On November 6, 2018 Diplomat Pharmacy, Inc. (NYSE: DPLO), the nation’s largest independent provider of specialty pharmacy services, reported financial results for the quarter ended September 30, 2018 (Press release, Diplomat Speciality Pharmacy, NOV 6, 2018, View Source [SID1234530763]). All comparisons, unless otherwise noted, are to the quarter ended September 30, 2017. Prior period financials have been recast to include certain direct expenses as part of cost of sales instead of selling, general and administrative ("SG&A") expense for our specialty segment. This change is a reclassification only and has no impact on overall results.

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Third Quarter 2018 Highlights include:

Revenue of $1,373 million, compared to $1,125 million, an increase of 22%
Specialty segment revenue of $1,212 million, compared to $1,125 million
PBM segment revenue of $170 million, which was not part of the business in the prior year period
Specialty segment total prescriptions dispensed of 230,000, compared to 222,000
PBM segment total volume, adjusted to 30-day equivalent, of 1,931,000
Gross margin of 6.8% versus 5.8%
Specialty segment gross margin of 5.5% versus 5.8%
PBM segment gross margin of 15.5%
EPS of $0.00 per diluted common share versus $0.01
Adjusted EBITDA of $41.9 million, compared to $23.2 million
Adjusted EBITDA margin of 3.1% versus 2.1%
Net cash used in operating activities was $33.4 million, compared to net cash provided by operating activities of $38.3 million
Net Debt, including contingent consideration, increased to $646.7 million, from $609.2 million at June 30, 2018
Brian Griffin, Chairman and CEO of Diplomat, commented, "Third quarter results were solid as we continue to successfully execute on our growth plan. Results were driven by strong Specialty segment growth and PBM performance. We recently opened our new state-of-the-art distribution and call center facility in Chandler, Arizona, furthering our efforts to provide the highest quality patient care nationwide. Every day we put our patients first, while at the same time investing in initiatives to drive further growth and productivity."

Third Quarter Financial Summary:

Revenue for the third quarter of 2018 was $1,373 million, compared to $1,125 million in the third quarter of 2017, an increase of $248 million or 22%. Revenue was comprised of $1,212 million and $170 million from our Specialty segment and our Pharmacy Benefit Management ("PBM") segment, respectively. The increase in our Specialty segment was driven by manufacturer price increases, approximately $10 million from our recent acquisitions, access to dispense drugs that were new in the past year and increased volume due to both payor and physician relationships. These increases were partially offset by a decrease in hepatitis C business versus the prior year period and reimbursement compression.

Gross profit in the third quarter of 2018 was $93.4 million and generated a 6.8% gross margin, compared to $65.1 million gross profit and a 5.8% gross margin in the third quarter of 2017. Gross profit was comprised of $67.0 million and $26.3 million from our Specialty segment and PBM segment, respectively. The gross margin increase in the quarter was primarily due to the impact of our PBM acquisitions, partially offset by reimbursement compression in our Specialty segment.

SG&A expenses for the third quarter of 2018 were $83.4 million, an increase of $20.6 million, compared to $62.8 million in the third quarter of 2017. This increase is primarily driven by an $11.0 million increase in employee cost, including employee cost for our acquired entities and a $4.0 million increase in share-based compensation. Also contributing to the SG&A expense increase was a $7.0 million increase in amortization expense from definite-lived intangible assets, inclusive of capitalized software for internal use, associated with our acquired entities. We also experienced increases in other SG&A expenses; including, rent due to the addition of our Chandler, Arizona facility, travel, consulting and professional fees, as well as other miscellaneous expenses. These increases were partially offset by a $2.4 million decrease in acquisition related expenses.

Net income attributable to Diplomat for the third quarter of 2018 was $0.2 million compared to $1.0 million in the third quarter of 2017. This decrease was primarily driven by an $8.1 million increase in interest expense due to a significant increase in outstanding debt to fund our PBM acquisitions, partially offset by a $7.6 million increase in income from operations. Adjusted EBITDA for the third quarter of 2018 was $41.9 million compared to $23.2 million in the third quarter of 2017, an increase of $18.7 million.

