Blood transfusion safety firm Cerus Corp. ensured a bit of added financial security after entering a $50 million loan commitment from a subsidiary of Baxter Healthcare Corp.

Cerus will be able to draw down on some or all of the unrestricted five-year loan beginning in January. A 12 percent interest rate will accrue on funds borrowed, with no interest or principal due until 2008. The loan is secured with collateral based on future revenue from sales of Intercept Blood Systems for platelets - a pathogen-inactivation product on which the companies have collaborated.

"Over the years, both companies have invested a lot in these technologies to make blood safer," said Gregory Schafer, Cerus' chief financial officer. "As we now begin to commercialize the products, I think the approval really does validate the marketplace and I think Baxter is highly confident about the product. And this does underscore that."

He said the loan would be used to fund general operations at the Concord, Calif.-based company.

Intercept is a pathogen-inactivation system based on Cerus' Helinx technology, which prevents nucleic acid (DNA and RNA) replication. Cerus is now exploring therapeutic applications of Helinx compounds to treat and prevent diseases, primarily in oncology.

"We've done one clinical trial using the technology in a bone marrow transplant setting for leukemia patients," Schafer said. "We used the compound to treat T lymphocytes that would go along with a stem cell transplant."

Like in blood transfusions, the technology's application is designed to increase safety in transplants.

"The oncology setting is a natural extension for us and the technology," he said.

But its blood transfusion application is nearing commercialization. The system consists of a disposable set containing a light-activated, nucleic acid-targeting compound and an illumination device. Designed to inactivate viruses, bacteria, parasites, other pathogens and white blood cells, it uses the Helinx technology for safer blood transfusions.

"They are compounds that can essentially lock up the DNA and RNA that you would find in bacteria and viruses," Schafer said. "That means that they can't replicate and cause infection, so to the extent that they're in the donated blood, you render them inactive and they can't cause infection in the transfusion recipient."

Intercept, developed through a partnership that dates to 1993, includes three products for blood components that are typically transfused - platelets, plasma and red blood cells. The companies in June received approval in Europe for Intercept's platelet application, triggering a $5 million milestone payment to Cerus from its Deerfield, Ill.-based partner. The CE mark initially applied to the system's disposable set, with approval for the illumination device completed last month to allow the companies a clear path toward commercialization. The U.S. regulatory process is under way.

"It's a broad arrangement to develop any technologies to improve blood safety through pathogen inactivation, but clearly that is the Intercept System," Schafer said. "The agreements work through cost-sharing arrangements and revenue-sharing at the end, once we're post-commercialization."

In the collaboration, Cerus developed the compounds used in the system, while Baxter developed the disposable packaging. The pair still share in clinical trial efforts, which continue for Intercept's plasma and red blood cell products, both in Phase III testing.

Cerus' stock (NASDAQ:CERS) fell 46 cents Thursday to close at $17.82.