Vericel (VCEL) risk factors, FY2025 10-K

Risks Related to Our Operations

1. 01We may experience significant quarterly and annual fluctuations in our results of operations due to a number of factors
2. 02Our operating results will be harmed if we are unable to effectively manage and sustain our future growth or scale our operations31% rewritten
3. 03If we do not manage inventory in an effective and efficient manner, it could adversely affect our results of operations22% rewritten
4. 04For the years ended December 31, 2025 and 2024, we reported net income of $16.5 million and $10.4 million, respectively. 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 inceptionNew
5. 05Our 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 adverse effect on our financial condition and operating results
6. 06Our products represent new classes of therapy that the marketplace may not understand or accept. Furthermore, the success of our products is dependent on wider acceptance by the medical community
7. 07If we do not effectively expand and train our direct sales force, we may be unable to add new customers or increase sales to our existing customers, and our business will be adversely affectedNew
8. 08Expansion into international markets is an aspect of our long-term growth, and as we expand internationally, we will face additional business, political, legal, regulatory, operational, financial, and economic risks, any of which could increase our costs and hinder such growthNew
9. 09Our 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
10. 10Failure of our Specialty Pharmacies to enter into written agreements with payers for reimbursement of our products and to obtain adequate reimbursement and reimbursement rates could have a material adverse effect on our financial condition and operating results
11. 11We rely on complex information technology systems for various critical purposes, including timely delivery of products and maintaining patient confidentiality. If these systems fail or are disrupted, we could lose product sales and our revenue and reputation would suffer
12. 12Our inability to complete our product development activities successfully would materially limit our ability to operate or finance our operations76% rewritten
13. 13Our planned clinical trials may not begin or be completed on schedule, if at all. Typically, if a biological product is intended to treat a chronic disease, safety and efficacy data must be gathered over an extended period of time, which can range from six months to three years or more25% rewritten
14. 14We rely on third parties to conduct some of our clinical trials, and their failure to perform their obligations in a timely or competent manner may delay development and/or impact commercialization, if approved, of our current and future product candidates
15. 15If we do not keep pace with our competitors and with technological and market changes, our products will become less attractive or obsolete and our business may suffer33% rewritten
16. 16We face risks associated with disruptive technologies, innovation and competition, including artificial intelligence26% rewritten
17. 17Restrictions on the use of animal-derived materials could harm our product development and commercialization efforts
18. 18If our licensing arrangement with MediWound is unsuccessful, our development of NexoBrid and its associated revenues may be limited

Risks Related to the Manufacturing and Production of Our Products

1. 19We 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 delayed24% rewritten
2. 20Failure of third parties, including, for example, Matricel GmbH, 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 commercialization78% rewritten
3. 21manufacture our products, which would delay our ability to market our commercial products or future product candidates or conduct clinical trials on a timely and cost-competitive basis, if at allNew
4. 22Failure 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
5. 23The manufacture of cell therapy products is characterized by inherent risks and challenges and has proven to be a costly endeavor relative to manufacturing other therapeutic products

