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What changed in Vericel Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Vericel Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+361 added−364 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in Vericel Corp's 2024 10-K

361 paragraphs added · 364 removed · 289 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

83 edited+18 added−25 removed212 unchanged
Biggest changeOther Healthcare Laws In the U.S., the research, manufacturing, distribution, sale and promotion of biological products and devices are subject to regulation by various federal, state, and local authorities, including (in addition to the FDA), the Centers for Medicare & Medicaid Services, other divisions of the U.S.
Biggest changeOrphan drug exclusivity, which would most likely run concurrently with the marketing exclusivity, if any, received from the time of first licensure of a reference product, does not prevent the FDA from approving a different biologic for the same disease or condition, or the same biologic for a different disease or condition. 18 Table of Contents Other Healthcare Laws In the U.S., the research, manufacturing, distribution, sale and promotion of biological products and devices are subject to regulation by various federal, state, and local authorities, including (in addition to the FDA), the Centers for Medicare & Medicaid Services, other divisions of the U.S.
Carticel received a BLA approval 6 Table of Contents in 1997, and was marketed in the U.S. by Vericel through the second quarter of 2017. The FDA approved MACI on December 13, 2016. MACI is an autologous cellular scaffold product consisting of autologous cultured chondrocytes seeded onto a resorbable Type I/III porcine-derived collagen membrane.
Carticel received a BLA approval in 1997, and was marketed in the U.S. by Vericel through the second quarter of 2017. The FDA approved MACI on December 13, 2016. 6 Table of Contents MACI is an autologous cellular scaffold product consisting of autologous cultured chondrocytes seeded onto a resorbable Type I/III porcine-derived collagen membrane.
Epicel is produced by isolating and expanding keratinocytes, which are the predominant cell type in the epidermis or outer layer of the skin, and which are originally obtained by taking of a small biopsy of a patient’s healthy skin.
Epicel is produced by isolating and expanding keratinocytes, which are the predominant cell type in the epidermis or outer layer of the skin, and which are originally obtained by taking a small biopsy of a patient’s healthy skin.
The testing, preparation of necessary applications and processing of those applications by the FDA is expensive, can take several years to complete, and can have uncertain outcomes.
The testing and preparation of necessary applications and the processing of those applications by the FDA is expensive, can take several years to complete, and can have uncertain outcomes.
Humanitarian Device Exemption Unless an exemption applies, each medical device commercially distributed in the U.S. requires either a substantial equivalence determination under a premarket notification submission pursuant to Section 510(k) of the FFDCA, or approval of a premarket approval application (“PMA”) application.
Humanitarian Device Exemption Unless an exemption applies, each medical device commercially distributed in the U.S. requires either a substantial equivalence determination under a premarket notification submission pursuant to Section 510(k) of the FFDCA, or approval of a premarket approval application (“PMA”).
Other non-surgical treatments include clostridial collagenase ointment (CCO/Santyl ® ) (Smith & Nephew, plc.), antimicrobial agents (silver sulfadiazine), or hydrogels. Although less invasive than surgical excision, prior to NexoBrid, non-surgical debridement agents have often been considered inefficient, can result in a lengthy sloughing period, and have the potential for the development of granulation tissue and increased infection and scarring.
Other non-surgical treatments include clostridial collagenase ointment (Santyl ® ) (Smith & Nephew, plc.), antimicrobial agents (silver sulfadiazine), or hydrogels. Although less invasive than surgical excision, prior to NexoBrid, non-surgical debridement agents have often been considered inefficient, can result in a lengthy sloughing period, and have the potential for the development of granulation tissue and increased infection and scarring.
Food and Drug Administration (“FDA”) approved autologous cell therapy products and one FDA-approved specialty biologic product in the U.S. MACI® is an autologous cellularized scaffold product indicated for the repair of symptomatic, single or multiple full-thickness cartilage defects of the knee with or without bone involvement in adults.
Food and Drug Administration (“FDA”) approved autologous cell therapy products and one FDA-approved specialty biologic product in the U.S. MACI ® is an autologous cellularized scaffold product that is indicated for the repair of symptomatic, single or multiple full-thickness cartilage defects of the knee with or without bone involvement in adults.
Unlike Carticel, which was a cell suspension and required a membrane to be sutured in place to confine the cell suspension to the defect area, MACI is comprised of cells uniformly seeded on a collagen membrane resulting in a surgery that is simpler than that with Carticel.
Unlike Carticel, which was a cell suspension and required a membrane to be sutured in place to confine the cell suspension to the defect area, MACI is comprised of cells uniformly seeded on a collagen membrane resulting in a surgery that is simpler than that involved with Carticel.
Specifically, under regulations issued by the FDA, a combination product may be: • A product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity; • Two or more separate products packaged together in a single package or as a unit and comprised of drug and device products, device and biological products, or biological and drug products; • A drug or device or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved, individually specified drug, or device, or biological product where both are required to achieve the intended use, indication, or effect and where upon approval of the proposed product the labeling of the approved product would need to be changed (e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in dose); or • Any investigational drug, device, or biological product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect.
Specifically, under regulations issued by the FDA, a combination product may be: • A product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity; • Two or more separate products packaged together in a single package or as a unit and comprised of drug and device products, device and biological products, or biological and drug products; • A drug or device or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved, individually specified drug, or device, or biological product where 14 Table of Contents both are required to achieve the intended use, indication, or effect and where upon approval of the proposed product the labeling of the approved product would need to be changed (e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in dose); or • Any investigational drug, device, or biological product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect.
NexoBrid’s FDA approval expands our burn care franchise’s total addressable market, which will permit us to treat a significantly larger segment of hospitalized burn patients than with Epicel.
NexoBrid’s FDA approval expands our burn care franchise’s total addressable market, which will permit us to treat a significantly larger segment of hospitalized burn patients than with Epicel alone.
NexoBrid is the first enzymatic agent to have demonstrated rapid and consistent removal of eschar in adult patients suffering from deep partial-thickness and full-thickness thermal burns.
NexoBrid is the first enzymatic agent to have demonstrated rapid and consistent removal of eschar in adult and pediatric patients suffering from deep partial-thickness and full-thickness thermal burns.
Epicel® is a permanent skin replacement Humanitarian Use Device (“HUD”) for the treatment of adult and pediatric patients with deep-dermal or full-thickness burns comprising greater than or equal to 30 percent of total body surface area (“TBSA”). We also hold an exclusive license from MediWound Ltd.
Epicel ® is a permanent skin replacement Humanitarian Use Device (“HUD”) indicated for the treatment of adult and pediatric patients with deep-dermal or full-thickness burns comprising greater than or equal to 30 percent of a patient’s total body surface area (“TBSA”). We also hold an exclusive license from MediWound Ltd.
The agency also prohibits the off-label promotion of biologics and devices and provides guidance on industry-sponsored scientific and educational activities to ensure that these activities are not promotional. Any claims we make for our products in advertising or promotion must be appropriately balanced with important safety information and otherwise adequately substantiated.
The agency also prohibits the off-label promotion of biologics and devices and provides guidance on industry-sponsored scientific and educational activities to ensure that these activities are not promotional. Any claims we make about our products in advertising or promotion must be appropriately balanced with important safety information and otherwise adequately substantiated.
Certain raw materials utilized in NexoBrid’s manufacture, including the supply of the active ingredient bromelain are obtained from Taiwan. On July 1, 2023, we renewed our long-term supply agreement with Matricel GmbH (“Matricel”) for the supply of ACI-Maix collagen membranes used in the manufacture of MACI (the “Matricel Supply Agreement”).
Certain raw materials utilized in NexoBrid’s manufacture, including the supply of the active ingredient bromelain, are sourced from Taiwan. On July 1, 2023, we renewed our long-term supply agreement with Matricel GmbH (“Matricel”) for the supply of ACI-Maix collagen membranes used in the manufacture of MACI (the “Matricel Supply Agreement”).
We will need to continue to comply with the terms of such agreements in order to maintain our rights to such patents as we further commercialize NexoBrid in 2024. Our efforts to secure our proprietary rights also include our reliance on trade secrets and know-how, which we seek to protect, in part, by confidentiality agreements.
We will need to continue to comply with the terms of such agreements in order to maintain our rights to such patents as we further commercialize NexoBrid in 2025. Our efforts to secure our proprietary rights also include our reliance on trade secrets and know-how, which we seek to protect, in part, by confidentiality agreements.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, imposes requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates, independent contractors, or agents that perform services involving the creation, maintenance, receipt, use, or disclosure of, individually identifiable health information relating to the privacy, security and transmission of individually identifiable health information.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, imposes requirements 19 Table of Contents on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates, independent contractors, or agents that perform services involving the creation, maintenance, receipt, use, or disclosure of, individually identifiable health information relating to the privacy, security and transmission of individually identifiable health information.
Over the past five years, a single quarter has ranged from as high as 37% to as low as 17% of annual volumes. Seasonal sales patterns and other variations related to our revenue recognition may cause significant fluctuations in our results of operations and cash flows.
Over the past five years, a single quarter has ranged from as high as 34% to as low as 17% of annual volumes. Seasonal sales patterns and other variations related to our revenue recognition may cause significant fluctuations in our results of operations and cash flows.
Other than NexoBrid, CCO is the only FDA-approved product for enzymatic eschar removal in the U.S. In the general area of cell-based therapies, we potentially compete with a variety of companies, most of whom are specialty medical technology/device or biotechnology companies.
Other than NexoBrid, Santyl is the only FDA-approved product for enzymatic eschar removal in the U.S. In the general area of cell-based therapies, we potentially compete with a variety of companies, most of whom are specialty medical technology/device or biotechnology companies.
The FDA provides an incentive for the development of certain devices intended to benefit patients by treating or diagnosing a disease or condition that affects or is manifested in not more than 8,000 individuals in the U.S. per year. These devices receive a HUD designation and may be eligible for marketing approval under an HDE application.
The FDA provides an incentive for the development of certain devices intended to benefit patients by treating or diagnosing a disease or condition that affects or is manifested in not more than 8,000 individuals in the U.S. per year. These devices receive a HUD designation and may be eligible for marketing approval under an HDE 15 Table of Contents application.
This requirement applies upon initiation of a Phase 2 or Phase 3 trial of the investigational drug. 13 Table of Contents Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the physical characteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
This requirement applies upon initiation of a Phase 2 or Phase 3 trial of the investigational drug. Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the physical characteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
Phase 3 studies are performed after preliminary evidence suggesting effectiveness of the product has been obtained and they are intended to establish the overall benefit-risk relationship of the investigational product, and provide an adequate basis for product approval and labeling. Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval.
Phase 3 studies are performed after preliminary evidence suggesting effectiveness of the product has been obtained and they are intended to establish the overall benefit-risk relationship of the investigational product, and provide an adequate basis for product approval and labeling. 12 Table of Contents Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval.
We expect Epicel’s utility to continue to grow as commercial and medical efforts are appropriately dedicated to the product and the burn centers that use it to treat patients. Due to the low incidence and sporadic nature of severe burns, Epicel revenue has inherent variability from quarter to quarter and does not exhibit significant seasonality.
We expect Epicel’s utility to continue to grow as commercial and medical efforts are appropriately dedicated to the product and the burn centers that use it to treat patients. 8 Table of Contents Due to the low incidence and sporadic nature of severe burns, Epicel revenue has inherent variability from quarter to quarter and does not exhibit significant seasonality.
Some of these, such as Smith & Nephew, plc, Arthrex, Inc. and Zimmer Biomet Holdings, Inc., are well-established and have substantial technical and financial resources compared to us. 22 Table of Contents However, as cell-based products are only just emerging as viable medical therapies, many of our potential competitors are smaller biotechnology and specialty medical products companies.
Some of these, such as Smith & Nephew, plc, Arthrex, Inc. and Zimmer Biomet Holdings, Inc., are well-established and have substantial technical and financial resources compared to us. However, as cell-based products are only just emerging as viable medical therapies, many of our potential competitors are smaller biotechnology and specialty medical products companies.
The intent of PREA is to compel sponsors whose products have pediatric applicability to study those products in pediatric populations, rather than ignoring pediatric indications in favor 17 Table of Contents of adult indications that could be more economically desirable. Even so, the FDA may grant deferrals for submission of pediatric data or full or partial waivers.
The intent of PREA is to compel sponsors whose products have pediatric applicability to study those products in pediatric populations, rather than ignoring pediatric indications in favor of adult indications that could be more economically desirable. Even so, the FDA may grant deferrals for submission of pediatric data or full or partial waivers.
More specifically, the IRA for the first time allows the government to directly negotiate drug prices with manufacturers of certain “select drugs,” creates inflation rebates for Medicare drugs whose price increases faster than the rate of inflation, benchmarked to 2021, and restructures the Medicare Prescription Drug (Part D) program in significant ways.
More specifically, the IRA for the first time allows the government to directly negotiate drug prices with manufacturers 20 Table of Contents of certain “select drugs,” creates inflation rebates for Medicare drugs whose price increases faster than the rate of inflation, benchmarked to 2021, and restructures the Medicare Prescription Drug (Part D) program in significant ways.
ETASU can include, but are not limited to, special training or certification for prescribing or 14 Table of Contents dispensing, distribution controls, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS (or use of a companion diagnostic with a biologic) can materially affect the potential market and profitability of the biologic.
ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, distribution controls, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS (or use of a companion diagnostic with a biologic) can materially affect the potential market and profitability of the biologic.
In addition, many of our smaller potential competitors have formed strategic collaborations, partnerships and other types of joint ventures with larger, well-established industry competitors that afford these companies potential research and development and commercialization advantages in the technology and therapeutic areas currently being 21 Table of Contents pursued by us.
In addition, many of our smaller potential competitors have formed strategic collaborations, partnerships and other types of joint ventures with larger, well-established industry competitors that afford these companies potential research and development and commercialization advantages in the technology and therapeutic areas currently being pursued by us.
A new drug application or BLA 15 Table of Contents for a regenerative advanced therapy may be eligible for priority review or accelerated approval through surrogate or intermediate endpoints reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites.
A new drug application or BLA for a regenerative advanced therapy may be eligible for priority review or accelerated approval through surrogate or intermediate endpoints reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites.
The FDA also may perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by the manufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of biological products.
The FDA also may perform certain confirmatory tests on lots of some products, such 16 Table of Contents as viral vaccines, before releasing the lots for distribution by the manufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of biological products.
In addition, our 19 Table of Contents activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information, and other information affecting federal, state, and third-party reimbursement for our products, and the sale and marketing of our products, are subject to scrutiny under this law.
In addition, our activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information, and other information affecting federal, state, and third-party reimbursement for our products, and the sale and marketing of our products, are subject to scrutiny under this law.
This treatment is sometimes augmented with allograft derived products such as BioCartilage ® (distributed by Arthrex, Inc.), Cartiform ® (manufactured by Osiris Therapeutics, Inc. and distributed by Arthrex, Inc.) and Prochondrix ® (distributed by Stryker Corporation). Additionally, CartiMax ® (distributed by ConMed Corporation) is an allograft filler that can be used to treat certain cartilage defects.
This treatment is sometimes augmented with allograft derived products such as BioCartilage ® and Cartiform ® (distributed by Arthrex, Inc.) and Prochondrix ® (distributed by Stryker Corporation). Additionally, CartiMax ® (distributed by ConMed Corporation) is an allograft filler that can be used to treat certain cartilage defects.
Specifically, in the U.S., the FDA regulates drugs, biologics and medical devices and requires new product approvals or clearances to assure the safety and effectiveness of these products. Governments in other countries have similar requirements for testing and 11 Table of Contents marketing.
Specifically, in the U.S., the FDA regulates drugs, biologics and medical devices and requires new product approvals or clearances to assure the safety and effectiveness of these products. Governments in other countries have similar requirements for testing and marketing.
The expansion of our target addressable market supports a broader commercial footprint, and we believe that this may help drive both increased NexoBrid use as well as increased Epicel awareness throughout the burn care space. The commercial launch of NexoBrid is well underway. The manufacturing process for NexoBrid is conducted by MediWound, primarily at manufacturing locations in Israel.
The expansion of our target addressable market supports a broader commercial footprint, and we believe that this will help drive both increased NexoBrid use as well as increased Epicel awareness throughout the burn care space. The manufacturing process for NexoBrid is conducted by MediWound, primarily at manufacturing locations in Israel.
When these patents and data exclusivity expire, our opportunity to establish or maintain product revenue could be substantially reduced. 10 Table of Contents Since 2019, we have held exclusive license and supply agreements with MediWound to commercialize NexoBrid in North America.
When these patents and data exclusivity expire, our opportunity to establish or maintain product revenue could be substantially reduced. Since 2019, we have held exclusive license and supply agreements with MediWound to commercialize NexoBrid in North America.
Biosimilars The Patient Protection and Affordable Care Act (“ACA”), includes the Biologics Price Competition and Innovation Act of 2009. That Act created an approval pathway authorizing the FDA to approve biosimilars and interchangeable biosimilars.
Biosimilars 17 Table of Contents The Patient Protection and Affordable Care Act (“ACA”), includes the Biologics Price Competition and Innovation Act of 2009. That Act created an approval pathway authorizing the FDA to approve biosimilars and interchangeable biosimilars.
In addition, as a condition of BLA approval, the FDA may require a REMS to help ensure that the benefits of the biologic outweigh potential risks. A REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use (“ETASU”).
In addition, as a condition of BLA approval, the FDA may require a Risk Evaluation and Mitigation Strategy (“REMS”) to help ensure that the benefits of the biologic outweigh potential risks. A REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use (“ETASU”).
A BLA supplement for a new indication 18 Table of Contents typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing BLA supplements as it does in reviewing BLAs. Similarly, changes to approved or cleared devices may require FDA’s premarket review.
A BLA supplement for a new indication often requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing BLA supplements as it does in reviewing BLAs. Similarly, changes to approved or cleared devices may require FDA’s premarket review.
