Good day, everyone, and welcome to Elutia Third Quarter 2025 Financial Results Call. [Operator Instructions] Please note, this conference is being recorded. Now it's my pleasure to turn the call over to Matt Steinberg, with FIN Partners. Please proceed.

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, 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 descriptions 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, 2024, 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. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 6, 2025. Elutia disclaims any intention or obligation, except as required by 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, 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 on the company's financial results release for the third quarter ended September 30, 2025, which is accessible on the SEC's website and posted on the Investor page of the Elutia website at www.elutia.com. With that, I will turn the call over to Elutia's CEO, Randy Mills.

Thank you very much, Matt, and welcome one and all to our third quarter 2025 conference call. I'm excited to be here with you today. Matt Ferguson, our Chief Financial Officer, is also with us today on this call. We're going to be going over a couple of things. One is the basics of evolution, a couple of things that I think everyone should know about the company. We're going to talk -- I'm going to spend a lot of time talking about where we're headed and not just where we're headed, but why we're going where we're going. Matt is going to give us an update on finance and litigation status. And then lastly, we'll close and take your questions. So let's get into it with some of the basics. So Elutia, we are a mission-based company. I think that's an important thing for investors to know. And I think that's a good thing, too, because we have a great mission. Our mission at Elutia is humanizing medicine so that patients can thrive without compromise. And today, we're going to talk a lot about breast reconstruction. And I hope that you can appreciate that our work in this space is so necessary because there's a patient population right now, women experiencing and making their way through their breast cancer journey who really are faced with a lot of compromise in their care and in their treatment, and that's holding them back from thriving. And we are applying our talents, our resources, our efforts and our mission to overcome that. So these women are able to thrive without compromise. I think it's really important for a company to know what they're good at, what are their strengths. And at Elutia, we are really great at combining biological matrices with powerful…

Okay. Thanks, Randy. And it's a very exciting time to be at Elutia and the future that Randy just described for everyone is really built on the great work that has been done over the past several years and the work that's been done more recently to build the foundation to make this future possible that we are also excited about. And so with that, I'm going to just take us back briefly to what Randy talked about at the very beginning of the call. And the big event for the third quarter of 2025, was the transaction of the sale of the bioennvelope business within Elutia to Boston Scientific. It was a sale for $88 million in cash, sold to a Tier 1 company that really put us through our paces digging under the covers, not just for the assets that they were acquiring, but really the whole company. And we came through that process very nicely with the technology and the company validated for work that had been going on really for years. So that transaction validates the technology platform that will be transformed in the coming quarters into NXT-41 and 41x and capture this big opportunity. And it also transforms our balance sheet importantly. And so it brings in a significant amount of cash and then it also streamlines our operations. So going forward, we'll be more nimble and we'll be more efficient and will be more productive. So the assets that were sold were the EluPro and CanGaroo products, along with that, our main operational facility within Roswell, Georgia that also went with the transaction. About half of the people in the company also went with that transaction. So that is going to make a big difference in our operating expense going forward and also should…

[Operator Instructions] It's from Frank Takkinen with Lake Street Capital Markets.

This is Nelson Cox on the line for Frank. Congrats on all the progress. It's exciting to see the story developing. You walked through it during the prepared remarks, but maybe just to go a little deeper, maybe walk through some of the learnings with EluPro from a development to approval to commercial rollout perspective. Just want to give you a chance to maybe dive into that a bit more and any learnings that will translate to NXT.

Yes. Thanks, Nelson. So first, I would say the team is everything. And that goes to development, FDA approval and commercial rollout as well. The team is really everything here. And so with EluPro, we actually had a submission of EluPro that was put in actually before my time coming back into the company. And we got some comments back from the -- we got a lot of comments back from the FDA about that. And that led actually to us getting an NSC on that. But through that nonsubstantial equivalence process, I brought in Michelle Williams, who you guys know I've worked with for 21 years now. And I would say best Chief Scientific Officer in the business for these kinds of things. And she was able to really not just respond to the NSC, but also learn from it and develop our own intellectual property around it on not just delivery methods for local antibiotic delivery, but also around testing methods and how you prove it and how you demonstrate it to the FDA. And in doing so, develop a really good relationship with the agency, giving them not just barely enough information to feel comfortable with the submission and the clearance, but actually making them feel really confident that we've made a real quality product here. So I would say that is probably the single most important thing from a development standpoint that we learned. Commercially, what we learned was it is really good to have some commercial infrastructure in place. EluPro, by the time we sold EluPro to Boston Scientific, it was running at an $18 million run rate; 9 months in, I mean, that thing shot out of a canon. And that was because we had a commercial team in place. They had a great VAC package that, again, Michelle Williams and her team had helped put together. But we also had the commercial infrastructure and the contracting in place, and we knew how to do that. And so CanGaroo helped EluPro, and we think in the same way, SimpliDerm is going to help 41x when we get out there. So I think those are 2 things that come to mind.

Then maybe just running off of that, SimpliDerm obviously gives you a big commercial presence like you're talking about ahead of NXT. Can you just frame that a bit more for us and how you plan to leverage those already existing relationships.

