Q4 2025 NexGel Inc Earnings Call

April 21, 2026

Shareholder update conference call.

Operator: I will be your conference operator today. At this time, I would like to welcome everyone to NexGel's Shareholder Update Conference Call. I will now turn the call over to Valter Pinto, Managing Director of KCSA Strategic Communications, for introductions. Please go ahead.

I will now turn the call over to Valter Pinto, managing director of <unk> strategic Communications, where introductions. Please go ahead.

Thank you operator, good afternoon, and welcome everyone to Nextgen shareholder update conference call I'm joined today by Adam Levy Chief Executive Officer.

Valter Pinto: Thank you, operator. Good afternoon, and welcome everyone to NexGel's Shareholder Update Conference Call. I'm joined today by Adam Levy, Chief Executive Officer. Before we begin, I'd like to remind everyone that statements made during today's conference call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995, and actual results may differ materially due to a variety of risks, uncertainties, and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I refer you to our filings with the SEC, filed periodically. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless otherwise required by law. With that, it's my pleasure to turn the call over to Mr. Adam Levy. Adam, please go ahead.

Before we begin I'd like to remind everyone that statements made during today's conference call maybe deemed forward looking statements within the meaning of the safe Harbor of the private Securities Litigation Reform Act of 1095, and actual results may differ materially due to a variety of risks uncertainties and other factors for a detailed discussion of some of the ongoing risks and uncertainties in the company's business.

For you to our filings with.

With the SEC filed periodically company disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise unless otherwise required by law without my pleasure to turn the call over to Mr. Adam Levy Adam. Please go ahead.

Thank you Walter and thank you everyone for joining.

Valter Pinto: With that, it's my pleasure to turn the call over to Mr. Adam Levy. Adam, please go ahead.

On today's call I will discuss our announcement this morning regarding the closing of our transaction to acquire cellular therapies degenerative wound segment.

Adam Levy: Thank you, Valter, and thank you everyone for joining. On today's call, I will discuss our announcement this morning regarding the closing of our transaction to acquire Celularity's degenerative wound segment. This is a transformational step forward for our company, marking our evolution into a more scalable, diversified medical technology business, tripling our revenue run rate and immediately contributing to profitability. To close on the transaction, we successfully secured capital on more favorable terms led by Sequence LifeScience, a strategic partner with deep expertise in regenerative medicine, manufacturing, development, and commercialization. Their lead investment of $5.5 million not only strengthened the financing structure of the transaction, but also aligns us with a partner that enhances our capabilities across all of the aforementioned verticals. The financing was done through convertible notes at a $0.60 conversion price and 50% warrant coverage with a strike price of $0.80.

This is a transformational step forward for our company, marking our evolution into a more scalable diversified medical technology business.

Tripling, our revenue run rate and immediately contributing to profitability.

To close on the transaction, we successfully secured capital on more favorable terms led by sequence life science, a strategic partner with deep expertise in regenerative medicine manufacturing development and commercialization.

They are lead investment of $5 5 million not only strengthen the financing structure of the transaction, but also aligns us with a partner that enhances our capabilities across all of the aforementioned verticals.

The financing was done through convertible notes at a 60% conversion price and 50% warrant coverage with a strike price of 80.

We are excited to announce the formation of the New Division <unk>.

<unk> surgical a dedicated division focused on advanced biomaterials for tendon repair soft tissue reconstruction.

Adam Levy: We are excited to announce the formation of a new division, BioNX Surgical, a dedicated division focused on advanced biomaterials for tendon repair, soft tissue reconstruction, bone regeneration, and of course, wound care. The acquired portfolio includes 6 established regenerative biomaterial products spanning these key areas, positioning us squarely within one of the fastest-growing segments of healthcare. These are not early-stage assets. They are commercial-stage products with more than a decade of clinical use, demonstrated real-world utility, and existing reimbursement pathways. These products are already approved in approximately 500 hospitals and represent a large opportunity for BioNX in non-orthopedic surgical specialties. In addition to these commercialized products, there are currently three existing 510(k) devices in our pipeline. These three products have $4.6 million in paid-in capital and are scheduled for 2026, 2027, and 2028. Beyond the products themselves, we are also gaining an experienced commercial and scientific team.

On regeneration and of course wound care.

The acquired portfolio includes six established regenerative biomaterial products spanning these key areas positioning are squarely within one of the fastest growing segments of health care.

These are not early stage assets. They are a commercial stage products with more than a decade of clinical use demonstrated real world utility an existing reimbursement pathway reimbursement pathways.

These products are already approved in approximately 500 hospitals and represent a large opportunity for bionics and non with the <unk> surgical specialties.

In addition to these commercialized products. There are currently three existing 500 10-K devices in our pipeline.

These three products have $4 $6 million in paid in capital and are scheduled for 2026 2027 and 2028.

Beyond the products themselves. We are also gaining an experienced commercial and scientific team. This is an important aspect of the trends.

Action is it meaningfully expands our internal capabilities and strengthens our ability to develop and market next gels, one medical devices as well.

Adam Levy: This is an important aspect of the transaction as it meaningfully expands our internal capabilities and strengthens our ability to develop and market NexGel's own medical devices as well. This transaction will be transformative not only from a strategic standpoint, but also financially. On a pro forma basis, we expect it to approximately triple our annual revenue to roughly $35 million and be immediately accretive to profitability upon closing. The strategic partnership with Sequence LifeScience is incredibly important to NexGel. In addition to providing the crucial capital for us to close on this transaction, Sequence LifeScience brings an enormous wealth of expertise and skills. Sequence LifeScience will act as backup manufacturer for the existing products, help us develop new products, and aid with distribution channels of their own to further expand our reach. I cannot think of a better partner for the journey we are about to take.

This transaction will be transformative not only from a strategic standpoint, but also financially on a pro forma basis, we expect it to approximately triple our annual revenue to roughly $35 million and the.

Ideally accretive to profitability upon closing.

The strategic partnership with sequence life science is incredibly important to nexgen.

In addition to providing the crucial capital for us to close on this transaction sequence brings an enormous wealth of expertise and skills.

Sequence will act as backup manufacturer for the existing products help us develop new products and aid with distribution channels of their own to further expand our reach.

I cannot think of a better partner for the journey, we are about to take.

Taken together the acquisition and our strategic partnership with sequence represents a step change in Nextgen trajectory.

Adam Levy: Taken together, the acquisition and our strategic partnership with Sequence represent a step change in NexGel's trajectory. We are combining a proven hydrogel platform with a portfolio of commercial regenerative products supported by a strategic manufacturing partner occurring on favorable financing terms. This positions us to accelerate product development, broaden our commercial footprint, and pursue new opportunities within the regenerative medicine landscape. Our focus is now on execution and successfully integrating these assets and driving commercial growth. We will continue to build a platform that can generate sustained long-term growth and profitability. With that, I'd like to open the call for questions. Operator?

We are combining a proven hydrogel platform with a portfolio of commercial regenerative products supported by our strategic manufacturing partner occurring occurring on favorable financing terms.

This positions us to accelerate product development broaden our commercial footprint and pursue new opportunities within the regenerative medicine landscape.

Our focus is now on execution and successfully integrating these assets and driving commercial growth.

We will continue to build a platform that can generate sustained long term growth and profitability.

