CERUS CORP, 10-K filed on 2/27/2019
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Feb. 15, 2019
Jun. 30, 2018
Document And Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Trading Symbol CERS    
Entity Registrant Name CERUS CORP    
Entity Central Index Key 0001020214    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer Yes    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Filer Category Large Accelerated Filer    
Entity Shell Company false    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Common Stock, Shares Outstanding   136,953,123  
Entity Public Float     $ 873
v3.10.0.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 28,859 $ 13,683
Short-term investments 88,718 47,013
Accounts receivable 8,752 12,415
Inventories 13,539 14,457
Prepaid and other current assets 7,034 2,330
Total current assets 146,902 89,898
Non-current assets:    
Property and equipment, net 8,130 2,119
Goodwill 1,316 1,316
Intangible assets, net 334 536
Restricted cash 2,728 247
Other assets 4,050 4,128
Total assets 163,460 98,244
Current liabilities:    
Accounts payable 18,595 10,974
Accrued liabilities 19,800 11,712
Debt - current 7,857  
Manufacturing and development obligations – current 5,928  
Deferred product revenue - current 498 445
Total current liabilities 52,678 23,131
Non-current liabilities:    
Debt - non-current 22,013 29,798
Manufacturing and development obligations - non-current   5,766
Other non-current liabilities 4,250 609
Total liabilities 78,941 59,304
Commitments and contingencies
Stockholders' equity:    
Preferred stock, $0.001 par value; 5,000 shares authorized, issuable in series; zero shares issued and outstanding at December 31, 2018 and 2017, respectively
Common stock, $0.001 par value; 225,000 shares authorized; 136,853 and 115,555 shares issued and outstanding at December 31, 2018 and 2017, respectively 136 115
Additional paid-in capital 863,531 760,225
Accumulated other comprehensive loss (281) (97)
Accumulated deficit (778,867) (721,303)
Total stockholders' equity 84,519 38,940
Total liabilities and stockholders' equity $ 163,460 $ 98,244
v3.10.0.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Dec. 31, 2018
Dec. 31, 2017
Statement Of Financial Position [Abstract]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 225,000,000 225,000,000
Common stock, shares issued 136,853,000 115,555,000
Common stock, shares outstanding 136,853,000 115,555,000
v3.10.0.1
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenue $ 76,051,000 $ 51,326,000 $ 39,275,000
Cost of revenue 31,634,000 22,531,000 20,295,000
Gross profit 29,274,000 21,037,000 16,888,000
Operating expenses:      
Research and development 42,564,000 33,710,000 31,322,000
Selling, general and administrative 56,841,000 52,615,000 48,955,000
Impairment of long-lived assets 0 0 150,000
Total operating expenses 99,405,000 86,325,000 80,427,000
Loss from operations (54,988,000) (57,530,000) (61,447,000)
Non-operating (expense) income, net:      
Foreign exchange (loss) gain (87,000) (10,000) 21,000
Interest expense (4,008,000) (3,022,000) (2,445,000)
Other income, net 1,748,000 3,864,000 1,140,000
Total non-operating (expense) income, net (2,347,000) 832,000 (1,284,000)
Loss before income taxes (57,335,000) (56,698,000) (62,731,000)
Provision for income taxes 229,000 3,887,000 175,000
Net loss $ (57,564,000) $ (60,585,000) $ (62,906,000)
Net loss per share:      
Basic $ (0.44) $ (0.56) $ (0.62)
Diluted $ (0.44) $ (0.56) $ (0.62)
Weighted average shares outstanding used for calculating net loss per share:      
Basic 131,663 108,221 101,826
Diluted 131,663 108,221 101,826
Product      
Revenue $ 60,908,000 $ 43,568,000 $ 37,183,000
Government Contract      
Revenue $ 15,143,000 $ 7,758,000 $ 2,092,000
v3.10.0.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Statement Of Income And Comprehensive Income [Abstract]      
Net loss $ (57,564) $ (60,585) $ (62,906)
Other comprehensive loss:      
Unrealized losses on available-for-sale investments, net of taxes (184) (200) (7,186)
Comprehensive loss $ (57,748) $ (60,785) $ (70,092)
v3.10.0.1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated Deficit
Balance at Dec. 31, 2015 $ 94,765 $ 99 $ 685,189 $ 7,289 $ (597,812)
Balance (in shares) at Dec. 31, 2015   99,095      
Net loss (62,906)       (62,906)
Other comprehensive loss (7,186)     (7,186)  
Issuance of common stock from public offering, net of offering costs 21,981 $ 3 21,978    
Issuance of common stock from public offering, net of offering costs (in shares)   3,526      
Issuance of common stock from exercise of stock options and purchases from ESPP 3,068 $ 1 3,067    
Issuance of common stock from exercise of stock options and purchases from ESPP (In Shares)   854      
Stock-based compensation 8,065   8,065    
Balance at Dec. 31, 2016 57,787 $ 103 718,299 103 (660,718)
Balance (in shares) at Dec. 31, 2016   103,475      
Net loss (60,585)       (60,585)
Other comprehensive loss (200)     (200)  
Issuance of common stock from public offering, net of offering costs 30,156 $ 11 30,145    
Issuance of common stock from public offering, net of offering costs (in shares)   10,986      
Issuance of common stock from exercise of stock options, vesting of restricted stock units, and purchases from ESPP 2,427 $ 1 2,426    
Issuance of common stock from exercise of stock options, vesting of restricted stock units, and purchases from ESPP (In Shares)   1,094      
Stock-based compensation 9,355   9,355    
Balance at Dec. 31, 2017 38,940 $ 115 760,225 (97) (721,303)
Balance (in shares) at Dec. 31, 2017   115,555      
Net loss (57,564)       (57,564)
Other comprehensive loss (184)     (184)  
Issuance of common stock from public offering, net of offering costs 85,085 $ 18 85,067    
Issuance of common stock from public offering, net of offering costs (in shares)   18,202      
Issuance of common stock from exercise of stock options, vesting of restricted stock units, and purchases from ESPP 7,848 $ 3 7,845    
Issuance of common stock from exercise of stock options, vesting of restricted stock units, and purchases from ESPP (In Shares)   3,096      
Stock-based compensation 10,394   10,394    
Balance at Dec. 31, 2018 $ 84,519 $ 136 $ 863,531 $ (281) $ (778,867)
Balance (in shares) at Dec. 31, 2018   136,853      
v3.10.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Operating activities      
Net loss $ (57,564,000) $ (60,585,000) $ (62,906,000)
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization 1,445,000 1,811,000 1,817,000
Stock-based compensation 10,394,000 9,355,000 8,065,000
Non-cash interest expense 1,248,000 551,000 1,017,000
Loss on disposal of property and equipment 5,000    
Deferred income taxes 4,000 (119,000) 28,000
Impairment of long-lived assets 0 0 150,000
Non-cash tax expense from realized gain on available-for-sale securities   3,825,000  
Gain on sale of investment in marketable equity securities   (3,466,000) (750,000)
Changes in operating assets and liabilities:      
Accounts receivable 3,663,000 (5,547,000) (1,074,000)
Inventories 806,000 (2,092,000) (1,781,000)
Other assets (2,744,000) 1,107,000 1,327,000
Accounts payable 5,683,000 2,487,000 3,261,000
Accrued liabilities and other non-current liabilities 6,042,000 (507,000) 1,330,000
Manufacturing and development obligations (266,000) 680,000 (3,568,000)
Deferred product revenue 38,000 265,000 (445,000)
Net cash used in operating activities (31,246,000) (52,235,000) (53,529,000)
Investing activities      
Capital expenditures (1,144,000) (353,000) (563,000)
Purchases of investments (80,701,000) (68,792,000) (82,811,000)
Proceeds from maturities and sale of investments 37,997,000 69,566,000 63,450,000
Net cash (used in) provided by investing activities (43,848,000) 421,000 (19,924,000)
Financing activities      
Net proceeds from equity incentives 7,848,000 2,428,000 3,068,000
Net proceeds from public offering 85,036,000 30,197,000 22,121,000
Proceeds from loans   30,000,000  
Repayment of debt (133,000) (19,625,000) (622,000)
Net cash provided by financing activities 92,751,000 43,000,000 24,567,000
Net increase (decrease) in cash, cash equivalents and restricted cash 17,657,000 (8,814,000) (48,886,000)
Cash, cash equivalents and restricted cash, beginning of year 13,930,000 22,744,000 71,630,000
Cash, cash equivalents and restricted cash, end of year 31,587,000 13,930,000 22,744,000
Supplemental disclosure of cash flow information:      
Cash paid for interest 2,728,000 2,034,000 1,366,000
Cash paid for income taxes 254,000 $ 160,000 $ 157,000
Non-cash investing activities:      
Non-cash purchases of capital expenditures $ 2,222,000    
v3.10.0.1
Nature of Operations and Basis of Presentation
12 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Nature of Operations and Basis of Presentation

