MACI Revenue Increased 38% Over First
Quarter 2018
Vericel Corporation (NASDAQ:VCEL), a leader in advanced cell
therapies for the sports medicine and severe burn care markets,
today reported financial results for the first quarter ended March
31, 2019, and recent business highlights.
First Quarter 2019
Financial Highlights
- Total net product revenues increased 21% to $21.8 million
compared to $18.0 million in the first quarter of 2018;
- Gross margins of 60% compared to gross margins of 57% in the
first quarter of 2018;
- Net loss of $2.8 million, or $0.07 per share, compared to $7.7
million, or $0.21 per share, in the first quarter of 2018;
- Non-GAAP adjusted EBITDA loss of $0.4 million compared to a
loss of $2.6 million in the first quarter of 2018;
- As of March 31, 2019, the company had $84.1 million in cash and
short-term investments compared to $82.9 million as of December 31,
2018; and
- Full year 2019 revenue guidance for MACI® and Epicel® raised to
$110 to $114 million compared to previous full year revenue
guidance of $108 million to $112 million.
Recent Business HighlightsDuring and since the
first quarter of 2019, the company:
- Announced an exclusive license agreement with MediWound Ltd.
for North American rights to NexoBrid®, a biological orphan product
for debridement of thermal burns;
- Deployed the expanded MACI sales force, which increased from 40
to 48 territories; and
- Reported publication of outcomes data from 954 burn patients
treated with Epicel in the Journal of Burn Care and Research.
“We delivered another solid quarter of performance and the MACI
sales force continues to increase its productivity even as we add
new representatives, which speaks to the quality of our sales
representatives as well as the demand for MACI,” said Nick
Colangelo, president and CEO of Vericel. “Based on the strong
underlying indicators of growth for the rest of the year we have
raised our full year 2019 revenue guidance. Moreover, we
believe that the addition of NexoBrid significantly expands our
burn care target addressable market and will enable us to build a
second significant commercial franchise to go along with our
cartilage repair franchise, thereby enhancing the long-term growth
profile of the company.” First Quarter 2019
ResultsTotal net product revenues for the quarter ended
March 31, 2019 increased 21% to $21.8 million compared to $18.0
million in the first quarter of 2018. Total net product
revenues for the quarter included $16.6 million of MACI®
(autologous cultured chondrocytes on porcine collagen membrane) net
revenue and $5.2 million of Epicel® (cultured epidermal autografts)
net revenue, compared to $12.1 million of MACI net revenue and $6.0
million of Epicel net revenue, respectively, in the first quarter
of 2018. Gross profit for the quarter ended March 31, 2019
was $13.2 million, or 60% of net revenues, compared to $10.4
million, or 57% of net revenues, for the first quarter of 2018.
Total operating expenses for the quarter ended
March 31, 2019 were $16.5 million compared to $14.7 million for the
same period in 2018. The increase in operating expenses was
primarily due to a $1.2 million increase in stock-based
compensation, an incremental $0.6 million in MACI sales force
expenses as a result of the sales force expansion in the second
quarter of 2018, and a $0.6 million increase in selling expenses
and patient reimbursement support services.
Vericel’s net loss for the quarter ended March
31, 2019 was $2.8 million, or $0.07 per share, compared to $7.7
million, or $0.21 per share, for the first quarter of 2018.
Non-GAAP adjusted EBITDA loss was $0.4 million for the quarter
ended March 31, 2019 compared to a loss of $2.6 million in the
first quarter of 2018. See table reconciling non-GAAP
measures for more details.As of March 31, 2019, the company had
$84.1 million in cash and short-term investments compared to $82.9
million as of December 31, 2018. Full Year 2019 Financial
GuidanceThe company now expects total MACI and Epicel net
product revenues for the full year 2019 to be in the range of $110
to $114 million, compared to the previous full year revenue
guidance of $108 to $112 million. Conference Call
Information Today's conference call will be available live
at 8:00am Eastern time in the Investor Relations section of the
Vericel website at
http://investors.vcel.com/events-presentations. A
presentation supporting today’s conference call will be available
on the webcast and in the Investor Relations section of the Vericel
website. Please access the site at least 15 minutes prior to
the scheduled start time in order to download the required audio
software if necessary. To participate in the live call by
telephone, please call (877) 312-5881 and reference Vericel
Corporation's first-quarter 2019 investor conference call. If
calling from outside the U.S., please use the international phone
number (253) 237-1173.If you are unable to participate in the live
call, the webcast will be available at
http://investors.vcel.com/events-presentations until May 7,
2020. A replay of the call will also be available until
11:00am (EDT) on May 12, 2019 by calling (855) 859-2056, or from
outside the U.S. (404) 537-3406. The conference ID is 1775796.
