Vericel Corporation (NASDAQ:VCEL), a leading developer of
autologous expanded cell therapies for the treatment of patients
with serious diseases and conditions, today reported financial
results for the first quarter ended March 31, 2017.
Total net revenues for the quarter ended March 31, 2017 were
approximately $9.4 million, net of a $2.8 million revenue reserve
related to an unresolved contractual dispute between one of the
Company’s pharmacy providers and a payer. Net revenue
included approximately $5.0 million of Carticel® (autologous
cultured chondrocytes) and MACI® (autologous cultured chondrocytes
on porcine collage membrane) net revenues and approximately $4.4
million of Epicel® (cultured epidermal autografts) net revenues,
compared to $8.8 million of Carticel revenues and $5.3 million of
Epicel revenues, respectively, in the first quarter of 2016.
Carticel and MACI net revenues reflect a change in estimate for
revenue reserves of $2.1 million related to 2016 sales and $0.7
million related to 2017 sales. The company engages pharmacies
to contract with insurance providers and recently received
notification of a dispute between one contracted pharmacy and a
payer. Since the company retains credit and collection risk
from the end customer, we revised our estimate by assuming cases
processed by that pharmacy will be paid at a lower out-of-network
rate. The earlier estimates were based on claims being paid
on an in-network basis consistent with the actual payment history
and the pharmacy’s interpretation of its contract with the
payer.
Gross profit for the quarter ended March 31, 2017 was $2.3
million, or 24% of net revenues, compared to $7.5 million, or 54%
of net product revenues, for the first quarter of 2016.
Research and development expenses for the quarters ended March
31, 2017 and March 31, 2016 were $3.5 million. Clinical trial
expenses for the ixCELL-DCM clinical trial and research and
development expenses related to Epicel were consistent for both
periods. Research and development expenses related to
Carticel decreased, offset by an increase in research and
development expenses related to MACI.
Selling, general and administrative expenses for the quarter
ended March 31, 2017 were $8.4 million compared to $6.0 million for
the same period in 2016. The increase in SG&A expenses is
primarily due to an increase in consulting expenses of $0.8 million
for marketing initiatives related to the launch of MACI, an
increase in personnel costs of $0.8 million primarily related to an
increase in the MACI sales force, costs associated with
reimbursement and patient support services for Carticel and MACI of
$0.5 million, and an increase in professional fees of $0.3
million.
Loss from operations for the quarter ended March 31, 2017 was
$9.6 million, compared to $2.0 million for the first quarter of
2016. Material non-cash items impacting the operating loss
for the quarter included $0.5 million of stock-based compensation
expense and $0.4 million in depreciation expense.
Other expense for the quarter ended March 31, 2017 was $0.2
million compared to $1.7 million for the same period in 2016.
The change in other expense for the quarter is primarily due to the
change in the fair value of warrants in the first quarter of 2017
compared to the same period in 2016.
Vericel’s net loss for the quarter ended March 31, 2017 was $9.8
million, or $0.31 per share, compared to a net loss of $3.7
million, or $0.24 per share, for the same period in 2016.
As of March 31, 2017, the company had $19.8 million in cash
compared to $23.0 million in cash at December 31, 2016.
Recent Business HighlightsDuring and since the
first quarter of 2017, the company:
- Commenced MACI launch activities and 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;
- Trained more than 200 surgeons on MACI, with nearly half of
trained surgeons coming from former Carticel user and non-Carticel
user segments;
- Increased MACI biopsies 17% in Q1 2017 compared to Q1
2016;
- Medical benefit policies updated to include MACI at several
commercial plans, including four of the top ten commercial plans
for MACI/Carticel;
- 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 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;
- Received the FDA Regenerative Medicine Advanced Therapy (RMAT)
designation for ixmyelocel-T for the treatment of advanced heart
failure due to ischemic dilated cardiomyopathy; and
- Completed treatment of eligible patients in the open-label
crossover extension portion of the ixCELL-DCM study.
“The first quarter of 2017 was challenging due to a number of
factors, but we are very pleased with the customer response to
MACI,” said Nick Colangelo, president and CEO of Vericel.
