Vericel Corporation (NASDAQ:VCEL), a leader in advanced therapies
for the sports medicine and severe burn care markets, today
reported financial results for the second quarter ended June 30,
2019, and recent business highlights.
Second Quarter 2019 Financial Highlights
- Total net product revenues increased 38% to $26.2 million
compared to $19.0 million in the second quarter of 2018;
- Gross margin of 66% compared to gross margin of 59% in the
second quarter of 2018;
- Net loss of $19.8 million, or $0.45 per share, which includes
the $17.5 million upfront license payment to MediWound for North
American rights to NexoBrid®;
- Non-GAAP adjusted net loss, excluding the $17.5 million upfront
license payment to MediWound, of $2.3 million, or $0.05 per share,
compared to a net loss of $4.7 million, or $0.12 per share, in the
second quarter of 2018;
- Non-GAAP adjusted EBITDA of $1.8 million compared to a loss of
$1.4 million in the second quarter of 2018;
- As of June 30, 2019, the company had $66.0 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
$112 to $116 million compared to previous full year revenue
guidance of $110 million to $114 million.
Recent Business HighlightsDuring and since the
second quarter of 2019, the company:
- Reported record second quarter revenues, marking the ninth
consecutive quarter with record revenues for the reported quarter
and the highest Epicel revenue for a second quarter in
history;
- Deployed the expanded MACI sales force, which increased from 40
to 48 sales representatives and initiated a MACI sales force sizing
assessment based on an expanded target audience of approximately
5,000 surgeons who perform a high volume of cartilage repair
procedures;
- Announced an exclusive license agreement with MediWound for
North American rights to NexoBrid, a registration-stage biological
orphan product for debridement of severe thermal burns;
- Announced that the U.S. Biomedical Advanced Research and
Development Authority (BARDA) has agreed to fund the NexoBrid
expanded access treatment (NEXT) protocol; and
- Confirmed plans after meeting with the U.S. Food and Drug
Administration (FDA) to submit a Biologics License Application
(BLA) for NexoBrid to the FDA in the second quarter of 2020.
“The continued strength in MACI revenue growth reflects the
increasing number of surgeons who view MACI as the standard of care
for certain large, full thickness cartilage defects,” said Nick
Colangelo, president and CEO of Vericel. “Given the
significant growth in new surgeons and biopsy volume, as well as
the strength in Epicel demand, we have increased our revenue
guidance for 2019. Looking forward, we anticipate submitting
the NexoBrid BLA in the second quarter of 2020 which, upon FDA
approval, would create a third growth driver for the company in
2021 and beyond.”
Second Quarter 2019 ResultsTotal net product
revenues for the quarter ended June 30, 2019 increased 38% to $26.2
million compared to $19.0 million in the second quarter of
2018. Total net product revenues for the quarter included
$20.8 million of MACI® (autologous cultured chondrocytes on porcine
collagen membrane) net revenue and $5.3 million of Epicel®
(cultured epidermal autografts) net revenue, compared to $14.1
million of MACI net revenue and $4.9 million of Epicel net revenue,
respectively, in the second quarter of 2018.
Gross profit for the quarter ended June 30, 2019 was $17.1
million, or 66% of net revenues, compared to $11.3 million, or 59%
of net revenues, for the second quarter of 2018.
Total operating expenses for the quarter ended June 30, 2019
were $37.3 million, including the $17.5 million upfront license
payment to MediWound Ltd. for North American Rights to
NexoBrid. Excluding the $17.5 million license payment,
operating expenses were $19.8 million, compared to $15.5 million
for the same period in 2018. The increase in operating
expenses was primarily due to a $1.4 million increase in
stock-based compensation, an incremental $0.7 million in MACI sales
force expenses as a result of the sales force expansion in 2019,
and a $0.9 million increase in selling expenses and patient
reimbursement support services.
Vericel’s net loss for the quarter ended June 30, 2019, which
includes the $17.5 million upfront license payment for NexoBrid,
was $19.8 million, or $0.45 per share. Non-GAAP adjusted net
loss, excluding the $17.5 million upfront license payment for
NexoBrid, was $2.3 million, or $0.05 per share, compared to a net
loss of $4.7 million, or $0.12 per share, for the second quarter of
2018. See table reconciling non-GAAP measures for more
details.
