Record Revenues of $16.5 Million Reported
for the Fourth Quarter
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
and business highlights for the fourth quarter and year ended
December 31, 2016.
Total net revenues for the quarter ended December 31, 2016 were
approximately $16.5 million and included approximately $12.7
million of Carticel® (autologous cultured chondrocytes) net
revenues and approximately $3.8 million of Epicel® (cultured
epidermal autografts) net revenues. Total Carticel and Epicel
net revenues in the fourth quarter increased approximately 8% over
the same period in 2015.
Total net revenues for the year ended December 31, 2016 were
approximately $54.4 million, including approximately $38.9 million
of Carticel net revenues and approximately $15.5 million of Epicel
net revenues. Total Carticel and Epicel net revenues for 2016
increased approximately 8% compared to total Carticel and Epicel
net revenues for 2015.
Gross profit for the quarter and year ended December 31, 2016
was $8.9 million, or 54% of net revenues, and $26.1 million, or 48%
of net revenues, respectively, compared to $8.2 million, or 53% of
net product revenues, and $24.7 million, or 48% of net product
revenues, for the quarter and year ended December 31, 2015,
respectively.
Research and development expenses for the quarter and year ended
December 31, 2016 were $4.3 million and $15.3 million,
respectively, versus $7.4 million and $18.9 million for the same
periods in 2015. The decrease in fourth-quarter and full-year
research and development expenses is primarily due to higher
research, development and regulatory expenses incurred in the
fourth quarter of 2015 associated with the MACI® (autologous
cultured chondrocytes on porcine collage membrane) Biologics
License Application (BLA) and the Humanitarian Device Exemption
(HDE) supplement submitted in December 2015 to revise the labeled
indications for use of Epicel, offset in part by additional
clinical trial expenses associated with the open-label crossover
extension portion of the ixCELL-DCM study.
Selling, general and administrative expenses for the quarter and
year ended December 31, 2016 were $7.9 million and $27.4 million,
respectively, compared to $5.7 million and $22.5 million for the
same periods in 2015. The increase in selling, general and
administrative expenses in 2016 is primarily due to the costs
associated with Vericel’s new provider of patient support and
reimbursement services for Carticel and MACI and additional
facility fees, technology infrastructure, personnel costs and
professional services related to preparing for the commercial
launch of MACI.
Loss from operations for the quarter and year ended December 31,
2016 was $5.9 million and $19.2 million, respectively, compared to
$5.0 million and $16.7 million for the same periods in 2015.
Material non-cash items impacting the operating loss for the
quarter and year ended December 31, 2016 included $0.5 million and
$2.5 million, respectively, of stock-based compensation expense and
$0.5 million and $1.9 million, respectively, in depreciation
and amortization expense. Loss from operations for the
quarter and year ended December 31, 2016 also included $2.6 million
from the write-off of the commercial use rights primarily related
to Carticel. Given the approval of MACI in December 2016 and
the planned replacement of Carticel with MACI, it was determined
that the Carticel-related intangible asset was fully impaired as of
December 31, 2016. Excluding this charge, loss from
operations for the quarter and year ended December 31, 2016 would
have been $3.3 million and $16.6 million, respectively.
Other income (expense) for the quarter and year ended December
31, 2016 was ($0.3) million for both periods, compared to less than
$0.1 million and $0.3 million, respectively, for the same periods
in 2015. The change for the quarter and year ended December
31, 2016 is primarily due to the interest expense related to the
outstanding revolver and credit term loans incurred in 2016.
Vericel reported a net loss for the quarter and year ended
December 31, 2016 of $6.2 million, or $0.34 per share, and $19.6
million, or $1.18 per share, respectively, compared to a net loss
of $4.9 million, or $0.28 per share, and $16.3 million, or $0.97
per share, for the same periods in 2015. Vericel reported an
adjusted net loss, a non-GAAP financial measure, for the quarter
and year ended December 31, 2016 of $3.5 million, or $0.14 per
share, and $16.9 million, or $0.73 per share, respectively,
compared to an adjusted net loss of $5.0 million, or $0.20 per
share, and $16.7 million, or $0.67 per share, for the same periods
in 2015. The adjusted net loss excludes the non-cash loss on
impairment of the Carticel-related intangible asset, 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 in 2015. The Series A non-voting
convertible preferred stock was exchanged for common shares in
2016. On March 9, 2017 all outstanding shares of Series B
Convertible Preferred Stock were converted into common stock.
As of March 10, 2017, the company had 32,723,646 shares of common
stock outstanding.
