Cerus Corporation (CERS) Q3 2014 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Cerus Corporation Third Quarter 2014 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to your host, Lainie Corten. 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 Financial Officer; Carol Moore, our Senior Vice President of Regulatory Affairs, Quality and Clinical; and also Larry Corash, our Chief Medical Officer. Cerus issued a press release today announcing our financial results for the third quarter ended September 30, 2014, 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 regarding the company's products, prospects and results, including expectations for future sales growth and performance, gross margins, new customers, revenue, operating expenses, research and development activities and costs, foreign exchange rates, manufacturing collaborations, commercial partnerships, regulatory submissions and approvals, sufficiency and utilization of cash, commercial launch of new products or in new territories, clinical trial activities and reporting of data, access to capital, BPAC reviews, INTERCEPT availability under an IDE and strategic changes to Cerus' distributor relationship. 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 June 30, 2014, on Form 10-Q, including the sections entitled 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 begin with quarterly financial results from Kevin, followed by an update from Carol on our development programs and regulatory submissions. 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 Q3 revenue of $10.4 million, consistent with our expectation that revenue growth would be higher in Q3, as certain distributor transitions came to a conclusion. We are winning new business in the region and our interaction with blood center customers has been very encouraging, underpinning our strategic thesis moving to a direct sales model in the region. We remain confident in our revenue growth over the longer term, but now anticipate lower than previously expected Q4 revenue due to the weakening euro exchange rate relative to the U.S. dollar. Though we expect sequential growth and demand for our products, that growth will not be enough to offset the foreign exchange headwind. We, therefore, believe it's prudent to adjust our full year 2014 revenue guidance. We are now targeting approximately $36 million to $38 million in annual revenue rather than the original range of $38 million to $40 million. Our gross margins during the third quarter were 45%, consistent with Q2, and improved from the 35% reported in the third quarter of 2013. Our product mix is in line with our expectations, with disposable kits representing just under 90% of sales. Looking ahead, we expect our gross margins will remain consistent, in the mid-40s. Turning now to operating expenses. Total operating expenses for Q3 were $16 million compared to $14.9 million last quarter and $12.1 million during Q3 of last year. As our PMA filings progress with the FDA, we continued to incur elevated regulatory expense and are making incremental investments in our North American commercial launch team. Both of these investments were drivers for the increased operating expenses. Looking ahead, we anticipate operating expenses may continue to increase modestly as we bring on additional resources and engage in activities in support of the potential U.S. launches. In addition, we expect development costs to increase as we undertake the CMC activities necessary to complete our CE Mark dossier for the INTERCEPT red cells. Net losses for the quarter were $10.8 million, or $0.15 per diluted share, when adjusted for the dilutive impact of the mark-to-market value of outstanding warrants. Comparatively, net loss was $20.5 million, or $0.29 per diluted share, in Q3 of 2013. The reported operating results for Q3 of 2014 were impacted by a noncash gain of $1.7 million from the warrant accounting. Of the 5.7 million warrants previously outstanding, 2.4 million warrants were exercised at the end of August, generating almost $7 million of cash. The remaining 3.3 million warrants expire in November of 2015. Now looking at the balance sheet. We ended Q3 with cash, cash equivalents and short-term investments of $47.6 million compared to $49.7 million at the end of last quarter. With that, I'd like to turn the call over to Carol, who will discuss our regulatory and development program progress.