Yes. So we're talking about -- when we have SimpliDerm, right, we're talking about biological mesh that's used in the same surgical procedures. It's used by exactly the same surgeons in pretty much exactly the same way we expect NXT-41x to get used, right? So we're not talking about requiring the surgeons to do anything different from their current practice. It's one of the reasons that we just -- we really love -- we love this approach. All of it's already in place. They're already doing it. The problem they have is despite their best efforts, they're left with this postoperative complication rate. And so our plans with SimpliDerm is to just keep using that product to have this direct customer interaction that we have. Nobody between us. As Matt said, we now have full control back of our SimpliDerm product line. We go out and meet directly with the plastic and reconstructive surgeons. We talk with them about how SimpliDerm is going and their problems and how we can be helpful and how we can have them get better outcomes. And then obviously, just from a commercial infrastructure standpoint, our contracting teams and our commercial teams from a customer service and distribution, all that stuff is in place and ready to go, and we'll keep building on it, right? So we think about this coming year, not in any way as an idle year for our commercial team, but it's actually one where they're going to be active as hell going out there and continuing to expand this in just the same ways that we did with CanGaroo before the launch of EluPro. Every seed we planted there ended up being very, very valuable for the launch of that product. And we learned that lesson. And so that's what we're going to do with SimpliDerm.

Maybe just sneak one more in. How are you thinking about kind of clinical evidence and data generation with NXT? Do you envision kind of needing to invest there significantly to drive education and adoption?

So through the combination 510(k) pathway, as you know, we actually don't have a requirement for clinical data for the approval process. Now we are a science-based company. We do really exceptional quality work, and we stand behind it. When we launched EluPro, we had no requirement for clinical data. But very quickly, we were able to put together, as part of our VAC package and as part of our marketing package, a complete story that made the implanting surgeons not just comfortable but enthusiastic about putting EluPro, and that worked really, really well. Well, we're doing the same thing here. And so preclinically, there is a tremendous amount of evidence that the team is building from things like pharmacokinetics, how long the antibiotics are there, the concentrations that they hang around in surgical sites from a preclinical efficacy standpoint. One of the things you can't do with patients is you can't go back into them a month after the product has been implanted and infuse them or inject them with large amounts of pathogenic bacteria. But we can do that in the preclinical setting with animal models and demonstrate like we did with EluPro that we're able to get complete kill even at 4 weeks out. But once the product, Nelson, comes to market, one, we don't think -- we know there's strong demand for this product now from the interactions that we have from the relationships that we have now, just the same way EluPro. There is a first wave of users that are ready to be done with putting cement into breasts in order to fix this problem and have a professionally built and constructed a product that fits in with their practice and they'll adopt right away. But we're not leaving it there. We're running clinical programs on these so that we generate conclusive data. Our goal here isn't to take significant market share. Our goal here is to flip the entire market so that women have much, much better outcomes than they currently do. The current standard of practice is not okay to leave the way it is. It needs to get better. And we know we'll have to generate clinical data to get all of that done, but that is our goal, all of it.

Our next question is from the line of Ross Osborn with Cantor Fitzgerald.

This is Matt Park on for Ross today. So I guess starting off with 41 and 41x. Can you just go back to any manufacturing plans you need to do ahead of time to -- I guess, like are there any validation steps needed to ensure a smooth transition from SimpliDerm to 41 and then to 41x?

Great question, Matt. So to be really clear, where we manufacture 41, 41x is a completely different facility than we manufacture SimpliDerm. SimpliDerm is a human-derived product. It has a host of regulations associated with it because human-derived products can carry human pathogens with them. And so we keep those 2 things completely separate in completely separate facilities. So the facility where we're manufacturing 41 and 41x is a GMP facility. We were really, really lucky here. You might say we were beneficiaries of the GLP-1 boon that occurred in that we were able to get a space, a great GMP space that was already built out and ready to go from a company that was acquired by Novo Nordisk. And because of that, we were able to get it at really great prices. But most importantly, it was this really high-quality facility that was ready to go looking for somebody to manufacture something in it. So we're really pleased with that facility. There's all kinds of tech transfer and process qualification, equipment qualification that goes on when you bring up a manufacturing process. We have all of -- our teams there have a schedule for all of 2026. They're running through that process right now and are underway. We don't anticipate manufacturing will hold back or be the rate limiting factor in anything that we're doing here. And by the way, facility-wise, this is all done out of our new facility in Gaithersburg, Maryland.

Maybe just one more on the cardiovascular business. Now that you've transitioned it back in-house, I guess, how should we think about the current run rate and the sustainability of growth from here?

Yes, Matt. So we've been really pleased with the bounce back that we've seen now that we've been able to devote some more attention and some direct resources to that part of the business. That is not the future of the company by any means, but it's a great little business that has a pretty significant market out there and great gross margins and some really committed physicians out there that are using the products. And so we're basically back at the $1 million a quarter revenue level. And I think there's some growth that we can achieve from there. But it's not going to be a rocket ship. It's going to be steady growth, but we're also not having to invest money upfront in order to achieve that. We've got really an exclusively contract sales organization that's out there. So it's completely variable expense. And with the high gross margins over 80% that we've been achieving there, it -- a significant amount of the revenue that we generate actually drops to the bottom line. So that's in general, how I would think about the product there -- the product and the future trajectory there.

Got it. Thanks again for taking the questions and congrats on progress.

As I see no further questions in the queue, I will conclude the Q&A session and conference for today. Thank you all for participating. You may now disconnect.