Good day, ladies and gentlemen, and welcome to the Cerus Q2 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. As a reminder, this conference is being recorded. And now, I would like to turn the conference to your host, Lainie Corten, Investor Relations for Cerus. You may begin.

Thank you 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; Richard Benjamin, our Chief Medical Officer; and also Larry Corash, our Chief Scientific Officer. Cerus issued a press release today announcing our financial results for the second quarter ended June 30, 2016 and also 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 expectations for its products, prospects and future results, including 2016 revenue guidance and the related assumptions, expectations for and timing of future demand and revenue growth, operating SG&A and R&D expenses, sufficiency of cash, gross margins, customer implementation and the scope and timing thereof, U.S. the timing we see and sufficiency of BARDA funding and the activities supported by such funding, the potential submission to timing of and approval by U.S. and European Regulatory Authorities or the Red Blood Cell System and a commercial launch subsequent there to, proposed reimbursement rates, growth in our MSL team, the impact of having pathogen reduction available for all blood components and hospital and blood center operations, and the timing of availability of data from our European chronic study. 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 in Cerus' quarterly report on Form 10-Q filed with the SEC on May 06, 2016, under the heading 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 opening remarks from Obi, followed by an INTERCEPT red cell update from Richard, Q2 financial results from Kevin and finally concluding remarks from Obi. And now, it's my pleasure to introduce Obi Greenman, Cerus' President and Chief Executive Officer.

Thank you, Lainie, and good afternoon everyone. Over the past week, Zika virus epidemic has reached the Continental U.S. and the impact on safety and availability in Florida has already been significant and continues to evolve. In contrast to all other Arboviral threats like Chikungunya, Dengue and West Nile virus, Zika is unique and then it can be transmitted sexual, is frequently asymptomatic and infected individuals and has a devastating impact on pregnant women and those considering having children. The current prevalence of Zika in Puerto Rico is now estimated to be greater than 2% of blood donors and is expected to affect 25% of the population by the end of the year. Fortunately the blood supply in Puerto Rico has been maintained during these crises by a combined approach, a blood component importation from non-endemic areas, the implementation of an investigational Zika test and the deployment of our FDA approved INTERCEPT Blood System for platelets and plasma. The Zika virus now in the Mainland, U.S., the challenges of using a similar combined approach to blood safety or just beginning to be understood with the largest concern being blood component availability in the phase of the expanding Zika epidemic throughout Florida and another southern states. Blood collections in two large Florida counties were recently halted; fall in suspected local transmissions of Zika virus. The FDA immediately called for the implementation of the blood safety measures outlined in their Zika guidance which permit local blood collection to continue only if pathogen reduction or investigational Zika testing is used. On Monday, the Florida Department of Health concluded their active local transmission was confirmed in Miami Dade County; however the FDA recommends that adjacent counties also move forward with safety measures an anticipation a possible expansion of local epidemic. The U.S. blood donors…

Thank you, Obi. You are absolutely right that pathogen reduction for red cells will finally solve the pressing need for blood centers. That is to have a blood safety measure that produces the risk of transfusion transmission without deferring donors and compromising availability of blood products. For an estimated 13.5 million units of blood collected annually in the U.S., red cells are top of mind for blood centers are frequently in short supply, especially during the summer months when the vacations interrupt the schedules of many regular blood donors. Adding new requirements such as Obi specified in the FDA’s Zika guidance makes maintaining that availability even more challenging even in areas not yet directly impacted by local transmissions. The need to obtaining informed consent from high risk patients receiving tested units also extends an additional burden into the hospital. In a future that includes pathogen for all three components, the response to new immerging pathogen might not require any change by either the blood center or the hospital. Pathogen reduction is always on looking to inactivate pathogens even before we know that they are there. Transitioning now to update on our red cell development program, our protocol of the red study REDIS study has been submitted to the FDA. REDIS is 600 patient randomized control trial with end points to characterize the safety and efficacy of INTERCEPT blood cells. The study to enroll a broad patient population in order to achieve the objective of ailing 30 access to red cell pathogen reduction in an areas with active local Zika transmission. We are already actively engaged with potential hospital sites in Puerto Rico as well as working with [indiscernible] the blood center that we expect will prepare the red cell units for the study. We are targeting enrollment for the first…

