CERUS CORPORATIONd18rn0p25nwr6d.cloudfront.net/CIK-0001020214/3be44090-024d-40… · Concord,...

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)☒☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF

1934For the quarterly period ended June 30, 2017

or

☐☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF1934

For the transition period from: to

Commission File Number 000-21937

CERUS CORPORATION(Exact name of registrant as specified in its charter)

Delaware 68-0262011(State or other jurisdiction ofincorporation or organization)

(I.R.S. EmployerIdentification No.)

2550 Stanwell Dr.Concord, California

94520

(Address of principal executive offices) (Zip Code)

(925) 288-6000(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirementsfor the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File requiredto be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” inRule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒

Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

As of July 27, 2017, there were 109,137,885 shares of the registrant’s common stock outstanding.

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CERUS CORPORATION

QUARTERLY REPORT ON FORM 10-Q

THREE AND SIX MONTHS ENDED June 30, 2017

TABLE OF CONTENTS PART I FINANCIAL INFORMATION

Item 1. Financial Statements 3 Unaudited Condensed Consolidated Balance Sheets –June 30, 2017 and December 31, 2016 3 Unaudited Condensed Consolidated Statements of Operations –Three and six months ended June 30, 2017 and 2016 4 Unaudited Condensed Consolidated Statements of Comprehensive Loss –Three and six months ended June 30, 2017 and 2016 5 Unaudited Condensed Consolidated Statements of Cash Flows –Six months ended June 30, 2017 and 2016 6 Notes to Unaudited Condensed Consolidated Financial Statements 7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23Item 3. Quantitative and Qualitative Disclosures About Market Risk 34Item 4. Controls and Procedures 34

PART II OTHER INFORMATION

Item 1. Legal Proceedings 34Item 1A. Risk Factors 34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 66Item 3. Defaults Upon Senior Securities 66Item 4. Mine Safety Disclosures 66Item 5. Other Information 66Item 6. Exhibits 67

SIGNATURES 69

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PART I: FINANCI AL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CERUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)

June 30, December 31, 2017 2016 (Unaudited)

ASSETS Current assets:

Cash and cash equivalents $ 20,278 $ 22,560 Short-term investments 30,628 45,116 Investment in marketable equity securities — 3,952 Accounts receivable 7,932 6,868 Inventories 12,213 12,531 Other current assets 3,256 3,078

Total current assets 74,307 94,105 Non-current assets:

Property and equipment, net 2,673 2,985 Goodwill 1,316 1,316 Intangible assets, net 637 738 Restricted cash 248 184 Other assets 4,304 4,148

Total assets $ 83,485 $ 103,476

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:

Accounts payable $ 9,564 $ 8,587 Accrued liabilities 9,787 11,218 Debt - current 5,548 6,934 Deferred product revenue - current 398 149

Total current liabilities 25,297 26,888 Non-current liabilities:

Debt - non-current 11,914 12,441 Manufacturing and development obligations - non-current 5,351 4,770 Other non-current liabilities 1,632 1,590

Total liabilities 44,194 45,689 Commitments and contingencies Stockholders' equity:

Common stock 109 103 Additional paid-in capital 735,600 718,299 Accumulated other comprehensive (loss) income (19) 103 Accumulated deficit (696,399) (660,718)

Total stockholders' equity 39,291 57,787 Total liabilities and stockholders' equity $ 83,485 $ 103,476

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSUNAUDITED

(in thousands, except per share data)

Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016

Product revenue $ 9,525 $ 9,251 $ 16,531 $ 16,883 Cost of product revenue 4,360 4,976 8,054 9,239

Gross profit on product revenue 5,165 4,275 8,477 7,644 Government contracts revenue 1,667 — 3,095 — Operating expenses:

Research and development 8,891 8,557 18,041 15,474 Selling, general and administrative 14,094 12,406 27,727 24,153 Amortization of intangible assets 51 51 101 101

Total operating expenses 23,036 21,014 45,869 39,728 Loss from operations (16,204) (16,739) (34,297) (32,084)Non-operating income (expense), net:

Foreign exchange (loss) gain (14) 101 (59) (16)Interest expense (501) (658) (1,032) (1,313)Other income, net 3,512 113 3,618 179

Total non-operating income (expense), net 2,997 (444) 2,527 (1,150)Loss before income taxes (13,207) (17,183) (31,770) (33,234)Provision for income taxes 3,876 983 3,911 1,795 Net loss $ (17,083) $ (18,166) $ (35,681) $ (35,029)

Net loss per share: Basic $ (0.16) $ (0.18) $ (0.34) $ (0.35)Diluted $ (0.16) $ (0.18) $ (0.34) $ (0.35)

Weighted average shares outstanding used for calculating net loss per share:

Basic 105,044 101,563 104,308 100,517 Diluted 105,044 101,563 104,308 100,517


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CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSUNAUDITED(in thousands)


Net loss $ (17,083) $ (18,166) $ (35,681) $ (35,029)Other comprehensive gains (losses):

Unrealized gains (losses) on available-for-sale investments, net of taxes of zero and$(205) for the three months ended June 30, 2017 and 2016, respectively, and zero and$(2,263) for the six months ended June 30, 2017 and 2016, respectively 124 (389) (122) (4,311)

Comprehensive loss $ (16,959) $ (18,555) $ (35,803) $ (39,340)


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CERUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSUNAUDITED(in thousands)

Six Months Ended June 30, 2017 2016

Operating activities Net loss $ (35,681) $ (35,029)Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 904 964 Stock-based compensation 4,617 3,862 Bad debt expense 658 — Non-cash interest expense 285 603 Deferred income taxes 12 18 Non-cash tax expense from other unrealized loss on available-for-sale securities 3,825 1,702 Gain on sale of investment in marketable equity securities (3,466) — Changes in operating assets and liabilities: Accounts receivable (1,722) 645 Inventories 237 (1,318)Other assets 704 435 Accounts payable 1,085 1,902 Accrued liabilities (1,457) (458)Manufacturing and development obligations 419 (1,082)Deferred product revenue 233 189

Net cash used in operating activities (29,347) (27,567)Investing activities

Capital expenditures (353) (118)Purchases of investments (20,749) (70,560)Proceeds from maturities and sale of investments 38,465 19,500

Net cash provided by (used in) investing activities 17,363 (51,178)Financing activities

Net proceeds from equity incentives 2,052 907 Net proceeds from public offering 9,644 14,547 Repayment of debt (1,930) (60)

Net cash provided by financing activities 9,766 15,394 Net decrease in cash, cash equivalents and restricted cash (2,218) (63,351)Cash, cash equivalents and restricted cash, beginning of period 22,744 71,630

Cash, cash equivalents and restricted cash, end of period $ 20,526 $ 8,279


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CERUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include those of Cerus Corporation and its subsidiary, Cerus Europe B.V. (together withCerus Corporation, hereinafter “Cerus” or the “Company”) after elimination of all intercompany accounts and transactions. These unaudited condensedconsolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S.(“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they donot include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting ofnormal recurring entries, considered necessary for a fair presentation have been made. Operating results for the three and six months ended June 30, 2017, are notnecessarily indicative of the results that may be expected for the year ending December 31, 2017, or for any future periods.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financialstatements and notes thereto for the year ended December 31, 2016, which were included in the Company’s 2016 Annual Report on Form 10-K, filed with the SECon March 8, 2017. The accompanying condensed consolidated balance sheet as of December 31, 2016, has been derived from the Company’s audited consolidatedfinancial statements as of that date .

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, management evaluates its estimates, including those relatedto the accounts receivable, inventory reserves, fair values of investments, stock-based compensation, intangible assets and goodwill, useful lives of intangible assetsand property and equipment, income taxes, and accrued liabilities, among others. The Company bases its estimates on historical experience, future projections, andon various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates under different assumptionsor conditions.

Revenue

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 605-25, “Revenue Recognition – Arrangements withMultipleDeliverables,”as applicable. Revenue is recognized when (i) persuasive evidence of the arrangement exists; (ii) delivery has occurred or services havebeen rendered; (iii) pricing is fixed or determinable; and (iv) collectability is reasonably assured. The Company’s main sources of revenues for the three and sixmonths ended June 30, 2017 and 2016 were product revenue from sales of the INTERCEPT Blood System for platelets and plasma (“platelet and plasma systems”or “disposable kits”) and UVA illumination devices (“illuminators”).

Revenue related to product sales is generally recognized when the Company fulfills its obligations for each element of an agreement. For all sales of theCompany’s INTERCEPT Blood System products, the Company uses a binding purchase order or signed sales contract as evidence of an arrangement. TheCompany 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 ofdefective or non-conforming product. Deliverables and the units of accounting vary according to the provisions of each purchase order or sales contract. Forrevenue arrangements with multiple elements, the Company determines whether the delivered elements meet the criteria as separate units of accounting. Suchcriteria 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 orperformance of the undelivered item(s) is considered probable and substantially in the control of the Company. Once the Company determines if the deliverablemeets the criteria for a separate unit of accounting, the Company must determine how the consideration should be allocated between the deliverables and how theseparate units of accounting should be recognized as revenue. Consideration received is allocated to elements that are identified as discrete units of accounting.Because the Company has no vendor specific objective evidence or third party evidence for its systems due to the Company’s variability in its pricing across theregions into which it sells its products, the allocation of product revenue is based on best estimated selling price for the products sold. The objective of bestestimated selling price is to determine the price at which the Company would transact a sale, had the product been sold on a stand-alone basis. The Companydetermines best estimated selling price for its systems by considering multiple factors. The Company regularly reviews best estimated selling price.

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The Company receives reimbursement under its U.S. government contract that supports research and development of defined projects. The contract generallyprovides for reimbursement of approved costs incurred under the terms of the contract. Revenue related to the cost reimbursement provisions under the Company’sU.S. government contract are recognized as the qualified direct and indirect costs on the projects are incurred. The Company invoices under its U.S. governmentcontract using the provisional rates in the government contract and thus is subject to future audits at the discretion of government. These audits could result in anadjustment to revenue previously reported, which adjustments potentially could be significant. The Company believes that revenue for periods not yet audited hasbeen recorded in amounts that are expected to be realized upon final audit and settlemen t. Costs incurred related to services performed under the contract areincluded as a component of research and development or selling, general and administrative expenses in the Company’s consolidated statements of operations. TheCompany’s use of estimate s in recording accrued liabilities for government contract activities (see “Use of Estimates” above) affects the revenue recorded fromdevelopment funding and under the government contract.

Research and Development Expenses

In accordance with ASC Topic 730, “AccountingforResearchandDevelopmentExpenses,”research and development (“R&D”) expenses are charged to expensewhen incurred, including cost incurred pursuant to the terms of any contract that has been awarded to the Company by the U.S. government. Research anddevelopment expenses include salaries and related expenses for scientific and regulatory personnel, payments to consultants, supplies and chemicals used in in-house laboratories, costs of R&D 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 R&D activities (see “Use of Estimates” above) affects the amounts of R&D expenses recordedfrom development funding and under the government contract. 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.

Investments

Investments with original maturities of greater than three months primarily include corporate debt and U.S. government agency securities are designated asavailable-for-sale and classified as short-term investments or investment in marketable equity securities, in accordance with ASC Topic 320, “ AccountingforCertain Investments in Debt and Equity Securities”. Available-for-sale securities are carried at estimated fair value. The Company views its available-for-saleportfolio as available for use in its current operations. Unrealized gains and losses derived by changes in the estimated fair value of available-for-sale securitieswere recorded in “Net unrealized (losses) gains on available-for-sale investments, net of taxes” on the Company’s unaudited condensed consolidated statements ofcomprehensive loss. Realized gains (losses) from the sale of available-for-sale investments were recorded in “Other income, net” on the Company’s unauditedcondensed consolidated statements of operations. The costs of securities sold are based on the specific identification method, if applicable. The Company reportedthe 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 reviews its available-for-sale securities on a regular basis to evaluate whether any security has experienced an other-than-temporary decline infair value. Other-than-temporary declines in market value, if any, are recorded in “Other income, net” on the Company’s unaudited condensed consolidatedstatements of operations.

Restricted Cash

As of June 30, 2017 and December 31, 2016, the Company had certain non-U.S. dollar denominated deposits recorded as “Restricted cash” in compliance withcertain foreign contractual requirements.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, available-for-sale securities andaccounts receivable.

Pursuant to the Company’s investment policy, substantially all of the Company’s cash, cash equivalents and available-for-sale securities are maintained at majorfinancial institutions of high credit standing. The Company monitors the financial credit worthiness of the issuers of its investments and limits the concentration inindividual securities and types of investments that exist within its investment portfolio. Generally, all of the Company’s investments carry high credit qualityratings, which is in accordance with its

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investment policy. At June 30, 2017, the Company does not believe there is significant financial risk from non-performance by the issuers of the Company’s cashequivalents and short-term investments.

Concentrations of credit risk with respect to trade receivables exist. On a regular basis, including at the time of sale, the Company performs credit evaluations of itssignificant customers that it expects to sell to on credit terms. 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 doubtfulaccounts against the accounts receivable on its unaudited condensed consolidated balance sheets and records a charge on its unaudited condensed consolidatedstatements of operations as a component of selling, general and administrative expenses.

The Company had three customers that accounted for more than 10% of the Company’s outstanding trade receivables at June 30, 2017 and December 31, 2016.These customers cumulatively represented approximately 46% of the Company’s outstanding trade receivables at both June 30, 2017 and December 31, 2016. Todate, the Company has not experienced collection difficulties from these customers.

Inventories

At June 30, 2017 and December 31, 2016, inventory consisted of work-in-process and finished goods only. Finished goods include INTERCEPT disposable kits,illuminators, and certain replacement parts for the illuminators. Platelet and plasma systems’ disposable kits generally have a two-year life from the date ofmanufacture. Illuminators and replacement parts do not have regulated expiration dates. Work-in-process includes certain components that are manufactured over aprotracted length of time before being sold to, and ultimately incorporated and assembled by Fresenius Kabi Deutschland GmbH or Fresenius, Inc. (with theiraffiliates, “Fresenius”) into the finished INTERCEPT disposable kits. The Company maintains an inventory balance based on its current sales projections, and ateach reporting period, the Company evaluates whether its work-in-process inventory would be sold to Fresenius for production of finished units in order to sell toexisting and prospective customers within the next twelve-month period. It is not customary for the Company’s production cycle for inventory to exceed twelvemonths. Instead, the Company uses its best judgment to factor in lead times for the production of its work-in-process and finished units to meet the Company’sforecasted demands. If actual results differ from those estimates, work-in-process inventory could potentially accumulate for periods exceeding one year. AtJune 30, 2017 and December 31, 2016, the Company classified its work-in-process inventory as a current asset on its consolidated balance sheets based on itsevaluation that the work-in-process inventory would be sold to Fresenius for finished disposable kit production within each respective subsequent twelve-monthperiod.

Inventory is recorded at the lower of cost, determined on a first-in, first-out basis, or net realizable value. The Company uses significant judgment to analyze anddetermine if the composition of its inventory is obsolete, slow-moving or unsalable and frequently reviews such determinations. The Company writes downspecifically identified unusable, obsolete, slow-moving, or known unsalable inventory that has no alternative use in the period that it is first recognized by using anumber of factors including product expiration dates, open and unfulfilled orders, and sales forecasts. Any write-down of its inventory to net realizable valueestablishes a new cost basis and will be maintained even if certain circumstances suggest that the inventory is recoverable in subsequent periods. Costs associatedwith the write-down of inventory are recorded in “Cost of product revenue” on the Company’s consolidated statements of operations. At both June 30, 2017 andDecember 31, 2016, the Company had $0.2 million recorded for potential obsolete, expiring or unsalable product.

Property and Equipment, net

Property and equipment is comprised of furniture, equipment, leasehold improvements, construction-in-progress, information technology hardware and softwareand 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 livesof 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 usefullives of the improvements.

Goodwill and Intangible Assets, net

Intangible assets, net, which include a license for the right to commercialize the INTERCEPT Blood System in Asia, are subject to ratable amortization over theoriginal estimated useful life of ten years. The amortization of the Company’s intangible assets, net, is recorded in “Amortization of intangible assets” on theCompany’s consolidated statements of operations. Goodwill is not amortized but instead is subject to an impairment test performed on an annual basis, or morefrequently 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 morelikely 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 ofa reporting unit is less than the carrying amount, the Company must then proceed with performing the quantitative goodwill impairment test. The Company maychoose not to perform the qualitative assessment to test goodwill for

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impairment and proceed directly to the quantitative impairment test; however, the Company may revert to the qualitative assessment to test goodwill forimpairment in any subsequ ent period. The quantitative goodwill impairment test 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 enterpriseapproach under which it considers the quoted market capitalization of the Company as reported on the Nasdaq Global Market. The Company considers quotedmarket prices that are available in active markets to be the best evidence of fair value. The Company also considers other factors, which include future forecastedresults, the economic environment and overall market conditions. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the re porting unitis considered not impaired. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognizedin an amount equal to that excess, limited to the carrying amount of goodwill in the Company’s one reporting unit .

The Company performs an impairment test on its intangible assets, in accordance ASC Topic 360-10, “Property, Plant and Equipment,” if certain events orchanges 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 furtherdetails regarding the impairment analysis, reference is made to the section below under “Long-lived Assets.” See Note 4 in the Notes to Unaudited CondensedConsolidated Financial Statements 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 ofits long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses recoverability by determining whetherthe carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the expected undiscounted future cash flows are lessthan 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 fairvalue of the assets. The Company did not recognize impairment charges related to its long-lived assets during the three and six months ended June 30, 2017 and2016.

Foreign Currency Remeasurement

The functional currency of the Company’s foreign subsidiary is the U.S. dollar. Monetary assets and liabilities denominated in foreign currencies are remeasured inU.S. dollars using the exchange rates at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are remeasured in U.S. dollarsusing historical exchange rates. Product revenues and expenses are remeasured using average exchange rates prevailing during the period. Remeasurements arerecorded in the Company’s consolidated statements of operations.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation. Stock-based compensationexpense 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-basedcompensation 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 themeasurement 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 thegrantee to earn the equity instrument is reached or (ii) the date at which the grantee’s performance is complete. The Company recognizes stock-based compensationexpense for the fair value of the vested portion of the non-employee stock-based awards in its consolidated statements of operations.

See Note 10 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s stock-based compensationexpenses.

Income Taxes

The Company accounts for income taxes using an asset and liability approach in accordance with ASC Topic 740, Accounting for Income Taxes . Under thismethod, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and aremeasured 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 taxpositions 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 derecognition of a tax position. The Company recognizes

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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 inits unaudited condensed consolidated statements of operations, nor ha s it accrued for or made payments for interest and penalties. Although the Company believesit 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 w illbe substantiated by a taxing authority if reviewed. The Company’s U.S. federal tax years 1998 through 2015 and California tax years through 2015 remain subjectto examination by the taxing jurisdictions due to unutilized net operating losses and research credits. The Company continues to carry a full valuation allowance onall of its net deferred tax assets, except for its indefinite lived intangibles.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per sharegives effect to all potentially dilutive common shares outstanding for the period. The potentially dilutive securities include stock options, employee stock purchaseplan rights and restricted stock units, which are calculated using the treasury stock method.

For the three and six months ended June 30, 2017 and 2016, all potentially dilutive securities outstanding have been excluded from the computation of dilutiveweighted average shares outstanding because such securities have an antidilutive impact due to losses reported. The table below presents shares underlying stock options, restricted stock units, and employee stock purchase plan rights that were excluded from the calculation ofthe weighted average number of shares outstanding used for the calculation of diluted net loss per share. These are excluded from the calculation due to their anti-dilutive effect for the three and six months ended June 30, 2017 and 2016 (shares in thousands): Three Months Ended Six Months Ended June 30, June 30,

2017 2016 2017 2016 Weighted average number of anti-dilutive potential shares:

Stock options 17,966 15,891 17,321 15,331 Restricted stock units 1,350 640 1,159 428 Employee stock purchase plan rights 43 27 75 19

Total 19,359 16,558 18,555 15,778

Guarantee and Indemnification Arrangements

The Company recognizes the fair value for guarantee and indemnification arrangements issued or modified by the Company. In addition, the Company monitorsthe 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 losshas occurred, then any such estimable loss would be recognized under those guarantees and indemnifications. Some of the agreements that the Company is a partyto contain provisions that indemnify the counter party from damages and costs resulting from claims that the Company’s technology infringes the intellectualproperty 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 notreceived 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. TheCompany accrues costs associated with warranty obligations when claims become known and are estimable. The Company has not experienced significant orsystemic warranty claims nor is it aware of any existing current warranty claims. Accordingly, the Company had not accrued for any future warranty costs for itsproducts at June 30, 2017 and December 31, 2016.

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, andother accrued liabilities approximate their fair value due to the relative short-term maturities. Based on the borrowing rates currently available to the Company forloans with similar terms, the Company believes the fair value of its debt approximates their carrying amounts. The Company measures and records certain financialassets and liabilities at fair value on a recurring basis, including its available-for-sale securities. The Company classifies instruments within Level 1 if quoted pricesare available in active markets for identical assets, which include the Company’s cash accounts and money market funds. The Company classifies instruments inLevel 2 if the instruments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricingsources with reasonable levels of price transparency. These instruments

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include the Company’s corporate debt and U.S. government agency securities holdings. The available-for- sale securities are held by a custodian who obtainsinvestment prices from a third party pricing provider that uses standard inputs (observable in the market) to models which vary by asset class. The Companyclassifies instruments in Level 3 if one or more significant inputs or significant value drivers are unobservable. The Company assesses any transfers among fairvalue measurement levels at the end of each reporting period.

See Notes 2 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding the Company’s valuation of financialinstruments.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, RevenuefromContractswithCustomers(Topic606),which providesa single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenuerecognition guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount thatreflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about thenature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments andassets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU No. 2015-14, RevenuefromContractswithCustomers(Topic606),DeferraloftheEffectiveDate, which defers by one year the effective date of ASU No. 2014-09 to annual reporting periods beginning after December15, 2017 (including interim periods within those periods). Early adoption is permitted to the original effective date of December 15, 2016 (including interimperiods within those periods). In March 2016, the FASB issued ASU No. 2016-08, RevenuefromContractswithCustomers(Topic606):PrincipalversusAgentConsiderations(ReportingRevenueGrossversusNet), which clarifies how to identify the unit of accounting for the principal versus agent evaluation and how toapply the control principle to certain types of arrangements. In April 2016, the FASB issued ASU No. 2016-10, RevenuefromContractswithCustomers(Topic606):IdentifyingPerformanceObligationsandLicensing,which clarifies the implementation guidance on identifying performance obligations and licensing. InMay 2016, the FASB issued ASU No. 2016-12, Revenue fromContracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,which addresses certain issues on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications attransition. In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts withCustomers, which makes technical corrections and improvements to the new revenue standard. These ASUs will be effective for the Company in the first quarter offiscal year 2018, using one of two retrospective application methods. The Company will adopt this ASU on January 1, 2018, using the modified retrospectiveapproach. To date the Company has primarily derived its revenues from product sales of its INTERCEPT Blood System and reimbursement under its U.S.government contract. The Company has categorized its current revenue streams into homogenous populations based on the terms and conditions included in thecontracts of its customers to date. The Company is currently in the process of evaluating the impact of the adoption to the Company’s financial statements as wellas the disclosure requirements under the new standard. The Company will continue to monitor industry activities and any additional guidance provided byregulators, standards setters, or the accounting profession as an ongoing component of its assessment and implementation plans.

In January 2016, the FASB issued ASU No. 2016-01, FinancialInstruments-Overall(Subtopic825-10), which requires all equity investments to be measured atfair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result inconsolidation of the investee). The amendments also require an entity to present separately in other comprehensive income the portion of the total change in the fairvalue of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance withthe fair value option for financial instruments. In addition, this ASU eliminates the requirement to disclose the fair value of financial instruments measured atamortized cost for entities that are not public business entities and the requirement to disclose the method(s) and significant assumptions used to estimate the fairvalue that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. The standard is effectivefor annual periods beginning after December 15, 2017, and interim periods thereafter, with early application permitted. The Company does not anticipate earlyadoption of the new standard and is currently assessing the future impact of this ASU on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability,initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated sothat the cost of the lease is allocated over the lease term, on a generally straight-line basis. The standard is effective for annual periods beginning after December15, 2018, and interim periods thereafter, with early application permitted. The Company does not anticipate early adoption of the new standard and is currentlyassessing the future impact of this ASU on its consolidated financial statements. The Company anticipates that the Company’s operating lease commitments will besubject to the new standard and recognized as operating lease liabilities and right-of-use assets upon the adoption of this ASU, which will increase the Company’stotal assets and total liabilities.

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In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) : Improvements to Employee Share-Based PaymentAccounting, which requires entities to record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement when awardsvest or are settled, and eliminates additional paid-in capital pools. The ASU also changes the accounting for an employee’s use of shares to satisfy the employer’sstatutory income tax withholding obligation, and the accounting for forfeitures, and provides two practical expedients for nonpublic entities. The Company hasadopted this ASU in the first quarter o f fiscal year 2017 and it did not have a significant impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, FinancialInstruments—CreditLosses(Topic326):MeasurementofCreditLossesonFinancialInstruments,which requires measurement and recognition of expected credit losses for financial assets held. The standard is effective for annual periods beginning afterDecember 15, 2019, and interim periods thereafter, with early application permitted. The Company does not anticipate early adoption of the new standard and iscurrently assessing the future impact of this ASU on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , whichremoves Step 2 from the goodwill impairment test and modifies the goodwill impairment to be the amount by which a reporting unit’s carrying value exceeds itsfair value, not to exceed the carrying amount of goodwill allocated to that report unit. The standard is effective for annual periods beginning after December 15,2019, and interim periods thereafter, with early application permitted for impairment tests performed after January 1, 2017. The Company has adopted this ASU inthe first quarter of fiscal year 2017 and it had no impact on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation-StockCompensation(Topic718): ScopeofModificationAccounting, which provides guidanceabout which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The standard iseffective for annual periods beginning after December 15, 2017, and interim periods thereafter, with early application permitted. The Company does not anticipateearly adoption of the new standard and is currently assessing the future impact of this ASU on the Company’s consolidated financial statements.

Note 2. Available-for-sale Securities and Fair Value on Financial Instruments

Available-for-saleSecurities

The following is a summary of available-for-sale securities at June 30, 2017 (in thousands):

June 30, 2017

Amortized Cost Gross

Unrealized Gain Gross

Unrealized Loss Fair Value Money market funds $ 6,143 $ — $ — $ 6,143 United States government agency securities 19,142 1 (14) 19,129 Corporate debt securities 12,012 — (6) 12,006

Total available-for-sale securities $ 37,297 $ 1 $ (20) $ 37,278

The following is a summary of available-for-sale securities at December 31, 2016 (in thousands):

December 31, 2016

Amortized Cost Gross

Unrealized Gain Gross

Unrealized Loss Fair Value Money market funds $ 8,991 $ — $ — $ 8,991 United States government agency securities 8,030 — (1) 8,029 Corporate debt securities 37,110 — (23) 37,087 Marketable equity securities — 3,952 — 3,952

Total available-for-sale securities $ 54,131 $ 3,952 $ (24) $ 58,059

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Available-for-sale securities at June 30, 2017 and December 31, 2016, consisted of the following by contractual maturity (in thousands):

June 30, 2017 December 31, 2016 Amortized Cost Fair Value Amortized Cost Fair Value One year or less $ 37,297 $ 37,278 $ 54,131 $ 54,107 Marketable equity securities — — — 3,952 Greater than one year and less than five years — — — —

Total available-for-sale securities $ 37,297 $ 37,278 $ 54,131 $ 58,059

The following tables show all available-for-sale marketable securities in an unrealized loss position for which an other-than-temporary impairment has not beenrecognized and the related gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in acontinuous unrealized loss position (in thousands): June 30, 2017 Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

United States government agency securities $ 13,039 $ (14) $ — $ — $ 13,039 $ (14)Corporate debt securities 10,505 (6) — — 10,505 (6)

Total available-for-sale securities $ 23,544 $ (20) $ — $ — $ 23,544 $ (20)

December 31, 2016 Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

United States government agency securities $ 6,035 $ (1) $ — $ — $ 6,035 $ (1)Corporate debt securities 34,086 (23) — — 34,086 (23)

Total available-for-sale securities $ 40,121 $ (24) $ — $ — $ 40,121 $ (24)

As of June 30, 2017, the Company considered the declines in market value of its marketable securities investment portfolio to be temporary in nature and did notconsider any of its investments other-than-temporarily impaired. The Company typically invests in highly-rated securities, and its investment policy limits theamount of credit exposure to any one issuer. The policy generally requires investments to be investment grade, with the primary objective of minimizing thepotential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial conditionof the issuer and any changes thereto, changes in market interest rates, and the Company’s intent to sell, or whether it is more likely than not it will be required tosell, the investment before recovery of the investment’s cost basis. During the three and six months ended June 30, 2017 and 2016, the Company did not recognizeany other-than-temporary impairment loss. The Company has no current requirement or intent to sell the securities in an unrealized loss position. The Companyexpects to recover up to (or beyond) the initial cost of investment for securities held.

The Company recognized $3.4 million and $3.5 million of realized gains from the sale of available-for-sale investments during the three and six months endedJune 30, 2017, which were reclassified out of accumulated other comprehensive income into “Other income, net” on the Company’s consolidated statements ofoperations. The Company did not record any gross realized losses from the sale or maturity of available-for-sale investments during the three and six months endedJune 30, 2016.

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FairValueDisclosures

The Company uses certain assumptions that market participants would use to determine the fair value of an asset or liability in pricing the asset or liability in anorderly transaction between market participants at the measurement date. The identification of market participant assumptions provides a basis for determiningwhat inputs are to be used for pricing each asset or liability. A fair value hierarchy has been established which gives precedence to fair value measurementscalculated 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 beindependently 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 June 30, 2017, the Company’s primary service relies on inputs from multiple industry-recognized pricingsources to determine the price for each investment. Corporate debt and U.S. government agency securities are systematically priced by this service as of the closeof business each business day. If the primary pricing service does not price a specific asset a secondary pricing service is utilized.

The fair values of the Company’s financial assets and liabilities were determined using the following inputs at June 30, 2017 (in thousands):

Balance sheet

QuotedPrices inActive

Markets forIdenticalAssets

SignificantOther

ObservableInputs

SignificantUnobservable

Inputs classification Total (Level 1) (Level 2) (Level 3)

Money market funds Cash and cash equivalents $ 6,143 $ 6,143 $ — $ — United States government agency securities Short-term investments 19,129 — 19,129 — Corporate debt securities Short-term investments 12,006 — 12,006 —

Total financial assets $ 37,278 $ 6,143 $ 31,135 $ —

The fair values of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2016 (in thousands):

Balance sheet

QuotedPrices inActive

Markets forIdenticalAssets

SignificantOther

ObservableInputs

SignificantUnobservable

Inputs classification Total (Level 1) (Level 2) (Level 3)

Money market funds Cash and cash equivalents $ 8,991 $ 8,991 $ — $ — United States government agency securities Short-term investments 8,029 — 8,029 — Corporate debt securities Short-term investments 37,087 — 37,087 — Marketable equity securities Marketable equity securities 3,952 3,952 — —

Total financial assets $ 58,059 $ 12,943 $ 45,116 $ —

The Company did not have any transfers among fair value measurement levels during the three and six months ended June 30, 2017.

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Note 3. Inventories

Inventories at June 30, 2017 and December 31, 2016, consisted of the following (in thousands):

June 30, December 31, 2017 2016

Work-in-process $ 4,053 $ 5,044 Finished goods 8,160 7,487

Total inventories $ 12,213 $ 12,531

Note 4. Goodwill and Intangible Assets, net

Goodwill

During the three and six months ended June 30, 2017, the Company did not dispose of or recognize additional goodwill. The Company expects to perform itsannual review of goodwill on August 31, 2017, unless indicators of impairment are identified prior to that date. As of June 30, 2017, the Company has notidentified any indicators of goodwill impairment.

IntangibleAssets,net

The following is a summary of intangible assets, net at June 30, 2017 (in thousands):

June 30, 2017

GrossCarryingAmount

AccumulatedAmortization

NetCarryingAmount

Acquisition-related intangible assets: Reacquired license - INTERCEPT Asia $ 2,017 $ (1,380) $ 637

Total intangible assets $ 2,017 $ (1,380) $ 637

The following is a summary of intangible assets, net at December 31, 2016 (in thousands):

December 31, 2016

GrossCarryingAmount

AccumulatedAmortization

NetCarryingAmount

Acquisition-related intangible assets: Reacquired license - INTERCEPT Asia $ 2,017 $ (1,279) $ 738

Total intangible assets $ 2,017 $ (1,279) $ 738

During the three and six months ended June 30, 2017 and 2016, there were no impairment charges recognized related to the acquired intangible assets.

At June 30, 2017, the expected amortization expense of the intangible assets, net is $0.1 million for the remaining six months of 2017, $0.2 million annuallybeginning with the year ending December 31, 2018, through the year ending December 31, 2019, and $0.1 million for the year ending December 31, 2020. Note 5. Marketable Equity Investments

The Company held an investment in preferred shares of Aduro which it had historically accounted for under the cost method of accounting with a net carryingvalue of zero. In April 2015, Aduro’s common stock began trading on the NASDAQ Global Select Market, under the symbol “ADRO”. At the time of Aduro’sinitial public offering (“IPO”), the Company’s preferred shares in Aduro converted to 396,700 shares of common stock, and the fair value of the Company’sinvestment became readily determinable and, as a result became a marketable equity security. Therefore, the Company no longer accounted for the investment inAduro under the cost basis of accounting. The Company reflected the investment in Aduro as an available-for-sale security included in investment in marketableequity securities on the Company’s unaudited condensed consolidated balance sheet (Note 2) and adjusted the carrying value of this investment to fair value eachquarterly reporting period, with changes in fair value recorded within other comprehensive income (loss), net of tax. During the six months ended June 30, 2017,the Company sold its remaining shares of Aduro common stock and recognized a gain of $3.5 million in “Other income, net” on the Company’s consolidatedstatements of operations. As of June 30, 2017, the Company had no remaining investment in Aduro’s common stock.

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Note 6. Accrued Liabilities

Accrued liabilities at June 30, 2017 and December 31, 2016, consisted of the following (in thousands):

June 30, December 31, 2017 2016

Accrued compensation and related costs $ 5,000 $ 7,098 Accrued professional services 3,707 2,511 Accrued customer costs 456 534 Accrued insurance premiums — 476 Other accrued expenses 624 599

Total accrued liabilities $ 9,787 $ 11,218

Note 7. Debt

Debt at June 30, 2017, consisted of the following (in thousands):

June 30, 2017

Principal UnamortizedDiscount Total

Loan and Security Agreement $ 17,631 $ (169) $ 17,462 Less: debt - current (5,674) 126 (5,548)Debt - non-current $ 11,957 $ (43) $ 11,914

Debt at December 31, 2016, consisted of the following (in thousands):

December 31, 2016

Principal UnamortizedDiscount

Net CarryingValue

Loan and Security Agreement $ 19,499 $ (124) $ 19,375 Less: debt - current (7,013) 79 (6,934)Debt - non-current $ 12,486 $ (45) $ 12,441

Principal and interest payments on debt at June 30, 2017, are expected to be as follows (in thousands): Year ended December 31, Principal Interest Total

2017 $ — $ 615 $ 615 2018 11,548 866 12,414 2019 6,083 1,524 7,607

Total $ 17,631 $ 3,005 $ 20,636

LoanandSecurityAgreement

On June 30, 2014, the Company entered into a five year loan and security agreement with Oxford Finance LLC (the “Term Loan Agreement”) to borrow up to$30.0 million in term loans in three equal tranches (the “Term Loans”). On June 30, 2014, the Company received $10.0 million from the first tranche (“Term LoanA”). The second tranche of $10.0 million (“Term Loan B”) was drawn on June 15, 2015. Term Loan A bore an interest rate of 6.95%. Term Loan B bore an interestrate of 7.01%. Term Loans A and B were set to mature on June 1, 2019.

On September 29, 2015, the Term Loan Agreement was amended to extend (i) the period in which the third tranche could have been drawn and (ii) the interest-onlyperiod for all advances under the Term Loan Agreement. The Company was required to make interest only payments through June 2016, followed by thirty-sixmonths of equal principal and interest payments thereafter. On July 28, 2016, the Term Loan Agreement was amended to include an additional interest-only periodfor all advances under the Term Loan Agreement. As amended, the Company was required to make interest only payments from August 2016 through January2017, followed by twenty-nine months of equal principal and interest payments thereafter. On April 27, 2017, the Term Loan Agreement was amended to includean additional interest-only period for all advances under the Term Loan Agreement. As amended, the Company was required to make interest only payments fromMay 2017 through December 2017, followed by eighteen months of

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equal principal and interest payments thereafter. The Company determined that these amendments to the Term Loan Agreement resulted in debt modifications. Asa result, the accounting treatment for th e Term Loan continues under the interest method, with a new effective interest rate based on revised cash flows calculatedon a prospective basis upon the execution of each of these amendments to the Term Loan Agreement. The Company was also required to ma ke a final paymentequal to 7% of the principal amounts of the Term Loans drawn payable on the earlier to occur of maturity or prepayment. The costs associated with the finalpayment are recognized as interest expense over the life of the Term Loans. The C ompany could prepay at any time the Term Loans subject to decliningprepayment fees over the term of the Term Loan Agreement. The Company pledged all current and future assets, excluding its intellectual property and 35% of theCompany’s investment in its subsidiary, Cerus Europe B.V., as security for borrowings under the Term Loan Agreement. The Term Loan Agreement contain edcertain nonfinancial covenants, with which the Company was in compliance at June 30, 2017. As discussed in Note 14 , on July 31 , 2017, the Company enteredinto the five year Amended and Restated Loan and Security Agreement with Oxford Finance LLC to borrow up to $40.0 million in term loans in two tranches .

Note 8. Commitments and Contingencies

OperatingLeases

The Company leases its office facilities, located in Concord, California and Amersfoort, the Netherlands, and certain equipment under non-cancelable operatingleases with initial terms in excess of one year that require the Company to pay operating costs, property taxes, insurance and maintenance. The operating leasesexpire at various dates through 2021, with certain of the leases providing for renewal options, provisions for adjusting future lease payments based on the consumerprice index, and the right to terminate the lease early. The Company’s leased facilities qualify as operating leases under ASC Topic 840, “Leases”and as such, arenot included on its consolidated balance sheets.

FinancedLeaseholdImprovements

In 2010, the Company financed $1.1 million of leasehold improvements. The Company pays for the financed leasehold improvements as a component of rent and isrequired to reimburse its landlord over the remaining life of the respective leases. At June 30, 2017, the Company had an outstanding liability of $0.3 millionrelated to these leasehold improvements, of which $0.1 million was reflected in “Accrued liabilities” and $0.2 million was reflected in “Other non-currentliabilities” on the Company’s consolidated balance sheets.

PurchaseCommitments

The Company is party to agreements with certain suppliers for certain components of the INTERCEPT Blood System. Certain of these agreements requireminimum purchase commitments from the Company. Note 9. Stockholders’ Equity

SalesAgreement

On May 5, 2016, the Company entered into Amendment No. 2 to the Controlled Equity Offering SM Sales Agreement, dated August 31, 2012, as previouslyamended on March 21, 2014, (together, the “Amended Cantor Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) that provides for the issuance and sale ofshares of the Company’s common stock over the term of the Amended Cantor Agreement having an aggregate offering price of up to $132.2 million throughCantor. As a result of Amendment No. 2, at May 5, 2016, the Company had $70 million of common stock available to be sold under the Amended CantorAgreement. Under the Amended Cantor Agreement, Cantor also acts as the Company’s sales agent and receives compensation based on an aggregate of 2% of thegross proceeds on the sale price per share of its common stock. The issuance and sale of these shares by the Company pursuant to the Amended Cantor Agreementare deemed an “at-the-market” offering and are registered under the Securities Act of 1933, as amended. During the six months ended June 30, 2017, 4.2 millionshares of the Company’s common stock were sold under the Amended Cantor Agreement for net proceeds of $10.7 million. At June 30, 2017, the Company had$51.4 million of common stock available to be sold under the Amended Cantor Agreement. See Note 14 regarding Amendment No. 3 to the Amended CantorAgreement to increase the amount of common stock available to be sold thereunder. Note 10. Stock-Based Compensation

EmployeeStockPurchasePlan

The Company maintains an Employee Stock Purchase Plan (the “Purchase Plan”), which is intended to qualify as an employee stock purchase plan within themeaning of Section 423(b) of the Internal Revenue Code. Under the Purchase Plan, the Company’s Board of Directors may authorize participation by eligibleemployees, including officers, in periodic offerings. Under the Purchase Plan eligible employee participants may purchase shares of common stock of the Companyat a purchase price equal to 85% of the lower of the fair

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market value per share on the start date of the offering period or the fair market value per share on the purchase date. The Purchase Plan consists of a fixed offeringperiod of 12 months with two purchase periods within each offering period. At June 30, 2017, the Com pany had 1,325,010 shares available for future issuance.

2008EquityIncentivePlanandInducementPlan

The Company also maintains an equity compensation plan to provide long-term incentives for employees, contractors, and members of its Board of Directors. TheCompany currently grants equity awards from one plan, the 2008 Equity Incentive Plan (the “2008 Plan”). The 2008 Plan allows for the issuance of non-statutoryand incentive stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, other stock-related awards, and performance awards whichmay 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”) such that the Amended 2008 Plan had reserved for issuance an amount not to exceed 19.5 million shares. On June 10, 2015, the Company’sstockholders approved an amendment and restatement of the 2008 Plan that increased the aggregate number of shares of common stock authorized for issuanceunder the 2008 Plan by 5,000,000 shares. On June 7, 2017, the Company’s stockholders approved an amendment and restatement of the 2008 Plan that increasedthe aggregate number of shares of common stock authorized for issuance under the 2008 Plan by 6,000,000 shares. Awards under the Amended 2008 Plangenerally have a maximum term of 10 years from the date of the award. The Amended 2008 Plan generally requires options to be granted at 100% of the fairmarket value of the Company’s common stock subject to the option on the date of grant. Options granted by the Company to employees generally vest over fouryears. RSUs are measured based on the fair market value of the underlying stock on the date of grant and will generally vest over three years. Performance-basedstock 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. OnAugust 31, 2016, the Company’s Board of Directors adopted the Cerus Corporation Inducement Plan (the “Inducement Plan”), and reserved 1,250,000 shares of itscommon stock under the Inducement Plan to be used exclusively for the issuance of non-statutory stock options and restricted stock units to individuals who werenot previously employees or directors of the Company, or who had experienced a bona fide period of non-employment, as an inducement material to theindividual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules. The Inducement Plan was approvedby the Company’s Board of Directors without stockholder approval pursuant to Rule 5635(c)(4), and the terms and conditions of the Inducement Plan aresubstantially similar to the Amended 2008 Plan. Effective June 7, 2017, the Company no longer issues shares from the Inducement Plan.

At June 30, 2017, the Company had an aggregate of approximately 26.4 million shares of its common stock subject to outstanding options or RSUs, or remainingavailable for future issuance under the Amended 2008 Plan, of which approximately 17.7 million shares and 1.4 million shares were subject to outstanding optionsand outstanding RSUs, respectively, and approximately 7.3 million shares were available for future issuance under the Amended 2008 Plan. The Company’s policyis to issue new shares of common stock upon the exercise of options or vesting of RSUs.

Activity under the Company’s equity incentive plans related to stock options is set forth below (in thousands except per share amounts):

Number of

Options Outstanding

WeightedAverageExercisePrice perShare

Balances at December 31, 2016 15,787 $ 4.39 Granted 3,120 4.23 Forfeited (642) 5.34 Expired (80) 6.00 Exercised (523) 3.15

Balances at June 30, 2017 17,662 4.36

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Activity under the Company’s equity incentive plans related to RSUs is set forth below (in thousands except per share amounts):

Number ofShares

Outstanding

WeightedAverage

Grant DateFair Valueper Share

Balances at December 31, 2016 739 $ 5.26 Granted (1) 918 4.18 Forfeited (43) 4.76 Vested (251) 5.28

Balances at June 30, 2017 1,363 4.54

(1) Includes the maximum number of shares issuable under the performance-based restricted stock unit awards granted during the six months ended June 30, 2017 .

