VCEL - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Vericel’s Fourth Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. I would also like to remind you that this call is being recorded for replay. I would now turn the conference call over to Eric Burns, Vericel's Head of Financial Planning & Analysis and Investor Relations.

Eric Burns

good and operator, you, morning, everyone. Thank Vericel's our financial to fourth quarter discuss to call conference results XXXX Welcome and highlights. business

described SEC, be begin, of Act we may the today's under filings expectations let remind Private making could we'll the you covered our forward-looking available uncertainties are Litigation are with XXXX. risks These from differ Before cause materially Securities more statements actual and in that, to on which me involve fully our call, Reform on that statements and results website.

results represent In forward-looking as the on views all of today fourth note addition, section press of Relations views copy Investor financial and our not statements any our release upon our relied is a website. only Please date. our that be available as of subsequent as should of representing quarter

this highlights I We today's I'm the or also turn Financial accessed from on directly Mara. and Officer, and our Nick call the Chief Colangelo; now that on by presentation a website. on short to be viewed Chief Nick. Executive over webcast call Joe have our call Officer, will Vericel's President with can joined

Nick Colangelo

guidance quarter this Strategic year Corporate and join business. on financial Global Investor us where Previously begin team roles, Eric, Analysis everyone. and January and you, the and morning, who U.S. Joe Relations. fourth as We're recently call. Vice XXXX I'd and CFO our in XXXX discuss most Planning of he and including Biogen Financial have joined Biogen's of our like full he'll financial Joe welcoming Finance Thank from results as to held later Head good several Joe leadership & Finance also Divisional to and excited by finance of Head for President served Vericel

financial XXXX results operational presented quarter to full the strong Turning fourth despite COVID-XX. delivered performance, in and we and challenges our year by

as for revenue delivered profitability revenue year, generated and product This in strong year first revenue positive we in Epicel. time full achieved performance record record GAAP over the volumes both year in the flow, full we cash MACI cash total non-GAAP reported the significant flow debt. and cash and For and and $XXX ending and and in and operating million for no $XX generated income $XX with company's million the adjusted million investments over EBITDA history net

we as finish also to quarterly the total revenue with measures. across history, had quarterly and well MACI quarter From as company's fourth fourth commercial record the net records the Epicel record quarterly in achieved demonstrating record the commercial strength and the Epicel perspective, strong revenue profile. perspective, second-highest income, the a revenue history quarterly several volume quarter, generated in quarter. year We From fourth operating graft adjusted implants in and clearly flow and a a second-highest we of in gross quarterly MACI financial record margin, EBITDA financial the and cash financial

for high COVID-XX number a monthly growth We a rapid long-term positioned in access and the believe the MACI high in biopsies, tier significant also beyond. growth of achieving high has We double-digit for and Despite revenue on execution taking record impact and and return a in biopsies resiliency throughout December. position. the operational quarterly a top in growth results strong demonstrate we that our biopsies XXXX to and the our the year XXXX, strong that of in our physician elective of company exited a record had surgeons surgeries quarterly MACI record profile

revenue additional the a coming NexoBrid the for quarters, United launch reflects underlying and potential for Our return accelerate guidance for trajectory we XXXX in momentum Epicel prepare to MACI's growth as drivers procurement States. pre-COVID the a growth as continued over

to leading for MACI a to Joe, will moments. approximately execute strong revenue indicators total MACI well remain continued Epicel. and expect we $XXX in and our XXXX, surgeons for driven morning, growth growth on in in respect team in X,XXX we increase provide to throughout from to million, biopsies and an this details range expectations, low-to-mid XX% approximately announced few $XXX the mid-teens the commercial to With very million to received XX% XXXX. XX% surgeons further performance Overall, XXXX approximately we from As XXXX. our XXXX by guidance grow financial

taking XXXX guidance rate which XXXX. Our higher the with in we more is in we XX%, biopsies by that than surgeons grow number generated more the of assumes will of line that growth

impact decreased per in and surgeon While to the by the XXXX recovered XXXX. through have of number biopsies growth the we as per to continued we COVID-XX, expect surgeon due XXXX, of average move biopsies quarter third levels,