Earnings per share for the third quarter of 2018 was $0.00 per basic/diluted common share, compared to $0.01 per basic/diluted common share for the third quarter of 2017.

2018 Financial Outlook

For the full-year 2018, we are updating our previous financial guidance:

Revenue between $5.5 and $5.7 billion, versus the previous range of $5.5 and $5.9 billion
Net (loss) income attributable to Diplomat between $(7.5) and $2.6 million, versus the previous range of $(11.0) and $0.5 million
Adjusted EBITDA between $164 and $170 million, no change to previous range
Diluted EPS between $(0.10) and $0.03, versus the previous range of $(0.15) and $0.01
Our EPS expectations assume approximately 74,300,000 weighted average common shares outstanding on a diluted basis and a tax rate of (10)% and 40% versus (5)% and 32%, for the low- and high-end of the range, respectively, for the full year 2018, each of which could differ materially.

Earnings Conference Call Information

As previously announced, the Company will hold a conference call to discuss its third quarter performance this evening, November 6, 2018, at 5:00 p.m. Eastern Time. Shareholders and interested participants may listen to a live broadcast of the conference call by dialing 833-286-5805 (647-689-4450 for international callers) and referencing participant code 7553049 approximately 15 minutes prior to the call. A live webcast of the conference call and associated slide presentation will be available on the investor relations section of the Company’s website for approximately 90 days at ir.diplomat.is.

On November 6, 2018 Exicure, Inc. (OTCQB:XCUR), the pioneer in gene regulatory and immunotherapeutic drugs utilizing three-dimensional, spherical nucleic acid (SNA) constructs, reported financial results for the third quarter ended September 30, 2018, and provided an update on corporate progress (Press release, Exicure, NOV 6, 2018, View Source;p=RssLanding&cat=news&id=2375500 [SID1234530761]).

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"During the quarter, we made progress in our clinical program in immuno-oncology while expanding our preclinical data in a growing number of disease models," said Dr. David Giljohann, Chief Executive Officer of Exicure. "The FDA informed us that our Phase1b/2 clinical trial in immuno-oncology may proceed. We also completed patient dosing in a Phase1 trial for Exicure’s lead anti-inflammatory compound. Additionally, the Exicure team continues to develop promising preclinical data in neurology, as well as demonstrated the preclinical delivery of our platform in the gastrointestinal tract. All of this work supports a core strategic objective of developing our digital medicines platform in oncology, genetically defined disorders, and inflammatory disease," added Dr. Giljohann.

Corporate Progress

Announced launch of a Phase1b/2 trial for AST-008, Exicure’s TLR9 agonist drug candidate designed for immuno-oncology applications. The IND for AST-008 has been opened by the FDA and we have been informed by the FDA that our proposed Phase1b/2 trial may proceed. We expect patient dosing to begin late this year.
Completed the Phase 1 clinical trial of AST-008 which demonstrated the desired highly potent immune system activation without serious adverse events or dose limiting toxicity.
Completed patient dosing in the Phase 1 clinical trial of XCUR17, our clinical stage anti-inflammatory drug candidate being tested in psoriasis. We expect topline results in 2018.
Presented data at the Oligonucleotide Therapeutics Society meeting showing the distribution and therapeutic efficacy of Exicure’s technology through oral delivery to the GI tract.
Developed preclinical bio-distribution data of Exicure’s platform after intrathecal injection, demonstrating a favorable distribution profile in the CNS, and enabling the potential expansion of the Exicure platform into the central nervous system.
Raised approximately $22.0 million in gross proceeds at a per share price of $4.50 in a private placement offering.
Clinical Updates

AST-008: AST-008 is an SNA consisting of toll-like receptor 9 (TLR9) agonists designed for immuno-oncology applications. The Phase 1 clinical trial of AST-008 was completed during the quarter and demonstrated our desired highly potent immune system activation without serious adverse events or dose limiting toxicity. The IND for AST-008 has been opened by the FDA and we have been informed that our proposed Phase1b/2 trial may proceed. We expect to dose the first patient late this year.

