Elutia (ELUT) Q4 2025 Earnings Call Transcript

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DATE

Wednesday, March 11, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Randy Mills
• Chief Financial Officer — Matt Ferguson
• Corporate Communications — Sonali Fonseca

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TAKEAWAYS

• Revenue -- $3.3 million, representing a 16% increase driven by a shift to direct distribution for both cardiovascular and SimpliDerm product lines.
• Adjusted gross margin -- 66.8%, up 12 percentage points from 56.5% in the prior-year quarter, attributed to direct distribution.
• Net Loss from Continuing Operations -- $6.5 million, versus a net loss of $7.2 million in the year-ago quarter; excludes divested bioenvelope business.
• Adjusted EBITDA (non-GAAP) -- Loss of $4.2 million, compared to a $3.4 million loss in the prior-year quarter, reflecting increased operating investment.
• Cash Position -- $44.4 million, including cash on hand and $8 million in escrow, after full repayment of $28 million in SWK debt.
• Shares Outstanding -- 42.8 million shares, with an additional 4.5 million pre-funded warrants, and elimination of all Class B shares due to conversion and sale during the quarter.
• Bioenvelope Divestiture -- Completed $88 million sale of the business to Boston Scientific, funding debt repayment and supporting cash reserves.
• Nasdaq Compliance -- Company returned to full compliance with all Nasdaq continued listing requirements following resolution of share class overhang.
• FDA Submissions -- NXT 41 FDA submission completed with expected clearance in 2026; NXT 41X submission and clearance expected toward the end of the first half of 2027, targeting a second-half launch.
• SimpliDerm Strategic Review -- Company announced exploration of strategic options for the SimpliDerm product line, considering its segregability and EBITDA accretion for a potential acquirer.
• Manufacturing Capacity -- Current facility supports up to $120 million in NXT 41X product revenue annually with a single shift, according to management.
• Workforce & Diversity -- 54% of employees are women, 62% of leadership roles held by women, and 50% possess advanced degrees.
• Board and Leadership Changes -- Addition of Guido Nils to the board and Pete Ligotti as Chief Commercial Officer to prepare for 41X commercialization.
• Great Place to Work Certification -- Company earned certification, which management cited as correlating with "fourfold" financial outperformance versus noncertified peers, according to referenced survey data.

SUMMARY

Elutia Inc. reported that the bioenvelope business was divested to Boston Scientific for $88 million, enabling full debt repayment and resulting in a cash position of $44.4 million. The company has filed an FDA submission for NXT 41 and plans to follow with NXT 41X, aiming for a commercial launch in the second half of 2027. Leadership is focused on high-value breast reconstruction markets and is preparing for NXT 41X rollout with targeted manufacturing and commercial strategies. The strategic review of the SimpliDerm product line is underway, and management highlighted both workforce diversity and the recent Great Place to Work certification.

• Management stated the breast reconstruction market opportunity for NXT 41X is $1.5 billion, with approximately 102,000 annual mastectomy reconstructions and biological meshes used in 90% of procedures.
• CEO Mills said, "we have 100 million lives covered across two of the largest payers, Anthem and UnitedHealthcare, as well as nine regional plans," referring to SimpliDerm reimbursement.
• A 15%-20% postoperative infection rate was cited as a key driver for the NXT 41X platform, with registry data cited in the call (reported as 12%-37%).
• Direct local antibiotic delivery demonstrated infection reductions of 62% and 82% in referenced studies, according to management's discussion.
• Leadership reported a "return to direct distribution" improved both cardiovascular and SimpliDerm revenue streams in the quarter.
• The conversion and sale of legacy Class B shares eliminated a share overhang and contributed to Nasdaq compliance, as explained by the CFO.
• Manufacturing in the Gaithersburg facility is positioned to support 41X ramp without additional major investment, as stated by management.

