Q2 2025 Elutia Inc Earnings Call
I would now like to hand, the conference over to Matt Steinberg with Finn partners. Thank you you may begin.
Thank you operator, and thank you all for participating in today's call.
Earlier today <unk> released financial results for the quarter ended June 32025.
Three 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.
Speaker #1: Good afternoon, ladies and gentlemen. Welcome to ELUTIA's second quarter 2025 financial results conference call. If you know you would like to ask a question, please press star one on your telephone keypad to join the queue.
Operator: Good afternoon, ladies and gentlemen. Welcome to ILUTIA's second quarter 2025 financial results conference call. 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 is being recorded. I would now like to hand the conference over to Matt Steinberg with Finn Partners. Thank you. You may begin.
Any statements contained in this call that do not relate to matters of historical facts that relate to expectations or predictions of future events results or performance are forward looking statements.
Speaker #1: Please be advised that today's conference is being recorded. I would now like to hand the conference over to Matt Steinberg with Finn Partners. Thank you, you may begin.
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.
Speaker #3: Thank you, operator, and thank you all for participating in today's call. Earlier today, ELUTIA released financial results for the quarter ended June 30th, 2025.
Matt Steinberg: Thank you, operator, and thank you all for participating in today's call. Earlier today, ILUTIA released financial results for the quarter ended June 30th, 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.
Speaker #3: 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.
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 within the SEC, including elusive annual report on Form 10-K for the year ended December 31 2024.
Speaker #3: 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.
More accessible on the Sec's website at.
VW that SEC dot Gov.
Speaker #3: 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.
Such factors may be updated from time to time in Lucius other filings with the SEC.
The conference call contains time sensitive information is accurate only as of the live broadcast today August 14 2025 <unk>.
Speaker #3: 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.
Matt Steinberg: 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 within the SEC, including ILUTIA's annual report on Form 10-K for the year ended December 31st, 2024, accessible on the SEC's website at www.sec.gov. Such factors may be updated from time to time in ILUTIA's other filings with the SEC. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 14th, 2025.
<unk> 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.
Speaker #3: 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 within the SEC.
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 second quarter ended June 32025, which is accessible on the Sec's website and posted on the Investor page of the Alicia website at Www Dot Alicia dot com and with that.
Speaker #3: Including ELUTIA's annual report on Form 10-K for the year ended December 31st, 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.
Speaker #3: The conference call contains time-sensitive information and is accurate only as of the live broadcast today. August 14th, 2025. ELUTIA disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements for the purpose of new information, future events, or otherwise.
I will turn the call over to Alicia CEO Randy Mills.
Thank you, Matt and welcome one and all to our to our second quarter 2025 earnings call. Let me start with a rundown of todays topics and first and foremost I want to provide some color on the success. We continue to have with our <unk> launch and the <unk>.
Matt Steinberg: ILUTIA disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements with the request 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 second quarter ended June 30th, 2025, which is accessible on the SEC's website and posted on the investor page of the ILUTIA website at www.ilutia.com. And with that, I will turn the call over to ILUTIA's CEO, Randy Mills.
Speaker #3: 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 second quarter ended June 30th, 2025, which is accessible on the SEC's website and posted on the investor page of the ELUTIA website at www.elutia.com.
Commercial success, we continue to have there then I am going to switch gears and I'm going to talk a little bit about the tremendous work. Our development teams are doing in the reconstruction pipeline that we have underway.
And then you're going to turn it over to Matt Who's going to provide an update in which we have some pretty significant updates on the litigation front and then lastly, Matt will also do as he always does a rundown of our financial progress Lastly, as I indicated in the press release on the business development front we.
Speaker #3: And with that, I will turn the call over to ELUTIA's CEO, Randy Mills.
Speaker #4: Thank you, Matt, and welcome one and all to our second quarter 2025 earnings call. Let me start with a rundown of today's topics. And first and foremost, I want to provide some color on the success we continue to have with our ELUPRO launch and the commercial success we continue to have there.
Dr. Randy Mills: Thank you, Matt, and welcome, one and all, to our second quarter 2025 earnings call. Let me start with a rundown of today's topics. And first and foremost, I want to provide some color on the success we continue to have with our ELU Pro launch, and the commercial success we continue to have there. Then I'm going to switch, gears, and I'm going to talk a little bit about the tremendous work our development teams are doing in the reconstruction pipeline that we have underway. I'm then going to turn it over to Matt, who's going to provide an update, which we have some pretty significant updates, on the litigation front. And then lastly, Matt will also do, as he always does, a rundown of our financial progress.
A number of strategic opportunities that we're sort of in the middle of that we're driving towards conclusion, and we anticipate having more to say on those in the near future here, but let's just jump right in with a review of <unk> first year and what a year it was.
Speaker #4: Then I'm going to switch gears, and I'm going to talk a little bit about the tremendous work our development teams are doing in the reconstruction pipeline that we have underway.
<unk>.
On the commercial side, 49% sequential growth this quarter over last quarter built on the back of seven national GPO contracts that the team has secured as we've said all along the key to our revenue growth has to do with the number of hospital systems, we can get into and we're currently at one.
Speaker #4: I'm then going to turn it over to Matt, who's going to provide an update. We have some pretty significant updates on the litigation front.
Speaker #4: And then lastly, Matt will also do, as he always does, a rundown of our financial progress. Lastly, as I indicated in the press release, on the business development front, we have a number of strategic opportunities that we're sort of in the middle of that we're driving towards conclusion.
161 Hospital systems actively ordering and then lastly, a lot of this growth has been facilitated by the tremendous partnership that we've developed with our friends at Boston scientific.
Dr. Randy Mills: Lastly, as I indicated in the press release, on the business development front, we have a number of strategic opportunities that we're sort of in the middle of that we're driving towards conclusion. And we anticipate having more to say on those in the near future here. But let's just jump right in with a review of ELU Pro's first year and what a year it was. On the commercial side, 49% sequential growth this quarter over last quarter, built on the back of seven national GPO contracts that the team has secured. As we've said all along, the key to revenue growth has to do with the number of hospital systems we can get into. We're currently at 161 hospital systems actively ordering. And then lastly, a lot of this growth has been facilitated by the tremendous partnership that we've developed with our friends at Boston Scientific.
Speaker #4: And we anticipate having more to say on those in the near future here. But let's just jump right in with a review of ELUPRO's first year, and what a year it was. On the commercial side, 49% sequential growth this quarter over last quarter.
But it's great commercial success that has been built.
On a great scientific foundation that we have at <unk>, our drug Eluting technology.
Particularly our biologics drug Eluting technology, we think is the best in the world. In this first year I think we've done a good job of validating that five peer reviewed publications in the first year alone validating not just the product, but the base technology, we won the Edison Award.
Speaker #4: Built on the back of seven national GPO contracts that the team has secured, as we've said all along, the key to revenue growth has to do with the number of hospital systems we can get into.
Gotcha.
Go and receive at what I would call the nerd Oscars for innovation in medical technology to medical device network Excellent awards, one for product innovation, which isn't a surprise another for product launch really combining with the two teams.
Speaker #4: And we're currently at 161 hospital systems actively ordering. Lastly, a lot of this growth has been facilitated by the tremendous partnership that we've developed with our friends at Boston Scientific.
Speaker #4: But it's great commercial success that has been built really on a great scientific foundation that we have at ELUTIA. Our drug-eluting technology particularly our biologics drug-eluting technology, we think is the best in the world in this first year I think we've done a good job of validating that.
Working together are able to accomplish and then lastly, our innovator and chief Dr. Michelle Williams.
Dr. Randy Mills: But it's great commercial success that has been built, really on a great scientific foundation that we have at ILUTIA. Our drug-eluting technology, particularly our biologics drug-eluting technology, we think is the best in the world. In this first year, I think we've done a good job of validating that. Five peer-reviewed publications in the first year alone validating not just the product, but the base technology. We won the Edison Award. I was, got to, actually go and and receive at what I would call the NERD Oscars for innovation in medical technology. Two Medical Device Network Excellent Awards, one for product innovation, which isn't a surprise, another for product launch, really combining what the two teams, working together are able to accomplish. And then lastly, our innovator in chief, Dr. Michelle Williams, won Medical Device Innovator of the Year Award, and we think that was certainly well, deserved.
Medical device innovator of the year Award and we think that was certainly well deserved.
Turning to the scoreboard really the numbers say it all first half performance bio envelope revenue for the quarter up 33% year over year that puts us at about a $14 million run rate now.
Speaker #4: Five peer-reviewed publications in the first year alone validating not just the product, but the base technology. We won the Edison Award. I was got to actually go and receive at what I would call the nerd Oscars for innovation in medical technology.
Now why is that well, that's really being driven by <unk> pro growth almost exclusively by LTE pro growth up 49% sequentially for the quarter Elliot now makes up 68% of our bio envelope revenue and it continues.
Speaker #4: Two medical device network excellence awards, one for product innovation, which isn't a surprise. Another for product launch. Really combining what the two teams working together are able to accomplish.
To grow.
Why is that well, that's all driven by our vac approvals. So we now have over a 160 hospitals that we've gotten through the vac process. When we say through the Vac process, we don't just mean.
Speaker #4: And then lastly, our innovator-in-chief, Dr. Michelle Williams, won the Medical Device Innovator of the Year award, and we think that was certainly well-deserved.
Speaker #4: Okay, turning to the scoreboard, really the numbers say it all. First half performance, bioenvelope revenue for the quarter up 33% year over year. That puts us at about a $14 million run rate.
