Total Revenues of $14.7 Million Reported
for the Fourth Quarter Conference Call Today at 4:30pm
Eastern Time
Vericel Corporation (Nasdaq:VCEL), a leading developer of
patient-specific expanded cellular therapies for the treatment of
severe diseases and conditions, today reported financial results
for the fourth quarter and year ended December 31, 2014. Total
revenues for the fourth quarter and year-end 2014 were generated
primarily from net sales of Carticel® (autologous cultured
chondrocytes) implants and surgical kits and Epicel® (cultured
epidermal autografts), which were acquired on May 30, 2014 as part
of the acquisition of Sanofi's cell therapy and regenerative
medicine business.
Vericel reported a net loss for the quarter and year ended
December 31, 2014 of $2.4 million, or $0.17 per share, and $19.9
million, or $2.23 per share, respectively, compared to a net loss
of $2.9 million, or $0.97 per share, and $15.6 million, or $6.95
per share, for the same periods in 2013.
Total net revenues for the quarter ended December 31, 2014 were
approximately $14.7 million and included approximately $11.4
million of net sales of Carticel implants and surgical kits and
approximately $3.3 million of net sales of Epicel. Total Carticel
and Epicel net product revenues in the fourth quarter increased
approximately 13% over the same period in 2013 prior to the
acquisition.
Total net revenues for the year ended December 31, 2014, which
include seven months of Carticel and Epicel sales, were
approximately $28.8 million and included approximately $22.3
million of net sales of Carticel implants and surgical kits and
approximately $6.0 million of net sales of Epicel. Total
Carticel and Epicel net product revenues for the June through
December period increased approximately 9% over the same period in
2013 prior to the acquisition.
Gross profit for the quarter ended December 31, 2014 was $8.0
million, or 54% of net product sales. Gross profit for the
year ended December 31, 2014 was $11.5 million, or 40% of net
product sales. Cost of product sales for the full year
includes $2.5 million in restructuring costs. The improved
margins in the fourth quarter resulted from an improvement in the
Carticel implant-to-biopsy and higher fourth quarter volumes.
Research and development expenses for the quarter and year ended
December 31, 2014 were $5.8 million and $21.3 million,
respectively, versus $3.3 million and $15.1 million for the same
periods a year ago. The increase in research and development
expenses in the fourth quarter is due to a net increase of $1.6
million in clinical expenses due to an increase in the number of
patients treated and followed in the Phase 2b ixCELL-DCM clinical
trial offset by a reduction in other clinical trial expenses in the
prior period, and $0.9 million in personnel and other expenses
associated with Epicel, Carticel and MACI.
The increase in full-year research and development expenses is
primarily due to a $3.2 million charge associated with the
settlement agreement that eliminates all future milestone payments
related to the development and commercialization of MACI in the
United States, an $0.8 million net increase in clinical trial
expenses resulting from increased enrollment in the Phase 2b
ixCELL-DCM clinical trial offset by a decrease in other clinical
trial expenses from the prior period, and the addition of $2.2
million in personnel and other expenses associated with Epicel,
Carticel and MACI.
Selling, general and administrative expenses for the quarter and
year ended December 31, 2014 were $4.5 million and $13.8 million,
respectively, compared to $1.6 million and $5.9 million for the
same periods a year ago. The increase in SG&A expenses in
the fourth quarter is primarily due to approximately $2.8 million
in sales and marketing expenses associated with the recently
acquired commercial business, approximately $0.9 million in
increased information technology, legal, consulting and personnel
costs related to integrating and managing the acquired business in
the U.S., offset by approximately $0.6 million in reductions in
previously accrued estimated obligations associated with closing
the Danish subsidiary.
The increase in SG&A expenses for the year ended December
31, 2014 over the prior year is due to approximately $5.4 million
in sales and marketing expenses related to the acquired commercial
business, approximately $1.9 million in increased information
technology, legal, consulting and personnel costs related to
integrating and managing the acquired business in the U.S., an
increase of approximately $0.5 million in restructuring charges,
and $0.3 million in general administrative costs from the Danish
subsidiary which has ceased manufacturing operations.