INDUSTRY GLOSSARY

• Adjusted Gross Margin: Gross margin excluding intangible asset amortization, as referenced in company non-GAAP presentations.
• KOL (Key Opinion Leader): Influential physicians and medical professionals actively engaged in product evaluation and market advocacy within targeted specialties.
• VAC (Value Analysis Committee): Hospital or institutional committee responsible for clinical and economic evaluation of new products for formulary or procurement decisions.
• Acellular Dermal Matrix (ADM): Biologic material derived from donated human or animal skin processed to remove cells, used for soft tissue reconstruction applications.

Full Conference Call Transcript

Sonali Fonseca: Thank you, operator, and thank you all for participating in today’s call. Earlier today, Elutia Inc. released financial results for the fourth quarter and full year ended 12/31/2025. 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. All statements contained in this call that do not relate to matters of historical fact or relate to expectations, predictions of future events, results, or performance are forward-looking statements.

All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance, are based upon our current estimates and various assumptions. These statements include 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 Inc.’s Annual Report on Form 10-K for the year ended 12/31/2024, and in our subsequent periodic reports on Forms 10-Q and 10-K, accessible on the SEC website at www.sec.gov.

Such factors may be updated from time to time in Elutia Inc.’s other filings with the SEC. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, 03/11/2026. Elutia Inc. disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements because of new information, future events, or otherwise. Also, during this presentation, we refer to gross margin excluding intangible asset amortization, which is a non-GAAP financial measure.

A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure is available in the company’s financial results release for the fourth quarter and full year ended 12/31/2025, which is accessible on the SEC’s website and posted on the investors page of the Elutia Inc. website at investors.elutia.com. With that, I will turn the call over to Elutia Inc. CEO, Randy Mills.

Randy Mills: Thank you, Sonali. Good evening, and welcome to our fourth quarter 2025 earnings call, from our Gaithersburg, Maryland facility, and I am super glad to be here. Wherever you are, however you may be listening, welcome. We are super glad to have you. I am going to try to keep my comments brief tonight, but on that point, you know I may fail. We have so many exciting things going on in Elutia Inc. right now, and I am eager to share them with you. With that, let us just jump in. Here is a forward-looking statement slide that basically says what Sonali just said. And then really quickly on our conference call, so what is on the agenda today?

We are going to go over some of the basics. You may have heard this, but we also have a lot of new callers on the call today, so be patient as we go over things like our mission and what we are good at, where we are headed as a company. We made a couple of announcements in that press release that are kind of important, and so we will be updating some of those things there. Matt is going to then talk about finance topics. And then lastly, we will close the call and take your questions. So let us start out with our mission. Humanizing medicine so patients can thrive without compromise. Humanizing medicine. Humanizing medicine.

Every 98 seconds, a woman in this country is diagnosed with an invasive form of breast cancer. That means even if I keep my remarks short today, there will be 18 new cases diagnosed during this call. Three of those are going to die during this call. Ten will have breast reconstruction. And three are going to have a serious complication from that surgery. Who are these people? These are our mothers. These are our wives. These are our friends. And our daughters. You know them. That is humanizing medicine. I am looking around this room right now at a group of brilliant overworked, tired professionals. And the look on every one of their faces is the same.

Randy, let us go get at this. So why do we think we can fix this appalling problem? Well, let us look at what we are good at. What we are great at, actually. We are great at combining an optimal biological matrix, and we use the biological matrix to hold an implant in place and regenerate into the patient’s own healthy tissue. That is an essential part of the surgery. But what we do that no one else does is we combine that with powerful antibiotics for sustained antibiotic release that prevents infection and these other complications that we are talking about. Infection is the number one complication of surgery, period.

And we have the ability to significantly reduce it. And this is not theoretical. Right? We have already done this. LU Pro, we launched in January. We got it through a 194 VACs in nine months. We got it up to an $18 million run rate because physicians loved it. And most importantly, it worked. So that is what we are doing with 41X in breast reconstruction. We cannot do this without an incredible team and I am super pleased to announce that we have done a great job adding some serious horsepower to our team this last quarter. I would like to welcome Guido Nils as our new board member.