XCUR17: XCUR17 is an antisense SNA that is designed to target the mRNA encoding IL-17RA. In our Phase 1 trial, XCUR17 is being tested in a microplaque study in patients with mild to moderate psoriasis. We have completed patient dosing and expect to report topline results late in 2018.

Third Quarter 2018 Financial Results and Financial Guidance

Cash Position: As of September 30, 2018, Exicure had cash and cash equivalents of $32.4 million compared to $25.8 million as of December 31, 2017.

Research and Development (R&D) Expenses: R&D expense was $4.0 million for the three months ended September 30, 2018 and $3.1 million for the three months ended September 30, 2017, an increase of $0.9 million, or 28%. The increase in R&D expense of $0.9 million was primarily due to higher employee-related expenses of $0.4 million, higher clinical development programs expense of $0.3 million, and higher platform and discovery-related expense of $0.2 million.

General and Administrative (G&A) Expenses: General and administrative expense was $1.9 million for the three months ended September 30, 2018 and $1.3 million for the three months ended September 30, 2017, an increase of $0.6 million, or 51%. This increase was due to higher costs associated with being a public company of $0.3 million, including higher expense for investor and public relations, director and officer insurance, and transfer agent, over the counter and other regulatory compliance related matters, as well as higher legal costs of $0.2 million mostly related to 2018 financing activities, and higher compensation and related expense of $0.1 million associated with salary increases.

Net Loss: Net loss was $5.3 million for the quarter ended September 30, 2018, compared to net loss of $1.9 million for the quarter ended September 30, 2017. The $3.4 million increase in net loss was due principally to a decrease in revenue of $2.4 million that mostly reflects the absence of revenue recognized in the prior period related to the amortization of the upfront payment, and certain reimbursable R&D activities pursuant to a research collaboration, option and license agreement. In addition, we had an increase in Other income of $0.5 million principally due to the fair value adjustment of our common stock warrant liability offsetting the increases in R&D and G&A discussed above.

Cash Runway Guidance: Exicure believes that, based on its current operating plans and estimates of expenses, as of the date of this press release, its existing cash and cash equivalents as of September 30, 2018, will be sufficient to meet its anticipated cash requirements into the first quarter of 2020.

On November 6, 2018 Jazz Pharmaceuticals plc (Nasdaq: JAZZ) reported financial results for the third quarter of 2018 and updated financial guidance for 2018 (Press release, Jazz Pharmaceuticals, NOV 6, 2018, View Source;p=RssLanding&cat=news&id=2375661 [SID1234530760]).

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"We delivered strong top-line and bottom-line growth in the third quarter and recently achieved two significant regulatory milestones, with the receipt of marketing authorization for Vyxeos in the EU and FDA approval of Xyrem for pediatric narcolepsy patients," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "In the U.S., we are reinforcing Vyxeos as essential therapy for secondary AML with increased education and outreach programs to address the complex and evolving marketplace for AML. As we approach year end, we are also focused on our remaining 2018 corporate goals, including our planned solriamfetol EU regulatory submission and expected FDA approval of solriamfetol."

GAAP net income for the third quarter of 2018 was $149.3 million, or $2.41 per diluted share, compared to $63.5 million, or $1.03 per diluted share, for the third quarter of 2017.

Adjusted net income for the third quarter of 2018 was $221.7 million, or $3.58 per diluted share, compared to $197.6 million, or $3.22 per diluted share, for the third quarter of 2017. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.

Total revenues increased 14% in the third quarter of 2018 compared to the same period in 2017 due to the contribution of strong sales from Xyrem and Defitelio and the inclusion of a full quarter of Vyxeos sales.

Xyrem net product sales increased 18% in the third quarter of 2018 compared to the same period in 2017.

Erwinaze/Erwinase net product sales decreased 16% in the third quarter of 2018 compared to the same period in 2017. Ongoing supply challenges at the manufacturer, Porton Biopharma Limited, continue to negatively impact the company’s ability to provide patients with this important component of the treatment regimen for acute lymphoblastic leukemia. There is currently a global supply outage of Erwinaze, and the company expects further supply disruptions during the fourth quarter and into 2019.

