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spk08: Ladies and gentlemen, thank you for standing by. Welcome to Veracel's second quarter 2021 conference call. At this time, all participants are in a listen-only mode. I would also like to remind you that this call is being recorded for replay. I will now turn the conference over to Eric Burns, Veracel's Head of Financial Planning and Analysis and Investor Relations.
spk10: Thank you, Operator, and good morning, everyone. Welcome to AveraCell's second quarter 2021 conference call to discuss our financial results and business highlights. Before we begin, let me remind you that on today's call, we will be making four looking statements covered under the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations and are described more fully in our filings with the SEC, which are available on our website. In addition, all forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Please note that a copy of our second quarter financial results press release is available in the investor relations section of our website. We also have a short presentation with highlights from today's call that can be viewed directly on the webcast or accessed on our website. I am joined on this call by Veriself's President and Chief Executive Officer, Nick Colangelo, and our Chief Financial Officer, Joe Marra. I will now turn the call over to Nick.
spk03: Thank you, Eric, and good morning, everyone. The company continued to execute extremely well in the second quarter as we delivered another quarter of strong financial and commercial results. From a financial perspective, we reported total revenue of $39.5 million for the second quarter, an increase of 97% compared to the second quarter of 2020, and 51% compared to the second quarter of 2019. We also generated positive adjusted EBITDA and operating cash flow for the fourth consecutive quarter. Based on these results, we're raising our full year total revenue guidance to $168 to $171 million and adjusted EBITDA margin guidance to 23 to 25%. Joe will provide further details regarding our updated 2021 financial guidance in a few moments. From a commercial perspective, we continued to deliver strong results with respect to the key underlying growth drivers for both Macy and Epizel. Macy biopsies, which grew more than 50% in the first half of 2021 compared to the same period in 2020, achieved record quarterly and monthly highs in the second quarter. We also had a record quarterly high in the number of surgeons taking Macy biopsies, with strong performances across both our legacy and expansion territories. Importantly, the 2020 expansion territories led the country in terms of new biopsy surgeon growth and overall new biopsy surgeons added in the first half of the year. Based on the efforts of our expanded sales force, as well as the strong surgeon engagement resulting from our highly effective virtual and in-person marketing programs, We're well positioned to meet our target of growing the number of surgeons taking Macy biopsies by more than 20% this year. We believe that the strong growth in biopsy surgeons, which is a primary growth driver, not only for this year but for the years ahead, reflects the strength of the underlying Macy business fundamentals and positions us to continue to drive sustainable penetration into the Macy addressable market. Turning to our burn care franchise, in addition to generating record quarterly EpiCell revenue of $12.2 million, we also achieved record quarterly highs in the number of EpiCell biopsies and the number of burn centers grafting patients in the second quarter. We believe that the recent changes to our EpiCell sales leadership and customer-facing sales and clinical support roles have driven the increase in our burn center customer base, the higher utilization of EpiCell at the patient level, and ultimately, the substantial increase in EpiCell volume. Importantly, the significant increase in EpiCell graphs per patient has also led to an increase in our estimated total addressable market, or TAM, for EpiCell. Our previous EpiCell TAM of more than $100 million was developed several years ago and was based on the historical number of EpiCell graphs per patient used at that time. The actual graph utilization trends over the past year as described on slide five in our accompanying earnings call presentation, have increased the total addressable market for EpiCell to more than $200 million. Based on our strong results in the first half of 2021, we believe that we're well positioned to continue driving sustained penetration into this increased TAM and strong EpiCell growth moving forward. Turning to Nexibrid, I'll begin by noting a few important points. First, based on EpiCell's outperformance this year, we now expect that our burn care franchise revenue for 2021 will significantly exceed our initial revenue expectations for this year, even with a delayed Nexaberg launch. We also believe that with additional time for field force training, disease state awareness, and continued burn center training on the use of Nexibrid through the next expanded access protocol, that we'll be in an even better position to drive Nexibrid uptake upon approval. And finally, we were pleased to see the positive top line results that MediWood recently reported for the Nexibrid phase three pediatric study, which met all of its primary endpoints with highly statistically significant results. reinforcing the strong clinical profile of the product. In terms of the Nexibrid BLA, VeriCell will now lead the BLA resubmission process and partner with MediWound to leverage their vast experience with Nexibrid. Our clinical, regulatory, and operations teams have a strong track record of regulatory success that we believe positions us well to drive the resubmission process. While it's premature to provide a specific timeline for the BLA resubmission, We're actively preparing for a Type A meeting with the FDA, and we'll provide a timeline update at the appropriate time. We remain very enthusiastic about adding Nexabrid to our burn care franchise and look forward to bringing this innovative product to the market as expeditiously as possible. I'll now turn the call over to Joe to provide more details on our second quarter financial performance and our updated 2021 financial guidance.
