Cerus Corporation (CERS) Q3 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Cerus Corporation Third Quarter 2012 Results Conference Call. [Operator Instructions] As a reminder, today's conference call is recorded. I'd like to turn the conference over to your host, Ms. Lainie Corten, Director, Investor Relations. Please go ahead.

Thank you, operator, and good afternoon. I'd like to thank everyone for joining us today. With me on the call are Obi Greenman, Cerus' President and Chief Executive Officer; Kevin Green, our Chief Accounting Officer; Dr. Larry Corash, our Chief Medical Officer; and Carol Moore, our Vice President of Regulatory Affairs, Quality and Clinical. Cerus issued a press release today announcing our financial results for the third quarter ended September 30, 2012, and describing the company's recent business highlights. You can access a copy of this announcement on the company website at cerus.com. I would like to remind you that during this call, we will be making forward-looking statements, including statements about forecasts of revenue and annual growth rate; commercialization progress; regulatory and governmental processes; the scope and timing of clinical trials and other research and development activities; prospects for CE Mark or other registration and for U.S. regulatory submissions or approvals; potential customer responses; sales; operating expenses; gross margins; use of cash; finances; business prospects and the effect of currency fluctuation. The company's actual results may differ materially from those suggested by forward-looking statements we will be making, and the company assumes no obligation to update guidance or other forward-looking statements. I call your attention to the disclosure in the company's SEC filings, in particular, Cerus' quarterly report for the fiscal period ended June 30, 2012, on Form 10-Q, including the sections titled Risk Factors. This call will be archived temporarily on our website and will not be updated during that time. On today's call, we'll start with introductory remarks from Obi. We'll then hear from Kevin on the company's financial results, followed by Larry, who will give an update on our development programs. We'll conclude our prepared remarks with commentary from Obi, who will review the recent quarter's achievements. And now, it's my pleasure to introduce Obi Greenman, Cerus' Chief Executive Officer

Thanks a lot, Lainie. First, I'd like to begin with some exciting news. Based on recent positive FDA discussions regarding the INTERCEPT plasma program, we now plan to proceed with the submission of a premarket approval application, or PMA. The FDA has indicated that we have sufficient clinical trial data to proceed with an application for multiple indications of plasma use, not just the TTP indication for which we received Orphan Drug Designation last year. Pending agreement with the FDA on the PMA modular submission plan, we'll begin the submission in Q1 of 2013. This will put us on a schedule that could result in the INTERCEPT plasma approval as early as 2014. The U.S. approval will be a pivotal achievement for Cerus, and we believe American blood thinners will embrace pathogen inactivation to both improve patient safety and replace certain less effective safety techniques. At the recent Boston meeting of the American Association of Blood Banks, or AABB, I was really encouraged by the interest in the INTERCEPT plasma already coming from large blood services. Our announced collaborations with the American Red Cross and Blood System Incorporated, as well as our research collaboration with the New York Blood Center set the stage for meaningful discussions in 2013 about the operational implications of INTERCEPT deployment in their centers. Equally compelling was the general support for pathogen activation from the thought leaders at the AABB meeting. Recent U.S. dialogue about the persistent issue of bacterial contamination of platelets has strongly focused attention on means to further safeguard patients. We believe this may facilitate discussion with U.S. policymakers to help us also define an approval pathway for INTERCEPT platelets. We are more optimistic than ever about the opportunities that lie before us in establishing INTERCEPT as an essential proactive measure for blood safety. I will now turn the call over to Kevin to review the financials for the last quarter before coming back later on the call to provide some closing comments.