He is an operating partner at Edsburg Woodlands and the former Chief Operating Officer of Guiding Corporation. He is also, importantly, a longtime friend and mentor of mine. And we are blessed to have him join the team. I would also like to welcome Pete Ligotti as our new Chief Commercial Officer. Pete joins us with a brilliant 30-year career, including 20 years at Integra. Some more time at NuVasive where he ran a successful business. He is going to be coming in here, and he is going to be spearheading our commercial efforts as we move towards the launch and commercialization of 41X. Welcome to both of these gentlemen, to the Elutia Inc. crew. Okay.

So where are we headed? I want to be really clear about all this so everybody understands. We are going to solve a really big problem that exists right down in breast reconstruction, and why this is such a transformational opportunity for us really comes at the intersection of three things. One is, it is a really big market. It is a really big market, and that matters. Breast reconstruction is a $1.5 billion market. But it is also a really big market that is facing an enormous problem. As I said, 15% to 20% of breast reconstruction patients will develop a serious postoperative infection. It is just unacceptable. We can do better. We have to do better.

And the good news is that our technology platform is almost purpose built for this specific problem. Our first FDA-cleared drug-eluting bioenvelope turns out to be a really, really great way of addressing breast reconstruction infection. And so that is what we are going to do. So digging in here a little bit, breast reconstruction is a really big market. There are 102,000 breasts reconstructed after mastectomy annually. That means there are a lot of biological meshes that are already being used. Biological meshes are already used in 90% of these surgeries. So what does that mean? It means we do not have to train a surgeon on some brand-new technology to solve their problem.

We just take a technology that they are used to, that they are familiar with using, and make it much better so it solves their number one problem. Human ADMs, human acellular dermal products lead this market and they are expensive. We are talking about $7,500 to $9,500 per breast. That makes them 65% or more of the total implant spend during a breast reconstruction procedure. So this is a really, really big market. But it is a market that confronts some very unique challenges. When I talk about the postoperative infection rate being 15% to 20%, people look at me and think, oh, that just could not be. It is. It definitively is.

I want to explain just a little bit about why we see such high infection. And I am not going to go through all the slides. Some of you may have seen this. I have a longer series on this. But I do want to show you what is really at the root of this. So in a mastectomy, all of the breast tissue has to get removed. If all of the breast tissue is not removed, the woman’s mastectomy is not complete and they have to go through follow-up and surveillance and mammograms and other types of things and still have the risk for redeveloping breast cancer. So all of this tissue has to be removed.

Well, one of the things that you should sort of know about breast tissue is that the blood supply for the anterior, or the front, side of the breast all goes through this breast tissue that has to get cut out. And so when a mastectomy is done and that tissue is removed, the blood vessels and therefore the blood supply for the front half of the breast is removed with it, and that closes off that blood supply. And what does that do? Well, that creates a situation where you have an area of the body that your blood flow cannot reach, where your immune system cannot readily reach, and very importantly, where postoperative antibiotics cannot reach.

You can give somebody oral antibiotics or you can give somebody IV antibiotics, but if they do not have a vasculature to a particular area, those antibiotics are not going to flow there. And this is what sets up the very unique problem that we see in breast reconstruction. And that is what leads to these exceedingly high infection rates. As I said, one in three women suffer a serious complication, but 15% to 20% experience infection. This is not one paper. This is not some esoteric citing. This is the registry. This is what all of the data says. In fact, put it into real specific numbers. The registry data says it is 12% to 37%.

You want to put the real numbers about it. So when we say 15% to 20%, we are not exaggerating. On that number, if anything, we are being conservative. And this is validated every time we go out and talk, particularly with the academic centers where they really track these numbers very, very closely. That leads up to one in five implant loss, so they have to go back and this whole thing comes out. It leads to a massive economic burden for the hospital, a $48,000 economic burden to the hospital. So the hospital certainly should be highly motivated to address this problem.

