Jul 31, 2014
Executives
Lainie Corten - Senior Director of Global Marketing & Investor Relations Kevin D. Green - Chief Financial Officer and Vice President of Finance Carol M.
Moore - Senior Vice President of Regulatory Affairs, Quality and Clinical William M. Greenman - Chief Executive Officer, President and Director
Analysts
Zarak Khurshid - Wedbush Securities Inc., Research Division Jeffrey T. Elliott - Robert W.
Baird & Co. Incorporated, Research Division Joshua T.
Jennings - Cowen and Company, LLC, Research Division George B. Zavoico - MLV & Co LLC, Research Division Brett Reiss
Operator
Good day, ladies and gentlemen, and welcome to the Cerus Corporation Second Quarter 2014 Results. [Operator Instructions] As a reminder, this call is being recorded.
I would now like to turn the call over to Lainie Corten. You may begin.
Lainie Corten
Thank you, operator, and good afternoon. I'd like to thank everyone for joining us today.
With me on the call are Obi Greenman, Cerus' President and Chief Executive Officer; Kevin Green, our Chief Financial Officer; Carol Moore, our Senior Vice President of Regulatory Affairs, Quality and Clinical; and also Larry Corash, our Chief Medical Officer. Cerus issued a press release today announcing our final -- our financial results for the second quarter ended June 30, 2014, and describing the company's recent business highlights.
You can access a copy of this announcement on the company website at cerus.com. I'd like to remind you that during this call, we will be making forward-looking statements regarding the company's product, prospects and results, including expectations for future sales growth and performance; gross margin; new customers and 2014 revenues; the anticipated impact of strategic changes to Cerus' distributor relationships; the anticipated timing, completion and potential approval of the company's modular PMA submissions to FDA and medical device application to Health Canada for plasma and platelets; the potential commercial launch of the INTERCEPT Blood System for plasma and platelets in North America and at the red blood cell facility [ph] in Europe, including anticipated marketing activities and expenses in support thereof; future operating expenses and cash utilization; research and development activities and the expenses related thereto; the timing of completing our ongoing clinical trials, including the reporting of data from these trials; the sufficiency of our cash resources and access to capital; the ability to take INTERCEPT available under an IDE and the potential impact on the company's [ph] PMA submissions; and the timing of review responses to FDA and their applicability to other regulatory submissions.
The company's actual results may differ materially from those suggested by forward-looking statements the company will be making, and the company assumes no obligation to update guidance or other forward-looking statements. I call your attention to the disclosure in the company's SEC filings, in particular, Cerus' quarterly reports for the fiscal period ended March 31, 2014, on Form 10-Q, including the sections entitled Risk Factors.
This call will be archived temporarily on our website and will not be updated during that time. On today's call, we'll begin with quarterly financial results from Kevin, followed by an update from Carol on our development programs and regulatory submissions.
We'll conclude our prepared remarks with commentary from Obi, who will review the recent quarter's achievements. And now it's my pleasure to introduce Kevin Green, Cerus' Chief Financial Officer.
Kevin D. Green
Thank you, Lainie. Earlier today, we reported Q2 revenue of $8.6 million, consistent with our guidance that first half revenues would be impacted as we work through certain distributor transitions.
Looking forward, we expect revenue growth will accelerate, starting in Q3, and we remain confident in our full year 2014 revenue guidance of $38 million to $40 million. Our gross margins during the second quarter were 45%, slightly improved from the 43% reported in the second quarter of 2013.
Our product mix sold in Q2 was in line with our expectation. Similar to past experience, disposable kits sold were more than 90% of sales with platelet kits representing roughly 2/3.
Going forward, we expect our gross margins will remain consistent in the mid 40%. Turning now to operating expenses.
Total operating expenses for Q2 were $14.9 million compared to $12.9 million last quarter and $11.5 million during Q2 of last year. Looking ahead, we anticipate operating expenses may increase modestly, but we continue to invest in additional resources and activities in support of the potential U.S.
launches. In addition, we expect development costs to increase as a result of our new strategy for an expedited INTERCEPT red blood cell CE Mark submission, which Carol will describe further in a moment.
This faster path to approval requires us to complete some of our CMV and other red cell development activities sooner than previously expected, increasing our spend rate in the near term but not necessarily overall project cost. Net losses for the quarter were $7.6 million, or $0.16 per diluted share, when adjusted for the dilutive impact of the mark-to-market value of outstanding [ph] warrant.
