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, 2021.
Third Quarter 2021 Financial Highlights
- Total net revenue of $34.5 million, compared to $32.3 million
in the third quarter of 2020
- MACI® net revenue of $23.9 million, Epicel® net revenue of $9.8
million, and NexoBrid® revenue of $0.8 million related to the U.S.
Biomedical Advanced Research and Development Authority (BARDA)
procurement for emergency response preparedness
- Gross margin of 64%, compared to 70% in the third quarter of
2020
- Net loss of $4.9 million, or $0.11 per share, compared to net
income of $3.6 million, or $0.08 per share, in the third quarter of
2020
- Non-GAAP adjusted EBITDA of $4.3 million, compared to $6.7
million in the third quarter of 2020
- Operating cash flow of $3.6 million
- As of September 30, 2021, the Company had approximately $119
million in cash and investments, compared to approximately $100
million as of December 31, 2020, and no debt
Year-to-Date 2021 Financial Highlights
- Total net revenue of $108.6 million, compared to $79.0 million
in 2020
- MACI net revenue of $74.2 million, Epicel net revenue of $31.8
million, and NexoBrid revenue of $2.6 million related to BARDA
procurement for emergency response preparedness
- Gross margin of 66%, compared to 64% for the same period in
2020
- Net loss of $12.0 million, or $0.26 per share, compared to net
loss of $9.4 million, or $0.21 per share, for the same period in
2020
- Non-GAAP adjusted EBITDA of $16.7 million, compared to $2.5
million for the same period in 2020
- Operating cash flow of $18.5 million
Business Highlights and Updates
- Growth in surgeons taking MACI biopsies in 2021 is on track to
exceed 20% and growth in total MACI biopsies is expected to exceed
30%, compared to 2020
- Epicel net revenue growth of 48% compared to the third quarter
of 2020 and the fourth straight quarter with Epicel revenue over $9
million
- Growth of over 30% in Epicel biopsies and treated patients
through the first nine months of 2021 compared to the same period
in 2020
- Following a Type A meeting with the FDA, the Company
anticipates resubmission of the NexoBrid Biologics License
Application in mid-2022
- Expanded executive leadership team and appointed Patrick Fowler
as Vericel’s Senior Vice President of Corporate Development and
Strategy
“Despite additional COVID-19 disruptions in the third quarter,
the Company delivered solid commercial and operational results and
continued to generate top-line revenue growth, positive adjusted
EBITDA and operating cash flow for the quarter,” said Nick
Colangelo, President and CEO of Vericel. “Based on the strength of
the underlying growth drivers for MACI and Epicel, we are poised to
deliver strong growth for both of our franchises this year with
Epicel growth of approximately 50% for the year and with MACI
expected to achieve the highest fourth quarter sequential revenue
growth since launch and record quarterly revenue to close the
year.”
Full-Year 2021 Financial Guidance Update
- Total net revenue now expected to
increase 27%-30% to approximately $158-$161 million
- Gross margin now expected to be
approximately 70%
- Adjusted EBITDA margin now expected
to be approximately 22%
- Estimated operating expenses of
approximately $114 million
Third Quarter 2021 ResultsTotal net revenue for
the quarter ended September 30, 2021 increased 7% to $34.5 million,
compared to $32.3 million in the third quarter of 2020. Total net
product revenue for the quarter included $23.9 million of MACI
(autologous cultured chondrocytes on porcine collagen membrane) net
revenue and $9.8 million of Epicel (cultured epidermal autografts)
net revenue, compared to $24.4 million of MACI net revenue and $6.7
million of Epicel net revenue, respectively, in the third quarter
of 2020. Total net revenue for the quarter also included $0.8
million of revenue related to the procurement of NexoBrid
(concentrate of proteolytic enzymes enriched in bromelain) by BARDA
for emergency response preparedness, compared to $1.2 million in
the third quarter of 2020.
Gross profit for the quarter ended September 30, 2021 was $22.1
million, or 64% of net revenue, compared to $22.5 million, or 70%
of net revenue, for the third quarter of 2020.
Total operating expenses for the quarter ended September 30,
2021 were $27.1 million, compared to $19.0 million for the same
period in 2020. The increase in operating expenses was primarily
due to an increase in stock-based compensation expense driven by
share price appreciation and lower spend in the prior year due to
COVID-19-related factors.
