Elutia Q3 2025 Earnings Call Transcript

Quartr
Provided by Quartr
November 6, 2025

Key Takeaways

  • Positive Sentiment: The sale of the bio-envelope business to Boston Scientific for $88 million closed in early Q4, and after debt and expenses Elutia received about $49 million in cash (plus an $8M escrow), providing runway to fund NXT 41/41X development and commercialization without dilution.
  • Positive Sentiment: NXT 41X targets the $1.5 billion U.S. breast reconstruction market with a drug‑eluting biological matrix (rifampin + minocycline) designed for therapeutic local release for >30 days to address 15–20% post‑operative infection rates.
  • Positive Sentiment: Regulatory and commercial roadmap: Elutia plans a staged approach with NXT 41 (matrix only) clearance first (H2 2026) followed by the combination NXT 41X in H1 2027 via the 510(k) pathway, leveraging its SimpliDerm commercial footprint for rapid adoption.
  • Positive Sentiment: Operational and financial improvements in Q3: continuing‑operations revenue was $3.3M (SimpliDerm $2.4M, up 18% QoQ; cardiovascular ~$0.9M, up 68% YoY), GAAP gross margin rose to 55.8% (adjusted 64%), operating expenses fell and adjusted EBITDA loss narrowed to $2.7M.
  • Positive Sentiment: Legacy litigation nearly behind them — seven fiber‑cell cases resolved this quarter, leaving six remaining with an estimated liability of about $700,000, reducing a prior overhang on the company.
AI Generated. May Contain Errors.
Earnings Conference Call
Elutia Q3 2025
00:00 / 00:00

Transcript Sections

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Operator

Today, everyone, and welcome to Elutia Q3 2025 earnings financial results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To participate, you will need to press star one one on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star one one again. Please note this conference is being recorded. Now, it's my pleasure to turn the call over to Matt Steinberg with FINN Partners. Please proceed.

Matt Steinberg
Partner at FINN Partners

Thank you, Operator, and thank you all for participating in today's call. Earlier today, Elutia released financial results for the quarter ended September 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.

Matt Steinberg
Partner at FINN Partners

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 lists and descriptions of the risks and uncertainties associated with our business, please refer to the risk factors section of our public filings with the SEC, including Elutia's annual report on Form 10-K for the year ended December 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. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 6, 2025. Elutia disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements whether because of new information, future events, or otherwise.

Matt Steinberg
Partner at FINN Partners

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 Q3 ended September 30th, 2025, which is accessible on the SEC's website and posted on the investor page of the Elutia website at www.elutia.com. With that, I will turn the call over to Elutia CEO Randal Mills.

Randal Mills
Randal Mills
CEO at Elutia

Thank you very much, Matt, and welcome one and all to our Q3 2025 conference call. I'm excited to be here with you today. Matt Ferguson, our Chief Financial Officer, is also with us today on this call. We're going to be going over a couple of things. One is the basics of Elutia. Just a couple of things that I think everyone should know about the company. I'm going to spend a lot of time talking about where we're headed, and not just where we're headed, but why we're going where we're going. Matt's going to give us an update on finance and litigation status. Lastly, we'll close and take your questions. Let's get into it with some of the basics. Elutia, we are a mission-based company. I think that's an important thing for investors to know.

Randal Mills
Randal Mills
CEO at Elutia

I think that's a good thing too because we have a great mission. Our mission at Elutia is humanizing medicine so that patients can thrive without compromise. You know, today we're going to talk a lot about breast reconstruction. I hope that you can appreciate that our work in this space is so necessary because there's a patient population right now, women experiencing and making their way through their breast cancer journey, who really are faced with a lot of compromise in their care and in their treatment. That's holding them back from thriving. We are applying our talents, our resources, our efforts, and our mission to overcome that so these women are able to thrive without compromise. I think it's really important for a company to know what they're good at, what are their strengths.

Randal Mills
Randal Mills
CEO at Elutia

At Elutia, we are really great at combining biological matrices with powerful antibiotics that create this sustained antibiotic release in implants that's able to prevent infectious complications from happening. We started in this with Elupro, our first antibiotic-eluting product that we got on the market and really did a great job in the initial commercialization with. We sold that, as you guys know, to Boston Scientific for $88 million. Now we're taking that technology into NXT-41x, which is our next-generation matrix for breast reconstruction. If you're new to the story, and I see there are a lot of new callers on the call today, three sort of things that are probably worth keeping in mind. One is this is a validated technology platform. What do I mean by that? We've already done it.

