Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by, welcome to Vericel's Second 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 will now turn the conference call over to Eric Burns, Vericel's Vice President of Finance and Investor Relations. Please go ahead.

Eric Burns

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

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

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

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

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

now I Nick. call to over the turn will

Nick Colangelo

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

to Epicel a MACI million and our significant underlying financial as From $XX for quarter and delivered outstanding both revenue and financial MACI flow an we exceeding continued guidance. with and increased second had quarter revenue for total and second business quarter strong company profitability quarter XX% the record growth The approximately operating perspective, cash results Epicel. second revenue

our quarter million with ending over last and XX% XXth of cash also investments to positive and delivered second and EBITDA which as quarter by no $XXX year the of $XX generate strong of million over increased adjusted debt. straight continued operating we We profitability flow cash

of full the growth and to year on our Based our strength million. included revenue of Epicel $XXX the which MACI we're year, the first to of raising XX% revenue guidance combined half million $XXX total performance in for

beyond in business we with of into XXXX, arthroscopic look our anticipated we and contribution this core commercial momentum the to from the expect As MACI continue a significant NexoBrid. year launch

drive believe to further with revenue of acceleration company XX% We revenue total we're well in XXXX. that growth over growth positioned

second XX% of MACI generated quarter strength Our by growth were representing for we momentum financial and to $XX.X as million last compared the revenue quarter second results for year. continued driven record

revenue MACI strength sustained and Our growth for first few which expansion were over biopsies, our base of both resulting primarily year. the of half quarters has our the continued driven in the of surgeon past ahead of the been forecast by the

revenue quarter In to MACI generating addition second and implants. record

We and sales last fourth strong in our surgeons the also improvement only biopsies number biopsies engaging and year. and highest taken launch market continued of the the taking were second handful This record the which of overall any surgeons reflects execution teams since number of marketing the had quarter, the number quarter the continued quarter performance in biopsies of dynamics. highest short in in new a in the

the MACI Based nearly year of growth. high with trajectory sustained business four a As consecutive delivered in half biopsies on of fundamentals record of quarters to quarters three we've our underlying with growth has for three highest we've now the these a since low in straight achieved, of surgeons quarters mid-XX% number MACI. first biopsy XX% XX% launched growth

than This we of $XXX updated guidance which for we An MACI $XXX more the increasing to year. start the versus revenue MACI XX% the rate expect another the to Given last XX% growth growth, and these represents full-year third acceleration full results growth continued are million. in quarter to our guidance momentum in year. range quarter

initiatives. MACI to With our management respect lifecycle

arthroscopic We continue MACI to the ankle and advance MACI development programs.

MACI the this and quarter of results label supplement end submit part study include Importantly, we as study to the to approval factors plan initiate a validation MACI MACI the prior the for to this human arthroscopic by arthroscopic expand to year. of

our now ahead commercial trajectory will the XXXX, half MACI a and of We the we overall in have anticipate arthroscopic growth first launch in impact years MACI believe impact significant which for of the on business. positively

the on an our XXX the and a have market. MACI view completed recently that project market. innovation surgeons meaningful cartilage arthroscopic of quantitative the addressable market in sports research orthopedic the This arthroscopic impact extensive than included that repair MACI - We've could penetration more delivery confirmed evaluate potential represent medicine to research

research less a in including interest First, procedure a there users invasive faster of recovery for to non-users. arthroscopic delivery less across potential arthroscopic improved in and included all was Surgeons MACI resulting groups, the high post-operative that surgeon as as of pointed benefits esthetic and indicated degree advantages MACI MACI pain, outcomes well which patients. several

the to The from regardless defect smaller products procedures to indicated and procedure. designed four of share in the current expected of MACI MACI to alternative two MACI instrument on the kit the that this centimeter arthroscopic arthroscopic procedures research femoral shift meaningful their square treat a usage to is - segment surgeons condyles and

for femoral XX,XXX of market third centimeter addressable represent largest condyles $X the as MACI year four approximately represents per the square patients opportunity a for MACI. market to billion segment two this or Importantly about defects

