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
third quarter ended September 30, 2020.
Third Quarter 2020 Financial Highlights
- Total net revenues of $32.3 million, compared to $30.5 million
in the third quarter of 2019;
- MACI® net revenue of $24.4 million, Epicel® net revenue of $6.7
million and NexoBrid® revenue of $1.2 million related to the U.S.
Biomedical Advanced Research and Development Authority (BARDA)
procurement for national response preparedness;
- Gross margin of 70%, compared to gross margin of 69% in the
third quarter of 2019;
- Net income of $3.6 million, or $0.08 per share, compared to
$3.5 million, or $0.07 per share, in the third quarter of
2019;
- Non-GAAP adjusted EBITDA of $6.7 million, compared to $6.8
million in the third quarter of 2019;
- Operating cash flow of $4.6 million; and
- Cash and investments of $85.5 million as of September 30, 2020,
compared to $79.0 million as of December 31, 2019, and no
debt.
Business Highlights and Updates
- Reported record third quarter MACI revenue and total revenues,
and the second highest quarterly Epicel revenue in history;
- Achieved double-digit growth in MACI revenue, implants and
biopsies in the third quarter, including a record monthly high for
biopsies in September;
- Announced the first delivery of NexoBrid to BARDA for emergency
response preparedness; and
- Announced that the FDA accepted for review the Biologics
License Application for NexoBrid for the treatment of severe
thermal burns, with a PDUFA goal date of June 29, 2021.
“Our company executed exceedingly well during the third quarter
as we generated stronger than expected financial results, drove
strong commercial performance for MACI and Epicel, and achieved
important milestones towards our goal of obtaining marketing
approval of NexoBrid in the United States,” said Nick Colangelo,
President and CEO of Vericel. “Our third quarter results
demonstrated the strength of our business across several measures
and, while uncertainties related to COVID-19 remain, we are highly
confident in the underlying fundamentals of our business and we
remain on track to deliver strong revenue and profit growth in the
years ahead.”
Third Quarter 2020 ResultsTotal net revenues
for the quarter ended September 30, 2020 increased 6% to $32.3
million, compared to $30.5 million in the third quarter of
2019. Total net product revenues for the quarter included
$24.4 million of MACI (autologous cultured chondrocytes on porcine
collagen membrane) net revenue and $6.7 million of Epicel (cultured
epidermal autografts) net revenue compared to $20.6 million of MACI
net revenue and $9.9 million of Epicel net revenue, respectively,
in the third quarter of 2019, and $1.2 million of revenue related
to the procurement of NexoBrid (concentrate of proteolytic enzymes
enriched in bromelain) by BARDA for emergency response
preparedness.
Gross profit for the quarter ended September 30, 2020 was $22.5
million, or 70% of net revenues, compared to $21.2 million, or 69%
of net revenues, for the third quarter of 2019.
Total operating expenses for the quarter ended September 30,
2020 were $19.0 million, compared to $18.1 million for the same
period in 2019. The increase was primarily driven by
incremental employee expenses related to the MACI sales force
expansion.
Vericel’s net income for the quarter ended September 30, 2020
was $3.6 million, or $0.08 per share, compared to $3.5 million, or
$0.07 per share, for the third quarter of 2019.
Non-GAAP adjusted EBITDA was $6.7 million for the quarter ended
September 30, 2020, compared to $6.8 million in the third quarter
of 2019. A table reconciling non-GAAP measures is included in
this press release for reference.
As of September 30, 2020, the company had $85.5 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 third-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 November 5, 2021. A replay of the call will also be
available until 11:00am (EDT) on November 12, 2020 by calling (855)
859-2056, or from outside the U.S. by calling (404) 537-3406.
The conference ID is 5426489.
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 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, 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 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. © 2020
Vericel Corporation. All rights reserved.
Forward-Looking StatementsVericel 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 our
expectations regarding future revenues, growth in revenues, market
penetration for MACI and Epicel, growth in profit, gross margins
and operating margins, the ability to achieve or sustain
profitability, contributions to adjusted EBITDA, the expected
target surgeon audience, potential fluctuations in sales and
volumes and our results of operations over the course of the year,
timing and conduct of clinical trial and product development
activities, timing or likelihood of regulatory approvals, the
estimate of the commercial growth potential of our products and
product candidates, availability of funding from the U.S.
Biomedical Research and Development Authority under its agreement
with MediWound Ltd. for use in connection with NexoBrid development
activities, competitive developments, changes in third party
coverage and reimbursement, our ability to supply or meet customer
demand for our products, and the wide-ranging impacts of the
COVID-19 pandemic on our business or the economy generally.