Randal Mills
Randal Mills
CEO at Elutia

We've already developed the first FDA-approved drug-eluting bio-envelope for pacemakers, which we sold to Boston Scientific. Now, there we're talking about a much smaller market, so only a $600 million market, with a much smaller unmet medical need. We're talking about infection rates on the order of about 3%. We're taking that same technology platform, and we're moving it into a much bigger market with this blockbuster 41x that we have coming. It's the same technology platform, but applied to the $1.5 billion breast reconstruction market. As you're going to see coming up, there we're talking about an unmet medical need where women are facing post-operative infection rates between 15%-20%. Lastly, the company is now fully resourced. We have the right team in place. We have a state-of-the-art GMP manufacturing facility.

Randal Mills
Randal Mills
CEO at Elutia

We have a commercial platform already in place with our SimpliDerm product that we already have and we're already distributing in this space. Very importantly, we now have the cash to fund the company, not only through product development and product approval, but all the way through commercialization of this technology as well. Let's get into it, and let's talk about where we're headed and, more importantly, why we're headed there. Why breast reconstruction? Why is breast reconstruction such a transformational opportunity for Elutia? It's really the convergence of three factors that make this a very special opportunity for us. One, as I've mentioned, breast reconstruction is a large market, a $1.5 billion market. Two, it's an unusual opportunity in that it's this large market that still has this really significant unmet medical need, post-operative infectious complications of 15%-20%.

Randal Mills
Randal Mills
CEO at Elutia

Despite our best efforts in this for the last 30 or 40 years, we just haven't been able to crack this. Lastly, our technology, our proven technology platform, works in this space. We're going to be able to solve this significant problem for these patients by applying our technology to this area. Let's go through these three different parts, right? Let's start with the large market. You know, I get out and I talk to a lot of different investors about this. I think this is actually one of the pieces of our story that most investors already appreciate. The breast reconstruction market is a really big market. It's an addressable market of about $1.5 billion. Why? There are 162,000 breast reconstructions performed in the United States annually. These are brand new 2024 numbers from ASPS that are out.

Randal Mills
Randal Mills
CEO at Elutia

Biological meshes are already used in 90% of these reconstruction cases. There is not like there is a market here that has to be retrained on how to use a biological mesh. In fact, not only are biological meshes the dominant treatment modality in these cases, they are also incredibly expensive. We are talking about per breast on the order of $9,000 a breast for the biological matrix alone. If you look at that as the percentage of implant spend, right, you take the permanent breast implant, you take the expander that has to go in there, and you take the biological matrix and put all that together, the biological mesh is 65% of the implant spend. Here is the problem. The outcomes are abysmal. Despite the high cost, the status quo here is not addressing the problem. Now, I want to be really clear.

Randal Mills
Randal Mills
CEO at Elutia

I'm not suggesting the biological matrices are causing the problem. I'm not suggesting the implants are causing the problem. I'm certainly not suggesting that the surgeons are causing this problem, but they're not fixing the problem. What we're left with here is one in three women that go through breast reconstruction suffer a serious complication after that reconstruction. Fully, 15%-20% of that is driven by infectious complications. We're talking about serious post-operative infections coming out of this case. We are probably understating this problem in this case. Ultimately, we're looking at up to 21% of the implants end up being lost. The procedure ends up being a failure and has to be abandoned. That, as you can imagine, leads to this very significant economic burden that the hospital faces. We're looking at $48,000, the average economic cost to the hospital of an infected breast reconstruction.

Randal Mills
Randal Mills
CEO at Elutia

Here's a real significant problem. Like I said, when I go out and I tell the story, I think people appreciate that the breast reconstruction market is large. I think they even appreciate that, "Hey, I believe you guys are going to get this approved. You did a pretty good job with that with Elupro. You got that there. You seem like you know what you're doing." They struggle to believe that this problem could be this bad in this big of a market for so long. They really want to know sort of why. How could that be? Why is that? I want to explain to you why this is the case. Here we go. There are some very unique challenges that are presented by mastectomy. In mastectomy, all of the breast tissue has to be removed.