With that I'd like to open the call for questions operator.

Thank you if you'd like to ask a question press star one on your keypad.

Operator: We'll take a question from Nazibur Rahman of Maxim Group. Your line is open. Please go ahead.

The queue at any time press star two.

Again that is star one to ask a question and we'll pause for just a moment to allow everyone a chance to join the queue.

Okay.

Thank you we'll take a question from NAS Rahman of Maxim Group. Your line is open. Please go ahead.

Operator: We'll take a question from Nazibur Rahman of Maxim Group. Your line is open. Please go ahead.

Hi, everyone. Congrats on the transaction and thanks for taking my questions I actually have a few.

First of all to clarify the structure.

Nazibur Rahman: Hi, everyone. Congrats on the transaction, and thanks for taking my questions. I actually have a few. First, I want to clarify the structure of the deal. You received $5.5 million from your strategic partner, but it looks like you have to pay $8.3 million in total. Was the entire $8.3 million that includes the $5.5 million or is it $5.5 million directly in cash and then the remaining being a convertible? Could you clarify the transaction? Also, you also gave a $5 million note to Celularity, right? Could you clarify all the terms of transaction? I just want to be clear on this.

The deal. So you received $5 5 million from.

From a strategic partner, but it looks like you have to pay $8 three in total so was entire 8.3.

That includes the $5 five or is it $5 five directly in cash and then the remaining being a convert.

I just wanted could you clarify the transaction also like.

You also gave a $5 million.

Note to sell Liberty right, because you clarify the all the terms of the transaction I would want to be clear on this.

Sure so.

Good to hear from you.

There was no note so basically.

Adam Levy: Sure. Good to hear from you, Naz. There was no note. Basically, and it's a little confusing, but we paid $5.3 million at closing to Celularity, and we assumed, and they're going to pay out the $2.9 million that is owed to the sales reps in back commissions. Those sales reps are then reinvesting some of that back into NexGel. Of the $5 million convertible note, we also gave Celularity $5 million of this convertible note. They then gave $2.5 million or half of that note to Sequence to settle a preexisting debt that they had with Sequence.

It's a little confusing, but we paid $5 3 million at closing too.

<unk>.

Cellular therapy, and we assumed and theyre going to pay out the $2 9 million.

Two that is owed to the sales reps and back commissions. Those sales reps are then reinvesting some of that back into Nextgen.

Of the $5 million convertible note. We also Gabe cellular already a $5 million of this convertible note.

They then gave $2 5 million or half of that node to sequence to settle a preexisting debt that they had with sequence.

<unk>, then wrote a check for $3 million in cash into this deal, thereby bringing their total investment.

Adam Levy: Sequence LifeScience then wrote a check for $3 million in cash into this deal, thereby bringing their total investment between the existing debt, the compensation they took for their debt, as well as the cash they wrote directly into NexGel to $5.5 million. It's a little bit, it's kind of like one of those four-way baseball trades. I hope that explains it for you.

<unk> the.

That the existing debt.

Compensation, they took for their debt as well as the cash they wrote directly into next gel to $5 5 million.

<unk> kind of like one of those four way baseball trades, but I hope that explains for Ya.

Yeah.

Got it okay.

So no.

What are the terms of the no one has it too.

Nazibur Rahman: Got it. Okay. The note, what are the terms of the note? When is it due? What is the maturity on that note? Interest rate, I'm sorry.

And on what is the maturity and interest rate I'm sorry.

Yes. So the note is an 18 months note.

And it's a convertible note, obviously and it matures in 18 months pays a 10% coupon.

Adam Levy: Yeah. The note is an 18-month note, and it's a convertible note, obviously, and it matures in 18 months, pays a 10% coupon.

Got it okay. So now that you have the transaction closed how long do you think it will take you to I guess integrate.

Nazibur Rahman: Got it. Okay. Now that you have the transaction closed, how long do you think it will take you to, I guess, integrate the assets into NexGel? Well, you're saying it'll be immediately accretive, but I guess, are you expecting any initial restructuring costs or anything along those lines?

Assets into next Chao and.

It'll be immune accretive, but I guess like how are you expecting like any industrial restructuring costs or anything along those lines.

No. What's nice about this transaction is that this was always a separate segment with its own people within cellular already in fact, they reported as a separate segment. So we took the key people that we wanted from that segment.

Adam Levy: No. What's nice about this transaction is that this was always a separate segment with its own people within Celularity. In fact, they reported as a separate segment. We took the key people that we wanted from that segment. We sublet some space in the actual same building that Celularity is in. Most of the operations kind of move over seamlessly. What there also is to integrate, however, is some of the synergies. I've been asked by, including yourself, many times, like, "Well, why don't you ever sell SilverSeal or these other medical devices? Why aren't you developing them?" Because they require, really, a medical sales force, which we never had.

We sublet some space in the actual same building with cellular therapies in so most of the operations kind of move overseeing Leslie.

There also is to integrate however is some of the synergies.

I've been asked by including yourself, many times like well why don't you ever sell silversea or these other medical devices why aren't you developing them because they require really a medical sales force, which we never had so we're looking forward to because we will now have reached through all the independent sales reps that we're planning on putting on and the ones that are returning to us.

Adam Levy: We're looking forward to, because we will now have reach through all the independent sales reps that we're planning on putting on, and the ones that are returning to us, to be able to not only fully commercialize these existing products, but the new products in the pipeline, as well as some of the NexGel products where appropriate within hospitals.

To be able to not only.

Fully commercialized these existing products, but the new products in the pipeline as well as some of the nextel products where appropriate within hospitals.

Got it and I guess on that point.

The integration of these new products.

Nazibur Rahman: Got it. Adam, I guess on that point, with the integration of these new products, what do you think happens to the company's gross margins for 2026? And what do you think EBITDA could potentially be in 2026?

Do you think happens to the company's gross margins for 2026, and what do you think EBITDA could potentially be in 2026.

So in the case.

This company doing the same business that they did last year. Our models. If we did $22 million to $23 million shows about 4 million to $4 5 million of EBITDA.

Adam Levy: In the case of this company doing the same business that they did last year, our models, if we did $22 to 23 million, shows about $4 million up to $4.5 million of EBITDA, assuming that's the number we hit. We were hoping to do better than that. The gross margins are, and I know you and I have had many conversations about NexGel's gross margins being complicated because you have both the medical device and the consumer products and how they skew each other. There's a little bit of that within Celularity. They really have three buckets of margins. There's the lower margin with higher cost of goods, distributor model, where there's no commissions paid.

Assuming that's the number we hit we were hoping to do better than that.

Gross margins are and I know you and I have had many conversations about nextgen gross margins being complicated because you have both the medical device in the consumer products and have the SKU each other.

There's a little bit of that within cellular already so they really have three buckets of margins. There is the lower the lower margin with higher cost of goods distributor model, where there's no commissions paid then there is the wound care area, which is only about 15% 20% of the business where the commissions are modest but there is also a little more margin, but still.

Adam Levy: There's the wound care area, which is only about 15% to 20% of the business, where the commissions are modest, but there's also a little more margin, but still less. There's surgical, where the margins are exceptionally good, but the sales commissions can go as high as 30% to 35% to almost 40% sometimes. When you talk about the blend, we expect to get a contribution margin of roughly 52%, but it's made up of three different components.

