Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Vericel’s First Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. I would also like remind you that this call is being recorded for replay.

I would now like to turn the conference call over to Eric Burns, Vericel’s Vice President of Finance and Investor Relations.

Eric Burns

good and Operator, you, morning everyone. Thank Vericel’s our financial to first quarter discuss to call conference results XXXX Welcome and highlights. business

described SEC, be begin, of Act we may the call, under filings expectations let remind Private making could will 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 on to on which me involve fully our we Reform today’s that statements and results website.

results represent In forward-looking as the in views all of today first 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

highlights We today’s the or also accessed from on directly call that presentation a website. on short be viewed webcast have our with can

Executive President on joined am I Officer, Joe Chief Chief this Colangelo; Mara. by Vericel’s and our Financial and Officer, call Nick

now turn the will to over Nick. call I

Nick Colangelo

Q&A. of our will for our and for for detailed first first I financial and updated as before morning, performance as everyone. our and call of year. the the guidance then XXXX today’s will provide you, Eric, a the well discussing Thank business by remainder good highlights the to Joe review begin quarter, our expectations call more quarter financial opening

NexoBrid. pathway great arthroscopic deal milestones, and the program regulatory with for momentum achieve We in year regulatory second approval the strong FDA MACI an a entered last growth accelerated the including of and we of XXXX of as generated half MACI significant

to total our programs very from quarter had for activities. a on the commercial a and the and and MACI quarter, perspective, delivering MACI the as That financial significant revenue Lifecycle momentum making progress NexoBrid strong through business launch first overall year first and continued record both we start Management

of revenue quarter, we and generated of both financial MACI ahead a $XX total Epicel with guidance. the million From perspective, quarter for first our

strong quarter we generate quarter to and flow, $XXX results first on are increasing adjusted continued million straight $XXX million ending profitability our million. guidance debt. also EBITDA our and XXth $XXX revenue no underlying delivered positive and nearly Based positive cash as to in with We quarter business fundamentals, to our investments and operating full the cash XXXX of year we

of growth continued Our and growth results revenue the quarter were by significant quarter by financial MACI. of compared driven prior the was in $XX.X driven record increases surgeon representing revenue strong for This first XX% of to engagement million, MACI year. utilization

highest number quarter in quarter addition have launched In implants, were taken surgeons fourth number had in last any to year. two quarter of MACI ever nearly record of record the record number biopsies with first generating the we biopsies quarter our highest the since quarters quarter of last first in biopsies. The a matching first quarters biopsy we revenue MACI biopsies of and taking

in nine-month that that at the the high This see quarter. also a down surgeons of biopsies first we last and growth biopsy step three noteworthy seasonal sales is XX% and the trailing fact MACI teams has XX%, typically XX%. in a over of It’s and in to representing reflection of that had quarters, execute to marketing a environment clearly continue a performance our resumed we growth a high and operating continues have level growth rate improve. its as year-over-year XX% profile, the

$X million that million. the growth midpoint last sales productivity high to increasing achieved to MACI reflects to and seen rep rep that second to momentum $XXX surpasses at This we revenue our year MACI and $XXX quarter, per also strong million strong of have continued year on start expect prior expansion. guidance full this updated we guidance quarter sales our the MACI implies are growth Based our the in we XX% force full historical

respect as to our with a study With Lifecycle continue to delivery with anticipated arthroscopic track we XXXX. an on MACI validation plans conduct launch our progress human to factors Management MACI this in program remains initiatives, year potential the