The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options and employee stock purchase plan rights. TheBlack-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 stockprice volatility, the risk-free interest rate and expected dividends. The Company recognizes the grant-date fair value of the stock award as stock-basedcompensation expense on a straight-line basis over the requisite service period, which is the vesting period, and is adjusted for estimated forfeitures. Note 11. Income Taxes

For the three and six months ended June 30, 2017, the Company recorded a tax expense of $3.9 million, which was primarily due to the sale of the Company’sshares of Aduro. For the three and six months ended June 30, 2016, the Company recorded a tax expense of $1.0 million and $1.8 million, respectively, which waslargely the result of changes in the fair value of the Company’s investments, primarily shares in Aduro. Note 12. Development and License Agreements

Agreements with Fresenius

Fresenius manufactures and supplies the platelet and plasma systems to the Company under a supply agreement. Under the previous agreements with Fresenius, theCompany was required to pay royalties to Fenwal Inc. (“Fenwal”), a subsidiary of Fresenius, on INTERCEPT Blood System product sales at royalty rates thatvaried by product. In addition, Fresenius was obligated to sell, and the Company was obligated to purchase, up to a certain specified annual volume of finisheddisposable kits for the platelet and plasma systems from Fresenius for both clinical and commercial use. The pricing was fixed for finished kits with successivedecreasing pricing tiers at various annual production volumes. Fresenius was also obligated to purchase and maintain specified inventory levels of the Company’sproprietary inactivation compounds and adsorption media from the Company at fixed prices.

In October 2015, the Company entered into an Amended and Restated Manufacturing and Supply Agreement (the “2015 Agreement”) with Fresenius, whichamended and restated its previous agreements. Under the 2015 Agreement, Fresenius continues to be obligated to sell and the Company is obligated to purchasefinished disposable kits for the Company’s platelet and plasma systems and the Company’s red blood cell system product candidate (the “RBC Sets”). The 2015Agreement permits the Company to purchase platelet and plasma systems and RBC Sets from third parties to the ext ent necessary to maintain supply qualificationswith such third parties or where local or regional manufacturing is needed to obtain product registrations or sales. Pricing terms per unit are initially fixed anddecline at specified annual production levels, and are subject to certain adjustments after the initial pricing term. Under the 2015 Agreement, the Company is nolonger required to make royalty payments to Fenwal for the sale of products after June 30, 2015. Under the 2015 Agreement, the Company maintains the amountsdue from the components sold to Fresenius as a current asset on its accompanying consolidated balance sheets until such time as the Company purchases finisheddisposable kits using those components.

The 2015 Agreement also requires the Company to make certain payments totaling €8.6 million (“Manufacturing and Development Payments”) to Fresenius in2016 and on December 31 of the earlier of (a) the year of achievement of certain production volumes or (b) 2022. Because these payments represent unconditionalpayment obligations, the Company recognized its liability for these payments at their net present value at discount rate of 9.72% based on the Company’s effectiveborrowing rate at that time. The Manufacturing and Development Payments liability is accreted through interest expense based on the estimated timing of itsultimate settlement. As of June 30, 2017, the Company had paid $3.4 million (€3.1 million) and accrued $5.4 million (€4.7 million) related to the Manufacturingand Development Payments, which was included in “Manufacturing and development obligations - non-current” on

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the Company’s Consolidated Balance Sheets. As of December 31, 2016, the Company had accrued $4.8 million (€4 .5 million) related to the Manufacturing andDevelopment Payments, which was included in “Manufacturing and development obligations - non-current” on the Company’s Consolidated Balance Sheets.

The Manufacturing and Development Payments will be made to support certain projects Fresenius will perform on behalf of the Company related to R&D activitiesand manufacturing efficiency activities. The Company allocated $4.8 million to R&D activities and $2.4 million to manufacturing efficiency activities based ontheir market value in October 2015. The prepaid asset related to amounts paid up front for the R&D activities to be conducted by Fresenius on behalf of theCompany is expensed over the period which such activities occur. The manufacturing efficiency asset is expensed on a straight line basis over the life of the 2015Agreement. As of June 30, 2017 and December 31, 2016, the prepaid asset related to amounts paid up front for the R&D activities to be conducted by Fresenius onbehalf of the Company was included in “Other current assets” and “Other assets” on the Company’s Consolidated Balance Sheets at $0.2 million and $0.9 million,respectively, and at $2.3 million and $2.0 million, respectively. As of June 30, 2017 and December 31, 2016, the manufacturing efficiency asset was included in“Other assets” on the Company’s Consolidated Balance Sheets at $2.0 million and $2.1 million, respectively.

The initial term of the 2015 Agreement extends through July 1, 2025 (the “Initial Term”) and is automatically renewed thereafter for additional two year terms(each, a “Renewal Term”), subject to termination by either party upon (i) two years written notice prior to the expiration of the Initial Term or (ii) one year writtennotice prior to the expiration of any Renewal Term. Under the 2015 Agreement, the Company has the right, but not the obligation, to purchase certain assets andassume certain liabilities from Fresenius.

The Company made payments to Fresenius of $3.2 million and $3.5 million relating to the manufacturing of the Company’s products during the three monthsended June 30, 2017 and 2016, respectively. At June 30, 2017 and December 31, 2016, the Company owed Fresenius $2.8 million and $3.0 million, respectively,for INTERCEPT disposable kits manufactured. At June 30, 2017 and December 31, 2016, amounts due from Fresenius were $0.5 million and $0.3 million,respectively, and were included in Other current assets in the Company’s condensed consolidated balance sheet.

Agreement with BARDA

In June 2016, the Company entered into an agreement with the Biomedical Advanced Research and Development Authority (“BARDA”) to support the Company’sdevelopment and implementation of pathogen reduction technology for platelet, plasma, and red blood cells.

The five-year agreement with BARDA includes a base period (the “Base Period”) and options (each an “Option Period”) with committed funding of up to $88.2million for clinical development of the INTERCEPT Blood System for red blood cells (the “red blood cell system”) and subsequent Option Periods that, ifexercised by BARDA and completed, would bring the total funding opportunity to $186.2 million over the five-year contract period. If exercised by BARDA,subsequent options would fund activities related to broader implementation of the platelet and plasma system or the red blood cell system in areas of Zika virusrisk, clinical and regulatory development programs in support of the potential licensure of the red blood cell system in the U.S., and development, manufacturingand scale-up activities for the red blood cell system. The Company is responsible for co-investment of $5.0 million and would be responsible for an additional $9.6million , if certain options were to be exercised. BARDA will make periodic assessments of the Company’s progress and the continuation of the agreement is basedon the Company’s success in completing the required tasks under the Base Period and each Option Period (if and to the extent any Option Periods are exercised byBARDA). BARDA has rights under certain contract clauses to terminate the agreement, including the ability to terminate the agreement for convenience at anytime.

Under the contract, the Company is reimbursed and recognizes revenue as allowable direct contract costs are incurred plus allowable indirect costs, based onapproved provisional indirect billing rates, which permit recovery of fringe benefits, overhead and general and administrative expenses. As of June 30, 2017 andDecember 31, 2016, $1.4 million and $1.0 million, respectively, of billed and unbilled amounts were included in accounts receivable on the Company’sConsolidated Balance Sheets related to BARDA. Note 13. 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 evaluatesperformance based on the net revenues and operating loss of the blood safety segment. The Company considers the sale of all of its INTERCEPT Blood Systemproducts to be similar in nature and function, and any revenue earned from services is minimal.

The Company’s operations outside of the U.S. include a wholly-owned subsidiary headquartered in Europe. The Company’s operations in the U.S. are responsiblefor the R&D and global and domestic commercialization of the INTERCEPT Blood System, while operations in Europe are responsible for the commercializationefforts of the platelet and plasma systems in Europe, the

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Commonwealth of Independent States and the Middle East. Product revenues are attributed to each region based on the location of the customer, a nd in the case ofnon-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, each of which operates in acountry outside of the U.S., during the three and six months ended June 30, 2017 and 2016 (in percentages):


EFS 13% * * * Advanced Technology Comp. KSC 10% * * * Rode Kruis Vlaanderen 10% * * 10%

* Represents an amount less than 10% of product revenue.

Note 14. Subsequent Events LoanandSecurityAgreement On July 31, 2017, the Company entered into an Amended and Restated Loan and Security Agreement (the “Restated Term Loan Agreement”) with Oxford FinanceLLC (“Oxford”), as collateral agent, and the lenders party thereto, which amends and restates in its entirety the Company’s prior Term Loan Agreement (See Note7). The Restated Term Loan Agreement provides for secured growth capital loans of up to $40.0 million (the “Term Loans”). All of the Company’s current andfuture assets, excluding its intellectual property and 35% of the Company’s investment in Cerus Europe B.V., are secured for its borrowings under the RestatedTerm Loan Agreement. On July 31, 2017, the Company received $30.0 million from the first tranche under the Restated Term Loan Agreement, and settled its priorTerm Loan Agreement. The second tranche of $10.0 million will be available subject to the Company achieving consolidated trailing six months’ revenue at aspecified threshold no later than January 31, 2019. The Term Loans shall be interest-only through February 1, 2019 followed by 42 months of equal principal andinterest. However, if the Company draws the Term Loan Two, then the interest-only period will be extended through August 1, 2019, and the amortization periodwill be reduced to 36 months. All of the Term Loans mature on July 1, 2022 (the “Maturity Date”). The interest rate of the term loans is 6.72 % plus the index rate,which is floating and will be reset monthly as the greater of (i) 8.01% and (ii) the sum of the three-month U.S. LIBOR rate plus (b) 6.72%. The Company will alsobe required to make a final payment fee of 8.00 % of the amounts of the Term L oans drawn payable on the earlier of (i) the prepayment of the Term Loans or (ii)the Maturity Date. The term loans contain certain financial covenants. SalesAgreement On August 4, 2017, the Company entered into Amendment No. 3 (“Amendment No. 3”) to the Controlled Equity Offering SM Sales Agreement, dated August 31,2012, as previously amended on March 21, 2014 and May 5, 2016 (as amended, the “Amended Cantor Agreement”) with Cantor. In connection with AmendmentNo. 3, the Company intends to file a new shelf registration statement on Form S-3 (the “New Registration Statement”). Amendment No. 3 will become effectiveupon the effectiveness of the New Registration Statement. As amended by Amendment No. 3, the Amended Cantor Agreement will provide for the issuance andsale of shares of the Company’s common stock following the effectiveness of the New Registration Statement having an aggregate offering price of up to $70.0million through Cantor, which amount includes any unsold shares of Common Stock previously available for sale under the Amended Cantor Agreement prior tothe effectiveness of the New Registration Statement. The Company can make no assurance regarding the initial or continued effectiveness of the New RegistrationStatement.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ThisdiscussionandanalysisshouldbereadinconjunctionwithourunauditedcondensedconsolidatedfinancialstatementsandtheaccompanyingnotesincludedinthisQuarterlyReportonForm10-QandtheauditedconsolidatedfinancialstatementsandaccompanyingnotesincludedinourAnnualReportonForm10-KfortheyearendedDecember31,2016.OperatingresultsforthethreeandsixmonthsendedJune30,2017arenotnecessarilyindicativeofresultsthatmayoccurinfutureperiods.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities and Exchange Act of 1934, as amended, that involve risks and uncertainties. The forward-looking statements are containedprincipally in this Item2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” andin Item1A, “Risk Factors.” Thesestatementsrelatetofutureeventsortoourfutureoperatingorfinancialperformanceandinvolveknownandunknownrisks,uncertaintiesandotherfactorsthatmaycauseouractualresults,performanceorachievementstobemateriallydifferentfromanyfutureresults,performancesorachievementsexpressedorimpliedbytheforward-lookingstatements.Theseforward-lookingstatementsmayinclude,butarenotlimitedto,statementsabout:

• futuresalesofandourabilitytoeffectivelycommercializeandachievemarketacceptanceoftheINTERCEPTBloodSystem,includingourabilitytocomplywithapplicableUnitedStates(U.S.),andforeignlaws,regulationsandregulatoryrequirements;

• our ability to manage the growth of our business and attendant cost increases, including in connection with the commercialization of theINTERCEPTBloodSystemintheU.S.,aswellasourabilitytomanagetherisksattendanttoourinternationaloperations;

• thetimingorlikelihoodofregulatorysubmissionsandapprovalsandotherregulatoryactionsorinteractions, includingouranticipatedCEmarksubmissionfortheredbloodcellsystem;

• ourabilitytoobtainandmaintainregulatoryapprovalsoftheINTERCEPTBloodSystem;

• ourabilitytoobtainadequateclinical andcommercial suppliesoftheINTERCEPTBloodSystemfromoursolesourcesuppliersforaparticularproductorcomponenttheymanufacture;

• the initiation, scope, rate of progress, results and timing of our ongoing and proposed preclinical and clinical trials of the INTERCEPT BloodSystem;

• thesuccessfulcompletionofourresearch,developmentandclinicalprogramsandourabilitytomanagecostincreasesassociatedwithpreclinicalandclinicaldevelopmentoftheINTERCEPTBloodSystem;

• theamountandavailabilityoffundingwemayreceiveunderouragreementwiththeBiomedicalAdvancedResearchandDevelopmentAuthority,orBARDA;

• ourabilitytotransitiondistributionoftheINTERCEPTBloodSystemfromthirdpartiestoadirectsalesmodelincertaininternationalmarkets;

• theabilityofourproductstoinactivatetheemergingvirusesandotherpathogensthatwemaytargetinthefuture;

• ourabilitytoprotectourintellectualpropertyandoperateourbusinesswithoutinfringingupontheintellectualpropertyrightsofothers;and

• ourestimatesregardingthesufficiencyofourcashresources,ourabilitytocontinueasagoingconcernandourneedforadditionalfunding.

In some cases, you can identify forward-looking statements by terms such as “anticipate,” “will,” “believe,” “estimate,” “expect,” “plan,” “may,” “should,”“could,” “would,” “project,” “predict,” “potential,” and similar expressions intended to identify such forward-looking statements. Forward-looking statementsreflect our current views with respect to future events, are based on assumptions, and are subject to risks and uncertainties. There can be no assurance that any ofthe events anticipated by forward-looking statements will occur or, if any of them do occur, what impact they will have on our business, results of operations andfinancial condition. Certain important factors could cause actual results to differ materially from those discussed in such statements, including the rate of customeradoption in the U.S. and our ability to achieve market acceptance of our products in the U.S. and international markets, whether our preclinical and clinical data ordata from commercial use will be considered sufficient by regulatory authorities to grant marketing approval for our products or for product extensions oradditional claims for our products, our ability to obtain reimbursement approval for our products, our ability to complete the development and testing of additionalconfigurations or redesigns of our products, our need for additional financing in the near term and our ability to access funding under our agreement with BARDA,the impacts of regulation of our products by domestic and foreign regulatory authorities, our limited experience in sales, marketing and regulatory support for theINTERCEPT Blood System, our reliance on Fresenius and third parties

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to manufacture certain c omponents of the INTERCEPT Blood System, incompatibility of our platelet system with some commercial platelet collection methods,our need to complete our red blood cell system’s commercial design, more effective product offerings by, or clinical setbacks of, our competitors, product liability,our use of hazardous materials in the development of our products, business interruption due to earthquake, our expectation of continuing losses, protection of ourintellectual property rights, volatility in our stoc k price, on-going compliance with the requirements of the Sarbanes-Oxley Act of 2002 and other factors discussedbelow and under the caption “Risk Factors” in Item 1A of this Quarterly Report on Form 10-Q. We discuss many of these risks in this Quarterly R eport on Form10-Q in greater detail in the section entitled “Risk Factors” under Part II, Item 1A below. Given these uncertainties, you should not place undue reliance on theseforward-looking statements. Also, forward-looking statements represent our est imates and assumptions only as of the date of this Quarterly Report on Form 10-Q.You should read this Quarterly Report on Form 10-Q and the documents that we incorporate by reference in and have filed as exhibits to this Quarterly Report onForm 10-Q comp letely. Our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to updateor revise any forward-looking statements to reflect new information or future events, even if new information be comes available in the future. You should notassume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements.

Overview

Since our inception in 1991, we have devoted substantially all of our efforts and resources to the research, development, clinical testing and commercialization ofthe INTERCEPT Blood System. The INTERCEPT Blood System is designed for three blood components: platelets, plasma and red blood cells. The INTERCEPTBlood System for platelets, or platelet system, and the INTERCEPT Blood System for plasma, or plasma system, have received CE marks and FDA approval andare being marketed and sold in a number of countries around the world.

The platelet system is approved in the U.S. for exvivopreparation of pathogen-reduced apheresis platelet components in order to reduce the risk of transfusion-transmitted infection, or TTI, including sepsis, and to potentially reduce the risk of transfusion-associated graft versus host disease or TA-GVHD. The plasmasystem is approved in the U.S. for exvivopreparation of plasma in order to reduce the risk of TTI when treating patients requiring therapeutic plasma transfusion.

The INTERCEPT Blood System for red blood cells, or the red blood cell system, is currently in development and has not been commercialized anywhere in theworld. We completed our European Phase III clinical trial of our red blood cell system for acute anemia patients and have another ongoing European Phase IIIclinical trial of our red blood cell system for chronic anemia patients. In the U.S., we successfully completed a Phase II recovery and lifespan study in 2014. In2016, we reached agreement with the FDA on a clinical trial protocol for a controlled, randomized, double-blind study, known as RedeS, which is assessing safetyin six-hundred (600) patients receiving red blood cell transfusions in regions heavily impacted by the Zika virus epidemic, including Puerto Rico and Florida. Inaddition, we will need to successfully conduct and complete two additional license-enabling Phase III clinical trials before the FDA will consider our red blood cellproduct for approval. Although we plan to complete additional development activities to support an anticipated CE mark submission for the red blood cell system,such development activities, could prolong development of our red blood cell system, and we do not expect to receive any regulatory approvals of our red bloodcell system in the next twelve months, if ever. We must demonstrate an ability to define, test and meet acceptable specifications for our GMP manufacturedcompounds used to prepare INTERCEPT-treated red blood cells before we can submit and seek regulatory approval of our red blood cell system. Failure to developa methodology and assay that is sufficiently sensitive and robust may be time consuming, which in-turn would delay our ability to obtain regulatory approvals. Weunderstand that while the acute anemia Phase III clinical trial in Europe may be sufficient to receive CE mark approval in Europe, we may need to generateadditional safety data from commercial use and/or achieve a successful outcome in the ongoing chronic anemia Phase III clinical trial of our red blood cell systemin order to achieve broad market acceptance. In addition, these trials may need to be supplemented by additional, successful Phase III clinical trials for approval incertain countries. If such additional Phase III clinical trials are required, they would likely need to demonstrate equivalency of INTERCEPT-treated red blood cellscompared to conventional red blood cells and significantly lower lifespan for INTERCEPT-treated red blood cells compared to non-treated red blood cells maylimit our ability to obtain any regulatory approvals for the red blood cell system. As part of our development activities, we will need to successfully complete anumber of in vitro studies prior to receiving any regulatory approvals in Europe and we will need to successfully complete additional activities, including theRedeS trial and two separate license-enabling Phase III clinical trials prior to receiving any regulatory approvals in the U.S. Successful completion of theseactivities may require capital beyond that which we currently have or that may be available to us under our agreement with the Biomedical Advanced Research andDevelopment Authority, or BARDA, and we may be required to obtain additional capital in order to complete the development of and obtain any regulatoryapprovals for the red blood cell system. If we experience delays in testing, conducting trials or obtaining approvals, our product development costs will increase.

In 2016, we entered into a five-year agreement with BARDA, part of the U.S. Department of Health and Human Services’ Office of the Assistant Secretary forPreparedness and Response, to receive funding during the initial base period and current options exercised by BARDA of up to $88.2 million with a total fundingopportunity of up to $186.2 million to support the development of our red blood cell system, including clinical and regulatory development programs in support ofpotential licensure, and development,

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manufacturing and scale-up activities, as well as activities related to broader implementation of all three INTERCEPT systems in areas of Zika virus risk. Under thecontract, BARDA reimburses us as allowable direct contract costs are incurred plus allowable indirect costs. See our discussion under “BARDA” below for moreinformation .

Our near-term capital requirements are dependent on various factors, including operating costs and working capital investments associated with commercializingthe INTERCEPT Blood System, including in connection with the continuing U.S. commercial launch and market penetration of our platelet and plasma systems,costs to develop different configurations of existing products and new products, including our illuminator, costs associated with planning, enrolling and completingongoing studies, and the post-approval studies we are required to conduct in connection with the FDA approval of the platelet system, costs associated withpursuing potential regulatory approvals in other geographies where we do not currently sell our platelet and plasma systems, costs associated with conducting invitrostudies and clinical development of our red blood cell system in Europe and the U.S., including our ongoing European Phase III clinical trial of our red bloodcell system for chronic anemia patients, costs associated with performing the agreed-upon activities under our BARDA agreement, and costs related to creating,maintaining and defending our intellectual property. Our long-term capital requirements will also be dependent on the success of our sales efforts, competitivedevelopments, the timing, costs and magnitude of our longer-term clinical trials and other development activities related to our platelet, plasma and red blood cellsystems, including required post-approval studies for the platelet system, market preparedness and product launch activities for any of our products in geographieswhere we do not currently sell our products, and regulatory factors. Until we are able to generate a sufficient amount of product revenue and generate positive netcash flows from operations, which we may never do, meeting our long-term capital requirements is in large part reliant on continued access to funds under ourBARDA agreement and the public and private equity and debt capital markets, as well as on collaborative arrangements with partners, augmented by cashgenerated from operations and interest income earned on the investment of our cash balances. We believe that our available cash and cash equivalents and short-term investments, as well as cash received from product sales and under our agreement with BARDA, will be sufficient to meet our capital requirements for at leastthe next twelve months. If, in the near term, we are unable to generate sufficient product revenue, or access sufficient funds under our BARDA agreement or thepublic and private equity and debt capital markets, we may be unable to execute successfully on our operating plan. We have based our cash sufficiency estimateon assumptions that may prove to be incorrect. If our assumptions prove to be incorrect, we could consume our available capital resources sooner than we currentlyexpect or in excess of amounts than we currently expect, which could adversely affect our commercialization and clinical development activities.

We have borrowed and in the future may borrow additional capital from institutional and commercial banking sources to fund future growth, including pursuant toour amended and restated loan and security agreement with Oxford Finance, as described below, or potentially pursuant to new arrangements with different lenders.We may borrow funds on terms that may include restrictive covenants, including covenants that restrict the operation of our business, liens on assets, high effectiveinterest rates, financial performance covenants and repayment prov isions that reduce cash resources and limit future access to capital markets. In addition, weexpect to continue to pursue access to the equity capital markets to support our development efforts and operations. To the extent that we raise additional capital byissuing equity securities, our stockholders may experience substantial dilution. To the extent that we raise additional funds through collaboration or partneringarrangements, we may be required to relinquish some of our rights to our technologies or rights to market and sell our products in certain geographies, grantlicenses on terms that are not favorable to us, or issue equity that may be substantially dilutive to our stockholders.

As a result of economic conditions, general global economic uncertainty, political change, and other factors, we do not know whether additional capital will beavailable when needed, or that, if available, we will be able to obtain additional capital on reasonable terms. If we are unable to raise additional capital due to thevolatile global financial markets, general economic uncertainty or other factors, we may need to curtail planned development or commercialization activities. Inaddition, we may need to obtain additional funds to complete development activities for the red blood cell system necessary for potential regulatory approval inEurope, if costs are higher than anticipated or we encounter delays. We may need to obtain additional funding to conduct additional randomized controlled clinicaltrials for existing or new products, particularly if we are unable to access any additional portions of the funding contemplated by our BARDA agreement, and wemay choose to defer such activities until we can obtain sufficient additional funding or, at such time, our existing operations provide sufficient cash flow to conductthese trials.

Although we received FDA approval of our platelet and plasma systems in December 2014, our commercial efforts in 2017 continue to be largely focused onimplementing INTERCEPT with customers with whom we have previously signed agreements and developing awareness of INTERCEPT’s product profile relativeto other platelet and plasma products, including conventional, un-treated components. Significant product revenue from customers in the U.S. may not occur, if atall, until we have been able to successfully implement the platelet and plasma systems and demonstrate that they are economical, safe and efficacious for potentialcustomers. We recognize product revenues from the sale of our platelet and plasma systems in a number of countries around the world including those in Europe,the Commonwealth of Independent States, or CIS, and the Middle East. If we are unable to gain widespread commercial adoption in markets where our bloodsafety products are approved for commercialization, including the U.S., we will have difficulties achieving profitability. In order to commercialize all of ourproducts and product candidates, we will be required to conduct significant research, development, preclinical and clinical evaluation, commercialization andregulatory

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compliance activities for our products and product candidates, which, together with anticipated selling, general and administrative expenses, are expected to resultin substantial losses. Accordingly, we may never achieve a profitable level of operations in the future.

In addition to the product revenues from sales of our platelet and plasma systems, we anticipate that we will continue to recognize revenue from our BARDAagreement. We recognize revenue associated with the BARDA agreement as qualified costs are incurred for reimbursement over the performance period.

Fresenius

Through June 30, 2015, we paid royalties to Fenwal Inc., or Fenwal, a subsidiary of Fresenius, on INTERCEPT Blood System product sales under certainagreements that arose from the sale of the transfusion therapies division of Baxter International Inc., or Baxter, in 2007 to Fenwal (Fenwal was subsequentlyacquired by Fresenius in 2012), at rates that varied by product: 10% of product sales for the platelet system and 3% of product sales for the plasma system.Fresenius assumed Fenwal’s rights and obligations under those agreements, including our manufacturing and supply agreement. In this report, references toFresenius include references to its predecessors-in-interest, Fenwal and Baxter.

In November 2013, we amended our manufacturing and supply agreement with Fresenius with the new terms effective January 1, 2014, which we refer to as the2013 Agreement. Under the 2013 Agreement, Fresenius was obligated to sell, and we were obligated to purchase up to a certain specified annual volume offinished disposable kits for the platelet and plasma systems from Fresenius for both clinical and commercial use. Once the specified annual volume of disposablekits was purchased from Fresenius, we were able to purchase additional quantities of disposable kits from other third-party manufacturers. The amended terms alsoprovided for fixed pricing for finished kits with successive decreasing pricing tiers at various annual production volumes. In addition, the 2013 Agreement requiredus to purchase additional specified annual volumes of sets if and when an additional Fresenius manufacturing site was identified and qualified to makeINTERCEPT disposable kits, subject to mutual agreement on pricing for disposable kits manufactured at the additional site. Fresenius was also obligated topurchase and maintain specified inventory levels of our proprietary inactivation compounds and compound adsorption devices from us at fixed prices.

In October 2015, we entered into a ten year Amended and Restated Manufacturing and Supply Agreement, or the 2015 Agreement, with Fresenius, which amendedand restated the 2013 Agreement. Under the 2015 Agreement, Fresenius continues to be obligated to sell and we are obligated to purchase finished disposable kitsfor our platelet, plasma and red blood cell systems. The 2015 Agreement permits us to purchase platelet, plasma and red blood cell systems from third parties to theextent necessary to maintain supply qualifications with such third parties or where local or regional manufacturing is needed to obtain product registrations or sales.Pricing terms are initially fixed and decline at specified annual production levels, and are subject to certain adjustments after the initial pricing term.

Under the 2015 Agreement, we are no longer required to make royalty payments to Fenwal for the sale of products after June 30, 2015. Under the 2015 Agreement,we maintain the amounts due from the components sold to Fresenius as a current asset on our accompanying consolidated balance sheets until such time as wepurchase finished disposable kits using those components. The 2015 Agreement also requires us to make certain payments totaling €8.6 million, or theManufacturing and Development Payments, to Fresenius in 2016 and on December 31 of the earlier of (a) the year of achievement of certain production volumes or(b) 2022. Because these payments represent unconditional payment obligations, we recognize our liability for these payments at their net present value. TheManufacturing and Development Payments liability is accreted through interest expense based on the estimated timing of its ultimate settlement. As of June 30,2017, we had accrued $5.4 million (€4.7 million) related to the Manufacturing and Development Payments.

The Manufacturing and Development Payments will be made to support certain projects Fresenius will perform on our behalf related to research and development,or R&D activities and manufacturing efficiency activities. We allocated $4.8 million to R&D activities and $2.4 million to manufacturing efficiency activitiesbased on their market value in October 2015. The prepaid asset related to amounts paid up front for the R&D activities to be conducted by Fresenius on our behalfis expensed over the period in which such activities occur. The manufacturing efficiency asset is expensed on a straight line basis over the life of the 2015Agreement.

The initial term of the 2015 Agreement extends through July 1, 2025, or the Initial Term, and is automatically renewed thereafter for additional two year terms, orRenewal Terms, subject to termination by either party upon (i) two years written notice prior to the expiration of the Initial Term or (ii) one year written noticeprior to the expiration of any Renewal Term. Under the 2015 Agreement, we have the right, but not the obligation, to purchase certain assets and assume certainliabilities from Fresenius. In the event that Fresenius refuses or is unable to continue operating under the 2015 Agreement, we may be unable to maintain inventorylevels or otherwise meet customer demand, and our business and operating results would be materially and adversely affected.

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Likewise, if we conclude that supply of the INTERCEPT Blood System or components from Fresenius and others is uncertain, we may choose to build andmaintain inventories of raw materials, work-in-process components, or finished goods, which would consume capital resources faster than we antici pate and maycause our supply chain to be less efficient. Like most regulated manufacturing processes, our ability to produce our products is dependent on our or our suppliers’ability to source components and raw materials which may at times be in short d emand or obsolete. In such cases, we and/or Fresenius or other suppliers may needto source, qualify and obtain approval for replacement materials or components which would likely prove to be disruptive and consume capital resources soonerthan we anticipa te.

BARDA

In June 2016, we entered into an agreement with BARDA to support our development and implementation of pathogen reduction technology for platelet, plasma,and red blood cells, including access to funding that could potentially support various activities, including funding studies necessary to support a potential PMAsubmission to the FDA for the red blood cell system, and acceleration of commercial scale up activities to facilitate potential adoption of the red blood cell systemby U.S. blood centers.

The five-year agreement with BARDA includes a base period, or the Base Period, and options, or Option Periods. The five-year agreement, as amended byBARDA, and Option Periods exercised include committed funding of up to $88.2 million for clinical development of the red blood cell system and subsequentOption Periods that, if exercised by BARDA and completed, would bring the total funding opportunity to $186.2 million over the five-year agreement period. Ifexercised by BARDA, each subsequent option would fund activities related to broader implementation of the platelet and plasma system or the red blood cellsystem in areas of Zika virus risk, clinical and regulatory development programs in support of the potential licensure of the red blood cell system in the U.S., anddevelopment, manufacturing and scale-up activities for the red blood cell system. We are responsible for co-investment of $5.0 million and would be responsiblefor an additional $9.6 million, if certain options were to be exercised. BARDA will make periodic assessments of our progress and the continuation of theagreement is based on our success in completing the required tasks under the Base Period and each Option Period (if and to the extent any Option Periods areexercised by BARDA). BARDA has rights under certain contract clauses to terminate the agreement, including the ability to terminate for convenience at any time.

Under the agreement, we are reimbursed and recognize revenue as qualified direct contract costs are incurred plus allowable indirect costs, based on approvedprovisional indirect billing rates, which permit recovery of fringe benefits, overhead and general and administrative expenses. Amounts payable under the BARDAagreement are subject to future audits at the discretion of the government. These audits could result in an adjustment to revenue previously reported, whichpotentially could be significant.

Equity and Debt Agreements

Cantor

On May 5, 2016, we entered into Amendment No. 2 to the Controlled Equity Offering SM Sales Agreement, dated August 31, 2012, as previously amended onMarch 21, 2014, which together we refer to as the Amended Cantor Agreement, with Cantor Fitzgerald & Co., or Cantor, that provides for the issuance and sale ofshares of our common stock over the term of the Amended Cantor Agreement having an aggregate offering price of up to $132.2 million through Cantor. Under theAmended Cantor Agreement, Cantor acts as our sales agent and receives compensation based on an aggregate of 2% of the gross proceeds on the sale price pershare of our common stock. The issuance and sale of these shares by us pursuant to the Amended Cantor Agreement are deemed an “at-the-market” offering andare available under the Securities Act of 1933, as amended. During the six months ended June 30, 2017, 4.2 million shares of our common stock were sold underthe Amended Cantor Agreement for net proceeds of $10.7 million. At June 30, 2017, we had $51.4 million of common stock available to be sold under theAmended Cantor Agreement, subject to the continued effectiveness of our current shelf registration statement or an effective replacement registration statement.See “Sales Agreement” section in Note 14, “Subsequent Events”, in the Notes to our unaudited consolidated financial statements regarding Amendment No. 3 tothe Amended Cantor Agreement to increase the amount of common stock available to be sold thereunder.

DebtAgreement

On June 30, 2014, we entered into a five year loan and security agreement with Oxford Finance, or the Term Loan Agreement. On June 30, 2014, we received$10.0 million from the first tranche, or Term Loan A. On June 15, 2015, we received $10.0 million from the second tranche, or Term Loan B. Term Loan A bore aninterest rate of 6.95%, and Term Loan B bore an interest rate of 7.01%. Term Loans A and B were set to mature on June 1, 2019.

On September 29, 2015, the Term Loan Agreement was amended to extend (i) the period in which the third tranche could have been drawn and (ii) the interest-onlyperiod for all advances under the Term Loan Agreement. Following the amendment to the Term Loan Agreement, we were required to make interest only paymentsthrough June 2016 followed by thirty-six months of equal principal and interest payments thereafter. On July 28, 2016, the Term Loan Agreement was amended toinclude an additional interest-only period

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for all advances under the Term Loan Agreement. As amended, we are r equired to make interest only payments from August 2016 through January 2017, followedby twenty-nine months of equal principal and interest payments thereafter. On April 27, 2017, the Oxford Term Loan Agreement was amended to include anadditional interes t-only period for all advances under the Term Loan Agreement. As amended, we are required to make interest only payments from May 2017through December 2017 followed by eighteen months of equal principal and interest payments thereafter. We were also requi red to make a final payment equal to7% of the principal amounts of the Term Loans drawn payable on the earlier to occur of maturity or prepayment. We pledged all current and future assets,excluding our intellectual property and 35% of our investment in o ur subsidiary, Cerus Europe B.V., as security for borrowings under the Term Loan Agreement.The Term Loan Agreement contain ed certain nonfinancial covenants, with which we were in compliance at June 30, 2017. On July 31 , 2017, the Companyentered into a n a mended and r estated l oan and security a greement with Oxford Finance, or the Restated Term Loan Agreement, which amends and restates theTerm Loan Agreement in its entirety . See “Loan and Security Agreement” section in Note 14, “Subsequent Events”, in the N otes to our unaudited consolidatedfinancial statements for details of the Restated Term Loan Agreement.

Critical Accounting Policies and Management Estimates

Critical accounting policies are those that require significant judgment and/or estimates by management at the time that the financial statements are prepared suchthat materially different results might have been reported if other assumptions had been made. We consider certain accounting policies related to revenuerecognition, inventory, accrued expenses, goodwill and intangible assets, stock-based compensation and income taxes to be critical policies. We have no changes toour critical accounting policies since we filed our 2016 Form 10-K with the SEC on March 8, 2017. For a description of our other critical accounting policies,please refer to our 2016 Annual Report on Form 10-K.

Results of Operations

ThreeandsixmonthsendedJune30,2017and2016

Revenue Three Months Ended Six Months Ended June 30, June 30, (in thousands, except percentages) 2017 2016 Change 2017 2016 Change Product revenue $ 9,525 $ 9,251 $ 274 3% $ 16,531 $ 16,883 $ (352) (2%)Government contracts revenue 1,667 — 1,667 N/A 3,095 — 3,095 N/A Total revenue $ 11,192 $ 9,251 $ 1,941 21% $ 19,626 $ 16,883 $ 2,743 16% Product revenue increased during the three months ended June 30, 2017, compared to the three months ended June 30, 2016, primarily due to year-over-yeargrowth in sales of U.S. and EMEA disposable kits, primarily related to our platelet products. Product revenue decreased during the six months ended June 30, 2017,compared to the six months ended June 30, 2016, primarily due to the decreased demand for plasma products in our European and Middle Eastern markets, and to alesser extent, the deterioration in the Euro relative to the U.S. dollar of approximately 3% for the six months ended June 30, 2017, as compared to the six monthsended June 30, 2016, as most product revenue has been invoiced and transacted in Euro, and reported in U.S. dollars.

We anticipate product revenue for INTERCEPT disposable kits will increase in future periods as the INTERCEPT Blood System gains market acceptance ingeographies where commercialization efforts are underway, including continued contribution from U.S. sales and newly accessible geographies. However, furtherdeterioration of the Euro relative to the U.S. dollar and continued general declines in the economic climate in Russia and the CIS markets would adversely impactproduct revenue, as the majority of our product revenue is expected to come from Euro denominated markets. As a result of these and other factors, the historicalresults may not be indicative of INTERCEPT Blood System product revenue in the future.

We recognized $1.7 million and $3.1 million revenue from our BARDA agreement during the three and six months ended June 30, 2017, as a result of the directand indirect contract costs incurred in the Base Period under the BARDA agreement, and to a lesser extent, under certain options exercised under the BARDAagreement . We did not recognize any revenue from our BARDA agreement during the three and six months ended June 30, 2016.

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CostofProductRevenue

Our cost of product revenue consists of the cost of the INTERCEPT Blood System sold, provisions for obsolete, slow-moving and unsaleable product, certain orderfulfillment costs, to the extent applicable and costs for idle facilities. Inventory is accounted for on a first-in, first-out basis. Three Months Ended Six Months Ended June 30, June 30, (in thousands, except percentages) 2017 2016 Change 2017 2016 Change Cost of product revenue $ 4,360 $ 4,976 $ (616) (12%) $ 8,054 $ 9,239 $ (1,185) (13%) Cost of product revenue decreased during the three and six months ended June 30, 2017, compared to the three and six months ended June 30, 2016. The decreasesduring the three and six months ended June 30, 2017, were primarily due to manufacturing and inventory management efficiencies in the current periods comparedto the prior year and an improved mix of cost of goods sold, notably higher proportion of lower cost platelet products.

Our realized gross margin on product sales was 54% during the three months ended June 30, 2017, up from 46% during the three months ended June 30, 2016. Ourrealized gross margin on product sales was 51% during the six months ended June 30, 2017, up from 45% during the six months ended June 30, 2016. The increasein gross margins on product sales was primarily due to increased demand for platelet products and manufacturing and inventory management efficiencies.

Changes in our gross margins on product sales are affected by various factors, including the volume of product manufactured and the relative per unit pricing in ouragreement with Fresenius, exchange rate of the Euro relative to the U.S. dollar, manufacturing and supply chain costs, the mix of product sold, and the mix ofcustomers to which products are sold. We may encounter unforeseen manufacturing difficulties which, at a minimum, may lead to higher than anticipated costs,scrap rates, or delays in manufacturing products. In addition, we may face competition which may limit our ability to maintain existing selling prices for ourproducts which in turn would negatively affect our reported gross margins on product sales. Our gross margins on product sales may be impacted in the futurebased on all of these and other criteria.

We expect to maintain inventory levels that will be sufficient to meet forecasted demand for a relatively short time period and plan to continue to manufacture atlevels above those produced in 2016.

Research and Development Expenses

Our research and development expenses include salaries and related expenses for our scientific personnel, non-cash stock based compensation, payments toconsultants, costs to prepare and conduct preclinical and clinical trials, third-party costs for development activities, certain regulatory costs, costs associated withour facility related infrastructure, and laboratory chemicals and supplies. Three Months Ended Six Months Ended June 30, June 30, (in thousands, except percentages) 2017 2016 Change 2017 2016 Change Research and development $ 8,891 $ 8,557 $ 334 4% $ 18,041 $ 15,474 $ 2,567 17% Research and development expenses increased during the three and six months ended June 30, 2017, compared to the three and six months ended June 30, 2016,primarily due to the increased costs associated with clinical development of our INTERCEPT red blood cell system, our pursuit of supplement approvals for theplatelet and plasma systems, and activities related to the BARDA agreement.

We expect to incur additional research and development costs associated with planning, enrolling and completing our required post-approval studies for the plateletsystem, pursuing potential regulatory approvals in other geographies where we do not currently sell our platelet and plasma systems, planning and conducting invitrostudies and clinical development of our red blood cell system in Europe and the U.S., completing activities to support a potential CE mark submission for ourred blood cell system in Europe, new product development and product enhancements, including increased claims, and costs associated with performing theactivities under our BARDA agreement. Due to the inherent uncertainties and risks associated with developing biomedical products, including, but not limited to,intense and changing government regulation, uncertainty of future preclinical studies and clinical trial results and uncertainty associated with manufacturing, it isnot possible to reasonably estimate the costs to complete these research and development projects. We face numerous risks and uncertainties associated with thesuccessful completion of our research and development projects, which risks and uncertainties are discussed in further detail under “Item 1A— RiskFactors” inPart II of this Quarterly Report on Form 10-Q.

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Selling,General,andAdministrativeExpenses

Selling, general, and administrative expenses include salaries and related expenses for administrative personnel, non-cash stock based compensation, expenses forour commercialization efforts in a number of countries around the world including those in U.S., Europe, the CIS and the Middle East, Asia, Latin America, andexpenses for accounting, tax, internal control, legal and facility and infrastructure related expenses, and insurance premiums. Three Months Ended Six Months Ended June 30, June 30, (in thousands, except percentages) 2017 2016 Change 2017 2016 Change Selling, general and administrative $ 14,094 $ 12,406 $ 1,688 14% $ 27,727 $ 24,153 $ 3,574 15% Selling, general, and administrative expenses increased during the three and six months ended June 30, 2017, compared to the three and six months ended June 30,2016, primarily due to increased commercial activity in the U.S. and to a lesser extent, the costs associated with administering the contract with BARDA forINTERCEPT red blood cell development, and bad debt expense related to an uncollectible receivable balance from a customer.

We anticipate our selling, general, and administrative spending to remain reasonably consistent over the coming year.

AmortizationofIntangibleAssets

Amortization of intangible assets relates to a license to commercialize the INTERCEPT Blood System in certain Asian countries. These intangible assets are beingamortized over an estimated useful life of ten years and will be reviewed for impairment. Three Months Ended Six Months Ended June 30, June 30, (in thousands, except percentages) 2017 2016 Change 2017 2016 Change Amortization of intangible assets $ 51 $ 51 $ — 0% $ 101 $ 101 $ — 0% Amortization of intangible assets remained flat during the three and six months ended June 30, 2017, compared to the three and six months ended June 30, 2016.

We expect that the amortization of our intangible assets to remain relatively consistent in future periods, unless facts and circumstances arise which may result inour intangible assets being impaired.

Non-OperatingExpense,Net

Non-operating expense, net consists of foreign exchange gains and losses, interest charges incurred on our debt, and other non-operating gains and losses, includinginterest earned from our short-term investment portfolio. Three Months Ended Six Months Ended June 30, June 30, (in thousands, except percentages) 2017 2016 Change 2017 2016 Change Foreign exchange (loss) gain (14) 101 (115) (114%) (59) (16) (43) 269% Interest expense (501) (658) 157 (24%) (1,032) (1,313) 281 (21%) Other income, net 3,512 113 3,399 3,008% 3,618 179 3,439 1,921% Total non-operating income (expense), net $ 2,997 $ (444) $ 3,441 (775%) $ 2,527 $ (1,150) $ 3,677 (320%)

Foreignexchangeloss

Foreign exchange loss remained relatively flat during the three and six months ended June 30, 2017.

Interestexpense

Interest expense decreased for the three and six months ended June 30, 2017, compared to the three and six months ended June 30, 2016, primarily due to a reducedaverage outstanding debt balance under our Term Loan Agreement (see discussion under the heading “Debt” below).

Otherincome,net

Other income, net increased during the three and six months ended June 30, 2017, primarily due to the realized gain from the sale of our Aduro common stock ofapproximately $3.4 million and $3.5 million, respectively.

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ProvisionforIncomeTaxes

For the three and six months ended June 30, 2017, we recorded a tax expense of $3.9 million, which was primarily due to the sale of our shares of Aduro. For thethree and six months ended June 30, 2016, we recorded a tax expense of $1.0 million and $1.8 million, respectively, which was largely the result of changes in thefair value of our investments, primarily shares of Aduro.