Thank you, Richard. This afternoon, we’ve reported Q2 revenue of $9.3 million, a 5% increase over reported from the second quarter of 2015. The increase was attributable to sales growth from our platelet kits in Europe and contribution from our U.S. sales efforts. On a year-to-date basis, 2016 revenue was $16.9 million compared to $16.5 million in the first half of 2015. We continue to expect 2016 annual global product revenue of $37 million to $40 million with anticipated second half growth supported by new business opportunities in both Europe and the U.S. We also expect kit revenue from our U.S. customers to accelerate as they move into routine production and begin to provide INTERCEPT platelets to an expanding base of hospitals. But as we’ve stated before, we will continue to be conservative about U.S. revenue projections until we gain further operational experience with the timing and scoped of their INTERCEPT rollouts as well as the impact of the Zika epidemic and future final version of the FDA guidance on bacterial safety. I’d also like to note that going forward; we plan to report our BARDA contract revenue separately from product revenue and will not be including the BARDA revenue in our annual revenue guidance. Now turning from revenue to other Q2 results. Gross margins for the second quarter and first half of 2016 were 46% and 45% respectively compared to 20% and 29% in the prior year. Foreign exchange rates did not affect first half 2016 gross margins as negatively as they did during the first half of 2015. As you may recall, during the first half of 2015, we’ve recorded COGS at historical elevated euro-dollar exchange rates relative to the foreign exchange rates at which we realized revenues. Currently we are experiencing fairly stable rates for both reported…

Thank you, Kevin. Zika virus concerns have driven several recent developments this past quarter aside from the newly reported local cases in Florida. In France, Arbovirus prepared as plan has led to the installation of luminaries and stockpiling of kits in two new regional EFS sites in the south. These regions are considered to be at an elevated risk for potential local transmission of mosquito borne virus and will now be prepared if local transmissions are detected. In Brazil, we donated INTERCEPT kits to HEMORIO so that they could began producing pathogen reduced platelets and plasma in time for the Olympic Games. HEMORIO anticipate signing a contract with our local distributor fall in the games in order to continue using INTERCEPT, and we believe several other Brazilian centers will began using pathogen reduction soon. And importantly HEMORIO will serve as a center of excellence for INTERCEPT in Brazil and the region. And related to Zika, we also moved forward in Canada receiving approval for INTERCEPT plasma. Health Canada has now begun their revenue of INTERCEPT platelets which will be evaluated as an amendment to the plasma license rather than a separate new application. And this was Red Cross Humanitarian Fund provided a grand of 2 million Swiss francs to fund clinical studies of the INTERCEPT whole blood process under a co-development project with the Swiss Red Cross for use in the developing world. In summary, we are making strong progress on many fronts. An increasing number of U.S. centers are starting to produce with INTERCEPT and recent Zika transmissions in the Continental U.S. underscore the importance of their proactive blood safety approach. We are preparing for a plan European Red Cell Submission and working on launch plans as well as initiating activities under our BARDA contracts to bring INTERCEPT red cells to the U.S. market in the future. As we discussed on the last call, 2016 is proving to be a transformational time for the company. Our challenge today is we want to continued execution in the pace of very positive momentum. There is a clear unmet medical need and Cerus is uniquely positioned to capitalize on this opportunity and deliver on our important mission of safe guarding blood safety and availability. Operator, please open the call for questions.

[Operator Instructions] Our first question comes from the line of Karen Koski with BTIG. Your line is open.

Hi, guys, congrats on a nice result and all of your progress. I guess this first from me, I know you mentioned in the press release that 14 U.S. blood centers are now routinely producing INTERCEPT treated products, but can you provide some color around how many were active in the second quarter versus how many became active after the second quarter ended?

Let me take a quick look here. So it goes 3, 5, 11 and then now we’re at 14 today, so hopefully that’s right. So I think was 5 in Q1 and then 11 in Q2 and as of today, 15.