Defitelio/defibrotide net product sales increased 16% in the third quarter of 2018 compared to the same period in 2017. The company continues to expect inter-quarter variability in Defitelio net sales given that hepatic veno-occlusive disease (VOD) is an ultra-rare disease.

Vyxeos net product sales were $21.0 million in the third quarter of 2018 compared to $9.7 million in the third quarter of 2017, which reflected the first six weeks of sales post-launch in August 2017. The company is implementing initiatives focused on establishing Vyxeos as essential therapy for patients with secondary acute myeloid leukemia (AML), as the company addresses challenges to wider adoption in a complex and evolving AML market.

Operating expenses changed over the prior year period primarily due to the following:

Selling, general and administrative (SG&A) expenses increased in the third quarter of 2018 compared to the same period in 2017 on a GAAP and on a non-GAAP adjusted basis due to higher expenses resulting from the expansion of the company’s business, including the rolling launch of Vyxeos in the EU and pre-launch activities for solriamfetol in anticipation of U.S. Food and Drug Administration (FDA) approval.
Research and development (R&D) expenses increased in the third quarter of 2018 compared to the same period in 2017 on a GAAP and on a non-GAAP adjusted basis due to an increase in expenses related to the company’s pre-clinical and clinical development programs and regulatory activities, including an increase in headcount to support these activities.
Acquired in-process research and development expense in the third quarter of 2017 related to an upfront payment of $75.0 million in connection with a collaboration and option agreement with ImmunoGen, Inc.
Cash Flow and Balance Sheet

As of September 30, 2018, cash, cash equivalents and investments were $1.1 billion and the outstanding principal balance of the company’s long-term debt was $1.8 billion. During the nine months ended September 30, 2018, the company generated $574.6 million of cash from operations, received a $50.0 million upfront payment for the sale of its rights to Prialt, purchased a priority review voucher for $110.0 million and used $77.0 million to repurchase approximately 500,000 ordinary shares under the company’s share repurchase program at an average cost of $154.03 per ordinary share. As of September 30, 2018, the remaining amount authorized under the share repurchase program was $106 million. In November 2018, the company’s board of directors increased the share repurchase program by $320 million.

Recent Developments

In August 2018, the company initiated the EU rolling launch of Vyxeos 44 mg/100 mg powder for concentrate for solution for infusion for the treatment of adults with newly diagnosed, therapy-related acute myeloid leukemia (t-AML) or AML with myelodysplasia-related changes (AML-MRC), following EU approval on August 23, 2018.

In September 2018, the company completed the sale of its rights to Prialt to TerSera Therapeutics LLC for a total purchase price of $80.0 million, of which the company received $50.0 million at closing and, subject to certain conditions, is scheduled to receive $15.0 million at the end of 2019 and $15.0 million at the end of 2020.

In September 2018, Nippon Shinyaku Co., Ltd. announced that Japan’s Ministry of Health, Labour and Welfare granted orphan drug designation to defibrotide sodium for the treatment of hepatic VOD following hematopoietic stem-cell transplantation, and, in October 2018, Nippon Shinyaku Co., Ltd. submitted a new drug application (NDA) in Japan.

In October 2018, the company announced the settlement of patent litigation against Amneal Pharmaceuticals LLC related to its abbreviated new drug application (ANDA) to market a generic version of Xyrem. This represents settlement of all outstanding patent litigation related to Xyrem.

In October 2018, the company received FDA approval of its supplemental NDA for Xyrem to treat cataplexy and excessive daytime sleepiness in pediatric narcolepsy patients and plans to launch in the first half of 2019.

Excludes $4-$8 million of share-based compensation expense from estimated GAAP gross margin.

Excludes $74-$82 million of share-based compensation expense and $57 million of estimated loss contingency from estimated GAAP SG&A expenses.

Excludes $17-$20 million of share-based compensation expense and $11 million of milestone payments from estimated GAAP R&D expenses.

Excludes the income tax effect of adjustments between GAAP reported and non-GAAP adjusted net income.

See "Non-GAAP Financial Measures" below. Reconciliations of non-GAAP adjusted guidance measures are included above and in the table titled "Reconciliation of GAAP to Non-GAAP Adjusted 2018 Net Income Guidance" at the end of this press release.