significant has is lower penetration volume this rate its compared segment, of areas MACI While other to knee. in the

arthroscopic beginning cartilage [indiscernible] current and next the years. the be femoral MACI penetration we trajectory patients growth to our in in double this and strong effectively very achieve growth per help represent XX% the that see which continue acceleration we'd MACI market delivery to segment. in We're able similar condyle MACI an over penetration is in example the will in For defects, company's year. coming overall a drive year MACI XX,XXX with arthroscopic We option patella than repair believe greater will business segment about

in of the also membrane. agreement for only MACI as this provides a recently our the supply this next agreement decade continued rights the beyond, is our collagen not release Finally, final noted morning, Matricel of exclusive exclusive executed important protection provides with part Maix the extension - to but component earnings we long-term for and with MACI. our an supply Vericel of which strategy key for product, for membrane MACI of long-term This

revenue the moving the Epicel we XX% treatment quarter the and our first driven and burn a This continue for with performance XX% quarter, of biopsy for year. in significantly primarily prior our strong second of see stabilization versus continued we in quarter by one the Turning the million, recent quarters Epicel patient. of for to number second our $X.X patients to was guidance to-date proportion franchise, higher trends with and Epicel of average of per was which care reported versus growth of fact onto higher grafts ahead that

Epicel significant half trends of revenues XX% performance our the first in XXXX $XX.X year improvement than million of and has as of second the for in burn the half utilization higher driven a our increase interested team is helping based beginning for Epicel on to this product. and pull-through NexoBrid Epicel drive see reps accounts. our to of at positive of engagement from usage sales NexoBrid the of We're high dormant level examples important also care

community. results to will in We're product. very first half a recent year be tremendous pre-launch the see the a burn activities first of for amount NexoBrid the care respect quarter-to-quarter. generated enthusiasm NexoBrid throughout Epicel half variable our that revenue Although and track year and still to on With team have improvement in for significant our has we pleased burn our strong and remained care the of of the expect from the interest

MediWound U.S. Which product at is end market NexoBrid of of availability, the of currently terms first product lot our for received warehouse In logistics our June. we third-party the provider. finished from

not for process. NexoBrid U.S. allotment to MediWound's associated in at to used distribute this distribution product Due manufacturing lab the We're criteria this testing all time. deviation able commercially in with While in Taiwan a a the third-party release market.

approval to And successfully the several updates of by pre-leased As the we of discussed updates required BLA. NexoBrid process we were related that implemented been have all facility there MediWound be were MediWound following completed. to manufacturing those

on in CDC appeal which test stems or the substance updates sprayed the pineapple first one material new intermediate that However, solutions on of a processing at control manufacturers a of preservative one upstream the drug raw was and process Taiwan antioxidant an botanical in steps process the MediWound the for for

as control rise to available of process testing the subsequently that the outsourced lots in is substance issue deviation manufactured product will routine which market results the record Taiwan produce drug drug NexoBrid intermediate and U.S. site done the the This not current substance finished intermediate all test a will finished was by in-process giving Though impact in to directly product. invalidating lots be from decision testing a our BLA. the approved lab of control currently test new for NexoBrid not the that for FDA, in was by to the MediWound

allowing able begin this of in to However, NexoBrid be to we quarter commercial would year. commercial and next distribute product FDA affected of deviation, distribution the we not by of this absent the expect finished product sales first

this assumption formal we of are to agency harvest discussions its pineapple with distribution while discretion engaged deviation. season, request current our currently FDA the the following is Following that upcoming lots that until hear the by impacted the otherwise. operating which the fall end, To NexoBrid in exercise we a

be the replenish which million NexoBrid, planned Although $X response there half Stockpile commercial of will expect in preparedness, to second a of delay of not NexoBrid the procurement the in National FDA's XXXX. may affect availability emergency for the now BARDA's we determination to