Thank you, Kevin. Q3 was a very active quarter for regulatory, clinical and development teams as we initiated Expanded Access IDEs to make INTERCEPT available in response to the ongoing epidemics of chikungunya, dengue and Ebola, as well as continuing to work with FDA on the reviews of our plasma and platelet PMAs. For Ebola, we recently announced submission of our protocol to apply INTERCEPT to the treatment of Ebola convalescent plasma. Plasma collected from individuals who have recovered from Ebola virus disease contain antibodies against the virus, these antibodies that can help fight Ebola infections in the recipient of the transfused plasma. Convalescent plasma has demonstrated benefit in prior disease outbreaks, and is one of the few therapies immediately available for Ebola virus disease. It is of note that each of the surviving patients treated in the U.S. received convalescent plasma during the active phase of their disease. A concern associated with collection of convalescent plasma from recovered patients is that they may carry undetected pathogens due to prior exposure, and their history of travel to Africa make these individuals temporarily ineligible to donate blood under U.S. regulatory guidelines. We believe that INTERCEPT pathogen inactivation can provide a critical risk mitigation strategy by inactivating harmful organisms that may be present without impacting the anti-Ebola antibodies that the patient needs. Convalescent plasma donors are tested for Ebola to ensure that they have recovered from their infection. So the purpose of applying pathogen inactivation is actually protection from other pathogens, not from Ebola itself. We are preparing to implement INTERCEPT at Emory, which is the first Ebola trial site, and can be ready to treat convalescent plasma very quickly if new patients arrive at that facility. In addition, we understand that the facility could elect to create a stockpile of INTERCEPT-treated convalescent plasma that can be provided to other U.S. Ebola virus treatment centers. For chikungunya and dengue, our protocol was accepted by the FDA, and we announced last week that the American Red Cross is participating in the study. We understand that their decision was driven by the fact that there are no licensed tests -- there is no licensed test available to screen donations for chikungunya infection, making pathogen inactivation the best alternative for the Red Cross to implement in order to resume safe platelet collection in Puerto Rico during the epidemic. The Red Cross also recognizes the additional operational benefits available with the use of INTERCEPT under the IDE protocol, including not having to perform bacterial detection tests, gamma irradiation and CMV testing. We are working closely with the Red Cross and Puerto Rico hospitals that they serve to initiate our clinical study in the near term. Now onto our ongoing PMA reviews. For INTERCEPT plasma, we submitted our responses to FDA questions regarding the manufacturing process in mid-September, restarting the clock for this review. There were approximately 90 days remaining on the original review clock and FDA still has the option to add an additional 90 days as a result of the new manufacturing validation data submission. It's possible we could still receive an approval decision in 2014, but if FDA takes the additional review time available to them, the plasma approval decision may not occur until early 2015. For INTERCEPT platelets, the FDA review has been ongoing since the submission of the final platelet module at the end of June. An approval before the end of 2014 is possible, but as we've seen with the plasma application, questions from FDA may require additional time to resolve, so we continue to expect that a U.S. platelet approval decision will occur in 2015. I'd like to take a moment to address the question of whether the products will be reviewed with the Blood Products Advisory Committee, or BPAC, prior to approval. Many products are approved without an advisory committee review and, thus far, FDA has not indicated that they plan to send either product to BPAC for review. Though FDA can change their plans at any time, Cerus' current expectation is that we may receive review decisions without an apparent at BPAC. Moving on to our INTERCEPT red cell development program. We've completed both our Phase III acute anemia trial for cardiovascular surgery patients in Europe and our U.S. Phase II recovery and survival study in healthy volunteers. We are analyzing the study data and continue to target announcement of the results for each study by year end. And now I'd like to turn the call over to Obi.