But I just want to keep in mind and go through our mission here in humanized medicine. We are also talking about a woman that started this journey because she was diagnosed with cancer. Not an augmentation. She was diagnosed with cancer. And the number one goal in that woman’s mind is curing herself from that cancer. And that involves chemotherapy. It involves surgery. It involves radiation sometimes. And when an infection pops up, all of that stops. None of that can go on until that infection is resolved. And so this is a significant problem on so many different fronts. And it is one that, if you cannot tell, we are very, very passionate and committed to solving.

So the great thing about this anatomical problem that is set up during the mastectomy is it kind of creates a perfect environment for what we do. So what if we flip the script on this and instead of trying to deliver this antibiotic systemically, we delivered it locally. We actually delivered it where the breast implant and the drain are, through the mesh, which is naturally there anyway to hold the implant in place. Well, the exact opposite would happen. Instead of concentrations being very, very low of antibiotic, the concentrations would be very high. And they would stay high for a long period of time. And then the best part, they would not have any systemic effects.

So you could have high therapeutic concentrations of antibiotics right there in the breast site without any of these systemic side effects that you sometimes get when you deliver systemic antibiotics. And this was the concept that we started out with a very long time ago. This was the premise behind EluPro, and when we started using EluPro in humans, we saw it was completely valid. And then we got more data on this specifically in breast reconstruction. So there is some really great data out there on what happens if you deliver antibiotics locally into the breast reconstruction spacers. Two different studies particularly that I will reference here. One of them uses a plaster antibiotic plate.

Now that does not sound like a great way to treat a woman who is undergoing breast reconstruction, to put a piece of plaster in her breast. But when the risk of postoperative infection is 15% to 20%, desperate times call for some pretty desperate measures. So they gave this a shot. They impregnated this plaster with this antibiotic and they looked at it in just the general breast reconstruction population. What they saw was a 62% reduction in infection risk. We are talking about going from 12.6% to 4.8%. This is not a small study. We are talking about an n of 593 patients in here.

So a significant proof of concept that if you deliver these antibiotics locally, you can do a really, really good job of preventing infection. Another version of this was tried, but in a much, much higher-risk setting. Here, what they were looking at is instead of using these big plates, they used these little plaster beads. Again, they are this plaster material. And they put those into the breast cavity. What they were looking at here were women who had very, very poor, in fact pathologically poor, blood flow to the anterior side of the breast, something we call mastectomy skin necrosis.

And this is where there is just literally no blood supply to the front part of the breast, and that front sort of breast tissue starts to die. When that happens, your risk of infection skyrockets. And so here, they saw an 82% reduction in infection. We are talking about going from 36% down to 6%. Again, n of 75 here. You might say, well, I guess maybe this problem is solved. Not really. Even the authors, and these are friends and champions of Elutia Inc. who were behind these studies, will tell you this is a suboptimal solution to a very serious problem. No woman likes that plaster put in there.

No plastic surgeon wants to make antibiotic beads off-label in the back part of their surgical center. They do not stay in place. They drop down into the inferior side and into the gutters of the breast. They do not provide uniform coverage, and they elute the antibiotic way, way, way too quickly. But it did show that this concept definitively works. And that is why we created NXT 41X. We are combining these powerful antibiotics, rifampin and minocycline. So these are antibiotics that specifically target the pathogens we know we see in breast infection. And it delivers them in a uniform field for an extended period of time. It might be 30 days. Wow.

What is this 30 days about? The drains that are placed at the time of surgery stay in 17 days. And so you want a couple of weeks of extra coverage. That is what that is about. And we combine these powerful sustained antibiotics with an optimal biologic matrix. And that matrix I will refer to as 41. It is just the matrix by itself. And we put those two things together and we made something purpose built for the problem that we are trying to solve, which is postoperative infection in breast cancer surgery. So let us talk about the roadmap and how do we get from here to there.