Non-GAAP adjusted EBITDA was $1.8 million for the quarter ended
June 30, 2019 compared to a loss of $1.4 million in the second
quarter of 2018. See table reconciling non-GAAP measures for
more details.
As of June 30, 2019, the company had $66.0 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 $112 to $116 million, compared to
the previous full year revenue guidance of $110 to $114
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 second-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 August 6, 2020. A replay of the call will also be
available until 11:00am (EDT) on August 11, 2019 by calling (855)
859-2056, or from outside the U.S. (404) 537-3406. The conference
ID is 6576007.
About Vericel CorporationVericel is a leader in
advanced 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. The company also
holds an exclusive license for North American commercial rights to
NexoBrid®, a registration-stage biological orphan product for
debridement of severe thermal burns. 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 net loss, non-GAAP
adjusted net loss per share, and non-GAAP adjusted EBITDA described
in the release, which include adjustments for specific items that
are generally not indicative of our core operations, provide
additional information that is useful to investors in understanding
Vericel's underlying performance, business and performance trends,
and help 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.
About BARDA The Biomedical Advanced Research
and Development Authority (BARDA), within the Office of the
Assistant Secretary for Preparedness and Response in the U.S.
Department of Health and Human Services, provides an integrated,
systematic approach to the development and purchase of the
necessary vaccines, drugs, therapies and diagnostic tools for
public health medical emergencies. Funding and support for
development of NexoBrid has been provided by BARDA, under the
Assistant Secretary for Preparedness and Response (ASPR), within
the U.S. Department of Health and Human Services (HHS), under
ongoing USG Contract No. HHSO100201500035C and
HHSO100201800023C.
Epicel® and MACI® are registered trademarks of Vericel
Corporation. NexoBrid® is a registered trademark of MediWound Ltd.
and is used under license to Vericel Corporation. © 2019 Vericel
Corporation. All rights reserved.
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 for MACI and Epicel, gross profit and
target surgeon audience, improvements in gross margins, ability to
achieve standard of care for MACI, 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, timing and
conduct of clinical trial and product development activities,
timing or likelihood of regulatory submissions or approvals,
availability of funding from BARDA, market demand for our
products, changes in third party coverage and reimbursement,
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)
|
|
June 30, |
|
December 31, |
|
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
13,962 |
|
|
$ |
18,286 |
|
Short term investments |
|
52,047 |
|
|
64,638 |
|
Accounts receivable (net of allowance for doubtful accounts of $748
and $514, respectively) |
|
21,084 |
|
|
23,454 |
|
Inventory |
|
4,788 |
|
|
3,558 |
|
Other current assets |
|
2,167 |
|
|
2,847 |
|
Total current assets |
|
94,048 |
|
|
112,783 |
|
Property and equipment, net |
|
6,963 |
|
|
5,906 |
|
Right-of-use assets |
|
24,815 |
|
|
— |
|
Total assets |
|
$ |
125,826 |
|
|
$ |
118,689 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
5,250 |
|
|
$ |
7,108 |
|
Accrued expenses |
|
4,701 |
|
|
6,930 |
|
Current portion of operating lease liabilities |
|
2,558 |
|
|
— |
|
Other liabilities |
|
34 |
|
|
754 |
|
Total current liabilities |
|