Conference Call Details

Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. EST (9:30 p.m. GMT) to provide a business and financial update and discuss its 2018 third quarter results. The live webcast may be accessed from the Investors section of the company’s website at www.jazzpharmaceuticals.com. Please connect to the website prior to the start of the conference call to ensure adequate time for any software downloads that may be necessary. Investors may participate in the conference call by dialing +1 855 353 7924 in the U.S., or +1 503 343 6056 outside the U.S., and entering passcode 8048589.

A replay of the conference call will be available through November 13, 2018 by dialing +1 855 859 2056 in the U.S., or +1 404 537 3406 outside the U.S., and entering passcode 8048589. An archived version of the webcast will be available for at least one week in the Investors section of the company’s website at www.jazzpharmaceuticals.com.

On November 6, 2018 CymaBay Therapeutics, Inc. (NASDAQ: CBAY) a clinical-stage biopharmaceutical company focused on developing therapies for liver and other chronic diseases with high unmet need, reported financial results and a corporate update for the quarter and nine months ended September 30, 2018 (Press release, CymaBay Therapeutics, NOV 6, 2018, View Source [SID1234530759]).

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"We continue to make excellent progress advancing our lead candidate, seladelpar, in two indications — primary biliary cholangitis (PBC) and nonalcoholic steatohepatitis (NASH)," said Sujal Shah, President and CEO of CymaBay. "Last week we announced the initiation of ENHANCE, a global Phase 3 registration study of seladelpar for patients with PBC. In addition, 52- and 26-week results from our Phase 2 PBC study will be featured in two late-breaking presentations at The Liver Meeting on November 12. We believe these data support the potential for seladelpar to offer patients with PBC improved efficacy and better tolerability than existing second line treatment while also significantly de-risking the ongoing Phase 3 study. Enrollment in our ongoing Phase 2b study of seladelpar for patients with NASH has been progressing well. We now expect to complete enrollment in the first quarter of 2019, one quarter ahead of our previous guidance. As the only highly selective and potent PPARδ agonist in development for liver disease, we think it may be particularly well suited to treat NASH because of its beneficial effects on lipid, glucose, and sterol metabolism, as well as its effects on inflammation and fibrogenesis. As we approach the end of 2018, our entire team remains committed to these core programs for which we look forward to providing further updates in 2019."

Third Quarter 2018 and Recent Business Highlights

Initiated ENHANCE, a global Phase 3 registration study evaluating 5 and 10 mg of seladelpar versus placebo for the treatment of PBC in patients that are inadequate responders to or are intolerant to ursodeoxycholic acid (UDCA)
The study is designed to support the submission of a global registration dossier with Health Authorities to obtain approval of seladelpar in PBC
Two late-breaking presentations featuring positive data from an ongoing Phase 2 study of seladelpar in PBC will be featured during The Liver Meeting hosted by the American Association for the Study of Liver Diseases (AASLD) in San Francisco, November 9-13, 2018
The 52-week composite responder rates in the ongoing Phase 2 study for the 5 mg / 5 mg to 10 mg titration and 10 mg seladelpar groups were 59% and 71%, respectively
Results suggest that seladelpar is not associated with drug-induced pruritus and may support the hypothesis that seladelpar decreases pruritus in PBC patients
This is the third consecutive year that data on seladelpar in PBC will be highlighted in a late-breaking presentation at The Liver Meeting
Patient recruitment in the placebo-controlled Phase 2b proof-of-concept study investigating seladelpar at three doses in biopsy-proven NASH is one quarter ahead of schedule and is now expected to be fully enrolled in the first quarter of 2019
The primary efficacy outcome is the change from baseline in liver fat content at 12 weeks as measured by magnetic resonance imaging using the proton density fat fraction method (MRI-PDFF)
The study also includes a second biopsy at 52 weeks to examine its activity on NASH and fibrosis
Appointed key individuals to expand and strengthen the development organization to execute the seladelpar Phase 3 program and deliver a high-quality registration package
Dr. Patricia Rohane, M.D., appointed Vice President, Clinical Development
Dr. Stephen Rossi, Pharm. D., appointed Vice President, Early Clinical Development
Kamal Sigel, M.S., appointed Vice President, Quality
Held $198.1 million in cash, cash equivalents and marketable securities at September 30, 2018. Existing cash is expected to fund the current operating plan into 2021.
Third Quarter 2018 Financial Results