Thanks, Obi. In Q3, demand for INTERCEPT was approximately $9 million. For accounting purposes, this translated into reported product revenue of $8.3 million and additional demand of approximately $700,000 that we were unable to recognize as revenue in Q3 in accordance with our revenue recognition policies. As additional demand gives us a running start in Q4 revenue, providing us with confidence that we'll meet our 2012 guidance, which we are currently maintaining at $34 million to $36 million in product revenue. As a reminder, our guidance represents a growth rate of 20% to 25% when compared in euros. Turning now to gross margins. Our gross margins on product sales during the quarter were 47%, up sequentially from 40% in Q2. We expect that margins will remain in the mid-40s at current production levels and will improve with increased levels of kit production, as well as from several cost reduction initiatives, which may have a favorable impact as early as next year. Total operating expenses for Q3 2012 were $8.2 million compared to $7.2 million during the same period in 2011 and $8.4 million sequentially from last quarter. We expect operating expenses to increase modestly going forward, driven primarily by increased research and development costs, as our European acute anemia trial begins patient enrollment and as we prepare for the initiation of the European chronic anemia study early next year. Research and development expenses will also be affected by red cell development activities in the U.S., including the Phase I and II studies, as well as the PMA submission process for our plasma system. Net losses for the quarter were $3.5 million or $0.08 per diluted share compared to net income of $2.3 million or $0.05 per diluted share in Q3 2011. As a reminder, Q3 2011 included a noncash gain of $5.4 million related to the mark-to-market adjustments of our outstanding warrants. When looking at the balance sheet, we ended the quarter with cash and marketable securities of $26.7 million. Tight management of working capital was instrumental to ending the quarter with relatively little cash used for operations. For the full year, we continue to expect an average quarterly burn of approximately $3.5 million. Now I'd like to turn the call over to Larry, who will provide you with an update on our development programs. Larry?

Thank you, Kevin. As Obi mentioned, our meeting with FDA earlier this month regarding the INTERCEPT plasma program has resulted in greater clarity regarding the pass to product registration in the United States. At our meeting, the FDA indicated their willingness to consider a regulatory application for the INTERCEPT plasma system based on the clinical data collected to-date in both the United States and Europe across a variety of indications. We now intend to move forward with the PMA process for the following indications: Acquired coagulopathies, congenital coagulopathies and therapeutic plasma exchange, including TTP. Our next step with FDA will be to determine the timing and sequence of submission of each PMA module. We submitted a proposal schedule to the FDA earlier this month. We believe the modules can be assembled and submitted to position us for a potential approval of INTERCEPT plasma as early as 2014. I'd now like to highlight some of the very recent discussions in the transfusion medicine community, regarding bacterial contamination of platelet components, transfusion safety and the role of pathogen inactivation to improve transfusion safety. Over the past few months, the AABB has been very active in promoting the discussion of transfusion safety for platelet components and determining whether current practices provide sufficient protection from transfusion transmitted bacterial infections. The FDA's Blood Products Advisory Committee, or BPAC, devoted an entire day to this subject at their September meeting. The community concluded unanimously that current culture testing methods to detect bacteria are not adequate. Following the BPAC recommendation, AABB issued new guidance for their member blood banks, urging them to adopt stronger measures against bacterial contamination of platelet components. The newly issued guidance includes the following passage and I quote, "It should be noted that additional steps to detect bacteria in apheresis platelets should not be needed in facilities located in countries that treat platelets with a regulatory approved pathogen inactivation system." The guidance goes on to note and I quote, "The pathogen inactivation bacterial sepsis mitigation option is the most definitive approach, but remains unavailable in the United States at this time. Ongoing experience from those countries adopting pathogenic inactivation may eventually influence decisions by U.S. policymakers regarding pathogen inactivation." Previously, AABB issued guidance aimed at limiting the risk of bacterial contamination. That guidance led to the widespread adoption of bacterial culture of platelet components. We believe that the recently issued statement from AABB, in addition to the French and Swiss haemovigilance data demonstrating prevention of platelet associated sepsis over 6 years with INTERCEPT use, provide a compelling argument for the value of pathogen inactivation to improve transfusion safety. I'd like to conclude my comments with an update on our INTERCEPT red cell development program. In the United States, we've initiated our Phase 2 red cell trial, a study of post transfusion recovery and survival of the INTERCEPT red cell components in 28 healthy volunteers. This study is a critical prerequisite for our planned U.S. Phase III chronic anemia trial. In Europe, site initiation activities are complete for our Phase III acute anemia trial and our investigators in sites are ready to begin enrolling patients. Starting enrollment is now subject to a regulatory authority response and a final site inspection at one center. Pending final approval from the regulators, we anticipate this 50-patient trial will start soon. We will provide an update on the estimated completion time on the next quarterly call once we gain the experience with enrollment rates. Finally, we continue to work with 2 centers in Italy to prepare for our European Phase III trial in chronic anemia anticipated to begin early next year. We have received ethical committee approval at one site and have filed our submission with the Italian Ministry of Health. We plan to use data from both the acute and the chronic anemia European Phase III studies for CE Mark submission, supporting a broad indication for red cell transfusion. And now, I'll turn the call back the Obi.