We the of on designed the segment the arthroscopic and common overall addressable represents a in attractive approximately which X one-third per addressable to defects the the delivery square most for year. centimeter the to and market, arthroscopic MACI market MACI X treat importantly, which potential surgeons, femoral kit are XX,XXX many a patients be defects of condyles, MACI believe is option that will MACI very or patients instrument

be MACI the to to growth believe of procedures repair MACI only We restorative treat allow that provide these would on take If arthroscopic market and company a defects. share would these greater upside this a MACI opportunity product cartilage ahead. the and approved, significant years for the the in

recently the and an We ankle an for pre-IND the over Clinical that MACI cartilage driver with market in $X treatment potential also long-term. the with of continue We addressable defects billion indication be MACI meeting the could growth advance ankle FDA. for significant estimated to Development initial conducted program believe the a a

an first Turning over quarter Epicel guidance and our to quarter. of we our the quarter reported for burn which franchise, revenue the of care $X was ahead approximately increase million, first prior

a per an quarter, as with the of treatment grafts patient. patients higher Importantly, previous we average number saw towards onto the compared increase in biopsy of levels moving well proportion fourth as Epicel, to as

With and burn remain respect very commercial and remains our surgeons from activities launch interest healthcare providers to on NexoBrid, track high.

the about this and of our have tracking targeting P&T ahead are packages perspective, approvals. we From year initial the been an for goals submissions Committee are and at access of P&T we submitted XX centers one-third committee

by week reflected fact in on Association professional the Annual upcoming leading inclusion Meeting the also American was NexoBrid demonstrations pre-conference is by hands at next interest surgeon for sessions education Strong selected that surgeons. with healthcare lab the burn Burn

FDA revenue and we product receive by that based towards on end in MediWound quarter complete manufacturing expectation our the the projected the additional initial the the second connection was of commercial the stocking In BLA NexoBrid with would approval. NexoBrid from of timelines updates to terms initial some product availability, required generate

that assuming timely manufacturing early $XX full did occur product believe the our burn for to updates, revenue is guidance million quarter, commercial not these in likely impact care more now $XX the to year which successful of third completion We year. million of availability

over financial I will to to call quarter the now turn our discuss first results. Joe

Joe Mara

net million was XX% with good or everyone. revenue, Epicel prior for profit million revenue MACI revenue. and with statement, revenue Nick, of $XX morning, the the and of you, net driven for the by $X.X consistent Thank million million Gross of income was quarter $XX.X total Starting $XX.X year. the quarter strong

increase expenses in in-person for operating due million, million expenses Total same activity for conference-related and XXXX. employee-related year. $XX.X sales $XX.X compared compared the higher to volumes quarter expenses, in primarily MACI expenses increase was to period operating last variable due and to higher were the to The

for the million million quarter Net quarter $X.X share first or of or compared per XXXX. $X.X loss the share, for was $X.XX $X.XX per to

Non-GAAP quarter adjusted have adjusted this the generated $X.X consecutive is that for XXth EBITDA was positive now quarter million, EBITDA. importantly, the we and

in approximately we ended cash cash generated million and flow with million the no quarter debt. Finally, $XXX QX and approximately operating we investments and in of $X

approximately this $X.X MediWound the net investments NexoBrid quarter, payment we increased approval cash by million the during quarter. of $X.X and NexoBrid after milestones million our approval the paid that during the of Note and

are million. financial guidance, million total increasing to $XXX Turning for revenue million, to our full of year We our of guidance XXXX. million our $XXX to compared now guidance to revenue we revenue $XXX expect $XXX prior

the expect mid-teens and guidance range profitability our be the gross maintaining range. are percentage in XX% high We EBITDA margin adjusted in to and

For with be million versus full prior XX% growth million, to expected to full we approximately to for expect guidance now million, the revenue of $XXX our year of MACI, $XXX million $XXX year. an $XXX increase

As quarter expect the into revenue momentum Nick million earlier, highlighted XX% we in range approximately to in with strong and in quarter has MACI low QX. second MACI remain the of $XX.X growth our the continued

burn are to our million our $XX $XX year For of revenue full guidance franchise, care million. maintaining we

QX, our and trends of first sales expect quarter. for quarter, a revenue the assumes of approximately in we availability second the NexoBrid, of guidance QX. Epicel million in quarter third the improved another $X on for commercial For the saw Epicel of NexoBrid based we product And in continuation

and of our our off Overall we pleased MACI’s first performance run that quarter growing year, strong quarterly very high the for XXXX. coupled revenue has for outlook are back the QX profile brought company, to in care burn company rate, our with the growth

total a our anticipated move XXXX, continued of we of with full the arthroscopic NexoBrid growth would and the as in company acceleration importantly, And MACI. launch revenue also we of market anticipate into year

