Vericel Corporation (NASDAQ:VCEL), a leading developer of expanded
autologous cell therapies for the treatment of patients with
serious diseases and conditions, today reported financial results
for the second quarter ended June 30,
2017.
Total GAAP net revenues for the quarter ended June 30, 2017 were
approximately $17.0 million and included approximately $12.9
million of MACI® (autologous cultured chondrocytes on porcine
collage membrane) and Carticel® (autologous cultured chondrocytes)
net revenues and approximately $4.1 million of Epicel® (cultured
epidermal autografts) net revenues, compared to $8.9 million of
Carticel revenues and $3.8 million of Epicel revenues,
respectively, in the second quarter of 2016. Total GAAP net
revenues increased 32% compared to the second quarter of 2016, with
MACI and Carticel revenues increasing 44% and Epicel revenues
increasing 6%, respectively, compared to the same period in
2016.
MACI and Carticel GAAP net revenues include a partial reversal
of a revenue reserve established in the first quarter of 2017.
In April 2017, the company received notification of a
contractual dispute between a contracted service provider and a
third-party payer related to certain insurance reimbursement claims
associated with Carticel and MACI surgeries performed in 2016 and
2017. This dispute was subsequently resolved and the
negotiated reimbursement resulted in the company’s ability to
recognize $1.4 million in additional MACI and Carticel revenue in
the second quarter. Excluding the $1.4 million partial
reversal of the revenue reserve, total revenues increased 21% and
MACI and Carticel net revenues increased 28%, respectively,
compared to the second quarter of 2016.
Gross profit for the quarter ended June 30, 2017 was $9.3
million, or 55% of net revenues, compared to $5.5 million, or 43%
of net product revenues, for the second quarter of 2016.
Research and development expenses for the quarter ended June 30,
2017 were $3.0 million compared to $4.1 million in the second
quarter of 2016. The reduction in second-quarter research and
development expenses is primarily due to a reduction in ixCELL-DCM
clinical trial expenses.
Selling, general and administrative expenses for the quarter
ended June 30, 2017 were $8.8 million compared to $6.4 million for
the same period a year ago. The increase in selling, general
and administrative expenses is primarily due to an increase in
expenses for marketing initiatives related to the launch of MACI
and an increase in personnel costs primarily related to an increase
in the MACI sales force.
Loss from operations for the quarter ended June 30, 2017 was
$2.5 million, compared to $5.0 million for the second quarter of
2016. Material non-cash items impacting the operating loss
for the quarter included $1.3 million of stock-based compensation
expense and $0.8 million in depreciation expense.
Other income for the quarter ended June 30, 2017 was $0.1
million compared to $1.9 million for the same period in 2016.
The change in other income for the quarter is primarily due to
interest expense on the outstanding revolving credit agreement and
term loans and the change in the fair value of warrants in the
second quarter of 2017 compared to the same period in
2016.
Vericel’s net loss for the quarter ended June 30, 2017 was $2.4
million, or $0.07 per share, compared to a net loss of $3.0
million, or $0.22 per share, for the same period in 2016.
As of June 30, 2017, the company had $14.0 million in cash
compared to $23.0 million in cash at December 31,
2016.
“We had a very strong second quarter driven by the accelerating
uptake of MACI,” said Nick Colangelo, president and CEO of
Vericel. “Our robust revenue growth and margin expansion
reflect the success of our commercial team’s sales and marketing
initiatives coupled with strong physician enthusiasm for MACI.”
Recent Business HighlightsDuring and since the
second quarter of 2017, the company:
- Achieved 28% growth in total MACI and Carticel net product
revenues for the second quarter of 2017 compared to the same period
in 2016, excluding the impact of a $1.4 million partial reversal of
a revenue reserve;
- Achieved gross margins of 51% of total net revenues in the
second quarter of 2017 versus 43% in the same period in 2016,
excluding the impact of a $1.4 million partial reversal of a
revenue reserve;
- Trained more than 350 surgeons on the MACI surgical procedures
to date, with approximately 50% of trained surgeons coming from
former Carticel user and non-Carticel user segments;
- Increased biopsies 23% in the second quarter and 20% for the
first half of 2017, respectively, compared to the same periods in
2016;
- Medical benefit policies updated to include MACI at multiple
commercial plans, including 18 of the top 28 commercial plans,
which we believe represent approximately half of covered
lives;
- Executed a distribution agreement with Orsini Healthcare
Services for MACI to ensure consistent and broad patient access and
launched a standalone patient case management service for patient
support services for MACI;
- Announced the presentation of outcomes data from over 950
severe burn patients treated with Epicel demonstrating a probable
survival benefit at the 49th annual meeting of the American Burn
Association;
- Received the FDA Regenerative Medicine Advanced Therapy (RMAT)
designation for ixmyelocel-T for the treatment of patients with
advanced heart failure due to ischemic dilated cardiomyopathy;
and
- Licensed the company’s product portfolio to Innovative Cellular
Therapeutics for distribution in China, South Korea, and other
countries in Southeast Asia.
“While
our focus remains on our commercial portfolio, the RMAT designation
for ixmyelocel-T opens up a number of exciting possibilities for
the future of the program,” added Mr. Colangelo. “Likewise,
the license of our product portfolio to ICT provides an opportunity
to develop a global footprint for our product portfolio and to
create another potential revenue stream for the company. We
believe that these results position the company for strong growth
in both the short and long term.”
Conference Call Information Today's conference
call will be available live at 8:00am 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 2017
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.cfm until
August 9, 2018. A replay of the call will also be available until
11:00am (EDT) on August 13, 2017 by calling (855) 859-2056, or from
outside the U.S. (404) 537-3406. The conference ID is 54878623.