Narratively, net loss was $6.7 million, or $0.10 per diluted share, in Q2 of 2013. The reported operating results for Q2 2014 were impacted by a noncash gain of $3.5 million for the warrant accounting.
Of the 5.7 million warrants currently outstanding, 2.4 million warrants expired in Q3 with the remainder expiring in November of 2015. Now looking at the balance sheet.
We ended Q2 with cash and short-term investments of $49.7 million compared to $48.3 million at the end of the last quarter. For 2014 as a whole, we expect our average quarterly burn to be approximately $7.5 million in [ph] the quarter.
I'd like to take a moment to note the $30 million growth capital credit facility announced earlier this month. We believe this significant and nondilutive source of capital provides us with the flexibility and resources necessary for a successful and aggressive North American launch as well as further support with the expansion of INTERCEPT's global commercial market.
We've received an immediate $10 million loan at closing on June 30 and have the option to draw another 2 tranches of $10 million each subject to achievement of certain specified milestones around U.S. approval, and in the case of the third tranche, for consolidated revenue targets.
With that, I'd like to turn the call over to Carol, who will discuss our regulatory progress and our development programs.
Carol M. Moore
Thank you, Kevin. Last week, we were contacted by FDA regarding Caribbean Chikungunya and dengue epidemic and local viral transmissions reported in both Puerto Rico and Florida.
Part of an emergency preparedness plan, FDA asked us to provide a proposal for making INTERCEPT available in these areas under an expanded access investigational device exemption authorization, or IDE, as part of several steps FDA is considering to reduce the risk of transfusion transmitted infections in the [ph] areas. We submitted a protocol synopsis yesterday and look forward to further discussions with FDA in the coming days and weeks to explore how INTERCEPT could be made available under an IDE, which would allow use of the product prior to approval.
The discussion and timeline for use under IDE is separate from our pending PMA application, and we do not expect it to impact the timing or process of either approval decision [ph]. Now I'd like to provide an update on the status of our ongoing regulatory reviews in the U.S.
and Canada. The third and final module for our platelet PMA has been submitted to the FDA, and we're beginning that review dialogue with the agency [ph].
We expect at least a 9-month review, putting a possible U.S. platelet approval in 2015.
Turning to plasma. We are currently assembling a response to FDA questions on the INTERCEPT plasma PMA.
We've needed additional time to provide the information requested and the review [indiscernible]. The set of questions for answering is focused on our manufacturing process.
We determined that the best approach for our FDA response provides consume [ph] manufacturing validation data. These 2 studies have been completed successfully and are now writing up the report for inclusion in the FDA response packet.
Because of the synergies between INTERCEPT plasma and INTERCEPT platelet, the manufacturing response [indiscernible] that also applied to a similar question you might otherwise have received during review of our platelet PMA. We plan to submit our response this quarter, allowing the review clause to resume.
The information we're submitting is considered a major event at PMA, so this allows the FDA to add up to 90 days additional review time [indiscernible]. While it's possible we could still receive an approval position in 2014, [indiscernible] FDA will take the additional review term available to them and, therefore, now expect the plasma transfusion [indiscernible] to early [indiscernible].
In Canada, our INTERCEPT plasma review is ongoing with an approval decision possible as early as [indiscernible] 4. We recently submitted our application for INTERCEPT platelets and estimate approximately 6 months for that review.
Moving on to our INTERCEPT red cell development program. I'm very pleased to announce a change in our European strategy for approval.
We now plan to submit our CE Mark application based on the Phase III acute anemia trial, which is fully enrolled and remains on track to report results by year end. We also need to complete our [indiscernible] work and some additional [indiscernible] for that submission [ph].
This change in approach allows us to move forward faster, targets the CE Mark application for the second half of 2016. Assuming approximately 12 months for review, we could have INTERCEPT red cells on the market by 2017.
Turning now to our ongoing red cell study. The chronic anemia trial continues to enroll patients at a slow pace.
Because chronic data is no longer waiting for the CE Mark approval, we have more flexibility to consider alternative approaches to generating data in patient population. Finally, in the U.S., our Phase II red cell study subjects are completing their second crossover period.
We continue to anticipate reporting data in the latter part of this year following submission of the final report to FDA. And now I'd like to turn the call over to Obi.
William M. Greenman
Thank you, Carol. We believe our INTERCEPT red cell program is really taking shape now with a defined pathway and projected timing for initial CE Mark approval as early as 2017.
