Vericel Corporation (NASDAQ:VCEL), a leader in advanced therapies
for the sports medicine and severe burn care markets, today
reported financial results and business highlights for the fourth
quarter and year ended December 31, 2019, and provided full-year
2020 financial guidance.
Fourth Quarter 2019 Financial Highlights
- Total net product revenues increased 26% to $39.4 million,
compared to $31.3 million in the fourth quarter of 2018, marking
the eleventh consecutive quarter with record revenues for the
reported quarter;
- MACI® net revenue of $33.6 million and Epicel® net revenue of
$5.8 million;
- Gross margin of 73%, compared to gross margin of 72% in the
fourth quarter of 2018;
- Net income of $9.5 million, or $0.20 per share, compared to
$5.2 million, or $0.11 per share, in the fourth quarter of 2018;
and
- Non-GAAP adjusted EBITDA of $12.8 million, compared to $7.7
million in the fourth quarter of 2018.
Full-Year 2019 Financial Highlights
- Total net product revenues increased 30% to $117.9 million,
compared to $90.9 million in 2018;
- MACI net revenue of $91.6 million and Epicel net revenue of
$26.2 million;
- Gross margin of 68%, compared to gross margin of 65% in
2018;
- Net loss of $9.7 million, or $0.22 per share, which includes
the $17.5 million upfront license payment to MediWound Ltd. for
North American rights to NexoBrid®;
- Non-GAAP adjusted net income, excluding the $17.5 million
upfront license payment to MediWound, of $7.8 million, or $0.18 per
share, compared to a net loss of $8.1 million, or $0.20 per share,
in 2018;
- Non-GAAP adjusted EBITDA of $21.2 million, compared to $4.7
million in 2018; and
- As of December 31, 2019, the company had $79.0 million in cash
and investments, compared to $82.9 million as of December 31, 2018;
excluding the $17.5 million license payment to MediWound, the
company’s cash balance increased by $13.6 million in 2019.
Business Highlights and Updates
- Initiated the MACI sales force expansion from 49 to 76 sales
territories and from six to nine sales regions, which remains on
track to be implemented on April 1, 2020;
- Announced initiation of the NexoBrid Expanded Access Treatment
Protocol (NEXT) to treat patients with deep partial- and
full-thickness burns in the United States during the preparation
and review of the NexoBrid Biologics License Application;
- Announced that that the U.S. Biomedical Advanced Research and
Development Authority (BARDA) has begun procuring NexoBrid for
emergency stockpile as part of the U.S. Department of Health and
Human Services’ mission to build national preparedness for public
health medical emergencies; and
- Planning a mid-2020 submission of the NexoBrid Biologics
License Application to the FDA.
“Our fourth-quarter and full-year results reflect a landmark
year for the company in which we not only continued to deliver
significant revenue growth, but also achieved strong profit growth
and added an exciting new product to our portfolio,” said Nick
Colangelo, President and CEO of Vericel. “With expected sustained
strong double-digit growth ahead for MACI, together with continued
growth for Epicel and the anticipated launch of NexoBrid, we
believe that Vericel is well-positioned to deliver substantial
revenue, profit, and cash flow growth in the years ahead.”
2020 Financial GuidanceThe company expects
total net revenues for 2020 to be in the range of $141 million to
$146 million, including full-year revenue of approximately $3.0
million from BARDA’s emergency stockpile purchases of NexoBrid.
Fourth Quarter 2019 ResultsTotal net product
revenues for the quarter ended December 31, 2019 increased 26% to
$39.4 million, compared to $31.3 million in the fourth quarter of
2018. Total net product revenues for the quarter included $33.6
million of MACI® (autologous cultured chondrocytes on porcine
collagen membrane) net revenue and $5.8 million of Epicel®
(cultured epidermal autografts) net revenue, compared to $25.1
million of MACI net revenue and $6.2 million of Epicel net revenue,
respectively, in the fourth quarter of 2018.
Gross profit for the quarter ended December 31, 2019 was $28.8
million, or 73% of net revenues, compared to $22.7 million, or 72%
of net revenues, for the fourth quarter of 2018.