with expansion of expect even our Finally, remain surgeon the range. biopsy-to-implant we rate to historical within conversion the base, the

also and to multiple graft a With expand to to the its expect States, had years respect reimbursement cartilage other in full the to improve largest defects fourth is in to the knee. than treated covered that not also patients, the only Epicel, XX% from to are revenue. in United with MACI. the achieved We by commercial in quarter submitted approved. the access and UnitedHealthcare include the thickness MACI broad the reinforce growth have of surgeons US XXXX, payers strong believe of we MACI coverage for cases expanded contribute commercial United more and benefit access And defects in decision access million than strong lives. ahead. any plan but the are finish UnitedHealthcare, UnitedHealthcare's will in and payer than record Over coverage And States. covering very patients to covered full UnitedHealthcare year for favorable patella. lives volumes MACI, with MACI more And will to XX of We more with and patients XX%

year accordingly, leadership In and a for third restrictions which we the done or Epicel several Epicel order, the in surgeons not uptick as sales that clinical sales for also body for quarters number that revenue of and patient. the have expectations an that our the so Epicel highest fourth protocols significant team implemented, time years. and from growth increased never in XXXX in area first were generated important worked XXXX, We and And orders structure operational treatment two number large they generated specialists grafts XXXX, can for very resulting representatives XXXX. centers We've Epicel of had with of by we're that of we've in And XXXX. We're of optimistic per hospital in to Despite changes support force results encouraged in with fact, place surface optimize, in number we had our believe, And ever burns. treatments seen quarters these continue yielded measures. trends. three previously several patients the per across the Epicel placed burn positive full a patient, total an access the in beyond.

of are approval. In extensive upon underway planned activities terms NexoBrid, the pre-commercialization to support launch

we addition disease awareness our last including the to that initiatives. campaign In development continue of market advance year, launched ongoing access commercial to and brand we state plans a number launch

surgical the is with be care in potentially as centers expanded access believe educational with severe burns. team next through critical affairs which will burn and standard replace medical protocol, removing patients we of for excision, in the training NexoBrid a Our engaged for initiatives to scar

to expected in fourth now XXXX. XXXX And the BARDA turn We the I'll review NexoBrid procurement of financial upon in to in based recognize quarter on required Committees approve a meaningful commercial for remaining related NexoBrid NexoBrid approval, revenue the XXXX. and its expect inclusion more initial uptake revenue hospital we'd to over formularies guidance. in for more timelines ultimately provide following of on to P&T financial potential expect and our Joe, our performance to details call

Joe Mara

Thanks Nick.

of wanted weeks I to excited months. you, And getting the saying very to look to by of know to start First, over I coming the part forward be and Vericel I'm team. that, many

the revenue, grew $XX.X the was $XX.X revenue XX% or per the quarter of in increase XX% response to quarter included $X.XX million preparedness. income or and same by $XX to to $X to $X.X XX% of million XX% XXXX. Net related expenses statement, million $XX.X revenue sales the $X.XX expenses quarter quarter grew Epicel XXXX Epicel the the also was the for or or approximately of to MACI net net million compared XXXX. incremental $X.X $XX.X period of the of for compared of quarter million for Epicel fourth EBITDA for for quarter the of quarter quarter revenue XXXX. to in Total MACI for net were expansion Non-GAAP to net of the fourth emergency expenses per and $XX.X compared fourth quarter quarter million in the Gross income fourth and the revenue revenue adjusted revenue for increased of quarter XXXX. revenue XXXX. MACI related operating the the revenue revenue BARDA, $X.X primarily Turning X% million to fourth was compared million compared $XX.X share for revenue $XX.X or XXXX. million of respectively, quarter of in $XX.X XXXX. for force included fourth of employee to by share million in in or of million procurement The the to million XX%, compared Total driven XX% profit for compared million, and $XX.X fourth and revenue the of NexoBrid of was million net MACI to $XX.X million total operating

