Q4 2024 Elutia Inc Earnings Call
Speaker Change: Good afternoon, ladies and gentlemen. Welcome to the Elutia 4th quarter and full year of 2024 Financial Results Conference Call.
Speaker Change: If you know you would like to ask a question, please press star one on your telephone keypad to join the queue. Please be advised that today's conference call is being recorded. I would now like to hand the conference call over to David Carey, Finn Partners. Please go ahead.
David Carey: Thank you, operator, and thank you all for participating in today's call. Relief today, Elutia released financial results for the quarter and full year and in December 31st, 2024. A copy of the press release is available on the company's website.
David Carey: 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 security litigation reform act at 1995.
David Carey: 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.
David Carey: All four looking statements, including with that limitation, those relating to our operating trends and future financial performance are based upon our current estimates and various assumptions.
David Carey: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these four-looking statements. Accordingly, you should not place undue reliance on these statements.
David Carey: For a list in description of the risks and uncertainty associated with our business, please refer to the Risk Factor's section of our public filings with the SEC, including Elutia's annual report on form 10K, year-end for the year-end of December 31, 2024, to be filed with the SEC.
David Carey: Accessible on the FEC's website at www.fec.gov. Such factors may be updated some time to time in Elutia's other filings with the SEC.
David Carey: The conference contains time-sensitive information and is accurate only as of the live broadcast Today, March 6, 2025
David Carey: Elutia disclaims any intention or obligation, except as required by law, to update or revise any financial projections or for looking statements, whether because of the new information, teacher events or otherwise.
David Carey: also during this presentation we referred a gross margin, excluding intangible asset and reputation, which is a non-GAAP financial measure.
David Carey: and with that, I will turn the callover to Elutia's CEO , Randy Bells.
Thank you, David.
and Good Afternoon.
Speaker Change: Welcome, one and all, wherever you might be joining us from today.
Speaker Change: Since we pre-announced so much of this, I'll do my best to keep my remarks short and brief but like the preacher said, once I get started, I often get too lazy to stop.
We are...
to some of the most challenging...
Speaker Change: Internal Affirmalators and Neuro Stimulators, and behind that we have our emerging simpler-term product that's often used.
Speaker Change: in Breast Reconstruction, but we're a company with a lot of focus and a lot of discipline. And so, even though we have a technology that can be broadly used across a number of different platforms.
Speaker Change: We have a very focused strategy for growth and it goes like this. One, prove out the commercial value of our drug-looting biologics technology on our LU Pro product platform.
Speaker Change: really explode the value of this technology by taking our drug-eluting biologics and adding it to other product lines including our simple-term product line specifically for use in breast reconstruction and other surgical repairs.
Speaker Change: That's the high-level strategy for the company, but today I'm going to spend really all of my time focusing on LU Pro and the amazing work that we're doing there because that's really a tremendous value driver for the company.
Speaker Change: So launching LU Pro, it's going on right now, we are now FDA cleared for LU Pro to be used.
Speaker Change: in cardiac implantable electronic devices as well as neuro stimulators, and while it took a while to get here, we've got a real winner on our hands, as I think I hope I'll be able to communicate to you through these upcoming slides.
Speaker Change: to protect a pacemaker that's getting implanted into somebody. So each year, there's about 600,000 pacemakers and internal defibrillators that are placed in the United States.
Speaker Change: Up until now, metronics had the only antibiotic alluding envelope that's been available to electrophysiologists for use. It's Tirex.
Speaker Change: Synthetically based antibiotic eluting envelope that does about $200 million a year, and like I said that was up until now. Metronic from a market dynamic standpoint, they have about 40% of the pacemaker market, so that means they're in about 40% of pacemaker cases, and so they had actually a really nice platform in which to introduce Tyrex. And they've done a nice job.
creating.
Speaker Change: the market for device protection in this concept of an antibiotic eluding envelope going around a pacemaker.
Speaker Change: But that leaves 60% of the market, Boston scientific, avid, and biotronic that don't have an antibiotic looting envelope, and that really don't like the idea of having a metronic
Speaker Change: Tyrex envelope going around their pacemakers. And this isn't something that happens sort of as a one-off. We estimate now that there's about $85 million a year of Tyrex.
