Cerus Corp. (NASDAQ: CERS)

Cerus Corp. (CERS) is a biomedical products company focused on commercializing the INTERCEPT Blood System to enhance blood safety. The INTERCEPT system is designed to inactivate blood-borne pathogens in donated blood components intended for transfusion. The Company markets the INTERCEPT system for both platelets and plasma in Europe and the Middle East. CERS is also pursuing regulatory approvals in the United States and other countries. The INTERCEPT red blood cell system is in clinical development. CERS also has collaboration agreements with Baxter International Inc., BioOne Corp. and Laboratorios Grifols S.A., as well as the United States Armed Forces.

The Company was founded in 1991 and is based in Concord, California.

Source: Reuters.com, SEC Filings.

Financial Summary

Total revenue for the third quarter of 2009 was $4.8 million, up from $3.9 million in revenue recognized during the third quarter of 2008. Total revenue for the first nine months of 2009 was $12.5 million, down from $12.9 million recognized during the first nine months of 2008, when $1.5 million of previously deferred product revenue was recognized.

Product revenue for the INTERCEPT Blood System was $4.6 million during the third quarter of 2009, representing an increase of $0.7 million, or 18%, from the second quarter of 2009. Third-quarter 2009 product revenue was up $1.5 million from $3.1 million recognized during the third quarter of 2008. Product revenue for the first nine months of 2009 was $11.5 million, down from $12.0 million during the first nine months of 2008, when the $1.5 million of previously deferred product revenue was recognized.

Gross profit from product revenue for the third quarter of 2009 was $0.3 million, down from $1.2 million for the same period in 2008. Cost of product revenue during the third quarter of 2009 included period costs of $1.0 million, representing idle manufacturing facility costs attributable to the Company’s decision to reduce inventory levels.

Total operating expenses for the third quarter of 2009 were $6.6 million, down from $9.6 million for the same period in 2008. The decrease in operating expenses was due to a reduction in research and development expenses and selling, general and administrative expenses associated with the Company’s restructuring plans, which were previously announced in March 2009. Operating expenses for the first nine months of 2009 were $22.6 million, down from $29.5 million during the same period in 2008. The reduction in operating expenses was directly attributable to the savings realized from the Company’s restructuring plan, which allowed the Company to focus its resources on commercializing the INTERCEPT platelet and plasma systems in Europe, reduce operating expenses and tightly manage working capital.

Net loss for the third quarter of 2009 was $5.6 million, or $0.16 per share, compared to a net loss of $7.8 million, or $0.24 per share, for the third quarter of 2008. Net loss for the first nine months of 2009 was $19.2 million, or $0.58 per share, compared to a net loss of $22.7 million, or $0.70 per share for the same period in 2008.

At September 30, 2009, the Company had cash, cash equivalents and short-term investments of $22.7 million, up from $22.6 million at December 31, 2008. Cash, cash equivalents and short-term investments at September 30, 2009, reflects the $12.2 million in net proceeds generated from the Company’s August 2009 registered direct public offering. Net cash used for the Company’s operations during the third quarter of 2009 was $2.4 million, which was in line with the net cash used during the second quarter of 2009 and down by $4.8 million from the first quarter of 2009. Close control of working capital, including management of inventory levels and cash collections, contributed to the relatively low net cash used in operating activities.

Source: Reuters.com, SEC Filings.

Analyst Consensus

This is the consensus forecast among two polled investment analysts. Against the Cerus Corp. company.

The two analysts offering 12-month price targets for CERS have a median target of 4.00, with a high estimate of 5.00 and a low estimate of 3.00. The median estimate represents a 56.25% increase from the last price of 2.56.

Source: www.ft.com

Source: http://www.reuters.com/finance/stocks/estimates?symbol=CERS.W

Investment Highlights

CERS announced today that the FDA’s Blood Products Advisory Committee (BPAC) rendered a positive opinion on the proposed hemostatic efficacy and safety endpoints for a potential U.S. phase III clinical trial of the INTERCEPT Blood System for platelets. The Committee disagreed with the safety margins for the trial proposed by CERS, and recommended that the trial design include more stringent safety margins for comparing INTERCEPT-treated platelets and conventional platelets. In addition, the committee rendered a positive opinion on a proposed pathway forward in which successful completion of the proposed phase III trial would be followed by a post-marketing randomized control study and concurrent staged roll-out of the product. The proposed phase III clinical trial is designed as a randomized, double-blinded, non-inferiority trial to assess the hemostatic efficacy and safety of routine use of INTERCEPT-treated platelets compared to platelets prepared with conventional processes. The proposed primary efficacy endpoint is number of days of Grade 2 bleeding (World Health Organization scale); and the proposed primary safety endpoint is the incidence of acute lung injury (ALI).

CERS announced November 16, 2009, that NASDAQ has halted trading of CERS common stock. The U.S. Food and Drug Administration’s (FDA) Blood Products Advisory Committee (BPAC) is meeting November 17 to review and discuss the proposed design for a potential U.S. phase III clinical trial of platelets treated with the Company’s INTERCEPT Blood System. Trading resumed as usual the following day.

Source: http://www.cerus.com/

Technical Analysis

CERS is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

CERS is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

The MACD for CERS currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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