Vericel Corporation

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.

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.

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.