Randal Mills
Randal Mills
CEO at Elutia

This is done by the oncologic breast surgeon that comes in and does the removal of the breast tissue. Why is this happening? This tissue has to come out because if any of it remains, then there is still a risk for breast cancer redeveloping in that woman. There needs to be further monitoring. There need to be mammograms, right? The whole purpose of having a mastectomy sort of goes out the window. The breast surgeon comes in here, and they are very aggressive with this removal, right? They need to take out all of this breast tissue, all the way to the margins of the skin, all the way down to the chest wall. The problem with that, as you can see in this diagram here, is that the vasculature for the breast.

Randal Mills
Randal Mills
CEO at Elutia

Runs through this very tissue that all has to come out. Again, the vasculature of the breast runs through the tissue that has to come out. What happens is when you remove this tissue from the breast, you have to tie off these vessels that get cut, right? When you tie off these vessels, then you basically create an area of hypoperfusion, right, where you do not have adequate amounts of blood flow. What is the consequence of that? The consequence of that is, generally speaking, the way we deal with and the way we prevent post-operative infection is by antibiotic therapy. We can give the patient oral antibiotics, or we can give the patient IV antibiotics.

Randal Mills
Randal Mills
CEO at Elutia

The idea is that you give these patients antibiotics, and they circulate all through the body and go to the parts of the body that you're looking to protect and prevent infection. When you remove the blood supply, you also remove the route in which systemic antibiotic therapy needs to reach the surgical pocket. No blood supply means no antibiotic therapy can reach where it needs. There are lots of studies that show this. The plastic surgeons refer to post-operative antibiotic therapy often as voodoo. It makes everyone feel good that they're taking these antibiotics, but it does not prevent post-operative infection. The reason why it doesn't prevent it is this very real anatomical challenge that's created.

Randal Mills
Randal Mills
CEO at Elutia

It also, by the way, if antibiotics can't get there because there's no blood, it also makes it a real challenge for even the patient's own immune system to get there. And our natural cellular components of our immune system have a far more difficult time. After we've done this procedure, we've done the mastectomy, now a plastic surgeon, this is a different surgeon now. A different surgeon and a different surgical team comes into the operating room to do the reconstruction of this area where they have this really thin skin. You have this pocket of tissue that doesn't have any vasculature. Now in there, they need to put an implant of some sort, either the permanent implant or oftentimes an expander. The other thing they'll also put in there is they'll go ahead and they'll put in surgical drains.

Randal Mills
Randal Mills
CEO at Elutia

These are drains, if you've never seen them, these are literally plastic tubes that port directly to the outside. They allow excess fluid that normally would accumulate there to drain out of these spaces. You're adding this large foreign body, and you're adding these drains that communicate with the outside and create a portal for contamination to enter. Lastly, there's a mesh, right? This mesh then goes around this entire construct to hold the implant in place and to create a bit of a barrier between the skin and the implant. The reason that's done is because the skin here that's left after this radical mastectomy is so thin that you need something. That's what meshes are used for in these types of procedures.

Randal Mills
Randal Mills
CEO at Elutia

This is all done in a surgical procedure that is taking somewhere on the order of four to six to eight hours in order to do. If you wanted to create the perfect recipe for post-operative infection, it would be difficult to come up with a better recipe than the one we have here in breast reconstruction. You have long surgical times, four to six hours, multiple different surgical teams. Creating an ischemic area in the body, right, that is hypoperfused, does not have as much blood flow as it would need. On top of that, you put a large foreign body, and then just for good measure, you throw a drain in that ports directly to the outside. The question is not, how do we end up with post-operative infection rates of 15%-20%? The question is, how is it not 100%?

Randal Mills
Randal Mills
CEO at Elutia

I mean, it's almost miraculous that you could do this procedure and not have more infectious complications. I think that actually is really a testament to the surgeons and the professionalism of the surgeons and the operating teams in this case because this is just almost the perfect storm for an infectious complication. We think about this differently. We look at this and we say, what if we flip the script here? What if we turned things over? Instead of having those antibiotics delivered systemically and hoping some trickle into this avascular necrotic space, what if instead we delivered them locally? What would happen in that case? In that case, you would have local concentrations of antibiotic that were much higher, that were at therapeutic or even super therapeutic levels.

Randal Mills
Randal Mills
CEO at Elutia

Just to boot, you would have systemic levels of antibiotic that were essentially indetectable. You would have antibiotic exactly where you needed it, being very effective at preventing infection, and you would completely avoid side effects that can come along with prolonged antibiotic and antimicrobial use. This is the fundamental basis behind what we do at Elutia, this idea of drug-eluting biologics and local antibiotic delivery. This is what we did with EluPro, and it worked very successfully there. It is what we are doing here with 41x. The good news is we are not alone here. It is not like we thought of this and like, "Hey, aren't we brilliant? I wonder and I hope this works." Really resourceful, inventive, creative plastic surgeons out there who are doing the best they can for their surgeons have already been looking into this.