Thank you, Carol. We just returned from the AABB conference last week in Philadelphia, which is the largest blood banking conference in the world and always a key event for Cerus. There were 20 abstracts covering INTERCEPT, including studies for platelets, plasma and red blood cells. We ran a workshop, which covered chikungunya and dengue epidemics in Puerto Rico, and the challenges of managing blood safety in the face of emerging pathogens. The workshop featured Dr. Susan Stramer, Vice President of Scientific Affairs of the American Red Cross; Dr. Harold Margolis, Chief of the Dengue Branch, CDC, Puerto Rico; and Dr. Brenda Garcia-Rivera (sic) [Dr. Brenda Rivera-Garcia], epidemiologist at the Department of Health, Puerto Rico. It is increasingly clearer that the challenges of the current blood testing paradigm related to both the economics of incremental tests for emerging pathogens and the time and complexity of developing those assays, make pathogen inactivation a more pragmatic approach to safeguarding national blood supplies. Also at the AABB, our plasma IDE was mentioned during a special late-breaking session regarding Ebola and convalescent plasma. We felt that there was heightened interest in, and awareness of, pathogen inactivation compared to previous years, an ideal lead into our pending U.S. approval decisions and potential launches for both platelets and plasma. Ebola headlines continue to dominate the news, and we are proud that the INTERCEPT technology can contribute to the support of patients in this epidemic through the treatment of convalescent plasma from survivors. As Carol mentioned, INTERCEPT-treated convalescent plasma will soon be available to U.S. Ebola patients under our IDE study in the U.S. We are also working diligently with collaborators to make this same approach available to the patients in West Africa, where it is most desperately needed. The World Health Organization recently identified convalescent plasma as a potentially promising experimental approach to Ebola virus disease therapy, issuing interim guidance suggesting how the plasma should be sourced and supplied. In collaboration with our partners, we are evaluating how all of the necessary equipment and disposables, including INTERCEPT, can be assembled to create self-contained collection and processing centers for convalescent plasma to be produced from local Ebola survivors. Cerus shares the fundamental belief of Global Health Equity, and we look forward to providing more information as we determine how and when INTERCEPT may become part of the Ebola relief effort in countries like Liberia, Sierra Leone and Guinea. In Asia, we are looking forward to working with Kawasumi to develop an INTERCEPT platelet kit optimized for use in Japan. Platelets in Japan are prepared to different specifications than those in Europe or the U.S., and the Japan Red Cross typically prefers their vendors to manufacture products with unique quality requirements. We believe our partnership with Kawasumi will be instrumental in achieving a competitive INTERCEPT product offering for Japan, as will any future FDA approval decisions with their implied validation. Our Q3 revenue demonstrates that we've been able to resume sales growth following the distributor transitions taking place in the first half, with a recent uptick in plasma market share in France due to the closure of their solvent detergent facility in Bordeaux and the full implementation of INTERCEPT platelets by the Flemish Red Cross in the first part of next year, we are optimistic about the sales growth going into 2015. We recently won a platelet tender for the prestigious Karolinska University Hospital in Sweden and see significant future upside potential from a number of meaningful EMEA prospects under discussion, as well as possible adoption in South Africa and additional sites in France. With the completion of our Phase III acute red cell study in Europe and with our investment in completing the CMC and manufacturer requirements for a 2016 CE Mark submission, we are increasingly confident about the prospect of commercializing the full portfolio of INTERCEPT products to blood centers in the years to come. Since taking over the commercial rights for INTERCEPT globally from Baxter in 2007, we've worked hard to expand beyond our initial base in Western Europe. In 2015, we believe we will be able to sell in most of the major markets around the globe. For Cerus, the recent announcement about our collaboration with the American Red Cross to deploy INTERCEPT in Puerto Rico was a major milestone. The ARC is the largest blood service in the world and sets high operational standards for the efficiency of blood component production. We've been impressed with their active engagement related to the utility of INTERCEPT in their operations and believe the Puerto Rico development will provide valuable experience for both organizations. Next year, we expect to start to see the revenue impact from the upcoming product launches in the U.S. and other regions under regulatory review. We look forward to providing 2015 guidance on our Q4 call in February. Operator, please open the call for questions.

[Operator Instructions] Our first question comes from Jeff Elliott with Robert W. Baird. Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division: Can we get an update on the U.K. opportunity? And when should we think about a decision out of the U.K.?

