Good afternoon, ladies and gentlemen. Welcome to the Elutia Inc. First Quarter 2025 Financial Results Conference Call. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to Matt Steinberg with Fin Partners. Please go ahead.

Thank you, operator. Thank you all for participating in today's call. Earlier today, Elutia Inc. released financial results for the quarter ended 03/31/2025. 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 fact 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 Inc.'s annual report on Form 10-K for the year ended 12/31/2024, accessible on the SEC's website at www.sec.gov. Such factors may be updated from time to time in Elutia Inc.'s other filings with the SEC. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, 05/08/2025. Elutia Inc. disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements because of new information, future events, or otherwise. Also, during this presentation, we refer to gross margin, excluding 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 in the company's financial results release for the first quarter ended 03/31/2025, which is accessible on the SEC's website and posted on the investor page of the Elutia Inc. website at www.elutia.com. With that, I will turn the call over to Elutia Inc.'s CEO, Randy Mills.

Thank you, Matt, and hello, and welcome all of you joining us today for our first quarter 2025 conference call. I'll start off like I always do, just briefly describing our mission. Our mission, our true north, the thing that guides us in this company, is humanizing medicine so that patients can thrive without compromise. We believe strongly in this intersection of biological materials being superior to metals or synthetics and then combining those with active pharmaceutical agents. That is what humanizing medicine means to us. Alright. So let's get into it. We've got a lot to talk about. I know we're starting a little later than normal today, so I'll try to be concise in my comments. We had a fantastic quarter, and there's a lot we need to get you up to speed on. So let's jump into it. Looking at an overview of what we're going to be talking about today, first, we couldn't start this conversation without talking about the success of EluPro and its start to the full launch exceeding expectations by far. Also, I'm going to talk a little bit about the future growth that we see coming through our new partnership with Boston Scientific that starts up this quarter, the second quarter, that we're currently in right now. We've also been out there doing some really significant and targeted marketing efforts, and we're going to talk through some of those scientific and marketing recognitions that we're getting. I do want to make a few quick comments on regaining our cardiovascular portfolio from LeMaitre. And then, obviously, Matt is going to talk to you about our finances and our financial position, which we were also able to materially strengthen during the quarter. So with that, let's jump right into it. EluPro's first quarter launch, this is the priority for the company. That's the most important thing going on in the organization. And during our first full quarter launch of the product, we really experienced some tremendous performance. So BioEnvelope, this combines our legacy Kangaroo product with our EluPro product. Up 31% year over year to $3.1 million for context. It is also up 16% sequentially, and that was off of a really strong, in fact, our best quarter that we had for BioEnvelope. So really, really strong overall results for our BioEnvelope franchise. But this was all driven by EluPro. In fact, all driven by EluPro offset by some cannibalization that was expected going on in Kangaroo. EluPro jumped 84% from the fourth quarter to the first quarter and now constitutes 52% of our BioEnvelope revenue. And as it's climbing out, it will become far and away, we think, the dominant factor in BioEnvelope revenue. How did we do that? How was that possible? Well, that was all made possible by the outstanding performance turned in by our team in securing back approvals. We've said this from the beginning that our work with value analysis committees and getting through the value analysis committees and on contract with the hospitals was the essential prerequisite. It has to happen before any sale can happen, and we are currently through 25 hospitals that are now actively ordering the product. And I want to take a moment to thank the team for such a tremendous effort there. So digging a little bit deeper into the value analysis committee approval process and also what we have going on with our GPOs. So as I said, 25 institutions currently through VAC and actively ordering the pro product. You can see here, this is actually, so since September, how we've done month to month by adding hospitals through contract and through the value analysis committee on a monthly basis. I will say, we do not add an institution merely by getting through the value committee process or even getting on contract. For us, to add them and for them to make this chart and for it to make this graphic, they actually have to be actively ordering the product as well. So 25 institutions through that process. Another 30 VACs in process. We're currently adding about 10 to 12 VACs a month. Again, just so everyone understands the universe. So we're in 25. We're targeting about a thousand hospitals to ultimately run this process out through with. We get there by taking only hospitals, so not ambulatory surgery centers. And then gating on those hospitals that do greater than a hundred pacemaker or defibrillator cases a year. So absolutely outstanding work going on here with our value analysis committee efforts. And really, what we think this does is we think this sets us up in a very, very strong position for us, a very strong second half of February and '25. Okay. Other work we've done in here, though, so value analysis committees are great to have. Another thing that really helps us along is having these GPO agreements in place, and we were able to add two more to the list in the first quarter. So we're super excited about that. We also have a lot more work going on with GPOs and hope to be adding to this list of seven within the year 2025. So a lot of great stuff going on from a VAC standpoint, from a contracting standpoint. The back office machine at Elutia Inc. is really starting to come into its own and work. Alright. I want to talk about how we are planning on supercharging that with our Boston Scientific relationship. Now we've been talking to our friends over at Boston Scientific for some time now on some bigger ways of working together. And we are still doing that. We're still working through that. But while we were going through that process, we said, you know what? This product is too important. We need to get this thing launched, and we need to get it into the hands of our reps. And so our two organizations came together. We decided to put this construct in place to be able to do that right now. So this is a distribution agreement that is able to leverage the Boston Scientific reps. Basically, the way it works is Boston Scientific reps get paid a direct commission for keeping Medtronic out of their cases. I mean, what could be better than that? You're already in the case. You're already there putting in the pacemaker. Why not get some money keeping Medtronic out of your case? And so that's basically what this deal does. It gives us a combined commercial footprint of over 900 sales professionals coast to coast now. For context, we had 12 territory managers, another 35 ten