spk02: Thanks, Nick. Starting with the income statements. Total net revenue for the second quarter increased 97% to $39.5 million, compared to $20 million in the second quarter of 2020, and included $26.5 million of MESI revenue and $12.2 million of EPICEL revenue, compared to $15.1 million and $4.9 million of MESI and EPICEL revenue, respectively, in the second quarter of 2020. Total revenue for the quarter also included approximately $0.8 million of revenue related to the procurement of Nexibrid by BARDA for emergency response preparedness. Macy revenue grew 76 percent compared to the second quarter of 2020, and EpiCell revenue grew 148 percent compared to the second quarter of 2020. Compared to the second quarter of 2019, Macy revenue grew 27 percent and FSL revenue grew 128%, reflecting the strong underlying growth of both franchises compared to a pre-COVID-19 baseline. Gross profit for the quarter was $26.9 million, or 68% of net revenue, compared to $11.4 million, or 57% of net revenue, for the second quarter of 2020, which was more than double the gross profit in the prior year. Total operating expenses for the quarter were $30.6 million compared to $19.7 million for the same period in 2020. The increase in operating expenses was primarily driven by higher non-cash stock compensation expenses related to our higher share price, as well as incremental spend across all areas of the business when compared to the constrained spend in 2020 due to COVID-19 related factors. Net loss for the quarter was $3.8 million or $0.08 per share compared to a net loss of $8.3 million or $0.18 per share in the second quarter of 2020. Non-GAAP adjusted EBITDA for the quarter was $7.8 million or 20 percent of net revenue compared to a loss of $3.5 million in the second quarter of 2020. Finally, we generated approximately $5 million of operating cash flow in the quarter And as of the end of Q2, the company had approximately $116 million in cash and investments compared to $100 million as of December 31, 2020, and no debt. Transitioning to our updated financial guidance for 2021, we are increasing our full-year revenue guidance and now expect total revenue of $168 to $171 million, or approximately 35% to 38% growth. This compares with our previous full-year revenue guidance of 165 to 168 million, or 33 to 35 percent growth. The revenue guidance increase is driven by EPICEL, which we now expect to have full-year growth in the low 40 percent range compared to our previous guidance of growth in the high 20 percent range. We are maintaining our previous MACIE guidance and expect full-year growth in the mid-30 percent range. This guidance for MACE reflects a higher growth rate in the second half of 2021 versus the first half of the year when compared to the same periods in 2019, driven by the significant growth of both surgeons taking biopsies and overall biopsies in the first half of this year. In terms of quarterly phasing, you're expecting the typical Q3 cadence compared to Q2, and that the factors which drive the strong sequential step up in Q4 are in place. Overall, our guidance assumes that approximately 60 percent of our full-year revenue would be in the second half of 2021, which is consistent with prior years. This guidance for MACIE assumes that biopsy conversion rates and timing or calendarization of that conversion is generally in line with historical patterns and that COVID-19 dynamics do not materially change those patterns versus prior years. Additionally, we expect to recognize approximately 0.8 to 0.9 million of revenue per quarter in Q3 and Q4 related to the BARDA stockpile procurement. Moving down the P&L, we continue to expect gross margin to be 70 to 71 percent for the full year and operating expenses to be approximately 115 million for the full year. And finally, based on our increased revenue expectations, we are increasing our non-GAAP adjusted EBITDA margin guidance for the full year to 23 to 25 percent compared to the prior guidance of 21.5 to 23.5 percent. Importantly, this updated adjusted EBITDA guidance for the full year would more than double our adjusted EBITDA of approximately 19 million in 2020, demonstrating the continued strengthening of the overall financial profile of the company. Our financial guidance also assumes that the COVID-19 dynamics do not worsen materially, including the impact of the Delta variant in the second half of the year. This concludes our prepared remarks. We will now open up the call to your questions.