Speaker Change: that goes around pacemakers of either Boston Scientific or Abbott. I'll just share with you, you know, when I say things like, you know, a rep just the last thing they want to see is a piece of Tyrex around
Speaker Change: Quote, I got from Rep. He came up and said,
Speaker Change: I don't want direction on my hands. It's like catch up on turkey. It just doesn't go and
Speaker Change: I couldn't agree more. We don't want Tyrex on their cans either and now we actually have a product that we can offer to them that we think isn't just as good as Tyrex.
Speaker Change: but is actually a much, much better product. And let me sort of explain why. So we have done this
Speaker Change: We have done this marketing survey in the past that 88%
Speaker Change: basically of Tyrex users that were pulled, said they would switch some or all of their business.
Speaker Change: over to Alipro once it was released. But now that we're out in the field, we're actually getting to engage with the electrophysiologist on a day-to-day basis.
Speaker Change: with an antibiotic envelope and with a really with a different
Speaker Change: Offering in a different approach to delivering the same powerful antibiotics, right? Famping them in a cyclone, but it did a completely different envelope that's not a synthetic base, but instead the natural biologic base that fully conforms to the can. We actually get to understand.
Speaker Change: Why they're so interested in a different solution, where this 88% comes up. These are actual direct quotes from electrophysiologists and they talk about this surface of Tyrex being a very rough surface.
Speaker Change: He's so rough in fact that it doesn't slide easily into the pocket so imagine you're making an incision into a patient you take your envelope you put it or you take your pacemaker you put it inside an envelope and then you're trying to put that into this incision but it's got this really rough texture it doesn't slide easily into the pocket and one of the quotes that really sort of stuck out to me it reminds me of the no slip coating you sometimes see on garage floors and you know what we think we
Speaker Change: We can do better than that. We think that that that patients should be able to have access.
Speaker Change: to an antibiotic envelope that delivers these powerful antibiotics that protects them from infection, but it does it in a way that enables them to thrive without compromise, and that is what we do at Alicia.
Speaker Change: We are humanizing medicine so that patients can thrive without compromise. And Elutia Pro we think is a really great example of doing that.
Speaker Change: So in the fourth quarter, which I guess technically we're reporting on now, in the fourth quarter that was our initial pilot launch of value pro we had just received clearance from FDA and we needed we needed to basically crawl before we walk before we run
Speaker Change: And so that's what our pilot launch was about in the fourth quarter, and we had three
Speaker Change: Main Goals that we wanted to demonstrate in the fourth quarter pilot launch.
Speaker Change: One, we wanted to demonstrate operational excellence. Can we make and ship and distribute this product, right? Sounds simple and like blocking and tackling, but if you can't do that, you can't win the game.
Speaker Change: You can't sell a product inside a hospital if you can't get through the value analysis committees.
Speaker Change: and you can't get through the contracting organizations that make it available to the physicians to use.
Speaker Change: and then third, we wanted to drive clinical uptake of the product.
Speaker Change: Can you actually turn it into sales with a physician's use the product and not just once, but will they use the product over and over again?
and we are really...
Speaker Change: Drill, as I think you will see, our pilot launch exceeded all of our expectations in across all three of these and I want to thank
The team for doing such an exceptional job.
with death.
Speaker Change: In the background of this, and I know I don't talk much about it, but we have a lot of ongoing business development activity.
Speaker Change: and we are engaged in strategic discussions right now with multiple partners and in time we will have more to say about those but right now we don't and I hope you understand.
Okay, so let's dig into...
Speaker Change: What we do talk about and what is so important is that we demonstrate the value of Elupros. The first thing we need to do is demonstrate operational excellence. Unfortunately, we had a bit of a head start here, so we're manufacturing Elupro in the same facility that we've been manufacturing our base kangaroo products since 2013. We had a good head start there with the...
Speaker Change: with that team in place. That's a facility that has a capacity to do about $140 million.
Speaker Change: Base Facility to Grow Off Up. We're also scaling up and growing into what ultimately we believe we will get to, which is a gross margin north of 70% with this product.
Speaker Change: Super important was that we completed our FDA site inspection of this facility.
Speaker Change: But one that puts the quality of product above everything else.