Yes. Thanks, Jeff. So as far as we understand, they are currently evaluating the possibility of going into tender for bacterial -- to address bacterial contamination of platelets. As I think you know, they currently do bacterial culture, and there was also a recent SaBTO report that suggested that the INTERCEPT technology was the only available PI technology that met the needs of the NHSBT. However, it's still not clear as to when that tender would be issued, even though we're -- we have an ongoing evaluation of the technology in the U.K., and INTERCEPT is deployed at, I believe, 1 site for sure, and it might be 2 sites. Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division: Got it. And then looking at the IDE for chikungunya, the way it's positioned in INTERCEPT, given that it can be used in place of bacterial detection, is that how you foresee ultimate FDA approval? I guess -- my guess is you're discussing the label with FDA right now, so you probably don't want to get into that. But, I guess, how do you see this being used in the U.S.? And do you see blood centers trying to charge a premium for this in the future, if you can use this in place of bacterial detection?

Yes. Thanks, Jeff. Obviously, we don't want to be speaking to potential label claims, given our discussions with the FDA. But I think that there is the ongoing possibility of a guidance document coming from the FDA addressing bacterial contamination of platelets this year. So that's a CEBR objective for 2014, as listed on their website. In the context of the rest of your question, I think there is a possibility that certain blood centers would like to see an upcharge for INTERCEPT, assuming certain label claims are realized. I think it's a little premature to think about what the blood centers might charge hospitals for INTERCEPT-treated components, but it is a function of what the label claims are. Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division: Got it. And then 1 quick one for Kevin. You mentioned on the gross margin commentary, near term we should expect mid-40s. I guess, is that -- what are you assuming for FX impact there? And then my understanding was that as we go into 2015, you could see some improvement from your updated contract with Fresenius. Was that really a fourth quarter comment? Or should we still expect kind of mid-40s in 2015 as well?

Well, Jeff, so we actually have -- are in the envious position. We have a natural hedge on our COGS and margins because we source most of the product in euro and, of course, sell in euro. So FX doesn't have a huge impact on our ultimate margins. The 40 -- the mid-40s and 45% we expect will continue through Q4. As we get into Q1, it's going to be a function of volume, as you mentioned. Right now, we continue to expect growth in 2015, but we're in the middle of our budgeting process and aren't prepared to talk about guidance and what those volumes might be.

Our next question comes from Zarak Khurshid with Wedbush Securities.

Can you speak to the currency headwind a little bit? Can you remind us, in the past, how currency has impacted the business? And as we look into the fourth quarter, is this just kind of trying to be more safe than sorry? And I guess, how realistic is -- or how real is kind of an FX impact on the business?

Yes, Zarak, thanks. So the euro-dollar FX rates have been pretty consistent this year, so we -- and that's something that we had contemplated when we gave initial guidance. However, what we've seen is about a 7% decline in Q2 to Q3, and we expect and understand from experts that that's likely to continue through Q4. So with that headwind, we felt it prudent to take guidance down to the $36 million to $38 million.

Understood. And then I was wondering if you could just quantify the impact or the benefit in the quarter from Spain and other Southern European regions that had been depressed in the prior periods.

Yes, so our distributor transition is complete as of Q3, so we really -- going forward is when we would see the major impact of going direct.

So was there any improvement Q3 versus Q2?

Yes, there was a -- they were slight. As we mentioned in the previous calls, that transition started to occur throughout Q3 and was completed by the end of the quarter, in early Q4. So there was some improvement Q2 to Q3.

Any chance you can quantify it? Was it $200,000, $700,000?

I don't have that, but I'm happy to talk to you about it offline. I can probably give you...

Got it. Okay, last one, just on Illuminators. How did that contribute in the quarter?

Illuminators, it's kind of an odd quarter for us, given the transition and signing up a new distributor in Italy. So they're about 10% of our overall revenue, which is fairly consistent. Although I think if you look at the number of Illuminators that were involved, it's disparate, just given that transition. So it's not a meaningful metric in Q3.

