Cerus Corp (CERS) 2003 Q1 法說會逐字稿

Welcome to the Cerus Corporation first quarter financial results conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session.

At that time, if you have a question please press the one followed by the four on your telephone. As a reminder, this conference is being recorded Monday, April 28th, 2003.

I would now like to turn the conference over to Sylvia Wheeler, Director of Corporate Communications and Investor Relations for Cerus Corporation. Please go ahead, ma'am.

Thank you and good afternoon. Before introducing Steve Isaacs, President and Chief Executive Officer of Cerus, I remind you that during this call we will be making forward-looking statements that involve risks and uncertainties.

Our actual results may differ materially from the results described and the factors that include but are not limited to those discussed in our annual report on Form 10-K and quarterly report on Form 10-Q.

To request copies of these documents, our press releases or financials, please call 925-288-6036 or find them on our Web site at cerus.com. I will now turn the call over to Steve.

Thanks a lot, Sylvia. Good afternoon, everyone.

Joining me on the call today are Greg Schafer, our Chief Financial Officer; and Dr. Larry Corash, our Chief Medical Officer who is traveling to Europe for customer meetings.

I'll begin with the general business and commercialization overview, then Larry will go over our clinical and regulatory progress. Greg will then review our first quarter financial results, which were released earlier today. In closing I will speak to our plans going forward and we will then open the call for questions.

I want to begin today's call by discussing our commercialization activities for the INTERCEPT Blood System for platelets in Europe. I'm pleased to report that customers in two additional countries -- Spain and Belgium -- began purchasing disposable during the past quarter.

While this is indeed encouraging, the principle focus of European activities still remain center by center validation studies and training and as a result, the amount of sales for the quarter was small at $20,000.00.

Baxter's progress and validation studies has reached nearly 60 percent of the potential platelet doses in Europe, but we clearly would like to see the adoption process move faster. I'll take a few minutes a little later in the call to tell you both how and why we see this happening over the next few quarters.

However, before I do, I want to quickly report the progress we've made on the three issues we discussed in our January conference call.

First, for INTERCEPT platelets in the U.S., we discussed our dialogue with the FDA regarding our ongoing PMA submission. Since January, we have completed our written response to the FDA's questions regarding the clinical module and we look forward to a thorough discussion with the Agency on the data we've submitted.

In the meantime, two additional modules and our PMA covering the design and configuration of the product as well as the platelet storage solution have been accepted and closed by the Agency. At this point, six of 12 planned modules are accepted and considered closed.

Second, for INTERCEPT plasma we discussed the manufacture ability of the device. Since January, the Baxter manufacturing and engineering teams have made what we believe are the necessary improvements in the CAD design to facilitate high volume manufacturing.

Finally, for INTERCEPT red cells, we reported that we were experiencing slower than anticipated enrollment in the red blood cell chronic study. We have now taken a number of steps to improve enrollment rates including additional clinical sites and expanding the type of patients that can be included in the trial.

Larry will provide the details of these actions in his section. I'm very pleased with the progress the teams have made to address these three issues which we discussed in last quarter's conference call.

I now want to return to commercialization. In general, the steps for INTERCEPT adoption in Europe are quite similar to many other medical products and therapies. They begin with product awareness, are followed by customer experience -- including validation studies -- then they transition to more routine usage and ultimately achieve standard status.

Today, we're in the early stages of this adoption process and it will take some time to get through. Earlier this month I spent a week in Europe with the Baxter sales and marketing team and with Greg Young, the President of Baxter's Transfusion Therapies business, which is responsible for the INTERCEPT product.

As previously noted, the high level of engagement by European blood centers and process validation studies is a clear indicator of awareness and interest in the INTERCEPT system. The purchasing decision for this kind of product, however, involves a mosaic of decision makers and opinion leaders which vary from country to country.

These include the blood centers, the hospitals, the prescribing doctors, the various patient groups and the agencies that are responsible for reimbursement. While there is a high level of awareness of INTERCEPT within the blood banking community, work remains to raise awareness among physicians and patient groups.

With multiple interest involved, there is a variable period of time between the completion of validation studies and the conversion of the account to a customer. Baxter's European teams for sales, marketing and regulatory affairs are well positioned to address each of these constituencies and are increasing the resources devoted to the task both in funding and in personnel.