Okay. And then as we’re thinking about the implementation process and obviously all the various stakeholders involved, you know in terms of timing and things that you’ve learned what have been the major surprises so far both positive and negative?

Well I think the nice about it is that there is a lot of interest both on the blood center side certainly now with Zika in the news but also in the context of the draft FDA guidance around bacterial safety platelets. And the challenge is that that represents if you are doing INTERCEPT. So just to remind you that you basically new culture plus release is the one option or INTERCEPT. So I think that’s driving a lot of interest. I think as far as moving through the process of getting the blood centers now, I think a lot of the focus historically has been getting the blood centers under contract and now we are going to be moving them into routine production. And then what influences sort of hospital demand and sort of getting the hospitals on board with purchasing INTERCEPT component from the blood centers, I mean that’s moving smoothly, it’s actually much more smooth in places where a soft collection where the blood center and the hospital are linked like the NIH or at Walter Reed, but - so it’s - it’s just basically a process by which the blood centers contract with their hospital customers. So I think overall we are really happy with the progress we are making. I think the current events are making the importance of pathogen activation even more relevant and we just need to continue to focus on. Probably one of the more important metrics is the rollout with American Red Cross and that’s progressing as we expect as well.

Okay. And then obviously not to kind of be little of the impact of Zika and perhaps the benefits that it’s providing now as far as maybe a sense of urgency to a doctor or an education perspective but how confident are you that we’ve seen kind of a more permanent change in the market’s perspective of the value of cost reduction. And I guess to put it a little bit differently is if Zika disappears tomorrow not saying it will, but if it does, how confident are you that this recent enthusiasm doesn’t go with it?

I’ll let Richard cover this one because I think he’s got a unique perspective on it.

Let me take this from - thank you Karen for that question. I guess the FDA’s response has been driving some of that those reactions both in the Zika guidance and the bacterial drop guidance that permanently place the pathogen reduction in there around how we should be responding to the threats. And I think that’s reflected now in how the blood centers and hospitals are starting to think about pathogen reduction. So I think as building momentum toward this way of looking at risk from infectious. So confident? Yes, absolutely confident. I think we’re on a row.

Great and then - go ahead.

Yeah I would say also BARDA which is part of HSS looks at this as emergency preparedness for way beyond Zika. There is a long range goal to have these systems in place as part of national emergency preparedness for future immerging pathogens. So this is a much bigger scope that just Zika.

Great, that’s very helpful. And then just one last one for me. Regarding your efforts to develop a whole blood pathogen reduction system for use in Africa, can you just remind us of some of the limitations around using a whole blood system versus kind of the current set up of one system for platelets and plasma and other for red cells?

Yeah, I’ll handle part of that maybe I’ll turn it over to Larry after that, because he’s been working on the Swiss Red Cross collaboration closely as Richard. But I think fundamentally blood component - medicine is based upon blood component separation. So all blood centers are geared up to separate whole blood into red cells, platelets and plasma and their operations have been configured to do that. So if you were to introduce a whole blood process that ultimately required separation after treatment, this wouldn’t be viable operationally throughout the globe. I think that the focus of our effort for the developing world is as we are - lot of component therapy doesn’t exist and where transfusions are still a whole blood, unseparated whole blood. I don’t know Larry or Richard has additional color.

I would add that the biology of red blood cells and platelets and plasma is markedly different. And the key objective for any technology around this is to develop optimal functionality of these blood products. And so that’s why our initial focus was on component therapy. We are also seeing that as countries in the developing world begin to improve their healthcare systems, they are migrating to component therapy. So we’ve already seen that happen in Uganda for example. So I think whole blood technology has a place in the developing world that has not yet evolved into component therapy and we’ll pursue that with the Swiss Red Cross but I think also we’re seeing the continual progression in these countries into component therapy and that’s where you get the optimal performance of these blood components.

Thanks and congrats again.

Thanks Karen.

Our next question comes from the line of Josh Jennings with Cowen. Your line is open.

Good evening, thanks a lot and congratulations on another quarter progress and sac full of positive news. I was hoping with the in terms of the FDA Zika guidance it’s out there in Mainland U.S. and Puerto Rico those two areas, I know it’s very early in Florida, but how will these centers been responding to the guidance and specifically to the utilization of INTERCEPT for plasma and platelets, has that been - an color there would be helpful?

