Vericel Corporation, known for its innovative cartilage repair product MACI, is on the cusp of a major transformation. While analysts focus on the upcoming launch of MACI Arthro and the promising future of NexoBrid, a silent revolution is brewing within their burn care franchise. The key? Epicel, Vericel's permanent skin replacement device, is quietly exceeding expectations and laying the groundwork for a potentially explosive revenue surge.

Sure, the recent Q1 2024 earnings call highlighted MACI's continued dominance with impressive 18% year-over-year growth, exceeding guidance, and laying the foundation for even stronger performance with the launch of MACI Arthro. NexoBrid, the company's novel burn treatment, is gaining traction with burn centers, showing positive KPIs and strong underlying demand.

But look closer. Epicel, often overshadowed by its flashier siblings, delivered a staggering 56% revenue jump in Q1 2024, reaching $10.7 million. This represents the second-highest quarterly revenue in Epicel's history. Even more intriguing is the source of this growth: new and dormant accounts. This suggests Vericel's expanded sales force and increased presence in the burn care market are creating a potent synergy.

While Joe Mara, Vericel's CFO, remains cautious about adjusting burn care guidance so early in the year, the potential for Epicel is undeniable. The company initially anticipated Epicel to maintain a quarterly run rate in the low to mid $8 million range. Q1's performance, however, shattered that expectation, leaving analysts and investors wondering: is this a one-time anomaly or a sign of a sustained upward trend?

Here's the hypothesis: Epicel's resurgence, fueled by the expanded sales team, is creating a positive feedback loop. The increased "share of voice" in the burn care market is not only driving NexoBrid adoption, but also revitalizing interest in Epicel within new and existing accounts. This dynamic, if sustained, could propel Epicel to a full-year revenue of approximately $40 million, a significant increase from the initial low double-digit growth projection.

Epicel and NexoBrid Quarterly Revenue

The following chart illustrates the quarterly revenue performance of Epicel and NexoBrid, based on information from Vericel's Q4 2023 and Q1 2024 earnings calls.

Consider this: in 2019, before the COVID-19 pandemic disrupted the market, Epicel routinely achieved approximately 20% growth. While the market for severe burns remains relatively stable, Vericel's expanded sales force is clearly changing the game. The ability to reach a larger customer base and offer a broader burn care portfolio is unlocking Epicel's full potential.

The implications are substantial. If Epicel maintains its current trajectory, it could become the primary driver of burn care franchise growth in 2024, eclipsing even NexoBrid's anticipated contribution. This would create a powerful two-pronged growth engine within Vericel's burn care franchise, driving significant revenue upside and further enhancing their impressive profitability profile.

The takeaway? While the upcoming launch of MACI Arthro and the continued rollout of NexoBrid will undoubtedly command attention, the hidden Epicel engine might be the real story to watch in 2024. Its unassuming rise has the potential to transform Vericel's burn care franchise, driving significant value for investors and establishing the company as a true force in both the sports medicine and burn care markets.

"Fun Fact: Vericel's products are not just changing the game in sports medicine and burn care, they're literally helping people get back on their feet and regain their lives. Epicel, for example, has been used to treat burn victims since 1984, playing a critical role in the recovery of countless individuals who have suffered life-altering injuries. That's innovation with a deeply human impact."