Vericel (VCEL) 10-Q 7 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 03, 2017
Document and Entity Information
Entity Registrant Name	Vericel Corp
Entity Central Index Key	887,359
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding (in shares)		34,907,789

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash	$ 15,466	$ 22,978
Accounts receivable (net of allowance for doubtful accounts of $226 and $225, respectively)	15,430	17,093
Inventory	4,049	3,488
Other current assets	1,366	1,164
Total current assets	36,311	44,723
Property and equipment, net	3,967	3,875
Total assets	40,278	48,598
Current liabilities:
Accounts payable	5,972	6,535
Accrued expenses	4,514	4,523
Current portion of term loan credit agreement (net of deferred costs of $110)	2,557	779
Warrant liabilities	1,269	757
Other	216	259
Total current liabilities	14,528	12,853
Long term deferred rent	7,400	9,318
Revolving and term loan credit agreement (net of deferred costs of $211 and $293, respectively)	1,613	1,687
Other long term debt	0	32
Total liabilities	23,541	23,890
COMMITMENTS AND CONTINGENCIES (Note 13)
Shareholders’ equity:
Common stock, no par value; shares authorized — 75,000; shares issued and outstanding — 34,852 and 31,595, respectively	377,711	329,720
Warrants	190	190
Accumulated deficit	(361,164)	(343,591)
Total shareholders’ equity	16,737	24,708
Total liabilities and shareholders’ equity	40,278	48,598
Series B-2
Shareholders’ equity:
Series B-2 voting convertible preferred stock, no par value: shares authorized and reserved — 39, shares issued and outstanding — 0 and 12, respectively	$ 0	$ 38,389

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Allowance for doubtful accounts	$ 226	$ 225
Current portion of term loan credit agreement, deferred costs	110	0
Revolving and term loan credit agreement, deferred costs	$ 211	$ 293
Common Stock, authorized (in shares)	75,000,000	75,000,000
Common Stock, issued (in shares)	34,852,000	31,595,000
Common Stock, outstanding (in shares)	34,852,000	31,595,000
Series B-2
Convertible preferred stock, authorized (in shares)	39,000	39,000
Convertible preferred stock, reserved (in shares)	39,000	39,000
Convertible preferred stock, issued (in shares)	0	12,000
Convertible preferred stock, outstanding (in shares)	0	12,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Product sales, net	$ 14,260	$ 10,929	$ 40,574	$ 37,860
Cost of product sales	7,186	6,856	21,965	20,716
Gross profit	7,074	4,073	18,609	17,144
Research and development	2,919	3,443	9,357	11,037
Selling, general and administrative	8,186	7,010	25,427	19,463
Total operating expenses	11,105	10,453	34,784	30,500
Loss from operations	(4,031)	(6,380)	(16,175)	(13,356)
Other income (expense):
(Increase) decrease in fair value of warrants	(1,060)	(203)	(512)	99
Foreign currency translation loss	(6)	(6)	(20)	(17)
Interest income	2	0	6	7
Interest expense	(317)	(86)	(878)	(92)
Other income (expense)	5	0	6	(10)
Total other income (expense)	(1,376)	(295)	(1,398)	(13)
Net loss	$ (5,407)	$ (6,675)	$ (17,573)	$ (13,369)
Net loss per share attributable to common shareholders (Basic and Diluted) (see note 12) (in dollars per share)	$ (0.16)	$ (0.38)	$ (0.54)	$ (0.84)
Weighted average number of common shares outstanding (Basic and Diluted) (in shares)	33,667	22,744	32,783	22,678

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Operating activities:
Net loss	$ (17,573)	$ (13,369)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	1,186	1,393
Stock compensation expense	2,053	1,973
Change in fair value of warrants	512	(99)
Inventory provision	232	98
Foreign currency translation loss	20	17
Changes in operating assets and liabilities:
Inventory	(793)	(2,325)
Accounts receivable	1,663	3,048
Other current assets	(202)	(278)
Accounts payable	(1,068)	(2,173)
Accrued expenses	(9)	(205)
Tenant improvement reimbursement	89	898
Deferred rent expense	2	438
Other assets and liabilities, net	(129)	0
Net cash used for operating activities	(14,017)	(10,584)
Investing activities:
Expenditures for property, plant and equipment	(792)	(1,314)
Net cash used in investing activities	(792)	(1,314)
Financing activities:
Net proceeds from issuance of common stock	7,549	469
Deferred financing costs	0	(244)
Borrowings under revolving credit agreement and term loan	0	8,400
Repayments of short-term debt	0	(2,400)
Payments on long-term debt	(252)	(28)
Net cash provided by financing activities	7,297	6,197
Net decrease in cash	(7,512)	(5,701)
Cash at beginning of period	22,978	14,581
Cash at end of period	15,466	8,880
Supplemental cash flow information (non-cash):
Additions to equipment in process included in accounts payable	486	36
Conversion of preferred stock into common stock	38,389	0
Warrants issued in connection with debt arrangement	0	190
Supplementary cash flows information:
Interest paid, net of interest capitalized	$ 691	$ 73

ORGANIZATION

ORGANIZATION	9 Months Ended
	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION	Organization Vericel Corporation, a Michigan corporation (the Company, Vericel, we, us or our), was incorporated in March 1989 and began employee-based operations in 1991. On May 30, 2014, Vericel completed the acquisition of certain assets and assumed certain liabilities of Sanofi, a French société anonyme (Sanofi), including all of the outstanding equity interests of Genzyme Biosurgery ApS (Genzyme Denmark or the Danish subsidiary) (now known as Vericel Denmark ApS), a wholly-owned subsidiary of Sanofi, and over 250 patent applications of Sanofi and certain of its subsidiaries for purposes of acquiring the portion of the cell therapy and regenerative medicine business (the CTRM Business), which researches, develops, manufactures, markets and sells the Carticel ® , MACI ® , and Epicel ® products. The Company is a fully integrated, commercial-stage biopharmaceutical company dedicated to the identification, development and commercialization of innovative therapies that enable the body to repair and regenerate damaged tissues and organs to restore normal structure and function. Vericel has marketed products and developmental stage product candidates, and the Company’s goal is to become the leader in cell therapy and regenerative medicine by developing, manufacturing and marketing best-in-class therapies for patients with significant unmet medical needs. The Company operates its business primarily in the U.S. in one reportable segment — the research, product development, manufacture and distribution of patient-specific, expanded cellular therapies for use in the treatment of specific diseases. The accompanying consolidated financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As of September 30, 2017 , the Company has an accumulated deficit of $361.2 million and had a net loss of $5.4 million during the quarter ended September 30, 2017 . The Company had cash of $15.5 million as of September 30, 2017 . The Company expects that existing cash together with its term loan and revolving line of credit agreement with Silicon Valley Bank (SVB) and MidCap Financial Services (MidCap) (the SVB-MidCap facility), will be sufficient to support the Company's current operations through at least twelve months following the filing of this Form 10-Q . In connection with the SVB-MidCap facility, the Company must remain in compliance with minimum monthly net revenue covenants (determined in accordance with U.S. GAAP), measured on a trailing twelve month basis. SVB and MidCap also have the ability to call debt based on material adverse change clauses which are subjectively determinable and result in a subjective acceleration clause. If the Company's cash requirements exceed its current expectations, or if it is not in compliance with the monthly net revenue covenants or the subjective acceleration clauses are triggered under the SVB-MidCap facility, then SVB may call the debt resulting in the Company immediately needing additional funds. As of September 30, 2017 , the Company was in compliance with the minimum revenue covenant set forth in the Second Loan Modification Agreement between the Company, SVB and MidCap. The Company may seek additional funding through debt or equity financings including the at-the-market sales agreement in place with Cowen and Company, LLC . However, the Company may not be able to obtain financing on acceptable terms or at all. The terms of any financing may adversely affect the holdings or the rights of the Company's shareholders. If the Company needs additional funds and is unable to obtain funding on a timely basis, the Company may need to significantly curtail its operations including its research and development programs in an effort to provide sufficient funds to continue its operations, which could adversely affect its business prospects.