The War in Israel and Gaza In May 2019, we entered into exclusive license and supply agreements with MediWound, under which MediWound manufactures and supplies NexoBrid to the U.S. market on a unit price basis. MediWound develops and manufactures NexoBrid in part, at its facilities in Yavne, Israel.
The Ongoing Conflicts in the Middle East In May 2019, we entered into exclusive license and supply agreements with MediWound, under which MediWound manufactures and supplies NexoBrid to the U.S. market on a unit price basis. MediWound develops and manufactures NexoBrid in part, at its facilities in Yavne, Israel.
Although age can vary, the typical Epicel patient is young and has suffered full-thickness burns due to a wide variety of occupational, household or vehicular accidents. Many of the most severely burned patients are medivac transported to one of the approximately 140 specialized burn centers across the U.S.
The typical Epicel patient has suffered full-thickness burns due to a wide variety of occupational, household or vehicular accidents. Many of the most severely burned patients are medivac transported to one of the approximately 140 specialized burn centers across the U.S.
Consequently, the European manufacturing authorization for MACI expired by its terms at the end of June 2018. Australian operations and the commercialization of MACI in that country was discontinued prior to our acquisition of the product in 2014.
We suspended the marketing of MACI in Europe in September 2014 and the European manufacturing authorization for MACI expired by its terms at the end of June 2018. Australian operations and the commercialization of MACI in that country was discontinued prior to our acquisition of the product in 2014.
The arthroscopic delivery of MACI could increase the ease of MACI’s use for physicians and reduce both the length of the procedure as well as procedure-induced trauma, ultimately resulting in a reduction of a patient’s post-operative pain and accelerating a patient’s recovery.
The arthroscopic delivery of MACI could increase the ease of MACI’s use for physicians and may reduce both the length of the procedure as well as procedure-induced trauma, which may result in a reduction of a patient’s post-operative pain and accelerate a patient’s recovery.
In the last five years through 2023, MACI sales volumes from the first through the fourth quarter on average represented 20% (18%-22% range), 22% (16%-24% range), 23% 7 Table of Contents (21%-26% range) and 35% (33%-38% range) respectively, of total annual volumes.
In the last five years through 2024, MACI sales volumes from the first through the fourth quarter on average represented 21% (20%-22% range), 22% (16%-24% range), 23% (21%-26% range) and 34% (33%-38% range) respectively, of total annual volumes.
There are multiple other cartilage repair technologies currently being studied in clinical and preclinical studies. Hyalofast ® is a biodegradable hyaluronic acid-based scaffold used in conjunction with autologous concentrated bone marrow aspirate being developed by Anika Therapeutics, Inc. It is currently being studied in a Phase 3 trial in the U.S. that was initiated in 2015.
There are multiple other cartilage repair technologies currently being studied in clinical and preclinical studies. Hyalofast ® is a biodegradable hyaluronic acid-based scaffold used in conjunction with autologous concentrated bone marrow aspirate being developed by Anika Therapeutics, Inc. The Phase 3 trial completed patient enrollment in 2023.
This process takes several years and requires expenditure of significant resources. There can be no assurance that our current or future product candidates will ultimately receive approval. The FFDCA, PHSA, and other federal and state statutes and regulations govern the research, testing, manufacture, safety, labeling, storage, record-keeping, approval, distribution, use, adverse event reporting, and advertising and promotion of our products.
There can be no assurance that our current or future product candidates will ultimately receive approval. 11 Table of Contents The FFDCA, PHSA, and other federal and state statutes and regulations govern the research, testing, manufacture, safety, labeling, storage, record-keeping, approval, distribution, use, adverse event reporting, and advertising and promotion of our products.
NexoBrid Our portfolio of commercial-stage products now includes NexoBrid (anacaulase-bcdb), a topically-administered biological product containing proteolytic enzymes. The FDA approved NexoBrid on December 28, 2022, and the product is indicated for the removal of eschar in adults with deep partial-thickness and/or full thickness thermal burns.
NexoBrid Our portfolio of commercial-stage products also includes NexoBrid (anacaulase-bcdb), a topically-administered biological orphan product containing proteolytic enzymes, for which the FDA approved a BLA in December 2022 permitting the product’s use for the removal of eschar in adults with deep partial-thickness and/or full thickness thermal burns.
We continue to monitor the ongoing conflict in Israel and are in close communication with MediWound leadership. MediWound’s NexoBrid manufacturing operations are continuing and, as of the date of this disclosure, MediWound does not anticipate a disruption to its ongoing supply of commercial NexoBrid to the United States.
We continue to monitor the ongoing conflicts in the Middle East region involving Israel, and we are in close communication with MediWound leadership. MediWound’s NexoBrid manufacturing operations are continuing and, as of the date of this disclosure, MediWound does not anticipate a material disruption to its ongoing supply of commercial NexoBrid to the U.S.
The FDA is not bound by the recommendation of the advisory committee, but it generally follows such recommendations. Before approving a BLA, the FDA will typically inspect one, or more, clinical sites to assure compliance with GCPs. Additionally, the FDA typically will inspect the facility or facilities at which the biologic is manufactured as part of a pre-license inspection.
The FDA is not bound by the recommendation of the advisory committee, but it generally follows such recommendations. Before approving a BLA, the FDA will typically inspect one, or more, clinical sites to assure compliance with GCPs.
The revised product label also now specifies that the probable benefit of Epicel, mainly related to survival, was demonstrated in two Epicel clinical experience databases and a physician-sponsored study comparing outcomes in patients with large burns treated with Epicel relative to standard care.
The revised product label also now specifies that the probable benefit of Epicel, mainly related to survival, was demonstrated in two Epicel clinical experience databases and a physician-sponsored study comparing outcomes in patients with large burns treated with Epicel relative to standard care. Market Opportunity for Epicel Each year in the U.S., more than 40,000 people are hospitalized for burns.
Rigorous and extensive FDA regulation of biological products and devices continues after approval, particularly with respect to cGMPs. We will rely, and expect to continue to rely, on third parties to manufacture or supply certain components, equipment, disposable devices, testing and other materials used in our manufacturing process for any products that we commercialize or may commercialize.
We will rely, and expect to continue to rely, on third parties to manufacture or supply certain components, equipment, disposable devices, testing and other materials used in our manufacturing process for any products that we commercialize or may commercialize.
To the extent the war between Israel and Hamas intensifies or expands to include additional countries or militant groups in the region and MediWound’s facilities in Israel are damaged or destroyed, travel to and from Israel is halted or inhibited, or significant key MediWound operational personnel are called to military service, MediWound’s ability to continue to supply NexoBrid to the U.S. market could be disrupted.
To the extent the conflicts in the Middle East region intensify or expand and MediWound’s facilities in Israel are damaged or destroyed, travel to and from Israel is halted or inhibited, or significant key MediWound operational personnel are called to military service, MediWound’s ability to continue to supply NexoBrid to the U.S. market could be disrupted.
We believe that this potential lifecycle enhancement and indication expansion for MACI will require conducting an additional randomized clinical trial concerning the product’s use in the ankle and we are on track to initiate a MACI Ankle clinical trial beginning in 2025 and, if approved, we believe MACI’s expansion into the ankle will be a significant longer-term growth driver for the product, beginning in the latter half of the decade.
We believe that this potential lifecycle enhancement and indication expansion for MACI will require conducting an additional randomized clinical trial concerning the product’s use in the ankle and we are on track to initiate a MACI Ankle clinical trial beginning in 2025.
Both autologous cell therapy products are currently manufactured and marketed in the U.S. NexoBrid is a topically-administered biological orphan product containing proteolytic enzymes that is indicated for eschar removal in adults with deep partial-thickness and/or full-thickness burns. We hold exclusive license and supply agreements with MediWound to commercialize NexoBrid in North America.
NexoBrid is a topically-administered biological orphan product containing proteolytic enzymes that is indicated for eschar removal in adult and pediatric patients with deep partial-thickness and/or full-thickness burns. We hold exclusive license and supply agreements with MediWound to commercialize NexoBrid in North America.
However, we did not take such actions prior to expiration, and therefore the EU marketing authorization for MACI expired in June 2018. 20 Table of Contents Pharmaceutical Coverage and Reimbursement In the U.S. and other countries, sales of any products for which we receive regulatory approval for commercial sale will depend in part on the availability of reimbursement from third-party payers, including government health administrative authorities, managed care providers, private health insurers, and other organizations.
Pharmaceutical Coverage and Reimbursement In the U.S. and other countries, sales of any products for which we receive regulatory approval for commercial sale will depend in part on the availability of reimbursement from third-party payers, including government health administrative authorities, managed care providers, private health insurers, and other organizations.
To achieve this objective, we intend to: • Increase MACI revenue by increasing the number of surgeons implanting MACI and the average number of implants per surgeon, seeking to expand the clinical indications for which the MACI procedure is approved, and optimizing the ease of use of the MACI procedure for surgeons through, among other efforts, developing and potentially commercializing an arthroscopic delivery method for MACI; • Increase Epicel revenue by expanding the number of burn centers and surgeons consistently using Epicel; • Increase NexoBrid revenue by continuing the successful commercial launch of the product in the U.S. and expanding the number of burn centers, hospitals and physicians consistently using NexoBrid for the removal of eschar; and • Generate positive operating income and cash flow.
To achieve this objective, we intend to: • Increase MACI revenue by increasing the number of surgeons implanting MACI and the average number of implants per surgeon, seeking to expand the clinical indications for which the MACI and MACI Arthro procedures are approved, and optimizing the ease of use of the MACI procedure for surgeons through continued innovation; • Increase Epicel revenue by expanding the number of burn centers and surgeons consistently using Epicel; • Increase NexoBrid revenue by expanding the number of burn centers, hospitals and physicians consistently using NexoBrid for the removal of eschar; and • Generate positive operating income and cash flow.
(“MediWound”) for North American rights to NexoBrid® (anacaulase-bcdb), a topically-administered biological orphan product containing proteolytic enzymes, which is indicated for the removal of eschar in adults with deep partial thickness and/or full thickness thermal burns. Following FDA approval, we began commercial sales of NexoBrid in the U.S. during the third quarter of 2023.
(“MediWound”) for North American rights to NexoBrid ® (anacaulase-bcdb), a topically-administered biological orphan product containing proteolytic enzymes, which is indicated for the removal of eschar in adult and pediatric patients with deep partial thickness and/or full thickness thermal burns.
Employees and Human Capital Resources As of December 31, 2023, we employed approximately 314 full-time employees. A significant number of our management and professional employees have had prior experience with pharmaceutical, biotechnology or medical product companies. None of our employees are covered by collective bargaining agreements, and management considers relations with our employees to be good.
Employees and Human Capital Resources As of December 31, 2024, we employed approximately 357 full-time employees. A significant number of our management and professional employees have had prior experience with pharmaceutical, biotechnology or medical product companies.
Available Information Additional information about Vericel is included on our website, www.vcel.com. Information on our website is not incorporated by reference into this Annual Report.
Available Information Additional information about Vericel, including for complying with our disclosure under the SEC’s Regulation FD (Fair Disclosure), is included on our website, www.vcel.com. Information on our website is not incorporated by reference into this Annual Report.
Sales and Marketing MACI, Epicel and NexoBrid are specialty products with focused physician and institutional call points. We have two sales teams, one dedicated to MACI and a Burn Care team focused on both Epicel and NexoBrid. The MACI sales organization is comprised of individual Joint Restoration Territory Managers, which engage with our target audience.
Sales and Marketing MACI, Epicel and NexoBrid are specialty products with focused physician and institutional call points. We have two sales teams, one dedicated to MACI and a Burn Care team focused on both Epicel and NexoBrid.
MACI may be implanted through a smaller incision or mini arthrotomy for focal defects. By using specialized instruments, MACI is simply trimmed by the surgeon to the size of the defect, allowing for a precise fit, and fixed to the bone with an off-the-shelf surgical fibrin sealant.
MACI is simply trimmed by the surgeon to the size of the defect, allowing for a precise fit, and fixed to the bone with an off-the-shelf surgical fibrin sealant.
Epicel is currently the only FDA-approved cultured epidermal autograft product available for large total surface area burns in both adult and pediatric patients.
The extent of the skin surface that the burn affects is usually referred to as a percent of TBSA. Epicel is currently the only FDA-approved cultured epidermal autograft product available for large total surface area burns in both adult and pediatric patients.
The ADN is determined by the FDA (i) when the agency approves the original HDE application, or (ii) when the agency approves an HDE supplement for an HDE approved before the enactment of FDASIA if the HDE holder seeks a determination based upon the profit-making eligibility criteria, and the FDA determines that the HUD meets the eligibility criteria. 16 Table of Contents FDA Post-Approval Requirements Maintaining substantial compliance with applicable federal, state, local, and foreign statutes and regulations requires the expenditure of substantial time and financial resources.
The ADN is determined by the FDA (i) when the agency approves the original HDE application, or (ii) when the agency approves an HDE supplement for an HDE approved before the enactment of FDASIA if the HDE holder seeks a determination based upon the profit-making eligibility criteria, and the FDA determines that the HUD meets the eligibility criteria.
Certain raw materials utilized in NexoBrid’s manufacture, including the supply of the active ingredient bromelain, are obtained from Taiwan. 9 Table of Contents Pursuant to the terms of our existing license agreement, following the FDA approval of NexoBrid, MediWound transferred the BLA to Vericel effective February 20, 2023.
Certain raw materials utilized in NexoBrid’s manufacture, including the supply of the active ingredient bromelain, are sourced from Taiwan. Pursuant to the terms of our existing license agreement, following the FDA approval of NexoBrid, MediWound transferred the BLA to Vericel. Subsequently, in August 2024, the FDA approved a supplemental BLA expanding NexoBrid’s indication to include pediatric patients.
NexoBrid is regulated by FDA’s Center for Drug Evaluation and Research (“CDER”) as a botanical protein biologic and the BLA associated with it was approved by the FDA on December 28, 2022, paving the way for marketing and commercialization. Commercial production of these products needs to occur in FDA-registered facilities in compliance with cGMP requirements for biologics.
NexoBrid is regulated by FDA’s Center for Drug Evaluation and Research (“CDER”) as a botanical protein biologic and the BLA associated with it was approved by the FDA on December 28, 2022, paving the way for marketing and commercialization. Subsequently, in August 2024, the FDA approved a supplemental BLA expanding NexoBrid’s indication to include pediatric patients.
Currently, the mortality rate for this group is 8 Table of Contents approximately 34%, partially due to the inability to quickly close wounds because of the lack of remaining healthy tissue from which to harvest autografts.
Approximately 1,500 of these patients are treated for burns covering more than 30% TBSA, the labeled indication for Epicel. Currently, the mortality rate for this group is approximately 34%, partially due to the inability to quickly close wounds because of the lack of remaining healthy tissue from which to harvest autografts.
Surgical excision of eschar, which involves slicing away the burn tissue until healthy tissue is reached, currently is the standard of care for the removal of eschar. There are limitations to this procedure, however, in that surgical excision is non-selective and can cause pain, blood loss and loss of healthy tissue.
There are limitations to this procedure, however, in that surgical excision is non-selective and can cause pain, blood loss and loss of healthy tissue. Currently, there also exist certain non-surgical approaches for the removal of eschar, which have limited efficacy and which have not been shown to reduce the need for surgical eschar removal.
Production Cell Manufacturing and Cell Production Components Our cell-manufacturing facility is located in Cambridge, Massachusetts, and is used for the U.S. manufacturing and distribution of MACI and Epicel. The Cambridge facility also houses our research and development function, which is responsible for process development, release assay development, and technology transfers between sites and departments.
Production Cell Manufacturing and Cell Production Components Our cell-manufacturing facility is located in Cambridge, Massachusetts, and is used for the U.S. manufacturing and distribution of MACI and Epicel.
Patients with full-thickness burn injuries of any size and partial-thickness burn injuries greater than 10% TBSA are most often transferred to specialized burn centers. These types of burn injuries, which damage the epidermal and dermal layers of the skin, require removal of the damaged tissue, or eschar, followed by grafting of the wound area to achieve closure of the wound.
These types of burn injuries, which damage the epidermal and dermal layers of the skin, require removal of the damaged tissue, or eschar, followed by grafting of the wound area to achieve closure of the wound. Early eschar removal and burn assessment are critical first steps in the treatment of burn patients.
The burn care franchise is divided into three geographic regions, each led by a Regional Manager, and reporting to a Vice President of National Burn Care Sales. There are approximately 140 burn centers in the U.S., and a subset of these institutions regularly treat patients suffering from large TBSA burns.
The burn care commercial team is divided into geographic regions and consists of sales representatives that regularly engage with our target audience and who are managed by a senior sales leadership team. There are approximately 140 burn centers in the U.S., and a subset of these institutions regularly treat patients suffering from large TBSA burns.
MACI is a third-generation autologous cellularized scaffold product indicated for the repair of symptomatic, single or multiple full-thickness cartilage defects of the knee with or without bone involvement in adults; and Epicel is a permanent skin replacement for the treatment of adult and pediatric patients with deep-dermal or full-thickness burns comprising greater than or equal to 30 percent TBSA.
Epicel is a permanent skin replacement indicated for the treatment of adult and pediatric patients with deep-dermal or full-thickness burns comprising greater than or equal to 30 percent of a patient’s TBSA. Both autologous cell therapy products are currently manufactured and marketed in the U.S.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees, advisors and consultants.
None of our employees are covered by collective bargaining agreements, and management considers relations with our employees to be good. 22 Table of Contents Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees, advisors and consultants.
As of the date of this report, our MACI commercial team consists of Joint Restoration Territory Managers that regularly engage with our target audience. The team is divided into geographic regions, each managed by a Regional Manager and led by a Vice President of National MACI Sales.
Our MACI commercial team is divided into geographic regions and consists of sales representatives that regularly engage with our target audience and who are managed by a senior sales leadership team.
Research & Development The bulk of our ongoing research and development activities are focused on exploring methods that improve our ability to efficiently manufacture high quality cell therapy products for patients. We have performed an in-depth analysis of the cell culture processes used in the manufacturing of Epicel and MACI and have identified several areas for potential improvement.
