BTIG Remains Buyer of Vericel Corp (VCEL) on Core Business Value

BTIG feels confident in Vericel core business as ixmyelocel-T's future became uncertain.

It was a rough day for Vericel Corp (NASDAQ:VCEL) shareholders who saw the value of their shares plummet. The reason? The drug maker provided an update regarding its heart failure treatment Ixmyelocel-T and noted that the FDA would require at least one additional study to support a BLA application. However, Vericel does not plan to conduct any additional clinical studies for the asset “unless fully funded by a partner.”

BTIG analyst Ryan Zimmerman commented, “While we feel that the odds of the 2nd option were not zero, we thought the RMAT designation, the Fast Track designation, and the Orphan Drug designation for Ixmyelocel-T would help check off the necessary boxes for the FDA to potentially allow VCEL to go right to BLA application and forego the last study. Even with this, we viewed Ixmyelocel-T as a call option when we initiated coverage and feel even with shares down on this news that the core business within cartilage repair is accelerating and remains the reason to BUY shares.”

“Management has been looking for a potential partner to fund the phase 3 trial (even before the FDA meeting) in a non-dilutive manner. We believe even though it may require a larger trial than the phase 2b study (114 subjects at 28 sites), management is confident it will be a single trial before BLA submission is allowed. We believe the information from the recent FDA meeting allows any potential partner to know exactly what would be required for the asset (and ultimately what it may cost to fund), should they choose to partner with VCEL on Ixmyelocel-T,” the analyst added.

As such, Zimmerman reiterates a Buy rating on Vericel shares, with a price target of $6.00, which represents a potential upside of 13% from where the stock is currently trading. (To watch Zimmerman’s track record, click here)

Other initial sentiment on the Street matches Zimmerman’s bullish take, as TipRanks analytics exhibit VCEL as a Buy. VCEL received 4 back-to-back buy ratings in the last three months, and the 12-month average price target stands at $7.40, marking a nearly 40% upside from where the stock is currently trading.VCEL ratings chart

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