Cerus Corporation Strengthens Balance Sheet with an Expandable Debt Facility of up to $90 Million

Business Wire 1-Apr-2019 4:05 PM

Cerus Corporation (NASDAQ:CERS) today announced the closing of a new debt facility with MidCap Financial (MidCap) which is expandable up to $90 million. The debt facility consists of a staged $70 million term loan and a $5 million revolving line of credit, expandable up to $20 million.

The new term loan provides an initial tranche of $40 million at closing. Cerus has the option to draw on two additional $15 million tranches contingent upon the achievement of specific clinical and commercial milestones. The first optional tranche is available to Cerus upon either CE Mark approval for the INTERCEPT red blood cell system or a PMA supplement approval for INTERCEPT cryoprecipitate. A second option is available upon Cerus' achievement of certain predetermined revenue levels. A portion of the initial proceeds will be used to retire the Company's existing term loan of approximately $29 million. In addition to the term loan, the Company closed on a $5 million revolving loan to help fund investment in working-capital to meet the growth in the business over the next several years. The revolving facility can expand to $20 million based on mutual agreement.

"The non-dilutive financing provides Cerus with additional capital and flexibility to fund our growth initiatives," said Kevin D. Green, Cerus' vice president, finance and chief financial officer. "The new term loan not only provides Cerus with additional capital at an attractive rate, but the amortization is deferred for 36 months and can be extended for an additional 12 months upon achievement of predetermined revenue levels allowing us to focus on business execution."

"MidCap was a true collaborative partner during this entire process," continued Green. "As a testament to MidCap's industry expertise in life science lending, their appreciation and understanding of our business opportunity and the Company's mission to make INTERCEPT the global standard of care was clearly evident."

ABOUT CERUS

Cerus Corporation is a biomedical products company focused in the field of blood transfusion safety. The INTERCEPT Blood System is designed to reduce the risk of transfusion-transmitted infections by inactivating a broad range of pathogens such as viruses, bacteria and parasites that may be present in donated blood. The nucleic acid targeting mechanism of action of the INTERCEPT treatment is designed to inactivate established transfusion threats, such as hepatitis B and C, HIV, West Nile virus and bacteria, as well as emerging pathogens such as chikungunya, malaria and dengue. Cerus currently markets and sells the INTERCEPT Blood System for both platelets and plasma in the United States, Europe, the Commonwealth of Independent States, the Middle East and selected countries in other regions around the world. The INTERCEPT red blood cell system is in clinical development. See http://www.cerus.com for information about Cerus.

About Midcap Financial

MidCap Financial is a middle market-focused, specialty finance firm that provides senior debt solutions to companies across all industries. MidCap is headquartered in Bethesda, MD, with offices in Chicago and Los Angeles, and provides a broad array of products intended to finance growth and manage working capital. For more information, visit www.midcapfinancial.com.

MidCap Financial refers to MidCap FinCo Designated Activity Company, a private limited company domiciled in Ireland, and its subsidiaries, including MidCap Financial Services, LLC. MidCap Financial Services, LLC employs all personnel and provides sourcing, due diligence and portfolio management services to MidCap FinCo Designated Activity Company pursuant to a services agreement. MidCap Financial is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management (NYSE:APO), pursuant to an investment management agreement.

Forward-Looking Statements

Except for the historical statements contained herein, this press release contains forward-looking statements concerning Cerus' expectations, opportunities and prospects, including statements concerning the availability of the two additional tranches under the debt facility with MidCap, the size of the revolving facility with MidCap, the quote from Cerus' vice president, finance and chief financial officer, and other statements that are not historical facts. Actual results could differ materially from these forward-looking statements as a result of certain factors, including, without limitation: risks associated with the satisfaction of the conditions to the funding of the two additional tranches under the debt facility with MidCap and Cerus' ability to maintain (and otherwise comply with the covenants in) the debt facility and revolving facility with MidCap; risks associated with Cerus' ability to meet its debt service obligations and its need for additional funding; risks associated with the commercialization and market acceptance of, and customer demand for, the INTERCEPT Blood System; risks associated with Cerus' lack of commercialization experience in the United States and its ability to develop and maintain an effective and qualified U.S.-based commercial organization, as well as the resulting uncertainty of its ability to achieve market acceptance of and otherwise successfully commercialize the INTERCEPT Blood System for platelets and plasma in the United States; risks related to Cerus' ability to commercialize the INTERCEPT Blood System in the United States without infringing on the intellectual property rights of others; risks related to Cerus' ability to demonstrate to the transfusion medicine community and other health care constituencies that pathogen reduction and the INTERCEPT Blood System is safe, effective and economical; the uncertain and time-consuming development and regulatory process, including the risks (a) that Cerus may be unable to comply with the FDA's post-approval requirements for the INTERCEPT platelet and plasma systems, including by successfully completing required post-approval studies, which could result in a loss of U.S. marketing approval for the INTERCEPT platelet and/or plasma systems, (b) related to Cerus' ability to expand the label claims and product configurations for the INTERCEPT platelet and plasma systems in the United States, which will require additional regulatory approvals and (c) that Cerus may be unable to obtain any regulatory approvals of the INTERCEPT red blood cell system in a timely manner or at all; risks related to adverse market and economic conditions, including continued or more severe adverse fluctuations in foreign exchange rates and/or weakening economic conditions in the markets where Cerus sells its products; Cerus' reliance on third parties to market, sell, distribute and maintain its products; Cerus' ability to maintain an effective manufacturing supply chain, including the ability of its manufacturers to comply with extensive FDA and foreign regulatory agency requirements; the impact of legislative or regulatory healthcare reforms that may make it more difficult and costly for Cerus to produce, market and distribute its products; risks related to future opportunities and plans, including the uncertainty of future revenues and other financial performance and results, as well as other risks detailed in Cerus' filings with the Securities and Exchange Commission, including Cerus' Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 27, 2019. Cerus disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this press release.

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