Note 1. Nature of Operations and Basis of Presentation

Cerus Corporation (the “Company”) was incorporated in September 1991 and is developing and commercializing the INTERCEPT Blood System, which is designed to enhance the safety of blood components through pathogen reduction. The Company has worldwide commercialization rights for the INTERCEPT Blood System for platelets, plasma and red blood cells.

The Company sells its INTERCEPT platelet and plasma systems in the United States of America (“U.S.”), Europe, the Commonwealth of Independent States (“CIS”) countries, the Middle East and selected countries in other regions around the world. The Company conducts significant research, development, testing and regulatory compliance activities on its product candidates that, together with anticipated selling, general, and administrative expenses, are expected to result in substantial additional losses, and the Company may need to adjust its operating plans and programs based on the availability of cash resources. The Company’s ability to achieve a profitable level of operations will depend on successfully completing development, obtaining additional regulatory approvals and achieving widespread market acceptance of its products. There can be no assurance that the Company will ever achieve a profitable level of operations.

v3.10.0.1
Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include those of Cerus Corporation and its subsidiary, Cerus Europe B.V. (together with Cerus Corporation, hereinafter “Cerus” or the “Company”) after elimination of all intercompany accounts and transactions. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Use of Estimates

The preparation of financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to the nature and timing of satisfaction of performance obligations, the timing when the customer obtains control of products or services, the standalone selling price (“SSP”) of performance obligations, variable consideration, accounts receivable, inventory reserves, fair values of investments, stock-based compensation, intangible assets and goodwill, useful lives of intangible assets and property and equipment, income taxes, and accrued liabilities, among others. The Company bases its estimates on historical experience, future projections, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates under different assumptions or conditions.

Revenue

The Company adopted Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”, on January 1, 2018, using the modified retrospective method applied to the contracts which were not completed as of the date of adoption. Revenue is recognized in accordance with that core principle by applying the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company’s main source of revenue is product revenue from sales of the INTERCEPT Blood System for platelets and plasma (“platelet and plasma systems” or “disposable kits”), UVA illumination devices (“illuminators”), spare parts and storage solutions, and maintenance services of illuminators. The Company sells its platelet and plasma systems directly to blood banks, hospitals, universities, government agencies, as well as to distributors in certain regions. The Company uses a binding purchase order or signed sales contract as evidence of a contract and satisfaction of its policy. Generally, the Company’s contracts with its customers do not provide for open return rights, except within a reasonable time after receipt of goods in the case of defective or non-conforming product. The contracts with customers can include various combinations of products, and to a lesser extent, services. The Company must determine whether products or services are capable of being distinct and accounted for as separate performance obligations, or are accounted for as a combined performance obligation. The Company must allocate the transaction price to each performance obligation on a relative SSP basis, and recognize the revenue when the performance obligation is satisfied. The Company determines the SSP by using the historical selling price of the products and services. If the amount of consideration in a contract is variable, the Company estimates the amount of variable consideration that should be included in the transaction price using the most likely amount method, to the extent it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Product revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to receive in exchange for those products or services. Product revenue from the sale of illuminators, disposable kits, spare parts and storage solutions are recognized upon the transfer of control of the products to the customer. Product revenue from maintenance services are recognized ratably on a straight-line basis over the term of maintenance as customers simultaneously consume and receive benefits. Freight costs charged to customers are recorded as a component of revenue. Taxes that the Company invoices to its customers and remits to governments are recorded on a net basis, which excludes such tax from product revenue.

