Vericel Corporation · NASDAQ:VCEL
Vericel — Investor Presentation (January 2018)
29 slides from Vericel's investor presentation, Jan 8, 2018
Slide 1: Safe Harbor
Safe Harbor This presentation contains forward-looking statements, including, without limitation, statements concerning anticipated progress, objectives and expectations regarding profitability, growth in revenue and earnings per share, cash payments, the commercial potential of our products, intend
Slide 2: Vericel Investment Highlights
Leader in Medicine Advanced Cell Therapies for the Sports and Severe Burn Care Markets • MACI® – Leading restorative cartilage repair product in the sports medicine market • $600M+ current addressable markets – underpenetrated and growing 3 Vericel Investment Highlights Innovative Advanced Therapy P
Slide 3: Overview – Articular Cartilage Structure and Function
Overview – Articular Cartilage Structure and Function Articular cartilage is a highly specialized connective tissue of synovial joints • Articular cartilage function – Provide a smooth, lubricated surface for articulation of joint surfaces allowing nearly frictionless movement Facilitate transmissio
Slide 4: Articular Cartilage Defects and Treatment Goals
Articular Cartilage Defects and Treatment Goals • Articular cartilage injury is a cause of significant musculoskeletal morbidity – Cartilage defects are found in ~60% of knee arthroscopies Damage is caused by acute and repetitive trauma, degenerative conditions (OA) and inflammatory conditions (RA)
Slide 5: MACI Overview
MACI Overview MACI is a 3rd generation autologous chondrocyte implant (ACI) for the treatment of cartilage defects of the knee • First tissue-engineered autologous cellularized scaffold product approved by the FDA (December 2016) First tissue-engineered product approved as an Advanced Therapy Medici
Slide 6: MACI Production and Administration
MACI Production and Administration Extraction Expansion Seeding 7 MACI Production Biopsy HarvestChondrocyteChondrocyteUniform Cell MACI Delivered MACI Administration DefectTemplateMACIAdhered with PreparedCreatedImplantedFibrin Glue
Slide 7: MACI Label Indications and Usage
MACI Label Indications and Usage 1. Indications and Usage MACI® (autologous cultured chondrocytes on porcine collagen membrane) is an autologous cellularized scaffold product indicated for the repair of single or multiple symptomatic, full-thickness cartilage defects of the knee with or without bone
Slide 8: MACI Administration Advantages
MACI Administration Advantages 9 MACI 3rd generation ACI – Less invasive ACI – Easier administration – Eliminates periosteal harvest and sutures – Significant reduction in surgical time – Uniform distribution of cells – Improved post-operative course CARTICEL Effective in a challenging patient popul
Slide 9: SUMMIT Clinical Study Results
SUMMIT (Superiority of MACI Implant Versus Microfracture Treatment) Clinical Study Results 45 KOOS Subscale 10 Improvement in Score (Mean Score) MACI demonstrated statistically significantly greater improvement in the co-primary endpoint of KOOS pain and function (SRA) scores compared to microfractu
Slide 10: SUMMIT Study Results – Response Rate
SUMMIT Study Results – Response Rate 11 KOOS Response Rate (%) The proportion of patients responding to treatment was statistically significantly greater with MACI compared to microfracture at year 2 Response Rate* 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% MACIMicrofracture *Response defined as >1
Slide 11: SUMMIT Study Results – Improvement in KOOS Pain and Function Scores Over Time
SUMMIT Study Results – Improvement in KOOS Pain and Function Scores Over Time Weeks Weeks 12 Difference in KOOS Pain (95% CI) Difference in KOOS Function (95% CI) A significant improvement for MACI over microfracture was observed for the KOOS pain and function subscales as early as 36 weeks, and was
Slide 12: SUMMIT Extension Study – Scores Maintained Over 5 Years
SUMMIT Extension Study – Improvement in KOOS Pain and Function Scores Maintained Over 5 Years Overall efficacy data support a long-term clinical benefit from the use of MACI in patients with cartilage defects of the knee 13 Mean Change from Baseline In KOOS Pain Mean Change from Baseline In KOOS Fun
Slide 13: MACI Rehabilitation Protocol
MACI Rehabilitation Protocol 14 % Weight Bearing Published MACI rehabilitation protocols achieve full weight-bearing in 6-8 weeks compared to 10-12 weeks for published Carticel rehabilitation protocols Rehabilitation Timelines for ACI procedures: Time to Weight-Bearing1 100% 80% 60% 40% 20% 0% 13579
Slide 14: Large Addressable Cartilage Repair Market for MACI
Large Addressable Cartilage Repair Market for MACI Chondroplasty/ Full-Thickness Cartilage Osteochondral (~24%) 23,000 Age-Allograft (17 – 55)3 Juvenile (~25%) Insured (~22%) 15 Estimated Annual AddressableSurgical Procedures6 Patient Population (U.S.)RestorativeNon-Restorative 892,000 Cartilage Rep
Slide 15: MACI Strategic Sales Force Expansion Investment
