used from operations and gross margins, as well as commercial development efforts, future growth and growth strategy, future product sales, product launches, ongoing and future clinical trials, ongoing and future product development and our regulatory activities, including the timing of these events and activities. These forward-looking statements involve risks and uncertainties that could cause actual events, performance and results to differ materially. They are identified and described in today's press release and under Risk Factors in our Form 10-K for the year ended September 30, 2019, in our Form 10-Q for the quarter ended September 30, 2020 which we will file shortly. We undertake no duty or obligation to update our forward-looking statements. On today's call, we'll begin with opening remarks from Obi followed by Vivek, who will provide the commercial update, Kevin to review our financial results followed by Obi with a development pipeline update and closing remarks. And now, it's my pleasure to introduce Obi Greenman, Cerus' President and Chief Executive Officer.

Thank you, Tim, and good afternoon everyone. We are pleased to report another quarter of record product revenue, totaling $23.6 million, driven by strong commercial execution with gains in both North America and the EMEA markets. Robust top-line performance in the quarter was complemented by continued progress in our development programs on all fronts. In particular, we are eagerly awaiting the FDA anticipated approval decision on pathogen-reduced cryoprecipitated fibrinogen complex, or PR-Cryo, which we think could happen next month. Later in the call, I’ll share with you our pre-launch activities in preparation for the anticipated approval for PR-Cryo. With the compliance period for the FDA guidance document on the bacterial safety of platelets coming to a close in five months, we are seeing an increasing adoption of our technology by both blood center and hospital customers in the U.S. As we have previously noted, we think most U.S. blood centers and hospitals will gravitate towards single-step methods, either pathogen inactivation or LVDS, Large Volume Delayed Sampling, to comply with the guidance. Our discussions with blood centers and hospitals indicate that rather than the two-step option, the single-step method provides the operational benefits and ease of availability. When comparing INTERCEPT to LVDS, we think our technology offers several advantages such as replacement of gamma radiation, CMV serology, Babesia testing and Zika virus testing, which gives us conviction in our belief that INTERCEPT will become the standard-of-care. Vivek will provide additional details on the U.S. platelet market during his prepared remarks. By now, hopefully you have had a chance to review our press release detailing our third quarter results. While the COVID-19 pandemic has had an impact on our business, I continue to be impressed with how the Cerus team is navigating these challenges in support of our customers and their increasing need to secure the safety of the blood supply. As we head into the winter months, we are seeing a substantial rise in the daily COVID-19 cases and hospitalizations both here in the U.S. and abroad. This surge could impact the availability of blood donors and staffing at donor centers. In light of the uncertainty as to where and when the COVID-19 surge will peak, we are narrowing our full year 2020 product revenue guidance range from $89 million to $93 million to $89 million to $91 million. Therefore, the implicit guidance range for Q4 product revenue will represent year-over-year fourth quarter growth between 21% and 30% and solid sales momentum heading into 2021. With that, let me turn the call over to Vivek for a more detailed review of our commercial operations.