a income MACI basis per was of net EBITDA X% the total the the revenue. year approximately to or adjusted $XXX.X non-GAAP for was of while fourth or BARDA XXXX $X.XX Epicel On non-GAAP quarter XX% in revenue share XXXX. versus adjusted as NexoBrid. Net revenue, in XX% of by from well as year EBITDA the driven both million procurement $XX the revenue million $XX.X full $X.X million increased increased growth million fourth of over quarter Our and

of operating full Finally, we in the cash $XX.X and million $XX.X generated quarter for the fourth year. million flow

assumes as $XXX XXXX. grow surgeons above the cash approximately approximately XXXX debt. Transitioning biopsies XXXX, which full to is $XX and conversion million our MACI guidance surgeon $XXX end expect year million we the low will As that year approximately investments biopsies no that year December of of grow full range taking total guidance in mid-XX% to will the represents company and to XXXX levels over XX, XX% of This revenue to XXXX and million. stable had revenue to revenue XX% to compared for a XX% in the to grow per $XXX million total rate. over increase expected of

not improvements steady the in COVID-XX see continue full COVID-XX MACI the materially our to and worsen year. for and rates trends do overall that assume cases year throughout Importantly, current that we hospitalization expectations

we quarters, that revenue generally pattern the terms of saw we that MACI across expect the of XXXX. In the mix seasonality MACI revenue in will follow quarterly

Epicel As trends and mentioned the to earlier had described strong XXXX. will we are into finish earlier positive a XXXX continue that very optimistic

increasing our for a we digits expected As Epicel the from result growth growth are full year. mid-teens high to rate single

evenly anticipate recognized For and in in beginning BARDA the NexoBrid, from across million XXXX. remaining commercial be each revenue revenue NexoBrid quarter we in to $X.X meaningful XXXX

Moving year our down Full driven the the XXXX. P&L, non-cash are operating be due the price share up compensation be by gross appreciation in to to XX% to XX primarily margin is to last months. expenses the expect $XXX growth approximately XX% expected we over operating million. XX% of Overall expenses approximately stock from expense XX%

a from grow full of XX% to is This expected by by of Our investments gross to for Non-GAAP revenue expected adjusted our to an the adjusted XX% MACI guidance year approximately stock increase with in and year spend. expectation approximately up commercial margin of respectively. be full and Nexobrid's XX%, marketing EBITDA XX% our sales operating XX% expenses margin convert to and in is other driven excluding normalization EBITDA and force discretionary XXXX. larger are XX% consistent marginal sales compensation to

meaningful to twice back in growth EBITDA roughly in it For now the over will XXXX the year turn EBITDA operating XXXX to full million points I cash XXXX or to Nick adjusted remarks. flow. which adjusted also for expected $XX approximately from in increase continued some versus closing is approximately to $XX.X million

Nick Colangelo

and teams employees patients without partner for products that I Joe. to dedicated our operator had commercial to wanted in in manufacturing and our access shareholders. the in clinical therapies continuing our contributions products. our quality to both And our deliver need to to a entire continued even teams Thank forward I'd manufacture to looks Thanks team moment provide strategy, now, the challenges execute to XXXX. Despite COVID-XX, to significant important our open you. The long-term and surgeons continued like thank our value growth and the Vericel take the patients to resulted support interruption and to in and process their more need your questions. from for that on to our all with of patients ensure create call

Operator

Instructions] [Operator Zimmerman Ryan with BTIG.

Ryan Zimmerman

Great. for a I PDUFA question. Joe, Nick of to around sense I minute get is your was and Previously with assume want it or just the Thanks and the for taking XXXX. NexoBrid launch. start still that timing January date

why maybe XXXX So, maybe XXXX? -- expecting or half start me second and first sales excuse in not half

Nick Colangelo

Yeah. Ryan, Hey, Nick. it's

PDUFA date, is remains June not which So same, just to January. XX, be the clear the XXXX

is during of process review opportunity forward. who NexoBrid to And submitted so excited that moving course, working the the the to is FDA we're case. have an Obviously, and BLA remains process US. the the that launch MediWound, in with

approval, As reviews individual process. we at or then of P&T a through the still and quarter with you mid-year burn had the go approval go a Committee talked so through centers about

been And in more saying, consistent we expect so, we've a meaningful in XXXX. from in very NexoBrid revenue uptake

Ryan Zimmerman

for Okay. I Yeah. correcting XXXX. meant Thank June you me.