Net loss for the quarter ended September 30, 2021 was $4.9
million, or $0.11 per share, compared to net income of $3.6
million, or $0.08 per share, for the third quarter of 2020.
Non-GAAP adjusted EBITDA for the quarter ended September 30,
2021 was $4.3 million, or 12% of net revenue, compared to $6.7
million, or 21% of net revenue, for the third quarter of 2020. A
table reconciling non-GAAP measures is included in this press
release for reference.
As of September 30, 2021, the Company had approximately $119
million in cash and investments, compared to approximately $100
million as of December 31, 2020, 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 second quarter 2021 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 9, 2022. A replay of the call will also be available
until 11:30am (EDT) on November 13, 2021 by calling (855) 859-2056,
or from outside the U.S. by calling (404) 537-3406. The conference
ID is 2998214.
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 MeasuresVericel’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.
(MediWound) and is used under license to Vericel Corporation. ©
2021 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 revenue, growth in revenue, 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 of the resubmission to the Food & Drug
Administration (FDA) of a Biologics License Application (BLA) for
NexoBrid seeking approval for the treatment of severe burns in the
United States following MediWound’s receipt of a complete response
on June 28, 2021, timing or likelihood of approval by the FDA of
the NexoBrid BLA resubmission, the estimate of the commercial
growth potential of our products and product candidates,
availability of funding from BARDA under its agreement with
MediWound 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 predict
whether the current spread of the COVID-19 “Delta” variant or a
future resurgence of COVID-19 infections that may limit the
effectiveness of approved vaccines will result in future
restrictions on the performance of elective surgical procedures or
affect the availability of physicians and/or their treatment
prioritizations, cause healthcare facility staffing shortages,
effect the willingness or ability of patients to seek treatment, or
heighten 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 or initiatives 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 NexoBrid, the COVID-19 pandemic may impact the
FDA’s response times to future regulatory submissions, its ability
to monitor our clinical trials, and/or conduct necessary reviews or
inspections of manufacturing facilities involved in the production
of NexoBrid, 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, 2020, filed with the Securities and Exchange
Commission (SEC) on February 24, 2021, Vericel’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2021, filed with
the SEC on November 9, 2021, 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 Contact: Eric Burnsir@vcel.com+1 (734)
418-4411
VERICEL
CORPORATIONCONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited, amounts in
thousands)
|
|
September 30, |
|
December 31, |
|
|
2021 |
|
2020 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
54,553 |
|
|
|
$ |
33,620 |
|
|
Short-term investments |
|
43,738 |
|
|
|
42,187 |
|
|
Accounts receivable (net of allowance for doubtful accounts of $40
and $143, respectively) |
|
28,910 |
|
|
|
34,504 |
|
|
Inventory |
|
13,059 |
|
|
|
9,356 |
|
|
Other current assets |
|
4,686 |
|
|
|
3,893 |
|
|
Total current assets |
|
144,946 |
|
|
|
123,560 |
|
|
Property and equipment, net |
|
11,819 |
|
|
|
7,633 |
|
|
Restricted cash |
|
211 |
|
|
|
211 |
|
|
Right-of-use assets |
|
46,713 |
|
|
|
50,105 |
|
|
Long-term investments |
|
20,235 |
|
|
|
24,099 |
|
|
Other long-term assets |
