Elutia Inc. Q2 FY2026 earnings call

Strategic Focus & Capital Position

• The company is executing a strategic refocus to concentrate all capital and management attention on the commercialization of NXT 41X, its lead product candidate for infection prevention in plastic and reconstructive breast cancer surgery.
• The company secured up to $26 million in additional non-dilutive capital, consisting of a $15 million credit facility from Avenue Capital Group ($10 million drawn, $5 million available upon NXT 41X FDA clearance) and up to $11 million from the signed Simpliderm divestiture ($8 million cash at closing, $3 million in milestone payments). Including end-of-quarter cash and the $8 million Boston Scientific escrow from the 2025 Elupro divestiture, total available cash is $54 million, enough to fund the company through the 2028 full commercial launch of NXT 41X.
• Definitive agreements have been signed to sell Simpliderm, with closing expected in Q3 2026; the strategic sales process for the cardiovascular segment is progressing, with a potential transaction closing in 2026. Once divestitures are complete, Alusha will be solely focused on NXT 41X.

Market & Clinical Opportunity

• NXT 41X is a surgical implant that combines a biological matrix with sustained local antibiotic delivery to prevent post-operative surgical site infection, built on the company's validated, previously commercialized platform.
• The U.S. market for breast cancer surgery reconstruction is a $1.5 billion established market, with a large unmet need: published data shows 15-20% post-operative infection rates, up to 21% implant loss, and 1 in 3 patients experience a serious complication, with significant added unreimbursed costs for hospitals and increased surgeon burnout.

Independent Surgeon Demand Survey Results

• The company commissioned an independent blinded survey of 50 representative board-certified plastic and reconstructive surgeons to quantify NXT 41X demand, with no disclosure of the sponsor.
• 86% of surveyed surgeons reported that the biological matrices they currently use increase surgical site infection risk, confirming the unresolved clinical problem.
• 96% rated NXT 41X's antibiotic combination effective at reducing infection, 98% view it as distinct from existing products, 100% would use it for high-risk patients, 96% are interested in adopting it into general practice, and 92% are willing to champion it through their hospital's value analysis committee (VAC) approval process, confirming tangible commercial demand.

Regulatory & Manufacturing Progress

• NXT 41 (the base biologic matrix without antibiotics) remains on track for a favorable FDA clearance decision in Q4 2026, following a productive recent meeting with the agency. NXT 41X remains on track for FDA clearance in H1 2027.
• The company has completed qualification of an automated, in-house commercial manufacturing process for NXT 41X at its Gaithersburg, Maryland GMP facility, with no reliance on third-party contract manufacturers or sole-source suppliers. The process is designed for scale, and the company targets gross margins above 80% at commercial scale.

Alusha reports two operating segments in continuing operations for Q2 2026: 1. Simpliderm: Net sales were $0.7 million lower than the prior year period due to a production disruption at the segment's contract manufacturer. It contributed negative net sales growth of $0.7 million, and will be reclassified to discontinued operations following the close of its planned divestiture in Q3 2026. 2. Cardiovascular: Net sales increased $0.4 million year over year, driven by the company's transition back to direct sales. Total net sales for all continuing operations in Q2 2026 was $2.4 million, compared to $2.7 million in Q2 2025. Total year-to-date net sales through the first half of 2026 was $5.5 million, down slightly from $5.7 million in the first half of 2025. The previously divested Elupro bioenvelope business is classified as a discontinued operation.

• Regulatory milestones are maintained: NXT 41 FDA clearance expected Q4 2026; NXT 41X FDA clearance expected H1 2027; full commercial launch of NXT 41X on track for 2028.
• The company maintains its target of gross margins exceeding 80% for NXT 41X at commercial scale, with no revision to this guidance.
• The $54 million total cash position is expected to provide sufficient funding through the 2028 full commercial launch and beyond, with no expected need for additional capital to reach this milestone.
• Simpliderm divestiture closing is expected in Q3 2026; a potential transaction for the cardiovascular segment is expected to close in 2026.

• Forward-looking statements, including those related to regulatory clearance timelines and outcomes, commercial launch, manufacturing scale, and future financial performance, are subject to material risks and uncertainties that could cause actual results to differ materially from expectations. These risks are detailed in the company's SEC filings, including the 2025 Form 10-K and subsequent periodic reports.
• Regulatory approval of NXT 41 and NXT 41X is not guaranteed, and FDA feedback could result in delayed timelines or non-approval.
• Commercial adoption of NXT 41X depends on successful navigation of hospital VAC approval processes, which can be slow and unpredictable even with surgeon support.
• Production disruptions at third-party contract manufacturers (as experienced by Simpliderm in the quarter) can negatively impact near-term sales and performance.
• Achieving the 80% gross margin target depends on future pricing decisions and commercial scale, and may not be achieved as quickly as expected.

Q: What can be shared about recent FDA interactions for NXT 41, and what stage of the clearance process is the program in currently? / A: NXT 41 is under FDA review, and the agency had questions for the company. The team held a meeting with FDA to align on how to structure responses to these questions to ensure full responsiveness. Management came out of the meeting feeling very positive about the program's position moving forward. The program remains on track for a Q4 2026 clearance decision.

Q: What manufacturing capacity does the company plan to have ready for NXT 41X's 2028 full launch, and how does capacity impact the 80%+ gross margin target? / A: The company expects to have at least $300 million in annual revenue capacity ready at launch. Expanding capacity beyond that will only require adding personnel and shifts, no additional facility space or production equipment, so scaling to meet unexpected demand will not be challenging. The team designed the NXT 41X manufacturing process using lessons from Elupro to reduce inherent production costs, and gross margins are expected to reach the target range relatively quickly after launch, with some final variability dependent on future pricing decisions.

Q: What is the plan for the limited soft launch of NXT 41X planned for H2 2027, and what milestones are needed for the 2028 full launch? / A: The primary focus of the 2027 soft launch is advancing NXT 41X through hospital VAC approval processes. VAC approval is the main gating factor for commercial adoption, so the company will use the soft launch period to target high-priority hospitals, leveraging detailed institutional data on current infection complication costs to demonstrate NXT 41X's clinical and economic value. No large revenue generation is expected during the soft launch; full commercial launch will proceed in 2028 once VAC approvals are sufficiently advanced.

Q: What will the annual operating expense run rate be after the Simpliderm divestiture is complete, excluding litigation costs? / A: The company is still refining its overhead structure post-divestiture, and sales and marketing expenses for the divested non-core businesses will decrease. Management continues working to finalize the new run rate and will provide updated guidance once that process is complete.