Loss from operations for the quarter and year ended December 31,
2014 was $2.3 million and $23.5 million, respectively, compared to
$4.9 million and $21.0 million for the same periods a year
ago. Material non-cash items impacting the operating loss for
the quarter and year included $0.2 million and $0.8 million,
respectively, of stock-based compensation expense and $0.3 million
and $0.8 million, respectively, in depreciation expense.
Other income for the quarter and year ended December 31, 2014
was less than $0.1 million and $3.6 million, respectively, compared
to $2.0 million and $5.3 million for the same periods a year
ago. The decrease in other income for the full year is due
primarily to a decrease in the fair value of warrants in 2013
compared to 2014 offset by the $3.5 million bargain purchase gain
in 2014. The change in other income for the quarter is
primarily due to an increase in other income attributable to a
decrease in the fair value of warrants in the fourth quarter of
2013 compared to the same period in 2014.
As of December 31, 2014, the company had $30.3 million in cash
and cash equivalents compared to $8.1 million in cash and cash
equivalents at December 31, 2013. The increase in cash
and cash equivalents was due primarily to the receipt of proceeds
from the company's successful $40.3 million equity offering in
September 2014.
Recent Business Highlights
During and since the fourth quarter of 2014, the company:
- Achieved 13% growth in total Carticel and Epicel net product
revenues in the fourth quarter versus the fourth quarter of
2013;
- Increased gross margins for the fourth quarter to 54% of
revenue;
- Completed patient enrollment in the Phase 2b ixCELL-DCM
clinical trial of ixmyelocel-T for the treatment of advanced heart
failure due to ischemic dilated cardiomyopathy;
- Submitted meeting request packages to the U.S. Food and Drug
Administration (FDA) to discuss U.S. registration requirements for
MACI, a Phase 3 product candidate for the treatment of cartilage
defects in the knee, and a pediatric label change for Epicel;
- Changed its corporate name to Vericel Corporation and relocated
its corporate headquarters to Cambridge, Massachusetts; and
- Appointed to its board of directors Dr. Steven Gilman, former
executive vice president and chief scientific officer of Cubist
Pharmaceuticals, Kevin F. McLaughlin, senior vice president and
chief financial officer of Acceleron Pharma, and Dr. Paul Wotton,
president and chief executive officer of Ocata Therapeutics.
"Our strong fourth-quarter financial results reflect both the
successful ongoing integration of the acquired commercial cell
therapy business and the implementation of new strategic
initiatives to support the acquired products," said Nick Colangelo,
Vericel's president and chief executive officer. "We are
encouraged by the revenue and gross margin improvements that we
achieved, and our fourth-quarter performance is an important step
towards our goal of achieving profitability without the need to
access additional capital."
"I am equally encouraged by our clinical and regulatory
progress," stated Mr. Colangelo. "We recently completed
patient enrollment in our ongoing ixCELL-DCM trial and look forward
to reporting top-line results in early 2016. In addition, we
expect to meet with the FDA in the coming months to discuss the
appropriate path to market for MACI in the U.S. and for obtaining a
pediatric label change for Epicel."
Conference Call Information
Today's conference call will be available live at 4:30pm 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 fourth quarter 2014 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 during the live call, the
webcast will be available at http://investors.vcel.com/events.cfm
until March 23, 2016. A replay of the call will also be
available until 11:59 pm (EDT) on March 27, 2015 by calling (855)
859-2056, or from outside the U.S. (404) 537-3406. The
conference ID is 84844964.
About Vericel Corporation
Vericel Corporation (formerly Aastrom Biosciences, Inc.) is a
leader in developing patient-specific expanded cellular therapies
for use in the treatment of patients with severe diseases and
conditions. The company markets two autologous cell therapy
products in the U.S.: Carticel® (autologous cultured chondrocytes),
an autologous chondrocyte implant for the treatment of cartilage
defects in the knee, and Epicel® (cultured epidermal autografts), a
permanent skin replacement for the treatment of patients with
deep-dermal or full-thickness burns comprising greater than or
equal to 30% of total body surface area. Vericel is also
developing MACI™, a third-generation autologous chondrocyte implant
for the treatment of cartilage defects in the knee, and
ixmyelocel-T, a patient-specific multicellular therapy for the
treatment of advanced heart failure due to ischemic dilated
cardiomyopathy. For more information, please visit the
company's website at www.vcel.com.