Speaker Change: Okay, so moving forward from an operational excellence standpoint, we are in a situation of demand where we are needing to significantly increase our production capacity earlier than we had originally anticipated. One of the ways that we're going to be doing this with specificities, we're going to be adding to the work that we bring in house.
Speaker Change: and that will actually help us not just lower our cost of goods fairly significantly, but it will also increase our overall capacity, which, which it is, uh...
Speaker Change: Every day it becomes more and more apparent that we need that in order to meet customer demand we're also increasing our testing lab capacity and this actually has to do with reducing cycle time again all in service of making sure we can get the product manufactured. Thank you very much.
Speaker Change: It within, you know, perfect quality standards and then hit service level so all of our sites and all of our physicians have the product available to them when they need it.
Okay.
Speaker Change: Moving on now to obtaining hospital and GPO approvals, we had a goal.
Speaker Change: and just to be an idea of this, we had a goal in the fourth quarter of 25 Vax. We wanted to be able to get through 25 Vax and on contract. We actually ended the quarter with 67.
Speaker Change: up and running. About 15 new approvals a month. And the reason we're having such significant success getting through the VAC process right now has really been driven.
Speaker Change: by two separate things. One of them we actually expected, and that was physician support.
So...
Speaker Change: We have a lot of physicians out there, right? If the 88% of Tirex users are saying, hey, I'd like to be using Elliott Pro. Well, it needs to get through the VAC doc in order to be able to have this product on the shelf. Well, tell me what I need to do. Who do I need to talk to? And we've been getting a lot of support navigating the product through the VAC process, and that's been helpful.
with the VAX, as well as with the GPO's, is...
that
The hospitals and the GPOs.
Speaker Change: Really like the idea of having EluPro on contract so that they have an alternative to Tyrex purely they just don't like having a sole source for any product.
Speaker Change: and that's really been gratifying and that's practically been helpful. It's been a bit of a tailwind.
Speaker Change: in this whole process. So as we look today, not just updating for the quarter, but getting sort of real time up the speed word about...
a hundred centers that aren't just through Vax.
because we don't count that, that's too easy. They actually have to get through the value and house committee and actively be ordering the products. We have about a hundred centers that are already...
Speaker Change: We have others and we have others coming in that we expect that our conference call coming up for the first quarter. We have others coming up for the first quarter.
Speaker Change: We'll be able to have several new announcements about that. All that to say, we are having a lot of success on this second goal, which was a painting hospital and GPO approvals. The team really knocked the cover off the ball on this one, and we're super happy about it.
Speaker Change: If the physicians didn't trust the product, if the physicians didn't think it was the best thing for their patients.
Speaker Change: and there wasn't the corresponding clinical uptake with it, but we've been seeing a tremendous amount of success. We've been seeing a tremendous amount of success.
here, expanding…
R.L.U. Probe Nation.
Speaker Change: there's a lot of pride in putting LU Pro on. Our team's obviously very excited about it.
Speaker Change: But our physician partners in this have been also very excited in the operating room teams coming together and say, hey, do we get our L.U. Pro picture? You know, we want our L.U. Pro picture to show that we're the first and the one in the middle there really.
Speaker Change: a really gratifying picture. That's actually the first usage of LUPRO and a pediatric patient. If you think about that, there could be no more meaningful...
Speaker Change: Life, then that of a child and the group down at Joe DiMaggio.
Speaker Change: Interesting their patients, their pediatric patients with L.E. Pros was really super meaningful.
Speaker Change: of the major cardiac implantable electrical devices, yes, even metronomic pacemakers are going in with LU Pro around it and we're happy to do that, it's sweet think, obviously the best thing.
for the patients.
Speaker Change: We're also being used now in neuro stimulator device protection as well. That's not a market that we're actually doing a lot of active outreach in yet. We're trying to stay focused in the in the cardiac space.
Speaker Change: but we're actually getting a lot of pull into that space and so that's gratifying as well.
We go and we look at the uh...
the actual numbers here.
Speaker Change: We're seeing this strong adoption. So in the fourth quarter, our bio envelope sales, this includes Kangaroo as well as Elupro. Up 18% for the quarter that had been stagnant actually for now a number of years, so that's a pretty significant up tick for us.
