Good day, ladies and gentlemen, and welcome to the Cerus Corporation Second Quarter 2013 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Lainie Corten. Ma'am, you may begin.

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 Financial Officer; Dr. Larry Corash, our Chief Medical Officer; and Carol Moore, our Senior Vice President of Regulatory Affairs, Quality and Clinical. Cerus issued a press release today announcing our financial results for the second quarter ended June 30, 2013, and describing the company's recent business highlights. You can access the copy of this announcement on the company website at cerus.com. I would like to remind you that during this call, we'll be making forward-looking statements, including statements regarding revenue, market adoption; production levels; annual growth rate and gross margins; operating expenses, including expenses related to research and development and commercialization activities; burn rate; product demand; commercialization activities and progress; the scope and timing of clinical trials and other research and development activities; the timing and potential approval of regulatory submissions; the impact of our commercialization experience on future regulatory and marketing efforts; the sufficiency of clinical data for regulatory submission; potential reactions to recent U.S. regulatory development; the sufficiency of cash resources, business prospects; and the effect of currency fluctuation. The company's actual results may differ materially from those suggested by forward-looking statements the company 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 March 31, 2013, on Form 10-Q, including the section entitled Risk Factor. 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 the quarterly financial results from Kevin, followed by Larry, who will give an update on our development program. 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 Kevin Green, Cerus' Chief Financial Officer.

Thank you, Lainie. Earlier today, we reported Q2 2013 revenue of $10.2 million, which came entirely from product sales and represents a 10% increase from Q2 of last year and a 4% increase from Q1 of this year. Approximately 90% of Q2 revenue was derived from disposable kits, with the remainder coming from new placements of illuminators. We believe our first half revenue of approximately $20 million provides solid support for our full year product revenue guidance of $41 million to $43 million. This guidance does not include major conversions in the largest European markets or in major new geographical markets, which could provide upside if any of those conversions occur. Our gross margins on product sales during the second quarter were 43%, following the 48% we reported in Q1. First half margins have been supported by improved overhead absorption and efficiencies in our manufacturing processes. Looking ahead, we continue to expect that our annualized margins will remain in the mid-40s at current production levels and will improve as production ramps to meet the anticipated growth in demand. Taking a look at operating expenses. We reported $11.5 million for Q2, compared to $8.4 million during the same period in 2012 and $9.6 million sequentially from last quarter. First half 2013 operating expenses were $21.1 million, compared to $16.3 million incurred during the first half of last year. As mentioned last quarter, this increase is consistent with our expectation for rising research and development expenditures to support the ongoing platelet and plasma PMA filings, as well as the conduct of our European Phase III red cell trials. We are now starting to build out our commercial infrastructure in the U.S., which we believe will also contribute to increased operating expenses as we approach the potential U.S. product launches. Net loss realized in Q2 was $6.7 million, or $0.10 per share, compared to $1.9 million or $0.04 per share realized in Q2 of last year. For the first half, net losses were $17 million, compared to $10.7 million in 2012. Current quarter net losses were impacted by noncash gains of $700,000 from the mark-to-market adjustment associated with the revaluation of our outstanding warrants. For the first half, net losses were affected by $4.4 million in noncash charges from the warrant revaluation. Looking at the balance sheet. We ended Q2 with cash of $58.2 million, compared to $26.7 million at the end of 2012 and $69.2 million at the end of the first quarter. With that, I'd like to turn the call over to Larry for a discussion of our development programs.

Thank you, Kevin. I'd like to provide an update on our red blood cell clinical program, as well as our U.S. regulatory submissions for platelets and plasma. We announced last month that we initiated patient enrollment in both of our European Phase III clinical trials for the INTERCEPT system for red blood cells. The first Phase III trial is being conducted for the indication of acute anemia in cardiovascular surgery patients undergoing elective procedures. Patients are randomized to receive 7 days of transfusion support, beginning on the day of surgery, with either conventional or INTERCEPT red cells. Target enrollment is 50 patients, and the primary endpoint is hemoglobin content per red cell unit transfused. Hemoglobin content was selected as the primary endpoint to evaluate the efficacy of the INTERCEPT Blood System, as it is a key requirement for RBC components for transfusion per the European guidelines from EDQM, and we'll provide supporting data for CE Mark registration per the EU Medical Device Directive. The second Phase III trial is being conducted for the indication of chronic anemia in transfusion-dependent thalassemia major patients. Patients are randomized in a crossover design and receive transfusion support in random sequence with either conventional and INTERCEPT red cells during separate treatment periods of 6 months each over approximately 12 months. Target enrollment is 70 patients, and the primary efficacy endpoint is hemoglobin usage per body weight. The primary safety endpoint is the immune response to repeated exposure to S-303 red cells. Hemoglobin usage was selected as the primary efficacy endpoint as it reflects the ability of transfused red cells to oxygenate tissues, persist in circulation and suppress endogenous red cell production. This endpoint is clinically relevant because hemoglobin consumption contributes to iron burden, an important aspect of chronic transfusion therapy, which is managed by iron…

