ELUTIA INC. Q2 FY2025 earnings call

• EluPro: Commercial success with 7 national GPO contracts, 161 hospital systems actively ordering, 49% sequential growth, making up 68% of BioEnvelope revenue. Driven by VAC approvals and partnership with Boston Scientific.
• Breast reconstruction market: $1.5 billion addressable market in US alone for biologics in reconstruction. 1 in 3 women face serious complications in breast reconstruction due to bacterial contamination. Elutia's drug-eluting biologic technology aims to address this.
• Litigation: Settled 27 cases in the last quarter, cumulatively settled 97 out of 110 original lawsuits from product recall, reducing future expenses and removing overhang.
• Financials: BioEnvelope sales $3.5 million, up from $2.6 million year-ago. Adjusted gross margin reached 62.4% in Q2, up over 4 percentage points from year-ago. Adjusted EBITDA loss $3.8 million for the quarter. Ended Q2 with $8.5 million of cash.

BioEnvelope revenue for the quarter was up 33% year-over-year, reaching about a $14 million run rate. EluPro saw a 49% sequential growth for the quarter and now makes up 68% of BioEnvelope revenue, with expectations to end the year at a revenue rate approaching $20 million. Cardiovascular patch products generated over $700,000 of revenue in the second quarter after taking control back from an exclusive distributor, which is more than double the previous quarter's distributor-generated revenue. SimpliDerm generated $2 million of revenue in the second quarter.

• Focus on EluPro scaling by getting more VACs on contract, leveraging direct sales channel and Boston Scientific partnership, and increasing production capacity to lower COGS.
• NXT-41 platform: Base matrix expected in second half of 2026, drug-eluting matrix in first half of 2027. Using proven regulatory pathway from EluPro.
• Evaluating business development transactions, expecting to provide more details soon with positive impact on cash position.

Past product recall led to 110 individual lawsuits, although significant progress made in settling cases, which was a past risk factor.

Q: Congrats on progress. Curious about bottlenecks for EluPro and NXT-41 steps.

A: Bottlenecks initially were commercial team stressing operations, but operations mastered it. Inventory in place for 100% service level. NXT-41 first is base matrix regulatory approval in second half of 2026, then drug-eluting in first half of 2027, using same regulatory playbook as EluPro.

Q: About gross margins and NXT-41 clinical evidence.

A: Opportunities across segments to improve gross margin. For NXT-41, using same regulatory platform as EluPro, staggering launches for clinical and marketing purposes, following well-established standards for surgical meshes