The question is around second MACI. just

we that back I'm least do based cadence. growth on XX%. expect of I the over me time? growth in, wrong above mid-teens growth in correct correct that if sustainable something rate, that the quarter Are at that's the to is, But implied on if the think first maybe in looking I and seasonality math a Joe. MACI And pre-COVID assume kind longer-term business to You get out to MACI the rate

comments that business would just be appreciated. So, around

Nick Colangelo

Yeah, start Ryan. I'll

bit growth. sort of got sort little per think take a longer-term terms where rate. of that example increase, we the previously to to what the good a Obviously surgeon increase So closer But biopsies because growth of is just and said to and we kind pretty the as bit about per surgeons. you price is for And we've growth more in of talked in I the a with consistently from we that extent, a get of increase in XXXX, ended growth that was the obviously rate, we low-single-digit long-term XX% that gets growth then sort surgeons biopsying little biopsies had revenue of up XX% surgeons of floor surgeon, biopsying in an we price biopsying more we've growth.

pretty those we business double-digit baseline how I as again, think So, years, talked at about. going strong we We look that's the yes, over But forward. mean growth remain expect drivers strong we growth.

Joe Mara

Yes, Ryan.

guidance, the So, range In being in to low question, talked of kind quarterly remarks, MACI. about kind in talked XXXX think estimate. we mid-XXs prepared terms I the of the of year back we kind to kind the good full of about of a going for

you the if kind get double-digits be in do think of some into you math estimate. there terms -- and I can you get point, get at QX. in still the mix apply that's best this but I do variability, of And think certainly MACI that kind our -- of you into

Ryan Zimmerman

there. again Congrats you. Thank Okay.

Nick Colangelo

Thanks, Ryan.

Operator

is with Leerink. question next SVB Danielle Antalffy Our from

Rebecca Wang

XX for trends? months, for in growth taking physicians This is with Rebecca you the the sales MACI. sense new physician get Wang sent over last early compare a how wanted many Danielle. biopsies I adoption How versus the the to with on guess, that question. I'll actually of I Thank in same-store MACI. does for ramp in adopters historical new start

Nick Colangelo

Yes.

up to the rate as were surgeons, So did again obviously over But so in grow we which In surgeons not XXXX that biopsying surgeons. still biopsying a Rebecca or prior was at surgeons year, XX% the XXXX, We've we about obviously to grow we expect over and we number XXXX, disrupted X% those X% increased we've XXXX. anticipated mentioned today XXXX in XX% COVID-XX. of mentioned than about had more to were to XXXX. able

expectation. would So math be that you XXXX end see can of our surgeons X,XXX do around and for the biopsying kind somewhere we'll up

Rebecca Wang

it. that's helpful. Got right. All very you. Thank And

reps, us that new normally QX. on reps question Can guys hire an give you Another reps in increase on sales update front? remember you I

Nick Colangelo

sales a that of would expansion for meaningful where did obviously from years. And perspective was to force XX XX be in we relatively couple territories. is Well, that XXXX, our Yes. we a

planning was to it look at but to the at again be sort not end year year. expand sales we're We'll for three-year intended of the So at the force expansion an to this this two of time period a least.

