Cerus Corporation (NASDAQ:CERS) announced financial results for the first quarter ended March 31, 2015.
Recent company highlights include:
- Signed INTERCEPT platelet and plasma supply agreement with the National Institutes of Health.
- Presented at AABB Symposium on Implementation of Pathogen-Reduced BloodComponents (April 27-28, Bethesda, Maryland).
- Mentioned in recent New England Journal of Medicine editorial (Snyder EL et al, N Engl J Med 2015 Apr 22, Epub ahead of print) in which certain US key opinion leaders argue for an FDA mandate for pathogen reduction to mitigate residual risks due to bacterial contamination, as well as established and emerging transfusion-transmitted infections.
- Enrolled first patient in TRUE Study with the American Red Cross to address Chikungunya and Dengue blood safety risks with pathogen reduced platelets.
- Signed INTERCEPT platelet supply agreement with Karolinska University Hospital,Sweden’s largest blood product supplier.
“We are encouraged by the recent advocacy for pathogen reduction in the US market, including a New England Journal of Medicine editorial urging an FDA mandate for the technology, and a two-day symposium on pathogen reduction sponsored by the AABB. Also of significance is the recent contract with the National Institutes of Health, an organization that leads standards of practice across many areas of medicine,” said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. “We look forward to the transfusion medicine community’s further engagement on the topic of improved bacterial contamination measures for platelet components.”
Revenue for the first quarter of 2015 was $7.7 million, reflecting an increase in INTERCEPT disposable kit demand of 17% and a 2% decrease in reported revenue from the first quarter of 2014. The difference between reported revenue and kit demand results from the weakness in the Euro. Because revenue for the first quarter of 2015 was driven exclusively by the European and Middle Eastern markets, reported revenue was negatively affected by an 18% weakening of the average Euro rates compared to the U.S. dollar, the Company’s reporting currency. The first quarter results of 2015 also reflect the impact of weakness in the Russian market. The Company continues to expect annual revenue for 2015 for its core European andMiddle East markets of $36 to $38 million.
During the first quarter of 2015, the Company signed two new contracts for customers in the United States. However, due to the lack of product availability stemming from the timing of final product labeling in the first quarter, the Company did not recognize revenue from those agreements in this period.
Gross margins for the first quarter of 2015 were 39%, compared to 47% for the first quarter of 2014. Margins for the first quarter of 2015 were impacted by the decline in the Euro relative to the Company‘s reporting currency, the U.S. dollar, negatively impacting reported first quarter 2015 gross margins by more than 5%. Most of the Company’s inventory is procured in Euro and most sales during the first quarter were also made in Euro. However, as reported under GAAP, revenues were recorded in US dollars at the foreign exchange rates in effect at the time of sale, whereas the cost of product sold was recorded at the higher historical foreign exchange rates in effect at the time the inventory was purchased.
Total operating expenses for the first quarter of 2015 were $17.3 million, compared to $12.9 million for the first quarter of 2014. The increase in operating expenses was related to the increase in selling, general and administrative expenses incurred in support of the commercialization of INTERCEPT in the United States and incremental research and development costs associated with ongoing studies in support of two Investigational Device Exemption (IDE) studies and incremental development costs to potentially expand the Company’s label claims and product configurations in the United States.
As the Company continues to build out its commercial sales, marketing and support teams for the U.S. market, it expects selling, general and administrative expenses to increase. Research and development expenses are expected to increase in 2015, as the Company plans to expand the label claims for the INTERCEPT Blood System in the U.S. and elsewhere, and seeks potential CE Mark submission for the red blood cell product in the second half of 2016.
Operating and Net Loss
Operating losses during the first quarter of 2015 were $14.4 million, compared to $9.2 millionfor the first quarter of 2014. Increased operating expenses incurred during the first quarter of 2015 relative to the same period in 2014 were the primary driver for the higher operating losses.
Net loss for the first quarter of 2015 was $9.5 million, or $0.17 per diluted share, compared to a net loss of $0.2 million, or $0.12 per diluted share, for the first quarter of 2014. Net losses were impacted by the above discussed operating losses and mark-to-market adjustments of the Company’s outstanding warrants to fair value, which resulted in non-cash gains of $6.3 million during the first quarter of 2015 compared to $9.0 million during the comparable period in 2014. Net losses were also impacted by foreign exchange losses of$1.1 million during the first quarter of 2015, compared to $21 thousand of foreign exchange gains during the first quarter of 2014.
Cash, Cash Equivalents and Investments
At March 31, 2015, the Company had cash, cash equivalents and short-term investments of$111.9 million compared to $51.3 million at December 31, 2014. Cash, cash equivalents and investments as of March 31 include the impact of the January 2015 underwritten public offering of common stock, which contributed approximately $75.5 million in net proceeds. The Company has up to $20 million in additional borrowing availability under its loan agreement with Oxford Finance, of which $10 million is conditioned upon the Company achieving consolidated trailing six months’ revenue at a specified level. (Original Source)
Shares of Cerus closed today at $4.46, up $0.195 or 4.19%. CERS has a 1-year high of $7.03 and a 1-year low of $3.48. The stock’s 50-day moving average is $4.21 and its 200-day moving average is $4.80.
On the ratings front, Cerus has been the subject of a number of recent research reports. In a report issued on April 24, BTIG analyst Karen Koski initiated coverage on CERS with a Buy rating and a price target of $8, which represents a potential upside of 72.0% from where the stock is currently trading. Separately, on February 27, Cantor Fitzgerald’s Caroline Corner maintained a Buy rating on the stock and has a price target of $7.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Karen Koski and Caroline Corner have a total average return of 3.6% and -24.6% respectively. Koski has a success rate of 50.0% and is ranked #2617 out of 3589 analysts, while Corner has a success rate of 18.2% and is ranked #3521.
In total, 4 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $4.65 which is 74.8% above where the stock opened today.
Cerus Corp is a biomedical products company. It is engaged indeveloping andcommercializing the INTERCEPT Blood System to enhance blood safety.