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

I just wanted to start with, Obi, you had some positive comments about the AABB Meeting last week. Can you just give us a little bit more color in terms of -- and how you would classify the temperature of the blood banking clinical communities in the U.S. in particular but also internationally around INTERCEPT, especially in the setting of these recent epidemics. But just the buzz that was generated and the desire that you sort of felt for another layer of safety in transfusion medicine. And then maybe if you could just talk about any hurdles that are coming up in the play in terms -- assuming approval next year for plasma and platelets, and how they can be surmounted.

Thanks, Josh. I'll take the first part of that question, and I'll turn over the second part to you, Carol, if that's okay. So for the first part, I think the AABB was really unique in that there obviously was a lot of buzz around the chikungunya and dengue epidemics as well as a discussion around Ebola and the use of convalescent plasma for the treatment of Ebola patients. And that sort of overshadowed what historically had been one of the major blood safety concerns, which is bacterial contamination of platelets. I think, in general, what's been realized now, which I guess I hadn't seen -- spoken of so openly in the past was pathogen inactivation really is something that you need when you're trying to address epidemics. It's somewhat obvious, but until you start looking at the cost of implementing a dengue assay or multiple dengue assays, multiple chikungunya assays to get sufficient test sensitivity, multiple Babesia assays to get sufficient test sensitivity and then combining that with potentially increased efforts to mitigate against bacterial contamination of platelets., ultimately, in that overall context, pathogen inactivation looks pretty good. I think further to that, a lot of our experience in Europe really sort of sends that message home in that they really do see cost savings associated with the use of the technology. It improves the supply logistics of platelets specifically, but even plasma. And it was really -- I felt that this was a year that we've been looking forward to for some time at AABB. The second part of that question was around any potential hurdles, Carol, around the PMA reviews.

I think the PMA reviews are going as expected. It's been a very interactive process with FDA. They've engaged with us in a very meaningful way and we're trying to address their questions as quickly as they ask them. And we've been successful in doing that. So we right now don't see any hurdles that will, in any way, limit us. We just have to complete the process.

Great. And then just a follow-up on a previous question. I know you can't get in the head of the FDA and read their minds, but can you, Obi or Carol, or Dr. Corash, can you think of any reason why the FDA would approve an IDE submission that does not necessitate CMV testing, gamma irradiation or bacterial detection and then be more restrictive on formal rule with the label?

Well, it's really 2 different processes. The IDE is an investigational process that's akin to a clinical trial even though this is a kind of a unique application for it. So there's more latitude when you're in an investigational situation than when you get an approval. And so the claims have to be evaluated against the existing data for a PMA approval. So while I can't predict what FDA will do, I just -- I guess I'm just cautioning that there are two different processes and 2 different ways to handle the actual indications for the product.

Okay. And then, Kevin, just on the -- those guidance revisions implied, 4Q guidance revision or revision for the full year, is that $2 million on the top and bottom end of the range fully from FX? Or are there any other headwinds that are part of that guidance revision?

Well, it's largely FX related, right? So if we use Q3 as the baseline and assuming a 7% headwind, you'd expect us to be in the $37 million range. That implies that the demand in product is at least 7% quarter-over-quarter. And so we -- as I mentioned in the prepared comments, we do expect growth in demand. Just not sure if they're going to be enough to fully offset that 7%.

Our next question comes from Brett Reiss with Janney Montgomery Scott.

First question, what's happening in Canada with the INTERCEPT plasma?

Yes, Brett, that product is -- or that submission's under review right now.

Okay. I think in some of the materials I've read, it's possible we can get -- we're looking for approval before year end. Are we still on track for that?

Yes, that's still possible.

Okay. And you mentioned briefly South Africa. Could you maybe give us a little bit more color on that? And then how about Brazil and Mexico? Where do the initiatives stand in these areas today?

Okay, Brett. Thanks. Yes, so for South Africa, the South African National Blood Service is looking at INTERCEPT platelets. There's no official tender that's been issued that we know of, but I think that the concern around HIV contaminant or transfusion-transmitted disease rates in South Africa is really a cause for concern. But furthermore, I think they're looking for ways to improve their platelet supply logistics and improve the bacterial contamination of platelets there. For Brazil, we're still under regulatory review there, and are likely -- or we're expecting approval in the first half of next year. And for Mexico, we are approved there and, at least as far as our understanding, there's sort of a large national tender process for the social service groups in Mexico, and I'd say that's been somewhat delayed to our liking. We've been expecting a large social service tender for some time, and it has not yet issued.