Dr. Randy Mills: Okay, turning to the scoreboard, really the numbers say it all. first half performance, Bioenvelope revenue for the quarter up 33% year over year. That puts us at about a $14 million run rate, now. Why is that? Well, that's really being driven by ELU Pro growth, almost exclusively by ELU Pro growth, up 49% sequentially for the quarter. ELU Pro now makes up 68% of our Bioenvelope revenue, and it continues, to grow. why is that? Well, that's all driven by our VAC approvals. So we now have over 160 hospitals that we've gotten through the VAC process. When we say through the VAC process, we don't just mean, on contract and able to order. We don't actually count these hospitals until they are actively ordering, and we are shipping, them, the product. So that breaks down sort of at a high level what's going on, with the product.
On contract enabled order, we don't actually count these hospitals until they are actively ordering.
We are shipping.
The product so that breaks down sort of at a high level, what's going on with the product.
Get into little drive a little bit more.
Speaker #4: Now, why is that? Well, that's really being driven by ELUPRO growth. Almost exclusively by ELUPRO growth. Up 49% sequentially for the quarter. ELUPRO now makes up 68% of our bioenvelope revenue, and it continues to grow.
Detailed here so.
Looking at the revenue, it's kind of amazing we sold the first unit of elite Pro last September.
Hearing some very modest.
Revenue recognition in the third quarter of 2024, but since then this product has been on a tear you can see the quarterly.
Speaker #4: Why is that? Well, that's all driven by our VAC approvals. So, we now have over 160 hospitals that we've gotten through the VAC process.
Growth.
Continues we now expect to end the year at a revenue rate approaching $20 million and that really is due to the tremendous work the commercial team.
Speaker #4: When we say through the VAC process, we don't just mean on-contract enabled orders. We don't actually count these hospitals until they are actively ordering and we are shipping them the product.
Is doing dig in here and see what's really going on though it's really driven by our sales per account. So as we said before if we can get.
Speaker #4: So that breaks down sort of at a high level what's going on with the product that's getting a little drive a little bit more detail here.
Dr. Randy Mills: Let's, get in a little, drive a little bit more, detail here. So looking at, the revenue, it's kind of amazing. we sold the first unit of ELU Pro last September, and we experienced some very modest, revenue, recognition in the third quarter of 2024. But since then, this product has been on a tear. You can see the quarterly, growth, continues. We now expect, to end, the year at a revenue rate approaching $20 million, and that really is due to the the tremendous work the commercial team is doing. Dig in here and see what's really going on, though. It's really driven by our sales per account. So, as we said before, if we can get, on contract, with the hospital, what we're seeing is a 130% higher revenue in those accounts for ELU Pro than we're seeing with Kangaroo.
On contract with the hospital, what we're seeing is a 130% higher revenue in those accounts for <unk> pro than were seeing with Kangaroo and this is reflecting greater utilization of the product Kangaroos are great biologic envelope. It was able to hold the pacemaker in place keep it stable.
Speaker #4: So looking at the revenue, it's kind of amazing. We sold the first unit of ELUPRO last September, and we experienced some very modest revenue recognition in the third quarter of 2024.
Speaker #4: But since then, this product has been on a tear. You can see the quarterly growth continues. We now expect to end the year at a revenue rate approaching $20 million, and that really is due to the tremendous work the commercial team is doing.
Prevent erosion.
From taking place and migration from taking place and ultimately a fibrotic capsule forming.
But if you add the powerful protection of rifampin in minutes cycling, you really get the full benefit of a drug eluting biologic.
And Thats why were seeing this 130% higher utilization rate with <unk> than with the Kangaroo, We couldnt do this not only without our own.
Speaker #4: Dig in here and see what's really going on though. It's really driven by our sales per account. So as we said before, if we can get on-contract with the hospital, what we're seeing is 130% higher revenue in those accounts for ELUPRO than we're seeing with Kangaroo.
Direct sales team, which is doing a great job, but also with our $10 99, a distributor network, which is now making up about 33% of our total sales, enabling us to very efficiently move across the.
Speaker #4: And this is reflecting greater utilization of the product. Kangaroo is a great biologic envelope. It was able to hold the pacemaker in place, keep it stable.
Dr. Randy Mills: And this is reflecting greater utilization of the product. Kangaroo is a great biologic envelope. It was able to hold the pacemaker in place, keep it stable, prevent erosion, from taking place and migration from taking place, and ultimately a fibrotic capsule forming. but if you add the powerful protection of rifampin and minocycline, you really get the full benefit of a drug-eluting biologic. and that's why we're seeing this 130% higher utilization rate with ELU Pro, than with, Kangaroo. We couldn't do this, not only without our own, direct sales team, which is doing a great job, but also with our, 1099 distributor network, which is now making up about 33% of our total sales, enabling us, to very efficiently move across, the the country and, and, gain new territories, but also with our partnership with Boston Scientific.
The country and gain new territories, but also with our partnership with Boston Scientific now Boston actively involved in <unk> pro sales in 98 distinct hospitals ordering they're currently facilitating and participating in about 30%.
Speaker #4: Prevent erosion from taking place, and migration from taking place, and ultimately a fibrotic capsule forming but if you add the powerful protection of rifampin and minocyclin, you really get the full benefit of a drug-eluting biologic.
Speaker #4: And that's why we're seeing this 130% higher utilization rate with ELUPRO than with Kangaroo. We couldn't do this not only without our own direct sales team, which is doing a great job, but also with our 1099 distributor network, which is now making up about 33% of our total sales.
<unk> pro.
Pro cases, so if you just start just do the math and you sort of extrapolate this out.
We're targeting something along the lines of 1600, or so hospital centers that would ultimately use elite pro that are active in planners of pacemakers.
That if it just sort of scales. The way, it's going makes this $150 million product in just the U S. In just pacemakers alone and we think the neuro market is.
Speaker #4: Enabling us to very efficiently move across the country and gain new territories. But also with our partnership with Boston Scientific. Now, Boston actively involved in ELUPRO sales in 98 distinct hospitals ordering.
At least as big of an opportunity for US there. So from a revenue standpoint really strong work. So far again, we've said all along our revenue if you want to know what our revenue is going to do look at what our vac approvals.
Dr. Randy Mills: Now, Boston actively involved in ELU Pro sales in 98 distinct hospitals ordering. They are currently, facilitating and participating in about 30% of ELU Pro cases. So if you just start, just do the math and you sort of extrapolate this out, we're targeting something along the lines of 1,600 or so, hospital centers that would ultimately use, ELU Pro that are active implanters of pacemakers. that, if it just sort of scales the way it's going, makes this a $150 million product in just the US, in just pacemakers alone. And we think the neuro market is, at least as big of an opportunity for us there. So from a revenue standpoint, really strong work so far. Again, we've said all along, our revenue, if you want to know what our revenue is going to do, look at what our VAC approvals, are doing.
Speaker #4: They are currently facilitating and participating in about 30% of ELUPRO cases. So if you just start to do the math and you sort of extrapolate this out, we're targeting something along the lines of 1,600 or so hospital centers that would ultimately use ELUPRO that are active in planners of pacemakers.
Doing in here.
Just shows the great work of our team continuing to grind out those approvals $101 61 institutions you can see.
You can see there the monthly progress, we're making we add somewhere between 12 to 15, new institutions a month, we have something along the lines of 90 submissions in.
Speaker #4: That if it just sort of scales the way it's going, makes this $150 million product in just the US, in just pacemakers alone, and we think the neuro market is at least as big of an opportunity for us there.
In progress and we have about a 95% success rate so when we submit to a vac.
We have a very very strong likelihood.
Of gaining approval facilitating.
Speaker #4: So from a revenue standpoint, really strong work so far. Again, we've said all along our revenue, if you want to know what our revenue is going to do, look at what our VAC approvals are doing.
That great work with the Vacs is the work we've done with our GPO contracts and so we are on contract now with seven major <unk>, including Premier <unk> at Ventas.
Speaker #4: And here, this just shows the great work of our team continuing to grind out those approvals. 101, 61 institutions; you can see there the monthly progress we're making.
Dr. Randy Mills: And here, this just shows the great work of our team continuing to grind out those approvals. 161 institutions, you can see, you can see there the monthly progress we're making. We add somewhere between 12 to 15 new institutions a month. We have something along the lines of 90, submissions, in progress, and we have about a 95% success rate. So when we, submit to a VAC, we have a very, very, strong likelihood, of of gaining approval. Facilitating, that great work with the VACs is, the work we've done with our GPO contracts. And so we are on contract now with seven major GPOs, including Premier, S3P, and Ventus. and we have several others under the work and believe we will be reporting on a few more successes there, as, as the year, concludes, as we get through this second half.
And we have several others under the work and believe we will be reporting on a few more successes there.
As the year concludes as we get through the second half so all in all what an incredible first year for <unk> and I want to thank the entire Lucia crew. It really was a team effort from science to operations to commercial everybody working together.
Speaker #4: We add somewhere between 12 to 15 new institutions a month. We have something along the lines of 90 submissions in progress, and we have about a 95% success rate.
Speaker #4: So when we submit to a VAC, we have a very, very strong likelihood of gaining approval. Facilitating that great work with the VACs is the work we've done with our GPO contracts.
Our culture says that we should.
Okay.
<unk> has a tremendous amount of fun and it's a great commercial success, but we are just getting started our mission is to humanize medicine. So that patients can thrive without compromise and there is no bigger need.
Speaker #4: And so we are on contract now with seven major GPOs, including Premier S3P, Inventus, and we have several others under the work. And believe we will be reporting on a few more successes there as the year concludes as we get through this second half.
