Total Revenues of $12.8 Million Reported
for the Quarter
Vericel Corporation (NASDAQ:VCEL), a leading developer of expanded
autologous cell therapies for the treatment of severe diseases and
conditions, today reported financial results for the second quarter
ended June 30, 2016.
Total net revenues for the quarter ended June 30, 2016 were
approximately $12.8 million and included approximately $9.0 million
of Carticel net revenues and approximately $3.8 million of Epicel
net revenues. Previously announced downtime for the Carticel
and Epicel cleanrooms to replace a rooftop air handler unit
resulted in a two-week, or approximately 16%, reduction in product
shipment dates for both products during the second quarter.
As a result, total Carticel and Epicel net revenues decreased 3.9%
compared to the second quarter of 2015, with Carticel net revenues
decreasing less than $0.1 million and Epicel net revenues
decreasing approximately $0.4 million, respectively, compared to
the second quarter of 2015. For the first half of 2016, total
net revenues were $26.9 million and included $17.8 million of
Carticel net revenues and $9.1 million of Epicel net revenues.
Total Carticel and Epicel net revenues for the first half of
2016 increased 12% compared to the first half of 2015, with
Carticel revenues increasing 10% and Epicel revenues increasing
15%, respectively, compared to the same period in 2015.
Gross profit for the quarter ended June 30, 2016 was $5.5
million, or 43% of net product revenues, compared to $6.7 million,
or 49% of net product revenues, for the second quarter of 2015.
The reduction in gross profit was primarily due to the
reduced volume resulting from the cleanroom downtime. Gross
profit for the first half of 2016 was $13.1 million, or 49% of net
product revenues, compared to $12.0 million, or 49% of net product
revenues, for the first half of 2015.
Research and development expenses for the quarter ended June 30,
2016 were $4.1 million compared to $3.4 million in the second
quarter of 2015. The increase in second-quarter research and
development expenses is primarily due to an increase in expenses
associated with the completion of the ixCELL-DCM clinical trial and
preparing to treat patients in the open-label crossover extension
portion of the study, as well as for research, development, and
regulatory consulting expenses for MACI® (Autologous Cultured
Chondrocytes on Porcine Collagen Membrane). MACI is Vericel’s
investigational third-generation autologous cultured chondrocyte
implant intended for the treatment of symptomatic full-thickness
cartilage defects of the knee.
Selling, general and administrative expenses for the quarter
ended June 30, 2016 were $6.4 million compared to $5.6 million
for the same period in 2015. The increase in selling, general
and administrative expenses is primarily due to costs associated
with the start-up of the Dohmen collaboration for patient support
and reimbursement services for Carticel and MACI, if approved,
professional services related to preparing for the potential launch
of MACI, as well as legal fees, shared facility fees and an
increase in personnel costs.
Loss from operations for the quarter ended June 30, 2016 was
$5.0 million, compared to $2.3 million for the second quarter
of 2015. Material non-cash items impacting the operating loss
for the quarter included $0.8 million of stock-based compensation
expense and $0.5 million in depreciation and amortization
expense.
Other income for the quarter ended June 30, 2016 was $1.9
million compared to $0.1 million for the same period in 2015.
The change in other income for the quarter is primarily due to the
change in the fair value of warrants in the second quarter of 2016
compared to the same period in 2015.
Vericel’s reported GAAP net loss for the quarter ended June 30,
2016 was $3.0 million, or $0.22 per share, compared to a net loss
of $2.2 million, or $0.16 per share, for the same period in
2015. Vericel reported an adjusted net loss for the quarter
ended June 30, 2016 of $5.0 million dollars, or $0.21 per share,
compared to an adjusted net loss of $2.3 million, or $0.10 per
share, for the same period in 2015. The adjusted net loss
excludes the non-cash change in the fair value of warrants and the
non-cash accumulated dividend on the Series B convertible preferred
stock. The adjusted net loss per share includes common shares
reserved as treasury shares received in exchange for the Series A
non-voting convertible preferred stock.
As of June 30, 2016, the company had $9.8 million in cash
compared to $14.6 million in cash at December 31,
2015.
Recent Business Highlights
During and since the second quarter of 2016, the company:
- Limited the impact of the manufacturing downtime for the
Carticel and Epicel cleanrooms; total Carticel and Epicel net
revenues increased 12% for the first half of 2016 compared to the
same period in 2015;
- Initiated the collaboration with Dohmen Life Science Services,
LLC for patient support services, as well as payer contracting and
product reimbursement services for Carticel and MACI, if approved,
which is expected to increase operating profit margin for these
products by retaining margin previously captured by a
distributor;
- Increased MACI launch preparation and operational activities in
anticipation of the January 3, 2017, MACI PDUFA goal date;
- Announced results from the Phase 2b ixCELL-DCM clinical trial
of ixmyelocel-T in patients with advanced heart failure due to
ischemic dilated cardiomyopathy, which were presented at the
American College of Cardiology’s 65th Annual Scientific
Session and published in The Lancet; and
- Initiated activities to explore potential expedited development
and review pathways and partnering discussions for ixymyelocel-T in
the U.S., Japan and Europe in light of meeting the primary endpoint
in the ixCELL-DCM clinical trial.