While it will take time, we remain highly confident of INTERCEPT's ultimate widespread adoption. One of the key activities this year is targeting the paying entities in the different European countries to make sure that our product is included in their 2004 budget.

Since the 2003 budgets are already in place, 2003 purchases will, in general, need to be made as budget variances. Due to the importance of our product, a number of centers have indicated an intention to use budget variances to enable purchase in 2003.

During the past quarter, the need for INTERCEPT has once again been demonstrated. Over the past few weeks we've witnessed the real time emergence and migration of yet another virus. SARS, the deadly new disease that has emerged from Asia illustrates again that we will continually face new threats from emerging viruses, bacteria and parasites.

While pathogens may emerge in one region, they quickly spread around the globe. Last week the FDA issued a guidance to blood centers for immediate implementation to defer blood donors that have traveled to certain parts of Asia due to concerns that SARS, "may pose immediate safety risk to the blood supply."

Studies on the ability of the INTERCEPT system to inactivate the SARS-like viruses are currently underway at Cerus. SARS is an envelope coronavirus which we are confident we will be able to inactivate based on the inactivation of similar viruses by the INTERCEPT blood system.

You may recall that in 2001, cases of Chagas disease and were making headlines while in 2002, the spread of West Nile Virus was considered at epidemic levels. Now in 2003, on top of these threats, SARS is dominating the news.

While scientists are scrambling to create tests for some of these emerging pathogens, testing and screening are not the best solutions to protecting our blood supply. Layers of testing are cumbersome and more and more expensive. And even the most accurate tests let some cases slip through the cracks.

Moreover, if you screen out donors who have been in Asia due to potential SARS exposure and donors from South and Central America who've been exposed to malaria or the parasite that causes Chagas and donors that may have been exposed to West Nile Virus and so forth, what does this do to the availability of blood products, which are already in short supply?

The health care community in Europe is acutely aware of these considerations as it is in the United States. In addition, European blood centers are under a European parliamentary directive to implement new blood safety measures.

Putting all these together, there is great emphasis in Europe toward the adoption of INTERCEPT. However, even with this emphasis, the European process requires Baxter and Cerus to work systematically to touch all the bases for buying decisions.

If you take a look at earlier blood safety technologies, they have received widespread adoption, but this has not happened overnight. With the INTERCEPT blood system for platelets, which offers much greater safety advantages, we expect broad adoption once the various stages have been touched.

The INTERCEPT blood system is truly a paradigm shift for blood safety. The ability of the INTERCEPT system to prevent infection caused by blood-borne pathogens is exceptional. As such, this ability is being leveraged extensively to facilitate expanded penetration.

I'll now turn the call over to Larry for clinical and regulatory update.

Thanks, Steve.

This past quarter I toured blood centers in Sweden, Norway and Finland with the Baxter Nordic INTERCEPT product team. Process validation studies with the INTERCEPT system are completed in some Nordic centers and continuing in others.

The response from these blood centers indicates that the INTERCEPT process is easily integrated into routine operations with sufficient flexibility to operate within the flow sequences for timely release of platelet components.

On the U.S. front, we responded to questions for the clinical module and expect to have meetings with FDA in the coming months to discuss these responses.

As mentioned last quarter, there was a range of potential outcomes including FDA's acceptance of the data submitted, a request for re-analysis for the data or the need for additional data. Our teams continue to respond to FDA questions on the other outstanding PMA modules as we have done so in the past.

With respect to scientific publications, our thorough report of the euroSPRITE study was published on March 15th in Blood, the Journal of the American Society of Hematology.

This quarter we received acceptance for presentation of abstracts at the European Bone Marrow Transplantation Society meeting and the International Society for Blood Transfusion. The abstracts present clinical data demonstrating prevention of transfusion associated graft versus host disease using the INTERCEPT platelet system.

As Steve mentioned, Baxter has completed a design improvement for the plasma system. Though testing of the new design shows an optimal removal of while maintaining critical coagulation proteins.

We continue to experience strong interest for INTERCEPT plasma in Europe driven by the complementary effect of a common platform for the treatment of plasma and platelets.

Recently, we initiated an in vitro study with the Hematology Service at University College Hospital in London to characterize further the properties of INTERCEPT plasma for plasma exchange therapy of thrombotic thrombocytopenic .

With respect to INTERCEPT red cells, we continue to transfuse patients in both Phase III studies this past quarter. In the acute study we are enrolling patients at five centers and have transfused 101 of the 200 required patients compared to 80 at end of last quarter.