Thanks, Obi, and good afternoon. First, I echo Obi’s comments; as a function of the team's resilience, it is my pleasure to report another record quarter led by strong commercial execution in both our North America and EMEA regions. North American platelet kit demand increased almost 90% year-over-year and approximately 30% sequentially as adoption of INTERCEPT platelets continues to increase. We are happy to report meaningful year-over-year increases in our Q3 product sales to four out of the five largest blood center networks in the U.S. These gains were led by the American Red Cross, which continues to be a strong supporter of INTERCEPT and has stated their goal of getting to 100% INTERCEPT adoption by 2023. Earlier this month, the American Red Cross’ manufacturing facility in Tulsa, Oklahoma produced their first INTERCEPT-treated platelets. With the Tulsa facility now online, 21 out of the 22 American Red Cross sites are making pathogen-reduced platelets. As the FDA guidance compliance period nears its close at the end of March 2021, we believe that the overall economic and operational challenges of LVDS are increasingly being understood by U.S. blood centers and hospitals, when compared to the relative ease of use and added value conferred by pathogen-reduced platelets. The recent virtual AABB Annual Meeting earlier this month highlighted the added relevance of pathogen reduction for protecting the integrity of the blood supply as blood centers considered their COVID-19 experience and lessons learned toward future pandemics. We expect U.S. demand for INTERCEPT platelet kits to continue to increase even beyond the end of the FDA guidance compliance period, eventually becoming the standard-of-care for platelet components over time. The seven-day shelf life plan we are seeking for INTERCEPT platelets in the U.S. will likely be a critical determinant of the slope of revenue appreciation over the next 24 months and create an even stronger advantage when compared to LVDS. Extending shelf life beyond the current five days has the potential for better inventory management and lower waste in hospitals. The COVID-19 pandemic has made it challenging to enroll our seven-day study at the pace we’d like; we are now in the final stages of conducting the study at those clinical trial sites. We are now planning for a first quarter 2021 PMA submission with a possible FDA approval in the third quarter of 2021. We believe that this label expansion adds substantial value from the perspective of blood center manufacturers and transfusing hospitals, particularly as these stakeholders learn to deal with the indication that the FDA bacterial safety guidance presents. In the EMEA region, the commercial organization delivered another solid quarter with reported product revenue up 13% on a year-over-year basis. Increasing product revenues in France and Portugal were key contributors. We are also pleased to see the momentum for pathogen inactivation in Germany that we described earlier this year has now translated into incremental project sales this quarter. The calculated number of treatable platelet doses based on kit sales improved in the quarter contributing to the regional growth compared to the year-over-year decline we experienced in the second quarter. Plasma kit sales were once again a driver for EMEA sales growth due in part to continued demand for pathogen-inactivated COVID-19 convalescent plasma, or CCP. Since the COVID-19 pandemic began, the Cerus team has partnered with blood centers around the world and in total helped to establish 94 new centers for the manufacture of INTERCEPT CCP. While we continue to believe that the recent sales contributions from CCP manufacture are transitory, we see this as a spotlight on the need for pandemic preparedness and, of course, that will help convert these customers into long-term INTERCEPT users. Fundamentally, we believe that supporting the CCP efforts of our blood center customers and their hospital partners is the right thing to do. With that, I will turn the call over to Kevin for a review of the third quarter financials.

Thank you, Vivek and good afternoon, everyone. Today, we reported third quarter 2020 product revenue of $23.6 million, which represents a 31% increase from the $18 million recorded during Q3 of last year. In the first nine months of 2020, product revenue totaled $63.7 million, up 19% compared to the $53.7 million reported during the prior year period. Global demand for INTERCEPT continued to increase during the third quarter. The calculated number of treatable platelet doses increased 23% year-over-year and looking at growth through the first three quarters, the worldwide calculated number of treatable platelet doses increased over 12%. In terms of product mix, platelet kits accounted for approximately 87% of total kit sales, while plasma sales accounted for the remaining 13%. This higher proportion of platelets compared to Q2 was anticipated as noted on the Q2 call when plasma kits accounted for approximately 18%, largely driven by the demand for pathogen-inactivated CCP. In addition to our product revenue and not included in our guidance, government contract revenues totaled $5.6 million and $16.9 million for the three and nine month periods ended September 30, 2020, respectively. Comparatively, government contract revenue totaled $4.8 million and $13.6 million for the corresponding prior year period. Going forward, we expect government contract revenue will continue to increase as BARDA-reimbursed clinical trial activities have returned to enrolling patients and as we began working on our whole blood initiative funded by the FDA. Now, let’s move the discussion to our reported gross margins. Gross margins for the quarter were 54%, compared to 58% for the prior year period. Gross margins during the quarter were negatively impacted by a non-routine period charge of approximately $870,000, or 3.7 percentage points of revenue, due to certain inventory components that failed to meet the company’s quality standards. That period charge was partially offset by economies of scale and lower per-unit costs as a result of our increased manufacturing volumes and the benefit of foreign exchange rates. On a year-to-date basis, gross margins were 55% and consistent with the levels reported during the first nine months of 2019. We continue to expect gross margins will be in the mid-50s for the balance of the year. I’d now like to discuss operating expenses, which totaled $32.2 million during the quarter and were largely unchanged compared to the prior year period. Of the total Q3 operating expenses, SG&A expenses accounted for approximately $16.3 million and were relatively flat compared to the prior year. For the first three quarters of 2020, SG&A spending totaled $48.3 million, down compared to $49 million reported during the first three quarters of 2019. The slight decline in SG&A expenses during the nine month period was primarily due to lower travel and marketing-related expenses as a result of the COVID-19 pandemic. Research and development expenses for the quarter totaled $15.9 million and remained relatively flat compared to the $16.1 million during the prior year. On a year-to-date basis, R&D expenses totaled $47.3 million, compared to $43.9 million during the prior year period. The increase in R&D expenses was tied to our Red Blood Cell program, as well as product enhancement initiatives and programs intended to expand label claims for our U.S. platelet business. Reported net loss and per share losses for the three and nine months ended September 30, 2020 narrowed considerably over the same period in 2019. Reported net loss for Q3 totaled $14.1 million or $0.08 per diluted share, compared to $18 million or $0.13 per diluted share for the prior year period. On a year-to-date basis, net loss was $45.5 million or $0.28 per diluted share, compared to a net loss of $54.3 million or $0.39 per diluted share for the 2019 period. In terms of our balance sheet, we ended the third quarter in a strong position with approximately $135.1 million of cash, cash equivalents and short-term investments on hand. Cash used from operations has been and is expected to be narrower for the full year, compared to the previously anticipated $50 million to $60 million range. The improvement is driven by increased revenues, steady gross margins, and leverage from our SG&A spending. With that, let me turn the call back over to Obi for some closing comments.

