CERUS CORP, 10-K filed on 3/7/2014
Annual Report
Document and Entity Information (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Feb. 26, 2014
Jun. 30, 2013
Document Information [Line Items]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 31, 2013 
 
 
Document Fiscal Year Focus
2013 
 
 
Document Fiscal Period Focus
FY 
 
 
Trading Symbol
CERS 
 
 
Entity Registrant Name
CERUS CORP 
 
 
Entity Central Index Key
0001020214 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
72,149,000 
 
Entity Public Float
 
 
$ 257.3 
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 29,485 
$ 26,696 
Short-term investments
28,191 
 
Accounts receivable, net of allowance of $0 at December 31, 2013 and 2012
6,125 
4,444 
Inventories
13,063 
10,180 
Prepaid expenses
848 
638 
Other current assets
442 
2,038 
Total current assets
78,154 
43,996 
Non-current assets:
 
 
Property and equipment, net
2,189 
1,698 
Goodwill
1,316 
1,316 
Intangible assets, net
1,344 
1,546 
Restricted cash
308 
304 
Other assets
70 
59 
Total assets
83,381 
48,919 
Current liabilities:
 
 
Accounts payable
5,674 
7,186 
Accrued liabilities
9,813 
7,619 
Deferred revenue
181 
77 
Debt-current
3,366 
4,828 
Warrant liability
20,390 
5,903 
Total current liabilities
39,424 
25,613 
Non-current liabilities:
 
 
Debt-non-current
 
2,896 
Deferred income taxes
89 
62 
Other non-current liabilities
1,073 
1,241 
Total liabilities
40,586 
29,812 
Commitments and contingencies
   
   
Stockholders' equity:
 
 
Preferred stock, $0.001 par value 5,000 shares authorized, issuable in series; 0 shares issued and outstanding at December 31, 2013 and 2012
   
   
Common stock, $0.001 par value 112,500 shares authorized; 71,859 and 56,252 shares issued and outstanding at December 31, 2013 and 2012, respectively
72 
56 
Additional paid-in capital
545,905 
478,903 
Accumulated other comprehensive income
 
Accumulated deficit
(503,189)
(459,852)
Total stockholders' equity
42,795 
19,107 
Total liabilities and stockholders' equity
$ 83,381 
$ 48,919 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Accounts receivable, allowance
$ 0 
$ 0 
Preferred stock, par value
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
5,000 
5,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 0.001 
$ 0.001 
Common stock, shares authorized
112,500 
112,500 
Common stock, shares issued
71,859 
56,252 
Common stock, shares outstanding
71,859 
56,252 
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Product related:
 
 
 
Product revenue
$ 39,657 
$ 36,695 
$ 30,602 
Cost of product revenue
22,602 
20,616 
18,535 
Gross profit on product revenue
17,055 
16,079 
12,067 
Government grants and cooperative agreements revenue
91 
2,442 
Operating expenses:
 
 
 
Research and development
15,187 
7,603 
7,178 
Selling, general and administrative
29,965 
25,665 
23,053 
Amortization of intangible assets
202 
202 
202 
Total operating expenses
45,354 
33,470 
30,433 
Loss from operations
(28,299)
(17,300)
(15,924)
Non-operating (expense) income, net:
 
 
 
Revaluation of warrant liability
(15,099)
2,059 
486 
Foreign exchange gain (loss)
533 
86 
(529)
Interest expense
(520)
(551)
(964)
Other income, net
266 
31 
92 
Total non-operating (expense) income, net
(14,820)
1,625 
(915)
Loss before income taxes
(43,119)
(15,675)
(16,839)
Provision for income taxes
218 
242 
143 
Net loss
$ (43,337)
$ (15,917)
$ (16,982)
Net loss per common share:
 
 
 
Basic
$ (0.64)
$ (0.29)
$ (0.35)
Diluted
$ (0.64)
$ (0.33)
$ (0.35)
Weighted average common shares outstanding used for calculating net loss per common share:
 
 
 
Basic
67,569 
54,515 
48,050 
Diluted
67,569 
55,061 
48,050 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Net loss
$ (43,337)
$ (15,917)
$ (16,982)
Other comprehensive income (loss):
 
 
 
Net unrealized gains (losses) on available-for-sale securities, net of taxes
 
(108)
Comprehensive loss
$ (43,330)
$ (15,917)
$ (17,090)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)
In Thousands
Total
Preferred Stock
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income
Accumulated Deficit
Beginning Balance at Dec. 31, 2010
$ 23,732 
$ 9,496 
$ 47 
$ 441,034 
$ 108 
$ (426,953)
Beginning Balance (in shares) at Dec. 31, 2010
 
47,329 
 
 
 
Net loss
(16,982)
 
 
 
 
(16,982)
Other comprehensive income
(108)
 
 
 
(108)
 
Issuance of common stock from public offering, net of expenses of $2,733 for 2013, $550 for 2012 , and $420 for 2011 (in shares)
 
 
3,701 
 
 
 
Issuance of common stock from public offering, net of expenses of $2,733 for 2013, $550 for 2012 , and $420 for 2011
9,678 
 
9,674 
 
 
Issuance of common stock from exercise of stock options and/or warrants, and purchases from ESPP(In Shares)
 
 
181 
 
 
 
Issuance of common stock from exercise of stock options and/or warrants, and purchases from ESPP
143 
 
 
143 
 
 
Stock-based compensation
1,850 
 
 
1,850 
 
 
Ending Balance at Dec. 31, 2011
18,313 
9,496 
51 
452,701 
 
(443,935)
Ending Balance (in shares) at Dec. 31, 2011
 
51,211 
 
 
 
Net loss
(15,917)
 
 
 
 
(15,917)
Issuance of common stock from public offering, net of expenses of $2,733 for 2013, $550 for 2012 , and $420 for 2011 (in shares)
 
 
4,487 
 
 
 
Issuance of common stock from public offering, net of expenses of $2,733 for 2013, $550 for 2012 , and $420 for 2011
13,821 
 
13,816 
 
 
Issuance of common stock from exercise of stock options and/or warrants, and purchases from ESPP(In Shares)
 
 
221 
 
 
 
Issuance of common stock from exercise of stock options and/or warrants, and purchases from ESPP
349 
 
 
349 
 
 
Preferred stock conversion (in shares)
 
(3)
333 
 
 
 
Preferred stock conversion
 
(9,496)
 
9,496 
 
 
Stock-based compensation
2,541 
 
 
2,541 
 
 
Ending Balance at Dec. 31, 2012
19,107 
 
56 
478,903 
 
(459,852)
Ending Balance (in shares) at Dec. 31, 2012
 
 
56,252 
 
 
 
Net loss
(43,337)
 
 
 
 
(43,337)
Other comprehensive income
 
 
 
 
Issuance of common stock from public offering, net of expenses of $2,733 for 2013, $550 for 2012 , and $420 for 2011 (in shares)
 
 
15,019 
 
 
 
Issuance of common stock from public offering, net of expenses of $2,733 for 2013, $550 for 2012 , and $420 for 2011
61,454 
 
15 
61,439 
 
 
Issuance of common stock from exercise of stock options and/or warrants, and purchases from ESPP(In Shares)
 
 
588 
 
 
 
Issuance of common stock from exercise of stock options and/or warrants, and purchases from ESPP
2,296 
 
2,295 
 
 
Stock-based compensation
3,268 
 
 
3,268 
 
 
Ending Balance at Dec. 31, 2013
$ 42,795 
 
$ 72 
$ 545,905 
$ 7 
$ (503,189)
Ending Balance (in shares) at Dec. 31, 2013
 
 
71,859 
 
 
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Issuance of common stock from public offering, expenses
$ 2,733 
$ 550 
$ 420 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Operating activities
 
 
 
Net loss
$ (43,337)
$ (15,917)
$ (16,982)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
557 
744 
922 
Stock-based compensation
3,268 
2,541 
1,850 
Changes in valuation of outstanding warrant liability
15,099 
(2,059)
(486)
(Interest expense paid) non-cash interest expense
(25)
20 
Loss on disposal of equipment
56 
 
 
Deferred income taxes
27 
62 
 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(1,681)
1,652 
(1,304)
Inventories
(1,813)
(3,740)
(601)
Other assets
339 
(1,663)
(13)
Accounts payable
(1,512)
2,506 
1,450 
Accrued liabilities
2,121 
1,971 
(336)
Deferred revenue
104 
(34)
(137)
Net cash used in operating activities
(26,797)
(13,917)
(15,632)
Investing activities
 
 
 
Purchases of furniture, equipment and leasehold improvements
(663)
(81)
(158)
(Purchases) sales of certain other assets
(15)
(1)
55 
Purchases of investments
(30,010)
 
 
Maturities of investments
1,631 
287 
666 
Net cash provided by (used in) investing activities
(29,057)
205 
563 
Financing activities
 
 
 
Net proceeds from equity incentives and the exercise of warrants
1,684 
332 
143 
Net proceeds from public offering
61,425 
14,226 
9,273 
Proceeds from revolving line of credit
3,102 
1,810 
2,300 
Proceeds from debt, net of discount
 
 
4,910 
Payments on revolving line of credit
(2,926)
(920)
 
Payments on debt and landlord provided leasehold incentives
(4,642)
(537)
(5,008)
Net cash provided by financing activities
58,643 
14,911 
11,618 
Net increase (decrease) in cash and cash equivalents
2,789 
1,199 
(3,451)
Cash and cash equivalents, beginning of period
26,696 
25,497 
28,948 
Cash and cash equivalents, end of period
29,485 
26,696 
25,497 
Supplemental disclosures:
 
 
 
Non-cash conversion of preferred stock to common stock
 
9,496 
 
Cash paid for interest
294 
460 
1,024 
Cash paid for income taxes
146 
162 
125 
Non-cash settlement of warranty claim
$ 1,272 
 
 
Nature of Operations and Basis of Presentation
Nature of Operations and Basis of Presentation

Note 1. Nature of Operations and Basis of Presentation

Cerus Corporation (the “Company”) was incorporated in September 1991 and is developing and commercializing the INTERCEPT Blood System, which is designed to enhance the safety of blood components through pathogen inactivation. The Company has worldwide commercialization rights for the INTERCEPT Blood System for platelets, plasma and red blood cells.

The Company sells its INTERCEPT platelet and plasma systems in Europe, the Commonwealth of Independent States (“CIS”) countries, the Middle East and selected countries in other regions around the world. The Company conducts significant research, development, testing and regulatory compliance activities on its product candidates that, together with anticipated selling, general, and administrative expenses, are expected to result in substantial additional losses, and the Company may need to adjust its operating plans and programs based on the availability of cash resources. The Company’s ability to achieve a profitable level of operations will depend on successfully completing development, obtaining additional regulatory approvals and achieving widespread market acceptance of its products. There can be no assurance that the Company will ever achieve a profitable level of operations.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include those of Cerus Corporation and its subsidiary, Cerus Europe B.V. (collectively hereinafter “Cerus” or the “Company”) after elimination of all intercompany accounts and transactions. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Use of Estimates

The preparation of financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, inventory valuation, certain accrued liabilities, valuation and impairment of purchased intangibles and goodwill, valuation of warrants, valuation of stock options under share-based payments, valuation allowance of its deferred tax assets and uncertain income tax positions. The Company basis its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form its basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions.

Reclassifications

In 2012, certain reclassifications have been made to prior period reported amounts to conform to the current period presentations. Previously the Company had presented its provision for income taxes as a component of other income (expense) , net on the Consolidated Statements of Operations. The Company has reclassified the provision for income taxes to a separate line item in the Consolidated Statements of Operations, and as presented in Note 17. This reclassification had no impact on net loss, total assets or total stockholders’ equity.

 

Revenue

Revenue is recognized when (i) persuasive evidence of an agreement exists; (ii) services have been rendered or product has been delivered; (iii) pricing is fixed or determinable; and (iv) collection is reasonably assured. The Company’s main sources of revenues for the years ended December 31, 2013, 2012 and 2011 were product revenue from sales of the INTERCEPT Blood System for platelets and plasma (“platelet and plasma systems”) and United States government grants and awards.

Revenue related to product sales is generally recognized when the Company fulfills its obligations for each element of an agreement. For all sales of the Company’s INTERCEPT Blood System products, the Company uses a binding purchase order and signed sales contract as evidence of a written agreement. The Company sells its platelet and plasma systems directly to blood banks, hospitals, universities, government agencies, as well as to distributors in certain regions. Generally, the Company’s contracts with its customers do not provide for open return rights, except within a reasonable time after receipt of goods in the case of defective or non-conforming product. Deliverables and the units of accounting vary according to the provisions of each purchase order or sales contract.

For revenue arrangements with multiple elements, the Company recognizes revenue in accordance with Financial Accounting Standards Board Accounting Standard Codification (“ASC”) Topic 605-25, “Revenue Recognition—Arrangements with Multiple Deliverables,” as applicable. The Company determines whether the delivered elements meet the criteria as separate units of accounting. Such criteria require that the deliverable have stand-alone value to the customer and that if a general right of return exists relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company. Once the Company determines if the deliverable meets the criteria for a separate unit of accounting, the Company must determine how the consideration should be allocated between the deliverables and how the separate units of accounting should be recognized as revenue. Consideration received is allocated to elements that are identified as discrete units of accounting based on its best estimate of selling price. The Company has determined that vendor specific objective evidence is not discernible due to the Company’s variability in its pricing across the regions into which it sells its products. Since the Company’s products are novel and unique and are not sold by others, third-party evidence of selling price is unavailable.

At both December 31, 2013 and 2012, the Company had $0.2 million and $0.1 million, respectively, of short-term deferred revenue on its consolidated balance sheets related to future performance obligations. Freight costs charged to customers are recorded as a component of revenue under ASC Topic 605, “Accounting for Shipping and Handling Fees and Costs.” Value-added-taxes (“VAT”) that the Company invoices to its customers and remits to governments are recorded on a net basis, which excludes such VAT from product revenue.

Revenue related to the cost reimbursement provisions under development contracts or United States government grants was recognized as the costs on the projects were incurred. The Company has received certain United States government grants and contracts that support research in defined research projects. These grants generally have provided for reimbursement of approved costs incurred as defined in the various grants. There were no such government grants in 2013 and none are expected in the foreseeable future.

Research and Development Expenses

In accordance with ASC Topic 730, “Accounting for Research and Development Expenses,” research and development expenses are charged to expense when incurred, including cost incurred under each grant that has been awarded to the Company by the United States government or development contracts. Research and development expenses include salaries and related expenses for scientific personnel, payments to consultants, supplies and chemicals used in in-house laboratories, costs of research and development facilities, depreciation of equipment and external contract research expenses, including clinical trials, preclinical safety studies, other laboratory studies, process development and product manufacturing for research use.

The Company’s use of estimates in recording accrued liabilities for research and development activities (see “Use of Estimates” above) affects the amounts of research and development expenses recorded and revenue recorded from development funding and government grants and collaborative agreements. Actual results may differ from those estimates under different assumptions or conditions.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be classified as cash equivalents. These investments primarily consist of money market instruments, and are classified as available-for-sale.

Short-Term Investments

Investments with original maturities of greater than three months which included corporate debt and United States government agency securities, are designated as available-for-sale and classified as short-term investments. In accordance with ASC Topic 320, “Accounting for Certain Investments in Debt and Equity Securities,” the Company classified all debt securities as available-for-sale at the time of purchase and reevaluates such designation as of each balance sheet date. Available-for-sale securities are carried at estimated fair value. Unrealized gains and losses derived by changes in the estimated fair value of available-for-sale securities were recorded in “Net unrealized gains (losses) on available-for-sale securities, net of taxes” on the Company’s consolidated statements of comprehensive loss. Realized gains and losses from the sale of available-for-sale investments were recorded in “Other income, net” on the Company’s consolidated statements of operations. The cost of securities sold was based on the specific identification method. The Company reported the amortization of any premium and accretion of any discount resulting from the purchase of debt securities as a component of interest income.

The Company also reviewed all of its marketable securities on a regular basis to evaluate whether any security has experienced an other-than-temporary decline in fair value.

Restricted Cash

The Company holds a certificate of deposit with a domestic bank for any potential decommissioning resulting from the Company’s possession of radioactive material. The certificate of deposit is held to satisfy the financial surety requirements of the California Department of Health Services and is recorded in “Restricted cash” on the Company’s consolidated balance sheets.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of investments and accounts receivable.

 

Pursuant to the Company’s investment policy, substantially all of the Company’s investments are maintained at a major financial institution in the United States of high credit standing, which at times, may exceed federally insured limits. The Company has not experienced any losses in its investments and believes it is not exposed to any significant risk.

Concentrations of credit risk with respect to trade receivables exist. However, in connection with the Company’s revolving line of credit, as discussed in Note 11 in the Notes to Consolidated Financial Statements, the Company purchased a credit insurance policy that mitigates some of its credit risk, as the policy will pay either the Company or its lender on eligible claims filed on its outstanding receivables. On a regular basis, including at the time of sale, the Company performs credit evaluations of its customers. Generally, the Company does not require collateral from its customers to secure accounts receivable. To the extent that the Company determines specific invoices or customer accounts may be uncollectible, the Company establishes an allowance for doubtful accounts against the accounts receivable on its consolidated balance sheets and records a charge on its consolidated statements of operations as a component of selling, general and administrative expenses.

The Company had two customers and three customers that accounted for more than 10% of the Company’s outstanding trade receivables at December 31, 2013 and 2012, respectively. These customers cumulatively represented approximately 48% and 59% of the Company’s outstanding trade receivables at December 31, 2013 and 2012, respectively. To date, the Company has not experienced collection difficulties from these customers.

Inventories

At December 31, 2013 and 2012, inventory consisted of work-in-process and finished goods only. Finished goods include INTERCEPT disposable kits, UVA illumination devices (“illuminators”), and certain replacement parts for the illuminators. Platelet and plasma systems’ disposable kits generally have a two-year life from the date of manufacture. Illuminators and replacement parts do not have regulated expiration dates. Work-in-process includes certain components that are manufactured over a protracted length of time, which can exceed one year, before being incorporated and assembled by Fresenius Kabi AG (“Fresenius”) into the finished INTERCEPT disposable kits. Fresenius is the successor-in-interest to Fenwal, Inc., or Fenwal, and Baxter International, Inc., or Baxter, under certain agreements which arose from the sale of the transfusion therapies division of Baxter in 2007 to Fenwal. Fenwal was recently acquired by Fresenius, which assumed Fenwal’s rights and obligations under these certain agreements, including the Company’s manufacturing and supply agreement with Fenwal. In these footnotes references to Fresenius include references to its predecessors-in-interest. The Company maintains an inventory balance based on its current sales projections, and at each reporting period, the Company evaluates whether its work-in-process inventory would be consumed for production of finished units in order to sell to existing and prospective customers within the next twelve-month period. It is not customary for the Company’s production cycle for inventory to exceed twelve months. Instead, the Company uses its best judgment to factor in lead times for the production of its finished units to meet the Company’s forecasted demands. If actual results differ from those estimates, work-in-process inventory could potentially accumulate for periods exceeding one year. At December 31, 2013 and 2012, the Company classified its work-in-process inventory as a current asset on its consolidated balance sheets based on its evaluation that the work-in-process inventory would be consumed for production and subsequently sold within each respective subsequent twelve-month period.

Inventory is recorded at the lower of cost, determined on a first-in, first-out basis, or market value. The Company uses significant judgment to analyze and determine if the composition of its inventory is obsolete, slow-moving or unsalable and frequently reviews such determinations. The Company writes-down specifically identified unusable, obsolete, slow-moving, or known unsalable inventory that has no alternative use to net realizable value in the period that it is first recognized by using a number of factors including product expiration dates, open and unfulfilled orders, and sales forecasts. Any write-down of its inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest that the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded in “Cost of product revenue” on the Company’s consolidated statements of operations. At December 31, 2013, and 2012, the Company had $0.4 million and $0.3 million, respectively, reserved for potential obsolete, expiring or unsalable product. At December 31, 2012, the Company also wrote-down the value of certain unsalable inventory of $1.7 million for which the Company had an offsetting warranty claim against Fresenius. As of December 31, 2013 the Company no longer has a warranty claim against Fresenius and all unsalable inventory has been returned to Fresenius.

See below in Note 2 and Note 16 for further information regarding the Company’s warranty claim against Fresenius.

Property and Equipment, net

Property and equipment is comprised of furniture, equipment, information technology hardware and software and is recorded at cost. At the time the property and equipment is ready for its intended use, it is depreciated on a straight-line basis over the estimated useful lives of the assets (generally three to five years). Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful lives of the improvements.

Goodwill and Intangible Assets, net

Additions to goodwill and intangible assets, net are derived at the time of a business acquisition, in which the Company assigns the total consideration transferred to the acquired assets based on each asset’s fair value and any residual amount becomes goodwill, an indefinite life intangible asset. Intangible assets, net, which include a license for the right to commercialize the INTERCEPT Blood System in Asia, are subject to ratable amortization over the estimated useful life of ten years. The amortization of the Company’s intangible assets, net, is recorded in “Amortization of intangible assets” on the Company’s consolidated statements of operations.