The development team is prepared to complete the CMV and development work for the CE Mark submission. And in parallel, we continue to collaborate with Nipro on the next-generation compoundability system as mentioned on the last call.
Our experience with the INTERCEPT platelet and plasma launches in Europe has underscored that some of the most important and influential clinical data could only be generated in a postapproval study. So we believe accelerating our market entry is the best strategy for the red cell program.
We also continue to deliver solid progress toward our planned launches in North America with the Canadian plasma approval possible later this year, and the additional U.S. and Canada approvals for plasma and platelets expected in 2015.
These approvals will significantly expand our market opportunity for these products, and we also believe they will be a key competitive advantage globally. As you heard from Carol, the ongoing Chikungunya epidemic is a significant concern to those responsible for maintaining a safe blood supply, and we appreciate the opportunity to respond to the FDA's request for an IDE proposal.
We are closely monitoring the reactions in other countries and have already seen France began to formulate a Chikungunya preparedness plan in case they start to see local transmission of the virus in the south of France. It's also important to note that the French have been using INTERCEPT on the islands of Martinique and Guadeloupe for over 5 years now, and accordingly, were well prepared for the recent Chikungunya outbreak in the Caribbean.
Finally, our major distributor transitions for the EMEA region are largely complete. We've added the modest number of additional hires necessary to go direct in the regions we are now handling ourselves and believe the appropriate foundation is now in place to resume revenue growth going forward with the result of these changes being fully realized before.
With the recent Belgian Red Cross contract and other significant customer contracts under discussion, we are well positioned not only for the second half of this year but also for 2015. Operator, please, open the call for questions.
Operator
[Operator Instructions] Our first question comes from Zarak Khurshid of Wedbush Securities.
Zarak Khurshid - Wedbush Securities Inc., Research Division
So with the uptick in the SG&A sequentially, can you just talk to us how that -- how you think that may trend for the remainder of the year?
Kevin D. Green
Yes, I mean, I think it should continue to increase very modestly, largely, our commercial team's in place starting the back half of last year and then we've made some additional hires in [ph] sales and in deployment [ph]. But those are already on board and reflected into [ph] numbers.
And then as we move forward and get closer to launch, we'll continue to make modest investments.
Zarak Khurshid - Wedbush Securities Inc., Research Division
Those expenses in Q2, were any of those one-time in nature? Or is most of that recurring?
Kevin D. Green
Most of it's recurring, Zarak, and part of the uptick is due to stock compensation, which we go through a grant process typically in the March timeframe than those -- the incremental OpEx reflected in Q2 [ph] and going forward.
Zarak Khurshid - Wedbush Securities Inc., Research Division
Understood. And then last one, just with respect to Belgium.
Any sense for the timing of the phase-in of that win?
William M. Greenman
Zarak, this is Obi. So they'll start production at some sites this year and then the full routine is we wouldn't expect [indiscernible] Q2 timeframe of next year.
Operator
Our next question comes from Jeff Elliott of Robert W. Baird.
Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division
Obi, could you talk about the benefits that you expect in the second half from the distribution changes, I guess, in terms of revenue and margins? How should we be thinking about the impact there?
William M. Greenman
Yes, I'll probably defer some of this to Kevin as well. But we have transitioned the distributor accounts that we had discussed on the previous calls over specifically in Spain and Portugal.
We have hired the staff that we need to go direct in those markets and have a transition plan in place for -- for the customer contracts, and that will be complete by the end of Q3. So I think the way to think about it is that, typically, those distributor markets represented about 20% of our top line sales and with those being out -- or not, not in the numbers for the last couple quarters, we'll start seeing those come back in.
Kevin, I don't know if you have anything else you want to add to that?
Kevin D. Green
Yes -- no, I think that's right, Obi. So on a quarterly basis, historically, those regions contributed roughly $2 million a quarter, which will obviously pick up.
And then, of course, we were selling through a distributor market. We'll now be direct and so we'll pick up increased margin.
We won't be giving them that volume discount anymore. And so, as Obi mentioned, that's happening now.
We'll see some effect in Q3 and a full effect of that in [ph] Q4.
Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division
Got it. And I guess coming back to your earlier point, you said the market is still kind of in the mid 40s going forward.
I think you're kind of leaving a range out there. But we should see some margin improvement, perhaps still within the mid-40 range but still some margin improvement as we exit the year from these changes, correct?
Kevin D. Green
Yes, I think you could see some modest improvement from these changes. Although our market continue to expand, so whatever pickup we get from these particular regions could be offset by new distributors or new regions coming online.
Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division
Got it. And then with all that's going on in Russia and the Ukraine, have you seen an impact there?
Or do you expect one in the guidance you laid out here? Is that something that you're just kind of monitoring as the situation unfolds?
William M. Greenman
Yes, I think we're definitely monitoring the situation, and it is factored into our guidance. So it's certainly of concern just given the potential disruption that, that represents.
But we spoke to you like we're on target with the way we're thinking about it.
Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division
Okay. So I guess -- so you haven't seen an impact then, is that fair?
William M. Greenman
Yes, we haven't seen an impact, but I think going into the year, we definitely didn't see a lot of growth coming out of that region.
Operator
Our next question comes from Josh Jennings of Cowen and Co.
Joshua T. Jennings - Cowen and Company, LLC, Research Division
I just wanted to start, Obi, and just ask about this emergency preparedness plan by the FDA and your protocol synopsis. Is this expanded access IDE for platelets and plasma?
Or does it include red blood cells?
William M. Greenman
Yes, I think I'll turn that over to Carol.
Carol M. Moore
At this point, we're just discussing platelets and plasma with the FDA.
Joshua T. Jennings - Cowen and Company, LLC, Research Division
Okay. Any update on the U.K.
tender process?
William M. Greenman
Well, there's ongoing studies that they're doing, and, other than that, I think there's still a possibility that a tender could be issued this year, but we basically are not factoring that into the end of -- forecast for contracts this year, but I think it's still on the table.
Joshua T. Jennings - Cowen and Company, LLC, Research Division
It's on the table. Okay, great.
And just any type of color you can provide, I know we're getting closer. You submitted the final module for platelets and moving through this regulatory process, but any updates in terms of any discussions with potential future customers in the U.S.
American Red Cross or other blood banks?
William M. Greenman
I think it's obviously premature since we're not approved to have those discussions. I think that it will come up in the context of the IDE's discussions that we'll be having.
And once we move further along with regards to the proposal that we submitted yesterday, but the part of the preparedness plan would be to consider rolling out the technology under this expanded access IDE to American Red Cross who supplies platelet components to the -- to Puerto Rico as well as other blood centers that supply blood products to regions that have exposure to transmitted disease risk associated with the Chikungunya epidemic as well as dengue.
Joshua T. Jennings - Cowen and Company, LLC, Research Division
All right. And then just lastly for me, the sales strategy optimization, is that complete now?
I just wanted to be clear. Is there still more territories that you're looking to optimize?
William M. Greenman
Thanks, Josh. Yes, so that is complete now.
Operator
Our next question comes from George Zavoico of MLV & Co.
George B. Zavoico - MLV & Co LLC, Research Division
A couple of questions about the IDE. Actually, who is the customer?
Is it going to be the government or the blood banks? Who's going to be actually buying the Illuminators and the kits?
William M. Greenman
I think the whole cost recovery mechanism is yet to be determined. There is a historical precedent for this, however, if one were to look back at how the West Nile Virus nucleic acid testing rolled out in the United States between the period of 2002 and 2007.
However, as far as how that cost recovery system or calculation and who is actually responsible for buying the kits is definitely TBD. I don't know, Carol, if you have anything else you want to add to that.
George B. Zavoico - MLV & Co LLC, Research Division
I'm sorry is who?
William M. Greenman
It's TBD. So it's not determined yet.
I think [indiscernible] to look for is just sort of what the historical precedent was with West Nile Virus nucleic acid testing.
George B. Zavoico - MLV & Co LLC, Research Division
Okay. And, I mean, besides dengue and Chikungunya, we've also seen some Ebola emerging.
Any talk about that with the FDA or EMA?
William M. Greenman
Not that we've heard of. No, I think the CDC came out with something this week saying that the concern about Ebola was low.
George B. Zavoico - MLV & Co LLC, Research Division
Okay. How big is Canada in terms of your potential number of customers and market size?
William M. Greenman
Yes, it's about -- there's 2 customers in Canada, one, is Canadian Blood Systems (sic) [Canadian Blood Services] and the other one is Héma-Québec. And the number of platelets and plasma components are north of 100,000 in total for both players and plasma.
We can give you [indiscernible] offline.
George B. Zavoico - MLV & Co LLC, Research Division
I'm sorry?
William M. Greenman
We can give you the specifics offline.
