ELUTIA INC. Q1 FY2026 earnings call

Strategic Focus & Core Opportunity

• The company is sharpening its strategic focus to become a pure-play drug-eluting bio matrix company centered on the large underserved U.S. breast reconstruction market, which management values at $1.5 billion total opportunity.
• NXT 41X, the lead product candidate built on the company's validated drug-eluting biologic platform, targets a well-documented unmet need: 15-20% post-operative infection rates and 21% implant loss after mastectomy reconstruction, which derails cancer treatment for affected patients.
• The U.S. market is already established for biologic matrices, which are used in over 85% of implant-based breast reconstruction procedures, and volume is highly concentrated: 75% of total market revenue comes from 585 hospitals, and the top 50 centers represent over $300 million in annual spend, reducing required sales infrastructure for launch.

Regulatory Progress

• Productive, collaborative interactions with the FDA's plastic and reconstructive surgery review group have increased management confidence in the NXT 41 and NXT 41X submission and review process.
• The company confirms NXT 41 (the base biologic matrix) is on track for its regulatory timeline, with NXT 41 (the drug-eluting indication) to follow.

Operational Milestones

• The automated manufacturing platform for NXT 41X was brought online this quarter, with precise robotic drug application, integrated in-house quality control, and scalability. The platform is targeted to deliver gross margins above 80% at scale, enabling competitive pricing alongside strong margins.
• Commercial readiness work led by the new chief commercial officer has confirmed surgeon feedback that post-operative infection is a top unmet challenge with no meaningful existing category innovation, and complication rates at high-volume centers reach 30%, creating strong early adoption potential.
• The company ended the quarter with $36.5 million in total cash and escrowed funds from the prior sale of Eliupro to Boston Scientific.

Strategic Portfolio Processes

• The company is progressing two divestiture/strategic processes to refocus all capital and management attention on NXT 41X: the previously announced Simpliderm divestiture, and a newly disclosed inbound acquisition interest in the cardiovascular product line.

Total continuing operations net sales for Q1 2026 were $3.1 million, a 6% year-over-year increase from $3.0 million in Q1 2025. The Simpliderm segment generated $2.1 million in revenue (67.7% of total net sales), down from $2.6 million in the prior year period, with a 57% gross margin. The cardiovascular product segment generated $1.0 million in revenue (32.3% of total net sales), up from $300,000 in the prior year period, with an 85% gross margin. GAAP gross margin for the overall company was 58% in Q1 2026, compared to 47% in Q1 2025; adjusted gross margin (excluding intangible asset amortization) was 67%, compared to 56% in the prior year.

• The company maintains its prior timeline: NXT 41 clearance is expected in Q4 2026, and NXT 41X clearance is expected in H1 2027, with a focused soft launch of NXT 41X planned for H2 2027.
• Management confirms current cash and escrow resources are sufficient to support all planned regulatory and operational milestones through these timelines; completion of the two strategic portfolio processes will further strengthen the balance sheet.
• No material changes to prior financial guidance were announced.

• Forward-looking statements (including regulatory, launch, and transaction timelines) are subject to material risks and uncertainties that could cause actual results to differ materially from expectations, per the safe harbor disclosure. Risks are detailed in the company's SEC filings, including the 2025 Form 10-K.
• Regulatory review timelines and outcomes carry inherent uncertainty, even with positive early interactions with the FDA.
• Divestiture transaction timelines and final completion are not guaranteed, despite strong current interest.
• Commercial adoption of NXT 41X depends on surgeon and hospital acceptance, which cannot be fully predicted prior to launch.

Q: The CEO said the company is incrementally more confident in the FDA process for NXT 41X. Does this mean there are no surprises and a clearer roadmap for the submission? / A: The FDA's plastic and reconstructive surgery review group has been far more collaborative and proactive than expected, with substantive, direct ongoing discussions rather than just perfunctory communications. While NXT 41 is progressing as planned, the core priority is NXT 41X, and these early interactions have given management significant increased confidence that the NXT 41X submission will be high-quality, on schedule, and approved as expected.

Q: Given the high market concentration, what is the company's current plan for sales rep hiring and launch structure, including the split between internal employees and 1099 contractors? / A: The commercial team is still finalizing the full launch plan, which will be shared in more detail on the next earnings call. Early market assessment confirms that only a small focused sales team is needed, given 75% of the market is concentrated in 585 centers, and $300 million of opportunity is in just 50 centers. The company's prior experience with Eliupro showed 12 direct reps paired with a small number of 1099s could activate significant market share, and the high concentration of need at large centers creates strong early adoption opportunity.

Q: What are the expected timelines for the Simpliderm and cardiovascular strategic processes? / A: The Simpliderm process has robust interest from 38 engaged targets, and management is confident a transaction will come together, but exact timing is not given as it is still in process. There is also high-quality inbound interest in the cardiovascular line, which was an unexpected upside development. Completing both transactions will strengthen the balance sheet and free up capital and management focus for NXT 41X, the company's core long-term value opportunity.