Randal Mills
Randal Mills
CEO at Elutia

They've actually already demonstrated proof of concept. What they've discovered is that local antibiotic delivery in breast reconstruction works. It effectively, it statistically significantly reduces post-operative infection. Now, the problem with it is they had to borrow techniques from orthopedic surgeons in order to pull this off. There are just two different examples here. This first one on the left, these are PMMA plates, polymethyl methacrylate plates. Said differently, they are plates of cement, like a bone cement. Hard, big, rigid discs. Basically, what they do with these plates is they're able to mix this stuff up in the operating room. While they're mixing it up, they'll mix in a powdered antibiotic into the aggregate and make that as part of this bone cement. They will literally put this bony plate up into the breast. Now, the problem is it's permanent. It's not resorbable.

Randal Mills
Randal Mills
CEO at Elutia

It deforms the rib cage. You know what it does really effectively? It prevents post-operative infection. Decreased infection, this is a study with 360 patients, right? This decreased infection of about 62% from 12.6% to 4.8%, P-value of less than 0.01, really beautiful statistical data that shows that if you have local delivery of these antibiotics, they will effectively address this post-operative complication. Another version of the same thing is instead of making a big disc, what happens if you made little beads out of it and sort of sprinkled them in there? Again, the same thing. This was a case or this was a study that was, if you're wondering why the infection rates are so high, this was actually looking at salvage cases where the patients were already being brought back to the operating room for tissue necrosis.

Randal Mills
Randal Mills
CEO at Elutia

Now, normally what would happen is that the implant procedure would just be considered a failure. Here, they wanted to see if they could salvage these cases. They tried with and without this local antibiotic delivery. Again, a 35% post-operative infection rate dropped to 6.3% post-operative infection rate. This is a 75-patient study, P-value 0.017, so highly statistically significant. The point of all of this is if you deliver local antibiotics, it doesn't just conceptually work. It works in practice. That is why we created NXT-41x. We did it in a way that the plastic surgeons are excited about using. Dr. Williams and her team have made a beautiful biological matrix. It's one of the things we're really good at doing that's purpose-built for plastic and reconstructive surgery. Onto that, they've added powerful antibiotics, rifampin and minocycline.

Randal Mills
Randal Mills
CEO at Elutia

They've done this in a way where they formulate it so they have a greater than 30-day release of these antibiotics that's putting therapeutic levels of antibiotic into the space for greater than 30 days. Why is this 30-day number so important? Because most drains come out by day 17. You want to make sure that once the portal's closed to the outside, you still have antibiotic delivery going on and they're able to address infections. This is NXT-41. That's the rationale why we came up with this. That's why it was so important for us to get EluPro done and commercialized, and then ultimately in the hands of Boston Scientific, who are going to knock the cover off the ball with that product. We can move on.

Randal Mills
Randal Mills
CEO at Elutia

Bring this product to market to the women who are going through breast cancer, who are battling breast cancer and so desperately need this technology. Let's talk a little bit about the plan and how we're going to get there. Right now, we have SimpliDerm, which is our biological matrix that doesn't have antibiotics. This is very analogous to, if those of you remember, our CanGaroo product that we had on the market before we introduced EluPro, just the biological matrix by itself. So that's our SimpliDerm product. And what it enables us to do, just like CanGaroo enabled us to do, is build out our commercial infrastructure, our sales team, our contracting team, the teams that work with the value analysis or the VAC committees, build out that whole infrastructure so it's up and functioning and ready to go when NXT-41 comes to market. Right?

Randal Mills
Randal Mills
CEO at Elutia

Second step, and you'll see this in the second half of next year, you'll see the first step is approval of NXT-41. Now, what we're doing here, NXT-41 is NXT without the antibiotics. So the thing about the "x" is Rx prescription, right? So the NXT-41 is just the base matrix. We're doing that for regulatory purposes. We want to get just the matrix cleared through the FDA before we add the combination of the drug to be able to separate a combination device drug review into its component parts. And then the last piece you'll see in the first half of 2027 is the approval of NXT-41x. And then lastly, before I turn the call over to Matt, just a little bit about what's going on inside the company and when we. Talk next about this, what I'll be providing updates.