We do not provide for U.S. income taxes on undistributed earnings of our foreign operations as we intend to permanently reinvest such earnings outside the U.S.Due to our history of cumulative operating losses, management has concluded that, after considering all of the available objective evidence, it is not likely that allour net deferred tax assets will be realized. Accordingly, all of our U.S. deferred tax assets continue to be subject to a valuation allowance as of June 30, 2017.

As of June 30, 2017, there have been no material changes to our total amount of unrecognized tax benefits. Liquidity and Capital Resources

In recent years, our sources of capital have primarily consisted of public issuance of common stock, debt instruments, and to a lesser extent, contribution fromproduct sales.

At June 30, 2017, we had cash and cash equivalents of $20.3 million, compared to $22.6 million at December 31, 2016. Our cash equivalents primarily consist ofmoney market instruments, which are classified for accounting purposes as available-for-sale. In addition, we had $30.6 million of short-term investments atJune 30, 2017, and $49.1 million of short-term investments and investments in marketable equity securities at December 31, 2016. We also had total indebtednessunder our Term Loan Agreement of approximately $17.5 million at June 30, 2017, and $19.4 million at December 31, 2016. Excess cash is typically invested inhighly liquid instruments of short-term investments with high-quality credit rated corporate and government agency fixed-income securities in accordance with ourinvestment policy.

OperatingActivities

Net cash used in operating activities was $29.3 million for the six months ended June 30, 2017, compared to $27.6 million net cash used during the six monthsended June 30, 2016. The increase in net cash used in operating activities was primarily related to the increased cash spent for development activities for our redblood cell program, including BARDA activities, and selling and administrative expenses related to continuing U.S. commercial development of our platelet andplasma systems, and a net increase in accounts receivable as a result of the timing of cash receipts during the six months ended June 30, 2017, as compared to thecorresponding period in 2016.

InvestingActivities

Net cash provided by investing activities was $17.4 million for the six months ended June 30, 2017, compared to $51.2 million net cash used during the six monthsended June 30, 2016. The change period over period was primarily the result of lower purchases of investments, and higher proceeds from the sale of ourinvestment in Aduro common stock and maturities of investments in marketable securities, during the six months ended June 30, 2017, as compared to the sameperiod in 2016.

FinancingActivities

Net cash provided in financing activities was $9.8 million during the six months ended June 30, 2017, compared to $15.4 million net cash provided during the sixmonths ended June 30, 2016. The change was primarily due to the decrease of proceeds received from public offerings, and the repayments against the principalbalance of our Oxford loan, during the six months ended June 30, 2017 .

WorkingCapital

Working capital decreased to $49.0 million at June 30, 2017, from $67.2 million at December 31, 2016, primarily due to the cash used to support ongoingoperations which resulted in lower cash and cash equivalent balances.

CapitalRequirements

Our near-term capital requirements are dependent on various factors, including operating costs and working capital investments associated with commercializingthe INTERCEPT Blood System, including in connection with expanding our U.S. commercial capabilities for our platelet and plasma systems, costs to developdifferent configurations of existing products and new products, including our illuminator, costs associated with planning, enrolling and completing ongoing studies,and the post-approval studies we are required to conduct in connection with the FDA approval of the platelet system, costs associated with pursuing potentialregulatory approvals in other geographies where we do not currently sell our platelet and plasma systems, costs associated with conducting in vitro studies andclinical development of our red blood cell system in Europe and the U.S., including our ongoing European Phase III clinical trial of our

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red blood cell system for chronic anemia patients, c osts associated with performing the agreed-upon activities under our BARDA agreement, and costs related tocreating, maintaining and defending our intellectual property. Our long-term capital requirements will also be dependent on the success of our sales efforts,competitive developments, the timing, costs and magnitude of our longer-term clinical trials and other development activities related to our platelet, plasma and redblood cell systems, including required post-approval studies for the platelet sys tem, market preparedness and product launch activities for any of our products ingeographies where we do not currently sell our products, and regulatory factors. Until we are able to generate a sufficient amount of product revenue and generatepositive ne t cash flows from operations, which we may never do, meeting our long-term capital requirements is in large part reliant on continued access to fundsunder our BARDA agreement and the public and private equity and debt capital markets, as well as on collab orative arrangements with partners, augmented bycash generated from operations and interest income earned on the investment of our cash balances. We believe that our available cash and cash equivalents andshort-term investments, as well as cash to be rec eived from product sales and under our agreement with BARDA, will be sufficient to meet our capitalrequirements for at least the next twelve months following the issuance of these financial statements. If we are unable to generate sufficient product reven ue, oraccess sufficient funds under our BARDA agreement or the public and private equity and debt capital markets, we may be unable to execute successfully on ouroperating plan. We have based our cash sufficiency estimate on assumptions that may prove to be incorrect. If our assumptions prove to be incorrect, we couldconsume our available capital resources sooner than we currently expect or in excess of amounts than we currently expect, which could adversely affect ourcommercialization and clinical deve lopment activities.

We have borrowed and in the future may borrow additional capital from institutional and commercial banking sources to fund future growth, including pursuant toour amended and restated loan and security agreement with Oxford Finance, as described below, or potentially pursuant to new arrangements with different lenders.We may borrow funds on terms that may include restrictive covenants, including covenants that restrict the operation of our business, liens on assets, high effectiveinterest rates and repayment provisions that reduce cash resources and limit future access to capital markets. In addition, we expect to continue to opportunisticallyseek access to the equity capital markets to support our development efforts and operations. To the extent that we raise additional capital by issuing equitysecurities, our stockholders may experience substantial dilution. To the extent that we raise additional funds through collaboration or partnering arrangements, wemay be required to relinquish some of our rights to our technologies or rights to market and sell our products in certain geographies, grant licenses on terms that arenot favorable to us, or issue equity that may be substantially dilutive to our stockholders.

While we expect to receive significant funding under our five-year agreement with BARDA, our ability to obtain the funding we expect to receive under theagreement is subject to various risks and uncertainties, including with respect to BARDA’s ability to terminate the agreement for convenience at any time. Inaddition, access to federal contracts is subject to the authorization of funds and approval of our research plans by various organizations within the federalgovernment, including the U.S. Congress. The general economic environment, coupled with tight federal budgets, has led to a general decline in the amountavailable for government funding. If BARDA were to eliminate, reduce or delay funding under our agreement, this would have a significant negative impact on theprograms associated with such funding and could have a significant negative impact on our revenues and cash flows. In addition, if we are unable to reachagreement with the FDA on a license-enabling Phase III clinical trial design for our red blood cell system, our agreement with BARDA will be severely limited inscope or could be terminated altogether, and our ability to complete the development activities required for licensure in the U.S. may require additional capitalbeyond which we currently have. If alternative sources of funding are not available, we may be forced to suspend or terminate development activities related to thered blood cell system in the U.S.

As a result of economic conditions, general global economic uncertainty, political change and other factors, we do not know whether additional capital will beavailable when needed, or that, if available, we will be able to obtain additional capital on reasonable terms. If we are unable to raise additional capital due to thevolatile global financial markets, general economic uncertainty or other factors, we may need to curtail planned development or commercialization activities. Inaddition, we may need to obtain additional funds to complete development activities for the red blood cell system necessary for potential regulatory approval inEurope, if costs are higher than anticipated or we encounter delays. We may need to obtain additional funding to conduct additional randomized controlled clinicaltrials for existing or new products, particularly if we are unable to access any additional portions of the funding contemplated by our BARDA agreement, and wemay choose to defer such activities until we can obtain sufficient additional funding or, at such time, our existing operations provide sufficient cash flow to conductthese trials. Commitments and Off-Balance Sheet Arrangements

Off-balancesheetarrangements

We did not have any off-balance sheet arrangements as of June 30, 2017.

Minimumpurchaserequirements

Our minimum purchase commitments include certain components of our INTERCEPT Blood System which we purchase from third party manufacturers. As ofJune 30, 2017, we had minimum purchase commitments of $13.2 million.

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Manufacturinganddevelopmentobligations

On October 19, 2015, we entered into the 2015 Agreement with Fresenius. The 2015 Agreement calls for a remaining payment of $6.3 million (€5.5 million) onDecember 31 of the year in which certain production volumes are achieved, or December 31, 2022, whichever occurs first. We expect to achieve the productionthreshold in 2019.

Operatingleases

We generally lease our office facilities and certain equipment under non-cancelable operating leases with initial terms in excess of one year that require us to payoperating costs, property taxes, insurance and maintenance. The operating leases expire at various dates through 2021, with certain of the leases providing forrenewal options, provisions for adjusting future lease payments, which is based on the consumer price index and the right to terminate the lease early. Our leasedfacilities qualify as operating leases under ASC Topic 840, “Leases”and as such, are not included on our unaudited condensed consolidated balance sheets. As ofJune 30, 2017, our total future lease payments under non-cancelable operating leases were $2.7 million.

Othercommitments

Our other commitments primarily consist of our landlord financed leasehold improvements, which are in addition to the operating leases we have for office andlaboratory space. We pay for the financed leasehold improvements as a component of rent and are required to reimburse our landlords over the remaining life of therespective leases. As of June 30, 2017, we had an outstanding liability of $0.3 million related to these leasehold improvements.

Debt

On June 30, 2014, we entered into the Term Loan Agreement with Oxford Finance. On June 30, 2014, we received $10.0 million from Term Loan A. On June 15,2015, we received $10.0 million from Term Loan B. On September 29, 2015, the Term Loan Agreement was amended to extend the period in which the thirdtranche could have been drawn and the interest-only period for all advances under the Term Loan Agreement. Term Loan A bore an interest rate of 6.95%, andTerm Loan B bore an interest rate of 7.01%. Term Loans A and B were set to mature on June 1, 2019. Following the amendment, we were required to make interestonly payments through June 2016 followed by thirty-six months of equal principal and interest payments thereafter. We are also required to make a final paymentequal to 7% of the principal amounts of the Term Loans drawn payable on the earlier to occur of maturity or prepayment. The costs associated with the finalpayment are recognized as interest expense over the principal life of the Term Loans. We could prepay the Term Loans subject to declining prepayment fees overthe term of the Term Loan Agreement. The Term Loan Agreement contained certain nonfinancial covenants, with which we were in compliance at June 30, 2017.Under the Term Loan Agreement, receipt of a qualified audit opinion (other than as to going concern or a qualification resulting solely from the scheduled maturityof Term Loans occurring within one year from the date such opinion is delivered) would be a violation of an affirmative covenant under the Term Loan Agreement.While we believe that our available cash and cash equivalents and short-term investments, as well as cash to be received from product sales and under ouragreement with BARDA, will be sufficient to meet our capital requirements for at least the next twelve months, if we are unable to generate sufficient productrevenue, or access sufficient funds under our BARDA agreement or the public and private equity and debt capital markets, we may be unable to executesuccessfully on our operating plan. If we were to default under the Term Loan Agreement, our lenders could foreclose on our assets, including substantially all ofour cash, which is held in accounts with our lenders. We pledged all current and future assets, excluding our intellectual property and 35% of our investment in oursubsidiary, Cerus Europe B.V., as security for borrowings under the Term Loan Agreement.

On July 28, 2016, the Term Loan Agreement was further amended to include an additional interest-only period for all advances under the Term Loan Agreement.As amended, we were required to make interest only payments from August 2016 through January 2017 followed by twenty-nine months of equal principal andinterest payments thereafter.

On April 27, 2017, the Term Loan Agreement was further amended to include an additional interest-only period for all advances under the Term Loan Agreement.As amended, we are required to make interest only payments from May 2017 through December 2017 followed by eighteen months of equal principal and interestpayments thereafter.

On July 31, 2017, we entered into the Restated Term Loan Agreement, which amends and restates the Term Loan Agreement in its entirety. See “Loan and SecurityAgreement” section in Note 14, “Subsequent Events”, in the Notes to our unaudited consolidated financial statements for details of the Restated Term LoanAgreement.

Financial Instruments

Our investment policy is to manage our marketable securities portfolio to preserve principal and liquidity while maximizing the return on the investment portfolioto assist us in funding our operations. We currently invest our cash and cash equivalents in money market funds and interest-bearing accounts with financialinstitutions. Our money market funds are classified as Level 1 in the fair value

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hierarchy, in which quoted prices are available in active markets, as the maturity of money market funds are relatively short and the carrying amount is a reasonableestimate of fair value. O ur marketable equity securities consist ed of our investment in Aduro and are classified as Level 1 in the fair value hierarchy, as quotedprice in active markets is readily available. Our available-for-sale securities related to corporate debt and U.S. gov ernment agency securities are classified as Level2 in the fair value hierarchy, which uses observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricingsources with reasonable levels of price tr ansparency. We maintain portfolio liquidity by ensuring that the securities have active secondary or resale markets. Wedid not record any other-than-temporary impairment losses during the three and six months ended June 30, 2017 or the year ended December 31, 2016. Adverseglobal economic conditions have had, and may continue to have, a negative impact on the market values of potential investments.

New Accounting Pronouncements

See “New Accounting Pronouncements” section in Note 1, “Summary of Significant Accounting Policies” in the Notes to our unaudited condensed consolidatedfinancial statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the six months ended June 30, 2017, there were no material changes to our market risk disclosures as set forth under, “Item 7A – Quantitative andQualitativeDisclosuresAboutMarketRisk,” in Part II of our Annual Report on Form 10-K for the year ended December 31, 2016.

ITEM 4. CONTROLS AND PROCEDURES

EvaluationofDisclosureControlsandProcedures

Our principal executive officer and principal financial officer are responsible for establishing and maintaining “disclosure controls and procedures” (as defined inRules 13a-15(e) and 15d-15(e), promulgated under the Securities Exchange Act of 1934, as amended) for our company. Based on their evaluation of our disclosurecontrols and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and principal financial officerhave concluded that our disclosure controls and procedures were effective as of June 30, 2017.

ChangesinInternalControloverFinancialReporting

There were no changes in our internal control over financial reporting which occurred during our fiscal quarter ended June 30, 2017, that have materially affected,or is reasonably likely to materially affect, our internal control over financial reporting.

LimitationsontheEffectivenessofControls

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system aremet. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within acompany have been detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable assurance, not absolute assurance, that theobjectives of our disclosure control system are met and, as set forth above, our principal executive officer and principal financial officer have concluded, that basedon their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to providereasonable assurance that the objective of our disclosure control system were met. PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Ourbusinessfacessignificant risks. If anyof theevents orcircumstancesdescribedinthefollowingrisksactually occurs, ourbusinessmaysuffer, thetradingpriceofourcommonstockcoulddeclineandourfinancialconditionorresultsofoperationscouldbeharmed.Theserisksshouldbereadinconjunctionwiththeotherinformationsetforthinthisreport.Therisksanduncertaintiesdescribedbelowarenottheonlyonesfacingus.Theremaybeadditionalrisksfacedbyourbusiness. Other events that wedonot currently anticipate or that wecurrently deemimmaterial also mayadversely affect ourfinancial condition or results ofoperations.

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We depend substantially upon the commercial success of the INTERCEPT Blood System for platelets and plasma in the United States, or U.S., and ourinabilitytosuccessfullycommercializetheINTERCEPTBloodSystemintheU.S.wouldhaveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperationsandgrowthprospects.

We have invested a significant portion of our efforts and financial resources on the development of the INTERCEPT Blood System for platelets and plasma for theU.S. market. As a result, our business is substantially dependent on our ability to successfully commercialize the INTERCEPT Blood System in the U.S. in a timelymanner. In December 2014, we received U.S. regulatory approval of the INTERCEPT Blood System for platelets and plasma, with certain restrictions regardingusage and although the INTERCEPT Blood System is now commercially available in the U.S., we have no prior experience commercializing any products in theU.S. and we may be unable to commercialize the INTERCEPT Blood System in the U.S. successfully or in a timely manner, or at all. In addition, although wereceived FDA approval of our platelet and plasma systems in December 2014, our commercial efforts in 2017 will continue to be largely focused on implementingINTERCEPT to customers with whom we have previously signed agreements and developing awareness of INTERCEPT’s product profile relative to other plateletand plasma products, including conventional, un-treated components. Significant product revenue from customers in the U.S. may not occur, if at all, until we havebeen able to successfully implement the platelet and plasma systems and demonstrate that they are economical, safe and efficacious for potential customers. Basedon our experience in foreign jurisdictions, and our experience with U.S. customers to date, some potential customers in the U.S. have chosen to first validate ourtechnology or conduct other pre-adoption activities prior to purchasing or deciding whether to adopt the INTERCEPT Blood System for commercial use, whichmay never occur. In addition, potential customers and certain existing customers must obtain site-specific licenses from the Center for Biologics Evaluation andResearch, or CBER, prior to engaging in interstate transport of blood components processed using the INTERCEPT Blood System, which could significantly delayor preclude our ability to successfully commercialize the INTERCEPT Blood System to those customers for the portion of their business involved in interstatecommerce. Until those licenses are obtained, U.S. blood centers will be limited to sales to hospital customers within the state in which the INTERCEPT-treatedplatelets or plasma are processed. Further, the hospital customers of any of our new blood center customers will need to go through the administrative process ofgenerating internal tracking codes to integrate INTERCEPT-treated products into their inventories, which may further delay customer adoption in the U.S. Theavailability of platelets in the U.S. is currently constrained. Should U.S. blood centers prioritize obtaining and selling conventional, untreated platelet componentsover INTERCEPT-treated components, we may not achieve widespread market adoption. If we are not successful in achieving market adoption of the INTERCEPTBlood System in the U.S., we may never generate substantial product revenue, and our business, financial condition, results of operations and growth prospectswould be materially and adversely affected.

Our ability to successfully commercialize the INTERCEPT Blood System for platelets and plasma in the U.S. will depend on our ability to:

• achieve market acceptance and generate product sales through execution of sales agreements on commercially reasonable terms;

• enter into and maintain sufficient manufacturing arrangements for the U.S. market with our third party suppliers;

• create market demand for the INTERCEPT Blood System through our education, marketing and sales activities;

• hire, train, deploy, support and maintain a qualified U.S.-based commercial organization and field sales force;

• expand the labeled indications of use for the INTERCEPT Blood System and/or design, develop and test new product configurations;

• comply with requirements established by the FDA, including post-marketing requirements and label restrictions; and

• comply with other U.S. healthcare regulatory requirements.

In addition to the other risks described herein, our ability to successfully commercialize the INTERCEPT Blood System for platelets and plasma in the U.S. issubject to a number of risks and uncertainties, including those related to:

• the highly concentrated U.S. blood collection market that is dominated by a small number of blood collection organizations;

• availability of donors;

• regulatory and licensing requirements, including the CBER licensing process that U.S.-based blood centers are required to follow in order to obtainthe required site-specific licenses to engage in interstate transport of blood components processed using the INTERCEPT Blood System;

• changed or increased regulatory restrictions or requirements;

• the amount available for reimbursement pursuant to codes we have obtained under the Healthcare Common Procure Coding System, or HCPCS, andpricing for outpatient use of INTERCEPT-treated blood components;

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• any supply or manufacturing problems or delays arising with any of our suppliers, many of whom are our sole suppliers for the particular product orcomponent they manufacture, including the ability of such suppliers to maintain FDA approval to manufacture the INTERCEPT Blood System andto comply with FDA-mandated current Good Manufacturing Pra ctice, or cGMP, and Quality System Regulation, or QSR, requirements;

• any third party manufacturer that supplies products required by blood centers to process and store blood components consistent with our approvedspecifications and claims, including but not limited to, apheresis collection devices, disposable blood bags and reagents, and PAS;

• changes in healthcare laws and policy, including changes in requirements for blood product coverage by U.S. federal healthcare programs; and

• acceptance of the INTERCEPT Blood System as safe, effective and economical from the broad constituencies involved in the healthcare system.

In addition to the above, our ability to successfully commercialize the INTERCEPT Blood System in the U.S. is dependent on our ability to operate withoutinfringing on the intellectual property rights of others. For example, we are aware of a U.S. patent issued to a third-party that covers methods to remove psoralencompounds from blood products. We have reviewed the patent and believe there exists substantial questions concerning its validity. We cannot be certain, however,that a court would hold the patent to be invalid or not infringed by our platelet or plasma systems. In this regard, whether or not we infringe this patent will not beknown with certainty unless and until a court interprets the patent in the context of litigation. In the event that we are found to infringe any valid claim of thispatent, we may, among other things, be required to pay damages, cease the use and sale of our platelet and plasma systems and/or obtain a license from the ownerof the patent, which we may not be able to do at a reasonable cost or at all.

These and the other risks described below related to the commercialization of the INTERCEPT Blood System could have a material adverse effect on our ability tosuccessfully commercialize the INTERCEPT Blood System for platelets and plasma in the U.S.

TheINTERCEPTBloodSystemmaynotachievebroadmarketadoption.

In order to increase market adoption of the INTERCEPT Blood System and to increase market demand in the U.S., we must address issues and concerns frombroad constituencies involved in the healthcare system, from blood centers to patients, transfusing physicians, key opinion leaders, hospitals, private and publicsector payors, regulatory bodies and public health authorities. We may be unable to demonstrate to these constituencies that the INTERCEPT Blood System is safe,effective and economical or that the benefits of using the INTERCEPT Blood System products justify their cost and outweigh their risks.

The use of the platelet system results in some processing loss of platelets. If the loss of platelets leads to increased costs, or the perception of increased costs, forour customers, our customers or prospective customers believe that the loss of platelets reduces the efficacy of the transfusion unit, or our process requires changesin blood center or clinical regimens, prospective customers may not adopt our platelet system or existing customers may not believe they can justify any perceivedoperational change or inefficiency by itself or in conjunction with a blood component availability shortage. Certain customers that attempt to optimize collectionpractices in order to produce the highest volume of transfusable units with those collections may experience a less optimized yield as result of adoptingINTERCEPT over conventional platelet products. Certain studies have indicated that transfusion of conventionally prepared platelets may yield higher post-transfusion platelet counts (according to a measurement called “corrected count increment”) and may be more effective than transfusion of INTERCEPT-treatedplatelets. Although certain other studies demonstrate that INTERCEPT-treated platelets retain therapeutic function comparable to conventional platelets,prospective customers may choose not to adopt our platelet system due to considerations relating to corrected count increment, efficacy or other factors.

The INTERCEPT Blood System does not inactivate all known pathogens, and the inability of the INTERCEPT Blood System to inactivate certain pathogens maylimit its market adoption. For example, our products have not been demonstrated to be effective in the reduction of certain non-lipid-enveloped viruses, includinghepatitis A and E viruses, due to these viruses’ biology. In addition, our products have not demonstrated a high level of reduction for human parvovirus B-19,which is also a non-lipid-enveloped virus. Although we have shown high levels of reduction of a broad spectrum of lipid-enveloped viruses, prospective customersmay choose not to adopt our products based on considerations concerning inability to inactivate, or limited reduction, of certain non-lipid-enveloped viruses.Similarly, although our products have been demonstrated to effectively inactivate spore-forming bacteria, our products have not been shown to be effective inreducing bacterial spores once formed. In addition, our products do not inactivate prions since prions do not contain nucleic acid. While transmission of prions hasnot been a major problem in blood transfusions, and we are not aware of any competing products that inactivate prions, the inability to inactivate prions may limitmarket adoption of our products. Furthermore, due to limitations of detective tests, we cannot exclude that a sufficient quantity of pathogen or pathogens may stillbe present in active form, which could present a risk of infection to the transfused patient. Should INTERCEPT-treated components contain detectable levels ofpathogens after treatment, the efficacy of INTERCEPT may be called into question, whether

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or not any remaining pathogens are the result of INTERCEPT’s efficacy or other factors. Such uncertainties may limit the market adoption of our products .

In 2015, we conducted a Phase I clinical study protocol under an investigational device exemption, or IDE, to treat plasma derived from convalesced patients thatwere previously infected with the Ebola virus and had recovered from the disease according to the criteria set by the Centers for Disease Control and Prevention.The transfusion of convalesced plasma from Ebola survivors is believed to pass on antibodies to the disease from the survivor to the recipient of the plasmatransfusion. INTERCEPT use under the IDE was limited to pathogen reduction claims that relied on existing clinical data that we had regarding reduction of certainpathogens in donated plasma. Accordingly, the study was not designed to generate any data on the efficacy of INTERCEPT to inactivate the Ebola virus, and westill do not have any clinical or commercial data on the efficacy of INTERCEPT to inactivate the Ebola virus, and therefore, we do not know the effectiveness ofINTERCEPT to inactivate the Ebola virus. This may negatively impact a customer’s desire to adopt INTERCEPT in those countries where addressing an Ebolavirus outbreak is a primary concern.

We have conducted studies of our products in both invitroand invivoenvironments using well-established tests that are accepted by regulatory bodies. When an invitrotest was not generally available or not well-established, we conducted invivostudies in mammalian models to predict human responses. Although we have noreason to believe that the invitroand invivostudies are not predictive of actual results in humans, we cannot be certain that the results of these invitroand invivostudies accurately predict the actual results in humans in all cases. In addition, strains of infectious agents in living donors may be different from those strainscommercially available or for which we have tested and for which we have received approval of the inactivation claims for our products. To the extent that actualresults in human patients differ, commercially available or tested strains prove to be different, or customers or potential customers perceive that actual results differ,from the results of our invitroor invivotesting, market acceptance of our products may be negatively impacted.

If customers experience operational or technical problems with the use of INTERCEPT Blood System products, market acceptance may be reduced or delayed. Forexample, if adverse events arise from incomplete reduction of pathogens, improper processing or user error, or if testing of INTERCEPT-treated blood samplesfails to reliably confirm pathogen reduction, whether or not directly attributable to the INTERCEPT Blood System, customers may refrain from purchasing ourproducts. Furthermore, should customers communicate operational problems or suspected product failure, we will need to investigate and report imputability to therelevant regulatory authorities in a timely manner. We may be required to file reports on such complaints or product failure before we have the ability to obtainconclusive data as to imputability which may cause concern with existing and prospective customers or regulators. The United States is currently experiencing ashortage of platelet components in many markets. Should customers feel that INTERCEPT treatment has a negative impact on the number of transfusable plateletunits able to be manufactured from available donors, our ability to ability to convince a blood center to treat increasing proportions of its platelet units may benegatively impacted. In addition, there is a risk that further studies that we or others may conduct, including the post-approval studies we are required to conduct asa condition to the FDA approval of the platelet system, will show results inconsistent with previous studies. Should this happen, potential customers may delay orchoose not to adopt our products and existing customers may cease use of our products. In addition, some hospitals may decide to purchase and transfuse bothINTERCEPT-treated blood components and conventional blood components. Managing such a dual inventory of blood products may be challenging, and hospitalsmay need to amend their product labels and inventory management systems before being able to move forward with INTERCEPT. This may require coordinationbetween hospital suppliers and blood centers, which in turn may cause delay in market adoption. Further, in certain markets, potential customers may require us todevelop, sell, and support data management application software for their operations before they would consider adopting INTERCEPT. Such softwaredevelopment efforts may be costly or we may be unsuccessful in developing a data management application that would be broadly accepted. Developing,maintaining and supporting software can be time consuming, costly and may require resources and skill sets that we do not possess. Failure to do so may limitmarket adoption in geographies where we commercialize the INTERCEPT Blood System, including the U.S.

Market adoption of our products is affected by blood center and healthcare facility budgets and the availability of reimbursement from governments, managed carepayors, such as insurance companies, and/or other third parties. In many jurisdictions, due to the structure of the blood products industry, we have little control overbudget and reimbursement discussions, which generally occur between blood centers, healthcare facilities such as hospitals, and national or regional ministries ofhealth and private payors. Even if a particular blood center is prepared to adopt the INTERCEPT Blood System, its hospital customers may not accept or may nothave the budget to purchase INTERCEPT-treated blood products. Since blood centers would likely not eliminate the practice of screening donors or testing bloodfor some pathogens prior to transfusion, even after implementing our products, some blood centers may not be able to identify enough cost offsets or hospitalpricing increases to afford to purchase our products. Budgetary concerns may be further exacerbated by economic legislation in certain countries and by proposalsby legislators at both the U.S. federal and state levels, regulators, healthcare facilities and third party payors to keep healthcare costs down, which may limit theadoption of new technologies, including our products. In some jurisdictions, including in the U.S. for in-patient treatment, commercial use of our products is notapproved for reimbursement by governmental or commercial third party payors for health care services and may never be approved for specific reimbursement. Inthe U.S., we obtained HCPCS reimbursement codes for INTERCEPT treated platelets and plasma in the outpatient setting in 2015. The costs and expenses incurredby the blood center related to donor blood are typically

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included in the price that the blood center charges a hospital for a unit of blood. Even after blood components treated with our products are approved forreimbursement by governmental or commercial third party payors, including under HCPCS codes, the costs and expenses related to use o f the INTERCEPT BloodSystem will not be directly reimbursed, but instead may be incorporated within the reimbursement structure for medical procedures and/or products at the site ofpatient care. If the costs to the hospital for INTERCEPT-processed blood products cannot be easily, readily, or fully incorporated into the existing reimbursementstructure, hospital billing and/or reimbursement for these products could be impacted, thus negatively impacting hospitals’ acceptance and uptake of our products.

The market for the INTERCEPT Blood System is highly concentrated with few customers, including often-dominant regional or national blood collection entities.Even where our products receive regulatory approval and reimbursement is available, failure to effectively market, promote, distribute, price or sell our products toany of these customers could significantly delay or even diminish potential product revenue in those geographies. Moreover, the market for pathogen reductionsystems in the U.S. is highly concentrated and dominated by a small number of blood collection organizations. In the U.S., the American Red Cross represents thelargest single portion of the blood collection market. While we entered into a multi-year commercial agreement with the American Red Cross in February 2016, wecannot guarantee the volume or timing of commercial purchases that the American Red Cross may make, if any, under our agreement. Our ability to gainsignificant market penetration in the U.S. is largely dependent on utilization of INTERCEPT and distribution of INTERCEPT treated blood components by theAmerican Red Cross. The American Red Cross is a large organization and broad-based utilization of INTERCEPT and distribution of INTERCEPT treatedproducts may be concentrated in a limited number of centers or may occur slowly, if at all. Conversely, given the large relative size of the American Red Cross,should they deploy the technology rapidly, our resources may be inadequate to fulfill the American Red Cross’s and other customers’ demands, which could resultin a loss of product revenues or customer contracts, or both. In many countries in Western Europe and in Japan, various national blood transfusion services or RedCross organizations collect, store and distribute virtually all of their respective nations’ blood and blood components supply. In Europe, the largest markets for ourproducts are in Germany, France, and England. In Germany, decisions on product adoption and subsequent reimbursement are made on a regional or even bloodcenter-by-blood center basis, but depend on both local approvals and centralized regulatory approvals from the Paul Ehrlich Institute, or PEI. Product specificationsthat receive marketing authorization from the PEI may differ from product specifications that have been adopted in other territories where we rely on CE markapproval, thereby necessitating market specific modifications to the commercial product, which may not be economical or technically feasible for us.

In July 2017, we entered into new agreements with the Établissement Français du Sang, or the EFS, to supply illuminators, platelet and plasma disposable kits.Although the agreement suggests that the EFS aims to standardize production of its platelets using the INTERCEPT Blood System, we cannot provide assurancethat this will happen or that it would be sustainable should it occur. In addition, we cannot provide any assurance that we will be able to secure any subsequentcontracts with EFS or that the terms, including the pricing or committed volumes, if any, of any future contract will be equivalent or superior to the terms under ourcurrent contract. If the final commercial terms of any subsequent contract are less favorable than the terms under our existing contract, our financial results may beadversely impacted.

In Japan, the Japanese Red Cross controls a significant majority of blood transfusions and exerts a high degree of influence on the adoption and use of blood safetymeasures in Japan. The Japanese Red Cross has been reviewing preclinical and clinical data on pathogen reduction of blood over a number of years and has yet tomake a formal determination to adopt any pathogen reduction approach. We also understand that the Japanese Red Cross has begun formal evaluation of acompeting technology. Before the Japanese Red Cross considers our products, we understand that we may need to commit to making certain product configurationchanges, which are currently under development but may not be economically or technologically feasible for us to accomplish.

Weexpecttocontinuetogeneratelosses.

We may never achieve a profitable level of operations. Our cost of product sold, research and development and selling, general and administrative expenses haveresulted in substantial losses since our inception. The platelet and plasma systems have been approved in the U.S. only since December 2014 and are not approvedin many countries around the world. The red blood cell system is in the development stage and may never emerge from the development stage as a marketedproduct. We may be required to reduce the sales price for our products in order to make our products economically attractive to our customers and to governmentaland private payors, or to compete favorably with other blood safety interventions or other pathogen reduction technologies, which may reduce or altogethereliminate any gross profit on sales. At our present and expected near-term sales levels of the platelet and plasma systems, our costs to manufacture, distribute,market, sell, and support the systems are and are expected to continue to be in excess of our revenue. We expect our losses to continue at least until we are able togain widespread commercial adoption, which may never occur. We expect to incur additional research and development costs associated with the development ofdifferent configurations of existing products including our illuminator, development of new products, planning, enrolling and completing ongoing clinical and non-clinical studies, including the post-approval studies we are required to conduct in connection with the FDA approval of the platelet system, pursuing potentialregulatory approvals in other geographies where we do not currently sell our platelet and plasma systems, planning and conducting invitrostudies and clinicaldevelopment of our red blood cell system in Europe and the U.S., and completing

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activities to support a potential CE mark submission for our red blood cell system in Europe. These costs could be substantial and could extend the per iod duringwhich we expect to operate at a loss, particularly if we experience any difficulties or delays in completing the activities.

In certain countries, governments have issued regulations relating to the pricing and profitability of medical products and medical product companies. Healthcarereform in the U.S. has also placed downward pressure on the pricing of medical products that could have a negative impact on our profit margins.

Adversemarketandeconomicconditionsmayexacerbatecertainrisksaffectingourbusiness.

Sales of our products are dependent on purchasing decisions of and/or reimbursement from government health administration authorities, distribution partners andother organizations. As a result of adverse conditions affecting the global economy and credit and financial markets, disruptions due to political instability orterrorist attacks, economies and currencies largely affected by declining commodity prices or otherwise, these organizations may defer purchases, may be unable tosatisfy their purchasing or reimbursement obligations, or may delay payment for the INTERCEPT Blood System. In addition, there have been concerns for theoverall stability and suitability of the Euro as a single currency given the economic and political challenges facing individual Eurozone countries. Continuingdeterioration in the creditworthiness of Eurozone countries, the withdrawal of, or the announcement of the withdrawal of, one or more member countries from theEuropean Union, or E.U., following the Un ited Kingdom ’s, or U.K.’s, referendum in which voters approved an exit from the E.U., or the failure of the Euro as acommon European currency or an otherwise diminished value of the Euro could materially and adversely affect our product revenue.

Additionally, a meaningful amount of our product revenue has come from sales to our distributor in Russia and other CIS countries. Low worldwide oil prices andthe ongoing civil, political and economic disturbances in Russia, Turkey and Ukraine, and their spillover effect on surrounding areas, along with the impact ofsanctions imposed against Russia by certain European nations and the U.S., have significantly devalued the Russian Ruble and other CIS currencies and maycontinue to have a negative impact on the Russi an and other CIS countries’ economies, particularly if sanctions continue to be levied against Russia or arestrengthened from those currently in place from either the E.U., U.S. or both. For example, in July 2017, the U.S. congressional leaders reached an agreement onadditional sanctions against Russia, which are expected to be signed into law by the Trump administration. While our agreement with our Russian and other CISdistributors calls for sales, invoicing and collections to be denominated in Euros, if significant sanctions continue or are strengthened, if new sanctions are imposedin connection with Russia’s alleged interference in the U.S. election or otherwise, if worldwide oil prices continue to remain low and/or if measures taken by theRussian government to support the Ruble fail, the Russian economy and value of the Ruble or other CIS currencies may further weaken or remain weak, and ourbusiness in Russia and other CIS countries may be negatively impacted further. Similarly, low worldwide oil prices and current political conflicts may negativelyimpact potential future sales of our products in the Middle East and other oil producing exporters.

In addition, terrorist attacks and civil unrests in some of the countries where we do business, and the resulting need for enhanced security measures may impact ourability to deliver services, threaten the safety of our employees, and increase our costs of operations.

Ourproducts,bloodproductstreatedwiththeINTERCEPTBloodSystemandwearesubjecttoextensiveregulationbydomesticandforeignauthorities.Ifourpreclinicalandclinicaldataarenotconsideredsufficientbyacountry’sregulatoryauthoritiestograntmarketingapproval,wewillbeunabletocommercializeourproductsandgenerateproductrevenueinthatcountry.Ourinvestigationalredbloodcellsystemrequiresextensiveadditionaltestinganddevelopment.

Our products, both those sold commercially and those under development are subject to extensive and rigorous regulation by local, state and federal regulatoryauthorities in the U.S. and by foreign regulatory bodies. These regulations are wide-ranging and govern, among other things:

• development;

• testing;

• manufacturing;

• labeling;

• storage;

• clinical trials;

• product safety;

• pre-market clearance or approval;

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• sales and distribution;

• use standards and documentation;

• conformity assessment procedures;

• product traceability and record keeping procedures;

• post-launch surveillance and post-approval studies;

• quality;

• advertising and promotion;

• product import and export; and

• reimbursement.

Our products must satisfy rigorous standards of safety and efficacy and we must adhere to quality standards regarding manufacturing and customer-facing businessprocesses in order for the FDA and international regulatory authorities to approve them for commercial use. For our product candidates, we must provide the FDAand international regulatory authorities with preclinical, clinical and manufacturing data demonstrating that our products are safe, effective and in compliance withgovernment regulations before the products can be approved for commercial sale. The process of obtaining required regulatory approvals is expensive, uncertainand typically takes a number of years. We may continue to encounter significant delays or excessive costs in our efforts to secure necessary approvals or licenses,or we may not be successful at all. In addition, our labeling claims may not be consistent across markets. Our approved labels from the FDA limit our currentapprovals to certain platelet collection platforms and a particular storage solution for the particular collection platform. For instance, our FDA approved claimspermit apheresis collection of platelets on the Fresenius Amicus device while stored in an additive solution or for apheresis collection of platelets collected on theTerumo Trima device and stored in 100% plasma. Such discrepant collection methodologies and storage solutions and conditions also exist for red blood cells. Wemay be required to provide the FDA with data for each permutation for which blood banking treatment practices exist which may be time consuming, costly andlimit the potential size of the U.S. market that can use our products. In addition, in order to generate data that would be satisfactory to the FDA, we need to test ourproducts with different blood center production configurations producing otherwise saleable products for the blood center. As such, we will generally need topurchase blood components which are expensive and may be limited during periods of low availability. For example, we continue to experience such availabilityconstraints for platelets. Any such inability to procure blood components at a reasonable price, or at all, to conduct studies in order to generate data sufficient forlabel claim expansions may negatively impact our business opportunities.

ClinicalandPreclinical

Clinical trials are particularly expensive and have a high risk of failure. Any of our trials may fail or may not achieve results sufficient to attain market acceptance,which could prevent us from achieving profitability. We do not know whether we will begin or complete clinical trials on schedule, if at all. Clinical trials can bedelayed for a variety of reasons, including delays in obtaining regulatory approval to commence a study, delays in reaching agreement on acceptable clinical studyagreement terms with prospective clinical sites, delays in obtaining institutional review board, ministry of health or ethical committee approval to conduct a studyat a prospective clinical site, delays in recruiting subjects to participate in a study, delays in the conduct of the clinical trial by personnel at the clinical site or due toour inability to actively and timely monitor clinical trial sites because of travel restrictions, political instability or terrorist activity or concerns over employeesafety. For example, our chronic anemia trial is currently ongoing in Turkey. We have in the past restricted and may again in the future need to restrict travel toTurkey for monitoring site visits or to otherwise manage the trial due to state department issued travel warnings and restrictions. Significant delays in clinicaltesting could also materially impact our clinical trials. Criteria for regulatory approval in blood safety indications are evolving, reflecting competitive advances inthe standard of care against which new product candidates are judged, as well as changing market needs and reimbursement levels. Clinical trial design, includingenrollment criteria, endpoints and anticipated label claims are thus subject to change, even if original objectives are being met. As a result, we do not know whetherany clinical trial will result in marketable products. Typically, there is a high rate of failure for product candidates in preclinical studies and clinical trials andproducts emerging from any successful trial may not reach the market for several years.

Enrollment criteria for certain of our clinical trials may be quite narrow, further delaying the clinical trial process. For instance, clinical trials previously conductedusing INTERCEPT-treated plasma for patients with thrombotic thrombocytopenic purpura lasted approximately four years due in part to the difficulties associatedwith enrolling qualified patients . In addition, enrollment criteria have impacted the speed with which we were able to enroll patients in our ongoing Phase III redblood cell system trial in chronic anemia in Europe and thus far in our Phase III red blood cell system clinical trial in Puerto Rico. Consequently, we may be unableto recruit suitable patients into clinical trials on a timely basis, if at all, which may lead to higher costs or the inability to complete the clinical trials. We cannot relyon interim results of trials to predict their final results, and acceptable results in early trials might not be

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repeated in later trials. Any trial may fail to produce results satisfactory to the FDA or foreign regulatory authorities. In addition, preclinical and clinical data can beinterpret ed in different ways, which could delay, limit or prevent regulatory approval. Negative or inconclusive results from a preclinical study or clinical trial, oradverse medical events during a clinical trial could cause a preclinical study or clinical trial to be repeated, require other studies to be performed or cause a programto be terminated, even if other studies or trials relating to a program are successful.

We have conducted many toxicology studies to demonstrate the safety of the platelet and plasma systems, and we have conducted and plan to conduct toxicologystudies for the red blood cell system throughout the product development process. At any time, the FDA and other regulatory authorities may require furthertoxicology or other studies to further demonstrate our products’ safety, which could delay or preclude regulatory approval and commercialization. In addition, theFDA or foreign regulatory authorities may alter guidance at any time as to what constitutes acceptable clinical trial endpoints or trial design, which may necessitatea redesign of our product or proposed clinical trials and cause us to incur substantial additional expense or time in attempting to gain regulatory approval.Regulatory agencies weigh the potential risks of using our pathogen reduction products against the incremental benefits, which may be difficult or impossible toquantify.

If any additional product candidates receive approval for commercial sale in the U.S., or if we obtain approval for expanded label claims for the platelet system orplasma system, the FDA may require one or more post-approval clinical or invitrostudies as a condition of approval, such as the post-approval clinical study weare required to conduct in connection with the approval of the platelet system and the additional post-approval study that we are required to conduct on recoveryand survival of platelets suspended in 100% plasma in connection with the recent expanded label claim that we received for the platelet system. Each of thesestudies and any additional studies that the FDA may require could involve significant expense and may require us to secure adequate funding to complete. Inaddition, enrollment of post-marketing studies may be difficult to complete timely if customers of blood centers are reluctant to accept conventional, non-INTERCEPT treated products once INTERCEPT products become available to them. Other regulatory authorities outside of the U.S. may also require post-marketing studies. Governments or regulatory authorities may impose new regulations or other changes or we may discover that we are subject to additionalregulations that could further delay or preclude regulatory approval and subsequent adoption of our potential products. We cannot predict the adoption,implementation or impact of adverse governmental regulation that might arise from future legislative or administrative action. Furthermore, any guidance documentor mandate that prescribes use of INTERCEPT may impose a compliance requirement on blood centers that operate and process blood components in a manner forwhich we do not yet have approved label claims. Our inability to meet such operational or processing constraints may impair our potential results permanently oruntil we are able to obtain such claims.

Outside the U.S., regulations vary by country, including the requirements for regulatory and marketing approvals or clearance, the time required for regulatoryreview and the sanctions imposed for violations. In addition to CE mark documentation, countries outside the E.U. may require clinical data submissions,registration packages, import licenses or other documentation. Regulatory authorities in Japan, China, Taiwan, South Korea, Vietnam, Thailand, Singapore andelsewhere may require in-country clinical trial data, among other requirements, or that our products be widely adopted commercially in Europe and the U.S., ormay delay approval decisions until our products are more widely adopted. In addition to the regulatory requirements applicable to us and to our products, there areregulatory requirements in several countries around the world, including the U.S., Germany, Canada, Austria, Australia and other countries, applicable toprospective customers of INTERCEPT Blood System products, the blood centers that process and distribute blood and blood products. In those countries, bloodcenters and other customers are required to obtain approved license supplements from the appropriate regulatory authorities before making available blood productsprocessed with our pathogen reduction systems to hospitals and transfusing physicians. Our customers may lack the resources or capability to obtain suchregulatory approvals. For example, in the U.S., blood centers are required to obtain site-specific licenses from CBER prior to engaging in interstate transport ofblood components processed using the INTERCEPT Blood System. These requirements or regulators’ delays in approving license applications or supplements maydeter some blood centers from using our products. Blood centers that do submit applications or supplements for manufacturing and sale may face disapproval ordelays in approval that could further delay or deter them from using our products. The regulatory impact on potential customers could slow or limit the potentialsales of our products.

