Elutia, Inc.

Good afternoon, ladies and gentlemen. Welcome to ELUSHA's second quarter 2025 financial results conference call. If you know you would like to ask a question, please press star 1 on your telephone keypad to join the queue. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Matt Steinberg with FinPartners. Thank you. You may begin.

Thank you, Operator, and thank you all for participating in today's call. Earlier today, Alusha released financial results for the quarter ended June 30th, 2025. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that do not relate to matters of historical facts or relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation, those relating to our operating trends, and future financial performance are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our public filings within the SEC, including Alusha'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 Alusha's other filings with the SEC. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 14, 2025. Alusha disclaims any intention or obligation, except as required by law, to update or revise any financial projections 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-gap financial measure a reconciliation of this non-gap financial measure so the most directly comparable gap financial measure is available in the company's financial results release for the second quarter ended June 30th, 2025, which is accessible on the SEC's website and posted on the investor page of the Alusha website at www.alusha.com. And with that, I will turn the call over to Alusha's CEO, Randy Mills.

Thank you, Matt, and welcome one and all to our second quarter 2025 earnings call. Let me start with a rundown of today's topics. And first and foremost, I want to provide some color on the success we continue to have with our LU Pro launch and the commercial success we continue to have there. Then I'm going to switch gears and I'm going to talk a little bit about the tremendous work our development teams are doing in the reconstruction pipeline that we have underway. I'm then going to turn it over to Matt, who's going to provide an update. We have some pretty significant updates on the litigation front. And then lastly, Matt will also do, as he always does, a rundown of our financial progress. Lastly, as I indicated in the press release, on the business development front, we have a number of strategic opportunities that we're sort of in the middle of that we're driving towards conclusion. And we anticipate having more to say on those in the near future here. But let's just jump right in with a review of LU Pro's first year and what a year it was. On the commercial side, 49% sequential growth this quarter over last quarter, built on the back of seven national GPO contracts that the team has secured. As we've said all along, the key to revenue growth has to do with the number of hospital systems we can get into. We're currently at 161 hospital systems actively ordering. And then lastly, a lot of this growth has been facilitated by the tremendous partnership that we've developed with our friends at Boston Scientific. But it's great commercial success that has been built really on a great scientific foundation that we have at Aleutia. Our drug-eluting technology, particularly our biologics drug-eluting technology, we think is the best in the world. In this first year, I think we've done a good job of validating that. Five peer-reviewed publications in the first year alone, validating not just the product but the base technology. We won the Edison Award. I got to actually go and receive at what I would call the nerd Oscars for innovation in medical technology. Two medical device network excellent awards, one for product innovation, which isn't a surprise, another for product launch, really combining what the two teams working together are able to accomplish. And then lastly, our innovator-in-chief, Dr. Michelle Williams, won medical device innovator of the year award, and we think that was certainly well deserved. Okay, turning to the scoreboard, really the numbers change. First half performance, bio envelope revenue for the quarter up 33% year over year. That puts us at about a $14 million run rate. Now, why is that? Well, that's really being driven by LU Pro growth, almost exclusively by LU Pro growth. up 49% sequentially for the quarter. LU Pro now makes up 68% of our bio envelope revenue, and it continues to grow. Why is that? Well, that's all driven by our VAC approvals. So we now have over 160 hospitals that we've gotten through the VAC process. When we say through the VAC process, we don't just mean on contract and able to order. We don't actually count these hospitals until they are actively ordering and we are shipping them the product. So that breaks down sort of at a high level what's going on with the product. Let's get in a little, drive a little bit more detail here. So Looking at the revenue, it's kind of amazing. We sold the first unit of LU Pro last September, and we experienced some very modest revenue recognition in the third quarter of 2024. But since then, this product has been on a tear. You can see the quarterly growth continues. We now expect to end the year at a revenue rate approaching $20 million, and that really is due to the tremendous work the commercial team is doing. Dig in here and see what's really going on, though. It's really driven by our sales per account. So as we said before, if we can get on contract with the hospital, what we're seeing is 130% higher revenue in those accounts for LU Pro than we're seeing with Kangaroo. And this is reflecting greater utilization of the product. Kangaroo is a great biologic envelope. It was able to hold the pacemaker in place, keep it stable, prevent erosion from taking place and migration from taking place and ultimately a fibrotic capsule forming. But if you add the powerful protection of rifampin and minocycline, you really get the full benefit of a drug-eluting biologic. And that's why we're seeing this 130% higher utilization rate with Eliapro than with Kangaroo. We couldn't do this not only without our own direct sales team, which is doing a great job. but also with our 1099 distributor network, which is now making up about 33% of our total sales, enabling us to very efficiently move across the country and gain new territories, but also with our partnership with Boston Scientific. Now Boston actively involved in LU Pro sales, in 98 distinct hospitals ordering. They are currently facilitating and participating in about 30% of LU Pro cases. So if you just start, just do the math and you sort of extrapolate this out, we're targeting something along the lines of 1600 or so hospital centers that would ultimately use LU Pro that are active in planners of pacemakers. if it just sort of scales the way it's going, makes this $150 million product in just the U.S., in just pacemakers alone, and we think the neuromarket is at least as big of an opportunity for us there. So from a revenue standpoint, really strong work so far. Again, we've said all along our revenue, if you want to know what our revenue is going to do, look at what our VAC approvals are doing. And here are This just shows the great work of our team continuing to grind out those approvals. 