Product revenue for the third quarter of 2012 was $8.3 million, and represented a 6% increase from the third quarter of 2011. The increase in product revenue was driven by the 14% increase in year-over-year demand for INTERCEPT disposable kits.
No government grant revenue was recognized during the third quarter of 2012, as government grants in support of the Company’s red blood cell system had been fully utilized by January 2012. This compared to $1.5 million of government grant revenue recognized during the third quarter of 2011.
Product revenue for the first nine months of 2012 was $26.2 million, and represented a 26% increase from the first nine months of 2011. The increase in product revenue during the first nine months of 2012 over 2011 was driven primarily by a 34% increase in demand for INTERCEPT disposable kits.Government grant revenue for the first nine months of 2012 was $0.1 million, down from $1.9 million recognized during the first nine months of 2011. The last government grant awarded to Cerus in support of the Company’s red blood cell system occurred in August 2011. The Company does not currently expect any government grant revenue for the foreseeable future. Gross Margins Gross margins on product sales for the third quarter of 2012 were 47%, compared to 39% reported for the third quarter of 2011. Gross margins on product sales for the first nine months of 2012 were 41%, compared to 40% for same period in 2011. The improvement in gross margins on product sales was driven by a more favorable mix of products sold and lower 2012 carrying costs resulting from higher levels of manufacturing. Operating Expenses Total operating expenses for the third quarter of 2012 were $8.2 million, compared to $7.2 million for the third quarter of 2011. Total operating expenses for the first nine months of 2012 were $24.5 million, compared to $22.9 million for the first nine months of 2011. The increase in operating expenses in both periods was related to increases in selling, general and administrative expenses in support of growing the commercial business in Europe, the Middle East, and The Commonwealth of Independent States, and the expansion into new markets and geographies. Operating expenses are expected to increase during the fourth quarter of 2012 and into 2013, driven by increased research and development expenses associated with the planned clinical trials and in-vitro studies to support potential regulatory approval of the INTERCEPT red blood cell system. In addition, the Company expects to incur additional regulatory costs in 2013 in connection with the planned submission to the FDA of the modular PMA for INTERCEPT plasma in the United States.
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