And then there are surgical where the margins are exceptionally good but the sales commissions can go as high as 30% to 35 to almost 40% sometimes so when you talk about the blend we expect to get a contribution margin of roughly 52% but.

But it's made up of three different components.

That was helpful. Okay. So Adam we're also basically passed one Q could you potentially provide some color on how do you think <unk> kind of develop or looked like for nexgen like Fort you. Obviously came in relatively light blow your guidance.

Nazibur Rahman: Got it. That was all folks. Okay. Adam, we're also basically past Q1. Could you potentially provide some color on how do you think Q1's going to develop or look like for NexGel? Q4 obviously came in relatively light below your guidance. Just curious if you could provide some context on what Q1 is going to look like.

Curious if you can provide some context on what once you is going to look like.

Yes, Q4 was surprisingly light for us some of the new products didn't really do what we thought they were going to do.

Adam Levy: Yeah. Q4 was surprisingly light for us. Some of the new products didn't really do what we thought they were going to do. Silly George had sort of a step back quarter, but we're seeing a nice recovery in Q1. We're not going to see a drop off, especially in consumer in Q1. I don't want to get too detailed because we obviously haven't reported it yet. We're seeing a return to normality in Q1. Q4 seemed to be on the consumer product side, a little bit of anomaly for us.

So George had sort of a step back quarter, but we're seeing a nice recovery in Q1.

We're not going to see a drop off especially in consumer in Q1.

Don't want to get too detailed because we obviously haven't reported it yet, but we're seeing a return to normality in Q1 Q4 seemed to be on the consumer product side, a little bit of anomaly for us.

Got it thanks for taking my questions.

Sure.

Thank you.

Thank you and once again, if you would like to ask a question. Please press star and then one on your telephone keypad now.

Nazibur Rahman: Got it. Thanks for taking my questions.

Adam Levy: Sure. Thank you.

Operator: Thank you. Once again, if you would like to ask a question, please press star and then one on your telephone keypad now. We'll move on to Mike Andrews. Your line is open. Please go ahead. Hey, Mr. Andrews, you may want to check your mute switch. Your line is open. Please go ahead.

We'll move on to Mike Andrews. Your line is open. Please go ahead.

And Mr. <unk>, you may want to check your mute switch your line is open.

Please go ahead.

Yeah.

Sorry, guys Adam Good afternoon, you mentioned in the press release.

Ongoing development of products.

Mike Andrews: Sorry, guys. Adam, good afternoon. You mentioned in the press release, the ongoing development of products as this partnership matures. Where does NexGelRx play in the dynamics of this deal?

[Analyst 1]: Sorry, guys. Adam, good afternoon. You mentioned in the press release, the ongoing development of products as this partnership matures. Where does NexGelRx play in the dynamics of this deal?

This partnership.

Partnership matures, where does next gel or ex play in the dynamics of this deal.

It doesn't nextgen <unk> Rx is specifically the drug delivery program.

It was spun out to be developed separately, which includes our <unk> program. So that is a separate spin out that next shell owns 20% of but has really very little to do with this transaction is not affected at all by this transaction.

Adam Levy: It doesn't. NexGelRx is specifically the drug delivery program that was spun out to be developed separately, which includes our Promelas program. That is a separate spin-out that NexGel owns 20% of, but has really very little to do with this transaction. It's not affected at all by this transaction.

Got it thank you.

Pleasure.

Thank you we'll move next to Brent Derrickson. Your line is open. Please go ahead.

Mike Andrews: Got it. Thank you.

[Analyst 1]: Got it. Thank you.

Adam Levy: Pleasure.

Operator: Thank you. We'll move next to Brett Derekson. Your line is open. Please go ahead.

Hey, guys congratulations on your on your purchase.

Just a quick question if you could if you could talk to the.

Brett Derekson: Hi, guys. Congratulations on your purchase. Just a quick question. If you could talk to what the dilutive outstanding shares is going to look like now, and then also when the warrants and the other items come into the strike price, can you talk a little bit about that? Thank you.

[Analyst 2]: Hi, guys. Congratulations on your purchase. Just a quick question. If you could talk to what the dilutive outstanding shares is going to look like now, and then also when the warrants and the other items come into the strike price, can you talk a little bit about that? Thank you.

What was the dilutive outstanding shares is going to look like now and then also.

Yeah, you know, Q4 was surprisingly light for us. Uh, some of the new products didn't really do what we thought they were going to do. Um, Silly George had sort of a step-back quarter, but we're seeing a nice recovery in Q1. Um, we're not going to see a drop-off, especially in consumer, in Q1. Um, and I don't want to get too detailed because we obviously haven't reported it yet. But, um, we're seeing a return to normality in Q1. Q4 seemed to be, on the consumer product side, a little bit of an anomaly for us.

When the warrants and the other items come into the strike price can you talk a little bit about that thank you.

Got it. Thanks for taking my questions.

Sure.

Thank you.

Sure. So if you take basically the conversion price.

Thank you. And once again, if you would like to ask a question, please press star and then 1 on your telephone keypad now.

60.

Adam Levy: Sure. If you take basically the conversion price of $0.60 and you also take 50% warrant coverage and assume that all the warrants are going to be exercised, you come up with a formula that for about every $1 million, there's 2.4 million shares. The deal will probably, between the purchase price and a little bit of working capital, be somewhere in the $12 to $14 million range total raised. If you do the math, you're somewhere in the 30 million share area.

And you also take 50% warrant coverage and assume that all the warrants are going to be exercised you come up with a formula that for about every million dollars Theres two 4 million shares.

We'll move on to Mike Andrews. Your line is open. Please go ahead.

The deal will probably between the purchase price.

And Mr. Andrews, you may want to check your mute switch. Your line is open.

And a little bit of working capital would be somewhere in the $12 million to $14 million range total raised so if you do the math.

Please go ahead.

Somewhere in the 30 million share area.

Sorry, guys. Adam, good afternoon. You mentioned in the press release, uh, the ongoing development of products.

Okay.

Hi, Thank you I appreciate it we'll give more details as the rounds close that will.

As this, uh, partnership matures, where does NextGel RX play in, uh, the dynamics of this deal?

Brett Derekson: Okay. Thank you. I appreciate it.

[Analyst 2]: Okay. Thank you. I appreciate it.

Our filings will certainly our 8-K and everything will certainly lay that out in great detail as soon as we know what the exact numbers are.

Adam Levy: We'll get more details as the rounds close. Our filings, our 8-Ks and everything, will certainly lay that out in great detail as soon as we know what the exact numbers are.

Great. Thank you very much congratulations sure. Thank you.

Thank you and once again, if you would like to ask a question. Please press star one on your telephone keypad now.

Brett Derekson: Sounds great. Thank you very much. Congratulations.

[Analyst 2]: Sounds great. Thank you very much. Congratulations.

Adam Levy: Sure. Thank you.

It doesn't. Uh, next gel RX is specifically the drug delivery program. Um, that was spun out to be developed uh, separately, uh, which includes our our Primal last program. Um, so that is a separate spin out that next Shell owns, uh, 20% of, but has really very little to do with this transaction. It's not affected At All by this transaction.