RedBloodCellSystem

Our red blood cell system is currently in development and has not been commercialized anywhere in the world. Significant development and financial resourceswill be required to progress the red blood cell system into a commercially viable product and to obtain the necessary regulatory approvals for the product. Finaldevelopment of the red blood cell system may never occur and failure can occur any time during the process. Any failure or delay in completing the developmentactivities for the red blood cell system would prevent or delay its commercialization, which could materially and adversely affect our business, financial condition,results of operations, growth prospects and potential future market adoption of any of our products, including the red blood cell system. Many of the factorsdescribed above that can contribute to the failure or delay of a clinical trial could impact the trials we conduct for our red blood cell system. Even if we aresuccessful in earlier clinical trials, the results of those early trials may not be predictive of results obtained in later and larger clinical trials of the red blood cellsystem or the results of routine use if we are able to commercialize the red blood cell system. In those cases, the FDA or foreign regulatory agencies may requirewe engage in additional clinical trials or

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conduct further studies or analysis which may be costly and time-consuming. Furthermore, regulators may require clinical data for our red blood cell system undereach collection and processing method using various additive or storage solutions before they would grant approval for any such configuration. If we were unableto collect data under each configuration or if we elect to pursue certain configu rations over others for initial approval, our market opportunity may be limited. Insome instances, we are relying on contract research organizations and other third parties to assist us in designing, managing, monitoring and otherwise carrying outour cli nical trials and development activities for the red blood cell system. We do not control these third parties and, as a result, they may not treat our activities astheir highest priority, or in the manner in which we would prefer, which could result in del ays, inefficient use of our resources and could distract personnel fromother activities. Additionally, if we, our contract research organizations or other third parties assisting us or our study sites fail to comply with applicable goodclinical practices , the clinical data generated in our trials may be deemed unreliable and the FDA or foreign regulatory agencies may require us to performadditional clinical trials before approving the red blood cell system for commercialization. We cannot assure you that , upon inspection, regulatory agencies willdetermine that any of our clinical trials comply with good clinical practices. In addition, our clinical trials must be conducted with product produced under theFDA’s cGMP regulations and similar regulations out side of the U.S. Our failure or the failure of our product manufacturers to comply with these regulations mayrequire us to repeat or redesign clinical trials, which would delay the regulatory approval process. We must demonstrate an ability to define, tes t and meetacceptable specifications for our GMP manufactured compounds used to prepare INTERCEPT-treated red blood cells before we can submit and seek regulatoryapproval of our red blood cell system. Failure to develop a methodology and assay that is suf ficiently sensitive and robust may be time consuming, which in-turnwould delay our ability to obtain regulatory approvals. In addition, existing lots of these red blood cell compound s manufactured under GMP may be dispositionedby regulators or ourselves as un suitable for either commercial or clinical use which would impact our ability to produce INTERCEPT treated-red blood cells forongoing and future clinical trials and may require changes to the manufacturing process of our re d blood cell compounds or new production of the compounds, allof which would be costly and time consuming and impact our ability to perform under our contract with BARDA. Further, we are currently in the process ofnegotiating a commercial supply agreemen t with the manufacturer of the processing kits used in the r ed blood cell clinical trials. If we are unable to reachagreement on terms, our ability to complete our contemplated Phase III clinical tria ls will be adversely impacted. There can be no guarante e that we will reachagreement or that, if an agreement is reached, that it will be on terms favorable to us.

In 2003, we terminated Phase III clinical trials evaluating a prior generation of the red blood cell system in acute and chronic anemia patients. The trials wereterminated due to the detection of antibody reactivity to INTERCEPT-treated red blood cells in two patients in the 2003 chronic anemia trial. Although theantibody reactivity was not associated with any adverse events, we developed process changes designed to diminish the likelihood of antibody reactivity in redblood cells treated with our modified process. In a subsequent Phase I clinical trial that we initiated in the fourth quarter of 2008 to evaluate recovery and survivalof treated red blood cells with the modified process, there were no adverse events reported. Based on the results from that trial, we obtained approval for andcommenced two Phase III clinical trials in Europe using the modified process in patients with acute and chronic anemia, respectively. We successfully completedthe acute anemia Phase III clinical trial, with the INTERCEPT Blood System for red blood cells meeting its primary endpoint. However, we cannot assure you thatthe adverse events observed in the terminated 2003 Phase III clinical trials of our earlier red blood cell system will not be observed in the ongoing chronic anemiaPhase III or any future clinical trials of our red blood cell system. In addition, although our completed Phase III clinical trial in acute anemia patients using ourmodified process met its primary endpoint, we cannot assure you that the same or similar results will be observed in our ongoing Phase III chronic anemia or anypotential future clinical trials using our modified process.

We will need to successfully conduct and complete license-enabling Phase III clinical trials in the U.S. before the FDA will consider our red blood cell product forapproval. There can be no assurance that we will be able to successfully complete perquisite Phase III clinical trials or otherwise generate sufficient Phase IIIclinical data, nor can there be any assurance that we and the FDA will agree to any trial protocol we propose or that we will otherwise obtain FDA clearance toinitiate a potential license-e nabling Phase III clinical trial. In part, we will seek to introduce supplemental clinical data we obtained from European clinical trials,though we cannot assure you that we will be able to demonstrate comparability or that the FDA will allow supplemental clinical European data. The FDA willrequire us to place a clinical hold on any clinical trial if we see a hemolytic reaction associated with treatment emergent antibodies with amustaline specificity inpatients receiving INTERCEPT-treated red blood cells in that trial. Should we experience such an incident, we will need to investigate the underlying cause of thehemolytic reaction, which in many patient populations may be difficult for us to assess imputability which may lead to a complete halt of the clinical trial, mayirreparably harm our red blood cell product’s reputation and we may be forced to suspend or terminate development activities related to the red blood cell system inthe U.S ., which would have a material adverse effect on our business and business prospects. In addition, if we are unable to generate sufficient perquisite PhaseIII clinical data and/or reach agreement with the FDA on a license-enabling Phase III clinical trial design for our red blood cell system, our agreement withBARDA will be severely limited in scope or could be terminated altogether.

We completed our European Phase III clinical trial of our red blood cell system for acute anemia patients and have another European Phase III clinical trial of ourred blood cell system for chronic anemia patients ongoing. Although we plan to complete development activities to support an anticipated CE mark submission,such activities, including any additional studies required by the FDA prior to its review of any proposed U.S. Phase III clinical trial protocol, could prolongdevelopment of the red blood cell system, and we cannot predict when we would receive regulatory approval of our red blood cell system, if ever. We understandthat while the acute

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anemia Phase III clinical trial in Europ e may be sufficient to receive CE mark approval in the E.U. , we may need to generate additional safety data fromcommercial use and/or achieve a successful outcome in the ongoing chronic anemia Phase III clinical trial for our red blood cell system in orde r to achieve broadmarket acceptance. Failure to successfully complete such clinical trials and generate a body of data in chronic patients in a clinical or commercial setting may delayregulatory approval, commercialization or market adoption. In addition , the trials may need to be supplemented by additional, successful Phase III clinical trials forapproval in certain countries. If such additional Phase III clinical trials are required, they would likely need to demonstrate equivalency of INTERCEPT-treate d redblood cells compared to conventional red blood cells and the significantly lower lifespan for INTERCEPT-treated red blood cells compared to non-treated redblood cells may limit our ability to obtain regulatory approval for the product. A number of t rial design issues that could impact efficacy, regulatory approval andmarket acceptance will need to be resolved prior to the initiation of further clinical trials. In addition, if we are unable to secure the full amount of fundingcontemplated by the BAR DA agreement for any reason, our ability to complete the development activities required for potential licensure in the U.S. may requireadditional capital beyond which we currently have, and we may be required to obtain additional capital in order to comp lete the development of and obtain anyregulatory approvals for the red blood cell system. Further, while we believe that our available cash and cash equivalents and short-term investments, as well ascash to be received from product sales and under our agreement with BARDA, will be sufficient to meet our capital requirements for at least the next twelvemonths , if we are unable to generate sufficient product revenue, or access sufficient funds under our BARDA agreement or the public and private equity an d debtcapital markets, we may be unable to execute successfully on our operating plan. If alternative sources of funding are not available, we may be forced to suspend orterminate development activities related to the red blood cell system in the U.S . wh ich would have a material adverse effect on our business and businessprospects. If we are unsuccessful in advancing the red blood cell system through clinical trials, resolving process and product design issues or in obtainingsubsequent regulatory approv als and acceptable reimbursement rates, we may never realize a return on our R&D expenses incurred to date for the red blood cellsystem program. Regulatory delays can also materially impact our product development costs. If we experience delays in testing , conducting trials or approvals,our product development costs will increase , which costs may not be reimbursable to us under the BARDA agreement . Even if we were to successfully completeand receive approval for our red blood cell system, potential blood center customers may object to working with a potent chemical, like amustaline, the activecompound in the red blood cell system, or may require modifications to automate the process, which would result in additional development costs, any of whichcould limit any market acceptance of the red blood cell system. If the red blood cell system were to face such objections from potential customers, we may chooseto pay for capital assets, specialized equipment or personnel for the blood center, which would have a negative impact on any potential contribution margin fromred blood cell system sales.

PlateletandPlasmaSystems

In 2007, we obtained a CE mark approval (extended in 2012 and renewed again in May 2017) from E.U. regulators for our platelet system in accordance with thefive year renewal schedule . We or our customers have received approval for the sale and/or use of INTERCEPT-treated platelets within the Europe in France,Switzerland, Germany and Austria. We or our customers may also be required to conduct additional testing in order to obtain regulatory approval in countries thatdo not recognize the CE mark as being adequate for commercializing the INTERCEPT Blood System in those countries. The level of additional product testingvaries by country, but could be expensive or take a long time to complete. In addition, regulatory agencies are able to withdraw or suspend previously issuedapprovals due to changes in regulatory law, our inability to maintain compliance with regulations or other factors.

In 2006, we obtained a CE mark approval (extended in 2011 and renewed again in September 2016) from E.U. regulators for our plasma system in accordance withthe five year renewal schedule. We or our customers have received approval for the sale and/or use INTERCEPT-treated plasma within Europe in France,Switzerland, Austria and Germany. In some countries, including several in Europe, we or our customers may be required to perform additional clinical studies orsubmit manufacturing and marketing applications in order to obtain regulatory approval. If we or our customers are unable to obtain or maintain regulatoryapprovals for the use and sale or continued sale and use of INTERCEPT-treated platelets or plasma, market adoption of our products will be negatively affected andour growth prospects would be materially and adversely impacted.

In December 2014, the FDA approved the platelet system for exvivopreparation of pathogen-reduced apheresis platelet components in order to reduce the risk oftransfusion-transmitted infection, or TTI, including sepsis, and to potentially reduce the risk of transfusion-associated graft versus host disease, or TA-GVHD. Alsoin December 2014, the FDA approved the plasma system for exvivopreparation of plasma in order to reduce the risk of TTI when treating patients requiringtherapeutic plasma transfusion. We have conducted and are conducting additional invitrostudies for our platelet system to potentially expand our label claims toinclude, among others, platelets collected from pooled random donors, storage of INTERCEPT-treated platelets for up to seven days rather than five days, and anew processing set for triple dose collections. Failure to obtain any of these label expansion claims may negatively affect market adoption and our growth prospectswould be materially and adversely affected.

As a condition to the initial FDA approval of the platelet system, we are required to conduct a post-approval clinical study of the platelet system. Successfulenrollment and completion of this study requires that we develop sufficient INTERCEPT production capabilities with U.S. blood center customers. Delays indelivering INTERCEPT systems to blood centers that can supply

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INTERCEPT-treated platelets to hospitals involved in the study may lead to increased costs to us and may jeopardize our ability to complete the study in atimeframe acceptable to the FDA. Furthermore, blood centers ability to produce INTERCEPT-treated platelets and supply hospitals enrolled in the study may benegatively impacted by a shortage of overall platelet availability, constraints in producing platelets in compliance with our approved claims or operational inefficiencies experienced as a result of INTERCEPT treatment. In addition, we must identify and contract with hospitals that have the desire and ability toparticipate and contribute to the study in a timely manner and who are willing to purchase INTERCEPT -treated platelets from our blood center customers. If weare unable to complete this study, in a timely manner or at all, or the results of this study reveal unacceptable safety risks, we could be required to performadditional studies, which may be costl y, and even lose U.S. marketing approval of the platelet system. Further, we are required to conduct a post-approval recoveryand survival clinical study in connection with the recent label expansion approval for the use of the platelet system to treat pla telets suspended in 100% plasma.Successful enrollment and completion of this additional study will also require that we identify and contract with hospitals that have the desire and ability toparticipate and contribute to the study in a timely manner and who are willing to purchase INTERCEPT-treated platelets from our blood center customers. If we areunable to complete this study, in a timely manner or at all, or the results of this study reveal unacceptable safety risks, we could be required to perform additionalstudies, which may be costly. In addition to these studies, the FDA may also require us to commit to perform other lengthy post-marketing studies, for which wewould have to expend significant additional resources, which could have an adverse ef fect on our operating results, financial condition and stock price. In addition,there is a risk that these studies will show results inconsistent with our previous studies. Should this happen, potential customers may delay or choose not to adoptthe INTER CEPT Blood System and existing customers may cease use of the INTERCEPT Blood System.

The execution and completion of our ongoing IDE studies will continue to result in additional costs, and will continue to require attention and resources from ourclinical, regulatory and management teams, which may adversely affect our commercialization efforts and other regulatory and clinical programs.

Post-MarketingApproval

We are also required to continue to comply with applicable FDA and other regulatory requirements now that we have obtained approval for the INTERCEPT BloodSystem for platelets and plasma. These requirements relate to, among other things, labeling, packaging, storage, advertising, promotion, record-keeping andreporting of safety and other information. In addition, our manufacturers and their facilities are required to comply with extensive FDA and foreign regulatoryagency requirements, including, in the U.S., ensuring that quality control and manufacturing procedures conform to cGMP and current QSR requirements. As such,we and our contract manufacturers are subject to continual review and periodic inspections. Accordingly, we and others with whom we work must continue toexpend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control. We are also required to report certainadverse events and production problems, if any, to the FDA and foreign regulatory authorities, when applicable, and to comply with requirements concerningadvertising and promotion for our products. For example, our promotional materials and training methods must comply with FDA and other applicable laws andregulations, including the prohibition of the promotion of unapproved, or off-label, use. If the FDA determines that our promotional materials or training constitutespromotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including theissuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties. It is also possible that other federal, state or foreign enforcementauthorities might take action if they consider our promotional or training materials to constitute promotion of an off-label use, or a violation or any other federal orstate law that applies to us, such as laws prohibiting false claims for reimbursement. Any enforcement action brought by a federal, state or foreign authority couldresult in significant civil, criminal and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government programs, such asMedicare and Medicaid, injunctions, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enterinto government contracts, contractual damages, administrative burdens, diminished profits and future earnings, additional reporting requirements and/or oversightif we become subject to a corporate integrity agreement or similar agreement. In addition, our reputation could be damaged and adoption of the products could beimpaired. Although our policy is to refrain from statements that could be considered off-label promotion of our products, the FDA or another regulatory agencycould disagree and conclude that we have engaged in off-label promotion. In addition, the off-label use of our products may increase the risk of product liabilityclaims. Product liability claims are expensive to defend, divert our management’s attention, result in substantial damage awards against us and harm our reputation.

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Should a regulatory agency question a reported adverse event, we may not be able to rule out product failure as the cause, whether or not product failure is thecause of the reported adv erse event. If a regulatory agency suspects or discovers problems with a product, such as adverse events of unanticipated severity orfrequency, or problems with the facility or the manufacturing process at the facility where the product is manufactured, o r problems with the quality of productmanufactured, or disagrees with the promotion, marketing, or labeling of a product, a regulatory agency may impose restrictions on use of that product, includingrequiring withdrawal of the product from the market. Ou r failure to comply with applicable regulatory requirements could result in enforcement action byregulatory agencies, which may include any of the following sanctions:

• adverse publicity, warning letters, fines, injunctions, consent decrees and civil penalties;

• repair, replacement, recall or seizure of our products;

• operating restrictions or partial suspension or total shutdown of production;

• delaying or refusing our requests for approval of new products, new intended uses or modifications to our existing products and regulatory strategies;

• refusal to grant export or import approval for our products;

• withdrawing marketing approvals that have already been granted, resulting in prohibitions on sales of our products; and

• criminal prosecution.

Any of these actions, in combination or alone, could prevent us from selling our products and harm our business. In addition, any government investigation ofalleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply withongoing or changing regulatory requirements may significantly and adversely affect our ability to successfully commercialize and generate additional productrevenues from our platelet and plasma systems or any future products. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of ourcompany and our operating results will be adversely affected. Additionally, if we are unable to continue to generate product revenues from the sale of our plateletand plasma systems, our potential for achieving operating profitability will be diminished and the need for additional capital to fund our operations will beincreased.

In addition, the regulations to which we are subject are complex and have tended to become more stringent over time. Regulatory changes could result inrestrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales.

AsignificantportionofthefundingforthedevelopmentoftheredbloodcellsystemisexpectedtocomefromourBARDAagreement,andifBARDAweretoeliminate,reduceordelayfundingfromouragreement,thiscouldhaveasignificant,negativeimpactonourrevenuesandcashflows,andwemaybeforcedtosuspendorterminateourU.S.redbloodcelldevelopmentprogramorobtainalternativesourcesoffunding.

We anticipate that a significant portion of the funding for the development of the red blood cell system will come from our agreement with BARDA . In this regard,in June 2016, we entered into an agreement with BARDA that is worth up to approximately $186.2 million to support the development of the red blood cell system.However, our agreement with BARDA only reimburses certain specified development and clinical activities that have been authorized by BARDA pursuant to thebase period and certain options of the agreement and the potential exercise of subsequent option periods. To date, BARDA has committed approximately $88.2million under the base period of the agreement and options exercised in 2016 . Accordingly, our ability to receive any of the additional $98.0 million in fundingprovided for under the BARDA agreement is dependent on BARDA exercising additional options und er the agreement, which it may do or not do at its solediscretion. In addition, BARDA is entitled to terminate our BARDA agreement for convenience at any time, in whole or in part, and is not required to providecontinued funding beyond amounts currently obligated under the agreement. Moreover, the continuation of our BARDA agreement depends in large part on ourability to meet development milestones previously agreed to with BARDA and on our compliance with certain operating procedures and protocols. BARDA maysuspend or terminate the agreement should we fail to achieve key milestones, or fail to comply with the operating procedures and processes approved by BARDAand its audit agency. There can be no assurance that we will be able to achieve these milestones or continue to comply with these procedures and protocols. Ourability to meet the expectations of BARDA under our contract is largely dependent on our ability to attract, hire and retain personnel with competencies that are inshort supply. In addition, in many instances we must identify third-party suppliers, negotiate terms acceptable to us and BARDA and ensure ongoing compliance bythese suppliers with the obligations covered by our BARDA contract. If we are unable to provide adequate supplier overs ight or if suppliers are unable to complywith the requirements of the contract, our ability to meet the anticipated milestones may be impaired. There can also be no assurance that our BARDA agreementwill not be terminated, that our BARDA agreement will be extended through the exercise of subsequent option periods, that any such extensions would be on termsfavorable to us, or that we will otherwise obtain the funding that we anticipate to obtain under our agreement with BARDA. Moreover, changes in governm entbudgets and agendas may result in a decreased and deprioritized emphasis on supporting the development of pathogen reduction technology. If our BARDA

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agreement is terminated or suspended, if there is any reduction or delay in funding under our BARDA ag reement, or if BARDA determines not to exercise some orall of the options provided for under the agreement, our revenues and cash flows could be significantly and negatively impacted and we may be forced to seekalternative sources of funding, which may n ot be available on non-dilutive terms, terms favorable to us or at all. If alternative sources of funding are not available,we may be forced to suspend or terminate development activities related to the red blood cell system in the U.S.

In addition, u nde r the BARDA agreement, BARDA will regularly review our development efforts and clinical activities. Under certain circumstances, BARDAmay advise us to delay certain activities and invest additional time and resources before proceeding. If we follow such BARDA advice, overall red blood cellprogram delays and costs associated with additional resources for which we had not planned may result. Also, the costs associated with following such advice mayor may not be reimbursed by BARDA under our agreement. Fina lly, we may decide not to follow the advice provided by BARDA and instead pursue activitiesthat we believe are in the best interests of our red blood cell program and Cerus, even if BARDA would not reimburse us under our agreement.

Unfavorableprovisionsingovernmentcontracts,includinginourcontractwithBARDA,mayharmourbusiness,financialconditionandoperatingresults.

U.S. government contracts typically contain unfavorable provisions and are subject to audit and modification by the government at its sole discretion, which willsubject us to additional risks. For example, under our agreement with BARDA, the U.S. government has the power to unilaterally:

• a udit and object to any BARDA agreement-related costs and fees on grounds that they are not allowable under the Federal Acquisition Regulation,or FAR, and require us to reimburse all such costs and fees;

• suspend or prevent us for a set period of time from receiving new contracts or grants or extending our existing agreement based on violations orsuspected violations of laws or regulations;

• c laim nonexclusive, nontransferable rights to product manufactured and intellectual property developed under the BARDA agreement and may,under certain circumstances involving public health and safety, license such inventions to third parties without our consent;

• c ancel, terminate or suspend our BARDA agreement based on violations or suspected violations of laws or regulations;

• t erminate our BARDA agreement in whole or in part for the convenience of the governm ent for any reason or no reason, including if funds becomeunavailable to the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response;

• r educe the scope and value of our BARDA agreement;

• decline to exerc ise an option to continue the BARDA agreement;

• direct the course of the development of the red blood cell system in a manner not chosen by us;

• r equire us to perform the option periods provided for under the BARDA agreement even if doing so may cause us to forego or delay the pursuit ofother red blood cell program opportunities with greater commercial potential;

• take actions that result in a longer development timeline than expected;

• limit the government’s financial liability to amounts appropriated by the U.S. Congress on a fiscal-year basis, thereby leaving some uncertainty aboutthe future availability of funding for the red blood cell program even after it has been funded for an initial period; and

• c hange certain terms and conditions in our BARDA agreement.

Generally, government contracts, including our agreement with BARDA, contain provisions permitting unilateral termination or modification, in whole or in part,at the U.S. government’s convenience. Termination-for-convenience provisions generally enable us to recover only our costs incurred or committed (plus a portionof the agreed fee) and settlement expenses on the work completed prior to termination. Except for the amount of services received by the government, termination-for-default provisions do not permit recovery of fees. In addition, in the event of termination or upon expiration of our BARDA agreement, the U.S. governmentmay dispute wind-down and termination costs and may question prior expenses under the contract and deny payment of those e xpenses. Should we choose tochallenge the U.S. government for denying certain payments under our BARDA agreement , such a challenge could subject us to substantial additional expensesthat we may or may not recover. Further, if our BARDA agreement is termi nated for convenience, or if we default by failing to perform in accordance with thecontract schedule and terms, a significant negative impact on our cash flows and operations could result.

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In addition, government contracts normally contain additional re quirements that may increase our costs of doing business and expose us to liability for failure tocomply with these terms and conditions. These requirements include, for example:

• specialized accounting systems unique to government contracts;

• mandatory financial audits and potential liability for price adjustments or recoupment of government funds after such funds have been spent;

• public disclosures of certain contract information, which may enable competitors to gain insights into our research program;

• mandatory internal control systems and policies; and

• mandatory socioeconomic compliance requirements, including labor standards, non-discrimination and affirmative action programs andenvironmental compliance requirements.

If we fail to maintain compliance with these requirements, we may be subject to potential liability and to the termination of our BARDA agreement.

Furthermore, we will enter into agreements and subcontracts with third parties, including suppliers, consultants and other third-party contra ctors, in order to satisfyour contractual obligations under our BARDA agreement. Negotiating and entering into such arrangements can be time-consuming and we may not be able to reachagreement with such third parties. Any such agreement must also be compl iant with the terms of our BARDA agreement . Any delay or inability to enter into sucharrangements or entering into such arrangements in a manner that is non-compliant with the terms of our contract, may result in violations of our BARDAagreement.

As a re sult of the unfavorable provisions in our BARDA agreement, we must undertake significant compliance activities. The diversion of resources from ourdevelopment and commercial programs to these compliance activities, as well as the exercise by the U.S. gove rnment of any rights under these provisions, couldmaterially harm our business.

Lawsandregulationsaffectinggovernmentcontracts,includingourBARDAagreement,makeitmorecostlyanddifficultforustosuccessfullyconductourbusiness.Failuretocomplywiththeselawsandregulationscouldresultinsignificantcivilandcriminalpenaltiesandadverselyaffectourbusiness.

We must comply with numerous laws and regulations relating to the administration and performance of our BARDA agreement. Among the most significantgovernment contracting regulations are:

• the FAR and agency-specific regulations supplemental to the FAR, which comprehensively regulate the procurement, formation, administration andperformance of government contracts;

• the business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict thegranting of gratuities and funding of lobbying activities and incorporate other requirements such as the Anti-Kickback Statute, the ProcurementIntegrity Act, the False Claims Act and the U.S. Foreign Corrupt Practices Act;

• export and import control laws and regulations; and

• laws, regulations and executive orders restricting the exportation of certain products and technical data.

In addition, as a U.S. government contractor, we are required to comply with applicable laws, regulations and standards relating to our accounting practices and aresubject to periodic audits and reviews. As part of any such audit or review, the U.S. government may review the adequacy of, and our compliance with, our internalcontrol systems and policies, including those relating to our purchasing, property, estimating, compensation and management information systems. Based on theresults of its audit s, the U.S. government may adjust our BARDA agreement-related costs and fees, including allocated indirect costs. This adjustment couldimpact the amount of revenues reported on a historic basis and could impact our cash flows under the contract prospectively. In addition, in the event BARDAdetermines that certain costs and fees were unallowable or determines that the allocated indirect cost rate was higher than the actual indirect cost rate, BARDAwould be entitled to recoup any overpayment from us as a r esult. In addition, if an audit or review uncovers any improper or illegal activity, we may be subject tocivil and criminal penalties and administrative sanctions, including termination of our BARDA agreement, forfeiture of profits, suspension of payments, fines andsuspension or prohibition from doing business with the U.S. government. We could also suffer serious harm to our reputation if allegations of impropriety weremade against us, which could cause our stock price to decline. In addition, under U.S. government purchasing regulations, some of our costs may not bereimbursable or allowed under our contracts. Further, as a U.S. government contractor, we are subject to an increased risk of investigations, criminal prosecution,civil fraud, whistleblower lawsuits and other legal actions and liabilities as compared to private sector commercial companies.

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Ifweorourthird-partysuppliersfailtocomplywiththeFDA’sgoodmanufacturingpracticeregulations,itcouldimpairourabilitytomarketourproductsinacost-effectiveandtimelymanner.

In order to be used in clinical studies or sold in the U.S., our products are required to be manufactured in FDA-approved facilities. If any of our suppliers fail tocomply with FDA’s cGMP regulations or otherwise fail to maintain FDA approval, we may be required to identify an alternate supplier for our products orcomponents. Our products are complex and difficult to manufacture. Finding alternate facilities and obtaining FDA approval for the manufacture of theINTERCEPT Blood System at such facilities would be costly and time-consuming and would negatively impact our ability to generate product revenue from thesale of our platelet or plasma system in the U.S. and achieve operating profitability.

We and our third-party suppliers are also required to comply with the FDA-mandated cGMP and QSR requirements, which cover the methods and documentationof the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products. The FDA audits compliancewith cGMP and QSR requirements through periodic announced and unannounced inspections of manufacturing and other facilities. The FDA may conductinspections or audits at any time. If we or our suppliers fail to adhere to cGMP and QSR requirements, have significant non-compliance issues or fail to timely andadequately respond to any adverse inspectional observations or product safety issues, or if any corrective action plan that we or our suppliers propose in response toobserved deficiencies is not sufficient, the FDA could take enforcement action against us, which could delay production of our products and may include:

• untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;

• unanticipated expenditures to address or defend such actions;

• customer notifications or repair, replacement, refunds, recall, detention or seizure of our products;

• operating restrictions or partial suspension or total shutdown of production;

• refusing or delaying our requests for premarket approval of new products or modified products;

• withdrawing marketing approvals that have already been granted;

• refusal to grant export or import approval for our products; or

• criminal prosecution.

Any of the foregoing actions could have a material adverse effect on our reputation, business, financial condition and operating results. Furthermore, our keysuppliers may not continue to be in compliance with all applicable regulatory requirements, which could result in our failure to produce our products on a timelybasis and in the required quantities, if at all. In addition, before any additional products would be considered for marketing approval in the U.S. or elsewhere, oursuppliers will have to pass an audit by the FDA or other regulatory agencies. We are dependent on our suppliers’ cooperation and ability to pass such audits. Suchaudits and any audit remediation may be costly. Failure to pass such audits by any of our suppliers would affect our ability to obtain licensure in the U.S. orelsewhere.

If we modify our FDA-approved products, we may need to seek additional approvals, which, if not granted, would prevent us from selling our modifiedproducts.

Any modifications to the platelet and plasma systems that could significantly affect their safety or effectiveness, including significant design and manufacturingchanges, or that would constitute a major change in their intended use, manufacture, design, components, or technology requires approval of a new PMA or PMAsupplement. However, certain changes to a PMA-approved device do not require submission and approval of a new PMA or PMA supplement and may onlyrequire notice to FDA in a PMA Annual Report. The FDA requires every supplier to make this determination in the first instance, but the FDA may review anysupplier’s decision. The FDA may not agree with our decisions regarding whether new clearances or approvals are necessary. Our products could be subject torecall if the FDA determines, for any reason, that our products are not safe or effective or that appropriate regulatory submissions were not made. If new regulatoryapprovals are required, this could delay or preclude our ability to market the modified system. For example, due to the obsolescence of certain parts, we haveredesigned the illuminators used in the platelet and plasma systems, and we will need to receive approval of this redesign from the FDA. In addition, in order toaddress the entire market in the U.S., we will need to obtain approval for additional configurations of the platelet system, including triple dose collections andrandom donor platelets. Our approved labels from the FDA limit our current approvals to certain platelet collection platforms and a particular storage solution forthe particular collection platform. For instance, our approved claims permit apheresis collection of platelets on the Fresenius Amicus device while stored in anadditive solution or for apheresis collection of platelets collected on the Terumo Trima device and stored in 100% plasma. Such discrepant collectionmethodologies and storage solutions and conditions also exist for red blood cells. We may be required to provide the FDA with data for each permutation for whichblood banking treatment practices exist which may be time consuming, costly and limit the potential size of the U.S. market that can use our products. We haveconducted and may conduct additional invitrostudies for our platelet system to potentially expand our label claims to include, among others, platelets collected

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from pooled random donors, storage of INTERCEPT-treated platelets for up to seven days rather than five days, and a new processing set for triple dosecollections. Our failure to obtain FDA and foreign regulatory approvals of new platelet and plasma product configurations could significantly limit productrevenues from sales of the platelet and plasma systems. In any event, delays in receipt or failure to receive approvals, the loss of previously received approvals, orthe failure to comply with any other existing or future regulatory requirements, could reduce our sales and negatively impact our profitability potential and futuregrowth prospects. In addition, if the FDA or other regulatory or accrediting body were to mandate safety interventions, in cluding the option of pathogen reductiontechnology, when we had not received approval for all operational configurations, the market to which we could sell our products may be limited until we obtainsuch approvals , if ever, or may be permanently impaired if competing options are more broadly available . In addition, we may seek to expand use of our productsunder new PMA approvals or PMA supplements. For instance we may perform additional studies and seek regulatory approval for INTERCEPT-treated cryoprecipitate from human plasma or to develop, test and seek approval for an INTERCEPT-treated lyophilized plasma product. Such products may require a change inbusiness model whereby we are selling the finished component to hospital rather than an illuminator an d disposable kit to blood centers. We have no experienceselling to hospitals nor do we have experience or expertise complying with regulations governing finished biologics. If we are unable to successfully market suchproducts to hospitals or comply with unique regulations, our ability to monetize and deliver such products will be negatively impacted.

We operate a complex global commercial organization, with limited experience in many countries, including the U.S. We have limited resources andexperiencecomplyingwithregulatory,legal,taxandpoliticalcomplexitiesasweexpandintonewandincreasinglybroadgeographies.

We are responsible for worldwide sales, marketing, distribution, maintenance and regulatory support of the INTERCEPT Blood System. If we fail in our efforts todevelop or maintain such internal competencies or establish acceptable relationships with third parties to support us in these areas on a timely basis, our ability tocommercialize the INTERCEPT Blood System may be irreparably harmed.

We have a wholly-owned subsidiary, headquartered in the Netherlands, dedicated primarily to selling and marketing the platelet and plasma systems in Europe, theCIS and the Middle East. Our commercial activities for the U.S., Latin and South America and Asia are based out of our headquarters in Concord, California withcertain support from our European headquarters in the Netherlands, with certain individuals servicing Latin and South America and Asia, domiciled outside of theU.S. Our commercial organization focused on the U.S. market has limited resources and is relatively inexperienced, and as a result, has limited to no experienceselling and marketing our platelet and plasma systems. Given the large relative size of the American Red Cross, should they deploy INTERCEPT rapidly under ourcommercial agreement, our resources may be inadequate to fulfill the American Red Cross’s and other customers’ demands, which could result in a loss of productrevenues or customer contracts, or both. We will need to maintain and may need to increase our competence and size in a number of functions, including sales,deployment and product support, marketing, regulatory, inventory and logistics, customer service, credit and collections, risk management, and quality assurancesystems in order to successfully support our commercialization activities in all of the jurisdictions we currently s ell and market, or anticipate selling and marketing,our products. Many of these competencies require compliance with U.S., E.U., South American, Asian and local standards and practices, including regulatory, legaland tax requirements, with some of which we have limited experience. In this regard, should we obtain regulatory approval in an increased number of geographies,we will need to ensure that we maintain a sufficient number of personnel or develop new business processes to ensure ongoing compliance with the multitude ofregulatory requirements in those territories. Hiring, training and retaining new personnel is costly, time consuming and distracting to existing employees andmanagement. We have limited experience operating on a global scale and we may be unsuccessful complying with the variety and complexity of laws andregulations in a timely manner, if at all. In addition, in some cases, the cost of obtaining approval and maintaining compliance with certain regulations and lawsmay exceed the product revenue that we recognize from such a territory, which would adversely affect our results of operations and could adversely affect ourfinancial condition.

Further, in June 2016, the U.K. held a referendum in which voters approved an exit from the E.U., commonly referred to as “Brexit,” and the U.K. governmentdelivered a notice of withdrawal in March 2017, with the U.K. scheduled to exit the E.U. by April 2019. The withdrawal could, among other outcomes, disrupt thefree movement of goods, services and people between the U.K. and the E.U., undermine bilateral cooperation in key policy areas and significantly disrupt tradebetween the U.K. and the E.U. We may also face new regulatory costs and challenges as result of Brexit that could have a material adve rse effect on ouroperations. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws toreplace or replicate. Altered regulations could add time and expense to the process by which our product candidates receive regulatory approval in the E.U. Giventhe lack of comparable precedent, it is unclear what financial, regulatory, trade and legal implications the withdrawal of the U.K. from the E.U. will have and howsuch w ithdrawal will affect us.

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Werelyonthirdpartiestomarket,sell,distributeandmaintainourproductsandtomaintaincustomerrelationshipsincertaincountries.

We have entered into distribution agreements, generally on a geographically exclusive basis, with distributors in certain regions. We rely on these distributors toobtain and maintain any necessary in-country regulatory approvals, as well as market and sell the INTERCEPT Blood System, provide customer and technicalproduct support, maintain inventories, and adhere to our quality system in all material respects, among other activities. Generally, our distribution agreementsrequire distributors to purchase minimum quantities in a given year over the term of the agreement. Failure by our distributors to meet these minimum purchaseobligations may impact our financial results. In addition, failure by our distributors to provide an accurate forecast impacts our ability to predict the timing ofproduct revenue and our ability to accurately forecast our product supply needs. While our contracts generally require distributors to exercise diligence, thesedistributors may fail to commercialize the INTERCEPT Blood System in their respective territories. For example, our distributors may fail to sell product inventorythey have purchased from us to end customers or may sell competing products ahead of or in conjunction with INTERCEPT. In addition, initial purchases ofilluminators or INTERCEPT disposable kits by these third parties may not lead to follow-on purchases of platelet and plasma systems’ disposable kits. Agreementswith our distributors typically require the distributor to maintain quality standards that are compliant with standards generally accepted for medical devices. Wemay be unable to ensure that our distributors are compliant with such standards. Further, we have limited visibility into the identity and requirements of bloodbanking customers these distributors may have. Accordingly, we may be unable to ensure our distributors properly maintain illuminators sold or provide qualitytechnical services to the blood banking customers to which they sell. In addition, although our agreements with our distributors generally require compliance withlocal anti-corruption laws, the U.S. Foreign Corrupt Practices Act, and other local and international regulations, we have limited ability to control the actions of ourdistributors to ensure they are in compliance. Noncompliance by a distributor could expose us to civil or criminal liability, fines and/or prohibitions on selling ourproducts in certain countries.

Currently, a fairly concentrated number of distributors make up a significant portion of our product revenue and we may have little recourse, short of termination,in the event that a distributor fails to execute according to our expectations and contractual provisions. In the past, we have experienced weaker than expectedgrowth due to declining performance by certain of our distributors. Periodically, we transition certain territories to new distribution partners or our direct sales forcewhere we believe we can improve performance relative to the distributor. Because new distribution partners or our direct sales force may have limited experiencemarketing and selling our products in certain territories, or at all, we cannot be certain that they will perform better than the predecessor distributor. In certain cases,our distributors hold the regulatory approval to sell INTERCEPT for their particular geography. Termination, loss of exclusivity or transitioning from thesedistributors would require us to negotiate a transfer of the applicable regulatory approvals to us or new distributors which may be difficult to do in a timely manner,or at all. We expect that our product revenue will be adversely impacted with the loss or transition of one or more of these distributors. If we chose to terminatedistributor agreements, we would either need to reach agreement with, qualify, train and supply a replacement distributor or supply and service end-user customeraccounts in those territories ourselves. Although our distribution agreements generally provide that the distributor will promptly and efficiently transfer its existingcustomer agreements to us, there can be no assurance that this will happen in a timely manner or at all or that the distributor will honor its outstanding amountsowed to us. In addition, terminated distributors may own illuminators placed at customer sites and may require us to repurchase those devices or require end-usercustomers to purchase new devices from us. Additionally, we may need terminated distributors to cooperate with us or a new distributor in transitioning sub-distributor relationships and contracts, hospital contracts, public tenders, or regulatory certificates or licenses held in their name. These factors may be disruptivefor our customers and our reputation may be damaged as a result. Our distribution partners may have more established relationships with potential end usercustomers than a new distributor or we may have in particular territory, which could adversely impact our ability to successfully commercialize our products inthese territories. In addition, it may take longer for us to be paid if payment timing and terms in these new arrangements are less favorable to us than those in ourexisting distributor arrangements. As we service end-user accounts directly rather than through distributors, we incur additional expense, our working capital isnegatively impacted due to longer periods from cash collection from direct sales customers when compared to the timing of cash collection from our formerdistribution partners and we may be exposed to additional complexity including local statutory and tax compliance. Current or transitioning distributors mayirreparably harm relationships with local existing and prospective customers and our standing with the blood banking community in general. In the event that weare unable to find alternative distributors or mobilize our own sales efforts in the territories in which a particular distributor operates, customer supply, ourreputation and our operating results may be adversely affected. In addition, in territories where new distributors are responsible for servicing end-user accounts,there will be a period of transition in order to properly qualify and train these new distributors, which may disrupt the operations of our customers and adverselyimpact our reputation and operating results.

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OurproductsareanoveltechnologyintheU.S.andbloodcentersandclinicianshavelittletonoexperiencewithpathogenreductionsystems.Further,wehavenopriorexperiencecommercializingproductsintheU.S.WemaybeunabletodevelopandmaintainaneffectiveandqualifiedU.S.basedcommercialorganizationoreducatebloodcenters,cliniciansandhospitalpersonnel. Asaresult, wemaynotbeabletosuccessfullyeducatethemarketonthevalueofpathogenreductionorcommercializeourplateletandplasmasystemsintheU.S.

Our ability to generate significant product revenue from our platelet and plasma systems depends in part on our ability to achieve market acceptance of, and tootherwise effectively market, our platelet and plasma systems in the U.S. Even if we are able to achieve market acceptance in the U.S. or newly commercializedmarkets, we have provided and may continue to provide adoption incentives which may negatively impact our reported sales. As a company, we have no priorexperience in commercializing any products in the U.S. and we still need to attract, retain, train and support sales, marketing and scientific affairs personnel andother commercial talent. For example, we need to attract and retain medical science liaisons, or MSLs, to help educate hospitals and physicians on our products,clinical trial history and publications. MSLs are highly educated and trained professionals and the hiring and employment market for MSLs is highly competitive.As such, we need to commit significant additional management and other resources in order to maintain and expand our MSL team and sales and marketingfunctions. We may be unable to develop and maintain adequate MSL, sales and marketing capabilities for the U.S. market and we also may not be able to devotesufficient resources to the advertising, promotion and sales efforts for the platelet and plasma systems in the U.S. We will also have to compete with other lifesciences and medical device companies to recruit, hire, train and retain the MSL, sales and marketing personnel that we anticipate we need. For these and otherreasons, we may be unable to develop and maintain an effective and qualified U.S.-based commercial organization in a cost-effective manner or realize a positivereturn on our investment. If we are unable to develop and maintain an effective and qualified U.S.-based commercial organization in a timely manner or at all, wemay fail to realize the full sales potential of our platelet and plasma systems in the U.S. In addition, should we seek and obtain approval for unique biologicalproducts created by use of the INTERCEPT blood system, we may choose to sell the treated end product directly to hospitals using our commercial organization.We have no experience selling biological end products directly to hospitals which may cause a distraction for our commercial organization or we may be viewed asa competitive threat to our blood center customers.

Ourmanufacturingsupplychainexposesustosignificantrisks.

We do not own our own manufacturing facilities, but rather manufacture our products using a number of third party suppliers, many of whom are our sole suppliersfor the particular product or component that we procure. We rely on various contracts and our relationships with these suppliers to ensure that the sourced productsare manufactured in sufficient quantities, timely, to our exact specifications and at prices we agree upon with the supplier. The price that we pay to some of oursuppliers is dependent on the volume of products or components that we order. If we are unable to meet the volume tiers that afford the most favorable pricing, ourgross margins will be negatively impacted.

In October 2015, we amended and restated our manufacturing and supply agreement with Fresenius. Under the amended agreement, Fresenius is obligated to sell,and we are obligated to purchase finished disposable kits for the platelet, plasma and red blood cell kits from Fresenius with certain exceptions permitted. Theinitial term of the amended agreement extends through July 1, 2025, and is automatically renewed thereafter for additional two year renewal terms, subject totermination by either party upon (i) two years written notice prior to the expiration of the initial term or (ii) one year written notice prior to the expiration of anyrenewal term. We and Fresenius each have normal and customary termination rights, including termination for material breach. Fresenius is our sole supplier forthe manufacture of these products. Fresenius may fail to manufacture an adequate supply of INTERCEPT disposable kits which would harm our business.Disruptions to our supply chain as a result of any potential ensuing protests, strikes or other work-stoppages would be detrimental to our business and operatingresults. While we and Fresenius recently entered into the amended agreement, in the event Fresenius refuses or is unable to continue operating under the amendedagreement, we may be unable to maintain inventory levels or otherwise meet customer demand, and our business and operating results would be materially andadversely affected.

We also have contracts with other third-party suppliers, including Ash Stevens for the manufacture of amotosalen, our proprietary compound for reducingpathogens that is used in our platelet and plasma systems; Purolite, and separately, Porex, for the manufacture of components of the compound adsorption devicesused in our platelet and plasma systems; and NOVA for the manufacture of illuminators and certain components of the INTERCEPT Blood System. Theseindependent suppliers are currently our sole qualified suppliers for such components and products.

