VCEL - Mgmt. Mtgs Highlight MACI Momentum Drivers, Upside Pot'l To Guidance, and Growing Cash/FCF (Unique in SMID)

Research evidence excerpt

VCEL - Mgmt. Mtgs Highlight MACI Momentum Drivers, Upside Pot'l To Guidance, and Growing Cash/FCF (Unique in SMID)

es up with investors, namely as Agili-C is on track to secure reimbursement in Jan. 2027,

and whether VCEL will be impacted (if nothing else by trialing) when that broader commercial launch of Smith & Nephew's (SNN, Not

Rated) Agili-C/Carticel benefits from coverage. Mgmt. noted that Agili-C has been approved for four years and hasn't had an impact

on MACI, and believes that the two products (MACI & Agili-C) treat different patient populations (i.e., MACI in younger, more

active patients, and Carticel in older osteoritic patients looking for a bridge/delay to surgery). As well, Agili-C is contraindicated for patellar

defects, which is a key growth area for MACI and where the majority of MACI use currently occurs. Rather, mgmt. sees Agili-C more as

just another Osteochondral allograft transplantation (OCA), against which the company currently competes and does not really overlap

meaningfully with MACI's target population (i.e. <5% overlap with MACI's current business mix and TAM). Mgmt. also noted that physician

economics favor MACI, which carries one of the best professional fees in cartilage repair. For our part, until we see Agili-C in the

field head to head with MACI for a few quarters, we think it will be hard to defuse the competition overhang. Nevertheless, the

oppty is large, mgmt.'s points make sense, and anecdotally, physician conversations don't suggest a dramatic impact to MACI volume

is forthcoming because of Agili-C so far; nonetheless we will continue to do more work/checks here. Taking a step back, we come

back to the increasing FCF story--on top of a likely 15-20% sustainable rev growth profile for MACI even with competition---that we think