Operator: Thank you. Once again, if you would like to ask a question, please press star one on your telephone keypad now. We'll move on to David Blocker. Your line is open. Please go ahead.

Got it. Thank you.

Move on to David Blocker. Your line is open. Please go ahead.

Pleasure. Thank

Hey, Adam.

Got a quick question.

You've modeled like what do you expect the revenue to be like two or three years out.

Thank you. We'll move next to Brent Derekson. Your line is open. Please go ahead.

David Blocker: Hey, Adam. Got a quick question. If you've modeled, what do you expect the revenue to be two, three years out?

[Analyst 3]: Hey, Adam. Got a quick question. If you've modeled, what do you expect the revenue to be two, three years out?

So this was a business that had scaled all the way up to $50 million as recently as 2024.

Adam Levy: This was a business that had scaled all the way up to $50 million as recently as 2024. Celularity ran into some financial challenges, and in 2025 did not pay their sales reps. That's why you see in the deal that one of the things that had to come out of proceeds immediately was getting those sales reps back and reengaged. As I said in my opening, these products are approved in over 500 hospitals, and there was nobody walking into them. It's our job to sort of reinvigorate that, get the sales force working again. We've identified and we'll soon be hiring a new national sales manager. We hope to get back to that level and beyond. Especially some of the new products, the product that we currently call Project SPARK, which is a tendon wrap.

Cellular already ran into some financial challenges.

And in 2025 did not pay their sales reps and that's why you see in the deal that one of the things that had to come out of proceeds immediately with getting those sales reps back and re engaged.

Hi, guys. Congratulations on your purchase. Uh, just a quick question. If you could, if you could talk to the, um, what the dilutive outstanding shares is going to look like now, and then also, uh, when the warrants and any other items come in to, uh, the strike price. Can you talk a little bit about that? Thank you.

As I said in the in my opening.

These products are approved in over 500 hospitals, and there was nobody walking into them.

It's our job to sort of reinvigorate that get the sales force working again, we've identified and will soon be hiring a new national sales manager.

We hope to get back to that level and beyond.

Especially in some of the new products the product that we currently call project spark, which is a tendon ramp.

It will be the first FDA 500 10-K.

Sure. So if you take, um, basically, uh, the conversion price of, of, um, $0.60 and you also take 50% warrant coverage and assume that all the warrants are going to be exercised, you come up with a formula that for about every $1 million, there's 2.4 million shares. Um, the deal will probably, between the purchase price, um, and a little bit of working capital, be somewhere in the $12 to $14 million range, total raised. So if you do the math, um, you're somewhere in the 30 million share area.

Constructed out of human tissue, it's made it central material. The reason for central material has not been used previously.

Adam Levy: It will be the first FDA 510(k) constructed out of human tissue. It's made of placental material. The reason placental material has not been used previously extensively for wraps like this is because of the tensile strength. This has about the highest tensile strength on the market. It's thin as a piece of paper. Of course, because it's made of placental material, has tremendous anti-inflammatory properties. We think that could be a game changer. We think that product could potentially be a $40 to $70 million product on its own. That's potential. We're very excited about the new products, and we think we can get back to close to what they were doing in 2024, hopefully in that two-year span that you're talking about.

Okay.

Extensively for apps like this is because of the tensile strength. This has brought the highest tensile strength on the market. It's been as a piece of paper and of course, because it's made up of central material has tremendous anti inflammatory properties. So we think that could be a game changer, we think that product could potentially be a $40 million to $70 million product on its own.

All right, thank you. I appreciate it. We'll get more details as the rounds close. It will, you know, the—the, our, um, our filings will certainly—our 8-K and everything—will certainly lay that out in great detail as soon as we know what the exact numbers are.

Sounds great. Thank you very much. Congratulations, sure. Thank you.

Potential.

But we have we're very excited about the new products and we think we can get back to close to what they were doing in 2024.

Thank you. And once again, if you would like to ask a question, please press star 1 on your telephone keypad now.

We'll move on to David Blocker. Your line is open, please go ahead.

Hopefully in that two.

Two year span that youre talking about.

Okay. Thank you.

Yeah, um, got a quick question. If you modeled, like, what do you expect the revenue to be, like, two, three years out?

Thank you and once again that is star one if you would like to ask a question one moment, while we queue.

David Blocker: Okay. Thank you.

[Analyst 3]: Okay. Thank you.

Operator: Thank you. Once again, that is star one if you would like to ask a question. One moment while we queue. It does appear that we have no further questions in queue. This does conclude today's question and answer. Actually, we do have a question. We'll take that from Vess Mihailov. Your line is open. Please go ahead.

And it does appear that we have no further questions in queue.

This does conclude today's question and answer as actually we do have a question, we'll take that from best buy Hayloft. Your line is open. Please go ahead.

Thank you very much hi, Adam this is Matt.

Okay got it too.

I wanted to ask you about.

Vess Mihailov: Thank you very much. Hi, Adam. This is Vess.

[Analyst 4]: Thank you very much. Hi, Adam. This is Vess.

The intellectual property acquired in this transaction it was a nice job going to be bank any royalties to anybody.

Adam Levy: Hey, Vess.

Vess Mihailov: Hey. I wanted to ask you about the intellectual property being acquired in this transaction. Is NexGel going to be paying any royalties to anybody on these products going forward?

[Analyst 4]: Hey. I wanted to ask you about the intellectual property being acquired in this transaction. Is NexGel going to be paying any royalties to anybody on these products going forward?

These products going forward.

There will be only royalty is a great question. The only royalties are because the new products that we're getting in the pipeline that have the $4 $6 million of paid in capital we have a 5% royalty to sell Cellulosic D. On the spark project, we have a 3% royalty on the <unk>.

Adam Levy: It's a great question. The only royalties are because the new products that we're getting in the pipeline that have the $4.6 million of paid-in capital, we have a 5% royalty to Celularity on the Spark project. We have a 3% royalty on the Orchid project, and a 1% royalty on the Fuse project. That's just sort of a, "Hey, you guys have a lot of money tied up in this." They obviously have the most money tied up in the one that's coming out this year, so that's got a little bit higher royalty. When you look at the sale price of these products, and the margins on these products being surgical products, that's a very easy to handle low single-digit royalty. That's it. Other than that, there's no other royalties.

Orchid project project, and a 1% royalty on the <unk> project and Thats, just sort of a hey, you guys have a lot of money tied up in this they are obviously the most money tied up in the one that's coming out this year. So that's got a little bit higher royalty, but when you look at the sale price of these products and the margins on these products being surgical products, that's a very easy to handle single.

<unk> low single digit royalty.

And that's it other than that there's no other royalties.

Who do they sunset at any point or.

For the life of the.

The royalties, yes, yes, they sunset I think after seven years I want to say.

Vess Mihailov: Do they sunset at any point, or for the life of the product?

[Analyst 4]: Do they sunset at any point, or for the life of the product?

Adam Levy: The royalties?

Okay.

I wanted to ask you about when.

Vess Mihailov: Yes.

[Analyst 4]: Yes.

Adam Levy: Yeah, they sunset I think after seven years, I want to say.

When you say that.

I understand that these parts will be accretive to the.