And then in the breast reconstruction space.
This year alone 317000 women will be told that they have an invasive form of breast cancer.
Speaker #4: So all in all, what an incredible first year for ELUPRO, and I want to thank the entire ELUTIA crew. It really was a team effort from science to operations to commercial.
Dr. Randy Mills: So all in all, what an incredible first year for ELU Pro. And I want to thank the entire ILUTIA crew. It really was a team effort from science to operations to commercial, everybody working together, the way our culture says, that we should. Okay. ELU Pro has a tremendous amount of fun, and it's a great commercial success, but we are just getting started. Our mission is to humanize medicine so that patients can thrive without compromise, and there is no bigger need than in the breast reconstruction space. This year alone, 317,000 women will be told that they have an invasive form of breast cancer. Many of those are going to go on and require mastectomies and need reconstruction, and a staggering one in three women going through breast reconstruction are going to suffer serious complications from that reconstruction procedure.
Many of those are going to go on and require mastectomies and need reconstruction.
Staggering one in three women going through breast reconstruction are going to suffer serious complications from that reconstruction procedure and that is something we can fix and that is something that we have resolved to change.
Speaker #4: Everybody working together the way our culture says that we should. Okay, ELUPRO has a tremendous amount of fun, and it's a great commercial success, but we are just getting started.
Speaker #4: Our mission is to humanize medicine so that patients can thrive without compromise. And there is no bigger need than in the breast reconstruction space.
Taking a look at the breast reconstruction market. It is a very big market and it is a very big market that already has.
The dominance of biologics in it so biologics represents a one 5 billion dollar addressable market in the U S alone and biologics accounts for 65% of the device related spend in reconstruction breaking down the numbers there.
Speaker #4: This year alone, 317,000 women will be told that they have an invasive form of breast cancer. Many of those are going to go on and require a mastectomy and need reconstruction.
Speaker #4: And I staggering one in three women going through breast reconstruction are going to suffer serious complications from that reconstruction procedure. And that is something we can fix, and that is something that we have resolved to change.
There are 151000 mastectomies annually in the United States two thirds of those involve bilateral procedures that generate somewhere between 200 225000 individual breast that are being reconstructed.
Dr. Randy Mills: And that is something we can fix, and that is something that we have resolved to change. Taking a look at the breast reconstruction market, it is a very big market, and it is a very big market that already has a dominance of biologics in it. So biologics represents a $1.5 billion addressable market in the US alone, and biologics accounts for 65% of the device-related spend in reconstruction. Breaking down the numbers, there are 151,000 mastectomies annually in the United States. Two-thirds of those involve bilateral procedures. That generates somewhere between 200,000 to 225,000 individual breasts that are being reconstructed. Biologics account for 80% of the reconstruction cases at a cost of somewhere between $7,500 and $9,500 per case. Therefore, biologics are about 65% of the implant-related costs, but they do not address the primary cause of implant failure.
Biologics account for 80% of the reconstruction cases at a cost of somewhere between 70 590 $500 per case, therefore, biologics are about 65% of the implant related costs, but they do not address.
Speaker #4: Taking a look at the breast reconstruction market, it is a very big market, and it is a very big market that already has a dominance of biologics in it.
Speaker #4: So biologics represents a 1.5 billion dollar addressable market in the US alone, and biologics accounts for 65% of the device-related spend in reconstruction. Breaking down the numbers, there are 151,000 mastectomies annually in the United States.
The primary cause of implant failure. So this is a market where we see biologics as the standard of care and that standard of care is currently failing.
Despite the high cost biologics alone don't address the problem and these numbers don't lie as I said, one in three women going through the breast reconstruction procedure.
Speaker #4: Two-thirds of those involve bilateral procedures. That generates somewhere between 200 to 225 thousand individual breasts that are being reconstructed. Biologics account for 80% of the reconstruction cases, at a cost of somewhere between 75 hundred and 95 hundred dollars per case.
<unk> a serious complication why is this it's driven almost exclusively by persistent bacterial contamination, so 10% to 14% of women will experience a significant infection, 19% to 29% will suffer capsular.
Speaker #4: Therefore, biologics are about 65% of the implant-related costs. But they do not address the primary cause of implant failure. So this is a market where we see biologics as the standard of care, and that standard of care is currently failing.
Fracture, which is most often a direct result of the inflammatory process from colonization of bacteria and up to 21% of women will actually have an implant loss and there is significant and very real economic cost associated with these two we are looking at almost.
Dr. Randy Mills: So this is a market where we see biologics as the standard of care, and that standard of care is currently failing. Despite the high costs, biologics alone don't address the problem. And these numbers don't lie. As I said, one in three women going through the breast reconstruction procedure suffer a serious complication. Why is this? It's driven almost exclusively by persistent bacterial contamination. So 10% to 14% of women will experience a significant infection. 19% to 29% will suffer capsular contracture, which is most often a direct result of the inflammatory process from colonization of bacteria, and up to 21% of women will actually have an implant loss. And there's significant and very real economic costs associated with these too. We're looking at almost $50,000 in economic burden to the hospital, which because it's a postoperative infection, the hospital must bear alone. These are not insured costs.
Speaker #4: Despite the high costs, biologics alone don't address the problem. And these numbers don't lie. As I said, one in three women going through the breast reconstruction procedure suffer a serious complication.
$50000.
An economic burden to the hospital, which because it's a post operative infection. The hospital must there alone. These are not insured costs. So if you think about this and just about everyone. I know knows of women going through a procedure like this.
Speaker #4: Why is this? It's driven almost exclusively by persistent bacterial contamination. So, 10% to 14% of women will experience a significant infection; 19% to 29% will suffer capsular contracture, which is most often a direct result of the inflammatory process from colonization of bacteria.
<unk> been diagnosed with breast cancer.
Horrible news youth.
Have the courage to go and face a mastectomy.
Our aviation oftentimes very frequently chemotherapy and instead what are your face you faced multiple surgeries delays in your underlying cancer treatment.
Speaker #4: And up to 21% of women will actually have an implant loss. And there's significant and very real economic costs associated with these too. We're looking at almost $50,000 in economic burden to the hospital which, because it's a post-operative infection, the hospital must bear alone.
And the pain and suffering of a failed reconstructive procedure. This is something that the drug Eluting biologic technology that we've developed with made to fix.
You might be wondering so how bad is it.
Well How's this for bad company breast reconstruction ranks among the riskiest procedures in medicine, despite being performed over 150000 times a year. It falls just between major limb amputation and colorectal resection within ostomy for serious complications so it's not really superb.
Speaker #4: These are not insured costs. So if you think about this in just about everyone I know knows a woman going through a procedure like this, you've been diagnosed with breast cancer, horrible news, you have the courage to go and face a mastectomy.
Dr. Randy Mills: So if you think about this, and just about everyone I know knows a woman going through a procedure like this, you've been diagnosed with breast cancer. Horrible news. You have the courage to go and face a mastectomy, radiation, oftentimes, very frequently, chemotherapy, and instead, what do you face? You face multiple surgeries, delays in your underlying cancer treatment, and the pain and suffering of a failed reconstructive procedure. This is something that the drug-eluting biologic technology that we've developed was made to fix. You might be wondering, so how bad is it? Well, how's this for bad company? Breast reconstruction ranks among the riskiest procedures in medicine, despite being performed over 150,000 times a year. It falls just between major limb amputation and colorectal resection with an ostomy for serious complications.
Rising that women when faced with the option for breast reconstruction, 60% of women opt to not have their breast reconstruction friends. This is a market that needs a revolution and that is exactly what <unk> is bringing to the table.
Speaker #4: Radiation oftentimes very frequently chemotherapy and instead what do you face? You face multiple surgeries, delays in your underlying cancer treatment. And the pain and suffering of a failed reconstructive procedure.
Speaker #4: This is something that the drug-eluting biologic technology that we've developed was made to fix. You might be wondering, so how bad is it? Well, how's this for bad company?
We have built on our award winning technology from <unk> to bring you. What's next NXT 41 X is a fully engineered next generation biological matrix.
Speaker #4: Breast reconstruction ranks among the riskiest procedures in medicine, despite being performed over 150,000 times a year. It falls just between major limb amputation and colorectal resection with an ostomy.
That brings both the handling and the biological remodeling of our biologics matrix, but two that we've added powerful antibiotics with sustained antibiotic or release to prevent infection that is associated with these types of procedures our team.
Speaker #4: For serious complications, so it's not really surprising that women when faced with the option for breast reconstruction, 60% of women opt to not have.
Dr. Randy Mills: So it's not really surprising that women, when faced with the option for breast reconstruction, 60% of women opt to not have their breast reconstruction. Friends, this is a market that needs a revolution, and that is exactly what ILUTIA is bringing to the table. We have built on our award-winning technology from ELU Pro to bring you what's next. NXT 41X is a fully engineered next-generation biological matrix that brings both the handling and the biological remodeling of a biologic matrix. But to that, we've added powerful antibiotics with sustained antibiotic release to prevent infection that is associated with these types of procedures. Our team has been hard at work on this for the past three years, and we are in a position now to where it's actually just around the corner.
Have been hard at work on this for the past three years.
Speaker #4: Their breast reconstruction. Friends, this is a market that needs a revolution, and that is exactly what ELUTIA is bringing to the table. We have built on our award-winning technology from ELUPRO to bring you what's next.
And we are in a position now to where it's actually just around the corner. So we've been hard at work leveraging our proven development experience both from a technological standpoint, as well as a regulatory standpoint to rapidly gain market access.
