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 first
quarter ended March 31, 2020.
First Quarter 2020 Financial Highlights
- Total net product revenues increased 22% to $26.7 million,
compared to $21.8 million in the first quarter of 2019, marking the
twelfth consecutive quarter with record revenues for the reported
quarter;
- MACI® net revenue of $20.3 million and Epicel® net revenue of
$6.4 million; the cancellation of scheduled MACI procedures late in
the first quarter due to restrictions on elective surgical
procedures reduced the volume of MACI implants for the quarter by
approximately 9%;
- Gross margin of 63%, compared to gross margin of 60% in the
first quarter of 2019;
- Net loss of $4.7 million, or $0.10 per share, compared to $2.8
million, or $0.07 per share, in the first quarter of 2019;
- Non-GAAP adjusted EBITDA loss of $0.7 million, compared to $0.4
million in the first quarter of 2019;
- Operating cash flow of $4.7 million; and
- As of March 31, 2020, the company had $83.3 million in cash and
investments, compared to $79.0 million as of December 31, 2019, and
no debt.
Business Highlights and Updates
- Implemented multiple measures in response to the COVID-19
pandemic to safeguard the health and well-being of employees, their
families, business partners and healthcare providers, while
continuing to supply MACI and Epicel to patients with knee
cartilage and severe burn injuries;
- Continued to provide field-based support for MACI and Epicel
surgical cases, as needed, in compliance with applicable
governmental orders and surgical facility policies and
procedures;
- Implemented the MACI sales force expansion from 49 to 76 sales
territories and from six to nine sales regions;
- Expanded utilization of virtual tools to support physician
education initiatives in regions where executive orders or hospital
policies restricted access;
- Continued to actively work with surgeon offices and patients to
move cases through the pipeline and reschedule or prepare to
reschedule cancelled and postponed cases;
- Implemented appropriate expense reduction measures, while
maintaining workforce and operational readiness to rapidly return
to normal operations when conditions allow; and
- Continue to plan for a mid-2020 submission of the NexoBrid®
Biologics License Application to the FDA.
“The entire Vericel team would like to thank healthcare workers
across the nation for their selfless efforts in the treatment and
care of COVID-19 patients, and I would also like to thank all of
our employees for their dedication and commitment to ensure that
our customers and patients continue to have access to our products
and clinical case support,” said Nick Colangelo, President and CEO
of Vericel. “I remain highly confident in the fundamental
prospects for our business given the significant clinical need for
both MACI and Epicel and, while uncertainties remain, we expect a
robust return of MACI orders in regions where elective surgery
restrictions are being lifted.”
2020 Financial GuidanceAs previously reported
on April 2, 2020, due to the continued uncertainties resulting from
the impact of the COVID-19 pandemic, the company has withdrawn its
previously announced 2020 financial guidance.
First Quarter 2020 ResultsTotal net product
revenues for the quarter ended March 31, 2020 increased 22% to
$26.7 million, compared to $21.8 million in the first quarter of
2019. Total net product revenues for the quarter included
$20.3 million of MACI® (autologous cultured chondrocytes on porcine
collagen membrane) net revenue and $6.4 million of Epicel®
(cultured epidermal autografts) net revenue, compared to $16.6
million of MACI net revenue and $5.2 million of Epicel net revenue,
respectively, in the first quarter of 2019.
Gross profit for the quarter ended March 31, 2020 was 16.8
million, or 63% of net revenues, compared to $13.2 million, or 60%
of net revenues, for the first quarter of 2019.
Total operating expenses for the quarter ended
March 31, 2020 were $21.8 million, compared to $16.5 million for
the same period in 2019. The increase in operating expenses
was primarily due to a $1.3 million increase in MACI sales force
expenses driven by the expansions in the first quarter of 2019 and
2020, a $0.9 million increase in stock based compensation expense,
a $0.6 million increase in patient reimbursement support services,
a $0.6 million increase in non-sales force related salaries and a
$0.6 million increase in Epicel sales force expenses compared to
the same period a year ago.