Vess Mihailov: Okay. Now, I wanted to ask you about when you say that. I understand that these products will be accretive to the corporate finances. In previous conference calls, I think you mentioned that it will make the company profitable at the operating line. I'm asking the following question. Under GAAP financing, let's go into Q2, the first quarter, fully integrated, fully reporting under the NexGel brand. Quarter ending in September. Under safe harbor and everything else, will this be a profitable company on an operating margin basis or at least an EBITDA basis overall, not just this division, but including the existing business of NexGel when you combine them together? What should we expect for, let's say, the Q3, the one ending in September?

[Analyst 4]: Okay. Now, I wanted to ask you about when you say that. I understand that these products will be accretive to the corporate finances. In previous conference calls, I think you mentioned that it will make the company profitable at the operating line. I'm asking the following question. Under GAAP financing, let's go into Q2, the first quarter, fully integrated, fully reporting under the NexGel brand. Quarter ending in September. Under safe harbor and everything else, will this be a profitable company on an operating margin basis or at least an EBITDA basis overall, not just this division, but including the existing business of NexGel when you combine them together? What should we expect for, let's say, the Q3, the one ending in September?

Corporate finance, but in previous a golfer discuss.

I think you mentioned that it.

It will make the company profitable so at the operating line. So I think that the follow on question.

Under GAAP financing.

Sure.

Let's let's go into Q2, the first quarter fully integrated fully reporting under.

The next Joe brand.

Our quarter ending in September.

Under Safe Harbor, and everything else will this be.

A profitable company on a operating margin basis or at least an EBITDA basis overall largest this division but.

Including the existing business if a next Joe when you combine them together what should we expect for let's say.

The third quarter, the one in against them right. So our third quarter Youre talking about the second quarter, which we own these products.

Correct I was talking about the quarter that starts July one.

Adam Levy: Right. Our Q3, you're talking about Q2, which we own these products.

Until September.

At September <unk>, our third quarter, Yes, the company the company will be on an EBITA basis for certain will be profitable remember. This is a seasonal Scott took me by surprise as well this is a seasonal product line.

Vess Mihailov: Well-

[Analyst 4]: Well-

Adam Levy: Rex, that's

Vess Mihailov: I'm talking about the quarter that starts 1 July and ends on 30 September.

[Analyst 4]: I'm talking about the quarter that starts 1 July and ends on 30 September.

Adam Levy: Got it.

Vess Mihailov: That calendar.

[Analyst 4]: That calendar.

Adam Levy: Yeah. Our third quarter. Yes, the company on an EBITDA basis for certain will be profitable. Remember, this is a seasonal, and this kind of took me by surprise as well. This is a seasonal product line. Q1 is generally the weakest. It gets a little stronger in Q2, and Q3, and Q4 is sort of where you kind of make hay, and Q4 particularly is the strongest product. That's because of these new high reimbursement insurance plans. A lot of people wait for these procedures until the end of the year when the reimbursement is better. Q4, to give you an example, in many of the historical years, Q4 was as big as the rest of the year put together.

Though the only royalty is a great question. Uh the only royalties are because the new products that we're getting in the pipeline that have the 4.6 million dollars of paid in capital. We have a 5% royalty to sell cellularity on the spark project. We have a 3% royalty on the um Orchid project project and a 1% royalty on the fuse project and that's just sort of a. Hey, you guys have a lot of money tied up in this? They obviously the most money tied up in the 1 that's coming out this year. So that's got a little bit higher royalty. Um, but when you look at the sale price of these products that that's that's and the margins on these products, being surgical products. That's a, a very easy to handle a single digit low, single digit royalty.

And that's it. Other than that, there are no other royalties.

Q1 is generally the weakest it gets a little stronger in Q2, and Q3 and Q4 is sort of where you.

Do they sunset at any point, or—

for the life of the

Product the, the, uh, the royalties.

And kind of make hay and Q4, particularly as the strongest product and thats because of the these new high reimbursement insurance plans a lot of people wait for these procedures until the end of the year when that when the reimbursement is better so Q4.

Yes. Yeah, the sunset—I think after seven years, I want to say.

To give you. An example in many of the historical years Q4 was as big as the rest of the year put together.

Hum.

But on a rolling.

12 month basis, the company should be both EBITDA and operating EBITDA profitable okay.

Vess Mihailov: On a rolling 12-month basis, companies should be both EBITDA and operating mar-

[Analyst 4]: On a rolling 12-month basis, companies should be both EBITDA and operating mar-

Yes, and Thats a great partner.

Okay that was going to embellish on that but I.

Adam Levy: Yes.

Vess Mihailov: At least EBITDA profitable. Okay.

[Analyst 4]: At least EBITDA profitable. Okay.

I was just going to say that's really one of the things that made this kind of one of the things amongst others that made this an attractive proposition for US is that look next Joe has made some acquisitions and each of those acquisitions from CG labs too.

Adam Levy: So-

Vess Mihailov: And last-

[Analyst 4]: And last-

Adam Levy: Oh, go ahead. I was gonna embellish on that, but go ahead.

Vess Mihailov: Sure.

[Analyst 4]: Sure.

Adam Levy: I was just gonna say, that's really one of the things, among others, that made this an attractive proposition for us is that, look, NexGel's made some acquisitions, and each of those acquisitions, from C.G. Laboratories Inc. to Silly George to Kenkoderm, each one is profitable in and of itself. The plant is still underutilized, and the public company expenses are still considerable. What we really lacked was the ability to scale, because this is a very long onboarding process. We talk about NexGel's medical device business. This is a nice way for us to accelerate and get enough revenue and volume and scale so that we can immediately become profitable. That was a big motivator in why we did this.

Certainly George who can't go derm, each one is profitable in and of its own but the plant is still underutilized and the public company expenses are still considerable so what we really lacked was the ability to scale. Because this is a very long onboarding process. We can talk about nextgen <unk> medical device business. So this is a nice way for us to accelerate in <unk>.

Enough.

Revenue and volume and scale. So that we can immediately become profitable and that was a big motivator and why we did this.

Okay.

Next question.

I'm sorry.

Arthur for you, but I think there is a likelihood.

Vess Mihailov: Okay. Next question, I'm sorry, but there are quite a few, but I think they're enlightening. When you speak about contribution margin, I get-

[Analyst 4]: Okay. Next question, I'm sorry, but there are quite a few, but I think they're enlightening. When you speak about contribution margin, I get-

You speak about contribution margin I get a little confused because from a contribution margin from the my accounting days, where.

Adam Levy: Yes

Vess Mihailov: a little confused. Because for me, contribution margin from my accounting days were delta in operating margin under GAAP. When you say 52% contribution margin, could you translate that for us, for me? What is the delta or the contribution margin at the operating line under GAAP or at the EBITDA line? 52 is obviously very high for an EBITDA, so obviously that's not what you mean. If you translate what you said, it was 52 percentage points.

[Analyst 4]: a little confused. Because for me, contribution margin from my accounting days were delta in operating margin under GAAP. When you say 52% contribution margin, could you translate that for us, for me? What is the delta or the contribution margin at the operating line under GAAP or at the EBITDA line? 52 is obviously very high for an EBITDA, so obviously that's not what you mean. If you translate what you said, it was 52 percentage points.

Delta in operating margin.

Under GAAP and so when you say, 52% contribution margin.

Could you translate that.

For Us for me what is the delta or the contribution margin at the operating line other gap.