spk08: Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your first question is from the line of Ryan Zimmerman with BTIG.
spk04: Good morning. Thanks for taking the question. I want to start with EpiCell for a moment here. You know, it continues to perform very well. And I'm just wondering, Nick, if you could elaborate a little bit on the dynamics within EpiCell in terms of market dynamics and the incidence of burns versus the higher graphs per patient that you're seeing and kind of, you know, Give us your thoughts around your expectations for those two dynamics and the interplay going forward.
spk03: Yeah, thanks, Ryan, and good morning. So, you know, as we've talked about, you know, we made changes recently to our Salesforce leadership and the customer-facing roles in terms of sales reps and clinical support specialists, and You know, we continue to believe that that has had a very significant impact in terms of the number of burn centers that we're engaged with, where we now have greater coverage. And then, obviously, as our reps and clinical support specialists continue to educate surgeons on the optimal use of EpiCell, that's led to an increase in the grafts per patient and obviously led to the increase in EpiCell volume. So, you know, that remains, it's kind of a theme we've been talking about all year, and I think, you know, the performance over the past three or four quarters has demonstrated the impact of those sales force changes. In terms of market dynamics, I know there's a lot of commentary out there around sort of reopening and greater incidence of burns and so on. And I would say for our patient population, which as you know, are really the most critically and severely burned patients, I don't really feel like there's really any reopening dynamics that's driving. It may contribute a little, but certainly not at the same level as our sales force effectiveness in that patient population. We had talked about even earlier this year that You know, in Q4 and Q1, cumulatively, it was the highest buyouts we had seen, and that was obviously before any reopening dynamics. So I really think it weighs more towards the Salesforce effectiveness than any market dynamics.
spk04: Got it. That's very helpful. And then maybe just one on guidance. You know, if I think about the past two quarters, you know, VeriSales beat expectations on the top line by, give or take, 8%. or so, and so, you know, be it Macy or Epizel or a combination of the two, and yet, you know, guidance has increased by roughly about 2% in each of those kind of past two quarters. So maybe for both of you, Nick and Joe, kind of help us understand your guidance philosophy and kind of what may or may not be constraining your decision to, you know, nudge that guide slightly higher than you are right now.
spk03: Well, Ryan, I think, you know, I'll start and Joe can chime in as well. But, you know, we've kind of had a consistent guidance approach for several years now where we kind of model out a bunch of scenarios and, you know, we try never to get out over our skis. And, yeah, we've kind of updated the guidance already twice this year based on outperformance. And, you know, that's a pretty approach, especially given, you know, there's always – as we talk about EpiCell, given this sort of low, smaller patient population is, you know, there are challenges forecasting in EpiCell, so we really never want to get too far out ahead on that. And then, you know, with Macy, I think we've been, we upped the guidance in the first quarter to mid-30% growth. I think that's a pretty healthy growth rate, and we're just comfortable where it is right now, especially, you know, as you've had some dynamics out there around you know, reopening and patient behavior and things like that. So really no reason to kind of get too aggressive at this point in the year.
spk02: Yeah, and this is Joe Ryan. Thanks for the question. I mean, just to add, I mean, if you go back a little bit in time, you know, we started the year kind of, you know, above a 30% growth rate when you think about the total company on guidance. And then again, EPCEL, you know, which last year we were talking about kind of high single digits. If you look at the progression there, you know, you're talking kind of mid-teens to high 20s to low 40s. So certainly as we've seen FSL continue to perform, that's certainly factored in as we think about guidance. And then really from a Macy perspective, you know, as Nick talked about, you know, we kind of started the year, you know, above 30% in line with that total growth rate. And, you know, we continue to see the underlying drivers. So we're certainly thoughtful on that. But, you know, there's certainly a full year aspect to think about as well as kind of the quarter to quarter aspect.
spk04: I appreciate the color. Thanks for taking the questions, and congrats on progress.
spk03: Thanks, Ryan.
