Ahead of a Jan. 3, 2017, PDUFA date, the FDA gave its blessing to Vericel Corp.'s MACI (autologous cultured chondrocytes on porcine collagen membrane) to repair symptomatic single or multiple full-thickness cartilage defects of the knee, with or without bone involvement, in adults. The company's shares (NASDAQ:VCEL) spiked more than 70 percent Wednesday on U.S. approval of the cell therapy, disclosed following Tuesday's market close, before finishing the day at $4.10 for a gain of $1.50, or 57.7 percent. Volume of approximately 53.6 million shares was more than 140 times the company's three-month moving average.

MACI, previously approved in the EU, was part of the 2014 acquisition by Vericel (then Aastrom Biosciences Inc.) of Sanofi SA's cell therapy and regenerative medicine business. The $6.5 million deal encompassed marketed products for skin replacement and joint repair, including three autologous cell therapy products: Carticel (autologous cultured chondrocytes), an autologous implant for articular cartilage defects, Epicel (cultured epidermal autografts), a permanent skin replacement for full-thickness burns greater than or equal to 30 percent of total body surface area, and MACI.

The MACI implant consists of autologous cultured chondrocytes seeded onto a resorbable Type I/III collagen membrane. The product offers significant advantages over the first-generation periosteum previously used by orthopedic surgeons as well as off-label collagen membranes now considered standard of care.

Collagen membranes offered a surgical advantage since they were not associated with the tissue overgrowth that occurred with periosteum, explained Tom Minas, an orthopedic surgeon at Brigham and Women's Hospital.

"But the problem is that you still have to micro-suture the membranes down and then deliver the cells under the membrane," Minas told BioWorld Today. "It's very tedious and time-consuming."

Collagen membranes are associated with another downside: lack of uniformity.

"Once you distribute the cells under the collagen membrane after it's sealed, you don't know how those cells will distribute and grow," Minas said. "Now we have an approved product with cells that are uniformly grown through a collagen membrane, with a density of almost 1 million cells per square centimeter. We know that we're going to have a uniform growth pattern of the cells in the defect."

And instead of micro-suturing, MACI – prepared in 3 cm x 5 cm sheets – can be cut precisely to match the defect and positioned using surgical glue.

MACI – the name is an acronym for matrix-induced autologous chondrocyte implantation – was advanced to approval in Europe by Sanofi's Genzyme unit. Genzyme, as an independent entity, had sought FDA guidance on regulation of autologous cells and tissue used in surgical reconstruction – in particular, whether the agency would review these products as biologics or as medical devices – all the way back in 1995, when its Genzyme Tissue Repair unit began to offer autologous articulator cartilage for implants and to train surgeons to perform the procedure.

"Over the past two years, our goals have been clear," Nick Colangelo, Vericel's president and CEO, said on a conference call with analysts, citing the need to "stabilize" the business acquired from Sanofi and to build a foundation for long-term growth. During that time, "we've taken a business that had declining revenues of approximately $42 million in the U.S. and negative gross margins prior to our acquisition and grown revenues at a cumulative annualized growth rate exceeding 10 percent," he added.

'fundamental change in the profile of our business'

MACI's approval marked two significant firsts for Vericel, becoming the first FDA-approved cellularized scaffold product that applies tissue engineering processes to grow cells on scaffolds using healthy cartilage tissue from the patient's own knee. The endorsement also represented the Cambridge, Mass.-based company's first biologics license application (BLA) approval. In March, Vericel reported that the FDA accepted the BLA filing and indicated its review would not involve an advisory committee meeting. (See BioWorld Today, March 11, 2016.)

MACI's approval was based on the phase III SUMMIT study (Superiority of MACI implant versus Microfracture Treatment in 144 patients, ages 18 to 54, with symptomatic articular cartilage defects in the knee), conducted by Genzyme and completed in 2012, according to Cortellis Clinical Trials Intelligence (CTI). The two-year prospective, multicenter, randomized, open-label, parallel-group study showed a statistically significantly (p=0.001) increase in improvement in Knee Injury and Osteoarthritis Outcome Score (KOOS) pain and function (sports and recreational activities) scores – the first product to do so in a phase III study, according to Vericel – compared to the conventional microfracture surgery group at two years.

The most frequently occurring adverse reactions (≥5 percent) reported for MACI in the randomized, controlled trial were arthralgia, tendonitis, back pain, joint swelling and joint effusion. Serious adverse reactions reported for MACI included arthralgia, cartilage injury, meniscus injury, treatment failure and osteoarthritis.

Patients who participated in SUMMIT had the option to enroll in a three-year extension study, which enrolled 128 participants and was completed last year, according to Cortellis CTI. Overall efficacy findings supported long-term clinical benefit from the use of MACI in patients with cartilage defects of the knee.

MACI is essentially a third-generation version of Carticel, which the company expects will gradually retire once the Vericel launch is complete. In fact, Vericel expects to price MACI at parity with Carticel at launch, using existing CPT and J codes, to provide a smooth transition of medical policies.

"Our primary interests are to make sure that physicians and patients have access to this product," Colangelo said.

Launch plans are well underway. They include a branding campaign for MACI as the market's premier cartilage repair product; an estimated 30 percent expansion of the company's cartilage repair sales force; increases in the marketing, market access and medical affairs teams; and development of new patient support programs.

"We were optimistic about the prospect of MACI's approval and have been making significant investments in all of the expected launch preparation activities," Colangelo said, noting that the company expects rapid uptake of MACI within the surgical community. In January, the company plans to bring key opinion leaders from Europe to train U.S. surgeons on the procedure.

Vericel had another regulatory win this year when the FDA approved the company's humanitarian device exemption supplement for Epicel, broadening the label to include pediatric patients and citing the probable survival benefit of Epicel based on two clinical experience databases and a randomized, controlled, independent physician-sponsored study comparing outcomes in patients with severe burns treated with Epicel and standard care compared to standard care alone. The label expansion enabled the company to expand its market for the product to approximately 360,000 grafts per year, or about 50 times the current volume.

With the MACI approval, "we now have two products in our portfolio with significant growth prospects – a fundamental change in the profile of our business from just one year ago," Colangelo said. "We've built a strong foundation for our next phase of growth."

Additional revenues from MACI could set up Vericel for what could be a bigger win with ixmyelocel-T, which the company is advancing in patients with advanced heart failure due to ischemic dilated cardiomyopathy (DCM). Earlier this year, the company rolled out phase IIb results of the candidate, branded ixCELL-DCM, which met its primary endpoint of reduction in deaths, cardiovascular hospitalizations or unplanned outpatient and emergency department visits to treat acute, decompensated heart failure during the 12 months following treatment, compared to placebo. Adverse events were comparable across treatment groups.

The therapy is manufactured from the patient's own bone marrow, using a process that selectively expands the population of mesenchymal stromal cells and alternatively activated macrophages. U.S. regulators granted ixmyelocel-T orphan drug status in DCM.