Rebecca Wang

you. All right. Thank

Operator

next Your from question Securities. Truist Krum Kaila with is

Kaila Krum

questions. our taking for Thanks guys. Hi,

can Are at X,XXX update at has Does high that that the range I be NexoBrid pricing point? So you per-patient this of think first, you Just still reasonable would on low or additional end comfortable historically, there X,XXX. rate? you of any helpful. said been there something seem to the range any color that maybe provide? more in

Nick Colangelo

our NexoBrid. Yes. of really that when midst there. benchmark based was your we question. Kaila, We're And pricing for product addressable yes a was of the study now. introduced And in sort the out thanks that's for perspective market right on a it

when of activities on we to this first laid that going was the be think out through pre-commercial quarter. going sort I launch our was something

made we And we say that end question So range. for clinical NexoBrid. any up premium data what haven't with kind really determinations. taking entire certainly final I'd will compelling the comfortable given the is of we're

Kaila Krum

under And you your benefit any you've guys you I'm I No, belt excited it. makes just the UnitedHealthcare like have coverage pretty about a guys are then sense. seen it Great. if that now think had or month curious, decision. positive sounds with

XXXX? there sort of how would frame you help Just opportunity us Thanks. the up in

Nick Colangelo

we are it month January, went X. on policy effect the because actually a into we in under but So, announced February

of of cartilage of about look UnitedHealthcare say business of at TAM we look the and is business, our about you days. So XX% patella XX% our it's very defects is way opportunity are first kind defects. at that early can the all But is

And $XX a it's can were I cases at we approved a but case-by-case $XX the so piece look on United. in if TAM, have that it math million, do already million terms And patella and basis the to because just of you say, obviously, TAM. want probably some of of the for

So at, approved that's rate the UnitedHealthcare our cases then at rate. of average look before much a kind can mentioned patella We than market as lower were we obviously opportunity.

cases. prepared over less mentioned for generally MACI in much remarks, patella for my the are I it approval As UnitedHealthcare XX%. And rates was

that's look to can that well, can you say, So and at that capture. business expect you

I surgeons UnitedHealthcare is cover didn't the that knew patella bigger issue think cases. that picture

of real that and that's saw who bother piece so bigger the the And of they have would patella were it. taking for question biopsies is, sort that defects patients many did how not patients they even UnitedHealthcare they otherwise, with treated

reimbursement So yeah, more relates the it. patients, to effective, continuing obviously. allow halo But more strong about access but to UnitedHealthcare excited only kind we're for just not it that us a think and TAM capture will MACI. portion We of there's

Kaila Krum

Great. Thank you.

Operator

The next with question Stephens. Cooley is from Chris

Chris Cooley

litany follow-on. impactful the lost question an within be think that number could more I'm just uptake in do fourth UnitedHealth standpoint. maybe thank beneficial follow skewed for going of there one, congratulations there, from for the could on, that one And surgeon result in quick about, the think my general if And If will track little And community? was sports curious, Kaila's quarter. I bit records coverage more then, morning. taking a my I questions. and think med you be have just the you if when I orthopedic as a or more Good on I forward change of policy, you the the first,

Nick Colangelo

a segmentation. we I feel, particular think there's Yeah. like don't

sort X,XXX to a I will targets. almost surgeons. medicine split of orthopedic that's the surgeons XX-XX apply general And think XX-XX, across versus roughly designated sports board again the benefit our of surgeon

skews wouldn't or I one way say the So it other.

can benefit it's that across think a realize the I board. we

Chris Cooley

then, just I of of productivity feel the curious, kind And I'm looking back year calendar there Or Understood. rep obviously is we the is opportunity you overall now? now … And like of or mean stride the leverage should impressive, of XXXX independent launch. NexoBrid in at in level very the that that about on think if are they basis? improve last which back here a going to Epicel growth, half per this was hitting just still forward? there

Nick Colangelo

Yeah.

Chris Cooley

to short? I room some there, still there in go guess is …Or

Nick Colangelo

think, the ground $X uninterrupted the I severe the Well, trends numbers than, in QX. to of I to small we've that look we in third always where that quarter about million. would folks because quarters things calling below we're in had second quarter. a you XXXX Each pointed million of issues, clearly When were and Epicel, just of in three year. of were And $X.X with then, at burns. say, at there and halt nature variable was XXXX, look careful quarters But the do access $X above sort other And million quarter. of the was an record

we're think by do there's capped we're But stronger we means, so, probably a or there. no baseline And we done like, that feel out.