Goodwill is not amortized but instead is subject to an impairment test performed on an annual basis, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. Such impairment analysis is performed on August 31 of each fiscal year, or more frequently if indicators of impairment exist. The test for goodwill impairment may be assessed using qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, the Company must then proceed with performing the quantitative two-step process to test goodwill for impairment; otherwise, goodwill is not considered impaired and no further testing is warranted. The Company may choose not to perform the qualitative assessment to test goodwill for impairment and proceed directly to the quantitative two-step process; however, the Company may revert to the qualitative assessment to test goodwill for impairment in any subsequent period. The first step of the two-step process compares the fair value of each reporting unit with its respective carrying amount, including goodwill. The Company has determined that it operates in one reporting unit and estimates the fair value of its one reporting unit using the enterprise approach under which it considers the quoted market capitalization of the Company as reported on the Nasdaq Global Market. The Company considers quoted market prices that are available in active markets to be the best evidence of fair value. The Company also considers other factors, which include future forecasted results, the economic environment and overall market conditions. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired and, therefore, the second step of the impairment test is unnecessary. The second step of the two-step process, which is used to measure the amount of impairment loss, compares the implied fair value of each reporting unit’s goodwill with the respective carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

The Company performs an impairment test on its intangible assets, in accordance ASC Topic 360-10, “Property, Plant and Equipment,” if certain events or changes in circumstances occur which indicate that the carrying amounts of its intangible assets may not be recoverable. If the intangible assets are not recoverable, an impairment loss would be recognized by the Company based on the excess amount of the carrying value of the intangible assets over its fair value. For further details regarding the impairment analysis, reference is made to the section below under “Long-lived Assets.” See Note 8 for further information regarding the Company’s impairment analysis and the valuation of goodwill and intangible assets, net.

Long-lived Assets

The Company evaluates its long-lived assets for impairment by continually monitoring events and changes in circumstances that could indicate carrying amounts of its long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the expected undiscounted future cash flows are less than the carrying amount of these assets, the Company then measures the amount of the impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company did not recognize impairment charges related to its long-lived assets during the years ended December 31, 2013, 2012 and 2011.

Foreign Currency Remeasurement

The functional currency of the Company’s foreign subsidiary is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are remeasured in United States dollars using the exchange rates at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are remeasured in United States dollars using historical exchange rates. Monetary revenues and expenses are remeasured using average exchange rates prevailing during the period. Remeasurements are recorded in the Company’s consolidated statements of operations as a component of foreign exchange gain (loss). The Company recorded foreign currency gains of $0.5 million and $0.1 million and a loss of $0.5 million during the years ended December 31, 2013, 2012 and 2011, respectively.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation—Stock Compensation.” Stock-based compensation expense is measured at the grant-date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period, and is adjusted for estimated forfeitures. To the extent that stock options contain performance criteria for vesting, stock-based compensation is recognized once the performance criteria are probable of being achieved.

For stock-based awards issued to non-employees, the Company follows ASC Topic 505-50, “Equity Based Payment to Non-Employees” and considers the measurement date at which the fair value of the stock-based award is measured to be the earlier of (i) the date at which a commitment for performance by the grantee to earn the equity instrument is reached or (ii) the date at which the grantee’s performance is complete. The Company recognizes stock-based compensation expense for the fair value of the vested portion of the non-employee stock-based awards in its consolidated statements of operations.

See Note 14 for further information regarding the Company’s stock-based compensation assumptions and expenses.

Warrant Liability

In August 2009, and November 2010, the Company issued warrants to purchase an aggregate of 2.4 million and 3.7 million shares of common stock, respectively. The material terms of the warrants were identical under each issuance except for the exercise price, date issued and expiration date. The Company classifies the warrants as a liability on its consolidated balance sheets as the warrants contain certain material terms which require the Company (or its successor) to purchase the warrants for cash in an amount equal to the value of the unexercised portion of the warrants in connection with certain change of control transactions. In addition, the Company may also be required to pay cash to a warrant holder under certain circumstances if the Company is unable to timely deliver the shares acquired upon warrant exercise to such holder.

The fair value of these outstanding warrants is calculated using a combination of the Black-Scholes model and/or binomial-lattice option-pricing model and is adjusted accordingly at each reporting period. Option-pricing models require that the Company uses significant assumptions and judgment to determine appropriate inputs to the model. Some of the assumptions that the Company relies on include the volatility of the Company’s stock over the life of the warrant, risk-free interest rate and the probability of a change of control occurring. The binomial-lattice option-pricing model also considers a certain number of share price movements and the probability of each outcome happening.

Changes resulting from the revaluation of warrants to fair value are recorded in “Revaluation of warrant liability” on the consolidated statements of operations. Upon the exercise or modification to remove the provisions which require the warrants to be treated as a liability, the fair value of the warrants will be reclassified from a liability to stockholders’ equity on the Company’s consolidated balance sheets and no further adjustment to the fair value would be made in subsequent periods.

See Note 13 for further information regarding the Company’s valuation of warrant liability.

Income Taxes

The Company accounts for income taxes using the asset and liability approach in accordance with ASC Topic 740 “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. ASC Topic 740 requires derecognition of tax positions that do not have a greater than 50% likelihood of being recognized upon review by a taxing authority having full knowledge of all relevant information. Use of a valuation allowance as described in ASC Topic 740 is not an appropriate substitute for the derecognition of a tax position. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax expense. To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has its accrued for or made payments for interest and penalties. The Company had no unrecognized tax benefits as of December 31, 2013 and 2012. The Company continues to carry a full valuation allowance on all of its deferred tax assets. Although the Company believes it more likely than not that a taxing authority would agree with its current tax positions, there can be no assurance that the tax positions the Company has taken will be substantiated by a taxing authority if reviewed. The Company’s tax years 1998 through 2013 remain subject to examination by the taxing jurisdictions due to unutilized net operating losses and research credits.

Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per common share gives effect to all potentially dilutive common shares outstanding for the period. The potentially dilutive securities include stock options, employee stock purchase plan rights, warrants and restricted stock units, which are calculated using the treasury stock method, and convertible preferred stock, which is calculated using the if-converted method. Diluted net loss per common share also gives effect to potential adjustments to the numerator for changes resulting from the revaluation of warrants to fair value for the period, even if the Company is in a net loss position if the effect would be dilutive.

Diluted net loss per common share used the same weighted average number of common shares outstanding for the years ended December 31, 2013 and 2011, as calculated for the basic net loss per common share as the inclusion of any potential dilutive securities would be anti-dilutive. In addition, certain potential dilutive securities were excluded from the dilution calculation for the years ended December 31, 2012, as their inclusion would have been anti-dilutive.

The following table sets forth the reconciliation of the numerator and denominator used in the computation of basic and diluted net loss per common share for the years ended December 31, 2013, 2012 and 2011 (in thousands, except per share amounts):

 

     Year Ended December 31,  
     2013     2012     2011  

Numerator:

      

Net loss

   $ (43,337   $ (15,917   $ (16,982

Effect of revaluation of warrant liability

            (2,059       
  

 

 

   

 

 

   

 

 

 

Adjusted net loss used for dilution calculation

   $ (43,337   $ (17,976   $ (16,982
  

 

 

   

 

 

   

 

 

 

Denominator:

      

Basic weighted average number of common shares outstanding

     67,569        54,515        48,050   

Effect of dilutive potential common shares resulting from warrants accounted for as liabilities

            546          
  

 

 

   

 

 

   

 

 

 

Diluted weighted average number of common shares outstanding

     67,569        55,061        48,050   
  

 

 

   

 

 

   

 

 

 

Basic

   $ (0.64   $ (0.29   $ (0.35

Diluted

   $ (0.64   $ (0.33   $ (0.35

 

The table below presents common shares underlying stock options, employee stock purchase plan rights, warrants, restricted stock units and/or convertible preferred stock that were excluded from the calculation of the weighted average number of common shares outstanding used for the calculation of diluted net loss per common share. These were excluded from the calculation due to their anti-dilutive effect for the years ended December 31, 2013, 2012 and 2011 (shares in thousands):

 

     Year Ended December 31,  
     2013      2012      2011  

Anti-dilutive common shares

     16,370         8,716         13,595   

Guarantee and Indemnification Arrangements

The Company recognizes the fair value for guarantee and indemnification arrangements issued or modified by the Company after December 31, 2002. In addition, the Company monitors the conditions that are subject to the guarantees and indemnifications in order to identify if a loss has occurred. If the Company determines it is probable that a loss has occurred, then any such estimable loss would be recognized under those guarantees and indemnifications. Some of the agreements that the Company is a party to contain provisions that indemnify the counter party from damages and costs resulting from claims that the Company’s technology infringes the intellectual property rights of a third party or claims that the sale or use of the Company’s products have caused personal injury or other damage or loss. The Company has not received any such requests for indemnification under these provisions and has not been required to make material payments pursuant to these provisions.

The Company generally provides for a one-year warranty on certain of its INTERCEPT blood-safety products covering defects in materials and workmanship. The Company accrues costs associated with warranty obligations when claims become known and are estimable. During the year ended December 31, 2012, the Company provided for and settled the claims for warranty obligations of $0.9 million related to replacement costs for certain of its products that the Company identified were defective or had the potential of being defective. Prior to this incident, there have been very few warranty costs incurred. As a result, the Company had not accrued for any potential future warranty costs at December 31, 2011. In addition, the Company believes that the defective products and those that had the potential of being defective identified during the year ended December 31, 2012 are isolated. Accordingly, the Company has not accrued for any other incremental potential future warranty costs for its products at December 31, 2013.

In connection with the warranty obligations provided for in relation to certain of its products during the year ended December 31, 2012, the Company filed a warranty claim against Fresenius, which Fresenius accepted. As a result, the Company recorded a current asset of $1.8 million on its consolidated balance sheets as of December 31, 2012 representing the full amount of the warranty claim against Fresenius as Fresenius will supply the Company with replacement products or credit notes for those defective or potentially defective products. The Company also wrote-down the value of certain unsalable inventory of $1.7 million related to these products as an offsetting warranty claim against Fresenius. As of December 31, 2013 the Company no longer has a warranty claim against Fresenius and all unsalable inventory has been returned to Fresenius.

Fair Value of Financial Instruments

The Company applies the provisions of fair value relating to its financial assets and liabilities. The carrying amounts of accounts receivables, accounts payable, and other accrued liabilities approximate their fair value due to the relative short-term maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, the Company believes the fair value of its debt approximates their carrying amounts. The Company measures and records certain financial assets and liabilities at fair value on a recurring basis, including its available-for-sale securities and warrant liability. The Company classifies instruments within Level 1 if quoted prices are available in active markets for identical assets, which include the Company’s cash accounts and its money market funds. The Company classifies instruments in Level 2 if the instruments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. These instruments include the Company’s available-for-sale securities related to corporate debt and United States government agency securities. The available-for-sale securities are held by a custodian who obtains investment prices from a third party pricing provider that uses standard inputs (observable in the market) to models which vary by asset class. The Company classifies instruments in Level 3 if one or more significant inputs or significant value drivers are unobservable, which include our warrant liability. The Company assesses any transfers among fair value measurement levels at the end of each reporting period.

See Notes 4 and 13 for further information regarding the Company’s valuation on financial instruments.

New Accounting Pronouncements

There have been no new accounting pronouncements issued during the year ended December 31, 2013, that are of significance, or potential significance, to the Company.

BioOne Acquisition
BioOne Acquisition

Note 3. BioOne Acquisition

On August 24, 2010, the Company acquired certain assets of BioOne, a privately held Japanese company established to develop technologies to improve the safety of blood products in Asia. The assets included the commercialization licenses that the Company had granted to BioOne for both the platelet and plasma systems, illuminators held as saleable inventory and demonstration illuminators. No liabilities were assumed.

The following table summarizes the fair value of assets acquired at the acquisition date (in thousands):

 

Commercialization rights—Asia

   $ 2,017   

Illuminators—inventory

     270   

Demonstration illuminators

     135   

Goodwill

     1,316   
  

 

 

 

Total

   $ 3,738   
  

 

 

 

The Company is amortizing the commercialization rights over a ten year period and annually evaluates the goodwill for impairment. See Note 8 for further information regarding the Company’s impairment analysis and the valuation of goodwill and intangible assets, net.

Certain illuminators acquired in connection with this transaction which remain unsold are classified as consigned equipment or demonstration equipment and reflected in property and equipment, net. See Note 7 for further information regarding the Company’s property and equipment, net.

Fair Value on Financial Instruments
Fair Value on Financial Instruments

Note 4. Fair Value on Financial Instruments

We determined the fair value of an asset or liability based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction between market participants at the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritized the inputs into three broad levels as follows:

 

   

Level 1: Quoted prices in active markets for identical instruments

 

   

Level 2: Other significant observable inputs (including quoted prices in active markets for similar instruments)

 

   

Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain investments)

Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments are readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

To estimate the fair value of Level 2 debt securities as of December 31, 2013 our primary service relies on inputs from multiple industry-recognized pricing sources to determine the price for each investment. Corporate debt and United States government agency securities are systematically priced by this service as of the close of business each business day. If the primary pricing service does not price a specific asset a secondary pricing service is utilized.

The fair value of certain of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2013 (in thousands):

 

     Total      Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Money market funds(1)

   $ 8,650       $ 8,650       $       $   

Corporate debt securities(2)

   $ 23,173               $ 23,173           

United States government agency securities(2)

   $ 5,018               $ 5,018           
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 36,841       $ 8,650       $ 28,191       $   
  

 

 

    

 

 

    

 

 

    

 

 

 

Warrant liability(3)

   $ 20,390       $       $       $ 20,390   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 20,390       $       $       $ 20,390   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Included in cash and cash equivalents on the Company’s consolidated balances sheets.

 

(2) Included in short-term investments on the Company’s consolidated balance sheets.

 

(3) Included in current liabilities on the Company’s consolidated balance sheets.

 

The fair values of certain of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2012 (in thousands):

 

     Total      Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Money market funds(1)

   $ 10,268       $ 10,268       $       $   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 10,268       $ 10,268       $       $   
  

 

 

    

 

 

    

 

 

    

 

 

 

Warrant liability(2)

   $ 5,903       $       $       $ 5,903   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 5,903       $       $       $ 5,903   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Included in cash and cash equivalents on the Company’s consolidated balance sheets.

 

(2) Included in current liabilities on the Company’s consolidated balance sheets.

A reconciliation of the beginning and ending balances for warrant liability using significant unobservable inputs (Level 3) from December 31, 2011 to December 31, 2013 was as follows (in thousands):

 

Balance at December 31, 2011

   $ 7,979   

Decrease in fair value of warrants

     (2,059

Settlement of warrants exercised

     (17
  

 

 

 

Balance at December 31, 2012

     5,903   

Increase in fair value of warrants

     15,099   

Settlement of warrants exercised

     (612
  

 

 

 

Balance at December 31, 2013

   $ 20,390   
  

 

 

 

See Notes 1 and 13 for further information regarding the Company’s valuation techniques and unobservable inputs for the warrant liability using significant unobservable inputs (Level 3).

The Company did not have any transfers among fair value measurement levels during the years ended December 31, 2013 and 2012.

Available-for-sale Securities
Available-for-sale Securities

Note 5. Available-for-sale Securities

The following is a summary of available-for-sale securities at December 31, 2013 (in thousands):

 

     December 31, 2013  
     Carrying Value      Gross
    Unrealized Gain    
    Fair Value  

Money market funds

   $ 8,650       $      $ 8,650   

United States government agency securities

     5,019         (1     5,018   

Corporate debt securities

     23,165         8        23,173   
  

 

 

    

 

 

   

 

 

 

Total available-for-sale securities

   $ 36,834       $ 7      $ 36,841   
  

 

 

    

 

 

   

 

 

 

 

The following is a summary of available-for-sale securities at December 31, 2012 (in thousands):

 

     December 31, 2012  
     Carrying Value      Gross
Unrealized Gain
     Fair Value  

Money market funds

   $ 10,268       $       $ 10,268   
  

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 10,268       $       $ 10,268   
  

 

 

    

 

 

    

 

 

 

Available-for-sale securities at December 31, 2013 and 2012 consisted of the following by original contractual maturity (in thousands):

 

     December 31, 2013      December 31, 2012  
     Carrying
Value
     Fair Value      Carrying
Value
     Fair Value  

Due in one year or less

   $ 30,700       $ 30,701       $ 10,268       $ 10,268   

Due greater than one year and less than five years

     6,134         6,140                   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 36,834       $ 36,841       $ 10,268       $ 10,268   
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company recorded minimal gross realized gains from the sale or maturity of available-for-sale investments during the year ended December 31, 2011 and did not record any gross realized gains from the sale or maturity of available-for-sale investments during the years ended December 31, 2013 and 2012. The Company recorded minimal gross realized losses from the sale of available-for-sale investments during the year ended December 31, 2013, and did not record any gross realized losses during the years ended December 31, 2012 and 2011. The Company did not record losses on investments experiencing an other-than-temporary decline in fair value during the years ended December 31, 2013, 2012 and 2011.

Inventories
Inventories

Note 6. Inventories

Inventories at December 31, 2013 and 2012 consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

Work-in-process

   $ 4,863       $ 3,551   

Finished goods

     8,200         6,629   
  

 

 

    

 

 

 

Total inventories

   $ 13,063       $ 10,180   
  

 

 

    

 

 

 
Property and Equipment, net
Property and Equipment, net

Note 7. Property and Equipment, net

Property and equipment, net at December 31, 2013 and 2012 consisted of the following (in thousands):

 

     December 31,  
     2013     2012  

Leasehold improvements

   $ 5,628      $ 5,598   

Machinery and equipment

     1,751        1,594   

Demonstration equipment

     100        24   

Office furniture

     763        644   

Computer equipment

     651        550   

Computer software

     1,083        1,062   

Consigned demonstration equipment

     642        493   

Construction-in-progress

     155        55   
  

 

 

   

 

 

 

Total property and equipment, gross

     10,773        10,020   

Accumulated depreciation and amortization

     (8,584     (8,322
  

 

 

   

 

 

 

Total property and equipment, net

   $ 2,189      $ 1,698   
  

 

 

   

 

 

 

Depreciation and amortization expense related to property and equipment, net was $0.4 million, $0.4 million and $0.6 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Goodwill and Intangible Assets, net
Goodwill and Intangible Assets, net

Note 8. Goodwill and Intangible Assets, net

Goodwill

During the year ended December 31, 2013, the Company did not dispose of or recognize additional goodwill. On August 31, 2013, the Company performed its annual review of goodwill. As described in Note 2 above, the Company applied the enterprise approach by reviewing the quoted market capitalization of the Company as reported on the Nasdaq Global Market to calculate the fair value. In addition, the Company considered its future forecasted results, the economic environment and overall market conditions. As a result of the Company’s assessment that its fair value of the reporting unit exceeded its carrying amount, the Company determined that goodwill was not impaired. Accordingly, at both December 31, 2013 and 2012, the carrying amount of goodwill was $1.3 million.

Intangible Assets, net

The following is a summary of intangible assets, net at December 31, 2013 (in thousands):

 

     December 31, 2013  
     Gross Carrying
Amount
     Accumulated
Amortization
    Net Carrying
Amount
 

Acquisition-related intangible assets:

       

Reacquired license—INTERCEPT Asia

   $ 2,017       $ (673   $ 1,344   
  

 

 

    

 

 

   

 

 

 

Total intangible assets

   $ 2,017       $ (673   $ 1,344   
  

 

 

    

 

 

   

 

 

 

 

The following is a summary of intangible assets, net at December 31, 2012 (in thousands):

 

     December 31, 2012  
     Gross Carrying
Amount
     Accumulated
Amortization
    Net Carrying
Amount
 

Acquisition-related intangible assets:

       

Reacquired license—INTERCEPT Asia

   $ 2,017       $ (471   $ 1,546   
  

 

 

    

 

 

   

 

 

 

Total intangible assets

   $ 2,017       $ (471   $ 1,546   
  

 

 

    

 

 

   

 

 

 

The Company recognized $0.2 million in amortization expense related to intangible assets for each of the years ended December 31, 2013 and 2012. During the years ended December 31, 2013 and 2012, there were no impairment charges recognized related to the Company’s intangible assets.

At December 31, 2013, the expected annual amortization expense of the intangible assets, net is $0.2 million beginning with the year ending December 31, 2014 and each subsequent year thereafter through the year ending December 31, 2019, and $0.1 million for the year ending December 31, 2020.

Long-Term Investments
Long-Term Investments

Note 9. Long-Term Investments

In connection with the agreements to license the immunotherapy technologies to Aduro BioTech (“Aduro”) in 2009, the Company received preferred shares of Aduro, a privately held company. Pursuant to these license agreements, the Company is eligible to receive a 1% royalty fee on any future sales resulting from the licensed technology. For the years ended December 31, 2013, 2012 and 2011, the Company has not received any royalty payments from Aduro pursuant to this agreement. As of December 31, 2013, the Company’s ownership in Aduro was less than 3% on a fully diluted basis. Since receiving preferred stock in Aduro, the Company has carried its investment in Aduro at zero in its consolidated balance sheet.