The Company receives reimbursement under its U.S. government contract with the Biomedical Advanced Research and Development Authority (“BARDA”) that supports research and development of defined projects. See “Note 13 Development and License Agreements—Agreement with BARDA” below. The contract generally provides for reimbursement of approved costs incurred under the terms of the contract. Revenue related to the cost reimbursement provisions under the Company’s U.S. government contract are recognized as the qualified direct and indirect costs on the projects are incurred. The Company invoices under its U.S. government contract using the provisional rates in the government contract and thus is subject to future audits at the discretion of government. These audits could result in an adjustment to government contract revenue previously reported, which adjustments potentially could be significant. The Company believes that revenue for periods not yet audited has been recorded in amounts that are expected to be realized upon final audit and settlement. Costs incurred related to services performed under the contract are included as a component of research and development or selling, general and administrative expenses in the Company’s consolidated statements of operations. The Company’s use of estimates in recording accrued liabilities for government contract activities (see “Use of Estimates” above) affects the revenue recorded from development funding and under the government contract.

 

Disaggregation of Product Revenue

Product revenue by geographical locations of customers during the years ended December 31, 2018, 2017 and 2016, were as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

 

Product revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Europe, Middle East and Africa

 

$

46,974

 

 

$

36,241

 

 

$

30,716

 

North America

 

 

12,696

 

 

 

6,325

 

 

 

4,569

 

Other

 

 

1,238

 

 

 

1,002

 

 

 

1,898

 

Total product revenue

 

$

60,908

 

 

$

43,568

 

 

$

37,183

 

 

Contract Balances

The Company invoices its customers based upon the terms in the contracts, which is generally from 30 to 60 days. Accounts receivable are recorded when the Company’s right to the consideration are estimated to be unconditional. The Company had no contract assets at December 31, 2018 and December 31, 2017.

Contract liabilities mainly consist of deferred product revenue related to maintenance services, unshipped products, and uninstalled illuminators. Maintenance services are generally billed upfront at the beginning of each annual service period and recognized ratably over the service period. The increase in the deferred product revenue balance for the year ended December 31, 2018, is primarily driven by performance obligations not satisfied but invoiced as of December 31, 2018, offset by $0.4 million of revenue recognized that were included in the deferred product revenue balance as of December 31, 2017.

The Company applies an optional exemption to not disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less.

Research and Development Expenses

Research and development (“R&D”) expenses are charged to expense when incurred, including cost incurred pursuant to the terms of the Company’s U.S. government contract. Research and development expenses include salaries and related expenses for scientific and regulatory personnel, payments to consultants, supplies and chemicals used in in-house laboratories, costs of R&D facilities, depreciation of equipment and external contract research expenses, including clinical trials, preclinical safety studies, other laboratory studies, process development and product manufacturing for research use.

The Company’s use of estimates in recording accrued liabilities for R&D activities (see “Use of Estimates” above) affects the amounts of R&D expenses recorded from development funding and under its U.S. government contract. Actual results may differ from those estimates under different assumptions or conditions.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be classified as cash equivalents. These investments primarily consist of money market instruments, and are classified as available-for-sale.

Investments

Investments with original maturities of greater than three months primarily include corporate debt and U.S. government agency securities that are designated as available-for-sale and classified as short-term investments. Available-for-sale securities are carried at estimated fair value. The Company views its available-for-sale portfolio as available for use in its current operations. Unrealized gains and losses derived by changes in the estimated fair value of available-for-sale securities were recorded in “Unrealized losses on available-for-sale investments, net of taxes” on the Company’s consolidated statements of comprehensive loss. Realized gains (losses) from the sale of available-for-sale investments, if any, were recorded in “Other income, net” on the Company’s consolidated statements of operations. The costs of securities sold are based on the specific identification method, if applicable. The Company reported the amortization of any premium and accretion of any discount resulting from the purchase of debt securities as a component of interest income.

The Company also reviews its available-for-sale securities on a regular basis to evaluate whether any security has experienced an other-than-temporary decline in fair value. Other-than-temporary declines in market value, if any, are recorded in “Other income, net” on the Company’s consolidated statements of operations.

Restricted Cash

As of December 31, 2018, the Company’s “Restricted cash” primarily consisted of a $2.5 million of letter of credit relating to the lease of the Company’s new office building. As of December 31, 2018 and December 31, 2017, the Company also had certain non-U.S. dollar denominated deposits recorded as “Restricted cash” in compliance with certain foreign contractual requirements.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, available-for-sale securities and accounts receivable.

Pursuant to the Company’s investment policy, substantially all of the Company’s cash, cash equivalents and available-for-sale securities are maintained at major financial institutions of high credit standing. The Company monitors the financial credit worthiness of the issuers of its investments and limits the concentration in individual securities and types of investments that exist within its investment portfolio. Generally, all of the Company’s investments carry high credit quality ratings, which is in accordance with its investment policy. At December 31, 2018, the Company does not believe there is significant financial risk from non-performance by the issuers of the Company’s cash equivalents and short-term investments.