Thank you, Larry. As I stated earlier, this one of the most dynamic times in the company's history. We are excited about the possibility of an INTERCEPT plasma approval in the U.S. in the 2014 timeframe. Throughout the next year, we will undertake large planning nativities for the U.S. benefiting from our extensive relationships with the major U.S. blood services and our many years of experience in Europe commercializing these INTERCEPT systems. We also have an active develop pipeline for the red cell program with 2 upcoming Phase III studies in Europe and a Phase II U.S. trial enrolling in this quarter. In addition, we believe the recent progress of plasma and calls for improved methods to eliminate bacterial risks could facilitate our dialogue with the FDA to determine an approval pathway for INTERCEPT platelets, which would fulfill our goal of defining FDA approval pathways for all 3 INTERCEPT products. Patients are our ultimately concerns at Cerus, and we are making steady progress to protect the blood supply for patients across the globe. The possibility of an FDA approval is now within reach, and this progress should help reinforce the merit of our technology to other regulatory bodies and national blood services. Finally, our growing global business and $26.3 million in sales to-date, makes us confident in delivering on our 2012 revenue guidance. We look forward to updating you in late February on our full year results and on our guidance for 2013. Operator, please open the call for questions.

[Operator Instructions] Our first question comes from Jeremy Feffer of Cantor Fitzgerald. Jeremy Feffer - Cantor Fitzgerald & Co., Research Division: First, I just wanted to come back to the PMA for plasma. How do the modules work and when you say potentially on track for approval in '14? Is that for the entire PMA or maybe just walk through how these modules are going to work.

Thanks, Jeremy. We're actually fortunate to have Carol Moore here today, so I'll let her cover the vast majority of your question. But what we've today is we basically have submitted an application shell proposal to the FDA. We did that at the beginning of this month. And right now, we're targeting 4 modules for that PMA submission plan. We still have yet to hear back from the FDA on that. So we're going to be a little bit cautious about communicating timing on each of the modules and whether there will only be 4 or not. And maybe I'll turn it over to Carol about sort of what the general concept is of the PMA submission process.

The general concept is, is that you can submit modules every 90 days. So depending on how many modules you end up having to submit, they can be submitted 90 days apart. At the completion of all of your modules, then an additional clock is applied for 180 days. That clock can stop at any time if you have a major set of questions that need response or some other activity that FDA feels necessitate a clock stop. But if things go perfectly, there's -- from the completion of your last module, there's at least 180 days of review. So our goal would be to get the modules submitted next year in 2014 -- I'm sorry, 2013, with the intention of then reviewing and discussing any outstanding issues and questions during 2014. And that's potentially how we get to the end-of-the-year timeframe. Jeremy Feffer - Cantor Fitzgerald & Co., Research Division: Okay. And the reason you're choosing this pathway?

It's for ease of both the FDA review, it allows them a chance to review the modules. It's one of the proposals that they have for companies to review or submit in modules so that they can review as the modules are completed. That allows the company to have a chance to see what the questions are, work on the questions so that at the time the module -- all the modules are complete, you have a picture of how the submission is going and what the FDA's issues might be. Jeremy Feffer - Cantor Fitzgerald & Co., Research Division: Okay, that makes a lot of sense. And then just one quick question on the quarter. Just on the revenue side. I noticed a comment here that you had the 14% increase in disposable kits but revenues were up just 6%. Was that currency or was that -- were there pricing issues? Maybe comment on that a little bit.