Thank you, Kevin. Before we open the call for questions, I would like to spend a few minutes providing a pipeline update. Based on our ongoing conversations with the FDA during their review of our PR-Cryo PMA supplement, we remain optimistic for an anticipated favorable FDA approval decision in late November. We are in the late stages of building out our therapeutic sales team and preparing them to target hospitals at level 1 and level 2 trauma centers which regularly manage life-threatening bleeding events. As a reminder, with an anticipated five-day post-thaw shelf life, PR-Cryo can be stocked in a ready-to-transfuse liquid form in hospital blood banks, operating rooms and emergency departments allowing for immediate administration to critically bleeding patients in need of fibrinogen and other coagulation factors. Following anticipated FDA approval our blood center manufacturing partners can begin manufacturing PR-Cryo including performing the necessary validations and quality control analyses that must be completed prior to distributing the product to hospitals. Therefore, we expect PR-Cryo commercial sales could begin in the first half of 2021. Regarding hospital reimbursement for PR-Cryo, earlier this month we submitted an application to the Centers for Medicare and Medicaid Services for a New Technology Add-on Payment, or NTAP. NTAPs are intended to provide additional reimbursement to help offset the incremental cost to hospitals. We expect the decision on our NTAP submission next year with an anticipated favorable decision allowing the additional reimbursement to begin in Q4 of 2021. Lastly, while the focus of our launch will be on PR-Cryo, it’s important to note that we also simultaneously filed a PMA supplement for a second blood component that is a byproduct of the PR-Cryo manufacturing process. This second component is called pathogen-reduced plasma cryoprecipitate reduced. Our proposed indication for use is transfusion or therapeutic plasma exchange in patients with Thrombotic Thrombocytopenic Purpura, or TTP. We view this pathogen-reduced plasma product as potentially having utility in other areas of unmet clinical need associated with therapeutic apheresis and possibly volume resuscitation, which we may explore further post approval. Overall, we are excited about adding both new therapeutic products to our portfolio. Moving on to our Red Blood Cell development program, in Europe, as planned we submitted the first two modules as part of the CE Mark review process. The final two modules are planned for submission in the second quarter of 2021. In the U.S., our two Phase 3 studies are advancing. While the COVID-19 pandemic continues, we anticipate ongoing uncertainty with regard to the pace of clinical trial enrollment and new site activations. As a consequence, completing the Phase 3 trials in the U.S. for the Red Blood Cell program is a gating item for the PMA submission timeline. We believe that the future PMA submission process will benefit significantly from all the documentation previously prepared for the European regulatory submission, especially as it relates to the CMC and commercial manufacturing scale work. Finally, earlier this month, we received an $11 million funding commitment from the FDA to support the development of novel blood technologies to enable the pathogen inactivation of whole blood. We believe this is yet another strong indication of the FDA’s advocacy for the role that pathogen inactivation can play as a foundational strategy to safeguard the blood supply to prepare for future pandemic threats. Alongside the U.S. BARDA funding for the INTERCEPT Red Blood Cell program, Cerus has been the beneficiary of a clear focus by the U.S. government on ensuring blood safety and availability, given its critical role in the provision of healthcare. In closing, the resilience of our team and the relevance of our technology in pandemics have all positioned the company for record sales over the coming quarters as we execute against our top-line, bottom-line and pipeline goals even as we work through the COVID-19 challenges as a nation. With that, let me turn the call back over to the operator for Q&A.