In the chronic study we activated three new centers in addition to our initial five centers. We've enrolled 20 of the required 50 patients compared to 15 at the end of last quarter.

To reach more patients, we sought and received FDA concurrence to expand enrollment to patients treated with exchange transfusion. In addition, with successful completion of our planned safety studies, we modified the informed consent, which should result in improved patient acceptance for this trial.

We expect these changes to result in accelerating enrollment this quarter. Our collaborate research program with the Department of Defense continues and we're now entering the advanced development phase for this program.

Going forward, the 2003 Defense Department Appropriation Bill contains funding for continuation of research in blood safety and availability. Cerus continues to work on four projects under this program.

The current Armed Forces deployment to Iraq has focused attention on the availability and safety of blood for the military and our programs with the combat casualty care command. With respect to cellular immuno-therapy, our collaborative trial with the National Marrow Donor Program is in position to begin enrollment.

This program is entirely funded by the Department of Defense source, so Cerus spares minimal cost for collaboration in this multi-center trial. Our collaborative trial with a cellular vaccine against the Epstein-Barr Virus -- EBD -- is open for enrollment at Johns Hopkins University.

Similar to the NMDP study, Cerus provides technical support but no direct funding for this program. The clinical trials and research studies using Helinx chemistry to modulate immune function emphasize the value of our platform technology in the field of cellular immuno-therapy. And we'll keep you posted on the results as we move forward.

And now I'll turn it over to Greg for the financial results.

Thanks, Larry. Our first quarter results were a net loss of $1.07 and this compares to the net loss of 86 cents for the comparable period in 2002.

Our cash balance at the end of the quarter was $96.4 million compared with $64.3 million balance at the end of 2002. Recall that in January we drew $59 million from the Baxter revolving loan facility.

Our cash use from operations for the fourth quarter was approximately $18 million. We expect our current funding to be sufficient to support our development activities for the next 18 months.

We recorded $1.3 million in revenue for the quarter, including $20,000.00 from early sales of the INTERCEPT platelet system in Europe. We recorded approximately $1.2 million of development revenue for the quarter, primarily derived from work performed under our agreements with the U.S. Armed Forces.

Our R&D spending of $14.7 million was a slight decrease when compared to the fourth quarter of last year. We expect R&D spending to be flat or increase slightly through 2003 and expect our total R&D spending for the year to be between $60 and $65 million.

G&A expense was $2.7 million for the quarter and we'd expect our G&A expense in 2003 to be less than $13 million. Interest expense -- net of interest income for the quarter -- was $1 million and included interest expense on a loan facility from Baxter of $1.4 million.

Going forward, we will continue to record a non-cash interest expense related to the Baxter revolving credit facility. Recall that no principle or interest payments are due under this facility until 2008.

Now I'd like to turn it back to Steve for some concluding remarks and then we'll take your questions.

Thanks, Greg. Our top priority at Cerus is to support Baxter's effort to rapidly penetrate the $115 million European platelet market and to pave the road to approval and adoption of INTERCEPT platelets here in the United States.

In terms of the near term adoption of INTERCEPT platelets in Europe, we would like to be able to provide more visibility on the projected ramp rate, but until we have a better idea of when different countries will come on board especially the larger countries, this remains difficult to predict.

We do expect that stair step type ramp as one country after another begins to offer INTERCEPT platelets. For INTERCEPT platelets in the United States, we are pleased with the news of acceptance and closure of two additional modules by the FDA, although this does not guarantee ultimate approval.

At this point, we plan to complete submission of the modular PMA this year, although this could take longer depending on our ongoing discussions with the FDA. For the INTERCEPT plasma systems, Baxter's made necessary design changes to improve commercial manufacturer ability, Baxter's currently manufacturing small lots of the new design for evaluation prior to transferring the process to larger, commercial batches.

We anticipate these qualification runs will be completed during the next six months, which will be followed by another three to six month period to generate the required stability data.

All in all, this should permit the INTERCEPT files from a PMA submission in 2004.

We are also making steady progress with the INTERCEPT red blood cell system. As Larry mentioned, we are actively enrolling in both the acute and chronic phase retrials. We believe we have taken the necessary steps to accelerate the rate of enrollment in upcoming months and look forward to updating you on our progress.