Accrued Liabilities
Accrued Liabilities

Note 10. Accrued Liabilities

Accrued liabilities at December 31, 2013 and 2012 consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

Accrued compensation and related costs

   $ 2,527       $ 2,692   

Accrued inventory costs

     3,553         2,352   

Accrued contract and other accrued expenses

     3,733         2,575   
  

 

 

    

 

 

 

Total accrued liabilities

   $ 9,813       $ 7,619   
  

 

 

    

 

 

 
Debt
Debt

Note 11. Debt

Debt at December 31, 2013 consisted of the following (in thousands):

 

     December 31, 2013  
     Principal     Unamortized
Discount
     Total  

Comerica—Revolving Line of Credit, due 2014

   $ 3,366      $       $ 3,366   
  

 

 

   

 

 

    

 

 

 

Total debt

     3,366                3,366   

Less: debt—current

     (3,366             (3,366
  

 

 

   

 

 

    

 

 

 

Debt—non-current

   $      $       $   
  

 

 

   

 

 

    

 

 

 

Debt at December 31, 2012 consisted of the following (in thousands):

 

     December 31, 2012  
     Principal     Unamortized
Discount
    Total  

Comerica—Growth Capital Loan A, due 2015

   $ 4,583      $ (49   $ 4,534   

Comerica—Revolving Line of Credit, due 2014

     3,190               3,190   
  

 

 

   

 

 

   

 

 

 

Total debt

     7,773        (49     7,724   

Less: debt—current

     (4,857     29        (4,828
  

 

 

   

 

 

   

 

 

 

Debt—non-current

   $ 2,916      $ (20   $ 2,896   
  

 

 

   

 

 

   

 

 

 

Principal and interest payments on debt at December 31, 2013 are expected to be $3.5 million during 2014 after which the Revolving Line of Credit will have been retired.

2011 Growth Capital Facility

The Company entered into a loan and security agreement on September 30, 2011, as amended effective on December 13, 2011, and June 30, 2012, with Comerica Bank (“Comerica”) (collectively, the “Amended Credit Agreement”). The Amended Credit Agreement provides for an aggregate borrowing of up to $12.0 million, comprised of a growth capital loan of $5.0 million (“Growth Capital Loan”) and a formula based revolving line of credit (“RLOC”) of up to $7.0 million. The Company pledged all current and future assets, excluding its intellectual property and 35% of the Company’s investment in its subsidiary, Cerus Europe B.V., as security for borrowings under the Amended Credit Agreement.

Growth Capital Loan

Concurrent with the execution of the original loan and security agreement in September 2011, the Company borrowed $5.0 million under the Growth Capital Loan, substantially all of which was used to repay the Company’s prior debt with Oxford Finance Corporation (“Oxford”), with the remainder used for general corporate purposes. The Growth Capital Loan, which was scheduled to mature on September 30, 2015, and bore a fixed interest rate of 6.37%, with interest–only payments due for the first twelve months, followed by equal principal and interest payments for the remaining 36 months. In April 2013, the Company repaid in full the Growth Capital Loan balance and all accrued interest as well as a scheduled final payment fee of $0.05 million, in an aggregate amount of $4.2 million. The Company has no further obligations, nor are there any further funds available, under the Growth Capital Loan.

 

In September 2011, the Company incurred a commitment fee of $40,000 and loan fees of $50,000, which were recorded as a discount to its Growth Capital Loan and were being amortized as a component of interest expense using the effective interest method over the term of the Growth Capital Loan (discount was based on an implied interest rate of 7.07%). The Company was also required to make a final payment fee of 1% of the amounts drawn under the Growth Capital Loan due on its prepayment of the Growth Capital Loan. The final payment fee was accreted to interest expense using the effective interest method over the life of the Growth Capital Loan upon draw. The remaining unaccreted balance of the final payment fee and unamortized discount was taken as an interest charge in April 2013 in connection with the repayment of that loan.

Revolving Line of Credit

The Amended Credit Agreement provides for a RLOC of up to $7.0 million (the “RLOC Loan Amount”). The amount available under the RLOC is limited to the lesser of (i) 80% of eligible trade receivables or (ii) the RLOC Loan Amount. At December 31, 2013 and 2012, the Company had $3.4 million and $3.2 million, respectively, outstanding under the RLOC. The Company is required to repay the principal drawn from the RLOC at the end of the RLOC term on June 30, 2014, or earlier if a portion or all of the outstanding RLOC exceeds the amount available under the RLOC. The RLOC bears a floating rate based on the lender’s prime rate plus 1.50%, with interest–only payments due each month. At both December 31, 2013 and 2012, the floating rate of the RLOC was at 4.75%. In September 2011, the Company incurred a commitment fee of $20,000. Upon amendment of the loan and security agreement in June 2012, the Company incurred another annual commitment fee of $20,000 and received a credit for the unused portion of the initial fee. The Company incurs a $20,000 commitment fee at each annual anniversary beginning June 30, 2013.

Compliance with Covenants

The Company is required to maintain compliance with certain customary and routine financial covenants under the Amended Credit Agreement, including maintaining a minimum cash balance of $2.5 million at Comerica and achieving minimum revenue levels, which are measured monthly based on a six-month trailing basis and must be at least 75% of the pre-established future projected revenues for the trailing six-month period. Non-compliance with the covenants could result in the principal of the note becoming due and payable. As of December 31, 2013, the Company was in compliance with the financial covenants as set forth in the Amended Credit Agreement.

Commitments and Contingencies
Commitments and Contingencies

Note 12. Commitments and Contingencies

Operating Leases

The Company leases its office facilities, located in Concord, California and Amersfoort, The Netherlands, and certain equipment under non-cancelable operating leases with initial terms in excess of one year that require the Company to pay operating costs, property taxes, insurance and maintenance. The operating leases expire at various dates through 2019, with certain of the leases providing for renewal options, provisions for adjusting future lease payments, which is based on the consumer price index and the right to terminate the lease early, which may occur as early as January 2015. In June 2013 the Company entered into a new lease for additional space in Concord. The lease has a two year initial term with four (4) two year options for the Company to renew. The lease commenced on August 1, 2013 and obligates the Company to make rent payments of $154,368 and $90,048 in 2014 and 2015, respectively. The Company’s leased facilities qualify as operating leases under ASC Topic 840, “Leases” and as such, are not included on its consolidated balance sheets.

 

Future minimum non-cancelable lease payments under operating leases as of December 31, 2013 are as follows (in thousands):

 

Year ended December 31,

      

2014

   $ 1,147   

2015

     553   

2016

     142   

2017

     68   

2018 and thereafter

     9   
  

 

 

 

Total minimum non-cancellable lease payments

   $ 1,919   
  

 

 

 

Rent expense for office facilities was $0.7 million, $0.6 million and $0.7 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Financed Leasehold Improvements

In December 2010, the Company financed $1.1 million of leasehold improvements. The Company pays for the financed leasehold improvements as a component of rent and is required to reimburse its landlord over the remaining life of the respective leases. If the Company exercises its right to early terminate the original Concord California lease, which may occur as early as January 2015, the Company would be required to repay for any remaining portion of the landlord financed leasehold improvements at such time. At December 31, 2013, the Company had an outstanding liability of $0.7 million related to these leasehold improvements, of which $0.1 million was reflected in “Accrued liabilities” and $0.6 million was reflected in “Other non-current liabilities” on the Company’s consolidated balance sheets.

Purchase Commitments

The Company is party to agreements with certain providers for certain components of INTERCEPT Blood System which the Company purchases from third party manufacturers and supplies to Fresenius at no cost for use in manufacturing finished INTERCEPT disposable kits. Certain of these agreements require minimum purchase commitments from the Company. The Company has paid $6.5 million, $7.2 million and $3.6 million for goods under agreements which are subject to minimum purchase commitments during the years ended December 31, 2013, 2012 and 2011, respectively. As of December 31, 2013, the Company has future minimum purchase commitments under these agreements of $3.4 million for the year ending December 31, 2014 and less than $1.3 million for each subsequent year thereafter through December 31, 2016.

Stockholders' Equity
Stockholders' Equity

Note 13. Stockholders’ Equity

Series B Convertible Preferred Stock

In March 1999, the Company issued 3,327 shares of the Company’s Series B convertible preferred stock to Fresenius. The Series B convertible preferred stock had no voting rights, except with respect to the authorization of any class or series of stock having preference or priority over the Series B convertible preferred stock as to voting, liquidation or conversion or with respect to the determination of fair value of non-publicly traded shares received by the holder of Series B convertible preferred stock in the event of a liquidation, or except as required by Delaware law. At any time, the holder had the ability to convert each share of Series B convertible preferred stock into 100 shares of the Company’s common stock. The Company had the right to redeem the Series B convertible preferred stock prior to conversion for a payment of $9.5 million. In June 2012, Fresenius exercised its right to convert all 3,327 shares of the Company’s Series B convertible preferred stock. As a result, the Company issued 332,700 shares of its common stock to Fresenius and retired the outstanding Series B convertible preferred stock.

Common Stock and Associated Warrant Liability

In August 2009, the Company issued warrants to purchase 2.4 million shares of common stock, exercisable at an exercise price of $2.90 per share (“2009 Warrants”). The 2009 Warrants are exercisable for a period of five years from the issue date. The fair value on the date of issuance of the 2009 Warrants was determined to be $2.8 million using the Black-Scholes model and/or binomial-lattice option valuation model and applying the following assumptions: (i) a risk-free rate of 2.48%, (ii) an expected term of 5.0 years, (iii) no dividend yield and (iv) a volatility of 77%.

In November 2010, the Company received net proceeds of approximately $19.7 million, after deducting underwriting discounts and commissions and stock issuance costs of approximately $1.3 million, from an underwritten public offering of 7.4 million units. Each unit sold consisted of one share of common stock and a warrant to purchase 1/2 of a share of common stock. Each unit was sold for $2.85, resulting in the issuance of 7.4 million shares of common stock and warrants to purchase 3.7 million shares of common stock, exercisable at an exercise price of $3.20 per share (“2010 Warrants”). The warrants issued in November 2010 became exercisable on May 15, 2011 and are exercisable for a period of five years from the issue date. The fair value on the date of issuance of the 2010 Warrants was determined to be $5.8 million using the Black-Scholes model and/or binomial-lattice option valuation model and applying the following assumptions: (i) a risk-free rate of 1.23%, (ii) an expected term of 5.0 years, (iii) no dividend yield and (iv) a volatility of 85%.

The fair value of the 2009 Warrants and 2010 Warrants was recorded on the consolidated balance sheets as a liability pursuant to “Accounting for Derivative Instruments and Hedging Activities” and “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” Topics of ASC and will be adjusted to fair value at each financial reporting date thereafter until the earlier of exercise or modification to remove the provisions which require the warrants to be treated as a liability, at which time, these warrants would be reclassified into stockholders’ equity. The Company classified the 2009 Warrants and 2010 Warrants as a liability as these warrants contain certain provisions that, under certain circumstances, which may be out of the Company’s control, could require the Company to pay cash to settle the exercise of the warrants or may require the Company to redeem the warrants.

The fair value of the warrants at December 31, 2013 and 2012 consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

2009 Warrants

   $ 8,542       $ 2,009   

2010 Warrants

     11,848         3,894   
  

 

 

    

 

 

 

Total warrant liability

   $ 20,390       $ 5,903   
  

 

 

    

 

 

 

 

The fair value of the Company’s warrants was based on using the Black-Scholes model and/or binomial-lattice option valuation model and using the following assumptions at December 31, 2013 and 2012:

 

     December 31,
     2013   2012

2009 Warrants:

    

Expected term (in years)

   0.65   1.65

Estimated volatility

   45%   45%

Risk-free interest rate

   0.10%   0.25%

Expected dividend yield

   0%   0%

2010 Warrants:

    

Expected term (in years)

   1.86   2.86

Estimated volatility

   41%   51%

Risk-free interest rate

   0.38%   0.36%

Expected dividend yield

   0%   0%

The Company recorded a non-cash loss of $15.1 million and non-cash gains of $2.1 million and $0.5 million during the years ended December 31, 2013, 2012, and 2011, respectively, in “Revaluation of warrant liability” on the consolidated statements of operations due to the changes in fair value of the warrants. Significant changes to the Company’s market price for its common stock will impact the implied and/or historical volatility used to fair value the warrants. As a result, any significant increases in the Company’s stock price will likely create an increase to the fair value of the warrant liability. Similarly, any significant decreases in the Company’s stock price will likely create a decrease to the fair value of the warrant liability. During the years ended December 31, 2013 and 2012, 2010 Warrants to purchase 0.2 million and 5,000 shares of common stock, respectively were exercised. At December 31, 2013 no 2009 Warrants have been exercised and an aggregate 5.9 million 2009 and 2010 Warrants remain outstanding.

Sales Agreements

The Company entered into an At-The-Market Issuance Sales Agreement in June 2011, as amended in January 2012 and August 2012 (collectively, the “MLV Agreement”), with MLV & Co. LLC, formerly McNicoll, Lewis & Vlak LLC (“MLV”) that provides for the issuance and sale of shares of the Company’s common stock over the term of the MLV Agreement having an aggregate offering price of up to $20.0 million through MLV. Under the MLV Agreement, MLV acts as the Company’s sales agent and receives compensation based on an aggregate of 3% of the gross proceeds on the sale price per share of its common stock. The issuance and sale of these shares by the Company pursuant to the MLV Agreement are deemed an “at-the-market” offering and are registered under the Securities Act. During the year ended December 31, 2012 and 2011, approximately 3.1 million and 3.5 million shares, respectively, of the Company’s common stock were sold under the MLV Agreement for aggregate net proceeds of $9.5 million and $9.7 million, respectively. At December 31, 2013, the Company had less than $0.1 million of common stock available to be sold under the MLV Agreement.

The Company also entered into a Controlled Equity OfferingSM Sales Agreement (the “Cantor Agreement”) in August 2012, with Cantor Fitzgerald & Co. (“Cantor”) that provides for the issuance and sale of shares of its common stock over the term of the Cantor Agreement having an aggregate offering price of up to $30.0 million through Cantor. Under the Cantor Agreement, Cantor also acts as the Company’s sales agent and receives compensation based on an aggregate of 2% of the gross proceeds on the sale price per share of its common stock. The issuance and sale of these shares by the Company pursuant to the Cantor Agreement are deemed an “at-the-market” offering and are registered under the Securities Act. During the years ended December 31, 2013 and 2012, approximately 5.4 million and 1.4 million shares, respectively, of the Company’s common stock were sold under the Cantor Agreement for aggregate net proceeds of $23.5 million and $4.3 million, respectively. At December 31, 2013, the Company had approximately $1.5 million of common stock available to be sold under the Cantor Agreement.

Stockholder Rights Plan

In October 2009, the Company’s Board of Directors adopted an amendment to its 1999 stockholder rights plan, commonly referred to as a “poison pill,” to reduce the exercise price, extend the expiration date and revise certain definitions under the plan. The stockholder rights plan is intended to deter hostile or coercive attempts to acquire the Company. The stockholder rights plan enables stockholders to acquire shares of the Company’s common stock, or the common stock of an acquirer, at a substantial discount to the public market price should any person or group acquire more than 15% of the Company’s common stock without the approval of the Board of Directors under certain circumstances. The Company has designated 250,000 shares of Series C Junior Participating preferred stock for issuance in connection with the stockholder rights plan.

Stock-Based Compensation
Stock-Based Compensation

Note 14. Stock-Based Compensation

Employee Stock Plans

Employee Stock Purchase Plan

The Company maintains an Employee Stock Purchase Plan (the “Purchase Plan”), which is intended to qualify as an employee stock purchase plan within the meaning of Section 423(b) of the Internal Revenue Code. Under the Purchase Plan, the Company’s Board of Directors may authorize participation by eligible employees, including officers, in periodic offerings. Although the Purchase Plan provides for an offering period to be no more than 27 months, the Company currently allows eligible employees to purchase shares of the Company’s common stock at the end of each six-month offering period at a purchase price equal to 85% of the lower of the fair market value per share on the start date of the offering period or the fair market value per share on the purchase date prior to 2012. Prior to June 6, 2012, the Purchase Plan, as amended by the Company’s stockholders, had authorized and provided for issuance an aggregate of 820,500 shares of common stock. On June 6, 2012, the stockholders approved a further amendment to the Purchase Plan to increase the aggregate number of shares of common stock authorized for issuance by 500,000 shares, such that the Purchase Plan has reserved for issuance an amount not to exceed 1,320,500 shares. At December 31, 2013, the Company had 514,820 shares available for future issuance.

2008 Equity Incentive Plan

The Company also maintains an equity compensation plan to provide long-term incentives for employees, contractors, and members of its Board of Directors. The Company currently grants equity awards from one plan, the 2008 Equity Incentive Plan (the “2008 Plan”). The 2008 Plan allows for the issuance of non-statutory and incentive stock options, restricted stock, restricted stock units, stock appreciation rights, other stock-related awards, and performance awards which may be settled in cash, stock, or other property. On June 6, 2012 and June 12, 2013, the stockholders approved amendments to the 2008 Plan (collectively the “Amended 2008 Plan”) which increased the aggregate number of shares of common stock authorized for issuance by 3,000,000 shares and 6,000,000 shares, respectively, such that the Amended 2008 Plan has reserved for issuance an amount not to exceed 19,540,940 shares. Awards under the 2008 Plan generally have a maximum term of 10 years from the date of the award. The 2008 Plan generally requires options to be granted at 100% of the fair market value of the Company’s common stock subject to the option on the date of grant and will generally vest over four years. Performance-based stock or cash awards granted under the Amended 2008 Plan are limited to either 500,000 shares of common stock or $1.0 million per recipient per calendar year. The attainment of any performance-based awards granted shall be conclusively determined by a committee designated by the Company’s Board of Directors. At December 31, 2013, no performance-based stock options were outstanding.

1996 Equity Incentive Plan, 1998 Non-Officer Stock Option Plan, and 1999 Equity Incentive Plan

The Company continues to have equity awards outstanding under its previous stock plans: 1998 Non-Officer Stock Option Plan and 1999 Equity Incentive Plan (collectively, the “Prior Plans”) and 1996 Equity Incentive Plan (the “1996 Plan”). Equity awards issued under the Prior Plans and the 1996 Plan continues to adhere to the terms of those respective stock plans and no further options may be granted under those previous plans. However, at June 2, 2008, any shares that remained available for future grants under the Prior Plans became available for issuance under the 2008 Plan.

At December 31, 2013, the Company had an aggregate of approximately 18.6 million shares of its common stock remaining available for future issuance under the Amended 2008 Plan, the Prior Plans and the 1996 Plan, of which approximately 10.5 million shares were subject to outstanding options and other stock-based awards, and approximately 8.1 million shares were available for future issuance under the Amended 2008 Plan. The Company’s policy is to issue new shares of common stock upon the exercise of options.

Activity under the Company’s equity incentive plans related to stock options is set forth below (in thousands except weighted average exercise price):

 

     Number of
Options
Outstanding
    Weighted Average
Exercise Price per
Share
 

Balances at December 31, 2010

     7,007      $ 6.42   

Granted

     2,169        2.36   

Forfeited

     (465     2.45   

Expired

     (1,237     11.52   

Exercised

     (112     0.81   
  

 

 

   

Balances at December 31, 2011

     7,362      $ 4.70   

Granted

     1,782        3.68   

Forfeited

     (98     2.78   

Expired

     (386     30.44   

Exercised

     (156     1.30   
  

 

 

   

Balances at December 31, 2012

     8,504      $ 3.40   

Granted

     2,621        3.82   

Forfeited

     (234     3.13   

Expired

     (189     6.71   

Exercised

     (297     3.14   
  

 

 

   

Balances at December 31, 2013

     10,405      $ 3.46   
  

 

 

   

 

Information regarding the Company’s stock options outstanding, stock options vested and expected to vest, and stock options exercisable at December 31, 2013 was as follows (in thousands except weighted average exercise price and contractual term):

 

     Number
of Shares
     Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Term (Years)
     Aggregate
Intrinsic
Value
 

Balances at December 31, 2013

           

Stock options outstanding

     10,405       $ 3.46         6.34       $ 32,724   

Stock options vested and expected to vest

     10,028       $ 3.45         6.25       $ 31,730   

Stock options exercisable

     6,589       $ 3.43         5.05       $ 21,555   

The aggregate intrinsic value in the table above is calculated as the difference between the exercise price of the stock option and the Company’s closing stock price on the last trading day of each respective fiscal period.

The total intrinsic value of options exercised for the years ended December 31, 2013, 2012 and 2011 was $0.6 million, $0.3 million and $0.2 million, respectively.

Restricted Stock Units

The Company has previously granted restricted stock units primarily to its senior management in accordance with the Amended 2008 Plan. Subject to each grantee’s continued employment, the restricted stock units generally vest in three annual installments from the date of grant and are generally issuable at the end of the three-year vesting term. The fair value of restricted stock units which vested during the years ended December 31, 2013, 2012 and 2011 was $0.05 million, $0.05 million and $0.1 million, respectively.