Right. Well, it sounds like all 3 countries, you're moving forward with. That sounds good.

Yes, we are. Yes, thanks, Brett.

All right. Germany, are the reimbursement issues in Germany any closer to being sorted out?

Yes. I mean, so I think the challenge in Germany is just that they -- their process for gaining reimbursement for any kind of incremental charge for any medical device takes a long time and, therefore, it's sort of a process that we don't ultimately control, and that has to be sponsored by the various calculation hospitals in Germany, and that's obviously complicated by the sense that we don't see a lot of adoption in Germany right now. So the calculation hospitals don't have anything to calculate against. So I think it's still a process in Germany with regard to reimbursement.

And I just want to make sure I heard this correctly. You're shooting for by the end of the year to release top line data on the Phase III red blood cell trial in acute anemia. Did I hear that correctly?

We've completed the studies for both the Phase II in the U.S. and the Phase III acute study in acute anemia, and are shooting to get the final study reports issued so we can do a press release around both those by year-end.

That'd be great. And 1 last question, if I may. Based on the secretive nature of the governments and regulatory agencies that you're dealing with, are there any near-term significant catalysts in Europe or other territories that you aren't free to talk about now on this call?

Yes, I think, we just have to basically let folks know when those events happen. So right now, I think that we'll disclose these things when we have signed contracts or when tenders are issued. Thanks very much, Brett. We're going to have to put you back in queue. And if you have additional questions, we'll take them later.

Our next question comes from Caroline Corner with Cantor Fitzgerald. Caroline V. Corner - Cantor Fitzgerald & Co.: I just had a question, first one would be when Carol was commenting about Emory potentially stockpiling plasma. Could you talk a little bit about if that was to happen, how it would work. Would that be x U.S.-sourced Plasma? And would this be something that other facilities could also stockpile just as a preparedness kind of thing to do?

Caroline, that's an interesting question. I should really turn it over to Larry because he's been leading the charge on this.

Yes, Caroline, the intention is and the capacity would be to create a stockpile of convalescent donor plasma. This is really the ideal way to be prepared for dealing -- the plasma -- with the epidemic. The plasma would be sourced from U.S. centers, and we've been collaborating with a working group that's now been put together with the major blood collection organizations in the United States to facilitate that process. Caroline V. Corner - Cantor Fitzgerald & Co.: Okay. But right now, you wouldn't have very many potential donors for that process at this point because we haven't had much Ebola in the U.S. yet?

Well, we've got 5 or 6 people who can donate. And the good thing about Apheresis plasma is you can donate about 1.3 liters twice a week with albumin replacement. So there's a good strategy here to collect convalescent plasma. Caroline V. Corner - Cantor Fitzgerald & Co.: Okay, that's interesting stuff. My other question then, maybe now to Kevin. Could you comment a little bit about -- you mentioned with OpEx, you've been building the commercial launch team or starting to build it out for -- assuming we'll get U.S. approval for platelets and plasma. Could you talk about -- a little bit about where you are with that? And then also, broader picture, if you could talk a little bit about once we're past the PMA for platelets and plasma in the U.S., we've got the U.S. red cell trial wrapping up, where do you see a run rate for OpEx if we look 1 or 2 years out from now?