George B. Zavoico - MLV & Co LLC, Research Division
Okay. And one more question -- oh, I'm sorry, did you say you might have the Canadian approval by the end of this year?
I think I may have missed that on the call -- on the prepared remarks.
William M. Greenman
We did for plasma.
George B. Zavoico - MLV & Co LLC, Research Division
For plasma?
William M. Greenman
Yes. That was [indiscernible].
George B. Zavoico - MLV & Co LLC, Research Division
And finally, the CMVs because we had to do the validation for the manufacturing. Was -- could you describe that in a little bit more detail?
Were there any changes in the manufacturing process to get to the new validation process? What exactly was the FDA looking for here?
Carol M. Moore
This is Carol. So this has -- there were no changes in the manufacturing process.
This is the same product we've been making in Europe since 2006. All the same equipment, all -- every -- all those cycles have been the same.
The reality is that it's the new file for FDA. And so it's a -- went through the file and ask questions which we felt we could answer with some existing data.
We also thought that to be really aggressive with the responses and provide a complete response to help move this along, that it would be wise of us to reduce some of the validations. They were primarily having to do with sterilization cycle.
So we redid the validation, and they were -- the outcomes were completely successful. And I think that, that will help FDA -- will address their questions.
Operator
Our next question comes from Joe Chiolo [ph].
Unknown Analyst
You talked about the addition -- I'm sorry. Ms.
Moore talked about the additional validation on sterilization. And my question is, has the company addressed whether or not a conditional letter of approval can be issued subject to the study?
William M. Greenman
The study...
Carol M. Moore
Oh, [indiscernible] study, I'm sorry...
Unknown Analyst
The validation study -- the validation study that the company is going to have to do now.
Carol M. Moore
I think the way the FDA is viewing these applications is they are on a different track. So the investigational [ph] activities replaced [ph] the technologies prior to approval is a different regulatory path than the PMA.
So we don't -- the FDA has remained clear that they would like to keep those discussions separate, and there is a clock by which they're reviewing the PMA. So we hope that we can continue to move that PMA along and have a licensed product in the appropriate timeframe.
But I don't think one will lead to the other at this point.
Unknown Analyst
Can you elaborate on the sterilization issue?
Carol M. Moore
It wasn't an issue. It was just that they -- we have sterilization validations and the FDA wanted -- just thought it would be better if they had one that was dated 2014 instead of looking at one that was 2 years old.
Really, it's simple as that. They wanted something that was -- their product sterilization cycles are revalidated every 2 years, and the FDA wanted to do something that [indiscernible] matures data on it.
So we did that.
William M. Greenman
I think it's important to note also that this product has been in routine production for about a decade. And so yes, I think it when you're looking at this, it's as Carol mentioned, there's just some specific questions that the FDA had around the sterilization cycles, and we've done -- and just also to note, we've completed those studies as well.
Unknown Analyst
Is the FDA accepting the plasma data from Europe as it is on the platelet data?
Carol M. Moore
The clinical data is acceptable to FDA. I mean it's in our file.
We haven't reviewed our clinical module for both platelets and plasma. And there haven't been any issues with regard to our individual data [ph] or our long-term safety data that we've collected.
So they told us at the time we filed these applications that they would consider all of the data, both from the clinical studies as well as from our market [indiscernible].
Unknown Analyst
If there's not been an issue as far as plasma is concerned regarding sterilization, do you have any understanding as to why this validation study is required?
Carol M. Moore
So again, it's a validation study of a piece of the manufacturing component. It's just part of the -- you have to -- you sterilize the component, and as I said earlier, they just wanted something that was dated with 2014.
They just wanted a contemporary validation instead of looking at a validation that was dated 2012.
William M. Greenman
And Joe, that type [ph] of study has been completed.
Carol M. Moore
Right. That was given [indiscernible], yes.
Unknown Analyst
Okay. So the issue is -- or the inquiry is sterilization of a component of the kit, is that correct?
Carol M. Moore
That's correct. It's just a component of the kit.
Unknown Analyst
Once the solution leaves the kit, if there are any bugs in it, it's inactivated through INTERCEPT, is that correct?
Carol M. Moore
Well, that's -- they're kind of independent events. You have to provide a sterile kit.
That's all this is about. You have to provide a sterile kit for the collection of blood or plasma.
So the question FDA had is they just wanted to see a validation cycle in 2014 that shows that we had a sterile kit.