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2017
BASIS OF PRESENTATION
BASIS OF PRESENTATION	Basis of Presentation The condensed consolidated financial statements included herein have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) requires management to make estimates, judgments, and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. The financial statements reflect, in the opinion of management, all adjustments (consisting only of normal, recurring adjustments) necessary to state fairly the financial position and results of operations as of and for the periods indicated. The results of operations for the three and nine months ended September 30, 2017 , are not necessarily indicative of the results to be expected for the full year or for any other period. The September 30, 2017 condensed consolidated balance sheet data was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016 , as filed with the SEC on March 13, 2017 (Annual Report).

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
RECENT ACCOUNTING PRONOUNCEMENTS	Recent Accounting Pronouncements Revenue Recognition In May 2014, the Financial Accounting Standards Board (FASB) issued authoritative guidance requiring entities to apply a new model for recognizing revenue from contracts with customers. The guidance will supersede the current revenue recognition guidance and require entities to evaluate their revenue recognition arrangements using a five step model to determine when a customer obtains control of a transferred good or service. The guidance is currently effective for annual reporting periods beginning after December 15, 2017 and may be adopted using a full or modified retrospective application. The Company does not expect a material impact to its consolidated financial statements following its initial evaluation of its revenue arrangements under the issued guidance. The Company will implement the guidance under the modified retrospective approach. Accounting for Leases The FASB issued guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In accordance with the updated guidance, lessees are required to recognize the assets and liabilities arising from operating leases on the balance sheet. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within 2018. The Company is currently reviewing the potential impact of adopting the new guidance. Share-based Payment Accounting The FASB issued guidance to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard became effective and was implemented for the Company beginning January 1, 2017. Consistent with prior periods, the Company will continue to estimate forfeitures and therefore, the guidance did not have an impact on the Company's consolidated financial statements.

REVENUE

REVENUE	9 Months Ended
	Sep. 30, 2017
Risks and Uncertainties [Abstract]
REVENUE	Revenue Revenue Recognition and Net Product Sales The Company sells Epicel and surgical kits directly to the customer based on contracted amounts. Revenue from sales to the customers is recognized in accordance with ASC 605, Revenue Recognition and SAB Topic 104, R eve nue Recognition , when (i) persuasive evidence of an arrangement exists, (ii) the goods are shipped or delivered and implanted, depending on shipping terms, (iii) title and risk of loss pass to the customer and (iv) collectability is reasonably assured. Shipping and handling costs are included as a component of revenue. Prior to July 1, 2016, the Company sold Carticel to a distributor and followed ASC 605, Revenue Recognition and SAB Topic 104 Revenue Recognition to record revenue. This distributor purchased and took title to Carticel upon shipment of the product and assumed credit and collection risk related to the end customers. The distributor worked with the payers on behalf of patients and surgeons to ensure medical coverage and to obtain reimbursement for Carticel implantation procedures. The Company retained responsibility for shipment of the product to the surgical suite. Revenue was recorded for Carticel upon occurrence of the surgery, net of provisions for rebates and cash discounts. Such rebates and discounts were $0.5 million for the nine months ended September 30, 2016. There were no rebates or cash discounts for the three months ended September 30, 2016. These rebates and prompt payment cash discounts were established by the Company at the time of sale, based on actual experience adjusted to reflect known changes in the factors that impact such reserves. Adjustments to these reserves have historically not been significant. On June 30, 2016, the Company reduced the scope of the agreement with its exclusive distributor by terminating their services for a significant portion of its Carticel sales. On July 1, 2016, the Company transitioned to a direct sales model for Carticel and MACI after launch whereby the Company retained credit and collection risk from the patient as the end customer. The Company utilized a new provider, Dohmen Life Science Services, LLC (DLSS), to provide patient support services but this provider did not purchase and take title to Carticel or MACI. On May 15, 2017, the Company and DLSS mutually terminated the agreement effective June 30, 2017. In addition, the Company utilized Vital Care Inc. and its franchisees as a second provider to expand the available network of contracted third-party payers for Carticel and MACI. Under this direct sales model, the patient bears the ultimate financial responsibility for the purchase of Carticel or MACI and as such the Company recognized revenue in accordance with ASC 954-605, Health Care Entities - Revenue Recognition . The third party payer (insurance company, government, etc.) pays all or some of the product price on the patient’s behalf. Under the direct sales model, the Company recognized product revenues from sales of Carticel and MACI upon implantation at which time the claim is billable to patient’s insurance provider on behalf of the patient and is billed by either DLSS or Vital Care. The Company assumed counterparty risk for the third party reimbursement payment from the payer and from the patient co-pay. Prior authorization or confirmation of coverage level by the patient’s private insurance plan, hospital or government payer is a prerequisite to the shipment of product to a patient. The Company's net product revenues are calculated by estimating expected payments for insurance, hospital or patient payments at the time it invoices and recognizes revenue.To support this direct sales model, the Company utilized DLSS to provide administrative services associated with case management and reimbursement support and to provide billing and collection services. The Company utilized Vital Care to provide similar billing and collection services for a subset of insurance payers and patients. In April 2017, the Company was notified of a contractual dispute between Vital Care and a third-party payer and as a result, during the three months ended March 31, 2017, the Company increased its estimated revenue allowances, reducing revenue by $2.1 million related to 2016 sales and $0.7 million related to 2017 sales to reflect the lower reimbursement that would be obtained if the claims are ultimately required to be treated as out-of-network. During the three months ended June 30, 2017, the dispute was resolved and the negotiated reimbursement resulted in the Company’s ability to reduce its estimated sales allowances by $1.4 million which resulted in additional revenue in the second quarter related to sales which originated primarily in 2016. As a result of the continuing evaluation and assessment of these expected payments, our estimates for expected payments could change. On May 15, 2017, the Company entered into a distribution agreement with Orsini Pharmaceutical Services, Inc. (Orsini) to appoint Orsini as a specialty pharmacy distributor of MACI to patients' physicians and other healthcare providers. The initial term of the distribution agreement will end on May 15, 2019 with the option of two additional two-year terms. The Company ships the product directly to the surgical suite. Orsini purchases and takes title to MACI upon shipment of the product at which point the Company recognizes revenue. Orsini assumes credit and collection risk related to the end customers. In 2017, there are no material chargebacks, rebates or other types of sales incentives that would impact revenue under the agreement with Orsini. The Company and Orsini amended their agreement in August 2017, and further amended the agreement in October 2017 to provide Orsini with a prompt pay discount beginning on January 1, 2018. Under the Orsini arrangement, Orsini is the customer and the Company is recognizing revenue in accordance with ASC 605 and SAB 104. Concentration of Credit Risk On May 15, 2017, the Company and DLSS mutually terminated their agreement effective June 30, 2017. On May 15, 2017, the Company entered into a distribution agreement with Orsini as a specialty pharmacy distributor of MACI and has engaged a third party services provider to provide the patient support program previously provided by DLSS and to manage patient cases for MACI. The Company’s receivables risk is now more concentrated, and the concentration of credit risk also shifted for the Company. Revenue from one customer, the MACI distributor in the U.S., represented approximately 55% and 25% during the three and nine months ended September 30, 2017 , respectively. Accounts receivable from the same customer accounted for 48% of the outstanding accounts receivable as of September 30, 2017 . For the three and nine months ended September 30, 2016 , the Company's largest customer represented 67% and 46% of total revenue, respectively. The next largest customer represented approximately 10% and 13% of revenue for the three and nine ended September 30, 2017 , respectively, and 8% and 13% of total revenue during the three and nine months ended September 30, 2016 , respectively. No other customer accounted for more than 10% of revenue or accounts receivable in 2017 or as of December 31, 2016.

