Elutia, Inc.

Greetings. Welcome to the Alusha third quarter 2024 financial results call. If you require operator assistance during the conference, please press star zero on your telephone keypad. At this time, I'd like to turn the conference over to Matt Steinberg with FinPartners. Please go ahead.

Thank you, operator, and thank you all for participating in today's call. Earlier today, Alusha released financial results for the quarter ended September 30th, 2024. A copy of the press release is available on the company's website. Before we begin, I'd 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 trend and future financial performance, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our public filings with the SEC, including Alicia's annual report on Form 10-K for the year ended December 31st, 2023. That's accessible on the SEC's website at www.sec.gov. Such factors may be updated from time to time in Lucia's other filings with the SEC. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 14, 2024. Lucia disclaims any intention or obligation, except as required by applicable law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. Also during this presentation, we refer to gross margin, including 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 third quarter ended September 30th, 2024, which is accessible on the SEC's website and posted on the investor page of the Alusha website at www.alusha.com. And with that, I will turn the call over to Alusha's CEO, Randy Mills.

Thank you, Matt. It is my sincere pleasure to be with you this afternoon and to go over the current progress that we're making at Aleutia. To start off, like we do everything as a mission-centric company, we'll go over our mission. We are humanizing medicine so that patients can thrive without compromise. That is taking all of the great benefits of humanized biological materials, combining them with active pharmaceuticals, and putting them together in a usable formulation that really can improve the standard of care that patients receive. And I think today we're going to point out that we are in the midst of one of those revolutions going on with the introduction of our LEU Pro product line. So we are a commercial stage company with two high growth proprietary product platforms. Most of my comments today are going to be aimed towards our LU Pro product launch, which we've talked about today. But we also, we can't forget, we also have our fantastic SimpliDerm product line in breast reconstruction. Simpliderm grew 19% this quarter, so we're really pleased to see that product return to a more normal rate. But we are pioneering the drug-eluting biologic, and that is to solve complex surgical problems that are not addressed by current technology. We got the first one of those cleared in June of 2024 with Eliapro. We had the first implant in September, and we're building towards our commercial launch in January of 2025 with a tremendous amount of momentum. Matt and I are going to talk through the company today, but I'm going to try to keep my comments brief and to the point, and I hope that you will find really full of substance. And so I'm going to talk a lot about what it is we're doing with LU Pro and how we're preparing for this commercial launch Full commercial launch that's going to start in January. And so as we've talked about, obviously we got approval in June, which was a necessary first step. But then we had to move on to manufacturing the product. And we actually, although that was a third quarter accomplishment, we actually talked about that in our last conference call. So I'll spare you the details of repeating that. But since that time, we've made a tremendous amount of progress. In planting it, the first LU Pro envelope went in September 5th. Since then, we've been growing our presence with both our Salesforce and with our representation through VACs and GPOs. And then lastly, supporting all of this great effort by publishing peer-reviewed data out there, demonstrating the proven activity of the product. I will say this. I'm going to go through all of that in much more detail. Please know underneath all of this, though, is a pretty earnest business development activity that's going on. We are engaged in strategic discussions with multiple partners. As you can probably imagine, though, that is mostly confidential and highly sensitive material, so I will not be going into more detail about that. But I was hoping, investors, you could appreciate the sensibility behind that decision. So let's move on to the details I can talk about, which is what is going on with LU Pro and starting off with implanting it. We are really energized by the fact that we were able to get the first commercial use underway on September 5th. We also had another really significant and cool event happen. We had the first neurostimulator device go in on October 31st, which is our first use of neurostimulation. It actually happened much earlier than we had expected. We didn't really have a big push in neurostim, but that was a That was one of those indications where a physician was looking and saw a high-risk patient and said, you know what, this is actually really the perfect product to make sure that this neurostimulator is protected now that we have a product on label and can do that. We're also seeing strong initial adoption. So Eliapro is being used across all major CIED brands, and we'll have a little bit more about to say on that. And it actually accounts now for for 25% of our bio envelope sales that are ongoing right now. So it's starting to make its presence known and we haven't really unleashed it yet at all to the full market. So we're very, very pleased with our current market adoptions. I think though this slide is kind of a fun one to do. Let's meet our emerging LU Pro nation. Dr. Catanzaro in the left side of this picture, Dr. Catanzaro at East Carolina University was our first electrophysiologist to implant on September 5th. And we were really excited to have his support and encouragement. You go to the right side, the bottom right side of the picture, my good friend, Dr. Kapoor at Harvard Medical School, not to be outdone. He wanted to get on the action team. in planting LU Pro around a Boston scientific pacemaker. In the middle of the picture, we have