Research and development expenses were $17.9 million in the third quarter of 2018 as compared to $4.2 million in the same period of 2017. The increase was primarily driven by increases in seladelpar-related clinical trial expenses from the expansion and extension of our PBC Phase 2 study, start-up activities related to our PBC Phase 3 study, the ongoing enrollment of our NASH Phase 2b study, and the execution of other NDA-enabling studies.
General and administrative expenses were $3.3 million in the third quarter of 2018 as compared to $2.2 million in the same period of 2017. The increase was driven primarily by employee compensation expense as we hired additional personnel to support our expanding operations.
Net loss was $18.6 million, or ($0.34) per diluted share in the third quarter of 2018, as compared to $8.2 million, or ($0.21) per diluted share in the same period of 2017. Net loss was higher primarily due to increased research and development expenses, partially offset by non-cash gains on the revaluation and extinguishment of our warrant liability.
Nine Months Ended September 30, 2018 Financial Results

No collaboration revenue was recognized in the nine months ended September 30, 2018. Collaboration revenue from Kowa Pharmaceuticals America, Inc. totaling $4.8 million was recognized in the same period of 2017.
Research and development expenses were $41.7 million in the nine months ended September 30, 2018 as compared to $12.3 million in the same period of 2017. The increase was primarily driven by increases in seladelpar-related clinical trial expenses from the expansion and extension of our PBC Phase 2 study, start-up activities related to our PBC Phase 3 study, the ongoing enrollment of our NASH Phase 2b study, and the execution of other NDA-enabling studies.
General and administrative expenses were $10.2 million in the nine months ended September 30, 2018, as compared to $9.5 million in the same period of 2017. The increase was driven primarily by higher compensation and consulting expenses, partially offset by decreases in severance and legal fees.
Net loss was $53.1 million, or ($0.93) per diluted share in the nine months ended September 30, 2018, as compared to $22.5 million, or ($0.71) per diluted share in the same period of 2017. Net loss was higher primarily due to increased research and development expenses and lower collaboration revenue.
Conference Call Details
CymaBay management will host a conference call today at 4:30 p.m. ET to discuss third quarter 2018 financial results and provide a business update. To access the live conference call, please dial 877-407-0784 from the U.S. and Canada, or 201-689-8560 internationally, Conference ID# 13683385. To access the live and subsequently archived webcast of the conference call, go to the Investors section of the company’s website at View Source

About Seladelpar
Seladelpar is a potent, selective, orally active PPARδ agonist that is in development for the treatment of the liver diseases PBC and NASH. For PBC, seladelpar has received an orphan designation from the US Food and Drug Administration and the European Medicine Agency. Seladelpar also received the PRIority MEdicine (PRIME) status from the European Medicine Agency.

On November 6, 2018 Vericel Corporation (NASDAQ:VCEL), a leader in advanced cell therapies for the sports medicine and severe burn care markets, reported financial results and business highlights for the third quarter ended September 30, 2018 and raised its full year 2018 revenue guidance (Press release, Vericel, NOV 6, 2018, View Source [SID1234530758]).
Third Quarter 2018 Financial Highlights

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Total net revenues increased 58% to $22.5 million compared to $14.3 million in the third quarter of 2017;

Gross margins of 64% compared to gross margins of 50% in the third quarter of 2017;

Net loss of $1.1 million, or $0.02 loss per share, compared to net loss of $5.4 million, or $0.16 per share, in the third quarter of 2017;

Non-GAAP adjusted EBITDA of $0.9 million compared to a loss of $2.9 million in the third quarter of 2017;

As of September 30, 2018, the company had $97.8 million in cash and short-term investments compared to $26.9 million in cash at December 31, 2017; and

Full year 2018 revenue guidance raised to $87 to $90 million compared to previous full year revenue guidance of $80 to $83 million.