And our first question comes from the line of Matthew Blackman with Stifel.

Maybe to start with Kevin on guidance, if I just look at the third quarter geographic performance in particular the really steep U.S. growth inflection, it would seem that and you comment around here that the narrower range for the full year is coming more from Europe than the U.S. Is that fair? And sort of the follow-on to that is, I want to understand the potential COVID headwind that you called out, I sense you even see much of an impact in the first or second quarter. So, wondering what potentially maybe going on here in the latter part of the year that gives you a little bit of pause?

Yes. Thanks, Matt. I’ll start and then ask Vivek to chime in with the latter part of that question. I think you are right largely, we continue to see really strong growth in the U.S. and expect that that will continue for the fourth quarter and beyond. But we are hearing quite a bit of news and concern coming out of Europe with the spike in COVID cases and we want to be conservative here and we are not really sure where that’s going to hit or how long or at what magnitude. And so, we felt it’s prudent to narrow the range of guidance. And then, Vivek, if I can ask you to chime in on the last part of Matt’s question.

Yes. Sure. I’d be happy to. Hey Matt, thanks for the question and thanks for dialing in. I think Kevin expressed it well. In the U.S., as you accurately pointed out, we are experiencing strong growth and we continue to expect that strong growth will be an ongoing dynamic both in the fourth quarter and beyond. Part of that is a function of the sites – and I think the amount of head room still in the U.S. Right, so there is room to grow. We are a little bit more cautious in those end-markets where we have a 100% share in Western Europe where overall platelet utilization is coming down a bit as elective procedures are being either canceled or postponed similar to what we saw earlier this year and our share there will not change at all; just the total number of procedures and platelet usage we anticipate will decline a little bit. And that’s a function of the hospitals pushing off these procedures. You heard this week that France is going back into a lockdown and then also note the need for blood centers to focus on donor recruitment, because there seems to be some drop off there in terms of donors coming in. So, you are right to point it’s principally an international dynamic at play. But our U.S. growth will continue to be strong.

Okay. And I guess, - I heard you mentioned that – I think you said you saw growth in four of the five major U.S. blood banks. But I’ll maybe just get a little bit more color on the progress outside of the – in the big five outside of the Red Cross, how are those conversations going? What is the feedback? And do you feel increasingly more confident getting to similar utilization rates that the Red Cross has very publicly called out as they align mandates they’ve drawn. Just give us an update on how those conversations are going?

Yes. Sure. I’d be happy to. One of the things that we’ve talked about in the past is, we’ve made a concerted effort to focus on the big five blood center families which represent north of 70% of nationwide distribution of platelets and the feedback that we’ve been receiving is that their intention is to move towards pathogen reduction as standard-of-care. And that’s been really consistent across all those blood center families. Now, the rate of growth and the timeline differs, I think part of that’s a function of where they are on the operational side of the house in terms of incorporating optimization measures for production and getting those things around. But what we’ve seen really across the board is, increasing engagement with hospitals moving towards getting pathogen-reduced platelets on to their hospital contracts and really understanding that there are those significant clinical values that they can offer with pathogen-reduced platelets and there is also an opportunity for them to improve their margin profiles on what’s historically been their highest margin product which is platelets. So, it is there, we think whether it’s - ARC is an explicit ability of their big five centers, our channel checks and feedback cycles from them indicate a path to make pathogen reduction their go-to over time in terms of how they address platelet safety.