This now our remarks. prepared concludes

to will questions. your We the call open

Operator

Ryan of will Thank from BTIG. you. And first line [Operator question come Instructions] Zimmerman with our the

is open. line Your

Ryan Zimmerman

my questions. taking and guys. Congrats on the Hi, thanks for quarter

Just some the gave wanted today. to touch commentary on guidance of you

second appreciate to strong, be to an last now half the could be but -- quarter the third prime think dynamic? maybe quarter, sounds but relative seasonal it like atypical Joe, year for And the on levels two to should be in seasonality? particularly how it the record maybe we MACI we the So growth, going quarters, just know is historical second also quarter fourth I seems like, to hitting have of MACI, with about these commentary biopsies

Joe Mara

Yeah.

good the So, morning, thanks for and Ryan, question.

and QX talk I the dynamics three as about from that, on pieces, you comparison touch on with perspective before on of year. full then close of the out hit briefly kind just So, QX a particularly key some

So, QX for I really we to think the about strong prepared in your was remarks, us. as a and talked quarter point

metrics. strengthened the So, across obviously, and by of just execution great in underlying really kind Board the our team

we of continued surgeons last and the quarters the half kind quarter last couple of biopsies in in So, in high biopsies, with the had about, really as have nearly highest of QX any back of matched QX, of we doing year growth. had talked trend record the the number we

importantly, that in first in quarter I conversion year, in the say, last improved would first the HX stabilized also which of rate, quarter. our

sign. we hearing behind seeing data. of I think the field our and us based encouraging on and So external an the that’s certainly kind dynamics, of think everything metrics, a are related also market lot on note, from kind and the we headwinds And the the of are a

to to question, we have of we had say, strong QX. and so continue a certainly kind a will that very to QX your strong look As continuation kind expect I we of biopsies, drive these would

the XX% to is QX think year. of look things which dynamic you kind couple had year range. last payer to you benefit kind from out pricing as that impacted in a of of that about But think, actually we I point well, guided second at there we last So, of as if QX, quarter, a low

think actually XX% of on your when actually think growth XX%s like And the more of So, about that’s kind as when as a of to that at being that important kind look year-over-year the year. well you that comparison. up you I adjustment high make low ends this cadence you question

ends of adjust look when and that you particularly kind QX and QX into to when at see saw that’s QX payer single-digit the that you So, you you in growth dynamic year, in of to range your quarters what similar kind that across QX. actually probably question last of kind and for

And the XX% then increased have are of for year, we of I the of full than, at full we higher think to we we question year. couple in started and in terms the are kind guidance the year last and your we the are years assuming,

to a back kind say of in for of a of think really we the of foundation our and half but growth this in in back that continues assume that assuming of kind point, are we and of going strong as But half, we set rate and results. not the will the QX our kind throughout strong of conversion year QX QX, to was framework, kind those kind kind biopsies hasn’t we continue also those I changed of certainly in back of surgeons the half some strong the that have framework the about year up terms guidance at think drive

quarters the back and and to But little that not kind the ahead really longer look half, you wait a bit So, I biopsies of in strong we think, ourselves. and of getting by if it’s driven surgeons. the at want

Ryan Zimmerman

Joe, helpful, MACI? where but are investment kind also margins you and Very from And last Thanks on have an adjusted came where year the Okay. I missed launch coming relative then this gross of arthroscopic to might and Joe. do EBITDA questions. margins margins in you prepared remarks, the just given prepare what in taking the in, NexoBrid the and perspective as and for expect for the op your

Joe Mara

Yeah.

a year margins So, from I’d a to Margins perspective, with look margin say, little are adjusted in -- a last at. looked probably hard line EBITDA. of it’s perspective, bit quarterly different, from and they kind gross the came but

think year on we adjusted likely in could on I range be still when gross basis that in you improve EBITDA that XX% think on basis, full think I we we margins. basis a full look on think year can a year-over-year we basis. on year mid-teens full range be a when high still the and about a

So, about P&L, year, that there in that we still or kind as the range I NexoBrid investments margin whether of think kind laid of for certainly, -- that we kind of we our think that’s Management are the think, are et Lifecycle and MACI, out. arthroscopic we of cetera, we -- think we launch, initially but part are

Ryan Zimmerman

guys. Thanks, Okay.