Recent Business Highlights
During and since the third quarter of 2018, the company:

Reported record third quarter revenues, marking the sixth consecutive quarter with record revenues for the reported quarter;

Announced plans to increase the MACI sales force by 20%, adding a sixth sales region and increasing from 40 to 48 representatives in 2019;

Expanded MACI manufacturing capacity to meet increased MACI demand;

Appointed Dr. Jonathan Hopper as Chief Medical Officer; and

Announced acceptance of four abstract podium presentations for Epicel at the upcoming Annual North American Burn Society Conference in January 2019.

"We achieved record third quarter revenues and our consistently strong revenue growth has generated significant improvements in gross margins, profitability and cash flow," said Nick Colangelo, president and CEO of Vericel. "Based on the strength of our performance year to date and the continued momentum in MACI uptake, we have raised our full year 2018 revenue guidance and plan to further expand the MACI sales force to meet an expanded addressable market."
Third Quarter 2018 Results
Total net revenues for the quarter ended September 30, 2018 were $22.5 million, which included $16.4 million of MACI (autologous cultured chondrocytes on porcine collagen membrane) net revenue and $6.0 million of Epicel (cultured epidermal autografts) net revenue, compared to $9.9 million of MACI net revenue and $4.4 million of Epicel net revenue, respectively, in the third quarter of 2017.
Gross profit for the quarter ended September 30, 2018 was $14.3 million, or 64% of net revenues, compared to $7.1 million, or 50% of net revenues, for the third quarter of 2017.
Total operating expenses for the quarter ended September 30, 2018 were $15.7 million compared to $11.1 million for the same period in 2017. The increase in operating expenses was primarily due to $1.2 million in service fees paid to MACI pharmacy distributors, a $1.0 million increase in MACI sales force expenses as a result of the MACI sales force expansion, a $1.0 million increase in reimbursement support services as a result of increased MACI demand, and a $1.0 million increase in stock-based compensation expenses.
Loss from operations for the quarter ended September 30, 2018 was $1.3 million, compared to a loss of $4.0 million for the third quarter of 2017. Material non-cash items impacting the operating loss for the quarter included $1.9 million of stock-based compensation expense and $0.3 million in depreciation expense, compared to $0.8 million of stock-based compensation expense and $0.4 million in depreciation expense in the third quarter of 2017.
Other income for the quarter ended September 30, 2018 was $0.3 million compared to other expense of $1.4 million for the third quarter of 2017. The increase in other income is primarily due to income recognized upon the expiration of unexercised warrants in the current quarter compared to an expense for the change in the fair value of warrants in the third quarter of 2017.
Non-GAAP adjusted EBITDA was $0.9 million for the quarter ended September 30, 2018 compared to a loss of $2.9 million in the third quarter of 2017. See table reconciling non-GAAP measures for more details.
Vericel’s net loss for the quarter ended September 30, 2018 was $1.1 million, or $0.02 per share, compared to a net loss of $5.4 million, or $0.16 per share, for the third quarter of 2017.

As of September 30, 2018, the company had $97.8 million in cash and short-term investments compared to $26.9 million in cash at December 31, 2017.
Full Year 2018 Financial Guidance
The company now expects total net product revenues for the full year 2018 to be in the range of $87 to $90 million, compared to the previous full year revenue guidance of $80 to $83 million.
Conference Call Information
Today’s conference call will be available live at 8:30am Eastern time in the Investor Relations section of the Vericel website at View Source." target="_blank" title="View Source." rel="nofollow">View Source Please access the site at least 15 minutes prior to the scheduled start time in order to download the required audio software if necessary. To participate in the live call by telephone, please call (877) 312-5881 and reference Vericel Corporation’s third-quarter 2018 investor conference call. If calling from outside the U.S., please use the international phone number (253) 237-1173.
If you are unable to participate in the live call, the webcast will be available at View Source until November 6, 2019. A replay of the call will also be available until 11:30am (EDT) on November 11, 2018 by calling (855) 859-2056, or from outside the U.S. (404) 537-3406. The conference ID is 9585868.