to call. overall improved In our and guidance $XX the $XX Epicel terms we're which anticipated Joe discuss will from on procurement the year increasing for million to revenue in million $XX guidance of our to BARDA revenue, trends later the in our burn million detail more based $XX care

beyond finally, look XXXX. we And as

will growth We In to and a we're our results management NexoBrid progress franchise and year contribution in pleased to at become in XXXX the our start XXXX revenue burn continued quarter significant continue second franchise with and second to for company to financial strong growth activities. care MACI beyond. on high lifecycle our summary, the expect a make excellent

significant new our year XXXX with to we continued expect performance of in our and products. from growth accelerate over products core the raised have this launch revenue Importantly, XX% expectations to and company for from contributions strong we

to and I'll Joe now over results to turn updated call discuss quarter our financial second guidance. the financial

Joe Mara

increase statement. net $XX.X revenue good the prior was Epicel the Thanks, Nick Starting morning of strong everyone. Total an the driven revenue of and with million quarter by $XX.X $X.X million and income MACI revenue. versus million, of XX% for year,

of half of first we the growth the MACI $XX.X first versus million, which half the last For during year, generated of represents year. XX% revenue

XX%, XX%, its over and addition, XX% In growth growth In with the year. quarters, MACI represents trailing has X consistently now growth seen each we've growth four this as high prior MACI profile. quarters a the total, a last now strong resumed XX% XX% on quarter basis versus

million of QX For quarter first Epicel XX% highest revenue year. in and compared the of revenue versus prior quarter the since the $X.X QX XXXX and XX% revenue the was second to grew quarterly our

In in quarter profit entering the Epicel rate the our $XX more compared net was was quarter increase run XX% or addition, ahead $X quarter an XXXX. revenue first of to of year. than revenue, significantly XX% Gross the of per quarterly our approximately for $XX.X half second million of million million

Net expenses the compared XXXX. or quarter to the was sales Total primarily $X.XX $XX.X higher XXXX, R&D compared to million $X costs. the operating was per in share expenses same $XX.X the expenses period for for million quarter $X.XX or million per related million for for $X second marketing was of in increase due share in and program to the operating quarter loss

positive Non-GAAP importantly, quarter for which versus have adjusted year. grew quarter we this million, adjusted now the EBITDA prior that XXth generated $X.X EBITDA. And XX% represents the was the consecutive

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

to financial Turning guidance. our

prior guidance by of total revenue increase guidance driven our $XXX our revenue both million to for of now an full-year $XXX to $XXX we $XXX million, expect million, our to of franchises. compared revenue million We are XXXX, increasing

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

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

MACI our the MACI the of quarter earlier As third Nick we approximately highlighted XX% continued to into expect quarter in momentum growth with has be $XX and revenue million.

NexoBrid half to now first revenue during care to with expect million of $XX our $XX previous burn strength based guidance BARDA quarter, an year our the million, we million. anticipated For and the revenue increase in $XX franchise compared $XX of of million fourth of full-year on to the Epicel the

run three increased during For In care not in the assume any rates on revenue Epicel commercial million this does based $X.X anticipate last NexoBrid higher over approximately quarterly burn our quarters. total, of revenue QX. We point. our revenue at XXXX for guidance

share of $X occur would fourth it does over our to million, BARDA Although expect now procurement include in which we quarter. revenue of the

are Overall, pleased quarter very we our performance. with second

of company Our strong quarter as on continued over products, we growth continued acceleration rates XXXX, NexoBrid. our start we our contributions as towards core the to revenue to MACI arthroscopic XX% as anticipated total and third look strong anticipate and with of the execution well

your call the This prepared now questions. concludes our open will we remarks to

Operator

go the line Ryan Zimmerman Please [Operator Thank BTIG. from of first Instructions] comes of you. ahead. question Our