Activity under the Company’s equity incentive plans related to restricted stock units is set forth below:

 

     Number
of RSUs
    Weighted Average
Grant-Date Fair
Value
 

Balances at December 31, 2010

     88,400      $ 2.54   

Granted

            0.00   

Forfeited

     (17,727     1.85   

Vested

     (37,378     3.48   
  

 

 

   

Balances at December 31, 2011

     33,295      $ 1.85   

Granted

     2,000        3.03   

Forfeited

            0.00   

Vested

     (18,650     1.98   
  

 

 

   

Balances at December 31, 2012

     16,645      $ 1.85   

Granted

            0.00   

Forfeited

            0.00   

Vested

     (16,645     1.85   
  

 

 

   

Balances at December 31, 2013

          $   
  

 

 

   

 

Stock-based Compensation Expense

Stock-based compensation expense recognized on the Company’s consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011, was as follows (in thousands):

 

     Year Ended December 31,  
     2013      2012      2011  

Stock-based compensation expense by caption:

        

Research and development

   $ 482       $ 554       $ 450   

Selling, general and administrative

     2,786         1,987         1,400   
  

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 3,268       $ 2,541       $ 1,850   
  

 

 

    

 

 

    

 

 

 

Stock-based compensation expense in the above table does not reflect any income taxes as the Company has experienced a history of net losses since its inception and has a full valuation allowance on its deferred tax assets. In addition, there was neither income tax benefits realized related to stock-based compensation expense nor any stock-based compensation costs capitalized as part of an asset during the years ended December 31, 2013, 2012 and 2011. The Company has also not recorded any stock-based compensation associated with performance-based stock options during the years ended December 31, 2013, 2012 and 2011 as the performance criteria was not probable of being achieved.

As of December 31, 2013, the Company expects to recognize the remaining unamortized stock-based compensation expense of $5.9 million related to non-vested stock options, net of estimated forfeitures, over an estimated remaining weighted average period of 2.56 years.

Valuation Assumptions for Stock-based Compensation

The Company currently uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options and employee stock purchase plan shares. The Black-Scholes option-pricing model is affected by the Company’s stock price, as well as assumptions regarding a number of complex and subjective variables, which include the expected term of the grants, actual and projected employee stock option exercise behaviors, including forfeitures, the Company’s expected stock price volatility, the risk-free interest rate and expected dividends. The Company recognizes the grant-date fair value of the stock award as stock-based compensation expense on a straight-line basis over the requisite service period, which is the vesting period, and is adjusted for estimated forfeitures.

Expected Term

The Company estimates the expected term for stock options based on grouping the population of stock options into discreet, homogeneous groups and then analyzing employee exercise and post-vesting termination behavior. The Company may also average the vesting term and the contractual term of the stock options, as illustrated in SAB 107 and SAB 110, if the Company is unable to obtain sufficient information for a particular homogeneous group of stock options. The expected term for the shares issuable under the employee stock purchase plan is the term of each purchase period, which is six months.

Estimated Forfeiture Rate

The Company estimates the forfeiture rate of stock options at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. The Company estimates the historic pre-vesting forfeiture rates by groups that possess a degree of homogeneity regarding average time to vest and expected term.

Estimated Volatility

The Company estimates the volatility of its common stock by using historical volatility of its common stock. The Company has used significant judgment in making these estimates and will continue to monitor the availability of actively traded stock options on its common stock. The Company may also consider a combination of historical and implied volatility, or solely implied volatility, if the Company determines that sufficient actively traded stock options on its common stock exists.

Risk-Free Interest Rate

The Company uses the risk-free interest rate based on the yield derived from United States Treasury zero-coupon issues with remaining terms similar to the expected term on the stock options.

Expected Dividend Yield

The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero.

The weighted average assumptions used to value the Company’s stock-based awards for the years ended December 31, 2013, 2012 and 2011, was as follows:

 

     Year Ended December 31,  
     2013     2012     2011  

Stock Options:

      

Expected term (in years)

     5.59        5.54        5.30   

Estimated volatility

     60     67     68

Risk-free interest rate

     0.87     1.03     1.23

Expected dividend yield

     0     0     0

Employee Stock Purchase Plan Rights:

      

Expected term (in years)

     0.50        0.50        0.50   

Estimated volatility

     39     101     48

Risk-free interest rate

     0.10     0.14     0.08

Expected dividend yield

     0     0     0

The weighted average grant-date fair value of stock options granted during the years ended December 31, 2013, 2012 and 2011, was $2.03 per share, $2.13 per share and $1.37 per share, respectively. The weighted average grant-date fair value of restricted stock units granted during the years ended December 31, 2012 was $3.03 per share. The weighted average grant-date fair value of employee stock purchase rights during the years ended December 31, 2013, 2012 and 2011, was $1.18 per share, $1.43 per share and $0.68 per share, respectively.

Retirement Plan
Retirement Plan

Note 15. Retirement Plan

The Company maintains a defined contribution savings plan (the “401(k) Plan”) that qualifies under the provisions of Section 401(k) of the Internal Revenue Code and covers eligible U.S. employees of the Company. Under the terms of the 401(k) Plan, eligible U.S. employees may make pre-tax dollar contributions of up to 60% of their eligible pay up to a maximum cap established by the IRS. The Company may contribute a discretionary percentage of qualified individual employee’s salaries, as defined, to the 401(k) Plan. The Company has not contributed to the 401(k) Plan during the years ended December 31, 2013, 2012 and 2011.

Development and License Agreements
Development and License Agreements

Note 16. Development and License Agreements

Agreements with Fresenius

The Company has certain agreements with Fresenius which require the Company to pay royalties on future INTERCEPT Blood System product sales at royalty rates that vary by product: 10% of product sales for the platelet system and 3% of product sales for the plasma system. During the years ended December 31, 2013, 2012 and 2011, the Company made royalty payments to Fresenius of $3.0 million, $2.7 million and $2.2 million, respectively. At December 31, 2013 and December 31, 2012, the Company owed Fresenius $0.7 million and $0.8 million, respectively, for royalties.

We also paid Fresenius certain costs associated with the amended manufacturing and supply agreement we executed with Fresenius in December 2008, the Original Supply Agreement, for the manufacture of INTERCEPT finished disposable kits for our platelet and plasma systems through December 31, 2013. Under the Original Supply Agreement, we paid Fresenius a set price per disposable kit, which was established annually, plus a fixed surcharge per disposable kit. In addition, volume driven manufacturing overhead was paid or refunded if actual manufacturing volumes were higher or lower than the annually estimated production volumes. The Company made payments to Fresenius of $15.0 million, $12.2 million and $9.6 million relating to the manufacturing of the Company products during the years ended December 31, 2013, 2012 and 2011, respectively. At December 31, 2013, and December 31, 2012, the Company owed Fresenius $4.3 million and $6.2 million, respectively, for INTERCEPT disposable kits manufactured.

In November 2013, we amended the Original Supply Agreement with Fresenius, with the new terms effective January 1, 2014, the 2013 Amendment. Under the 2013 Amendment, Fresenius is obligated to sell, and we are obligated to purchase, up to a certain specified annual volume of finished disposable kits for the platelet and plasma systems from Fresenius for both clinical and commercial use. Once the specified annual volume of disposable kits is purchased from Fresenius, we are able to purchase additional quantities of disposable kits from other third-party manufacturers. The 2013 Amendment also provides for fixed pricing for finished kits with successive decreases in pricing at certain annual production volumes. In addition, the 2013 Amendment requires us to purchase additional specified annual volumes of sets per annum if and when an additional Fresenius manufacturing site is identified and qualified to make INTERCEPT disposable kits subject to mutual agreement on pricing for disposable kits manufactured at the additional site. Fresenius is also obligated to purchase and maintain specified inventory levels of our proprietary inactivation compounds and adsorption media from us at fixed prices. The term of the 2013 Amendment extends through December 31, 2018, subject to termination by either party upon thirty months prior written notice, in the case of Fresenius, or twenty-four months prior written notice, in our case. We and Fresenius each have normal and customary termination rights, including termination for material breach.

In connection with the warranty claims incurred by the Company and remediation of those claims during the year ended December 31, 2012 (see Note 2 in the Notes to Consolidated Financial Statements under “Guarantee and Indemnification Arrangements” for more detail), the Company filed a warranty claim against Fresenius. Fresenius accepted the warranty claim and supplied the Company with replacement product or credit notes. As a result, the Company had recorded a current asset of $1.8 million on its consolidated balance sheets as of December 31, 2012 representing the full amount of the warranty claim against Fresenius. As of December 31, 2013 the Company no longer has a warranty claim against Fresenius.

Cooperative Agreements with the United States Armed Forces

Since February 2001, the Company had received awards under cooperative agreements with the Army Medical Research Acquisition Activity division of the Department of Defense. The Company received these awards in order to develop its pathogen inactivation technologies for the improved safety and availability of blood that may be used by the United States Armed Forces for medical transfusions. Under the terms of the cooperative agreements, the Company was conducting research on the inactivation of infectious pathogens in blood, including unusual viruses, bacteria and parasites that were of concern to the United States Armed Forces. This funding supported advanced development of the Company’s red blood cell system. The Company recognized $0 million, $0.1 million and $2.4 million of revenue under these agreements during the years ended December 31, 2013, 2012 and 2011, respectively. The Company has fully utilized the remaining availability under these existing agreements, accordingly the Company will not recognize any additional revenue associated with these agreements.

Income Taxes
Income Taxes

Note 17. Income Taxes

U.S and foreign components of consolidated loss before income taxes for the years ended December 2013, 2012 and 2011 was as follows (in thousands):

 

     Year Ended December 31,  
     2013     2012     2011  

Income (loss) before income taxes:

      

U.S.

   $ (44,035   $ (16,360   $ (17,461

Foreign

     916        685        622   
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

   $ (43,119   $ (15,675   $ (16,839
  

 

 

   

 

 

   

 

 

 

The provision for income taxes for the years ended December 2013, 2012 and 2011 was as follows (in thousands):

 

     Year Ended December 31,  
         2013              2012              2011      

Provision for income taxes:

        

Current:

        

Foreign

   $ 191       $ 180       $ 143   

Federal

                       

State

                       
  

 

 

    

 

 

    

 

 

 

Total Current

     191         180         143   

Deferred:

        

Foreign

                       

Federal

     21         48           

State

     6         14           
  

 

 

    

 

 

    

 

 

 

Total Deferred

     27         62           
  

 

 

    

 

 

    

 

 

 

Provision for income taxes

   $ 218       $ 242       $ 143   
  

 

 

    

 

 

    

 

 

 

 

The difference between the provision for income taxes and the amount computed by applying the federal statutory income tax rate to loss before taxes for the years ended December 31, 2013, 2012 and 2011 was as follows (in thousands):

 

     Year Ended December 31,  
     2013     2012     2011  

Federal statutory tax

   $ (14,661   $ (5,329   $ (5,725

Stock-based compensation

     (10     99        83   

Lobbying expenses

     107        51        112   

Warrants

     4,926        (706     (165

Foreign rate differential

     (121     (53     (68

Expiration of federal net operating losses and credits—tax effected

            4,352        1,744   

Change in valuation allowance

     9,934        1,761        4,158   

Goodwill amortization

     21        48          

Other

     22        19        4   
  

 

 

   

 

 

   

 

 

 

Provision for income taxes

   $ 218      $ 242      $ 143   
  

 

 

   

 

 

   

 

 

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at the enacted rates. The significant components of the Company’s deferred tax assets at December 31, 2013 and 2012 were as follows (in thousands):

 

     December 31,  
     2013     2012  

Deferred tax assets:

    

Net operating loss carryforwards

   $ 142,500      $ 137,700   

Research and development credit carryforwards

     32,100        30,800   

Capitalized inventory costs

     800        900   

Inventory reserve

     100        700   

Capitalized research and development

     12,300        9,100   

Capitalized trademark

     400        400   

Capitalized revenue sharing rights

     100        300   

Asia license intangible

     100        100   

Deferred compensation

     4,900        4,800   

Accrued liabilities

     200        100   

Depreciation

     1,300        1,300   

Acquisition costs

     200        200   

Deferred tenant allowance

     100        200   

Capital loss carryforwards

     3,900        3,900   
  

 

 

   

 

 

 

Total deferred tax assets

     199,000        190,500   

Valuation allowance

     (199,000     (190,500
  

 

 

   

 

 

 

Net deferred tax assets

   $      $   
  

 

 

   

 

 

 

Deferred tax liabilities:

    

Amortization of goodwill

   $ 89      $ 62   
  

 

 

   

 

 

 

Total deferred tax liabilities

   $ 89      $ 62   
  

 

 

   

 

 

 

 

The valuation allowance increased by $8.5 million for the year ended December 31, 2013, compared to a decrease of $0.8 million and an increase of $2.0 million for the years ended December 31, 2012 and 2011, respectively. The Company believes that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a full valuation allowance has been recorded. These factors include the Company’s history of net losses since its inception, the need for regulatory approval of the Company’s products prior to commercialization, expected near-term future losses and the absence of taxable income in prior carryback years. The Company expects to maintain a full valuation allowance until circumstances change.

Undistributed earnings of the Company’s foreign subsidiary, Cerus Europe B.V., amounted to approximately $2.8 million at December 31, 2013. The earnings are considered to be permanently reinvested and accordingly, no deferred United States income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to United States income taxes. At the Federal statutory income tax rate of 34%, this would result in taxes of approximately $0.9 million. In the event all foreign undistributed earnings were remitted to the U.S., any incremental tax liability would be fully offset by the Company’s domestic net operating loss.

For the year ended December 31, 2013, the Company reported net losses of $43.3 million on its consolidated statement of operations and calculated taxable losses for both federal and state taxes. The difference between reported net loss and taxable loss are due to temporary differences between book accounting and the respective tax laws.

At December 31, 2013, the Company had federal and state net operating loss carryforwards of approximately $381.7 million and $218.1 million, respectively. The net operating loss carryforwards for federal and state expire at various dates beginning in 2018 and 2014, respectively, and ending in 2033.

At December 31, 2013, the Company had federal research and development credit carryforwards of approximately $21.6 million that expire in various years between 2018 and 2033. The state research and development credits are approximately $15.9 million as of December 31, 2013 have an indefinite carryforward period.

The utilization of net operating loss carryforwards, as well as research and development credit carryforwards, is limited by current tax regulations. These net operating loss carryforwards, as well as research and development credit carryforwards, will be utilized in future periods if sufficient income is generated. The Company believes it more likely than not that its tax positions would be recognized upon review by a taxing authority having full knowledge of all relevant information. The Company’s ability to utilize certain loss carryforwards and certain research credit carryforwards are subject to limitations pursuant to the ownership change rules of Internal Revenue Code Section 382.

The Company will recognize accrued interest and penalties related to unrecognized tax benefits in its income tax expense. To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has it accrued for or made payments for interest and penalties. The Company had no unrecognized tax benefits as of December 31, 2013 and 2012. The Company’s tax years 1998 through 2013 remain subject to examination by the taxing jurisdictions due to unutilized net operating losses and research credits.

 

Segment, Customer and Geographic Information
Segment, Customer and Geographic Information

Note 18. Segment, Customer and Geographic Information

The Company continues to operate in only one segment, blood safety. The Company’s chief executive officer is the chief operating decision maker who evaluates performance based on the net revenues and operating loss of the blood safety segment. The Company considers the sale of all of its INTERCEPT Blood System products to be similar in nature and function, and any revenue earned from services is minimal.

The Company’s operations outside of the United States include a wholly-owned subsidiary headquartered in Europe. The Company’s operations in the United States are responsible for the research and development and global commercialization of the INTERCEPT Blood System, while operations in Europe are responsible for the commercialization efforts of the platelet and plasma systems in Europe, The Commonwealth of Independent States and the Middle East. Product revenues are attributed to each region based on the location of the customer, and in the case of non-product revenues, on the location of the collaboration partner.

The Company had the following significant customers that accounted for more than 10% of the Company’s total product revenue, all of which operate in a country outside of the United States, during the years ended December 31, 2013, 2012 and 2011 (in percentages):

 

     Year Ended December 31,  
         2013             2012             2011      

Movaco, S.A.

     18     19     21

Etablissement Francais du Sang

     17     20     24

Delrus Inc.

     *        12     12

 

* Represents an amount less than 10% of product revenue

The Company also recognized government grants and cooperative agreements revenue which represented less than 1% of total revenue and 7% of total revenue, during the years ended December 31, 2012 and 2011, respectively. The Company recognized no revenue from governmental grants and cooperative agreements during the year ended December 31, 2013.

Net revenues by geographical location was based on the location of the customer, in the case of product revenues, and in the location of the collaboration partner, in the case of non-product revenues, during the years ended December 31, 2013, 2012 and 2011 and was as follows (in thousands):

 

     Year Ended December 31,  
     2013      2012      2011  

Product Revenue:

        

France

   $ 7,030       $ 7,321       $ 7,385   

Spain and Portugal

     7,033         7,061         6,504   

CIS

     8,220         8,016         3,754   

Belgium

     3,971         4,016         3,703   

Switzerland

     4,078         3,866         3,315   

Other countries

     9,325         6,415         5,941   
  

 

 

    

 

 

    

 

 

 

Total product revenue

     39,657         36,695         30,602   

Government grants and cooperative agreements:

        

United States

             91         2,442   
  

 

 

    

 

 

    

 

 

 

Total government grants and cooperative agreements

             91         2,442   
  

 

 

    

 

 

    

 

 

 

Total revenue

   $ 39,657       $ 36,786       $ 33,044   
  

 

 

    

 

 

    

 

 

 

 

Long-lived assets by geographical location, which consist of property and equipment, net, intangible assets, net, and certain other assets, at December 31, 2013 and 2012 were as follows (in thousands):

 

     December 31,  
      2013      2012  

United States

   $ 3,088       $ 2,895   

Europe

     445         349   
  

 

 

    

 

 

 

Total long-lived assets

   $ 3,533       $ 3,244   
  

 

 

    

 

 

 
Quarterly Financial Information (Unaudited)
Quarterly Financial Information (Unaudited)

Note 19. Quarterly Financial Information (Unaudited)

The following tables summarize the Company’s quarterly financial information for the years ended December 31, 2013 and 2012 (in thousands except per share amounts):

 

     Three Months Ended  
     March 31,
2013
    June 30,
2013
    September 30,
2013
    December 31,
2013
 

Revenue:

        

Product revenue

   $ 9,733      $ 10,150      $ 10,542      $ 9,232   

Cost of product revenue

     5,090        5,747        6,826        4,939   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit on product revenue

     4,643        4,403        3,716        4,293   

Government grants and cooperative agreements revenue

                            

Operating expenses:

        

Research and development

     2,700        3,506        4,363        4,618   

Selling, general and administrative

     6,853        7,954        7,728        7,430   

Amortization of intangible assets

     50        51        50        51   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     9,603        11,511        12,141        12,099   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (4,960     (7,108     (8,425     (7,806

Total non-operating income (expense), net

     (5,241     438        (12,016     1,999   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (10,201     (6,670     (20,441     (5,807

Provision for income taxes

     51        54        60        53   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (10,252   $ (6,724   $ (20,501   $ (5,860
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share:

        

Basic

   $ (0.17   $ (0.10   $ (0.29   $ (0.08

Diluted

   $ (0.17   $ (0.10   $ (0.29   $ (0.10

 

     Three Months Ended  
     March 31,
2012
    June 30,
2012
    September 30,
2012
    December 31,
2012
 

Revenue:

        

Product revenue

   $ 8,691      $ 9,224      $ 8,252      $ 10,528   

Cost of product revenue

     5,514        5,574        4,411        5,117   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit on product revenue

     3,177        3,650        3,841        5,411   

Government grants and cooperative agreements revenue

     91                        

Operating expenses:

        

Research and development

     1,824        1,712        1,903        2,164   

Selling, general and administrative

     5,966        6,686        6,219        6,794   

Amortization of intangible assets

     50        51        50        51   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     7,840        8,449        8,172        9,009   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (4,572     (4,799     (4,331     (3,598

Total non-operating income (expense), net

     (4,227     2,933        926        1,993   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (8,799     (1,866     (3,405     (1,605

Provision for income taxes

     35        41        55        111   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (8,834   $ (1,907   $ (3,460   $ (1,716
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share:

        

Basic

   $ (0.17   $ (0.04   $ (0.06   $ (0.03

Diluted

   $ (0.17   $ (0.10   $ (0.08   $ (0.07
Summary of Significant Accounting Policies (Policies)

Principles of Consolidation

The accompanying consolidated financial statements include those of Cerus Corporation and its subsidiary, Cerus Europe B.V. (collectively hereinafter “Cerus” or the “Company”) after elimination of all intercompany accounts and transactions. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Use of Estimates

The preparation of financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, inventory valuation, certain accrued liabilities, valuation and impairment of purchased intangibles and goodwill, valuation of warrants, valuation of stock options under share-based payments, valuation allowance of its deferred tax assets and uncertain income tax positions. The Company basis its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form its basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions.

Reclassifications

In 2012, certain reclassifications have been made to prior period reported amounts to conform to the current period presentations. Previously the Company had presented its provision for income taxes as a component of other income (expense) , net on the Consolidated Statements of Operations. The Company has reclassified the provision for income taxes to a separate line item in the Consolidated Statements of Operations, and as presented in Note 17. This reclassification had no impact on net loss, total assets or total stockholders’ equity.