Dr. Hutchison, who is protecting an Abbott neurostimulator here down at Spartanburg. And then actually, probably my favorite of these pictures is the one at the top. This is Dr. Al-Khatib, who's a professor at Duke protecting a Medtronic device, actually lending some credence to this notion that 88% of former Tyrex users might actually want to switch over and become Medtronic. and become LU Pro users. And so this is just the beginning for the electrophysiologists out there and the pain management physicians with neurostimulators. I can assure you there is plenty of room on the bandwagon for you all, and you are all welcome. So let's move along into what we're doing to strengthen our sales and our commercial presence out in the field. So we are expanding our commercial footprint. We're doing this strategically. We added significant key additions to Southern California and to the Northeast. We did this through a balanced blend of direct and independent reps. We are using this balanced blend of direct and independent reps because it actually helps us get quality coverage where we want it in targeted locations, but actually by keeping a lot of our costs variable. And for a company our size, that actually matters. We're thinking about how we do this effectively, but we're also thinking about how we do it from a cost-conscious standpoint as well. That leaves us a hybrid model right now, 12 direct reps, 34 independent reps, nine product consultants. We've also completed a very in-depth sales training program for all of these sales professionals that are out in the field, explaining to them and making sure that they understand the science behind the story of not just a pharmaceutical product and not just a device product, but one that actually combines pharmaceutical device and biologics into one. So we're really excited about all the work that Kimberly and her team have done there. And boy, have they done some work. So they have actually completed submissions to over 100 VACs so far. And this number I thought was the most surprising. 36 accounts are now actively ordering. So typically we would anticipate a VAC on average to take about six months to get through that process. And in six weeks, we have 36 through. We're not leaving it there. We continue to submit to VACs. We have hundreds to go. And we're on the march. But we clearly have a strategy going. That is resonating with the VACs. It's working with them. We're getting through that process. We're getting them pricing letters, and we're getting pricing on our terms. Speaking of which, we're also not leaving it at just VACs. We're advancing this strategy with our GPO partners as well, and we have made significant progress with the GPOs through major healthcare systems, and we would expect to have favorable coverage decisions by a number of them early in 2025, and we'll obviously be making those announcements as they warrant. So that's what we're doing from an implanted standpoint, and that's what we're doing from a commercial standpoint. But this is a scientifically supported product as well, and this is a next-generation product, not a Me Too product either. And we're going out there and we're making that clinical data known. And so we have an initial clinical study that we have kicked off our registry study. It's designed to provide real-world outcomes data of people that are actually using LU Pro in CID implantations. We are going to be using this data, obviously, for publication and continued ongoing clinical support in the United States, but it actually also forms the basis of our efforts in the EU to obtain the CE mark. Okay. Speaking of which, we're also really excited to announce our peer-reviewed publication. So I should point out here that when we took Eliapro through the approval process in 2024, that wasn't like any FDA approval process that might have taken place five or ten years ago. We can tell you firsthand The bar has been raised very, very significantly on what it takes in order to get a product through this process scientifically. And frankly, we intend to flex our full scientific muscle in this regard. And so we've gotten some data published out in the frontiers, in frontiers in drug delivery. We're showcasing, we can go on to the next slide, we're showcasing how we were able to completely eliminate four of the most important bacterial contaminants that you frequently see in the hospital setting on these types of devices. So Staph aureus, and not just Staph aureus, methicillin-resistant Staph aureus, probably the single most significant hospital pathogen, completely eliminates Staph epidermidis, the most abundant potential pathogen. Acinetobacter, a really prominent hospital-acquired infection, Haemophilus influenzae, everybody knows about, too, as well, a significant gram-negative pathogen. So gram-positive, gram-negative, cocci, bacilli, complete kill, greater than 99% or four log reduction. And just getting the message out there that we really have created a product that physicians can feel scientifically and clinically very, very good about. There's a tremendous amount of data backing this up. And so I'll close out my comments here. This was a slide we put up last time, but I think now that we are about six weeks into this product being out there and commercially available, this idea that 88% of of electrophysiologists that are using Tyrex said they would switch some of their envelope, some or all of their envelope business to Alupro. That seems to be true. And we're in this $600 million market, and it doesn't seem to matter whether or not you're putting on an Abbott pacemaker or whether or not you're putting on a Medtronic pacemaker or a Boston Scientific pacemaker or You want that pacemaker protected by the only biologic solution out there that offers the complete antibiotic protection of rifampin and minocycline. And we are seeing that enthusiastic response from physicians, from hospital purchasing organizations, and from industry partners. We could not be more pleased with how our prelaunch process is going and can't wait to talk to you again about this once we actually are in the full swing of our commercial launch. So with that, I will step aside and Matt will run us through some pertinent financials. Then, of course, we'll open it up for questions.