Total operating expenses for the quarter ended December 31, 2019
were $19.6 million, compared to $16.7 million for the same period
in 2018. The increase in operating expenses was primarily due to a
$1.3 million increase in stock-based compensation expense, a $0.7
million increase in MACI sales force expenses driven by the
expansion in the second quarter of 2019, and a $0.7 million
increase in patient reimbursement support services.
Vericel’s net income for the quarter ended December 31, 2019 was
$9.5 million, or $0.20 per share, compared to $5.2 million, or
$0.11 per share, for the fourth quarter of 2018.
Non-GAAP adjusted EBITDA was $12.8 million for the quarter ended
December 31, 2019, compared to $7.7 million in the fourth quarter
of 2018. A table reconciling non-GAAP measures is included in this
press release for reference.
Full-Year 2019 ResultsTotal net product
revenues for the year ended December 31, 2019 increased 30% to
$117.9 million, compared to $90.9 million in 2018. Total net
product revenues included $91.6 million of MACI net revenue and
$26.2 million of Epicel net revenue, compared to $67.7 million of
MACI net revenue and $23.1 million of Epicel net revenue,
respectively, in 2018.
Gross profit for the year ended December 31, 2019 was $80.3
million, or 68% of net revenues, compared to $58.7 million, or 65%
of net revenues, in 2018.
Total operating expenses for the year ended December 31, 2019
were $91.5 million, including the $17.5 million upfront license
payment to MediWound for North American rights to NexoBrid®.
Excluding the $17.5 million license payment, operating expenses
were $74.0 million, compared to $62.6 million in 2018. Other
increases in operating expenses include a $5.0 million increase in
stock-based compensation expenses, an incremental $2.6 million in
MACI sales force expenses driven by the expansion in the second
quarter of 2019, a $2.4 million increase in marketing expenses, and
a $1.8 million increase in patient reimbursement support
services.
Vericel’s net loss for the year ended December 31, 2019 was $9.7
million, or $0.22 per share, which includes the $17.5 million
upfront license payment to MediWound for North American rights to
NexoBrid. Non-GAAP adjusted net income, excluding the $17.5 million
upfront license payment to MediWound, was $7.8 million, or $0.18
per share, compared to a net loss of $8.1 million, or $0.20 per
share, in 2018. A table reconciling non-GAAP measures is included
in this press release for reference.
Non-GAAP adjusted EBITDA was $21.2 million for the year ended
December 31, 2019, compared to $4.7 million in 2018. A table
reconciling non-GAAP measures is included in this press release for
reference.
As of December 31, 2019, the company had $79.0 million in cash
and investments, compared to $82.9 million as of December 31, 2018.
Excluding the $17.5 million license payment to MediWound, the
company’s cash balance increased by $13.6 million in 2019.
Conference Call Information Today’s conference
call will be available live at 8:30am Eastern Standard Time and can
be accessed through the Investor Relations section of the Vericel
website at http://investors.vcel.com/events-presentations. A
slide presentation with highlights from today’s conference call
will be available on the webcast and in the Investor Relations
section of the Vericel website. 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 2019 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-presentations
until February 25, 2021. A replay of the call will also be
available until 11:00am (EDT) on March 1, 2020 by calling (855)
859-2056, or from outside the U.S. at (404) 537-3406. The
conference ID is 1269587.
About Vericel CorporationVericel is a leader in
advanced therapies for the sports medicine and severe burn care
markets. The company markets two cell therapy products in the
United States. MACI® (autologous cultured chondrocytes on porcine
collagen membrane) is 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. 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. The company also holds an exclusive
license for North American commercial rights to NexoBrid®, a
registration-stage biological orphan product for debridement of
severe thermal burns. For more information, please visit the
company’s website at www.vcel.com.
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 certain financial information
that has not been prepared in accordance with GAAP. Vericel’s
management believes that the non-GAAP adjusted EBITDA described in
the release, which includes adjustments for specific items that are
generally not indicative of our core operations, provide additional
information that is useful to investors in understanding Vericel’s
underlying performance, business and performance trends, and help
facilitate period to period comparisons and comparisons of its
financial measures with other companies in Vericel’s industry.
However, the 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.