“We are pleased with the commercial performance of the business
in light of the manufacturing downtime as we have generated strong
growth in our core commercial business during the first half of the
year,” said Nick Colangelo, president and CEO of Vericel. “We
believe that we are building a strong foundation for our cartilage
repair franchise, and we look forward to continuing to work
productively with the FDA during the ongoing MACI BLA review
process as we prepare for the potential launch of MACI, if
approved, in the first quarter of 2017.”
Conference Call InformationToday's conference
call will be available live at 4:30pm Eastern time in the Investors
section of the Vericel website at
http://investors.vcel.com/events.cfm. 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 2016
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 August 8, 2017. A replay of the call will
also be available until 11:59 pm (EDT) on August 12, 2016 by
calling (855) 859-2056, or from outside the U.S. (404)
537-3406. The conference ID is 57713501.
About Vericel CorporationVericel Corporation is
a leader in developing expanded autologous cell therapies for use
in the treatment of patients with severe diseases and conditions.
The company markets two autologous cell therapy products in
the U.S.: Carticel® (autologous cultured chondrocytes), an
autologous chondrocyte implant for the treatment of cartilage
defects in the knee, and Epicel® (cultured epidermal autografts), a
permanent skin replacement for the treatment of patients with
deep-dermal or full-thickness burns comprising greater than or
equal to 30% of total body surface area.
Vericel is also developing MACI® (Autologous Cultured
Chondrocytes on Porcine Collagen Membrane), a third-generation
autologous chondrocyte implant for the treatment of cartilage
defects in the knee, and ixmyelocel-T, an autologous
multicellular therapy for the treatment of advanced heart failure
due to ischemic dilated cardiomyopathy. For more information,
please visit the company’s website at www.vcel.com.
Epicel®, Carticel®, and MACI® are registered trademarks of
Vericel Corporation. ©Vericel Corporation. All rights
reserved.
Non-GAAP Financial MeasuresVericel has provided
in this release financial information that has not been prepared in
accordance with generally accepted accounting principles in the
United States, or GAAP. Vericel believes that the use of
these non-GAAP financial measures provides supplementary
information for investors to use in evaluating operating
performance and in comparing its financial measures with other
companies in Vericel’s industry. The adjusted net loss
excludes the non-cash change in the fair value of warrants and the
non-cash accumulated dividend on the Series B convertible preferred
stock. The adjusted earnings per share includes common shares
reserved as treasury shares received in exchange for the Series A
non-voting convertible preferred stock. Non-GAAP financial
measures that Vericel uses may differ from measures that other
companies may use. In addition, 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.
This document contains forward-looking statements, including,
without limitation, statements concerning anticipated progress,
objectives and expectations regarding the commercial potential of
our products and growth in revenues, intended product development,
clinical activity timing, 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," 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
competitive developments, clinical trial and product development
activities, regulatory approval requirements, estimating the
commercial potential of our products and product candidates, growth
in revenues and operating margins and improvement in costs, market
demand for our products, 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, 2015, filed with the
Securities and Exchange Commission ("SEC") on March 14, 2016,
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.
|
VERICEL CORPORATION |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Unaudited, amounts in thousands) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2016 |
|
2015 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash |
|
$ |
9,835 |
|
|
$ |
14,581 |
|
Accounts
receivable (net of allowance for doubtful accounts of $54 and $68,
respectively) |
|
9,031 |
|
|
10,919 |
|
Inventory |
|
2,393 |
|
|
1,379 |
|
Other
current assets |
|