spk08: Thank you. Your next question is from the line of Danielle Antolfi with SVB Learning.
spk09: Hey, good morning, guys. Thanks so much for taking the question. Just a quick question on, excuse me, the reopening dynamics and any lingering COVID issues. impact? I mean, are you seeing the referral funnel? Is it back to 100%? Or how can you characterize the recovery here at this point in time?
spk03: Yes, Danielle, number one, I think, you know, a couple of things we track are sort of, you know, whether it's, you know, general market commentary or market research we do with, you know, some of our top surgeons, you know, looking at their surgical volumes and where that is compared to pre-COVID levels. And I'd say that's still probably, you know, 5% to 10% down versus the pre-COVID timeframe. Clinic visits were lagging that a little bit, but seem to be catching up a little bit more now since December. So those dynamics, you know, they're not quite back to pre-COVID levels, but are catching up. I would say in terms of the recent commentary around the Delta variant or the sort of situation, we really haven't seen any impact at this point in terms of no widespread kind of facilities restricting surgeries and so on. I think one thing we do think about there is that you know, for any surgical procedure, patients will have a pre-op COVID test. And, you know, as cases tend to surge or spike, you know, you'll have patients that will have to reschedule if they test positive. And so, you know, keeping our eye on that. And then from a reopening dynamic, you know, lots of commentary around, you know, patients, physicians taking vacations and things like that. And, you know, I think it just generally leads to a little, you know, less linear or a little choppier sort of month-to-month kind of dynamic. But overall, again, we kind of take a step back and look at the significant increase in surgeons taking biopsies, the record number of biopsies that we're receiving, and we feel really good about the underlying growth drivers in the business.
spk09: Understood. That's helpful. And then just one quick follow-up on the growth in biopsying surgeons. I think you said 20% growth. Correct me if I'm wrong there. But How are those new surgeons that are starting to biopsy ramping relative to sort of past years as surgeons would come online? Thanks so much.
spk03: Yep. So, you know, it's kind of early days when we just get new biopsy surgeons, you know, in terms of what their implant behavior will be. But, you know, I think we'd say consistent from year to year that The patterns for new surgeons are the same as we've seen in prior years, so we expect that to remain the case.
spk08: Thank you.
spk03: Okay, thanks, Danielle.
spk08: Your next question is from the line of Chris Cooley with Stevens.
spk05: Good morning, and thanks for taking the questions, and congrats on the great quarter. Just two for me, if I may. I just wanted to follow back up on EpiCell a little bit here. When you think about the step-up in TAM and then the revised guidance, if I'm doing the math right here, it really kind of applies that on average, you're still in early days in terms of stepping up the number of grafts for a patient. Just wanted to, one, see if I could kind of confirm that. And when we think about, I realize each case is different, but you know, in terms of that step-up, you're still, I would say, sub-50% in terms of the step-up in the number of graphs for a patient when you look at the increase in the TAM relative to the, you know, implied annual growth guidance. So just kind of think about where we were in that adoption curve.
spk02: Yeah, so, you know, thanks, Chris. I'll start, and, you know, if Nick wants to add, he can. If you kind of take a step back on the FSL guidance, right, kind of more near-term, you know, obviously we've had, you know, some really strong quarters of late, kind of run rates, you know, kind of 9 million plus over the last few quarters. But if you look back historically, you know, prior to those quarters, you know, you're talking more about kind of a $6 to $7 million run rate, right? So I think, you know, the business has really kind of shifted a bit. And as we think about guidance, I think we're mindful of that in the sense that, you know, we are certainly at a higher run rate. We think the execution on the sales The field force has improved, as Nick has talked about. But we are mindful if it's difficult to predict. And as we think of the back half of the year, you know, it's above kind of prior run rates, but, you know, not quite at the last quarter. And obviously this past quarter was much higher. You know, as you think about that relative to the TAM, I would say, you know, I think what you're talking about is kind of that 90 to that 120 average graft per patient, I believe. But, you know, if you take a step back, I think what we said, you know, a couple years ago or a few years ago is we think the TAM is at that, call it 100 million plus number. And really what that means is, and now what we're saying is we think that's 200 million plus. And I think the key difference there is what we're saying is on average we are seeing higher utilization or a higher number of grafts per patient. So historically that number was around 90 per patient. Now it's actually closer to about 120. So I think we've taken a look at that trend over the last few quarters, and we think it's a bigger addressable market. There's certainly some rounding there. There's an average price of $3,000. That's changed a bit as well. But certainly we think it's $200 million plus. So as we kind of think about where EpiCell is now, we still think there's a fair amount of opportunity as we think about that TAM. So certainly that TAM has increased a bit. And again, there's a bit of rounding there, I think, which is part of the answer to your question. But as we think about guidance, you know, we continue to take that up based on kind of what we're seeing and the underlying trends and the performance to date.