Concentrations of credit risk with respect to trade receivables exist. On a regular basis, including at the time of sale, the Company performs credit evaluations of its significant customers that it expects to sell to on credit terms. Generally, the Company does not require collateral from its customers to secure accounts receivable. To the extent that the Company determines specific invoices or customer accounts may be uncollectible, the Company establishes an allowance for doubtful accounts against the accounts receivable on its consolidated balance sheets and records a charge on its consolidated statements of operations as a component of selling, general and administrative expenses.

The Company had two customers and three customers that accounted for more than 10% of the Company’s outstanding trade receivables at December 31, 2018 and December 31, 2017, respectively. These customers cumulatively represented approximately 50% and 53% of the Company’s outstanding trade receivables at December 31, 2018 and December 31, 2017, respectively. To date, the Company has not experienced collection difficulties from these customers.

Inventories

At December 31, 2018 and December 31, 2017, inventory consisted of work-in-process and finished goods only. Finished goods include INTERCEPT disposable kits, illuminators, and certain replacement parts for the illuminators. Platelet and plasma systems’ disposable kits generally have 18 to 24 months shelf lives from the date of manufacture. Illuminators and replacement parts do not have regulated expiration dates. Work-in-process includes certain components that are manufactured over a protracted length of time before being sold to, and ultimately incorporated and assembled by Fresenius Kabi Deutschland GmbH or Fresenius, Inc. (with their affiliates, “Fresenius”) into the finished INTERCEPT disposable kits. The Company maintains an inventory balance based on its current sales projections, and at each reporting period, the Company evaluates whether its work-in-process inventory would be sold to Fresenius for production of finished units in order to sell to existing and prospective customers within the next twelve-month period. It is not customary for the Company’s production cycle for inventory to exceed twelve months. Instead, the Company uses its best judgment to factor in lead times for the production of its work-in-process and finished units to meet the Company’s forecasted demands. If actual results differ from those estimates, work-in-process inventory could potentially accumulate for periods exceeding one year. At December 31, 2018 and December 31, 2017, the Company classified its work-in-process inventory as a current asset on its consolidated balance sheets based on its evaluation that the work-in-process inventory would be sold to Fresenius for finished disposable kit production within each respective subsequent twelve-month period.

Inventory is recorded at the lower of cost, determined on a first-in, first-out basis, or net realizable value. The Company uses significant judgment to analyze and determine if the composition of its inventory is obsolete, slow-moving or unsalable and frequently reviews such determinations. The Company writes down specifically identified unusable, obsolete, slow-moving, or known unsalable inventory that has no alternative use in the period that it is first recognized by using a number of factors including product expiration dates, open and unfulfilled orders, and sales forecasts. Any write-down of its inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest that the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded in “Cost of product revenue” on the Company’s consolidated statements of operations. At December 31, 2018 and December 31, 2017, the Company had $0.3 million and $0.1 million, respectively, recorded for potential obsolete, expiring or unsalable product.

Property and Equipment, net

Property and equipment is comprised of furniture, equipment, leasehold improvements, construction-in-progress, information technology hardware and software and is recorded at cost. At the time the property and equipment is ready for its intended use, it is depreciated on a straight-line basis over the estimated useful lives of the assets (generally three to five years). Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful lives of the improvements. As of December 31, 2018 and December 31, 2017, the Company capitalized construction-in-progress costs included in “Property and Equipment, net” on the Company’s consolidated balance sheets, of $6.9 million and $0.1 million, respectively, related to leasehold improvements, of which $3.7 million was unpaid as of December 31, 2018. As of December 31, 2018 and December 31, 2017, the Company had receivables included in “Prepaid and other current assets” on the Company's consolidated balance sheets, of $1.2 million and zero, respectively, related to its new office building.

 

Goodwill and Intangible Assets, net

Intangible assets, net, which include a license for the right to commercialize the INTERCEPT Blood System in Asia, are subject to ratable amortization over the original estimated useful life of ten years. Accumulated amortization of intangible assets as of December 31, 2018 and December 31, 2017, was $1.7 million and $1.5 million, respectively. Goodwill is not amortized but instead is subject to an impairment test performed on an annual basis, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. Such impairment analysis is performed on August 31 of each fiscal year, or more frequently if indicators of impairment exist. The test for goodwill impairment may be assessed using qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, the Company must then proceed with performing the quantitative goodwill impairment test. The Company may choose not to perform the qualitative assessment to test goodwill for impairment and proceed directly to the quantitative impairment test; however, the Company may revert to the qualitative assessment to test goodwill for impairment in any subsequent period. The quantitative goodwill impairment test compares the fair value of each reporting unit with its respective carrying amount, including goodwill. The Company has determined that it operates in one reporting unit and estimates the fair value of its one reporting unit using the enterprise approach under which it considers the quoted market capitalization of the Company as reported on the Nasdaq Global Market. The Company considers quoted market prices that are available in active markets to be the best evidence of fair value. The Company also considers other factors, which include future forecasted results, the economic environment and overall market conditions. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess, limited to the carrying amount of goodwill in the Company’s one reporting unit.

The Company performs an impairment test on its intangible assets if certain events or changes in circumstances occur which indicate that the carrying amounts of its intangible assets may not be recoverable. If the intangible assets are not recoverable, an impairment loss would be recognized by the Company based on the excess amount of the carrying value of the intangible assets over its fair value. During the year ended December 31, 2018 and 2017, there were no impairment charges recognized related to the acquired intangible assets.

Long-lived Assets

The Company evaluates its long-lived assets for impairment by continually monitoring events and changes in circumstances that could indicate carrying amounts of its long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the expected undiscounted future cash flows are less than the carrying amount of these assets, the Company then measures the amount of the impairment loss based on the excess of the carrying amount over the fair value of the assets.