About Vericel CorporationVericel is a leader in
advanced cell therapies for the sports medicine and severe burn
care markets. The company markets two cell therapy products
in the United States. MACI (autologous cultured chondrocytes
on porcine collagen membrane) is an autologous cellularized
scaffold product indicated for the repair of symptomatic, single or
multiple full-thickness cartilage defects of the knee with or
without bone involvement in adults. Epicel (cultured
epidermal autografts) is a permanent skin replacement for the
treatment of patients with deep dermal or full-thickness burns
greater than or equal to 30% of total body surface area. For
more information, please visit the company's website at
www.vcel.com.
GAAP v. Non‑GAAP Measures Vericel's reported
earnings are prepared in accordance with generally accepted
accounting principles in the United States, or GAAP, and represent
earnings as reported to the Securities and Exchange Commission.
Vericel has provided in this release financial information
that has not been prepared in accordance with GAAP. Vericel's
management believes that the non-GAAP adjusted EBITDA described in
the release, or non-GAAP EBITDA adjusted for specific items that
are generally not indicative of our core operations, provides
additional information that is useful to investors in understanding
Vericel's underlying performance, business and performance trends,
and helps facilitate period to period comparisons and comparisons
of its financial measures with other companies in Vericel's
industry. However, non-GAAP financial measures that Vericel
uses may differ from measures that other companies may use.
Non-GAAP financial measures are not required to be uniformly
applied, are not audited and should not be considered in isolation
or as substitutes for results prepared in accordance with
GAAP.Epicel® and MACI® are registered trademarks of Vericel
Corporation. © 2019 Vericel Corporation. All rights
reserved.NexoBrid® is a registered trademark of MediWound Ltd. and
is used under license to Vericel Corporation.This document contains
forward-looking statements, including, without limitation,
statements regarding full-year 2019 revenue and financial guidance,
statements concerning anticipated progress, objectives and
expectations regarding the commercial potential of our products and
growth in revenues, and objectives and expectations regarding our
company described herein, all of which involve certain risks and
uncertainties. These statements are often, but are not always, made
through the use of words or phrases such as "anticipates,"
"intends," "estimates," "plans," "expects," "we believe," "we
intend," “guidance,” ”outlook,” “future,” and similar words or
phrases, or future or conditional verbs such as "will," "would,"
"should," "potential," "could," "may," or similar expressions.
Actual results may differ significantly from the expectations
contained in the forward-looking statements. Among the factors that
may result in differences are the inherent uncertainties associated
with our expectations regarding 2019 revenues, growth in revenues,
profit and target addressable market, improvements in gross margins
and cash flow, our ability to achieve or sustain profitability, our
need to generate significant sales to become profitable, potential
fluctuations in sales volumes and our results of operations over
the course of the year, competitive developments, estimating the
commercial growth potential of our products and product candidates,
market demand for our products, our ability to secure consistent
reimbursement for our products, changes in third party coverage and
reimbursement, any disruption or delays in operations at our
facilities, our dependence on a limited number of third party
suppliers, our ability to maintain and expand our network of direct
sales employees, and our ability to supply or meet customer demand
for our products. These and other significant factors are discussed
in greater detail in Vericel's Annual Report on Form 10-K for the
year ended December 31, 2018, filed with the Securities and
Exchange Commission ("SEC") on February 26, 2019, Quarterly Reports
on Form 10-Q and other filings with the SEC. These forward-looking
statements reflect management's current views and Vericel does not
undertake to update any of these forward-looking statements to
reflect a change in its views or events or circumstances that occur
after the date of this release except as required by law.