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, integration of the acquired business, 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, integration of the acquired
business, clinical trial and product development activities,
regulatory approval requirements, the availability and allocation
of resources among different potential uses, estimating the
commercial potential of our products and product candidates and
growth in revenues, market demand 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 (formerly Aastrom Biosciences, Inc.) Annual Report on
Form 10-K for the year ended December 31, 2013, filed with the
Securities and Exchange Commission ("SEC") on March 13, 2014,
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
CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(amounts in
thousands) |
|
|
|
|
December
31, |
|
2014 |
2013 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
Cash |
$ 30,343 |
$ 8,059 |
Accounts receivable |
8,191 |
8 |
Inventory |
1,920 |
— |
Other current assets |
1,036 |
409 |
Total current assets |
41,490 |
8,476 |
Property and equipment, net |
2,892 |
739 |
Intangible assets |
3,197 |
— |
Total assets |
$ 47,579 |
$ 9,215 |
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
Accounts payable |
$ 5,824 |
$ 2,676 |
Accrued expenses |
4,714 |
620 |
Warrant liabilities |
1,081 |
2,019 |
Other |
210 |
— |
Total current liabilities |
11,829 |
5,315 |
Long term liabilities |
109 |
6 |
COMMITMENTS AND CONTINGENCIES |
|
|
Shareholders' equity: |
|
|
Series B-2 voting convertible
preferred stock, no par value: shares authorized and
reserved — 39, shares issued and outstanding — 12 |
38,389 |
38,389 |
Common stock, no par value; shares
authorized — 75,000 and 15,000; shares issued and outstanding
— 23,786 and 4,723, respectively |
305,008 |
253,270 |
Other comprehensive loss |
(71) |
— |
Accumulated deficit |
(307,685) |
(287,765) |
Total shareholders' equity |
35,641 |
3,894 |
Total liabilities and shareholders'
equity |
$ 47,579 |
$ 9,215 |
|
|
VERICEL
CORPORATION |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(In thousands, except
per share amounts) |
|
|
For the Quarter Ended
December 31, 2014 |
For the Year Ended December
31, 2014 |
For the Quarter Ended
December 31, 2013 |
For the Year Ended December
31, 2013 |
Revenues: |
|
|
|
|
Product sales |
$ 14,706 |
$ 28,796 |
$ 8 |
$ 19 |
Total revenues |
14,706 |
28,796 |
8 |
19 |
Costs and expenses: |
|
|
|
|
Cost of product sales |
6,752 |
17,293 |
1 |
4 |
Gross profit |
7,954 |
11,503 |
7 |
15 |
|
|
|
|
|
Research and development |
5,794 |
21,263 |
3,315 |
15,104 |
Selling, general and administrative |
4,506 |
13,774 |
1,616 |
5,875 |
Total operating expenses |
10,300 |
35,037 |
4,931 |
20,979 |
Loss from operations |
(2,346) |
(23,534) |
(4,924) |
(20,964) |
Other income (expense): |
|
|
|
|
(Increase) decrease in fair value of
warrants |
127 |
(27) |
2,006 |
5,337 |
Bargain purchase gain |
— |
3,473 |
— |
— |
Foreign currency translation gain
(loss) |
(2) |
152 |
— |
— |
Interest income |
15 |
24 |
2 |
16 |
Other expense |
(162) |
(2) |
— |
— |
Interest expense |
(2) |
(6) |
— |
(11) |
Total other income (expense) |
(24) |
3,614 |
2,008 |
5,342 |
Net loss |
$ (2,370) |
$ (19,920) |
$ (2,916) |
$ (15,622) |
Net loss per share attributable to common
shareholders (Basic and Diluted) |
$ (0.17) |
$ (2.23) |
$ (0.97) |
$ (6.95) |
Weighted average number of common shares
outstanding (Basic and Diluted) |
23,786 |
11,642 |
4,469 |
3,016 |
CONTACT: Chad Rubin
The Trout Group
crubin@troutgroup.com
(646) 378-2947
Lee Stern
The Trout Group
lstern@troutgroup.com
(646) 378-2922
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