We have performed an in-depth analysis of the cell culture processes used in the manufacturing of Epicel and MACI and have identified several areas for potential improvement.
NexoBrid can be administered to an area of up to 20% body surface area, in two separate applications, at the patient’s bedside through a series of steps.
In treating patients with deep partial-thickness and/or full thickness burns, NexoBrid works to selectively degrade eschar over the course of approximately four hours while preserving viable tissue. NexoBrid can be administered to an area of up to 20% body surface area, in two separate applications, at the patient’s bedside through a series of steps.
The CTA has similar data requirements to those of an IND including the need for IRB and/or Ethics Committee approvals for investigational protocols. We discussed with the FDA a non-clinical regulatory strategy to support the potential inclusion of arthroscopic delivery in MACI’s approved labeling.
The CTA has similar data requirements to those of an IND including the need for IRB and/or Ethics Committee approvals for investigational protocols. MACI and NexoBrid are regulated by the FDA as biologics.
Approximately 60,000 of these eligible patients have larger lesions and are likely to secure insurance authorization for MACI. As a result of the uncertainty and other impacts of the COVID-19 pandemic and the resulting shifts of timing in some revenue, our historically observable seasonality of MACI revenues has been partially impacted.
Approximately 60,000 of these eligible patients have larger lesions and are likely to secure insurance authorization for MACI. We have traditionally experienced a level of seasonality with respect to the timing of MACI revenues.
Early eschar removal and burn assessment are critical first steps in the treatment of burn patients. The early removal of eschar can help reduce inflammation, slow or stop burn progression and reduce the potential for infection and sepsis.
The early removal of eschar can help reduce inflammation, slow or stop burn progression and reduce the potential for infection and sepsis. Surgical excision of eschar, which involves slicing away the burn tissue until healthy tissue is reached, currently is the standard of care for the removal of eschar.
Regulatory Process The FDA regulates biologics under the Federal Food, Drug, and Cosmetic Act (“FFDCA”) and the Public Health Service Act (“PHSA”), and their implementing regulations. Obtaining approval of a BLA for a new biological product is a lengthy process, leading from the development of a new product through preclinical and clinical testing.
Obtaining approval of a BLA for a new biological product is a lengthy process, leading from the development of a new product through preclinical and clinical testing. This process takes several years and requires expenditure of significant resources.
Agili-C ® is a non-cellular biphasic implant derived from aragonite coral which is implanted into the subchondral bone.
The final module of clinical data is expected to be filed with FDA in late 2025. Potential U.S. launch is anticipated in 2026. Agili-C ® is a non-cellular biphasic implant derived from aragonite coral which is implanted 21 Table of Contents into the subchondral bone.
In 2014, Aesculap Biologics, LLC initiated a Phase 3 trial of NOVOCART ® 3D, a biologic-device combination product comprised of autologous chondrocytes seeded on a collagen scaffold. The trial is still enrolling patients. Patients who are severely burned over a substantial portion of their TBSA have few options for permanent skin coverage.
Aesculap Biologics completed enrollment in its Phase 3 clinical trial for NOVOCART ® 3D in the U.S. in 2023. It was subsequently announced in June of 2024 that the NOVOCART assets had been acquired by Octane Medical Group. Patients who are severely burned over a substantial portion of their TBSA have few options for permanent skin coverage.
Epicel Epicel is a permanent skin replacement for deep-dermal or full-thickness burns comprising greater than or equal to 30 percent of TBSA. The extent of the skin surface that the burn affects is usually referred to as a percent of TBSA.
If approved, we believe MACI’s label expansion allowing its use to repair cartilage defects in the ankle will be a significant long-term growth driver for the product in the coming years. Epicel Epicel is a permanent skin replacement for deep-dermal or full-thickness burns comprising greater than or equal to 30 percent of TBSA.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe expect that cash from the sales of our products and existing cash, cash equivalents, investments and available borrowing capacity will be sufficient to support our current operations through at least 12 months following the issuance of the consolidated financial statements included in this Annual Report on Form 10-K.
Biggest changeWe expect that cash from the sales of our products and existing cash, cash equivalents, investments and available borrowing capacity will be sufficient to support our current operations through at least 12 months following the issuance of the consolidated financial statements included in this Annual Report on Form 10-K. 26 Table of Contents Although we believe we can continue to achieve profitability without the need to raise additional capital, we may incur operating losses over the next several years despite sales increasing and margins improving, due to continuing expenses related to research and development, the qualification of our new manufacturing facility, and the expense associated with continuing the commercialization of our approved products.
We expect that our commercial success and our future NexoBrid-related revenue will depend largely on the medical community’s acceptance of NexoBrid as an important treatment option for patients that are suffering from severe burn injuries and, ultimately, as the standard of care for the removal of eschar.
We expect that the commercial success of NexoBrid and our future NexoBrid-related revenue will depend largely on the medical community’s acceptance of NexoBrid as an important treatment option for patients that are suffering from severe burn injuries and, ultimately, as the standard of care for the removal of eschar.
The U.S. medical community’s acceptance of NexoBrid and other of our products will depend upon our ability to demonstrate long-term clinical performance and advantages and cost-effectiveness of our products.
The U.S. medical community’s acceptance of NexoBrid and our other products will depend upon our ability to demonstrate long-term clinical performance and the advantages and cost-effectiveness of our products.
The degree of market acceptance of any of our marketed or potential new products will depend on a number of factors, including: • The clinical safety and effectiveness of our products and their demonstrated advantage over alternative treatment methods; • Our ability to demonstrate to healthcare providers that our products provide a therapeutic advancement over standard of care treatment or other competitive products and methods; • Our ability to educate healthcare providers on the autologous use of human tissue, to avoid potential confusion with, and differentiate ourselves from, the ethical controversies associated with human fetal tissue and engineered human tissue; • Our ability to educate healthcare providers on the benefits and appropriate use of enzymatic agents for the removal of eschar in adult patients suffering from deep partial-thickness and full-thickness thermal burns; • Our ability to educate healthcare providers, patients and payers on the safety and adverse reactions associated with our products; • Our ability to meet supply and demand and develop a group of medical professionals familiar with and committed to the use of our products; and 27 Table of Contents • The cost-effectiveness of our products and the reimbursement policies of government and third-party payers.
The degree of market acceptance of any of our marketed or potential new products will depend on a number of factors, including: • The clinical safety and effectiveness of our products and their demonstrated advantage over alternative treatment methods; • Our ability to demonstrate to healthcare providers that our products provide a therapeutic advancement over standard of care treatment or other competitive products and methods; • Our ability to educate healthcare providers on the autologous use of human tissue, to avoid potential confusion with, and differentiate ourselves from, the ethical controversies associated with human fetal tissue and engineered human tissue; 27 Table of Contents • Our ability to educate healthcare providers on the benefits and appropriate use of enzymatic agents for the removal of eschar in adult and pediatric patients suffering from deep partial-thickness and full-thickness thermal burns; • Our ability to educate healthcare providers, patients and payers on the safety and adverse reactions associated with our products; • Our ability to meet supply and demand and develop a group of medical professionals familiar with and committed to the use of our products; and • The cost-effectiveness of our products and the reimbursement policies of government and third-party payers.
In particular, although the passage of the Tax Cuts and Jobs Act of 2017 reduced the U.S. tax rate to 21 percent the law is complex and further regulations and interpretations are still being issued. We could face audit challenges on how we apply the new law that could have a negative impact on our provision for income taxes.
In particular, although the passage of the Tax Cuts and Jobs Act of 2017 reduced the U.S. tax rate to 21 percent the law is complex and further regulations and interpretations are still being issued. We could face audit challenges on how we apply the law that could have a negative impact on our provision for income taxes.
We have also developed an integrated information technology system for benefit coordination for MACI patients who have opted-in to the My Cartilage Care program, which we use with our benefit coordination contractor and our contracted specialty pharmacies. This system contains patient-related information some of which is accessible by company personnel and healthcare professionals for surgery coordination activities.
We have also developed an integrated information technology system for care coordination for MACI patients who have opted-in to the My Cartilage Care program, which we use with our care coordination contractor and our contracted specialty pharmacies. This system contains patient-related information some of which is accessible by company personnel and healthcare professionals for surgery coordination activities.
Therefore, we may not be able to achieve or sustain profitability. In the longer term, we may need to raise additional funds in order to continue to complete product development programs and the clinical trials needed to obtain approval for and commercialize our future product candidates, or to capitalize on potential strategic opportunities.
Therefore, we may not be able to consistently achieve or sustain profitability. In the longer term, we may need to raise additional funds in order to continue to complete product development programs and the clinical trials needed to obtain approval for, and commercialize, our future product candidates, or to capitalize on potential strategic opportunities.
Failing to maintain and obtain written agreements from payers for reimbursement of our products or to obtain adequate reimbursement rates could have a material adverse effect on our financial condition and operating results. In addition, healthcare providers are under pressure to increase profitability and reduce costs.
Failing to maintain and obtain written agreements from payers for reimbursement of our products or to obtain adequate reimbursement rates could have a material adverse effect on our financial condition and operating results. In addition, many healthcare providers are under pressure to increase profitability and reduce costs.
These, and additional legislation which may be passed, may cause us to incur significant additional costs of compliance due to the need for expanded data collection, analysis, and certification with respect to greenhouse gas emissions and other climate change related risks, as well as other ESG topics.
Additional legislation which may be passed, may cause us to incur significant additional costs of compliance due to the need for expanded data collection, analysis, and certification with respect to greenhouse gas emissions and other climate change related risks, as well as other ESG topics.
Further, continued market acceptance of Epicel, MACI and NexoBrid, and any future product candidates that may be approved, depends on our efforts to educate the medical community and third-party payers on the benefits of our products and product candidates and will require significant resources from us.
Further, continued market acceptance of Epicel, MACI, MACI Arthro and NexoBrid, and any future product candidates that may be approved, depends on our efforts to educate the medical community and third-party payers on the benefits of our products and product candidates and will require significant resources from us.
Uncertainty caused by pandemics, epidemics, or similar public health crises could lead to prolonged economic downturns and reduce or delay demand for our products, in which case our results of operations could be significantly impacted.
Uncertainty caused by pandemics, epidemics, or other similar public health crises could lead to prolonged economic downturns and reduce or delay demand for our products, in which case our results of operations could be significantly impacted.
Some of the factors that will impact our ability to raise additional capital and our overall success include: • Our ability to further commercialize our products; • The rate and degree of progress of our product development; 51 Table of Contents • The rate of regulatory approval to proceed with clinical developmental programs; • The level of success achieved in clinical trials; • The requirements necessary for marketing authorization from regulatory bodies in the U.S. and other countries; • The liquidity and market volatility of our equity securities; and • Regulatory and manufacturing requirements and uncertainties, and technological developments by competitors.
Some of the factors that will impact our ability to raise additional capital and our overall success include: 52 Table of Contents • Our ability to further commercialize our products; • The rate and degree of progress of our product development; • The rate of regulatory approval to proceed with clinical developmental programs; • The level of success achieved in clinical trials; • The requirements necessary for marketing authorization from regulatory bodies in the U.S. and other countries; • The liquidity and market volatility of our equity securities; and • Regulatory and manufacturing requirements and uncertainties, and technological developments by competitors.
Governmental and regulatory actions against us could result in various consequences that could adversely impact our operations, including: • The recall or seizure of products; • The suspension or revocation of the authority necessary for the production or sale of a product; • The suspension of shipments from particular manufacturing facilities, including non-U.S. facilities placed on an import alert; • The imposition of fines and penalties; • The delay of our ability to introduce new products into the market; 39 Table of Contents • Our exclusion or the exclusion of our products from being reimbursed by federal and state healthcare programs (such as military, Medicare, Medicaid, Veterans Administration health programs and/or Civilian Health and Medical Program Uniformed Service, or CHAMPUS); and • Other civil or criminal prosecution or sanctions against us or our officers, directors and employees, such as fines, penalties or imprisonment.
Governmental and regulatory actions against us could result in various consequences that could adversely impact our operations, including: • The recall or seizure of products; • The suspension or revocation of the authority necessary for the production or sale of a product; • The suspension of shipments from particular manufacturing facilities, including non-U.S. facilities placed on an import alert; • The imposition of fines and penalties; • The delay of our ability to introduce new products into the market; • Our exclusion or the exclusion of our products from being reimbursed by federal and state healthcare programs (such as military, Medicare, Medicaid, Veterans Administration health programs and/or Civilian Health and Medical Program Uniformed Service, or CHAMPUS); and • Other civil or criminal prosecution or sanctions against us or our officers, directors and employees, such as fines, penalties or imprisonment.
We rely on these systems to maintain the chain of identity for each autologous product, and to ensure timely delivery of product, prior to expiration. Each of our autologous products has a limited usable life measured in days from the completion of the manufacturing process to patient implant or grafting. Accordingly, maintaining accurate scheduling logistics is critical.
We rely on these systems to maintain the chain of identity for each autologous product, and to ensure timely delivery of product, prior to expiration. Each of our autologous products has a limited usable life measured in days from the completion of the manufacturing process to patient implant or grafting, therefore, maintaining accurate scheduling logistics is critical.
If our operations are found to be in violation of any of the laws described above or any other governmental laws and regulations that may apply to us, we may be subject to significant penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, the exclusion from participation in federal and state 44 Table of Contents healthcare programs, individual imprisonment, reputational harm, and the curtailment or restructuring of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws.
If our operations are found to be in violation of any of the laws described above or any other governmental laws and regulations that may apply to us, we may be subject to significant penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, the exclusion from participation in federal and state healthcare programs, individual imprisonment, reputational harm, and the curtailment or restructuring of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws.
The commercial success of NexoBrid depends, in part, on MediWound’s ability to obtain and maintain patent protection and trade secret protection for NexoBrid and its uses, as well as our ability to operate without infringing upon the proprietary rights of others. The family of patents that covers NexoBrid specifically includes approximately 35 granted patents worldwide.
The commercial success of NexoBrid depends, in part, on MediWound’s ability to obtain and maintain patent protection and trade secret protection for NexoBrid and its uses, as well as our ability to operate without infringing upon the proprietary rights of others. The family of patents that covers NexoBrid specifically includes approximately 32 granted patents worldwide.
Others may challenge our patents or other intellectual property rights or sue us for infringement. 49 Table of Contents Risks Related to an Investment in our Common Stock Our common stock price has been volatile and future sales of shares of common stock could have an adverse effect on the market price of such shares.
Others may challenge our patents or other intellectual property rights or sue us for infringement. 50 Table of Contents Risks Related to an Investment in our Common Stock Our common stock price has been volatile and future sales of shares of common stock could have an adverse effect on the market price of such shares.
Market acceptance of any future product candidates, if approved, will not be fully known until after they are launched and may be negatively affected by a potential poor safety experience and the track record of other similar products and product candidates.
Market acceptance of any future product candidates, if approved, will not be fully known until after they are launched and may be negatively affected by a potentially poor safety experience and the track record of other similar products and product candidates.
This could result in higher costs to us or deprive us of potential product revenues. 35 Table of Contents Complying with cGMP, International Conference on Harmonization (“ICH”) and other non-U.S. regulatory requirements will require that we expend time, money, and effort in production, recordkeeping, and quality control to assure that the product or product candidate meets applicable specifications and other requirements.
This could result in higher costs to us or deprive us of potential product revenues. Complying with cGMP, International Conference on Harmonization (“ICH”) and other non-U.S. regulatory requirements will require that we expend time, money, and effort in production, recordkeeping, and quality control to assure that the product or product candidate meets applicable specifications and other requirements.
These commitments may include costly activities, such as additional clinical trials, and a failure to meet these commitments can result in negative actions by the FDA, including the withdrawal of the product from the market. 38 Table of Contents Our business, financial condition, results of operation and cash flows could be significantly and negatively affected by substantial governmental regulations.
These commitments may include costly activities, such as additional clinical trials, and a failure to meet these commitments can result in negative actions by the FDA, including the withdrawal of the product from the market. Our business, financial condition, results of operation and cash flows could be significantly and negatively affected by substantial governmental regulations.
While we cannot predict what impact on federal reimbursement policies these laws or any replacement law will have in general or specifically on any product we may commercialize in the future, modifications IRA, subsequent Executive Branch action, or HHS implementation of current laws may result in downward pressure on reimbursement, which could negatively affect market acceptance of new products.
While we cannot predict what impact on federal reimbursement policies these laws or any replacement law will have in general or specifically on any product we may commercialize in the future, modifications to the ACA, subsequent Executive Branch action, or HHS implementation of current laws may result in downward pressure on reimbursement, which could negatively affect market acceptance of new products.
There are certain limitations in the supply of certain animal-derived materials, which may lead to delays in our ability to complete clinical trials or eventually to meet the anticipated market demand for our cell products. 32 Table of Contents If our licensing arrangement with MediWound is unsuccessful, our development of NexoBrid and its associated revenues may be limited.
There are certain limitations in the supply of certain animal-derived materials, which may lead to delays in our ability to complete clinical trials or eventually to meet the anticipated market demand for our cell products. If our licensing arrangement with MediWound is unsuccessful, our development of NexoBrid and its associated revenues may be limited.
Failure to receive FDA approval or regulatory approval for the arthroscopic administration of MACI or the clinical use of MACI to treat cartilage defects in the ankle in a timely manner or at all, could harm our financial results and results of operations.
Failure to receive FDA approval or regulatory approval for the clinical use of MACI to treat cartilage defects in the ankle in a timely manner or at all, could harm our financial results and results of operations.
Regulatory requirements outside 36 Table of Contents the U.S. often require additional studies and data to obtain registration and, as a result, approval timelines can also be longer than those in the U.S. The safety, potency, and purity of our products must be monitored to be in compliance with FDA requirements for safety, cGMPs, and all other applicable regulations.
