Cerus Corp 10-Q for FY2020 Q1

Cerus Corp (CERS)

10-Q 2020-05-05 For: 2020-03-31

Added on April 09, 2026

About this 10-Q

Cerus Corp filed this 10-Q on May 5, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $16.47M; compared with a net loss of $18.79M a year earlier

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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)

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

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets – March 31, 2020 and December 31, 2019		1
	Condensed Consolidated Statements of Operations – Three months ended March 31, 2020 and 2019		2
	Condensed Consolidated Statements of Comprehensive Loss – Three months ended March 31, 2020 and 2019		3
	Condensed Consolidated Statements of Stockholders’ Equity – Three months ended March 31, 2020 and 2019		4
	Condensed Consolidated Statements of Cash Flows – Three months ended March 31, 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	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

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	70
Item 3.	Defaults Upon Senior Securities	70
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	71

SIGNATURES		72

	March 31,			December 31,
	2020			2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	33,679		$	34,986
Short-term investments		99,426			50,732
Accounts receivable		18,165			16,882
Inventories		21,684			19,490
Prepaid and other current assets		5,365			6,018
Total current assets		178,319			128,108
Non-current assets:
Property and equipment, net		14,654			14,898
Goodwill		1,316			1,316
Operating lease right-of-use assets		14,080			14,122
Intangible assets, net		82			132
Restricted cash		2,439			2,435
Other assets		4,473			4,524
Total assets	$	215,363		$	165,535

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	20,185		$	22,185
Accrued liabilities		17,198			20,951
Debt – current		4,813			5,017
Operating lease liabilities – current		1,751			1,613
Deferred product revenue – current		1,142			570
Total current liabilities		45,089			50,336
Non-current liabilities:
Debt – non-current		39,458			39,414
Operating lease liabilities – non-current		18,005			18,406
Other non-current liabilities		403			327
Total liabilities		102,955			108,483
Commitments and contingencies
Stockholders' equity:
Common stock		164			144
Additional paid-in capital		978,944			906,905
Accumulated other comprehensive (loss) income		(123	)		114
Accumulated deficit		(866,577	)		(850,111	)
Total stockholders' equity		112,408			57,052
Total liabilities and stockholders' equity	$	215,363		$	165,535

	Three Months Ended
	March 31,
	2020			2019
Product revenue	$	18,611		$	17,504
Cost of product revenue		8,320			8,432
Gross profit on product revenue		10,291			9,072
Government contract revenue		6,030			4,461
Operating expenses:
Research and development		15,810			13,440
Selling, general and administrative		15,913			16,161
Total operating expenses		31,723			29,601
Loss from operations		(15,402	)		(16,068	)
Non-operating expense, net:
Foreign exchange loss		(223	)		(162	)
Interest expense		(935	)		(2,924	)
Other income, net		151			422
Total non-operating expense, net		(1,007	)		(2,664	)
Loss before income taxes		(16,409	)		(18,732	)
Provision for income taxes		57			60
Net loss	$	(16,466	)	$	(18,792	)

Net loss per share:
Basic and diluted	$	(0.10	)	$	(0.14	)
Weighted average shares used for calculating net loss per share:
Basic and diluted		157,405			137,108

	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

	Three Month Ended
	March 31,
	2020			2019
Operating activities
Net loss	$	(16,466	)	$	(18,792	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		706			376
Stock-based compensation		3,754			2,878
Non-cash operating lease cost		300			353
Loss on sale of available-for-sale securities		267			—
Non-cash interest expense		119			197
Changes in operating assets and liabilities:
Accounts receivable		(1,283	)		(5,004	)
Inventories		(2,226	)		(2,286	)
Other assets		1,119			2,165
Accounts payable		(2,308	)		2,597
Accrued liabilities and other non-current liabilities		(4,356	)		(4,809	)
Manufacturing and development obligations		—			(118	)
Deferred product revenue		572			265
Net cash used in operating activities		(19,802	)		(22,178	)
Investing activities
Capital expenditures		(452	)		(3,315	)
Purchases of investments		(68,520	)		(1,000	)
Proceeds from maturities and sale of investments		18,787			17,500
Net cash (used in) provided by investing activities		(50,185	)		13,185
Financing activities
Net proceeds from equity incentives		1,193			710
Net proceeds from public offerings		67,695			—
Net payment on revolving line of credit		(204	)		—
Proceeds from loans		—			39,433
Repayment of debt		—			(31,010	)
Net cash provided by financing activities		68,684			9,133
Net (decrease) increase in cash, cash equivalents and restricted cash		(1,303	)		140
Cash, cash equivalents and restricted cash, beginning of period		37,421			31,587
Cash, cash equivalents and restricted cash, end of period	$	36,118		$	31,727

	March 31, 2020
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Allowance for Credit Loss		Fair Value
Money market funds	$	10,733	$	—	$	—		$	—	$	10,733
United States government agency securities		22,591		274		—			—		22,865
Corporate debt securities		76,958		90		(487	)		—		76,561
Total available-for-sale securities	$	110,282	$	364	$	(487	)	$	—	$	110,159

	December 31, 2019
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Money market funds	$	8,860	$	—	$	—	$	8,860
United States government agency securities		15,545		16		—		15,561
Corporate debt securities		35,073		98		—		35,171
Total available-for-sale securities	$	59,478	$	114	$	—	$	59,592