You know I think looking at the situation in Puerto Rico where a lot of the initial response was a function of importing blood components from outside the Puerto Rico to address their immediate needs and then INTERCEPT was still up very quickly at some of the key sites there. In Florida it’s a little different because it’s really not practical to import blood products there. So a lot of the focus has been on making sure that red cells were available given that’s the highest volume component. In order to do that they had to stand up the investigational Zika test to be able to do that. In Florid, there is three major blood centers and we have contracts with each of them. Two of those are already in routine years. And I just going forward the benefits of Florida by INTERCEPT are that you don’t compromise donor availability, so you don’t have to take donors out of the pool. And also I think as Richard alluded to, if you are using an investigational test, there is applied I think mandatory inform consent for higher risk patients of the hospital, so there is some complexity associated with that. And not just focused on Zika, so obviously INTERCEPT has other benefits for other immerging pathogens and also allows for them to become compliant with the FDA guidance document for bacterial safety of platelets.

Great and I just wanted to ask another it’s been the - you talked, you’ve got Zika the American Red Cross adopted lot of positive, we could just focus on hospital demand, clearly there is significant blood center demand, but you your medical use on center out in the field now, any incremental positivity in terms of generally hospital demand in front of the final bacterial protection guidance for platelets?

I think it’s probably best to have Larry and Richard comment on this because they have out speaking to the hospitals and have been taking to the transfusion services at children’s hospitals for example they are really very excited about having this technology.

So I would say one of the key things that we hear from people is the opportunity to have fresher platelets. Under the current system with quarantine and bacterial culture platelet components, they are getting platelets that are three and four days old before they can transfuse them. With the INTERCEPT technology they will get a fresher platelet and they appreciate the more comprehensive protection against bacteria but also Megalovirus also having a universal inventory that’s been treated for prevention of disease, all of those things resonate very strongly with it clinicians and they are the people when there is septic transfusion reaction they are the brunt of dealing with the patients and explaining how these things happen and how they have a better explanation to give to their patients.

I think a lot of these things are very much emotion, the bacterial guidance is a growing realization for many hospitals that they in fact well if they don’t do pathogen reduction will need to implement major changes in the way they handle and process platelets in the future. So that’s definitely a plus. So we are seeing through our PIPER Study a lot of interest in some of the major hospitals in engaging in PIPER and moving towards pathogen reduction. So this is all going in a good direction at this point.

Great and my last question just on the - with the BARDA funding in the red blood cell development program, you mentioned some positive result about the design for the initial study in Puerto Rico and potentially starting an IDE in 2017, any sense in terms of how long that study would last and with the follow period and then potential general timeline for U.S. FDA approval for the red blood cell platform? Thank a lot.

Thanks Josh. I think I’ll let Richard handle that because he is the one who is driving the red cell clinical offer, so.

So - thanks Josh. Let’s figure that there is existing IDE for the red cell program and that we are putting these studies into that IDE, the Puerto Rico REDIS study is already with the FDA as I mentioned in my presentation and we hope to have comments - hope it have it back within 30 days, so we are moving forward towards those patients in by the end of the year. For - in terms of or pivotal studies for approval in the U.S. we have an acute transfusion study in cardiovascular patients that we are in active discussion with the FDA. And we expect that we also will have to a chronic transfusion study to get a full approval. We will be meeting with the FDA and developing a comprehensive plan towards to the PMA submission by the end of the year, so certainly will say as we get certainty around the FDA’s expectations.

Our next question comes from the line of Drew Jones with Stephens. Your line is open.

Thanks, good afternoon, guys.

Hi, Drew.

Understanding that it’s very early in the domestic market, but Kevin maybe could you give us a little more color on the revenue split by geography as broadly as maybe Americas versus EMEA and then also Illuminator versus kits?

