Core Viewpoint - Elutia Inc. has successfully sold its BioEnvelope business to Boston Scientific for $88 million, allowing the company to focus on its NXT-41x biomatrix aimed at improving breast reconstruction outcomes [1][2][3] Company Overview - Elutia specializes in drug-eluting biomatrix technologies, aiming to enhance compatibility between medical devices and patients [4] - The company is committed to humanizing medicine, enabling patients to thrive without compromise [4] Financial Position - The sale of the BioEnvelope business has significantly strengthened Elutia's financial position, providing the necessary funds to develop and launch the NXT-41x platform [3][6] - Elutia plans to bring NXT-41x to market in the first half of 2027, with expectations of reshaping the breast reconstruction treatment paradigm [3] Market Opportunity - The U.S. market for breast reconstruction procedures is substantial, with over 150,000 procedures performed annually and a total addressable market of approximately $1.5 billion [3][6] - Biologics account for 65% of implant-based costs, indicating a significant opportunity for improved treatment options [3]

Core Insights - Elutia Inc. has published clinical and preclinical data demonstrating the effectiveness of its antibiotic-eluting bioenvelopes in managing cardiac implantable electronic device (CIED) pockets, which could significantly improve patient outcomes [1][4] Group 1: Clinical Findings - The HEAL study revealed that patients with engineered extracellular matrix (ECM) envelopes experienced 43% lower overall procedural difficulty, with specific improvements of 46% in generator mobilization and 41% in lead mobilization compared to those without envelopes [2] - Preclinical studies indicated that the antibiotic-eluting envelope completely eradicated bacterial inoculates associated with CIED-related complications, including MRSA, while maintaining regenerative function [3] Group 2: Technological Advancements - Elutia's drug-eluting biomatrix technology addresses two major challenges in CIED procedures: the elimination of bacteria causing post-operative complications and the reduction of long-term procedural difficulties [4] - The combination of regenerative ECM and broad-spectrum antibiotics, such as rifampin and minocycline, positions Elutia to develop future drug-eluting biologics, particularly for high-risk surgical procedures like breast reconstruction [4] Group 3: Company Mission and Future Directions - Elutia aims to humanize medicine by improving compatibility between medical devices and patients, addressing real-world clinical needs to enhance patient outcomes [5] - The company is advancing a next-generation pipeline targeting higher-risk procedures, indicating a strategic focus on expanding its product offerings in the medical device sector [4]

Core Viewpoint - Elutia Inc. (ELUT) has experienced significant selling pressure, resulting in a 25.9% decline over the past four weeks, but analysts anticipate improved earnings in the near future [1] Technical Analysis - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold conditions, with a reading below 30 typically indicating that a stock is oversold [2] - ELUT's current RSI reading is 27.88, suggesting that the heavy selling may be exhausting itself, indicating a potential for price recovery [5] Fundamental Indicators - There has been a strong consensus among sell-side analysts to raise earnings estimates for ELUT, leading to a 20% increase in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [7] - ELUT holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a turnaround [8]

Core Insights - Elutia Inc. has entered into a definitive agreement to sell its EluPro™ and CanGaroo® bioenvelopes to Boston Scientific Corporation for $88 million in cash, highlighting the strength of its drug-eluting biologics platform and enabling further development of its product pipeline without shareholder dilution [1][4] Financial Impact - The transaction is expected to transform Elutia's balance sheet, allowing the company to eliminate outstanding debt and resolve litigation from its previously divested Orthobiologics business, while significantly reducing its burn rate [8] - The sale fully funds the advancement and commercialization of NXT-41 and NXT-41x, positioning Elutia for cash-flow positive operations without diluting shareholder equity [8] Market Positioning - Elutia aims to leverage its experience from the successful launch of EluPro to address the $1.5 billion breast reconstruction market with its novel technology NXT-41x, which is designed to support women recovering from breast cancer [3][8] - The company has secured seven national group purchasing organization contracts and over 160 value analysis committee approvals for EluPro, demonstrating its capability to develop and commercialize regulated medical products [2] Upcoming Events - Elutia will provide a company update at the H.C. Wainwright 27th Annual Global Investment Conference on September 10, 2025, at 9:30 a.m. ET [5]