Foreign Currency Remeasurement

The functional currency of the Company’s foreign subsidiary is the U.S. dollar. Monetary assets and liabilities denominated in foreign currencies are remeasured in U.S. dollars using the exchange rates at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are remeasured in U.S. dollars using historical exchange rates. Product revenues and expenses are remeasured using average exchange rates prevailing during the period. Remeasurements are recorded in the Company’s consolidated statements of operations.

Stock-Based Compensation

Stock-based compensation expense is measured at the grant-date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period, and is adjusted for estimated forfeitures. To the extent that stock options contain performance criteria for vesting, stock-based compensation is recognized once the performance criteria are probable of being achieved.

For stock-based awards issued to non-employees, the measurement date at which the fair value of the stock-based award is measured to be the earlier of (i) the date at which a commitment for performance by the grantee to earn the equity instrument is reached or (ii) the date at which the grantee’s performance is complete. The Company recognizes stock-based compensation expense for the fair value of the vested portion of the non-employee stock-based awards in its consolidated statements of operations.

See Note 11 for further information regarding the Company’s stock-based compensation assumptions and expenses.

Income Taxes

The provision for income taxes is accounted for using an asset and liability approach, under which deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company does not recognize tax positions that do not have a greater than 50% likelihood of being recognized upon review by a taxing authority having full knowledge of all relevant information. Use of a valuation allowance is not an appropriate substitute for derecognition of a tax position. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax expense. To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has it accrued for or made payments for interest and penalties. Although the Company believes it more likely than not that a taxing authority would agree with its current tax positions, there can be no assurance that the tax positions the Company has taken will be substantiated by a taxing authority if reviewed. The Company’s U.S. federal tax returns for years 1998 through 2017, California tax returns for years through 2017, and Netherlands tax returns for years 2015 through 2017 remain subject to examination by the taxing jurisdictions. The Company continues to carry a valuation allowance on substantially all of its net deferred tax assets.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share gives effect to all potentially dilutive common shares outstanding for the period. The potentially dilutive securities include stock options, employee stock purchase plan rights and restricted stock units, which are calculated using the treasury stock method.

For the years ended December 31, 2018, 2017 and 2016, all potentially dilutive securities outstanding have been excluded from the computation of dilutive weighted average shares outstanding because such securities have an antidilutive impact due to losses reported.

The following table sets forth the reconciliation of the numerator and denominator used in the computation of basic and diluted net loss per share for the years ended December 31, 2018, 2017 and 2016 (in thousands, except per share amounts):

 

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

 

Numerator for Basic and Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss used for basic calculation

 

$

(57,564

)

 

$

(60,585

)

 

$

(62,906

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of shares outstanding

 

 

131,663

 

 

 

108,221

 

 

 

101,826

 

Effect of dilutive potential shares

 

 

 

 

 

 

 

 

 

Diluted weighted average number of shares outstanding

 

 

131,663

 

 

 

108,221

 

 

 

101,826

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.44

)

 

$

(0.56

)

 

$

(0.62

)

Diluted

 

 

(0.44

)

 

 

(0.56

)

 

 

(0.62

)

 

The table below presents potential shares that were excluded from the calculation of the weighted average number of shares outstanding used for the calculation of diluted net loss per share. These are excluded from the calculation due to their anti-dilutive effect for the years ended December 31, 2018, 2017 and 2016 (shares in thousands):

 

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

 

Weighted average number of anti-dilutive potential shares:

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

18,031

 

 

 

17,373

 

 

 

15,592

 

Restricted stock units

 

 

1,902

 

 

 

1,225

 

 

 

576

 

Employee stock purchase plan rights

 

 

20

 

 

 

21

 

 

 

43

 

Total

 

 

19,953

 

 

 

18,619

 

 

 

16,211

 

 

Guarantee and Indemnification Arrangements

The Company recognizes the fair value for guarantee and indemnification arrangements issued or modified by the Company. In addition, the Company monitors the conditions that are subject to the guarantees and indemnifications in order to identify if a loss has occurred. If the Company determines it is probable that a loss has occurred, then any such estimable loss would be recognized under those guarantees and indemnifications. Some of the agreements that the Company is a party to contain provisions that indemnify the counter party from damages and costs resulting from claims that the Company’s technology infringes the intellectual property rights of a third party or claims that the sale or use of the Company’s products have caused personal injury or other damage or loss. The Company has not received any such requests for indemnification under these provisions and has not been required to make material payments pursuant to these provisions.

The Company generally provides for a one-year warranty on certain of its INTERCEPT blood-safety products covering defects in materials and workmanship. The Company accrues costs associated with warranty obligations when claims become known and are estimable. The Company has not experienced significant or systemic warranty claims nor is it aware of any existing current warranty claims. Accordingly, the Company had not accrued for any future warranty costs for its products at December 31, 2018 and December 31, 2017.

Fair Value of Financial Instruments

The Company applies the provisions of fair value relating to its financial assets and liabilities. The carrying amounts of accounts receivables, accounts payable, and other accrued liabilities approximate their fair value due to the relative short-term maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, the Company believes the fair value of its debt approximates their carrying amounts. The Company measures and records certain financial assets and liabilities at fair value on a recurring basis, including its available-for-sale securities. The Company classifies instruments within Level 1 if quoted prices are available in active markets for identical assets, which include the Company’s cash accounts and money market funds. The Company classifies instruments in Level 2 if the instruments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. These instruments include the Company’s corporate debt and U.S. government agency securities holdings. The available-for-sale securities are held by a custodian who obtains investment prices from a third party pricing provider that uses standard inputs (observable in the market) to models which vary by asset class. The Company classifies instruments in Level 3 if one or more significant inputs or significant value drivers are unobservable. The Company assesses any transfers among fair value measurement levels at the end of each reporting period.