Randal Mills
Randal Mills
CEO at Elutia

There are these three really essential work streams going on. Obviously. The most important one is the development. And we're looking for the development and approval of a highly differentiated product that significantly improves outcomes in plastic and reconstructive surgery. That is NXT-41. But alongside all of that is our manufacturing team that are building out this robust production platform that's able to achieve really, really significantly low cost of goods through our own proprietary in-house manufacturing process. We have this manufacturing facility in Gaithersburg, Maryland. If you're ever in the area, stop by. We'd love to give you a tour about it. We have this really great facility and this really great team there that's building out this process that will enable us to produce this at a low cost of goods. And then lastly, the commercial teams.

Randal Mills
Randal Mills
CEO at Elutia

The commercial teams are working on SimpliDerm and doing a great job with SimpliDerm, but also building out the clinical advocacy and the commercial infrastructure that we need to have in place so that when 41x gets approved, we're able to do as good a job, if not a better job, commercializing that product as we were able to do with EluPro. That is what we're doing. That is why we're doing it. Our plan in order to get from here to there. With that, I'll turn the call over to Matt, and he'll tell you about our operations.

Matt Ferguson
Matt Ferguson
CFO at Elutia

Okay. Thanks, Randy. It's a very exciting time to be at Elutia. The future that Randy just described for everyone is.

Matt Ferguson
Matt Ferguson
CFO at Elutia

Really built on the great work that has been done over the past several years and the work that's been done more recently to build the foundation to make this future possible that we are all so excited about. With that, I'm going to just take us back briefly to what Randy talked about at the very beginning of the call. The big event for the third quarter of 2025 was the transaction of the sale of the BioEnvelope business within Elutia to Boston Scientific. It was a sale for $88 million in cash. Sold to a tier-one company that really put us through our paces, digging under the covers, not just for the assets that they were acquiring, but really the whole company. We came through that process very nicely.

Matt Ferguson
Matt Ferguson
CFO at Elutia

With the technology and the company validated for work that had been going on really for years. That transaction validates the technology platform that will be transformed in the coming quarters into NXT-41 and 41x and capture this big opportunity. It also transforms our balance sheet, importantly. It brings in a significant amount of cash, and it also streamlines our operations. Going forward, we'll be more nimble, and we'll be more efficient, and we'll be more productive. The assets that were sold were the EluPro and CanGaroo products. Along with that, our main operational facility was in Roswell, Georgia. That also went with the transaction. About half of the people in the company also went with that transaction. That is going to make a big difference in our operating expense going forward. It also should lead to.

Matt Ferguson
Matt Ferguson
CFO at Elutia

Improved bottom lines for the company. The transaction was announced in early September. It did not close until Q4, but it actually closed on the first day of Q4. While the financial results, the balance sheet that we show as of the end of the quarter, does not yet reflect the infusion of cash and the other associated payoff of debt and that sort of thing that occurred with the transaction, that happened just the day after the end of the quarter. We will talk a little bit more about that in a second. From a financial point of view, when you look at our financials going forward, the business of the BioEnvelope division, that will now be shown just as a single line in discontinued operations. Starting with Q3 this quarter, we are no longer reporting on the sales and.

Matt Ferguson
Matt Ferguson
CFO at Elutia

Expenses associated with that part of the business, except in that one line, which is below our operating line at this point. Just moving forward, talking a little bit about the results for the quarter of the continuing operations, really it breaks down into our two other product lines that are commercial right now, that's SimpliDerm and Cardiovascular. SimpliDerm, we saw a nice uptick from the prior quarter in revenue. We generated $2.4 million of revenue, which was up about 18% from Q2 of this year. It was down, granted, from a year ago, but there are a variety of factors that caused that over time. A lot of it, we believe, had to do with the contributions from the distribution partner that we've had over time. I can say that we've actually now ended that relationship as of October, and we now have full control.

Matt Ferguson
Matt Ferguson
CFO at Elutia

Over that product line. It is unencumbered from a strategic point of view. Just as important, we now have full operational control over it. As we rebuild the commercial footprint associated with that part of the business, it will do a couple of things. One, it will lead to renewed growth of that part of the business, but it will also, very importantly, lay the groundwork, which Randy talked about a little bit, for the products NXT-41, NXT-41x, which are sold into the same customer base and into the same types of procedures that SimpliDerm is sold into. You could think of it a little bit similar to what we did with EluPro, where we had the CanGaroo product before we had the EluPro drug-eluting version of the product.