SELECTED BALANCE SHEET COMPONEN

SELECTED BALANCE SHEET COMPONENTS	9 Months Ended
	Sep. 30, 2017
Balance Sheet Related Disclosures [Abstract]
SELECTED BALANCE SHEET COMPONENTS	Selected Balance Sheet Components Inventory as of September 30, 2017 and December 31, 2016 : (In thousands) September 30, 2017 December 31, 2016 Raw materials $ 3,727 $ 3,214 Work-in-process 279 257 Finished goods 43 17 Inventory $ 4,049 $ 3,488 Property and equipment, net as of September 30, 2017 and December 31, 2016 : (In thousands) September 30, 2017 December 31, 2016 Machinery and equipment $ 3,264 $ 3,150 Furniture, fixtures and office equipment 981 931 Computer equipment and software 3,485 3,147 Leasehold improvements 3,908 3,332 Construction in process 608 408 Total property and equipment, gross 12,246 10,968 Less: Accumulated depreciation (8,279 ) (7,093 ) $ 3,967 $ 3,875 Depreciation expense for both the three months ended September 30, 2017 and September 30, 2016 was $0.4 million and depreciation expense for both the nine months ended September 30, 2017 and September 30, 2016 was $1.2 million . Accrued expenses as of September 30, 2017 and December 31, 2016 : (In thousands) September 30, 2017 December 31, 2016 Bonus related compensation $ 1,608 $ 2,433 Employee related accruals 2,021 1,668 Clinical trial related accruals 379 422 Other 506 — $ 4,514 $ 4,523

STOCK PURCHASE WARRANTS

STOCK PURCHASE WARRANTS	9 Months Ended
	Sep. 30, 2017
Warrants and Rights Note Disclosure [Abstract]
STOCK PURCHASE WARRANTS	Stock Purchase Warrants The Company has historically issued warrants to purchase shares of the Company’s common stock in connection with certain of its common stock offerings and in September 2016 the Company issued warrants in connection with the updated debt agreement (September 2016 Warrants) discussed in note 7. The warrants issued in August 2013 (August 2013 Warrants) include anti-dilution price protection provisions that could require cash settlement of the warrants and accordingly require the warrants to be recorded as liabilities of the Company at the estimated fair value at the date of issuance, with changes in estimated fair value recorded as income or expense (non-cash) in the Company’s statement of operations in each subsequent period. The September 2016 Warrants meet the requirements for equity classification. The following table describes the outstanding warrants: August 2013 September 2016 Warrants Exercise price $4.80 $2.48 Expiration date August 16, 2018 September 9, 2022 Total shares issuable on exercise 724,950 117,074 On September 9, 2016, the Company issued 117,074 warrants to two holders in conjunction with the loan agreement described in note 7. The initial valuation of the September 2016 Warrants was recorded as debt issuance costs and is being amortized over the remaining life of the loan agreement to interest expense. The September 2016 Warrants are treated as equity instruments recorded at fair value with no subsequent remeasurement. Pursuant to the warrants, the holders may exercise their warrants for an aggregate of 117,074 shares of the Company’s common stock. The fair value of the warrants described in the table above is measured using the Black-Scholes valuation model. Inherent in the Black-Scholes valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero . See further detail in note 9 of the condensed consolidated financial statements. The assumptions used by the Company are summarized in the following tables: August 2013 Warrants September 30, 2017 December 31, 2016 Closing stock price $ 6.00 $ 3.00 Expected dividend rate — % — % Expected stock price volatility 50.6 % 97.9 % Risk-free interest rate 1.3 % 1.0 % Expected life (years) 0.88 1.62 September 2016 Warrants September 9, 2016 Closing stock price $ 2.20 Expected dividend rate — % Expected stock price volatility 89.8 % Risk-free interest rate 1.4 % Expected life (years) 6.00

