Greetings. Welcome to the Elutia Third Quarter 2024 Financial Results Call. At this time, I'd like to turn the conference over to Matt Steinberg with FINN Partners. Please go ahead.

Thank you, operator, and thank you all for participating in today's call. Earlier today, Elutia released financial results for the quarter ended September 30, 2024. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that do not relate to matters of historical facts or relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the SEC, including Elutia's annual report on Form 10-K for the year ended December 31, 2023, that's accessible on the SEC's website at www.sec.gov. Such factors may be updated from time to time in Elutia's other filings with the SEC. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 14, 2024. Elutia disclaims any intention or obligation, except as required by applicable law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. Also during this presentation, we refer to gross margin, including intangible asset amortization, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure is available on the company's financial results release for the third quarter ended September 30, 2024, which is accessible on the SEC's website and posted on the Investor page of the Elutia website at www.elutia.com. And with that, I will turn the call over to Elutia's CEO, Randy Mills.

Thank you, Matt. It is my sincere pleasure to be with you this afternoon and to go over the current progress that we're making at Elutia. To start off, like we do everything as a mission-centric company, we'll go over our mission. We are humanizing medicine so that patients can thrive without compromise. That is taking all of the great benefits of humanized biological materials combining them with active pharmaceuticals and putting them together in a usable formulation that can really improve the standard of care that patients receive. Today, we're going to point out that we are in the midst of one of those revolutions with the introduction of our EluPro product line. We are a commercial-stage company with two high-growth proprietary product platforms. Most of my comments today are going to be focused on our EluPro product launch, but we also can't forget our fantastic SimpliDerm product line in breast reconstruction. SimpliDerm grew 19% this quarter, so we're really pleased to see that product return to a more normal rate. We are pioneering the drug-eluting biologic to solve complex surgical problems that are not addressed by current technology. We got the first one of those cleared in June 2024 with EluPro. We had the first implant in September, and we're building towards our commercial launch in January 2025 with tremendous momentum. I'll try to keep my comments brief and to the point, and I hope they are full of substance. We're very energized by the progress we have made since the EluPro envelope was first implanted on September 5th. We are growing our presence with both our sales force and representation through VAC and GPOs, supporting this effort by publishing peer-reviewed data demonstrating the proven activity of the product. Underpinning this is earnest business development activity with multiple partners, but that is mostly confidential and sensitive. So let’s move on to the details I can discuss about EluPro. We are very energized by our first commercial use on September 5th. Another significant event occurred with the first neurostimulator device implanted on October 31st, which happened much earlier than expected. We are seeing strong initial adoption with EluPro being used across all major CIED brands, now accounting for 25% of our bio envelope sales without having fully unleashed the product to the market yet. We are excited to introduce our emerging EluPro nation, featuring physicians who are early adopters of the product. This idea that 88% of former TYRX users may want to switch over to EluPro seems to be holding true as we observe clinic patterns in the field. Our adoption among electrophysiologists and pain management physicians is growing rapidly, and we believe there is plenty of room to expand. In expanding our commercial footprint, we strategically added key personnel in Southern California and the Northeast through a blend of direct and independent reps. This strategy allows us quality coverage while maintaining a cost-conscious approach. We currently have 12 direct reps, 34 independent reps, and nine product consultants, all of whom have recently undergone comprehensive sales training to ensure they understand the complexities of our product. We've seen surprising results, with 36 accounts actively ordering, a clear indication that our strategy is resonating. We are advancing our strategy with GPO partners and expect favorable coverage decisions early in 2025. Additionally, we kicked off an initial clinical study that will provide real-world outcomes data to support our efforts in both the U.S. and the EU for obtaining the CE Mark. I should note that the approval process for EluPro was significantly more rigorous than in previous years, reflecting the elevated standards in place today. We have published data showcasing our product's ability to eliminate major bacterial contaminants common in hospital settings, highlighting the scientific backing we have for EluPro. We'll keep gathering data to demonstrate the product's clinical efficacy. I'm optimistic about how our pre-launch process is going and can't wait to update you further once we fully launch commercially. Now, I will step aside, and Matt will run us through some pertinent financials before opening up for questions.

