Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vericel Corp (VCEL, Financial) reported record second-quarter revenue of nearly $53 million, driven by strong growth in MACI and NexoBrid demand.
- The company achieved a record second-quarter gross margin of 70% and adjusted EBITDA growth of 42% compared to the previous year.
- MACI revenue increased by 21% in the second quarter, exceeding guidance, with a significant increase in biopsies and surgeon engagement.
- Vericel Corp (VCEL) is on track to launch MACI Arthro, expanding its target surgeon base and addressing a significant market opportunity.
- The company expects FDA approval for a pediatric indication for NexoBrid, which could enhance its uptake in pediatric burn centers.
Negative Points
- Vericel Corp (VCEL) reported a net loss of $4.7 million for the quarter, although this was an improvement from the previous year's loss.
- Operating expenses increased to $42.6 million, primarily due to development and pre-launch activities for MACI Arthro and increased headcount.
- Epicel revenue was lower than expected in the second quarter due to variability in patient treatments and health issues.
- The burn care market, particularly for Epicel, remains volatile, impacting quarterly revenue consistency.
- Despite strong revenue growth, the company still faces challenges in achieving consistent profitability on a quarterly basis.
Q & A Highlights
Q: Can you clarify the expectations for MACI's growth in the fourth quarter, especially with the potential Arthro launch?
A: Joe Mara, CFO: We have increased our expectations for MACI to around 20% growth for the full year. The third quarter estimate is approximately $44.5 million, similar to the first two quarters. The fourth quarter will follow our typical seasonal pattern, and we expect MACI Arthro to be more of a 2025 driver.
Q: How do you see the conversion rates for MACI being affected by the move to smaller cartilage defects?
A: Dominick Colangelo, CEO: Higher-volume surgeons have higher conversion rates. The size of the defect, such as 2 to 4 square centimeters, is significant, and we don't anticipate any impact on conversion rates from the size and location of the defect.
Q: Is there any structural change in the burn market affecting Epicel's performance?
A: Dominick Colangelo, CEO: No structural change is observed. The number of biopsies remains consistent, and we had a strong start in July. The variability in patient treatments is due to health issues and timing, but demand remains strong.
Q: Can you provide details on the record number of MACI biopsies and its relation to the arthroscopic launch?
A: Dominick Colangelo, CEO: The record number of biopsies occurred in May. This is independent of the arthroscopic prep, as the delivery method is not yet approved. The strong performance is due to the core MACI business.
Q: How quickly can you target the 2,000 new surgeons for MACI Arthro, and when will sales efficiency improve?
A: Dominick Colangelo, CEO: We can start targeting immediately upon FDA approval. Existing MACI surgeons familiar with the product may see immediate uptake, and the transition for new surgeons will occur over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