Speaker Change: Just in that quarter and you think we probably didn't have room for most of that quarter. We didn't have that many sites activated. That was a pretty, that was a pretty significant uptick.
Speaker Change: Elutia Pro during the quarter accounted for about 30% of bio envelope sales, so that's going from zero to already accounting for about 35%.
Speaker Change: But what we thought was really an important and interesting statistic, we can obviously we know the accounts.
Speaker Change: that we have sold kangaroo into for quite a long time, right, sort of same center sales. And when we flip that center over to an aliepro center and those centers, sales increase
Speaker Change: 65% when they when we when we flip into a new center and that's a big deal and it's what we would have expected right it's a it's a it's a better more useful product that you might be thinking well maybe that's a stocking order actually it's the opposite. It's a big deal and it's a big deal.
Speaker Change: We saw that the initial stocking orders were actually only about 25% higher. It's actually the repeat orders that are driving it up to this 65% and growing level.
Speaker Change: We really think we have a winner here. We've got a product that's going into a market where there was only one one dominant player doing it was doing $200 million but
Speaker Change: This $200 million of existing business and be able to take a fair share. But we don't think we have a me too product. We think we actually have a significantly better product and we think our initial data is bearing that out. So we're really, really excited about the way this is going.
Speaker Change: We've also done a little bit of work on the sales model, so as you guys might remember, we have our hybrid model, we have 12.
Speaker Change: experienced Elutia territory managers that manage the different territories in the country as well as 35 independent reps. We think that blend gives us the ability to cover the entire country, but in a pretty efficient way.
Speaker Change: We've seen that that actually is also playing out. So, if we look actually in the quarter.
Speaker Change: How are 1099 or are independent reps performed? They accounted for 50% of the AluPro sales in the corner and what that's showing us is why that statistic was important is we can use the 1099 rep model.
to go in and efficiently penetrate these accounts.
For us, it's an economically very efficient way.
of generating the sales that we think it speaks to.
Speaker Change: The value proposition that the product has, that we're able to do that with our outstanding group of 1099 reps.
Speaker Change: Driving clinical uptake, the third piece, and we're really super excited about how that went as well. So, what are we doing moving forward? Here's the plan for the coming quarter or the quarter that we're in right now.
Speaker Change: One, continued to drive top line growth of Elipro. That shouldn't come as a shock to anyone.
Speaker Change: to keep driving our VAC approvals or value analysis committee approvals and our GPO coverage.
Speaker Change: We have seen that VAC approval is a really, really good surrogate.
Speaker Change: to top line growth. If we can get on contract with a hospital, if we can get into a hospital, they will buy the product. So number two, drive VAC and GPO coverage.
Speaker Change: 3. We're going to be initiating, we've done all of this.
on our own, Little Bitty, Elutia, all by herself.
Speaker Change: But this quarter we're initiating our LUPRO rollout with our Distribution Partner Boston Scientific that you guys know we've had for a while we've...
Speaker Change: careful and so we are initiating the Elie Pro wool out with them this quarter and we're really really excited about the impact that they're going to be having on these sales as well.
Speaker Change: Because of all that, we need to keep increasing our production capacity. This is the head of the schedule that we thought we would need. We are out.
Matt: Pacing what we thought we would need from a production capacity standpoint. It's a good problem to have. The operations people gladly take on the challenge. And in doing that will naturally be lowering the cost of goods as we scale up. There's just a lot of natural absorption that takes place there. And then lastly, initiating our registry for the data collection of our clinical subjects for other usage that we're going to have. And then lastly, and I'll turn it over to Matt after this. I promise.
Speaker Change: Come visit us at HRS. It's in my hometown of San Diego this year. We're going to be having an event out there. We'd love to see you at the booth.
Matt: and if not at the booth at one of the events we're holding and talking to you and maybe get a chance to speak with some of our electrophysiologist physician partners and learn more about why ELU Pro is such a home run product for us.
David Carey: And with that, I'll turn it over to Matt Ferguson, our chief financial officer for some financial updates.
All right. Thanks very much, Randy.
David Carey: and I'll just give you a summary of our financial results for the quarter and a few of the highlights for the year.