Right now, we have SimpliDerm, which I am going to talk about in just a second, but that is our current product that is used in the breast reconstruction space. It gives us a lot of practical, on-the-floor experience in this space. The real excitement starts with 41 and 41X. So 41 is our base matrix. So when I say NXT 41, I am talking about just the biological matrix alone, without antibiotic. It is a phenomenal matrix in its own right. If we were not a drug-eluting biologics company, we would be talking about this incredible NXT 41, but we cannot leave good enough alone, primarily because it does not solve the biggest problem in breast reconstruction.

But what we do is we use 41, from a regulatory standpoint, to set the foundation for 41X. We announced today that we have already submitted to FDA NXT 41. Let me just sort of pause and reality check everybody. We know we are going to get questions from FDA. We know we are going to need to respond to them thoughtfully and professionally, and we know that is probably going to take a little while. So let us be patient. Let us give our incredible R&D team the time to do the professional job they need. If something significant happens, I promise we will update you on it. In the meantime, we expect clearance sometime in 2026 for 41.

And that will serve as the platform for NXT 41X, which is the base matrix combined with the rifampin and minocycline. And if we put the timelines together, we expect clearance for NXT 41X towards the end of the first half of 2027. So we are looking at a second-half launch of that product. Okay. What is going on inside the company? Well, you can sort of divide it up into three major workstreams. The first one is obviously development. No surprise here. That group is focused pretty heavily on the approval of a highly differentiated product that significantly improves outcomes in plastic and reconstructive surgery.

That starts with our 41 base matrix and rolls seamlessly into our 41X drug-eluting matrix. I said we are here in our beautiful Gaithersburg facility. Well, that allows me to introduce manufacturing, because this is our manufacturing facility here, where we have enough capacity to make 41X for the foreseeable future. I think we have something like $120 million in revenue-generating capacity for 41X with just one shift right now. We have this great manufacturing facility. And then, basically, I could sum up manufacturing’s job right now into two things. One, ensuring adequate supply of perfect quality tissue. And two, driving down cost of goods. So that is what they are working on.

And then lastly, we now have Pete Ligotti coming in and heading commercial, building these KOL partnerships. I am going to tell you, we do not have a problem getting a meeting and building strong relationships with our KOLs. We have, and are continuing to build, a very robust KOL team of champions. And there is really no secret to it. We are able to do it not because we have great personalities, but because we are addressing their number one problem and the number one problem that their patients are facing right now.

In addition to that, Pete is working on developing health economic models, obviously spending a lot of time on reimbursement strategies, and generally preparing for launch readiness of 41X. So now let us turn a little bit to SimpliDerm. We are exploring SimpliDerm strategic options. We announced that in the press release today. You might ask, well, why now? Well, we have gotten to the point where our confidence with the 41X program really dictates that this is now the time for us to focus all of our time, all of our resources, all of our energy on making sure we do a great job with that platform.

SimpliDerm is a great product, and whoever gets this asset is going to get a really, really wonderful product. Acellular dermal matrix that is used in soft tissue reconstruction. It has great handling. It is sterile. It is hydrated and ready to use, which is what the plastic surgeons want. 100 million lives covered is a big deal. Some people think they could introduce their own acellular dermal product really quickly and just get it on the market. It turns out reimbursement in the acellular dermal matrix market is a really big deal. So we have 100 million lives covered across two of the largest payers, Anthem and UnitedHealthcare, as well as nine regional plans. Patent protected, obviously.

It is completely standalone. So for us, it is a completely segregable business that does not cause any disruption. And whoever gets it, it is EBITDA accretive. So no incremental capital investment is required. It is really a beautiful plug-and-play technology. We will keep you updated on this, and we will see how that process goes. Lastly, I would not be able to say any of the great things that I am saying today, and we would not have been able to make any of the progress that we are making, without our incredible Elutia Inc. crew. We are proud to be recognized for something we already knew.