Ryan Zimmerman

the to more relative quarter your the quarter that good I appreciate I understand maybe year. of off. seeing? moving with to from continue to But nice your broadly, levels then on on interest little suggests start acceleration in a guess end and guess raise a 'XX by performance. fourth bit morning third I'll just topic, an it first us dynamics speak a And accelerate a we're couldn't market congrats expectations. not I'll your biopsies Joe, why help and comments maybe given And I there's last behavior guys, to that I'd Hi patient and the bit half, why given you prior components on like off all guidance. start quarter. record lot again here, commentary MACI

Joe Mara

then Yes, take little good of so on full in the point morning, a about year Ryan, and I'll touch third you that on the question, bit course where we and as out thanks second for talk the that quarter probably were quarter pieces in about your of the and round think kind QX.

in talked another XX% would say MACI So the second quarter we really first quarter guidance. our as for of ahead off, I strong about, just growth

job. you I of with an of excellent and mid trends From continuation kind I had the execution think of to the the plus a relative 'XXs, team seen and is perspective. number an quarters last XX% of just you're first back, a half basically doing now we've really XX% looking year.

the question, really to strength driven the So, that point. the to And and underlying really really of has growth think strong been I top the your by metrics and funnel.

extremely is and QX where very The strong continued that QX biopsies been quarters. nearly record we straight So have continued at in matched number. our growth surgeons three in strongly

kind So, results we and say, those key are the drivers. forward. I really as would to-date this of look year of our

remarks quarter quarter. and QX start $XX So I another perspective off we in the think is to it's which touched XX%, from we growth prepared high on another strong of as the for expect a million approximately

which we And that does QX up see. importantly to imply QX, from don't a step always

would are other strong, in QX apply will more I last also respectively. some were they QX But well. is, XX% And So, we as of and XX% the running say momentum. comps QX sign difficult into I that to piece that's think the a sense continued then certainly grew year and this quite and

certainly So as we consideration forward. that's look a

As about guidance. full-year we think the

range, I think with, started now we're it the which for above increase the teens, to and kind the couple last low quarters. we that. XX% years starts guidance above the year mid in really to of in of last continued couple And of high the the we is

point, And XX% also year XXX being that QX is on HX to So, the ahead just we your ahead think, And of quarter. throughout kind basis. last where I then and At on a of be certainly was of the come in context there give the to mid-teens. it would we've - and midpoint full year expect increased the about midpoint, in QX. the kind growth kind both to of

balanced want up of in mid-XX% think QX, still difficult potentially if the typically are we're I lines And see. to significant some It's it It's at Certainly, that that, better look a kind be running into in again, of step comps. than we we up range. a just what with, pretty revenue. think I the more set but the about third you up sense full-year we do

speaking, now continued QX broadly on in So, would We're performance QX with XX% year into the the a that pleased range. and say I basis. into full low

think So, the throughout in I want for just in ahead business. get of would essentially that And half. this continuing business call drive QX, second the at continue this to we but point, too strength to well, the don't we'll far again, ourselves

Ryan Zimmerman

Nick, thoughts that's numbers but launch investors want great. it thing timing, of and want Yes. for prudent there. out color it's was to I half the all back just appreciate the think then, And the I I pull Joe and to your the on NexoBrid think understand, year, I to No, and of would understand.

of kind on see a and what reestablish there that year? to what And maybe is launch lots be would potential this The the potentially this I NexoBrid your in So, they is potential allow market the FDA these of second to year. allowing the to of view that of half guess need

I So doing the had mean we've is delay I since this the MediWound? deal on NexoBrid this think second with is,

Nick Colangelo

Yes, Ryan.

got on delay. still beyond NexoBrid go months we're product NexoBrid, frustrated right, over can obviously the commercial the was and approved have the into we around. We've product line, had market. MediWound it the is seven approval. not that the or don't stepped goal that You're from obviously the product the second disappointed put we're first in And we We

So, again, I to here. we're in comment. And a step think trying fair that's

of intermediate batches supply Now U.S. drug again market. to engage be with able and substance the the these use to FDA

details FDA we in as the go all with the can't discussions of I included into our So, XX-Q. our

any product safety. to don't risk assessments risk a or done there's have detailed quality believe we incremental and We patient