Our manufacturing and supply agreement with Ash Stevens currently extends through December 31, 2017, and is automatically renewable thereafter for periods oftwo years each, but may be terminated by Ash Stevens provided that Ash Stevens notifies us in writing at least two years in advance. Although we are not subjectto minimum annual purchase requirements under the manufacturing and supply agreement with Ash Stevens, we may be required to pay a maintenance fee of up to$50,000 a year if specified quantities of amotosalen are not purchased in any year. We have incurred these maintenance fees in the past and may incur thesemaintenance fees in future periods.

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In April 2017, we entered into an amended and restated manufactur ing and supply agreement with Porex for the manufacture and supply of compound adsorptiondevices used in our platelet and plasma systems. Porex is our sole supplier for certain components of and manufacturing of the compound adsorption devices.Under the amended and restated Porex agreement, we are no longer subject to a minimum annual purchase requirement; however, Porex has the right to terminatethe agreement, upon twelve months’ prior written notice, if annual production falls below a mutually agreed t hreshold. If not sooner terminated, the amended andrestated Porex agreement expires on December 31, 2019. In addition, we entered into an amended and restated supply agreement with Purolite, which suppliesother components of the compound adsorption devic es, in April 2014. The amended supply agreement expires in April 2021 and will automatically renew for anadditional year unless either party has provided notice not to renew at least two years prior to the expiration. Under the terms of the amended agreem ent, pricing isvolume based and is subject to annual, prospective adjustments based on a Producer Price Index subject to an annual cap. Our agreement with NOVA, whichmanufacturers our illuminators, currently extends through September 2017 and is automati cally renewable for one year terms, but may be terminated by NOVA onat least twelve months’ prior written notice. We have not been notified by NOVA of their intention to terminate the agreement.

Facilities at which the INTERCEPT Blood System or its components are manufactured may cease operations for planned or unplanned reasons or may unilaterallychange the formulations of certain commercially available reagents that we use, causing at least temporary interruptions in supply. Even a temporary failure tosupply adequate numbers of INTERCEPT Blood System components may cause an irreparable loss of customer goodwill. Although we are actively evaluatingalternate suppliers for certain components, we do not have qualified suppliers beyond those on which we currently rely, and we understand that Fresenius reliessubstantially on sole suppliers of certain materials for our products. In addition, suppliers that our contract manufacturers source components and raw materialsfrom may cease production of or providing those components to our contract manufacturers. For example, we understand that certain plastics used to makeINTERCEPT disposable kits are no longer available. As a result, we and our manufacturers have identified alternate plastics but will need to qualify and validatethose plastics before we can seek regulatory approval and begin to utilize them in commercial manufacturing. Identification and qualification of alternate suppliersis time consuming and costly, and there can be no assurance that we will be able to demonstrate equivalency of alternate components or suppliers or that we willreceive regulatory approval in the U.S. or other jurisdictions. If we conclude that supply of the INTERCEPT Blood System or components from suppliers isuncertain, we may choose to build and maintain inventories of raw materials, work-in-process components, or finished goods, which would consume capitalresources faster than we anticipate and may cause our supply chain to be less efficient.

Currently NOVA is manufacturing illuminators to meet customer demand and maintain our own inventory levels. Subject to obsolescence, we may be required toidentify and qualify replacement components for illuminators and in doing so, we may be required to conduct additional studies, which could include clinical trialsto demonstrate equivalency or validate any required design or component changes. We and our customers rely on the availability of spare parts to ensure thatcustomer platelet and plasma production is not interrupted. If we are not able to supply spare parts for the maintenance of customer illuminators, our ability to keepexisting customers or sign up new customers may be negatively impacted. Due to the obsolescence of certain parts, we have redesigned the illuminators used i n theplatelet and plasma systems, and we will need to receive approval of this redesign from the FDA. Our failure to obtain FDA and foreign regulatory approvals of anew illuminator could constrain our ability to penetrate the U.S. market and may otherwise significantly limit product revenue from sales of the platelet and plasmasystems. In any event, delays in receipt or failure to receive these approvals could reduce our sales and negatively impact our profitability potential and futuregrowth prospects. Furthermore, we understand that components used in the redesigned illuminator are no longer commercially available beyond what we and Novahave stockpiled or access to under final buy transactions. We will need to continue investing in subsequent versions of the illuminator to enhance functionality andmanage obsolescence. In addition, our illuminators contain embedded proprietary software that runs on software code we have developed and that we own.Changes to certain components due to obsolescence, illuminator redesign or market demand, may require us to modify the existing software code or to develop newilluminator software. Our ability to develop new illuminator software, correct coding flaws and generally maintain the software code is reliant on third-partycontractors who, in some cases, have sole knowledge of the software code. Our ability to develop and maintain the illuminator software may be impaired if we arenot able to continue contracting with those key third-party contracted developers or if we are unable to source alternate employees or consultants to do so. Softwaredevelopment is inherently risky and may be time consuming and costly.

In the event that alternate manufacturers are identified and qualified, we will need to transfer know-how relevant to the manufacture of the INTERCEPT BloodSystem to such alternate manufacturers; however, certain of our supplier’s materials, manufacturing processes and methods are proprietary to them, which willimpair our ability to establish alternate sources of supply, even if we are required to do so as a condition of regulatory approval. We may be unable to establishalternate suppliers without having to redesign certain elements of the platelet and plasma systems. Such redesign may be costly, time consuming and require furtherregulatory review and approvals. We may be unable to identify, select, and qualify such manufacturers or those third parties able to provide support fordevelopment and testing activities on a timely basis or enter into contracts with them on reasonable terms, if at all. Moreover, the inclusion of componentsmanufactured by new suppliers could require us to seek new or updated approvals from regulatory authorities, which could result in delays in product delivery. Wemay not receive any such required regulatory approvals. We cannot assure you that any amendments to existing manufacturing agreements or any newmanufacturing agreements that we may enter into

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will contain terms more favorable to us than those that we currently have with ou r manufacturers. Many of the existing agreements we have with suppliers containprovisions that we have been operating under for an extended period of time, including pricing. Should we enter into agreements or amend agreements with anymanufacturer with l ess favorable terms, including pricing, our results of operations may be impacted, our recourse against such manufacturers may be limited, andthe quality of our products may be impacted.

Raw materials, components or finished product may not meet specifications or may be subject to other nonconformities. In the past, non-conformities in certaincomponent lots have caused delays in manufacturing of INTERCEPT disposable kits. Similarly, we have experienced non-conformities and out of specificationresults in certain component manufacturing needed for commercial sale and regulatory submissions. Non-conformities can increase our expenses and reduce grossmargins or result in delayed regulatory submissions. Should non-conformities occur in the future, we may be unable to manufacture products to meet customerdemand, which would result in lost sales and could cause irreparable damage to our customer relationships. Later discovery of problems with a product,manufacturer or facility may result in additional restrictions on the product, manufacturer or facility, including withdrawal of the product from the market. We aresubject to risks and costs of product recall, which include not only potential out-of-pocket costs, but also potential interruption to our supply chain. In such anevent, our customer relations could be harmed and we would incur unforeseen losses.

In the event of a failure by Fresenius or other manufacturers to perform their obligations to supply components of the INTERCEPT Blood System to us, damagesrecoverable by us may be insufficient to compensate us for the full loss of business opportunity. Many of our supply agreements contain limitations on incidentaland consequential damages that we may recover. A supplier’s potential liability in the event of non-performance may not be sufficient to compel the supplier tocontinue to act in conformity with our agreements. Our product supply chain requires us to purchase certain components in minimum quantities and may result in aproduction cycle of more than one year. Significant disruptions to any of the steps in our supply chain process may result in longer productions cycles which couldlead to inefficient use of cash or may impair our ability to supply customers with product.

We may encounter unforeseen manufacturing difficulties which, at a minimum, may lead to higher than anticipated costs, scrap rates, or delays in manufacturingproducts. In addition, we may not receive timely or accurate demand information from distributors or may not accurately forecast demand ourselves for theINTERCEPT Blood System. Further, certain customers require, and potential future customers may require, product with a minimum shelf life. As a result, we mayneed to manufacture sufficient product to meet that forecasted demand. As a result, we may carry excess work-in-process or finished goods inventory, which wouldconsume capital resources and may become obsolete, or our inventory may be inadequate to meet customer demand. We have entered into certain public tenders,some which call for us to maintain certain minimum levels of inventory. If our suppliers fail to produce components or our finished products satisfactorily, timely,at acceptable costs, and in sufficient quantities, we may incur delays, shortfalls and additional expenses, or non-compliance with certain public tenders which mayin turn result in permanent harm to our customer relations or loss of customers. Conversely, we may choose to overstock inventory in order to mitigate anyunforeseen potential disruption to manufacturing which could consume our cash resources faster than we anticipate and may cause our supply chain to be lessefficient. Our platelet and plasma systems’ disposable kits have a two-year shelf life from the date of manufacture. Should we change or modify any of our productconfigurations or components, such future configurations of our products may not achieve the same shelf life that existing products have. In addition, we and ourdistributors may be unable to ship product to customers prior to the expiration of the product shelf life, a risk that is heightened if we elect to increase our inventorylevels in order to mitigate supply disruptions. Certain customers may require product with a minimum shelf life remaining prior to shipment. If customers requiringminimum shelf-lives order smaller quantities or do not purchase product as we anticipate, or at all, we may have elevated inventory levels with relatively shortshelf-lives which may lead to increased write-offs and inefficient use of our cash. Should we chose not to fulfill smaller orders with minimum shelf lives, ourproduct sales may be harmed. We will need to destroy or consume outdated inventory in product demonstration activities, which may in turn lead to elevatedproduct demonstration costs and/or reduced gross margins.

Obsolescence or shortage of raw materials, key components of and accessories to the INTERCEPT Blood System, may impact our ability to supply ourcustomers,maynegativelyimpacttheoperationalcostsofourcustomersandmayincreasethepricesatwhichwesellourproducts,resultinginslowerthananticipatedgrowthornegativefuturefinancialperformance.

The manufacture, supply and availability of key components of, and accessories to, our products are dependent upon a limited number of third parties and thecommercial adoption and success of our products is dependent upon the continued availability of these components or accessories. For example, our customers relyon continued availability of third-party supplied plastics, saline and reagents for processing, storing and manufacturing blood components. If the blood productindustry experiences shortages of these components or accessories, the availability and use of our products may be impaired. Additionally, the current internationalshortage of saline has adversely impacted our ability to source the optimal fill weight of saline vials for use in our chronic anemia study of the red blood cellsystem. As a result, we were required to purchase saline vials with higher than preferred fill weights at a higher cost.

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With respect to the manufacture of our products, our third party manufacturers source components and raw materials for the manufacture of the INTERCEPTprocessing sets. Certain of the se components are no longer commercially available, are nearing end-of-life or are available only from a limited number ofsuppliers. We and our third party manufacturers do not have guaranteed supply contracts with all of the raw material or component sup pliers for our products,which magnifies the risk of shortage and obsolescence and decreases our manufacturers’ ability to negotiate pricing with their suppliers. Any shortage orobsolescence of raw materials, components or accessories or our inability to control costs associated with raw materials, components or accessories, could increaseour costs to manufacture our products. Further, if any supplier to our third party manufacturers is unwilling or unable to provide high quality raw materials inrequired quantities and at acceptable prices, our manufacturers may be unable to find alternative sources or may fail to find alternative suppliers at commerciallyacceptable prices, on satisfactory terms, in a timely manner, or at all. If any of these events were to occur, our product quality, competitive position, reputation andbusiness could suffer, we could experience cancellations of customer orders, refusal by customers to accept deliveries or a reduction in our prices and margins tothe detriment of our fin ancial performance and results of operations.

We are subject to federal, state and foreign laws governing our business practices which, if violated, could result in substantial penalties and harm ourreputationandbusiness.

We are subject to a number of laws that affect our sales, marketing and other promotional activities by limiting the kinds of financial arrangements we may havewith hospitals, physicians, healthcare providers or other potential purchasers of our products. These laws are often broadly written, and it is often difficult todetermine precisely how these laws will be applied to specific circumstances. For example, within the E.U., the control of unlawful marketing activities is a matterof national law in each of the member states. The memb er states of the E.U. closely monitor perceived unlawful marketing activity by companies. We could facecivil, criminal and administrative sanctions if any member state determines that we have breached our obligations under its national laws. Industry associations alsoclosely monitor the activities of member companies. If these organizations or authorities name us as having breached our obligations under their regulations, rulesor standards, our reputation would suffer and our business and financial condition could be adversely affected.

In addition, there are numerous U.S. federal and state healthcare regulatory laws, including, but not limited to, anti-kickback laws, false claims laws, privacy laws,and transparency laws. Our relationships with healthcare providers and entities, including but not limited to, hospitals, physicians, healthcare providers and ourcustomers are or will be subject to scrutiny under these laws. Violations of these laws can subject us to penalties, including, but not limited to, administrative, civiland criminal penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in federal and state healthcare programs, including the Medicareand Medicaid programs, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolveallegations of non-compliance with these laws, and the curtailment of our operations. Healthcare fraud and abuse regulations are complex, and even minorirregularities can potentially give rise to claims that a statute or prohibition has been violated. The laws that may affect our ability to operate include, but are notlimited to:

• the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully offering, paying,soliciting, or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in exchange for or to induce, the referral of anindividual for, the purchase, lease, order or recommendation of, any good, facility, item or service for which payment may be made, in whole or inpart, under federal healthcare programs such as Medicare and Medicaid;

• federal false claims laws that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval fromMedicare, Medicaid or other federal payors that are false or fraudulent, or knowingly making a false statement to improperly avoid, decrease orconceal an obligation to pay money to the federal government, and which may apply to entities that provide coding and billing advice to customers;

• the civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presentedor caused to be presented, a claim to a federal healthcare program that the person knows, or should know, is for an item or service that was notprovided as claimed or is false or fraudulent;

• the federal Health Insurance Portability and Accountability Act of 1996, as amended, or HIPAA, which created federal criminal laws that prohibitexecuting a scheme to defraud any healthcare benefit program, including private payors, or making false statements relating to healthcare matters;

• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respectiveimplementing regulations, which impose requirements on certain covered healthcare providers, health plans and healthcare clearinghouses as well astheir business associates that perform services for them that involve individually identifiable health information, relating to the privacy, security andtransmission of individually identifiable health information without appropriate authorization, including mandatory contractual terms as well asdirectly applicable privacy and security standards and requirements;

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• the Federal Trade Commission Act and simil ar laws regulating advertisement and consumer protections; and

• foreign or U.S. state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items orservices reimbursed by any third-party payor, including commercial insurers; U.S. state laws that require device companies to comply with theindustry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government or otherwise restrictpayments that may be made to healthcare providers; U.S. state laws that require device manufacturers to report information related to payments andother transfers of value to physicians and other healthcare providers or marketing expenditures; and U.S. state laws governing the privacy andsecurity of certain health information, many of which differ from each other in significant ways and often are not preempted by HIPAA, thuscomplicating compliance efforts.

We are also subject to foreign laws and regulations covering data privacy and the protection of health-related and other personal information. In this regard, E.U.member states and other foreign jurisdictions, including Switzerland, have adopted data protection laws and regulations which impose significant complianceobligations. For example, the E.U. Data Protection Directive, as implemented into national laws by the E.U. member states, imposes strict obligations andrestrictions on the ability to collect, analyze and transfer personal data, including health data from clinical trials and adverse event reporting. The E.U. DataProtection Directive prohibits the transfer of personal data to countries outside of the European Economic Area, or EEA, such as the U.S., which are not consideredby the European Commission, or EC, to provide an adequate level of data protection. Switzerland has adopted similar restrictions. Although there are legalmechanisms to allow for the transfer of personal data from the EEA and Switzerland to the U.S., a recent judgment of the European Court of Justice thatinvalidated the EC decision on the U.S. safe harbor has increased uncertainty around the adequacy of these legal mechanisms. This means that it will no longer bepossible to transfer personal data from the E.U. to entities in the U.S. that rely on safe harbor certification as a legal basis for the transfer of such data. In addition,data protection authorities from the different E.U. member states may interpret the E.U. Data Protection Directive and national laws differently, and guidance onimplementation and compliance practices are often updated or otherwise revised, which adds to the complexity of processing personal data in the E.U. If we fail tocomply with applicable data privacy laws, or if the legal mechanisms we rely upon to allow for the transfer of personal data from the EEA or Switzerland to theU.S. (or other countries not considered by the EC to provide an adequate level of data protection) are not considered adequate, we could be subject to governmentenforcement actions and significant penalties against us, and our business could be adversely impacted if our ability to transfer personal data outside of the EEA orSwitzerland is restricted, which could adversely impact our operating results. Further, a proposal for an E.U. Data Protection Regulation, intended to replace thecurrent E.U. Data Protection Directive, is currently under consideration. The proposed E.U. Data Protection Regulation, if adopted, is expected to introduce newdata protection requirements and substantial fines for breaches of the data protection rules. When the draft E.U. Data Protection Regulation is adopted, it mayincrease our responsibility and liability in relation to personal data that we process, and we may be required to put in place additional mechanisms to ensurecompliance with the new E.U. data protection rules.

We are also subject to the U.S. Foreign Corrupt Practices Act and anti-corruption laws, and similar laws with a significant anti-corruption intent in foreigncountries. In general, there is a worldwide trend to strengthen anticorruption laws and their enforcement. Any violation of these laws by us or our agents ordistributors could create a substantial liability for us, subject our officers and directors to personal liability and also cause a loss of reputation in the market. Wecurrently operate in many countries where the public sector is perceived as being more or highly corrupt. Our strategic business plans include expanding ourbusiness in regions and countries that are rated as higher risk for corruption activity, such as China, India and Russia. Becoming familiar with and implementing theinfrastructure necessary to comply with laws, rules and regulations applicable to new business activities and mitigate and protect against corruption risks could bequite costly. In addition, failure by us or our agents or distributors to comply with these laws, rules and regulations could delay our expansion into high-growthmarkets, could damage market perception of our business and could adversely affect our existing business operations. Increased business in higher risk countriescould also subject us and our officers and directors to increased scrutiny and increased liability.

Further, the United States Patient Protection and Affordable Care Act, or the ACA, among other things, amends the intent requirements of the federal Anti-Kickback Statute and certain criminal statutes governing healthcare fraud. A person or entity can now be found guilty of violating the statute without actualknowledge of the statute or specific intent to violate it. In addition, the ACA provides that the government may assert that a claim including items or servicesresulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act. Moreover, whilewe do not submit claims and our customers make the ultimate decision on how to submit claims, from time-to-time, we may provide reimbursement guidance toour customers. If a government authority were to conclude that we provided improper advice to our customers or encouraged the submission of false claims forreimbursement, we could face action against us by government authorities. Any violations of these laws, or any action against us for violation of these laws, even ifwe successfully defend against it, could result in a material adverse effect on our reputation, business, results of operations and financial condition.

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available under such laws, it is possible that someof our business activities, including our relationships with healthcare providers and entities, including,

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but not limited to, hospitals, physicians, healthcare providers and our distributors, and certain sales and marketing practices, including the provision of certain itemsand services to our customers, could be subject to challenge under one or more of such laws.

To enforce compliance with the healthcare regulatory laws, federal and state enforcement bodies have recently increased their scrutiny of interactions betweenhealthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business. Additionally, as a result of theseinvestigations, healthcare providers and entities may have to agree to additional onerous compliance and reporting requirements as part of a consent decree orcorporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.

In addition, there has been a recent trend of increased U.S. federal and state regulation of payments and transfers of value provided to healthcare professionals orentities. Section 6002 of the ACA known as the Physician Payment Sunshine Act that imposes new annual reporting requirements on device manufacturers forpayments and other transfers of value provided by them, directly or indirectly, to physicians and teaching hospitals, as well as ownership and investment interestsheld by physicians and their family members. A manufacturer’s failure to submit timely, accurately and completely the required information for all payments,transfers of value or ownership or investment interests may result in civil monetary penalties of up to an aggregate of $150,000 per year, and up to an aggregate of$1.0 million per year for “knowing failures.” Manufacturers must submit reports by the 90th day of each subsequent calendar year. Due to the difficulty incomplying with the Physician Payment Sunshine Act, we cannot assure you that we will successfully report all payments and transfers of value provided by us, andany failure to comply could result in significant fines and penalties. Some states, such as California and Connecticut, also mandate implementation of commercialcompliance programs, and other states, such as Massachusetts and Vermont, impose restrictions on device manufacturer marketing practices and tracking andreporting of gifts, compensation and other remuneration to healthcare professionals and entities. The shifting commercial compliance environment and the need tobuild and maintain robust and expandable systems to comply with different compliance and reporting requirements in multiple jurisdictions increase the possibilitythat we may fail to comply fully with one or more of these requirements.

Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Anyaction against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert ourmanagement’s attention from the operation of our business.

Most of these laws apply to not only the actions taken by us, but also actions taken by our distributors or other third party agents. We have limited knowledge andcontrol over the business practices of our distributors and agents, and we may face regulatory action against us as a result of their actions which could have amaterial adverse effect on our reputation, business, results of operations and financial condition.

In addition, the scope and enforcement of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light ofthe lack of applicable precedent and regulations. U.S. federal or state regulatory authorities might challenge our current or future activities under these laws. Anysuch challenge could have a material adverse effect on our reputation, business, results of operations and financial condition. Any U.S. federal or state or foreignregulatory review of us, regardless of the outcome, would be costly and time-consuming. Additionally, we cannot predict the impact of any changes in these laws,whether or not retroactive. Compliance with these and other changing regulations will increase our costs and may require increasing management attention.

Legislative,regulatory,orotherhealthcarereformsmaymakeitmoredifficultandcostlyforustoobtainregulatoryapprovalofourproductsandtoproduce,marketanddistributeourproductsafterapprovalisobtained.

Regulatory guidance and regulations are often revised or reinterpreted by the regulatory agencies in ways that may significantly affect our business and ourproducts. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of our products.Delays in receipt of, or failure to receive, regulatory approvals for our new products or product configurations would have a material adverse effect on our business,results of operations and financial condition.

Federal and state governments in the U.S. have recently enacted legislation to overhaul the nation’s healthcare system. While the goal of healthcare reform is toexpand coverage to more individuals, it also involves increased government price controls, additional regulatory mandates and other measures designed toconstrain medical costs. The ACA significantly impacts the medical device industry. Among other things, the ACA:

• imposes an annual excise tax of 2.3% on entities that manufacture or import eligible medical devices offered for sale in the U.S.;

• establishes a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in aneffort to coordinate and develop such research;

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• implements payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providersto improve the coordination, quality and efficiency of certain heal thcare services through bundled payment models; and

• creates an independent payment advisory board that will submit recommendations to reduce Medicare spending if projected Medicare spendingexceeds a specified growth rate.

Since its enactment, there have been judicial and Congressional challenges to numerous provisions of the ACA. In January 2017, President Trump signed anExecutive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, o r delay theimplementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, ormanufacturers of pharmaceuticals or medical devices. The U.S. House of Representatives passed legislation known as the American Health Care Act of 2017 inMay 2017. More recently, the Senate Republicans released and then updated an ACA replacement bill known as the Better Care Reconciliation Act of 2017. TheSenate Republicans also introduced legislation to repeal the ACA without companion legislation to replace it, and a “skinny” version of the Better CareReconciliation Act of 2017. Each of these measures was rejected by the full Senate. Congress will likely consider other legislat ion to replace elements of the ACA,which may have the effect of limiting the amounts that governments will pay for healthcare products and services, which could result in reduced demand for ourproducts or additional pricing pressure, or may lead to significant deregulation, which could make the introduction of competing products and technologies mucheasier. Policy changes, including potential modification or repeal of all or parts of the ACA or the implementation of new health care legislation could result insignificant changes to the health care system, which could have a material adverse effect on our business, results of operations and financial condition.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. On August 2, 2011, President Obama signed into law theBudget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spendingreductions. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering thelegislation’s automatic reduction to several government programs. This includes reductions to Medicare payments to providers of 2% per fiscal year, which wentinto effect in April 2013 and will stay in effect through 2024, unless additional congressional action is taken. On January 2, 2013, President Obama signed into lawthe American Taxpayer Relief Act of 2012 which, among other things, further reduced Medicare payments to several providers, including hospitals, and increasedthe statute of limitations period for the government to recover overpayments to providers from three to five years.

In January 2017, President Trump became President of the U.S. The administration has publicly stated a core goal is to deregulate wherever possible. It is unclear ifthis contraction in regulation would also apply to guidance documents that would impact our industry. For example, the FDA has indicated that they will finalizeguidance prescribing steps blood centers would have to comply with to safeguard platelet products from bacterial contamination. The initial draft guidanceprescribed our technology as an option. Should the administration remove such guidance documentation, market uptake for INTERCEPT platelets may beimpaired. Conversely, any significant deregulation could make the introduction of competing products and technologies much easier than the burden faced by us inorder to receive FDA approval. We expect that additional U.S federal and state and foreign healthcare reform measures will be adopted in the future, any of whichcould limit the amounts that governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricingpressure.

Ourplateletandplasmaproductsandproductcandidatesarenotcompatiblewithsomecollection,productionandstoragemethodsorcombinationsthereof.Further,bloodcentersusingINTERCEPTmusthaveaccesstothosecertaindevices,bloodbags,assaysorplateletadditivesolutionsthatarecompatiblewithourproducts.

The equipment and materials used to collect platelets vary by manufacturer and by geographic region. Platelets may be collected from a single donor by apheresisusing an automated collection machine. Apheresis devices currently used in the U.S. and European markets differ, among other characteristics, in their ability tocollect platelets in reduced volumes of plasma. Platelet collection device manufacturers may need to modify device collection parameters or software before aprospective customer could use INTERCEPT. If these manufacturers are not cooperative or are resistant to assist their customers or do not assist with making suchmodifications, the potential market for our products may be limited. Platelet concentrates may also be prepared from whole blood by pooling together plateletsfrom multiple donors. There are two commonly used methods for preparing whole blood platelets: the buffy coat method, which is used extensively in Europe, andthe pooled random donor method, which is used in the U.S. Our platelet system is designed to work with platelets collected and stored in storage solutions, calledInterSol and SSP+, and for platelets s uspended in 100% plasma. Fresenius is the exclusive manufacturer of InterSol and MacoPharma of SSP+, both widely-usedPASs. Many of our customers and prospective customers use InterSol or SSP+ in connection with INTERCEPT treatment. Similarly, many of our customerscombine multiple plasma components from whole blood donations before treating the combined plasma product with INTERCEPT. Grifols makes such a product(Plasmix). Customers’ ability to use our INTERCEPT products may be impaired should manufacturers of those products, including those sold by Grifols, notprovide access to the products allowing for the combination of multiple components.

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Should manufacturers of collection devices, compatible assays and blood bags, pooling sets o r platelet additive so lutions fail to obtain or maintain regulatoryapproval , experience unexpected production disruption, or decide to cease distribution of those respective products to customers and prospective customers, ourability to sell the INTERCEPT Blood System may be impaired and acceptance in the marketplace could be harmed .

In order to address the entire market in the U.S., Japan, and potentially elsewhere, we will need to develop and test additional configurations of the platelet system.For example, in the U.S., we understand a significant number of platelet concentrates are derived from larger volumes collected from apheresis donors split intothree therapeutic transfusable doses. Future configurations of the platelet system will be needed to treat platelet donations with such processing parameters. Weestimate that the majority of platelets used in the U.S. are collected by apheresis, though a significant minority is prepared from pooled random donor plateletsderived from whole blood collections. In addition, many blood centers may view pooled random donor platelets treated with INTERCEPT as an economicallyoptimal approach. In order to gain regulatory approvals for a pathogen reduction system compatible with triple dose collections, and random donor platelets, wewill need to perform additional product development and testing, including additional clinical trials. We have conducted and may conduct additional invitrostudiesfor our platelet system to potentially expand our label claims to include, among others, platelets collected from pooled random donors, storage of INTERCEPT-treated platelets for up to seven days rather than five days, and a new processing set for triple dose collections. In the U.S, our approved labels for the plateletsystem from the FDA limit our current approvals to certain platelet collection platforms and a particular storage solution for the particular collection platform. Forinstance, our approved claims permit apheresis collection of platelets on the Fresenius Amicus device while stored in an additive solution or for apheresis collectionof platelets collected on the Terumo Trima device and stored in 100% plasma. We may be required to provide the FDA with data for each permutation for whichblood banking treatment practices exist which may be time consuming, costly and limit the potential size of the U.S. market that can use our products. Our failureto obtain FDA and foreign regulatory approvals of any new configurations could significantly limit product revenue from sales of the platelet system. In addition,given that there is some loss of platelets using our product, blood centers may need to increase collection volumes in order to use our product and maintain anadequate concentration for a triple therapeutic dose. In any event, delays in receipt or failure to receive approval could reduce our sales and negatively impact ourprofitability potential and future growth prospects. Similarly, to achieve market acceptance in certain geographies, we may be required to design, develop and testnew product configurations for the platelet and plasma systems. In addition, if the FDA or other regulatory or accrediting body were to mandate safetyinterventions, including the option of pathogen reduction technology, when we had not received approval for all operational configurations, the market to which wecould sell our products may be limited until we obtain such approvals, if ever, or may be permanently impaired if competing options are more broadly available. Inaddition, we will need to continue to generate acceptable data in order to conform with the evolving collection practices such as automated whole-blood collection.If we are unable to conform to evolving collection practices our ability to address those portions of the market may be compromised. These development activitieswill increase our costs significantly and may not be successful. We may need to demonstrate the safety and efficacy of our platelet system using a variety ofconfigurations before our platelet system would be approved for such configurations. Delays in obtaining any future approvals would adversely affect our ability tointroduce new or enhanced products in a timely manner, which in turn would harm our product revenue and potential future profitability.

Ifourcompetitorsdevelopproductssuperiortoours,markettheirproductsmoreeffectivelythanwemarketourproducts,orreceiveregulatoryapprovalbeforeourproducts,ourcommercialopportunitiescouldbereducedoreliminated.

We expect our products will continue to encounter significant competition. The INTERCEPT Blood System products compete with other approaches to bloodsafety currently in use and may compete with future products that may be developed by others. Our success will depend in part on our ability to respond quickly tocustomer and prospective customer needs, successfully receive and maintain regulatory approvals, and adapt to medical and technological changes brought aboutby the development and introduction of new products. Competitors’ products or technologies may make our products obsolete or non-competitive before we areable to generate any significant product revenue. In addition, competitors or potential competitors may have substantially greater financial and other resources thanwe have. They may also have greater experience in preclinical testing, human clinical trials and other regulatory approval procedures. If competitors’ productsexperience significant problems, customers and potential customers may question the safety and efficacy of all pathogen reduction technologies, including theINTERCEPT Blood System. Such questions and concerns may impair our ability to market and sell the INTERCEPT Blood System.

Several companies have, or are developing, technologies that are, or in the future may be, the basis for products that will directly compete with or reduce the marketfor our pathogen reduction systems. A number of companies are specifically focusing on alternative strategies for pathogen reduction in platelets and plasma.

These alternative strategies may be more effective in reducing certain types of pathogens from blood products, including certain non-lipid-enveloped viruses, suchas hepatitis A and E viruses, which our products have not demonstrated an ability to inactivate, or human parvovirus B-19, which is also a non-lipid-envelopedvirus, for which our products have not demonstrated a high level of inactivation. While studies have demonstrated that our products can effectively inactivate abroad spectrum of pathogens in blood components, market adoption of our products may be reduced if customers determine that competitors’ products inactivate abroader range of pathogens that are of particular interest to the transfusion medicine community. In addition, customers and prospective

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customers may believe that our competitors’ products are safer, m ore cost effective or easier to implement and incorporate into existing blood processingprocedures than INTERCEPT Blood System products. In Europe, several companies, including Grifols S.A., Octapharma AG, MacoPharma International andKedrion Biopharma, a re developing or selling commercial pathogen reduction systems or services to treat fresh frozen plasma.

MacoPharma has received CE Mark for a UVC-based product for pathogen reduced platelets. MacoPharma currently has a Phase III clinical trial underway inGermany to generate additional data for expanded approval. In addition, Terumo BCT, a subsidiary of Terumo Corporation, has developed a pathogen reductionsystem for blood products and has been issued CE marks for its system for both platelets and plasma. We further understand that Terumo BCT developed apathogen reduction system for whole blood and has recently completed a clinical trial of its whole blood system in Ghana, receiving a class II CE mark. Terumo’sproducts may offer competitive advantages over our INTERCEPT Blood System. Terumo Corporation is a large Japanese-based, multinational corporation withmore mature products and relationships than we have. Our ability to commercialize our products in certain markets, particularly in Japan, may be negativelyaffected by Terumo’s resources and their pre-existing relationships with regulators and customers. Should Terumo BCT’s product be approved for use andcommercialized in Japan, our products would likely directly compete with their products and we believe we would likely either need to establish operations inJapan or partner with a local Japanese company.

Octapharma AG received FDA approval in January 2013 to sell treated fresh frozen plasma for certain indications and is currently commercially available. ShouldOctapharma enter into exclusive agreements with key customers, our plasma system may encounter market resistance and we will have a more limited market intowhich we can sell.

In addition, we understand that Octapharma received approval to sell fresh frozen plasma in France. Octapharma’s entry into the French market may pose acompetitive threat to other pathogen reduced plasmas, including INTERCEPT and may in turn limit the potential market available to us in France.

Other companies developing competing products may also offer and sell other blood-banking products and services. As a result, competitors may have pre-existinglong-term relationships with customers and may be able to offer synergies for both pathogen reduction and non-pathogen reduction products that we are unable tooffer. Regulatory agencies may mandate use of competing products which would limit our ability to sell our products in those markets.

New methods of testing whole blood for specific pathogens have been approved by the FDA and in Europe, as have tests for bacteria in platelets. Other companiesare marketing rapid, point-of-care bacterial tests, and developing synthetic blood product substitutes and products to stimulate the growth of platelets. Developmentand commercialization of any of these or other related technologies could limit the potential market for our products as would a mandate of any competingtechnology other than INTERCEPT.

Wemaybeliable andwemayneedto withdrawourproducts fromthemarket if ourproducts harmpeople. Wemaybeliable if anaccident occurs inourcontrolleduseofhazardousmaterials.Ourinsurancecoveragemaybeinadequatetooffsetlosseswemayincur.

We are exposed to potential liability risks inherent in the testing and marketing of medical devices. We may be liable if any of our products cause injury, illness ordeath. Although we will have completed preclinical and clinical safety testing prior to marketing our products, there may be harmful effects caused by our productsthat we are unable to identify in preclinical or clinical testing. In particular, unforeseen, rare reactions or adverse side effects related to long-term use of ourproducts may not be observed until the products are in widespread commercial use. Because of the limited duration and number of patients receiving bloodcomponents treated with the INTERCEPT Blood System products in clinical trials, it is possible that harmful effects of our products not observed in preclinical andclinical testing could be discovered after a marketing approval has been received. For example, in cases where we have obtained regulatory approval for ourproducts, we have demonstrated pathogen reduction to specified levels based on well-established tests. However, there is no way to determine, after treatment byour products, whether our products have completely inactivated all of the pathogens that may be present in blood components. There is also no way to determinewhether any residual amount of a pathogen remains in the blood component treated by our products and there is no way to exclude that such residual amount wouldbe enough to cause disease in the transfused patient or was a result of a potential defect or lack of efficacy of our products. For ethical reasons, we cannot conducthuman testing to determine whether an individual who receives a transfusion of a blood component containing a pathogen that was inactivated using theINTERCEPT Blood System might show positive results if tested for an antibody against that pathogen. While we believe, based on the clinical experience of ourscientists, that the level of inactivated pathogens would likely be too small to induce a detectable antibody response in diagnostic tests, we cannot exclude that atransfused patient might show positive results if tested for an antibody against that pathogen. We could be subject to a claim from a patient that tests positive, eventhough that patient did not contract a disease. In addition, should personnel at clinical study sites or ultimately, potential customers, be harmed by amustaline, orbelieve they have been or could be harmed by amustaline, our insurance coverage may be insufficient to provide coverage for any related potential liabilities.Amustaline is considered a potent chemical and is the active compound of our red blood cell system.

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We maintain product liability insurance, but do not know whether the insurance will provide adequate coverage against potential liabilities. If we cannotsuccessfully defend ourselves against product liability cl aims, we may incur substantial liabilities or be required to limit commercialization of our products.

Our research and development activities involve the controlled use of hazardous materials, including certain hazardous chemicals, radioactive materials andinfectious pathogens, such as HIV and hepatitis viruses. Although we believe that our safety procedures for handling and disposing of hazardous materials areadequate and comply with regulatory requirements, we cannot eliminate the risk of accidental contamination or injury. If an accident occurs, we could be heldliable for any damages that result.

Arecallofourproducts,eithervoluntarilyoratthedirectionoftheFDAoranothergovernmentalauthority,orthediscoveryofserioussafetyissueswithourproductsthatleadstocorrectiveactions,couldhaveasignificantadverseimpactonus.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies ordefects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health. The FDA’s authority to require a recall must bebased on an FDA finding that there is reasonable probability that the device would cause serious injury or death. Manufacturers may also, under their owninitiative, recall a product if any material deficiency in a device is found or withdraw a product to improve device performance or for other reasons. The FDArequires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated. A government-mandated or voluntaryrecall by us or one of our distributors could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing errors, design orlabeling defects or other deficiencies and issues. Regulatory agencies in other countries have similar authority to recall devices because of material deficiencies ordefects in design or manufacture that could endanger health. Any recall would divert management attention and financial resources and could cause the price of ourstock to decline, expose us to product liability or other claims and harm our reputation with customers. Such events could impair our ability to supply our productsin a cost-effective and timely manner in order to meet our customers’ demands. Companies are required to maintain certain records of recalls, even if they are notreportable to the FDA or similar foreign governmental authorities. We may initiate voluntary recalls involving our products in the future that we determine do notrequire notification of the FDA or foreign governmental authorities. If the FDA or foreign governmental authorities disagree with our determinations, they couldrequire us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect our sales. In addition, theFDA or a foreign governmental authority could take enforcement action for failing to report the recalls when they were conducted.

In addition, under the FDA’s medical device reporting regulations, we are required to report to the FDA any incident in which our products may have caused orcontributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death orserious injury. Repeated product malfunctions may result in a voluntary or involuntary product recall. We are also required to follow detailed recordkeepingrequirements for all firm-initiated medical device corrections and removals, and to report such corrective and removal actions to FDA if they are carried out inresponse to a risk to health and have not otherwise been reported under the medical device reporting regulations. If we do not adequately address problemsassociated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrativepenalties, or civil or criminal fines. We may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as facesignificant adverse publicity or regulatory consequences, which could harm our business, including our ability to market our products in the future.

Any adverse event involving our products, whether in the U.S. or abroad could result in future voluntary corrective actions, such as recalls or customernotifications, or agency action, such as inspection, mandatory recall or other enforcement action. Any corrective action, whether voluntary or involuntary, as wellas defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm ourreputation and financial results.

Ifwefailtoobtainthecapitalnecessarytofundourfutureoperationsorifweareunabletogeneratepositivecashflowsfromouroperations,wewillneedtocurtailplanneddevelopmentorsalesandcommercializationactivities.

Our near-term capital requirements are dependent on various factors, including operating costs and working capital investments associated with commercializingthe INTERCEPT Blood System, including in connection with the continuing U.S. commercial launch of our platelet and plasma systems, costs to develop differentconfigurations of existing products and new products, including our illuminator, costs associated with planning, enrolling and completing ongoing studies, and thepost-approval studies we are required to conduct in connection with the FDA approval of the platelet system, costs associated with pursuing potential regulatoryapprovals in other geographies where we do not currently sell our platelet and plasma systems, costs associated with conducting in vitro studies and clinicaldevelopment of our red blood cell system in Europe and the U.S., including our ongoing European Phase III clinical trial of our red blood cell system for chronicanemia patients, costs associated with performing the agreed-upon activities under our BARDA agreement, and costs related to creating, maintaining and defendingour intellectual property. Our long-term capital requirements will also be dependent on the success of our sales efforts, competitive developments, the timing, costsand magnitude of our longer-term clinical trials and other development activities related to our platelet, plasma and red blood cell systems, including required post-

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approval studies for the platelet system, market preparedness and product launch activiti es for any of our products in geographies where we do not currently sellour products, and regulatory factors. Until we are able to generate a sufficient amount of product revenue and generate positive net cash flows from operations,which we may never do, meeting our long-term capital requirements is in large part reliant on continued access to funds under our BARDA agreement and thepublic and private equity and debt capital markets, as well as on collaborative arrangements with partners, augmented by cas h generated from operations andinterest income earned on the investment of our cash balances. While we believe that our available cash and cash equivalents and short-term investments, as well ascash received from product sales and under our agreement wit h BARDA , will be sufficient to meet our capital requirements for at least the next twelve months, ifwe are unable to generate sufficient product revenue, or access sufficient funds under our BARDA agreement or the public and private equity and debt capita lmarkets, we may be unable to execute successfully on our operating plan . We have based our cash sufficiency estimate on assumptions that may prove to beincorrect. If our assumptions prove to be incorrect, we could consume our available capital resources sooner than we currently expect or in excess of amounts thanwe currently expect, which could adversely affect our commercialization and clinical development activities.

We have borrowed and in the future may borrow additional capital from institutional and commercial banking sources to fund future growth, including pursuant toour amended and restated loan and security agreement with Oxford Finance, as described below, or potentially pursuant to new arrangements with different lenders.We may borrow funds on terms that may include restrictive covenants, including covenants that restrict the operation of our business, liens on assets, high effectiveinterest rates and repayment provisions that reduce cash resources and limit future access to capital markets. In addition, we expect to continue to opportunisticallyseek access to the equity capital markets to support our development efforts and operations. To the extent that we raise additional capital by issuing equitysecurities, our stockholders may experience substantial dilution. To the extent that we raise additional funds through collaboration or partnering arrangements, wemay be required to relinquish some of our rights to our technologies or rights to market and sell our products in certain geographies, grant licenses on terms that arenot favorable to us, or issue equity that may be substantially dilutive to our stockholders.

While we expect to receive significant funding under our five-year agreement with BARDA, our ability to obtain the funding we expect to receive under theagreement is subject to various risks and uncertainties, including with respect to BARDA’s ability to terminate the agreement for convenience at any time. Inaddition, access to federal contracts is subject to the authorization of funds and approval of our research plans by various organizations within the federalgovernment, including the U.S. Congress. The general economic environment, coupled w ith tight federal budgets, has led to a general decline in the amountavailable for government funding. If BARDA were to eliminate, reduce or delay funding under our agreement, this would have a significant negative impact on theprograms associated with s uch funding and could have a significant negative impact on our revenues and cash flows. In addition, if we are unable to reachagreement with the FDA on a license-enabling Phase III clinical trial design for our red blood cell system, our agreement with B ARDA will be severely limited inscope or could be terminated altogether, and our ability to complete the development activities required for licensure in the U.S. may require additional capitalbeyond which we currently have. If alternative sources of funding are not available, we may be forced to suspend or terminate development activities related to thered blood cell system in the U.S.

As a result of economic conditions, general global economic uncertainty, political change, and other factors, we do not know whether additional capital will beavailable when needed, or that, if available, we will be able to obtain additional capital on reasonable terms. If we are unable to raise additional capital due to thevolatile global financial markets, general economic uncertainty or other factors, we may need to curtail planned development or commercialization activities. Inaddition, we may need to obtain additional funds to complete development activities for the red blood cell system necessary for potential regulatory approval inEurope, if costs are higher than anticipated or we encounter delays. We may need to obtain additional funding to conduct additional randomized controlled clinicaltrials for existing or new products , particularly if we are unable to acce ss the any additional portions of the funding contemplated by our BARDA agreement, andwe may choose to defer such activities until we can obtain sufficient additional funding or, at such time, our existing operations provide sufficient cash flow toconduct these trials.

Covenantsinouramendedandrestatedloanandsecurityagreementrestrictourbusinessandoperationsinmanywaysandifwedonoteffectivelymanageourcovenants,ourfinancialconditionsandresultsofoperationscouldbeadverselyaffected.Inaddition,ouroperationsmaynotprovidesufficientcashtomeettherepaymentobligationsofourdebtincurredundertheamendedandrestatedloanandsecurityagreement.