Sure, Caroline. So we're in the middle of our budgeting process, so it's maybe a bit premature to give you a specific quantification on where we would expect OpEx in 1 or 2 years out. But at a high level, you're right. We've got a number of things going on. You should expect that when we are fully built out in the U.S. with the sales team, the medical science liaison team, and our marketing efforts, and I would expect that to be at least a year after initial launch, that the SG&A footprint would be relatively equivalent to what we have in Europe, which for us is about $10 million a year. On the R&D side, the red cell trials are concluding, however, we'll have likely a number of ongoing studies that we're required to do with the FDA, Phase IV commitments as well as work on our Illuminator for upcoming generations of the Illuminator. And then beyond that, the CMC activities for the red cell program, which will really offset the reduced red cell clinical trial cost in 2015, and going into the CE Mark submission year of 2016. Hopefully, that can provide color at a high level. Caroline V. Corner - Cantor Fitzgerald & Co.: That's really helpful. And just one last quick one for me. Assuming you get approval for platelets and plasma in the U.S., can you talk a little bit about the months following approval? What has to fall into place before you get those first sales in the U.S.?

Well, I think that, obviously with the approval, we'd be able to sell and, essentially, we're ready. So looking forward to that opportunity.

Our final question comes from George Zavoico with MLV. George B. Zavoico - MLV & Co LLC, Research Division: You mentioned American Red Cross, ARC, in Puerto Rico and that agreement came rather quickly after the IDE was approved. What's of interest to me is the potential commercial implications of that. How do you see the ARC testing its ability to implement and use the INTERCEPT platelets, and what are they going to compare it to? And how do you think that might reflect on them becoming a customer in the U.S. following approval? What exactly are they looking for in terms of pharmacoeconomics, labor savings, that sort of thing?

Thanks, George. Yes, so obviously, the American Red Cross is a very efficient producer of blood components and really knows their costs down to the penny when it comes to the production of platelet components. So in evaluating whether they were going to restart collections in Puerto Rico, they have done a very extensive cost analysis of what it would -- what the opportunity looks like. I think under the IDE, we obviously were able to remove bacterial culture, gamma radiation and CMV testing, and so they'll be looking at what that looks like for their operations. But ultimately, I think what this collaboration really speaks to is the opportunity that it affords Cerus to have a dialogue with the operations folks at the American Red Cross so that this potentially new product code can be implemented faster upon an approval decision. And that's something that we hadn't expected. George B. Zavoico - MLV & Co LLC, Research Division: I would imagine, they also -- maybe they don't, that closely, speak to the experience of your European colleagues to learn more about what to expect ahead of time?

I think they've mostly taken that under consideration but, at the end of the day, it really is how they produce platelets and subsequently, potentially, INTERCEPT platelets and what that looks like for their operations in a detailed sort of cost analysis way. George B. Zavoico - MLV & Co LLC, Research Division: And as the IDE is implemented, and you begin to place the Illuminators, how much of an impact will it have on your OpEx, if any?

Well, it be a cost of the conduct of the clinical study, and so we expect that, that will last between 12 and 18 months. Obviously, that's subject to when an approval decision by the FDA might occur. And I think for both parties, we'd prefer it to be operating INTERCEPT in routine use rather than under a clinical study in which clinical monitoring is required for each transfusion, and the complexities of that. So from an OpEx perspective, I don't think it contributes meaningfully, but it is a burn on our part. George B. Zavoico - MLV & Co LLC, Research Division: You just mentioned potential approval. Obviously, we're expecting that next year. And with the 12 to 18 months IDE progression, what happens to the IDE if the approval occurs halfway through the IDE? You have to complete the IDE?

Well, I think our main concern is around the maintenance of supply of platelets for hospitals in Puerto Rico, and that transition may be shorter or it may be longer. So I think that the broader opportunity at that time with the approval, obviously, is the potential use of INTERCEPT by the American Red Cross in other markets besides Puerto Rico, which is not a very large demand thing for the Red Cross, that is.

That concludes the Q&A session. I will now turn the call back over to Obi Greenman for final remarks.

Well, thank you for joining us today. We look forward to updating you again on our Q4 call in February. Thanks very much, everyone. Bye-bye.

Thank you, ladies and gentlemen. That does conclude today's conference. You may all disconnect and, everyone, have a great day.