Epicel® and MACI® are registered trademarks of Vericel
Corporation. NexoBrid® is a registered trademark of MediWound Ltd.
and is used under license to Vericel Corporation. © 2019 Vericel
Corporation. All rights reserved.
This document contains forward-looking statements, including,
without limitation, statements regarding revenue and financial
guidance for full-year 2020, statements concerning anticipated
progress, objectives and expectations regarding the commercial
potential of our products and growth in revenues, profit, and cash
flow, and objectives and expectations regarding our company as
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,” “guidance,” “outlook,” “future,” 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 our expectations regarding 2020 revenues, growth in revenues
for MACI and Epicel, the expected target surgeon audience,
improvements in gross margins, our need to generate significant
sales to become profitable, potential fluctuations in sales volumes
and our results of operations over the course of the year,
competitive developments, estimating the commercial growth
potential of our products and product candidates, timing and
conduct of clinical trial and product development activities,
timing or likelihood of regulatory submissions or approvals,
availability of funding from the Biomedical Advanced Research and
Development Authority (“BARDA”) under its agreement with MediWound
Ltd. for use in connection with NexoBrid development activities,
market demand for our products, changes in third party coverage and
reimbursement, our ability to maintain and expand our network of
direct sales employees, 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, 2019, filed with the Securities and
Exchange Commission (“SEC”) on February 25, 2020, and in other
filings with the SEC. These forward-looking statements reflect
management's views as of the date hereof and Vericel does not
assume and specifically disclaims any obligation 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 LLCDavid.schull@russopartnersllc.com+1 212-845-4271
(office)+1 858-717-2310 (mobile)
Investor Contacts:Lee SternSolebury
Troutlstern@troutgroup.com+1 (646) 378-2922
VERICEL
CORPORATIONCONSOLIDATED BALANCE
SHEETS(unaudited, amounts in
thousands)
|
|
December 31, |
|
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
26,889 |
|
|
$ |
18,286 |
|
Short term investments |
|
42,829 |
|
|
64,638 |
|
Accounts receivable (net of allowance for doubtful accounts of $306
and $514, respectively) |
|
32,168 |
|
|
23,454 |
|
Inventory |
|
6,816 |
|
|
3,558 |
|
Other current assets |
|
2,953 |
|
|
2,847 |
|
Total current assets |
|
111,655 |
|
|
112,783 |
|
Property and equipment, net |
|
7,144 |
|
|
5,906 |
|
Restricted cash |
|
89 |
|
|
— |
|
Right-of-use assets |
|
25,103 |
|
|
— |
|
Long term investments |
|
9,247 |
|
|
— |
|
Total assets |
|
$ |
153,238 |
|
|
$ |
118,689 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
6,345 |
|
|
$ |
7,108 |
|
Accrued expenses |
|
7,948 |
|
|
6,930 |
|
Current portion of operating lease liabilities |
|
5,461 |
|
|
— |
|
Other liabilities |
|
41 |
|
|
754 |
|
Total current liabilities |
|
19,795 |
|
|
14,792 |
|
Operating lease liabilities |
|
22,242 |
|
|
— |
|
Other long-term liabilities |
|
110 |
|
|
1,666 |
|
Total liabilities |
|
42,147 |
|
|
16,458 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
Shareholders’ equity: |
|
|
|
|
Common stock, no par value; shares authorized — 75,000; shares