Okay. And then, one last quick one, I just want to confirm that the slight push out on the seven day label, that’s entirely enrollment based given that’s something that’s going on that we need to be concerned about?

Sorry, go ahead, Obi.

Yes, I think, we are targeting submission in Q1 and that’s largely a function of wrapping those final 12 subjects that’s well underway as we mentioned. So, I think we are optimistic that we’ll have a label claim assuming the FDA moves forward with that submission and through the 180-day review timeframe in the second half of next year. So, that will come into play at a very important time.

Alright. Thank you very much guys.

Thanks, Matt.

Thank you. And our next question comes from the line of Josh Jennings with Cowen.

Hi guys. This is Eric on for Josh. I was just curious on the opportunity in Asia, you guys delivered the positive update on Hong Kong over the summer and we heard about the potential for a joint partner in China while Japan is still reviewing the technology. I was just wondering if there has been any further progress to note in those two markets. Thank you.

Vivek, do you want to cover just what’s happened in Hong Kong as far as getting off the Hong Kong Red Cross something going? And then I’ll be back and elaborate on what we are doing in APAC.

Sure, I’d be happy to. What was encouraging this past quarter in Hong Kong is we were able to get in with our technical services team; get those illuminators deployed and installed and they are now producing INTERCEPT platelets in Hong Kong. So, that’s encouraging progress there and we really do view that as sort of a check for us. The Hong Kong Red Cross is a very influential customer who has significant sway over the specific blood network in the region.

Okay. Yes, more broadly, I think across APAC, there is an awareness around the need for pandemic preparedness in securing both blood safety and availability. China over time will clearly be the largest market for transfusion components globally. We are continuing to see double-digit growth rates in overall platelet demand and availability in China. And there is a strong realization there that pathogen inactivation of platelets is the ultimate transformational change to blood safety that’s required and also theoretically will increase availability. Most of the platelets in China today are derived from apheresis and they can’t really meet the current demand. Over time, the ability to do pooled whole blood-derived platelets in China will increase overall availability. So that’s a strong selling point for us. We are in continued discussions with a joint venture partner there and still hope to have something to announce before the end of this year. In other markets, the China Red Cross is another major stakeholder. I think they really do look to what’s happening across the globe and specifically what happens with the American Red Cross. And so, I think over time we should see increased awareness there and how INTERCEPT has rolled out in the United States on the back of the FDA guidance for platelet safety in the United States.

Great. Thank you. And then, maybe just one more on the seven-day label claim. So, in some of the countries that it’s being used currently, I think for instance with some of the news at the claim there. What has the experience been like so far? And then, is there anything to consider in the U.S. market that might cause this experience to differ?

Yes. Thanks, Eric. It’s a good question. We’ve had a great experience over the last five years in Switzerland and France with the seven-day label claim and that’s clearly something that reduces overall wastage and improves logistics not only at the blood center but also at the hospitals. So if you have remote hospitals that have a hard time managing their platelet inventories, this really gives them increased flexibility. In the United States, with the two one-step options that we referred to in the prepared remarks, you’ve got INTERCEPT with currently a five-day claim, but that can be released earlier and then the LVDS claim potentially going after seven days with blood centers; LVDS has a release at day three. So the effective shelf life isn’t as long as you’d expect. Assuming that we get this seven-day label claim in the U.S. it will provide the longest effective shelf life and earlier release of the platelet component. So, we think the benefits that we’ve seen in Switzerland and France will also confer to U.S. customers and it will be a strong selling point for U.S. hospitals specifically.

Great. Thank you for taking the questions.

Thanks, Eric.

Thank you. And our next question comes from the line of Mark Massaro with BTIG.

Hey guys. Congratulations on the quarter and thanks for taking my questions. My first question is really around COVID-19. So, recognizing that obviously, we are still in the pandemic and we are seeing signs of – I guess, we are in a second wave. Can you just maybe clarify that the lowering at the top-end of the guidance is largely or completely related to COVID-19 in Europe? Or are you also taking some conservatism in the United States? And then, the second part of that question, recognizing that COVID-19 is certainly a headwind. I know that one of your studies at AABB demonstrated that there was demonstrated inactivation of COVID-19 in human plasma with INTERCEPT. So I was curious if there is any potential opportunity to make COVID-19 actually a benefit to your business? And I am curious if you are exploring inactivation with INTERCEPT for platelets?