Revenue

Revenue is recognized when (i) persuasive evidence of an agreement exists; (ii) services have been rendered or product has been delivered; (iii) pricing is fixed or determinable; and (iv) collection is reasonably assured. The Company’s main sources of revenues for the years ended December 31, 2013, 2012 and 2011 were product revenue from sales of the INTERCEPT Blood System for platelets and plasma (“platelet and plasma systems”) and United States government grants and awards.

Revenue related to product sales is generally recognized when the Company fulfills its obligations for each element of an agreement. For all sales of the Company’s INTERCEPT Blood System products, the Company uses a binding purchase order and signed sales contract as evidence of a written agreement. The Company sells its platelet and plasma systems directly to blood banks, hospitals, universities, government agencies, as well as to distributors in certain regions. Generally, the Company’s contracts with its customers do not provide for open return rights, except within a reasonable time after receipt of goods in the case of defective or non-conforming product. Deliverables and the units of accounting vary according to the provisions of each purchase order or sales contract.

For revenue arrangements with multiple elements, the Company recognizes revenue in accordance with Financial Accounting Standards Board Accounting Standard Codification (“ASC”) Topic 605-25, “Revenue Recognition—Arrangements with Multiple Deliverables,” as applicable. The Company determines whether the delivered elements meet the criteria as separate units of accounting. Such criteria require that the deliverable have stand-alone value to the customer and that if a general right of return exists relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company. Once the Company determines if the deliverable meets the criteria for a separate unit of accounting, the Company must determine how the consideration should be allocated between the deliverables and how the separate units of accounting should be recognized as revenue. Consideration received is allocated to elements that are identified as discrete units of accounting based on its best estimate of selling price. The Company has determined that vendor specific objective evidence is not discernible due to the Company’s variability in its pricing across the regions into which it sells its products. Since the Company’s products are novel and unique and are not sold by others, third-party evidence of selling price is unavailable.

At both December 31, 2013 and 2012, the Company had $0.2 million and $0.1 million, respectively, of short-term deferred revenue on its consolidated balance sheets related to future performance obligations. Freight costs charged to customers are recorded as a component of revenue under ASC Topic 605, “Accounting for Shipping and Handling Fees and Costs.” Value-added-taxes (“VAT”) that the Company invoices to its customers and remits to governments are recorded on a net basis, which excludes such VAT from product revenue.

Revenue related to the cost reimbursement provisions under development contracts or United States government grants was recognized as the costs on the projects were incurred. The Company has received certain United States government grants and contracts that support research in defined research projects. These grants generally have provided for reimbursement of approved costs incurred as defined in the various grants. There were no such government grants in 2013 and none are expected in the foreseeable future.

Research and Development Expenses

In accordance with ASC Topic 730, “Accounting for Research and Development Expenses,” research and development expenses are charged to expense when incurred, including cost incurred under each grant that has been awarded to the Company by the United States government or development contracts. Research and development expenses include salaries and related expenses for scientific personnel, payments to consultants, supplies and chemicals used in in-house laboratories, costs of research and development facilities, depreciation of equipment and external contract research expenses, including clinical trials, preclinical safety studies, other laboratory studies, process development and product manufacturing for research use.

The Company’s use of estimates in recording accrued liabilities for research and development activities (see “Use of Estimates” above) affects the amounts of research and development expenses recorded and revenue recorded from development funding and government grants and collaborative agreements. Actual results may differ from those estimates under different assumptions or conditions.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be classified as cash equivalents. These investments primarily consist of money market instruments, and are classified as available-for-sale.

Short-Term Investments

Investments with original maturities of greater than three months which included corporate debt and United States government agency securities, are designated as available-for-sale and classified as short-term investments. In accordance with ASC Topic 320, “Accounting for Certain Investments in Debt and Equity Securities,” the Company classified all debt securities as available-for-sale at the time of purchase and reevaluates such designation as of each balance sheet date. Available-for-sale securities are carried at estimated fair value. Unrealized gains and losses derived by changes in the estimated fair value of available-for-sale securities were recorded in “Net unrealized gains (losses) on available-for-sale securities, net of taxes” on the Company’s consolidated statements of comprehensive loss. Realized gains and losses from the sale of available-for-sale investments were recorded in “Other income, net” on the Company’s consolidated statements of operations. The cost of securities sold was based on the specific identification method. The Company reported the amortization of any premium and accretion of any discount resulting from the purchase of debt securities as a component of interest income.

The Company also reviewed all of its marketable securities on a regular basis to evaluate whether any security has experienced an other-than-temporary decline in fair value.

Restricted Cash

The Company holds a certificate of deposit with a domestic bank for any potential decommissioning resulting from the Company’s possession of radioactive material. The certificate of deposit is held to satisfy the financial surety requirements of the California Department of Health Services and is recorded in “Restricted cash” on the Company’s consolidated balance sheets.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of investments and accounts receivable.

 

Pursuant to the Company’s investment policy, substantially all of the Company’s investments are maintained at a major financial institution in the United States of high credit standing, which at times, may exceed federally insured limits. The Company has not experienced any losses in its investments and believes it is not exposed to any significant risk.

Concentrations of credit risk with respect to trade receivables exist. However, in connection with the Company’s revolving line of credit, as discussed in Note 11 in the Notes to Consolidated Financial Statements, the Company purchased a credit insurance policy that mitigates some of its credit risk, as the policy will pay either the Company or its lender on eligible claims filed on its outstanding receivables. On a regular basis, including at the time of sale, the Company performs credit evaluations of its customers. Generally, the Company does not require collateral from its customers to secure accounts receivable. To the extent that the Company determines specific invoices or customer accounts may be uncollectible, the Company establishes an allowance for doubtful accounts against the accounts receivable on its consolidated balance sheets and records a charge on its consolidated statements of operations as a component of selling, general and administrative expenses.

The Company had two customers and three customers that accounted for more than 10% of the Company’s outstanding trade receivables at December 31, 2013 and 2012, respectively. These customers cumulatively represented approximately 48% and 59% of the Company’s outstanding trade receivables at December 31, 2013 and 2012, respectively. To date, the Company has not experienced collection difficulties from these customers.

Inventories

At December 31, 2013 and 2012, inventory consisted of work-in-process and finished goods only. Finished goods include INTERCEPT disposable kits, UVA illumination devices (“illuminators”), and certain replacement parts for the illuminators. Platelet and plasma systems’ disposable kits generally have a two-year life from the date of manufacture. Illuminators and replacement parts do not have regulated expiration dates. Work-in-process includes certain components that are manufactured over a protracted length of time, which can exceed one year, before being incorporated and assembled by Fresenius Kabi AG (“Fresenius”) into the finished INTERCEPT disposable kits. Fresenius is the successor-in-interest to Fenwal, Inc., or Fenwal, and Baxter International, Inc., or Baxter, under certain agreements which arose from the sale of the transfusion therapies division of Baxter in 2007 to Fenwal. Fenwal was recently acquired by Fresenius, which assumed Fenwal’s rights and obligations under these certain agreements, including the Company’s manufacturing and supply agreement with Fenwal. In these footnotes references to Fresenius include references to its predecessors-in-interest. The Company maintains an inventory balance based on its current sales projections, and at each reporting period, the Company evaluates whether its work-in-process inventory would be consumed for production of finished units in order to sell to existing and prospective customers within the next twelve-month period. It is not customary for the Company’s production cycle for inventory to exceed twelve months. Instead, the Company uses its best judgment to factor in lead times for the production of its finished units to meet the Company’s forecasted demands. If actual results differ from those estimates, work-in-process inventory could potentially accumulate for periods exceeding one year. At December 31, 2013 and 2012, the Company classified its work-in-process inventory as a current asset on its consolidated balance sheets based on its evaluation that the work-in-process inventory would be consumed for production and subsequently sold within each respective subsequent twelve-month period.

Inventory is recorded at the lower of cost, determined on a first-in, first-out basis, or market value. The Company uses significant judgment to analyze and determine if the composition of its inventory is obsolete, slow-moving or unsalable and frequently reviews such determinations. The Company writes-down specifically identified unusable, obsolete, slow-moving, or known unsalable inventory that has no alternative use to net realizable value in the period that it is first recognized by using a number of factors including product expiration dates, open and unfulfilled orders, and sales forecasts. Any write-down of its inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest that the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded in “Cost of product revenue” on the Company’s consolidated statements of operations. At December 31, 2013, and 2012, the Company had $0.4 million and $0.3 million, respectively, reserved for potential obsolete, expiring or unsalable product. At December 31, 2012, the Company also wrote-down the value of certain unsalable inventory of $1.7 million for which the Company had an offsetting warranty claim against Fresenius. As of December 31, 2013 the Company no longer has a warranty claim against Fresenius and all unsalable inventory has been returned to Fresenius.

See below in Note 2 and Note 16 for further information regarding the Company’s warranty claim against Fresenius.

Property and Equipment, net

Property and equipment is comprised of furniture, equipment, information technology hardware and software and is recorded at cost. At the time the property and equipment is ready for its intended use, it is depreciated on a straight-line basis over the estimated useful lives of the assets (generally three to five years). Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful lives of the improvements.

Goodwill and Intangible Assets, net

Additions to goodwill and intangible assets, net are derived at the time of a business acquisition, in which the Company assigns the total consideration transferred to the acquired assets based on each asset’s fair value and any residual amount becomes goodwill, an indefinite life intangible asset. Intangible assets, net, which include a license for the right to commercialize the INTERCEPT Blood System in Asia, are subject to ratable amortization over the estimated useful life of ten years. The amortization of the Company’s intangible assets, net, is recorded in “Amortization of intangible assets” on the Company’s consolidated statements of operations.

Goodwill is not amortized but instead is subject to an impairment test performed on an annual basis, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. Such impairment analysis is performed on August 31 of each fiscal year, or more frequently if indicators of impairment exist. The test for goodwill impairment may be assessed using qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, the Company must then proceed with performing the quantitative two-step process to test goodwill for impairment; otherwise, goodwill is not considered impaired and no further testing is warranted. The Company may choose not to perform the qualitative assessment to test goodwill for impairment and proceed directly to the quantitative two-step process; however, the Company may revert to the qualitative assessment to test goodwill for impairment in any subsequent period. The first step of the two-step process compares the fair value of each reporting unit with its respective carrying amount, including goodwill. The Company has determined that it operates in one reporting unit and estimates the fair value of its one reporting unit using the enterprise approach under which it considers the quoted market capitalization of the Company as reported on the Nasdaq Global Market. The Company considers quoted market prices that are available in active markets to be the best evidence of fair value. The Company also considers other factors, which include future forecasted results, the economic environment and overall market conditions. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired and, therefore, the second step of the impairment test is unnecessary. The second step of the two-step process, which is used to measure the amount of impairment loss, compares the implied fair value of each reporting unit’s goodwill with the respective carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

The Company performs an impairment test on its intangible assets, in accordance ASC Topic 360-10, “Property, Plant and Equipment,” if certain events or changes in circumstances occur which indicate that the carrying amounts of its intangible assets may not be recoverable. If the intangible assets are not recoverable, an impairment loss would be recognized by the Company based on the excess amount of the carrying value of the intangible assets over its fair value. For further details regarding the impairment analysis, reference is made to the section below under “Long-lived Assets.” See Note 8 for further information regarding the Company’s impairment analysis and the valuation of goodwill and intangible assets, net.

Long-lived Assets

The Company evaluates its long-lived assets for impairment by continually monitoring events and changes in circumstances that could indicate carrying amounts of its long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the expected undiscounted future cash flows are less than the carrying amount of these assets, the Company then measures the amount of the impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company did not recognize impairment charges related to its long-lived assets during the years ended December 31, 2013, 2012 and 2011.

Foreign Currency Remeasurement

The functional currency of the Company’s foreign subsidiary is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are remeasured in United States dollars using the exchange rates at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are remeasured in United States dollars using historical exchange rates. Monetary revenues and expenses are remeasured using average exchange rates prevailing during the period. Remeasurements are recorded in the Company’s consolidated statements of operations as a component of foreign exchange gain (loss). The Company recorded foreign currency gains of $0.5 million and $0.1 million and a loss of $0.5 million during the years ended December 31, 2013, 2012 and 2011, respectively.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation—Stock Compensation.” Stock-based compensation expense is measured at the grant-date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period, and is adjusted for estimated forfeitures. To the extent that stock options contain performance criteria for vesting, stock-based compensation is recognized once the performance criteria are probable of being achieved.

For stock-based awards issued to non-employees, the Company follows ASC Topic 505-50, “Equity Based Payment to Non-Employees” and considers the measurement date at which the fair value of the stock-based award is measured to be the earlier of (i) the date at which a commitment for performance by the grantee to earn the equity instrument is reached or (ii) the date at which the grantee’s performance is complete. The Company recognizes stock-based compensation expense for the fair value of the vested portion of the non-employee stock-based awards in its consolidated statements of operations.

See Note 14 for further information regarding the Company’s stock-based compensation assumptions and expenses.

Warrant Liability

In August 2009, and November 2010, the Company issued warrants to purchase an aggregate of 2.4 million and 3.7 million shares of common stock, respectively. The material terms of the warrants were identical under each issuance except for the exercise price, date issued and expiration date. The Company classifies the warrants as a liability on its consolidated balance sheets as the warrants contain certain material terms which require the Company (or its successor) to purchase the warrants for cash in an amount equal to the value of the unexercised portion of the warrants in connection with certain change of control transactions. In addition, the Company may also be required to pay cash to a warrant holder under certain circumstances if the Company is unable to timely deliver the shares acquired upon warrant exercise to such holder.

The fair value of these outstanding warrants is calculated using a combination of the Black-Scholes model and/or binomial-lattice option-pricing model and is adjusted accordingly at each reporting period. Option-pricing models require that the Company uses significant assumptions and judgment to determine appropriate inputs to the model. Some of the assumptions that the Company relies on include the volatility of the Company’s stock over the life of the warrant, risk-free interest rate and the probability of a change of control occurring. The binomial-lattice option-pricing model also considers a certain number of share price movements and the probability of each outcome happening.

Changes resulting from the revaluation of warrants to fair value are recorded in “Revaluation of warrant liability” on the consolidated statements of operations. Upon the exercise or modification to remove the provisions which require the warrants to be treated as a liability, the fair value of the warrants will be reclassified from a liability to stockholders’ equity on the Company’s consolidated balance sheets and no further adjustment to the fair value would be made in subsequent periods.

See Note 13 for further information regarding the Company’s valuation of warrant liability.

Income Taxes

The Company accounts for income taxes using the asset and liability approach in accordance with ASC Topic 740 “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. ASC Topic 740 requires derecognition of tax positions that do not have a greater than 50% likelihood of being recognized upon review by a taxing authority having full knowledge of all relevant information. Use of a valuation allowance as described in ASC Topic 740 is not an appropriate substitute for the derecognition of a tax position. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax expense. To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has its accrued for or made payments for interest and penalties. The Company had no unrecognized tax benefits as of December 31, 2013 and 2012. The Company continues to carry a full valuation allowance on all of its deferred tax assets. Although the Company believes it more likely than not that a taxing authority would agree with its current tax positions, there can be no assurance that the tax positions the Company has taken will be substantiated by a taxing authority if reviewed. The Company’s tax years 1998 through 2013 remain subject to examination by the taxing jurisdictions due to unutilized net operating losses and research credits.

Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per common share gives effect to all potentially dilutive common shares outstanding for the period. The potentially dilutive securities include stock options, employee stock purchase plan rights, warrants and restricted stock units, which are calculated using the treasury stock method, and convertible preferred stock, which is calculated using the if-converted method. Diluted net loss per common share also gives effect to potential adjustments to the numerator for changes resulting from the revaluation of warrants to fair value for the period, even if the Company is in a net loss position if the effect would be dilutive.

Diluted net loss per common share used the same weighted average number of common shares outstanding for the years ended December 31, 2013 and 2011, as calculated for the basic net loss per common share as the inclusion of any potential dilutive securities would be anti-dilutive. In addition, certain potential dilutive securities were excluded from the dilution calculation for the years ended December 31, 2012, as their inclusion would have been anti-dilutive.

The following table sets forth the reconciliation of the numerator and denominator used in the computation of basic and diluted net loss per common share for the years ended December 31, 2013, 2012 and 2011 (in thousands, except per share amounts):

 

     Year Ended December 31,  
     2013     2012     2011  

Numerator:

      

Net loss

   $ (43,337   $ (15,917   $ (16,982

Effect of revaluation of warrant liability

            (2,059       
  

 

 

   

 

 

   

 

 

 

Adjusted net loss used for dilution calculation

   $ (43,337   $ (17,976   $ (16,982
  

 

 

   

 

 

   

 

 

 

Denominator:

      

Basic weighted average number of common shares outstanding

     67,569        54,515        48,050   

Effect of dilutive potential common shares resulting from warrants accounted for as liabilities

            546          
  

 

 

   

 

 

   

 

 

 

Diluted weighted average number of common shares outstanding

     67,569        55,061        48,050   
  

 

 

   

 

 

   

 

 

 

Basic

   $ (0.64   $ (0.29   $ (0.35

Diluted

   $ (0.64   $ (0.33   $ (0.35

 

The table below presents common shares underlying stock options, employee stock purchase plan rights, warrants, restricted stock units and/or convertible preferred stock that were excluded from the calculation of the weighted average number of common shares outstanding used for the calculation of diluted net loss per common share. These were excluded from the calculation due to their anti-dilutive effect for the years ended December 31, 2013, 2012 and 2011 (shares in thousands):

 

     Year Ended December 31,  
     2013      2012      2011  

Anti-dilutive common shares

     16,370         8,716         13,595   

Guarantee and Indemnification Arrangements

The Company recognizes the fair value for guarantee and indemnification arrangements issued or modified by the Company after December 31, 2002. In addition, the Company monitors the conditions that are subject to the guarantees and indemnifications in order to identify if a loss has occurred. If the Company determines it is probable that a loss has occurred, then any such estimable loss would be recognized under those guarantees and indemnifications. Some of the agreements that the Company is a party to contain provisions that indemnify the counter party from damages and costs resulting from claims that the Company’s technology infringes the intellectual property rights of a third party or claims that the sale or use of the Company’s products have caused personal injury or other damage or loss. The Company has not received any such requests for indemnification under these provisions and has not been required to make material payments pursuant to these provisions.

The Company generally provides for a one-year warranty on certain of its INTERCEPT blood-safety products covering defects in materials and workmanship. The Company accrues costs associated with warranty obligations when claims become known and are estimable. During the year ended December 31, 2012, the Company provided for and settled the claims for warranty obligations of $0.9 million related to replacement costs for certain of its products that the Company identified were defective or had the potential of being defective. Prior to this incident, there have been very few warranty costs incurred. As a result, the Company had not accrued for any potential future warranty costs at December 31, 2011. In addition, the Company believes that the defective products and those that had the potential of being defective identified during the year ended December 31, 2012 are isolated. Accordingly, the Company has not accrued for any other incremental potential future warranty costs for its products at December 31, 2013.

In connection with the warranty obligations provided for in relation to certain of its products during the year ended December 31, 2012, the Company filed a warranty claim against Fresenius, which Fresenius accepted. As a result, the Company recorded a current asset of $1.8 million on its consolidated balance sheets as of December 31, 2012 representing the full amount of the warranty claim against Fresenius as Fresenius will supply the Company with replacement products or credit notes for those defective or potentially defective products. The Company also wrote-down the value of certain unsalable inventory of $1.7 million related to these products as an offsetting warranty claim against Fresenius. As of December 31, 2013 the Company no longer has a warranty claim against Fresenius and all unsalable inventory has been returned to Fresenius.

Fair Value of Financial Instruments

The Company applies the provisions of fair value relating to its financial assets and liabilities. The carrying amounts of accounts receivables, accounts payable, and other accrued liabilities approximate their fair value due to the relative short-term maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, the Company believes the fair value of its debt approximates their carrying amounts. The Company measures and records certain financial assets and liabilities at fair value on a recurring basis, including its available-for-sale securities and warrant liability. The Company classifies instruments within Level 1 if quoted prices are available in active markets for identical assets, which include the Company’s cash accounts and its money market funds. The Company classifies instruments in Level 2 if the instruments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. These instruments include the Company’s available-for-sale securities related to corporate debt and United States government agency securities. The available-for-sale securities are held by a custodian who obtains investment prices from a third party pricing provider that uses standard inputs (observable in the market) to models which vary by asset class. The Company classifies instruments in Level 3 if one or more significant inputs or significant value drivers are unobservable, which include our warrant liability. The Company assesses any transfers among fair value measurement levels at the end of each reporting period.

See Notes 4 and 13 for further information regarding the Company’s valuation on financial instruments.

New Accounting Pronouncements

There have been no new accounting pronouncements issued during the year ended December 31, 2013, that are of significance, or potential significance, to the Company.