“Moreover, while our focus remains on our core commercial business,
we are very pleased with to have received the RMAT designation for
ixmyelocel-T and to have signed the license agreement with ICT,
which we believe have the potential to create shareholder value
moving forward.”
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 first-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 May 14,
2018. A replay of the call will also be available until 11:00 am
(EST) on May 14, 2017 by calling (855) 859-2056, or from outside
the U.S. (404) 537-3406. The conference ID is 11385924.
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.
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) |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2017 |
|
2016 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash |
|
$ |
19,847 |
|
|
$ |
22,978 |
|
Accounts
receivable (net of allowance for doubtful accounts of $249 and
$225, respectively) |
|
12,127 |
|
|
17,093 |
|
Inventory |
|
3,958 |
|
|
3,488 |
|
Other
current assets |
|
1,018 |
|
|
1,164 |
|
Total
current assets |
|
36,950 |
|
|
44,723 |
|
Property and equipment,
net |
|
3,638 |
|
|
3,875 |
|
Total
assets |
|
$ |
40,588 |
|
|
$ |
48,598 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
6,335 |
|
|
$ |
6,535 |
|
Accrued
expenses |
|
6,030 |
|
|
4,523 |
|
Current
portion of term loan credit agreement, net of deferred costs of
$110 |
|
1,446 |
|
|
779 |
|
Warrant
liabilities |
|
650 |
|
|
757 |
|
Other |
|
291 |
|
|
259 |
|
Total
current liabilities |
|
14,752 |
|
|
12,853 |
|
Revolving and term loan
credit agreement, net of deferred costs of $265 and $293,
respectively |
|
8,679 |
|
|
9,318 |
|
Long term deferred
rent |
|
1,632 |
|
|
1,687 |
|
Other long term
debt |
|
21 |
|
|
32 |
|
Total
liabilities |
|
25,084 |
|
|
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 and12, respectively |
|
— |
|
|
38,389 |
|
Common
stock, no par value; shares authorized — 75,000; shares issued
and outstanding — 32,724 and 31,595, respectively |
|
368,683 |
|
|
329,720 |
|
Warrants |
|
190 |
|
|
190 |
|
Accumulated deficit |
|
(353,369 |
) |
|
(343,591 |
) |
Total
shareholders’ equity |
|
15,504 |
|
|
24,708 |
|
Total
liabilities and shareholders’ equity |
|
$ |
40,588 |
|
|
$ |
48,598 |
|
VERICEL CORPORATIONCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited,
amounts in thousands except per share amounts) |
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2017 |
|
2016 |
|
Product
sales, net |
|
$ |
9,361 |
|
|
$ |
14,108 |
|
Cost of
product sales |
|
7,109 |
|
|
6,560 |
|
Gross
profit |
|
2,252 |
|
|
7,548 |
|
Research
and development |
|
3,467 |
|
|
3,536 |
|
Selling,
general and administrative |
|
8,408 |
|
|
6,004 |
|
Total
operating expenses |
|
11,875 |
|
|
9,540 |
|
Loss from
operations |
|
(9,623 |
) |
|
(1,992 |
) |
Other income
(expense): |
|
|
|
|
Decrease
(increase) in fair value of warrants |
|
107 |
|
|
(1,640 |
) |
Foreign
currency translation loss |
|
(1 |
) |
|
(10 |
) |
Interest
income |
|
1 |
|
|
5 |
|
Interest
expense |
|
(262 |
) |
|
(3 |
) |
Other
expense |
|
— |
|
|
(10 |
) |
Total
other income (expense) |
|
(155 |
) |
|
(1,658 |
) |
Net loss |
|
$ |
(9,778 |
) |
|
$ |
(3,650 |
) |
|
|
|
|
|
Net loss per share
attributable to common shareholders (Basic and Diluted) |
|
$ |
(0.31 |
) |
|
$ |
(0.24 |
) |
Weighted average number
of common shares outstanding (Basic and Diluted) |
|
31,896 |
|
|
22,604 |
|
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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