Well, Mark thanks very much for the questions. So, I’ll cover the first part. I am not sure I clearly understood your second question, but I’ll give it a shot. And then, correct me if I’ve got it right or not. So, specifically, as it relates to the narrowing of the guidance here in Q4, it really does relate specifically to the resurgence of COVID in Europe. And as Vivek already mentioned, just with markets where we are 100% penetrated, to the extent that there is variability in platelet supply and demand either as a function of elective procedures getting pushed out or the availability of donors, that’s what we looked at and we thought it was prudent to narrow the range. It still represents, as we mentioned, 21% to 30% growth year-over-year, which shows super strong growth. In the United States, we’ve seen strong growth throughout the COVID-19 pandemic. And that growth is going to continue into Q4 and allow for strong momentum going into 2021. With regards to your last question, we clearly believe that INTERCEPT is very effective against coronavirus families. So, we’ve done this historically with MERS, the Middle East respiratory syndrome virus, and now with SARS-CoV-2. We see it as a benefit for future pandemic threats because of the broad spectrum of inactivation that our technology affords.

Yes. No, that’s fair. I also want to ask about your expectations around the FDA approval. You are sort of in the late innings here and that comments are largely around labeling and without much heavy lifting in terms of the back and forth with the FDA?

We had a lot of back and forth and that’s been a very positive discussion to-date. So, yes, I guess, what we can say is that we don’t have the complete outcomes to-date. Maybe I can ask Carol to opine on how she sees the next month playing out and her overall optimism for where we are today.

Thank you, Obi and thanks for the question. Yes, I think we are very positive at this point about the progress we are making. FDA has told us in a number of correspondences that they are targeting to complete the review in a timely fashion. When we get questions, we get them by email, which is a very good way to have an effective question-and-answer opportunity, so that we can respond quickly and they can receive the information and process it quickly to move on to whatever else they’d like to have in the submission. So, we don’t have any indication of any concerns from FDA there. It’s a reasonable set of questions and answers and I think we remain optimistic that we’ll complete the process very shortly.

That’s great. And then, my final question, recognizing that the FDA deadline of March 2021 is rapidly approaching. And you’ve commented that you are seeing an increase from the other large blood centers, I mean, I’d say it’s at least four to five in total. Can you speak to maybe the rate of adoption that these other blood centers, I am trying to recognize if there is any penalty for not complying or just how do you think of – is this going to be other blood centers dipping their toe? Or do you see the potential for broader adoption after March?

We clearly see the March deadline as being a point in time, but continued adoption in March towards standard-of-care beyond that. I think Vivek already mentioned that the American Red Cross came out very clearly on how they see the ramp looking through 2023 which they are targeting a 100% adoption. I think they mentioned that they plan to be 40% penetrated by the end of February. So that’s in advance of the final guidance compliance date. Vivek, do you want to maybe add a few more comments just around how you see the market evolving past the March timeframe?

Yes, I think the point you make about the Red Cross is fairly notable and the other point that I would highlight is when we discussed the seven-day label claim and the impact that will have in terms of further accelerating adoption, we certainly view and are seeing steps that the blood centers are taking now around hospital contracting and things of that nature to ensure that they can continue to make that progress. So, while the guidance compliance deadline is March 31st, by no means is that a fixed adoption rate. We in fact expect an accelerated adoption of pathogen reduction beyond the guidance through the balance of calendar year 2021 and really in 2022 and beyond. So, we are preparing for that and the big reason why this seven-day label claim will be a big push in driving further adoptions.

Thanks very much.

Thanks a lot, Mark.

Thank you. And our next question comes from the line of Jacob Johnson with Stephens.

Hey. Thanks. Maybe just a quick follow-up on the last comment there. Just on the slight push out in the timeline for seven-day platelet approval, I realize this doesn’t change the long-term outlook at all. But in the near-term could this slow the ramp of adoption for platelets, just given that I think that approval is key for some customers versus prior expectations?