Speaker #4: NXT 41X is a fully engineered next-generation biological matrix that brings both the handling and the biological remodeling of a biologic matrix but to that, we've added powerful antibiotics with sustained antibiotic release to prevent infection that is associated with these types of procedures.
And so as you guys know, we've submitted income and gotten approval for <unk> pro.
But we haven't talked about we spent a tremendous amount of time during those last three years, developing and perfecting a great base biological matrix and our development of that matrix is complete our animal data supporting the use of that matrix is complete we have already held pre submission meetings with the food and drug.
Speaker #4: Our team have been hard at work on this for the past three years. And we are in a position now to where it's actually just around the corner.
<unk> administration and our teams are now preparing submissions for approval. So we anticipate having the next 41 base matrix approved now in launching in the second half of 2026.
Speaker #4: So we've been hard at work leveraging our proven development experience, both from a technological standpoint as well as a regulatory standpoint to rapidly gain market access.
Dr. Randy Mills: So we've been hard at work leveraging our proven development experience, both from a technological standpoint as well as a regulatory standpoint, to rapidly gain market access. And so, as you guys know, we've submitted and gotten approval for ELU Pro, but we haven't talked about we spent a tremendous amount of time during those last three years developing and perfecting a great base biological matrix, and our development of that matrix is complete. Our animal data supporting the use of that matrix is complete. We have already held pre-submission meetings with the Food and Drug Administration, and our teams are now preparing submissions for approval. So we anticipate having the next 41 base matrix approved now and launching in the second half of 2026, and the antibiotic matrix in the first half of '27.
The antibiotic matrix in the first half of 2007, we will obviously, providing more detail on this in the coming months, but I wanted to give you a good sense of not just where we are in the development program more importantly, why the next 41 program for breast reconstruction.
Speaker #4: And so as you guys know, we've submitted and gotten approval for ELUPRO, but we haven't talked about, we spent a tremendous amount of time during those last three years developing and perfecting a great base biological matrix.
<unk> has been so high on the development teams.
Speaker #4: And our development of that matrix is complete. Our animal data supporting the use of that matrix is complete. We have already held pre-submission meetings with the Food and Drug Administration, and our teams are now preparing submissions for approval.
Priority list for the last three years with that I will conclude my comments and turn the call over to Matt who will.
Discuss where we are from a litigation standpoint, and then do his financial review.
Speaker #4: So we anticipate having the next 41 base matrix approved now and launching in the second half of 2026. And the antibiotic matrix in the first half of 27.
Okay. Thank you Randy.
So first off.
Litigation update which is a new section for our conference calls, but it's not a new situation that that we have been working on here.
Speaker #4: We will obviously be providing more detail on this in the coming months, but I wanted to give you a good sense of not just where we are in the development program, but more importantly, why the next 41 program for breast reconstruction has been so high on the development team's priority list for the last three years.
Dr. Randy Mills: We will obviously be providing more detail on this in the coming months, but I wanted to give you a good sense of not just where we are in the development program, but more importantly, why the next 41 program for breast reconstruction has been so high on the development team's priority list for the last three years. With that, I will conclude my comments and turn the call over to Matt, who will discuss where we are from a litigation standpoint and then do his financial review.
As a little bit of background this stemmed from.
Product recall that we had.
Over four years ago.
And it was in a part of the company that we actually sold two years ago. So it really relates to.
His history of the company as opposed to any.
Anything that we're doing right now.
Speaker #4: With that, I will conclude my comments and turn the call over to Matt, who will discuss where we are from a litigation standpoint and then do his financial review.
But.
What we have been left with based on that product recall is.
Quite a large number of lawsuits and many of you are aware of that already but we had a 110.
Individual lawsuits that stemmed from this event and the long ago.
Speaker #5: Okay, thank you, Randy. So first off, the litigation update, which is a new section for our conference calls, but it's not a new situation that we have been working on here.
Matt Ferguson: Okay. Thank you, Randy. So first off, the litigation update, which is a new section for our conference calls, but it's not a new situation that we have been working on here. As a little bit of background, this stems from a product recall that we had over four years ago, and it was in a part of the company that we actually sold two years ago. So it really relates to the history of the company as opposed to anything that we're doing right now. But what we have been left with based on that product recall is quite a large number of lawsuits, and many of you are aware of that already. But we had 110 individual lawsuits that stemmed from this event in the long ago.
It has been a.
Really a substantial weight on our company both from a value point of view and from a personal point of view and I am glad to say that we are now very close to the end of that process. We've made really substantial progress recently and.
Speaker #5: As a little bit of background, this stems from a product recall that we had over four years ago. It was in a part of the company that we actually sold two years ago.
It is.
<unk> been a real focus for a small number of people in the company for some time, so what has happened.
Speaker #5: So it really relates to history of the company as opposed to anything that we're doing right now. But what we have been left with based on that product recall is quite a large number of lawsuits and many of you are aware of that already.
We've really started making a concerted effort.
At least a couple of quarters ago to get these cases behind us to get them all settled.
And.
Just in the last quarter, we settled 27 of these cases and cumulatively now.
Speaker #5: But we had 110 individual lawsuits that stemmed from this event in the long ago. It has been a really a substantial weight on the company both from a value point of view and from a personal point of view.
We have settled 97 out of that original 110.
<unk>.
With the remaining 13 cases.
Matt Ferguson: It has been really a substantial weight on the company, both from a value point of view and from a personal point of view. And I'm glad to say that we are now very close to the end of that process. We've made really substantial progress recently, and it has been a real focus for a small number of people in the company for some time. So what has happened? We've really started making a concerted effort at least a couple of quarters ago to get these cases behind us, to get them all settled. And just in the last quarter, we settled 27 of these cases, and cumulatively now we've settled 97 out of that original 110.
And any individual basis, they should actually be easier to settle then much of what we've had to deal with over the last few years.
Speaker #5: And I'm glad to say that we are now very close to the end of that process. We've made really substantial progress. Recently, and it has been a real focus for a small number of people in the company for some time.
Even in the last quarter.
No single.
No single trial attorney is handling more than three of those so.
And a lot of ways that actually makes it a little bit easier for us to deal with them. One by one the implications of this for the company are there are two big ones. One is that substantially reduces the expense that we incur going forward.
Speaker #5: So what has happened? We've really started making a concerted effort at least a couple of quarters ago to get these cases behind us to get them all settled.
Speaker #5: And just in the last quarter, we settled 27 of these cases, and cumulatively now we've settled 97 out of that original 110. With the remaining 13 cases, on an individual basis, they should actually be easier to settle than much of what we've had to deal with over the last few years.
And then the other one is that it really removes an overhang that.
Made it very difficult we've been talking to other companies about any kind of strategic transaction and I think we have.
Matt Ferguson: And with the remaining 13 cases, on an individual basis, they should actually be easier to settle than much of what we've had to deal with over the last few years, and even in the last quarter. No single trial attorney is handling more than three of those. So in a lot of ways, that actually makes it a little bit easier for us to deal with them one by one. The implications of this for the company are two big ones. One is that it substantially reduces the expense that we incur going forward. And then the other one is that it really removes an overhang that made it very difficult. And we've been talking to other companies about any kind of strategic transaction. And I think we have really addressed their concerns now. And like I said, I think we're very close to putting this entirely behind us.
Really address their concerns now and like I said I think we're very close to putting this entirely behind us.
So.
With that I will move on to the financial update.
Speaker #5: And even in the last quarter, no single trial attorney is handling more than three of those. So in a lot of ways, that actually makes it a little bit easier for us to deal with them one by one.
And they are really integrates very directly with everything that Randy talked about.
The.
I won't go through all of the bullet points on this page, but just hitting a few highlights really at the top of the list is the performance of <unk>.
Speaker #5: The implications of this for the company are they're two big ones. One is that it substantially reduces the expense that we incur going forward.
We saw 49% growth on a sequential basis for elite pro from Q1 of this year to Q2 of this year that drove really substantial growth even in the overall bio envelope business, even though a lot of a fair amount of that business is still kangaroo. So we saw a $3 $5 million in sales in the bio envelope.
Speaker #5: And then the other one is that it really removes an overhang that made it very difficult. We've been talking to other companies about any kind of strategic transaction.
Speaker #5: And I think we have really addressed their concerns now. And like I said, I think we're very close to putting this entirely behind us.
Business versus $2 6 million from a year ago.
And as Randy indicated we expect that growth to continue and we expect more and more accounts to convert over to Elliott pro and to bring on new accounts based on having that thats really exciting product in our portfolio right now.
Speaker #5: So with that, I will move on to the financial update. And there it really integrates very directly with everything that Randy talked about. I won't go through all of the bullet points on this page, but just hitting a few highlights really at the top of the list is the performance of ELUPRO.
Matt Ferguson: So with that, I will move on to the financial update. And there, you know, it really integrates very directly with everything that Randy talked about. I won't go through all of the bullet points on this page, but just hitting a few highlights. Really, at the top of the list is the performance of ELU Pro. We saw 49% growth on a sequential basis for ELU Pro from Q1 of this year to Q2 of this year. That drove really substantial growth even in the overall bioenvelope business, even though a fair amount of that business is still Kangaroo. So we saw 3.5 million in sales in the bioenvelope business versus 2.6 million from a year ago.
Just touching briefly on our other two main product areas.
Cardiovascular patch products.
We took control back of those products from an exclusive distributor last quarter in Q2, we only had them for a portion of the quarter, but even just in that portion of the quarter, we were able to generate over $700000 of revenue from those products and thats more than double what we were able to do through.