Thank you, Randy. I would like to first say that I completely agree with Randy's enthusiasm about our company's progress across multiple fronts—commercially, strategically, and financially. I'll hit on a few financial points and then we’ll take your questions. For sales, we reported $5.9 million for the quarter, down slightly from $6.1 million in the same quarter last year. We are seeing contributions from EluPro aligning with Randy's insights, and CanGaroo continues to perform well as users await EluPro's availability. SimpliDerm saw a 19% year-over-year growth this quarter with $3.1 million in sales. Our adjusted gross margin increased slightly to 61% compared to 60% last year, with the gross margin for our BioEnvelope business at 68%. We managed our operating expenses effectively, despite a rise to $13 million, primarily due to non-cash stock-based compensation. The loss from operations was $10.2 million for the quarter versus $7.4 million last year. Notably, we achieved positive net income for the quarter of $1.3 million, though largely due to a non-cash gain related to warrants exercised in the quarter. Adjusted EBITDA remains manageable with a loss of $2.9 million for the quarter. As of the end of the quarter, we had $25.7 million in cash, bolstered by $13.8 million from warrant exercises. Overall, we feel great about our current status as a company. Now, we will open it up for questions.

Thank you. We will now be conducting a question-and-answer session. Thank you. Our first question comes from the line of Frank Takkinen with Lake Street Capital Markets. Please proceed.

Great. Thanks for taking the questions. Congrats on all the progress. I was hoping I could start with one on EluPro mix of implants. I'm sure it's small numbers, and I'm sure it's a little tough to tell exactly where they're all being used, but I know you commented on some being used with Medtronic cans. But I was curious if you have kind of in broad strokes, what the mix of implants between Abbott, Boston, and Medtronic was with the early implants.

Yes. Frank, so it is very early into this journey. Right now, we're not really seeing a bias towards any one brand. We have all major pacemakers covered, and we're seeing orders coming in at a balanced rate across the board. The usage is more about which centers are moving through the process quickly and the underlying pacemaker being utilized by the electrophysiologists.

Okay. That's helpful. And then maybe on the account base, appreciate the commentary there. Can you just level set us how many CanGaroo accounts you have at this point? And then maybe talk about the broader total account opportunity.

Yes, we have around 400 CanGaroo accounts. They come in all different shapes and sizes, and this makes up the majority of our target universe. I think we're currently at 37 active accounts, about 10% of these accounts have activated already, which was quicker than we anticipated.

That's helpful. And then maybe talk a little bit about hiring. Obviously, you guys made a lot of hires in the quarter. Is this team now fully staffed, or do you expect there will be more hiring?

We are feeling good with the team we have right now. We are not yet in every single spot that we want, specifically in certain areas out West. We are looking to utilize independent distributors strategically to enhance our reach and effectively cover those gaps without compromising on standards for who represents Elutia and EluPro.

Okay. That's helpful. And then one last one from me. On the transition from CanGaroo to EluPro, how should we think about the short-term noise in the numbers for Q4 until we get into the full launch?

While we don’t provide forward-looking guidance, I appreciate the question. The noise will likely be around the margins. Our enthusiastic adopters of EluPro were our biggest users of CanGaroo. We are seeing larger initial orders for EluPro, averaging about 20% larger than CanGaroo orders, indicating potential upside.

Thank you. Our next question comes from the line of Ross Osborn with Cantor Fitzgerald. Please proceed.

Hey guys. Congrats on progress. Thanks for taking our questions. So starting off, your comment on EluPro used with the neurostim was interesting. While we've thought about this opportunity, it really hasn't been top of mind. Is this something you are currently marketing for or just nice to have for incremental adoption?

This was a pull-through situation, indicating actual demand. We weren’t originally targeting the neurostim space. However, we see a significant opportunity here as there's a critical need to reduce postoperative infection rates. We’ll definitely be looking to grow within this area.

I'm glad to hear it. Switching to SimpliDerm, can you outline the top initiatives for 2025 around that offering?

Our initiative is to expand our proprietary distribution efforts and own the reconstructive biosurgery field, particularly in breast reconstruction. We see significant potential in this area, particularly with our drug-eluting version of SimpliDerm as we build our commercial infrastructure.

Thank you. There are no further questions at this time. I would like to conclude the call. Thank you, everyone, for your participation, and have a wonderful day.