David Carey: and then we'll get into your questions. Really, top of the list is Randy mentioned 2.7 million for bio envelope or device protection sales as we call it in the quarter that is. That was an 18% growth over the same quarter of the prior year.
David Carey: just under 10 million, 9.9 million for the year which was also solid growth at about 5% for the full year but really more than anything what we're doing as Randy spoke to, we're really
for this product line and for the whole company.
Um...
The other category of sales, main category of products that we have is simple-a-derm and our women's health.
David Carey: Division. There, it was a lighter quarter, $2.3 million, which was down year over year.
David Carey: We actually were at 11.6 million, which was up 12% year every year, so that also is expected to be a strong growth driver for 2025.
David Carey: Rounding it out, Cardiovascular, which we have partnered with LeMate for the complete distribution of that in the U.S. That was at half a million dollars for the quarter.
David Carey: and that compares to $600,000 in the 2023 fourth quarter. So down there, that leaves us overall at $5.5 million in revenue for the quarter.
David Carey: Down about 7% for the comparison to the same quarter of the prior year. On the full year basis, we were about 24.4 million for the year. That's down just about 1% from 24.7 million in the prior year.
David Carey: Moving into Gross Margin, our gap Gross Margin was 43% for the quarter versus 36% in the prior year, so a nice increase there, but probably more importantly backing out the non-cash amortization expense, we were at 58%
David Carey: for the quarter versus 51% for the year before quarter and so that was nice growth that we saw in our growth margin year over year.
and just breaking that down a little bit further.
David Carey: It's all in a relatively close range between our three different product lines, but just breaking that down for you, it was 60% for the device protection, portion of our business, 55% for simple Durham, and 64% for cardiovascular.
David Carey: Operating expense, very consistent year-over-year, $10.8 million in the fourth quarter of ten-point-six million a year ago.
David Carey: That only leads us to a loss from operations of 8.4 million versus 8.5 so again a very consistent year over year.
David Carey: and then again a better indicator probably of just the operating portion of our business, the adjusted EBITDA which we have a breakdown of in our press release that was $3.8 million dollars as a loss for the
David Carey: for the quarter versus 4.5 million for the year ago quarter, so it can improve in year-over-year as we continue to grow the business.
David Carey: from a cash point of view, we ended the quarter at 13.2 million in cash. So larger cash usage during the quarter than what we have...
and some of the recent quarters, but...
David Carey: There was a good reason for that, and that's that we were actually able to settle a number of the outstanding lawsuits that we had during the quarter and get those resolved.
David Carey: and so that contributes to the cash usage, but it also is a positive thing in that we are very much getting around around that.
Remaining set of cases there.
David Carey: and then, very importantly, after the end of the quarter, so it doesn't show up in our financial results, but in...
David Carey: Early February we did a registered direct offering where we raised $15 million in gross proceeds and so again well that doesn't show up in our year end cash balance that has a nice addition to our overall cash balance in terms of where we currently sit.
David Carey: So, with that, I will pause there, turn it back to the operator to tee up any questions that may be out there.
David Carey: Thank you. And at this time we'll conduct our question and answer session.
Speaker Change: To ask a question, press star one on your telephone keypad. A confirmation tone will indicate that your line is in a question cue.
David Carey: You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, task a question, press star 1 on your phone.
Speaker Change: We'll pause for a moment while we pull for questions. Thank you.
Speaker Change: And our first question comes from Ross Osborn with Cantor Fitzgerald. Please state your question.
Ross Osborne: Hey guys, congrats on the quarter and really successful pilot launch. Thanks for taking our questions.
Ross Osborne: So starting off, can you send some time discussing what extent Boston will be involved with Elifro in terms of the amount of reps pushing the envelope and any marketing accolades?
Yeah, Ross.
Ross Osborne: The way I'll answer that is so we have an agreement with them right now.
Ross Osborne: for the distribution of the product where we basically partner with them to leverage their
Ho, when they're...
They're reps, basically partner with our territory managers.
Ross Osborne: Keeping in mind, they might have a rep, but I'm kind of making this up.
but they might have a rep for...
Roughly, let's just call it three hospitals for every rep.
Sometimes it's...