spk05: Super. That's really helpful. And then just as a quick follow-up for me, you know, the passing of the baton here on the Nexabred resubmission, could you just maybe, I guess, Nick, in broad strokes kind of paint kind of what's transpired there and what specifically you think you can bring to the table here that might, you know, expedite, you know, the process and any challenges you see, you know, post the prior notification from the agency. Thanks so much.
spk03: Yeah, thanks, Chris. So, you know, as I mentioned in my prepared remarks, you know, we have a clinical regulatory and operations team with a great deal of experience and a great deal of success on the regulatory front, you know, not just, you know, during their varicelle tenure with respect to the Macy BLA, the EPICEL label expansion and, you know, probably a couple dozen, you know, prior approval supplements principally related to CMC matters for Macy and EPICEL over the past several years. So, you know, it starts with the leadership. Mike Halperin, our COO, was you know, head of North American Regulatory Affairs for the Sanofi Genzyme Business Unit. So, you know, highly experienced leadership. And then, you know, the members of his team are, you know, in that sort of realm of experience as well, whether it's on the CMC side, clinical side, et cetera. So, I think we just bring a great deal of experience and a track record of working well with the FDA. And then, we're in a great position to leverage the vast experience that medawin brings, given 20 years of history with Nexabrid. So we feel good about, you know, the path forward. Obviously, we still have a great deal of confidence in the clinical data with MediWound and look forward to bringing it to the market. And I would say for us, it's probably a little bit less about, you know, how fast we can do it and a little bit more about making sure we put a quality package together, you know, that will ultimately lead to approval from the FDA.
spk05: Understood. Thank you so much.
spk03: Okay. Thanks, Chris.
spk05: Thank you.
spk08: Your next question is from the line of Jeffrey Cohen with Leidenberg-Gallman.
spk01: Hi, Nick and Joe. How are you? Good, Jeff. Good morning. Good, thanks. So a couple from Aaron. If you can just follow up a little bit from Chris's comments on the resubmission. Any effect on your R&D that you'd kind of call out beyond your OPEX number for 2021?
spk02: Yeah, I don't think we don't really see that having material impact on the operating expense line.
spk01: Okay, got it. And then secondly, can you give us a little further flavor on Macy as far as Q2 being pretty strong biopsies and pull-throughs? Do you think that was as effective, you know, people waiting on the biopsy side and then the pull-through on the implant side? How do you see that kind of, you know, pulling out on the other end and kind of, you know... So would COVID into that scenario for us, please?
spk03: Well, yeah, I'll start just on, you know, on the biopsy side. You know, again, we continue to see strength in not only biopsy surgeon growth, which is we've always, you know, consistently been stating that that's kind of the key primary growth driver right now. And that's really what is driving the growth in biopsies. The average biopsies per surgeon, which is another key driver, is kind of consistent with where we were in 2019, and we expect that to increase in the second half of the year. So we think all those dynamics are set up really well for not just the second half of this year, but, you know, into 2022 and beyond. So that's number one. In terms of the pull-through on the implants, you know, as Joe mentioned in his prepared comments, our assumptions for the back half of the year. And I think it is important to recognize that, you know, our guidance suggests kind of that 40% first half, 60% second half of the year revenue for MACIE, which has been consistent since 2017, other than last year where it skewed a little more heavily into the second half of the year. you know, that's the dynamic that we would expect to see absent any changes that, as you mentioned, any COVID-related factors might have on sort of timing of conversion and so on.
spk01: Okay, so no material pull-through percentages that you're factoring in versus what you've been thinking over the past number of years? Nope. Got it.