Financial Data and Key Metrics Changes - The company reported a gross margin increase from the mid-fifties to the low sixties on an adjusted basis, excluding non-cash amortization [23][24] - The cash balance at the end of the last quarter was $8.5 million, with expectations of bringing in non-dilutive cash through strategic transactions [38][50] Business Line Data and Key Metrics Changes - The company has successfully launched EluPro, which has shown strong commercial traction, with expectations of reaching an annual run rate of $18 million to $20 million by year-end [41][44] - The company is actively adding accounts for EluPro, with 161 accounts currently ordering and an addition of 12 to 15 new accounts per month [16][19] Market Data and Key Metrics Changes - The U.S. pacemaker protection market is valued at approximately $600 million, with the company targeting a significant portion of this market due to its differentiated product offering [11][12] - The breast reconstruction market presents a significant opportunity, with 151,000 procedures performed annually in the U.S., and a high rate of postoperative complications that the company's products aim to address [26][27] Company Strategy and Development Direction - The company aims to scale the success of EluPro while also focusing on the upcoming launch of NXT 41X, a drug-eluting version for breast reconstruction, which is expected to address unmet medical needs [41][46] - The partnership with Boston Scientific is seen as a key driver for accelerating growth and market penetration [21][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of EluPro and the potential for NXT 41X, emphasizing the importance of scaling operations and maintaining focus on execution [41][58] - The company is optimistic about the regulatory pathway for NXT 41X, expecting to bring it to market efficiently by 2027 [36][46] Other Important Information - The company has established seven GPO contracts, which are expected to facilitate faster market access [18] - Management highlighted the importance of their manufacturing capabilities in maintaining competitive advantages in the drug-eluting biologics space [45] Q&A Session Summary Question: What is the expected impact of non-dilutive capital on cash runway? - Management indicated that non-dilutive capital could extend the cash runway from a few quarters to potentially reaching cash flow breakeven [50] Question: Will Medtronic users switch to EluPro? - Market research indicated that 80% of TYRX users expressed interest in switching to EluPro, but Medtronic's bundling strategy currently limits this transition [52][53] Question: How does the company view the competitive landscape? - Management believes EluPro is a superior product compared to existing offerings, and once physicians use it, they tend to prefer it over older technologies [56]

Core Insights - Elutia Inc. has been selected to exhibit its EluPro™ Antibiotic-Eluting BioEnvelope at the Vizient Innovative Technology Exchange, highlighting its innovative approach in healthcare technology [1][4] - The EluPro is the first FDA-cleared antibiotic-eluting bioenvelope specifically designed for cardiac implantable electronic devices (CIEDs) and neurostimulators, combining a natural biologic scaffold with antibiotics for enhanced patient outcomes [3][4] Company Overview - Elutia develops and commercializes drug-eluting biomatrix products aimed at improving compatibility between medical devices and patients, with a mission to humanize medicine [6] Product Details - The EluPro BioEnvelope promotes healthy tissue regeneration while providing antimicrobial protection directly at the surgical site, enhancing procedural efficiency and standard of care [3][4] - The product is designed to address critical post-surgical complications such as infection, migration, and erosion, thereby improving patient safety and delivering clinical and economic value [4] Event Significance - The Vizient Innovative Technology Exchange provides a platform for suppliers to showcase products that improve clinical outcomes and healthcare delivery, with Elutia's participation underscoring its commitment to innovation in the healthcare sector [2][4] - Since 2003, Vizient has reviewed over 1,700 product submissions as part of its Innovative Technology Program, indicating a rigorous selection process for showcasing impactful healthcare technologies [4]

Core Viewpoint - Elutia Inc. (ELUT) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [4][6]. - For Elutia Inc., the recent increase in earnings estimates suggests an improvement in the company's underlying business, likely leading to a higher stock price [5]. Zacks Rating System - The Zacks Rank stock-rating system categorizes stocks into five groups based on earnings estimates, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - The system maintains a balanced distribution of "buy" and "sell" ratings, ensuring that only the top 20% of stocks receive a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [9][10]. Earnings Estimate Revisions for Elutia Inc. - Elutia Inc. is projected to earn -$0.52 per share for the fiscal year ending December 2025, with no year-over-year change [8]. - Over the past three months, the Zacks Consensus Estimate for Elutia Inc. has increased by 20%, reflecting analysts' growing confidence in the company's earnings potential [8].

