Vericel (US:VCEL)2024-08-01 19:58Financial Data and Key Metrics Changes - The company reported record second quarter revenue of nearly $53 million, representing a 20% growth in total revenue for the first half of the year [7][16] - Gross margin reached 70%, an increase of 430 basis points compared to the prior year, marking the highest second quarter gross margin to date [17] - Adjusted EBITDA grew by 42% year-over-year, reaching $6.3 million or 12% of net revenue [18] - The company generated $18.5 million of operating cash flow in the quarter and ended with $154 million in cash, restricted cash, and investments, with no debt [18] Business Line Data and Key Metrics Changes - MACI revenue was over $44 million, increasing 21% year-over-year and exceeding guidance [8][16] - Burn Care revenue totaled $8.5 million, with NexoBrid revenue increasing 76% compared to the prior quarter [16] - Epicel revenue remained stable at approximately $8 million, with a quarterly run rate increasing to over $9 million for the first half of the year [13][18] Market Data and Key Metrics Changes - The company is expanding its target surgeon base for MACI from 5,000 to 7,000 surgeons with the upcoming launch of MACI Arthro [10] - Approximately 70 burn centers completed P&T Committee submissions for NexoBrid, with over 40 centers gaining approval [12] Company Strategy and Development Direction - The company is focused on launching MACI Arthro to expand its market reach, targeting smaller cartilage defects [10] - Plans are in place to initiate the MACI Ankle clinical study in 2025, representing a significant growth opportunity with an estimated $1 billion addressable market [11] - The company is actively pursuing business development opportunities in sports medicine and advanced cell therapy [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued high revenue and profit growth for the remainder of the year, reaffirming revenue guidance of $238 million to $242 million [19][50] - The company expects to be GAAP profitable in 2024 and anticipates strong growth in both MACI and Burn Care revenue for the third quarter [20][19] Other Important Information - The company is preparing for the FDA approval of a pediatric indication for NexoBrid, which is expected to enhance uptake in pediatric burn centers [12][40] - The company has implemented a sales force optimization plan, increasing territories for the Burn Care sales force to 17 [28] Q&A Session Summary Question: Clarification on MACI pacing expectations and conversion rates - Management confirmed strong performance in MACI and expects continued growth, with Q3 estimates around $44.5 million [22][23] - Conversion rates are expected to improve as surgeons gain experience, with no anticipated negative impact from targeting smaller cartilage defects [25][26] Question: Inquiry about Burn Care market stability - Management reassured that there are no structural changes in the burn market, citing consistent biopsy numbers and strong growth indicators for Epicel [27][28] Question: Record number of biopsies in May - Management confirmed that the highest number of biopsies occurred in May, independent of the upcoming arthroscopic launch [30] Question: Update on business development initiatives - Management stated that they are actively seeking synergistic opportunities in sports medicine and advanced cell therapy, maintaining a high bar for potential acquisitions [36][37] Question: Composition of Burn Care revenue in Q3 - Management indicated that Epicel is expected to maintain a higher run rate, while NexoBrid is also progressing positively [42][43] Question: Pediatric indication for NexoBrid and its impact - Management highlighted that approximately 20 pediatric burn centers will be added to the target customer base upon approval, which is expected to significantly impact NexoBrid uptake [48][40]