Sure Drew. I mean the revenue story is still predominantly European, Middle East and African driven. We had a number of and have a number of early adopter incentives in place in the Americas which dampens the revenue impact that those sales have. Now we expect that in the back half of the year as those unwind and as we move into 2017 and see those come off that we’ll see more significant revenue contribution from the U.S. But at this point, it’s almost entirely a European, Middle East and Africa in revenue story. As far as Illuminator placements and revenue contribution, in Europe it’s predominantly kit based, very few Illuminator placements at this point except for the 1C, 2C site that are coming on board. In the U.S. the majority of our revenue is device driven, we anticipate roughly two third year will be device driven and that will then move to a more mature market and we’ll start generating a higher proportion of kit sales relative to device placements.

Perfect. And then just trying to understand the French market going forward, with this stock piling do you view that sort of a onetime revenue event or is this the pass to maybe leading that mandate of 90% plus platelets treated or screened by year end?

Yeah I think the indications are that they are moving in that direction and obviously the experience that they have had over the last decade within players has been a good one and extensively documented by the French vigilant system. So I think the fact that the site are preparing to go into routine is a strong signal. Obviously we don’t have absolute clarity on the overall French transfusion service quality agreement with their FDA or NSM. So I think they are still targeting to have 90% of the play that’s by the end of the year have some of kind of bacterial mitigation, bacterial contamination mitigation step but we don’t’ have clarity on how they will accomplish that yet.

Alright, I appreciate it, congrats.

Thanks Drew.

Our next question comes from the line of Bryan Brokmeier with Cantor Fitzgerald. Your line is open.

Hi, good afternoon. You now have a total 14 U.S. blood centers in routine use, the three from a 11 three weeks ago, is one center per week a good expectation going forward or what’s back that may cause that rate defer that accelerated?

I think we’ve got another so 16 in the queue, it’s sort of hard for us to predict exactly when they are going to go online, can speed up or slow down. And I think that we just have to keep executing. We certainly have a great team in place to help centers get started. That’s one of the things that’s always nice for me at least to call or customers and have discussions with the blood center CEOs, they almost always and with why your team is fantastic and really grateful for their help and deploying the technology, so I can give you more specifics about how the rest of the contracted and as will roll into routine. I think the one thing that you probably should continue to look for though is and it will obviously give you a color on this or update you as we have clarity as how quickly the Red Cross is moving. And we are really excited to see them going to routine years just given how they look at sort of their overall blood component production environment and how sort of centralize it if you will. So the fact that they have this operational pilot site get up and going; move towards their BLA and then that set things emotion. So we would expect to be able to update you on progress meaningful progress over the next couple of quarters with regard of the Red Cross.

You donated an INTERCEPT system in kits to Brazil ahead of the Olympics but are you receiving additional orders for kits at this point or you are not going to receive those until after the Olympic?

Well we work to a distributor down there and so essentially they have purchased kits. There are other blood centers that are moving towards routine. Typically private blood center hospital systems as oppose to the public ones, I think it’s sort of like I’d look at as like 10% of the blood centers in - the blood component production sites in Brazil are private and probably 90% are public. The HEMORIO site is a public center and so one of the things we wanted to do beyond just sort of getting them prepared for the Olympic Games was to establish a center of excellence that ultimately would be able to show the Brazilian government the cost savings that are afforded by INTERCEPT and the perspective protection that is also afforded. So I think what we’ll see is the - it’s been a good experience with our distributor. At HEMORIO, the site is up and producing both platelets and plasma now and then we expect our distributor to purchase probably more on a quarterly basis as oppose to sort of site by site.

Okay. And how does the kit sales in Brazil compared to what you donated?

It’s just nascent right now, so essentially we’re just trying to make sure we got the HEMORIO site up and going quickly and the invest - that the study director there is really a key opinion leader both in Brazil and globally. And so having him have the experience of being able to go in routine quickly and then the benefits of having a center of excellence I think is what the focus was. I was - obviously love to sales and we will but right now the sales are sort of can’t play in the second half of the year. Beyond that there are distributor purchased already, so.

Okay, great, thanks a lot.

Thanks a lot Bryan.

Our next question comes from the line of Thomas Yip with FBR & Co. Your line is open, sir.