Speaker #5: We saw 49% growth on a sequential basis for ELUPRO from Q1 of this year to Q2 of this year. That drove substantial growth even in the overall bioenvelope business, even though a fair amount of that business is still kangaroo.
The distributor just the quarter before.
Speaker #5: So we saw $3.5 million in sales in the bioenvelope business versus $2.6 million from a year ago. And as Randy indicated, we expect that growth to continue.
We expect to also see continued growth there.
And then for simple derm, which is a product with a lot of opportunity.
Matt Ferguson: And as Randy indicated, we expect that growth to continue, and we expect more and more accounts to convert over to ELU Pro and to bring on new accounts based on having this really exciting product in our portfolio right now. Just touching briefly on our other two main product areas in the cardiovascular patch products, we took control back of those products from an exclusive distributor last quarter in Q2. We only had them for a portion of the quarter, but even just in that portion of the quarter, we were able to generate over $700,000 of revenue from those products. And that's more than double what we were able to do through the distributor just the quarter before. And we expect to also see continued growth there. And then for SimpleDerm, which is a product with a lot of opportunity, we didn't do as well last quarter.
We didn't do as well last quarter, and we generated $2 million of revenue there.
Speaker #5: We expect more and more accounts to convert over to ELUPRO. And to bring on new accounts based on having this really exciting product in our portfolio right now.
Versus what we've done previously which was higher I do believe that there are multiple ways that we can generate value from that franchise.
Speaker #5: Just touching briefly on our other two main product areas. In the cardiovascular patch products, we took control back of those products from an exclusive distributor last quarter in Q2.
Whether it's by driving additional sales or buy.
Partnering with another company in order to.
To bring value to our shareholders.
Speaker #5: We only have them for a portion of the quarter, but even just in that portion of the quarter, we were able to generate over $700,000 of revenue from those products.
So.
Overall, those three things add up to sales of $6 3 million for the quarter.
Which.
Which we expect to see growing going forward.
Speaker #5: And that's more than double what we were able to do through the distributor just the quarter before. We expect to also see continued growth there.
That was essentially.
Comparable to what we did in the year ago quarter.
The other areas I'd like to touch on our gross margin, where we're seeing really nice efficiency in terms of our operations and we saw a substantial improvement in our adjusted gross margin, reaching 62, 4% for Q2 up about four full percentage points or more than four full percentage points.
Speaker #5: And then for Simple Derm, which is a product with a lot of opportunity, we didn't do as well last quarter. We generated $2 million of revenue there.
Matt Ferguson: And we generated 2 million of revenue there versus what we had done previously, which was higher. I do believe that there are multiple ways that we can generate value from that franchise, whether it's by driving additional sales or by partnering with another company in order to bring value to our shareholders. So overall, those three things add up to sales of 6.3 million for the quarter, which we expect to see growing going forward. That was essentially comparable to what we did in the year-ago quarter. The other areas I'd like to touch on are gross margin, where we're seeing really nice efficiency in terms of our operations. And we saw a substantial improvement in our adjusted gross margin, reaching 62.4% for Q2, up about four full percentage points or more than four full percentage points from a year ago.
Speaker #5: Versus what we had done previously, which was higher. I do believe that there are multiple ways that we can generate value from that franchise, whether it's by driving additional sales or by partnering with another company in order to bring value to our shareholders.
From a year ago, and we're seeing that largely based on the efficiency that we're getting in the bio envelope business.
As we start to scale that up a little bit more and then also with the really high margins that we generate in cardiovascular those.
Speaker #5: So overall, those three things add up to sales of $6.3 million for the quarter, which we expect to see growing going forward. That was essentially comparable to what we did in the year-ago quarter.
Gross margins are actually over 80% for that business and.
That does a nice job of dropping money towards our bottom line.
So.
On a bottom line basis, there are different ways of looking at it whether it's an operating or net or an EBITDA basis really I think the most constructive.
Speaker #5: The other areas I'd like to touch on are gross margin, where we're seeing really nice efficiency in terms of our operations. We saw a substantial improvement in our adjusted gross margin, reaching 62.4% for Q2, up about four full percentage points—or more than four full percentage points—from a year ago.
Metric is adjusted EBITDA here, which takes out the nonrecurring and noncash expenses there.
At $3 $8 million loss for the quarter.
But when I think about that for where the company is.
With.
Really high growth Tom.
Speaker #5: And we're seeing that largely based on the efficiency that we're getting in the bioenvelope business as we start to scale that up a little bit more.
Matt Ferguson: And we're seeing that largely based on the efficiency that we're getting in the bioenvelope business as we start to scale that up a little bit more. And then also with the really high margins that we generate in cardiovascular, those gross margins are actually over 80% for that business. And that does a nice job of dropping money towards our bottom line. So on a bottom line basis, there are different ways of looking at it, whether it's an operating or a net or an EBITDA basis. Really, I think the most instructive metric is adjusted EBITDA here, which takes out the non-recurring and non-cash expenses. There, we had a $3.8 million loss for the quarter.
Topline franchise in the form of Elliott Pro and then also.
With the product development investments that we've been making which are going to yield really exciting results.
Speaker #5: And then also with the really high margins that we generate in cardiovascular, those gross margins are actually over 80% for that business. That does a nice job of dropping money towards our bottom line.
In the near future.
I'm actually really pleased with the efficiency that we're seeing there and the ability to move this company towards profitability.
And then lastly, I just mentioned that we ended Q2 with $8 $5 million of cash and I think the important thing to mention there is that.
Speaker #5: So, on a bottom-line basis, there are different ways of looking at it, whether it's on an operating, net, or EBITDA basis.
Speaker #5: Really, I think the most instructive metric is adjusted EBITDA here, which takes out the non-recurring and non-cash expenses. There we had a $3.8 million loss for the quarter.
We do have a number of business development transactions that we are evaluating and we won't say too much more about that here, but we do expect to be able to say more in the very near future and we do expect those to have an impact in a very positive way on on our cash position.
Speaker #5: But when I think about that for where the company is, with a really high-growth top-line franchise in the form of ELUPRO, and then also with the product development investments that we've been making, which are going to yield really exciting results in the near future.
Matt Ferguson: But when I think about that for where the company is with a really high growth top-line franchise in the form of ELU Pro, and then also with the product development investments that we've been making, which are going to yield really exciting results in the near future, I'm actually really pleased with the efficiency that we're seeing there and the ability to move this company towards profitability. And then lastly, I just mentioned that we ended Q2 with $8.5 million of cash. And I think the important thing to mention there is that we do have a number of business development transactions that we are evaluating. And we won't say too much more about that here, but we do expect to be able to say more in the very near future. And we do expect those to have an impact in a very positive way on our cash position.
With that I will turn it back to Randy.
Thank you Matt Okay. So, let's just conclude the call here with providing you some guidance and clarity on where it is we are going as a company is probably not going to come as a surprise to anyone to find out that.
Speaker #5: I am actually really pleased with the efficiency that we're seeing there and the ability to move this company towards profitability. Lastly, I would just mention that we ended Q2 with $8.5 million of cash.
It's a lot of our focus is dedicated exactly where it should be two elite pro <unk> Pro is now at the stage, where it's about scaling.
Speaker #5: And I think the important thing to mention there is that we do have a number of business development transactions that we are evaluating. We won't say too much more about that here, but we do expect to be able to say more in the very near future.
No exactly how to grow revenue in <unk>, it simply to get more vacs.
On contract. So we are going to continue to scale revenue in earlier pro by by expanding the number of vaccine GPO coverage that we have we're going to be leveraging.
Speaker #5: And we do expect those to have a positive impact on our cash position. With that, I will turn it back to Randy.
Both.
Matt Ferguson: With that, I will turn it back to Randy.
The momentum that we've developed with our own direct sales channel as well as our partner or partners at Boston scientific to help drive this process and those two things really couldnt shouldnt come as a surprise to anyone.
Speaker #4: Thank you, Matt. Okay, so let's just conclude the call here by providing you with some guidance and clarity on where it is we are going as a company.
Dr. Randy Mills: Thank you, Matt. Okay, so let's just conclude the call here with providing you some guidance and clarity on where it is we are going as a company. It's probably not going to come as a surprise to anyone to find out that a lot of our focus is dedicated exactly where it should be to ELU Pro. ELU Pro is now at the stage where it's about scaling. We know exactly how to grow revenue in ELU Pro. It's simply to get more VACs on contract. So we are going to continue to scale revenue in ELU Pro by expanding the number of VACs and GPO coverage that we have. We're going to be leveraging both the momentum that we've developed with our own direct sales channel as well as our partners at Boston Scientific to help drive this process.
Speaker #4: It's probably not going to come as a surprise. To anyone, to find out that it's a lot of our focus is dedicated exactly where it should be to ELUPRO.
Third we're going to continue to increase the production capacity and continue to lower Cogs, we've already seen a tremendous job being done.
Speaker #4: ELUPRO is now at the stage where it's about scaling. We know exactly how to grow revenue in ELUPRO. It's simply to get more VACs on contract.
Our gross margin by our operations team and as we like to say.
That product doesn't make itself the team in Roswell, Georgia does a phenomenal job.
Growing with this product and continuing to meet product orders and we're incredibly proud of the work that they do so you could expect to see more of that going on.
Speaker #4: So we are going to continue to scale revenue in ELUPRO by expanding the number of VACs and GPO coverage that we have. We're going to be leveraging both the momentum that we've developed with our own direct sales channels, as well as our partner at Boston Scientific to help drive this process.