Thank you, Larry. In early June, we had a large presence at the International Society of Blood Transfusion in Amsterdam. ISBT is a significant industry event to the large international audience of blood thinner directors and other blood thinner and transfusion medicine experts. This ISBT was a special one for Cerus as we were able to highlight our over 10 years of INTERCEPT use in Europe and cumulative kit sales representing the production of nearly of 2 million units of INTERCEPT platelets and plasma. These statistics represent a very substantial experience with these products, and we believe that this experience is increasingly important to both our regulatory and marketing efforts on a global basis. In Q2, we delivered another solid quarter of sales growth, including signing on our first customer in Denmark. Our sales team remains focused on delivering continued progress across Europe, CIS, Middle East and Africa, and we are continuing to build our distributor network and expand our markets through additional regulatory submissions, including those under review in Mexico and Brazil. Our biggest advocates continue to be our international blood thinner customers, who have realized operational benefits from INTERCEPT implementation, in addition to the pride they have in advancing the field of transfusion medicine and securing the safety of their component production. Initiation of our Phase III red cell trial sets the stage for our next phase of growth beyond INTERCEPT platelet and plasma business. It is an important step towards commercialization in Europe with the data from these studies forming the basis for a potential future CE Mark application. And finally, we continue to believe that platelet and plasma approvals in United States will be our most pivotal goals to achieve over the next 2 years. Successful execution on our PMA submissions remains a clear priority for our regulatory clinical and development teams, and we are beginning to build out our commercial infrastructure in anticipation of launch. Among our first hires are additional scientific affairs, marketing and regulatory staff to ensure adequate support for the PMA, as well as other global regulatory activities. I look forward to updating you on our progress in all these areas in the future quarters. Operator, please open the call for questions.

[Operator Instructions] Our first question is from Jeremy Feffer of Cantor Fitzgerald. Jeremy Feffer - Cantor Fitzgerald & Co., Research Division: First, Larry, I just wanted to come back to the comment you made on the PMA processes. You mentioned that, in your words, clock stops are not uncommon. I'm wondering, what typically would cause them. And has there been anything that you've heard from the FDA in response to your first 2 plasma modules that would suggest that one is likely?

Jeremy, I've got Carol Moore here as well so she can build the question for you.

I think a clock stop is just a [indiscernible], which the FDA might trigger if they feel that a response to one of their questions require an additional review time. If there's a certain amount of review that's built into the [Audio Gap] also a response to the questions depending on the amount of data that is provided, and as a result [Audio Gap] if FDA feels that it's going to take them a longer than a specified period, they may ask for additional [indiscernible] or may just stop the clock to allow themselves some additional time. It's just a routine regulatory option. And to this point, [indiscernible] receive some questions from FDA on our first 2 modules that we were able to respond in the prescribed amount of time and have not experienced any clock stops to this point. Jeremy Feffer - Cantor Fitzgerald & Co., Research Division: Okay. So theoretically [Audio Gap] on a theoretically [Audio Gap] could be further questions that could delay perhaps with the third module or would the clock stop occur after all 4 modules are submitted?

Well I don't -- we aren't experiencing or expecting any issues to come our way that would extend the clock. I think we're just providing this, as you say, as a theoretical example as part of a regulatory process that could occur [Audio Gap] registration review. Jeremy Feffer - Cantor Fitzgerald & Co., Research Division: Got it, understood. Then on a -- just quickly on guidance, I know historically, the second half has usually been stronger than the first half, so I understand the commentary about confidence that your guidance range is still achievable even though you're less than halfway there. What sort of upside opportunities do you potentially foresee that might not be embedded in there?

Well I think as we've developed our guidance, we look for the full year effects historically, and I think we also anticipate increasing demand from either current customers or [Audio Gap] customers coming online. So I think relative to what we were expecting, we're in line and believe we have a solid start to the -- I guess, not start, but at the first couple of years beyond. So this is in line with what our expectations were. As far as new opportunities, I think we're still believing that there's not going to be any major revenue inflection points associated with some of the key markets like France, Germany and the U.K. But it would be basically incremental new customers that are -- and others, a lot of them that are in the upper end. So, yes, it's sort of hard to point to a specific one. Jeremy Feffer - Cantor Fitzgerald & Co., Research Division: Okay. And then the last one for me and I'll jump back in queue. Kevin, you were talking about building out U.S. commercial operations. Is that putting some sales folks on the ground? Or what -- just trying to get a better understanding of what types of investments you're making here?