It's sometimes, you know, there's even more-
Ross Osborne: Higher concentration of reps, and that's something that's less. But let's just say that they have a rep for every three hospitals. So our territory managers will be partnering with multiple Boston scientific reps.
Ross Osborne: and the first thing they do is they partner to get access into the hospital. So we talk about vac approvals and the number of vacs we're on contract with.
Ross Osborne: where I'm on contract now with a hundred. There's actually 1,400.
Center in the United States.
that are hospital-based, that-
Ross Osborne: that in plant 100 or more pacemakers a year, right? So even though we're in 100
Ross Osborne: We still have a fairly long way to go. The first thing that there are reps really help us do is get in and get through those...
Let's frequently visit centers that we otherwise.
Ross Osborne: We otherwise wouldn't be in. The second thing they do is it's a real top of mind kind of thing. Now, our reps are really good at demonstrating the value of using a biological envelope and a drug, a ju- eluding product.
Ross Osborne: has significant advantages and what the biologics can ultimately do. And you don't really need to be there in absolutely every case.
Ross Osborne: to make sure that there's consistent use of value pro because it's a fairly easy product to you. You take the pacemaker and you put it into the envelope and then you take all that and [inaudible]
Ross Osborne: and planted into the patient that actually makes it easier to do.
Ross Osborne: and really kind of glides in nicely. But what their reps will do is help in remembering, hey, I'd like to, I need to use an antibiotic.
Ross Osborne: Envelope on this because there's something about this patient that's high-risk. Hey, we should use one of those L.U. Pro envelopes. Yeah, okay, great. And the Boston rep can actually facilitate the use of that.
Ross Osborne: for that product. And when they do that, what they'll do is they sort of scan that product into the system, and then that enables us to compensate them.
Ross Osborne: on a per usage basis. So we pay them a really nominal commission.
Ross Osborne: on every time an LU Pro gets used and so the system really works really well for both parties because they don't want anything to do with a direct envelope being used in their procedure.
Ross Osborne: and we like the idea of value-proving used and so it's kind of a way of us being able to pay them and their reps for keeping metronica out of their cases.
Ross Osborne: So, that's how overall that arrangement works, or at least the arrangement we have today, we have in place.
today.
We are going through there's...
Ross Osborne: There's training in a very specific rollout plan and all of that other kind of stuff. I'm not going to go into more of that right now. We'll have more details on that coming up on our next our first quarter conference. We'll have more details on our next conference.
Ross Osborne: Conference Call. We'll have a lot more detail about all this kind of stuff on that, but that gives you a sort of a picture on what's in place right now, and then any updates so that we'll have.
Speaker Change: We'll have coming up to the first quarter. That was great, that was perfect. And when will Boston commence this mission?
Thank you.
shortly
Speaker Change: Okay, burn it up. And then realize you're not fighting it's getting worse there, Ross.
Speaker Change: You know, I think, I think what's important there, sorry, and me to step on your Ross, I think what's important there is
Speaker Change: They haven't yet, right? So everything that we've done here, which is frankly all we could handle, you know, was was was was able we were able to do it just, you know, little old Elutia, and I and I think that talks.
Speaker Change: to the value of having a really good product that physicians want to use.
Speaker Change: It mixed in with, frankly, the Switzerland strategy, which is we don't make a pacemaker, so we're not a threat to anybody.
Speaker Change: You know, we're not going to, we're not going to put our envelope around your product and then come in and then try to steal your underlying pacemaker business away the next day. And those two factors team up to make...
a pretty attractive launch.
Speaker Change: Yes, absolutely. And then, realizing up providing guidance. But how should we be thinking about utilization at account? Maybe it would be helpful to relay how you view a high volume account versus a low volume account?
Matt Ferguson: Maybe I could jump in there a little bit Ross, this is Matt.
Ross Osborne: You know, I think I would go back to some of the numbers that we provided in the past, where we have
Ross Osborne: We have about 400 accounts that have ordered, you know, there are kangaroo accounts and as we just reported today we're up at about 100 that are now ordering Elut Pro. So I mean that and then we also talked about how pretty.
Ross Osborne: We're certainly seeing more of the growth coming from Mel you pro as you would expect in the current quarter and based on where we are Q1
Ross Osborne: That will just accelerate in Q1. We already know that that's going to be the case as we sit here in early March with just a few more weeks left in Q1.