Matt Ferguson
Matt Ferguson
CFO at Elutia

Having that sales organization and commercial footprint for CanGaroo really allowed us to hit the ground running. By the time that we were three quarters into our launch, we had ramped up to about an $18 million run rate with EluPro. We think we can likely do even better when we have NXT-41 on the market. Moving on to Cardiovascular. That also had a nice quarter. Again, with the theme of us regaining control over the product completely, we returned to full operational control of that product after having a distribution partner there as well in the second quarter. In May, we started selling that directly ourselves. We generated in the third quarter, the first full quarter where we had only direct sales, just a little under a million, $900,000 of sales with that.

Matt Ferguson
Matt Ferguson
CFO at Elutia

That actually compares to both the prior year and the prior quarter quite nicely. It was up 68% from the prior year, up 28% sequentially. We're doing nicely there. That product also has very high gross margins. The more we sell there, the more it drops to our bottom line and funds the really strategic opportunities that we have in front of us. Moving on to a few other financial highlights in our statement of operations. Overall sales were $3.3 million, comprised of those two product lines that I just talked through, compared to $3.6 million from a year ago quarter. The GAAP gross margin was 55.8% versus about 49% a year ago. We've seen a nice uptick in our gross margin.

Matt Ferguson
Matt Ferguson
CFO at Elutia

There again, we're actually benefiting from the margin profile of these products that we're now selling compared to the full portfolio that we had previously. I think we'll see continued gains there. Our adjusted gross margin, which excludes non-cash amortization expense, that was even better at about 64% versus 56% in the year-ago quarter. We also saw improvements both from an operating expense point of view and a loss from operations perspective. We were at $7.1 million in overall operating expense, down from $11 million a year ago. Our loss from operations was $5.2 million versus about $9 million a year ago. All of that nets out to what is probably a more important metric when you back out the non-cash items and non-recurring items. Our adjusted EBITDA was 2.7. Excuse me. Adjusted EBITDA loss for the quarter was $2.7 million.

Matt Ferguson
Matt Ferguson
CFO at Elutia

I think that's a pretty good indication of where we expect to be in the near future. From a balance sheet perspective, again, as I mentioned, the transaction had not closed yet by the end of the quarter. We ended the quarter with $4.7 million in cash. Again, one day later, we closed the transaction. That resulted in $80 million coming in at closing. $8 million is in escrow, an interest-bearing escrow account that we'll receive in 2026. That $80 million was then deployed to pay off about $28 million of debt. After paying off deal expenses and the like, we ended up with about $49 million of actual cash that came into our account in early October. That puts us in a great position as we move forward and think about our development plans going ahead. We believe that gives us the.

Matt Ferguson
Matt Ferguson
CFO at Elutia

Runway to get us completely through the development and approval of NXT-41 and NXT-41x and the actual commercial launch of those products out in 2026 and 2027. Finally, for people who've been watching the company for some time, you know that we have been working very diligently to put behind us some legacy litigation from a part of the company that we sold off a couple of years ago. That's generally referred to as the FiberCel litigation. I can report there that we were able to resolve another seven of those cases in the quarter. When we started with 110 of those cases, we're now down to only six remaining. I can say we are very, very close to putting that completely in the rearview mirror for us. We're very glad to have that almost behind us.

Matt Ferguson
Matt Ferguson
CFO at Elutia

From a financial point of view, it's a relatively small number that those remaining six cases account for. The estimated liability of those is less than a million dollars at about $700,000. With those highlights, just before we take your questions, I would say, if you think about it from a big picture, why, as an investor, would you own Elutia? It goes back to the opportunity, really, that we've been talking about here for the last half hour or so. We like to say that it's a biotech-like upside with the risk profile and timeline of medtech. It's something that is very unique in the marketplace. We have a validated technology platform that physicians will adopt and that strategics will value. We have a de-risked path to be first in class in a $1.5 billion market with a significant unmet medical need.

Matt Ferguson
Matt Ferguson
CFO at Elutia

We have the team and the capital to get there without dilution. With that, we'll take your questions.

Operator

Thank you so much. As a reminder, to ask a question, simply press star one one and wait for your name to be announced. To remove yourself, press star one one again. Please stand by for our first question. It's from Frank Takkinen with Lake Street Capital Markets. Please proceed.