Elutia Inc. is a great place to work, and we were certified by the Great Place to Work certification. The results, I thought when I saw them, I was really proud. It proved we are a mission-driven organization. We are also a merit-driven organization. 54% women, 62% of our leadership roles are occupied by women. 50% have advanced degrees. We are a brilliant group. Not me. But the team. An entire third of our organization has a doctorate. And we are a committed group. Our average tenure, 6.3 years. The advantages, if you are wondering, so what is the advantage of this Great Place to Work certification? Well, the certification is kind of nice.

I guess you can hang it on the wall. But what it means is that, compared to our noncertified peer competitors, we tend to outperform on financial metrics by fourfold. We are able to attract job seekers because of the Great Place to Work certification with a 15 times higher attractiveness, and our turnover of certified workforces is about half that of the regular U.S. workplace. So I am going to end my comments there by thanking this tremendous team for frankly making my job such a joy. And with that, I will stop talking, and I will turn it over to Matt Ferguson.

Matt Ferguson: Okay. Thank you, Randy. And before I start my remarks, I would just like to say I so appreciate the passion and the leadership that you brought to the organization, and I support all of the comments that you just made about our mission and our market, our opportunity, and probably most importantly, our team. And with that, we put out our earnings press release today with quite a bit of detail in it, and we will put out our 10-K in a couple of days. That will have even more detail in it. So I am just going to hit a few highlights and not take very long here.

But moving into a summary of our fourth quarter financial results, from a revenue perspective, we did $3.3 million in revenue, and that compares to $2.8 million in the year-ago quarter. That is up 16%. So we were very pleased with that performance. That was really driven by the return to direct distribution for both our cardiovascular and our SimpliDerm product lines, as we have talked about. The return to direct distribution has also had a very positive effect on our gross margins. So on an adjusted basis, which is probably the better indication of how things are really performing from a business perspective, we had an adjusted gross margin for the fourth quarter of 66.8%.

That was up 12 points from the prior-year quarter, when it was 56.5%. So really nice results there. Our net loss from continuing operations, so that is excluding the bioenvelope business that was divested on October 1, was $6.5 million, versus $7.2 million a year ago. And then probably a more relevant metric in terms of our operating performance, our adjusted EBITDA, which is a non-GAAP metric but excludes certain noncash, nonrecurring, noncore operational metrics, was a loss of $4.2 million in the quarter compared to $3.4 million in the year-ago quarter. On our balance sheet, a lot has changed in the last quarter.

As you know, our total cash on hand plus the $8 million that we have in escrow is $44.4 million. So it puts us in a really nice position from an overall cash point of view. That is after having paid off all of our debt with SWK that took place at the beginning of the fourth quarter as well. That was about $28 million that went to pay off that debt. And then just from a share count point of view, we have 42.8 million common shares outstanding as of the end of the year. In addition to that, there are 4.5 million pre-funded warrants that are outstanding, so a total of 47.3 million.

And all of those common shares outstanding now are Class A common shares. So what that means is that all of our Class B common shares, which were held by one entity, were converted during the quarter and sold into the market. So that, as you know, is essentially an overhang that is gone now, and we are very pleased to get that behind us. One of the effects that we have seen as that has gotten behind us is that we recently came back into compliance with all of Nasdaq continued listing requirements.

We put out that release at the beginning of last week, and I would just like to thank all of our investors out there who have put their trust and their capital into Elutia Inc. and helped support that return to compliance there. So moving on, just to take a step back and at a big-picture level, 2025, and really all of 2025, represented a real strategic reset for the company.