DEBT

DEBT	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
DEBT	Debt On March 8, 2016, the Company entered into a $15.0 million debt financing with SVB which on September 9, 2016, was replaced by an expanded term loan and revolving line of credit agreement with SVB and MidCap, which together initially provided access to up to $20 million . The updated debt financing consists of a $4.0 million term loan which was drawn at the closing, a $4.0 million term loan which was drawn upon in November 2016, a $2.0 million term loan which is no longer available as it was not drawn upon by April 12, 2017 and up to $10.0 million of a revolving line of credit. The term loans are interest only (indexed to Wall Street Journal (WSJ) Prime plus 5.00% ) until September 1, 2017 followed by 36 equal monthly payments of principal plus interest maturing September 9, 2020. The revolving line of credit is limited to a borrowing base calculated using eligible accounts receivable and maturing September 9, 2020 with an interest rate indexed to WSJ Prime plus 1.25% . The Company is subject to various financial and nonfinancial covenants including but not limited to monthly minimum net revenue covenants (determined in accordance with U.S. GAAP), measured on a trailing twelve month basis . SVB and MidCap have the ability to call debt based on material adverse change clauses which are subjectively determinable and result in a subjective acceleration clause. The Company has not been informed of any material adverse changes that have occurred. SVB and MidCap have a shared first priority perfected security interest in all assets of the Company other than intellectual property. As of September 30, 2017 , there was an outstanding balance of $7.8 million under the term loan and $2.5 million under the revolving line of credit (net of total deferred costs of $0.3 million ). The weighted average interest rate on the outstanding term and revolving credit loans as of September 30, 2017 was 7.8% . On December 30, 2016, the Company entered into an amendment to the SVB-MidCap facility to amend certain financial covenants and to modify the final payment of the term loan advance. The Company further amended the SVB-MidCap facility on May 9, 2017 to update the monthly net revenue requirement covenants, measured on a trailing twelve month basis . The amendment decreased the monthly 12 month trailing minimum revenue covenant and revised the December 31, 2017 minimum revenue covenant to $51.7 million . As of September 30, 2017 , the Company was in compliance with the minimum revenue covenant. As of September 30, 2017 , there was $3.3 million remaining capacity under the revolving line of credit.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
STOCK-BASED COMPENSATION	Stock-based Compensation Stock Option and Equity Incentive Plans The Company can issue nonqualified and incentive stock options as well as other equity awards pursuant to its Second Amended and Restated 2009 Omnibus Incentive Plan (Option Plan). Such awards pursuant to the Option Plan may be granted by the Company’s Board of Directors to certain of the Company’s employees, directors and consultants. During the three and nine months ended September 30, 2017 , the Company granted 127,200 and 1,677,760 , respectively, service-based options to purchase common stock. The options were granted with exercise prices equal to the fair market value of the Company’s stock at the grant date, and other than those granted to non-employee directors, vest over four years , under a graded-vesting methodology, following the date of grant, and expire after ten years . The Company issues new shares upon the exercise of stock options. The weighted average grant-date fair value of service-based options granted under the Option Plan during the three and nine month periods ended September 30, 2017 was $2.53 and $1.99 , respectively and, $1.77 and $2.15 , respectively for the same periods in 2016 . Non-cash stock-based compensation expense included in cost of goods sold, research and development expenses and selling, general and administrative expenses is summarized in the following table: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Cost of goods sold $ 119 $ 117 $ 316 $ 330 Research and development 177 133 $ 391 $ 392 Selling, general and administrative 459 404 1,346 1,251 Total non-cash stock-based compensation expense $ 755 $ 654 $ 2,053 $ 1,973 The fair value of each service-based stock option grant for the reported periods is estimated on the date of the grant using the Black-Scholes option-pricing model using the weighted average assumptions noted in the following table. Nine Months Ended September 30, Service-Based Stock Options 2017 2016 Expected dividend rate — % — % Expected stock price volatility 80.1 – 88.2% 78.7 – 92.2% Risk-free interest rate 1.8 – 2.3% 1.1 – 1.8% Expected life (years) 5.5 – 6.3 5.5 – 6.3 The following table summarizes the activity for service-based stock options for the indicated periods: Service-Based Stock Options Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2016 3,355,692 $ 4.66 8.2 $ 610 Granted 1,677,760 $ 2.82 Exercised (165,678 ) $ 3.12 $ 362 Expired (100,131 ) $ 16.31 Forfeited (190,766 ) $ 3.35 Outstanding at September 30, 2017 4,576,877 $ 3.84 8.2 $ 13,336 Exercisable at September 30, 2017 1,870,011 $ 5.18 7.5 $ 4,988 As of September 30, 2017 there was approximately $3.4 million of total unrecognized compensation cost related to non-vested service-based stock options granted under the Option Plan. That cost is expected to be recognized over a weighted-average period of 3.0 years. The total fair value of options vested during the three and nine months ended September 30, 2017 was $0.6 million and $1.8 million , respectively, and $0.6 million and $1.6 million , respectively, for the same periods in 2016. Employee Stock Purchase Plan Employees are able to purchase stock under the Vericel Corporation Employee Stock Purchase Plan (ESPP), which was implemented effective October 1, 2015. Participation in this plan is available to substantially all employees. Compensation expense is recorded based on the fair market value of the purchase options at the grant date, which corresponds to the first day of each purchase period and is amortized over the purchase period. On October 2, 2017, employees purchased 40,683 shares resulting in proceeds from the sale of common stock of $0.1 million under the ESPP. The total share-based compensation expense for the ESPP for the nine months ended September 30, 2017 was approximately $0.1 million .

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2017
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENTS	Fair Value Measurements The Company’s fair value measurements are classified and disclosed in one of the following three categories: • Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; • Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and • Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). There was no movement between level 1 to level 2 or between level 2 to level 3. The following table summarizes the valuation of the Company’s financial instruments that are measured at fair value on a recurring basis: September 30, 2017 December 31, 2016 Fair value measurement category Fair value measurement category (In thousands) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Liabilities: Warrant liabilities $ 1,269 $ — $ 1,269 $ — $ 757 $ — $ 757 $ — The following table summarizes the change in the estimated fair value of the Company’s warrant liabilities: Warrant Liabilities (In thousands) Balance at December 31, 2016 $ 757 Increase in fair value 512 Balance at September 30, 2017 $ 1,269 Revolving and Term Loan Credit Agreements At September 30, 2017 and December 31, 2016 , we had a total of $10.0 million and $10.1 million , respectively, outstanding under our revolving and term loan credit agreements, which are variable rate loans. The fair value of these loans approximates book value based on the borrowing rates currently available for variable rate loans obtained from third party lending institutions. These fair values represent Level 2 under the three-tier hierarchy described above.

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY	9 Months Ended
	Sep. 30, 2017
Stockholders' Equity Note [Abstract]
SHAREHOLDERS' EQUITY	Shareholders' Equity At-the-Market Sales Agreement On October 10, 2016, the Company entered into our at-the-market sales agreement with Cowen (ATM Agreement), pursuant to which the Company may sell shares of our common stock through Cowen, as sales agent, in registered transactions from our shelf registration statement filed in June 2015, for aggregate proceeds of up to $25.0 million . Shares of common stock sold under the ATM are to be sold at market prices. The Company will pay up to 3% of the gross proceeds to Cowen as a commission. A total of 2,222,240 shares of common stock have been sold under the ATM Agreement of which 1,864,384 were sold in 2017 for proceeds of $6.7 million (net of $0.3 million in commission and issuance costs) and as of September 30, 2017 had remaining capacity of approximately $17.2 million . We currently intend to use the net proceeds for research, development, manufacturing, and general and administrative expenses, and for other general corporate purposes.

PREFERRED STOCK

PREFERRED STOCK	9 Months Ended
	Sep. 30, 2017
Equity [Abstract]
PREFERRED STOCK	Preferred Stock Series B Convertible Preferred Stock On February 10, 2017, the Company sent notice to Eastern Capital Limited (Eastern), an existing holder of shares of the Company’s Series B-1 Non-Voting Convertible Preferred Stock or Series B-2 Voting Convertible Preferred Stock (Preferred Stock), informing Eastern of the Company's election to convert all 12,308 of the outstanding shares of Preferred Stock held by Eastern, plus 9,570 shares of Preferred Stock in accumulated but undeclared dividends thereon, into 1,093,892 shares of the Company's common stock pursuant to the terms of the Amended and Restated Certificate of Designations, Preferences and Rights of Series B-1 Non-Voting Preferred Stock and Series B-2 Voting Preferred Stock of the Company (Mandatory Conversion). After the Mandatory Conversion on March 9, 2017, no shares of Preferred Stock of the Company remain outstanding as of September 30, 2017 .