Summary of Significant Accounting Policies (Tables)

The following table sets forth the reconciliation of the numerator and denominator used in the computation of basic and diluted net loss per common share for the years ended December 31, 2013, 2012 and 2011 (in thousands, except per share amounts):

 

     Year Ended December 31,  
     2013     2012     2011  

Numerator:

      

Net loss

   $ (43,337   $ (15,917   $ (16,982

Effect of revaluation of warrant liability

            (2,059       
  

 

 

   

 

 

   

 

 

 

Adjusted net loss used for dilution calculation

   $ (43,337   $ (17,976   $ (16,982
  

 

 

   

 

 

   

 

 

 

Denominator:

      

Basic weighted average number of common shares outstanding

     67,569        54,515        48,050   

Effect of dilutive potential common shares resulting from warrants accounted for as liabilities

            546          
  

 

 

   

 

 

   

 

 

 

Diluted weighted average number of common shares outstanding

     67,569        55,061        48,050   
  

 

 

   

 

 

   

 

 

 

Basic

   $ (0.64   $ (0.29   $ (0.35

Diluted

   $ (0.64   $ (0.33   $ (0.35

The table below presents common shares underlying stock options, employee stock purchase plan rights, warrants, restricted stock units and/or convertible preferred stock that were excluded from the calculation of the weighted average number of common shares outstanding used for the calculation of diluted net loss per common share. These were excluded from the calculation due to their anti-dilutive effect for the years ended December 31, 2013, 2012 and 2011 (shares in thousands):

 

     Year Ended December 31,  
     2013      2012      2011  

Anti-dilutive common shares

     16,370         8,716         13,595   
BioOne Acquisition (Tables)
Fair Value of Assets Acquired at Acquisition Date

The following table summarizes the fair value of assets acquired at the acquisition date (in thousands):

 

Commercialization rights—Asia

   $ 2,017   

Illuminators—inventory

     270   

Demonstration illuminators

     135   

Goodwill

     1,316   
  

 

 

 

Total

   $ 3,738   
  

 

 

 
Fair Value on Financial Instruments (Tables)

The fair value of certain of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2013 (in thousands):

 

     Total      Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Money market funds(1)

   $ 8,650       $ 8,650       $       $   

Corporate debt securities(2)

   $ 23,173               $ 23,173           

United States government agency securities(2)

   $ 5,018               $ 5,018           
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 36,841       $ 8,650       $ 28,191       $   
  

 

 

    

 

 

    

 

 

    

 

 

 

Warrant liability(3)

   $ 20,390       $       $       $ 20,390   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 20,390       $       $       $ 20,390   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Included in cash and cash equivalents on the Company’s consolidated balances sheets.

 

(2) Included in short-term investments on the Company’s consolidated balance sheets.

 

(3) Included in current liabilities on the Company’s consolidated balance sheets.

 

The fair values of certain of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2012 (in thousands):

 

     Total      Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Money market funds(1)

   $ 10,268       $ 10,268       $       $   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

   $ 10,268       $ 10,268       $       $   
  

 

 

    

 

 

    

 

 

    

 

 

 

Warrant liability(2)

   $ 5,903       $       $       $ 5,903   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 5,903       $       $       $ 5,903   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Included in cash and cash equivalents on the Company’s consolidated balance sheets.

 

(2) Included in current liabilities on the Company’s consolidated balance sheets.

A reconciliation of the beginning and ending balances for warrant liability using significant unobservable inputs (Level 3) from December 31, 2011 to December 31, 2013 was as follows (in thousands):

 

Balance at December 31, 2011

   $ 7,979   

Decrease in fair value of warrants

     (2,059

Settlement of warrants exercised

     (17
  

 

 

 

Balance at December 31, 2012

     5,903   

Increase in fair value of warrants

     15,099   

Settlement of warrants exercised

     (612
  

 

 

 

Balance at December 31, 2013

   $ 20,390   
  

 

 

 
Available-for-sale Securities (Tables)

The following is a summary of available-for-sale securities at December 31, 2013 (in thousands):

 

     December 31, 2013  
     Carrying Value      Gross
    Unrealized Gain    
    Fair Value  

Money market funds

   $ 8,650       $      $ 8,650   

United States government agency securities

     5,019         (1     5,018   

Corporate debt securities

     23,165         8        23,173   
  

 

 

    

 

 

   

 

 

 

Total available-for-sale securities

   $ 36,834       $ 7      $ 36,841   
  

 

 

    

 

 

   

 

 

 

 

The following is a summary of available-for-sale securities at December 31, 2012 (in thousands):

 

     December 31, 2012  
     Carrying Value      Gross
Unrealized Gain
     Fair Value  

Money market funds

   $ 10,268       $       $ 10,268   
  

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 10,268       $       $ 10,268   
  

 

 

    

 

 

    

 

 

 

Available-for-sale securities at December 31, 2013 and 2012 consisted of the following by original contractual maturity (in thousands):

 

     December 31, 2013      December 31, 2012  
     Carrying
Value
     Fair Value      Carrying
Value
     Fair Value  

Due in one year or less

   $ 30,700       $ 30,701       $ 10,268       $ 10,268   

Due greater than one year and less than five years

     6,134         6,140                   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 36,834       $ 36,841       $ 10,268       $ 10,268   
  

 

 

    

 

 

    

 

 

    

 

 

 
Inventories (Tables)
Inventories

Inventories at December 31, 2013 and 2012 consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

Work-in-process

   $ 4,863       $ 3,551   

Finished goods

     8,200         6,629   
  

 

 

    

 

 

 

Total inventories

   $ 13,063       $ 10,180   
  

 

 

    

 

 

 
Property and Equipment, net (Tables)
Property and Equipment, Net

Property and equipment, net at December 31, 2013 and 2012 consisted of the following (in thousands):

 

     December 31,  
     2013     2012  

Leasehold improvements

   $ 5,628      $ 5,598   

Machinery and equipment

     1,751        1,594   

Demonstration equipment

     100        24   

Office furniture

     763        644   

Computer equipment

     651        550   

Computer software

     1,083        1,062   

Consigned demonstration equipment

     642        493   

Construction-in-progress

     155        55   
  

 

 

   

 

 

 

Total property and equipment, gross

     10,773        10,020   

Accumulated depreciation and amortization

     (8,584     (8,322
  

 

 

   

 

 

 

Total property and equipment, net

   $ 2,189      $ 1,698   
  

 

 

   

 

 

 
Goodwill and Intangible Assets, net (Tables)
Summary of Intangible Assets

The following is a summary of intangible assets, net at December 31, 2013 (in thousands):

 

     December 31, 2013  
     Gross Carrying
Amount
     Accumulated
Amortization
    Net Carrying
Amount
 

Acquisition-related intangible assets:

       

Reacquired license—INTERCEPT Asia

   $ 2,017       $ (673   $ 1,344   
  

 

 

    

 

 

   

 

 

 

Total intangible assets

   $ 2,017       $ (673   $ 1,344   
  

 

 

    

 

 

   

 

 

 

 

The following is a summary of intangible assets, net at December 31, 2012 (in thousands):

 

     December 31, 2012  
     Gross Carrying
Amount
     Accumulated
Amortization
    Net Carrying
Amount
 

Acquisition-related intangible assets:

       

Reacquired license—INTERCEPT Asia

   $ 2,017       $ (471   $ 1,546   
  

 

 

    

 

 

   

 

 

 

Total intangible assets

   $ 2,017       $ (471   $ 1,546   
  

 

 

    

 

 

   

 

 

 
Accrued Liabilities (Tables)
Accrued Liabilities

Accrued liabilities at December 31, 2013 and 2012 consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

Accrued compensation and related costs

   $ 2,527       $ 2,692   

Accrued inventory costs

     3,553         2,352   

Accrued contract and other accrued expenses

     3,733         2,575   
  

 

 

    

 

 

 

Total accrued liabilities

   $ 9,813       $ 7,619   
  

 

 

    

 

 

 
Debt (Tables)
Debt

Debt at December 31, 2013 consisted of the following (in thousands):

 

     December 31, 2013  
     Principal     Unamortized
Discount
     Total  

Comerica—Revolving Line of Credit, due 2014

   $ 3,366      $       $ 3,366   
  

 

 

   

 

 

    

 

 

 

Total debt

     3,366                3,366   

Less: debt—current

     (3,366             (3,366
  

 

 

   

 

 

    

 

 

 

Debt—non-current

   $      $       $   
  

 

 

   

 

 

    

 

 

 

Debt at December 31, 2012 consisted of the following (in thousands):

 

     December 31, 2012  
     Principal     Unamortized
Discount
    Total  

Comerica—Growth Capital Loan A, due 2015

   $ 4,583      $ (49   $ 4,534   

Comerica—Revolving Line of Credit, due 2014

     3,190               3,190   
  

 

 

   

 

 

   

 

 

 

Total debt

     7,773        (49     7,724   

Less: debt—current

     (4,857     29        (4,828
  

 

 

   

 

 

   

 

 

 

Debt—non-current

   $ 2,916      $ (20   $ 2,896   
  

 

 

   

 

 

   

 

 

 
Commitments and Contingencies (Tables)
Future Minimum Non-Cancelable Lease Payments Under Operating Leases

Future minimum non-cancelable lease payments under operating leases as of December 31, 2013 are as follows (in thousands):

 

Year ended December 31,

      

2014

   $ 1,147   

2015

     553   

2016

     142   

2017

     68   

2018 and thereafter

     9   
  

 

 

 

Total minimum non-cancellable lease payments

   $ 1,919   
  

 

 

 
Stockholders' Equity (Tables)

The fair value of the warrants at December 31, 2013 and 2012 consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

2009 Warrants

   $ 8,542       $ 2,009   

2010 Warrants

     11,848         3,894   
  

 

 

    

 

 

 

Total warrant liability

   $ 20,390       $ 5,903   
  

 

 

    

 

 

 

The fair value of the Company’s warrants was based on using the Black-Scholes model and/or binomial-lattice option valuation model and using the following assumptions at December 31, 2013 and 2012:

 

     December 31,
     2013   2012

2009 Warrants:

    

Expected term (in years)

   0.65   1.65

Estimated volatility

   45%   45%

Risk-free interest rate

   0.10%   0.25%

Expected dividend yield

   0%   0%

2010 Warrants:

    

Expected term (in years)

   1.86   2.86

Estimated volatility

   41%   51%

Risk-free interest rate

   0.38%   0.36%

Expected dividend yield

   0%   0%
Stock-Based Compensation (Tables)

Activity under the Company’s equity incentive plans related to stock options is set forth below (in thousands except weighted average exercise price):

 

     Number of
Options
Outstanding
    Weighted Average
Exercise Price per
Share
 

Balances at December 31, 2010

     7,007      $ 6.42   

Granted

     2,169        2.36   

Forfeited

     (465     2.45   

Expired

     (1,237     11.52   

Exercised

     (112     0.81   
  

 

 

   

Balances at December 31, 2011

     7,362      $ 4.70   

Granted

     1,782        3.68   

Forfeited

     (98     2.78   

Expired

     (386     30.44   

Exercised

     (156     1.30   
  

 

 

   

Balances at December 31, 2012

     8,504      $ 3.40   

Granted

     2,621        3.82   

Forfeited

     (234     3.13   

Expired

     (189     6.71   

Exercised

     (297     3.14   
  

 

 

   

Balances at December 31, 2013

     10,405      $ 3.46   
  

 

 

   

Information regarding the Company’s stock options outstanding, stock options vested and expected to vest, and stock options exercisable at December 31, 2013 was as follows (in thousands except weighted average exercise price and contractual term):

 

     Number
of Shares
     Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Term (Years)
     Aggregate
Intrinsic
Value
 

Balances at December 31, 2013

           

Stock options outstanding

     10,405       $ 3.46         6.34       $ 32,724   

Stock options vested and expected to vest

     10,028       $ 3.45         6.25       $ 31,730   

Stock options exercisable

     6,589       $ 3.43         5.05       $ 21,555   

Activity under the Company’s equity incentive plans related to restricted stock units is set forth below:

 

     Number
of RSUs
    Weighted Average
Grant-Date Fair
Value
 

Balances at December 31, 2010

     88,400      $ 2.54   

Granted

            0.00   

Forfeited

     (17,727     1.85   

Vested

     (37,378     3.48   
  

 

 

   

Balances at December 31, 2011

     33,295      $ 1.85   

Granted

     2,000        3.03   

Forfeited

            0.00   

Vested

     (18,650     1.98   
  

 

 

   

Balances at December 31, 2012

     16,645      $ 1.85   

Granted

            0.00   

Forfeited

            0.00   

Vested

     (16,645     1.85   
  

 

 

   

Balances at December 31, 2013

          $   
  

 

 

   

Stock-based compensation expense recognized on the Company’s consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011, was as follows (in thousands):

 

     Year Ended December 31,  
     2013      2012      2011  

Stock-based compensation expense by caption:

        

Research and development

   $ 482       $ 554       $ 450   

Selling, general and administrative

     2,786         1,987         1,400   
  

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 3,268       $ 2,541       $ 1,850   
  

 

 

    

 

 

    

 

 

 

The weighted average assumptions used to value the Company’s stock-based awards for the years ended December 31, 2013, 2012 and 2011, was as follows:

 

     Year Ended December 31,  
     2013     2012     2011  

Stock Options:

      

Expected term (in years)

     5.59        5.54        5.30   

Estimated volatility

     60     67     68

Risk-free interest rate

     0.87     1.03     1.23

Expected dividend yield

     0     0     0

Employee Stock Purchase Plan Rights:

      

Expected term (in years)

     0.50        0.50        0.50   

Estimated volatility

     39     101     48

Risk-free interest rate

     0.10     0.14     0.08

Expected dividend yield

     0     0     0
Income Taxes (Tables)

U.S and foreign components of consolidated loss before income taxes for the years ended December 2013, 2012 and 2011 was as follows (in thousands):

 

     Year Ended December 31,  
     2013     2012     2011  

Income (loss) before income taxes:

      

U.S.

   $ (44,035   $ (16,360   $ (17,461

Foreign

     916        685        622   
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

   $ (43,119   $ (15,675   $ (16,839
  

 

 

   

 

 

   

 

 

 

The provision for income taxes for the years ended December 2013, 2012 and 2011 was as follows (in thousands):

 

     Year Ended December 31,  
         2013              2012              2011      

Provision for income taxes:

        

Current:

        

Foreign

   $ 191       $ 180       $ 143   

Federal

                       

State

                       
  

 

 

    

 

 

    

 

 

 

Total Current

     191         180         143   

Deferred:

        

Foreign

                       

Federal

     21         48           

State

     6         14           
  

 

 

    

 

 

    

 

 

 

Total Deferred

     27         62           
  

 

 

    

 

 

    

 

 

 

Provision for income taxes

   $ 218       $ 242       $ 143   
  

 

 

    

 

 

    

 

 

 

The difference between the provision for income taxes and the amount computed by applying the federal statutory income tax rate to loss before taxes for the years ended December 31, 2013, 2012 and 2011 was as follows (in thousands):

 

     Year Ended December 31,  
     2013     2012     2011  

Federal statutory tax

   $ (14,661   $ (5,329   $ (5,725

Stock-based compensation

     (10     99        83   

Lobbying expenses

     107        51        112   

Warrants

     4,926        (706     (165

Foreign rate differential

     (121     (53     (68

Expiration of federal net operating losses and credits—tax effected

            4,352        1,744   

Change in valuation allowance

     9,934        1,761        4,158   

Goodwill amortization

     21        48          

Other

     22        19        4   
  

 

 

   

 

 

   

 

 

 

Provision for income taxes

   $ 218      $ 242      $ 143   
  

 

 

   

 

 

   

 

 

 

The significant components of the Company’s deferred tax assets at December 31, 2013 and 2012 were as follows (in thousands):

 

     December 31,  
     2013     2012  

Deferred tax assets:

    

Net operating loss carryforwards

   $ 142,500      $ 137,700   

Research and development credit carryforwards

     32,100        30,800   

Capitalized inventory costs

     800        900   

Inventory reserve

     100        700   

Capitalized research and development

     12,300        9,100   

Capitalized trademark

     400        400   

Capitalized revenue sharing rights

     100        300   

Asia license intangible

     100        100   

Deferred compensation

     4,900        4,800   

Accrued liabilities

     200        100   

Depreciation

     1,300        1,300   

Acquisition costs

     200        200   

Deferred tenant allowance

     100        200   

Capital loss carryforwards

     3,900        3,900   
  

 

 

   

 

 

 

Total deferred tax assets

     199,000        190,500   

Valuation allowance

     (199,000     (190,500
  

 

 

   

 

 

 

Net deferred tax assets

   $      $   
  

 

 

   

 

 

 

Deferred tax liabilities:

    

Amortization of goodwill

   $ 89      $ 62   
  

 

 

   

 

 

 

Total deferred tax liabilities

   $ 89      $ 62   
  

 

 

   

 

 

 
Segment, Customer and Geographic Information (Tables)

The Company had the following significant customers that accounted for more than 10% of the Company’s total product revenue, all of which operate in a country outside of the United States, during the years ended December 31, 2013, 2012 and 2011 (in percentages):

 

     Year Ended December 31,  
         2013             2012             2011      

Movaco, S.A.

     18     19     21

Etablissement Francais du Sang

     17     20     24

Delrus Inc.

     *        12     12

 

* Represents an amount less than 10% of product revenue

Net revenues by geographical location was based on the location of the customer, in the case of product revenues, and in the location of the collaboration partner, in the case of non-product revenues, during the years ended December 31, 2013, 2012 and 2011 and was as follows (in thousands):

 

     Year Ended December 31,  
     2013      2012      2011  

Product Revenue:

        

France

   $ 7,030       $ 7,321       $ 7,385   

Spain and Portugal

     7,033         7,061         6,504   

CIS

     8,220         8,016         3,754   

Belgium

     3,971         4,016         3,703   

Switzerland

     4,078         3,866         3,315   

Other countries

     9,325         6,415         5,941   
  

 

 

    

 

 

    

 

 

 

Total product revenue

     39,657         36,695         30,602   

Government grants and cooperative agreements:

        

United States

             91         2,442   
  

 

 

    

 

 

    

 

 

 

Total government grants and cooperative agreements

             91         2,442   
  

 

 

    

 

 

    

 

 

 

Total revenue

   $ 39,657       $ 36,786       $ 33,044   
  

 

 

    

 

 

    

 

 

 

 

Long-lived assets by geographical location, which consist of property and equipment, net, intangible assets, net, and certain other assets, at December 31, 2013 and 2012 were as follows (in thousands):

 

     December 31,  
      2013      2012  

United States

   $ 3,088       $ 2,895   

Europe

     445         349   
  

 

 

    

 

 

 

Total long-lived assets

   $ 3,533       $ 3,244   
  

 

 

    

 

 

 
Quarterly Financial Information (Unaudited) (Tables)
Quarterly Unaudited Financial Data

The following tables summarize the Company’s quarterly financial information for the years ended December 31, 2013 and 2012 (in thousands except per share amounts):

 

     Three Months Ended  
     March 31,
2013
    June 30,
2013
    September 30,
2013
    December 31,
2013
 

Revenue:

        

Product revenue

   $ 9,733      $ 10,150      $ 10,542      $ 9,232   

Cost of product revenue

     5,090        5,747        6,826        4,939   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit on product revenue

     4,643        4,403        3,716        4,293   

Government grants and cooperative agreements revenue

                            

Operating expenses:

        

Research and development

     2,700        3,506        4,363        4,618   

Selling, general and administrative

     6,853        7,954        7,728        7,430   

Amortization of intangible assets

     50        51        50        51   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     9,603        11,511        12,141        12,099   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (4,960     (7,108     (8,425     (7,806

Total non-operating income (expense), net

     (5,241     438        (12,016     1,999   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (10,201     (6,670     (20,441     (5,807

Provision for income taxes

     51        54        60        53   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (10,252   $ (6,724   $ (20,501   $ (5,860
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share:

        

Basic

   $ (0.17   $ (0.10   $ (0.29   $ (0.08

Diluted

   $ (0.17   $ (0.10   $ (0.29   $ (0.10

 

     Three Months Ended  
     March 31,
2012
    June 30,
2012
    September 30,
2012
    December 31,
2012
 

Revenue:

        

Product revenue

   $ 8,691      $ 9,224      $ 8,252      $ 10,528   

Cost of product revenue

     5,514        5,574        4,411        5,117   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit on product revenue

     3,177        3,650        3,841        5,411   

Government grants and cooperative agreements revenue

     91                        

Operating expenses:

        

Research and development

     1,824        1,712        1,903        2,164   

Selling, general and administrative

     5,966        6,686        6,219        6,794   

Amortization of intangible assets

     50        51        50        51   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     7,840        8,449        8,172        9,009   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (4,572     (4,799     (4,331     (3,598

Total non-operating income (expense), net

     (4,227     2,933        926        1,993   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (8,799     (1,866     (3,405     (1,605

Provision for income taxes

     35        41        55        111   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (8,834   $ (1,907   $ (3,460   $ (1,716
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share:

        

Basic

   $ (0.17   $ (0.04   $ (0.06   $ (0.03

Diluted

   $ (0.17   $ (0.10   $ (0.08   $ (0.07
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
Share data in Millions, unless otherwise specified
3 Months Ended 12 Months Ended 12 Months Ended
Mar. 31, 2012
Dec. 31, 2013
Customer
Dec. 31, 2012
Customer
Dec. 31, 2011
Dec. 31, 2012
Product Warranty
Aug. 31, 2009
2009 Unit Offering
Warrant
Nov. 30, 2010
2010 Unit Offering
Warrant
Dec. 31, 2013
Trade Accounts Receivable
Dec. 31, 2012
Trade Accounts Receivable
Dec. 31, 2013
Maximum
Dec. 31, 2013
Minimum
Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Deferred revenue
 
