Cerus: A Biotech Play on Zika?

04/13/2016 8:00 am EST


Joe Duarte

Editor, Joe Duarte In the Money Options

Our latest featured stock is a niche play on blood testing and the neutralization of infectious agents including hepatitis, HIV, the agent that causes syphilis and other infectious agents, explains Dr. Joe Duarte in Smart Tech Investing.

Cerus (CERS) has a proprietary technology, the Intercept system, which is used to test blood components, plasma and platelets, for parasites and viruses and to inactivate them.

Cerus has been expanding its market share steadily in the last 6-12 months, having signed key agreements for the use of Intercept with key regional blood supply agencies in the United States and elsewhere.

It already has a presence in Europe, Africa, and South America, which may be its most important asset at the moment.  

Cerus, in our opinion, may also be a play on the Zika virus, due to its the potentially pivotal role in the prevention of blood supply contamination with resurging infectious agents.  

A key future development is receiving FDA approval for the Intercept System to be used for red blood cells.  The global market for blood transfusions is huge, with over 100 million potential transfusions per year possible.

An increase in global travel and immigration also raises the potential for a resurgence of infectious diseases. Just recently the incidence of dengue fever -- a mosquito transmitted virus that can lead to heart disease -- has increased in the US.

The company reported its earnings on March 8th after the close coming in with a 15 cent per share loss and $9.7 million in revenues. 

Estimates were for $9.72 million in revenues and a loss of $0.16 in net income. The stock reacted well, especially in a tough period for the overall biotech sector.

It’s important to recognize that Cerus’s potential market is huge, estimated at $2 billion. I personally own shares in this stock and consider the stock a core holding.

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By Dr. Joe Duarte in Smart Tech Investing

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