Vericel (NSDQ:VCEL) said yesterday it inked an exclusive U.S. licensing and supply agreement with MediWound (NSDQ:MDWD) for its NexoBrid biological product, and reported first quarter earnings that missed expectations on Wall Street.
The NexoBrid is a topically-administered product intended to enzymatically remove nonviable burn tissue in patients with deep partial and full-thickness thermal burns. The product has already received CE Mark approval in the European Union and has been designated as an orphan biologic in the U.S., Vericel said.
Under the terms of the deal, Vericel will pay $17.5 million upfront to MediWound with an additional $7.5 million payment contingent upon U.S. approval, and another possible $125 million based on certain annual sales milestones. The first sales milestone in the deal is worth $7.5 million, and will be triggered when NexoBrid sees annual net sales that exceed $75 million, the companies said.
“MediWound is excited to partner with Vericel, a company that shares our commitment to bringing innovative therapies to the market to meet the needs of burn patients. Vericel’s proven track record of commercializing novel products and changing standard of care, as well as their strong history with the burn community, gives us confidence that they are the ideal partner to realize the full potential of NexoBrid in North America,” MediWound chair Stephen Wills said in prepared remarks.
Vericel also said that it will pay MediWound tiered royalties on net sales ranging from single-digit to low double-digit percentages and a percentage of gross profits on an initial committed procurement from the U.S. Biomedical Advanced Research and Development Authority and on any additional BARDA purchases of NexoBrid.
The companies also inked a supply agreement through which MediWound will manufacture NexoBrid for Vericel for a supply price plus a fixed margin percentage.
“We are delighted to expand our burn care franchise with the addition of NexoBrid, a highly innovative product with compelling clinical and pharmacoeconomic data that represents a paradigm shift in burn care for hospitalized patients. NexoBrid is an excellent strategic fit with our advanced therapy portfolio and is highly synergistic with our existing commercial franchise. The addition of NexoBrid significantly expands our target addressable market and supports a broader commercial footprint to both drive NexoBrid uptake and increase Epicel penetration as we broaden our focus to a significantly larger segment of hospitalized burn patients. We look forward to working closely with the MediWound team to bring NexoBrid to the U.S. market. In addition to the clear strategic fit with our burn care franchise, this transaction is attractive from a financial perspective as well. The performance-based deal structure, together with BARDA funding support for development expenses to obtain U.S. marketing approval and medical countermeasure procurement, makes the transaction essentially neutral to adjusted EBITDA in the near-term and generates longer-term margins consistent with expected margins for our current portfolio,” Vericel prez & CEO Nick Colangelo said in a press release.
In a separate release, Vericel reported first quarter earnings that missed both sales and loss-per-share expectations, but has seen shares rise in mid-day trading.
The Cambridge, Mass.-based company posted losses of $2.8 million, or 7¢ per share, on sales of $21.8 million for the three months ended March 31, seeing losses shrink 62.9% while sales grew 21% when compared with the same period during the previous year.
Losses per share were just behind the 6¢ loss-per-share consensus on Wall Street, where analysts expected to see sales of $22.5 million, which the company also missed.
“We delivered another solid quarter of performance and the MACI sales force continues to increase its productivity even as we add new representatives, which speaks to the quality of our sales representatives as well as the demand for MACI. Based on the strong underlying indicators of growth for the rest of the year we have raised our full year 2019 revenue guidance. Moreover, we believe that the addition of NexoBrid significantly expands our burn care target addressable market and will enable us to build a second significant commercial franchise to go along with our cartilage repair franchise, thereby enhancing the long-term growth profile of the company,” prez & CEO Nick Colangelo said in a prepared statement.
The company lifted its full year 2019 financial guidance, now expecting to see sales of between $110 million and $114 million, up from earlier guidance of between $108 million and $112 million.
Shares in Vericel have risen 3% so far today, at $17.83 as of 12:26 p.m. EDT.
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