spk02: I would say it's consistent, you know, as we talked about in the prepared remarks, really consistent with kind of historical patterns and you know, what we've seen in other years.
spk01: Okay, perfect. Strong readout. Nice quarter. Thanks. Thank you, Jeff.
spk08: Your next question is from the line of Sam Brodowski with truest.
spk00: Hi, thanks for taking the questions just just to start off on episode and he touched on it in the prepared remarks, but we'd be curious to hear a little bit more about the account dynamics and surging winds coming from from the new Salesforce. Any deeper you can go into maybe the number of burn centers you're in now and if these new reps are helping to drive new account wins there?
spk03: Yeah, I think, you know, Sam, the The way I would say it is we've talked in the past about we are definitely seeing activity in burn centers that, I think we mentioned it on our last call, that either never had used EpiCell or hadn't used EpiCell in a number of years. And so there's no doubt that our sales representatives are having an impact in terms of broadening the customer base. You also have to keep in mind that sort of at the tail, there's some burn centers that may not see EPICEL patients, you know, routinely, and so there's a little bit of churn on that sort of tail end of things, but I think we absolutely are seeing an impact from our new reps in terms of broadening the customer base. You know, within those centers, I think it's kind of, you know, as you'd expect, the more they're present, the more often they see patients who are admitted and can have educational discussions with our surgeons about appropriate patients, appropriate treatment plans, et cetera. And we do think that's also having an impact in terms of the number of grafts per patient that we've seen over the past several quarters.
spk00: Great. That's helpful. And then just as you start to think about, you know, the sales force getting a little more mature and, you know, maybe it's a little earlier, but thinking about the sustainable growth rate for surgeons, you know, is Is maintaining that 20% surge in growth rate into 22 a reasonable assumption going forward? Thank you.
spk02: Yeah, so this is Joe. So we haven't obviously given guidance on 22. I think as we talked about, we think we're in a strong position to exceed that 20% target we talked about in terms of number of surgeons on Macy this year. You know, I think as we look forward, we still believe that will be a material growth driver. you know, what that percentage looks like, I think we'll see. But I think that, you know, as we think about the Macy growth drivers, you know, that's one of them. And the biopsies per surgeon, the conversion rate, you know, hopefully over the long term are also growth drivers. So that will certainly continue to be important. But we'll have to see kind of where, you know, what that looks like next year. But we think that will still be, you know, pretty robust into 22 for sure.
spk08: Okay, your next question is from the line of Kevin DeGieter with Oppenheimer.
spk07: Hey, guys. Good morning. I want to follow up on the, I guess, prior question with regard to how to think about sustainability of growth and maybe from the perspective of how we should think about the relative volume of potential Macy's samples from the surgeon you're bringing on now. It's great to see the high growth rate. Are there still a number of high-volume sports medicine surgeons that are coming on with some of these more recent ads? Given the success you've had over an outstanding period of time on that market, maybe you can provide an update as well as to you know, how you would characterize the potential, you know, volume in throughput from some of the general orthopedic surgeons, which I know you're calling on as well. But I'm trying to appreciate if whether, you know, these 20% ads have the same amount of potential Macy volume, you know, as Poulter would say, you know, same number of surgeons being added, you know, three or four years ago.
spk03: Yeah, thanks, Kevin. Good to talk to you this morning. So I would say that we still believe it's kind of early days in terms of adding surgeons. And I'll follow on to Joe's response that even in 2019 when we had our 3,000 initial targets, we were adding 25% more biopsying surgeons in 2019 versus 2018 when we were three years into launch at that point. Obviously, we expanded our target universe to 5,000 surgeons when we added the reps. And, you know, we ended 2020 with 1,500, so less than a third. We said we'll grow 20 plus percent. So, you know, you can do the math and call it 1850 or so. So you're still, you know, barely more than a third penetrated into that surgeon base. So we think there are, you know, Several years it had a strong growth in terms of adding surgeons, and there's no reason to think we won't see the same dynamic that we saw, you know, based on our initial target surgeons. So that's number one. In terms of sort of the potential for those surgeons, as you know, we're calling on high-volume cartilage repair surgeons. And so, you know, from my perspective, at this point as we're penetrating this expanded surgeon base, you know, there's no difference, really, in the potential for these surgeons. The numbers are really still, on a per-surgeon basis, quite low. They see a very large number of patients with cartilage injuries. And so, you know, we don't put any sort of, I guess, governors on what we think any of our target surgeons can do.
