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Cerus Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 3, 2011 10:26PM
Cerus Corp. (CERS) filed Quarterly Report for the period ended 2011-09-30. Cerus Corp. has a market cap of $137.9 million; its shares were traded at around $2.89 with and P/S ratio of 6. Cerus Corp. had an annual average earning growth of 1.9% over the past 5 years.
Highlight of Business Operations:Product revenue increased by $3.2 million and $5.0 million for the three and nine months ended September 30, 2011 compared to the three and nine months ended September 30, 2010, respectively, primarily as a result of an increase in sales volume of our disposable platelet and plasma system kits sold to existing customers due to increased market penetration and customer adoption of the INTERCEPT Blood System in Europe, the CIS countries, and the Middle East, which was partially offset by a decline in the sales volume of our illuminators. We expect that product revenues for both our platelet and plasma systems will continue to increase in future periods as the INTERCEPT Blood System gains market acceptance in geographies where commercialization efforts are underway. These quarterly results may not be indicative of INTERCEPT Blood System revenue in the future.
Cost of product revenue increased by $2.3 million and $3.7 million for the three and nine months ended September 30, 2011 compared to the three and nine months ended September 30, 2010, respectively, primarily due to a higher number of disposable kits sold. During the three and nine months ended September 30, 2011, we incurred period costs of $0.5 million related to fees associated with contractual minimum purchases with certain of our suppliers.
Our realized gross margins on product sales were 40% during the three months ended September 30, 2011 down from 49% during the three months ended September 30, 2010. For the nine months ended September 30, 2011, our realized gross margins on product sales were 42%, down from 46% for the nine months ended September 30, 2010. Changes in our gross margins are affected by various factors, including manufacturing and supply chain costs, the mix of product sold and the mix of customers to which product is sold. During the three months ended September 30, 2011, we incurred certain supplier costs associated with our inventory manufacturer. These costs impacted gross margins on product sales by 7% and 2% for the three and nine months ended September 30, 2011 compared to the corresponding periods in 2010, respectively. Generally, we offer our distributors tiered volume discounts of varying magnitudes, depending on their purchase commitments, which, depending on sales volumes to those distributors receiving tiered volume discounts, may impact our gross margins.
In June 2011, we entered into the Sales Agreement with MLV, pursuant to which we may, but are not required to, issue and sell shares of our common stock having an aggregate offering price of up to $20.0 million from time to time through MLV as our sales agent. The issuance and sale of these shares by us under the Sales Agreement, if any, is subject to the effectiveness of our shelf registration statements on Form S-3, initially filed with the SEC in October 2008 and August 2009. Sales of our common stock through MLV, if any, will be made on The NASDAQ Global Market by means of ordinary brokers transactions at market prices, in block transactions or as otherwise agreed by us and MLV. Subject to the terms and conditions of the Sales Agreement, MLV will use commercially reasonable efforts to sell our common stock from time to time, based upon our instructions (including any price, time or size limits or other customary parameters or conditions we may impose). We are not obligated to make any sales of common stock under the Sales Agreement. The offering of shares of our common stock pursuant to the Sales Agreement will terminate upon the earlier of (1) the sale of all common stock subject to the Sales Agreement and (2) termination of the Sales Agreement. The Sales Agreement may be terminated by MLV or us at any time upon 10 days notice to the other party, or by MLV at any time in certain circumstances, including our undergoing a material adverse change. We will pay MLV an aggregate commission rate equal to 3.0% of the gross proceeds of the sales price per share of any common stock sold through MLV under the Sales Agreement. We did not place any common stock under the Sales Agreement during the three and nine months ended September 30, 2011.
We are required to maintain compliance with certain customary and routine financial covenants under the Credit Agreement. Throughout the term of the Credit Agreement, we are also obligated to meet certain conditions which include maintaining a minimum cash balance of $2.5 million and achieving minimum revenue levels, which will be measured monthly based on a six-month trailing basis and must be at least 75% of the pre-established future projected revenues for the six-month period. Non-compliance with the covenants could result in the principal of the note becoming due and payable. As of September 30, 2011, we were in compliance with the financial covenants as set forth in the Credit Agreement.
Stocks Discussed: CERS,