Nelson Cox
Equity Research Associate at Lake Street Capital Markets

Hey, great. This is Nelson Cox on the line for Frank. Thanks for taking the questions. Congrats on all the progress. It's exciting to see the story developing. You walked through it during the prepared remarks, but maybe just to go a little deeper, maybe walk through some of the learnings with EluPro from a development to approval to commercial rollout perspective.

Nelson Cox
Equity Research Associate at Lake Street Capital Markets

Just want to give you a chance to maybe dive into that a bit more and any learnings that'll translate to NXT. Thanks.

Randal Mills
Randal Mills
CEO at Elutia

Yeah. Hey, thanks, Nelson. First, I would say the team is everything. That goes to development, FDA approval, and commercial rollout as well. The team is really everything here. With EluPro, we actually had a submission of EluPro that was put in actually before my time coming back into the company. We got some comments back from the—we got a lot of comments back from the FDA about that. That led actually to us getting an NSE on that. Through that non-substantial equivalence process, I brought in Michelle Williams, who you guys know I've worked with for 21 years now. I would say best Chief Scientific Officer in the business for these kinds of things.

Randal Mills
Randal Mills
CEO at Elutia

She was able to really not just respond to the NSE, but also learn from it and develop our own intellectual property around it. Not just delivery methods for local antibiotic delivery, but also around testing methods and how you prove it and how you demonstrate it to the FDA. In doing so, developed a really good relationship with the agency, giving them not just barely enough information to feel comfortable with the submission and the clearance, but actually making them feel really confident that we've made a real quality product here. I would say that is probably the single most important thing from a development standpoint that we learned. Commercially, what we learned was it's really good to have some commercial infrastructure in place. EluPro, by the time we sold EluPro to Boston Scientific, it was running at an $18 million run rate.

Randal Mills
Randal Mills
CEO at Elutia

Nine months in, I mean, that thing shot out of a cannon. That was because we had a commercial team in place. They had a great VAC package that, again, Michelle Williams and her team had helped put together. We also had the commercial infrastructure and the contracting in place, and we knew how to do that. CanGaroo helped EluPro, and we think in the same way SimpliDerm is going to help 41x when we get out there. I think those are two things that come to mind, Nelson.

Nelson Cox
Equity Research Associate at Lake Street Capital Markets

Perfect. That's helpful. Maybe just running off of that, SimpliDerm obviously gives you a big commercial presence like you were talking about ahead of NXT. Maybe just frame that a bit more for us and how you plan to leverage those already existing relationships.

Randal Mills
Randal Mills
CEO at Elutia

Yeah. We're talking about when we have SimpliDerm, right, we're talking about a biological mesh that's used in the same surgical procedures. It's used by exactly the same surgeons in pretty much exactly the same way we expect NXT-41x to get used, right? We're not talking about requiring the surgeons to do anything different from their current practices. One of the reasons that we really love this, we love this approach, all of it's already in place. They're already doing it. The problem they have is, despite their best efforts, they're left with this post-operative complication rate. Our plans with SimpliDerm is to just keep using that product to have this direct customer interaction that we have. Nobody between us. As Matt said, we now have full control back of our SimpliDerm product line. We go out and meet directly with the plastic.

Randal Mills
Randal Mills
CEO at Elutia

We talk with reconstructive surgeons about how SimpliDerm's going and their problems and how we can be helpful and how we can have them get better outcomes. Obviously, just from a commercial infrastructure standpoint, our contracting teams and our commercial teams from a customer service and distribution, right, all that stuff is in place and ready to go, and we'll keep building on, right? We think about this coming year not in any way as an idle year for our commercial team, but it's actually one where they're going to be active as hell going out there and continuing to expand this in just the same ways that we did with CanGaroo before the launch of EluPro. Every seed we planted there ended up being very, very valuable for the launch of that product. We learned that lesson, and so that's what.

Randal Mills
Randal Mills
CEO at Elutia

We're going to—that's what we're going to do with SimpliDerm.

Nelson Cox
Equity Research Associate at Lake Street Capital Markets

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

Randal Mills
Randal Mills
CEO at Elutia

Through the combination 510(k) pathway, as you know, we actually don't have a requirement for clinical data for the approval process. Now, we are a science-based company. We do really exceptional quality work, and we stand behind it. When we launched EluPro, we had no requirement for clinical data, but very quickly, we were able to put together, as part of our VAC package and as part of our marketing package, a complete story that made the implanting surgeons not just comfortable, but enthusiastic about putting EluPro in. That worked really, really well. We're doing the same thing here.