Joe Mara

you. Thank

Nick Colangelo

Thanks, Ryan.

Operator

with Securities. Brodovsky next moment for will That our Sam one come And the of from question. Truist line

open. Your line is

Sam Brodovsky

congrats year. off NexoBrid. just updated to start on want to the get available can supply, good there the confident you get ask with in to Hi, any that accomplished and needs available guys. with a color on us in I two the for being are how QX on question the to you give and start Thanks what timeframe? to taking One that

Nick Colangelo

This Yeah. Sam. Nick. Hey, is

the product updates think, earlier sort were timeline in of that occurred and late and inspections mentioned, some there There ongoing and calls, just the year. initial that made Taiwan last were were the and drove as post-approval of facility I needed So, of be in sort to for availability. MediWound we CBC

was that stocking made as towards quarter. expected a of little we revenue always have end the product we second mentioned, available the we As maybe

at -- just likely more more think dynamic that end think and we quarter comfortable it’s I straddling just we of the are that, saying it’s QX.

and on our of what’s all great. kind in to guidance, starts QX, in is it it So more happens just the continues driving QX, it been going if that’s assume work that’s prudent updated

Sam Brodovsky

versus think the given burn should year quarter is to and And of strong the dynamic? guidance, relates Okay. then NexoBrid any much as that broader complexion Epicel how it different we about of [ph] payer this

Joe Mara

repeat of hear Sorry, the you Could your the I didn’t last Sam. last part, question? part

Sam Brodovsky

Sorry, any complexion just the think the about and supply how QX there NexoBrid, guidance between Epicel burn in given Epicel? me, the different we and excuse issue much, should stronger for

Joe Mara

talked we off we that off think I of care think able were about, a that starts mean and is higher quarter. quarter And to we about quarter kind second rate than guidance burn million I of run by Yeah. as the in of for it kind we improve of number, kind point, the $X the the QX digits $X first in around I as grow Obviously, double are million quarter. first think number. number to that the your

initial of again, our expectations. ahead kind So, of

the you our first think, roughly the from as I of QX, the million So, two quarters put and QX you together, results guidance for are kind at half. for $XX first

million. half on $XX to of strong guidance So, million that about as certainly, think, kind first a Epicel the we think $XX of I

component, still the number we of to last year kind again quarter, probably a get which of are about kind scenarios depending talked and full is, of of Epicel on what it’s of Epicel kind what to there right trending terms of or In of guidance our that here kind on does similar of of was coming run kind are guidance, kind at if obviously, balances million. rate to kind own you you But now. get of rate, higher $X that of the Epicel at a NexoBrid goal can that its to

stocking get So, of I just that’s on kind how no that’s that QX kind timing of in uptake mix forecast from there, change of QX. kind really a just, and say, of I speaking, mean, of our would it broadly now, just patient right in and change the dynamic, the assuming kind forecast, of to are place kind of perspective, guidance a takes we that doesn’t just element, versus terms

change So than than part start anticipated. it in really stronger Epicel other probably the year no is bit of as a of the

Sam Brodovsky

questions. the taking for Thanks Great.

Operator

our the for that of with Jeffrey Cohen Thank come next you. will One Thalmann. question. moment Ladenburg And line from

is line Your open.