See Note 3 for further information regarding the Company’s valuation of financial instruments.

New Accounting Pronouncements

Recently adopted accounting pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The Company adopted the new accounting standard on January 1, 2018, using the modified retrospective method, and the adoption had no impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10), which requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The Company adopted this ASU on January 1, 2018, and the adoption had no impact on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The Company adopted this ASU on January 1, 2018, and the adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The standard is effective for annual periods beginning after December 15, 2018, and interim periods thereafter, with early application permitted. The Company early adopted this new accounting standard on July 1, 2018, and the adoption did not have a material impact on the Company’s consolidated financial statements.
Recently issued accounting pronouncements not yet adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases, which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. This ASU will be effective for annual periods beginning after December 15, 2018, and interim periods thereafter, with early application permitted. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides for certain practical expedient when implementing the new leases standard. Companies may apply the practical expedient either retrospectively or prospectively. The Company will adopt these ASUs on January 1, 2019, using the modified retrospective approach and will apply the practical expedient prospectively. The Company is currently assessing the future impact of these ASUs on its consolidated financial statements. The Company anticipates that the Company’s operating lease commitments will be subject to the new standard. The Company will recognize right-of-use assets and lease liabilities on the Company’s consolidated balance sheets upon the adoption of these ASUs, which will increase the Company’s total assets and total liabilities. Based on the lease portfolio as of December 31, 2018, the Company anticipates recording both right-of-use assets and lease liabilities between approximately $2 million to $3 million on its consolidated balance sheets, and anticipates no material impact to its consolidated statements of operations. However, the ultimate impact of adopting ASU 2016-02 will depend on the Company’s final evaluation as of the adoption date. The most significant impact on the Company’s consolidated balance sheets is expected to be the Company’s lease to office space located in Concord, California, with commencement date of March 2019. The Company will continue to monitor industry activities and any additional guidance provided by regulators, standards setters, or the accounting profession as an ongoing component of its assessment and implementation plans.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. The standard is effective for annual periods beginning after December 15, 2019, and interim periods thereafter, with early application permitted. The Company plans to adopt this ASU on January 1, 2020, using the modified retrospective transition method. The Company is currently assessing the future impact of this ASU on the Company’s consolidated financial statements.

 

v3.10.0.1
Available-for-sale Securities and Fair Value on Financial Instruments
12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Available-for-sale Securities and Fair Value on Financial Instruments

Note 3. Available-for-sale Securities and Fair Value on Financial Instruments

Available-for-sale Securities

The following is a summary of available-for-sale securities at December 31, 2018 (in thousands):

 

 

 

December 31, 2018

 

 

 

Amortized Cost

 

 

Gross

Unrealized Gain

 

 

Gross

Unrealized Loss

 

 

Fair Value

 

Money market funds

 

$

6,167

 

 

$

 

 

$

 

 

$

6,167

 

United States government agency securities

 

 

15,971

 

 

 

 

 

 

(23

)

 

 

15,948

 

Corporate debt securities

 

 

73,028

 

 

 

2

 

 

 

(260

)

 

 

72,770

 

Total available-for-sale securities

 

$

95,166

 

 

$

2

 

 

$

(283

)

 

$

94,885

 

 

The following is a summary of available-for-sale securities at December 31, 2017 (in thousands):

 

 

 

December 31, 2017

 

 

 

Amortized Cost

 

 

Gross

Unrealized Gain

 

 

Gross

Unrealized Loss

 

 

Fair Value

 

Money market funds

 

$

3,758

 

 

$

 

 

$

 

 

$

3,758

 

United States government agency securities

 

 

11,252

 

 

 

 

 

 

(24

)

 

 

11,228

 

Corporate debt securities

 

 

35,858

 

 

 

 

 

 

(73

)

 

 

35,785

 

Total available-for-sale securities

 

$

50,868

 

 

$

 

 

$

(97

)

 

$

50,771

 

 

Available-for-sale securities at December 31, 2018 and 2017, consisted of the following by contractual maturity (in thousands):

 

 

 

December 31, 2018

 

 

December 31, 2017

 

 

 

Amortized Cost

 

 

Fair Value

 

 

Amortized Cost

 

 

Fair Value

 

One year or less

 

$

85,227

 

 

$

84,957

 

 

$

38,836

 

 

$

38,781

 

Greater than one year and less than five years

 

 

9,939

 

 

 

9,928

 

 

 

12,032

 

 

 

11,990

 

Total available-for-sale securities

 

$

95,166

 

 

$

94,885

 

 

$

50,868

 

 

$

50,771

 

 

The following tables show all available-for-sale marketable securities in an unrealized loss position for which an other-than-temporary impairment has not been recognized and the related gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

 

 

December 31, 2018

 

 

Less than 12 Months

 

 

12 Months or Greater

 

 

Total

 

 

Fair Value

 

 

Unrealized Loss

 

 

Fair Value

 

 

Unrealized Loss

 

 

Fair Value

 

 

Unrealized Loss

 

United States government agency    

    securities

$

14,948

 

 

$

(22

)

 

$

999

 

 

$

(1

)

 

$

15,947

 

 

$

(23

)

Corporate debt securities

 

60,813

 

 

 

(231

)

 

 

9,976

 

 

 

(29

)

 

 

70,789

 

 

 

(260

)

Total available-for-sale securities

$

75,761

 

 

$

(253

)

 

$

10,975

 

 

$

(30

)

 

$

86,736

 

 

$

(283

)

 

 

December 31, 2017

 

 

Less than 12 Months

 

 

12 Months or Greater

 

 

Total

 

 

Fair Value

 

 

Unrealized Loss

 

 

Fair Value

 

 

Unrealized Loss

 

 

Fair Value

 

 

Unrealized Loss

 