1,046 |
|
|
464 |
|
Total
current assets |
|
22,305 |
|
|
27,343 |
|
Property and equipment,
net |
|
4,351 |
|
|
4,049 |
|
Intangible assets,
net |
|
2,778 |
|
|
2,917 |
|
Total
assets |
|
$ |
29,434 |
|
|
$ |
34,309 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
5,305 |
|
|
$ |
7,588 |
|
Accrued
expenses |
|
2,892 |
|
|
3,603 |
|
Revolving
credit agreement, net of deferred costs of $96 |
|
2,304 |
|
|
— |
|
Warrant
liabilities |
|
455 |
|
|
757 |
|
Short-term
deferred rent |
|
460 |
|
|
118 |
|
Other |
|
39 |
|
|
42 |
|
Total
current liabilities |
|
11,455 |
|
|
12,108 |
|
|
|
|
|
|
Long-term deferred
rent |
|
820 |
|
|
— |
|
Long term debt |
|
52 |
|
|
71 |
|
Total
liabilities |
|
12,327 |
|
|
12,179 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
Shareholders’ equity: |
|
|
|
|
Series A
non-voting convertible preferred stock, no par value: shares
authorized and reserved — 1; shares issued and outstanding — 1 |
|
3,150 |
|
|
3,150 |
|
Series B-2 voting convertible preferred stock, no par value:
shares authorized and reserved — 39, shares issued and
outstanding — 12 |
|
38,389 |
|
|
38,389 |
|
Common
stock, no par value; shares authorized — 75,000; shares issued
and outstanding — 22,684 and 23,789, respectively |
|
309,437 |
|
|
307,766 |
|
Treasury
stock — 1,250 shares |
|
(3,150 |
) |
|
(3,150 |
) |
Accumulated
deficit |
|
(330,719 |
) |
|
(324,025 |
) |
Total
shareholders’ equity |
|
17,107 |
|
|
22,130 |
|
Total
liabilities and shareholders’ equity |
|
$ |
29,434 |
|
|
$ |
34,309 |
|
|
|
|
|
|
|
|
|
|
VERICEL CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited, amounts in thousands except per
share amounts) |
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues: |
|
|
|
|
|
|
|
|
Product
sales |
|
$ |
12,823 |
|
|
$ |
13,590 |
|
|
$ |
26,931 |
|
|
$ |
24,439 |
|
Total
revenues |
|
12,823 |
|
|
13,590 |
|
|
26,931 |
|
|
24,439 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of
product sales |
|
7,300 |
|
|
6,901 |
|
|
13,860 |
|
|
12,469 |
|
Gross profit |
|
5,523 |
|
|
6,689 |
|
|
13,071 |
|
|
11,970 |
|
Research and
development |
|
4,058 |
|
|
3,369 |
|
|
7,594 |
|
|
7,746 |
|
Selling,
general and administrative |
|
6,449 |
|
|
5,585 |
|
|
12,453 |
|
|
11,061 |
|
Total
operating expenses |
|
10,507 |
|
|
8,954 |
|
|
20,047 |
|
|
18,807 |
|
Loss from
operations |
|
(4,984 |
) |
|
(2,265 |
) |
|
(6,976 |
) |
|
(6,837 |
) |
Other income
(expense): |
|
|
|
|
|
|
|
|
Decrease
(increase) in fair value of warrants |
|
1,942 |
|
|
112 |
|
|
302 |
|
|
(205 |
) |
Foreign
currency translation (loss) gain |
|
(1 |
) |
|
(6 |
) |
|
(11 |
) |
|
10 |
|
Interest
income |
|
2 |
|
|
9 |
|
|
7 |
|
|
22 |
|
Interest
expense |
|
(3 |
) |
|
(2 |
) |
|
(6 |
) |
|
(4 |
) |
Other
expense |
|
— |
|
|
— |
|
|
(10 |
) |
|
— |
|
Total other
income (expense) |
|
1,940 |
|
|
113 |
|
|
282 |
|
|
(177 |
) |
Net loss |
|
$ |
(3,044 |
) |
|
$ |
(2,152 |
) |
|
$ |
(6,694 |
) |
|
$ |
(7,014 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to common shareholders (Basic and Diluted) |
|
$ |
(0.22 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.46 |
) |
|
$ |
(0.43 |
) |
Weighted average number of
common shares outstanding (Basic and Diluted) |
|
22,684 |
|
|
23,786 |
|
|
22,644 |
|
|
23,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF REPORTED NUMERATOR AND
DENOMINATOR IN NET LOSS PER SHARE (GAAP) TO ADJUSTED NET LOSS PER
SHARE (NON-GAAP MEASURE) – |
UNAUDITED |
|
|
|
|
|
Three Months Ended June 30, |
(Amounts In
thousands except per share amounts) |
|
2016 |
|
2015 |
Numerator: |
|
|
|
|
Numerator of basic and
diluted EPS |
|
$ |
(4,900 |
) |
|
$ |
(3,806 |
) |
Add:
Decrease in fair value of warrants |
|
(1,942 |
) |
|
(112 |
) |
Add:
Dividends accumulated on convertible preferred stock |
|
1,856 |
|
|
1,654 |
|
Adjusted
net loss - Non-GAAP |
|
$ |
(4,986 |
) |
|
$ |
(2,264 |
) |
Denominator: |
|
|
|
|
Denominator for basic
and diluted EPS: |
|
|
|
|
Weighted-average common shares outstanding |
|
22,684 |
|
|
23,786 |
|
Add:
Treasury stock |
|
1,250 |
|
|
— |
|
Adjusted
denominator for basic and diluted EPS - Non-GAAP |
|
23,934 |
|
|
23,786 |
|
Adjusted net loss per
share (basic and diluted) - Non-GAAP |
|
$ |
(0.21 |
) |
|
$ |
(0.10 |
) |
|
|
|
|
|
|
|
|
|
CONTACT:
Chad Rubin
The Trout Group
crubin@troutgroup.com
(646) 378-2947
or
Lee Stern
The Trout Group
lstern@troutgroup.com
(646) 378-2922
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