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 whether the outbreak
will cause state and local governments to impose future
restrictions on the performance of elective surgical procedures or
the pace with which such restrictions may be lifted should they be
imposed, the willingness or ability of patients to seek treatment,
the availability of physicians and/or their treatment
prioritizations or the impact of the outbreak on the overall
healthcare infrastructure. 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 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. With respect to FDA’s review of the pending
NexoBrid Biologics License Application, the COVID-19 pandemic may
impact the FDA’s response times to regulatory submissions, its
ability to monitor our clinical trials, and/or conduct necessary
reviews or inspections any or all of which may result in timelines
being materially delayed, which could affect the development and
ultimate commercialization of NexoBrid. 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, Vericel’s Quarterly Report
on Form 10-Q for the quarter ended September, 30, 2020, filed with
the SEC on November 5, 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
CORPORATIONCONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited, amounts in
thousands)
|
|
September 30, |
|
December 31, |
|
|
2020 |
|
2019 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
43,507 |
|
|
$ |
26,889 |
|
Short-term investments |
|
42,035 |
|
|
42,829 |
|
Accounts receivable (net of allowance for doubtful accounts of $187
and $306, respectively) |
|
26,174 |
|
|
32,168 |
|
Inventory |
|
10,080 |
|
|
6,816 |
|
Other current assets |
|
3,586 |
|
|
2,953 |
|
Total current assets |
|
125,382 |
|
|
111,655 |
|
Property and equipment, net |
|
7,115 |
|
|
7,144 |
|
Restricted cash |
|
211 |
|
|
89 |
|
Right-of-use leased assets |
|
24,796 |
|
|
25,103 |
|
Long-term investments |
|
— |
|
|
9,247 |
|
Total assets |
|
$ |
157,504 |
|
|
$ |
153,238 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
6,475 |
|
|
$ |
6,345 |
|
Accrued expenses |
|
8,695 |
|
|
7,948 |
|
Current portion of operating lease liabilities |
|
6,102 |
|
|
5,461 |
|
Other liabilities |
|
41 |
|
|
41 |
|
Total current liabilities |
|
21,313 |
|
|
19,795 |
|
Operating lease liabilities |
|
21,487 |
|
|
22,242 |
|
Other long-term liabilities |
|
74 |
|
|
110 |
|
Total liabilities |
|
$ |
42,874 |
|
|
$ |
42,147 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
Shareholders’ equity: |
|
|
|
|
Common stock, no par value; shares authorized — 75,000; shares
issued and outstanding — 45,315 and 44,864, respectively |
|
$ |
502,587 |
|
|
$ |
489,749 |
|
Other comprehensive gain |
|
78 |
|
|
21 |
|
Accumulated deficit |
|
(388,035 |
) |
|
(378,679 |
) |
Total shareholders’ equity |
|
114,630 |
|
|
111,091 |
|
Total liabilities and shareholders’ equity |
|
$ |
157,504 |
|
|
$ |
153,238 |
|
VERICEL
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited, amounts in thousands, except
per share amounts)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Product sales, net |
|
$ |
31,020 |
|
|
$ |
30,499 |
|
|
$ |
77,712 |
|
|
$ |
78,460 |
|
Other revenue |
|
1,238 |
|
|
— |
|
|
1,238 |
|
|
— |
|
Total revenue |
|
32,258 |
|
|
30,499 |
|
|
78,950 |
|
|
78,460 |
|
Cost of product sales |
|
9,787 |
|
|
9,324 |
|
|
28,369 |
|
|
26,986 |
|
Gross profit |
|
22,471 |
|
|
21,175 |
|
|
50,581 |
|
|
51,474 |
|
Research and development |
|
2,913 |
|
|
3,096 |
|
|
9,902 |
|
|
27,174 |
|
Selling, general and administrative |
|
16,041 |
|
|
14,982 |
|
|
50,596 |
|
|
44,761 |
|
Total operating expenses |
|
18,954 |
|
|
18,078 |
|
|
60,498 |
|
|
71,935 |
|
Income (loss) from
operations |
|
3,517 |
|
|
3,097 |
|
|
(9,917 |
) |
|
(20,461 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
Interest income |
|
121 |
|
|
385 |
|
|
574 |
|
|
1,293 |
|
Interest expense |
|
(2 |
) |
|
(2 |
) |
|
(5 |
) |
|
(6 |
) |
Other income (expense) |
|
(18 |
) |
|
(10 |
) |
|
(8 |
) |
|
8 |
|
Total other income |
|
101 |
|
|
373 |
|
|
561 |
|
|
1,295 |
|
Net income (loss) |
|
$ |
3,618 |
|
|
$ |
3,470 |
|
|
$ |
(9,356 |
) |
|
$ |
(19,166 |
) |
Net income (loss) per share
attributable to common shareholders (Basic) |
|
$ |
0.08 |
|
|
$ |
0.08 |
|
|
$ |
(0.21 |
) |
|
$ |
(0.44 |
) |
Weighted average number of common
shares outstanding (Basic) |
|
45,272 |
|
|
44,251 |
|
|
45,112 |
|
|
43,979 |
|
Net income (loss) per share
attributable to common shareholders (Diluted) |
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
(0.21 |
) |
|
$ |
(0.44 |
) |
Weighted average number of common
shares outstanding (Diluted) |
|
47,314 |
|
|
46,667 |
|
|
45,112 |
|
|
43,979 |
|
RECONCILIATION OF REPORTED NET INCOME
(LOSS) (GAAP)TO ADJUSTED EBITDA (NON-GAAP MEASURE)
– UNAUDITED
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(In
thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss) |
|
$ |
3,618 |
|
|
$ |
3,470 |
|
|
$ |
(9,356 |
) |
|
$ |
(19,166 |
) |
Non-recurring license agreement purchase |
|
— |
|
|
— |
|
|
— |
|
|
17,500 |
|
Stock compensation expense |
|
2,675 |
|
|
3,285 |
|
|
10,819 |
|
|
10,095 |
|
Depreciation and amortization |
|
570 |
|
|
475 |
|
|
1,649 |
|
|
1,174 |
|
Net interest income |
|
(119 |
) |
|
(383 |
) |
|
(569 |
) |
|
(1,287 |
) |
Adjusted EBITDA
(Non-GAAP) |
|
$ |
6,744 |
|
|
$ |
6,847 |
|
|
$ |
2,543 |
|
|
$ |
8,316 |
|
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