Vivek, I’ll turn that to you as well. I mean, Jacob, I think that we are talking about a month or two here. And so, I think overall, what we are hearing from customers is that they are looking forward to that claim in 2021 and that’s still very much in the timeframe that we talked about.

Yes. No, it’s a fair question. I don’t anticipate it slowing any near-term adoption, simply because there are a number of activities prior to transacting kits that need to occur for the blood centers and hospitals to be in a position to adopt the technology. The production optimization measures which we talked about in the past need to be adopted at the blood center operations level. The Red Cross has been ahead of the curve on this, but other blood center families are making the resource investments required to do that. There is also the contracting with hospitals that needs to occur and so those activities are ongoing and they are not seeing delays or slowdowns due to the timing of our submission. So I think what you’ll see is continued strong progress and then it will simply serve as a further accelerant because by the time that arrives, you’ll have a lot of the other operational issues either completely or primarily addressed at that point.

Got it. That makes sense. And then, maybe a question for Kevin. I think you already said gross margins for the balance of the year should be in the mid-50s. I think if you look ex the inventory charge, they would have been towards 58% this quarter. Is that a fair proxy for how we should be thinking about fourth quarter gross margins? Are there some other puts and takes we need to be aware of?

Yes. There was about a 3.7% impact to our overall gross margins. So, you are right. We would have expected the non-routine charge and product mix to have been on par with where they were last year and we do think that’s a good proxy. We expect platelets to continue to be strong. In Q2, as we discussed, we had a fairly high concentration historically speaking of plasma kits which carry the lower margin; that reversed and I think as we move forward with the platelet demand that we are seeing in the U.S., we’d expect that the numbers would be fairly consistent. Of course, we can’t predict what’s going to happen with foreign exchange rates. So that’s a wildcard, but assuming normalcy, I think your comments are accurate.

That makes sense. Thanks, Kevin and thanks for taking the questions.

Yes. Thanks, Jacob.

Thanks, Jacob.

Thank you. Our next question comes from the line of Brandon Folkes with Cantor Fitzgerald.

Hi. Thanks for taking my question. Maybe just following on from an earlier question regarding the FDA deadline, could we be in a situation where centers may be in a position where they comply with the deadline, but they don’t adopt INTERCEPT just because some may be reluctant to change the standard operating procedures given everything else they are dealing with in COVID. And then, once we get past COVID, we actually see centers moving towards INTERCEPT given its advantages. And then, my second question is, can you just elaborate in terms of what you are seeing in terms of volume at blood donation centers post the quarter end? Thank you.

Thanks a lot, Brandon for the question. I will start and then Vivek can add some comments. I think what we are seeing is that most partners have already adopted INTERCEPT in some shape or form and they continue to optimize it so they can maximize the production of INTERCEPT-treated platelets to meet the demand they are seeing from hospitals. At the same time, even the Red Cross has communicated to all their hospital customers that they will be providing INTERCEPT as well as LVDS platelets for a period of time so that hospitals have both products in their systems to be able to accept both products and fulfill their supply requirements. So, I think to your question about whether this transitions over time as the COVID pandemic subsides — I think that is true to some extent. By and large it really comes down to optimization of their ability to increase overall INTERCEPT platelet production. Vivek, would you have anything else you want to add?

I think you captured it well. I’ll just keep coming back to it: the Red Cross has stated explicitly that they intend to be at 100% in the 2023 timeframe, which implies continued progression beyond the March 2021 deadline. The key things are messaging that to hospitals, having contracts in place and preparing to manage inventory. I think you’ll see other blood center families following a similar path.

Thank you. And I am showing no further questions at this time. So with that, I’ll turn the call back to President and CEO, Obi Greenman for any further remarks.

Well, thank you again for joining us today and for your interest in Cerus. Next month, we will be participating in the Stephens Virtual Investment Conference and the Stifel Virtual Healthcare Conference. We hope to connect with many of you there. Thanks again.

Ladies and gentlemen, this concludes today's conference. Thank you for participating, and you may now disconnect.