Our amended and restated loan and security agreement with Oxford Finance provides $40.0 million of term loan funds, due July 1, 2022, of which $30.0 millionhas been borrowed to date. All of our current and future assets, except for intellectual property and 35% of our investment in our subsidiary, Cerus Europe B.V., aresecured for our borrowings under the amended and restated loan and security agreement. The amended and restated loan and security agreement requires that wecomply with certain covenants applicable to us and our subsidiary, including among other things, covenants restricting dispositions, changes in business,management, ownership or business locations, mergers or acquisitions, indebtedness, encumbrances, distributions, investments, transactions with affiliates andsubordinated debt, any of which could restrict ou r business and operations, particularly our ability to respond to changes in our business or to take specified actionsto take advantage of certain business opportunities that may be presented to us. In addition,

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receipt of a qualified audit opinion (other than as to going concern or a qualification resulting solely from the scheduled maturity of term loans occurring within oneyear from the date such opinion is delivered) would be a violation of an affirmative covenant under the amended and restated loan a nd security agreement . Whilebelieve that our available cash and cash equivalents and short-term investments, as well as cash to be received from product sales and under our agreement withBARDA, will be sufficient to meet our capital requirements for at l east the next twelve months , if we are unable to generate sufficient product revenue, or accesssufficient funds under our BARDA agreement or the public and private equity and debt capital markets, we may be unable to execute successfully on our operatingplan. Our failure to comply with any of the covenants could result in a default under the amended and restated loan and security agreement, which could permit thelenders to declare all or part of any outstanding borrowings to be immediately due and payabl e, or to refuse to permit additional borrowings under the amendedand restated loan and security agreement. If we are unable to repay those amounts, the lenders under the amended and restated loan and security agreement couldproceed against the collateral granted to them to secure that debt, which would seriously harm our business. In addition, should we be unable to comply with thesecovenants or if we default on any portion of our outstanding borrowings, the lenders can also impose a 5% penalty. Moreover , our ability to access the final $10.0million under the amended and restated loan and security agreement is subject to our ability to achieve a certain revenue threshold, which condition we may not beable to meet and which could adversely affect our liq uidity. Before we would consider accessing the final $10.0 million under the amended and restated loan andsecurity agreement, if available, we must first satisfy ourselves that we will have access to future alternate sources of capital, including cash flo w from our ownoperations, equity capital markets or debt capital markets in order to repay any principal borrowed, which we may be unable to do, in which case, our liquidity andability to fund our operations may be substantially impaired.

Virtuallyallofourresearchanddevelopmentactivitiesandthesignificantmajorityofourgeneralandadministrativeactivitiesareperformedinormanagedfromasinglesitethatmaybesubjecttolengthybusinessinterruptionintheeventofasevereearthquake.Wealsomaysufferlossofcomputerizedinformationandmaybeunabletomaketimelyfilingswithregulatoryagenciesintheeventofcatastrophicfailureofourdatastorageandbackupsystems.

Virtually all of our research and development activities and the significant portion of our general and administrative activities are performed in or managed fromour facilities in Concord, California, which are within an active earthquake fault zone. Should a severe earthquake occur, we might be unable to occupy ourfacilities or conduct research and development and general and administrative activities in support of our business and products until such time as our facilitiescould be repaired and made operational. Our property and casualty and business interruption insurance in general does not cover losses caused by earthquakes.While we have taken certain measures to protect our scientific, technological and commercial assets, a lengthy or costly disruption due to an earthquake wouldhave a material adverse effect on us. We have also taken measures to limit damage that may occur from the loss of computerized data due to power outage, systemor component failure or corruption of data files. However, we may lose critical computerized data, which may be difficult or impossible to recreate, which mayharm our business. We may be unable to make timely filings with regulatory agencies in the event of catastrophic failure of our data storage and backup systems,which may subject us to fines or adverse consequences, up to and including loss of our ability to conduct business.

Ifwefailtoattract,retainandmotivatekeypersonnelortoretainthemembersofourexecutivemanagementteam,ouroperationsandourfuturegrowthmaybeadverselyaffected.

We are highly dependent upon our executive management team and other critical personnel, including our specialized research and development, regulatory andoperations personnel, many of whom have been employed with us for many years and have a significant amount of institutional knowledge about us and ourproducts. We do not carry “key person” insurance. If one or more members of our executive management team or other key personnel were to retire or resign, ourability to achieve development, regulatory or operational milestones for commercialization of our products could be adversely affected if we are unable to replacethem with employees of comparable knowledge and experience. In addition, we may not be able to retain or recruit other qualified individuals, and our efforts atknowledge transfer could be inadequate. If knowledge transfer, recruiting and retention efforts are inadequate, significant amounts of internal historical knowledgeand expertise could become unavailable to us.

We also rely on our ability to attract, retain and motivate skilled and highly qualified personnel in order to grow our company. Competition for qualified personnelin the medical device and pharmaceutical industry is very intense. If we are unable to attract, retain and motivate quality individuals, our business, financialcondition, ability to perform under our BARDA agreement, or results of operations and growth prospects could be adversely affected. Even if we are able toidentify and hire qualified personnel commensurate with our growth objectives and opportunities, the process of integrating new employees is time consuming,costly and distracting to existing employees and management. Such disruptions may have an adverse impact on our operations, our ability to service existingmarkets and customers, or our ability to comply with regulations and laws.

All of the employees of our subsidiary, Cerus Europe B.V., are employed outside the U.S., including in France, where labor and employment laws are relativelystringent and, in many cases, grant significant job protection to certain employees, including rights on termination of employment. In addition, one of ourmanufacturing partners that we are dependent on is located in France and may have employees that are members of unions or represented by a works council asrequired by law. These more stringent labor and

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employment laws to the extent that they are applicable, coupled with the requirement to consult with the relevant unions or works’ councils, could increase ouroperational costs with respect to ou r own employees and could result in passed through operational costs by our manufacturing partner. If the increased operationalcosts become significant, our business, financial condition and results of operations could be adversely impacted.

Significantdisruptionsofinformationtechnologysystemsorbreachesofdatasecuritycouldadverselyaffectourbusiness.

Our business is increasingly dependent on complex and interdependent information technology systems, including internet-based systems, databases and programs,to support our business processes as well as internal and external communications. These computer systems are potentially vulnerable to breakdown, maliciousintrusion and computer viruses which may result in the impairment of production and key business processes or loss of data or information. Additionally, oursystems are potentially vulnerable to data security breaches—whether by employees or others—which may expose sensitive data to unauthorized persons. Suchdata security breaches could lead to the loss of trade secrets or other intellectual property, or could lead to the public exposure of personal information (includingsensitive personal information) of our employees, clinical trial patients, distributors, customers and others. Such disruptions and breaches of security could have amaterial adverse effect on our business, financial condition and results of operations.

In addition, our enterprise resource planning system, or ERP System, is extremely complex and impacts a significant number of our business processes. Should weexperience unforeseen difficulties with our ERP System, we may experience disruptions to our operations, increased costs in troubleshooting and resolving theissues, and erosion in confidence from customers and employees, any of which could have a material adverse effect on our business and operations.

Ourabilitytouseournetoperatinglosscarryforwardsandcertainothertaxattributesisuncertainandmaybelimited.

Our ability to use our federal and state net operating loss, or NOL, carryforwards to offset potential future taxable income and related income taxes that wouldotherwise be due is dependent upon our generation of future taxable income before the expiration dates of the NOL carryforwards, and we cannot predict withcertainty when, or whether, we will generate sufficient taxable income to use all of our NOL carryforwards. In addition, utilization of NOL carryforwards to offsetpotential future taxable income and related income taxes that would otherwise be due is subject to annual limitations under the “ownership change” provisions ofSections 382 of the Internal Revenue Code of 1986, as amended, or the Code, and similar state provisions, which may result in the expiration of NOLcarryforwards before future utilization. In general, under the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50%change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change taxattributes (such as research and development credit carryforwards) to offset its post-change taxable income or taxes may be limited. Our equity offerings and otherchanges in our stock ownership, some of which are outside of our control, may have resulted or could in the future result in an ownership change. Although wehave completed studies to provide reasonable assurance that an ownership change limitation would not apply, we cannot be certain that a taxing authority wouldreach the same conclusion. If, after a review or audit, an ownership change limitation were to apply, utilization of our domestic NOL and tax credit carryforwardscould be limited in future periods and a portion of the carryforwards could expire before being available to reduce future income tax liabilities.

Wemaynotbeabletoprotectourintellectualpropertyoroperateourbusinesswithoutinfringingintellectualpropertyrightsofothers.

Our commercial success will depend, in part, on obtaining and maintaining patent protection on our products and successfully defending our products against third-party challenges. Our technology will be protected from unauthorized use only to the extent that it is covered by valid and enforceable patents or effectivelymaintained as trade secrets. As a result, our success depends in part on our ability to:

• obtain patents;

• protect trade secrets;

• operate without infringing upon the proprietary rights of others; and

• prevent others from infringing on our proprietary rights.

We cannot be certain that our patents or patents that we license from others will be enforceable and afford protection against competitors. Our patents or patentapplications, if issued, may be challenged, invalidated or circumvented. Our patent rights may not provide us with proprietary protection or competitive advantagesagainst competitors with similar technologies. Others may independently develop technologies similar to ours or independently duplicate our technologies. Forexample, we are aware of a U.S. patent issued to a third-party that covers methods to remove psoralen compounds from blood products. We have reviewed thepatent

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and believe there exist substantial questions concerning its validity. We cannot be certain, however, that a court would hold the patent to be invalid or not infringedby our platelet or plasma systems. In this regard, whether or not we infringe this patent will not be known with certainty unless and until a court interprets thepatent in the context of litigation. In the event that we are found to infringe any valid claim of this patent, we may, among other things, be required to pay damages,cease the use and sale of our platelet and plasma systems and/or obtain a license from the owner of the patent, which we may not be able to do at a reasonable costor at all. Our patents expire at various dates between now and 2031. Recent patent applications will, if granted, result in patents with later expiration dates. Inaddition, we have a license from Fresenius to U.S. and f oreign patents relating to the INTERCEPT Blood System, which expire at various dates between 2018 and2024. Due to the extensive time required for development, testing and regulatory review of our potential products, our patents may expire or remain in exi stencefor only a short period following commercialization. This would reduce or eliminate any advantage of the patents.

We cannot be certain that we were the first to make the inventions covered by each of our issued patents or pending patent applications or that we were the first tofile patent applications for such inventions. We may need to license the right to use third-party patents and intellectual property to continue development andcommercialization of our products, including in connection with our planned commercialization of the platelet and plasma systems in the U.S. We may not be ableto acquire such required licenses on acceptable terms, if at all. If we do not obtain such licenses, we may need to design around other parties’ patents, or we maynot be able to proceed with the development, manufacture or sale of our products.

Our patents do not cover all of the countries in which we are selling, and planning to sell, our products. We will not be able to prevent potential competitors fromusing our technology in countries where we do not have patent coverage. Further, the laws of some foreign countries may not protect intellectual property rights tothe same extent as the laws of the U.S., including the CIS countries, China and India, jurisdictions where we are currently expanding our commercialization effortsthrough distributors. In certain countries, compulsory licensing laws exist that may be used to compel a patent owner to grant licenses to third parties, for reasonssuch as non-use of the patented subject matter within a certain period of time after patent grant or commercializing in a manner that is cost-prohibitive in thecountry. In those countries, we may have limited remedies if our patents are infringed or if we are compelled to grant a license for INTERCEPT to a third party,which could materially diminish the value of such patents. This could adversely impact our potential product revenue opportunities.

We may face litigation requiring us to defend against claims of infringement, assert claims of infringement, enforce our patents, protect our trade secrets or know-how or determine the scope and validity of others’ proprietary rights. Patent litigation is costly. In addition, we may require interference proceedings before theU.S. Patent and Trademark Office to determine the priority of inventions relating to our patent applications. Litigation or interference proceedings could beexpensive and time consuming, and we could be unsuccessful in our efforts to enforce our intellectual property rights. We may rely, in certain circumstances, ontrade secrets to protect our technology. However, trade secrets are difficult to protect. We protect our proprietary technology and processes, in part, byconfidentiality agreements with employees, consultants and contractors. These agreements may be breached and we may not have adequate remedies for anybreach or our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our employees, consultants orcontractors use intellectual property owned by others, disputes also may arise as to the rights in related or resulting know-how and inventions.

Asourinternationaloperationsgrow,wemaybesubjecttoadversefluctuationsinexchangeratesbetweentheU.S.dollarandforeigncurrencies,tariffsandothertraderestrictions.

Our international operations are subject to risks typical of an international business, including, among other factors: differing political, economic, and regulatoryclimates, different tax structures and foreign exchange volatility. We do not currently enter into any hedging contracts to normalize the impact of foreign exchangefluctuations. As a result, our future results could be materially affected by changes in these or other factors.

Product sales of the INTERCEPT Blood System sold outside of the U.S. are typically invoiced to customers in Euros. In addition, we purchase finishedINTERCEPT disposable kits for our platelet and plasma systems and incur certain operating expenses in Euros and other foreign currencies. Our exposure toforeign exchange rate volatility is a direct result of our product sales, cash collection and cash payments for expenses to support our international operations.Foreign exchange rate fluctuations are recorded as a component of other income, net on our consolidated statements of operations. Significant fluctuations in thevolatility of foreign currencies relative to the U.S. dollar may materially affect our results of operations. For example, the announcement of Brexit caused severevolatility in global currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar against foreign currencies in which we transact business,and should this foreign exchange volatility continue, it could cause volatility in our results of operations. In addition, in a period where the U.S. dollar isstrengthening/weakening as compared to Euros and other currencies we transact in, our product revenues and expenses denominated in Euros or other foreigncurrencies are translated into U.S. dollars at a lower/higher value than they would be in an otherwise constant currency exchange rate environment.

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Currently we do not have a formal hedging program to mitigate the effects of foreign currency volatility. As our commercial operations grow globally, ouroperations are exposed to more currencies and as a result our exposure to foreign exchange risk will grow.

Additionally, the Trump administration has called for substantial changes to foreign trade policy and has raised the possibility of imposing significant increases intariffs on international trade. We also rely on various U.S. corporate tax provisions related to international commerce. If we are subject to new regulations, or ifrestrictions and tariffs increase our operating costs in the future, and we are not able to recapture those costs from our customers, or if such initiatives, regulations,restrictions or tariffs make it more difficult for us to compete in overseas markets, our business, financial condition and results of operations could be adverselyimpacted.

Wecurrentlyhavealimitedtradingvolume,whichresultsinhigherpricevolatilityfor,andreducedliquidityof,ourcommonstock.

Our shares of common stock are currently quoted on the Nasdaq Global Market under the symbol “CERS.” The market for our common stock has been limited dueto low trading volume and the small number of brokerage firms acting as market makers. Active trading markets generally result in lower price volatility and moreefficient execution of buy and sell orders. The absence of an active trading market increases price volatility and reduces the liquidity of our common stock. As longas this condition continues, the sale of a significant number of shares of common stock at any particular time could be difficult to achieve at the market pricesprevailing immediately before such shares are offered, which may limit our ability to effectively raise money. In addition, due to the limitations of our market andthe volatility in the market price of our stock, investors may face difficulties in selling shares at attractive prices when they want to sell. As a result of this lack oftrading activity, the quoted price for our common stock is not necessarily a reliable indicator of its fair market value.

Weareobligatedtodevelopandmaintainproperandeffectiveinternalcontroloverfinancialreporting.Inthefuture,wemaynotcompleteouranalysisofourinternal control over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affectinvestorconfidenceinourcompanyand,asaresult,thevalueofourcommonstock.

We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internalcontrol over financial reporting. This assessment includes disclosure of any material weakness identified by our management in our internal control over financialreporting, as well as a statement that our independent registered public accounting firm has issued an attestation report on the effectiveness of our internal controlover financial reporting.

Complying with Section 404 requires a rigorous compliance program as well as adequate time and resources. As a result of expanding our commercializationefforts, developing, improving and expanding our core information technology systems as well as implementing new systems to support our sales, supply chainactivities and reporting capabilities, all of which require significant management time and support, we may not be able to complete our internal control evaluation,testing and any required remediation in a timely fashion. Additionally, if we identify one or more material weaknesses in our internal control over financialreporting, we will not be unable to assert that our internal controls are effective. For example, our management concluded that our internal control over financialreporting was ineffective as of December 31, 2014, because material weaknesses existed in our internal control over financial reporting related to the valuation ofour inventory and cost of product revenue and the timeliness and accuracy of recording adjustments to certain accrued liabilities as reported on our consolidatedbalance sheets and statements of operations. Although we have been able to successfully remediate those internal control deficiencies, to the extent we identifyfuture weaknesses or deficiencies, there could be material misstatements in our consolidated financial statements and we could fail to meet our financial reportingobligations. As a result, our ability to obtain additional financing, or obtain additional financing on favorable terms, could be materially and adversely affectedwhich, in turn, could materially and adversely affect our business, our financial condition and the value of our common stock. If we are unable to assert that ourinternal control over financial reporting is effective in the future, or if our independent registered public accounting firm is unable to express an opinion orexpresses an adverse opinion on the effectiveness of our internal controls in the future, investor confidence in the accuracy and completeness of our financialreports could be further eroded, which would have a material adverse effect on the price of our common stock.

Provisionsofourcharterdocuments,ourstockholderrightsplan,ourcompensatoryarrangementsandDelawarelawcouldmakeitmoredifficultforathirdpartytoacquireus,eveniftheoffermaybeconsideredbeneficialbyourstockholders.

Provisions of the Delaware General Corporation Law could discourage potential acquisition proposals and could delay, deter or prevent a change in control. Theanti-takeover provisions of the Delaware General Corporation Law impose various impediments to the ability of a third party to acquire control of us, even if achange in control would be beneficial to our existing stockholders. In addition, Section 203 of the Delaware General Corporation Law, unless its application hasbeen waived, provides certain default anti-takeover protections in connection with transactions between us and an “interested stockholder”. Generally, Section 203prohibits

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stockholders who, alone or together with their affiliat es and associates, own more than 15% of the subject company from engaging in certain businesscombinations for a period of three years following the date that the stockholder became an interested stockholder of such subject company without approval of theboard or the vote of two-thirds of the shares held by the independent stockholders. Our board of directors has also adopted a stockholder rights plan, or “poisonpill,” which would significantly dilute the ownership of a hostile acquirer. Additionally, pro visions of our amended and restated certificate of incorporation andbylaws could deter, delay or prevent a third party from acquiring us, even if doing so would benefit our stockholders, including without limitation, the authority ofthe board of director s to issue, without stockholder approval, preferred stock with such terms as the board of directors may determine. In addition, our executiveemployment agreements, change of control severance benefit plan and equity incentive plans and agreements thereund er provide for certain severance benefits inconnection with a change of control of us, including single-trigger equity vesting acceleration benefits with respect to outstanding stock options, which couldincrease the costs to a third party acquirer and/or deter such third party from acquiring us. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On August 4, 2017, the Company entered into Amendment No. 3 (“Amendment No. 3”) to the Controlled Equity Offering SM Sales Agreement, dated August 31,2012, as previously amended on March 21, 2014 and May 5, 2016 (as amended, the “Amended Cantor Agreement”) with Cantor Fitzgerald & Co., as sales agent(“Cantor”), pursuant to which the Company may offer and sell, from time to time, through Cantor, additional shares of the Company’s common stock (the“Common Stock”). In connection with Amendment No. 3, the Company intends to file a new shelf registration statement on Form S-3 (the “New RegistrationStatement”). Amendment No. 3 will become effective at the time the Securities and Exchange Commission declares the New Registration Statement effective. Asamended by Amendment No. 3, the Amended Cantor Agreement will provide for the issuance and sale of shares of the Company’s common stock following theeffectiveness of the New Registration Statement having an aggregate offering price of up to $70.0 million through Cantor, which amount includes any unsoldshares of Common Stock previously available for sale under the Amended Cantor Agreement prior to the effectiveness of the New Registration Statement (suchshares, the “Sales Agreement Shares”). The Company can make no assurance regarding the initial or continued effectiveness of the New Registration Statement.

Under the Amended Cantor Agreement, Cantor may sell the Sales Agreement Shares by methods deemed to be an “at the market offering” as defined in Rule 415promulgated under the Securities Act of 1933, as amended. Subject to the terms and conditions of the Amended Cantor Agreement, Cantor will use commerciallyreasonable efforts to sell our Common Stock from time to time, based upon our instructions (including any price, time or size limits or other customary parametersor conditions we may impose). Cantor is entitled to compensation from us at a commission rate of up to 3.0% of the gross sales price per share of Common Stockunder the terms of the Amended Cantor Agreement. The Company is not obligated to make any sales of Common Stock under the Amended Cantor Agreement.The offering of shares of our Common Stock pursuant to the Amended Cantor Agreement will terminate upon the earlier of (1) the sale of all of the SalesAgreement Shares provided for in the New Registration Statement, (2) the date that is three years following the effective date of the New Registration Statement,and (3) termination of the Amended Cantor Agreement. The Amended Cantor Agreement may be terminated by Cantor or the Company at any time upon 10 days’notice to the other party, or by Cantor at any time in certain circumstances, including the occurrence of a material adverse change with respect to the Company.

The foregoing description of the Amended Cantor Agreement is not complete and is qualified in its entirety by reference to (i) the Controlled Equity Offering SMSales Agreement, dated August 31, 2012 (the “Original Agreement”), a copy of which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-Kfiled with the Securities and Exchange Commission on August 31, 2012, (ii) Amendment No. 1 to the Original Agreement, a copy of which was filed as Exhibit10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2014, (iii) Amendment No. 2 to the OriginalAgreement, a copy of which was filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with theSecurities and Exchange Commission on May 6, 2016, and (iv) Amendment No. 3, is filed herewith as Exhibit 10.6, and in each case incorporated herein byreference.

A copy of the opinion of Cooley LLP relating to the validity of the issuance and sale of the Sales Agreement Shares pursuant to the Amended Cantor Agreement(the “Opinion”) will be filed as an exhibit to the New Registration Statement. This Quarterly Report on Form 10-Q also will incorporate by reference AmendmentNo. 3 into the New Registration Statement to be filed with the Securities and Exchange Commission.

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ITEM 6. E XHIBITS Exhibit Number Description of Exhibit

3.1 (1) Amended and Restated Certificate of Incorporation of Cerus Corporation.

3.2 (1) Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Cerus Corporation.


3.4 (1) Certificate of Designation of Series C Junior Participating Preferred Stock of Cerus Corporation.

3.5 (2) Amended and Restated Bylaws of Cerus Corporation.

4.1 (3) Specimen Stock Certificate.

4.2 (4) Rights Agreement, dated as of November 3, 1999, as amended as of August 6, 2001, between Cerus Corporation and Wells Fargo Bank, N.A.(formerly known as Norwest Bank Minnesota, N.A.).

4.3 (5) Amendment to Rights Agreement, dated as of October 28, 2009, between Cerus Corporation and Wells Fargo Bank, N.A. (which includes theform of Rights Certificate as Exhibit B thereto).

10.1*(7) Cerus Corporation Amended and Restated Non-Employee Director Compensation Policy. 10.2 † Amended and Restated Supply and Manufacturing Agreement, dated April 1, 2017, by and between Cerus Corporation and Porex Corporation .

10.3 Letter, dated April 25, 2017, to Cuff Property Management exercising option to extend the lease term under the Real Property Lease, dated June20, 2013, between Cerus Corporation and S. P. Cuff as Managing Partner of the Redwoods Business Center LP .

10.4

Fifth Amendment to Loan and Security Agreement, dated April 27, 2017, by and among Cerus Corporation and Oxford Finance LLC, ascollateral agent and a lender .

10.5 Amended and Restated 2008 Equity Incentive Plan, as amended, effective June 7, 2017 .

10.6 Amendment No. 3 to Controlled Equity Offering SM Sales Agreement, dated August 4, 2017, by and between Cerus Corporation and CantorFitzgerald & Co.

31.1 Certification of the Principal Executive Officer of Cerus Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of the Principal Financial Officer of Cerus Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 (8) Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document.

101.SCH XBRL Taxonomy Extension Schema Document.

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB XBRL Taxonomy Extension Label Linkbase Document.

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

† Registrant has requested confidential treatment for portions of this exhibit.* Compensatory plan.(1) Incorporated by reference to the like-described exhibit to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-21937), for the quarter ended

September 30, 2012.(2) Incorporated by reference to the like-described exhibit to the Registrant’s Current Report on Form 8-K (File No. 000-21937), filed with the SEC on June 19,

2008.

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(3) Incorporated by reference to the like-described exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-11341) and amendmentsthereto.

(4) Incorporated by reference to the like-described exhibit to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-21937), for the quarter endedJune 30, 2009.

(5) Incorporated by reference to the like-described exhibit to the Registrant’s Current Report on Form 8-K (File No. 000-21937), filed with the SEC onOctober 30, 2009.


(7) Incorporated by reference to the like-described exhibit to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-21937) for the quarter ended March31, 2017.

(8) This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission, and is not incorporatedby reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whethermade before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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SIGNA TURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized. CERUS CORPORATION Date: August 4, 2017 /s/ Kevin D. Green Kevin D. Green

Vice President, Finance and Chief Financial Officer(on behalf of registrant and as Principal Financial Officer)

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EXHIBIT INDEX Exhibit Number Description of Exhibit

3.1 (1) Amended and Restated Certificate of Incorporation of Cerus Corporation.



3.4 (1) Certificate of Designation of Series C Junior Participating Preferred Stock of Cerus Corporation.

3.5 (2) Amended and Restated Bylaws of Cerus Corporation.

4.1 (3) Specimen Stock Certificate.

4.2 (4) Rights Agreement, dated as of November 3, 1999, as amended as of August 6, 2001, between Cerus Corporation and Wells Fargo Bank, N.A.(formerly known as Norwest Bank Minnesota, N.A.).

4.3 (5) Amendment to Rights Agreement, dated as of October 28, 2009, between Cerus Corporation and Wells Fargo Bank, N.A. (which includes theform of Rights Certificate as Exhibit B thereto).

10.1*(7) Cerus Corporation Amended and Restated Non-Employee Director Compensation Policy. 10.2 † Amended and Restated Supply and Manufacturing Agreement, dated April 1, 2017, by and between Cerus Corporation and Porex Corporation .

10.3 Letter, dated April 25, 2017, to Cuff Property Management exercising option to extend the lease term under the Real Property Lease, dated June20, 2013, between Cerus Corporation and S. P. Cuff as Managing Partner of the Redwoods Business Center LP .

10.4 Fifth Amendment to Loan and Security Agreement, dated April 27, 2017, by and among Cerus Corporation and Oxford Finance LLC, ascollateral agent and a lender .

10.5 Amended and Restated 2008 Equity Incentive Plan, as amended, effective June 7, 2017 . 10.6

Amendment No. 3 to Controlled Equity Offering SM Sales Agreement, dated August 4, 2017, by and between Cerus Corporation and CantorFitzgerald & Co.

31.1 Certification of the Principal Executive Officer of Cerus Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of the Principal Financial Officer of Cerus Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 (8) Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document.

101.SCH XBRL Taxonomy Extension Schema Document.

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB XBRL Taxonomy Extension Label Linkbase Document.

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

† Registrant has requested confidential treatment for portions of this exhibit.* Compensatory Plan.(1) Incorporated by reference to the like-described exhibit to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-21937), for the quarter ended

September 30, 2012.(2) Incorporated by reference to the like-described exhibit to the Registrant’s Current Report on Form 8-K (File No. 000-21937), filed with the SEC on June 19,

2008.

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(3) Incorporated by reference to the like-described exhibit to t he Registrant’s Registration Statement on Form S-1 (File No. 333-11341) and amendmentsthereto.


(5) Incorporated by reference to the like-described exhibit to the Registrant’s Current Report on Form 8-K (File No. 000-21937), filed with the SEC onOctober 30, 2009.


(7) Incorporated by reference to the like-described exhibit to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-21937) for the quarter ended March31, 2017.

(8) This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission, and is not incorporatedby reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whethermade before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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EXHIBIT 10.2 [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

SUPPLY AND MANUFACTURING AGREEMENT

THIS AMENDED AND RESTATED SUPPLY AND MANUFACTURING AGREEMENT ( THE “ Supply Agreement ”) is made effective asof the 1st day of April, 2017 (the “Effective Date”) by and between Cerus Corporation (“ Cerus”), a Delaware corporation, havingits principal place of business at 2550 Stanwell Drive, Concord, CA 94520, and Porex Corporation (“ Porex ”), a Delawarecorporation, having its principal place of business at 500 Bohannon Road, Fairburn, GA 30213. (Cerus and Porex are eachindividually referred to in this Supply Agreement as a “Party” and, collectively, as the “ Parties”).

WITNESSETH

WHEREAS , the Parties desire to set forth the terms under which Cerus may purchase from Porex [ * ] porous plastic [ * ]wafers designed for the pathogen inactivation system for platelets ( the Platelet Wafers” ) and [ * ] porous plastic [ * ] disksdesigned for the pathogen inactivation system for plasma ( the “ PlasmaDisks”) (collectively, the “ Components”) made to Cerusspecifications as further detailed in EXHIBIT A and EXHIBIT B attached hereto, respectively ( the “ Specifications”); and

WHEREAS, the Platelet Wafers and Plasma Disks will be used in the manufacture of disposable products forming part of theINTERCEPT Blood System for platelets and the INTERCEPT Blood System for plasma, respectively, for sale by Cerus and itsaffiliates, and disposable products forming part of similar systems for sale by a third party (collectively, the “ Products”).

NOW THEREFORE , in consideration of the foregoing premises and the mutual covenants set forth herein, Cerus and Porexagree as follows:

1 PURCHASES

1.1 Purchase and Sale

1.1.1 During the term of this Supply Agreement, Porex shall sell to Cerus Components orderedpursuant to Section 1.3 of this Supply Agreement.

1.1.2 By written notice to Porex, Cerus may designate, from time to time, one or more third parties(hereinafter referred to as “ Designee”) provided such Designee is not a Porex competitor as defined in Section 13.3 below, that isauthorized to:

(a) issue purchase orders for Components pursuant to Section 1.3; and

(b) receive, inspect and test shipments from Porex for such ordered Components pursuant to Section 1.4.

Designees are not authorized to act for Cerus in any other capacity or to bind Cerus in any other respectwhatsoever. Notwithstanding anything contained herein to the contrary, Cerus shall be legally responsible for any act, omission orobligation of Designee pertaining to this Agreement.

Porex acknowledges that Fresenius-Kabi Deutschland GmbH and its affiliates , including Fenwal Inc. (collectively, “ Fenwal”) arenot as of the Effective Date Porex Competitor s .

1.2 Raw Materials

1.2.1 Cerus shall arrange, at its own expense, for the supply and delivery to Porex of [ * ] (in conformance with thespecifications set forth on EXHIBITS A-1 and B-1 ), [ * ] for production of Plasma Disks (collectively, the “ RawMaterials”) as setforth in the Porex Raw Material Projections (as hereinafter defined). Porex shall timely inspect such Raw Materials. If such RawMaterials fail to meet the specifications for such Raw Materials set forth in EXHIBITS A-3, A-4, A-5 AND B-2 , Porex shall have theright to reject such Raw Materials. If Porex does not deliver such written notice to Cerus within the [ * ] business day period frominspection of such Raw Materials, Porex shall be deemed to have accepted the Raw Materials. On or before September 15 th (withrespect to the first half of the applicable calendar year) and June 15 th (with respect to the second half of the applicable calendaryear), Porex and Cerus shall meet in person or telephonically (each, a “ RawMaterials Planning Meeting”) to discuss Porex’santicipated: (i) requirements for Raw Materials needed to manufacture the quantity of Components forecasted by Cerus for theupcoming Purchase Order Period (as defined in Section 1.3); and (ii) the required delivery dates of such Raw Materials needed tomeet Cerus’ projected delivery schedule for the upcoming Purchase Order Period. Within [ * ] business days after receipt of Cerus’Short Term Forecast as provided in Section 1.3, Porex shall provide Cerus with a good faith forecast of the additional Raw Materials,if any, needed by Porex, taking into account its current inventory of Raw Materials, to manufacture the forecasted quantity ofComponents for the upcoming Purchase Order Period; and (ii) the latest date by which such Raw Materials must be received byPorex to meet Cerus’ projected delivery schedule, in each case as set forth in the applicable Purchase Order (the “ Porex RawMaterial Projections”). Such obligation by Cerus to supply and deliver Raw Materials as provided in the Porex Raw MaterialProjections shall hereinafter be referred to as the “ RawMaterialObligation”.

1.2.2 Porex shall be solely responsible for obtaining the [ * ] (in conformance with the specifications setforth on EXHIBIT B-2 ) used for production of the Plasma Disks. Porex shall also be responsible for ordering and purchasingpackaging material meeting the Specifications.

1.2.3 In the event Raw Materials are supplied to Porex in excess of the Raw Materials consumed in themanufacture of Product, Porex shall notify Cerus and use such Raw Materials in fulfillment of the subsequent order. In the eventPorex requires Raw Materials in excess of Raw Materials specified in the Porex Raw Material Projections as a result of Porex’sfailure to comply with the procedures applicable to the production of Components as set forth on EXHIBIT C , Porex shall bear alladditional costs for obtaining such additional materials from Cerus or its designated supplier at a price equal to Cerus’ cost.

1.2.4 Cerus and Porex will work together to achieve the rates and yields as described in Exhibit G. Porex shall provide monthly inventories of, and shall track the Raw Material usage for, each lot of Raw Material supplied by Cerusand shall provide Cerus with a report (“ RawMaterial Report”) at the depletion of each Raw Material lot. Such Raw MaterialReport shall contain the Porex lot numbers and the quantity of wafers manufactured for each lot of [ * ]

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CERUS –POREX AGREEMENT

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE


supplied by Cerus, and the Porex lot number and quantity of disks manufactured for each lot of [ * ] supplied by Cerus. The RawMaterial Report will also identify when [ * ] set forth in EXHIBIT G . T he P arties shall collectively review the Raw Material Reportand discuss the root cause, financial responsibility, and what actions, if any, shall be taken to [ * ] . Notwithstanding the foregoing, [* ] will not exceed [ * ] without the prior written consent of Cerus, which consent will be conditioned upon a discussion regardingthe root cause , disposition and the financial responsibility for scrap rates in excess of [ * ] .

1.2.5 The process flow charts from receipt of the Raw Materials to shipment of the Components areattached hereto as EXHIBIT C , subject to change by mutual written agreement of the Parties.

1.3 Short-Term Forecasts/Purchase Orders

During the Initial Term, on or before [ * ] for the [ * ] month period beginning on [ * ] of the applicable calendar year, andon or before [ * ] for the [ * ] month period beginning on [ * ] of the applicable calendar year, Cerus (directly or through itsDesignee) will provide to Porex a written forecast of Cerus’ requirements for Components for the applicable [ * ] month period andthe monthly delivery dates therefor (each, a “ ShortTermForecast”). The first [ * ] months of each Short Term Forecast (each, a “PurchaseOrderPeriod”) shall constitute a binding [ * ] month purchase order (such portion, a “ PurchaseOrder”). In no eventshall any Purchase Order: require delivery of more than [ * ] units of [ * ] and [ * ] units of [ * ] in any single month (the “ PorexCapacityLimitations”). Within [ * ] business days after receipt of the Short Term Forecast, Porex shall provide confirmation toCerus of its ability to meet the monthly requirements in the Short Term Forecast, subject to Cerus’ ability to meet its Raw MaterialObligation and the Porex Capacity Limitations.

1.4 Delivery

1.4.1 Porex shall ship the Components to destinations specified by Cerus (directly or through itsDesignee) in the Purchase Order, by mutually agreed upon carriers, [ * ]. Cerus shall pay all shipping and applicable insurancecharges. Porex shall provide to Cerus or Designee (as the case may be) all documentation as described in the Specifications.

1.4.2 All Components shipped hereunder shall be received subject to inspection and testing by Cerus(directly or through its Designee) for compliance with the Specifications, which testing shall be completed within sixty (60) daysfrom the receipt of said shipment. Cerus (directly or through its Designee) shall also, within that same period, notify Porex inwriting of the acceptance or rejection of a shipment for failure to meet Specifications and if rejected, specifying in detail the reasonsfor rejection. If the shipment is rejected, Cerus (directly or through its Designee) shall promptly make such Components available toPorex for examination and testing and Porex shall either (i) credit Cerus for the amount of such non-conforming Components forwhich Cerus has previously paid Porex, or (ii) provide replacement for Components that fail to meet the Specifications as soon assuch replacement can be completed within Porex's normal schedules and operating capacity without adversely affecting Porex’current production. If Cerus or its Designee does not deliver such written notice to Porex within the sixty (60) day period from

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the receipt of shipment, Cerus shall be deemed to have accepted the shipment. Prior to inspection and testing by Cerus (directly orthrough its Designee) of Components for compliance with the Specifications, Cerus or its Designee will work with Porex to correlatethe testing and inspection methods and procedures to be used by Cerus or its Designee. Cerus will bear the costs of correlating thetesting and inspection methods and procedures. Porex testing and inspections procedures and methods will control until such testingand inspection methods and procedures to be used by Cerus or its Designee are correlated. Any failures of results obtained by Cerus’or Designee’s testing and inspection methods to correspond to results obtained by Porex’s testing and inspection methods, until thetesting and inspection methods and procedures used by Cerus or its Designee are correlated, will be the responsibility of Cerus. Forthe avoidance of doubt, the references to the Cerus or its designee’s testing methods, procedures or other obligations (collectively “CerusMethods”) in the Specifications are included solely for Cerus’ internal use and shall not be binding upon Porex and shall haveno effect whatsoever for purposes of determining any party’s rights or obligations under this Agreement, except for the purpose ofconfirming conformance to the Specifications, after correlation of Porex’s and Cerus’ and its Designee’s testing and inspectionmethods.

1.5 Price; Payment Terms

1.5.1 Prices to be paid by Cerus (the “ Prices ”) are set forth on EXHIBIT D . Porex shall pay to Cerusthe applicable rebate within [ * ] days of shipment of Product at the respective threshold specified in EXHIBIT D . The Rebate shall beissued in the form of a credit. Based on Cerus request, Porex will issue a cash rebate at the end of any agreement year for anyremaining rebate earned in that agreement year. Notwithstanding the foregoing, any rebate for the final year of this Agreement shallbe issued in the form of cash.

1.5.2 Porex will invoice Cerus monthly for Components shipped pursuant to Purchase Orders placed forthat month. Cerus will pay the amount of the invoice within [ * ] days following (i) receipt of the invoice by Cerus, or (ii) deliveryof such Components covered by such invoice, whichever later occurs. Past due payments will bear interest at [ * ] per month fromthe due date.

2 MANUFACTURING FACILITY

2.1 Capacity

Porex represents that, as of the date of this Supply Agreement, its annual capacity for production of Components is [ * ](the “ PorexCapacityLimitation”). Porex agrees not to reduce the foregoing capacity during the term of the Supply Agreement.Further, in the event that additional capacity in excess of the Porex Capacity Limitation is required to meet Cerus’ productiondemands for Product, and as agreed to in advance by Porex (which agreement shall not be unreasonably withheld, delayed orconditioned) following a review of the business case for such expansion, Porex shall undertake any equipment and/or facilityimprovements and associated validation activities, at its sole cost, necessary or advisable to increase its production capacity to meetCerus’ demand forecasts on the timelines required.

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2.2 Dedicated Space

Porex shall reserve the space identified in EXHIBIT E (the “ Cerus Dedicated Space”) solely for the manufacture andproduction of the Products under this Supply Agreement. No other activities other than those agreed upon in advance in writing byCerus may be performed in the Cerus Dedicated Space. Cerus shall have unrestricted access, subject to providing reasonable advancenotice to Porex, to the Cerus Dedicated Space during the Term of this Supply Agreement to ensure that the products are beingmanufactured and produced in compliance with the terms of this Supply Agreement and the terms of the Quality Agreement (ashereinafter defined). In [ * ] the provisions of this Section 2.2, [ * ]. In the event that Porex is unable to produce the quantity ofProduct set forth in a Purchase Order(s) due to regulatory or compliance issues, or facility driven production downtime, [ * ]. Forillustrative purposes only, if Cerus delivers a Purchase Order for a total of [ * ] units during a Purchase Order Period, but Porex isonly able to produce and ship [ * ] units due to facilities closures in that year, Cerus shall [ * ] for 2017. Any [ * ] pursuant to thisSection 2.2 shall be issued in the same manner as [ * ].

2.3 Ownership of Equipment

[ * ] ownership of all stations, tooling and additional equipment set forth on EXHIBIT F, which items were funded in wholeor in part by [ * ] (the “ Equipment”). The Equipment will be considered [ * ]. [ * ] shall be responsible for maintaining, servicingand insuring the Equipment, and keeping appropriate records regarding such use, maintenance and service during the term of thisSupply Agreement. The Equipment shall be used by Porex during the term of this Supply Agreement solely for production ofComponents for Cerus under this Supply Agreement. Upon termination or expiration of this Supply Agreement, Porex will removeand destroy any Tooling set forth on Exhibit F embodying Cerus’ proprietary specifications or design).

2.4 Ownership of Facility Improvements

[ * ] shall own all facility improvements set forth on EXHIBIT F which improvements were funded in whole or in part by [ * ] (the “FacilityImprovements”).

3 COMPONENT CHANGES

During the term of the Supply Agreement, Cerus may propose modifications to the Components; provided, however, thatany proposed modifications and any work related thereto shall be subject to mutual agreement by the Parties, which agreement byPorex shall not be unreasonably withheld or delayed. In approving any modification contemplated by this Section 3, the Parties shallwork in good faith to mutually agree upon defining the scope of the change, including the respective roles and responsibilities of theParties with respect thereto, as well as the allocation of any cost or expense related to such modification, which scope shall be setforth in writing and executed by each of the Parties. Any changes to the raw material, product or process Specifications, or requiredmanufacturing environment (i.e., classification of a clean room) must be done pursuant to change control projects mutually agreedupon by the Parties in writing. Further, to the extent such modification was requested by Cerus and such modification results in anincrease

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in the cost to manufacture the Products, the Parties shall mutually agree on revisions , if any, to the pricing set forth on E XHIBIT D .

4 QUALITY OBLIGATIONS

The Parties have concurrently entered into the Amended and Restated Quality Agreement attached hereto as EXHIBIT G(the “ Quality Agreement ”). The Parties shall review and, if necessary, update the Quality Agreement on or prior to eachanniversary of the date hereof (or sooner if circumstances so dictate). Further, Porex shall provide, at its sole cost, at least oneexperienced, management-level quality manager to oversee the production and supply of Product under this Supply Agreement. TheParties hereto acknowledge that the provisions of this Section 4 are an essential and material component of this Supply Agreement.

5 REGULATORY RESPONSIBILITY

Cerus is solely responsible for all regulatory compliance and requirements relating to the Products and use of Components inthe Products and Porex will provide its full cooperation and attention in assisting Cerus fulfill the foregoing responsibilities, asrequired by Cerus’ authorized regulatory bodies. This will include providing any required records or information related to theComponents and their manufacture by Porex as the contract manufacturer thereof either directly to Cerus or to the requestingregulatory body (with a copy to Cerus so long as such records or information contain information to which Cerus is otherwiseentitled to access, otherwise, Porex shall provide redacted versions of such records or information).

6 FORCE MAJEURE

Porex shall not be liable for delays in performance or for non-performance of its obligations hereunder if prevented bycauses outside of its reasonable control. Without limiting the foregoing, such causes shall include, but not be limited to, acts of Godor the public enemy, fires, floods, earthquake, riots, boycotts, strikes, lock-outs, and delays in transportation or shortage of suppliesnecessary for production, in each case where delays could not reasonably have been prevented. Upon discovering that timelyperformance will be delayed, Porex will promptly notify Cerus of the nature of the delay and Porex's disaster recovery plan alongwith timing expectations.

7 WARRANTIES; INDEMNIFICATIONS

7.1 Porex Warranties

7.1.1 The warranties set forth herein are made solely for the benefit of Cerus and its affiliates. Allclaims hereunder shall be made by Cerus and may not be made by Cerus customers or any third parties. The term "affiliate", as usedin this Supply Agreement, means with respect to a Party any entity that, directly or indirectly, controls, or is controlled by, or isunder common control with, such Party. The term "controls", "controlled by", or "under common control with", means thepossession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whetherby contract or through the ownership of voting securities, including the ownership of more than fifty percent (50%) of the equity,partnership,

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membership or similar interest in such entity.