Kevin, why don't you get that one.

Sure. So there is an impact on currencies. We've seen that throughout 2012 compared to 2011. Kit demand was up but Illuminator demand was not. So that all [indiscernible].

Our next question comes from Josh Jennings of Cowen and Company.

Can you just first start off commenting on -- I mean, it seems like significant promise in your commentary around the potential for FDA approval for the platelet indication down the road is very optimistic, more optimistic than you have been in the past. Can you sort of tell us, has there been a catalyst? Was the BPAC meeting and the AABB subsequent bulletin really the catalyst in terms of settlement with the FDA changing? And then just why the new optimism on the platelet indication? Is it just on the heels of this PMA module acceptance by the FDA? And in terms of the historic spear trial concerns that the FDA has, is that going to be alleviated?

Well, I think, it's a little premature to discuss the position that the FDA has on our platelet pathway to approval. We have a proposal before them and we have yet to have sort of a face-to-face meeting with them to discuss that proposal. So that's still in the works. I think what -- I'll let Larry speak about the current situation with regard to the AABB recommendation and the meeting at BPAC, but I think that just to summarize at a high level is that there is increasing concern about the bacterial contamination risk of platelets. I think there's a widespread understanding now that existing bacterial detection methods are insufficient, whether it's culture or point of release. So maybe I'll just turn over to Larry to talk about sort of the general AABB recommendation and BPAC meeting situation.

Yes, just starting with the recent BPAC meeting on plasma, I think that BPAC's vote clearly indicated to FDA that there is interest in the transfusion medicine community and the clinical community have pathogen inactivation available in the United States. And that really represents a change in the landscape. And I think that the recent AABB focus on bacterial contamination of platelet components needs to be set in the context of what AABB has done in the past and that started in late 2003 when AABB issued a requirement for blood banks that sought AABB accreditation, which is basically every major blood bank in the United States, that they do something to limit bacterial contamination in order to be accredited. And that led to widespread bacterial culturing of platelet components. And now, the data accumulated have shown that that's not working and the blood centers are now engaged in a very complicated logistical scheme and still don't have complete protection. And I think the community looking at what's happened in Europe with pathogen inactivation, looking at their own situation have become much more introspective, I would say, about the value of pathogen inactivation in the United States.

Great, that's helpful. And then, Kevin, just on the constant currency, can you break the constant currency growth out, can you separate it from reported growth for us? Or the impact?

If I can get back to you on that separately on the impact of the half [ph] that FX had year-over-year, that would be helpful.

Sure. And then just -- the reason -- there's a reason by Baxter that Brazilian authorities wanted to provide [ph] improved access to your recombinant factor 8. And then they have also stated a desire to incorporate pathogen inactivation into their country's blood safety algorithm. I mean, it applies a strategic shift to reduce infectious transmission risks. I mean do you agree with that read-through and what additional steps needed to be taken for Brazil to adopt PI? And has there been any incremental progress in Q3?

I think we still have to do our submission there in Brazil, and that's -- but we are engaged in sort of experience studies down there are about ready to start these studies sort of to validate the technology. I think we're really happy with our distribution partner there, which is a company called CEI and their relationships with the blood centers in Brazil. So we think it's a unique opportunity and certainly there's a lot of transfusion, transmitted infections risk there. So it's interesting to hear that news from you, Josh, about what the Brazilian government has said recently, so.

Great. And then just any update on the U.K. tender process? And lastly, any incremental detail in terms of your outlook for Germany and Spain? And with this momentum that you have with the FDA and sort of an outlook for pathogen inactivation in Europe, I mean, is that -- can you capture some of that momentum and drive some more growth in some of the countries that have - that already have adopted PI but have been a little bit slower to -- on the utilization side?

