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 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 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 to 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 pithy 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 and away. 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…

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 ninety nines 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.…

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 gory 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 darn 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…

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 kinda 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 sorta 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 gotta 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 can that 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 kinda 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 point some 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.

Okay. That's helpful. Thanks for the questions.

Our next question comes from Ross Osborn with Cantor Fitzgerald. Please proceed.

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 kinda 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.