Record Third Quarter Revenue of $14.3
Million Represents a 30% Increase Over Third Quarter
2016
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 third quarter ended September 30, 2017.
Total net revenues for the quarter ended September 30, 2017 were
$14.3 million, which included $9.9 million of MACI® (autologous
cultured chondrocytes on porcine collage membrane) net revenues and
$4.4 million of Epicel® (cultured epidermal autografts) net
revenues, compared to $8.3 million of Carticel® (autologous
cultured chondrocytes) net revenues and $2.6 million of Epicel net
revenues, respectively, in the third quarter of 2016. Total
net revenues increased 30% compared to the third quarter of 2016,
with MACI revenues increasing 19% and Epicel revenues increasing
67%, respectively, compared to the same period in 2016.
Gross profit for the quarter ended September 30, 2017 was $7.1
million, or 50% of net revenues, compared to $4.1 million, or 37%
of net revenues, for the third quarter of 2016.
Research and development expenses for the quarter ended
September 30, 2017 were $2.9 million compared to $3.4 million in
the third quarter of 2016. The reduction in third-quarter
research and development expenses is primarily due to a reduction
in clinical trial expenses.
Selling, general and administrative expenses for the quarter
ended September 30, 2017 were $8.2 million compared to $7.0 million
for the same period in 2016. 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 September 30, 2017
was $4.0 million, compared to $6.4 million for the third quarter of
2016. Material non-cash items impacting the operating loss
for the quarter included $0.8 million of stock-based compensation
expense and $0.4 million in depreciation expense.
Other expense for the quarter ended September 30, 2017 was $1.4
million compared to $0.3 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 third quarter of 2017
compared to the same period in 2016 and interest expense on the
company’s outstanding revolving credit agreement and term
loans.
Vericel’s net loss for the quarter ended September 30, 2017 was
$5.4 million, or $0.16 per share, compared to a net loss of $6.7
million, or $0.38 per share, for the same period in 2016.
As of September 30, 2017, the company had $15.5 million in cash
compared to $23.0 million in cash at December 31, 2016.
“We had a very strong third quarter in which we achieved record
third quarter revenues and the second straight quarter of 30% or
higher revenue growth compared to the same quarter of the prior
year,” said Nick Colangelo, president and CEO of Vericel.
“Our significant revenue growth and gross margin expansion were
driven by both the accelerating uptake of MACI as well as
substantial growth for Epicel in the quarter.”
Recent Business HighlightsDuring and since the
third quarter of 2017, the company:
- Achieved record third quarter revenues and the second straight
quarter of 30% or greater revenue growth versus same quarter of the
prior year;
- Achieved 19% growth in MACI net revenues for the third quarter
of 2017 compared to Carticel revenues for the same period in
2016;
- Achieved 67% growth in Epicel net revenues for the third
quarter of 2017 compared to the same period in 2016;
- Achieved gross margins of 50% of net revenues in the third
quarter of 2017 versus 37% of net revenues in the same period in
2016;
- Trained more than 440 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 MACI biopsies 44% in the third quarter of 2017
compared to the same period in 2016;
- Announced that medical benefit policies have been updated to
include MACI at multiple commercial plans including
UnitedHealthcare; at this time, the number of covered lives for
commercial plans providing access to MACI is approximately
equivalent to the number of covered lives for commercial plans that
previously covered Carticel; and
- Announced plans to expand the MACI sales force from 28 to 40
sales representatives.
“Based on the expanding surgeon customer base and the increasing
volume of MACI biopsies and implants, we believe that demand for
MACI will far exceed that for Carticel,” added Mr. Colangelo.
“Given the MACI launch momentum and expanded patient access, we
have initiated another sales force expansion in order to drive
continued strong revenue growth in 2018 and beyond.”
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 third-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
November 7, 2018. A replay of the call will also be available until
11:00am (EST) on November 11, 2017 by calling (855) 859-2056, or
from outside the U.S. (404) 537-3406. The conference ID is
7097908.
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. 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.