MACI Strategic Sales Force Expansion Investment 16 •MACI Key Performance Indicators (KPI) –BiopsiesLeading indicator of future implants –Biopsy SurgeonsStrong interest from surgeon population –Implanting SurgeonsIntent to treat with MACI –Conversion RatioBased on surgeon intent, patient awareness an
Slide 16: Additional Investments to Drive MACI Uptake
Additional Investments to Drive MACI Uptake • Case Management Services – Expanding by 33% to meet increased physician, patient, and sales force demand • Payer Access – – Achieved payer access for MACI consistent with Carticel within nine months of launch Priority shifts to improved Medical Policy an
Slide 17: Epicel Production and Administration
Epicel Production and Administration Expansion Procedure Exposed 19 Epicel Production Biopsy HarvestKeratinocyteEpicel SheetEpicel Graft Epicel Delivered Epicel Administration Graft RemovalGrafts AppliedTakedownNew Skin
Slide 18: Revised Epicel Label Will Enable Continued Growth
Revised Epicel Label Will Enable Continued Growth Epicel (cultured epidermal autografts) HDE# BH990200 Epicel may now be sold for profit on up to 360,400 grafts per year (>50X volume) 2015 Directions for Use HUMANITARIAN DEVICE: Authorized by Federal law for use in adult and pediatric patients who h
Slide 19: Comparison of Epicel Patient Database to National Burn Repository
Comparison of Epicel Patient Database to National Burn Repository1 Data Demonstrates Lower Mortality Rate Twenty-five Years’ Experience and Beyond with Cultured Epidermal Autografts (CEA) for Coverage of Large Burn Wounds in Adult and Pediatric Patients, 1989-2015; Hickerson, American Burn Associati
Slide 20: Large Addressable Burn Care Market for Epicel
Large Addressable Burn Care Market for Epicel Hospitalized Indicated Patients 22 Estimated U.S. Burn Patients1 500,000Epicel Grafting Burn Centers Annual Burns (U.S.) 30 40,000 Patients$120 Million 1,500Addressable Epicel-Market in the (>30% TBSA)U.S.2 600 Surviving >40% TBSA Patients 1 2012 Nationa
Slide 21: Epicel Strategic Investments
Epicel Strategic Investments • Expanded Commercial and Medical Affairs Team – – Expanded to five sales representatives and a dedicated Regional Sales Director Hired a dedicated Product Manager and Medical Science Liaison • Enhanced Patient and Customer Support Programs – Comprehensive peer-to-peer p
Slide 22: Strong Total Revenue Growth Since Acquisition
Strong Total Revenue Growth Since Acquisition $57.1M • • LTM revenue = $57.1 million 9% CAGR in revenue since the acquisition of Carticel/MACI and Epicel 24 $ Millions Total MACI/Carticel and Epicel Net Revenue $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Pre-AcquisitionPost-Acquisition $42.8M
Slide 23: Revenue Growth Accelerating Following MACI Launch
Revenue Growth Accelerating Following MACI Launch +30% 25 $ Millions Record third quarter revenue and second straight quarter of 30% or higher revenue growth Q3 2017 Net Revenue vs. Q3 2016 $16 $14 $12 $10 $8 $6+19% $4 $2 $0 Q3 2016EpicelQ3 2017 MACI +67%
Slide 24: Accelerating Biopsy Growth Expected to Drive Strong Implant Growth
Accelerating Biopsy Growth Since MACI Launch is Expected to Drive Strong Implant Growth 40% 18% growth into 2018 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Foundation for Growth Surgeon Penetration – 22% growth in the number of surgeons sending a biopsy in 2017 Biopsy Growth – 33% biopsy growth
Slide 25: Continued Revenue Growth Expected to Generate Margin Leverage and Earnings Growth
Continued Revenue Growth is Expected to Generate Strong Margin Leverage and Earnings Growth Gross Margin market Strong Operating growth of MACI and Sheet capacity drive further gross additional dilutive is expected biopsies per surgeon and marginal COGS < 20% • Expand number of burn with concentrate
Slide 26: Recent Financial Results Demonstrate Business Model Leverage
Recent Financial Leverage Results Demonstrate Business Model $4 >50% of sales converted to COGS Operating Sales Operating 28 $ Millions Recent financial results demonstrate that continued revenue growth should further improve gross margins and generate significant operating income leverage Q2-Q3 201
Slide 27: Balance Sheet and Capital Structure
Balance Sheet and Capital Structure • Balance Sheet and Capital Structure – As of September 30, 2017 and Pro Forma with debt refinancing and ICT payment 1. 2. Pro forma cash position illustrates impact of recent debt restructuring and ICT license fee and warrant purchase payment. As of September 30,
Slide 28: Vericel Investment Highlights
Leader in Medicine Advanced Cell Therapies for the Sports and Severe Burn Care Markets • MACI® – Leading restorative cartilage repair product in the sports medicine market • $600M+ current addressable markets – underpenetrated and growing 30 Vericel Investment Highlights Innovative Advanced Therapy
Slide 29: Vericel Investment Highlights
Leader in Advanced Cell Therapies for the Sports Medicine and Severe Burn Care Markets Vericel Investment Highlights * Combination device/biologics use a patient's own cells to repair tissue & restore function Innovative Advanced + MACI® ~ Leading restorative cartilage repair product in the sports m