Regulatory requirements outside the U.S. often require additional studies and data to obtain registration and, as a result, approval timelines can also be longer than those in the U.S. The safety, potency, and purity of our products must be monitored to be in compliance with FDA requirements for safety, cGMPs, and all other applicable regulations.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs, and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs, and other business arrangements generally. Activities subject to these laws 44 Table of Contents also involve the improper use of information obtained in the course of patient recruitment for clinical trials.
The GDPR (and UK equivalent laws) and other changes in laws or regulations associated with the enhanced protection of certain types of personal data, such as healthcare data or other 29 Table of Contents sensitive information, could greatly increase our cost of providing our products and services or even prevent us from offering certain services in jurisdictions that we may operate in.
The GDPR (and UK equivalent laws) and other changes in laws or regulations associated with the enhanced protection of certain types of personal data, such as healthcare data or other sensitive information, could greatly increase our cost of providing our products and services or even prevent us from offering certain services in jurisdictions that we may operate in.
If we are unable to protect the confidentiality of our proprietary information and know-how related to our products, our competitive position would be impaired and our business, financial condition and results of operations could be adversely affected. 45 Table of Contents Some of our technology, including our knowledge regarding the processing of our products, is maintained by us as trade secrets.
If we are unable to protect the confidentiality of our proprietary information and know-how related to our products, our competitive position would be impaired and our business, financial condition and results of operations could be adversely affected. Some of our technology, including our knowledge regarding the processing of our products, is maintained by us as trade secrets.
The results from an 30 Table of Contents open-label trial may not be predictive of future clinical trial results with any of our product candidates for which we include an open-label clinical trial when studied in a controlled environment with a placebo or active control. Our planned clinical trials may not begin or be completed on schedule, if at all.
The results from an open-label trial may not be predictive of future clinical trial results with any of our product candidates for which we include an open-label clinical trial when studied in a controlled environment with a placebo or active control. Our planned clinical trials may not begin or be completed on schedule, if at all.
We may not have the financial resources to finance the litigation required to preserve our patent and trade secret rights. 47 Table of Contents A successful challenge to our trademarks, or to MediWound’s trademarks covering NexoBrid, could force us to rebrand Epicel, MACI or NexoBrid, which could result in a loss of brand recognition and adversely affect our business.
We may not have the financial resources to finance the litigation required to preserve our patent and trade secret rights. A successful challenge to our trademarks, or to MediWound’s trademarks covering NexoBrid, could force us to rebrand Epicel, MACI or NexoBrid, which could result in a loss of brand recognition and adversely affect our business.
We also are evaluating the feasibility and potential market opportunity involved in delivering MACI treatment to patients suffering from cartilage damage in the ankle. We believe that this potential lifecycle enhancement and indication expansion for MACI will require conducting an additional randomized clinical trial concerning the product’s use in the ankle.
For example, we are currently evaluating the feasibility and potential market opportunity involved in delivering MACI treatment to patients suffering from cartilage damage in the ankle. We believe that this potential lifecycle enhancement and indication expansion for MACI will require conducting an additional randomized clinical trial concerning the product’s use in the ankle.
We also sell a portion of MACI implants directly to facilities based on prices stated in an approved contract or an applicable purchase order with the facility. Often the contracted rates are tied to the facility’s third-party reimbursement from an underlying insurance provider.
We also sell a portion of MACI implants directly to facilities based on prices stated in an approved contract or an 28 Table of Contents applicable purchase order with the facility. Often the contracted rates are tied to the facility’s third-party reimbursement from an underlying insurance provider.
In many instances, manufacturers and the life science industry do not have the benefit of significant regulatory or judicial interpretation of these laws and regulations. In certain public statements, governmental authorities have taken positions on issues for which little official interpretation was previously available.
In many instances, manufacturers and the life science industry do not have the 39 Table of Contents benefit of significant regulatory or judicial interpretation of these laws and regulations. In certain public statements, governmental authorities have taken positions on issues for which little official interpretation was previously available.
In addition, we cannot be certain that patents will be issued from any of our pending patent applications or that the scope of the claims in our pending patent applications will not be significantly narrowed and/or invalidated. 46 Table of Contents If our patents and proprietary rights do not provide substantial protection, then our business and competitive position will suffer.
In addition, we cannot be certain that patents will be issued from any of our pending patent applications or that the scope of the claims in our pending patent applications will not be significantly narrowed and/or invalidated. If our patents and proprietary rights do not provide substantial protection, then our business and competitive position will suffer.
In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act (jointly, the ACA), which includes measures to significantly change the way health care is financed by both governmental and private insurers.
In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act of 2010, as 43 Table of Contents amended by the Health Care and Education Reconciliation Act (jointly, the ACA), which includes measures to significantly change the way health care is financed by both governmental and private insurers.
Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents.
Non-compliance events that could result in 47 Table of Contents abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents.
We continue to monitor the ongoing conflict in Israel and are in close communication with MediWound leadership. MediWound’s NexoBrid manufacturing operations are continuing and, as of the date of this disclosure, MediWound does not anticipate a disruption to its ongoing supply of commercial NexoBrid to the United States.
We continue to monitor the ongoing conflicts in Israel and are in close communication with MediWound leadership. MediWound’s NexoBrid manufacturing operations are continuing and, as of the date of this disclosure, MediWound does not anticipate a material disruption to its ongoing supply of commercial NexoBrid to the United States.
Our success depends, in part, on the commercial success of NexoBrid for the removal of eschar in adults with deep partial-thickness and/or full-thickness thermal burns. On December 28, 2022, we announced that the FDA granted a BLA and approved NexoBrid for the removal of eschar in adults with deep partial-thickness and/or full thickness thermal burns.
Our success depends, in part, on the commercial success of NexoBrid for the removal of eschar in adult and pediatric patients with deep partial-thickness and/or full-thickness thermal burns. On December 28, 2022, we announced that the FDA granted a BLA and approved NexoBrid for the removal of eschar in adults with deep partial-thickness and/or full thickness thermal burns.
While the most significant impact of this provision is to the year ended December 31, 2022, the tax year in which the provision took effect, the impact will decline annually over the five-year amortization period. 54 Table of Contents Item 1B. Unresolved Staff Comments None.
While the most significant impact of this provision is to the year ended December 31, 2022, the tax year in which the provision took effect, the impact will decline annually over the five-year amortization period. Item 1B. Unresolved Staff Comments None.
To the extent MediWound is unable to manufacture NexoBrid in accordance with the requirements of its BLA approval, or experiences supply chain or other disruptions, whether as a result of the ongoing Israel-Hamas war, military or other conflicts between China and Taiwan, or some other event, it could adversely affect the commercial success of NexoBrid. • NexoBrid may not be approved for the treatment of severe burns in other North American markets, outside of the U.S., and NexoBrid may not be accepted in the markets where regulatory approvals have been received. • A cyber security incident could result in a loss of confidential data, give rise to remediation and other expenses, expose us to liability under HIPAA, consumer protection and privacy laws, or other common law theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business. • Failure to obtain adequate reimbursement and reimbursement rates for our products could have a material adverse effect on our financial condition and operating results. • Failure to obtain and/or maintain required regulatory approvals would severely limit our ability to sell our products. • Environmental, social and governance matters (“ESG”) and any related reporting obligations may adversely impact our business, financial condition and results of operations. 24 Table of Contents • Any changes in the regulatory requirements that affect our products and/or future product candidates could prevent, limit or delay our ability to market or develop new product candidates. • Changes to our products or future product candidates, including the development of an arthroscopic delivery method for MACI, and the use of MACI to treat cartilage defects in the ankle, will require regulatory approvals which could result in the delay of the change being made or, if not approved, prevent any changes from being made. • If any federal or state agency determines that we have promoted the off-label use of our products and/or we have violated anti-kickback or other anti-bribery laws, we may be subject to various penalties, including civil or criminal penalties, and the off-label use of our products may result in injuries that lead to product liability lawsuits, which could be costly to our business. • If MediWound’s family of patents and proprietary rights covering NexoBrid do not provide substantial protection, our commercialization efforts with respect to NexoBrid could suffer. • Future sales of shares of common stock could have an adverse effect on the market price of such shares.
To the extent MediWound is unable to manufacture NexoBrid in accordance with the requirements of its BLA approval, or experiences supply chain or other disruptions, whether as a result of the ongoing conflicts in the Middle East region involving Israel, military or other conflicts between China and Taiwan, or some other event, it could adversely affect the commercial success of NexoBrid. • NexoBrid may not be approved for the treatment of severe burns in other North American markets, outside of the U.S., and NexoBrid may not be accepted in the markets where regulatory approvals have been received. • A cyber security incident could result in a loss of confidential data, give rise to remediation and other expenses, expose us to liability under HIPAA, consumer protection and privacy laws, or other common law theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business. • We face risks associated with disruptive technologies, innovation and competition, including artificial intelligence. 24 Table of Contents • Failure to obtain adequate reimbursement and reimbursement rates for our products could have a material adverse effect on our financial condition and operating results. • Failure to obtain and/or maintain required regulatory approvals would severely limit our ability to sell our products. • Environmental, social and governance matters (“ESG”) and any related reporting obligations may adversely impact our business, financial condition and results of operations. • Any changes in the regulatory requirements that affect our products and/or future product candidates could prevent, limit or delay our ability to market or develop new product candidates. • Changes to our products or future product candidates, including the use of MACI to treat cartilage defects in the ankle, will require regulatory approvals which could result in the delay of the change being made or, if not approved, prevent any changes from being made. • If any federal or state agency determines that we have promoted the off-label use of our products and/or we have violated anti-kickback or other anti-bribery laws, we may be subject to various penalties, including civil or criminal penalties, and the off-label use of our products may result in injuries that lead to product liability lawsuits, which could be costly to our business. • If MediWound’s family of patents and proprietary rights covering NexoBrid do not provide substantial protection, our commercialization efforts with respect to NexoBrid could suffer. • Future sales of shares of common stock could have an adverse effect on the market price of such shares.
Tensions between China and Taiwan, or an escalation of hostilities in the wider Middle East, could continue to create substantial uncertainty in the global economy and contribute to heightened inflation and supply chain disruptions. • If our manufacturing facility is destroyed or we experience any manufacturing difficulties, disruptions or delays, this could limit supply of our products or adversely affect our ability to conduct clinical trials and our business would be adversely impacted. • Failure of third parties, including for example Matricel GmbH (“Matricel”), to manufacture or supply certain components, equipment, disposable devices and other materials used in our MACI or Epicel cell manufacturing processes would impair our cell product development and commercialization. • Because our manufacturing and supply chain are subject to significant regulations, failure by our third-party manufacturers, including Matricel, to comply with the regulatory requirements set forth by the FDA with respect to our products could limit our ability to manufacture commercial products and/or result in the products being subject to restrictions or withdrawn from the market. • Failure to achieve the commercial success of NexoBrid in the U.S. • The commercial success of NexoBrid in the U.S. is dependent, in part, on MediWound’s ability to timely manufacture and supply sufficient quantities of NexoBrid to meet customer demand.
Tensions between China and Taiwan, or an escalation of hostilities in the wider Middle East, could continue to create substantial uncertainty in the global economy and contribute to heightened inflation and supply chain disruptions. • If our manufacturing facility is destroyed or we experience any manufacturing difficulties, disruptions or delays, this could limit supply of our products or adversely affect our ability to conduct clinical trials and our business would be adversely impacted. • Failure of third parties, including, for example, Matricel GmbH (“Matricel”), to manufacture or supply certain components, equipment, disposable devices and other materials used in our MACI or Epicel cell manufacturing processes would impair our cell product development and commercialization. • Because our manufacturing and supply chain are subject to significant regulations, failure by our third-party manufacturers, including Matricel, to comply with the regulatory requirements set forth by the FDA with respect to our products could limit our ability to manufacture commercial products and/or result in the products being subject to restrictions or withdrawn from the market. • Our financial results could be significantly impacted by uncertainty in U.S. trade policy, including uncertainty surrounding changes in tariffs, trade agreements or other trade restrictions imposed by the U.S. or other governments. • Failure to achieve the commercial success of NexoBrid in the U.S. • The commercial success of NexoBrid in the U.S. is dependent, in part, on MediWound’s ability to timely manufacture and supply sufficient quantities of NexoBrid to meet customer demand.
The GDPR applies to any company established in the EU as well as to those outside the EU if they collect and use personal data in connection with the offering of goods or services to individuals in the EU or the monitoring of their behavior.
The GDPR applies to any company established in the EU as well as to those outside the EU if they collect and use personal data in 29 Table of Contents connection with the offering of goods or services to individuals in the EU or the monitoring of their behavior.
Our facilities and quality systems and the facilities and 37 Table of Contents quality systems of some or all of our third-party contractors and suppliers are subject to pre-approval and routine FDA inspections for compliance with the applicable regulations as a condition of FDA approval of our products.
Our facilities and quality systems and the facilities and quality systems of some or all of our third-party contractors and suppliers are subject to pre-approval and routine FDA inspections for compliance with the applicable regulations as a condition of FDA approval of our products.
These broad market and industry fluctuations may adversely affect the trading price of our common stock, regardless of our operating performance or prospects. The sale of our common stock through future equity offerings may cause dilution and could cause the price of our common stock to decline.
These broad market and industry fluctuations may adversely affect the trading price of our common stock, regardless of our operating performance or prospects. The sale of our common stock through future equity offerings and exercises and vestings of equity awards may cause dilution and could cause the price of our common stock to decline.
Product manufacturers are subject to payment of annual prescription drug product program user fees and their facilities are subject to periodic inspections by the FDA and other regulatory agencies for compliance with cGMP and other applicable 41 Table of Contents regulations.
Product manufacturers are subject to payment of annual prescription drug product program user fees and their facilities are subject to periodic inspections by the FDA and other regulatory agencies for compliance with cGMP and other applicable regulations.
Litigation and legislative efforts to change or repeal IRA may be initiated in the coming months and years, with unpredictable and uncertain results.
Litigation and legislative efforts to change or repeal the ACA may be initiated in the coming months and years, with unpredictable and uncertain results.
In addition, in an infringement proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our 48 Table of Contents patents do not cover the technology in question.
In addition, in an infringement proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.
In addition, acceptance of products for the treatment of eschar removal is dependent upon, among other factors, the level of awareness and education of the medical community about the removal of eschar in adults with deep partial-thickness and/or full-thickness thermal burns and the existence, effectiveness, safety, and cost effectiveness of our products.
In addition, acceptance of products for the treatment of eschar removal is dependent upon, among other factors, the level of awareness and education of the medical community about the removal of eschar in adult and pediatric patients with deep partial-thickness and/or full-thickness thermal burns and the existence, effectiveness, safety, and cost effectiveness of our products.
MediWound’s current patents will eventually expire or they may otherwise cease to provide meaningful competitive advantage, and MediWound may be unable to adequately develop new technologies and obtain future patent protection to preserve our competitive advantage or avoid adverse effects on our business.
MediWound’s current patents will eventually expire or they may otherwise cease to provide meaningful 46 Table of Contents competitive advantage, and MediWound may be unable to adequately develop new technologies and obtain future patent protection to preserve our competitive advantage or avoid adverse effects on our business.
Should the FDA determine that our activities constitute 42 Table of Contents off-label promotion, the FDA could bring an action to prevent us from distributing MACI, Epicel, or NexoBrid for the off-label use and could seek to impose fines and penalties on us and our executives.
Should the FDA determine that our activities constitute off-label promotion, the FDA could bring an action to prevent us from distributing MACI, Epicel, or NexoBrid for the off-label use and could seek to impose fines and penalties on us and our executives.
The extent to which COVID-19 or another similar public health crisis impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including a resurgence of COVID-19, including new variants, the timing or effectiveness of vaccine roll-outs globally, the timing of easing of preventative or mitigation measures or mandates, the impact of any variants that emerge, or any impact of a global vaccine roll-out on the global economy.
The extent to which a public health crisis impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including the timing or effectiveness of vaccine roll-outs globally, the timing of easing of preventative or mitigation measures or mandates, the impact of any variants that emerge, or any impact of a global vaccine roll-out on the global economy.
The price of our common stock may continue to fluctuate in response to a number of events and factors, such as: • Announcements of research activities, business developments, technological innovations or new products by us or our competitors; • Entering into or terminating strategic relationships; • Information related to decisions by regulatory authorities regarding our products or product candidates or other regulatory developments or guidance in both the U.S. and abroad; • Disputes concerning patents or proprietary rights; • Changes in our revenues or expense levels; • Changes in our pricing policies or the pricing policies of our competitors; • Substantial changes in reimbursement practices; • The amount of our cash resources and our ability to obtain additional funding; • Seasonal or other variations in patient demand for MACI, Epicel and NexoBrid; • Demand for and clinical acceptance of our products; • The timing of sales of products and of the introduction of new products; • Public concern regarding the safety, efficacy or other aspects of the products or methodologies we are developing; • Clinical trial results; • News or reports from other cell therapy, regenerative medicine companies, or companies competing for market share in the burn care space; • Actual or threatened litigation or governmental investigations or other major developments in such matters; • Reports by securities analysts; • Status and condition of the global economy, investment markets, regional or global conflicts or other developments that may affect the global supply chain or ability to manufacture and distribute our products; • Public or private sales of additional securities; • Cybersecurity incidents that materially affect our products, services, relationships or competitive conditions; • Loss of key personnel; • A resurgence of COVID-19, which may impact our business, operations, prospects and financial condition; • Changes in management or the Board of Directors; and • Concerns related to management transitions.