nineties of our own. We were in, before this arrangement, we were already in 35 states. Not bad. But with this Boston Scientific arrangement, it's game-changing for us. It gives us 900 sales reps covering coast to coast. It also gives us really great economics under this model. So this model allows us to recognize end market revenue and actually pay a fairly modest commission to the Boston Scientific reps each time they actually sell EluPro in a case. So they're incentivized to make EluPro more successful. The Boston reps actually help us in two ways. Right? So one way that they help us is Boston Scientific actually helps us drive the VAC process by introducing us and making those essential connections with the physicians and with the purchasing people inside these hospitals. They can actually help us get back approvals more efficiently. And when we talk about going from where we are now really to scale, this becomes essential for us. The other way they help us is just actually case coverage and adoption within the procedure. So the Boston rep is in every single case right there with the pacemaker when the pacemaker is going in. And it's just super easy for them to say, hey. How about we also protect this pacemaker and this patient by putting the best antibiotic eluting envelope available on the market around this? And getting paid to do it. So with that, our sales training of the organization, the initial sales training and rollout has already been completed. Kimberly and her team are doing a fantastic job. And get this, Boston Scientific reps have already gone out and started generating sales at over fifty-two hospitals, as of today, where Boston Scientific reps are actively selling EluPro. So a lot going on with Boston Scientific. We have a great partnership. We're fully engaged with them, talking about what we're doing now and talking about bigger ways of working together. But in the meantime, we have really put together a tremendous package that helps us get the most out of EluPro and get the most out of the launch of this product. Okay. With all of that great work going on commercially from an operational standpoint, we need to make sure that we can keep up. We need to make sure we can keep getting more and more efficient. So our production of EluPro takes place at our Roswell, Georgia facility that also supports our Kangaroo manufacturing process as well. It has the capacity to do about $140 million in revenue of 70% plus gross margin. But we were finding ourselves a little constrained by the production of the amp component of it. So our team in Roswell, Georgia can actually crank out EluPro all day long provided they have the subcomponents necessary. And one of those critical ones is the antibiotic disc that we use. And so, we have actually expanded and opened a new facility in Gaithersburg, Maryland that adds GMP manufacturing capacity to it. That allows us to make the antibiotic disc. That's important because it removes a bottleneck. But the other reason that's important is it's actually a pretty significant component of the cost of the product. And so by making that antibiotic disc directly ourselves, we remove the supply constraint and the bottleneck on it and significantly reduce the cost of goods of the product. So we're super thrilled to have that facility. We're moving into that facility right now and getting that up and running. We hope to have that site manufacturing and contributing by the end of the year. We were also able to get really exceptional lease terms for this facility. And so we were able to gain all of this space in this capacity from existing GMP space in really favorable economic terms. Alright. And then, certainly, a fun thing to do is to get out and spend time with physicians and other partners that we have and market the product. And we had a phenomenal kickoff of EluPro at the Heart Rhythm Society meeting in San Diego just a few weeks ago where we launched our ad campaign putting an end to unnecessary roughness, feel the difference biology makes. And I'll just tell you, you can see here the is a photograph of our booth. Would say rather strategically placed in the middle of this conference center next to our partners, Boston Scientific and in real serious proximity to some of our competitors, and it stood out. It was very eye-catching, and we had a tremendous presence at our booth. It was great getting to speak with our physician partners who were stopping by and engaging with us. And I would thank many, actually, investors and other partners of you who stopped by and said hello at HRS. I hope you enjoy the experience as much as we did, but it was a great kickoff to EluPro, and it was a great kickoff to this marketing campaign where we think really underscores the value proposition that we add. The same phenomenal antibiotic rifampin and minocycline, proven to protect patients from postoperative infections combined with a biological envelope that makes it easier for the physician to use and more comfortable for the patient to have. So a great kickoff. And, you know, adding right to that was my extreme honor to be present at the 2025 Edison Awards to accept an Edison Award on behalf of the entire Elutia Inc. crew for innovation in postsurgical recovery. EluPro already starting to win awards. The word's getting out. And it was fantastic. The science team wants to know that they will not be left out of this conference call. They have enrolled the first patients in our real-world clinical study going on. Our first patients were enrolled at UCSD. We're enrolling patients in this study across the country, gaining the kinds of clinical outcome data that physicians care about. And then lastly, they were able to notch another win with a peer-reviewed publication confirming the broad-spectrum antibacterial effect of EluPro against all different kinds of bacteria and showing just how robust the antibacterial properties of EluPro are when implanted. Okay. So those are my comments about EluPro. Lastly, I will just make a few comments on our reacquisition of our cardiovascular products from LeMaitre. This was a process that really went as seamlessly as it possibly could. There was really minimal customer disruption. We were able to assemble a team. So far, twenty-six ten ninety-nine sales reps that are out there selling the product. Direct sales are now underway. And this has already begun. And, again, this one, we think really has a possibility of adding and contributing from a financial standpoint right away. So I want to make these couple of these points really clear because we got some questions about it. One is, yes, it's going to help our top-line revenue because we are capturing top-line revenue. Our gross margins, we expect, will go up pretty predictably to about 80%. But here's the important thing. We expect this to essentially immediately contribute positively on the cash flow line. So this isn't a change that will cost us money. This isn't a change where we will have to make an investment. This is something that contributes right away to the bottom line. And then lastly, it does increase our strategic flexibility with this product line. Having this back from LeMaitre and fully in our control lets us make other strategic decisions with it. This is a product line where we've been approached by other strategics about, and so it gives us that opportunity to consider a lot of different options with this cardiovascular line. So with that, I will pause my comments. I'll turn it over to Matt. I'll be back with, after Matt's rundown of our financial update with a few parting comments.