Ross Osborne: So, you know, I guess when I think of a high-volume account, I would say it would be annual usage in the hundreds, and we know that there are...
Ross Osborne: Say a hundred pacemaker and defibrillator procedures for the year and you know another cut at that is we think there are about 500 accounts in the US that are over 500 procedures per year so
and as Randy mentioned.
Atleast.
Ross Osborne: 60% of that is not touched by metronics so far and we actually have you know feedback from the market that there are a lot of Tyrex.
Ross Osborne: Metronik users that are very interested and are already switching some of their usage, in some cases all of their envelope usage over to LUPRO.
Ross Osborne: You know, it's hard to put exact numbers on it. What we would say is a high-volume account, but hopefully that gives you some sense of what we think is achieved well.
Speaker Change: Yes, that's exactly what I was looking for. And then last one for me and I'll jump back in the queue. Realize the excitement around Ellie Crow. So, as you know, our big fan will simply be around as well. Did you spend a little bit more time going ever what occurred during the fourth quarter?
Speaker Change: in terms of the deceleration and growth and the game plan there for 2025. Thank you.
Yeah, so...
Simplonorm is a product that we distribute.
through two different, two different mechanisms. The one is our independent...
our network of our independent distributors.
Speaker Change: The other one was or is a relationship, a distribution relationship that we developed with The Entra.
you know that was like
Speaker Change: Can't remember now. It was a couple of years ago.
Speaker Change: Or so that we put that relationship in place and that was a relationship that was just getting off the ground. But the idea there was Cientra was in about 23% of reconstruction cases where a biological is used almost every time. So that's all I have to say.
Speaker Change: and they didn't have a biological offering, and we thought that would just sort of make sense, give them access to a really, you know, we think a market leading biological for us.
Speaker Change: of potential usage there. And so that was the rationale behind creating that partnership.
Speaker Change: and it's a non-exclusive partnership in that we maintain our own distribution network and we allow them to distribute the product.
Speaker Change: but it's also a non-exclusive partnership that where we also, we go.
Speaker Change: We go to pretty significant lengths to not step on each other's toes, so we're not competing against ourselves in the same accounts. And so it makes it...
Speaker Change: to expand into territories that aren't being adequately covered by one of us or the other. Instead, we try to do it
Speaker Change: We try to under this agreement to do it a little bit, in a little bit more planned and methodical way where we meet on a periodic basis and we say, okay, you know.
Speaker Change: We're not having success in these counts. Maybe you guys want to go in there or vice versa, right? And that agreement was really really forecasting out well. And then, unfortunately, the answer went into bankruptcy.
Yeah, procedure and
Speaker Change: Out of it, that agreement has now been taken over by Tiger aesthetics.
Speaker Change: and, you know, I would say just very candidly, we've had...
Speaker Change: We've had some some growing pains, right? We've had we've had
Speaker Change: First of all, they had a very difficult job to do, taking over the assets of Cientra and
Speaker Change: You know, to use, when a company experiences a bankruptcy, you can imagine there's obviously some changes that are going to need to take place and there's some very obvious disruption that's also going to take place. And then for us, learning how to work...
and so...
Speaker Change: Naturally, we saw some of that disruption flow through into the end user.
Speaker Change: Market in terms of volumes for us. Now with that said we were still able to have that product grow 12%
Speaker Change: over the year. I know the fourth quarter wasn't great, but we're hoping the fourth quarter was actually a little bit more of an anomaly there than anything we would expect to see repeat, but certainly the products backed away from the growth trajectory that it used to be on.
Speaker Change: We are working our way through that agreement. We have some milestones coming up in this agreement. We have some decisions to make there but we are also...
Speaker Change: You know, we're also trying to be as constructive as we can with the team we have right now.
Speaker Change: from our side and with Tigran. Like I said, I think we actually are...
So.
Speaker Change: Sounds great. Congrats again on the really strong start for Elie Troll. Excited for 2025.
Speaker Change: Thank you, and our next question comes from Frank Takkinen with Lake Street Capital of Markets. Please stay your question.
Frank Takkinen. It is, it is, Frank.