Jeffrey Cohen

end. questions. firstly, quarter. NexoBrid, were focus guess, after morning out separate the previously you centers, you thank from relative strong update that you go there A commercial organization I your breaking talk a our I and could taking Good end? talking Hey. few know a force non-burn Congrats to for our sales to about any on about from

Nick Colangelo

Jeff. It’s Yeah. Nick. Hey,

plan our same the for remains So force launch. commercial the NexoBrid the sales to expansion with respect

specialists So, obviously, we force to a now field support have and clinical sales support reps there Epicel. out of

NexoBrid, of mentioned, adding same NexoBrid-only reps field. and been launch are already of those has had the six the that so additional we with of reps are the have sort hired start the we to in and remained as and majority out And

kind footprint are throughout have rest as and we reach year. forward bigger of we excited obviously So the move centers to of more the

Jeffrey Cohen

talk of Great. as have a And worth a there. been you bit as about big docs, MACI Any centers, then, that out? calling or geographies Okay. far picture snapshots of little number, kind could utility trained out surgeons

Nick Colangelo

Yeah.

think on lot year XXXX biopsying we I had X,XXX quarter we the where our metrics Obviously, we where out last targets. of had highest strength biopsy surgeons. said our of we had sort from about building of the in ever a surgeons first

quarter into pretty where from fourth that’s of the again the a down had a And the historically quarter step quarter. seen first bit you in meaningful first

quite engagement in we So excited in are terms quite and increase really, about the surgeons. sort of continued frankly, encouraged of surgeon

in terms reps. much the those force, feel that to territories geographies, in this obviously expanded for are We we point sales and XXXX. our So, reps back of XX at manageable more

doing territories cases sure reps and and different of we some forward, we certainly have look higher so so of add things, to on think we yet, on. make that coverage of volume resources to adequate like, territories the need to don’t additional to in we support sort piloting realign we open As are but

Jeffrey Cohen

And trial thinking us, lastly might as how of it. the are agency about Got the about any number patients trial? be a and Okay. you running look may as like the perhaps relative in or endpoints. running to FDA then, would trial far commentary for How any ankle the thinking what about and the

Nick Colangelo

Yeah. with a Well, to is mentioned, planned and a and initial little there I clinical then meeting our work preclinical as an on program have it we the element there’s FDA study. pre-IND did

unlike have And gained point as simply have with of are are say and we human we safe this sort aligned pleased on of that alignment study. to it’s very generally FDA clinical I study that a arthroscopic think to kind the where said always at we factor a MACI opposed to on

for MACI the was, for be it it probably, update continue ankle, MACI maybe would investors XXX in point more details. and SUMMIT will and timelines assumption in and as we refine For this in would about on at program the that the to it continue where ankle program like to be XXX to we case, that knee, the study patients, closer operating our

Jeffrey Cohen

for Super. Thanks my and quarter. the questions taking congrats on

Nick Colangelo

Jeff. Thanks,

Joe Mara

Thank you.

Operator

you. will Stephens. from Thank for come that moment Sellers of line And with the our question. George One next

open. Your line is

George Sellers

physicians Hey. kind Is the Congrats elevated question. of the number. on in you change? What’s in procedure the staying that primarily or quarter the to are is comfortable biopsy with seeing that? driving first there Maybe number the here dig the that here on positive quarter getting little or biopsy it reimbursement that taking some of What quarter. great more market driving strong are Good first bit thanks first morning quarter? are some for and dynamics more a in

Nick Colangelo

and sort as like eliminating as have would think that, flow, headwinds the improvements it in seen obviously, you and sort market, of say Joe higher things of definitely that, to alluded just patient that. I the we that, of Well,

offices well. obviously more So that’s surgeon’s these in as contributor traffic that there’s is obviously a as

in expansion surgeon practices resulted I’d quarter biopsy that’s their say, brand MACI, engagement and sort more number the as a normalize there’s continued of just any the and have of in just sur also what of become in around surgeons the highest stronger aware first more in we engagement quarter. as -- surgeons

in to very that’s abate that that surgeon the as engagement. make talked continued about our sort as we good as are strong are of helpful rates, kind changes force on note, reps those just out we we reimbursement of well. progress past, obviously, have No continuing and are strong in So, of encouraged and approval headwinds