The EBITA line. So so you know 52 is obviously a very high for an EBITDA. So obviously, that's not what you mean, but if you translate what you said it was 52 percentage points sure into insurance for sure and we kind of we kind of get that from the we did the same thing on the commercial products. So really all we what I just called.

Adam Levy: Sure

Vess Mihailov: ... into-

[Analyst 4]: ... into-

Adam Levy: Sure. We do the same thing in the commercial products. Really all we, what I just called, and I'll clarify, contribution margin is essentially cost of goods plus commissions, sales commissions, and direct sales costs. It does not include any of the fixed overhead. That's what I consider is being contributed to cover the fixed overhead, which gives you a good way to analyze things, right? We know we have 52% margin, and we know our fixed cost, payroll, rent, all of those things are X. We have to do some multiple of revenue to get to where we cover that, and after that, we become profitable. That's what I mean when I say contribution margin.

Ill clarify contribution margin is essentially cost of goods.

Plus commissions and sales commissions and sales direct sales costs.

It does not include any of the fixed overhead that is what I consider as being contributed to cover the fixed overhead which gives you a good way to analyze things right. We know we do we have 52% margin and we know our fixed cost payroll rent all of those things are X. We have to do some multiple of revenue to get to where we cover that and after that we become.

Some profitable so that's what I mean, when I say contribution margin started to Cogs cost of goods sold plus sales commissions and then yes, what was basically goes into the corporate overhead.

Vess Mihailov: It's COGS, cost of goods sold, plus sales commissions. Then

[Analyst 4]: It's COGS, cost of goods sold, plus sales commissions. Then

And so all of the other things rent salespeople.

Adam Levy: Yes

Vess Mihailov: What basically goes into corporate overhead and before?

[Analyst 4]: What basically goes into corporate overhead and before?

We have a fixed overhead that's pretty easy to quantify.

Adam Levy: All of the other things, rent, sales people. We have a fixed overhead that's pretty easy to quantify. It's going to be probably around the $6 to 6.5 million range. In that, we also have budgets for things like demonstrations and travel, and it covers everything else that's below the line in the SG&A line. The contribution margin really is the gross profit that goes into the SG&A line.

And so it's going to be probably around six to $6 $5 million range them in that we also have budgets for things like demonstrations and travel and it covers everything else that's below the line and the SG&A line. So the contribution margin really is the gross profit that goes into the SG&A line.

Okay, Okay and the last question here.

So going forward.

Vess Mihailov: Okay. Last question here. Going forward, will NexGel basically have an R&D department for this division, such that it develops the new products? When you say we're developing new products, is NexGel developing them and retaining the intellectual property, or is somebody else doing the R&D and then there is some sort of an arrangement? Who's going to get basically the margin from any future, all the margins from any future R&D being performed with these product lines?

[Analyst 4]: Okay. Last question here. Going forward, will NexGel basically have an R&D department for this division, such that it develops the new products? When you say we're developing new products, is NexGel developing them and retaining the intellectual property, or is somebody else doing the R&D and then there is some sort of an arrangement? Who's going to get basically the margin from any future, all the margins from any future R&D being performed with these product lines?

Next Joe basically have an R&D department for this division.

Such that Oh, it develops new products. When you say, we're developing new products is less gel developing them and they were sending to them.

Intellectual property or is somebody else doing the R&D and then there was some sort of an arrangement so who's who's going to get basically the margin from the.

Any future.

All the all the margin for many future.

R&D being performed through with these product lines.

So the short answer is next Joe well, but it's going to be done in a series of different ways. Okay. So first of all this is a great opportunity for Nexgen will to move forward with some programs, we kind of put to the side like.

Adam Levy: The short answer is NexGel will, but it's going to be done in a series of different ways. Okay? First of all, this is a great opportunity for NexGel to move forward with some programs we kind of put to the side, like our drape programs and NEXDerm, things that we really said, we can't really make these right now because the only real opportunity for us is to hope we can sell them to somebody else, and we have other things to do right now. Now we have a sales force, so we can begin to continue to develop those because there's not a lot of cost needed for those. Number two is the continued development of the programs that are already in Celularity, and those are done within our offices. The space that we took has its own development lab.

Draped programs and next term things that we really said, we can't really make these right now because the only real opportunity for US is to hope we can sell them to somebody else and we have other things to do right now, but now we have the sales force. So we can begin to continue to develop those because theres not a lot of cost needed for those number two is the continued development of.

The programs that are already in cellular already and those are done.

Our offices.

The space that we took.

<unk> has its own development lab. So we have a budget built in to continue to do R&D on those types of products and get him to get labeled on those products and the third one which is really exciting is that our new strategic partner sequence also developed products. They have in full development team and their facility in San Antonio and they were very excited about.

Adam Levy: We have a budget built in to continue to do R&D on those types of products and continue to get labels on those products. The third one, which is really exciting, is that our new strategic partner, Sequence, also develops products. They have a full development team in their facility in San Antonio, and they're very excited about combining technologies with us, finding uses for the hydrogel, and helping us distribute the hydrogel. They have some ideas on how our hydrogels could be used in wound care in the new landscape that's out there. We'll be getting products from multiple different sources.

Combining technologies with US finding uses for the hydrogel, helping us distribute the hydrogel. They have some ideas on how our hydrogel could be used in wound care in the new landscape. That's out there. So we will be getting products from multiple different sources.

Okay, but at least for these product lines, you're acquiring at an R&D team.

And so therefore and intellectual property developed under an agile through for inmates within next Joe Yes, we own for example on project fuse and project work and we will own all the patents on those.

Vess Mihailov: At least for these product lines, you're acquiring an R&D team and a space, and so therefore, any intellectual property developed under NexGel's roof remains within NexGel?

[Analyst 4]: At least for these product lines, you're acquiring an R&D team and a space, and so therefore, any intellectual property developed under NexGel's roof remains within NexGel?

And that means obviously higher margins go through them next joe's shareholders or stakeholders, let's put it that way.

Adam Levy: Yes. We own, for example, on Project FUSE and Project ORCHID, we will own all the patents on those.

Vess Mihailov: That means obviously higher margins go to NexGel's shareholders or stakeholders, let's put it that way.

[Analyst 4]: That means obviously higher margins go to NexGel's shareholders or stakeholders, let's put it that way.

Yes, and but again the margins are the same on the other products don't have really patent protection anymore. The <unk>.

Adam Levy: Yes. Again, the margins are the same on the other products. The other products don't have really patent protection anymore. The BIOVANCE, Interfyl, these products have been on the market since 2012, 2013, 2014. Really what makes them valuable is the fact that they're approved in 500 hospitals, is the fact that they have great clinical data to support their sale, the fact that they're reimbursed by Blue Cross. That's what really makes those products interesting to us.

Products have been on the market since 2012, 2013, 2014, so really what what makes them valuable is the fact that they are approved and 500 hospitals is the fact that they have great clinical data to support their sale. The fact that they are reimbursed by Blue Cross.

That's what really makes those products are interesting to us.

Oh, not patent protection they are off patent drugs.

Okay, Okay, but my point was.

Vess Mihailov: Mm-hmm.

[Analyst 4]: Mm-hmm.

Adam Levy: Not patent protection. They're off patent already.

If it gets developed under.

Next gels.