Fourth.
<unk> heard about it now are our NXT 41 platform is now just about here. It is proven technology drug Eluting biologics technology through a proven regulatory pathway going into a much bigger market with a much bigger unmet.
Speaker #4: And those two things really shouldn't come as a surprise to anyone. Third, we're going to continue to increase the production capacity and continue to lower COGs.
Dr. Randy Mills: And those two things really shouldn't come as a surprise to anyone. Third, we're going to continue to increase the production capacity and continue to lower COGs. We've already seen a tremendous job being done in our gross margin by our operations team. And as we like to say, you know that product doesn't make itself. The team in Roswell, Georgia, does a phenomenal job growing with this product and continuing to meet product orders. And we're incredibly proud of the work that they do. So you can expect to see more of that going on. Fourth, you've heard about it now. Our NXT 41 platform is now just about here. It is proven technology, drug-eluting biologics technology through a proven regulatory pathway, going into a much bigger market with a much bigger unmet medical need.
Medical need and we are really excited to not just bring that to market from a business standpoint, but also when you are in this business being able to develop a product like that for people and for an indication where there is such an outstanding.
Speaker #4: We've already seen a tremendous job being done in our gross margin by our operations team. And as we like to say, you know that product doesn't make itself; the team in Roswell, Georgia does a phenomenal job growing with this product and continuing to meet product orders.
Such an outstanding medical need.
Speaker #4: And we're incredibly proud of the work that they do. So you can expect to see more of that going on. Fourth, you've heard about it now.
Are not only excited but we are passionately.
Pursuing that and driving that forward.
At full speed and then lastly, as Matt said and as I said at the beginning in my comments, we are working on a number of strategic opportunities and expect.
Speaker #4: Our NXT 41 platform is now just about here. It is proven technology—drug-eluting biologics technology—through a proven regulatory pathway going into a much bigger market.
To drive one or more of those to conclusion in the relatively near future and we will have more on that.
When.
Developments warrant with that I will conclude my comments and turn the call over to the operator for your questions.
Speaker #4: With a much bigger unmet medical need, we are really excited to not just bring that to market from a business standpoint, but also, you know, when you're in this business, being able to develop a product like that.
Dr. Randy Mills: And we are really excited to not just bring that to market from a business standpoint, but also, you know, when you're in this business, being able to develop a product like that for people and for an indication where there is such an outstanding medical need. We are not only excited, but we are passionately pursuing that and driving that forward at full speed. And then lastly, as Matt said, and as I said at the beginning into my comments, we are working on a number of strategic opportunities and expect to drive one or more of those to conclusion in the relatively near future. And we'll have more on that when developments warrant. With that, I will conclude my comments and turn the call over to the operator for your questions.
Thank you if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants.
Speaker #4: For people, and for an indication where there is such an outstanding medical need, we are not only excited, but we are passionately pursuing that and driving that forward at full speed.
Using speaker equipment.
Sorry to pick up your handset before pressing the star keys.
Speaker #4: And then lastly, as Matt said, and as I mentioned at the beginning of my conference, we are working on a number of strategic opportunities and expect to drive one or more of those to conclusion in the relatively near future.
Our first question is from Frank <unk> with Lake Street Capital markets. Please proceed.
Thanks, taking the questions and congrats on all the exciting progress I wanted to start first with one.
<unk>, obviously, you've had very strong market receptivity.
Speaker #4: And we'll have more on that when developments warrant. With that, I will conclude my comments and turn the call over to the operator for your questions.
Just curious when obviously when a product is launching as quickly and successfully as well.
Pro has theres always bottlenecks along the way so just curious what those bottlenecks or whether thats still vacs and just the process there and the variability of timing inventory or anything like that and anything you need to address to continue this growth trajectory.
Speaker #1: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For a participant using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Frank Tacketton with Lake Street Capital Markets. Please proceed.
Speaker #1: You may press star two if you would like to remove your question from the queue. For participants who think speaker equipment may be necessary to pick up your handset, please press the star keys before proceeding.
Yes, thanks, Frank So bottlenecks I would say at first.
The commercial team really did give the operations team a run for their money.
Speaker #1: Our first question is from Frank Tackleton with Lake Street Capital Markets. Please proceed.
There were some there were some people flooding being able to keep up with production as we first got started but but.
Speaker #6: Thanks for taking the questions, and congrats on all of the exciting progress. I wanted to start first with one on ELUPRO. Obviously, you've had very strong market receptivity.
Frank Tacketton: Well, thanks for the questions, and congrats on all of the exciting progress. I wanted to start first with one on ELU Pro. Obviously, you've had very strong market receptivity. And just curious, when obviously when a product is launching as quickly and successfully as ELU Pro has, there's always bottlenecks along the way. So just curious what those bottlenecks are, whether that's still VACs and just the process there and the variability of timing, inventory, or anything like that, and anything you need to address to continue this growth trajectory.
They have done that they have really mastered that youre starting to see that efficiency show up in the gross margin.
Speaker #6: And just curious, when obviously when a product is launching as quickly and successfully as ELUPRO has, there's always bottlenecks along the way. So, just curious what those bottlenecks are, whether that's still VACs and just the process there, and the variability of timing, inventory, or anything like that, and anything you need to address to continue this growth trajectory.
We don't.
Like any any good company, we don't like to build crazy amounts of inventory, but we have the inventory in place there to be able to have 100% service level, that's our goal deliver.
To deliver exactly what the customer wants exactly when the customer expects to receive it.
And they've done they've done a great job there I wish it were more exciting.
Speaker #4: Yeah, thanks, Frank. So, bottlenecks—I would say at first the commercial team really did give the operations team a run for their money. There were some people sweating to keep up with production as we first got that started.
Dr. Randy Mills: Yeah, thanks, Frank. So bottlenecks, I would say at first, the commercial team really did give the operations team a run for their money. There were some people sweating being able to keep up with production as we first got that started. But they have done that. They have really mastered that. You're starting to see that efficiency show up in the gross margin. We don't like any good company. We don't like to build crazy amounts of inventory. But we have the inventory in place there to be able to have 100% service level. That's our goal, deliver exactly what the customer wants, exactly when the customer expects to receive it. And they've done a great job there. I wish it were more exciting than maybe I don't wish it was more exciting than the opportunity that we see. But really, it's about scaling VACs.
And then and maybe I don't wish it was more exciting than the opportunity that we see but really it's about scaling back.
The ordering is now so predictable when we turn a hospital on the order and they're ordering at this really significant right over.
Speaker #4: But they have done that. They have really mastered that. You're starting to see that efficiency show up in the gross margin. Like any good company, we don't like to build crazy amounts of inventory.
What they want.
130% of what they were ordering kangaroo at.
<unk>.
A good account for US, we'll do actually but we expect actually just an average account for us to do about $100000.
Speaker #4: But we have the inventory in place to be able to have 100% service level. That's our goal: deliver exactly what the customer wants, exactly when the customer expects to receive it.
A year.
So those accounts or are just scaling so as we get through the vac process.
Revenue scale so.
Speaker #4: And they've done a great job there. I wish it were more exciting than—and maybe I don't wish it was more exciting than the opportunity that we see—but really, it's about scaling VACs.
I don't know if you call it a bottleneck or just the work we have to do but.
But we have 160.
We have 160 vacs through approval right now it's kind of interesting it lines up we have 1600 centers that we're targeting.
Speaker #4: The ordering is now so predictable. When we turn a hospital on, they order, and they're ordering at this really significant rate—over 130% of what they were ordering kangaroo at.
Dr. Randy Mills: The ordering is now so predictable. When we turn a hospital on, they order, and they're ordering at this really significant rate over what they want. 130% of what they were ordering Kangaroo at a good account for us will do some, you know, actually, we expect actually just an average account for us to do about $100,000 a year. So those accounts are just scaling. So as we get through the VAC process, revenue scales. So I don't know if you call it a bottleneck or just the work we have to do, but we have 160 VACs through approval right now. It's kind of interesting it lines up. We have 1,600 centers that we are targeting in total. It takes us on average about six months to do that. We always keep a really strong number of those accounts in the pipeline.
In total it takes us on average about six months to do that we always keep a really strong.
A number of those accounts in the pipeline like I said I think right now we happen to have 90, because actually we had a lot pull through but we add new filings everyday and our partners at Boston scientific are being tremendously helpful.
Speaker #4: A good account for us will do some, you know, actually we expect just an average account for us to do about $100,000 a year.
Speaker #4: So those accounts are just scaling. As we get through the VAC process, revenue scales. So I don't know if you call it a bottleneck or just the work we have to do.
In opening up those new doors. They certainly have accounts that they have high interest in how you need it. So it's not really much of a mystery anymore, what drives the revenue with.
Speaker #4: But we have 160 VACs through approval right now. It's kind of interesting; it lines up. We have 1,600 centers that we are targeting in total.
With <unk> it really is if we get through the backs.
We are seeing the ordering just scale.
Great. That's good color maybe one on the.
NXT 41 exciting to hear that advancing along.
Speaker #4: It takes us, on average, about six months to do that. We always keep a really strong number of those accounts in the pipeline. Like I said, I think right now we happen to have 90.
First maybe just a little clarification and help us understand kind of a two step process I think we read in the press release.
Dr. Randy Mills: Like I said, I think right now we happen to have 90. It's because actually we had a lot pull through. But we add new filings every day, and our partners at Boston Scientific are being tremendously helpful in opening up those new doors. They certainly have accounts that they have high interest and high need in. So it's not really much of a mystery anymore what drives the revenue. With ELU Pro, it really is if we get through the VACs, you know, we're seeing the ordering just scale.