The price of our common stock may continue to fluctuate in response to a number of events and factors, including but not limited to: • Announcements of research activities, business developments, technological innovations or new products by us or our competitors; • Entering into or terminating strategic relationships; • Information related to decisions by regulatory authorities regarding our products or product candidates or other regulatory developments or guidance in both the U.S. and abroad; • Disputes concerning patents or proprietary rights; • Changes in our revenues or expense levels; • Changes in our pricing policies or the pricing policies of our competitors; • Substantial changes in reimbursement practices; • The amount of our cash resources and our ability to obtain additional funding; • Seasonal or other variations in patient demand for MACI, Epicel and NexoBrid; • Demand for and clinical acceptance of our products; • The timing of sales of products and of the introduction of new products; • Public concern regarding the safety, efficacy or other aspects of the products or methodologies we are developing; • Clinical trial results; • News or reports from other cell therapy, regenerative medicine companies, or companies competing for market share in the burn care space; • Actual or threatened litigation or governmental investigations or other major developments in such matters; • Reports by securities analysts; • Status and condition of the global economy, investment markets, regional or global conflicts or other developments that may affect the global supply chain or ability to manufacture and distribute our products; • Impact of the recent elections in the United States, including the potential passage of certain laws, orders and policy decisions; • Public or private sales of additional securities; • Cybersecurity incidents that materially affect our products, services, relationships or competitive conditions; • Loss of key personnel; • A public health crisis, which may impact our business, operations, prospects and financial condition; • Changes in management or the Board of Directors; and • Concerns related to management transitions.
These risks include, but are not limited to, the following: • We may experience significant quarterly and annual fluctuations in our results of operations due to a number of factors. • Our operating results will be harmed if we are unable to effectively manage and sustain our future growth or scale our operations. • The COVID-19 pandemic and other global crises have had and may have in the future a significant adverse effect on our business, financial condition, and results of operations. • We may be unable to effectively manage and sustain our future growth or scale our operations. • We may not be able to manage inventory in an effective and efficient manner, which could adversely affect our results of operations. • We have incurred losses and may not achieve consistent profitability for some time or at all. • Our products and product development programs are based on novel technologies and are inherently risky, which may decrease the chances of regulatory approval and could have a material effect on our financial condition and operating results. • We may not be able to raise the required capital to develop and commercialize our future product candidates and otherwise grow and expand our business. • Current financial market conditions may exacerbate certain risks affecting our business. • We are dependent on our key manufacturing, quality and other management personnel and the loss of any of these individuals could harm our business. • Inflationary pressures and our responses thereto as well as other unfavorable global and regional economic conditions, geopolitical events, and military conflicts, such as repercussions from the ongoing war in Ukraine or the Israel-Hamas war.
These risks include, but are not limited to, the following: • We may experience significant quarterly and annual fluctuations in our results of operations due to a number of factors. • Our operating results will be harmed if we are unable to effectively manage and sustain our future growth or scale our operations. • Global crises have had and may have in the future a significant adverse effect on our business, financial condition, and results of operations. • We may not be able to manage inventory in an effective and efficient manner, which could adversely affect our results of operations. • Although we reported net income for the year ended 2024, we have incurred losses in the past and may not achieve consistent profitability for some time or at all. • Our products and product development programs are based on novel technologies and are inherently risky, which may decrease the chances of regulatory approval and could have a material effect on our financial condition and operating results. • We may not be able to raise the required capital to develop and commercialize our future product candidates and otherwise grow and expand our business. • Current financial market conditions may exacerbate certain risks affecting our business. • We are dependent on our key manufacturing, quality and other management personnel and the loss of any of these individuals could harm our business. • Inflationary pressures and our responses thereto as well as other unfavorable global and regional economic conditions, geopolitical events, and conflicts, such as repercussions from the ongoing conflicts in Ukraine or the Middle East region involving Israel.
Adequate third-party reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate return on investment in our products and future product development.
Adequate third-party reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate return on 37 Table of Contents investment in our products and future product development.
As a result, certain regulatory agencies, including the FDA, have had to furlough essential employees and stop critical activities in the past. If a prolonged government shutdown occurs in the future, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
During previous shutdowns, certain regulatory agencies, including the FDA, have had to furlough essential employees and stop critical activities. If a prolonged government shutdown occurs in the future, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Disruptions at the FDA and other agencies may also slow the time necessary to review and/or approve product candidates or changes to existing products, which would adversely affect our business. For example, several times in recent years, the U.S. government has shut down.
Disruptions at the FDA and other agencies may also slow the time necessary to review and/or approve product candidates or changes to existing products, which would adversely affect our business. For example, the U.S. government has previously shut 42 Table of Contents down and has nearly shut down several times in recent years.
Factors that may affect our results of operations include: • the timing of new orders and revenue recognition for new and prior year orders; • seasonal buying patterns of our customers; • volatility in the sales of our products; • volume of revenues; • competitive developments; • changes in third-party coverage and reimbursement for our products; • our ability to supply and meet customer demand for our products; • our ability to increase sales to our existing customers, particularly larger customers; • our ability to attract new customers; • our ability to develop and achieve market adoption of our products; • our ability to continue to successfully commercialize NexoBrid; • the impact of a recession or any other adverse global economic conditions on our business; • the impact of public health crises, such as the COVID-19 pandemic; • erosion in margins or significant fluctuations in revenues caused by changing customer demand; • the timing and cost of hiring personnel and of large expenses such as third-party professional services; • stock-based compensation expenses, which vary along with changes to our stock price; • supply chain disruptions or constraints; • fluctuations in foreign currency exchange rates; and • future accounting pronouncements or changes in accounting rules or our accounting policies.
Factors that may affect our results of operations include: • the timing of new orders and revenue recognition for new and prior year orders; • seasonal buying patterns of our customers; • volatility in the sales of our products; • volume of revenues; • competitive developments; • changes in third-party coverage and reimbursement for our products; • our ability to supply and meet customer demand for our products; • our ability to increase sales to our existing customers, particularly larger customers; • our ability to attract new customers; • our ability to develop and achieve market adoption of our products; • our ability to continue to successfully commercialize NexoBrid; • the impact of a recession or any other adverse global economic conditions on our business; • the impact of public health crises; • erosion in margins or significant fluctuations in revenues caused by changing customer demand; • the timing and cost of hiring personnel and of large expenses such as third-party professional services; • stock-based compensation expenses, which vary along with changes to our stock price; • supply chain disruptions or constraints; • fluctuations in foreign currency exchange rates; and • future accounting pronouncements or changes in accounting rules or our accounting policies. 25 Table of Contents The foregoing factors are difficult to forecast, and these, as well as other factors, could materially adversely affect our quarterly and annual results of operations.
Our ability to maintain profitability will depend on, among other things, increasing sales of our current products, improving gross margins, successfully commercializing new products, completing the development of our 26 Table of Contents future product candidates, timely initiation and completion of clinical trials, obtaining regulatory approvals, establishing manufacturing, sales and marketing arrangements with third parties, maintaining supplies of key manufacturing components and the possible acquisition and development of additional and complementary products.
Our ability to maintain profitability will depend on, among other things, increasing sales of our current products, improving gross margins, successfully commercializing new products (including the recent commercial launch of MACI Arthro), completing the development of our future product candidates, timely initiation and completion of clinical trials, obtaining regulatory approvals, establishing manufacturing, sales and marketing arrangements with third parties, maintaining supplies of key manufacturing components and the possible acquisition and development of additional and complementary products.
If our products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may have to: obtain licenses, which may not be available on commercially reasonable terms, if at all; abandon an infringing product; redesign our products or processes to avoid infringement; stop using the subject matter claimed in the patents held by others; pay damages; and/or defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources.
If our products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may have to: obtain licenses, which may not be available on commercially reasonable terms, if at all; abandon an infringing product; redesign our products or processes to avoid infringement; stop using the subject matter claimed in the patents held by others; pay damages; and/or defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources. 49 Table of Contents Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
In addition, these IT systems store and protect the privacy of certain patient information, which is required for the manufacture of our individualized cell therapy products.
Furthermore, our IT systems store and protect the privacy of certain patient information, which is required for the manufacture of our individualized cell therapy products.
Specifically, our debt could have important consequences to our investors, including the following: • making it more difficult for us to satisfy our obligations under the Revolving Credit Agreement; and if we fail to comply with these requirements, an event of default could result; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, or other general corporate requirements; • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • exposing us to the risk of increased interest rates as borrowings under our Revolving Credit Agreement are subject to floating interest rates based on SOFR, which could increase the cost of servicing our financial instruments and could materially reduce our profitability and cash flows; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete; • placing us at a disadvantage compared to other, less leveraged competitors; and • increasing our cost of borrowing. 52 Table of Contents Adverse developments affecting financial institutions, companies in the financial services industry or the financial services industry generally, such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect our operations and liquidity.
Specifically, our debt could have important consequences to our investors, including the following: • making it more difficult for us to satisfy our obligations under the Revolving Credit Agreement; and if we fail to comply with these requirements, an event of default could result; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, or other general corporate requirements; • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • exposing us to the risk of increased interest rates as borrowings under our Revolving Credit Agreement are subject to floating interest rates based on SOFR, which could increase the cost of servicing our financial instruments and could materially reduce our profitability and cash flows; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete; • placing us at a disadvantage compared to other, less leveraged competitors; and • increasing our cost of borrowing.
Market acceptance and adoption of our products or procedures also depends on the level of health insurer (including Medicare) reimbursement to physicians and hospitals for procedures using our products. Negative publicity resulting from incidents involving our products, or similar products, could have a significant adverse effect on the overall acceptance of our products.
Market acceptance and adoption of our products or procedures also depends on the level of payer (including government payers such as Medicare) reimbursement to physicians and hospitals for procedures using our products. Negative publicity resulting from incidents involving our products, or similar products, could have a significant adverse effect on the overall acceptance of our products.
Further, geopolitical tensions between Taiwan and China have risen steadily in recent months. Although Taiwan has been governed independently from China since 1949, China views Taiwan as part of its territory and has vowed to eventually unify Taiwan with China, using military force if necessary.
Further, geopolitical tensions between Taiwan and China have risen steadily over the past year. Although Taiwan has been governed independently from China since 1949, China views Taiwan as part of its territory and has vowed to eventually unify Taiwan with China, using military force if necessary.
Public health crises, such as the COVID-19 pandemic, have had, and may in the future have, a significant adverse effect on our business, financial condition, and results of operations. We are subject to public health crises, such as the COVID-19 pandemic, which has had and may continue to have a significant impact on our operations, cash flows and liquidity.
Public health crises have had, and may in the future have, a significant adverse effect on our business, financial condition, and results of operations. We are subject to public health crises, which have had and may in the future have a significant impact on our operations, cash flows and liquidity.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage.
If we are not able to protect our intellectual property rights, our business may be adversely affected. The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage.
Prior to that, with the exception of the year ended December 31, 2020, when we reported net income of $2.9 million, we had incurred net losses each year since our inception. As of December 31, 2023, we had accumulated a deficit of approximately $403.2 million and $152.6 million of cash, cash equivalents and investments.
Prior to that, with the exception of the year ended December 31, 2020, when we reported net income of $2.9 million, we had incurred net losses each year since our inception. As of December 31, 2024, we had accumulated a deficit of approximately $392.8 million and $156.1 million of cash, cash equivalents and investments.
Collaboration and licensing arrangements pose many risks, including, but not limited to, the following: • collaborations and licensing arrangements may be terminated; • collaborators and licensors may delay clinical trials or post-market studies and prolong clinical development, or under-fund or stop a clinical trial; • expected revenue might not be generated because clinical adoption of the product may be less than predicted; • collaborators and licensors could independently develop, or develop with third parties, products that could compete with our future products despite non-competition provisions; • the terms of our contracts with current or future collaborators and license parties may not be favorable to us in the future; • disputes may arise delaying, or terminating or interrupting the research, development, supply or commercialization of our products or product candidates, or result in significant and costly litigation or arbitration; and • one or more third-party developers could obtain approval for a similar product resulting in unforeseen price competition in connection with the product.
Collaboration and licensing arrangements pose many risks, including, but not limited to, the following: • collaborations and licensing arrangements may be terminated; • collaborators and licensors may delay clinical trials or post-market studies and prolong clinical development, or under-fund or stop a clinical trial; • expected revenue might not be generated because clinical adoption of the product may be less than predicted; • collaborators and licensors could independently develop, or develop with third parties, products that could compete with our future products despite non-competition provisions; • the terms of our contracts with current or future collaborators and license parties may not be favorable to us in the future; • disputes may arise delaying, or terminating or interrupting the research, development, supply or commercialization of our products or product candidates, or result in significant and costly litigation or arbitration; and • one or more third-party developers could obtain approval for a similar product resulting in unforeseen price competition in connection with the product. 33 Table of Contents Risks Related to the Manufacturing and Production of Our Products We rely on MediWound for the manufacture, production, and supply of NexoBrid, and our business, financial condition, and results of operations could be materially adversely affected to the extent the manufacture, production, and supply of NexoBrid is disrupted or delayed.
If this facility, or some or all of the equipment in it, is significantly damaged or destroyed by fire, flood, power loss, catastrophic incident, or similar event, we will not be able to quickly or inexpensively replace our manufacturing capacity, and we may not be able to replace our facility at all.
If the Cambridge facility, or some or all of the equipment in it, is significantly damaged or 34 Table of Contents destroyed by fire, flood, power loss, catastrophic incident, or similar event, we will not be able to quickly or inexpensively replace our current manufacturing capacity until FDA qualification of the Burlington facility, and we may not be able to replace our Cambridge facility at all.
Although, to date, our business has not been materially impacted by the ongoing military conflict between Russia and Ukraine or the Israel-Hamas war, geopolitical tensions, or record inflation, it is impossible to predict the extent to which our operations will be impacted in the short and long term, or the ways in which such matters may impact our business.
Although, to date, our business has not been materially impacted by the ongoing military conflict between Russia and Ukraine or the ongoing conflict in the Middle East region, geopolitical tensions, or sustained high levels of inflation, it is impossible to predict the extent to which our operations will be impacted in the short and long term, or the ways in which such matters may impact our business.
Although the length and impact of the ongoing military conflict in Ukraine and the Israel-Hamas war is highly unpredictable, the geopolitical uncertainty caused by the conflicts has led to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions, which has contributed to record inflation globally.
Although the length and impact of the ongoing conflict in Ukraine and the Middle East region is highly unpredictable, the geopolitical uncertainty caused by the conflicts has led to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions, which has contributed to sustained high levels of inflation globally.
In addition, particularly in light of the Biden Administration, our future earnings could be negatively impacted by changes in tax legislation, including a repeal or modification of the Tax Cuts and Jobs Act of 2017, changes in tax rates and tax base such as limiting, phasing-out or eliminating deductions or tax credits, increased taxation of certain excess income from intellectual property, revising tax law interpretations and changes in other tax laws in the U.S.
In addition, our future earnings could be negatively impacted by changes in tax legislation, changes in tax rates and tax base such as limiting, phasing-out or eliminating deductions or tax credits, increased taxation of certain excess income from intellectual property, revising tax law interpretations and changes in other tax laws in the U.S.
Sales of our common stock offered through future equity offerings may result in substantial dilution to the interests of other holders of our common stock.
Sales of our common stock offered through future equity offerings and sales of our common stock through exercises of stock options and the vesting of restricted stock units may result in substantial dilution to the interests of other holders of our common stock.
If we fail to adequately address any of these regulations, our business will be harmed. NexoBrid has been designated as an orphan drug in the U.S., but we may be unable to obtain or maintain such a designation or the benefits associated with orphan drug status, including marketing exclusivity, which may cause our revenue to be reduced.
NexoBrid has been designated as an orphan drug in the U.S., but we may be unable to obtain or maintain such a designation or the benefits associated with orphan drug status, including marketing exclusivity, which may cause our revenue to be reduced.
Failure to do so may harm our long-term growth prospects. We have incurred losses and may not achieve consistent profitability for some time or at all. For the year ended December 31, 2023 we reported net loss of $3.2 million.
Failure to do so may harm our long-term growth prospects. Although we reported net income for the year ended December 31, 2024, we have incurred losses in the past and may not achieve consistent profitability for some time or at all. For the year ended December 31, 2024 we reported net income of $10.4 million.
The extent and duration of the war in Ukraine and the Israel-Hamas war, geopolitical tensions, record inflation and resulting market disruptions are impossible to predict but could be substantial. We are dependent on our key manufacturing, quality and other management personnel and the loss of any of these individuals could harm our business.
The extent and duration of the ongoing conflict in Ukraine and the Middle East region involving Israel, geopolitical tensions, sustained high levels of inflation and resulting market disruptions are impossible to predict but could be substantial. We are dependent on our key manufacturing, quality and other management personnel and the loss of any of these individuals could harm our business.
Thus, we could be sued for misappropriation of proprietary information and trade secrets. Such claims are expensive to defend and could divert our attention and could result in substantial damage awards and injunctions that could have a material adverse effect on our business, financial condition or results of operations.
Such claims are expensive to defend and could divert our attention and could result in substantial damage awards and injunctions that could have a material adverse effect on our business, financial condition or results of operations.
Data obtained from clinical activities are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. Additionally, several of our ongoing clinical trials utilize an “open-label” trial design.
The results of early-stage clinical trials do not ensure success in later clinical trials, and interim results are not necessarily predictive of final results. Data obtained from clinical activities are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. Additionally, several of our ongoing clinical trials utilize an “open-label” trial design.
Because of the recent tightening of global credit, volatility in the financial markets, and global inflationary pressures, there may be a delay or disruption in the performance or satisfaction of commitments to us by these third parties, which could adversely affect our business. Our Revolving Credit Agreement contains covenant restrictions that may limit our ability to operate our business.
Because of the recent tightening of global credit, volatility in the financial markets, and global inflationary pressures, there may be a delay or disruption in the performance or satisfaction of commitments to us by these third parties, which could adversely affect our business. We may incur substantial indebtedness.
Our business, financial condition and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the war in Ukraine, the Israel-Hamas war, geopolitical tensions, or record inflation.
Our business, financial condition and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the ongoing conflicts in Ukraine, the Middle East Region involving Israel, geopolitical tensions, or sustained high levels of inflation.
With these changes in guidance and expedited programs, competitors may be able to make sales in the U.S. with minimally manipulated or homologous use products without the necessity of a BLA. In addition, competitors may also be able to obtain accelerated approval of new cell therapy products through use of RMAT designation.