Thanks, Josh. So I'll start with the last part of your question first, and I think the situation with regard to bacterial contamination of platelets is a problem in Europe. And at the end of the day, it's our belief that it's sort of a product this is -- it's not product, it's a problem that's not going to resolve itself without pathogen inactivation. So I think that the various services throughout Europe are looking at this in a serious way. And even for those countries that have adopted bacterial culture, they realize that it's only picking up roughly 25% of the problem. So that does have an influence on the decision-making in places like Germany and the U.K. and France. I think it is -- basically, we are making progress in all those countries, but it's a little too early to say that we have sort of definitive routine use contracts in place. And so what we've typically chosen to do is to delay making releases until we actually have something definitive to announce. In Germany, we're working with a number of different blood services there and they have not implemented bacterial culture yet or bacterial point of release tests. In the U.K., they have implemented bacterial culture but I think there are some problems associated with a very high false positive rate there. And to sort of conclude, with regard to the U.K. tender process, basically, what we understand right now is going on as far as the process is that the contract for bacterial culture will come up -- will conclude at the end of 2013, early 2014. And so the -- NHSBT or the U.K. Blood Service will be evaluating INTERCEPT to see what the operational considerations are prior to that point -- prior to that date and obviously, economics will also play into the decision-making.

Our next question comes from Zarak Khurshid of Wedbush Securities.

Kevin, can you just kind of provide a little more color on the recognition issue in the quarter? Kind of what's behind that and what's going to get things back on track?

Sure. So it's very short-term. In fact, we'll recognize all that $700,000 in Q4. It relates to orders and sales that we had in Q3 where distributors are responsible for picking up goods at our warehouse and picked up goods just subsequent to the balance sheet date. In fact, most of those orders actually were paid for in the quarter.

Okay, that makes sense. And then as we think about kind of U.S. plasma market developing potentially for 2014, how are you thinking about that versus the way things have played out in Europe? Would you envision the curve being similar to that of Europe? Or perhaps a steeper ramp? Give us a flavor for how you're thinking.

Yes. I mean, I think it's a little premature because we just sort of have this news as of the last couple of months. And so we're in the midst of sort of doing our launch planning right now. I think the major differences between the launch in Europe and the launch in the U.S. would be that we have very good relationships with most of the major blood services, it's also a highly concentrated market. So essentially, 5 customers make up 80-plus percent of the demand for our production of plasma in the United States. And I think we just have, obviously, learned a lot from the experience in Europe with regard to how to launch a product more effectively. I think, obviously, we've done a relatively good job compared to our former partner, Baxter, but I think we have learned a lot over the last 8 years in Europe and a lot of that is applicable to the U.S. situation.

And just as a final follow-up, can you just talk a little bit about the state of Europe, what you're seeing in various jurisdictions there? northern versus southern and maybe just talk about kind of your -- how you view your -- the headwinds perhaps over the next couple of quarters?

Thanks, Zarak. So I think we still see strong demand for our INTERCEPT kits in Europe. What we've seen happen though is that just with sort of the current economic situation in Europe, it does impact the pace of decision-making. So we have seen some delays in various customers taking on INTERCEPT as has happened and we haven't seen widespread adoption of INTERCEPT plasma yet. And so, for example, we are moving in that direction. So there have been delays throughout northern Europe. And Southern Europe, I would say it's more or less status quo. We haven't lost market share or lost a lot of revenue, but we aren't seeing a big uptick in demand either, and that's largely a function of just sort of the budget crisis in places like Spain, Portugal and Italy. So in overall, I think, we're highly confident in the ongoing demand for INTERCEPT in Europe and certainly in light of the situation around bacterial contamination of platelets. At the same time, to the extent that there continue to be economic headwinds in Europe, part of our corporate strategy has been to really target other markets outside of Europe and expand our distributor network so that we're not completely reliant upon European growth for our top line sales.

Our next question comes from the line of Blake Arnold of Robert W. Baird. Blake C. Arnold - Robert W. Baird & Co. Incorporated, Research Division: So I heard you mention that kit demand grew 14% year-over-year and I'm sorry if I may have missed this but what was the percentage change in demand quarter-over-quarter?