7.1.2 Porex shall not be responsible for any Components that do not meet the Specifications if suchfailure is caused by the Raw Materials supplied under this Supply Agreement, subject to Porex's inspection obligations as providedunder Section 1.2.1, and the Porex warranties in Section 7.1 do not extend to such failure to meet the Specifications if caused by theRaw Materials or any specifications or processes provided by Cerus for the Raw Materials if such Raw Materials did not pass theinspection provided for in Section 1.2.1.

7.1.3 In no event shall Porex be responsible for any damage, change or effect to the Components orProducts resulting from or related to any acts or omissions of Cerus or its Designees or their respective affiliates, agents, distributors,vendors or customers or any intermediary or end user of any product manufactured, distributed or sold by Cerus or its Designee,including, but not limited to, improper storage, handling, installation, modifications, abuse or misuse.

7.1.4 Porex warrants and represents that:

7.1.4.1 it will comply with all laws, decrees, rules, regulations, codes, orders, ordinances, actionsand requests of all federal, state and local governmental bodies and courts applicable to Porex’s obligations under this Agreementand that the Products manufactured hereunder will be manufactured in compliance with the foregoing, as well as current GoodManufacturing Practices;

7.1.4.2 Porex’s technology, processes, know-how, trade secrets and other intellectual propertyused by Porex to manufacture the Components will not infringe upon the intellectual property rights of any third party, and Porex hasthe right to use such technology, processes, know-how and other intellectual property; and

7.1.4.3 Porex’s performance of its obligations under this Agreement will not result in the breachof any covenant, undertaking or obligation of Porex to any third party.

7.1.5 EXCEPT AS PROVIDED IN SECTION 7.1.3, POREX WARRANTS THAT THECOMPONENTS SHALL CONFORM TO THE SPECIFICATIONS, AND POREX WARRANTS THAT POREX TRANSFERSGOOD AND MARKETABLE TITLE TO THE COMPONENTS SOLD TO CERUS UNDER THIS SUPPLY AGREEMENT ASOF THE TIME THAT POREX SHIPS SUCH COMPONENTS AND RECEIVES PAYMENT. THE WARRANTIES IN SECTION7.1.4 AND THIS SECTION 7.1.5 ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH AREHEREBY DISCLAIMED AND EXCLUDED BY POREX, INCLUDING WITHOUT LIMITATION ANY WARRANTY OFMERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, ANY OTHER WARRANTY OF TITLE,REGULATORY COMPLIANCE, OR ANY WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OFDEALING OR USAGE OF TRADE. THE SOLE AND EXCLUSIVE REMEDY FOR BREACH OF ANY AND ALLWARRANTIES SHALL BE LIMITED TO THE REPLACEMENT OR EXCHANGE OF THE DEFECTIVE COMPONENTS.

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7.2 Indemnification

7.2.1 Cerus will indemnify, defend and hold harmless Porex, its affiliates, and their respective officers,directors, agents, and employees (each a “Porex Indemnified Party ” ) from and against any and all third party claims, actions,causes of action, liabilities, losses, costs, damages or expenses (including reasonable attorney's fees) to the extent arising out of or inconsequence of (i) the possession or use of any Products including, but not limited to, those containing the Components; (ii) thedeath of or bodily injury to any person on account of the use of any Cerus Product containing the Components or use of anyComponents; (iii) any claim that the Products or Components violate a patent or trademark or the intellectual property rights of anythird party; or, (iv) Cerus’ failure to obtain any clearance, approval or license for the Products or the Components that is actuallyrequired by applicable law (collectively, “ Claims ”), except to the extent arising under Porex’s indemnity obligation in Section7.2.2. However, subject to the combined aggregate limitation set forth in Section 7.2.3 hereof, Cerus shall not be obligated toindemnify a Porex Indemnified Party from any liability to the extent caused by a Porex Indemnified Party’s negligence ormisconduct, as finally determined by a court of competent jurisdiction.

7.2.2 Porex will indemnify, defend and hold harmless Cerus and its respective officers, directors,agents, employees and affiliates (each a "Cerus Indemnified Party" ) from and against any and all third party claims, actions,causes of action, liabilities, losses, costs, damages or expenses (including reasonable attorney's fees) to the extent arising out of or inconsequence of any claim of patent, trademark or trade secrets infringement which relates to Porex's proprietary manufacturingprocess(es) for [ * ] porous plastic [ * ].

7.2.3 Notwithstanding anything contained herein to the contrary, the combined aggregate amount bywhich (x) Cerus’ indemnification obligations pursuant to Section 7.2.1 may be reduced pursuant to the last sentence of Section 7.2.1and (y) Porex may be liable for recalls under Section 9 of this Agreement, shall not exceed a combined aggregate limit of [ * ] duringthe term of this Agreement.

7.2.4 Each indemnified party agrees to give the indemnifying party prompt written notice of any claims,including any claims asserted or made by any governmental authority, for which the other might be liable under the foregoingindemnification, together with the opportunity to defend, negotiate and settle such claims. Such notice shall be given to theindemnifying party promptly after receipt of such claim. Failure to provide or promptly provide such notice shall not release theindemnifying party from any of its obligations hereunder except to the extent that the indemnifying party is materially prejudiced bysuch failure. Each indemnified party will cooperate fully with the indemnifying party in defending or otherwise resolving any suchaction, and each indemnified party in any such action may at its option and expense be represented in such action. No party shall beresponsible or bound by any compromise made by any other party without its prior written consent, provided that such any suchparty requested to give consent shall not unreasonably withhold its consent to any such settlement.

7.3 LIMITATION OF LIABILITY

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IN NO EVENT, OTHER THAN FOR PAYMENT OF DEFENSE AND INDEMNITY UNDER SECTION 7.2, SHALL

CERUS BE LIABLE TO POREX, FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY ORCONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOST USE, OR THE LIKE)ARISING OUT OF OR IN CONNECTION WITH THIS SUPPLY AGREEMENT OR THE MANUFACTURE, USE ORPERFORMANCE OF THE COMPONENTS OR PRODUCTS, EVEN IF SUCH PARTY IS ADVISED OF THE POSSIBLITY OFSUCH DAMAGES. IN NO EVENT SHALL POREX BE LIABLE TO CERUS UNDER ANY THEORY OF LAW OR EQUITY,WHETHER IN CONTRACT, TORT OR OTHERWISE, FOR ANY DAMAGES INCLUDING, BUT NOT LIMITED TO, ANYSPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY OR COSEQUENTIAL DAMAGES (INCLUDING, BUT NOTLIMITED TO, LOST PROFITS, LOST USE, OR THE LIKE), ARISING OUT OF THIS SUPPLY AGREEMENT OR THEMANUFACTURE, USE, OR PERFORMANCE OF THE COMPONENTS OR PRODUCTS, IN AN AGGREGATE AMOUNT INEXCESS OF [ * ] . DURING THE TERM OF THIS AGREEMENT , EXCEPT AS PROVIDED IN SECTIONS 1.2.3, 2.3, 2.4, 7.2,8.2, 9, 10, 11 AND 13.3 OF THIS SUPPLY AGREEMENT , IN WHICH CASE SUCH LIABILITY SHALL BE CAPPED AT [ * ]. THE PARTIES AGREE THAT THE FOREGOING LIMITATIONS OF LIABILITY ARE A REASONABLE ANDNEGOTIATED ALLOCATION OF RISK BETWEEN THE PARTIES AND THAT THEY WOULD NOT ENTER INTO THISSUPPLY AGREEMENT ABSENT SUCH TERMS. EACH PARTY AGREES THAT IT SHALL NOT CLAIM THAT THESELIMITATIONS ARE UNREASONABLE, AGAINST PUBLIC POLICY, OR CAUSE ANY REMEDY TO FAIL OF ITSESSENTIAL PURPOSE; THESE LIMITATIONS SHALL BE ENFORCED DESPITE ANY SUCH CLAIM.

7.4 Insurance

During the term of this Supply Agreement and for [*]thereafter, Cerus shall at all times keep and maintain thefollowing insurance coverage and limits of liability:

(a) General Commercial Liability for death or personal injury and damage to property (including, but notlimited to, coverage for products liability and completed operations, advertising injury and independentcontractors coverage) with limits of not less than $[ * ] per occurrence and $[ * ] in theaggregate. Such insurance to provide for broad form contractual liability coverage, including coveragefor the liabilities assumed in this Supply Agreement.

(b) Umbrella/Excess Insurance follow form over (a) above with a limit of $[ * ].

(c) Statutory Workers’ Compensation in accordance with the laws of California and Employers LiabilityInsurance with a limit of not less than $[ * ].

Policies of insurance set forth in Section 7.4(a) and 7.4(b) above shall provide for the following:

i.) Name Porex and its officers, directors, employees, subsidiaries, parent

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company, if any, and agents as additional insureds.

ii.) Be primary and non-contributory with respect to all obligations of Cerus under this SupplyAgreement. Any insurance carried by Porex shall not contribute to, or be excess of insurancemaintained by Cerus, nor in any way provide benefit to Cerus, its affiliates, officers, directors,employees, subsidiaries, parent company, if any, or agents.

iii.) Have reasonable and customary deductible amounts, provided that in no event shall such deductibleamounts exceed $[ * ] per occurrence. Any deductibles that exceed $[ * ] must be pre-approved inwriting by Porex.

iv.) Be issued by insurance carriers licensed to do business under the laws of the country, state,commonwealth, province or territory in which Cerus’ obligations are provided, and with a rating of notless than A VII, as rated in the most currently available “Best’s Insurance Guide.”

v.) Provide a waiver of subrogation in favor of Porex and its officers, directors, employees, subsidiaries,parent company, if any, and agents.

vi.) Include a separation of insurance clause and cross-liability coverage where Porex is an additionalinsured.

Upon execution of this Supply Agreement, Cerus shall cause certificates to be issued evidencing that the coverages and policyendorsements required under this Supply Agreement are maintained in force and effect and providing for not less than 30 days, 10days in the case of nonpayment, written notice to Porex prior to any material modification, cancellation or non-renewal of thepolicies. Certificates shall expressly confirm the above limits and obligations. The certificate of insurance shall be delivered toPorex’s address as set forth in the Notices provision of this Supply Agreement. The receipt of any certificate does not constituteacceptance by Porex that the insurance requirements have been met.

If Cerus fails to procure and maintain the insurance coverage types or limits, or any portion thereof, as specified herein, Porex, in itssole discretion, may procure and maintain the required insurance for and in the name of Cerus and Cerus shall pay the cost thereof orsuch cost shall be deducted from monies due to Cerus by Porex. Cerus shall furnish to Porex all information necessary to acquire andmaintain such insurance. Cerus shall not violate or knowingly permit any violation of any conditions or terms of the policies ofinsurance described herein.

8 INTELLECTUAL PROPERTY

8.1 Cerus understands and agrees that nothing in this Supply Agreement is intended to grant Cerus any right, title, interest,or license to use or disclose Porex's Confidential Information, intellectual property (both as further defined in the ConfidentialityAgreement referenced in Section 10 below), or manufacturing processes, including, but not limited to, Porex products, designs andspecifications.

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8.2 Porex understands and agrees that this Supply Agreement is not intended to grant Porex any right, title, interest or

license to use or disclose Cerus’ Confidential Information, intellectual property (both as further defined in the ConfidentialityAgreement referenced in Section 10 below), including, but not limited to Products designs and Specifications.

8.3 Neither this Supply Agreement nor one Party’s disclosure of Confidential Information or intellectual property shall bedeemed, by implication or otherwise to vest in any other Party any rights in any patents, trade secrets, trademarks, trade names,designs, copyrights, or other property of the disclosing Party; provided, however, that Porex is granted a limited license to use theintellectual property of Cerus to the extent required for Porex to perform its obligations under this Supply Agreement.

9 FIELD ACTION

Any removal, correction, or other similar action involving Products shall be made solely by Cerus at Cerus’ sole discretionand expense. However, if in the event of a recall due solely to a failure of the Components to meet the Specifications (other than as aresult of the Raw Materials), Porex shall, subject to [ * ] set forth in Section 7.2.3 of this Agreement, reimburse Cerus for actual,reasonable direct costs and expenses actually incurred by Cerus in connection with all such recalls including, but not limited to,direct costs of (i) administration of the recalls, (ii) retrieving Products already delivered to customers, and (iii) notification, shippingand handling charges. The Parties will cooperate fully with each other in effecting any actions under this Section. Cerus will beresponsible for communications to its customers and users of the Products.

10 DISCLOSURE AND USE OF INFORMATION

The Agreement Regarding the Exchange of Confidential Information between Porex and Cerus, effective February 22,2007, (the "Confidentiality Agreement") is attached hereto as Exhibit H and hereby incorporated by reference in their entiretyherein and any exchange of information between Porex and Cerus pursuant hereto and this Supply Agreement shall be subject to theterms of such Confidentiality Agreement . Section 13 of the Confidentiality Agreement is hereby amended to provide that the enddate of the period which covers the provision of Confidential Information by the parties has been extended to five (5) years followingthe termination of this Agreement. Cerus will insure that any and all Designees agree in writing to be bound by the ConfidentialityAgreement and Cerus will be responsible for any and all breaches of the Confidentiality Agreement by Designees.

11 DEVELOPMENT ACTIVITIES

During the term of this Supply Agreement, provided that Cerus is not in material breach of its obligations under this Agreement, andprovided Porex continues to [ * ], Porex agrees that it will not knowingly develop or sell product utilizing Porex’s [ * ] porous plastic[ * ] for or to any of the companies set forth on Exhibit I (each such company a “Prohibited Company”) [ * ] that [ * ]. For clarity,Porex is [ * ] to any other company [ * ]. If Cerus discovers Porex has engaged in such activities, Porex will have [ * ] days fromnotice from Cerus to discontinue supplying Components and/or immediately cease doing development work with the other entity. Asof the Effective Date,

Page 11 of 15




Fenwal is an entity approved in writing by Cerus for Porex to sell Components to. Notwithstanding anything to the contrary herein,including, without limitation, Section 13.3, if the business of Porex is acquired by another person, either through an acquisition of thestock or assets of Porex, the restrictions set forth in this Section 11 shall only be binding on the acquiring person with respect to thePorex business and the trade secrets and intellectual property acquired through the acquisition of Porex and shall not impose anyrestriction on such person or such person’s affiliates with respect to any other aspect of such person’s business.

12 TERM; TERMINATION

12.1 This Supply Agreement will have a term (the “ Initial Term ”) which will run through December 31, 2019. Unlessterminated earlier pursuant to this Section 12, this Supply Agreement will automatically renew for an additional period of two (2)years (the “ RenewalTerm” and, together with the Initial Term, the “ Term”). Any additional renewals beyond the Term shall bebased upon the mutual agreement of the Parties. Within [ * ] days of the expiration of the Initial Term, Cerus and Porex will discussthe pricing terms for the Renewal Term. If Cerus and Porex agree on new pricing within such period, such pricing will becomeeffective as of [ * ]. The Parties hereto agree that in no event shall the price increase for any Product produced hereunder exceed [ *]. If Cerus and Porex are unable to agree within such [ * ] days after having negotiated in good faith and adhering to the limit onpricing increases set forth in the preceding sentence, then this Supply Agreement will, at Cerus’ option either (i) terminate at theexpiration of the Initial Term or (ii) renew with a [ * ] increase to the pricing in effect as of the expiration of the Initial Term, whichpricing shall be effective as of [ * ].

12.2 Cerus may terminate this Supply Agreement in its sole discretion at any time by giving Porex at least twelve (12)months’ prior written notice of its intent to terminate this Supply Agreement.

12.3 In the event that Cerus’ aggregate billable units fall below [ * ] units in any calendar year during the Term (unless suchshortfall is due to regulatory or compliance issues or facility-driven production downtime), Porex may terminate this SupplyAgreement in its sole discretion by giving Cerus at least twelve (12) months’ prior written notice of its intent to terminate this SupplyAgreement.

12.4 If a Party materially breaches this Supply Agreement and such breach remains uncured for a period of ninety (90) daysafter written notice containing details of the breach is delivered to the breaching Party, then the non-breaching Party may terminatethis Supply Agreement as to the breaching Party by further notice delivered no later than thirty (30) days after the expiration of theinitial ninety (90) day cure period.

12.5 Each Party may terminate this Supply Agreement effective immediately with written notice in the event the otherParty (“ InsolventParty”) files for bankruptcy, is adjudicated bankrupt, takes advantage of applicable insolvency laws, makes anassignment for the benefit of creditors, is dissolved or has a receiver appointed for its property (which in the case of a receiver is notremoved within thirty (30) days after notice to the Insolvent Party). Such termination is only

Page 12 of 15




effective as to the Insolvent Party.

12.6 The provisions of Sections 2.3, 2.4, 4, 5 and 7 through 11 of this Supply Agreement shall survive termination of theSupply Agreement and remain in effect in accordance with their terms.

13 MISCELLANEOUS

13.1 Entire Agreement

This Supply Agreement and the Confidentiality Agreement contain the entire agreement between the Parties relating to theComponents and supersede all prior agreements and negotiations between Cerus and Porex. All Purchase Orders placed on or afterJanuary 1, 2017 shall be subject to the terms and conditions of this Supply Agreement. None of the terms of this Supply Agreementshall be deemed to be waived or amended by any Party unless such a waiver or amendment specifically references this SupplyAgreement and is in writing signed by the Party to be bound.

13.2 Notices

All notices and demands required or permitted to be given or made pursuant to this Supply Agreement shall be in writingand effective when personally given or when placed in an envelope and deposited in the United States mail postage prepaid andreturn receipt requested, or delivered by a recognized commercial courier service, addressed as follows:

If to Cerus:Chief Executive OfficerCerus Corporation2550 Stanwell DriveConcord, CA 94520cc: Chief Legal Officer

If to Porex:PresidentPorex Corporation500 Bohannon RoadFairburn, Georgia

Or to such other address as to which any Party may notify the other Parties.13.3 Assignment

This Supply Agreement shall be binding upon and inure to the benefit of the Parties, their successors and assigns. This SupplyAgreement shall be assignable: (i) by either Party to an affiliate of the Party, in whole or in part, without the consent of the otherParty, provided such affiliate is not a competitor of the other Party; (ii) by either Party with the written consent of the other Party,which consent shall not be unreasonably withheld or delayed (it being understood that

Page 13 of 15




withholding such consent on the basis of the assignee’s financial and/or competitive status shall not be deemed to be unreasonable);or (iii) by any Party without the consent of the other Party to the purchaser of substantially all the assets of its business to which thisSupply Agreement relates or to any corporate successor to a Party by merger, consolidation or otherwise. Any change of control ofownership of fifty (50) percent or more of any Party will be deemed an assignment under (iii) immediately above. For the purpose ofthis Section and Section 1.1.2, a “Porex competitor” shall mean those persons, entities or companies who sell competitive productsthat directly compete with Porex’s products and a “Cerus competitor” shall mean those companies who sell competitive products toProducts in the field of blood pathogen inactivation. Any attempted assignment that does not comply with the terms of this Sectionshall be void. Each Party shall cause this Supply Agreement to be assigned in whole to any business organization that purchases itsoperations supporting this Supply Agreement or to any corporate successor to a Party by merger, consolidation or otherwise. Despiteany assignment under this Section, the Party making the assignment shall remain liable for its obligations as a Party to this SupplyAgreement.

13.4 Governing Law

This Supply Agreement is deemed to have been executed in and shall be governed by and construed in accordance with theUniform Commercial Code as enacted in the State of New York and other applicable laws of the State of New York. The Partieshereby submit to the jurisdiction of the courts of that State for purposes of resolving any dispute. If particular portions of this SupplyAgreement are ruled unenforceable, such portions shall be deleted and all other terms and conditions of this Supply Agreement shallremain in full force and effect. Except where a remedy is expressly stated to be the exclusive remedy, the rights and remedies of theParties under this Agreement shall be cumulative and in addition to any other rights or remedies provided by law or equity.

13.5 Independent Contractors; Relationship of Parties; Waiver; Proceedings

13.5.1 The relationship of the Parties under this Supply Agreement shall be and at all times one ofindependent contractors. No Party is an employee, agent or legal representative of any other Party or shall have any authority toassume or create obligations on any other Party's behalf.

13.5.2 Cerus shall have the right to revoke any designation as a Designee made pursuant to Section1.1.2 of this Supply Agreement, by providing thirty (30) days prior written notice of such to Porex, and thereafter said Designee willno longer be authorized to purchase Components on Cerus’s behalf or perform any other of the tasks described in Section 1.1.2.

13.5.3 Nothing herein shall be construed as giving any third party, including Designee, any rights,interest or claims hereunder or be entitled to any benefits under or on account of this Supply Agreement as a third-party beneficiaryor otherwise and the sole and intended beneficiaries of this Supply Agreement are Cerus and Porex.

Page 14 of 15




13.5.4 Failure of any Party at any time to require performance by any other Party of its obligations

under this Supply Agreement shall in no way affect the right to require such performance at any time thereafter. The waiver by anyParty of a breach of any provision of this Supply Agreement shall not constitute a waiver of any succeeding breach of the same orany other provision.

13.5.5 If any Party files any action or brings any proceeding against the other Party arising out of thisSupply Agreement, the prevailing Party in such action or proceeding shall be entitled to recover reasonable attorneys' fees to be fixedby the court sitting without a jury.

IN WITNESS WHEREOF , the Parties have executed this Supply Agreement in counterparts, effective as of the day and yearfirst written above.

CERUS CORPORATION

By: /s/ William “Obi” GreenmanName: William “Obi” GreenmanTitle: President and Chief Executive Officer 4/17/2017

POREX CORPORATION

By: /s/ John LavoratoName: John LavoratoTitle: VP and General Counsel/Filtration Group Corporation 4/17/2017

Page 15 of 15




Exhibit A -1

Specifications for Platelet [ * ] Wafer, [ * ]

(Porex Part Number [ * ])

[providedseparatelyfromthisAgreement]

[ * ]

{6 pages omitted}

EXHIBIT A-1




Exhibit A- 2

Specifications for Platelet [ * ] Wafer



[ * ]

{7 pages omitted}

EXHIBIT A-2




Exhibit A-3

Specifications for [ * ]


[ * ]

{8 pages omitted}

EXHIBIT A-3




Exhibit A-4



[ * ]

{2 pages omitted}

EXHIBIT A-4




Exhibit A-5



[ * ]

{2 pages omitted}

EXHIBIT A-5




Exhibit B -1




[ * ]

{6 pages omitted}

EXHIBIT B-1




Exhibit B- 2



[ * ]

{4 pages omitted}

EXHIBIT B-2




Exhibit B-3



[ * ]

{4 pages omitted}

EXHIBIT B-3




Exhibit C

[ * ]

{3 pages omitted}

EXHIBIT C




Exhibit D

Pricing

[ * ]

EXHIBIT D




Exhibit E

Cerus Dedicated Space

[ * ]

EXHIBIT E




Exhibit F

Equipment and Facility Improvements

[ * ]

EXHIBIT F




Exhibit G

Raw Material Target Usage Rates

[ * ]

EXHIBIT H




Exhibit H

Confidentiality Agreement

EXHIBIT H




AGREEMENTREGARDINGTHEEXCHANGEOFCONFIDENTIALINFORMATION

In connection with the possible development, manufacture and sale of certain parts by POREX CORPORATION (“Porex”) toCERUS CORPORATION (“ Cerus ”) and, collectively with Porex, the “Parties” and each of Porex and Cerus may be referred toindividually as a “Party”), Parties have determined that it is necessary and useful for the Parties to exchange ConfidentialInformation belonging to each Party. Except as set forth below, Confidential Information of a Party shall include all informationrelating to such Party’s (or an affiliate of such Party’s) data, books, records, specifications, trade secrets, know-how, formulas,processes, manufacturing methods, techniques, raw materials, sources of supply, applications for particular technologies, vendorlists, customer lists, employee lists, management systems, financial information, pricing, sales and marketing plans, researchand development, inventions, and such other documents and materials that are delivered or otherwise disclosed (including,without limitation, through facility tours) by such Party to the other Party, whether orally or in writing, and whether or not identifiedas confidential. Notwithstanding anything to the contrary herein, Confidential Information shall not include information (i) which isdeveloped or discovered by a Party independent of and without the use of the Confidential Information, (ii) in the possession ofboth Parties prior to the date of this Agreement and there is competent evidence to establish such fact, (iii) established at anytime to be in the public domain otherwise than by breach of this Agreement, or (iv) is required to be disclosed in compliance withany law, governmental regulation, or court order, provided the receiving Party shall notify the disclosing Party in advance of anysuch disclosure, if feasible, and will assist the disclosing Party in pursuing such nondisclosure or protective orders as may beavailable. For and in consideration of the mutual promises herein contained, the Parties agree as follows effective the 22 day ofFebruary 2007 (the “Effective Date”):

1. The receiving Party shall keep the Confidential Information secret and confidential and will not, without the prior writtenconsent of the disclosing Party, use or disclose the Confidential Information for the term of this Agreement plus five (5)years, except that the confidentiality obligations with respect to any Confidential Information that constitutes a trade secretshall continue in effect for so long as the information remains a trade secret. The term “trade secret” as used in thisAgreement shall mean Confidential Information that: (i) derives economic value, actual or potential, from not beinggenerally known to, and not being readily ascertainable by proper means by, other persons who can obtain economicvalue from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintainsecrecy. Without limiting any of the other provisions hereof, each Party agrees to use at least the same degree of care toavoid and prevent disclosure of the other Party’s Confidential Information as it uses to prevent disclosure of its ownConfidential Information, and in no event less than a reasonable standard of care.

EXHIBIT H




2. A receiving Party will restrict transmission of Confidential Information to those of its directors, officers, employees, agents

and affiliates who are consulted concerning the discussions with the disclosing Party and who need to know ConfidentialInformation for the purpose of facilitating those discussions, provided such individuals shall have been advised of theconfidential nature of the Confidential Information and the obligations imposed under this Agreement. The receiving Partyshall be responsible to the disclosing Party for any improper disclosure or use of the Confidential Information by suchpersons.

3. No right of title or interest in or to the Confidential Information or license, either expressed or implied, under any patent,trade secret or otherwise is granted hereunder.

4. All Confidential Information in tangible form received or delivered hereunder shall be returned within thirty (30) days afterthe request of the Party submitting it.

5. The Parties agree that they shall not assume or incur any financial liability merely by receipt of Confidential Information,and any financial, supply or other agreement between the Parties will be covered by subsequent agreement(s).

6. Each Party acknowledges and agrees that the misappropriation, unauthorized use or disclosure of the ConfidentialInformation of the other Party or its affiliate would cause irreparable harm to the other Party. In the event of a breach ofany part of this Agreement, the Party which has been damaged by the breach or such affiliate shall be entitled to relief byappropriate legal or equitable means, including but not limited to a temporary restraining order, temporary injunctionand/or permanent injunctive relief, restraining and prohibiting the Party in breach from breaching or continuing to breachthe terms of this Agreement. In addition, the Party damaged by the breach or such affiliate shall be entitled to therecovery of any and all damages incurred as a result of such breach, including cost of enforcement, reasonable attorney’sfees and court costs.

7. This Agreement shall be binding upon and shall inure to the benefit of the Parties, their successors, assigns and affiliates,except that no assignment of any right to access the Confidential Information may be made by the receiving Party withoutthe prior written consent of the disclosing Party. The waiver of any provision in any instance shall not be construed as awaiver in other instances.

8. This Agreement contains the entire understanding of the Parties with respect to the subject matter hereof and withrespect to the matters contained herein and supersedes all prior agreements or understandings. This Agreement shall notbe modified except in writing signed by both Parties. Notwithstanding anything to the contrary herein, this Agreementshall not release either Party from any obligation to the other Party of confidentiality or non-use created pursuant to anyprior agreement or understanding between the Parties, and each such obligation shall remain in full force and effect.

9. The Parties agree that this Agreement is for the purposes of protecting proprietary information only. This Agreement isnot a joint venture or other such business arrangement; and any agreement between the Parties as to joint businessactivities will be set forth in subsequent written agreements.

EXHIBIT H




10. The Parties acknowledge that each of them (or an affiliate thereof) may be engaged now or in the future in a business

similar to or competitive with that of the other, and that the terms of this agreement shall in no way restrict either Partyfrom engaging in such business activities, except that each Party shall be bound by its agreements herein as they relateto Confidential Information.

11. Neither Party under this Agreement shall publicly announce or disclose the existence of this Agreement, or its contents,or any discussions relating thereto, without the prior consent of the other Party or except as may be required by law, inwhich case the Party required to make disclosure shall give the other Party the maximum feasible prior notice of suchdisclosure.

12. This Agreement shall be governed by the laws of the State of Georgia, which relate to contracts negotiated, executed andperformed within such state, without regard to the conflict of laws provisions thereof, and only the courts sitting in suchstate shall have exclusive jurisdiction of the Parties for the purposes of adjudicating any disputes under this Agreement.The Parties hereby consent to personal jurisdiction and venue in the courts of the State of Georgia and hereby waive anyclaim or defense that the party lacks minimum contacts with the forum, that the courts of .the State of Georgia lackpersonal jurisdiction of the Parties, or that the courts of the State of Georgia are an improper or inconvenient venue. TheParties further agree that service of process may be accomplished by certified mail, return receipt.

13. This Agreement shall remain in force until the earlier of (i) five (5) years from the Effective Date and (ii) the cancellation ofthis Agreement by either Party by written notification to the other Party. No expiration, cancellation or termination of thisAgreement for any reason will affect the validity and enforceability of the Confidentiality, non-disclosure and non-useprovisions contained in Paragraphs 1 and 2 hereof.

The completed signatures of the Parties attest to their mutual agreement to the conditions of this Agreement.

CERUSCORPORATION2411 Stanwell DriveConcord, California 94520

By: /s/ Howard G. Ervin

Print Name: Howard G. Ervin

Title: Vice President, Legal Affairs

Date: February 22, 2007

POREXCORPORATION500 Bohannon RoadFairburn, Georgia 30213-2828

By: /s/ Victor L. Marrero

Print Name: Victor L. Marrero

Title: Executive Vice President & Chief FinancialOfficer OfficerDate: February 22, 2007

EXHIBIT H




Exhibit I

Prohibited Companies*

[ * ]

EXHIBIT I




Exhibit 10.3

April 25, 2017

ViaEmail

Redwoods Business Center, LPc/o Cuff Property Management Co.2401 Stanwell DriveC o n cord, CA 94520Attn: S.P. Cuff, Managing Partner

Re: 2411 Stanwell Proper t y L ease

Dear Mr. Cuf f :

Pursuant to Section 37, Option to Rene w , of the Lease Agreement dated August 1, 2013 this lett e r will serve asCerus Corporatio n ' s notice of its option to renew and extend the lease for an additional term of two year s . The exp ir ation date of the lease shall be extended to Ju l y 3 1 , 201 9 .

Please acknowledge receipt of this letter by signing b e l ow and returning a copy to me f o r our f i l es.

Should you have any question s , please do not hesitate to contact m e .Sincerely, Kevin D. Green /s/ Kevin D. Green Vice President, Finance and CFO AcknowledgedandAgreedTo: By : /s/ S.P. Cuff S.P. Cuff, Managing Partner

CERUS CORPORATION 2550 Stanwell Drive, Concord, CA 94520 Tel. 925.288.6000 Fax 925-288-6001 www.cerus.com

Exhibit 10.4FIFTH AMENDMENT TO

LOAN AND SECURITY AGREEMENT

THIS FIFTH AMENDMENT to Loan and Security Agreement (this “ Amendment ”) is entered into as of April 27, 2017, by and between OXFORDFINANCE LLC , a Delaware limited liability company with an office located at 133 North Fairfax Street, Alexandria, Virginia 22314 (“ Oxford ”), as collateralagent (in such capacity, “ Collateral Agent ”), the Lenders listed on Schedule 1.1 of the Loan Agreement (as defined below) or otherwise party thereto from timeto time (each a “ Lender ” and collectively, the “ Lenders ”) including Oxford in its capacity as a Lender and CERUS CORPORATION , a Delaware corporationwith offices located at 2550 Stanwell Drive, Concord, CA 94520 (“ Borrower ”).

RECITALS

A. Collateral Agent, Lenders and Borrower have entered into that certain Loan and Security Agreement dated as of June 30, 2014, asamended by that certain First Amendment to Loan and Security Agreement dated as of January 30, 2015, that certain Second Amendment to Loan and SecurityAgreement dated as of September 29, 2015, that certain Third Amendment to Loan and Security Agreement dated as of July 28, 2016 and that certain FourthAmendment to Loan and Security Agreement dated as of October 25, 2016 (as the same may from time to time be amended, modified, supplemented or restated,the “ Loan Agreement ”).

B. Lenders have extended credit to Borrower for the purposes permitted in the Loan Agreement.

C. Borrower has requested that Collateral Agent and Lenders (i) modify the repayment terms and (ii) make certain other revisions tothe Loan Agreement as more fully set forth herein.

D. Collateral Agent and Lenders have agreed to modify such consent and to amend certain provisions of the Loan Agreement, butonly to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

AGREEMENT

NOW, THEREFORE , in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is herebyacknowledged, and intending to be legally bound, the parties hereto agree as follows:

1. Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the LoanAgreement.

2. Amendments to Loan Agreement.

2.1 Section 2.2 (Term Loans) . Section 2.2(b) of the Loan Agreement hereby is amended and restated in itsentirety to read as follows:

“(b) Repayment . As of the Fifth Amendment Effective Date, the outstanding principal balance of the Term Loans isSeventeen Million Six Hundred Thirty Thousand Five Hundred Nine and 45/100 Dollars ($17,630,509.45) (the “Fifth AmendmentPrincipal Balance”). Borrower shall continue to make monthly payments of interest only on the Fifth Amendment Principal Balance on thePayment Date of each month through and including the Payment Date immediately preceding the Amortization Date. Commencing on theAmortization Date, and continuing on the Payment Date of each month thereafter, Borrower shall make consecutive equal monthlypayments of principal and interest, in arrears, to each Lender, as calculated by Collateral Agent (which calculations shall be deemedcorrect absent manifest error) based upon: (1) the amount of such Lender’s Term Loan, (2) the effective rate of interest, as determined inSection 2.3(a), and (3) a repayment schedule equal to eighteen (18) months. All unpaid principal and accrued and unpaid interest withrespect to each Term Loan is due and payable in full on the

Maturity Date. Each Term Loan may only be prepaid in accordance with Sections 2.2(c) and 2.2(d).”

2.2 Section 13.1 (Definitions) . The following terms and their respective definitions hereby are added oramended and restated in their entirety, as applicable, to Section 13.1 of the Loan Agreement as follows:

“ Amortization Date ” is, with respect to each Term Loan, January 1, 2018.

“ Fifth Amendment Effective Date ” is April 27, 2017.

“ Maturity Date ” is, for each Term Loan, June 1, 2019.

3. Limitation of Amendment.

3.1 The amendments set forth in Section 2 above, are effective for the purposes set forth herein and shall belimited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any LoanDocument, or (b) otherwise prejudice any right or remedy which Collateral Agent or any Lender may now have or may have in the future under or in connectionwith any Loan Document.

3.2 This Amendment shall be construed in connection with and as part of the Loan Documents and all terms,conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmedand shall remain in full force and effect.

4. Representations and Warranties. To induce Collateral Agent and Lenders to enter into this Amendment, Borrower herebyrepresents and warrants to Collateral Agent and Lenders as follows:

4.1 Immediately after giving effect to this Amendment (a) the representations and warranties contained in theLoan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to anearlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

4.2 Borrower has the power and authority to execute and deliver this Amendment and to perform itsobligations under the Loan Agreement, as amended by this Amendment;

4.3 The organizational documents of Borrower delivered to Collateral Agent and Lenders on the EffectiveDate, or subsequent thereto, remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force andeffect;

4.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower of itsobligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

4.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower of itsobligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower,(b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority,or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

4.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower of itsobligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, orfiling, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower; and

4.7 This Amendment has been duly executed and delivered by Borrower and is the binding obligation ofBorrower, enforceable against Borrower in accordance with its terms, except as such enforceability

2

may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating toor affecting creditors’ rights.

5. Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken togethershall be deemed to constitute one and the same instrument.

6. Effectiveness. This Amendment shall be deemed effective upon (i) the due execution and delivery to Collateral Agent andLenders of this Amendment by each party hereto, (ii) Borrower’s payment to Oxford, of an amendment fee in an amount equal to One Hundred Thousand Dollars($100,000), which may be debited from any of Borrower’s accounts and (iii) Borrower’s payment of all Lenders’ Expenses incurred through the date of thisAmendment.

[ BalanceofPageleftIntentionallyBlank]

3

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

COLLATERAL AGENT AND LENDER: OXFORD FINANCE LLC By: /s/ Mark DavisName: Mark DavisTitle: Vice President – Finance, Secretary andTreasurer

BORROWER: CERUS CORPORATION

By: /s/ Kevin D. GreenName: Kevin D. GreenTitle: VP, Finance and Chief Financial Officer

[ Signature Page to Fifth Amendment to Loan and Security Agreement ]

Exhibit 10.5

C ERUS C ORPORATION

A MENDED AND R ESTATED 2008 E QUITY I NCENTIVE P LANAPPROVED BY THE BOARD OF DIRECTORS ON: APRIL 19, 2017

APPROVED BY STOCKHOLDERS ON: JUNE 7, 2017TERMINATION DATE: APRIL 21, 2023

1. G ENERAL .

(a) Successor and Continuation of Prior Plans . The Plan is intended as the successor to and continuation of the Cerus Corporation 1999 EquityIncentive Plan, as amended and the Cerus Corporation 1998 Non-Officer Stock Option Plan (the “ PriorPlans”). Following the Effective Date, no additional stockawards shall be granted under the Prior Plans. Any shares remaining available for future awards under the Prior Plans as of the Effective Date (the “ PriorPlansAvailableReserve”) shall become available for issuance pursuant to Awards granted hereunder. From and after the Effective Date, all outstanding stock awardsgranted under the Prior Plans shall remain subject to the terms of the Prior Plans, and from and after June 7, 2017, all outstanding stock awards granted under theCerus Corporation Inducement Plan (the “ InducementPlan”) shall remain subject to the terms of the Inducement Plan; provided,however, that (i) any sharessubject to outstanding stock awards granted under the Prior Plans that, on or after the Effective Date, expire or terminate for any reason prior to exercise orsettlement and (ii) any shares subject to outstanding stock awards granted under the Inducement Plan as of April 13, 2017 that, on or after June 7, 2017, expire orterminate for any reason prior to exercise or settlement (collectively, the “ ReturningShares”) shall become available for issuance pursuant to Awards grantedhereunder. All Awards granted on or after the Effective Date of this Plan shall be subject to the terms of this Plan.

(b) Eligible Award Recipients . The persons eligible to receive Awards are Employees, Directors and Consultants.

(c) Available Awards . The Plan provides for the grant of the following Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options,(iii) Restricted Stock Awards, (iv) Restricted Stock Unit Awards, (v) Stock Appreciation Rights, (vi) Performance Stock Awards, (vii) Performance Cash Awards,and (viii) Other Stock Awards.

(d) General Purpose . The Company, by means of the Plan, seeks to secure and retain the services of the group of persons eligible to receive Awards asset forth in Section 1(a), to provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and to provide a meansby which such eligible recipients may be given an opportunity to benefit from increases in value of the Common Stock through the granting of Stock Awards.

2. A DMINISTRATION .

(a) Administration by Board . The Board shall administer the Plan unless and until the Board delegates administration of the Plan to a Committee orCommittees, as provided in Section 2(c).

(b) Powers of Board . The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:(i) To determine from time to time (A) which of the persons eligible under the Plan shall be granted Awards; (B) when and how each Award shall

be granted; (C) what type or combination of types of Award shall be granted; (D) the provisions of each Award granted (which need not be identical), including thetime or times when a person shall be permitted to receive cash or Common Stock pursuant to a Stock Award; and (E) the number of shares of Common Stock withrespect to which a Stock Award shall be granted to each such person.

(ii) To construe and interpret the Plan and Awards, and to establish, amend and revoke rules and regulations for the Plan’s administration. TheBoard, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement or in the written terms of aPerformance Cash Award, in a manner and to the extent it shall deem necessary or expedient to make the Plan or Award fully effective.

(iii) To settle all controversies regarding the Plan and Awards.

(iv) To accelerate the time at which a Stock Award may first be exercised or the time during which an Award or any part thereof will vest inaccordance with the Plan, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest.

(v) To suspend or terminate the Plan at any time. Suspension or termination of the Plan shall not impair rights and obligations under any StockAward granted while the Plan is in effect except with the written consent of the affected Participant.

(vi) To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, relating to Incentive Stock Optionsand certain nonqualified deferred compensation under Section 409A of the Code and to bring the Plan and/or Stock Awards into compliance therewith, subject tothe limitations, if any, of applicable law. However, except as provided in Section 9(a) relating to Capitalization Adjustments, stockholder approval shall be requiredfor any amendment of the Plan that either (A) materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materiallyexpands the class of individuals eligible to receive Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan or materiallyreduces the price at which shares of Common Stock may be issued or purchased under the Plan, (D) materially extends the term of the Plan, or (E) expands thetypes of Awards available for issuance under the Plan, but only to the extent required by applicable law or listing requirements. Except as provided above, rightsunder any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (1) the Company requests the consent of theaffected Participant, and (2) such Participant consents in writing.

(vii) To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy therequirements of (A) Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit oncorporate deductibility of compensation paid to Covered Employees, (B) Section 422 of the Code regarding “incentive stock options” or (C) Rule 16b-3.

(viii) To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but notlimited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in thePlan that are not subject to Board discretion; providedhowever, that the Participant’s rights under any Award shall not be impaired by any such amendment unless(A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, subject to thelimitations of applicable law, if any, and without the affected Participant’s consent, the Board may amend the terms of any one or more Awards if necessary tomaintain the qualified status of the Award as an Incentive Stock Option or to bring the Award into compliance with Section 409A of the Code and Department ofTreasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued oramended after the Effective Date.

(ix) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of theCompany and that are not in conflict with the provisions of the Plan or Awards.

(x) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors orConsultants who are foreign nationals or employed outside the United States.

(c) Delegation to Committee.

(i) General . The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Planis delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that havebeen delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee isauthorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, notinconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may retain the authority to concurrently administer thePlan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated to the Committee, Committees, subcommittee orsubcommittees.

(ii) Section 162(m) and Rule 16b-3 Compliance . In the sole discretion of the Board, the Committee may consist solely of two (2) or moreOutside Directors, in accordance with Section 162(m) of the Code, or solely of two (2) or more Non-Employee Directors, in accordance with Rule 16b-3. Inaddition, the Board or the Committee, in its sole discretion, may (A) delegate to a Committee which need not consist of Outside Directors the authority to grantAwards to eligible persons who are either (1) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of incomeresulting from such Stock Award, or (2) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code, or (B) delegate to aCommittee which need not consist of Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of theExchange Act.

(d) Delegation to an Officer . The Board may delegate to one (1) or more Officers the authority to do one or both of the following (i) designateEmployees who are not Officers to be recipients of Options (and, to the extent permitted by applicable law, other Stock Awards) and the terms thereof, and(ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Employees; provided,however, that the Boardresolutions regarding such delegation shall specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officerand that such Officer may not grant a Stock Award to himself or herself. Notwithstanding anything to the contrary in this Section 2(d), the Board may not delegateto an Officer authority to determine the Fair Market Value pursuant to Section 13(v)(ii) below.

(e) Effect of Board’s Decision . All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review byany person and shall be final, binding and conclusive on all persons.

(f) Cancellation and Re-Grant of Stock Awards . Neither the Board nor any Committee shall have the authority to: (i) effect the reduction of theexercise price of any outstanding Option or Stock Appreciation Rights under the Plan (other than pursuant to Section 9 relating to adjustments upon changes instock), or (ii) cancel any outstanding Options or Stock Appreciation Rights with an exercise price that is greater than the Fair Market Value on the date ofcancellation in exchange for the grant in substitution therefore of cash or new Stock Awards under the Plan with an exercise price that is less than the originalexercise price of the Options or Stock Appreciation Rights, unless the stockholders of the Company have approved such an action within twelve (12) months priorto such an event.