Vess Mihailov: Okay. My point was, if it gets developed under NexGel's roof, so to speak, any future products, I presume, developed by NexGel, there will be no royalties going-

[Analyst 4]: Okay. My point was, if it gets developed under NexGel's roof, so to speak, any future products, I presume, developed by NexGel, there will be no royalties going-

So to speak and future products.

I presume.

Developed by Nextgen, there will be no royalties, 100% of our plan is to own the patents ourself.

Okay, Okay, and really last question here, you mentioned on a previous Oh.

Adam Levy: 100%, our plan is to own the patents ourselves.

Vess Mihailov: Okay. Really last question here. You mentioned on a previous conference call that there may be some contemplation about doing a stock buyback, provided the company is on solid financial footing and generating cash flow, and obviously has some cash on the balance sheet down the road. Do you still believe that may be the case or not?

[Analyst 4]: Okay. Really last question here. You mentioned on a previous conference call that there may be some contemplation about doing a stock buyback, provided the company is on solid financial footing and generating cash flow, and obviously has some cash on the balance sheet down the road. Do you still believe that may be the case or not?

Conference call that there may be some contemplation about.

Doing a stock buyback provided the company is on solid financial footing and generating cash flow and August shut some cash on the balance sheet down the road.

Do you still believe that maybe the case or not.

Well that also depends on on where things are I mean, what what's always been critical to us and we haven't been able to achieve that yet, but it's always been very important is that when you switch a company from a to b to being profitable than switches on the offense. So at that moment when youre at offense, you don't have to do anything because youre, making money. So if you feel your stock is getting unfairly treated.

Adam Levy: Well, that also depends on where things are. What's always been critical to us and we haven't been able to achieve it yet, but it's always been very important, is that when you switch a company to being profitable, it then switches onto offense. At that moment, when you're at offense, you don't have to do anything because you're making money. If you feel your stock is getting unfairly treated or beaten up, then it's absolutely a time for stock buybacks to protect your shareholders and increase their value. If you feel that your stock has gotten ahead of itself, then sometimes it's good to take a little money off the table. You have the ability to do those things on a decision-making basis as opposed to we need to raise money basis because we can't stay afloat. That's the goal.

Or beaten up then it's absolutely a time for stock buybacks.

To protect your shareholders and increase their value. If you feel that your stock has gotten ahead of itself and sometimes it's good to take a little money off the table, but you have the ability to do those things on a decision making basis as opposed to we need to raise money basis, because we can't you know.

Sales stay afloat, so that that's the goal that's one of the reasons why this transaction is so important to us. So you know I can't particularly say what the circumstances are going to be but yes that would certainly be one of the tools in the toolkit would be a stock buyback should the right circumstances present themselves.

Adam Levy: That's one of the reasons why this transaction is so important to us. I can't particularly say what the circumstances are going to be, but yes, that would certainly be one of the tools in the toolkit, would be a stock buyback should the right circumstances present themselves.

Thank you Adam.

Generous with your time and the details that you provided I appreciate that very much.

Vess Mihailov: Thank you, Adam. You've been very generous with your time and the details that you provided. I appreciate that very much.

[Analyst 4]: Thank you, Adam. You've been very generous with your time and the details that you provided. I appreciate that very much.

No worries thanks for your question.

And once again that is star one if you would like to ask a question star one on your telephone keypad, one moment, while we queue.

Adam Levy: No worries. Thanks for your questions.

Operator: Once again, that is star one if you would like to ask a question, star one on your telephone keypad. One moment while we queue. We'll move on to Robert Gottlieb. Your line is open. Please go ahead.

We'll move on to Robert Gutman. Your line is open. Please go ahead.

Thank you Adam for taking my call and what a great update.

Couple of questions when will the cellular therapy products start.

Robert Gottlieb: Thank you, Adam, for taking my call, and what a great update. A couple questions. When will the Celularity products start having sales under the NexGel banner, the ones that came over? Will it be-

[Analyst 5]: Thank you, Adam, for taking my call, and what a great update. A couple questions. When will the Celularity products start having sales under the NexGel banner, the ones that came over? Will it be-

Having sales under.

The next job banner.

The ones that came over will it be yesterday end of the quarter mid quarter earlier yesterday Robert.

Okay. Thanks.

Adam Levy: Yesterday

Robert Gottlieb: at the end of the quarter, mid-quarter, or earlier?

[Analyst 5]: at the end of the quarter, mid-quarter, or earlier?

Excellent yes.

The effective date was Monday, and so as of Monday, all sale. They remember these are products that are used in hospitals everyday so as of Monday, it will begin to generate revenue.

Adam Levy: Yesterday, Robert.

Robert Gottlieb: Okay. Excellent.

[Analyst 5]: Okay. Excellent.

Adam Levy: Yeah. The effective date was Monday, and as of Monday, all sales. Remember, these are products that are used in hospitals every day. As of Monday, it will begin to generate revenue.

Okay, and then as you model things out.

If you're able to share any.

Robert Gottlieb: Okay. As you've modeled things out, if you're able to share any, I don't want to put you on the spot of making exact predictions, but how do you model sort of a middle case versus best case scenario for the convertible note in terms of, do you think that the note will be paid back? Do you think the note will be issued as equity? How do you game that out?

[Analyst 5]: Okay. As you've modeled things out, if you're able to share any, I don't want to put you on the spot of making exact predictions, but how do you model sort of a middle case versus best case scenario for the convertible note in terms of, do you think that the note will be paid back? Do you think the note will be issued as equity? How do you game that out?

I don't want to put you on this.

King exact predictions, but how do you model sort of a middle case versus best case scenario for.

The convertible note in terms of.

Do you think that the note will be paid back do you think the note will be issued as equity.

How do you gave that out.

Well, obviously, if the if the if we do well and we are successful and we stay above the conversion price of note. It would certainly convert and therefore, we would not have to pay the money back.

Adam Levy: Well, obviously if we do well and we're successful and we stay above the conversion price of the note, it would certainly convert, and therefore, we would not have to pay the money back. If we do poorly and nobody can convert, well, then we better find a way to get the money back to the folks. That's why it is so critical that we turn profitable, as one of the previous callers said, in Q3 and Q4 and Q1 and maintain that profitability. Because if we have that kind of strength, then all those things are very easy to do. If you can't do that, if something goes horribly wrong, it's convertible notes. I'm not going to sugarcoat it can turn ugly. We have a very high confidence level here. We know sort of the space, the area.

We do poorly.

And nobody can convert well then we'd better find a way to get the money back to the folks and that's why it is so critical.

We turned profitable.

One of the previous caller said in Q3, and Q4 and Q1 and maintain that profitability because if we have that kind of strength than all of those things are very easy to do.

If you can't do that if something goes horribly wrong.

Its convertible notes and I think I sugarcoat, it can turn ugly.

But we have very high confidence level here, we know.

Sort of.

The space the area.

It's interesting because when we announced this deal the street clearly didnt like it and there were times that we thought about abandoning it and I kept talking to more and more people and going so what am I missing here like why does the street hate the steel.