NET LOSS PER COMMON SHARE

NET LOSS PER COMMON SHARE	9 Months Ended
	Sep. 30, 2017
Earnings Per Share [Abstract]
NET LOSS PER COMMON SHARE	Net Loss Per Common Share Basic earnings (loss) per share is calculated using the two-class method, which is an earnings allocation formula that determines earnings (loss) per share for the holders of the Company’s common shares and holders of the Series B Preferred Stock. The Series B Preferred Stock shares contain participation rights in undistributed earnings, but do not share in the losses of the Company. The dividends on the Series B Preferred Stock were treated as a reduction of earnings attributable to common shareholders. The following reflects the net loss attributable to common shareholders and share data used in the basic and diluted earnings per share computations using the two class method: Three months ended September 30, Nine months ended September 30, (Amounts in thousands except per share amounts) 2017 2016 2017 2016 Numerator: Net loss $ (5,407 ) $ (6,675 ) $ (17,573 ) $ (13,369 ) Dividends accumulated on convertible preferred stock — (1,931 ) — (5,591 ) Net loss attributable to common shareholders $ (5,407 ) $ (8,606 ) $ (17,573 ) $ (18,960 ) Denominator: Denominator for basic and diluted EPS: Weighted-average common shares outstanding 33,667 22,744 32,783 22,678 Net loss per share attributable to common shareholders (basic and diluted) $ (0.16 ) $ (0.38 ) $ (0.54 ) $ (0.84 ) Common equivalent shares are not included in the diluted per share calculation where the effect of their inclusion would be anti-dilutive. The aggregate number of common equivalent shares (related to options, warrants and preferred stock) that have been excluded from the computations of diluted net loss per common share at September 30, 2017 and 2016 were 5.4 million and 6.5 million , respectively.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	Commitments and Contingencies The Company leases facilities in Ann Arbor, Michigan and Cambridge, Massachusetts. In March 2016, the Company amended its current lease in Cambridge to, among other provisions, extend the terms until February 2022. Under the amendment, the landlord will contribute approximately $2.0 million toward the cost of tenant improvements. The contribution toward the cost of tenant improvements is recorded as deferred rent on the Company's consolidated balance sheet and is amortized to our consolidated statement of operations as reductions to rent expense over the lease term. As of September 30, 2017 , the Company has recorded $1.0 million of leasehold improvements funded by the tenant improvement allowance . In addition to the property leases, the Company also leases an offsite warehouse, various vehicles and computer equipment. The Company's purchase commitments consist of minimum purchase amounts of material in manufacturing. As of September 30, 2017 , future minimum payments related to leases and other contractual obligations are as follows: (In thousands) Total 2017 2018 2019 2020 2021 More than 5 Years Operating leases $ 20,378 $ 1,317 $ 4,806 $ 4,473 $ 4,475 $ 4,546 $ 761 Purchase commitments 2,940 45 681 576 546 546 546 Capital leases 43 11 32 Total $ 23,361 $ 1,373 $ 5,519 $ 5,049 $ 5,021 $ 5,092 $ 1,307 Rent expense for the three and nine months ended September 30, 2017 was $1.5 million and $4.1 million , respectively, and $1.2 million and $3.6 million , respectively, for the three and nine months ended September 30, 2016 . License Agreement On May 10, 2017, the Company announced that it has entered into a License Agreement (License Agreement) with Innovative Cellular Therapeutics Co. Ltd, (ICT), a leading cell therapy company and developer of CAR-T cell therapy for cancer treatment, for the development and distribution of the Vericel product portfolio in Greater China, South Korea, Singapore, and other countries in Asia. ICT will acquire an exclusive license to certain patent rights, know-how and intellectual property relating to Carticel, MACI, ixmyelocel-T, and Epicel as well as enter into a warrant purchase agreement. As part of the license and warrant purchase agreements, the Company will receive an upfront payment of $6.0 million , less any applicable taxes, within 60 days of the effective date of the License Agreement. The initiation of the technology transfer, the license grants in the License Agreement and the warrant purchase are contingent upon Vericel’s receipt of the upfront payment. Vericel is eligible to receive approximately $8.0 million in development and commercial milestones. ICT has also agreed to pay tiered royalties to Vericel equal to a percentage of net sales of each Licensed Product in the low double digits for the commercial life of the applicable Licensed Product. ICT will be responsible for funding the development of the programs and manufacturing of the products for commercialization in China and the rest of the territory. The funding transfer is subject to approval by the State Administration of Foreign Exchange of the People's Republic of China and has not occurred as of issuance date of the financial statements. As a result, the parties have amended the agreement monthly to provide additional time for ICT to pay and reset certain terms of the warrant. The initiation of the technology transfer, the license grants in the License Agreement and the warrant purchase have not occurred. As partial consideration for an amount included in the upfront payment Vericel will issue to ICT a warrant, exercisable for the number of shares of Vericel’s Common Stock equal to $5.0 million less the withholding tax payable thereon divided by $4.90 currently (formerly $3.05 ), with a strike price of $0.01 per share.

RECENT ACCOUNTING PRONOUNCEME19

RECENT ACCOUNTING PRONOUNCEMENTS (Policies)	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Recent Accounting Pronouncements	Recent Accounting Pronouncements Revenue Recognition In May 2014, the Financial Accounting Standards Board (FASB) issued authoritative guidance requiring entities to apply a new model for recognizing revenue from contracts with customers. The guidance will supersede the current revenue recognition guidance and require entities to evaluate their revenue recognition arrangements using a five step model to determine when a customer obtains control of a transferred good or service. The guidance is currently effective for annual reporting periods beginning after December 15, 2017 and may be adopted using a full or modified retrospective application. The Company does not expect a material impact to its consolidated financial statements following its initial evaluation of its revenue arrangements under the issued guidance. The Company will implement the guidance under the modified retrospective approach. Accounting for Leases The FASB issued guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In accordance with the updated guidance, lessees are required to recognize the assets and liabilities arising from operating leases on the balance sheet. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within 2018. The Company is currently reviewing the potential impact of adopting the new guidance. Share-based Payment Accounting The FASB issued guidance to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard became effective and was implemented for the Company beginning January 1, 2017. Consistent with prior periods, the Company will continue to estimate forfeitures and therefore, the guidance did not have an impact on the Company's consolidated financial statements.