With these changes in guidance and expedited programs, competitors may be able to make sales in the U.S. with minimally manipulated or homologous use products without the necessity of a BLA.
U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions due in part to the conflict in Ukraine and the Israel-Hamas war.
U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions due, in part, to the conflicts in Ukraine and the Middle East region involving Israel.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Executive Director, Corporate Information Systems, has served in this role for two years and has access to Vericel’s external information security firm and an industry-leading intelligence platform. This Executive Director manages and leads the internal Information Technology team to maintain and update the company’s technology infrastructure and corresponding safety measures.
Biggest changeIn this role, our Executive Director, Corporate Information Systems works closely with an internal team that includes resources with various cybersecurity certifications and leverages the support of our external information security firm, technology partners and an industry-leading intelligence platform.
These tools and services include, from time to time: • monitoring emerging data protection laws and best practices regarding application security, access management, device protection, network management, and data loss prevention and recovery and implementing responsive changes to our processes; • undertaking periodic reviews of our partner-facing policies and statements related to cybersecurity; • utilizing intrusion detection and monitoring applications and multifactor authentication; • conducting periodic table-top exercises with management, including our Executive Director, Corporate Information Systems, and testing of our data security, incident response policies and procedures; • conducting periodic cybersecurity management and incident training for employees, including simulated phishing campaigns, which provide education on the risk of potential cybersecurity incidents, methods for identification of such incidents and appropriate responses; and • requiring employees, as well as third-parties who provide services on our behalf, to treat information and data with care.
These tools and services include, from time to time: • monitoring emerging data protection laws and best practices regarding application security, access management, device protection, network management, and data loss prevention and recovery and implementing responsive changes to our processes; • undertaking periodic reviews of our partner-facing policies and statements related to cybersecurity; • utilizing intrusion detection and monitoring applications and multifactor authentication; • conducting periodic table-top exercises with management, including our Executive Director, Corporate Information Systems, and testing of our data security, incident response policies and procedures; 55 Table of Contents • conducting periodic cybersecurity management and incident training for employees, including simulated phishing campaigns, which provide education on the risk of potential cybersecurity incidents, methods for identification of such incidents and appropriate responses; and • requiring employees, as well as third-parties who provide services on our behalf, to treat information and data with care.
Additionally, the Board was engaged with management and outside experts throughout 2022 and 2023 in overseeing the development of the Company’s Enterprise Incident Response Plan.
Additionally, the Board was engaged with management and outside experts throughout 2022, 2023 and 2024 in overseeing the development of the Company’s Enterprise Incident Response Plan. This plan is reviewed and updated on an annual basis.
Our General Counsel works closely with him and reports regularly to the Board and to the Audit Committee of the Board, covering the risks from cybersecurity threats.
Our 56 Table of Contents Chief Legal Officer works closely with him and reports regularly to the Board and to the Audit Committee of the Board, covering the risks from cybersecurity threats.
This plan is reviewed and updated on an annual basis. 55 Table of Contents Our Executive Director, Corporate Information Systems, along with our General Counsel, Information Technology management team, and Chief Operating Officer, oversees our approach to cybersecurity and is responsible for assessing and managing our material risks from cybersecurity threats.
Our Executive Director, Corporate Information Systems, along with our Chief Legal Officer, Information Technology management team, and Chief Operating Officer, oversees our approach to cybersecurity and is responsible for assessing and managing material risks associated with cybersecurity threats.
The Audit Committee receives reports from management at least semi-annually, and more frequently if necessary, with respect to risks from cybersecurity threats. The Audit Committee also reviews cybersecurity and data security risks and mitigation strategies, along with program assessments, planned improvements and the status of information technology initiatives.
The Audit Committee also reviews cybersecurity and data security risks and mitigation strategies, along with program assessments, planned improvements and the status of information technology initiatives.
In the three most recently completed fiscal years, we have not experienced any material cybersecurity incidents. This includes penalties and settlements, of which there were none. Governance The Audit Committee of our Board oversees our risk management process, which includes risks from cybersecurity threats.
This includes cybersecurity incidents resulting in penalties and settlements, of which there were none. Governance The Audit Committee of our Board oversees our risk management process, which includes risks from cybersecurity threats. The Audit Committee receives reports from management at least semi-annually, and more frequently if necessary, with respect to risks from cybersecurity threats.
Added
Despite our security measures, there can be no assurance that we, or the third parties with which we interact, will not experience a cybersecurity incident in the future that will materially affect us.
Added
In the three most recently completed fiscal years and as of the date of this Annual Report on Form 10-K, we have not experienced any material cybersecurity incidents. Additionally, we do not believe any previous cybersecurity incidents we may have experienced are reasonably likely to materially affect us.
Added
Our Executive Director, Corporate Information Systems has over 20 years of experience in the life science industry, including a focus in the past four years on information technology management. Additionally, his academic background includes advanced degrees in the life sciences and he brings a strong track record of managing cyber incident responses and related activities.
Added
Our Executive Director manages and leads the internal Information Technology team to maintain, update and enhance the Company’s technology infrastructure and corresponding safety measures, as well as to ensure that appropriate safety measures are implemented to protect against evolving cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Removed
Item 2. Properties We lease approximately 57,000 square feet in Cambridge, Massachusetts for manufacturing operations including clean rooms, laboratories and office space. This Cambridge lease expires in February 2032 and we have the right to extend until February 2037, subject to certain conditions being met.
Added
Properties The following table summarizes information regarding our leased properties as of January 31, 2025: Location Primary Use Approximate Square Footage Lease Expiration Date Renewal Option Burlington, Massachusetts Manufacturing, laboratory and office space * 126,000 June 2036 One ten-year term Cambridge, Massachusetts Manufacturing, laboratory and office space 57,000 February 2032 One five-year term Ann Arbor, Michigan Office space 6,000 April 2025 None * The Burlington facility is substantially complete, and we are currently utilizing the facility's office space.
Removed
We lease approximately 14,000 square feet of additional office space in Cambridge, Massachusetts expiring in 2024 and we have the right to extend until 2029. We also lease approximately 6,000 square feet of office space in Ann Arbor, Michigan, which expires in April 2025. We believe that our facilities are adequate to meet our current needs.
Added
Once validated, the facility's manufacturing component will eventually become the primary manufacturing facility for MACI and Epicel. We believe that our facilities are adequate to meet our current needs. Additional facilities may be required to support expansion of our manufacturing operations and research and development activities. See Note 5, “Leases” in our accompanying consolidated financial statements for further informatio n.
Removed
Additional facilities will be required to support expansion of our manufacturing operations and research and development activities. On January 28, 2022, we entered into a new lease for approximately 126,000 square feet of manufacturing, laboratory and office space in Burlington, Massachusetts, which is currently being constructed, and will serve as our new corporate headquarters and primary manufacturing facility.
Removed
See Note 5, “Leases” in our accompanying consolidated financial statements for further informatio n.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRule 10b5-1 Trading Plans During the three months ended December 31, 2023, the following Section 16 officers and directors adopted, modified or terminated a “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K of the Exchange Act): • On November 15, 2023, Sean Flynn, Senior Vice President, General Counsel and Secretary, entered into a Rule 10b5-1 trading arrangement providing for the potential sale of up to 11,365 shares of our common stock between March 8, 2024, and November 29, 2024.
Biggest changeRule 10b5-1 Trading Plans During the three months ended December 31, 2024, the following Section 16 officers and directors adopted, modified or terminated a “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K of the Exchange Act): • On November 14, 2024, Heidi Hagen, a member of the Vericel Corporation Board of Directors, entered into a Rule 10b5-1 trading arrangement providing for the potential sale of up to 24,000 shares of our common stock between March 3, 2025, and March 27, 2026. • On November 15, 2024, Joseph Mara, Vericel Corporation’s Chief Financial Officer, entered into a Rule 10b5-1 trading arrangement.
The comparison assumes that a hypothetical $100 was invested on December 31, 2018 in our common stock and in both of the foregoing indices. All values assume reinvestment of the pre-tax value of dividends paid by companies included in these indices.
The comparison assumes that a hypothetical $100 was invested on December 31, 2019 in our common stock and in both of the foregoing indices. All values assume reinvestment of the pre-tax value of dividends paid by companies included in these indices.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchase of Equity Securities Market Information Our common stock is currently trading on the NASDAQ Stock Market under the symbol “VCEL”. Holders of Record As of January 31, 2024 there were approximately 170 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchase of Equity Securities Market Information Our common stock is currently trading on the NASDAQ Stock Market under the symbol “VCEL”. Holders of Record As of January 31, 2025 there were approximately 166 holders of record of our common stock.
Set forth below is a line graph comparing the cumulative total shareholder return on Vericel’s common stock with the cumulative total return of (i) the NASDAQ Composite Index, and (ii) the NASDAQ Biotechnology Index, for the period from December 31, 2018 through December 31, 2023.
Set forth below is a line graph comparing the cumulative total shareholder return on Vericel’s common stock with the cumulative total return of (i) the NASDAQ Composite Index, and (ii) the NASDAQ Biotechnology Index, for the period from December 31, 2019 through December 31, 2024.
There were no “non-Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted, modified or terminated during the fiscal quarter ended December 31, 2023 by our directors and section 16 officers.
Additionally, there were no “non-Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted, modified or terminated during the three months ended December 31, 2024 by our Section 16 officers or directors.
The historical stock price performance of our common stock shown in the graph below is not necessarily indicative of future stock price performance, and we do not make or endorse any predictions as to future stockholder returns. 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Vericel Corporation (VCEL) $100 $100 $177 $226 $151 $205 NASDAQ Composite Index (^IXIC) $100 $135 $194 $236 $158 $226 NASDAQ Biotechnology Index (^NBI) $100 $124 $156 $155 $138 $144 57 Table of Contents Purchases of Equity Securities by the Issuer There were no repurchases of shares of common stock made during the year ended December 31, 2023.
The historical stock price performance of our common stock shown in the graph below is not necessarily indicative of future stock price performance, and we do not make or endorse any predictions as to future stockholder returns. 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Vericel Corporation (VCEL) $100 $177 $226 $151 $205 $316 NASDAQ Composite Index (^IXIC) $100 $144 $174 $117 $167 $215 NASDAQ Biotechnology Index (^NBI) $100 $126 $125 $111 $115 $114 58 Table of Contents Purchases of Equity Securities by the Issuer There were no repurchases of shares of common stock made during the year ended December 31, 2024.
Removed
Each of the Rule 10b5-1 trading arrangements are in accordance with our Statement of Company Policy on Insider Trading and Disclosure and actual sale transactions made pursuant to such trading arrangements will be disclosed publicly in Section 16 filings with the SEC in accordance with applicable securities laws, rules and regulations.
Added
Mr. Mara subsequently amended that trading arrangement on November 26, 2024.
Added
The amended trading arrangement provides for the potential sale of up to 88,500 shares of our common stock between March 3, 2025, and December 31, 2025. • On November 19, 2024, Michael Halpin, Vericel Corporation’s Chief Operating Officer, entered into a Rule 10b5-1 trading arrangement providing for the potential sale of up to 30,000 shares of our common stock between March 3, 2025, and February 27, 2026. • On December 2, 2024, Dominick Colangelo, Vericel Corporation’s President and Chief Executive Officer, entered into a Rule 10b5-1 trading arrangement providing for the potential sale of up to 131,008 shares of our common stock between March 12, 2025, and June 2, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCertain raw materials utilized in NexoBrid’s manufacture, including the supply of the active ingredient bromelain are obtained from Taiwan. 61 Table of Contents Results of Operations The following is a summary of our consolidated results of operations: Year Ended December 31, 2023 vs. 2022 (In thousands) 2023 2022 2021 Change $ Change % Total revenue $ 197,516 $ 164,365 $ 156,184 $ 33,151 20.2 % Cost of product sales 61,940 54,577 50,159 7,363 13.5 % Gross profit 135,576 109,788 106,025 25,788 23.5 % Research and development 21,042 19,943 16,287 1,099 5.5 % Selling, general and administrative 120,998 106,903 97,592 14,095 13.2 % Total operating expenses 142,040 126,846 113,879 15,194 12.0 % Loss from operations (6,464) (17,058) (7,854) 10,594 (62.1) % Total other income 4,096 1,070 272 3,026 282.8 % Income tax expense (benefit) 814 721 (111) 93 12.9 % Net loss $ (3,182) $ (16,709) $ (7,471) $ 13,527 (81.0) % Comparison of the Periods Ended December 31, 2023 and 2022 Total Revenue Revenue by product is as follows: Year Ended December 31, 2023 vs. 2022 (In thousands) 2023 2022 2021 Change $ Change % MACI $ 164,800 $ 131,967 $ 111,554 $ 32,833 24.9 % Epicel 31,574 31,731 41,521 (157) (0.5) % NexoBrid 1,142 667 3,109 475 71.2 % Total revenue $ 197,516 $ 164,365 $ 156,184 $ 33,151 20.2 % Total revenue increase for the year ended December 31, 2023, compared to 2022, was driven primarily by MACI volume and price growth and the launch of NexoBrid after its commercial availability during the third quarter of 2023.
Biggest changeResults of Operations The following is a summary of our consolidated results of operations: 62 Table of Contents Year Ended December 31, 2024 vs. 2023 (In thousands) 2024 2023 2022 Change $ Change % Total revenue $ 237,224 $ 197,516 $ 164,365 $ 39,708 20.1 % Cost of product sales 65,117 61,940 54,577 3,177 5.1 % Gross profit 172,107 135,576 109,788 36,531 26.9 % Research and development 24,797 21,042 19,943 3,755 17.8 % Selling, general and administrative 142,791 120,998 106,903 21,793 18.0 % Total operating expenses 167,588 142,040 126,846 25,548 18.0 % Income (loss) from operations 4,519 (6,464) (17,058) 10,983 169.9 % Total other income 5,991 4,096 1,070 1,895 46.3 % Income tax expense 148 814 721 (666) (81.8) % Net income (loss) $ 10,362 $ (3,182) $ (16,709) $ 13,544 425.6 % Comparison of the Periods Ended December 31, 2024 and 2023 Total Revenue Revenue by product is as follows: Year Ended December 31, 2024 vs. 2023 (In thousands) 2024 2023 2022 Change $ Change % MACI $ 197,309 $ 164,800 $ 131,967 $ 32,509 19.7 % Epicel 36,623 31,574 31,731 5,049 16.0 % NexoBrid 3,292 1,142 667 2,150 188.3 % Total revenue $ 237,224 $ 197,516 $ 164,365 $ 39,708 20.1 % Total revenue increase for the year ended December 31, 2024, compared to 2023, was driven primarily by MACI volume and price growth, in addition to higher Epicel and NexoBrid volume.
Net Cash Used in Investing Activities Net cash used in investing activities during the year ended December 31, 2023 was the result of $55.2 million in investment purchases, a $7.5 million regulatory milestone payment to MediWound resulting from the FDA’s approval of the NexoBrid BLA, and $20.0 million of property and equipment purchases primarily for construction in process related to the Burlington Lease partially offset by $79.6 million of investment sales and maturities.
Net cash used in investing activities during the year ended December 31, 2023 was the result of $55.2 million in investments purchases, a $7.5 million regulatory milestone payment to MediWound resulting from the FDA’s approval of the NexoBrid BLA, and $20.0 million of property and equipment purchases primarily for construction in process related to the Burlington Lease, partially offset by $79.6 million of investment sales and maturities.
Food and Drug Administration (“FDA”) approved autologous cell therapy products and one FDA-approved specialty biologic product in the U.S. MACI ® is an autologous cellularized scaffold product indicated for the repair of symptomatic, single or multiple full-thickness cartilage defects of the knee with or without bone involvement in adults.
Food and Drug Administration (“FDA”) approved autologous cell therapy products and one FDA-approved specialty biologic product in the U.S. MACI ® is an autologous cellularized scaffold product that is indicated for the repair of symptomatic, single or multiple full-thickness cartilage defects of the knee with or without bone involvement in adults.
Epicel ® is a permanent skin replacement Humanitarian Use Device (“HUD”) for the treatment of adult and pediatric patients with deep-dermal or full-thickness burns comprising greater than or equal to 30 percent of total body surface area (“TBSA”). We also hold an exclusive license from MediWound Ltd.
Epicel ® is a permanent skin replacement Humanitarian Use Device (“HUD”) indicated for the treatment of adult and pediatric patients with deep-dermal or full-thickness burns comprising greater than or equal to 30 percent of a patient’s total body surface area (“TBSA”). We also hold an exclusive license from MediWound Ltd.
We have no immediate plans to borrow under the Revolving Credit Agreement, but we may use the facility for working capital needs and other general corporate purposes. As of December 31, 2023 , there are no outstanding borrowings under the Revolving Credit Agreement, and we are in compliance with all applicable covenant requirements.
We have no immediate plans to borrow under the Revolving Credit Agreement, but we may use the facility for working capital needs and other general corporate purposes. As of December 31, 2024 , there are no outstanding borrowings under the Revolving Credit Agreement, and we are in compliance with all applicable covenant requirements.
Certain raw materials utilized in NexoBrid’s manufacture, including the supply of the active ingredient bromelain, are obtained from Taiwan. Product Portfolio Our marketed products include two FDA-approved autologous cell therapies and one FDA-approved specialty biologic product.
Certain raw materials utilized in NexoBrid’s manufacture, including the supply of the active ingredient bromelain, are sourced from Taiwan. Product Portfolio Our marketed products include two FDA-approved autologous cell therapies and one FDA-approved specialty biologic product.
Pursuant to the terms of the Construction Escrow Agreement, in April 2023 we began funding into an escrow account maintained by the escrow agent a portion of our share of tenant improvement construction costs at the facility, which will be designated as restricted cash.
Pursuant to the terms of the Construction Escrow Agreement, in April 2023 we began funding into an escrow account maintained by the escrow agent a portion of our share of tenant improvement construction costs at the facility, which is designated as restricted cash.
