Vericel Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the VeriCell's second quarter 2022 conference call. At this time, all participants are in listen-only mode. I would also like to remind you that this call is being recorded for replay. I will now turn the conference call over to Eric Burns, VeriCell's head of financial planning and analysis and investor relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to VeriCell's second quarter 2022 conference call to discuss our financial results and business highlights. Before we begin, let me remind you on today's call, we will be making forward-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. 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 financial results press release and a short presentation with highlights from today's call are available on the investor relations section of our website. I am joined on this call by Verasoft President and Chief Executive Officer Nick Colangelo and our Chief Financial Officer Joe Mara. I will now turn the call over to Nick.

Thank you, Eric, and good morning, everyone. I'll begin today's call with a discussion of our second quarter financial and business highlights and our expectations for the remainder of the year. Then turn the call over to Joe for a more detailed review of our financial performance in 2022 financial guidance before opening the call to Q&A. We generated total revenue of $37 million in the second quarter and approximately $3 million of adjusted EBITDA and operating cash flow, marking the eighth consecutive quarter of sustained profitability and positive cash flow for the company. Macy had a very strong quarter as we generated revenue of $28.6 million, representing the highest quarterly revenue outside of the seasonally high fourth quarter since the launch of Macy. Macy revenue grew 8% compared to the second quarter of 2021, and sequential revenue growth was more than 10% compared to the first quarter of 2022. Importantly, Macy continued to outperform the overall cartilage repair procedure market, And we remain on track to generate our expected double-digit growth in surgeons taking Macy biopsies this year as our sales team continues to expand the Macy customer base. Macy's also off to a strong start in the third quarter. And as Joe will discuss in further detail, we expect to see an inflection in Macy performance in the second half of the year with continued strong quarterly revenue progression and significantly higher quarterly growth rates compared to the same periods in 2021. Based on our results to date and Macy's continued momentum, we expect Macy growth to accelerate through the remainder of the year, translating to growth in the mid to high 20% range in the third quarter and mid to high 30% range in the fourth quarter versus the same periods in 2021. Accordingly, We're maintaining our full-year revenue guidance for Macy as it resumes its high-growth trajectory. Macy adoption also continues to be supported through medical education and publications. Data from a recently published Macy study in the journal Cartilage was featured in Orthopedics Today, showing the expansion of knee cartilage defects and the formation of new high-grade lesions in patients as time between a Macy biopsy and implantation increases. highlighting the importance of treating patients in a timely manner. Finally, we remain on track for planned meetings with the FDA later this year to discuss our Macy arthroscopic and Macy ankle development programs, initiatives that we believe will support sustained growth in the years ahead. Turning to our burn care franchise, we reported epi-cell revenue of $8.2 million for the second quarter, which was below our most recent quarterly run rate. As we've discussed previously, even though quarterly baseline revenue for EpiCell is significantly higher than pre-2021 periods, there'll continue to be inherent volatility in quarterly revenue given the small patient population and the concentrated number of burn centers treating these patients. We have seen solid underlying fundamentals for EpiCell in the first half of the year as the number of burn centers taking biopsies and treating patients with EpiCell was consistent with the significantly higher burn center penetration seen in the same period last year, which included the highest EpiCell volume and revenue quarter ever in Q2 2021. However, we did see fewer biopsies in patients treated with epicellin in the second quarter and a lower average burn size for treated patients compared to recent trends. This clearly impacted our quarterly results, although, again, quarterly revenue of over $8 million is significantly above pre-2021 quarterly run rates. We also continue to support the expanded utilization of EpiCell through medical education and important publications. We recently announced the publication of results in the Journal of Burn Care and Research, a leading peer-reviewed journal, from a retrospective study conducted by the Burn and Reconstructive Centers of America, which showed a 90% survival rate for patients with large posterior burns treated with EpiCell. These burns presented a treatment challenge in that the posterior surface bears the major portion of body weight. And this first of its kind study highlights the potential for improved outcomes using EpiCell for patients with significant posterior burns. Turning to Nexibrid, we're very pleased to announce this morning that the Nexibrid BLA resubmission has been accepted for review by the FDA with a PDUFA date of January 1st, 2023. Our cross-functional teams, in conjunction with their colleagues at MediWound, worked extremely diligently to address the FDA's feedback with a high-quality and timely resubmission, which met our target timeline. We're very pleased to have completed this important milestone, and we continue to believe that Nexibrid, if approved, has the potential to become a new standard of care for eschar removal for patients with severe burns in a meaningful part of our overall business. Finally, I'd like to highlight that we recently issued our inaugural ESG report, which reflects our commitment to incorporating these important principles across all of our business activities. We'll continue to identify opportunities to broaden our positive impact and build upon our ESG performance in the years ahead as we remain focused on how we can better serve all of our stakeholders, including our patients, customers, employees, investors, and the communities in which we operate. In summary, after a solid start to the year, we're maintaining our total revenue, MESI revenue, and adjusted EBITDA guidance for the full year as the entire Verisol team is focused on delivering continued strong commercial and financial results in the second half of the year while preparing for a potential Nexenberg launch in the first half of 2023. I'll now turn the call over to Joe to provide additional details regarding our second quarter results and financial guidance.