And discussions are obviously, the with we're those FDA. having the

we were implemented. So to manufacturing is, that number be a of number before, this there required about were of talked manufacturers, updates a

approval, those as drug inspections obviously talked MediWound engaged the in facility the of Taiwan Israeli approved. went we in with with substance the Following about last inspections we their well was previously facility fall were and product CBC

it's completed had test facility of were again But that related completed, testing their be that is those of these needed we pineapple to or a solution had ones updates the in one this third-party sprayed testing first they own successfully the lab the microbial completed to MediWound stems - and microbial of on processing some updates antioxidant in basically the steps.

number our have microbial that the is with are responsible a this approve they There testing that were obviously not controls is of didn't contract manufacturer who other that did one, execute. MediWound FDA added for been involved this site. not We and

incremental going and the able At to FDA there's think in don't be an so, to use of to we material. the using that And we're end day, try risk working to again, this. the this with

the NexoBrid same It's all prior manufacturing. for that process was used

material that clinical So this control test. all in BARDA upstream was over without the material XX,XXX process used stockpile that used globally all was in patients was manufactured to product trials treat of that All

we half unless have forward in there you our as to think able light it, not green I second numbers So, that until the to move get is and prudent from a it's think to FDA. the good but we case be with mentioned,

Ryan Zimmerman

being half Are year. Okay. that's loss the being on just that that to follow-up back finer The off held currently? the revenue of to one. in those And recognized the BARDA are find point same

Nick Colangelo

Yes.

Ryan Zimmerman

then conceivably get you would when an FDA. update And from

of get if one with share second can you year, the half you us? If in the

Nick Colangelo

Yes.

of then FDA XXXX terms needed in you tested to the the lots right, to soon. be the XXXX expect lab same short were would timing both Obviously, seasons. all this current harvest because be And and they So collectively pretty substance by we'd we be - it discussions, lots, drug intermediate the this determination on in of need the of relatively order. from

in pineapple otherwise. assume, XXXX. of have substance drug we again result just in is operating the So, and next that that going We're to finished product And harvest intermediate know, but we would we'll first NexoBrid I quarter both for of hear think new to batches unless assumption the wait season. the

Ryan Zimmerman

of appreciate Okay. But A way. lot updates. going good in the pineapple I the

Operator

One please moment next you. Thank for our question.

Our of line question Securities. the Sam Brodovsky comes Truist of from next

is line now Your open.

Sam Brodovsky

taking for question. the thanks Hi,

grow as on First expect being a on sequential going XQ the sort a forward some year? just to your sequentially quick normal bit touch unusual one, are market of we for a little dynamics, before little confidence this in or XQ and Should MACI. there this to started still to increase behind able

Joe Mara

off cadence I about you're going good expect quarterly a forward. Hi, the of kind we asking but morning. this end, should bit think at you're And trailing

Sam Brodovsky

the Yes, more behind a or sorry. Is forward? normal that unusual going sequential increase XQ, anything XQ from to seasonality is

Joe Mara

the strong good in Yes. off And obviously good we've we're to think, I QX. it and way a of about to both think say, I I I start results thinking And got would start in QX. think another we're off kind QX is with

So, seen from if can bit. they where have down you stepped look certainly historically to certainly kind of is We little a QX of your kind around there QX. some bounce point, years

I could sequentially are But bit driving the a et QX strong biopsies QX, QX, is by I what cetera of, come year of But and surgeons think which where of pretty kind is in momentum this within going three think certainly kind the is kind now new which seeing this driven field little quarters great. you're think, - together forward. change and I we

and it going as this seen would high that's in how I execution of is pretty year you playing the out it's continued how think playing step-up that's past, think about it's, forward. the So in as it's terms see QX, but that and think numbers of be just I and because The I we strong cadence through of the of that's quarters. quite in thinking may kind probably be not

within continued good a quarters, But vary I to it's would certainly but little think a see the say actually year. it we could still throughout sign momentum bit the