See Note 8, “Revolving Credit Agreement” in the accompanying consolidated financial statements for further details. Contractual Obligations We lease facilities in Ann Arbor, Michigan, Cambridge, Massachusetts and Burlington, Massachusetts. The Cambridge facilities include clean rooms, laboratories for MACI and Epicel manufacturing and office space. We also pay for use of two offsite warehouse spaces and lease computer equipment.
See Note 8, “Revolving Credit Agreement” in the accompanying consolidated financial statements for further details. Contractual Obligations We lease facilities in Ann Arbor, Michigan, Cambridge, Massachusetts and Burlington, Massachusetts. The Cambridge facility includes clean rooms, laboratories for MACI and Epicel manufacturing and office space. We also pay for use of two offsite warehouse spaces and lease equipment.
The expansion of our target addressable market supports a broader commercial footprint, and we believe that this may help drive both increased NexoBrid use as well as increased Epicel awareness throughout the burn care space. The commercial launch of NexoBrid is well underway.
The expansion of our target addressable market supports a broader commercial footprint, and we believe that this may help drive both increased NexoBrid use as well as increased Epicel awareness throughout the burn care space.
Comparison of the Periods Ended December 31, 2022 and 2021 For a comparison of our results of operations for the fiscal years ended December 31, 2022 and December 31, 2021, see “Part II, Item 7.
Comparison of the Periods Ended December 31, 2023 and 2022 For a comparison of our results of operations for the fiscal years ended December 31, 2023 and December 31, 2022, see “Part II, Item 7.
Additionally, and in order to support the expansion of our autologous cell manufacturing operations at the new facility in Burlington, we plan to invest in the acquisition and installation of certain specialized manufacturing and laboratory equipment.
Additionally, and in order to support the expansion of our autologous cell manufacturing operations at the new facility in Burlington, we have and continue to invest in the acquisition and installation of certain specialized manufacturing and laboratory equipment.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 23, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024.
The leases are initially measured using the present value of the projected payments adjusted for the index or rate in effect at the commencement date. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Certain of our lease agreements include lease payments that are adjusted periodically for an index or rate. The leases are initially measured using the present value of the projected payments adjusted for the index or rate in effect at the commencement date. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
We estimate expected collections for these transactions using the portfolio approach. We record a reduction to revenue at the time of sale for the estimate of the amount of consideration that will not be collected. In addition, potential credit risk exposure has been evaluated for our accounts receivable in accordance with ASC 326 , Financial Instruments - Credit Losses .
We record a reduction to revenue at the time of sale for the estimate of the amount of consideration that will not be collected. In addition, potential credit risk exposure has been evaluated for our accounts receivable in accordance with ASC 326 , Financial Instruments - Credit Losses .
Our total purchase commitments consist of minimum purchase amounts of raw materials and finished goods used in our cell manufacturing process to manufacture our marketed cell therapy products and total $19.3 million as of December 31, 2023, as well as usage of offsite warehouse space.
Our total purchase commitments consist of minimum purchase amounts of raw materials and finished goods used in our cell manufacturing process to manufacture our marketed cell therapy products and total $15.4 million as of December 31, 2024, as well as usage of offsite warehouse space.
Net Cash Provided by Operating Activities Our cash, cash equivalents, and restricted cash totaled $86.9 million, short-term investments totaled $40.5 million and long-term investments totaled $25.3 million as of December 31, 2023.
Our cash, cash equivalents and restricted cash totaled $86.9 million, short-term investments totaled $40.5 million and long-term investments totaled $25.3 million as of December 31, 2023.
The arthroscopic delivery of MACI could increase the ease of MACI’s use for physicians and reduce both the length of the procedure as well as procedure-induced trauma, ultimately resulting in a reduction of a patient’s post-operative pain and accelerating a patient’s recovery.
The arthroscopic delivery of MACI could increase the ease of MACI’s use for physicians and may reduce both the length of the procedure as well as procedure-induced trauma, which may result in a reduction of a patient’s post-operative pain and accelerate a patient’s recovery.
Net cash provided by financing activities during the year ended December 31, 2021 was the result of net proceeds from the exercise of stock options and the employee stock purchase plan of $3.7 million, partially offset by the payment of employee withholding taxes related to the vesting of restricted stock units of $1.5 million and payments of debt issuance costs of $1.1 million.
Net Cash Provided by Financing Activities Net cash provided by financing activities during the year ended December 31, 2024 was the result of net proceeds from the exercise of stock options and the employee stock purchase plan of $24.5 million, partially offset by the payment of employee withholding taxes related to the vesting of restricted stock units of $5.5 million.
The team is divided into geographic regions, each managed by a Regional Manager and led by a Vice President of National MACI Sales. Most private payers have a medical policy that covers treatment with MACI with the top 30 largest commercial payers having a formal medical policy for MACI or ACI in general.
The team is divided into geographic regions and is managed by a senior sales leadership team. Most private payers have a medical policy that covers treatment with MACI with the top 30 largest commercial payers having a formal medical policy for MACI or ACI in general.
Total remaining obligations related to operating leases are $157.1 million, with $20.7 million of tenant improvement allowances allowed for, as of December 31, 2023. 65 Table of Contents In April 2023, in connection with the Burlington Lease, we entered into a construction escrow agreement (the “Construction Escrow Agreement”) with the facility’s landlord and an escrow agent.
Total remaining obligations related to operating and finance leases are $146.0 million, with $4.4 million of tenant improvement allowances allowed for, as of December 31, 2024. In April 2023, in connection with the Burlington Lease, we entered into a construction escrow agreement (the “Construction Escrow Agreement”) with the facility’s landlord and an escrow agent.
As of December 31, 2023, we have sold no shares pursuant to the Sales Agreement. On July 29, 2022, we entered into a $150.0 million five-year senior secured revolving credit agreement by and among the Company, the other loan parties thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as the administrative agent (the “Revolving Credit Agreement”).
Sources of Capital On July 29, 2022, we entered into a $150.0 million five-year senior secured revolving credit agreement by and among the Company, the other loan parties thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as the administrative agent (the “Revolving Credit Agreement”).
Epicel was designated as a HUD in 1998 and an HDE application for the product was submitted in 1999. HUDs are devices that are intended for diseases or conditions that affect fewer than 8,000 individuals annually in the U.S., and certain HUDs are restricted by the amount which a manufacturer may charge for its use.
HUDs are devices that are intended for diseases or conditions that affect fewer than 8,000 individuals annually in the U.S., and certain HUDs are restricted by the amount which a manufacturer may charge for its use.
The $17.7 million of net cash provided by operations in 2022, was primarily the result of non-cash charges of $37.2 million related to stock compensation expense, $4.2 million in operating lease amortization and $4.0 million in depreciation and amortization expense, offset by a net loss of $16.7 million and a net decrease of $11.2 million related to movements in our working capital accounts.
The $58.2 million of net cash provided by operations in 2024, was primarily the result of net income of $10.4 million, non-cash charges of $36.5 million related to stock compensation expense, $6.7 million in operating lease amortization and $5.5 million in depreciation and amortization expense, partially offset by a net decrease of $0.7 million related to movements in our working capital accounts.
We assess risk and determine a loss percentage by pooling accounts receivable based on similar risk characteristics. The loss percentage is calculated through the use of forecasts that are based on current and historical economic and financial information.
We assess risk and determine a loss percentage by pooling accounts receivable based on similar risk characteristics. The loss percentage is calculated through the use of forecasts that are based on current and historical economic and financial information. Changes in estimates of the Transaction Price are recorded through revenue in the period in which such change occurs.
We continue to maintain a full valuation allowance on all of our net deferred tax assets. Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years for tax purposes.
This is primarily due to the elimination of the option to deduct research and development expenditures immediately in the year incurred and instead amortize such expenditures over five years for tax purposes. We continue to maintain a full valuation allowance on all of our net deferred tax assets.
Both autologous cell therapy products are currently manufactured and marketed in the U.S. NexoBrid is a topically-administered biological orphan product containing proteolytic enzymes that is indicated for eschar removal in adults with deep partial-thickness and/or full-thickness burns. We hold exclusive license and supply agreements with MediWound to commercialize NexoBrid in North America.
NexoBrid is a topically-administered biological orphan product containing proteolytic enzymes that is indicated for eschar removal in adult and pediatric patients with deep partial-thickness and/or full-thickness burns. We hold exclusive license and supply agreements with MediWound to commercialize NexoBrid in North America.
In the last five years through 2023, MACI sales volumes from the first through the fourth quarter on average represented 20% (18%-22% range), 22% (16%-24% range), 23% (21%-26% range) and 35% (33%-38% range) respectively, of total annual volumes.
Seasonality. Sales of MACI implants have historically experienced a level of seasonality throughout the year. In the last five years through 2024, MACI sales volumes from the first through the fourth quarter on average represented 21% (20%-22% range), 22% (16%-24% range), 23% (21%-26% range) and 34% (33%-38% range) respectively, of total annual volumes.
The Company continues to monitor the ongoing conflict in Israel and is in close communication with MediWound leadership. MediWound’s NexoBrid manufacturing operations are continuing and, as of the date of this disclosure, MediWound does not anticipate a disruption to its ongoing supply of commercial NexoBrid to the United States.
MediWound’s NexoBrid manufacturing operations are continuing and, as of the date of this disclosure, MediWound does not anticipate a material disruption to its ongoing supply of commercial NexoBrid to the United States.
(“MediWound”) for North American rights to NexoBrid ® (anacaulase-bcdb), a topically-administered biological orphan product containing proteolytic enzymes, which is indicated for the removal of eschar in adults with deep partial thickness and/or full thickness thermal burns. Following FDA approval, we began commercial sales of NexoBrid in the U.S. during the third quarter of 2023.
(“MediWound”) for North American rights to NexoBrid ® (anacaulase-bcdb), a topically-administered biological orphan product containing proteolytic enzymes, which is indicated for the removal of eschar in adult and pediatric patients with deep partial-thickness and/or full-thickness thermal burns.
Stock-based Compensation Expense Non-cash stock-based compensation expense is summarized in the following table: Year Ended December 31, 2023 vs. 2022 (In thousands) 2023 2022 2021 Change $ Change % Cost of product sales $ 2,970 $ 3,630 $ 3,681 $ (660) (18.2) % Research and development 3,705 5,261 4,120 (1,556) (29.6) % Selling, general and administrative 25,650 28,292 26,521 (2,642) (9.3) % Total non-cash stock-based compensation expense $ 32,325 $ 37,183 $ 34,322 $ (4,858) (13.1) % 63 Table of Contents The decrease in stock-based compensation expense for the year ended December 31, 2023, is due primarily to fluctuations in stock prices and the mix of service-based options and restricted stock units, which impacts the fair value of the options and restricted stock units awarded and the expense recognized in the period.
Stock-based Compensation Expense Non-cash stock-based compensation expense is summarized in the following table: Year Ended December 31, 2024 vs. 2023 (In thousands) 2024 2023 2022 Change $ Change % Cost of product sales $ 3,911 $ 2,970 $ 3,630 $ 941 31.7 % Research and development 4,068 3,705 5,261 363 9.8 % Selling, general and administrative 28,516 25,650 28,292 2,866 11.2 % Total non-cash stock-based compensation expense $ 36,495 $ 32,325 $ 37,183 $ 4,170 12.9 % The increase in stock-based compensation expense for the year ended December 31, 2024, is due primarily to fluctuations in stock prices and the mix of service-based options and restricted stock units, which impacts the fair value of the options and restricted stock units awarded and the expense recognized in the period.
In May 2019, we entered into exclusive license and supply agreements with MediWound to commercialize NexoBrid in North America. The manufacturing process for NexoBrid is conducted by MediWound, primarily at manufacturing locations in Israel.
In May 2019, we entered into exclusive license and supply agreements with MediWound to commercialize NexoBrid in North America. The manufacturing process for NexoBrid is conducted by MediWound, primarily at manufacturing locations in Israel. Certain raw materials utilized in NexoBrid’s manufacture, including the supply of the active ingredient bromelain, are sourced from Taiwan.
To the extent the war between Israel and Hamas intensifies or expands to include additional countries or militant groups in the region and MediWound’s facilities in Israel are damaged or destroyed, travel to and from Israel is halted or inhibited, or significant key 59 Table of Contents MediWound operational personnel are called to military service, MediWound’s ability to continue to supply NexoBrid to the U.S. market could be disrupted.
To the extent the conflicts in the Middle East region intensify or expand and MediWound’s facilities in Israel are damaged or destroyed, travel to and from Israel is halted or inhibited, or significant key MediWound operational personnel are called to military service, MediWound’s ability to continue to supply NexoBrid to the U.S. market could be disrupted.
We believe that this potential lifecycle enhancement and indication expansion for MACI will require conducting an additional randomized clinical trial concerning the product’s use in the ankle and we are on 60 Table of Contents track to initiate a MACI Ankle clinical trial beginning in 2025, and if approved, we believe MACI’s expansion into the ankle will be a significant longer-term growth driver for the product, beginning in the latter half of the decade.
We believe that this potential lifecycle enhancement and indication expansion for MACI will require conducting an additional randomized clinical trial concerning the product’s use in the ankle and we are on track to initiate a MACI Ankle clinical trial beginning in 2025.
Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that could materially impact the consolidated financial statements and disclosures based on varying assumptions.
We have no off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our financial condition. 66 Table of Contents Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that could materially impact the consolidated financial statements and disclosures based on varying assumptions.
Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 35,311 $ 17,687 $ 29,040 Net cash used in investment activities (3,130) (36,206) (3,501) Net cash provided by financing activities 3,618 1,045 9,171 Net increase (decrease) in cash, cash equivalents, and restricted cash $ 35,799 $ (17,474) $ 34,710 For a discussion of our liquidity and capital resources related to our cash flow activities for the fiscal year ended December 31, 2021, see “Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024. 64 Table of Contents Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 58,163 $ 35,311 $ 17,687 Net cash used in investment activities (79,034) (3,130) (36,206) Net cash provided by financing activities 19,054 3,618 1,045 Net (decrease) increase in cash, cash equivalents, and restricted cash $ (1,817) $ 35,799 $ (17,474) For a discussion of our liquidity and capital resources related to our cash flow activities for the fiscal year ended December 31, 2022, see “Part II, Item 7.
At the same time, the facility’s landlord began funding a portion of its tenant improvement allowance through a separate escrow account. To date, we have transferred into our escrow account 50% of our required cost amount, or approximately $28.3 million. We anticipate funding the remaining 50% of our required cost amount in early 2024.
At the same time, the facility’s landlord began funding a portion of its tenant improvement allowance through a separate escrow account. The Company funded the remaining 50% of its required cost amount, or approximately $28.3 million, with cash on hand, pursuant to the Construction Escrow Agreement in April 2024.
NexoBrid is approved in the European Union (“EU”) and other international markets and has been designated as an orphan biologic in the U.S., EU and other international markets. NexoBrid has the potential to change the standard of care for eschar removal with respect to hospitalized burn patients and treat a significant addressable market in the U.S.
NexoBrid has the potential to change the standard of care for eschar removal with respect to hospitalized burn patients and treat a significant addressable market in the U.S.
Total Other Income The change in total other income for the year ended December 31, 2023, was due primarily to fluctuations in the rates of return on our investments in various marketable debt securities partially offset by interest expense related to our Revolving Credit Agreement.
Total Other Income The change in total other income for the year ended December 31, 2024, was due primarily to fluctuations in the rates of return on our investments in various marketable debt securities and money market funds.
All operating lease commitments with a lease term greater than 12 months are recognized as right-of-use (“ROU”) assets and liabilities, on a discounted basis on the balance sheet. Leases with an initial term of 12 months or less are not recorded on the balance sheet.
Leases We determine if an arrangement is a lease at inception, in accordance with ASC Topic 842, Leases . Operating lease commitments with a lease term greater than 12 months are recognized as right-of-use (“ROU”) assets and liabilities, on a discounted basis on the balance sheet.
The increase in selling, general and administrative expenses is primarily due to a $8.1 million increase in headcount and employee expenses, an increase of $3.3 million associated with the Burlington lease which commenced in June of 2023, and additional travel and in person events across the commercial organization, partially offset by lower stock compensation expense.
The increase in selling, general and administrative expenses is primarily due to higher headcount and an increase in employee expenses and stock compensation, the Burlington Lease which commenced in June of 2023, and additional travel, marketing programs and in person events across the commercial organization, including to support the MACI arthroscopic launch.
Gross Profit Gross profit increased for the year ended December 31, 2023, compared to the same period in 2022, driven by higher MACI volume and price growth. 62 Table of Contents Research and Development Expenses The following table summarizes research and development expenses, which include materials, professional fees and an allocation of employee-related salary and fringe benefit costs for our research and development projects: Year Ended December 31, 2023 vs. 2022 (In thousands) 2023 2022 2021 Change $ Change % MACI $ 13,813 $ 11,969 $ 9,170 $ 1,844 15.4 % Epicel 3,885 4,924 4,061 (1,039) (21.1) % NexoBrid 3,344 3,050 3,056 294 9.6 % Total research and development expenses $ 21,042 $ 19,943 $ 16,287 $ 1,099 5.5 % Research and development expenses for the year ended December 31, 2023 were $21.0 million, compared to $19.9 million for 2022.
Research and Development Expenses The following table summarizes research and development expenses, which include materials, professional fees and an allocation of employee-related salary and fringe benefit costs for our research and development projects: 63 Table of Contents Year Ended December 31, 2024 vs. 2023 (In thousands) 2024 2023 2022 Change $ Change % MACI $ 18,075 $ 13,813 $ 11,969 $ 4,262 30.9 % Epicel 4,433 3,885 4,924 548 14.1 % NexoBrid 2,289 3,344 3,050 (1,055) (31.5) % Total research and development expenses $ 24,797 $ 21,042 $ 19,943 $ 3,755 17.8 % Research and development expenses for the year ended December 31, 2024 were $24.8 million, compared to $21.0 million for 2023.