$ 181,000 
$ 77,000 
 
 
 
 
 
 
 
 
Revenue from government grants
91,000 
91,000 
2,442,000 
 
 
 
 
 
 
 
Number of major customers representing outstanding trade receivables
 
 
 
 
 
 
 
 
 
Cumulative outstanding trade receivables percentage by major customers
 
 
 
 
 
 
 
48.00% 
59.00% 
 
 
Life of inventory
 
2 years 
 
 
 
 
 
 
 
 
 
Protracted length of inventory
 
1 year 
 
 
 
 
 
 
 
 
 
Inventory valuation reserves
 
400,000 
300,000 
 
 
 
 
 
 
 
 
Unsalable product having offsetting warranty claim
 
 
1,700,000 
 
 
 
 
 
 
 
 
Estimated useful life of property and equipment
 
 
 
 
 
 
 
 
 
5 years 
3 years 
Estimated useful life of intangible assets
 
10 years 
 
 
 
 
 
 
 
 
 
Impairment charges on long-lived assets
 
 
 
 
 
 
 
 
Foreign currency gains (losses)
 
533,000 
86,000 
(529,000)
 
 
 
 
 
 
 
Warrants to purchase an aggregate shares of common stock
 
 
 
 
 
2.4 
3.7 
 
 
 
 
Derecognition of tax positions, Maximum
 
 
 
 
 
 
 
 
 
50.00% 
 
Company's tax years subject to examination by the taxing jurisdictions
 
 
 
 
 
 
 
 
 
2013 
1998 
Unrecognized Tax Benefits
 
 
 
 
 
 
 
 
 
Period of warranty
 
1 year 
 
 
 
 
 
 
 
 
 
Warrants obligation provided
 
 
900,000 
 
 
 
 
 
 
 
 
Warranty claim
 
442,000 
2,038,000 
 
1,800,000 
 
 
 
 
 
 
Inventory write down
 
 
$ 1,700,000 
 
 
 
 
 
 
 
 
Reconciliation of Numerator and Denominator Used in Computation of Basic and Diluted Net Income Loss per Common Share (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Numerator:
 
 
 
 
 
 
 
 
 
 
 
Net loss
$ (5,860)
$ (20,501)
$ (6,724)
$ (10,252)
$ (1,716)
$ (3,460)
$ (1,907)
$ (8,834)
$ (43,337)
$ (15,917)
$ (16,982)
Effect of revaluation of warrant liability
 
 
 
 
 
 
 
 
 
(2,059)
 
Adjusted net loss used for dilution calculation
 
 
 
 
 
 
 
 
$ (43,337)
$ (17,976)
$ (16,982)
Denominator:
 
 
 
 
 
 
 
 
 
 
 
Basic weighted average number of common shares outstanding
 
 
 
 
 
 
 
 
67,569 
54,515 
48,050 
Effect of dilutive potential common shares resulting from warrants accounted for as liabilities
 
 
 
 
 
 
 
 
 
546 
 
Diluted weighted average number of common shares outstanding
 
 
 
 
 
 
 
 
67,569 
55,061 
48,050 
Basic
$ (0.08)
$ (0.29)
$ (0.10)
$ (0.17)
$ (0.03)
$ (0.06)
$ (0.04)
$ (0.17)
$ (0.64)
$ (0.29)
$ (0.35)
Diluted
$ (0.10)
$ (0.29)
$ (0.10)
$ (0.17)
$ (0.07)
$ (0.08)
$ (0.10)
$ (0.17)
$ (0.64)
$ (0.33)
$ (0.35)
Common Shares Underlying Stock Options Convertible Preferred Stock Employee Stock Purchase Plan Rights Warrants and Restricted Stock Units Excluded from Calculation of Weighted Average Number of Common Shares Outstanding used for Calculation of Diluted Net Income Loss Per Common Share (Detail)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive common shares
16,370 
8,716 
13,595 
Summary of Final Allocation of Fair Value of Assets Acquired (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Aug. 24, 2010
Business Acquisition [Line Items]
 
 
 
Commercialization rights-Asia
 
 
$ 2,017 
Illuminators-inventory
 
 
270 
Demonstration illuminators
 
 
135 
Goodwill
1,316 
1,316 
1,316 
Total
 
 
$ 3,738 
BioOne Acquisition - Additional Information (Detail)
12 Months Ended
Dec. 31, 2013
Business Acquisition [Line Items]
 
Amortizing period of commercialization rights
10 years 
Fair Value on Financial Assets and Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Fair value of financial assets and liabilities
 
 
Total financial assets
$ 36,841 
$ 10,268 
Total financial liabilities
20,390 
5,903 
Money market funds
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
8,650 1
10,268 2
Corporate debt securities
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
23,173 3
 
United States government agency securities
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
5,018 3
 
Warrant Liability
 
 
Fair value of financial assets and liabilities
 
 
Total financial liabilities
20,390 4
5,903 4
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
8,650 
10,268 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Money market funds
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
8,650 1
10,268 2
Significant Other Observable Inputs (Level 2)
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
28,191 
 
Significant Other Observable Inputs (Level 2) |
Corporate debt securities
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
23,173 3
 
Significant Other Observable Inputs (Level 2) |
United States government agency securities
 
 
Fair value of financial assets and liabilities
 
 
Total financial assets
5,018 3
 
Significant Unobservable Inputs (Level 3)
 
 
Fair value of financial assets and liabilities
 
 
Total financial liabilities
20,390 
5,903 
Significant Unobservable Inputs (Level 3) |
Warrant Liability
 
 
Fair value of financial assets and liabilities
 
 
Total financial liabilities
$ 20,390 4
$ 5,903 4
Reconciliation of Beginning and Ending Balances for Warrant Liability Using Significant Unobservable Inputs (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Beginning balance
$ 5,903 
$ 7,979 
Increase / (Decrease)in fair value of warrants
15,099 
(2,059)
Settlement of warrants exercised
(612)
(17)
Ending balance
$ 20,390 
$ 5,903 
Summary of Available for Sale Securities (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
 
 
Carrying Value
$ 36,834 
$ 10,268 
Gross Unrealized Gain
 
Fair Value
36,841 
10,268 
Money market funds
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Carrying Value
8,650 
10,268 
Fair Value
8,650 
10,268 
United States government agency securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Carrying Value
5,019 
 
Gross Unrealized Gain
(1)
 
Fair Value
5,018 
 
Corporate debt securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Carrying Value
23,165 
 
Gross Unrealized Gain
 
Fair Value
$ 23,173 
 
Available for Sale Securities by Original Contractual Maturity (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
 
 
Due in one year or less, carrying value
$ 30,700 
$ 10,268 
Due greater than one year and less than five years, carrying value
6,134 
 
Total available-for-sale securities, carrying value
36,834 
10,268 
Due in one year or less, fair value
30,701 
10,268 
Due greater than one year and less than five years, fair value
6,140 
 
Total available-for-sale securities, fair value
$ 36,841 
$ 10,268 
Available-for-Sale Securities - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Gross realized gains from the sale or maturity of available-for-sale investments
$ 0 
$ 0 
 
Gross realized losses from the sale or maturity of available-for-sale investments
 
Other-than-temporary impairments from the sale or maturity of available-for-sale investments
$ 0 
$ 0 
$ 0 
Inventories (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Inventory [Line Items]
 
 
Work-in-process
$ 4,863 
$ 3,551 
Finished goods
8,200 
6,629 
Total inventories
$ 13,063 
$ 10,180 
Property and Equipment Net (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Property, Plant and Equipment [Line Items]
 
 
Leasehold improvements
$ 5,628 
$ 5,598 
Machinery and equipment
1,751 
1,594 
Demonstration equipment
100 
24 
Office furniture
763 
644 
Computer equipment
651 
550 
Computer software
1,083 
1,062 
Construction-in-progress
155 
55 
Total property and equipment, gross
10,773 
10,020 
Accumulated depreciation and amortization
(8,584)
(8,322)
Total property and equipment, net
2,189 
1,698 
Consigned Equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Demonstration equipment
$ 642 
$ 493 
Property and Equipment Net - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, depreciation and amortization expense
$ 0.4 
$ 0.4 
$ 0.6 
Goodwill and Intangible Assets Net - Additional Information (Detail) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Aug. 24, 2010
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Disposal or recognition of additional goodwill
 
 
 
 
 
 
 
 
$ 0 
 
 
 
Impairment charges on goodwill
 
 
 
 
 
 
 
 
 
 
 
Goodwill balance
1,316,000 
 
 
 
1,316,000 
 
 
 
1,316,000 
1,316,000 
 
1,316,000 
Amortization expenses of intangible assets
51,000 
50,000 
51,000 
50,000 
51,000 
50,000 
51,000 
50,000 
202,000 
202,000 
202,000 
 
Impairment charges recognized related to the acquired intangible assets
 
 
 
 
 
 
 
 
 
 
Annual amortization expense of the intangible assets, 2014
200,000 
 
 
 
 
 
 
 
200,000 
 
 
 
Annual amortization expense of the intangible assets, 2015
200,000 
 
 
 
 
 
 
 
200,000 
 
 
 
Annual amortization expense of the intangible assets, 2016
200,000 
 
 
 
 
 
 
 
200,000 
 
 
 
Annual amortization expense of the intangible assets, 2017
200,000 
 
 
 
 
 
 
 
200,000 
 
 
 
Annual amortization expense of the intangible assets, 2018
200,000 
 
 
 
 
 
 
 
200,000 
 
 
 
Annual amortization expense of the intangible assets, 2019
200,000 
 
 
 
 
 
 
 
200,000 
 
 
 
Annual amortization expense of the intangible assets, 2020
$ 100,000 
 
 
 
 
 
 
 
$ 100,000 
 
 
 
Summary of Intangible Assets Net (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 2,017 
$ 2,017 
Accumulated Amortization
(673)
(471)
Net Carrying Amount
1,344 
1,546 
Reacquired license - INTERCEPT Asia
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
2,017 
2,017 
Accumulated Amortization
(673)
(471)
Net Carrying Amount
$ 1,344 
$ 1,546 
Long-Term Investments - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Investment [Line Items]
 
 
 
Eligibility to receive a royalty fee
1.00% 
 
 
Royalty income, nonoperating
$ 0 
$ 0 
$ 0 
Carrying value of investment
$ 0 
 
 
Maximum
 
 
 
Investment [Line Items]
 
 
 
Ownership percentage under Cost Method for Investments
3.00% 
 
 
Accrued Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Schedule of Accrued Liabilities [Line Items]
 
 
Accrued compensation and related costs
$ 2,527 
$ 2,692 
Accrued inventory costs
3,553 
2,352 
Accrued contract and other accrued expenses
3,733 
2,575 
Total accrued liabilities
$ 9,813 
$ 7,619 
Debt (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Debt Instrument [Line Items]
 
 
Total debt, Principal
$ 3,366 
$ 7,773 
Total debt, Unamortized amount
 
(49)
Total debt
3,366 
7,724 
Less: debt - current, Principal
(3,366)
(4,857)
Less: debt - current, Unamortized Discount
 
29 
Less: debt - current
(3,366)
(4,828)
Debt - non-current, Principal
 
2,916 
Debt - non-current, Unamortized Discount
 
(20)
Debt - non-current
 
2,896 
Comerica - Growth Capital Loan A, due 2015
 
 
Debt Instrument [Line Items]
 
 
Total debt, Principal
 
4,583 
Total debt, Unamortized amount
 
(49)
Total debt
 
4,534 
Comerica - Revolving Line of Credit, due 2014
 
 
Debt Instrument [Line Items]
 
 
Total debt, Principal
3,366 
3,190 
Total debt
$ 3,366 
$ 3,190 
Debt - Additional Information (Detail) (USD $)
12 Months Ended 12 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 6 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Jun. 30, 2012
Securities Pledged as Collateral
Dec. 31, 2013
Comerica - Growth Capital Facility
Jun. 30, 2012
Comerica - Growth Capital Facility
Dec. 31, 2013
Compliance With Covenants
Jun. 30, 2012
Revolving Credit Facility
Comerica - Growth Capital Facility
Sep. 30, 2011
Revolving Credit Facility
Comerica - Growth Capital Facility
Dec. 31, 2013
Revolving Credit Facility
Comerica - Growth Capital Facility
Dec. 31, 2012
Revolving Credit Facility
Comerica - Growth Capital Facility
Apr. 30, 2013
Capital Loan
Comerica - Growth Capital Facility
Sep. 30, 2011
Capital Loan
Comerica - Growth Capital Facility
Jun. 30, 2012
Capital Loan
Comerica - Growth Capital Facility
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal and interest payments on debt
$ 3,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
Amended Credit Agreement
 
 
 
 
12,000,000 
 
7,000,000 
 
 
 
 
5,000,000 
 
Growth capital loan from amended Credit Agreement
 
 
 
 
 
 
 
 
 
 
 
 
5,000,000 
Percentage of investments made in subsidiary
 
 
35.00% 
 
 
 
 
 
 
 
 
 
 
Principal and interest payments
 
 
 
 
 
 
 
 
 
 
 
The Growth Capital Loan, which was scheduled to mature on September 30, 2015, and bore a fixed interest rate of 6.37%, with interest-only payments due for the first twelve months, followed by equal principal and interest payments for the remaining 36 months. 
 
Maturity period
 
 
 
 
 
 
 
 
Jun. 30, 2014 
 
 
Sep. 30, 2015 
 
Fixed interest rate
 
 
 
 
 
 
 
 
 
 
 
6.37% 
 
Interest Only payments Period
 
 
 
12 months 
 
 
 
 
 
 
 
 
 
Principal and interest payments
 
 
 
36 months 
 
 
 
 
 
 
 
 
 
Final payment fee for early repayment of credit facility
 
 
 
 
 
 
 
 
 
 
50,000 
 
 
Repayment of credit facility
2,926,000 
920,000 
 
 
 
 
 
 
 
 
4,200,000 
 
 
Commitment fee
 
 
 
 
 
 
20,000 
20,000 
 
 
 
40,000 
 
Loan fees
 
 
 
 
 
 
 
 
 
 
 
50,000 
 
Effective interest rate
 
 
 
 
 
 
 
 
 
 
 
7.07% 
 
Final payment fee percentage
 
 
 
 
 
 
 
 
 
 
 
1.00% 
 
Amount under RLOC available to the Company
 
 
 
 
 
 
 
 
80.00% 
 
 
 
 
Outstanding amounts
 
 
 
 
 
 
 
 
3,400,000 
3,200,000 
 
 
 
Lender's prime rate plus 1.50%
 
 
 
 
 
 
 
 
Lender's prime rate plus 1.50% 
 
 
 
 
Margin rate
 
 
 
 
 
 
 
 
1.50% 
 
 
 
 
Floating rate of interest
 
 
 
 
 
 
 
 
4.75% 
4.75% 
 
 
 
Frequency of commitment fee
 
 
 
 
 
 
 
 
Annually on June 30 
 
 
 
 
Commitment fee at each annual anniversary beginning June 30, 2013
 
 
 
 
 
 
 
 
20,000 
 
 
 
 
Minimum cash balance
 
 
 
 
 
$ 2,500,000 
 
 
 
 
 
 
 
Minimum revenues levels percentage
 
 
 
 
 
75.00% 
 
 
 
 
 
 
 
Commitments and Contingencies - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Commitments and Contingencies Disclosure [Line Items]
 
 
 
 
Minimum term of non-cancellable operating leases
1 year 
 
 
 
Expiration of non-cancellable operating leases maximum year
2019 
 
 
 
Future rent payment, 2014
$ 1,147,000 
 
 
 
Future rent payment, 2015
553,000 
 
 
 
Operating lease, rent expense
700,000 
600,000 
700,000 
 
Financing for leasehold improvement
 
 
 
1,100,000 
Outstanding liability related to leasehold improvements
700,000 
 
 
 
Leasehold Improvements reflected in Accrued liabilities
100,000 
 
 
 
Leasehold Improvements reflected in Other non-current liabilities
600,000 
 
 
 
Purchase commitment, paid
6,500,000 
7,200,000 
3,600,000 
 
Future minimum purchase commitment 2014
3,400,000 
 
 
 
Future minimum purchase commitment 2015
1,300,000 
 
 
 
Future minimum purchase commitment 2016
1,300,000 
 
 
 
Additional Concord Lease
 
 
 
 
Commitments and Contingencies Disclosure [Line Items]
 
 
 
 
Early termination of non-cancellable operating leases minimum period
2015-01 
 
 
 
Initial term of operating lease
2 years 
 
 
 
Number of renewal options
 
 
 
Renewal period of operating lease
2 years 
 
 
 
Lease commencement date
Aug. 01, 2013 
 
 
 
Future rent payment, 2014
154,368 
 
 
 
Future rent payment, 2015
$ 90,048 
 
 
 
Future Minimum Non-Cancelable Lease Payments Under Operating Leases (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Future Minimum Payments Under Non-Cancelable Operating Leases With Initial Terms Of One-Year Or More [Line Items]
 
2014
$ 1,147 
2015
553 
2016
142 
2017
68 
2018 and thereafter
Total minimum non-cancellable lease payments
$ 1,919 
Stockholders Equity - Additional Information (Detail) (USD $)
12 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
2009 Unit Offering
Dec. 31, 2013
2010 Unit Offering
Dec. 31, 2013
Stockholder Rights Plan
Jun. 30, 2012
Series B Preferred Stock
Dec. 31, 2013
Series B Preferred Stock
Mar. 31, 1999
Series B Preferred Stock
Jun. 30, 2012
Common Stock
Aug. 31, 2009
Warrant
2009 Unit Offering
Nov. 30, 2010
Warrant
2010 Unit Offering
Dec. 31, 2013
Warrant
2010 Unit Offering
Dec. 31, 2012
Warrant
2010 Unit Offering
Dec. 31, 2013
Sales Agreement
Mlv
Dec. 31, 2012
Sales Agreement
Mlv
Dec. 31, 2011
Sales Agreement
Mlv
Dec. 31, 2013
Sales Agreement
Mlv
Maximum
Dec. 31, 2013
Sales Agreement
Cantor
Dec. 31, 2012
Sales Agreement
Cantor
Stockholders Equity Note [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock issued
 
 
 
 
 
 
3,327 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock conversion basis to common shares
 
 
 
 
 
 
 
100 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable preferred stock, amount
 
 
 
 
 
 
$ 9,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion of preferred stock to Common stock
 
 
 
 
 
 
3,327 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock issued to Fresenius
 
 
 
 
 
 
 
 
 
332,700 
 
 
 
 
 
 
 
 
 
 
Conversion of preferred stock to common stock date
 
 
 
 
 
 
 
 
 
Jun. 30, 2012 
 
 
 
 
 
 
 
 
 
 
Warrants to purchase an aggregate shares of common stock
 
 
 
 
 
 
 
 
 
 
2,400,000 
3,700,000 
 
 
 
 
 
 
 
 
Warrant exercise price
 
 
 
 
 
 
 
 
 
 
2.90 
3.20 
 
 
 
 
 
 
 
 
Exercisable period
 
 
 
 
 
 
 
 
 
 
5 years 
5 years 
 
 
 
 
 
 
 
 
Warrant liability
20,390,000 
5,903,000 
 
5,900,000 
5,900,000 
 
 
 
 
 
2,800,000 
5,800,000 
 
 
 
 
 
 
 
 
Risk-free rate
 
 
 
 
 
 
 
 
 
 
2.48% 
1.23% 
 
 
 
 
 
 
 
 
Expected term
 
 
 
 
 
 
 
 
 
 
5 years 
5 years 
 
 
 
 
 
 
 
 
Dividend yield
 
 
 
 
 
 
 
 
 
 
0.00% 
0.00% 
 
 
 
 
 
 
 
 
Volatility
 
 
 
 
 
 
 
 
 
 
77.00% 
85.00% 
 
 
 
 
 
 
 
 
Net proceeds from underwritten public offering
 
 
 
 
 
 
 
 
 
 
 
19,700,000 
 
 
 
 
 
 
 
 
Payment for underwriting discounts and commissions and stock issuance cost
2,733,000 
550,000 
420,000 
 
 
 
 
 
 
 
 
1,300,000 
 
 
 
 
 
 
 
 
Number of units sold in underwritten public offering
 
 
 
 
 
 
 
 
 
 
 
7,400,000 
 
 
 
 
 
 
 
 
Number of common stock in each unit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of common stock shares purchasable with each warrant
 
 
 
 
 
 
 
 
 
 
 
0.5 
 
 
 
 
 
 
 
 
Units issued, price per unit
 
 
 
 
 
 
 
 
 
 
 
$ 2.85 
 
 
 
 
 
 
 
 
Common stock, number of shares issued
 
 
 
 
 
 
 
 
 
 
 
7,400,000 
 
 
 
3,100,000 
3,500,000 
 
5,400,000 
1,400,000 
Warrants exercisable date
 
 
 
 
 
 
 
 
 
 
 
May 15, 2011 
 
 
 
 
 
 
 