spk07: Great. And then maybe just a follow-up question on the TAM for Babicelle. you know, appreciate the higher, you know, revenue, you know, per patient, higher graft volume, but can you just comment in a little bit more granularity as to, you know, what's driving that in your assumption? Is it a level of medical education and, you know, the surgeons are using EpiCell in a different way than when, you know, going all the way back to when you inherited this product many years ago? You know, is it, you know, now that you've brought out more centers, you're just seeing, you know, numerically more patients who are the, you know, the optimal users for Acocell, these most severe patients. I mean, I just kind of want to understand, you know, I get that there's opportunity to expand the TAM. I'm just trying to understand how much of it is for the docs using the product differently versus Acocell doing a great job of making sure, you know, access is more broadly available. So you're getting more of the kind of optimal patients.
spk03: Yeah, so as I mentioned, we're certainly seeing an expansion of the customer base. And then on an individual patient basis, I think you referenced at a very important point that a lot of it has to do with medical education from our reps and our clinical support specialists. And certainly there's in our medical affairs team as well where, for instance, at a meeting earlier this year, one of our largest customers presented data on the use of epicell on posterior surfaces. So, you know, that's an additional use for some centers who, you know, may have felt comfortable with epicell on anterior surfaces, might have not used it as routinely, might have used autographs on posterior surfaces. So, there's that kind of educational initiatives that we believe are having an impact. And then just, you know, given the size and severity of these burns, you know, we've seen as we've implemented sort of an extra graft program where if during the manufacturing process we have extra grafts, we ship them and they get used quite often, which, you know, might tell you that the initial estimates of the number of grafts needed might be a little low. And, you know, that has a role in epicellar volume as well. So, it really is about you know, our clinical support folks and SALS reps engaging earlier in the process, putting together treatment plans and educating the surgeons on optimal use of epacel that we think is having the biggest impact. Thanks for the question. Okay, thanks, Kevin.
spk08: Your final question comes from the line of Arthur He with HC Wainwright.
spk06: Good morning, everyone. This is Arthur for RK. Thanks for taking my question. I just had a follow-up on the next BLA resubmission. I just wonder, have you guys scheduled a meeting with the FDA? And also, between your communication with the regulator, how are you feeling about for the regulator to perform the site inspection timely up to do the resubmission? Thank you.
spk03: Yeah, so number one, you know, we certainly, as I mentioned in my prepared remarks, are actively planning for a Type A meeting with the FDA. So that's a meeting that you request within three months after an FDA regulatory action. once that's requested the FDA has 14 days to respond and the meeting is typically scheduled within 30 days so that's kind of the time frame within which we are operating so obviously we are looking to do that as as soon as possible you know in a type a meeting it's a little different than for instance a pre BLA meeting in that you have to submit a meeting package along with the meeting request so there's more front-end work to be done in a Type A meeting versus, for instance, a Type C pre-BLA meeting where it gets scheduled 90 days out. So, you request it early, but then you have to submit a package 30 days ahead of that. So, it's just kind of a difference in the timing. So, once a package and meeting request are submitted, the meeting gets scheduled in pretty short order. So, again, that's the timeframe we're working within. And, you know, beyond that, we're not going to comment on when the meeting is scheduled and so on, but we'll certainly update investors and analysts at the appropriate time. In terms of the inspections, you know, that's not a discussion that we've been engaged with at this point. But as we mentioned before, you certainly can resubmit, and the inspections just need to occur prior to an approval.
spk06: Thank you. Thank you for the call, and congratulations on the strong quarter. Okay. Thank you very much.
spk08: At this time, there are no further questions.
spk03: Okay, well, I'll just close by saying thank you to everyone for joining us this morning and for your continued interest in Veracel. You know, as we mentioned today, obviously the company executed extremely well in the first half of 2021, and we remain focused on continuing to deliver on our long-term strategy to bring our products to even more patients and drive significant growth and profitability in the years ahead. So thanks again, and have a great day.
spk08: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may all disconnect.
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