	March 31, 2020
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate debt securities	$	55,318	$	487	$	—	$	—	$	55,318	$	487

	Balance sheet			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	classification	Total		(Level 1)		(Level 2)		(Level 3)
Money market funds	Cash and cash equivalents	$	10,733	$	10,733	$	—	$	—
United States government agency securities	Short-term investments		22,865		—		22,865		—
Corporate debt securities	Short-term investments		76,561		—		76,561		—
Total financial assets		$	110,159	$	10,733	$	99,426	$	—

	March 31, 2020		December 31, 2019
Work-in-process	$	5,668	$	5,160
Finished goods		16,016		14,330
Total inventories	$	21,684	$	19,490

	March 31, 2020		December 31, 2019
Accrued compensation and related costs	$	8,660	$	12,703
Accrued professional services		4,039		3,489
Accrued development costs		1,369		1,468
Other accrued expenses		3,130		3,291
Total accrued liabilities	$	17,198	$	20,951

	March 31, 2020
	Principal		Unamortized Discount			Total
Term Loan Credit Agreement	$	40,000	$	(542	)	$	39,458
Less: debt – current		—		—			—
Debt – non-current	$	40,000	$	(542	)	$	39,458

	Three Months Ended
	March 31,
	2020		2019
Weighted average number of anti-dilutive potential shares:
Stock options		17,361		17,648
Restricted stock units		4,743		2,247
Employee stock purchase plan rights		41		7
Total		22,145		19,902

Year ended December 31,	Principal		Interest and Fees		Total
2020 (remainder)	$	—	$	2,291	$	2,291
2021		—		3,042		3,042
2022		15,000		2,660		17,660
2023		20,000		1,203		21,203
2024		5,000		1,264		6,264
Total	$	40,000	$	10,460	$	50,460

	March 31, 2020
Weighted-average remaining lease term	9.0 years
Weighted-average discount rate		8.9	%

	Operating Leases
2020 (remainder)	$	2,443
2021		3,450
2022		2,927
2023		2,788
2024		2,711
Thereafter		16,053
Total future lease payments		30,372
Less imputed interest		10,616
Present value of lease liabilities	$	19,756

	Three Month Ended
	March 31, 2020
Cash payments for operating leases	$	964
Right-of-use assets obtained in exchange for operating lease obligations		265

	Number of Options Outstanding			Weighted Average Exercise Price per Share
Balances at December 31, 2019		16,830		$	4.53
Granted		2,034			5.11
Exercised		(196	)		3.74
Forfeited/canceled		(47	)		5.51
Balances at March 31, 2020		18,621			4.60

	Number of RSUs Unvested			Weighted Average Grant Date Fair Value per Share
Balances at December 31, 2019		4,098		$	5.24
Granted ⁽¹⁾		3,029			5.09
Vested ⁽¹⁾		(1,514	)		5.01
Forfeited⁽¹⁾		(35	)		6.41
Balances at March 31, 2020		5,578			5.21

	March 31, 2020		December 31, 2019
Prepaid R&D asset – current ⁽¹⁾	$	42	$	54
Prepaid R&D asset – non-current ⁽²⁾		2,105		2,094
Manufacturing efficiency asset ⁽²⁾		1,288		1,349

	March 31, 2020		December 31, 2019
Payables to Fresenius ⁽¹⁾	$	8,262	$	8,470
Receivables from Fresenius ⁽²⁾		1,631		1,796

	Three Months Ended
	March 31,
(in thousands, except percentages)	2020		2019		Change
Product revenue	$	18,611	$	17,504	$	1,107	6	%
Government contract revenue		6,030		4,461		1,569	35	%
Total revenue	$	24,641	$	21,965	$	2,676	12	%

Contractual Commitments	Total		1 year		2 - 3 years		4 - 5 years		After 5 years
Debt	$	55,273	$	7,854	$	25,391	$	22,028	$	—
Operating leases		30,372		3,442		5,933		5,432		15,565
Minimum purchase requirements		12,914		8,744		1,474		783		1,913
Other commitments		367		357		10		—		—
Total contractual obligations	$	98,926	$	20,397	$	32,808	$	28,243	$	17,478

Exhibit Number		Description of Exhibit

3.1 (1)		Amended and Restated Certificate of Incorporation of Cerus Corporation.

3.2 (1)		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Cerus Corporation.

3.3 (4)		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Cerus Corporation.

3.4 (2)		Amended and Restated Bylaws of Cerus Corporation.

4.1 (3)		Specimen Stock Certificate (see Exhibit 4.2 to Form S-1 Registration Statement filed with the SEC on January 8, 1997).
10.1*		2019 and 2020 Executive Officer Compensation Arrangements.

10.2*		Amended and Restated Non-Employee Director Compensation Policy, effective March 27, 2020.
10.3†		Side Letter to Supply Agreement, dated January 14, 2020, by and between Cerus Corporation and Fresenius Kabi Deutschland GmbH.
31.1		Certification of the Principal Executive Officer of Cerus Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Principal Financial Officer of Cerus Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 (5)		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

		CERUS CORPORATION

Date: May 5, 2020		/s/ Kevin D. Green
		Kevin D. Green
		Vice President, Finance and Chief Financial Officer (on behalf of registrant and as Principal Financial Officer)