Sure. So initially, I -- we needed to do some market research and build out marketing efforts. And then I think, as we move forward, we'll look to develop deployment of sales force and then beyond that, customer service, et cetera. So that's what I was referring to.

Our next question is from Zarak Khurshid of Wedbush Securities.

With respect to the FDA clock stops, as far as you know, were there any issues there with your competitors' products and any sense as to why there were some issues?

I think it's a little bit different in that as the Octapharma product that was recently approved goes down a different regulatory pathway, but maybe I'll turn it over to Carol, if you're familiar with anything.

Well I think there's a clock on all the processes that's why all sponsors pay user fees, and I think that we don't have complete visibility to a competitive process review. I don't know if they had any clock stops. But again, it's really up to the agency and to the sponsor to determine if there's adequate time available for responding and reviewing of data.

Great. And maybe a question for Kevin. I think I missed it in the initial remarks. Can you just break out the contribution from the illuminators of the quarter? And then if you can, perhaps, could you provide a little bit more color on what sort of a reasonable distribution between Illuminators and consumables for the remainder of the year, and then next year as well? Just trying to get a sense for kind of what the -- what would the appropriate run rate we should be thinking about for the equipment side of the business.

Sure. So this quarter was very typical for our past experience. Illuminators represented about 10% of our revenue this quarter. Historically, it's ranged from between 5% and 10%, and we expect that, that trend will continue and it's quite healthy as we place new Illuminator devices. There's an ongoing pull-through on disposable kits following those. So a 5% to 10% Illuminator mix is healthy in our opinion.

Great. And then as a follow-up for Larry or Obi, I think a lot of investors are starting to look further out and they're thinking about the red blood opportunity. Can you just kind of walk us through the kind of the economic argument for that product? I think we're all aware of the benefits for -- from the shelf life improvement on the platelet side. But can you give us a sense for, again, the incentives behind potential uptake for the red blood cell product?

I'll start, and maybe I'll turn it over to Larry. I mean there is an ongoing concern about transfusion-transmitted infection in red cells and specifically, in certain parts of the U.S. and around the globe, where there's malaria or dengue fever. So the ability to really rationalize the existing safety paradigm comes into play once you have the complete portfolio of INTERCEPT products available. So that's what we ultimately hope would happen once an INTERCEPT red cell product is approved. And beyond that, I don't know, Larry, if you have any other thoughts.

Well I think that in terms of transfusion exposure, there are populations of patients with thalassemia, those patients, sickle cell anemia patients, people with cancer who have chronic transfusion requirements, who probably have the greatest exposure to blood products among the 3 components. And so you can regard those as very high-value patients because they have had such expensive therapies, and an infection would be such a disastrous event for those patients. So I think that those are places of great benefit for the technology and offer a potential for pricing opportunities because you can improve the outcome for those patients.

[Operator Instructions] Our next question is from George Zavoico of MLV & Co. George B. Zavoico - MLV & Co LLC, Research Division: You mentioned that Mexico and Brazil are now on the regulatory review. Could you expand on that a little bit and say when you might expect a decision by those regulatory authorities?

Well I'll turn it over to Carol. I mean, as a function of timing, I don't think we want to speculate there yet, but maybe she can give us -- give you an update on what -- where we stand in the process.

Well the process in Mexico is moving right along wherein dossier reviews have gone quite far in their review and are asking us some, I think, some final questions. Again, I don't want to speculate on their final approval date. But I think there's been nothing in that Mexico review process that was different than any other review process. So it's been going quite well. In Brazil, it's a 2-stage process. They start with an inspection of facilities, and they schedule those inspections and then we go to a paper review after that. So it's a routine process at this point. And I think there's no indication that there's anything different about our review in Brazil than any other review. George B. Zavoico - MLV & Co LLC, Research Division: So you mean, they inspect the facilities, the manufacturing facilities and not the blood donors' types, right?

No, I'm sorry, the manufacturing facilities, yes. George B. Zavoico - MLV & Co LLC, Research Division: Yes, yes, okay. And are these countries like Switzerland, if they decide, then all country goes or is it by hospitals like Germany?