So quarter-over-quarter, demand is actually down around 5%, largely as a function of the French rebalance for PI, which is what we expected and talked about in the last call. Blake C. Arnold - Robert W. Baird & Co. Incorporated, Research Division: Great. And so I think on the last call, you mentioned France was currently at about 30% market share? Where is that now and do you expect that to be the normal rate sort of here going forward?

Yes. So last call, it was 34% as we reported. And so this call, it's about 30%. I think we sort of don't have a lot of visibility into where that's going to go throughout the next year, but we believe it'll continue along the path of the fact that the FDA -- not the FDA, the EFS has sort of 3 options to make plasma. One is quarantine, where they essentially bring the donors back 2 months after collection and then release the product then. The second one is their SD facility in Bordeaux and the third option is INTERCEPT. To date, INTERCEPT has worked remarkably well, and we believe that the sites that are using the technology like it and feel it's a very easy way to manufacture pathogen-activated plasma. But as going forward, I think that, at least it's to our understanding right now that the EFS will continue to sort of balance the overall plasma demand across all 3 options. Blake C. Arnold - Robert W. Baird & Co. Incorporated, Research Division: Great. And then just one final question as it relates to your 2012 guidance. Just doing the math on that, the low end comprise 5% decline quarter-on-quarter in revenue, whereas the higher end will be almost 20% sequential growth. So a pretty wide range there. Could you maybe talk about the different near-term variables that factor into that guidance? What would need to go right in order for you guys to hit the high end?

Well, Blake, we believe that a certain degree of conservatism is warranted given the EU economic uncertainty, which may influence timing of decision-makers that are looking to adopt INTERCEPT. So also the global economic uncertainty, which does have an impact on FX rates, which we do believe there is potential downside. So we're comfortable maintaining our guidance. To answer your question on what we need to see to beat guidance, it's really a function of timing of new customers coming online.

[Operator Instructions] Our next question comes from George Zavoico of MLV Company. George B. Zavoico - McNicoll, Lewis & Vlak LLC, Research Division: My question about -- I mean, it seems like the snowball now is rolling down the hill. It seems that Europe and then AABB seems to have influenced the FDA and now that the FDA is sort of coming onboard the bandwagon. Do you see sort of it flowing back over to Europe with some of the more stubborn or more difficult countries that have -- been taking a while to adopt? There seems to be -- or you seem to be riding a wave right now. Could you tell me a little bit more about how you feel about that?

Yes. I think having being on the market for 10 years now for platelets and 6 years for plasma, yes, there is sort of this ongoing database that we have of successful use of the product and a clearer demonstrated safety and efficacy in that setting. And I think that does influence decision-makers in Europe. And so our hope would be that as we move forward with the PMA process, that the FDA situation changes. And so ultimately, that this would lead to an FDA approval, and I think that does have a big impact on global regulatory authorities, as well as national blood services, as I alluded to on the call. So I think that, that is important. And then the other major driver at the moment would be around just how are they going to resolve this issue around bacterial contamination of platelets and whether that requires additional bacterial detection measures or whether, ultimately, INTERCEPT is seen as the most logical way to proceed. George B. Zavoico - McNicoll, Lewis & Vlak LLC, Research Division: And in that regard, I think, perhaps you might not be able to speak to it because you mentioned that you're still in discussions as to how to go forward with the platelet, INTERCEPT and the FDA. Do you envision that at all requiring additional trials or comparisons because as you said, you've been on the market for 10 years and you could probably draw on a lot of experience to help convince the FDA that that this is something that can be done, perhaps more quickly?

I think the FDA will definitely require us do additional Phase III clinical study and the proposals that we have in front of them sort of describes how that would be done in addition to how we would collect safety data from the European experience. But I think that's about the extent of what we can describe right now until we have the meeting with them. George B. Zavoico - McNicoll, Lewis & Vlak LLC, Research Division: Okay. And in that regard, might it require a better haemovigilance, as well as a Phase IV or after [indiscernible]?

Yes, I mean, perspective data collection from Europe is something that we need to figure out how to do a better job of. I mean, we have a good database and maybe Larry can speak to that because he gave a presentation at the AABB around the French and Swiss experience, but it's just going forward, how can we leverage that experience in Switzerland/France that has very good haemovigilance systems and then in place this protocol that allows us to collect prospectively data on the experience going forward.