SELECTED BALANCE SHEET COMPON20

SELECTED BALANCE SHEET COMPONENTS (Tables)	9 Months Ended
	Sep. 30, 2017
Balance Sheet Related Disclosures [Abstract]
Schedule of inventory	Inventory as of September 30, 2017 and December 31, 2016 : (In thousands) September 30, 2017 December 31, 2016 Raw materials $ 3,727 $ 3,214 Work-in-process 279 257 Finished goods 43 17 Inventory $ 4,049 $ 3,488
Schedule of property and equipment, net	Property and equipment, net as of September 30, 2017 and December 31, 2016 : (In thousands) September 30, 2017 December 31, 2016 Machinery and equipment $ 3,264 $ 3,150 Furniture, fixtures and office equipment 981 931 Computer equipment and software 3,485 3,147 Leasehold improvements 3,908 3,332 Construction in process 608 408 Total property and equipment, gross 12,246 10,968 Less: Accumulated depreciation (8,279 ) (7,093 ) $ 3,967 $ 3,875
Schedule of accounts payable and accrued expenses	Accrued expenses as of September 30, 2017 and December 31, 2016 : (In thousands) September 30, 2017 December 31, 2016 Bonus related compensation $ 1,608 $ 2,433 Employee related accruals 2,021 1,668 Clinical trial related accruals 379 422 Other 506 — $ 4,514 $ 4,523

STOCK PURCHASE WARRANTS (Tables

STOCK PURCHASE WARRANTS (Tables)	9 Months Ended
	Sep. 30, 2017
Warrants and Rights Note Disclosure [Abstract]
Schedule of warrants outstanding	The following table describes the outstanding warrants: August 2013 September 2016 Warrants Exercise price $4.80 $2.48 Expiration date August 16, 2018 September 9, 2022 Total shares issuable on exercise 724,950 117,074
Schedule of assumptions used in calculating estimated fair value of warrants	The assumptions used by the Company are summarized in the following tables: August 2013 Warrants September 30, 2017 December 31, 2016 Closing stock price $ 6.00 $ 3.00 Expected dividend rate — % — % Expected stock price volatility 50.6 % 97.9 % Risk-free interest rate 1.3 % 1.0 % Expected life (years) 0.88 1.62 September 2016 Warrants September 9, 2016 Closing stock price $ 2.20 Expected dividend rate — % Expected stock price volatility 89.8 % Risk-free interest rate 1.4 % Expected life (years) 6.00

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of non-cash stock-based compensation expense	Non-cash stock-based compensation expense included in cost of goods sold, research and development expenses and selling, general and administrative expenses is summarized in the following table: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Cost of goods sold $ 119 $ 117 $ 316 $ 330 Research and development 177 133 $ 391 $ 392 Selling, general and administrative 459 404 1,346 1,251 Total non-cash stock-based compensation expense $ 755 $ 654 $ 2,053 $ 1,973
Schedule of weighted average assumptions used to estimate fair value of each service-based stock option grant	The fair value of each service-based stock option grant for the reported periods is estimated on the date of the grant using the Black-Scholes option-pricing model using the weighted average assumptions noted in the following table. Nine Months Ended September 30, Service-Based Stock Options 2017 2016 Expected dividend rate — % — % Expected stock price volatility 80.1 – 88.2% 78.7 – 92.2% Risk-free interest rate 1.8 – 2.3% 1.1 – 1.8% Expected life (years) 5.5 – 6.3 5.5 – 6.3
Summary of activity for service-based stock options	The following table summarizes the activity for service-based stock options for the indicated periods: Service-Based Stock Options Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2016 3,355,692 $ 4.66 8.2 $ 610 Granted 1,677,760 $ 2.82 Exercised (165,678 ) $ 3.12 $ 362 Expired (100,131 ) $ 16.31 Forfeited (190,766 ) $ 3.35 Outstanding at September 30, 2017 4,576,877 $ 3.84 8.2 $ 13,336 Exercisable at September 30, 2017 1,870,011 $ 5.18 7.5 $ 4,988

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2017
Fair Value Disclosures [Abstract]
Summary of valuation of the Company's investments and financial instruments that are measured at fair value on a recurring basis	The following table summarizes the valuation of the Company’s financial instruments that are measured at fair value on a recurring basis: September 30, 2017 December 31, 2016 Fair value measurement category Fair value measurement category (In thousands) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Liabilities: Warrant liabilities $ 1,269 $ — $ 1,269 $ — $ 757 $ — $ 757 $ —
Summary of change in estimated fair value of warrant liabilities	The following table summarizes the change in the estimated fair value of the Company’s warrant liabilities: Warrant Liabilities (In thousands) Balance at December 31, 2016 $ 757 Increase in fair value 512 Balance at September 30, 2017 $ 1,269

NET LOSS PER COMMON SHARE (Tabl

NET LOSS PER COMMON SHARE (Tables)	9 Months Ended
	Sep. 30, 2017
Earnings Per Share [Abstract]
Schedule of net loss attributable to common shareholders and share data used in the basic and diluted earnings per share computations using the two class method	The following reflects the net loss attributable to common shareholders and share data used in the basic and diluted earnings per share computations using the two class method: Three months ended September 30, Nine months ended September 30, (Amounts in thousands except per share amounts) 2017 2016 2017 2016 Numerator: Net loss $ (5,407 ) $ (6,675 ) $ (17,573 ) $ (13,369 ) Dividends accumulated on convertible preferred stock — (1,931 ) — (5,591 ) Net loss attributable to common shareholders $ (5,407 ) $ (8,606 ) $ (17,573 ) $ (18,960 ) Denominator: Denominator for basic and diluted EPS: Weighted-average common shares outstanding 33,667 22,744 32,783 22,678 Net loss per share attributable to common shareholders (basic and diluted) $ (0.16 ) $ (0.38 ) $ (0.54 ) $ (0.84 )

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Schedule of future minimum payments related to leases	As of September 30, 2017 , future minimum payments related to leases and other contractual obligations are as follows: (In thousands) Total 2017 2018 2019 2020 2021 More than 5 Years Operating leases $ 20,378 $ 1,317 $ 4,806 $ 4,473 $ 4,475 $ 4,546 $ 761 Purchase commitments 2,940 45 681 576 546 546 546 Capital leases 43 11 32 Total $ 23,361 $ 1,373 $ 5,519 $ 5,049 $ 5,021 $ 5,092 $ 1,307

ORGANIZATION (Details)

ORGANIZATION (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2017USD ($)segment	Sep. 30, 2016USD ($)	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)	May 30, 2014patent
Organization
Number of reportable segments | segment			1
Accumulated deficit	$ 361,164		$ 361,164		$ 343,591
Net loss	5,407	$ 6,675	17,573	$ 13,369
Cash	$ 15,466	$ 8,880	$ 15,466	$ 8,880	$ 22,978	$ 14,581
CTRM Business
Organization
Number of patents and patents applications acquired | patent							250

REVENUE (Details)