Global Media Contacts:David SchullRusso
Partners LLC+1 212-845-4271 (office)+1 858-717-2310
(mobile)David.schull@russopartnersllc.com
Karen ChaseRusso Partners LLC+1 646-942-5627 (office)+1
917-547-0434 (mobile)Karen.chase@russopartnersllc.com
Investor Contacts: Chad RubinThe Trout
Groupcrubin@troutgroup.com+1 (646) 378-2947
Lee SternThe Trout Grouplstern@troutgroup.com+1 (646)
378-2922
| VERICEL CORPORATIONCONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited, amounts in
thousands) |
| |
| |
|
September 30, |
|
December 31, |
| |
|
2017 |
|
2016 |
|
ASSETS |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash |
|
$ |
15,466 |
|
|
$ |
22,978 |
|
| Accounts
receivable (net of allowance for doubtful accounts of $226 and
$225, respectively) |
|
15,430 |
|
|
17,093 |
|
|
Inventory |
|
4,049 |
|
|
3,488 |
|
| Other
current assets |
|
1,366 |
|
|
1,164 |
|
| Total
current assets |
|
36,311 |
|
|
44,723 |
|
| Property and equipment,
net |
|
3,967 |
|
|
3,875 |
|
| Total
assets |
|
$ |
40,278 |
|
|
$ |
48,598 |
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
| Current
liabilities: |
|
|
|
|
| Accounts
payable |
|
$ |
5,972 |
|
|
$ |
6,535 |
|
| Accrued
expenses |
|
4,514 |
|
|
4,523 |
|
| Current
portion of term loan credit agreement (net of deferred costs of
$110) |
|
2,557 |
|
|
779 |
|
| Warrant
liabilities |
|
1,269 |
|
|
757 |
|
|
Other |
|
216 |
|
|
259 |
|
| Total
current liabilities |
|
14,528 |
|
|
12,853 |
|
| Revolving and term loan
credit agreement (net of deferred costs of $211 and $293,
respectively) |
|
7,400 |
|
|
9,318 |
|
| Long term deferred
rent |
|
1,613 |
|
|
1,687 |
|
| Other long term
debt |
|
— |
|
|
32 |
|
| Total
liabilities |
|
23,541 |
|
|
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 — 34,852 and 31,595, respectively |
|
377,711 |
|
|
329,720 |
|
|
Warrants |
|
190 |
|
|
190 |
|
|
Accumulated deficit |
|
(361,164 |
) |
|
(343,591 |
) |
| Total
shareholders’ equity |
|
16,737 |
|
|
24,708 |
|
| Total
liabilities and shareholders’ equity |
|
$ |
40,278 |
|
|
$ |
48,598 |
|
| VERICEL CORPORATIONCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited,
amounts in thousands except per share amounts) |
| |
| |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| Product
sales, net |
|
$ |
14,260 |
|
|
$ |
10,929 |
|
|
$ |
40,574 |
|
|
$ |
37,860 |
|
| Cost of
product sales |
|
7,186 |
|
|
6,856 |
|
|
21,965 |
|
|
20,716 |
|
| Gross
profit |
|
7,074 |
|
|
4,073 |
|
|
18,609 |
|
|
17,144 |
|
| Research
and development |
|
2,919 |
|
|
3,443 |
|
|
9,357 |
|
|
11,037 |
|
| Selling,
general and administrative |
|
8,186 |
|
|
7,010 |
|
|
25,427 |
|
|
19,463 |
|
| Total
operating expenses |
|
11,105 |
|
|
10,453 |
|
|
34,784 |
|
|
30,500 |
|
| Loss from
operations |
|
(4,031 |
) |
|
(6,380 |
) |
|
(16,175 |
) |
|
(13,356 |
) |
| Other income
(expense): |
|
|
|
|
|
0 |
|
|
|
(Increase) decrease in fair value of warrants |
|
(1,060 |
) |
|
(203 |
) |
|
(512 |
) |
|
99 |
|
| Foreign
currency translation loss |
|
(6 |
) |
|
(6 |
) |
|
(20 |
) |
|
(17 |
) |
| Interest
income |
|
2 |
|
|
— |
|
|
6 |
|
|
7 |
|
| Interest
expense |
|
(317 |
) |
|
(86 |
) |
|
(878 |
) |
|
(92 |
) |
| Other
income (expense) |
|
5 |
|
|
— |
|
|
6 |
|
|
(10 |
) |
| Total
other income (expense) |
|
(1,376 |
) |
|
(295 |
) |
|
(1,398 |
) |
|
(13 |
) |
| Net loss |
|
$ |
(5,407 |
) |
|
$ |
(6,675 |
) |
|
$ |
(17,573 |
) |
|
$ |
(13,369 |
) |
| |
|
|
|
|
|
|
|
|
| Net loss per share
attributable to common shareholders (Basic and Diluted) |
|
$ |
(0.16 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.54 |
) |
|
$ |
(0.84 |
) |
| Weighted average number
of common shares outstanding (Basic and Diluted) |
|
33,667 |
|
|
22,744 |
|
|
32,783 |
|
|
22,678 |
|
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