The first one is expected second half of 'twenty six and then the drug Eluting version in the first half of 2007. So some additional background there would be interesting to understand and then just a clarification is there any linkage to NXT 41, too simple a derm.
Speaker #4: It's because we actually had a lot of pull-through. However, we add new filings every day, and our partners at Boston Scientific are being tremendously helpful in opening up those new doors.
Speaker #4: They certainly have accounts that they have high interest in and high need in. So it's not really much of a mystery anymore what drives the revenue with ELUPRO.
As you think about business development activities.
Sure.
So the first centers around regulatory strategy right. So.
Speaker #4: It really is, if we get through the VACs, we're seeing the ordering just scale.
And you know Dr. Williams.
She she doesn't just deliver great science. She also knows that the product wont help people until it can get through the FDA and we are taking what you might call it conservative or a derisked approach by uncoupling the.
Speaker #6: Great, that's good color. Maybe one on the NXT 41. Exciting to hear that advancing along. First, maybe just a little clarification and help us understand kind of the two-step process.
Frank Tacketton: Great. That's a good caller. Maybe one on the NXT 41. Exciting to hear that advancing along. First, maybe just a little clarification and help us understand kind of the two-step process. I think we read in the press release that the first one's expected second half of '26, and then the drug-eluting version in the first half of '27. So some additional background there would be interesting to understand. And then just a clarification, is there any linkage to NXT 41 to SimpleDerm as you think about business development activities?
Regulatory clearances of first the matrix by itself.
Speaker #6: I think we read in the press release that the first one's expected in the second half of 2026, and then the drug-eluting version in the first half of 2027.
And then the matrix with the antibiotic.
<unk>.
Speaker #6: So, some additional background there would be interesting to understand. And then just a clarification: is there any linkage to NXT 41 to Simple Derm?
Attached.
To it and so the first approval that Youll see is the matrix by itself. This is not a derivative of simple term. This is a brand new matrix for a lot of different reasons, we went with what we call a fully engineered matrix and so.
Speaker #6: As you think about business development activities,
Speaker #4: Sure. So the first centers around regulatory strategy, right? And you know Dr. Williams, she doesn't just deliver great science. She also knows that the product won't help people until it can get through the FDA.
Dr. Randy Mills: Sure. So the first centers around regulatory strategy, right? So, and you know Dr. Williams, she doesn't just deliver great science. She also knows that the product won't help people until it can get through the FDA. And we are taking what you might call a conservative or a de-risked approach by uncoupling the regulatory clearances of first the matrix by itself, and then the matrix with the antibiotic attached to it. And so the first approval that you'll see is the matrix by itself. This is not a derivative of SimpleDerm. This is a brand new matrix for a lot of different reasons. We went with what we call a fully engineered matrix. And so this is a, it starts with a porcine extracellular matrix base that we treat with a number of different procedures that chemical and enzymatic that Michelle and her team have developed.
This is a.
It starts with.
A.
Porcine extracellular matrix base.
Speaker #4: And we are taking what you might call a conservative or a de-risked approach by uncoupling the regulatory clearances of, first, the matrix by itself and then the matrix with the antibiotic attached.
That we treat with a number of different a number of different.
Procedures that chemical an enzymatic that Michelle and her team have developed we optimized it not just for handling but we also optimized it for incorporation and because this is an engineered matrix. What we were looking to do there Frank was one of the knocks on sort of.
Speaker #4: To it. And so the first approval that you'll see is the matrix by itself. This is not a derivative of Simple Derm. This is a brand new matrix for a lot of different reasons.
Biologics and particularly human tissue. That's used in biologics is that is the donor to donor variability and we wanted to take that out we wanted to make a base matrix.
Speaker #4: We went with what we call a fully engineered matrix. And so this is a it starts with a porcine extracellular matrix. Base that we treat with a number of different a number of different procedures that chemical and enzymatic that Michelle and her team have developed.
The physician would say I know exactly how this thing is going to perform and I know this this space matrix is engineered in such a way to where it is going to incorporate biologically.
On an absolutely optimal state and so that's what we did.
With that with that with that base matrix and so thats that will youll see that.
Come on the market in the second half of 2006 now and then shortly after that the antibiotic.
Speaker #4: We optimized it not just for handling, but we also optimized it for incorporation. And because this is an engineered matrix, what we were looking to do there, Frank, was one of the knocks on sort of biologics and particularly human tissue that's used in biologics: the donor-to-donor variability.
Dr. Randy Mills: We optimized it not just for handling, but we also optimized it for incorporation. And because this is an engineered matrix, what we were looking to do there, Frank, was one of the knocks on sort of biologics and particularly human tissue that's used in biologics is the donor-to-donor variability. And we wanted to take that out. We wanted to make a base matrix where the physician would say, "I know exactly how this thing is going to perform. And I know this base matrix is engineered in such a way to where it's going to incorporate biologically in an absolutely optimal state." And so that's what we did with that base matrix. And so that will, you'll see that come on the market in the second half of '26 now. And then shortly after that, the antibiotic delivery version attached.
Delivery.
<unk> attached and that we've been able.
To develop really we think the expertise from the process with elite pro drug what what the FDA wants to see from a drug Eluting standpoint, we are using the same drugs different delivery system.
Speaker #4: And we wanted to take that out. We wanted to make a base matrix where the physician would say, "I know exactly how this thing is going to perform."
System, but we really actually love rifampin and minocycline in this space will have more to talk about that but we actually have some really powerful not just anti microbial effects.
Speaker #4: And I know this base matrix is engineered in such a way to where it's going to incorporate biologically in an absolutely optimal state. And so that's what we did with that base matrix.
But actually pro regenerative effects that we've been able to prove out.
In the lab with that so we're really excited about that and then your second question sort of centered around how this related.
Speaker #4: And so that will you'll see that come on the market in the second half of 2026 now. And then shortly after that, the antibiotic delivery version attached.
To simply to them. This is.
Going into the same markets as <unk>.
<unk> is obviously using a biologic mesh in in breast reconstruction, but we think really with a with a second generation.
Speaker #4: And that we've been able to develop, really, we think the expertise from the process with ELUPRO and what the FDA wants to see from a drug-eluting standpoint.
Dr. Randy Mills: And that we've been able to develop really, we think, the expertise from the process with ELU Pro and what the FDA wants to see from a drug-eluting standpoint. We are using the same drugs, different delivery system, but we really actually love rifampin and minocycline in this space. We'll have more to talk about that. But we actually have some really powerful, not just antimicrobial effects, but actually pro-regenerative effects that we've been able to prove out in the lab with that. So we're really excited about that. And then your second question sort of centered around how this related to SimpleDerm. This is going into the same markets as SimpleDerm is, obviously using a biologic mesh in breast reconstruction, but we think really with a second-generation sort of technology. And so what we like about having SimpleDerm is we have our key accounts.
Sort of technology, and so what we like about having simple term is yes. We have are our key accounts, we have our kols establish these great surgeon relationships.
Speaker #4: We are using the same drugs. Different delivery system, but we really actually love rifampin and minocycline in this space. We'll have more to talk about that.
<unk> is as we say simply a great product physicians love simple term, we think it is.
Speaker #4: But we actually have some really powerful, not just antimicrobial effects, but also pro-regenerative effects that we've been able to prove out in the lab with that.
Best biologic on the market today.
But ultimately where we're going as we think we think.
Speaker #4: So, we're really excited about that. Then your second question sort of centered around how this relates to Simple Derm. This is going into the same markets as Simple Derm, obviously using a biologic mesh in breast reconstruction.
At <unk> 41.
Really gives a more complete solution.
Then than any.
Human derived matrix could get.
Perfect helpful. And then maybe just one last one and Im guessing you can't say too much on it but related to the comments of <unk>.
Speaker #4: But we think really with a second generation sort of technology. And so what we like about having Simple Derm is we have our key accounts, we have our KOLs established, these great surgeon relationships.
Very soon when we should hear some business development commentary would you characterize very soon as weeks months or quarters.
Dr. Randy Mills: We have our KOLs established, these great surgeon relationships. And SimpleDerm is, as we say, simply a great product. Physicians love SimpleDerm. We think it is the best biologic on the market today. But ultimately, where we're going is we think that NXT 41 really gives a more complete solution than any human-derived matrix could give.
Speaker #4: And Simple Derm is, as we say, simply a great product. Physicians love Simple Derm. We think it is the best biologic on the market today.
If nothing is done Frank until it's done.
And so.
I would expect it to be in weeks months or quarters.
Speaker #4: But ultimately, where we're going is we think that NXT 41 really gives a more complete solution than any human-derived matrix could give.
In one of those it's just one of those things thats like it reminds me of that Bill.
Billy Crystal line and Princess Bride.
Russian miracles to get lousy miracles, well your us business development, you get lousy business development and.
And.
Speaker #6: Perfect, helpful. And then maybe just one last one, and I'm guessing you can't say too much on it, but related to the comments of 'very soon' when we should hear some business development commentary. Would you characterize 'very soon' as weeks, months, or quarters?
Frank Tacketton: Perfect. Helpful. And then maybe just one last one, and I'm guessing you can't say too much on it, but related to the comments of very soon when we should hear some business development commentary, would you characterize very soon as weeks, months, or quarters?
And so we have a number of transactions that were contemplating right now.
We would expect at least one of them to come to fruition, but nothing nothing is done until it's done so.