Yes, George, we've used 3 of our own haemovigilance programs in Europe and are about to launch yet another one because we like to collect that data and it involves active haemovigilance, so we record the outcome of every transfusion. And then we've also taken advantage of data coming out of the French system, which is active haemovigilance and the Swiss system. And that was very useful data because for the first time, we've been able to show with very large numbers of transfusions that the INTERCEPT process is preventing transfusion associated sepsis. I think that we will use some part of that program in the United States if FDA agrees to an approval because I think again, it's a very powerful tool to number one, confirm the safety of the product; and number two, it becomes, I think, a very valuable scientific demonstration for other potential customers. George B. Zavoico - McNicoll, Lewis & Vlak LLC, Research Division: And then the haemovigilance part is based on -- mainly on historical controls because in the Switzerland at least everybody is getting it now, right? So you can see a natural elimination, almost of any sort of bacterial contamination. That should be pretty convincing.

Well, in France, we actually had a fantastic opportunity because we started INTERCEPT in 4 centers in late 2006 and the other 10 centers in France did not use INTERCEPT. And so we have over those years, compared the rates of transfusion-related sepsis in the centers using conventional platelets where those events have continued. And we now have 6 years of experience in the centers in France and to that, we've added the centers in Switzerland showing no cases of transfusion-related sepsis. So we actually have a parallel control in time concurrent. George B. Zavoico - McNicoll, Lewis & Vlak LLC, Research Division: Okay, that should help a lot, I think. And finally, one more question about -- Kevin, you mentioned that you -- the operating expenses, you expect to increase modestly going forward. But it seems with the number of trials you're talking about starting in Europe for potentially a Phase III platelet study in the U.S. and perhaps you've been building out some sort of sales infrastructure assuming approval in the U.S. Does that going forward modestly [ph]-- does that really refer mainly to the first half of next year? Or do you see a more of increase in OpEx throughout the end of next year?

Well, I certainly think it applies to next year. The preparations for the acute and chronic trials are fairly costly in line with the cost that we would expect to run the clinical trials over next few years. So we won't see a huge increase as a result of running those files. As it relates to a potential platelet trial, we're not prepared to give comments on that until we understand the size and scope of what that trial may look like in cost. And then as far as the SG&A footprint, I think as Obi mentioned during the call, we are still looking at our launch plans for the plasma assuming that we are able to navigate the PMA process timely. But the customer base is concentrated and we wouldn't expect, even when we're building out that team to have a huge SG&A footprint. So I hope that answer your question. George B. Zavoico - McNicoll, Lewis & Vlak LLC, Research Division: Yes, yes, it does. Plus, it seems to me you'd have a very, very interested and willing customer base to adopt it as well. So it shouldn't be that hard of a sell, I wouldn't think.

Our next question comes from Edwin Schloss [ph] of Schloss Associates [ph].

Good to know because regulatory approval is such a prolonged process. Do you detect that other companies are developing similar products that would compete with Cerus within the next few years?

Well, there is -- there was a BPAC meeting. The most recent BPAC meeting did have Octaplas LG present there. And so we do anticipate that they would be an approved product potentially in the near term as a function of the BPAC recommendation or the BPAC vote during that meeting. We don't know where they stand with regard to the FDA approval process, but that's one potential competitor. As far as other competitors, I'm just not aware of any other competitive PI plasma products that have the breadth of clinical data that Cerus and INTERCEPT programs have. And so I think it may be a long time before we see another viable competitor who has done the studies required for approval.

What about Baxter and Becton, Dickinson?

They don't have any active pathogen inactivation programs for plasma for transfusion.

I'm showing no further questions at this time and I would like to the conference back over to Mr. Obi Greenman for any closing remarks.

Well, thank you, all, for joining today. We look forward to updating you again in late February. And thanks again. Bye-bye.

Ladies and gentlemen, this does conclude today's conference. You may all disconnect and have a wonderful day.