And the biggest event in that really was the $88 million sale of our bioenvelope business to Boston Scientific, which, again, allowed us to pay off all of our outstanding senior debt to SWK, left us with $44.4 million of cash on the balance sheet and in escrow that will come in later this year, and it really allows us to be completely focused and extremely well resourced for the continued development and the launch of NXT 41, which we truly believe will be transformational in the market starting next year.

So I guess with that, the last thing I would like to mention is just that we have tried to be very active in getting this story out, which we truly believe in. We have been active in getting it out to investors, and we are going to continue to do that. We have two conferences coming up in the next couple of months. The first will be just next week, the Sidoti Small Cap Conference, which is an online conference, and then in May, we have the LD Micro Conference, which is a live conference in Los Angeles. So if any of you are attending those events, we would very much love to meet with you there.

So with that, in summary, before turning it over to questions, I would just like to reiterate the three key points of our story. We have a validated technology platform, as has been proven by the sale of our EluPro product and our bioenvelope business last quarter to Boston Scientific for $88 million. We have a truly blockbuster pipeline underway, which is really starting with NXT 41 and a $1.5 billion market. And then we are in a great position from a resource point of view. We have a fantastic team. We have a great facility that we are sitting in here today. And we have a strong balance sheet, which will take us through that approval and into commercialization.

So with that, I will open it up to questions, and back to you, Operator, to start that off. Thanks.

Operator: Thank you so much. We will now open for questions. As a reminder, to ask a question, simply press 11 to get in the queue and wait for your name to be announced. To remove yourself, press 11 again. We have a question from the line of Frank Takkinen with Lake Street Capital Markets. Please proceed.

Frank Takkinen: Great. Thanks for taking the questions. Congrats on all the progress. Congrats on 41 submission to the FDA. I was hoping to start with a few questions around that. I know it is a question along the lines of trying to predict the unpredictable, but as you are working internally, what kind of questions are you preparing for from the FDA, and how do you think about the challenges you might have to go through to get it to market, or if it should be a relatively streamlined process? And then secondly, once you do get 41 across the goal line, how quickly can you shift the filing to 41X and resubmit?

Randy Mills: Okay. I am just making some notes, Frank. So, Frank, thanks for the questions. I think everyone should view the review process and respect the review process the way we do. The timelines that we have laid out for clearance are fairly conservative. And they are fairly conservative because we want to make sure that we do a really professional job. Now I would say, first and foremost, we submit a high-quality application with everything in it that we think is necessary for a clearance. We do retain a lot of backup data and supporting data on all the necessary points.

But as a matter of sort of regulatory strategy and best practices in regulatory science, you do not over answer a question with FDA. You just be prepared to explain the rationale for the things that you did answer. And so that is really the strategy that we have going on. There is no question that biocompatibility for a product like this is a big question in mind, and a big focus right now in the Food and Drug Administration. We know that. We feel pretty good about our product there.

We know that when we get into 41X, if we just remember back to the days from EluPro, that things like in vitro elution were a real big point with them. You probably remember the IVE days, Frank. And so we are prepared for any and all of it, but we are prepared for it in a very humble and respectful way. And that is the timelines we have set up that have that in place. And I would just sort of encourage everyone to just keep that in mind. I would not be pulling forward any timelines until we tell you that is probably a good idea.

With regards to how fast we roll into 41X, I would say just to keep in mind the whole purpose of 41 is to improve the efficiency of 41X. We have no intention of commercializing 41. It is not a drug-eluting matrix, and so it does not fit with our high-level thesis. So, really, the only reason that we are doing it is for regulatory efficiency. And therefore, the team will learn from the 41 submission. They will call any audibles that they need to as a result of what we learned from the 41 submission. But clearly, their plan is to go pretty efficiently from 41 into 41X.

And if at any point we think that might not, that 41 might no longer serve that purpose, well then we might change the plan. Right? Even pull forward a 41X submission. But right now, we anticipate, in the timelines, an approval pretty efficiently after 41.