161 institutions, you can see there the monthly progress we're making. We add somewhere between 12 to 15 new institutions a month. We have something along the lines of 90 submissions in progress. and we have about a 95% success rate. So when we submit to a VAC, we have a very, very strong likelihood of gaining approval. Facilitating That great work with the VACs is the work we've done with our GPO contracts. And so we are on contract now with seven major GPOs, including Premier, S3P, Adventus. And we have several others under the work and believe we will be reporting on a few more successes there. as the year concludes as we get through the second half. So all in all, what an incredible first year for LU Pro, and I want to thank the entire ILLUSIA crew. It really was a team effort from science to operations to commercial, everybody working together the way our culture says that we should. Okay. LU Pro has a tremendous amount of fun, and it's a great commercial success, but we are just getting started. Our mission is to humanize medicine so that patients can thrive without compromise, and there is no bigger need than in the breast reconstruction space. This year alone, 317,000 women will be told that they have an invasive form of breast cancer. Many of those are going to go on and require mastectomies and need reconstruction, and a staggering one in three women going through breast reconstruction are going to suffer serious complications from that reconstruction procedure. And that is something we can fix. And that is something that we have resolved to change. Taking a look at the breast reconstruction market, it is a very big market. And it is a very big market that already has a dominance of biologics in it. So biologics represents a $1.5 billion addressable market in the US alone. And biologics accounts for 65% of the device-related spend in reconstruction. Breaking down the numbers, there are 151,000 mastectomies annually in the United States. Two-thirds of those involve bilateral procedures. That generates somewhere between 200,000 to 225,000 individual breasts that are being reconstructed. Biologics account for 80% of the reconstruction cases at a cost of somewhere between $7,500 and $9,500 per case. Therefore biologics are about 65% of the implant related costs, but they do not address the primary cause of implant failure. So this is a market where we see biologics as the standard of care And that standard of care is currently failing. Despite the high costs, biologics alone don't address the problem. And these numbers don't lie. As I said, one in three women going through the breast reconstruction procedure suffer a serious complication. Why is this? It's driven almost exclusively by persistent bacterial contamination. So 10% to 14% of women will experience a significant infection. 19% to 29% will suffer capsular contracture, which is most often a direct result of the inflammatory process from colonization of bacteria. And up to 21% of women will actually have an implant loss. And there's significant and very real economic costs associated with these two. We're looking at almost $50,000 in economic burden to the hospital, which because it's a post-operative infection, the hospital must bear alone. These are not insured costs. So if you think about this, and just about everyone I know knows a woman going through a procedure like this. You've been diagnosed with breast cancer. Horrible news. You have the courage to go and face a mastectomy. Radiation oftentimes, very frequently chemotherapy, and instead what do you face? You face multiple surgeries, delays in your underlying cancer treatment, and the pain and suffering of a failed reconstructive procedure. This is something that the drug-eluting biologic technology that we've developed was made to fix. You might be wondering, so how bad is it? Well, how's this for bad company? Breast reconstruction ranks among the riskiest procedures in medicine despite being performed over 150,000 times a year. It falls just between major limb amputation and colorectal resection with an ostomy. for serious complications. So it's not really surprising that women, when faced with the option for breast reconstruction, 60% of women opt to not have their breast reconstruction. Friends, this is a market that needs a revolution, and that is exactly what Alicia is bringing to the table. We have built on our award-winning technology from LU Pro to bring you what's next. NXT 41X is a fully engineered next generation biological matrix that brings both the handling and the biological remodeling of a biologic matrix. But to that, we've added powerful antibiotics with sustained antibiotic release to prevent infection that is associated with these types of procedures. Our team have been hard at work on this for the past three years. and we are in a position now to where it's actually just around the corner. So we've been hard at work leveraging our proven development experience, both from a technological standpoint, as well as a regulatory standpoint, to rapidly gain market access. And so as you guys know, we've submitted and gotten approval for LU Pro, but we haven't talked about We spent a tremendous amount of time during those last three years developing and perfecting a great base biological matrix, and our development of that matrix is complete. Our animal data supporting the use of that matrix is complete. We have already held pre-submission meetings with the Food and Drug Administration, and our teams are now preparing submissions for approval. So we anticipate having the NEXT41 base matrix approved now and launching in the second half of 2026, and the antibiotic matrix in the first half of 2027. We will obviously be providing more detail on this in the coming months, but I wanted to give you a good sense of not just where we are in the development program, but more importantly, why the NEXT41 program for breast reconstruction has been so high on the development team's priority list for the last three years. With that, I will conclude my comments and turn the call over to Matt, who will discuss where we are from a litigation standpoint and then do his financial review.