As of December 31, 2016, the company had $23.0 million in cash
and cash equivalents compared to $14.6 million in cash and cash
equivalents at December 31, 2015.
Recent Business Highlights During and since the
fourth quarter of 2016, the company:
- Received FDA approval of MACI on December 13, 2016 for the
repair of symptomatic, single or multiple full‑thickness cartilage
defects of the knee with or without bone involvement in
adults;
- Announced treatment of the first patient with MACI on February
1, 2017;
- Increased the number of sales representatives and expanded the
marketing, market access and medical affairs teams to support the
MACI launch;
- Received FDA Fast Track designation for the investigation of
ixmyelocel‑T for the reduction in the risk of death and
cardiovascular hospitalization in patients with chronic advanced
heart failure due to ischemic dilated cardiomyopathy;
- Presented additional pre‑specified secondary results from the
Phase 2b ixCELL-DCM clinical trial of ixmyelocel‑T at the American
Heart Association (AHA) Annual Meeting Scientific Sessions
demonstrating a reduction of ventricular arrhythmias in patients
treated with ixmyelocel‑T;
- Completed treatment of eligible patients in the open-label
crossover extension portion of the ixCELL-DCM study;
- Achieved 8% growth in total Carticel and Epicel net revenues
for the fourth quarter and year ended 2016 compared to the same
periods in 2015;
- Achieved 13% and 10% growth in Carticel net revenues for the
fourth quarter and year ended 2016, respectively, versus the same
periods in 2015; and
- Closed an underwritten public offering of 7,130,000 shares of
common stock for gross proceeds of approximately $20 million.
“In 2016 we created the drivers for long-term growth of the
company by achieving two important regulatory milestones with the
approval of a pediatric indication for Epicel and the approval of
MACI,” said Nick Colangelo, president and CEO of Vericel.
“These significant approvals, combined with our expanded sales and
marketing infrastructure and a strong balance sheet, have
positioned the company for strong revenue growth in the years
ahead.”
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 fourth-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 at http://investors.vcel.com/events.cfm until
March 14, 2018. A replay of the call will also be available until
12:00 pm (EDT) on March 14, 2017 by calling (855) 859-2056, or from
outside the U.S. (404) 537-3406. The conference ID is
61247055.
About Vericel Corporation Vericel develops,
manufactures, and markets autologous expanded cell therapies for
the treatment of patients with serious diseases and
conditions. The company markets three 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.
Carticel® (autologous cultured chondrocytes) is an autologous
chondrocyte implant for the treatment of cartilage defects in the
knee in patients who have had an inadequate response to a prior
arthroscopic or other surgical repair procedure. 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.
Vericel is also developing ixmyelocel‑T, an autologous
multicellular therapy intended to treat advanced heart failure due
to ischemic dilated cardiomyopathy (DCM). 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.
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 adjusted operating loss or profit
described in the release, or operating profit 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 compare 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.
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, 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
CORPORATIONCONSOLIDATED BALANCE
SHEETS(Unaudited, amounts in
thousands) |
|
|
|
|
|
December 31, |
|
|
2016 |
|
2015 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash |
|
$ |
22,978 |
|
|
$ |
14,581 |
|
Accounts
receivable (net of allowance for doubtful accounts of $225 and $68,
respectively) |
|
17,093 |
|
|
10,919 |
|
Inventory |
|
3,488 |
|
|
1,379 |
|
Other
current assets |
|
1,164 |
|
|
464 |
|
Total
current assets |
|
44,723 |
|
|
27,343 |
|
Property and equipment,
net |
|
3,875 |
|
|