United States government agency

    securities

$

8,729

 

 

$

(24

)

 

$

 

 

$

 

 

$

8,729

 

 

$

(24

)

Corporate debt securities

 

35,785

 

 

 

(73

)

 

 

 

 

 

 

 

 

35,785

 

 

 

(73

)

Total available-for-sale securities

$

44,514

 

 

$

(97

)

 

$

 

 

$

 

 

$

44,514

 

 

$

(97

)

 

As of December 31, 2018, the Company considered the declines in market value of its marketable securities investment portfolio to be temporary in nature and did not consider any of its investments other-than-temporarily impaired. The Company typically invests in highly-rated securities, and its investment policy limits the amount of credit exposure to any one issuer. The policy generally requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s cost basis. During the years ended December 31, 2018, 2017 and 2016, the Company did not recognize any other-than-temporary impairment loss. The Company has no current requirement or intent to sell the securities in an unrealized loss position. The Company expects to recover up to (or beyond) the initial cost of investment for securities held.

During the years ended December 31, 2018, 2017 and 2016, the Company sold zero, 346,700 and 50,000 shares of Aduro Biotech, Inc., or Aduro, common stock, respectively, and recognized zero, $3.5 million, and $0.8 million gross realized gains respectively, which were reclassified out of accumulated other comprehensive income into “Other income, net” on the Company’s consolidated statements of operations. As of December 31, 2018 and 2017, the Company had no remaining investment in Aduro’s common stock. The Company did not record any gross realized losses during the years ended December 31, 2018, 2017 and 2016.

Fair Value Disclosures

The Company uses certain assumptions that market participants would use to determine the fair value of an asset or liability in pricing the asset or liability in an orderly transaction between market participants at the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritized the inputs into three broad levels as follows:

 

Level 1:  Quoted prices in active markets for identical instruments

 

Level 2:  Other significant observable inputs (including quoted prices in active markets for similar instruments)

 

Level 3:  Significant unobservable inputs (including assumptions in determining the fair value of certain investments)

Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments are readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

To estimate the fair value of Level 2 debt securities as of December 31, 2018, the Company’s primary pricing service relies on inputs from multiple industry-recognized pricing sources to determine the price for each investment. Corporate debt and U.S. government agency securities are systematically priced by this service as of the close of business each business day. If the primary pricing service does not price a specific asset a secondary pricing service is utilized.

The fair values of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2018 (in thousands):

 

 

 

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

 

$

6,167

 

 

$

6,167

 

 

$

 

 

$

 

United States government agency  

  securities

 

Short-term investments

 

 

15,948

 

 

 

 

 

 

15,948

 

 

 

 

Corporate debt securities

 

Short-term investments

 

 

72,770

 

 

 

 

 

 

72,770

 

 

 

 

Total financial assets

 

 

 

$

94,885

 

 

$

6,167

 

 

$

88,718

 

 

$

 

 

The fair values of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2017 (in thousands):

 

 

 

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

 

$

3,758

 

 

$

3,758

 

 

$

 

 

$

 

United States government agency securities

 

Short-term investments

 

 

11,228

 

 

 

 

 

 

11,228

 

 

 

 

Corporate debt securities

 

Short-term investments

 

 

35,785

 

 

 

 

 

 

35,785

 

 

 

 

Total financial assets

 

 

 

$

50,771

 

 

$

3,758

 

 

$

47,013

 

 

$

 

 

 The Company did not have any transfers among fair value measurement levels during the years ended December 31, 2018 and 2017.

v3.10.0.1
Inventories
12 Months Ended
Dec. 31, 2018
Inventory Disclosure [Abstract]  
Inventories

 

Note 4. Inventories

Inventories at December 31, 2018 and 2017, consisted of the following (in thousands):

 

 

 

December 31,

 

 

 

2018

 

 

2017

 

Work-in-process

 

$

3,075

 

 

$

4,299

 

Finished goods

 

 

10,464

 

 

 

10,158

 

Total inventories

 

$

13,539

 

 

$

14,457

 

v3.10.0.1
Property and Equipment, net
12 Months Ended
Dec. 31, 2018
Property Plant And Equipment [Abstract]  
Property and Equipment, net

Note 5. Property and Equipment, net

Property and equipment, net at December 31, 2018 and 2017, consisted of the following (in thousands):

 

 

 

December 31,

 

 

 

2018

 

 

2017

 

Construction-in-progress

 

$

6,864

 

 

$

70

 

Machinery and equipment

 

 

1,945

 

 

 

2,205

 

Computer equipment and software

 

 

2,915

 

 

 

3,446

 

Furniture and fixtures

 

 

901

 

 

 

904

 

Leasehold improvements

 

 

5,715

 

 

 

5,698

 

Consigned equipment

 

 

1,299

 

 

 

1,190

 

Total property and equipment, gross

 

 

19,639

 

 

 

13,513

 

Accumulated depreciation and amortization

 

 

(11,509

)

 

 

(11,394

)

Total property and equipment, net

 

$

8,130

 

 

$

2,119

 

 

Depreciation and amortization expense related to property and equipment, net was $1.1 million, $1.2 million and $1.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. The impairment of long-lived assets were zero, zero, and $0.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. As part of the Company’s 2016 review of property and equipment, an impairment of long-lived assets on the consolidated statement of operations was recorded for construction-in-progress related to a deposit associated with a terminated agreement.

v3.10.0.1
Goodwill and Intangible Assets, net
12 Months Ended
Dec. 31, 2018
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets, net

Note 6. Goodwill and Intangible Assets, net

Goodwill

During the year ended December 31, 2018, the Company did not dispose of or recognize additional goodwill. On August 31, 2018, the Company performed its impairment test of goodwill. As described in Note 2 above, the Company applied the enterprise approach by reviewing the quoted market capitalization of the Company as reported on the Nasdaq Global Market to calculate the fair value. In addition, the Company considered its future forecasted results, the economic environment and overall market conditions. As a result of the Company’s assessment that its fair value of the reporting unit exceeded its carrying amount, the Company determined that goodwill was not impaired.

