Vericel Corp.'s (VCEL:NASDAQ) NexoBrid, a product that removes nonviable burn tissue, was recently approved and given a wider label than expected by the U.S. Food and Drug Administration (FDA), reported H.C. Wainwright & Co. analyst Dr. Swayampakula Ramakanth in a Jan. 3 research note. Vericel expects to commercially launch the drug in Q2/23.
"We expect management to provide additional details of the commercial launch in Q1/23 at an investor conference," Ramakanth wrote.
On the news of the FDA approval, H.C. Wainwright increased its price target on Vericel to US$37 per share from US$35, the analyst pointed out. The biopharma is trading now at about $26.34 per share. The investment bank also reiterated its Buy rating on it.
Approved Uses
Ramakanth reported that NexoBrid is approved for adults with deep partial thickness and/or full-thickness thermal burns.
Patients may apply it to these burns twice within a 24-hour period, first to an area of up to 15% of their body surface area and second to an area of up to 20% of their body surface area.
Milestone Payment Due
NexoBrid is the result of a collaboration between Vericel and MediWound, Ramakanth indicated. Now that the drug is FDA approved, Vericel owes MediWound a milestone payment of US$7.5 million ($7.5M), payable in this first quarter of 2023.
Rationale for a New Target
H.C. Wainwright derived its new price target on Vericel based on a few assumptions, Ramakanth noted. One is that Vericel will initially garner US$6,500 per patient per burn treatment.
Another is that the biopharma will start generating revenue from NexoBrid in Q3/23. The third is that Vericel's revenue from NexoBrid in 2023 will be an estimated US$8.5M and, by year-end 2026, will be about US$31M.
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Disclosures For H.C.Wainwright & Co., MediWound Ltd., January 3, 2023
H.C. Wainwright & Co, LLC (the “Firm”) is a member of FINRA and SIPC and a registered U.S. Broker-Dealer. I, Swayampakula Ramakanth, Ph.D., Arthur He, Ph.D. and Sean Lee , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of Vericel Corporation and MediWound Ltd. (including, without limitation, any option, right, warrant, future, long or short position). As of December 31, 2022 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Vericel Corporation and MediWound Ltd.
Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report. The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from Vericel Corporation for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report. The Firm or its affiliates did receive compensation from MediWound Ltd. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report. H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for MediWound Ltd. during the past 12 months.
The Firm does not make a market in Vericel Corporation and MediWound Ltd. as of the date of this research report. The securities of the company discussed in this report may be unsuitable for investors depending on their specific investment objectives and financial position. Past performance is no guarantee of future results. This report is offered for informational purposes only, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be prohibited. This research report is not intended to provide tax advice or to be used to provide tax advice to any person.
H.C. Wainwright & Co., LLC does not provide individually tailored investment advice in research reports. This research report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this research report.
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