Randal Mills
Randal Mills
CEO at Elutia

Pre-clinically, there is a tremendous amount of evidence that the team's building from things like pharmacokinetics, how long the antibiotics are there, the concentrations that they hang around in surgical sites. From a pre-clinical efficacy standpoint, one of the things you can't do with patients is you can't go back into them a month after the product's been implanted and infuse them or inject them with large amounts of pathogenic bacteria. We can do that in the pre-clinical setting with animal models and demonstrate, like we did with EluPro, that we're able to get complete kill even at four weeks out. Once the product, Nelson, comes to market, one, we know there's strong demand for this product now from the interactions that we have, from the relationships that we have now, just the same way EluPro.

Randal Mills
Randal Mills
CEO at Elutia

There is a first wave of users that are ready to be done with putting cement into breasts in order to fix this problem and have a professionally built and constructed product that fits in with their practice, and they'll adopt right away. We are not leaving it there. We are running clinical programs on these so that we generate conclusive data. Our goal here is not to take significant market share. Our goal here is to flip the entire market so that women have much, much better outcomes than they currently do. The current standard of practice is not okay to leave the way it is. It needs to get better. We know we will have to generate clinical data to get all of that done, but that is our goal, all of it.

Nelson Cox
Equity Research Associate at Lake Street Capital Markets

Great. Awesome. Thank you for taking the questions.

Operator

Thank you. Our next question is from the line of Ross Osborn with Cantor Fitzgerald. Please proceed.

Matt Park
Matt Park
Equity Research Associate at Cantor Fitzgerald

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

Randal Mills
Randal Mills
CEO at Elutia

Great question, Matt. To be really clear, where we manufacture 41, 41x is a completely different facility than we manufacture SimpliDerm. SimpliDerm is a human-derived product. It has a host of regulations associated with it because human-derived products can carry human pathogens with them. We keep those two things completely separate in completely separate facilities. The facility where we're manufacturing 41 and 41x is.

Randal Mills
Randal Mills
CEO at Elutia

A GMP facility. We were really, really lucky here. You might say. We were beneficiaries of the GLP-1 boom that occurred in that we were able to get a space, a great GMP space that was already built out and ready to go from a company that was acquired by Novo Nordisk. And because of that, we were able to get it at really great prices. Most importantly, it was just a really high-quality facility that was ready to go, looking for somebody to manufacture something in it. We are really pleased with that facility. There is all kinds of tech transfer and process qualification, equipment qualification that goes on when you bring up a manufacturing process. We have all of our teams there have a schedule for all of 2026. They are running through that process right now and are underway. We do not anticipate manufacturing will hold back.

Randal Mills
Randal Mills
CEO at Elutia

Or be the rate-limiting factor in anything that we're doing here. By the way, facility-wise, this is all done out of our new facility in Gaithersburg, Maryland.

Matt Park
Matt Park
Equity Research Associate at Cantor Fitzgerald

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

Matt Ferguson
Matt Ferguson
CFO at Elutia

Yeah, Matt. We've been really pleased with the bounce back that we've seen now that we've been able to devote some more attention and some direct resources to that part of the business. That is not the future of the company by any means, but it's a great little business that has a pretty significant market out there and great gross margins and some really committed physicians out there that are using the products.

Matt Ferguson
Matt Ferguson
CFO at Elutia

We are basically back at the million-dollar-a-quarter revenue level. I think there is some growth that we can achieve from there. It is not going to be a rocket ship. It is going to be steady growth, but we are also not having to invest money upfront in order to achieve that. We have really an exclusively contract sales organization that is out there. It is completely variable expense. With the high gross margins over 80% that we have been achieving there, a significant amount of the revenue that we generate actually drops to the bottom line. That is, in general, how I would think about the product there or the product and the future trajectory there.

Matt Park
Matt Park
Equity Research Associate at Cantor Fitzgerald

Got it. Thanks again for taking the questions, and congrats on progress. Thank you so much.

Operator

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

Executives
    • Matt Ferguson
      Matt Ferguson
      CFO
    • Randal Mills
      Randal Mills
      CEO
Analysts
    • Nelson Cox
      Equity Research Associate at Lake Street Capital Markets
    • Matt Steinberg
      Partner at FINN Partners
    • Matt Park
      Equity Research Associate at Cantor Fitzgerald
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