George Sellers

improvements continuing you then And helpful. sounds maybe revisit XXXX. yet, and territories realigned but reps? adding in on That’s as option add that, additional plan sales any a you productivity they potentially then timeline you reps, timing think curious Okay. arthroscopic to the mentioned, sort drive there? the to need comments around productivity just to the And like of don’t What about coming to are for it continued

Nick Colangelo

or couple like we and we when years Well, properly we XXXX, more a another had Obviously, we of said, at Yeah. in like felt to sizing it COVID, of influenced, the that of that this disruption we the and so look sales next were force kind take felt three years added the back revisit reps for we we comfortable two would years all out. point. did are we

MACI, as we targets from we as look ahead our increase X,XXX to the sales arthroscopic think I in a surgeons, to size. made X,XXX earlier, when force corresponding we increased mentioned I

think of from surgeon through the whether pool the that closer We will get add on would to predominant sort year the determine and number we be of near next as that and arthroscopic-only we will will potential I need that’s we the year. launch again targets reps go or as we depending something anywhere past, dictate exercise throughout it don’t in that percentage did add but not. we size expansion would to we the move same or the

George Sellers

helpful. Very congrats the again you quarter. Okay. great Thank on and

Nick Colangelo

George. Thanks,

Operator

question. you. our moment with for from next Lee Wainwright. One Sean of that H.C. And will the Thank come line

Your is line open.

Sean Lee

growth, into quarter terms a more bit surgeon and provide was net rates? the color your could are in the question as of MACI you on growth, was, conversion my if from as thanks I what Congrats questions. and for first surgeon wondering everyone. taking metrics well biopsy Good My of morning, number great a

Joe Mara

is Joe. Yeah. Good morning. This

question. the for thanks So

and of to guess, look we it what some I the hard the kind it’s probably call is more year kind of highest in of questions, what think, speaks particularly have biopsying for is number and any of surgeons kind we probably way percentage surgeons, of point kind on I talked of growth think the but similar quarter about had in the itself. not, is, would at sort the the that which absolute I on earlier frame I of to that

number. that is significant clearly So a

And were then revenue started in of been an side, biopsy driving are the of the I again, certainly results a would terms and into growth think growth, really which into but acceleration quite the kind the strong, of last the of I what’s say, QX. biopsy important on we has what’s year, end quarter and particularly towards the as first year continued quarter

I quarter. surgeons us first well year. of the but drives of the the on But point at which also the positions also certainly we kind So, of think say, quarter, a and number the being for highest we by biopsies, are engagement encouraged I would the its in think, remainder growth accelerating the

Sean Lee

for last track I question XXXX, believe guidance that. Great. wondering was side. for? manufacturing whether what on still is for new your called I facility the Thanks or My is is manufacturing last on the

Nick Colangelo

Yeah.

to our manufacturing and office be facility FDA on space is the Burlington track obviously, approval through and done needs prior space the would expect timelines the earlier, we process. in So with that go new will

kind to company could expect may manufacturing, then would be begin commercial next in and of the well be very portion of it up move we there a moves So QX year staged late XXXX. the where office

planned. So everything moving forward as

Sean Lee

all again and I taking That’s questions. my Great. thanks for have

Nick Colangelo

Okay. Thank you very much.

Joe Mara

Yeah.

Operator

the any I call over time. to queue the am turn would at this Colangelo questions no closing Mr. back showing now Nick further in like for I to remarks.

Nick Colangelo

and your well great thanks start for your interest and the company to thank Obviously, year. in Well, and questions executed everyone the you, first Vericel. a had continued the Operator, Okay. to in

forward deliver our year to and further look XXXX providing strong updates on expect results call. in operating financial to and of next We we another

great So thanks and again have day. a

Operator

concludes participating. program. Thank all you for today’s This

now disconnect. may You

Vericel (VCEL) 10 May 232023 Q1 Earnings call transcript