Obviously, the commercial success of INTERCEPT in Europe is important to Cerus and is a primary focus of our management team today. Baxter's European marketing and sales force has also made INTERCEPT its top priority and they're redoubling their efforts to maximize product adoption. We're actively engaged to help Baxter with this effort and we continue to provide extensive scientific and technical support. Through our own discussions with customers and opinion leaders, it's very clear that INTERCEPT's ability to deal with blood safety throughout such as West Nile Virus and now potentially SARS, is very important to the transfusion community.

Based on these interactions and working closely with Baxter, we remain highly confident in the ultimate broader option of the INTERCEPT Blood System for platelets throughout Europe.

In summary, we will continue to focus on commercialization of INTERCEPT platelets and late stage development of INTERCEPT plasma and red blood cells as we target the broader, two point five billion dollar market opportunity for the pathogen and activation products. Concurrently, we will continue to support development of our pipeline products using healing technology and therapeutic applications, which are primarily funded by external collaborators.

We appreciate your support and look forward to keeping you apprised of our progress. I will now open the call to questions and I'd like to note that Jim Vaughn, our Vice President of Marketing, is here for your questions today.

Ladies and gentlemen, if you would like to register a question, please press the one followed by the four on your telephone. You will hear a three tone prompt to acknowledge your request.

If your question has been answered and you would like to withdraw your registration, please press the one followed by the three.

If you are using a speakerphone, please lift your handset before entering your request.

One moment please for the first question.

Our first question comes from the line of Katherine Martinelli with Merrill Lynch. Please proceed with your question.

Great. Thanks. A couple of questions, first of all, maybe just a little bit of clarity with respect to the module that you have submitted to the FDA with respect to the platelets and what exactly was included in that and what exactly you're waiting to hear back from them on.

Yes, Katherine, this is Steve. How are you doing?

Fine, thanks.

Good. Yes, as we said last time, we did receive questions from the FDA on the clinical module, that's module six, and when, you know, we routinely repeat questions on all modules that we submit and we answer those questions and sometimes it iterates a couple of times. And as a result of that we've been able to close out six modules so far.

The clinical module remains open. What we've done is to respond to the questions the FDA has asked and we're going to be meeting with the FDA over the course of the next few months and reviewing our response to those questions.

And I'll ask Larry to comment a little bit further on some of the things that they're looking at.

Well they really cover a wide range of questions from our clinical trial and they are not unanticipated given the scope of the trial and we're responding to them in due course.

And so, I guess, in switching gears, Steve, back to Europe. Since it does sound like there's this lag period in the validation process before commercialization. Are you guys assuming similar revenue this year per quarter as we saw this quarter or are you assuming it starts to ramp in the back half of the year? What do you guys have kind of dialed in to your internal targets?

Yes. Well, as you know, Katherine, we're not putting specific targets out there. Clearly we would like to see the rate of adoption moving faster than it's moving right now. And some of the things I talked about in terms of the decision-making are things that Baxter's working very hard on. In terms of working with the hospitals and the primary physicians who will prescribe INTERCEPT platelets and some of the agencies involved with reimbursement. And we think, you know, the results of those efforts will bear fruit toward hope that latter half of this year.

Jim, maybe you want to add to that?

Well, I think you've covered it, Steve. I think the back half of the year should give us some, you know, additional, you know, opportunities as people complete their validations and as we work to get the variances to the budget.

So I guess maybe, Steve, then given the fact that there is this uncertainty and that it could take a few quarters longer to get to the ramp, have you guys done anything internally that might allow you to reduce the burn rate in case this process of uptake in Europe really stretches out longer than you guys are expecting.

Yes. We're obviously being careful with our cash at this point. We are doing everything we can to, you know, cut the burn rate back. As Greg said in his prepared remarks, we believe we have cash for something like 18 months going forward and we do feel that, you know, there are opportunities, obviously, to continue to finance the company should that take longer, you know, to get the profitability than we're now anticipating.

But at this point nothing in the R&D pipeline in terms of some of the longer term R&D projects have been put on the back burner until the revenue ramp starts to catch up?

Yes. Well one of the things we've done is with all non-INTERCEPT R&D is basically we are in the process of getting that externally funded. For instance, our EBD trial for Epstein Barr virus is totally funded by the investigator. The work we're doing on cellular immuno-therapy is totally funded by the national marrow donor program. We do continue to receive increasing amounts of money from the Department of Defense. I think we said last quarter we received about six million dollars and there's more in that pipeline.