12,543 |
|
|
14,792 |
|
Operating lease
liabilities |
|
24,607 |
|
|
— |
|
Other long-term liabilities |
|
134 |
|
|
1,666 |
|
Total liabilities |
|
37,284 |
|
|
16,458 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
Shareholders’ equity: |
|
|
|
|
Common stock, no par value; shares authorized — 75,000; shares
issued and outstanding — 44,066 and 43,578, respectively |
|
480,050 |
|
|
471,180 |
|
Other comprehensive gain (loss) |
|
38 |
|
|
(39 |
) |
Warrants |
|
104 |
|
|
104 |
|
Accumulated deficit |
|
(391,650 |
) |
|
(369,014 |
) |
Total shareholders’ equity |
|
88,542 |
|
|
102,231 |
|
Total liabilities and shareholders’ equity |
|
$ |
125,826 |
|
|
$ |
118,689 |
|
VERICEL
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited, amounts in thousands except
per share amounts)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Product sales, net |
|
$ |
26,151 |
|
|
$ |
19,011 |
|
|
$ |
47,961 |
|
|
$ |
37,038 |
|
Cost of product sales |
|
9,022 |
|
|
7,727 |
|
|
17,662 |
|
|
15,393 |
|
Gross profit |
|
17,129 |
|
|
11,284 |
|
|
30,299 |
|
|
21,645 |
|
Research and development |
|
21,070 |
|
|
3,739 |
|
|
24,078 |
|
|
7,468 |
|
Selling, general and administrative |
|
16,259 |
|
|
11,791 |
|
|
29,779 |
|
|
22,745 |
|
Total operating expenses |
|
37,329 |
|
|
15,530 |
|
|
53,857 |
|
|
30,213 |
|
Loss from operations |
|
(20,200 |
) |
|
(4,246 |
) |
|
(23,558 |
) |
|
(8,568 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
Increase in fair value of warrants |
|
— |
|
|
(37 |
) |
|
— |
|
|
(2,944 |
) |
Interest income |
|
428 |
|
|
83 |
|
|
908 |
|
|
83 |
|
Interest expense |
|
(2 |
) |
|
(448 |
) |
|
(4 |
) |
|
(880 |
) |
Other income (expense) |
|
(18 |
) |
|
(3 |
) |
|
18 |
|
|
(1 |
) |
Total other income (expense) |
|
408 |
|
|
(405 |
) |
|
922 |
|
|
(3,742 |
) |
Net loss |
|
$ |
(19,792 |
) |
|
$ |
(4,651 |
) |
|
$ |
(22,636 |
) |
|
$ |
(12,310 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share (Basic and
Diluted) |
|
$ |
(0.45 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.52 |
) |
|
$ |
(0.33 |
) |
Weighted average number of common
shares outstanding (Basic and Diluted) |
|
43,956 |
|
|
38,349 |
|
|
43,841 |
|
|
37,251 |
|
RECONCILIATION OF REPORTED NET LOSS (GAAP) TO
ADJUSTED NET LOSS AND ADJUSTED NET LOSS PER SHARE (NON-GAAP
MEASURE) - UNAUDITED |
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(In thousands, except
per share amounts) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Net loss (GAAP) |
|
$ |
(19,792 |
) |
|
$ |
(4,651 |
) |
|
$ |
(22,636 |
) |
|
$ |
(12,310 |
) |
|
Upfront license agreement payment |
|
17,500 |
|
|
— |
|
|
17,500 |
|
|
— |
|
|
Adjusted Net Loss
(Non-GAAP) |
|
$ |
(2,292 |
) |
|
$ |
(4,651 |
) |
|
$ |
(5,136 |
) |
|
$ |
(12,310 |
) |
|
Adjusted Net Loss per Share
(Non-GAAP) (Basic and Diluted) |
|
$ |
(0.05 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.33 |
) |
|
RECONCILIATION OF REPORTED NET LOSS (GAAP) TO
ADJUSTED EBITDA (NON-GAAP MEASURE) - UNAUDITED |
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(In
thousands) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Net loss (GAAP) |
|
$ |
(19,792 |
) |
|
$ |
(4,651 |
) |
|
$ |
(22,636 |
) |
|
$ |
(12,310 |
) |
|
Upfront license agreement payment |
|
17,500 |
|
|
— |
|
|
17,500 |
|
|
— |
|
|
Change in fair value of warrants |
|
— |
|
|
37 |
|
|
— |
|
|
2,944 |
|
|
Stock compensation expense |
|
4,182 |
|
|
2,465 |
|
|
6,810 |
|
|
3,807 |
|
|
Depreciation and amortization |
|
376 |
|
|
386 |
|
|
700 |
|
|
813 |
|
|
Net interest expense |
|
(426 |
) |
|
365 |
|
|
(904 |
) |
|
797 |
|
|
Adjusted EBITDA
(Non-GAAP) |
|
$ |
1,840 |
|
|
$ |
(1,398 |
) |
|
$ |
1,470 |
|
|
$ |
(3,949 |
) |
|
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