Okay. Thanks, Randy. Thanks for all of you for being on the call today. I'm just gonna hit a few of our highlights from our financials, of course, refer you to our earnings release and our 10-Q, which will come out early next week for all of the details of those. So of course, leading the way, as Randy mentioned, on the top line, our BioEnvelope division or device protection as we sometimes call it, came in at $3.1 million revenue. That's compared to $2.4 million a year ago. That represents 31% growth year over year, and also great sequential growth there compared to the Q4 number, which was pretty good in and of itself. For Simploderm, we were at $2.6 million for the quarter. That is down admittedly from last year's number of $3.6 million, but it's up quite a bit from the number that we had in Q4. Up about 13% from our Q4 number. So we're pleased with what's happening there and feel like we're on the right trajectory. Our cardiovascular products division, as Randy mentioned, the number for Q1 represented sales that were still going through our outside distributor at only about $300,000, we would expect that as taking that back and starting to capture the top-line sales, a percentage of the top-line sales, and also reinvigorating the actual sales efforts there. Through a really great organization of contract salespeople that we have in place already. We'll see some significant growth there going forward as well as better contributions to our bottom line. So, overall, adding those things up, we came in at $6 million in sales. Down a bit from last year, but, again, up sequentially from Q4 by about 10%. So moving down the P&L, I'll skip down to our adjusted gross margin, which is how we look at it internally, excludes non-cash amortization of intangible expense. That came in at 54.8%, really basically unchanged from last year when we were at 55.2%. But we also believe that there will be a number of positive changes going forward there. Particularly as we make some efficiencies in the manufacturing of EluPro as we take some of that in-house and increase volumes there. And then also, as I mentioned, the capturing of direct revenue on the cardiovascular side of things. So we actually expect gross margin to improve going forward. We also did a good job in Q1, even in spite of what really was a lot of focus on the launch of EluPro, we were able to control expenses quite well. Operating expense actually went down year over year by close to a million dollars. $10.4 million versus $11.3 million. And that translated down to what I consider to be our most salient profitability or loss measure, our adjusted EBITDA number came in at $3.3 million and that is an improvement from last year when we were at $4.5 million for a comparable measure. So feel like we're getting nice control around our operations and seeing the leverage associated with the growth that we're generating on the top line. From a cash point of view, we ended the quarter at $17.4 million and that reflects a number of things that were going on in the quarter. One of those was a registered direct offering, which took place in February of the first quarter where we had $15 million in gross proceeds, so that added about $13.7 million in net proceeds. We also just today have announced a couple of amendments to important relationships that we have with Ligand Pharmaceuticals who has a loyalty interest agreement with us and SWK Holdings, which is our lender. And both of those amendments are designed to help us conserve cash both in the current quarter and also going forward. So in the case of SWK, that includes an additional potential term loan that we can draw on of $5 million as well as a deferral of the full deferral of our cash interest payment in the second quarter and a number of other changes to terms and covenants. In the case of Ligand, we actually have agreed that we will satisfy the payments for the first half of the year in stock, so that completely eliminates the cash outlay which would have been $2.2 million in the first quarter. So I think this really is a great indicator of the relationship that we have with these lenders and financial partners and the support that they're showing going forward. So very pleased to have those done and appreciate their work with us to get those done today. So that's sort of the recap on the financials. And with that, I will turn it back to Randy.