Sam Brodovsky

sort think was should launch through should switching be we to of we that to half think 'XX, thanks being is really the the then that the market great. arthroscopic going great about about Yes, commentary progressing full year? And that second that's through and of scale color. release and market or How for safe

Nick Colangelo

Nick. It's Sam. hi, Yes,

terms of full of itself, launch the will delivery Obviously MACI be the label launch In updated mode. there. in for out sort is once arthroscopic

will I wait to see the exactly think it dynamic how - out. rolls

MACI lot do cases opportunity it's a obviously pick to having it complicated, trained They an very and up of who of users but I a it MACI quicker. probably do wanted little arthroscopically. not sort experienced think they'll be

are The peer-to-peer wait segment surgeons sort so sooner, non-MACI they programs come to a users, later. may they may that of they come kind to little of tend may they may

So, wait launch, of our we sort of I out in think we launch. the it and surgeons. obviously differ will exactly, how and - see we'll rolling But it terms efforts to differing making when it out plays available by in it

Sam Brodovsky

Thanks for questions. the taking

Nick Colangelo

you. Thank

Operator

next you. Thank question. for One please our moment

next line comes from Our Ladenburg. Jeffrey question of of Cohen the

Your line is now open.

Jeffrey Cohen

Hi thanks questions. Nick and for Joe, taking our

Nick Colangelo

Good morning.

Jeffrey Cohen

pull end. our a Just from

half back for you Firstly, the about year on about million the Joe think in of about few forecasting approximately we BARDA million half a impact just talking being $X dollars. BARDA sounded purposes. for What should QX commented like Nick this year? of was a back it the And of

Joe Mara

Yes.

So just clarify to that.

it's be perspective, from is $X we was and play that about was MediWound. total about BARDA BARDA into economics of million then replenishing but what stockpile which part that would replenishment their that share that talking So will in some with Nick a

million is million. $X think which our expect think over from of we the said, portion I would as of about revenue right something I to that our essentially $X number So what

over our $X So but and $X.X quarter. expectation that be that million million, to would million in would $X - and the be fourth

Jeffrey Cohen

Okay.

purposes for for don't think anything quarter? about third So the modeling

Joe Mara

Exactly.

Jeffrey Cohen

the you It over that forward in it and specific organization to going could look now NexoBrid got a was few like How that how it. Okay. seems I like expansion. bit - does about your talk might And seems the was past of quarters. NexoBrid? commercial most little place look expanded

Nick Colangelo

Yes.

Then NexoBrid them that Epicel reps originally and eventually right, trained of if we green light that And reps adding plan. get products. up So of all line, the you're shortly. dozen be would that would kind successfully only We've half we've intended. course we'll under for only - we and sometime managers Jeff. original And FDA down be they account the as reps mentioned from pretty deploy kind the our on NexoBrid executed a on of are we as current sell will both then that

wait that accelerate well, reps is get as NexoBrid of, dormant pull getting those Epicel the one And meantime, see they terms from we've of the in call in to hoping have on are I accounts we launch, cases they're to in we exactly actually burn as see had when now. there some achieve And started the Epicel through what we centers them which expanded If we call, force training, to NexoBrid impact then have, to our we'll up as that the to the we well. speed as mentioned sales

Jeffrey Cohen

That's expect recent far about or half may to discuss any we for year? as the And progress in lastly back it. the got ankle what helpful. Okay, as Nick. us or commentary then the the of news indication

Nick Colangelo

arthroscopic either kind into focus, past is needs ankle MACI for we're focus clinical done start larger is this nature that and was We'll about preclinical nearer year provide that that that's or a we've obviously some And progress. Yes, term opportunity. talked our the team been of year continues over of the the upfront heavy kind for once as to MACI kind we guidance plan. on get later to talking next that's that year. ready of and progressing. to on be early about our point the more to And other work where There

Jeffrey Cohen

questions. strong quarter. our on it. Congrats for the Thanks Okay, got taking

Nick Colangelo

Jeff. Thanks

Operator

you. our moment please Thank question. One for next

of Ramakanth from of Swayampakula line Our next the question comes HCW.