Financial Data and Key Metrics Changes - The company reported a 33% year-over-year increase in bioenvelope revenue for the quarter, reaching a run rate of approximately $14 million [10] - Elupro revenue grew 49% sequentially, now accounting for 68% of total bioenvelope revenue [10][12] - Adjusted gross margin improved to 62.4%, up over four percentage points from the previous year [34] - The company ended Q2 with $8.5 million in cash, indicating a stable financial position [36] Business Line Data and Key Metrics Changes - Elupro's sales per account are 130% higher than the previous product, Kangaroo, reflecting greater utilization [13] - The cardiovascular patch products generated over $700,000 in revenue for a partial quarter, more than double the previous distributor's revenue [32] - SimpliDerm revenue decreased to $2 million, indicating potential for improvement in that product line [33] Market Data and Key Metrics Changes - The breast reconstruction market is valued at $1.5 billion in the U.S., with biologics accounting for 65% of device-related spending [20] - Approximately 317,000 women are diagnosed with invasive breast cancer annually, leading to significant market potential for reconstruction products [19] Company Strategy and Development Direction - The company aims to scale Elupro by increasing the number of VAC approvals and GPO coverage [38] - The NXT 41 platform is positioned to address significant unmet medical needs in breast reconstruction, with anticipated market launch in 2026 [25][40] - The company is exploring strategic opportunities that may positively impact cash position in the near future [36][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of Elupro, citing predictable ordering patterns and strong hospital partnerships [46][50] - The company is focused on addressing the high complication rates in breast reconstruction procedures, emphasizing the need for innovative solutions [22][23] Other Important Information - The company has settled 97 out of 110 lawsuits related to a past product recall, significantly reducing future expenses and legal overhang [29][30] - The company is actively working on business development transactions, with expectations for announcements in the near future [41] Q&A Session Summary Question: What are the bottlenecks in the Elupro launch? - Management noted initial production challenges but emphasized that operations have now stabilized, allowing for efficient scaling [45][46] Question: Can you clarify the NXT 41 launch timeline? - The base matrix is expected to launch in 2026, followed by the drug-eluting version in 2027, with a focus on regulatory strategy [52][56] Question: How can gross margins be maintained or expanded? - Management highlighted opportunities for margin improvement across all business segments, particularly in Elupro and cardiovascular products [64] Question: What level of clinical evidence is needed for NXT 41? - The company plans to follow a similar regulatory pathway as Elupro, focusing on generating clinical data for marketing purposes [67]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) The unaudited financial statements show a net loss of $13.5 million for H1 2025 and a significant 'going concern' uncertainty [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2025, shows total assets of $33.8 million and a stockholders' deficit of $41.8 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $8,500 | $13,239 | | Total current assets | $22,280 | $26,172 | | Total assets | $33,849 | $36,127 | | Total current liabilities | $37,948 | $37,795 | | Total liabilities | $75,692 | $82,387 | | Total stockholders' deficit | $(41,843) | $(46,260) | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss of $13.5 million for H1 2025, an improvement from $46.2 million in H1 2024 due to warrant liability revaluation Q2 Statement of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net sales | $6,263 | $6,291 | | Gross profit | $3,058 | $2,799 | | Loss from operations | $(9,875) | $(8,510) | | (Gain) loss on revaluation of warrant liability | $(2,233) | $18,337 | | Net loss from continuing operations | $(9,610) | $(28,360) | Six-Month Statement of Operations Highlights (in thousands) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net sales | $12,293 | $12,985 | | Gross profit | $5,515 | $5,642 | | Loss from operations | $(17,797) | $(16,989) | | (Gain) loss on revaluation of warrant liability | $(7,420) | $27,974 | | Net loss from continuing operations | $(13,543) | $(46,354) | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash used in operations increased to $17.1 million in H1 2025, leading to a net decrease in cash of $4.7 million Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(17,109) | $(6,973) | | Net cash provided by (used in) investing activities | $(392) | $167 | | Net cash provided by financing activities | $12,762 | $5,718 | | **Net decrease in cash and cash equivalents** | **$(4,739)** | **$(1,088)** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes disclose substantial 'going concern' doubt, a $17.0 million contingent liability for product recalls, and debt amendments - The company has substantial doubt about its ability to continue as a going concern due to a **net loss of $13.5 million** and **$17.1 million of cash used in operations** for the six months ended June 30, 2025, along with an accumulated deficit of $243.1 million[43](index=43&type=chunk) - The company has accrued a **contingent liability of $17.0 million** for legal proceedings as of June 30, 2025, related to the FiberCel and VBM product recalls[27](index=27&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk) - In May 2025, the company amended its SWK Loan Facility to, among other things, fix the minimum liquidity covenant at **$8.0 million** and allow the May 2025 interest payment to be paid-in-kind (PIK)[99](index=99&type=chunk) Net Sales by Segment - Q2 2025 (in thousands) | Segment | Net Sales | | :--- | :--- | | Device Protection | $3,516 | | Women's Health | $2,011 | | Cardiovascular | $736 | | **Total** | **$6,263** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the EluPro launch driving Device Protection sales, offset by declines in other segments and ongoing liquidity challenges [Overview](index=47&type=section&id=Overview) The company focuses on Device Protection and Women's Health markets, with success highly dependent on the new EluPro product - The company's mission is to reduce complications associated with implanted medical devices, focusing on Device Protection and Women's Health markets[148](index=148&type=chunk)[150](index=150&type=chunk) - The company's success is highly dependent on the successful commercialization, marketing, and sale of its **EluPro product**, which was cleared by the FDA in June 2024[159](index=159&type=chunk) - The company divested its Orthobiologics Business in November 2023 but retained liabilities from the **FiberCel and VBM product recalls**, which are subject to ongoing litigation[160](index=160&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [Results of Operations](index=54&type=section&id=Results%20of%20Operations) Q2 2025 net sales were flat as Device Protection growth was offset by declines elsewhere, while litigation costs rose significantly Net Sales by Segment: Q2 2025 vs Q2 2024 (in thousands) | Segment | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Device Protection | $3,516 | $2,639 | $877 | 33.2% | | Women's Health | $2,011 | $2,571 | $(560) | (21.8)% | | Cardiovascular | $736 | $1,081 | $(345) | (31.9)% | | **Total Net Sales** | **$6,263** | **$6,291** | **$(28)** | **(0.4)%** | - Gross margin, excluding intangible asset amortization, **improved to 62.4%** in Q2 2025 from 58.0% in Q2 2024, primarily due to production efficiencies in the Device Protection segment[177](index=177&type=chunk) - Litigation costs **increased to $4.0 million** in Q2 2025 from $2.3 million in Q2 2024, as the company has no more insurance to cover the cost of the FiberCel Litigation[182](index=182&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces significant liquidity concerns with only $8.5 million in cash and substantial doubt about its 'going concern' status - As of June 30, 2025, the company had **cash of $8.5 million** and an **accumulated deficit of $243.1 million**[199](index=199&type=chunk) - The company raised gross proceeds of approximately **$15.0 million** in a registered direct offering in February 2025 and **$13.3 million** in June 2024 to fund operations[200](index=200&type=chunk)[201](index=201&type=chunk) - Management has **substantial doubt** about the company's ability to continue as a going concern due to expected continued losses and uncertainty about its ability to raise sufficient capital[205](index=205&type=chunk)[227](index=227&type=chunk) - The company has **$24.3 million of indebtedness outstanding** as of June 30, 2025, primarily under its SWK Loan Facility, with principal payments scheduled to begin in November 2025[212](index=212&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=75&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate fluctuations on its variable-rate debt and credit risk from cash deposits - The company's main market risk is **interest rate risk** from its variable-rate SWK Loan Facility[235](index=235&type=chunk) - **Credit risk** exists as cash balances are maintained at two financial institutions and may exceed federally insured limits[236](index=236&type=chunk) [Item 4. Controls and Procedures](index=77&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period - Management concluded that **disclosure controls and procedures were effective** as of June 30, 2025[241](index=241&type=chunk) - **No material changes** to internal control over financial reporting occurred during the six months ended June 30, 2025[242](index=242&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=77&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9 of the financial statements for details on legal proceedings related to product recalls - For information about legal proceedings, the report refers to **Note 9** of the condensed consolidated financial statements[244](index=244&type=chunk) [Item 1A. Risk Factors](index=77&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's previously disclosed risk factors were reported during the period - There have been **no material changes** in risk factors from those included in the company's Annual Report[245](index=245&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not conduct any unregistered sales of equity securities during the reporting period - None[246](index=246&type=chunk) [Item 5. Other Information](index=79&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading plans during the six-month period - No directors or officers adopted or terminated any **Rule 10b5-1 trading plans** during the six-month period[250](index=250&type=chunk) [Item 6. Exhibits](index=79&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including credit agreement amendments and officer certifications - Lists various agreements and certifications filed as exhibits, such as amendments to the Royalty Agreement with Ligand and the Credit Agreement with SWK Funding[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk)

EluPro Commercial Progress - EluPro实现了显著的商业成功，同比增长49%[12] - EluPro的增长现在占BioEnvelope收入的68%[14] - 已经获得了7个国家GPO合同[12, 21, 22] - 161家医院积极订购EluPro[12, 23] - 预计年底销售额将接近2000万美元[17] - 通过波士顿科学公司销售的EluPro案例占30%[18] Reconstruction Pipeline - 生物制剂代表着15亿美元的美国市场，占重建支出的65%[28] - 每年大约有151,000例乳房切除术，其中三分之二是双侧乳房切除术，导致200,000-225,000个乳房重建[30] - 生物网在80%的重建案例中使用，每个乳房的成本为7,500-9,500美元[30] - 1/3的患者在乳房重建后会出现严重的并发症[31] Litigation Update - 在FiberCel诉讼方面取得了重大进展，自2025年第一季度以来已解决了27起案件[42] - 总共解决了110起案件中的97起[42] Financial Review - BioEnvelope（EluPro和CanGaroo）的净销售额为350万美元，而去年同期为260万美元[45] - 调整后的毛利率为62.4%，而去年同期为58.0%[45] - 截至2025年6月30日，现金余额为850万美元[45]