issued and outstanding— 44,864 and 43,578, respectively |
|
489,749 |
|
|
471,180 |
|
Other comprehensive gain (loss) |
|
21 |
|
|
(39 |
) |
Warrants |
|
— |
|
|
104 |
|
Accumulated deficit |
|
(378,679 |
) |
|
(369,014 |
) |
Total shareholders’ equity |
|
111,091 |
|
|
102,231 |
|
Total liabilities and shareholders’ equity |
|
$ |
153,238 |
|
|
$ |
118,689 |
|
VERICEL
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited, amounts in thousands except
per share amounts)
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Product sales, net |
|
$ |
39,390 |
|
|
$ |
31,335 |
|
|
$ |
117,850 |
|
|
$ |
90,857 |
|
Cost of product sales |
|
10,585 |
|
|
8,629 |
|
|
37,571 |
|
|
32,160 |
|
Gross profit |
|
28,805 |
|
|
22,706 |
|
|
80,279 |
|
|
58,697 |
|
Research and development |
|
3,217 |
|
|
3,018 |
|
|
30,391 |
|
|
13,599 |
|
Selling, general and administrative |
|
16,378 |
|
|
13,693 |
|
|
61,139 |
|
|
49,007 |
|
Total operating expenses |
|
19,595 |
|
|
16,711 |
|
|
91,530 |
|
|
62,606 |
|
Income (loss) from
operations |
|
9,210 |
|
|
5,995 |
|
|
(11,251 |
) |
|
(3,909 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
Increase in fair value of warrants |
|
— |
|
|
— |
|
|
— |
|
|
(2,524 |
) |
Loss on extinguishment of debt |
|
— |
|
|
(838 |
) |
|
— |
|
|
(838 |
) |
Interest income |
|
321 |
|
|
507 |
|
|
1,614 |
|
|
897 |
|
Interest expense |
|
(2 |
) |
|
(392 |
) |
|
(8 |
) |
|
(1,732 |
) |
Other expense |
|
(28 |
) |
|
(30 |
) |
|
(20 |
) |
|
(31 |
) |
Total other income (expense) |
|
291 |
|
|
(753 |
) |
|
1,586 |
|
|
(4,228 |
) |
Net income (loss) |
|
$ |
9,501 |
|
|
$ |
5,242 |
|
|
$ |
(9,665 |
) |
|
$ |
(8,137 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss) per share
attributable to commonshareholders (Basic) |
|
$ |
0.21 |
|
|
$ |
0.12 |
|
|
$ |
(0.22 |
) |
|
$ |
(0.20 |
) |
Net income (loss) per share
attributable to commonshareholders (Diluted) |
|
$ |
0.20 |
|
|
$ |
0.11 |
|
|
$ |
(0.22 |
) |
|
$ |
(0.20 |
) |
Weighted average number of
common shares outstanding(Basic) |
|
44,775 |
|
|
43,445 |
|
|
44,180 |
|
|
40,242 |
|
Weighted average number of
common shares outstanding(Diluted) |
|
46,803 |
|
|
46,153 |
|
|
44,180 |
|
|
40,242 |
|
RECONCILIATION OF REPORTED NET INCOME
(LOSS) (GAAPTO ADJUSTED NET INCOME (NON-GAAP
MEASURE) - UNAUDITED
|
|
Year Ended December 31, |
(In
thousands) |
|
2019 |
Net loss |
|
$ |
(9,665 |
) |
Upfront license agreement payment |
|
17,500 |
|
Adjusted net income
(Non-GAAP) |
|
$ |
7,835 |
|
Adjusted net income per share
attributable to common shareholders (Non-GAAP) |
|
$ |
0.18 |
|
RECONCILIATION OF REPORTED NET INCOME
(LOSS) (GAAP)TO ADJUSTED EBITDA (NON-GAAP MEASURE) -
UNAUDITED
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(In
thousands) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income (loss) |
|
$ |
9,501 |
|
|
$ |
5,242 |
|
|
$ |
(9,665 |
) |
|
$ |
(8,137 |
) |
Upfront license agreement payment |
|
— |
|
|
— |
|
|
17,500 |
|
|
— |
|
Change in fair value of warrants |
|
— |
|
|
— |
|
|
— |
|
|
2,524 |
|
Stock compensation expense |
|
3,083 |
|
|
1,484 |
|
|
13,179 |
|
|
7,223 |
|
Depreciation and amortization |
|
573 |
|
|
293 |
|
|
1,744 |
|
|
1,426 |
|
Loss on extinguishment of debt |
|
— |
|
|
838 |
|
|
— |
|
|
838 |
|
Net interest (income) expense |
|
(319 |
) |
|
(115 |
) |
|
(1,606 |
) |
|
835 |
|
Adjusted EBITDA
(Non-GAAP) |
|
$ |
12,838 |
|
|
$ |
7,742 |
|
|
$ |
21,152 |
|
|
$ |
4,709 |
|
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