Global Media Contacts:David SchullRusso
Partners LLCDavid.schull@russopartnersllc.com+1 212-845-4271
(office)+1 858-717-2310 (mobile)
Karen ChaseRusso Partners LLCKaren.chase@russopartnersllc.com+1
646-942-5627 (office)+1 917-547-0434 (mobile)
Investor Contacts: Chad RubinSolebury
Troutcrubin@troutgroup.com+1 (646) 378-2947
Lee SternSolebury Troutlstern@troutgroup.com+1 (646)
378-2922
VERICEL
CORPORATIONCONDENSED CONSOLIDATED BALANCE
SHEETS(unaudited, amounts in
thousands)
|
|
March 31, |
|
December 31, |
|
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
35,084 |
|
|
$ |
18,286 |
|
Short term
investments |
|
49,001 |
|
|
64,640 |
|
Accounts
receivable (net of allowance for doubtful accounts of $669 and
$514, respectively) |
|
18,774 |
|
|
23,454 |
|
Inventory |
|
4,063 |
|
|
3,558 |
|
Other
current assets |
|
2,679 |
|
|
2,847 |
|
Total
current assets |
|
109,601 |
|
|
112,783 |
|
Property and equipment,
net |
|
6,445 |
|
|
5,906 |
|
Right-of-use
assets |
|
25,183 |
|
|
— |
|
Total assets |
|
$ |
141,229 |
|
|
$ |
118,689 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
6,201 |
|
|
7,108 |
|
Accrued
expenses |
|
4,179 |
|
|
6,930 |
|
Current
portion of operating lease liabilities |
|
2,385 |
|
|
— |
|
Other
liabilities |
|
176 |
|
|
754 |
|
Total
current liabilities |
|
12,941 |
|
|
14,792 |
|
Operating lease
liabilities |
|
25,100 |
|
|
— |
|
Other long-term
liabilities |
|
133 |
|
|
1,666 |
|
Total liabilities |
|
38,174 |
|
|
16,458 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
Shareholders’ equity: |
|
|
|
|
Common
stock, no par value; shares authorized — 75,000; shares issued and
outstanding — 43,825 and 43,578, respectively |
|
474,806 |
|
|
471,180 |
|
Other
comprehensive gain (loss) |
|
3 |
|
|
(39 |
) |
Warrants |
|
104 |
|
|
104 |
|
Accumulated
deficit |
|
(371,858 |
) |
|
(369,014 |
) |
Total
shareholders’ equity |
|
103,055 |
|
|
102,231 |
|
Total
liabilities and shareholders’ equity |
|
$ |
141,229 |
|
|
$ |
118,689 |
|
VERICEL
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited, amounts in thousands except
per share amounts)
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
Product
sales, net |
|
$ |
21,810 |
|
|
$ |
18,027 |
|
Cost of
product sales |
|
8,640 |
|
|
7,666 |
|
Gross
profit |
|
13,170 |
|
|
10,361 |
|
Research and
development |
|
3,008 |
|
|
3,729 |
|
Selling,
general and administrative |
|
13,520 |
|
|
10,954 |
|
Total
operating expenses |
|
16,528 |
|
|
14,683 |
|
Loss from
operations |
|
(3,358 |
) |
|
(4,322 |
) |
Other income
(expense): |
|
|
|
|
Increase in
fair value of warrants |
|
— |
|
|
(2,907 |
) |
Interest
income |
|
480 |
|
|
— |
|
Interest
expense |
|
(2 |
) |
|
(432 |
) |
Other
income |
|
36 |
|
|
2 |
|
Total other
income (expense) |
|
514 |
|
|
(3,337 |
) |
Net loss |
|
$ |
(2,844 |
) |
|
$ |
(7,659 |
) |
|
|
|
|
|
Net loss per share (Basic
and Diluted) |
|
$ |
(0.07 |
) |
|
$ |
(0.21 |
) |
Weighted average number of
common shares outstanding (Basic and Diluted) |
|
43,725 |
|
|
36,140 |
|
RECONCILIATION OF REPORTED NET LOSS (GAAP) TO
ADJUSTED EBITDA (NON-GAAP MEASURE) - UNAUDITED |
|
|
|
|
|
|
|
Three Months Ended March 31, |
(In
thousands) |
|
2019 |
|
2018 |
Net loss (GAAP) |
|
$ |
(2,844 |
) |
|
$ |
(7,659 |
) |
Change in
fair value of warrants |
|
— |
|
|
2,907 |
|
Stock
compensation expense |
|
2,628 |
|
|
1,342 |
|
Depreciation
and amortization |
|
324 |
|
|
427 |
|
Net
interest (income) expense |
|
(478 |
) |
|
432 |
|
Adjusted EBITDA
(Non-GAAP) |
|
$ |
(370 |
) |
|
$ |
(2,551 |
) |
|
|
|
|
|
|
|
|
|
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