Unknown Analyst
From the standpoint of a shareholder, looking at the future, what comes to mind is, regardless if there's a low risk of some sterilization issue in the bag, once it leaves the bag and is treated by INTERCEPT, whatever bacteria could possibly be there is killed by Cerus' pathogen inactivation, is that right?
Carol M. Moore
Well, certainly pathogen inactivation would be effective, that's right. But you can't -- the FDA wouldn't accept an explanation that you don't have to have a sterile kit because of pathogen inactivation.
There's kind of 2 different elements. So FDA just wants to assure that you start out giving the customer a sterile kit so they can select their transfusion component.
And then after that, certainly, then the robustness of the INTERCEPT process is an important question about the transfusion component itself.
Unknown Analyst
Are you able to evaluate the significance of the request for a validation test in light of what you know, which is on the off chance that there may be a breakdown in sterilization, it will create a risk for the patient, which is ultimately the question for FDA.
Carol M. Moore
I don't think FDA is looking at it like that. They're not really saying...
Unknown Analyst
Can you tell me why not?
Carol M. Moore
Well, it's because, again, these are GMP requirements for licensure, that's -- you have a certain number of GMP licensing requirements. Your facility has to be of a certain cleanliness, and you have to have certain validations in place, and you have to do a certain amount of testing on your components.
The nature of the product being a pathogen inactivation product doesn't offset the requirement for GMP. And that's really what we're satisfying is the fact that we produce a GMP-certified product that is sterile, and that's what we assure the customer when they opened that test kit or that collection kit that they're assured that they're getting a sterile device.
Unknown Analyst
And did I hear Mr. Green correctly saying that the validation study had been completed?
William M. Greenman
That's correct.
Unknown Analyst
And that it was successful?
William M. Greenman
Yes.
Unknown Analyst
For Ms. Moore, can -- my understanding is...
William M. Greenman
Joe, can we possibly take some of these other questions offline and get back to you? Is that...
Carol M. Moore
I think there's more people on the queue.
Unknown Analyst
Can I ask one more question?
William M. Greenman
Sure go ahead.
Unknown Analyst
Mr. Greenman talked about revamping things in Spain, and would that mean revamping things with Grifols?
William M. Greenman
Our distributor in Southern Europe was Grifols, and we are transitioning away from them.
Unknown Analyst
Is there a reason?
William M. Greenman
Yes, we basically wanted to have more influence over how those products were sold in that region.
Unknown Analyst
Is there any relationship between Grifols buying Novartis' blood-testing diagnostic business on November 11 and the decrease in sales in the fourth quarter of last year?
William M. Greenman
Well, I mean, I think that obviously they have a lot of activities going on associated with that acquisition. And certainly it was part of the way we were thinking about it.
Joe, would you mind going back into the queue and we can try and -- address these questions offline? Do you have any other additional questions?
We just have some other folks in the queue we would like to get to.
Operator
Our next question comes from Brett Reiss of Janney Montgomery Scott.
Brett Reiss
If you're successful in providing service in Florida or under the IDE, and you demonstrate being a good corporate citizen, and the thing is successful in protecting lives, that won't have any bearing on the timetable of the more formal plasma and platelet approval process that's going through the FDA?
William M. Greenman
They are distinct sort of processes, and so I think what we're responding to here is a request by the FDA to consider an IDE. And so we responded to that.
We feel in order to see INTERCEPT as being considered a viable technology for addressing potential transfusion transmitted infectious disease risk, that's part of the multipronged strategy that the FDA is trying to put together. And obviously, we can't really speculate on how one event will influence the other.
Brett Reiss
Right. Are the same people that you'd be dealing with at the FDA on the IDE the same people that are reviewing your application for plasma and platelets?
William M. Greenman
It is the same group.
Brett Reiss
Okay. And just with respect to the Russian situation, do you get paid in dollars or if its rubles, do you hedge that?
Because the ruble has been declining with the sanctions and ratcheting up of them.
Kevin D. Green
Yes -- so, Brett, we get paid in euro. So kind of stable currency there.
Brett Reiss
Okay. Right, right.
And is there still an outside chance that plasma can be a second half 2014 event? Or really it's first quarter 2015 if all goes well?
William M. Greenman
I guess, Carol alluded to in her prepared notes that it is possible. But given that the FDA has an additional 90 days, we thought it was conservative -- appropriate to provide some [indiscernible].
Okay. Well, thank you very much for joining us all today.
Once again, we look forward to updating you again on our Q3 call. Thanks.
Operator
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may, all, disconnect.
Everyone, have a great day.