REVENUE (Details) - USD ($)	Sep. 30, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Allowance for Receivable from Insurance Provider | Valuation Allowances And Reserves Period, Related To 2016
CONCENTRATION
Revenue reserves, deductions				$ 2,100,000
Allowance for Receivable from Insurance Provider | Valuation Allowances And Reserves Period, Related To 2017
CONCENTRATION
Revenue reserves, deductions				$ 700,000
Allowance for Receivable from Insurance Provider | Valuation Allowances And Reserves Period, Related To 2017 | Disputes
CONCENTRATION
Revenue reserves, reversal of change in estimate			$ 1,400,000
Carticel
CONCENTRATION
Provision for rebates and cash discounts					$ 0		$ 500,000
Carticel And MACI Distributor | Customer concentration | Revenue
CONCENTRATION
Concentration risk		55.00%				25.00%
Carticel And MACI Distributor | Customer concentration | Accounts Receivable
CONCENTRATION
Concentration risk	48.00%
Largest Customer | Customer concentration | Revenue
CONCENTRATION
Concentration risk					67.00%		46.00%
Second Largest Customer | Customer concentration | Revenue
CONCENTRATION
Concentration risk		10.00%			8.00%	13.00%	13.00%

SELECTED BALANCE SHEET COMPON28

SELECTED BALANCE SHEET COMPONENTS - INVENTORY (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Inventory:
Raw materials	$ 3,727	$ 3,214
Work-in-process	279	257
Finished goods	43	17
Inventory	$ 4,049	$ 3,488

SELECTED BALANCE SHEET COMPON29

SELECTED BALANCE SHEET COMPONENTS - PROPERTY PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Property and equipment, net:
Total property and equipment, gross	$ 12,246		$ 12,246		$ 10,968
Less: Accumulated depreciation	(8,279)		(8,279)		(7,093)
Total, net	3,967		3,967		3,875
Depreciation and amortization	400	$ 400	1,200	$ 1,200
Machinery and equipment
Property and equipment, net:
Total property and equipment, gross	3,264		3,264		3,150
Furniture, fixtures and office equipment
Property and equipment, net:
Total property and equipment, gross	981		981		931
Computer equipment and software
Property and equipment, net:
Total property and equipment, gross	3,485		3,485		3,147
Leasehold improvements
Property and equipment, net:
Total property and equipment, gross	3,908		3,908		3,332
Construction in process
Property and equipment, net:
Total property and equipment, gross	$ 608		$ 608		$ 408

SELECTED BALANCE SHEET COMPON30

SELECTED BALANCE SHEET COMPONENTS - ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accounts payable and accrued expenses:
Bonus related compensation	$ 1,608	$ 2,433
Employee related accruals	2,021	1,668
Clinical trial related accruals	379	422
Other	506	0
Total	$ 4,514	$ 4,523

STOCK PURCHASE WARRANTS (Detail

STOCK PURCHASE WARRANTS (Details)	Sep. 09, 2016holder$ / sharesshares	Sep. 30, 2017$ / sharesshares	Dec. 31, 2016$ / shares
August 2013 Warrants
Stock Purchase Warrants
Exercise price per share (in dollars per share)		$ 4.80
Total shares issuable on exercise (in shares) | shares		724,950
Assumptions used in calculating the estimated fair value of the warrants
Closing stock price (in dollars per share)		$ 6	$ 3
Expected dividend rate		0.00%	0.00%
Expected stock price volatility		50.60%	97.90%
Risk-free interest rate		1.30%	1.00%
Expected life		10 months 18 days	1 year 7 months 12 days
September 2016 Warrants
Stock Purchase Warrants
Exercise price per share (in dollars per share)		$ 2.48
Total shares issuable on exercise (in shares) | shares		117,074
Warrants issued (in shares) | shares	117,074
Number of warrant holders | holder	2
Assumptions used in calculating the estimated fair value of the warrants
Closing stock price (in dollars per share)	$ 2.2
Expected dividend rate	0.00%
Expected stock price volatility	89.80%
Risk-free interest rate	1.40%
Expected life	6 years

DEBT (Details)

DEBT (Details)	Mar. 08, 2016USD ($)installment	Sep. 30, 2017USD ($)	May 09, 2017USD ($)	Dec. 31, 2016USD ($)	Sep. 09, 2016USD ($)
Debt Instrument [Line Items]
Current portion of term loan credit agreement, deferred costs		$ 110,000		$ 0
Silicon Valley Bank
Debt Instrument [Line Items]
Weighted average interest rate		7.80%
Silicon Valley Bank | Revolving Credit Facility | December 31, 2017
Debt Instrument [Line Items]
Minimum revenue covenant			$ 51,700,000
Silicon Valley Bank | Debt Financing Agreement
Debt Instrument [Line Items]
Debt instrument, face amount	$ 15,000,000
Maximum borrowing capacity (up to)					$ 20,000,000
Silicon Valley Bank | Debt Financing Agreement | Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 10,000,000
Line of credit, current		$ 2,500,000
Current portion of term loan credit agreement, deferred costs		300,000
Remaining borrowing capacity		3,300,000
Silicon Valley Bank | Term Loan
Debt Instrument [Line Items]
Short-term bank loans and notes payable		$ 7,800,000
Silicon Valley Bank | Term Loan | Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	5.00%
Number of installments | installment	36
Silicon Valley Bank | Term Loan | Prime Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	1.25%
Silicon Valley Bank | Term Loan | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Debt instrument, face amount	$ 4,000,000
Silicon Valley Bank | Term Loan | Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Debt instrument, face amount	4,000,000
Silicon Valley Bank | Term Loan | Debt Instrument, Redemption, Period Three
Debt Instrument [Line Items]
Debt instrument, face amount	$ 2,000,000

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands	Oct. 02, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Subsequent Event
Aggregate Intrinsic Value
Stock issued during period, employee stock purchase plans (in shares)	40,683
Service-Based Stock Options
Stock-Based Compensation
Vesting period				4 years
Expiration period				10 years
Grant date fair value (in dollars per share)		$ 2.53	$ 1.77	$ 1.99	$ 2.15
Total non-cash stock-based compensation expense		$ 755	$ 654	$ 2,053	$ 1,973
Weighted average assumptions used to estimate fair value of each service-based stock option grant
Expected dividend rate				0.00%	0.00%
Options
Outstanding at the beginning of the period (in shares)				3,355,692
Granted (in shares)		127,200		1,677,760
Exercised (in shares)				(165,678)
Expired (in shares)				(100,131)
Forfeited (in shares)				(190,766)
Outstanding at the end of the period (in shares)		4,576,877		4,576,877		3,355,692
Exercisable at the end of the period (in shares)		1,870,011		1,870,011
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)				$ 4.66
Granted (in dollars per share)				2.82
Exercised (in dollars per share)				3.12
Expired (in dollars per share)				16.31
Forfeited (in dollars per share)				3.35
Outstanding at the end of the period (in dollars per share)		$ 3.84		3.84		$ 4.66
Exercisable at the end of the period (in dollars per share)		$ 5.18		$ 5.18
Weighted Average Remaining Contractual Term
Outstanding				8 years 2 months 19 days		8 years 2 months 12 days
Exercisable at the end of the period				7 years 6 months
Aggregate Intrinsic Value
Outstanding		$ 13,336		$ 13,336		$ 610
Exercised				362
Exercisable at end of period		4,988		4,988
Total unrecognized compensation cost		3,400		$ 3,400
Weighted average period over which unrecognized compensation is expected to be recognized				3 years
Total fair value of options vested		600	$ 600	$ 1,800	$ 1,600
Service-Based Stock Options | Minimum
Weighted average assumptions used to estimate fair value of each service-based stock option grant
Expected stock price volatility				80.10%	78.70%
Risk-free interest rate				1.80%	1.10%
Expected life				5 years 6 months	5 years 6 months
Service-Based Stock Options | Maximum
Weighted average assumptions used to estimate fair value of each service-based stock option grant
Expected stock price volatility				88.20%	92.20%
Risk-free interest rate				2.30%	1.80%
Expected life				6 years 3 months 18 days	6 years 3 months 18 days
Employee Stock
Stock-Based Compensation
Total non-cash stock-based compensation expense		$ 100		$ 100
Employee Stock | Subsequent Event
Aggregate Intrinsic Value
Stock issued during period, employee stock purchase plans	$ 100