I don't want to really provide any more time frame that because I don't want to have to negotiate against ourselves with regards to time, but if I set an unrealistic expectation really it's it's only us that would bear the consequence of that.
Speaker #4: If nothing's done, Frank, until it's done. And so I would expect it to be in weeks, months, or quarters. In one of those, you know, it's just one of those things.
Dr. Randy Mills: If nothing's done, Frank, until it's done. And so I would expect it to be in weeks, months, or quarters in one of those. You know, it's just one of those things that's like it reminds me of that Billy Crystal line in Princess Bride, "You know, you rush miracles, you get lousy miracles." Well, you rush business development, you get lousy business development. And so we have a number of transactions that we're contemplating right now. We would expect at least one of them to come to fruition, but nothing's done until it's done. So I don't want to really provide any more time frame than that because I don't want to have to negotiate against ourselves with regards to the time. And if I set an unrealistic expectation, really, it's only us that would bear the consequence of that.
Perfect Fair enough thanks for taking the questions.
Thanks, Mike.
Our next question is from Ross <unk> with Cantor Fitzgerald. Please proceed.
Speaker #4: It's like it reminds me of that Billy Crystal line in The Princess Bride: you rush miracles, you get lousy miracles. Well, you rush business development, and you get lousy business development.
Hey, guys. This is Matt Parker on for Us and thanks for taking the questions I guess, just starting with gross margin good step up this quarter with cardiovascular coming back in the mix.
Speaker #4: And so we have a number of transactions that we're contemplating right now. We would expect at least one of them to come to fruition, but nothing's done until it's done.
As we think about the pops or how should we frame your ability to not just maintain but potentially expand gross margins from here.
Hey, Matt its Matt Ferguson.
Speaker #4: So, I don't want to really provide any more time for that because I don't want to have to negotiate against ourselves with regards to time.
Good to talk to you again.
Hi.
I think I got your whole question I know, it's centered around gross margin and opportunities for growth in the future and I would say absolutely opportunities across really all segments of our business to to improve gross margin going forward.
Speaker #4: And if I said an unrealistic expectation, really it's only us that would bear the consequence of that.
Speaker #6: Perfect. Fair enough. Thanks for taking the questions.
Frank Tacketton: Perfect. Fair enough. Thanks for taking the questions.
Speaker #4: Thanks, Frank.
Dr. Randy Mills: Thanks, Frank.
Certainly in the case of <unk>, we've got.
Speaker #1: Our next question is from Russ Osborne with Cantor Fitzgerald. Please proceed.
Operator: Our next question is from Russ Osburn with Kanter Fitzgerald. Please proceed.
We've got a lot of scaling that we're doing and we will see the benefits of that over time, and I think youll see youll see them.
Speaker #7: Hey guys, this is Matt Park on for us today. Thanks for taking the questions. I guess just starting with gross margin, it was good to see a step up this quarter with cardiovascular coming back in the mix.
Matt Park: Hey, guys. This is Matt Park on for Russ today. Thanks for taking the questions. I guess just starting with gross margins, I was a good step up this quarter with cardiovascular coming back in the mix. You know, as we think about the PEPFAR, how should we frame your ability to not just maintain, but potentially expand gross margins from here?
Pretty substantial and significant and it shouldn't take too long.
In the case of cardiovascular and Thats, a little more straightforward, we're now selling at a higher gross margin I mentioned that in the prepared remarks that.
Speaker #7: As we think about the path forward, how should we frame your ability to not just maintain but potentially expand gross margins from here?
That's over 80% so the more we can grow that business and I think theres a lot of opportunity there that will contribute positively to the overall gross margin.
Speaker #6: Hey, Matt, it's Matt Ferguson. Good to talk to you again. I think I got your whole question. I know it's centered around gross margin and opportunities for growth in the future.
Matt Ferguson: Hey, Matt. It's Matt Ferguson. Good to talk to you again. I think I got your whole question. I know it's centered around gross margin and opportunities for growth in the future. And I would say absolutely opportunities across really all segments of our business to improve gross margin going forward. Certainly, in the case of ELU Pro, we've got a lot of scaling.We're
And in the case of simple derm.
There are some things that we can do there to improve efficiency as well. So I think there are opportunities there as well probably a little less so than the other two but but substantial nonetheless.
Speaker #6: And I would say absolutely, there are opportunities across really all segments of our business to improve gross margin going forward. Certainly in the case of ELUPRO, we've got a lot of scaling that we're doing.
Did I did I get your entire question there or was there another one.
Yep Yep.
Speaker #6: And we will see the benefits of that over time. I think you'll see them as pretty substantial and significant, and they shouldn't take too long.
Operator: doing, and we will see the benefits of that over time. And I think they'll see, you'll see them as pretty substantial and significant, and they shouldn't take too long. In the case of cardiovascular, that's a little more straightforward. You know, we're now selling at a higher gross margin. I mentioned that in the prepared remarks that that's over 80%. So the more we can grow that business, and I think there's a lot of opportunity there, that will contribute positively to the overall gross margin. And in the case of Simple Derm, you know, there are some things that we can do there to improve efficiency as well. So I think there are opportunities there as well. Probably a little less so than the other two, but substantial nonetheless. Did I get your entire question there, or was there another?
And then I guess, just moving on to an extra 40 onex.
This more than answered already on the call, but can you kind of just walk us through what level of clinical evidence or studies on you.
Speaker #6: In the case of cardiovascular, that's a little more straightforward. You know we're now selling at a higher gross margin. I mentioned that in the prepared remarks that that's over 80%.
Do you believe.
It was needed to support FDA approval for both the base matrix as long as the drug Eluting version.
Yeah. So we are.
Speaker #6: So the more we can grow that business, and I think there's a lot of opportunity there, that will contribute positively to the overall gross margin.
We are taking both the base matrix and the antibiotic delivery matrix through the same regulatory platform that we took.
Speaker #6: And in the case of simple derm, you know there are some things that we can do there to improve efficiency as well. So I think there are opportunities there as well.
That we took early pro through.
So.
From a regulatory standpoint, we will be able to do.
Speaker #6: Probably a little less so than the other two, but substantial nonetheless. Did I get your entire question there, or was there another part?
That with the.
Exactly the same playbook.
That we that we use for <unk> with the exception of there or.
Operator: Yep, yep, that was great. And then I guess just moving on to NXT 41X. This may have been answered already on the call, but can you kind of just walk us through what level of clinical evidence or study design you believe is needed to support FDA approval for both the base matrix as well as the drug-eluting version?
When you get into surgical meshes for different things there are different.
There are different specific requirements for those.
<unk> will be following the well established.
<unk>.
Standard it's on.
From a clinical standpoint, one of the reasons that were staggering.
Operator: Yeah, so we are, we are taking both the base matrix and the antibiotic delivery matrix through the same regulatory platform that we took, that we took ELUPRO through. And so from a regulatory standpoint, we will be able to do that with, you know, exactly the same playbook that we used for ELUPRO, with the exception of there are, when you get into surgical meshes for different things, there are different, you know, there are different specific requirements for those that the, you know, that the team will be following the well-established standards on. From a clinical standpoint, one of the reasons that we're staggering the launch of the base matrix is actually so we can go and generate the clinical data, not from a regulatory standpoint, but actually from a marketing standpoint.
The launch of the base matrix is actually so we can go and generate the clinical data not from a regulatory standpoint, but actually from a marketing standpoint.
Because we.
We're looking to we're looking to win this thing.
In the short term, but actually but actually in the long term, we think 40 onex.
Has the opportunity we actually think it will be by far.
The first.
<unk> alluding matrix to market.
But we care about the matrix that it's on and so.
Sort of not to pick on overly pick on tire X, but we were not looking to just rush first with with a synthetic or a plastic.
Matrix, but here really a proven biologics matrix, which the surgeons have gotten used to and frankly expect and they should expect a great biologics matrix and then <unk>.
Operator: Because, you know, we're looking to win this thing not in the short term, but actually in the long term. We think 41X has the opportunity, we actually think we'll be by far the first antibiotic-eluting matrix to market. But we care about the matrix that it's on. And so, you know, sort of not to pick on, overly pick on TRX, but we're not looking to just rush first with, you know, with a synthetic or a plastic matrix, but here really a proven biologics matrix, which the surgeons have gotten used to and frankly expect, and they should expect a great biologics matrix, and then prove that and then add to that the drug-eluting component.
That and then add to that the drug eluting component, but from a regulatory standpoint, it's actually pretty like I say pretty straightforward and I know our regulatory team will would laugh at me for that but.
But a pretty straightforward combination.
The development pathway that involves the centre for device and Radiological health combined with the center for drugs you put all that together and you have the same pathway that we got <unk> pro through and we feel pretty confident we'll be able to do that expeditiously with 41 X.
Got it most of them are helpful.
It for me congrats on the quarter and thanks for taking the questions.
Thank you so much.
There are no further questions at this time.
Conclude today's conference you may disconnect your lines at this time and thank you for your participation.
Operator: But from a regulatory standpoint, it's actually pretty, I say pretty straightforward, and I know our regulatory team would laugh at me for that, but a pretty straightforward combination development pathway that involves the Center for Device and Radiologic Health combined with the Center for Drugs. You put all that together and you have the same pathway that we got ELUPRO through, and we feel pretty confident we'll be able to do that expeditiously with 41X.
Operator: Got it. That was super helpful. That's it for me. Congrats on the quarter and thanks for taking the questions.
Operator: Thank you so much.
Matt Ferguson: There are no further questions at this time. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.
Operator: Goodbye.