further Our we goal obviously think to well. own. Epicel, continue get that a for expanded uptake would an with ahead as we'll on NexoBrid growing its Epicel And sales be launch, of force

Chris Cooley

Thank it. appreciate you. I

Nick Colangelo

Chris. Thanks, right. All

Operator

Your next Thalmann. Ladenburg question Jeffrey from with Cohen is

Jeffrey Cohen

Hi, are Nick you? Joe. and How

Nick Colangelo

Jeff. Good

Joe Mara

thanks. Well,

Jeffrey Cohen

our years BARDA as them So, the drive out? margin about questions the a QX, two keep strong potential? thinking guidance those Or revenues and what's few your pull-through still kind very range? or three does in per margins of same be on we or the low-XXs, for higher Should side, from

Joe Mara

you can I second repeat Sorry, the gross got margin. the part?

Jeffrey Cohen

low Nexobrid that to looks mid-XXs. How in ramifications and XXXX. XXXX Sorry. it those And on call from the

Joe Mara

Yeah.

say, would you strong the remarks. would of this perspective, kind we we the margin range higher prepared for was to it see in a full that So being I More fourth typically our we the broadly, in say revenues. of about about of year. and talked XXXX, quarter Obviously, I in when go to from XX% back talked if kind guidance gross XX%

EBITDA. on say kind we XX% So on still focused line I'd the adjusted marginal approximately also on as move comes about that in, kind converting of of and the gross as of revenue we're forward, XX% profit

beyond. remain in those goals both the certainly XXXX, kind and of So longer-term

which kind a single In royalty, kind then components cost there fixed There's of and in the two terms margin. NexoBrid, of a there's in there's is digits the of high component.

of from perspective So fits I with kind in a portfolio. that current our think P&L

So we to now. consistent a to we perspective expect where from margin that be relative are

Jeffrey Cohen

OpEx, number that's And it. your GAAP of commentary on just XX% then review $XXX comp. what XXXX? that's and said Is to a that for you inclusive Got was and approximately Okay. million stock the correct

Joe Mara

was, think rate what said that I year-over-year like we kind XX% the when XXXX component stock kind of guidance comp to at underlying about look of XXXX XX%. on that growth the of is related you exclude if so versus back the increase, is stock comp, and more you

Jeffrey Cohen

but Okay. Got read like past it. It read into downtake through manufacturing? conversions there's few the And Nick? trends, any biopsies into from uptake throughputs quarters, or recently some time or then strong or sounds over any

Nick Colangelo

No.

I lower with XXXX surgeons typically and that experienced this of adding has more large users. historical we're higher remained think and for up rates biopsy-to-implant and ranges. they assumptions new as conversion said, number engage the of relatively who a we've rate become they sort the have our underlies volume conversion obviously though, move Even brand within as stable then

latter those in years. surgeons outer new be surgeon. getting surgeon of is two now start we I'd more take drivers our adding adding is then and new conversion biopsies by prominence driven Over surgeon, our more to the really growth but saturate target time, you'd rate to three biopsies being per remaining expect clearly as So good say to right surgeons, current time; the over increasing per and getting drivers stable of universe now, X,XXX

Jeffrey Cohen

for putting Perfect. question. for Okay. taking again XXXX Thanks guidance, it's our appreciated out and

Nick Colangelo

Okay. Thanks, Jeff.

Joe Mara

you. Thank

Operator

Your next is Oppenheimer. question from DeGeeter Kevin with

Kevin DeGeeter

business? the – in medicine still update as penetrated? general for about can there the growth way just think historical an my is new get do look more those percentage differences that new strong. first and medicine how the ordering to Nick, the little you year-over-year thinking of XX% a guidance patterns as sports Thanks of orthopedic guys. skew to that ads, Maybe ordering the think appreciate I docs do as we about MACI, of longer-term to on about the trying bit sort which docs? questions. taking provide Or sports towards think right And the is the surgeons? be one of Hey, think doc surgeons shift you very mix surgeon sports whether to I'm TAM those mix the opposed in some you've to portion medicine of kind you might you're increasingly the