Intangible Assets, net

The following is a summary of intangible assets, net at December 31, 2018 (in thousands):

 

 

 

December 31, 2018

 

 

 

Gross

Carrying Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying Amount

 

Acquisition-related intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

Reacquired license - INTERCEPT Asia

 

$

2,017

 

 

$

(1,683

)

 

$

334

 

Total intangible assets

 

$

2,017

 

 

$

(1,683

)

 

$

334

 

 

The following is a summary of intangible assets, net at December 31, 2017 (in thousands):

 

 

 

December 31, 2017

 

 

 

Gross

Carrying Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying Amount

 

Acquisition-related intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

Reacquired license - INTERCEPT Asia

 

$

2,017

 

 

$

(1,481

)

 

$

536

 

Total intangible assets

 

$

2,017

 

 

$

(1,481

)

 

$

536

 

 

During the years ended December 31, 2018, 2017 and 2016, there were no impairment charges recognized related to the Company’s intangible assets.

At December 31, 2018, the expected annual amortization expense of the intangible assets, net is $0.2 million for the year ending December 31, 2019, and $0.1 million for the year ending December 31, 2020.

v3.10.0.1
Accrued Liabilities
12 Months Ended
Dec. 31, 2018
Payables And Accruals [Abstract]  
Accrued Liabilities

Note 7. Accrued Liabilities

Accrued liabilities at December 31, 2018 and 2017, consisted of the following (in thousands):

 

 

 

December 31,

 

 

 

2018

 

 

2017

 

Accrued compensation and related costs

 

$

10,765

 

 

$

7,372

 

Accrued professional services

 

 

4,544

 

 

 

1,811

 

Accrued development costs

 

 

1,965

 

 

 

794

 

Other accrued expenses

 

 

2,526

 

 

 

1,735

 

Total accrued liabilities

 

$

19,800

 

 

$

11,712

 

v3.10.0.1
Debt
12 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Debt

Note 8. Debt

Debt at December 31, 2018, consisted of the following (in thousands):

 

 

 

December 31, 2018

 

 

 

Principal

 

 

Unamortized

Discount

 

 

Net Carrying

Value

 

Loan and Security Agreement

 

$

30,000

 

 

$

(130

)

 

$

29,870

 

Less: debt - current

 

 

(7,857

)

 

 

 

 

 

(7,857

)

Debt - non-current

 

$

22,143

 

 

$

(130

)

 

$

22,013

 

 

Debt at December 31, 2017, consisted of the following (in thousands):

 

 

 

December 31, 2017

 

 

 

Principal

 

 

Unamortized

Discount

 

 

Total

 

Loan and Security Agreement

 

$

30,000

 

 

$

(202

)

 

$

29,798

 

Less: debt - current

 

 

 

 

 

 

 

 

 

Debt - non-current

 

$

30,000

 

 

$

(202

)

 

$

29,798

 

 

Expected future principal and interest payments based on debt balances at December 31, 2018, are expected to be as follows:

 

Year ended December 31,

 

Principal

 

 

Interest

 

 

Total

 

2019

 

$

7,857

 

 

$

2,579

 

 

 

10,436

 

2020

 

 

8,571

 

 

 

1,765

 

 

 

10,336

 

2021

 

 

8,572

 

 

 

931

 

 

 

9,503

 

2022

 

 

5,000

 

 

 

2,560

 

 

 

7,560

 

Total

 

$

30,000

 

 

$

7,835

 

 

$

37,835

 

 

Loan and Security Agreement

Prior to December 31, 2016, the Company maintained a five-year loan and security agreement (the “Term Loan Agreement”) with Oxford Finance LLC (“Oxford”), under which the Company borrowed $20.0 million. The borrowings were set to mature on June 1, 2019, with various interest only periods.

On April 27, 2017, the Term Loan Agreement was amended to include an additional interest-only period under the Term Loan Agreement. As amended, the Company was required to make interest only payments from May 2017 through December 2017, followed by eighteen months of equal principal and interest payments thereafter. The Company was also required to make a final payment equal to 7% of the principal amounts drawn payable on the earlier to occur of maturity or prepayment. 

On July 31, 2017 (the “Closing Date”), the Company entered into an amended and restated loan and security agreement (the “Amended Credit Agreement”) with Oxford, which amended and restated the Term Loan Agreement in its entirety. The Amended Credit Agreement provided for secured growth capital term loans of up to $40.0 million (the “2017 Term Loans”). All of the Company’s current and future assets, excluding its intellectual property and 35% of the Company’s investment in Cerus Europe B.V., are secured for its borrowings under the Amended Credit Agreement. The 2017 Term Loans were available in two tranches. The first tranche of $30.0 million (“2017 Term Loan A”) was drawn by the Company on July 31, 2017, with the proceeds used in part to repay in full all of the outstanding term loans under the Term Loan Agreement of $17.6 million and the final payment of the Term Loan Agreement of $1.4 million. The availability of the second tranche of $10.0 million (“2017 Term Loan B”) expired on May 14, 2018, and the Company did not elect to draw the 2017 Term Loan B. The 2017 Term Loan A bears interest at a rate equal to the greater of (i) 8.01% and (ii) the three-month U.S. LIBOR rate plus 6.72%. The interest rate on the 2017 Term Loan A at December 31, 2018 was approximately 9.53%. The Company will also be required to make a final payment fee of 8.00% of the principal amounts of the 2017 Term Loan A. The Amended Credit Agreement contains certain nonfinancial covenants, with which the Company was in compliance at December 31, 2018.