3. S HARES S UBJECT TO THE P LAN .

(a) Share Reserve . Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stockthat may be issued pursuant to Stock Awards from and after the Effective Date shall not exceed 31,497,190 shares (the “ ShareReserve”), which number includesthe Prior Plans Available Reserve and the Returning Shares, if any, as such shares become available from time to time. For clarity, the Share Reserve is a limitationin the number of shares of the Common Stock that may be issued pursuant to the Plan and does not limit the granting of Stock Awards except as provided inSection 7(a). Shares may be issued in connection with a merger or acquisition as permitted by NASD Rule 4350(i)(1)(A)(iii) or, if applicable, NYSE ListedCompany Manual Section 303A.08, or AMEX Company Guide Section 711 and such issuance shall not reduce the number of shares available for issuance underthe Plan. Furthermore, if a Stock Award (i) expires or otherwise terminates without having been exercised in full or (ii) is settled in cash ( i.e., the holder of theStock Award receives cash rather than stock), such expiration, termination or settlement shall not reduce (or otherwise offset) the number of shares of the CommonStock that may be issued pursuant to the Plan.

(b) Subject to subsection 3(c), the number of shares available for issuance under the Plan shall be reduced by: (i) one (1) share for each share of stockissued pursuant to (A) an Option granted under Section 5, or (B) a Stock Appreciation Right granted under subsection 6(c) with respect to which the strike price isat least one hundred percent (100%) of the Fair Market Value of the underlying Common Stock on the date of grant; and (ii) one and sixty one hundredths (1.61)shares for each share of Common Stock issued pursuant to a Restricted Stock Award, Restricted Stock Unit Award, Performance Stock Award or Other StockAward.

(c) Reversion of Shares to the Share Reserve.

(i) Shares Available For Subsequent Issuance . If any shares of common stock issued pursuant to a Stock Award are forfeited back to theCompany because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares which are forfeited shall revert toand again become available for

issuance under the Plan. Notwithstanding the provisions of this Section 3(c)(i), any such shares shall not be subsequently issued pursuant to the exercise ofIncentive Stock Options. To the extent there is issued a share of Common Stock pursuant to a Stock Award that was counted as more than one share against thenumber of shares available for issuance under the Plan pursuant to Section 3(b) and such share of Common Stock again becomes available for issuance under thePlan pursuant to this Section 3(c), then the number of shares of Common Stock available for issuance under the Plan shall increase by one and sixty one hundredths(1.61) shares.

(ii) Shares Not Available For Subsequent Issuance . If any shares subject to a Stock Award are not delivered to a Participant because theStock Award is exercised through a reduction of shares subject to the Stock Award ( i.e., “net exercised”), the number of shares that are not delivered to theParticipant shall not remain available for issuance under the Plan. Also, any shares reacquired by the Company pursuant to Section 8(g) or as consideration for theexercise of an Option, and any shares repurchased by the Company on the open market with the proceeds of the exercise price of an Option shall not again becomeavailable for issuance under the Plan.

(d) Incentive Stock Option Limit . Notwithstanding anything to the contrary in this Section 3(d), subject to the provisions of Section 9(a) relating toCapitalization Adjustments the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Optionsshall be the Share Reserve.

(e) Section 162(m) Limitation on Annual Grants . Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, at such time as theCompany may be subject to the applicable provisions of Section 162(m) of the Code, no Employee shall be eligible to be granted during any calendar year StockAwards whose value is determined by reference to an increase over an exercise or strike price of at least one hundred percent (100%) of the Fair Market Value onthe date the Stock Award is granted (that is, Options or Stock Appreciation Rights) covering more than eight hundred thousand (800,000) shares of Common Stock.

(f) Source of Shares . The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including sharesrepurchased by the Company on the market or otherwise.

4. E LIGIBILITY .

(a) Eligibility for Specific Stock Awards . Incentive Stock Options may be granted only to employees of the Company or a parent corporation orsubsidiary corporation (as such terms are defined in Sections 424(e) and (f) of the Code). Stock Awards other than Incentive Stock Options may be granted toEmployees, Directors and Consultants.

(b) Ten Percent Stockholders . A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is atleast one hundred ten percent (110%) of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five (5) years from thedate of grant.

(c) Consultants . A Consultant shall be eligible for the grant of a Stock Award only if, at the time of grant, a Form S-8 Registration Statement under theSecurities Act (“ FormS-8”) is available to register either the offer or the sale of the Company’s securities to such Consultant because of the nature of the servicesthat the Consultant is providing to the Company, because the Consultant is a natural person, or because of any other rule governing the use of Form S-8.

5. O PTION P ROVISIONS .

Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separatelydesignated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates shall beissued for shares of Common Stock purchased on exercise of each type of Option. If an Option is not specifically designated as an Incentive Stock Option, then theOption shall be a Nonstatutory Stock Option. The provisions of separate Options need not be identical; provided,however, that each Option Agreement shallinclude (through incorporation of provisions hereof by reference in the Option Agreement or otherwise) the substance of each of the following provisions:

(a) Term . Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option shall be exercisable after the expiration of ten(10) years from the date of its grant or such shorter period specified in the Option Agreement.

(b) Exercise Price . Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise price of each Option shall be not less thanone hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing,an Option may be granted with an exercise price lower than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option ifsuch Option is granted pursuant to an assumption of or substitution for another option in a manner consistent with the provisions of Section 424(a) of the Code(whether or not such options are Incentive Stock Options).

(c) Consideration . The purchase price of Common Stock acquired pursuant to the exercise of an Option shall be paid, to the extent permitted byapplicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board shall have theauthority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Optionsthat require the consent of the Company to utilize a particular method of payment. The methods of payment permitted by this Section 6(c) are:

(i) by cash, check, bank draft or money order payable to the Company;

(ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stocksubject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price tothe Company from the sales proceeds;

(iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;

(iv) by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issued upon exercise bythe largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided,however, that the Company shall accepta cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number ofwhole shares to be issued; provided,further, that shares of Common Stock will no longer be outstanding under an Option and will not be exercisable thereafter tothe extent that (A) shares are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and(C) shares are withheld to satisfy tax withholding obligations; or

(v) in any other form of legal consideration that may be acceptable to the Board.

(d) Transferability of Options . The Board may, in its sole discretion, impose such limitations on the transferability of Options as the Board shalldetermine. In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options shall apply:

(i) Restrictions on Transfer . An Option shall not be transferable except by will or by the laws of descent and distribution and shall beexercisable during the lifetime of the Optionholder only by the Optionholder; provided,however, that the Board may, in its sole discretion, permit transfer of theOption in a manner consistent with applicable tax and securities laws upon the Optionholder’s request.

(ii) Domestic Relations Orders . Notwithstanding the foregoing, an Option may be transferred pursuant to a domestic relations order, provided,however, that an Incentive Stock Option may be deemed to be a Nonqualified Stock Option as a result of such transfer.

(iii) Beneficiary Designation . Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a formprovided by or otherwise satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be the beneficiaryof an Option with the right to exercise the Option and receive the Common Stock or other consideration resulting from an Option exercise.

(e) Vesting Generally . The total number of shares of Common Stock subject to an Option may vest and therefore become exercisable in periodicinstallments that may or may not be equal. The Option may be subject to such other terms and conditions on the time or times when it may or may not be exercised(which may be based on the satisfaction of Performance Goals or other criteria) as the Board may deem appropriate. The vesting provisions of individual Optionsmay vary. The provisions of this Section 5(e) are subject to any Option provisions governing the minimum number of shares of Common Stock as to which anOption may be exercised.

(f) Termination of Continuous Service . Except as otherwise provided in the applicable Option Agreement or other agreement between theOptionholder and the Company, in the event that an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability), theOptionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of ContinuousService) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder’s ContinuousService (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement.If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (asapplicable), the Option shall terminate.

(g) Extension of Termination Date . Unless otherwise provided in an Optionholder’s Option Agreement, if the exercise of the Option following thetermination of the Optionholder’s Continuous Service would be prohibited at any time solely because the issuance of shares of Common Stock would violate theregistration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of a period equal to the original post-termination exercise period applicable to such Award during which the exercise of the Option would not be in violation of such registration requirements, or (ii) theexpiration of the term of the Option as set forth in the Option Agreement. In addition, unless otherwise provided in an Optionholder’s Option Agreement, if the saleof the Common Stock received upon exercise of an Option following the termination of the Optionholder’s Continuous Service would violate the Company’sinsider trading policy, then the Option shall terminate on the earlier of (i) the expiration of a period equal to the original post-termination exercise period applicableto such Award during which the exercise of the Option would not be in violation of the Company’s insider trading policy, (ii) the 15 th day of the third month afterthe date on which the Option would cease to be exercisable but for this Section 5(g), or such longer period as would not cause the Option to become subject toSection 409A(a)(1) of the Code; or (iii) the expiration of the term of the Option as set forth in the Option Agreement.

(h) Disability of Optionholder . In the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, theOptionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of ContinuousService), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination of Continuous Service (or suchlonger or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, aftertermination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (asapplicable), the Option shall terminate.

(i) Death of Optionholder. In the event that (i) an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, or (ii) theOptionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder’s Continuous Service for a reason otherthan death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’sestate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated as the beneficiary of the Option upon theOptionholder’s death, but only within the period ending on the earlier of (A) the date eighteen (18) months following the date of death (or such longer or shorterperiod specified in the Option Agreement), or (B) the expiration of the term of such Option as set forth in the Option Agreement. If, after the Optionholder’s death,the Option is not exercised within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate. If the Optionholder designates athird party beneficiary of the Option in accordance with Section 5(d)(iii), then upon the death of the Optionholder such designated beneficiary shall have the soleright to exercise the Option and receive the Common Stock or other consideration resulting from an Option exercise.

(j) Non-Exempt Employees . No Option granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act shall befirst exercisable for any shares of Common Stock until at least six (6) months following the date of grant of the Option. The foregoing provision is intended tooperate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option will be exempt from his or her regular rate ofpay.

6. P ROVISIONS OF S TOCK A WARDS OTHER THAN O PTIONS .

(a) Restricted Stock Awards . Each Restricted Stock Award Agreement shall be in such form and shall contain such terms and conditions as the Boardshall deem appropriate. To the extent consistent with the Company’s Bylaws, at the Board’s election, shares of Common Stock may be (x) held in book entry formsubject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse; or (y) evidenced by a certificate, which certificate shall beheld in such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change from time to time, and theterms and conditions of separate Restricted Stock Award Agreements need not be identical; provided,however, that each Restricted Stock Award Agreement shallinclude (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

(i) Consideration . A Restricted Stock Award may be awarded in consideration for (A) past or future services actually or to be rendered to theCompany or an Affiliate, or (B) any other form of legal consideration that may be acceptable to the Board in its sole discretion and permissible under applicablelaw.

(ii) Vesting . Shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company inaccordance with a vesting schedule to be determined by the Board.

(iii) Termination of Participant’s Continuous Service . In the event a Participant’s Continuous Service terminates, the Company may receivevia a forfeiture condition, any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination of Continuous Serviceunder the terms of the Restricted Stock Award Agreement.

(iv) Transferability . Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement shall be transferable by the

Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board shall determine in its sole discretion, solong as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement.

(b) Restricted Stock Unit Awards . Each Restricted Stock Unit Award Agreement shall be in such form and shall contain such terms and conditions asthe Board shall deem appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time to time, and the terms andconditions of separate Restricted Stock Unit Award Agreements need not be identical; provided,however, that each Restricted Stock Unit Award Agreement shallinclude (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:

(i) Consideration . At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid by theParticipant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid (if any) by the Participant foreach share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board in itssole discretion and permissible under applicable law.

(ii) Vesting . At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions or conditions to the vesting ofthe Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.

(iii) Payment . A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, anycombination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.

(iv) Additional Restrictions . At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose suchrestrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted Stock Unit Award to a time afterthe vesting of such Restricted Stock Unit Award.

(v) Dividend Equivalents . Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock UnitAward, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalentsmay be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner as determined by the Board. Any additionalshares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents

will be subject to all the terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.

(vi) Termination of Participant’s Continuous Service . Except as otherwise provided in the applicable Restricted Stock Unit AwardAgreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service.

(vii) Compliance with Section 409A of the Code . Notwithstanding anything to the contrary set forth herein, any Restricted Stock Unit Awardgranted under the Plan that is not exempt from the requirements of Section 409A of the Code shall contain such provisions so that such Restricted Stock UnitAward will comply with the requirements of Section 409A of the Code. Such restrictions, if any, shall be determined by the Board and contained in the RestrictedStock Unit Award Agreement evidencing such Restricted Stock Unit Award.

(c) Stock Appreciation Rights . Each Stock Appreciation Right Agreement shall be in such form and shall contain such terms and conditions as theBoard shall deem appropriate. Stock Appreciation Rights may be granted as stand-alone Stock Awards or in tandem with other Stock Awards. The terms andconditions of Stock Appreciation Right Agreements may change from time to time, and the terms and conditions of separate Stock Appreciation Right Agreementsneed not be identical; provided,however, that each Stock Appreciation Right Agreement shall include (through incorporation of the provisions hereof by referencein the Agreement or otherwise) the substance of each of the following provisions:

(i) Term . No Stock Appreciation Right shall be exercisable after the expiration of ten (10) years from the date of its grant or such shorterperiod specified in the Stock Appreciation Right Agreement.

(ii) Strike Price . Each Stock Appreciation Right will be denominated in shares of Common Stock equivalents. The strike price of each StockAppreciation Right shall not be less than one hundred percent (100%) of the Fair Market Value of the Common Stock equivalents subject to the Stock AppreciationRight on the date of grant.

(iii) Calculation of Appreciation . The appreciation distribution payable on the exercise of a Stock Appreciation Right will be not greater thanan amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the Stock Appreciation Right) of a number of shares ofCommon Stock equal to the number of Common Stock equivalents in which the Participant is vested under such Stock Appreciation Right, and with respect towhich the Participant is exercising the Stock Appreciation Right on such date, over (B) the strike price that will be determined by the Board at the time of grant ofthe Stock Appreciation Right.

(iv) Vesting . At the time of the grant of a Stock Appreciation Right, the Board may impose such restrictions or conditions to the vesting ofsuch Stock Appreciation Right as it, in its sole discretion, deems appropriate.

(v) Exercise . To exercise any outstanding Stock Appreciation Right, the Participant must provide written notice of exercise to the Company incompliance with the provisions of the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right.

(vi) Payment . The appreciation distribution in respect to a Stock Appreciation Right may be paid in Common Stock, in cash, in anycombination of the two or in any other form of consideration, as determined by the Board and contained in the Stock Appreciation Right Agreement evidencingsuch Stock Appreciation Right.

(vii) Termination of Continuous Service . In the event that a Participant’s Continuous Service terminates, the Participant may exercise his orher Stock Appreciation Right (to the extent that the Participant was entitled to exercise such Stock Appreciation Right as of the date of termination) but only withinsuch period of time ending on the earlier of (A) the date three (3) months following the termination of the Participant’s Continuous Service (or such longer orshorter period specified in the Stock Appreciation Right Agreement), or (B) the expiration of the term of the Stock Appreciation Right as set forth in the StockAppreciation Right Agreement. If, after termination, the Participant does not exercise his or her Stock Appreciation Right within the time specified herein or in theStock Appreciation Right Agreement (as applicable), the Stock Appreciation Right shall terminate.

(viii) Compliance with Section 409A of the Code . Notwithstanding anything to the contrary set forth herein, any Stock Appreciation Rightsgranted under the Plan that are not exempt from the requirements of Section

409A of the Code shall contain such provisions so that such Stock Appreciation Rights will comply with the requirements of Section 409A of the Code. Suchrestrictions, if any, shall be determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right.

(d) Performance Awards .

(i) Performance Stock Awards . A Performance Stock Award is a Stock Award that may be granted, may vest, or may be exercised basedupon the attainment during a Performance Period of certain Performance Goals. A Performance Stock Award may, but need not, require the completion of aspecified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and themeasure of whether and to what degree such Performance Goals have been attained shall be conclusively determined by the Committee in its sole discretion. Themaximum number of shares that may be granted to any Participant in a calendar year attributable to Stock Awards described in this Section 6(d)(i) shall not exceedfive hundred thousand (500,000) shares of Common Stock. In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Boardmay determine that cash may be used in payment of Performance Stock Awards.

(ii) Performance Cash Awards . A Performance Cash Award is a cash award that may be granted upon the attainment during a PerformancePeriod of certain Performance Goals. A Performance Cash Award may also require the completion of a specified period of Continuous Service. The length of anyPerformance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goalshave been attained shall be conclusively determined by the Committee in its sole discretion. The maximum value that may be granted to any Participant in acalendar year attributable to Performance Cash Awards described in this Section 6(d)(ii) shall not exceed one million dollars ($1,000,000). The Board may providefor or, subject to such terms and conditions as the Board may specify, may permit a Participant to elect for, the payment of any Performance Cash Award to bedeferred to a specified date or event. The Committee may specify the form of payment of Performance Cash Awards, which may be cash or other property, or mayprovide for a Participant to have the option for his or her Performance Cash Award, or such portion thereof as the Board may specify, to be paid in whole or in partin cash or other property. In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Board may determine that Common Stockauthorized under this Plan may be used in payment of Performance Cash Awards, including additional shares in excess of the Performance Cash Award as aninducement to hold shares of Common Stock.

(e) Other Stock Awards . Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock may begranted either alone or in addition to Stock Awards provided for under Section 5 and the preceding provisions of this Section 6. Subject to the provisions of thePlan, the Board shall have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted,the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions ofsuch Other Stock Awards.

7. C OVENANTS OF THE C OMPANY .

(a) Availability of Shares . During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of CommonStock reasonably required to satisfy such Stock Awards.

(b) Securities Law Compliance . The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan suchauthority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided,however, that thisundertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to anysuch Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for theCompany deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issueand sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained.

(c) No Obligation to Notify . The Company shall have no duty or obligation to any holder of a Stock Award to advise such holder as to the time ormanner of exercising such Stock Award. Furthermore, the Company shall have no duty or obligation to warn or otherwise advise such holder of a pendingtermination or expiration of a Stock

Award or a possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of a StockAward to the holder of such Stock Award. 8. M ISCELLANEOUS .

(a) Use of Proceeds from Sales of Common Stock . Proceeds from the sale of shares of Common Stock pursuant to Stock Awards shall constitutegeneral funds of the Company.

(b) Corporate Action Constituting Grant of Stock Awards . Corporate action constituting a grant by the Company of a Stock Award to anyParticipant shall be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument,certificate, or letter evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant.

(c) Stockholder Rights . No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares ofCommon Stock subject to such Stock Award unless and until such Participant has exercised the Stock Award pursuant to its terms and the Participant shall not bedeemed to be a stockholder of record until the issuance of the Common Stock pursuant to such exercise has been entered into the books and records of theCompany.

(d) No Employment or Other Service Rights . Nothing in the Plan, any Stock Award Agreement or other instrument executed thereunder or inconnection with any Award granted pursuant to the Plan shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacityin effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with orwithout notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or(iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which theCompany or the Affiliate is incorporated, as the case may be.

(e) Incentive Stock Option $100,000 Limitation . To the extent that the aggregate Fair Market Value (determined at the time of grant) of CommonStock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of theCompany and any Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof that exceed such limit (according to the order inwhich they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).

(f) Investment Assurances . The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award,(i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ apurchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she iscapable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurancessatisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with anypresent intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements,shall be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a thencurrently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel for the Company thatsuch requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, placelegends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, butnot limited to, legends restricting the transfer of the Common Stock.

(g) Withholding Obligations . Unless prohibited by the terms of a Stock Award Agreement, the Company may, in its sole discretion, satisfy anyfederal, state or local tax withholding obligation relating to an Award by any of the following means (in addition to the Company’s right to withhold from anycompensation paid to the Participant by the Company) or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholdingshares of Common Stock from the shares of Common Stock issued or otherwise issuable

to the Participant in connection with the Award; (iii) withholding cash from an Award settled in cash; or (iv) by such other method as may be set forth in the AwardAgreement.

(h) Electronic Delivery . Any reference herein to a “written” agreement or document shall include any agreement or document delivered electronicallyor posted on the Company’s intranet.

(i) Deferrals . To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or thepayment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish programs and procedures for deferralelections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of theCode, the Board may provide for distributions while a Participant is still an employee. The Board is authorized to make deferrals of Stock Awards and determinewhen, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of employment orretirement, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.

(j) Compliance with Section 409A of the Code . To the extent that the Board determines that any Award granted under the Plan is subject to Section409A of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions necessary to avoid the consequences specified inSection 409A(a)(1) of the Code. To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A of the Code andDepartment of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that maybe issued or amended after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Boarddetermines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasuryguidance as may be issued after the Effective Date), the Board may adopt such amendments to the Plan and the applicable Award Agreement or adopt otherpolicies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Board determines are necessaryor appropriate to (i) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to theAward, or (ii) comply with the requirements of Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issuedthereunder, including without limitation any such regulations or other guidance that may be issued or amended after the Effective Date.

9. A DJUSTMENTS UPON C HANGES IN C OMMON S TOCK ; O THER C ORPORATE E VENTS .

(a) Capitalization Adjustments . In the event of a Capitalization Adjustment, the Board shall appropriately adjust: (i) the class(es) and maximumnumber of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise ofIncentive Stock Options pursuant to Section 3(d), (iii) the class(es) and maximum number of securities that may be awarded to any person pursuant to Section 3(d)and 6(d)(i), and (iv) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards. The Board shall make suchadjustments, and its determination shall be final, binding and conclusive.

(b) Dissolution or Liquidation . Except as otherwise provided in the Stock Award Agreement, in the event of a dissolution or liquidation of theCompany, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to the Company’sright of repurchase) shall terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to theCompany’s repurchase option may be repurchased by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service, provided,however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject torepurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed butcontingent on its completion.

(c) Corporate Transaction . The following provisions shall apply to Stock Awards in the event of a Corporate Transaction unless otherwise provided inthe instrument evidencing the Stock Award or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expresslyprovided by the Board at the time of grant of a Stock Award.

(i) Stock Awards May Be Assumed . Except as otherwise stated in the Stock Award Agreement, in the event of a Corporate Transaction, anysurviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all Stock Awardsoutstanding under the Plan or may substitute similar stock awards for Stock Awards outstanding under the Plan (including but not limited to, awards to acquire thesame consideration paid to the stockholders of the Company pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by theCompany in respect of Common Stock issued pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or the successor’sparent company, if any), in connection with such Corporate Transaction. A surviving corporation or acquiring corporation (or its parent) may choose to assume orcontinue only a portion of a Stock Award or substitute a similar stock award for only a portion of a Stock Award. The terms of any assumption, continuation orsubstitution shall be set by the Board in accordance with the provisions of Section 2.

(ii) Stock Awards Held by Current Participants . Except as otherwise stated in the Stock Award Agreement, in the event of a CorporateTransaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Stock Awards orsubstitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and thatare held by Participants whose Continuous Service has not terminated prior to the effective time of the Corporate Transaction (referred to as the “ CurrentParticipants”), the vesting of such Stock Awards (and, with respect to Options and Stock Appreciation Rights, the time at which such Stock Awards may beexercised) shall be accelerated in full to a date prior to the effective time of such Corporate Transaction (contingent upon the effectiveness of the CorporateTransaction) as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five (5) days prior to the effective time of theCorporate Transaction), and such Stock Awards shall terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and anyreacquisition or repurchase rights held by the Company with respect to such Stock Awards shall lapse (contingent upon the effectiveness of the CorporateTransaction).

(iii) Stock Awards Held by Persons other than Current Participants . Except as otherwise stated in the Stock Award Agreement, in theevent of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstandingStock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued orsubstituted and that are held by persons other than Current Participants, such Stock Awards shall terminate if not exercised (if applicable) prior to the effective timeof the Corporate Transaction; provided,however, that any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall notterminate and may continue to be exercised notwithstanding the Corporate Transaction.

(iv) Payment for Stock Awards in Lieu of Exercise . Notwithstanding the foregoing, in the event a Stock Award will terminate if notexercised prior to the effective time of a Corporate Transaction, the Board may provide, in its sole discretion, that the holder of such Stock Award may not exercisesuch Stock Award but will receive a payment, in such form as may be determined by the Board, equal in value, at the effective time, to the excess, if any, of (A) thefair market value of the property the holder of the Stock Award would have received upon the exercise of the Stock Award (including, at the discretion of theBoard, any unvested portion of such Stock Award), over (B) any exercise price payable by such holder in connection with such exercise.

(d) Change in Control . A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control asmay be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliateand the Participant, but in the absence of such provision, no such acceleration shall occur.

10. T ERMINATION OR S USPENSION OF THE P LAN .

(a) Plan Term . Unless sooner terminated by the Board pursuant to Section 2, the Plan shall automatically terminate on April 21, 2023. No Awards maybe granted under the Plan while the Plan is suspended or after it is terminated.

(b) No Impairment of Rights . Termination of the Plan shall not impair rights and obligations under any Award granted while the Plan is in effectexcept with the written consent of the affected Participant.

11. E FFECTIVE D ATE OF P LAN .

This Plan originally became effective on the Effective Date. This amendment and restatement of the Plan is effective June 7, 2017.

12. C HOICE OF L AW .

The law of the State of California shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to suchstate’s conflict of laws rules.

13. D EFINITIONS . As used in the Plan, the definitions contained in this Section 13 shall apply to the capitalized terms indicated below:(a) “ Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 of the Securities

Act. The Board shall have the authority to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.

(b) “ Award” means a Stock Award or a Performance Cash Award.

(c) “ Board” means the Board of Directors of the Company.

(d) “ CapitalizationAdjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan orsubject to any Stock Award after the Effective Date without the receipt of consideration by the Company (through merger, consolidation, reorganization,recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares,change in corporate structure or other transaction not involving the receipt of consideration by the Company. Notwithstanding the foregoing, the conversion of anyconvertible securities of the Company shall not be treated as a transaction “without receipt of consideration” by the Company.

(e) “ Cause” means with respect to a Participant, the occurrence of any of the following events: (i) such Participant’s commission of any felony or anycrime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof; (ii) such Participant’s attempted commission of, orparticipation in, a fraud or act of dishonesty against the Company; (iii) such Participant’s intentional, material violation of any contract or agreement between theParticipant and the Company or of any statutory duty owed to the Company; (iv) such Participant’s unauthorized use or disclosure of the Company’s confidentialinformation or trade secrets; or (v) such Participant’s gross misconduct. The determination that a termination of the Participant’s Continuous Service is either forCause or without Cause shall be made by the Company in its sole discretion. Any determination by the Company that the Continuous Service of a Participant wasterminated by reason of dismissal without Cause for the purposes of outstanding Awards held by such Participant shall have no effect upon any determination ofthe rights or obligations of the Company or such Participant for any other purpose.

(f) “ ChangeinControl” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%)

of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction . Notwithstandingthe foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an investor, any affiliate thereofor any other Exchange Act Person from the Company in a transaction or series of related transactions the primary purpose of which is to obtain financing for theCompany through the issuance of equity securities or (B) solely because the level of Ownership held by any Exchange Act Person (the “ SubjectPerson”) exceedsthe designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Companyreducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition ofvoting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming therepurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over thedesignated percentage threshold, then a Change in Control shall be deemed to occur;

(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after theconsummation of such merger, consolidation or similar transaction, the

stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fiftypercent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent(50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case insubstantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;

(iii) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Companyand its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries toan Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company insubstantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or otherdisposition; or

(iv) individuals who, on the date this Plan is adopted by the Board, are members of the Board (the “Incumbent Board”) cease for any reason toconstitute at least a majority of the members of the Board; provided,however, that if the appointment or election (or nomination for election) of any new Boardmember was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of thisPlan, be considered as a member of the Incumbent Board.

For clarity, the term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing thedomicile of the Company.

Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an individual writtenagreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Awards subject to such agreement; provided,however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definitionshall apply.

(g) “ Code” means the Internal Revenue Code of 1986, as amended. (h) “ Committee” means a committee of one (1) or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).

(i) “ CommonStock” means the common stock of the Company.

(j) “ Company” means Cerus Corporation, a Delaware corporation.

(k) “ Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory servicesand is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, servicesolely as a Director, or payment of a fee for such service, shall not cause a Director to be considered a “Consultant” for purposes of the Plan.

(l) “ ContinuousService” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is notinterrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Directoror a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with theCompany or an Affiliate, shall not terminate a Participant’s Continuous Service. For example, a change in status from an employee of the Company to a consultantto an Affiliate or to a Director shall not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer ofthe Company, in that party’s sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absenceapproved by that party, including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated asContinuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company’s leave of absence policy, in the written termsof any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.

(m) “ CorporateTransaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the followingevents:

(i) a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Companyand its Subsidiaries;

(ii) a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company;

(iii) the consummation of a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

(iv) the consummation of a merger, consolidation or similar transaction following which the Company is the surviving corporation but the sharesof Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger,consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

(n) “ CoveredEmployee” shall have the meaning provided in Section 162(m)(3) of the Code and the regulations promulgated thereunder.

(o) “ Director” means a member of the Board.

(p) “ Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of anymedically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less thantwelve (12) months, as provided in Section 22(e)(3) and 409A(a)(2)(c)(i) of the Code.

(q) “ EffectiveDate” means the original effective date of this Plan document, which is the date of the annual meeting of stockholders of the Company

held in 2008. This restatement of the Plan document is effective on June 7, 2017, the date of the annual meeting of the stockholders of the Company held in 2017.

(r) “ Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for suchservices, shall not cause a Director to be considered an “Employee” for purposes of the Plan.

(s) “ Entity” means a corporation, partnership, limited liability company or other entity.

(t) “ ExchangeAct” means the Securities Exchange Act of 1934, as amended.

(u) “ ExchangeActPerson” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), exceptthat “Exchange Act Person” shall not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiaryof the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) anunderwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of theCompany in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning ofSection 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date of the Plan as set forth in Section 11, is the Owner, directly or indirectly, of securities ofthe Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities.

(v) “ FairMarketValue” means, as of any date, the value of the Common Stock determined as follows:(i) If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share of

Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchangeor market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in TheWallStreetJournalor such other source asthe Board deems reliable. Unless otherwise provided by the Board, if there is no closing sales price (or closing bid if no sales were reported) for the Common Stockon the date of determination,

then the Fair Market Value shall be the closing selling price (or closing bid if no sales were reported) on the last preceding date for which such quotation exists.

(ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined by the Board in good faith.

(w) “ IncentiveStockOption” means an option granted pursuant to Section 5 of the Plan that is intended to be, and qualifies as, an “incentive stockoption” within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(x) “ Non-EmployeeDirector” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receivecompensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director(except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“RegulationS-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is notengaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

(y) “ NonstatutoryStockOption” means any option granted pursuant to Section 5 of the Plan that does not qualify as an Incentive Stock Option.

(z) “ Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulationspromulgated thereunder.

(aa) “ Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.

(bb) “ OptionAgreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Optiongrant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

(cc) “ Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if permitted under the terms of this Plan, such other personwho holds an outstanding Option.

(dd) “ OtherStockAward” means an award based in whole or in part by reference to the Common Stock which is granted pursuant to the terms andconditions of Section 6(d).

(ee) “ OtherStockAwardAgreement” means a written agreement between the Company and a holder of an Other Stock Award evidencing the termsand conditions of an Other Stock Award grant. Each Other Stock Award Agreement shall be subject to the terms and conditions of the Plan.

(ff) “ OutsideDirector” means a Director who either (i) is not a current employee of the Company or an “affiliated corporation” (within the meaning ofTreasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an “affiliated corporation” who receivescompensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, has not been an officer of the Company or an“affiliated corporation,” and does not receive remuneration from the Company or an “affiliated corporation,” either directly or indirectly, in any capacity other thanas a Director, or (ii) is otherwise considered an “outside director” for purposes of Section 162(m) of the Code.

(gg) “ Own,” “ Owned,” “ Owner,” “ Ownership” A person or Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to haveacquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, hasor shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

(hh) “ Participant” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding StockAward.

(ii) “ PerformanceCashAward” means an award of cash granted pursuant to the terms and conditions of Section 6(d)(ii).

(jj) “ PerformanceCriteria” means the one or more criteria that the Board shall select for purposes of establishing the Performance Goals for aPerformance Period. The Performance Criteria that shall be used to establish such Performance Goals may be based on any one of, or combination of, thefollowing: (i) earnings per share; (ii) earnings before interest, taxes and depreciation; (iii) earnings before interest, taxes, depreciation and amortization; (iv) totalstockholder return; (v) return on equity; (vi) return on assets, investment, or capital employed; (vii) operating margin; (viii) gross margin; (ix) operating income;(x) net income (before or after taxes); (xi) net operating income; (xii) net operating income after tax; (xiii) pre-tax profit; (xiv) operating cash flow; (xv) sales orrevenue targets; (xvi) increases in revenue or product revenue; (xvii) expenses and cost reduction goals; (xviii) improvement in or attainment of working capitallevels; (xix) economic value added (or an equivalent metric); (xx) market share; (xxi) cash flow; (xxii) cash flow per share; (xxiii) share price performance;(xxiv) debt reduction; (xxv) implementation or completion of projects or processes; (xxvi) customer satisfaction; (xxvii) stockholders’ equity; and (xxviii) to theextent that an Award is not intended to comply with Section 162(m) of the Code, other measures of performance selected by the Board. Partial achievement of thespecified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Stock Award Agreement or the written termsof a Performance Cash Award. The Board shall, in its sole discretion, define the manner of calculating the Performance Criteria it selects to use for suchPerformance Period.

(kk) “ PerformanceGoals” means, for a Performance Period, the one or more goals established by the Board for the Performance Period based upon thePerformance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or businesssegments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Atthe time of the grant of any Award, the Board is authorized to determine whether, when calculating the attainment of Performance Goals for a Performance Period:(i) to exclude restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects, as applicable, for non-U.S. dollar denominated net sales andoperating earnings; (iii) to exclude the effects of changes to generally accepted accounting standards required by the Financial Accounting Standards Board; (iv) toexclude the effects of any statutory adjustments to corporate tax rates; and (v) to exclude the effects of any “extraordinary items” as determined under generallyaccepted accounting principles. In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment ofPerformance Goals.

(ll) “ PerformancePeriod” means the period of time selected by the Board over which the attainment of one or more Performance Goals will bemeasured for the purpose of determining a Participant’s right to and the payment of a Stock Award or a Performance Cash Award. Performance Periods may be ofvarying and overlapping duration, at the sole discretion of the Board.

(mm) “ PerformanceStockAward” means a Stock Award granted under the terms and conditions of Section 6(d)(i).

(nn) “ Plan” means this Cerus Corporation 2008 Equity Incentive Plan.

(oo) “ RestrictedStockAward” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).

(pp) “ RestrictedStockAwardAgreement” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing theterms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement shall be subject to the terms and conditions of the Plan.

(qq) “ RestrictedStockUnitAward” means a right to receive shares of Common Stock which is granted pursuant to the terms and conditions of Section6(b).

(rr) “ RestrictedStockUnitAwardAgreement” means a written agreement between the Company and a holder of a Restricted Stock Unit Awardevidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement shall be subject to the terms andconditions of the Plan.

(ss) “ Rule16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

(tt) “ SecuritiesAct” means the Securities Act of 1933, as amended.

(uu) “ StockAppreciationRight” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions ofSection 6(c).

(vv) “ StockAppreciationRightAgreement” means a written agreement between the Company and a holder of a Stock Appreciation Right evidencingthe terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement shall be subject to the terms and conditions of the Plan.

(ww) “ StockAward” means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory StockOption, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right, a Performance Stock Award or any Other Stock Award.

(xx) “ StockAwardAgreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a StockAward grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

(yy) “ Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stockhaving ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class orclasses of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned bythe Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form ofvoting or participation in profits or capital) of more than fifty percent (50%).

(zz) “ TenPercentStockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more thanten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate.

Exhibit 10.6AMENDMENT NO. 3 TO SALES AGREEMENT

August 4, 2017

Cantor Fitzgerald & Co.499 Park AvenueNew York, NY 10022 Ladies and Gentlemen:

Cerus Corporation, a Delaware corporation (the “ Company ”), and Cantor Fitzgerald & Co. (“ Agent ”) are parties to that certainControlled Equity Offering SM Sales Agreement dated August 31, 2012 as previously amended on March 21, 2014 and May 5, 2016 (asamended, the “ Sales Agreement ”). All capitalized terms not defined herein shall have the meanings ascribed to them in the SalesAgreement. The parties, intending to be legally bound, hereby amend the Sales Agreement as follows:

1. The first two paragraphs of Section 1 of the Sales Agreement are hereby deleted and replaced with the following: “1. Issuance and Sale of Shares . The Company agrees that, from time to time during the term of this Agreement,and on the terms and subject to the conditions set forth herein, it may issue and sell through Agent, shares (the “ PlacementShares ”) of the Company’s common stock, par value $0.001 per share (the “ Common Stock ”). Following the time that theNew Registration Statement (as defined below) is declared effective under the Securities Act of 1933, as amended (the “Securities Act ”) by the Securities and Exchange Commission (the “ Commission ”) , $70,000,000 of Placement Shares,inclusive of any Placement Shares remaining unsold under this Agreement pursuant to the Prior Prospectus (as definedbelow), shall be available for offer and sale (the “ Available Placement Shares ”); provided,however, that in no event shallthe Company issue or sell through Agent such number of Placement Shares that (a) would cause the Company to not satisfythe eligibility requirements for use of Form S-3 (including, if applicable, Instruction I.B.6. thereof), (b) exceeds the amount ofPlacement Shares registered on the effective Registration Statement and included in the Prospectus (as defined below)pursuant to which the offering is being made or (c) exceeds the number of authorized but unissued shares of the CommonStock (the lesser of (a), (b) or (c), the “ Maximum Amount ”). Notwithstanding anything to the contrary contained herein, theparties hereto agree that compliance with the limitations set forth in this Section 1 on the amount of Placement Shares issuedand sold under this Agreement shall be the sole responsibility of the Company and that Agent shall have no obligation inconnection with such compliance. The issuance and sale of Placement Shares through Agent will be effected pursuant to theRegistration Statement filed by the Company and declared effective by the Commission, although nothing in this Agreementshall be construed as requiring the Company to use the Registration Statement to issue any Placement Shares.

The Company has filed with the Commission, in accordance with the provisions of the Securities Act, and the rulesand regulations thereunder (the “ Securities Act Regulations ”), a registration statement on Form S-3 (File No. 333–198005),relating to certain securities, including a base prospectus, relating to certain securities, and a prospectus dated May 6, 2016specifically relating to a portion of the Placement Shares (the “ Prior Prospectus ”), and which incorporates by reference, tothe extent provided for under Form S-3, documents that the Company has filed or will file in accordance with the provisionsof the

Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the rules and regulations thereunder.

The Company shall file with the Commission, in accordance with the provisions of the Securities Act, and the SecuritiesAct Regulations, a registration statement on Form S-3 (the “ New Registration Statement ”), relating to certain securities, includinga prospectus relating to the Available Placement Shares (the “ Placement Share Prospectus ”), and which incorporates by reference,to the extent provided for under Form S-3, documents that the Company has filed or will file in accordance with the provisions ofthe Exchange Act, and the rules and regulations thereunder. Following the date that the New Registration Statement is declaredeffective by the Commission, the Company will furnish to Agent, for use by Agent, copies of the Placement Share Prospectus, assupplemented, if at all, by any prospectus supplement relating to the Placement Shares. Except where the context otherwiserequires, the New Registration Statement, as amended when it becomes effective, and any post-effective amendment thereto,including all documents filed as part thereof or incorporated by reference therein, and including any information contained in aProspectus (as defined below) subsequently filed with the Commission pursuant to Rule 424(b) under the Securities ActRegulations or deemed to be a part of such registration statement pursuant to Rule 430B of the Securities Act Regulations, or anysubsequent registration statement on Form S-3 filed pursuant to Rule 415(a)(6) under the Securities Act by the Company to coverany Placement Shares is herein called the “ Registration Statement .” The Placement Share Prospectus, including all documentsincorporated therein by reference, included in the Registration Statement, as it may be supplemented by any prospectussupplement, in the form in which such Placement Share Prospectus and/or any prospectus supplement have most recently beenfiled by the Company with the Commission pursuant to Rule 424(b) under the Securities Act Regulations, is herein called the “Prospectus .” Any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall bedeemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms “amend,”“amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and includethe filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein (the “Incorporated Documents ”). For purposes of this Agreement, all references to the Registration Statement, the Prospectus or anyamendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to the Electronic DataGathering Analysis and Retrieval System or any successor thereto (“ EDGAR ”).” 2. Section 13(d) of the Sales Agreement is hereby deleted and replaced with the following: “(d) Unless earlier terminated pursuant to this Section 13, this Agreement shall automatically terminate upon the earlier tooccur of (i) the date that is three years following the date that the New Registration Statement is declared effective under theSecurities Act or (ii) issuance and sale of all of the Placement Shares through Agent on the terms and subject to the conditionsset forth herein except that, in either such case, the provisions of Section 9, Section 11, Section 12, Section 18 and Section 19hereof shall remain in full force and effect notwithstanding such termination.” 3. The first sentence of Schedule 1 is amended by adding the words “and August 4, 2017” immediately after “as amended

on March 21, 2014 and as further amended on May 5, 2016”. 4. The first sentence of the Form of Representation Date Certificate attached as Exhibit 7(l) is amended by adding the

words “and August 4, 2017” immediately after “as amended on March 21, 2014 and as further amended on May 5, 2016.”

5. This Amendment No. 3 to Sales Agreement shall become effective upon the date that the New Registration Statement is

declared effective under the Securities Act.

6. No Further Amendments . Except as specifically set forth herein, all other provisions of the Sales Agreement shallremain in full force and effect.

7. New Registration Statement . The Company shall file the New Registration Statement within two business days of thedate hereof.

8. Entire Agreement; Amendment; Severability . This Amendment No. 3 to Sales Agreement together with the Sales

Agreement (including all schedules and exhibits attached hereto and thereto and Placement Notices issued pursuant hereto and thereto), theConfidentiality Agreement and that certain side letter agreement between the Company and Agent dated August 4, 2017, constitute the entireagreement and supersede all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties heretowith regard to the subject matter hereof. All references in the Sales Agreement to the “Agreement” shall mean the Sales Agreement asamended by this Amendment No. 3; provided , however , that all references to “date of this Agreement” or “date hereof” (with respect to theSales Agreement) in the Sales Agreement shall continue to refer to the original date of the Sales Agreement, and the reference to “time ofexecution of this Agreement” set forth in Section 13(a) shall continue to refer to the time of execution of the original Sales Agreement.

9. Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an

original, but all of which shall constitute one and the same instrument. Delivery of an executed Amendment by one party to the other may bemade by facsimile or email transmission.

10. Governing Law . This Amendment shall be governed by, and construed in accordance with, the internal laws of theState of New York without regard to the principles of conflicts of laws.

[Remainder of Page Intentionally Blank]

If the foregoing correctly sets forth the understanding among the Company and Agent, please so indicate in the space provided

below for that purpose, whereupon this letter shall constitute a binding amendment to the Agreement between the Company and Agent.

Very truly yours, CERUS CORPORATION

By: /s/ Kevin D. Green Name: Kevin D. Green Title: Vice President, Finance and Chief Financial Officer ACCEPTED as of the date first-above written:

CANTOR FITZGERALD & CO.

By: /s/ Jeffrey Lumby Name: Jeffrey LumbyTitle: Senior Managing Director

Exhibit 31.1

CERTIFICATION

I, William M. Greenman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cerus Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.

Date: August 4, 2017 /s/ William M. Greenman William M. Greenman

President and Chief Executive Officer(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Kevin D. Green, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cerus Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.

Date: August 4, 2017 /s/ Kevin D. Green Kevin D. Green

Vice President, Finance and Chief Financial Officer(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 ofChapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), William M. Greenman, the Chief Executive Officer of Cerus Corporation (the “Company”)and Kevin D. Green, the Chief Financial Officer of the Company, hereby certify that, to the best of their knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2017, and to which this Certification is attached as Exhibit 32.1 (the“Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, the undersigned have set their hands hereto as of the 4th day of August, 2017.

/s/ William M. Greenman William M. GreenmanPresident and Chief Executive Officer (Principal ExecutiveOfficer) /s/ Kevin D. Green Kevin D. GreenVice President, Finance and Chief Financial Officer (PrincipalFinancial Officer)

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporatedby reference into any filing of Cerus Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether madebefore or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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