On August 6, 2019 Vericel Corporation (NASDAQ:VCEL), a leader in advanced therapies for the sports medicine and severe burn care markets, reported financial results for the second quarter ended June 30, 2019, and recent business highlights (Press release, Vericel, AUG 6, 2019, View Source [SID1234538205]).

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Second Quarter 2019 Financial Highlights

Total net product revenues increased 38% to $26.2 million compared to $19.0 million in the second quarter of 2018;

Gross margin of 66% compared to gross margin of 59% in the second quarter of 2018;

Net loss of $19.8 million, or $0.45 per share, which includes the $17.5 million upfront license payment to MediWound for North American rights to NexoBrid;

Non-GAAP adjusted net loss, excluding the $17.5 million upfront license payment to MediWound, of $2.3 million, or $0.05 per share, compared to a net loss of $4.7 million, or $0.12 per share, in the second quarter of 2018;

Non-GAAP adjusted EBITDA of $1.8 million compared to a loss of $1.4 million in the second quarter of 2018;

As of June 30, 2019, the company had $66.0 million in cash and short-term investments compared to $82.9 million as of December 31, 2018; and

Full year 2019 revenue guidance for MACI and Epicel raised to $112 to $116 million compared to previous full year revenue guidance of $110 million to $114 million.

Recent Business Highlights
During and since the second quarter of 2019, the company:

Reported record second quarter revenues, marking the ninth consecutive quarter with record revenues for the reported quarter and the highest Epicel revenue for a second quarter in history;

Deployed the expanded MACI sales force, which increased from 40 to 48 sales representatives and initiated a MACI sales force sizing assessment based on an expanded target audience of approximately 5,000 surgeons who perform a high volume of cartilage repair procedures;

Announced an exclusive license agreement with MediWound for North American rights to NexoBrid, a registration-stage biological orphan product for debridement of severe thermal burns;

Announced that the U.S. Biomedical Advanced Research and Development Authority (BARDA) has agreed to fund the NexoBrid expanded access treatment (NEXT) protocol; and

Confirmed plans after meeting with the U.S. Food and Drug Administration (FDA) to submit a Biologics License Application (BLA) for NexoBrid to the FDA in the second quarter of 2020.

"The continued strength in MACI revenue growth reflects the increasing number of surgeons who view MACI as the standard of care for certain large, full thickness cartilage defects," said Nick Colangelo, president and CEO of Vericel. "Given the significant growth in new surgeons and biopsy volume, as well as the strength in Epicel demand, we have increased our revenue guidance for 2019. Looking forward, we anticipate submitting the NexoBrid BLA in the second quarter of 2020 which, upon FDA approval, would create a third growth driver for the company in 2021 and beyond."

Second Quarter 2019 Results
Total net product revenues for the quarter ended June 30, 2019 increased 38% to $26.2 million compared to $19.0 million in the second quarter of 2018. Total net product revenues for the quarter included $20.8 million of MACI (autologous cultured chondrocytes on porcine collagen membrane) net revenue and $5.3 million of Epicel (cultured epidermal autografts) net revenue, compared to $14.1 million of MACI net revenue and $4.9 million of Epicel net revenue, respectively, in the second quarter of 2018.

Gross profit for the quarter ended June 30, 2019 was $17.1 million, or 66% of net revenues, compared to $11.3 million, or 59% of net revenues, for the second quarter of 2018.

Total operating expenses for the quarter ended June 30, 2019 were $37.3 million, including the $17.5 million upfront license payment to MediWound Ltd. for North American Rights to NexoBrid. Excluding the $17.5 million license payment, operating expenses were $19.8 million, compared to $15.5 million for the same period in 2018. The increase in operating expenses was primarily due to a $1.4 million increase in stock-based compensation, an incremental $0.7 million in MACI sales force expenses as a result of the sales force expansion in 2019, and a $0.9 million increase in selling expenses and patient reimbursement support services.

Vericel’s net loss for the quarter ended June 30, 2019, which includes the $17.5 million upfront license payment for NexoBrid, was $19.8 million, or $0.45 per share. Non-GAAP adjusted net loss, excluding the $17.5 million upfront license payment for NexoBrid, was $2.3 million, or $0.05 per share, compared to a net loss of $4.7 million, or $0.12 per share, for the second quarter of 2018. See table reconciling non-GAAP measures for more details.Non-GAAP adjusted EBITDA was $1.8 million for the quarter ended June 30, 2019 compared to a loss of $1.4 million in the second quarter of 2018. See table reconciling non-GAAP measures for more details.
As of June 30, 2019, the company had $66.0 million in cash and short-term investments compared to $82.9 million as of December 31, 2018.

Full Year 2019 Financial Guidance
The company now expects total MACI and Epicel net product revenues for the full year 2019 to be in the range of $112 to $116 million, compared to the previous full year revenue guidance of $110 to $114 million.

Conference Call Information
Today’s conference call will be available live at 8:00am Eastern time in the Investor Relations section of the Vericel website at View Source." target="_blank" title="View Source." rel="nofollow">View Source A presentation supporting today’s conference call will be available on the webcast and in the Investor Relations section of the Vericel website. 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 second-quarter 2019 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 August 6, 2020. A replay of the call will also be available until 11:00am (EDT) on August 11, 2019 by calling (855) 859-2056, or from outside the U.S. (404) 537-3406. The conference ID is 6576007.