Adam Levy: It's interesting because when we announced this deal, the Street clearly didn't like it. There were times that we thought about abandoning it. I kept talking to more and more people and going, "So what am I missing here? Why does the Street hate this deal?" A lot of really smart people said, "We think the Street's wrong. We like this deal. We like what it does for NexGel." Then eventually I asked Sequence, and they confirmed, "Not only do we think the Street's wrong and do we like this deal, but we'd like to get involved in a meaningful way." Sometimes you have to kind of do what you believe is the right call and take an opportunity that's there, and we're pretty confident this is going to turn out very well.

And a lot of really smart people said, we think street's wrong.

We liked the deal we like what it does for Nexgen and then eventually I asked sequence and they confirm not only do we think the street's wrong and do we like this deal, but we'd like to get involved in a meaningful way.

So sometimes you have to kind of do what you believe is the right call and taken opportunity. That's there and we're pretty confident this is going to turn out very very well.

And if it is profitable.

Let's say it does convert.

Rather than required payment.

Robert Gottlieb: Thanks. If it is profitable, let's say it does convert rather than require payment, what other debt is on the books that is of relevance?

[Analyst 5]: Thanks. If it is profitable, let's say it does convert rather than require payment, what other debt is on the books that is of relevance?

What other debt is on the books.

As of relevance.

No no.

Yeah.

Oh, okay.

Okay. Thanks.

Adam Levy: None.

This is this is this is senior secured debt there is nothing else on the books with Nextel never had that before this.

Robert Gottlieb: Oh, okay. Thanks.

[Analyst 5]: Oh, okay. Thanks.

Adam Levy: This is senior secured debt. There's nothing else on the books. NexGel never had debt before this.

Okay.

And then.

Basically it seems like a acquisition of.

Robert Gottlieb: It basically seems like an acquisition of a commercial line that really places you as a different company than a hydrogel company that's more of a regenerative medicine. How do you see the branding working in that regard?

Commercial line that really places you as a different company than a.

[Analyst 5]: It basically seems like an acquisition of a commercial line that really places you as a different company than a hydrogel company that's more of a regenerative medicine. How do you see the branding working in that regard?

Hydrogel company, that's more of a regenerative medicine, how do you how do you see the branding working in that regard.

Well, we're branding it as bionics the brands are really already established in terms of.

Adam Levy: Well, we're branding it as BioNX. The brands are really already established in terms of BIOVANCE and Interfyl. Those brand names are what the doctors recognize. It's what the hospitals recognize. That part is done. We have a great deal of familiarity with these products. The original iteration of BIOVANCE, and I think it was 2012, was released by Alliqua BioMedical, in a partnership with Celgene. Well, Alliqua BioMedical was our parent. I've talked about this before. The person that runs and is the president of Celularity's regenerative wound segment is Dr. Stephen Brigido, who is coming over with us and is already on my scientific advisory board, has been for four years. He did all the SilverSeal studies. This is kind of what NexGel was always sort of thinking about being. We were always going to be a medical device company.

<unk> those brand names that were or what the doctors recognize its what the hospitals recognized so that part is done we have a great deal of familiarity with these products. The original iteration of bio Vance and I think it was 2012 was released by our legal biomedical as.

As in a partnership with Celgene will equal biomedical with our parent.

I've talked about this before the person that runs the president of cellular already degenerative wound.

<unk> is Dr. Steve <unk>, who is coming over with us and.

As already on our scientific Advisory Board has been for four years did all the Silversea studies. So this is kind of what Nextgen <unk>.

What's always sort of thinking about being we were always going to be a medical device company. The whole branded things sort of happened in commercial products happen because of the pandemic.

And so we ended up with something that is now profitable it's lucrative and so we're going to continue it but this is really our routes. This is really our core.

Adam Levy: The whole branded thing sort of happened, and commercial products happened because of the pandemic. We ended up with something that is now profitable, it's lucrative, and so we're going to continue it. This is really our roots. This is really our core.

And I'm thinking back to your in terms of the synergies that you mentioned about other wound care products I know you mentioned in Silverdale.

Robert Gottlieb: Thanks. Thinking back to your, in terms of synergies that you mentioned about other wound care products, I know you mentioned SilverSeal. At the inception of going public, there was talk shortly thereafter of the NexTra program. If you have sales folks selling BioNX, I guess that's the term, products that was acquired from Celularity, do you see an opportunity that would, instead of developing something like NexTra for external sale to an external distributor, do you see ever the possibility of distributing it using that same sales force?

Adam Levy: Thanks. Thinking back to your, in terms of synergies that you mentioned about other wound care products, I know you mentioned SilverSeal. At the inception of going public, there was talk shortly thereafter of the NexTra program. If you have sales folks selling BioNX, I guess that's the term, products that was acquired from Celularity, do you see an opportunity that would, instead of developing something like NexTra for external sale to an external distributor, do you see ever the possibility of distributing it using that same sales force?

At the inception of going public through was talk shortly thereafter of the next rate program.

You have.

Sales folks selling.

Bionics, I guess thats the term products.

Acquired from.

From cellular already.

Do you see an opportunity that would instead of two.

Developing something like Nextera for external sale.

<unk>.

External.

Distributor do you see ever the possibility of distributing it using that same sales force.

Yeah, we do.

And that's really important whether they prefer the sales force we have to start talking to them and talk to the independent reps in and see what products. They think are most viable.

Adam Levy: Yeah, we do. That's really important. Now, whether they prefer the sales force, we have to start talking to them and talk to the independent reps and see what products they think are most viable. I think there so far has been more interest in the NEXDerm, just because that's an easier sell in hospital. What's the old saying? You kind of want to always be in the bag of whoever's carrying metal in the hospital, who's carrying the devices, because they have access to the entire hospital. Those are the sales reps that we want to be the biologic in their bag. If we can do that, it opens up putting other things in their bag.

So far has been more interest in the next derm, just because thats an easier sell in hospital, but what's the old saying you kind of want to always be in the bag or whoever's carrying metal in the hospital is carrying the devices because they have access to the entire hospital. Those are the sales reps that we want to be the biologic in their bag and if we can do that it opens up putting other things in their bag and so.

Yeah, we're going to we're going to identify those and the important thing is is that no longer we are only making this product that we can't possibly hope to commercialize and maybe we could sell it to somebody now we can say you know what we think it's a good product we think it's a viable product, let's try and sell it ourselves and if we sell it ourselves really well then maybe we can sell it then or maybe it will just keep it but it will.

Adam Levy: Yeah, we're going to identify those, and the important thing is it no longer we're only making this product that we can't possibly hope to commercialize, and maybe we could sell it to somebody. Now, we can say, "You know what? We think it's a good product. We think it's a viable product. Let's try and sell it ourselves." If we sell it ourselves really well, then maybe we can sell it then, or maybe we'll just keep it. It opens up a lot more opportunities for us.

Brings up a lot more opportunities for us.

Thanks, Adam.

Welcome to the coming quarters.

Thanks Robert.

Robert Gottlieb: Thanks, Adam. I wish you the best of luck on the coming quarters.

Adam Levy: Thanks, Adam. I wish you the best of luck on the coming quarters.

Yeah.

And it appears that we have no further questions at this time.

Adam Levy: Thanks, Robert.

This does conclude our question and answer session as well as our conference call for today.

Operator: It appears that we have no further questions at this time. This does conclude our question and answer session, as well as our conference call for today. We appreciate your time and participation. You may now disconnect.

We appreciate your time and participation you may now disconnect.

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