About Vericel CorporationVericel develops,
manufactures, and markets expanded autologous cell therapies for
the treatment of patients with serious diseases and conditions. The
company markets two cell therapy products in the United States.
Vericel is marketing MACI® (autologous cultured chondrocytes on
porcine collagen membrane), 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. Vericel is also marketing Epicel®
(cultured epidermal autografts), 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. Vericel is
developing ixmyelocel-T, an autologous multicellular therapy
intended to treat 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. © 2017 Vericel Corporation. All
rights reserved.
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, regulatory progress, 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 growth potential of our products and product candidates
and growth in revenues and improvement in costs, market demand for
our products, our ability to secure consistent reimbursement 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, 2016, filed with the Securities and Exchange
Commission ("SEC") on March 13, 2017, 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 CORPORATIONCONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited, amounts in
thousands) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2017 |
|
2016 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash |
|
$ |
14,041 |
|
|
$ |
22,978 |
|
Accounts
receivable (net of allowance for doubtful accounts of $108 and
$225, respectively) |
|
14,729 |
|
|
17,093 |
|
Inventory |
|
3,155 |
|
|
3,488 |
|
Other
current assets |
|
1,116 |
|
|
1,164 |
|
Total
current assets |
|
33,041 |
|
|
44,723 |
|
Property and equipment,
net |
|
3,493 |
|
|
3,875 |
|
Total
assets |
|
$ |
36,534 |
|
|
$ |
48,598 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
6,272 |
|
|
$ |
6,535 |
|
Accrued
expenses |
|
4,135 |
|
|
4,523 |
|
Current
portion of term loan credit agreement, net of deferred costs of
$110 |
|
2,112 |
|
|
779 |
|
Warrant
liabilities |
|
209 |
|
|
757 |
|
Other |
|
215 |
|
|
259 |
|
Total
current liabilities |
|
12,943 |
|
|
12,853 |
|
Revolving and term loan
credit agreement, net of deferred costs of $238 and $293,
respectively |
|
8,040 |
|
|
9,318 |
|
Long term deferred
rent |
|
1,567 |
|
|
1,687 |
|
Other long term
debt |
|
11 |
|
|
32 |
|
Total
liabilities |
|
22,561 |
|
|
23,890 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
Shareholders’
equity: |
|
|
|
|
Series B-2 voting convertible preferred stock, no par value:
shares authorized and reserved — 39, shares issued and
outstanding — 0 and 12, respectively |
|
— |
|
|
38,389 |
|
Common
stock, no par value; shares authorized — 75,000; shares issued
and outstanding — 32,768 and 31,595, respectively |
|
369,540 |
|
|
329,720 |
|
Warrants |
|
190 |
|
|
190 |
|
Accumulated deficit |
|
(355,757 |
) |
|
(343,591 |
) |
Total
shareholders’ equity |
|
13,973 |
|
|
24,708 |
|
Total
liabilities and shareholders’ equity |
|
$ |
36,534 |
|
|
$ |
48,598 |
|
VERICEL CORPORATIONCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited,
amounts in thousands except per share amounts) |
|
|
|
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June 30,
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Product
sales, net |
|
$ |
16,953 |
|
|
$ |
12,823 |
|
|
$ |
26,314 |
|
|
$ |
26,931 |
|
Cost of
product sales |
|
7,670 |
|
|
7,300 |
|
|
14,779 |
|
|
13,860 |
|
Gross
profit |
|
9,283 |
|
|
5,523 |
|
|
11,535 |
|
|
13,071 |
|
Research
and development |
|
2,971 |
|
|
4,058 |
|
|
6,438 |
|
|
7,594 |
|
Selling,
general and administrative |
|
8,833 |
|
|
6,449 |
|
|
17,241 |
|
|
12,453 |
|
Total
operating expenses |
|
11,804 |
|
|
10,507 |
|
|
23,679 |
|
|
20,047 |
|
Loss from
operations |
|
(2,521 |
) |
|
(4,984 |
) |
|
(12,144 |
) |
|
(6,976 |
) |
Other income
(expense): |
|
|
|
|
|
0 |
|
|
Decrease
in fair value of warrants |
|
441 |
|
|
1,942 |
|
|
548 |
|
|
302 |
|
Foreign
currency translation loss |
|
(13 |
) |
|
(1 |
) |
|
(14 |
) |
|
(11 |
) |
Interest
income |
|
3 |
|
|
2 |
|
|
4 |
|
|
7 |
|
Interest
expense |
|
(299 |
) |
|
(3 |
) |
|
(561 |
) |
|
(6 |
) |
Other
income (expense) |
|
1 |
|
|
— |
|
|
1 |
|
|
(10 |
) |
Total
other income (expense) |
|
133 |
|
|
1,940 |
|
|
(22 |
) |
|
282 |
|
Net loss |
|
$ |
(2,388 |
) |
|
$ |
(3,044 |
) |
|
$ |
(12,166 |
) |
|
$ |
(6,694 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to common shareholders (Basic and Diluted) |
|
$ |
(0.07 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.46 |
) |
Weighted average number
of common shares outstanding (Basic and Diluted)
|
|
32,765 |
|
|
22,684 |
|
|
32,333 |
|
|
22,644 |
|
Global Media Contacts:
David Schull
Russo Partners LLC
+1 212-845-4271 (office)
+1 858-717-2310 (mobile)
David.schull@russopartnersllc.com
Karen Chase
Russo Partners LLC
+1 646-942-5627 (office)
+1 917-547-0434 (mobile)
Karen.chase@russopartnersllc.com
Investor Contacts:
Chad Rubin
The Trout Group
crubin@troutgroup.com
+1 (646) 378-2947
Lee Stern
The Trout Group
lstern@troutgroup.com
+1 (646) 378-2922
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