 
Gain (Loss) from Revaluation of warrant liability
(15,099,000)
2,059,000 
486,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrants exercised
 
 
 
 
 
 
 
 
 
 
 
200,000 
5,000.0 
 
 
 
 
 
 
Maximum common stock offering price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,000,000 
 
 
 
30,000,000 
 
Percentage of proceeds payable as compensation to underwriter
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.00% 
 
 
 
2.00% 
 
Proceeds from common stock sold
61,425,000 
14,226,000 
9,273,000 
 
 
 
 
 
 
 
 
 
 
 
 
9,500,000 
9,700,000 
 
23,500,000 
4,300,000 
Common stock available for sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 100,000 
$ 1,500,000 
 
Minimum percentage of common stock acquired by stockholders
 
 
 
 
 
15.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Designated preferred stock for future issuance
 
 
 
 
 
250,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value of Warrants (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Class of Warrant or Right [Line Items]
 
 
Warrant liability
$ 20,390 
$ 5,903 
2009 Warrants
 
 
Class of Warrant or Right [Line Items]
 
 
Warrant liability
8,542 
2,009 
2010 Warrants
 
 
Class of Warrant or Right [Line Items]
 
 
Warrant liability
$ 11,848 
$ 3,894 
Fair Value of Warrants Using Valuation Model (Detail)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
2009 Warrants
 
 
Class of Warrant or Right [Line Items]
 
 
Expected term (in years)
7 months 24 days 
1 year 7 months 24 days 
Estimated volatility
45.00% 
45.00% 
Risk-free interest rate
0.10% 
0.25% 
Expected dividend yield
0.00% 
0.00% 
2010 Warrants
 
 
Class of Warrant or Right [Line Items]
 
 
Expected term (in years)
1 year 10 months 10 days 
2 years 10 months 10 days 
Estimated volatility
41.00% 
51.00% 
Risk-free interest rate
0.38% 
0.36% 
Expected dividend yield
0.00% 
0.00% 
Stock-Based Compensation - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Stock Options
Dec. 31, 2013
Restricted Stock Units (RSUs)
Dec. 31, 2012
Restricted Stock Units (RSUs)
Dec. 31, 2011
Restricted Stock Units (RSUs)
Dec. 31, 2013
Employee Stock Purchase Plan
Dec. 31, 2012
Employee Stock Purchase Plan
Dec. 31, 2011
Employee Stock Purchase Plan
Jun. 6, 2012
Employee Stock Purchase Plan
Dec. 31, 2013
Employee Stock Purchase Plan
Maximum
Dec. 31, 2013
2008 Equity Incentive Plan
Jun. 12, 2013
2008 Equity Incentive Plan
Jun. 6, 2012
2008 Equity Incentive Plan
Dec. 31, 2013
2008 Equity Incentive Plan
Stock Options
Dec. 31, 2013
2008 Equity Incentive Plan
Performance-based Stock or Cash Awards
Dec. 31, 2013
2008 Equity Incentive Plan
Maximum
Jun. 6, 2012
2008 Equity Incentive Plan
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee Stock Purchase Plan, offering period
 
 
 
 
 
 
 
 
 
 
 
27 months 
 
 
 
 
 
 
 
Employee Stock Purchase Plan, period for eligible employees to purchase
 
 
 
 
 
 
 
 
 
 
 
6 months 
 
 
 
 
 
 
 
Employee Stock Purchase Plan, purchase price of common stock as percentage of fair market value
 
 
 
 
 
 
 
85.00% 
 
 
 
 
100.00% 
 
 
 
 
 
 
Employee Stock Purchase Plan, authorized shares for issuance
 
 
 
 
 
 
 
 
 
820,500 
 
 
 
 
 
 
500,000 
 
 
Increase in shares of common stock authorized for issuance
 
 
 
 
 
 
 
 
 
 
500,000 
 
 
6,000,000 
3,000,000 
 
 
 
 
Maximum number of shares of common stock authorized for issuance
112,500,000 
112,500,000 
 
 
 
 
 
 
 
 
1,320,500 
 
 
 
 
 
 
 
19,540,940 
Number of shares available for future issuance
 
 
 
 
 
 
 
514,820 
 
 
 
 
8,100,000 
 
 
 
 
 
 
Stock-based compensation, award term
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 years 
 
Stock-based compensation, vesting period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 years 
 
 
 
Stock option plan granted on cash award
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 1.0 
 
 
Performance-based stock options, outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate number of shares of common stock reserved for future issuance
18,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding options and other stock based awards
10,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intrinsic value of options exercised
0.6 
0.3 
0.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted stock units vesting Description
 
 
 
 
The restricted stock units generally vest in three annual installments from the date of grant and are generally issuable at the end of the three-year vesting term. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of restricted stock units which vested during the year
 
 
 
 
0.05 
0.05 
0.10 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense expected to be recognized
 
 
 
$ 5.9 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation, weighted average recognition period
 
 
 
2 years 6 months 22 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation, expected dividend yield
0.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant-date fair value of stock options granted
$ 2.03 
$ 2.13 
$ 1.37 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant-date fair value of awards granted
 
 
 
 
 
$ 3.03 
 
$ 1.18 
$ 1.43 
$ 0.68 
 
 
 
 
 
 
 
 
 
Information Regarding Stock Options Outstanding Stock Options Vested and Expected to Vest and Stock Options Exercisable (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Number of Shares
 
 
 
 
Stock options outstanding
10,405 
8,504 
7,362 
7,007 
Stock options vested and expected to vest
10,028 
 
 
 
Stock options exercisable
6,589 
 
 
 
Weighted Average Exercise Price
 
 
 
 
Stock options outstanding
$ 3.46 
$ 3.40 
$ 4.70 
$ 6.42 
Stock options vested and expected to vest
$ 3.45 
 
 
 
Stock options exercisable
$ 3.43 
 
 
 
Weighted Average Remaining Contractual (Years)
 
 
 
 
Stock options outstanding
6 years 4 months 2 days 
 
 
 
Stock options vested and expected to vest
6 years 3 months 
 
 
 
Stock options exercisable
5 years 18 days 
 
 
 
Aggregate intrinsic value
 
 
 
 
Stock options outstanding
$ 32,724 
 
 
 
Stock options vested and expected to vest
31,730 
 
 
 
Stock options exercisable
$ 21,555 
 
 
 
Stock-Based Compensation Recognized on Condensed Consolidated Statements of Operations (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
$ 3,268 
$ 2,541 
$ 1,850 
Research and Development Expense
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
482 
554 
450 
Selling, General and Administrative Expenses
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Stock-based compensation expense
$ 2,786 
$ 1,987 
$ 1,400 
Weighted Average Assumptions Used to Value Stock-Based Awards (Detail)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected dividend yield
0.00% 
 
 
Stock Option
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected term (in years)
5 years 7 months 2 days 
5 years 6 months 15 days 
5 years 3 months 18 days 
Estimated volatility
60.00% 
67.00% 
68.00% 
Risk-free interest rate
0.87% 
1.03% 
1.23% 
Expected dividend yield
0.00% 
0.00% 
0.00% 
Employee Stock Purchase Plan
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected term (in years)
6 months 
6 months 
6 months 
Estimated volatility
39.00% 
101.00% 
48.00% 
Risk-free interest rate
0.10% 
0.14% 
0.08% 
Expected dividend yield
0.00% 
0.00% 
0.00% 
Retirement Plan - Additional Information (Detail)
12 Months Ended
Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
 
Retirement plan, employees maximum pre-tax contributions percentage
60.00% 
Development and License Agreements - Additional Information (Detail) (USD $)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2013
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Licenses Agreements [Line Items]
 
 
 
 
 
Royalty payments on products
 
 
$ 3,000,000 
$ 2,700,000 
$ 2,200,000 
Payments made relating to the manufacturing of the products
 
 
15,000,000 
12,200,000 
9,600,000 
Prior written notice for termination of agreement
24 months 
 
 
 
 
Current asset, warrant claim
442,000 
 
442,000 
2,038,000 
 
Revenue from cooperative agreement
 
91,000 
91,000 
2,442,000 
Product Warranty
 
 
 
 
 
Licenses Agreements [Line Items]
 
 
 
 
 
Current asset, warrant claim
 
 
 
1,800,000 
 
Fresenius
 
 
 
 
 
Licenses Agreements [Line Items]
 
 
 
 
 
Prior written notice for termination of agreement
30 months 
 
 
 
 
Royalty
 
 
 
 
 
Licenses Agreements [Line Items]
 
 
 
 
 
Manufacturing costs owed
700,000 
 
700,000 
800,000 
 
Royalty |
Platelet system
 
 
 
 
 
Licenses Agreements [Line Items]
 
 
 
 
 
Royalty rate applied towards sale of products
 
 
10.00% 
 
 
Royalty |
Plasma system
 
 
 
 
 
Licenses Agreements [Line Items]
 
 
 
 
 
Royalty rate applied towards sale of products
 
 
3.00% 
 
 
Manufacturing Costs
 
 
 
 
 
Licenses Agreements [Line Items]
 
 
 
 
 
Manufacturing costs owed
$ 4,300,000 
 
$ 4,300,000 
$ 6,200,000 
 
United States and Foreign Components of Consolidated Loss before Income Taxes (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Schedule Of Income Loss From Continuing Operations [Line Items]
 
 
 
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
$ (44,035)
$ (16,360)
$ (17,461)
Foreign
 
 
 
 
 
 
 
 
916 
685 
622 
Loss before income taxes
$ (5,807)
$ (20,441)
$ (6,670)
$ (10,201)
$ (1,605)
$ (3,405)
$ (1,866)
$ (8,799)
$ (43,119)
$ (15,675)
$ (16,839)
Provision Benefit for Income Taxes (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Components Of Income Tax Expense Benefit [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Foreign
 
 
 
 
 
 
 
 
$ 191 
$ 180 
$ 143 
Federal
 
 
 
 
 
 
 
 
   
   
   
State
 
 
 
 
 
 
 
 
   
   
   
Total Current
 
 
 
 
 
 
 
 
191 
180 
143 
Foreign
 
 
 
 
 
 
 
 
   
   
   
Federal
 
 
 
 
 
 
 
 
21 
48 
 
State
 
 
 
 
 
 
 
 
14 
 
Total Deferred
 
 
 
 
 
 
 
 
27 
62 
 
Provision for income taxes
$ 53 
$ 60 
$ 54 
$ 51 
$ 111 
$ 55 
$ 41 
$ 35 
$ 218 
$ 242 
$ 143 
Difference Between Provision for Income Taxes and Amounts Computed by Applying Federal Statutory Income Tax Rate to Loss before Taxes (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Reconciliation of Provision of Income Taxes [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Federal statutory tax
 
 
 
 
 
 
 
 
$ (14,661)
$ (5,329)
$ (5,725)
Stock-based compensation
 
 
 
 
 
 
 
 
(10)
99 
83 
Lobbying expenses
 
 
 
 
 
 
 
 
107 
51 
112 
Warrants
 
 
 
 
 
 
 
 
4,926 
(706)
(165)
Foreign rate differential
 
 
 
 
 
 
 
 
(121)
(53)
(68)
Expiration of federal net operating losses and credits-tax effected
 
 
 
 
 
 
 
 
 
4,352 
1,744 
Change in valuation allowance
 
 
 
 
 
 
 
 
9,934 
1,761 
4,158 
Goodwill amortization
 
 
 
 
 
 
 
 
21 
48 
 
Other
 
 
 
 
 
 
 
 
22 
19 
Provision for income taxes
$ 53 
$ 60 
$ 54 
$ 51 
$ 111 
$ 55 
$ 41 
$ 35 
$ 218 
$ 242 
$ 143 
Significant Components of Deferred Tax Assets (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Deferred tax assets:
 
 
Net operating loss carryforwards
$ 142,500 
$ 137,700 
Research and development credit carryforwards
32,100 
30,800 
Capitalized inventory costs
800 
900 
Inventory reserve
100 
700 
Capitalized research and development
12,300 
9,100 
Capitalized intangible asset
100 
100 
Deferred compensation
4,900 
4,800 
Accrued liabilities
200 
100 
Depreciation
1,300 
1,300 
Acquisition costs
200 
200 
Deferred tenant allowance
100 
200 
Capital loss carryforwards
3,900 
3,900 
Total deferred tax assets
199,000 
190,500 
Valuation allowance
(199,000)
(190,500)
Net deferred tax assets
   
   
Deferred tax liabilities:
 
 
Amortization of goodwill
89 
62 
Total deferred tax liabilities
89 
62 
Trademarks
 
 
Deferred tax assets:
 
 
Capitalized intangible asset
400 
400 
Capitalized Revenue Sharing Rights
 
 
Deferred tax assets:
 
 
Capitalized intangible asset
$ 100 
$ 300 
Income Tax - Additional Information (Detail) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Tax Disclosure [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) in valuation allowance
 
 
 
 
 
 
 
 
$ 8,500,000 
$ (800,000)
$ 2,000,000 
Federal statutory income tax rate
 
 
 
 
 
 
 
 
34.00% 
 
 
Undistributed earnings, federal statutory income taxes
 
 
 
 
 
 
 
 
(14,661,000)
(5,329,000)
(5,725,000)
Net loss
(5,860,000)
(20,501,000)
(6,724,000)
(10,252,000)
(1,716,000)
(3,460,000)
(1,907,000)
(8,834,000)
(43,337,000)
(15,917,000)
(16,982,000)
Research and development tax credit carryforwards
32,100,000 
 
 
 
30,800,000 
 
 
 
32,100,000 
30,800,000 
 
Internal Revenue Service (IRS)
 
 
 
 
 
 
 
 
 
 
 
Income Tax Disclosure [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net operating loss carryforwards
381,700,000 
 
 
 
 
 
 
 
381,700,000 
 
 
Research and development tax credit carryforwards
21,600,000 
 
 
 
 
 
 
 
21,600,000 
 
 
Internal Revenue Service (IRS) |
Minimum
 
 
 
 
 
 
 
 
 
 
 
Income Tax Disclosure [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net operating loss carryforwards, expiration year
 
 
 
 
 
 
 
 
2018 
 
 
Research and development tax credit carryforwards, expiration year
 
 
 
 
 
 
 
 
2018 
 
 
Internal Revenue Service (IRS) |
Maximum
 
 
 
 
 
 
 
 
 
 
 
Income Tax Disclosure [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net operating loss carryforwards, expiration year
 
 
 
 
 
 
 
 
2033 
 
 
Research and development tax credit carryforwards, expiration year
 
 
 
 
 
 
 
 
2033 
 
 
State and Local Jurisdiction
 
 
 
 
 
 
 
 
 
 
 
Income Tax Disclosure [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net operating loss carryforwards
218,100,000 
 
 
 
 
 
 
 
218,100,000 
 
 
Research and development tax credit carryforwards
15,900,000 
 
 
 
 
 
 
 
15,900,000 
 
 
State and Local Jurisdiction |
Minimum
 
 
 
 
 
 
 
 
 
 
 
Income Tax Disclosure [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net operating loss carryforwards, expiration year
 
 
 
 
 
 
 
 
2014 
 
 
State and Local Jurisdiction |
Maximum
 
 
 
 
 
 
 
 
 
 
 
Income Tax Disclosure [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net operating loss carryforwards, expiration year
 
 
 
 
 
 
 
 
2033 
 
 
Cerus Europe B.V.
 
 
 
 
 
 
 
 
 
 
 
Income Tax Disclosure [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Undistributed earning of foreign subsidiary
 
 
 
 
 
 
 
 
2,800,000 
 
 
Undistributed earnings, federal statutory income taxes
 
 
 
 
 
 
 
 
$ 900,000 
 
 
Segment, Customer and Geographic Information - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2012
Dec. 31, 2013
Segment
Dec. 31, 2012
Dec. 31, 2011
Segment Reporting Information [Line Items]
 
 
 
 
Number of operating segments
 
 
 
Government grants and cooperative agreements revenue
$ 91 
$ 0 
$ 91 
$ 2,442 
Government Grants And Cooperative Agreements
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Government grants and cooperative agreements revenue
 
$ 0 
 
 
Government Grants And Cooperative Agreements |
Total Revenue
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Company's total product revenue from significant customers
 
 
1.00% 
7.00% 
Significant Customers that Accounted for More than Ten Percentage of Total Product Revenue (Detail)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Movaco, S.A.
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
Percentage of revenue derived from significant customer from Company's total product revenue
18.00% 
19.00% 
21.00% 
Etablissement Francais du Sang
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
Percentage of revenue derived from significant customer from Company's total product revenue
17.00% 
20.00% 
24.00% 
Delrus Inc.
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
Percentage of revenue derived from significant customer from Company's total product revenue
 
12.00% 
12.00% 
Net Revenue by Geographical Location (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Revenue, Major Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Product revenue
$ 9,232 
$ 10,542 
$ 10,150 
$ 9,733 
$ 10,528 
$ 8,252 
$ 9,224 
$ 8,691 
$ 39,657 
$ 36,695 
$ 30,602 
Government grants and cooperative agreements
 
 
 
 
 
 
 
91 
91 
2,442 
Total revenue
 
 
 
 
 
 
 
 
39,657 
36,786 
33,044 
FRANCE
 
 
 
 
 
 
 
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Product revenue
 
 
 
 
 
 
 
 
7,030 
7,321 
7,385 
SPAIN
 
 
 
 
 
 
 
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Product revenue
 
 
 
 
 
 
 
 
7,033 
7,061 
6,504 
CIS
 
 
 
 
 
 
 
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Product revenue
 
 
 
 
 
 
 
 
8,220 
8,016 
3,754 
BELGIUM
 
 
 
 
 
 
 
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Product revenue
 
 
 
 
 
 
 
 
3,971 
4,016 
3,703 
SWITZERLAND
 
 
 
 
 
 
 
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Product revenue
 
 
 
 
 
 
 
 
4,078 
3,866 
3,315 
Other Countries
 
 
 
 
 
 
 
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Product revenue
 
 
 
 
 
 
 
 
9,325 
6,415 
5,941 
UNITED STATES
 
 
 
 
 
 
 
 
 
 
 
Revenue, Major Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Government grants and cooperative agreements
 
 
 
 
 
 
 
 
 
$ 91 
$ 2,442 
Long Lived Assets by Geographical Location (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Long-Lived Assets by Geographical Areas [Line Items]
 
 
Total long-lived assets
$ 3,533 
$ 3,244 
UNITED STATES
 
 
Long-Lived Assets by Geographical Areas [Line Items]
 
 
Total long-lived assets
3,088 
2,895 
Europe
 
 
Long-Lived Assets by Geographical Areas [Line Items]
 
 
Total long-lived assets
$ 445 
$ 349 
Summary of Quarterly Financial Information (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Quarterly Financial Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Product revenue
$ 9,232 
$ 10,542 
$ 10,150 
$ 9,733 
$ 10,528 
$ 8,252 
$ 9,224 
$ 8,691 
$ 39,657 
$ 36,695 
$ 30,602 
Cost of product revenue
4,939 
6,826 
5,747 
5,090 
5,117 
4,411 
5,574 
5,514 
22,602 
20,616 
18,535 
Gross profit on product revenue
4,293 
3,716 
4,403 
4,643 
5,411 
3,841 
3,650 
3,177 
17,055 
16,079 
12,067 
Government grants and cooperative agreements revenue
 
 
 
 
 
 
 
91 
91 
2,442 
Research and development
4,618 
4,363 
3,506 
2,700 
2,164 
1,903 
1,712 
1,824 
15,187 
7,603 
7,178 
Selling, general and administrative
7,430 
7,728 
7,954 
6,853 
6,794 
6,219 
6,686 
5,966 
29,965 
25,665 
23,053 
Amortization of intangible assets
51 
50 
51 
50 
51 
50 
51 
50 
202 
202 
202 
Total operating expenses
12,099 
12,141 
11,511 
9,603 
9,009 
8,172 
8,449 
7,840 
45,354 
33,470 
30,433 
Loss from operations
(7,806)
(8,425)
(7,108)
(4,960)
(3,598)
(4,331)
(4,799)
(4,572)
(28,299)
(17,300)
(15,924)
Total non-operating income (expense), net
1,999 
(12,016)
438 
(5,241)
1,993 
926 
2,933 
(4,227)
(14,820)
1,625 
(915)
Loss before income taxes
(5,807)
(20,441)
(6,670)
(10,201)
(1,605)
(3,405)
(1,866)
(8,799)
(43,119)
(15,675)
(16,839)
Provision for income taxes
53 
60 
54 
51 
111 
55 
41 
35 
218 
242 
143 
Net loss
$ (5,860)
$ (20,501)
$ (6,724)
$ (10,252)
$ (1,716)
$ (3,460)
$ (1,907)
$ (8,834)
$ (43,337)
$ (15,917)
$ (16,982)
Basic
$ (0.08)
$ (0.29)
$ (0.10)
$ (0.17)
$ (0.03)
$ (0.06)
$ (0.04)
$ (0.17)
$ (0.64)
$ (0.29)
$ (0.35)
Diluted
$ (0.10)
$ (0.29)
$ (0.10)
$ (0.17)
$ (0.07)
$ (0.08)
$ (0.10)
$ (0.17)
$ (0.64)
$ (0.33)
$ (0.35)