Hey, good afternoon, everyone. Thanks for taking my questions. My first question pertains to with American Red Cross, can you tell us some factors that the American Red Cross factors to choose which state to implement INTERCEPT and are there and after North Carolina, Maryland and Connecticut et cetera?

You know I think it’s sort of a function of - it’s primarily a function of customer demand, so hospital demand but also at least for North Carolina, it’s one of their top three production sites in the country, so they use that as for like a better word an operational center of excellence for them. And then ultimately that will set the stage for their BLA submission that would allow them to ship, play the components across the U.S. So that was the real focus as I understand it for the North Carolina site. The other sites I mentioned on the call Maryland, New York and Connecticut are also a function of hospital demand and also PIPER sites that Richard mentioned previously are Phase 4 study has sites that are - six sites now that are enrolling or will be enrolling soon. And the Red Cross is the primary supplier for many of those sites.

Okay, thanks for the details. That makes sense. Mix so of the 14 of 15 blood center that you said have grown and are there and the sites outside of Florida that indicated Zika is one of the reasons they started to implement INTERCEPT?

Well, I think it’s still relatively new. We do hear a lot of discussion about Zika in Texas as well as Louisiana and Georgia. And I think right now we are happy to see that the blood center of New Orleans signed up yesterday I guess so. I think from what I’ve heard from our sales team, it’s clearly as a topic of discussion in the blood center dialog right now.

Okay, thanks. One last question and I am going to switch gear to your CE Mark submission that’s projected by year end, so assuming that INTERCEPT receives a CE Mark approval by say year-end, next year, why some of the commercial prep and timing of them that is required for as a rollout in ex-U.S. market?

Yeah, and so what we are looking is we’ve identified 10 to 15 initial blood center rollout sites. So essentially those customers that go live at launch and with the focus on how to get them up and going over the course of the next year. There is a lot of interesting blood centers especially from customers that are already in routine for platelets or plasma or both, so some of those sites will have preference from our perspective because they have already sort of see the benefits of INTERCEPT and pathogen activation and there was strong interest in having a complete solution for all three components. Another factor that influences the demand on their end is a lot of these blood centers would like to get rid of their CCM sourced radiators so that they can deal with some of the non- proliferation legislation that’s coming out of the EU I guess policy. So they are essentially trying to address the possibility of dirt bomb threat from terrorism. So the way they would do that is that they would use INTERCEPT red cells to get the need for CCM sourced radiators.

That makes sense. Thanks again for taking my question and thanks again and looking for to second half 2016 progress in the U.S.

Thanks a lot Thomas.

Our final question comes from the line Emily Stent with Robert W. Baird. Your line is open.

Hey, guys, thanks for taking my question. So I guess the first one from me, I know you’d previously said you are expecting between five and seven American Red Cross sites to come online by year end, is this sill in line with what you are thinking and what you are seeing in the market?

Yes, I think that’s all in schedule as we anticipate it.

Okay, prefect. And then I guess next one for me, how should we think about OpEx facing throughout second half in light of the BARDA funding?

Yeah, so it’s a situation where there will be some upfront costs. We are incurring cost now to seek FDA approval and then we’ll incur those upfront costs as we set up the sites and begin to enroll. And that should occur in the back half of the year and then from there as we enrolling, we would expect it to be more steady.

Got it, that makes sense. I guess final one from me, I know you’d previously talked about labor expansions for storage in treatment of triple-dose platelets and donor platelets from whole blood, I know that you called out label extension as one of the reason for R&D increase, what’s your expectations on these timelines, and do we think we’ll see any of them coming in 2016?

Yeah, thanks, I’ll take one. So we are planning to summit for the triple dose set in Europe in August, so that’s moving as expected. In parallel that we are - a lot of activities underway for the triple dose set in the United States. I think there is still some additional color we need from the FDA on what’s required for that submission. So we’re hoping to target that for 2017. Some of the additional ones you mentioned are secondary to the triple dose which we see as a priority that just allows blood centers do, that do a lot of triple dose collections to treat a 100% of their supply.

Got it, that makes sense. Thanks for answering my questions and congrats on the nice quarter.

Thank you so much.

There are no other questions in the queue and I would now like to turn the call over Obi Greenman for closing remarks.