Alright. So I'm just gonna conclude with a wrap-up of where are we going. You know, we don't give guidance, but I do like to be really explicit and really transparent with the direction of the organization. So not a surprise to anyone. Our number one priority is to continue to drive top-line growth of EluPro and we're doing this by expanding our VAC and our GPO coverage. Two, everything we've done up to date, I should say, everything we reported in this quarter, the EluPro team was able to do on their own. They are now joined in that effort with 900 Boston Scientific sales reps that are really interested in this product. And so our second point is to continue building on the momentum that we've already started through the engagement of our Boston Scientific partnership, and we're really excited about that. Number three, we need to continue with our production capacity efforts. And increase or in lowering the cost of goods for EluPro. Our target here, again, is we think this is a product that has gross margins, ultimately, in the mid-70% range. And our operations team is hard at work in making that come true. Number four, now that we are at a position in our relationship with our Sientra contract, which was acquired by Tiger, to explore strategic alternatives. We're going to do that. We're actually starting that process work exploring different strategic options for Simploderm. I might have more clarity around that. But I will hopefully, coming up in future calls. And then lastly, continue to advance the drug-eluting biologic pipeline that we have for reconstructive surgery. We will be introducing some of this stuff more explicitly later on in the year and I think you're gonna find it absolutely stunning. The same team that brought you EluPro, and was able to get that technology through the FDA, has been hard at work on absolutely game-changing technologies. And we're really excited about those. And actually, getting some of those technologies through FDA in a relatively near-term horizon. So with that, I will conclude my comments today and turn the call over to Latanya for any questions that you might have.

Thank you. We will now conduct a question and answer session. The first question comes from Frank Takkinen with Lake Street Capital. Please proceed.

Great. Thanks for taking the questions. Congrats on the really strong start to the year. I was hoping to start with one on Boston Scientific. I know it's kind of early days still, but was excited to see you're in the 50 accounts selling with BSX already. How have those relationships with the physicians gone in those cases? Are they fully switched out their TYRX use for EluPro? Is it testing it a few times and then they shift it? Gradually from there? Just trying to get a feel for how quickly the Boston reps can flip the competitive accounts.

Yeah. Thanks, Frank. The way we're finding the adoption patterns for EluPro sort of goes like this. And I'll tell you a sort of a little bit of story about this because it relates to originally, we saw a surge in EluPro ordering over Kangaroo ordering, and we thought well, that might be a stocking order. But what we found was subsequent orders in general are higher than the initial order that's placed. And so we're spending a lot of time in the field. Obviously, I've been in out riding with our reps and sort of experiencing this firsthand. We saw again at HRS. Here's generally what happens is, historically, there might be one physician who likes or is interested in using EluPro in their center, and they'll bring the product in, and they'll use it. And what happens is they tend to like the experience, particularly if they've used TYRX in the past. The use of EluPro is a completely different experience. But what we found is it spreads through practices pretty predictably and pretty consistently. And so what we find is that we might originally have one physician in a practice that's interested in getting it on the shelf and ordering, and Boston Scientific is essential in giving us that introduction. But when other physicians in that practice see the product, hear about it, they try it, and they're also adopting it and using it. Now this is a game. Obviously, we've got to play hospital by hospital, but we certainly like that dynamic. Frank, the second thing that I think it's important to understand is once this conversion tends to happen with an electrophysiologist, it tends not to be just with their Boston Scientific cases. So it's rare that you find an electrophysiologist that only uses one particular brand of pacemaker. Usually, they might use, you know, 40% of one, 40% of another, and 20% of a third. And so if they're in there and they've experienced the use of EluPro with their Boston Scientific rep on their Boston Scientific pacemaker, what tends to happen is they tend to also carry that usage over to their other cases where they might be using a competitive pacemaker. It really becomes part of their surgical practice, more so than related to which particular brand they're using. So this is really a great way for us to leverage the Boston Scientific relationship even beyond those individual cases Boston is able to take us into and rep it to. And I think this is also a feature that Boston Scientific is pretty excited about as well because they like the idea of EluPro going into cases other than their own.

