By Lisa Seachrist

Cerus Corp. raised $46.2 million in a public offering of 2.2 million shares of newly issued common stock, priced at $21 each.

Managing underwriters of the offer ¿ Morgan Stanley & Co., BT Alex. Brown Inc., and SG Cowen Securities, all of New York ¿ have the option to purchase a total of 330,000 shares in overallotments. Should all the overallotments be used, the Concord, Calif., company will raise an additional $6.9 million.

The offering, completed March 31, will be used to fund clinical trials as well as advancing research and development of the company¿s technology to prevent transmission of diseases during blood transfusions.

In addition, Cerus will use the funds to explore whether its technology can increase the success rate for stem-celltransplantation procedures.

¿The funds will be used in large part to fund the clinical research programs we¿ve started,¿ said Stephen Isaacs, president and CEO of Cerus. ¿With four programs in the clinic it gets very expensive, very quickly. We will also continue to add new products.¿

Isaacs said the company is particularly interested in applying its technology to the problem of restenosis.

Cerus¿ Blood Programs Target RNA And DNA

Currently, the safety of the blood supply is maintained by screening donors for high-risk activities and testing blood for a limited number of known blood-borne pathogens. Emerging pathogens pose a risk because blood centers can¿t detect them. HIV, hepatitis B and hepatitis C were widely transmitted through blood transfusions, before adequate tests were developed.Cerus focuses on targeting and forming irreversible bonds with RNA and DNA, to prevent the molecules from replicating and inactivate the pathogen. Because blood components such as red blood cells, platelets and fresh frozen plasma do not contain DNA and RNA, Cerus¿ technology inactivates pathogens without harming the blood products, the company said.

Laboratory tests of the inactivation systems have proven them effective against a broad array of viruses and bacteria. The company has completed five clinical trials of its systems. The platelet system is in Phase III clinical trials in Europe, and a U.S. Phase III program is in the works. The fresh-frozen plasma system is in Phase II clinical studies in the U.S., where the red blood cells system is in Phase I clinical studies.

¿I think the transfusion community really sees this work as a quantum leap forward,¿ Isaacs said. ¿We believe we will be able to get our first product out next year.¿

Cerus has two development and commercialization agreements with Baxter Healthcare Corp., of Deerfield, Ill., to develop these systems. Baxter shares in the development expenses, and will have primary responsibility for manufacturing, marketing and distribution. Baxter has made equity investments in Cerus, provided development funding of about $53.8 million and will provide another $76.5 million.

Cerus also is developing its technology as a means of treating white blood cells for use during stem-cell transplantation procedures. Untreated donor white blood cells can cause serious and fatal complications, such as graft-vs.-host disease. Preclinical studies indicate that donor white blood cells treated with Cerus¿ technology may produce fewer complications and increase the success rate of stem-cell transplantation. The company is preparing to enroll patients in a clinical program testing this system.

Cerus¿ stock (NASDAQ:CERS) closed Thursday at $21.062, down $1.187.