So any non-INTERCEPT type work that we do will be supported by outside funds and has to be, you know, basically a zero sum gain. We also are using in - we're working with the Department of Defense to apply theses funds to the projects that make sense to the military and there is overlap with the primary application in the decontamination system, such as viral and activation and so on.

So, you know, those are some of the things we're doing to get those out of the burn. And that's pretty much done.

OK. Great. Thank you.

Sure.

Our next question comes from the line of Ben Andrew with William Blair and Company. Please proceed with your question.

Good afternoon.

Hi, Ben.

Just wanted to talk about the existing sales that you've got into, I guess its Spain and Belgium. Can you talk about what percentage of the units that they run through the typical blood center that you guys are processing? I assume it's less than 100 percent, given the kind of revenue numbers we're seeing. You guys, you know, recognizing. Maybe just start with that.

Yes. Certainly it's not 100 percent. You know, there are multiple centers in each of those countries and we're dealing with centers, you know, in Spain and centers in Belgium at the present time. Some of these centers are still in the process of validation, so we're just in the beginning of the selling process.

Jim, you want to give a little bit more color on that?

Yes, I think that's right. I think they're still purchasing really based upon completing some of the various validations. And until the contracts and so forth are negotiated, then we'll see the uptake in sales.

Thanks for ...

The one thing that we've done is necessary is, you know, Baxter likes to get long-term contracts in place for these type of things. The longer the better, and the sale involves not only disposables, but it's, you know, there's several different things. Some of the items include the preparation kits for other platforms. Some of them include the platelet additive solution. There is the device and the device can be sold several different ways. And, again, Baxter tries to get, you know, the longest possible commitment from these centers, so it does take awhile to go through these negotiations and in the non-centralized countries, and the two you mentioned, Spain and Belgium, are non-centralized, this is on a center-by-center basis.

And so it's, you know, sort of like I said in the prepared remarks, we have to work through this together at each center. We don't think it's a question at all will it happen, it's a question of, you know, how long will it take to happen? And we think, you know, with all we're doing that we will see a significant uptake in the back half of the year.

Just to be clear though, the revenue recognition in this quarter would represent still validation unit sales into some of these as opposed, some of these centers, as opposed to explicit adoption for commercialization's sake for, you know, certain centers in Spain and Belgium. Is that fair?

I think that actually is not right. I think the sales, or maybe I didn't understand exactly what you said, but the sales we're looking at are true sales. These are sales for commercial use, for the most part. There may be - there may be some validation sales in there, I'm not exactly sure how that breaks down. But clearly most of them are for commercial purposes.

OK. My original question I'm trying to get at is if you - so the center that has done the validation work and is purchasing stuff for commercial use, would your sale be some significant percentage of that center's platelets or would that center stick with, say, five or 10 percent initially just to get their feet wet as they go forward? I'm just getting a sense of how each individual blood center's going to adopt this once they move through their validation phase.

Yes. Jim, you want to comment on that?

Yes, you know, I guess the direction I would give is that we don't anticipate centers to be carry a split blood supply. So while initially there've been, you know, X amount of sales, X number of disposables that are being utilized, it's all really still in keeping with the whole processing and completing the negotiation. And that at this point we don't, you know, there's nothing that leads us to believe they're going to be having any sort of split supply in terms of what's INTERCEPT treated.

Yes. I think we can say that some of the blood centers are now in the mode of using INTERCEPT for routine use, you know, at this point in time.

OK. Maybe this is a quick question for Greg, you may not want to answer, but the 20 thousand in recognized revenues, can you give us a ballpark expense of that represents in end user sales?

Well, I can tell you a few things, then. I can tell you that it represents both single donor and code disposal sets, also preparation kits from some of the other platforms. As you know, Baxter's asked us not to get detailed, precise details of what the sales are. But the variety of the product codes out there.

OK. But it - you're not going to give us a ratio in terms of end user sales for that 20 grand?

As far as unit sales, no, I'm - I can't provide that.

OK. Thanks.

Ladies and gentlemen, as a reminder to register for a question, please press the one followed by the four on your telephone at this time.

Our next question comes from the line of Steve Hamill with RBC Capital Markets. Please proceed with your question.

Good afternoon.

Hi, Steve.