Got it. That's helpful. Maybe the second one on manufacturing. Just curious if you think about your current business without the Gaithersburg facility, how much capacity do you have? Or in other words, how much revenue can you get before you start to get pretty constricted from a capacity standpoint?

Out of our current manufacturing capacity that we have, we are able to generate about $140 million in EluPro revenue. Now that requires our component suppliers and really the chief component being the antibiotic disc to be able to keep up with that. Without expansion of the antibiotic disc, the capacity on an annualized basis is more in the $25 to $30 million range.

Okay. That's helpful. And then maybe just one for Matt. Obviously, a lot of moving pieces related to cash use and reduction of cash use. How should we kind of think about the burn profile going forward with EluPro growing, cardiovascular coming in-house, the Ligand stuff, just any help you can provide us in kind of anchoring to what a reasonable burn rate on a go-forward should be?

Yeah. You know, there were a lot of puts and takes in the first quarter. I would say that, you know, when you see our cash flow statement, it comes out on Monday or Tuesday in our 10-Q, it'll show cash flow from operations of about $8 million, and that includes about $4 million that was related to the settlement of litigation. That will largely be behind us after Q2, I would say. And at least in terms of anything that's already been committed to. So I would see that probably staying at a kind of a similar range in Q2, but coming down a bit and coming down after that. As we move through the year, probably more into that, you know, more historical range that was, like, in the $4 to $5 million range.

Hey guys, this is Matt Ferguson on for Ross Osborn today. Thanks for taking the questions and congrats on the solid progress with the registry study. How are you guys thinking about the role of that data in supporting commercial conversions or broader clinical adoption over the next, call it, twelve to eighteen months?

Yeah, Matt. So this is, you know, obviously, when you're doing human clinical studies, not much comes fast. And so this is something that we see being helpful more in the second half of next year when publications will come out. Now, I mean, this will be just one study that, you know, alongside all of the other great work that we already have clinically using the ECM technology as well as the different scientific studies that the science group continues to publish on. Basically, what do we do with that stuff? Well, we do a couple of things. I mean, one of the reasons that we hit on that science stuff so hard is a lot of the VAC process leans on those types of publications. So when our, you know, we had a press release earlier about another scientific publication that got published in a peer-reviewed journal about EluPro. That's one of the many things that goes into the portfolio that makes up our VAC submissions. So anything that we can do to bolster that obviously improves our chances with the VACs. Now if you look at how it's going, it's kind of hard to imagine we could be doing better with the VACs, but we're always thinking about the next one. The other thing that we do with this, and particularly the real-world study, the clinical study that we have going on, is we're starting to prepare for regulatory submissions outside of the United States. And it's in those OUS regulatory submissions where this type of stuff becomes really important to have, particularly going into the EU. So, Matt, that's what the plan is there, not just with the real-world study that's underway, but with basically that entire package of scientific work that the science team has put together.

Got it. Super helpful color. And then, one more from me on EluPro. I want to ask about the mix shift between EluPro and the whole BioEnvelope category. How should we think about the pace of continued mix shift towards EluPro in the second quarter and beyond? And then how can they increase conversions from Kangaroo over to the next-gen EluPro device?

I mean, you know, we think this is a product that's gonna end up doing about $200 million or so in US revenue when it reaches maturity. Kangaroo did $10 million in revenue when it reached maturity. So in pretty short order, we certainly hope that our EluPro revenue dwarfs what we, you know, what we have and what we were able to do with Kangaroo. Now with that said, don't expect Kangaroo to go away too soon. There are a couple of indications, and then there are a couple of patient populations where the non-antibiotic version is really actually pretty important. And so we are a patient-first company. So we will, you know, we'll be keeping the product line around for that. But I think, you know, what I want to say something like EluPro was 32%. You know, in the fourth quarter of last year, it was 30-32% of BioEnvelope revenue, now it's over 50%. I think you're just gonna see that continue to take greater and greater, you know, share of that market. But that's primarily just because of how fast EluPro is growing offset by a little cannibalization of Kangaroo.

Understood. Thanks again for taking the questions, and congrats on all the progress.

Thank you, Matt.

Thank you. This does conclude today's teleconference and webcast. Thank you for your participation. You may disconnect your lines at this time and have a great day.

Goodbye.