Vericel’s net loss for the quarter ended March
31, 2020 was $4.7 million, or $0.10 per share, compared to $2.8
million, or $0.07 per share, for the first quarter of 2019.
Non-GAAP adjusted EBITDA loss was $0.7 million
for the quarter ended March 31, 2020, compared to $0.4 million in
the first quarter of 2019. A table reconciling non-GAAP
measures is included in this press release for reference.
As of March 31, 2020, the company had $83.3
million in cash and investments, compared to $79.0 million as of
December 31, 2019, and no debt.
Conference Call Information
Today’s conference call will be available live at 8:30am Eastern
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 first-quarter 2020 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 May 5,
2021. A replay of the call will also be available until
11:00am (EDT) on May 10, 2020 by calling (855) 859-2056, or from
outside the U.S. (404) 537-3406. The conference ID is
5906069.
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.
Vericel cautions you that all statements other than statements
of historical fact included in this press release that address
activities, events or developments that we expect, believe or
anticipate will or may occur in the future are forward-looking
statements. Although we believe that we have a reasonable
basis for the forward-looking statements contained herein, they are
based on current expectations about future events affecting us and
are subject to risks, assumptions, uncertainties and factors
relating to our operations and business environment, all of which
are difficult to predict and many of which are beyond our
control. Our actual results may differ materially from those
expressed or implied by the forward-looking statements in this
press release. These statements are often, but are not
always, made through the use of words or phrases such as
“anticipates,” “intends,” “estimates,” “plans,” “expects,”
“continues,” “believe,” “guidance,” “outlook,” “target,” “future,”
“potential,” “goals” and similar words or phrases, or future or
conditional verbs such as “will,” “would,” “should,” “could,”
“may,” or similar expressions.
Among the factors that could cause actual results to differ
materially from those set forth in the forward-looking statements
include, but are not limited to uncertainties associated with the
scope, scale and duration of the impact of the COVID-19 pandemic,
growth in revenues for MACI and Epicel, the expected target surgeon
audience, the estimate of the commercial growth potential of our
products and product candidates, availability of funding from the
Biomedical Research and Development Authority under its agreement
with MediWound Ltd. for use in connection with NexoBrid development
activities, potential fluctuations in sales and volumes and our
results of operations over the course of the year, competitive
developments, timing and conduct of clinical trial and product
development activities, timing or likelihood of regulatory
submissions or approvals, 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.
With respect to COVID-19, we are currently unable to reasonably
estimate the specific extent, or duration, of the impact of the
COVID-19 outbreak on our business, financial and operating
results. We are also unable to predict how the outbreak will
affect the pace with which state and local governments lift
restrictions on the performance of elective surgical procedures,
the availability of physicians and/or their treatment
prioritizations or the impact of the outbreak on the overall
healthcare infrastructure. In addition to impacts on
procedure and surgery volumes, we are experiencing and may
experience other disruptions as a result of the COVID-19
outbreak. For example, enrollment in our clinical trials may
be adversely affected. In addition, patients who have
cancelled or postponed surgeries may not reschedule cases in a
timely fashion, or at all. Other disruptions or potential
disruptions include restrictions on the ability of Company
personnel to travel and access customers for training, promotion
and case support, delays in approvals by regulatory bodies, delays
in product development efforts, and additional government-imposed
quarantines and requirements to “shelter at home” or other
incremental mitigation efforts that may impact our ability to
source supplies for our operations or our ability or capacity to
manufacture, sell and support the use of our products. The
total impact of these disruptions could have a material impact on
the Company’s financial condition, cash flows and results of
operations.
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 our 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.