Your line is now open.

Swayampakula Ramakanth

numbers. your MACI Nick on Thank to and increase you. and Joe, in continued quarter be regarding same biopsies careful Good fourth at I'm the comments to trying time triangulate morning, trying

to how trending So higher that biopsies the for the same a to into with adding has been get number? surgeons stayed use additional is of the MACI and it it is rate or conversion has conversion rate

Nick Colangelo

Hi RK, it's Nick.

driven record kind been of of quarters mentioned, for principally the Joe surgeons. the driving surgeons. by far is They number are biopsy as in of increase that's straight three outperformance has again an the which principally driving a outperformance. really in the and the Obviously biopsy So, funnel really number so the significant biopsy, of of of increase year course top

I'd did the sort that uptick two to that but of was the surgeon. new there secondary say of an mentioned of terms in we're of been pre-COVID that of biopsies. that's in increasing QX, past, quarter you we've We kind you're in and their maintained even the drivers a surgeons of say kind surgeons rate that new kind mentioned conversion as adding in the where and number I'd experienced into substantial prior situation the I first of kind in

surgeons kind segments now. those are lower up rates rate on dynamic they a conversion their conversion new board. have as typically And come of that surgeons we're going of surgeon They're same seeing

think the Overall, I that's in MACI. of terms explanation. for the So, drivers

Swayampakula Ramakanth

the And indication? the then in is Thank but on you MACI on, or change having the that. a anything manufacturing to do it the for new same of product itself, product, Nick. arthroscopic product need you

Nick Colangelo

a why work. having an in to we versus or accelerated no regulatory product, product. clinical the with substance any the that's factor drug there's move were and the drug same And study do to human able exact forward manner it's from Yes, no changes additional to standpoint

the So, human study. it's of has development the form and that will kind the really that around been the instrument basis factor work kit

Swayampakula Ramakanth

additional of sure adding supplier with that supply, that is make to that from to any and to then be have Is 'XX be changes because you're going the or indications Matricel new Germany. trying additional just going And making Okay. 'XX? through you

Nick Colangelo

is supplier for our new not membrane. Matricel so a the supplier, they're actually Yes, existing

executed a long-term the our is mentioned in into take extension terms it's of agreement. supply that that's agreement that us because well we what we XXXXs XXXXs will into an So and exclusive important,

that So they these down who can following interested be sell anybody of to path. this in sort else membranes might

protection an our MACI. of it's So of important long-term sort strategy market for part

Swayampakula Ramakanth

Nick. Okay, last question one me from

care that about of on have dynamics feet mean talking is that careful Epicel on So, the market traditionally, that or ground about now, doing you're more because you that guidance burn confident I'm does are sales, for the Epicel product? through more, you've you it more more becoming glad but been and that and giving

Nick Colangelo

kind I right. no, of market, Well, a of stabilization the it's think

incidents past the change the down. has of Over burns come year large and

that executing. half reflected I fighting there of last sort year just of that's and that of stronger first half think of the is of more now kind kind that's you're stabilized to So out the dynamic And second team the in and had year. compared we've this

So market just think of story execution stabilization I an story. it's

we and numbers on both we're sales And accounts were contributor, as And But as and do ground, then right. that those the biopsies through what important. new right. that's mentioned having Epicel in huge accounts realizing happen exactly think, NexoBrid dormant to intending not from I is again, reps talking expanded orders I then and what the we that's of exactly earlier, it's pull force. reps

Swayampakula Ramakanth

Perfect. Great quarter.

and to always, looking As to talking soon. forward you Thanks.

Nick Colangelo

Okay. Thanks RK.