Risks Related to Our Regulation by the FDA and other Government Entities

1. 24Failure to maintain required regulatory approvals would severely limit our ability to sell our products
2. 25The price and sale of any of our products may be limited by health insurance coverage and government regulation
3. 26We are subject to significant regulation with respect to the manufacturing of our products. If we are not able to comply with such regulation, our business may be materially harmed
4. 27Corporate sustainability matters and any related reporting obligations may adversely impact our business, financial condition and results of operationsNew
5. 28We could incur significant costs complying with environmental and health and safety requirements, or as a result of liability for contamination or other harm caused by hazardous materials that we use
6. 29Our products are subject to rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities. Overall, there appears to be a trend toward more stringent regulation worldwide, and we do not anticipate that this trend will dissipate in the near future
7. 30Any of these consequences, in combination or alone, or even a public announcement that we are being investigated for possible violations of these laws, could have a material adverse effect on our business, financial condition, results of operations and cash flows31% rewritten
8. 31NexoBrid 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
9. 32Changes to our products or future product candidates may require regulatory approvals and a denial of such required approval will negatively impact our prospects, financial condition and future results38% rewritten
10. 33If we or our suppliers fail to comply with ongoing FDA or other foreign regulatory authority requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market46% rewritten
11. 34If the FDA determines that we have marketed or promoted our products for one or more off-label uses, we may be subject to civil or criminal penalties
12. 35In the U.S., there have been a number of legislative and regulatory changes to the healthcare system that could affect our future results of operations and the future results of operations of our potential customers. See section entitled “Business — Government Regulation — Healthcare Reform”94% rewritten
13. 36changing policies and agency funding, staffing and leadership. We cannot be sure whether future changes to the regulatory environment will be favorable or unfavorable to our business prospectsNew
14. 37The distribution of biotechnology and biopharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage, and security requirements intended to prevent the unauthorized sale of biotechnology and biopharmaceutical products
15. 38Tissue-based products are regulated differently in different countries. These requirements may be costly and result in delay or otherwise preclude the distribution of our products in some foreign countries, any of which would adversely affect our ability to generate operating revenues

Risks Related to Intellectual Property

1. 39If we fail to fulfill our obligations under our intellectual property licenses with third parties, we could lose license rights that are important to our business
2. 40If 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
3. 41We have no patent protection for Epicel, which could adversely impact Epicel’s competitive position
4. 42If MediWound’s family of patents and proprietary rights covering NexoBrid do not provide substantial protection, then our commercialization efforts with respect to the product could suffer
5. 43Some of our issued patents relating to MACI have already expired and others may be insufficient to protect our business
6. 44If our patents and proprietary rights do not provide substantial protection, then our business and competitive position will suffer
7. 45We cannot assure you that our patent portfolio or our efforts to seek patent protection for our technology and products will not be negatively impacted by the guidance issued by the USPTO, the decisions described above, rulings in other cases, or changes in guidance or procedures issued by the USPTO
8. 46Obtaining and maintaining our patent protection depends on compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
9. 47With respect to MACI, if we are unable to obtain and enforce patents and to protect our trade secrets, others could use our technology to compete with us, which could limit opportunities for us to generate revenues by licensing our technology and selling products
10. 48The preparation, filing, and prosecution of patent applications can be costly and time consuming. Our limited financial resources may not permit us to pursue patent protection of all of our technology and products throughout the world
11. 49A 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
12. 50We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful and have a material adverse effect on the success of our business
13. 51If we infringe the rights of third parties, we could be prevented from selling products, forced to pay damages, and defend against litigation
14. 52Intellectual property rights do not necessarily address all potential threats to our competitive advantage. If we are not able to protect our intellectual property rights, our business may be adversely affected

General Risks

1. 53The use of our products and future product candidates may expose us to product liability claims, and we may not be able to obtain adequate insurance. As a result, such claims could affect our earnings and financial condition
2. 54Notwithstanding the net proceeds we received from previous public offerings, we may require substantial additional capital resources for strategic opportunities
3. 55The current credit and financial market conditions may exacerbate certain risks affecting our business26% rewritten
4. 56We may incur substantial indebtedness
5. 57Our Revolving Credit Agreement contains covenant restrictions that may limit our ability to operate our business
6. 58Adverse 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 liquidity28% rewritten
7. 59We are dependent on our key manufacturing, quality and other management personnel and the loss of any of these individuals could harm our business
8. 60Efforts to comply with securities laws and regulations require management resources, and we still may fail to comply. If we are not able to comply with such laws and regulations, there may be a material adverse impact on our business, financial conditions and results of operations
9. 61Our corporate documents and Michigan law contain provisions that may make it more difficult for us to be acquired
10. 62Changes to tax legislation and regulations could negatively impact our earnings77% rewritten