Nick Colangelo

I'll Well, XXXX. And Yeah. the and of in when go I answer question, target launched we back of started were we sort just get XXXX of to who as had in so can folks lists were historical and with give is you those the of were which societies surgeons and the to sports background who you surgeons by. your principally, get – And go call the through then used Carticel years sort gone medicine them and those on.

expanded we obviously, when I when say, more X,XXX we've it X,XXX of X,XXX surgeons. surgeons, to by towards surgeons. sports from we had And XXXX, now roughly launched. it heavily probably so. We exclusively penetrated But about targets was XX% it so medicine wouldn't biopsies was focused said, gotten that initial And call we

best were orthopedic penetrated hadn't of potential guess, customers. yet I X,XXX X,XXX I it evenly look the look targets plus think at we way still surgeons, terms probably there you original just split if of at proportionately, in that's new So to so it. new And those general roughly

Kevin DeGeeter

between of dynamics in pre-COVID the of you in kind follow-up think and That's of guidance? addressable size really And have historically your just macro sort market? the that related differences I on any super does I my terms industry standpoint conversion guess decrease in rate a to the or follow-up And commentary ask maybe feed-through I second XXXX. of question. tremendous how question and the is to of then imply kind do Epicel. helpful. is of any and rates Epicel of really the medicine severe in overall just of new two overall other burn seen about terms I'll question market towards from a And portions return the mean volumes results on separate behaviors my sports of guidance particularly is general features pools, against orthopedic surgeons? my And Or some restrictions just COVID on your a burn from in

Nick Colangelo

Right. started users users Well in mean an pool because right with had versus conversion high users pretty with sports I Carticel medicine they and enriched than were bit new a more surgeons new case. I'll the original so either start of MACI historically volumes with the rate customers. obviously you just typically MACI

added a when with our it did little data skewed ZS look the we But cartilage we when did utilization we volume we doesn't open levels were new take to And surgeons that patients for were become MACI sales procedures. So user. the the Associates, important lower surgeons. force heavier repair about really towards sports of had claims medicine pretty sizing, it volumes and with surgeons a sort many really high-volume knee -- think of that generally, you exercise

potential So board across the I the with we're there's that think surgeons calling on.

didn't what at folks more generally really of mix early all midst were top to would and change COVID-XX terms the just of in have that home and And of changed. activity of dynamics, sort of back sort The in when you then who a the might days impact our we the going often. was funnel. we the be said see of in reduced had lot industrial about when activity In be what Epicel we sort discussions of a maybe of reduced the had

I couple because But up at treat our for industrial their who happen home in obviously think centers at these little. it work. a accidents made of down accidents went reasons activity And was that's of other areas. a unfortunate or lot a typically many burn

of in the really the funnel. change a didn't meaningful see top we so And

I force structure way new driven for how we business sales the these getting the centers, leadership treat as was think patients approaching our what's said from Epicel burns. new some treatment and severe is you with protocols

some and pretty So I our per grafts seeing more think behalf. on re-treatments then focused effort we're And a that's more patient.

Kevin DeGeeter

you. guys. congrats. Thank Great again, Once quarter,

Nick Colangelo

Kevin. Thanks,

Joe Mara

Thank you.

Operator

H.C. is Wainwright. next Your with question from Swayampakula Ramakanth

open. Your line is

Swayampakula Ramakanth

Hello.

Good growth. guidance looking Sorry your on Joe. looks A of like quick XXXX like you're Based about and that. questions. it morning, couple for like Nick

close you situation? pretty that things that us some highlight So much kind are to the you you confidence which the a looking for quite are can is of at you of pre-pandemic giving

Nick Colangelo

Yes. thanks We'll question. Well at look and kind a good take RK, we'll both of I the morning products. think -- for

of So two we've three the obviously highest ever back XXXX. revenue mentioned the quarters half on for of Epicel, call, had as in we our