Joe Mara

RK. Thanks

Operator

please Thank right. for moment our One last question. All you.

comes last question from of Stephens George Incorporated. Our of the line Sellers

line now open. Your is

George Sellers

question. sales sticking at all expanding my taking with force. in and the the delivery on strategy, quarter for arthroscopic that changed just of how option good Hi, does, dynamic. thanks my you would if one terms that Congrats be sales first I curious, I'm option that in guess morning.

Given just the force. Maybe how the focus that market or sales your with sales target do launch or shift expect current to you impact increased operations? their

Nick Colangelo

Yes.

when our think exercise back sizing in the past as did in sales I force So XXXX. we about we talked

open we we of have our and that basis on sort orthopedic of that surgeons. high targets. the repair Now And procedures intersection of for volumes the data could obviously did X,XXX XX,XXX surgeons and draw cartilage initial form

of group a high procedure we did them. cartilage surgeons have But also that data repair. was open those volumes not on did There

surgeons surgeons. that only kind predominantly arthroscopic arthroscopic presumption those is the are procedure of are so, And

intention to ladder data there are be. expect I so bucket, our targets kind to that of And refresh and is that will in that the will there focus on extent additional which

not. feel like would sales need drive That or we whether increase the to we force

basically that just In and now - which terms cases we is arthroscopically, speaks option product appropriate and they this gives surgeons it's think very that. again the strong for potential process of and - delivered to clinical doing do itself. benefits sales to the there think advantages the data in meaningful to obviously MACI And

expand of add expect not to targets fundamentally of it we some force, targets requires sell. kind envision again dozen I us we'll if reps. change we so about if that our sales any how it then a the won't and we'll I force And that. to would X,XXX wholesale we add maybe we'll think as two restructuring you'd of sort launch. or add But, sales get do closer

George Sellers

it has in would sort you key more Okay. MACI I'm the years. what expectations biopsies your that just coming rates to delivery. really revenue growth? surgeons that are that on arthroscopic double the of there conversion now curious, to potential into arthroscopic believe more in And delivery mentioned with biopsy That's going change of prepared that is associated Or simply drive assumptions your biopsies is And some go then that, what's for the any remarks is in taking going helpful. and I

Nick Colangelo

of of Yes, years could start coming share If that over business. and had those we do basically of same current in patella. as said that condyles kind go of we the well, just can sort math smaller the we our Joe into what essentially I'll the defects the we But femoral double comment. the was

patients addressable in MACI's don't There's about go-to-product the defects. cases. with you and So patella patella market a XX,XXX

below segment sizes, to condyles two of femoral is condyles double are added There in in that defects if centimeters square that you femoral four defects centimeters. four all this that triple

in our point advantage current and opportunity defects business. big the you is, a smaller those share, get have double it's to now the same size a the market because we if could you So of basically delivery

Joe Mara

But But and segment. think deck Nick this. would it. could out, is and have kind two a, earnings our the million think, this on TAM think where so north double-digits I is what about kind is hit into I on of This to shows in that we're the Joe. a we in competitive be again, potentially a double-click $XXX that add, I of bit also from we again of helpful it's patella I again, kind that opportunity to slide and centimeter just Yes, of there saying digitally point four square that

potentially significant, kind effectively business That of plays doubling is don't of you the which could be kind in. where

one again MACI opportunity slides the if a pretty And more So that would competitive potentially make. point much arthroscopic us big the I to space. helpful. think This think when make in is we

George Sellers

makes the you of that a okay, color. And sense. leave lot there. for it Okay, I'll Thank time. you for thank that

Joe Mara

Thank you.

Operator

Thank like for At Colangelo CEO, I back this you. would to Nick closing point. conference the to turn remarks. now

Nick Colangelo

continued of everyone operator. in obviously company interest Vericel and we the in you, questions And and expect year thanks to half beyond. second the your had results a very in the for quarter. Thank And that and the your financial Okay. strong business second continue momentum

further And So updates again call. forward a we to thanks on that, have great providing next with look day. and our

Operator

conference today's concludes Thank participating. for call. This you

You may now disconnect.

Vericel (VCEL) 2 Aug 232023 Q2 Earnings call transcript