Investor Contacts:Lee SternSolebury
Troutlstern@troutgroup.com+1 (646) 378-2922
VERICEL
CORPORATIONCONSOLIDATED BALANCE
SHEETS(unaudited, amounts in
thousands)
|
|
March 31, |
|
December 31, |
|
|
2020 |
|
2019 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
45,623 |
|
|
$ |
26,889 |
|
Short term investments |
|
35,957 |
|
|
42,829 |
|
Accounts receivable (net of allowance for doubtful accounts of $223
and $306, respectively) |
|
24,171 |
|
|
32,168 |
|
Inventory |
|
7,282 |
|
|
6,816 |
|
Other current assets |
|
6,129 |
|
|
2,953 |
|
Total current assets |
|
119,162 |
|
|
111,655 |
|
Property and equipment, net |
|
7,423 |
|
|
7,144 |
|
Restricted cash |
|
89 |
|
|
89 |
|
Right-of-use assets |
|
24,496 |
|
|
25,103 |
|
Long term investments |
|
1,720 |
|
|
9,247 |
|
Total assets |
|
$ |
152,890 |
|
|
$ |
153,238 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
6,400 |
|
|
$ |
6,345 |
|
Accrued expenses |
|
8,774 |
|
|
7,948 |
|
Current portion of operating lease liabilities |
|
5,535 |
|
|
5,461 |
|
Other liabilities |
|
41 |
|
|
41 |
|
Total current liabilities |
|
20,750 |
|
|
19,795 |
|
Operating lease liabilities |
|
21,597 |
|
|
22,242 |
|
Other long-term liabilities |
|
91 |
|
|
110 |
|
Total liabilities |
|
42,438 |
|
|
42,147 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
Shareholders’ equity: |
|
|
|
|
Common stock, no par value; shares authorized — 75,000; shares
issued and outstanding — 44,963 and 44,864, respectively |
|
493,774 |
|
|
489,749 |
|
Other comprehensive gain |
|
62 |
|
|
21 |
|
Accumulated deficit |
|
(383,384 |
) |
|
(378,679 |
) |
Total shareholders’ equity |
|
110,452 |
|
|
111,091 |
|
Total liabilities and shareholders’ equity |
|
$ |
152,890 |
|
|
$ |
153,238 |
|
VERICEL
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited, amounts in thousands except
per share amounts)
|
|
Three Months Ended March 31, |
|
|
2020 |
|
2019 |
Product sales, net |
|
$ |
26,678 |
|
|
$ |
21,810 |
|
Cost of product sales |
|
9,922 |
|
|
8,640 |
|
Gross profit |
|
16,756 |
|
|
13,170 |
|
Research and development |
|
3,763 |
|
|
3,008 |
|
Selling, general and administrative |
|
18,069 |
|
|
13,520 |
|
Total operating expenses |
|
21,832 |
|
|
16,528 |
|
Loss from operations |
|
(5,076 |
) |
|
(3,358 |
) |
Other income (expense): |
|
|
|
|
Interest income |
|
306 |
|
|
480 |
|
Interest expense |
|
(2 |
) |
|
(2 |
) |
Other income |
|
67 |
|
|
36 |
|
Total other income (expense) |
|
371 |
|
|
514 |
|
Net loss |
|
$ |
(4,705 |
) |
|
$ |
(2,844 |
) |
Net loss per share attributable
to common shareholders (Basic and Diluted) |
|
$ |
(0.10 |
) |
|
$ |
(0.07 |
) |
Weighted average number of common
shares outstanding (Basic and Diluted) |
|
44,924 |
|
|
43,725 |
|
RECONCILIATION OF REPORTED NET LOSS (GAAP) TO
ADJUSTED EBITDA (NON-GAAP MEASURE) - UNAUDITED |
|
|
|
|
|
|
|
Three Months Ended March 31, |
(In
thousands) |
|
2020 |
|
2019 |
Net loss |
|
$ |
(4,705 |
) |
|
$ |
(2,844 |
) |
Stock compensation expense |
|
3,768 |
|
|
2,628 |
|
Depreciation and amortization |
|
533 |
|
|
324 |
|
Net interest income |
|
(304 |
) |
|
(478 |
) |
Adjusted EBITDA
(Non-GAAP) |
|
$ |
(708 |
) |
|
$ |
(370 |
) |
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