So bumping to been of I our product has sort of year. just the reflects high-single expectations to pandemic the from performing kind think low through how double-digits mid-teens,

and in into straightforward. of that we business that of and With MACI performed of the pretty how sort part the have biopsies through conversion respect in XXXX. a So light obviously, of sort one's rates view the to

in served have us going. obviously, for of we're using pretty pretty say, relatively well, growth feel we MACI, So have reasonableness obviously, penetration. very have mentioned a models where -- would market, I for terms things innings, it's are assuming that able as early plus to a good low XX% large of I

that a well. will sales lot larger for then there's a of to will as experienced year, call force surgeon We've place on penetration, be is now got surgeons more and penetration. obviously both the be that and full place in patient So grow in room to on

So it's expected mid $XXX characterized back was right, guidance to which million so. and at how in think XXX range you we in have last you pretty initial if $XXX XXX-teens we the million And say or that, year, MACI reasonable. would I'd looked the our

play, so comfortable that. at XX% we're applying uptick of, pretty from say with $XX this to million past million kind year, with the $XX into, So a dynamics all in the you're to mid-XXs, those

Swayampakula Ramakanth

Yeah. No, that's great.

them So kind bit. tease little just which a things a of, let's, said and couple you up of so

merge you're to up franchise congratulations in XXXX, sure Epicel or two NexoBrid very, some the clinics Part as had quarters. very some B will -- that drivers What for promising those not right? a it's but never two certainly of makes now? And I'm of sales trend, terms we is force on ordered burn with expect for were quarters what on So the Epicel, them should along expansion for for in expecting this well?

Nick Colangelo

Yeah.

we just into in We of as So leadership centers, support representatives dynamic then brought specialists. mean, clinical first in of new XXXX. the I in terms new restructured sales of I and sales the mentioned, all force

a roles. come brought the representatives. relationships. So people it's obviously, We in existing business They, few right the always with the on new about to right having

not previously. execution, explaining using who sales and may in strong very benefits to just it's Epicel obviously think these work I been with centers So have it good profound the

So seeing explanation for we're why think that's I really the that.

Swayampakula Ramakanth

the the Perfect. expansion specifics for force sales on And then any bone franchise specifically?

Nick Colangelo

Yeah. on we'll We'll when bringing launch, of get up end to the we're that potential the probably follow we expand a planning -- same we ahead that reps that. when playbook closer done we've to MACI

then can they, their study study, office their up do get So obviously, home field training. and trained

ahead we would launch. a to expect that So quarter of do

zone kind we're entering hopefully. So of that

Swayampakula Ramakanth

quick Okay. One question. the last coverage. UnitedHealthcare on Congratulations

XXXX? expect in having we in folks? So should with Are that you you -- also other to additional now have payers UnitedHealthcare the jump

Nick Colangelo

we I MACI. have access Well, Yeah. mentioned outstanding as for

in XX% was plans lives was major to all was based the it more have of that, really were So, US condyle of that or therapy. which medical on had when second-line in existing knee. access part MACI Carticel plans. It that nuance for the around policies all approved, more than defects these the here limited only the label, covered the was femoral was MACI The a

MACI, time knee, frames -- just as broader there. in the took a anywhere or label. periods defects labeled a much plans So time to different get cover time And therapy, first-line to had

them their reviewed updated and the of Some label policy immediately. MACI

investigational Some policy. just list, off of other it parts took didn't the update the but

current and of of major update. years a that couple an last this And MACI mirror ago United to just the really and policy so label. to was same done the just the had was had of the the mentioned Cigna Aetna We plans kind really

there's on. enhancements, out focus incremental one waiting we're continue on sort that left any So, we'll but of no there to big

Swayampakula Ramakanth

Great. taking you, very Nick. my questions, for Thank all much

Nick Colangelo

Okay. Thank you.

Operator

there questions. time, no this At are

Nick Colangelo

thank the Great. call Well, on appreciate and for interest everybody wanted just us joining I to today. your continued We support.

great to have and again so look you forward soon. Thank day to talking you. And a

Operator

participating for you in today's Thank conference.

disconnect. now may You

Vericel (VCEL) 24 Feb 212020 Q4 Earnings call transcript