In terms of, you know, just kind of segueing off of that last question, in terms of the idea of having split inventories, is there any indication that some of the blood centers want to wait until they have a plasma product available?

You know Larry spends a lot of his time in Europe so I'm going to ask him to address that question. I think he can comment very accurately on that.

Yes, I think the way the customers are approaching this, , is actually the converse of that. They see their ability to get the platelet system up as being the first step and when they're trained in the light device and actually even major aspects of the F-59 process for platelets, then plasma becomes very easy for them to do. And so I think their intention, in fact, is to integrate platelets first and then plasma easily follows behind. And that seems to be the approach they're taking.

OK. How about in terms of the budget dollars and, you know, in particular as you go for some of these budget variances. Do you find yourselves competing at all with the bacterial detection methods for platelets that are now available?

Larry, you want to just talk a little bit about bacterial detection and how it plays with INTERCEPT?

You know, clearly bacterial detection systems have become available more for quality control than for relief. There are some issues in terms of their applicability because the results, of course, are not immediately available when a lot of this product goes out the door.

The bacterial detection system, some of the methodologies, does not actually work with platelets that are suspended in additive solutions and that's a very substantial part of the European market.

I think that it's fair to say that many people are obviously looking at these sytems, but at the same time they understand the added features of the INTERCEPT system and the other benefits that they get. And so I think the bacterial detection system have called obvious attention to the need to do something about bacteria, but I think the customers realize the added benefit that you get out of the INTERCEPT system because it deals obviously with viruses, protozoans, and both anaerobic and aerobic bacteria in any type of suspension media that you might encounter.

OK. So in terms of, you know, as they compare them you're not running into people who would view bacterial detection as a poor man's alternative to INTERCEPT given the prevalence of bacterial contamination as an issue?

Well I think one of the things which the bacterial detection systems do is they create some very complicated logistics. You put your cultures up on day one - your product - most of it is transfused by day three. You may not have your results until day four or day five. And so the logistics of dealing with those cultures is quite difficult for them. It turns out now that, as opposed to prior experience, when you culture on day one, the positive culture rates are running about one percent. That's a fair number of units that you have to start to track through your system and either notify the hospital about or recall back into the center.

So I think people are really beginning to come to grasp the complexity of those logistics compared to the simplicity of INTERCEPT where you treat at the time of preparation of your product and you don't have those ongoing tracking and recall problems.

You know, Steve -- this is Steve. I'd like to add to add to that. I think you know that, you know, for detection you have to have enough copies of the bacteria to see a result that's positive. That's just how the tests work. So below that copy number, if you will, you would get a false negative result. And so, you know, we have a fundamental better way to do it because we can kill all the bacteria in the bag, which is really a superior approach. So, I don't think it's a poor man's choice to intercept it. Maybe a poor man's choice to intercept while waiting for INTERCEPT. And when INTERCEPT becomes available, we think people will take INTERCEPT, certainly, over bacterial testing because it's just, fundamentally, a better way to do it.

OK. And then, last, can you just give us an update in terms of some of the larger countries like France, Germany, the UK - where are they in terms of validation studies?

Yes. Let me just make a few comments and then I'll hand it over to Greg. Basically, we're running validation studies in all of those countries. In the UK, we're basically through the first round and I believe we're almost done with the second round. And we're getting those results put together and ready to submit. In France, we've gone through the first round at two centers of excellence. They're actually looking at that data now.

And we're looking at the necessity of doing a second round at this point in time. And then, in Germany, I think as you know, it's a center by center event. And we've gone through a dozen or so centers and we have submitted regulatory data. We - when I say we I mean the centers have submitted regulatory data to the Institute to get their establishment license so the state can buy the process. And that's ongoing right now.

So it's all moving those R&D to large countries. They have, you know, about half the inventory in Europe - very important countries. But it, you know, it takes time to go through the validation and the regulatory review. And Greg, if there's anything left to say ...

Yes. I think you've covered it. The only thing I might just remind everyone is that, you know, with Germany in force it is kind of like center and then it's not centralized in terms of the way France and the UK, you know, .

OK. If I can just follow up there with my question. Is there any standard timeframe you expect the Institute to take in reviewing those?