|
219 |
|
|
|
— |
|
|
Total assets |
|
$ |
224,143 |
|
|
|
$ |
205,608 |
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
5,575 |
|
|
|
$ |
6,755 |
|
|
Accrued expenses |
|
10,932 |
|
|
|
11,293 |
|
|
Current portion of operating lease liabilities |
|
2,280 |
|
|
|
4,394 |
|
|
Other liabilities |
|
41 |
|
|
|
41 |
|
|
Total current liabilities |
|
18,828 |
|
|
|
22,483 |
|
|
Operating lease liabilities |
|
48,493 |
|
|
|
48,789 |
|
|
Other long-term liabilities |
|
42 |
|
|
|
76 |
|
|
Total liabilities |
|
$ |
67,363 |
|
|
|
$ |
71,348 |
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
Shareholders’ equity: |
|
|
|
|
Common stock, no par value; shares authorized — 75,000; shares
issued and outstanding 46,767 and 45,804, respectively |
|
544,624 |
|
|
|
510,061 |
|
|
Accumulated other comprehensive income (loss) |
|
(23 |
) |
|
|
14 |
|
|
Accumulated deficit |
|
(387,821 |
) |
|
|
(375,815 |
) |
|
Total shareholders’ equity |
|
156,780 |
|
|
|
134,260 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
224,143 |
|
|
|
$ |
205,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
VERICEL
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited, amounts in thousands, except
per share amounts)
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Product sales, net |
|
$ |
33,718 |
|
|
|
$ |
31,020 |
|
|
|
$ |
106,025 |
|
|
|
$ |
77,712 |
|
|
Other revenue |
|
788 |
|
|
|
1,238 |
|
|
|
2,568 |
|
|
|
1,238 |
|
|
Total revenue |
|
34,506 |
|
|
|
32,258 |
|
|
|
108,593 |
|
|
|
78,950 |
|
|
Cost of product sales |
|
12,408 |
|
|
|
9,787 |
|
|
|
36,600 |
|
|
|
28,369 |
|
|
Gross profit |
|
22,098 |
|
|
|
22,471 |
|
|
|
71,993 |
|
|
|
50,581 |
|
|
Research and development |
|
4,284 |
|
|
|
2,913 |
|
|
|
12,363 |
|
|
|
9,902 |
|
|
Selling, general and administrative |
|
22,775 |
|
|
|
16,041 |
|
|
|
71,625 |
|
|
|
50,596 |
|
|
Total operating expenses |
|
27,059 |
|
|
|
18,954 |
|
|
|
83,988 |
|
|
|
60,498 |
|
|
Income (loss) from
operations |
|
(4,961 |
) |
|
|
3,517 |
|
|
|
(11,995 |
) |
|
|
(9,917 |
) |
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest income |
|
44 |
|
|
|
121 |
|
|
|
163 |
|
|
|
574 |
|
|
Interest expense |
|
(1 |
) |
|
|
(2 |
) |
|
|
(3 |
) |
|
|
(5 |
) |
|
Other income (expense) |
|
(13 |
) |
|
|
(18 |
) |
|
|
45 |
|
|
|
(8 |
) |
|
Total other income |
|
30 |
|
|
|
101 |
|
|
|
205 |
|
|
|
561 |
|
|
Income (loss) before tax
expense |
|
(4,931 |
) |
|
|
3,618 |
|
|
|
(11,790 |
) |
|
|
(9,356 |
) |
|
Tax expense |
|
— |
|
|
|
— |
|
|
|
(215 |
) |
|
|
— |
|
|
Net income (loss) |
|
$ |
(4,931 |
) |
|
|
$ |
3,618 |
|
|
|
$ |
(12,006 |
) |
|
|
$ |
(9,356 |
) |
|
Net income (loss) per common
share (Basic and Diluted) |
|
$ |
(0.11 |
) |
|
|
$ |
0.08 |
|
|
|
$ |
(0.26 |
) |
|
|
$ |
(0.21 |
) |
|
Weighted average common shares
outstanding (Basic) |
|
46,669 |
|
|
|
45,272 |
|
|
|
46,355 |
|
|
|
45,112 |
|
|
Weighted average common shares
outstanding (Diluted) |
|
46,669 |
|
|
|
47,314 |
|
|
|
46,355 |
|
|
|
45,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF REPORTED NET INCOME (LOSS)
(GAAP) |
TO ADJUSTED EBITDA (NON-GAAP MEASURE) -
UNAUDITED |
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(In
thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income (loss) |
$ |
(4,931 |
) |
|
|
$ |
3,618 |
|
|
|
$ |
(12,006 |
) |
|
|
$ |
(9,356 |
) |
|
Stock-based compensation expense |
8,596 |
|
|
|
2,675 |
|
|
|
26,481 |
|
|
|
10,819 |
|
|
Depreciation and amortization |
679 |
|
|
|
570 |
|
|
|
2,185 |
|
|
|
1,649 |
|
|
Net interest income |
(43 |
) |
|
|
(119 |
) |
|
|
(160 |
) |
|
|
(569 |
) |
|
Income tax expense |
— |
|
|
|
— |
|
|
|
215 |
|
|
|
— |
|
|
Adjusted EBITDA
(Non-GAAP) |
$ |
4,301 |
|
|
|
$ |
6,744 |
|
|
|
$ |
16,715 |
|
|
|
$ |
2,543 |
|
|
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