4,049 |
|
Intangible assets |
|
— |
|
|
2,917 |
|
Total
assets |
|
$ |
48,598 |
|
|
$ |
34,309 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
6,534 |
|
|
$ |
7,588 |
|
Accrued
expenses |
|
4,523 |
|
|
3,603 |
|
Warrant
liabilities |
|
757 |
|
|
757 |
|
Current
portion of term loan credit agreement, net of deferred costs of
$110 |
|
779 |
|
|
— |
|
Other |
|
259 |
|
|
160 |
|
Total
current liabilities |
|
12,852 |
|
|
12,108 |
|
Revolving
and term loan credit agreement, net of deferred costs of $293 |
|
9,318 |
|
|
— |
|
Long term
deferred rent |
|
1,687 |
|
|
— |
|
Other
long term debt |
|
32 |
|
|
71 |
|
Total
liabilities |
|
23,889 |
|
|
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 — 0 and 1,
respectively |
|
— |
|
|
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 — 31,595 and 23,789, respectively |
|
329,721 |
|
|
307,766 |
|
Treasury
stock — 0 and 1,250 shares, respectively |
|
— |
|
|
(3,150 |
) |
Warrants |
|
190 |
|
|
— |
|
Accumulated deficit |
|
(343,591 |
) |
|
(324,025 |
) |
Total
shareholders’ equity |
|
24,709 |
|
|
22,130 |
|
Total
liabilities and shareholders’ equity |
|
$ |
48,598 |
|
|
$ |
34,309 |
|
VERICEL
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited, amounts in thousands, except
per share amounts) |
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Product
sales |
|
$ |
16,523 |
|
|
$ |
15,420 |
|
|
$ |
54,383 |
|
|
$ |
51,168 |
|
Cost of
product sales |
|
7,591 |
|
|
7,229 |
|
|
28,307 |
|
|
26,470 |
|
Gross
profit |
|
8,932 |
|
|
8,191 |
|
|
26,076 |
|
|
24,698 |
|
Research
and development |
|
4,258 |
|
|
7,404 |
|
|
15,295 |
|
|
18,890 |
|
Selling,
general and administrative |
|
7,925 |
|
|
5,744 |
|
|
27,388 |
|
|
22,479 |
|
Loss on
impairment of intangible asset |
|
2,638 |
|
|
— |
|
|
2,638 |
|
|
— |
|
Total
operating expenses |
|
14,821 |
|
|
13,148 |
|
|
45,321 |
|
|
41,369 |
|
Loss from
operations |
|
(5,889 |
) |
|
(4,957 |
) |
|
(19,245 |
) |
|
(16,671 |
) |
Other income
(expense): |
|
|
|
|
|
|
|
|
Decrease
(increase) in fair value of warrants |
|
(99 |
) |
|
68 |
|
|
— |
|
|
324 |
|
Foreign
currency translation gain (loss) |
|
12 |
|
|
(72 |
) |
|
(5 |
) |
|
(67 |
) |
Interest
income |
|
1 |
|
|
7 |
|
|
8 |
|
|
36 |
|
Other
income (expense) |
|
— |
|
|
47 |
|
|
(10 |
) |
|
47 |
|
Interest
expense |
|
(222 |
) |
|
(3 |
) |
|
(314 |
) |
|
(9 |
) |
Total
other income (expense) |
|
(308 |
) |
|
47 |
|
|
(321 |
) |
|
331 |
|
Net loss |
|
$ |
(6,197 |
) |
|
$ |
(4,910 |
) |
|
$ |
(19,566 |
) |
|
$ |
(16,340 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to common shareholders (Basic and Diluted) |
|
$ |
(0.34 |
) |
|
$ |
(0.28 |
) |
|
$ |
(1.18 |
) |
|
$ |
(0.97 |
) |
Weighted average number
of common shares outstanding (Basic and Diluted) |
|
24,329 |
|
|
23,681 |
|
|
23,093 |
|
|
23,760 |
|
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 December 31, |
|
Year Ended December 31, |
(Amounts in
thousands except per share amounts) |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Numerator: |
|
|
|
|
|
|
|
|
Numerator of basic and
diluted EPS |
|
$ |
(8,185 |
) |
|
$ |
(6,681 |
) |
|
$ |
(27,145 |
) |
|
(23,076 |
) |
Add:
(Decrease) Increase in fair value of warrants |
|
99 |
|
|
(68 |
) |
|
— |
|
|
(324 |
) |
Add:
Dividends accumulated on convertible preferred stock |
|
1,988 |
|
|
1,771 |
|
|
7,579 |
|
|
6,736 |
|
Add: Loss
on impairment on intangible asset |
|
2,638 |
|
|
— |
|
|
2,638 |
|
|
— |
|
Adjusted
net loss - Non-GAAP |
|
$ |
(3,460 |
) |
|
$ |
(4,978 |
) |
|
$ |
(16,928 |
) |
|
$ |
(16,664 |
) |
Denominator: |
|
|
|
|
|
|
|
|
Denominator for basic
and diluted EPS: |
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
24,329 |
|
|
23,681 |
|
|
23,093 |
|
|
23,760 |
|
Add:
Treasury stock |
|
— |
|
|
1,250 |
|
|
— |
|
|
1,250 |
|
Adjusted
denominator for basic and diluted EPS |
|
24,329 |
|
|
24,931 |
|
|
23,093 |
|
|
25,010 |
|
Adjusted net loss per
share (basic and diluted) - Non-GAAP |
|
$ |
(0.14 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.73 |
) |
|
$ |
(0.67 |
) |
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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