Speaker Change: Okay, and is that something you've considered pursuing or at this point of it, Boston first and then the other demand comes from that and maybe think about that at a later date and time.
Right now!
We have...
and so...
Speaker Change: that certainly fills our dance card with regards to demand that we think we can appropriately handle. There's also different strategic reasons on why we might do one versus the other, but we have the flexibility to do it, but...
But it's a, you know, it's a more complicated...
series of questions.
Speaker Change: then just that. But from a distribution standpoint, from a caring about growing the product and really establishing it, we think we're in really, really good shape with us partnering with Boston Scientific right now to do that.
Speaker Change: Okay, that's helpful. And then from an active ordering account perspective, we've got a couple of goalposts, obviously we've got 100 active now, 400 kangaroo, 500 different over 500 implants, and then the broader market of 1,400 over 100.
Speaker Change: in plants per year. Maybe talk through the cadence of expectations around how new account additions will occur throughout 2025.
Speaker Change: Yeah, you know, so we were we were clicking along or we are clicking along in about 15 a month right now. I do think
Speaker Change: It's unrealistic to think it will probably keep that pace up.
Speaker Change: for the whole year, but there's sort of two things that are going on.
One is
The
Speaker Change: There's just the sort of the law of averages. So, if you go to submit 200 back applications.
Speaker Change: and there's a six month cycle time for a vac.
Speaker Change: 100 of those are going to be less than six months. They're going to be faster than the average. But 100 of those are going to be longer than six months.
Speaker Change: We will just be running into vacs that take longer. We said sort of all along, we thought this would be the gating.
Speaker Change: This would be the gating item and they're not all going to go as fast as certainly we would like them to move and the physicians would like to move so.
Speaker Change: That will be something that will be tugging on how fast we can get them signed up. The thing that's going to be pulling in the other direction is having a partner like Boston scientific, pulling us into those accounts.
Um...
Speaker Change: Well, obviously, you know, that's a lot of help to be able to bring to the problem. And so we think that will be helping on the plus side. But in general...
Speaker Change: It will probably back down a little bit off the pace that we started on, but maybe that's just being conservative, we'll see how it goes.
Speaker Change: Okay, that's helpful. And then this last one for me, one for Matt, was hoping you could talk a little bit about the cash burn in the quarter because you parcel kind of operational cash burn from the business versus litigation paydown and then maybe a update around litigation expectations for 255 would be helpful as well. Thanks.
Speaker Change: Yeah, sure. Well, I'll tell you, you know, I'll share with you what I can. A lot of that is one hard hard to forecast and also something that, you know, we don't.
Speaker Change: I don't want to get into too much detail for all these cases are ongoing, some of them more active than others, but you know what you'll see even just looking at our balance sheet, you'll see that
Speaker Change: At the end of the third quarter, we had a liability related to the fiber cell mitigation and, again, for those people who aren't familiar with it, this is part of our company that we sold off in 2023.
Speaker Change: But we, you know, we retain some of that legacy litigation associated with it.
Speaker Change: So we had a liability of a little over $20 million at that stage and at the end of the year it was down at about $15.9 million was the number and so you know it's a pretty healthy reduction in the...
The overall liability, in terms of the number of cases.
Speaker Change: We had 79 outstanding at the end of Q3. Some of those were settled, but not yet paid for.
Speaker Change: at the end of the year, we were actually down to 43 that have not yet been settled. So, we're really, I think,
Speaker Change: We're making really significant progress putting all of this behind us. There is still more work to be done but
Speaker Change: but you know, a lot of what we did in the fourth quarter was resolve cases that had trial dates that would otherwise have been coming up at some point during 2025, which you know, I think it's probably a good thing for everyone, both us and the people on the other side of those cases that we didn't...
Speaker Change: have those actual trials take place very costly and just not productive to go through that.
Speaker Change: So I guess the last quarter was particularly active. You know, there will still be some activity in 2025 certainly but you know but it should be declining I think from where it was in Q4.
Okay, let's open things and congrats on all the progress.
Thanks, Frank. Thank you, Frank.
Speaker Change: Thank you and ladies and gentlemen, that was our last question for today.
Speaker Change: So with that, we will conclude today's conference call. All parties may now disconnect and have a great evening. Thank you.