STOCK-BASED COMPENSATION - Non-

STOCK-BASED COMPENSATION - Non-Cash Stock-Based Compensation Expense (Details) - Service-Based Stock Options - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total non-cash stock-based compensation expense	$ 755	$ 654	$ 2,053	$ 1,973
Cost of goods sold
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total non-cash stock-based compensation expense	119	117	316	330
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total non-cash stock-based compensation expense	177	133	391	392
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total non-cash stock-based compensation expense	$ 459	$ 404	$ 1,346	$ 1,251

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Dec. 31, 2016
Liabilities that are measured at fair value on a recurring basis
Warrants	$ 190		$ 190		$ 190	$ 190
Change in the estimated fair value of warrant liabilities
Balance at December 31, 2016			190
Increase in fair value	1,060	$ 203	512	$ (99)
Balance at September 30, 2017	190		190
Level 2 | Silicon Valley Bank | Line of Credit | Revolving Credit Facility
Change in the estimated fair value of warrant liabilities
Lines of credit, fair value					10,000	10,100
Warrants
Liabilities that are measured at fair value on a recurring basis
Warrants	1,269		757		1,269	757
Change in the estimated fair value of warrant liabilities
Balance at December 31, 2016			757
Increase in fair value			512
Balance at September 30, 2017	1,269		1,269
Warrants | Recurring
Liabilities that are measured at fair value on a recurring basis
Warrants	1,269		757		1,269	757
Change in the estimated fair value of warrant liabilities
Balance at December 31, 2016			757
Balance at September 30, 2017	1,269		1,269
Warrants | Recurring | Level 2
Liabilities that are measured at fair value on a recurring basis
Warrants	1,269		757		1,269	757
Change in the estimated fair value of warrant liabilities
Balance at December 31, 2016			757
Balance at September 30, 2017	1,269		1,269
Warrants | Recurring | Level 3
Liabilities that are measured at fair value on a recurring basis
Warrants	0		0		$ 0	$ 0
Change in the estimated fair value of warrant liabilities
Balance at December 31, 2016			0
Balance at September 30, 2017	$ 0		$ 0

SHAREHOLDERS' EQUITY (Details)

SHAREHOLDERS' EQUITY (Details) - USD ($)	Oct. 10, 2016	Dec. 31, 2016	Sep. 30, 2017	Sep. 30, 2017
Class of Stock [Line Items]
Payments of stock issuance costs				$ 300,000
Cowen
Class of Stock [Line Items]
At-the-market sales agreement, maximum aggregate proceeds	$ 25,000,000
At-the-market sales agreement, proceeds from issuance of common stock		$ 6,700,000
Amount of net capacity remaining on the at-the-market sales agreement			$ 17,200,000	$ 17,200,000
Cowen | Common Class A
Class of Stock [Line Items]
At-the-market sales agreement, shares issued (in shares)			1,864,384	2,222,240
Cowen | Maximum
Class of Stock [Line Items]
Percentage of gross proceeds payable as commission	3.00%

PREFERRED STOCK (Details)

PREFERRED STOCK (Details) - shares	Mar. 09, 2017	Feb. 10, 2017	Mar. 10, 2017
Convertible Preferred Stock
Conversion of stock, issued (in shares)	0
Preferred Class A And Class B
Convertible Preferred Stock
Conversion of stock, converted (in shares)		12,308
Accumulated undeclared dividends (in shares)			9,570
Common Class A
Convertible Preferred Stock
Conversion of stock, issued (in shares)		1,093,892

NET LOSS PER COMMON SHARE (Deta

NET LOSS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Numerator:
Net loss	$ (5,407)	$ (6,675)	$ (17,573)	$ (13,369)
Dividends accumulated on convertible preferred stock	0	(1,931)	0	(5,591)
Net loss attributable to common shareholders	$ (5,407)	$ (8,606)	$ (17,573)	$ (18,960)
Denominator:
Weighted-average common shares outstanding (in shares)	33,667	22,744	32,783	22,678
Net loss per share attributable to common shareholders (basic and diluted) (in dollars per share)	$ (0.16)	$ (0.38)	$ (0.54)	$ (0.84)
Aggregate number of common equivalent shares (related to options, warrants and preferred stock) that have been excluded from computations of diluted net loss per common share (in shares)			5,400	6,500

COMMITMENTS AND CONTINGENCIES39

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Incentive from Lessor					$ 2,000
Deferred rent credit	$ 1,000		$ 1,000
Operating leases
Total	20,378		20,378
2,017	1,317		1,317
2,018	4,806		4,806
2,019	4,473		4,473
2,020	4,475		4,475
2,021	4,546		4,546
More than 5 Years	761		761
Purchase commitments
Total	2,940		2,940
2,017	45		45
2,018	681		681
2,019	576		576
2,020	546		546
2,021	546		546
More than 5 Years	546		546
Capital leases
Total	43		43
2,017	11		11
2,018	32		32
2,019
2,020
2,021
More than 5 Years
Total
Total	23,361		23,361
2,017	1,373		1,373
2,018	5,519		5,519
2,019	5,049		5,049
2,020	5,021		5,021
2,021	5,092		5,092
More than 5 Years	1,307		1,307
Rent expense	$ 1,500	$ 1,200	$ 4,100	$ 3,600

COMMITMENTS AND CONTINGENCIES -

COMMITMENTS AND CONTINGENCIES - License Agreement (Details) - Innovative Cellular Therapeutics - USD ($)	May 10, 2017	May 09, 2017
Class of Stock [Line Items]
License agreement, initial payment	$ 6,000,000
License agreement, days within effective date of agreement initial payment due	60 days
License agreement, contingent consideration, asset	$ 8,000,000
License agreement, contingent consideration, liability	$ 5,000,000
Common Stock
Class of Stock [Line Items]
Warrants issued (in dollars per share)	$ 4.90	$ 3.05
Exercise price per share (in dollars per share)	$ 0.01