Frank Takkinen: Got it. Very helpful color. I was hoping to ask a little bit more about commercial. Appreciate some of the comments you made there. But kind of related to SimpliDerm, I think we have talked about just having experience in that space via SimpliDerm could help the commercial readiness of the organization once 41X is approved. How do you think about balancing that readiness that SimpliDerm could have helped with versus the strategic process? And then at the same time, what are you maybe doing from a commercial readiness perspective in light of that transition that is occurring?

Randy Mills: Right. So, Frank, let us go through this with the three things that really help us get ready for 41X. One is just the base understanding of this market, how it works, and that includes the reimbursement. Right? So we have done that. We do know and we do understand how this current market works, how reimbursement works here, who the players are, literally the logistics of a breast reconstruction product. So we think we check that. You will remember, by far, the most important thing in the commercialization of EluPro was the value analysis committees, like the VACs. And I will be completely honest here.

We learned more about how to do that with EluPro than probably we learned or are learning from SimpliDerm. My 194 VACs in the time that we did that, I mean, that was so key to the explosive growth of that product. And we feel, and we have a team that understands that. We know what to do from a VAC package standpoint. We feel pretty good about that. The third piece, though, was KOLs, and, you know, key opinion leaders and who are the thought leaders in this space.

And here is, Frank, where our thought process has really flipped, and it really started flipping when we were able to go last October to the big plastics and breast meeting in New Orleans and just cold call some of these marquee leaders in the field of plastic and reconstructive surgery and say, hey, would you mind having a conversation with us? We are trying to develop a locally delivering biological matrix for breast reconstruction, you know, deliver antibiotic, try to prevent infection. Our dance card filled. And it filled with some of the brightest, strongest thought leaders in this space, and that continues to this day.

We have no problem getting meetings with these KOLs and engaging in very meaningful, very enthusiastic conversations with them on how we can best design, build, and deliver a product that is exactly what we need. And so when that last piece sort of started to happen was when we sort of made the decision we are probably pretty good here and can start moving up, particularly with the progress the R&D team is making with the filings.

Frank Takkinen: Yep. Yep. That is perfectly clear. I got it. One last I wanted to ask, Randy. Obviously, the data is really impressive with plate as well as the powder with 60% and 80% plus reductions. How do you think, and it is a speculative question, but how do you think NXT 41X could compare from an infection reduction perspective in relation to some of these other techniques that are being used today?

Randy Mills: Yeah. We would be thrilled with a 50% reduction. Anyone would be thrilled with something like that. We have some advantages, though, over those techniques that are delivering those results. Those advantages are uniform distribution. So as I said, with the plates and the beads, those things have mass to them and they notoriously sort of fall down into the breast gutters and do not provide uniform coverage. The second thing is the teams that were doing that work know that antibiotic comes out of that real fast, and therefore it does not provide a particularly long-term coverage.

We targeted this 30 days, and we targeted the 30 days because the drains come out at day 17, and if the drains are still in, particularly with this, there is a pistoning that can happen with the drains from the outside to the inside, you are constantly introducing and have the potential to introduce bacteria back into that surgical field. So we felt pretty strongly that you needed to have antibiotic coverage that persisted after the drains were pulled. So we feel like we have probably built a better solution than the ones you are seeing with these really fantastic results. I cannot knock what they are seeing.

But I think I want to caution everyone here again to a little bit of humility and perspective. There is a percentage of these cases that have such severe necrosis. This is where the vasculature to the breast is so compromised that it does not matter what you would put in there. The tissue just dies. And in that case, we can add antibiotics all day long, but we are not going to prevent what ultimately is going to become something more like a gangrenous infection and the complications from those. And that is really just an unsolvable, at least at this time, consequence of the base mastectomy. So does that help?

Frank Takkinen: Yeah. That is perfect. Appreciate the color. Thanks, guys.

Operator: Thank you so much. And ladies and gentlemen, this concludes our Q&A session and our conference for today. Thank you for participating. You may now disconnect.

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