The total remaining contractual obligations related to the warehouse agreement are $3.8 million as of December 31, 2023. See Note 15, “Commitments and Contingencies” in our accompanying consolidated financial statements for further informatio n. We have no off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition.
The total remaining contractual obligations related to the warehouse agreement are $0.9 million as of December 31, 2024. See Note 14, “Commitments and Contingencies” in our accompanying consolidated financial statements for further informatio n.
The total consideration which we expect to collect in exchange for MACI implants (the “Transaction Price”) may be fixed or variable.
The total consideration which we expect to collect in exchange for MACI implants (the “Transaction Price”) may be fixed or variable. Direct sales to hospitals or distributors are recorded at a contracted price, and there are typically no forms of variable consideration.
MACI is a third-generation autologous cellularized scaffold product indicated for the repair of symptomatic, single or multiple full-thickness cartilage defects of the knee with or without bone involvement in adults; and Epicel is a permanent skin replacement for the treatment of adult and pediatric patients with deep-dermal or full-thickness burns comprising greater than or equal to 30 percent TBSA.
Epicel is a permanent skin replacement indicated for the treatment of adult and pediatric patients with deep-dermal or full-thickness burns comprising greater than or equal to 30 percent of a patient’s TBSA. Both autologous cell therapy products are currently manufactured and marketed in the U.S.
We primarily enter into lease agreements for manufacturing and office space, warehouses space, and other computer-related equipment. The leases have varying terms, some of which may include options to extend. Certain of our lease agreements include lease payments that are adjusted periodically for an index or rate.
Leases with an initial term of 12 months or less are not recorded on the balance sheet. We 67 Table of Contents primarily enter into lease agreements for manufacturing and office space, warehouse space, and certain equipment. The leases have varying terms, some of which may include options to extend.
Net cash used in investing activities during the year ended December 31, 2022 was the result of $69.6 million in investments purchases and $7.6 million of property and equipment purchases primarily for manufacturing upgrades, partially offset by $40.9 million of investment sales and maturities through December 31, 2022. 64 Table of Contents Net Cash Provided by Financing Activities Net cash provided by financing activities during the year ended December 31, 2023 was the result of net proceeds from the exercise of stock options and the employee stock purchase plan of $6.0 million, partially offset by the payment of employee withholding taxes related to the vesting of restricted stock units of $2.3 million.
Net cash provided by financing activities during the year ended December 31, 2023 was the result of net proceeds from the exercise of stock options and the employee stock purchase plan of $6.0 million, partially offset by the payment of employee withholding taxes related to the vesting of restricted stock units of $2.3 million. 65 Table of Contents Liquidity Since our acquisition of MACI and Epicel in 2014, our primary focus has been to invest in our existing commercial business with the goal of growing revenue.
Income Tax Expense For the years ended December 31, 2023 and December 31, 2022, we recorded $0.8 million and $0.7 million, respectively, of income tax expense as a result of state income taxes primarily due to the elimination of the option to deduct research and development expenditures immediately in the year incurred and instead amortize such expenditures over five years for tax purposes.
Income Tax Expense For the years ended December 31, 2024 and 2023, we recorded $0.1 million and $0.8 million, respectively, of income tax expense as a result of state income taxes.
The overall decreases in cash from our working capital accounts were primarily driven by an increase in accounts receivable due to an increase in sales volume, an increase in inventory due to increased production needs and payments on operating leases, offset by an increase of accounts payable and accrued expenses due to timing of payments.
The overall decrease in cash from our working capital accounts was primarily driven by an increase in inventory primarily related to supporting NexoBrid commercial availability and an increase in accounts receivable due to higher sales volume, partially offset by an increase in operating lease liabilities due to receipts of tenant improvement allowances which exceeded payments on operating leases amortization.
To date, we have financed our operations primarily through cash received through MACI, Epicel and NexoBrid sales, debt, and public and private sales of our equity securities. We generated $35.3 million in operating cash flows during 2023 and we may finance our operations through the sales of equity securities, revolver borrowings or other debt financings.
In the future, we may finance our operations through the sales of equity securities, revolver borrowings or other debt financings, in addition to cash generated from operations.
If the actual forfeiture rate is different from the estimate, we adjust the expense accordingly.
If the actual forfeiture rate is different from the estimate, we adjust the expense accordingly. We record the expense for stock options and restricted stock units using a graded-vesting attribution method.
This summary of significant accounting policies should be read in conjunction with our consolidated financial statements and related notes and this discussion of our results of operations.
We will continue to monitor our cumulative loss position and forecasts and reevaluate the need for a valuation allowance as it could be reversed in future periods. This summary of significant accounting policies should be read in conjunction with our consolidated financial statements and related notes and this discussion of our results of operations.
Our burn care field force consists of individual sales and clinical representatives that regularly engage with our target audience. The team is divided into geographic regions, each managed by a Regional Manager and led by a Vice President of National Burn Care Sales. NexoBrid Our portfolio of commercial-stage products now includes NexoBrid (anacaulase-bcdb), a topically-administered biological product containing proteolytic enzymes.
Both our Epicel and NexoBrid products are serviced by our burn care field force, which consists of individual sales and clinical representatives that regularly engage with our target audience. The team is divided into geographical regions and is managed by a senior sales leadership team.
Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 31, 2023 were $121.0 million, compared to $106.9 million for 2022.
The increase is primarily related to MACI arthroscopic development program costs and an increase in headcount and employee expenses. Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 31, 2024 were $142.8 million, compared to $121.0 million for 2023.
Our cash, cash equivalents and restricted cash totaled $51.1 million, short-term investments totaled $68.5 million and long-term investments totaled $20.0 million as of December 31, 2022.
Net Cash Provided by Operating Activities Our cash, cash equivalents, and restricted cash totaled $85.0 million, short-term investments totaled $41.7 million and long-term investments totaled $39.9 million as of December 31, 2024.
Due to our three-year cumulative loss position and history of operating losses, a full valuation allowance against our net deferred tax assets was considered necessary. We will continue to monitor our cumulative loss position and forecasts and reevaluate the need for a valuation allowance as it could be reversed in future periods.
Tax Valuation Allowance A valuation allowance is recorded if it is more likely than not that a deferred tax asset will not be realized based on the weight of available evidence, both positive and negative. Due to our three-year cumulative loss position and history of operating losses, a full valuation allowance against our net deferred tax assets was considered necessary.
Epicel Epicel is a permanent skin replacement for deep-dermal or full-thickness burns comprising greater than or equal to 30 percent TBSA. Epicel is regulated by CBER of the FDA under medical device authorities, and is the only FDA-approved cultured epidermal autograft product available for large total surface area burns.
Epicel is regulated by CBER of the FDA under medical device authorities, and is the only FDA-approved cultured epidermal autograft product available for large total surface area burns in both adult and pediatric patients. Epicel was designated as a HUD in 1998 and an HDE application for the product was submitted in 1999.
Liquidity Since our acquisition of MACI and Epicel in 2014, our primary focus has been to invest in our existing commercial business with the goal of growing revenue. We have raised significant funds in order to advance and complete our product development and product life-cycle management programs and to market and commercialize our products, including NexoBrid.
We have raised significant funds in order to advance and complete our product development and product life-cycle management programs and to market and commercialize our products, including NexoBrid. To date, we have financed our operations primarily through cash received through MACI, Epicel and NexoBrid sales, debt, and public and private sales of our equity securities.
With respect to private commercial payers that have not yet approved a medical policy for MACI, we often obtain approval on a case-by-case basis. MACI is currently implanted into the patient’s cartilage defect through an open surgical procedure.
With respect to private commercial payers that have not yet approved a medical policy for MACI, we often obtain approval on a case-by-case basis. MACI consists of autologous cultured chondrocytes, which are human-derived cells that are obtained from the patient’s own cartilage, and which are seeded onto resorbable Type I/III collagen membrane.
Changes in estimates of the Transaction Price are recorded through revenue in the period in which such change occurs and relate primarily to changes in the initial expected reimbursement or collection expectation upon completion of the billing claims process for MACI implants that occurred in a prior period.
They relate primarily to changes in the initial expected reimbursement or collection expectation upon completion of the billing claims process for MACI implants that occurred in a prior year. A 50 basis points change to the estimated uncollectible percentage could result in approximately $0.5 million decrease or increase in the revenue recognized for the year ended December 31, 2024.
Reimbursements from third-party insurers and government payers vary by patient and payer and are based on either contracted rates, publicly available rates, fee schedules or past payer precedents. Net product revenue is recognized net of estimated contractual allowances, which considers historical collection experience from both the payer and patient, denial rates and the terms of our contractual arrangements.
Net product revenue is recognized net of estimated contractual allowances, which considers historical collection experience from both the payer and patient, denial rates and the terms of our contractual arrangements. We estimate expected collections for these transactions using the portfolio approach.
The War in Israel and Gaza In May 2019, the Company entered into exclusive license and supply agreements with MediWound, under which MediWound manufactures and supplies NexoBrid to the U.S. market on a unit price basis. MediWound develops and manufactures NexoBrid, in part, at its facilities in Yavne, Israel.
See “Risk Factors “Our success depends, in part, on the commercial success of NexoBrid for the removal of eschar in adults with deep partial thickness and/or full thickness thermal burns.” The Ongoing Conflicts in the Middle East In May 2019, we entered into exclusive license and supply agreements with MediWound, under which MediWound manufactures and supplies NexoBrid to the U.S. market on a unit price basis.
Direct sales to hospitals or distributors are recorded at a contracted price, and there are typically no forms of variable consideration. 66 Table of Contents When we sell MACI through its specialty pharmacies, we are typically reimbursed by a third-party insurer or government payer, subject to a patient co-pay amount.
When we sell MACI through specialty pharmacies, we are typically reimbursed by a third-party insurer or government payer, subject to a patient co-pay amount. Reimbursements from third-party insurers and government payers vary by patient and payer and are based on either contracted rates, publicly available rates, fee schedules or past payer precedents.
We also are evaluating the feasibility and potential market opportunity involved in delivering MACI treatment to patients suffering from cartilage damage in the ankle.
In conjunction with the launch of MACI Arthro, we have expanded our target surgeon base from 5,000 to 7,000 to include orthopedic surgeons that perform high volumes of knee cartilage repair surgeries, predominantly through arthroscopic procedures. We also are evaluating the feasibility and potential market opportunity involved in delivering MACI treatment to patients suffering from cartilage damage in the ankle.
For a discussion of additional risks associated with the ongoing conflict in Israel, please see Part I, Item 1A. “Risk Factors”. Manufacturing We have a cell manufacturing facility in Cambridge, Massachusetts, which is used for U.S. manufacturing and distribution of MACI and Epicel. The manufacturing process for NexoBrid is conducted by MediWound, primarily at manufacturing locations in Israel.
As of the date of this report, we maintain an ample supply of NexoBrid at our U.S.-based third-party logistics provider. For a discussion of additional risks associated with the ongoing conflicts in the Middle East, please see Part I, Item 1A. “Risk Factors”.
We are currently focused on the arthroscopic delivery of MACI to the cartilage defect – a procedure in which a surgeon can evaluate, prepare and treat the cartilage defect under direct arthroscopic visualization using specialized instruments delivered through a number of smaller incisions or portals.
MACI Arthro provides a less invasive technique compared to the open arthrotomy approach and allows surgeons to evaluate, prepare and treat the cartilage defect, and deliver the MACI implant, under direct arthroscopic visualization and, should the surgeon so choose, to use specialized and custom-designed instruments (the “MACI Arthro instruments”) through small incisions or portals.
Removed
See “Risk Factors - “ Our success depends, in part, on the commercial success of NexoBrid for the removal of eschar in adults with deep partial-thickness and/or full-thickness thermal burns. ” COVID-19 On May 11, 2023, the U.S. Department of Health and Human Services announced the expiration of the federal Public Health Emergency for COVID-19.
Added
Since MACI’s commercial launch, the product’s FDA-approved labeling has provided for a treating surgeon to use MACI to treat a patient through an open surgical procedure. In August 2024, the FDA approved a supplemental Biologics License Application (“sBLA”) expanding the MACI indication to add instructions for the arthroscopic delivery of MACI to the product’s approved labeling.
Removed
At this juncture, the pandemic’s effects on our business and results of operations have largely moderated and we have seen a return to more normal operations.
Added
MACI Arthro™ allows surgeons to evaluate and prepare the cartilage defect site as well as deliver the MACI implant through small incisions using custom-designed arthroscopic instruments developed by the Company (“MACI Arthro instruments”). MACI Arthro became commercially available in the United States during the third quarter of 2024 and the Company began selling the MACI Arthro instruments at that time.
Removed
Should a resurgence of COVID-19 occur, or new virus variants emerge, it could result in additional disruptions that could impact our business and operations in the future, including U.S. hospital or surgical center staffing shortages, periodic cancellation or delay of elective MACI surgical procedures, intermittent restrictions on the ability of our personnel to travel and access customers for selling, marketing, training, case support and product development feedback, delays in approvals by regulatory bodies, delays in product development efforts, and additional government requirements or other incremental mitigation efforts that may further impact our capacity to manufacture, sell and support the use of our products.
Added
MediWound develops and manufactures NexoBrid, in part, at its facilities in Yavne, Israel. We continue to monitor the ongoing conflicts in the Middle East region involving Israel, and we are in close communication with MediWound leadership.
Removed
For a discussion of additional risks associated with the COVID-19 pandemic and other potential future public health emergencies, please see Part I, Item 1A. “Risk Factors”.
Added
Manufacturing We have a cell manufacturing facility in Cambridge, Massachusetts, which is used for U.S. manufacturing and distribution of MACI and Epicel. In January 2022, we entered into a lease agreement (as amended, the “Burlington Lease”) to lease approximately 126,000 square feet of manufacturing, laboratory and office space in Burlington, Massachusetts, which has been under construction.
Removed
The War in Ukraine The ongoing war between Russia and Ukraine and the related sanctions and other penalties imposed by countries across the globe against Russia are continuing to create substantial uncertainty in the global economy and have contributed to heightened inflation and supply chain disruptions.
Added
The Burlington facility is substantially complete, and we are currently utilizing the facility’s office space. Once validated, the facility’s manufacturing component will eventually become the primary manufacturing facility for MACI and Epicel. 60 Table of Contents The manufacturing process for NexoBrid is conducted by MediWound, primarily at manufacturing locations in Israel.
Removed
While we do not have operations in Russia or Ukraine and do not have exposure to distributors, or third-party service providers in Russia or Ukraine, we are unable to predict the ultimate impact that these actions will have on the global economy or on our financial condition, results of operations, and cash flows as of the date of these consolidated financial statements.
Added
MACI is a third-generation autologous cellularized scaffold product indicated for the repair of symptomatic, single or multiple full-thickness cartilage defects of the knee with or without bone involvement in adults. In connection with our MACI product, we sell MACI biopsy kits, which are used by treating surgeons to obtain a sample of cartilage tissue, which is later sent to us.
Removed
On December 28, 2022, the FDA approved a BLA for NexoBrid, granting a license for commercial use in the U.S. During the third quarter of 2023, the Company announced the U.S. commercial availability of NexoBrid and, subsequently, has commenced commercial sales of the product.
Added
If a patient decides to move forward with MACI treatment, we subsequently use the cartilage sample to manufacture a MACI implant. When an orthopedic surgeon decides to treat a patient by implanting MACI through an arthroscopic approach the surgeon may choose to use our custom MACI Arthro instruments during the procedure, which we sell by way of a separate transaction.
Removed
We have designed and are currently developing novel and specialized instruments to be used in and help facilitate such a procedure. We discussed with the FDA a non-clinical regulatory strategy to support the potential inclusion of arthroscopic delivery in MACI’s approved labeling.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur earnings and cash flows are subject to fluctuations due to changes in interest rates, principally in connection with our investments in marketable debt securities. We believe that probable near-term changes in interest rates would not materially affect our financial condition, results of operations or cash flows.
Biggest changeOur earnings and cash flows are subject to fluctuations due to changes in interest rates, principally in connection with our investments in marketable debt securities. We believe that 68 Table of Contents probable near-term changes in interest rates would not materially affect our financial condition, results of operations or cash flows.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk As of December 31, 2023, we held marketable debt securities, which are classified as available-for-sale and carried at fair value in the accompanying consolidated balance sheet included in this Form 10-K. The fair value of our cash equivalents and marketable securities is subject to changes in market interest rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk As of December 31, 2024, we held marketable debt securities, which are classified as available-for-sale and carried at fair value in the accompanying consolidated balance sheet included in this Form 10-K. The fair value of our cash equivalents and marketable securities is subject to changes in market interest rates.
We operate in the U.S. only. We are primarily exposed to foreign exchange risk with respect to recognized assets and liabilities due to vendors in countries outside the U.S., which are typically paid in Euros. We do not enter into hedging transactions and do not purchase derivative instruments. 68 Table of Contents
We operate in the U.S. only. We are primarily exposed to foreign exchange risk with respect to recognized assets and liabilities due to vendors in countries outside the U.S., which are typically paid in Euros. We do not enter into hedging transactions and do not purchase derivative instruments. 69 Table of Contents
We are also subject to interest rate risks in connection with our Revolving Credit Agreement, which is variable rate indebtedness. As of December 31, 2023, there were no borrowings outstanding under the Revolving Credit Agreement.
We are also subject to interest rate risks in connection with our Revolving Credit Agreement, which is variable rate indebtedness. As of December 31, 2024, there were no borrowings outstanding under the Revolving Credit Agreement.
We do not currently use interest rate derivative instruments or hedging transactions to manage exposure to interest rate changes of our investments. We estimate that a 100 basis point, or 1%, unfavorable change in interest rates would have resulted in approximately a $0.5 million decrease in the fair value of our investment portfolio as of December 31, 2023.
We do not currently use interest rate derivative instruments or hedging transactions to manage exposure to interest rate changes of our investments. We estimate that a 100 basis point, or 1%, unfavorable change in interest rates would have resulted in approximately a $0.8 million decrease in the fair value of our investment portfolio as of December 31, 2024.

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