Well each country is unique, but yes, we don't expect it to be a national decision in Brazil or Mexico. George B. Zavoico - MLV & Co LLC, Research Division: Not a national decision, okay. Okay. And Larry with regard to the anemia and trials, both acute and chronic, you mentioned that's hemoglobin content and hemoglobin usage, and what is the hurdle here for a positive result? You basically want to be equivalent, if I understand correctly, to traditional methods, right, conventional methods? When do you need to show them?

Yes. So both of these studies are designed as inferiority studies. And so we need to demonstrate that in the acute study, the hemoglobin content is not inferior to conventional red cell components. And in the chronic trial, we need to demonstrate that the use of hemoglobin per kilo of body weight is not inferior for INTERCEPT compared to conventional red cells. George B. Zavoico - MLV & Co LLC, Research Division: Okay, yes, that's what I thought. Okay and finally, you're -- I guess, to Kevin, the ramp-up of the expenses both in R&D and selling and general, SG&A, now that all the trials are -- now that the 2 trials are going, it looks like that, that ramp-up might slow down a bit. Or can you provide any additional guidance on where you might expect those to go?

Well we do expect operating expenses to continue to nudge upward, George. I think as a function of the red cell trials, we'll have now full quarters of the trials that are running fully or enrolled. And then on the SG&A front, we're going to continue to bring on resources and expand our commercial infrastructure. George B. Zavoico - MLV & Co LLC, Research Division: Yes, like you already mentioned, doing that in the U.S., right?

Yes.

Our next question is from Josh Jennings of Cowen.

I guess, first, for Larry, if you could just comment on the Phase II study in the U.S. for red blood cells and just a little bit more color on -- it sounds like this is a benign event, but just during your prepared remarks, you went a little bit quickly, if you could just break it down for us exactly what happened and what the fed requirements are and what you need to bring forward, and whether or not -- I mean how much has pushed up at the timeline to move into the Phase III portion of the RBC regulatory pathway in the U.S.?

Yes, I think that your assessment that it's benign agrees with our assessment. The -- our clinical-wide showed us that the measurement of packs -- packed red cell volume at one of the sites was not achieving the precision that we demanded. And that the results of that assay are used to calculate recovery and lifespan, and it has to be obtained on every -- on the sample that's withdrawn from the subjects over the 35-posttransfusion-day period. And the results have to achieve a certain precision. And this site was not achieving that precision. So we took the corrective action. It will have an impact of approximately a 1-quarter delay because we'll add 12 additional subjects to replace these data.

Okay. And in terms of -- so it's about a quarter of push out, and what are the steps after you secure these -- the data on these additional 12 patients in terms of moving forward with the FDA and getting into Phase III in the U.S.?

Yes, it doesn't really impact when we would commence the Phase III trial, where in the United States, we're looking at starting that trial at the end of 2014. And so this still gives us adequate time to analyze the data from this Phase II trial and then negotiate the clinical trial design with FDA. We've already had preliminary clinical design discussions with FDA, and so we know the direction that this is going in, and we'll still be able to stay within the schedule that we had set for the program.

I think the other caveat is just that we are looking at the outcome of the European clinical studies and hoping that some of that data will guide the development and timing, to be frank, of the Phase III red cell studies in the United States.

Okay. And just to be clear, in terms of the measurement of the RBCs, the precision was lacking in both -- I don't know what's your crossover studies, was it lacking in all patients at one point?

It was lacking in all patients at one site in both arms. It was evenly distributed. Didn't have anything to do with the S-303 treatment process. It had to do with the acquisition and processing of the samples and the actual assay itself.

Okay, great. And a follow-up for Kevin, just what was the currency impact in the quarter?

So quarter-over-quarter is about -- or year-over-year is about 3%. So FX rates were up from where they were in Q2 2012 or $300,000.

And then for Obi, just in terms of having these FDA regulatory pathways in place, had it had any positive effect in terms of your ability to market in countries that have achieved -- where you have achieved approval and begin any traction from this regulatory pathway in the U.S. opening up?

Thanks, Josh. We have seen a heightened interest and enthusiasm outside the United States. Although, we really think that the impact will be most pronounced following any kind of FDA approval decision because I think that it's a little too soon to draw any conclusions about impact of U.S. applications on future approvals or as the market adoption over the course of the next 12 to 18 months. But all in all, it's been a very positive thing for the company.

Thank you. I'm showing no further questions at this time. I would now like to turn the conference back over to Obi Greenman for closing remarks.

Thank you for joining us today. We look forward to updating you again on our next call in late October. Thanks very much.