Well, our information from Baxter is that, typically for a medical device, they can take between two and seven months for an application. And, you know, it just - it just depends on the complexity application. We think these are pretty simple. They typically involve between 10 and 20 units that are processed with the equipment and, you know, we look at things like measurements and then that's written up and submitted. So we - it would certainly help. It would be less time rather than more, but that's kind of the range we've been given by Baxter.

Thank you.

Once again, ladies and gentlemen, as a reminder to register for a question, please press the one followed by the four on your telephone at this time. Our next question is a follow-up from Steve Hamill with RBC Capital Markets. Please proceed with your question.

I guess I could have just kept going. I - the one last question I actually had for Larry. Can you give us just an idea in terms of what new , if any, you have for INTERCEPT for red cells?

Actually, the pre-clinical safety studies for red cells have been completed and the last study was the carcinogenicity which showed that the INTERCEPT red cells were completely clean and that was sent into the FDA. And that allowed us to then modify our informed consent and advise our patients that these red cells were not carcinogenic in this test system.

And actually, Steve, you know, that program has been a very, very comprehensive program, looking at acute and chronic toxicity, various types of reproductive toxicity assays, sensitization - all kinds of different things. And it's all complete, including a full carcinogenicity study that Larry just referred to.

And at this point, is it possible that you think, Larry, to have the chronic and the acute phases there enrolled before the end of this calendar year or is that being optimistic?

That's our objective. That's what we're shooting for. As you know, you can't predict enrollment rates. They're not frequently nonlinear, but we have done a number of things that we believe will begin to give us an accelerating enrollment rate.

OK. Thanks.

Yes. Specifically, Steve, we've added, you know, three more sizes, Larry said. We've expanded the inclusion criteria for exchange transfusions. And then, because we have a very favorable or clean, I should say, carcinogenicity study, that allows us to make some changes in the consent form that, you know, we believe will enhance the rate of enrollment.

Our next question comes from the line of with Morgan Stanley. Please proceed with your question.

Hi. Just wanted to follow up on some of the questions on sales of disposable sets in Belgium. The customers who had, I think you reported last quarter, in Portugal and Italy, are those - are those customers also at a point where they're buying sets? I mean, are those - are you seeing sales into those countries or is the - or is it just into Spain and Belgium so far?

No, it's into those countries as well. You know, we're now in five countries - Portugal, Italy, Spain, Belgium and the Nordic, basically. So those are - those are countries we sell in at the present time.

So they're all quarter to quarter into those - into those areas.

Well, you know, they differ by center. But the basic answer is yes.

Great. Thanks.

Our next question comes from the line of with Peninsula Capital. Please proceed with your question.

.

Hi, .

Could you discuss, in some way, how you plan to meet the financing needs beyond the 18 months where you've got the cash in hand?

Sure. That question I'm going to give to our CFO, Greg Schafer.

Sure. Thanks, Steve. Well, as I mentioned on the call, we're at about $100 million for the cash right now and that represents 18 months or so. You know, one thing, we definitely have this strong partnership with Baxter. And one of the things we didn't talk about in the call base - just how much leverage we get on the R&D side out of that partnership where they fund a significant amount of the INTERCEPT development work as well as bringing their expertise to bear. We're working hard to get external funding through the military, which is an increasingly important part of our funding - different funding opportunities we have. And then some other grants that we can get from , et cetera.

But most importantly, we - when we look at our investor base, we have a very solid investor base right now with some of the strongest biotech investors and we continue to monitor the equity capital market as an opportunity. And that's something we'll continue to do as we look forward to the next 12 to 18 months.

Just to follow up a little bit on that, . I think, you know, when people look at Cerus and the partnership with Baxter and thinks like West Nile Virus and SARS, and the fundamental that there's no way to deal with things like West Nile and SARS without decontamination, I think, you know, the industry comes to the conclusion that this is the only way to deal with it. Now, admittedly, it's taking longer than anybody would like for this to happen. But I don't think anybody questions that it will happen. As I said earlier, it's a matter of how fast we can push it. And I can assure you that both Cerus and Baxter are pushing it very hard. And we do expect, you know, this proverbial hockey stick to happen in the not-to-distant future.

OK. Thanks.

I'm sorry. No further questions at this time. Please continue with your presentation or any closing remarks.

OK. Very good. I'd just like to thank everybody very much for being on the call. We do appreciate your participation and we look forward to keeping you updated on our progress and we'll talk you on our next call, which will be in July. So thank you very much.

Ladies and gentlemen, that does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your lines.