Elutia (ELUT) Q3 2026 Earnings Call: FDA-Einreichung für NXT 41X auf Kurs

Wichtigste Erkenntnisse

• Die Nettoumsatzerlöse aus fortgeführten Geschäftsbereichen stiegen im dritten Quartal 2026 im Jahresvergleich um 20 % auf 1,1 Millionen US-Dollar, getrieben durch das kardiovaskuläre Geschäft. Die bereinigte Bruttomarge verbesserte sich von 81,3 % auf 85,5 %.
• Elutia beendete das Quartal mit liquiden Mitteln in Höhe von 29,1 Millionen US-Dollar, ohne den Einbehalt von Boston Scientific in Höhe von 8 Millionen US-Dollar, der am 1. Oktober 2026 einging.
• Das Unternehmen sicherte sich ohne Kapitalerhöhung 26 Millionen US-Dollar über das Darlehen von Avenue Capital, den Verkauf von SimpliDerm sowie die Zahlung von Boston Scientific. Die Unternehmensführung geht davon aus, dass diese Finanzierung den Geschäftsbetrieb bis zur erwarteten FDA-Zulassung von NXT 41X und durch das erste Jahr der Markteinführung trägt.
• Die zulassungsrelevante GLP-Studie zu NXT 41X erreichte ihre vorab definierten Endpunkte. Elutia plant, das Produkt im vierten Quartal 2026 bei der FDA einzureichen, und erwartet vorbehaltlich der behördlichen Prüfung eine Zulassungsentscheidung im zweiten Quartal 2027.
• Das Management strebt eine schrittweise Markteinführung (Soft Launch) von NXT 41X in der zweiten Jahreshälfte 2027 sowie den vollen kommerziellen Verkaufsstart im Jahr 2028 an. Die Produktionskapazität ist so ausgelegt, dass sie bei voller Skalierung einen Umsatz von mindestens 300 Millionen US-Dollar und eine Bruttomarge von über 80 % unterstützt.
• Elutia prüft weiterhin einen Verkauf seines kardiovaskulären Geschäfts, betonte jedoch, dass eine Transaktion nur dann zustande kommen wird, wenn sie einen akzeptablen finanziellen und strategischen Wert bietet.

Wichtigste Finanzdaten

Geschäftliche und operative Entwicklung

Entwicklung von NXT 41X

Laut Elutia hat die entscheidende GLP-Kaninchenimplantatstudie für NXT 41X alle vorab festgelegten Leistungsendpunkte erreicht. In der Studie wurde das Produkt unter hoher Bakterienbelastung mit MRSA und E. coli getestet. Nach sieben Tagen konnten weder in den NXT-41X-Proben noch im umliegenden Gewebe lebensfähige Bakterien nachgewiesen werden, während bei allen Tieren, die die Matrix ohne Antibiotika erhielten, eine Kolonisierung auftrat.

Nach Angaben der Unternehmensführung sind die wesentlichen Leistungsstudien abgeschlossen. Die verbleibenden Arbeiten umfassen im Wesentlichen die Zusammenstellung des endgültigen Zulassungsantrags, Laborfreigaben sowie ein laufendes Stabilitätsprogramm. Das Unternehmen plant, den Zulassungsantrag für NXT 41X im vierten Quartal 2026 bei der FDA einzureichen.

Das automatisierte Beschichtungssystem von Elutia ist bereit für die Serienproduktion. Laut Unternehmensführung bietet es zum Marktstart eine Umsatzkapazität von mindestens 300 Millionen US-Dollar und ist so ausgelegt, dass es bei voller Skalierung eine Bruttomarge von über 80 % unterstützt.

Zulassungsweg für NXT 41

Die Programme NXT 41 und NXT 41X folgen getrennten regulatorischen Zeitplänen. NXT 41, die biologische chirurgische Matrix ohne Wirkstoffkomponente, befindet sich bereits im Prüfverfahren der FDA; eine Entscheidung wird für das vierte Quartal 2026 erwartet.

Elutia plant keine Kommerzialisierung von NXT 41. Das Management beschrieb den Antrag als Möglichkeit, Fragen der FDA zur Basismatrix vor der kommerziell weitaus bedeutenderen Einreichung von NXT 41X zu klären.

Kardiovaskuläres Geschäft

Der kardiovaskuläre Umsatz stieg im dritten Quartal im Jahresvergleich um 20 % auf 1,1 Millionen US-Dollar und in den ersten neun Monaten des Jahres 2026 um 65 %. Der Geschäftsbereich erzielte im Quartal eine bereinigte Bruttomarge von rund 85 %.

Elutia prüft eine potenzielle Veräußerung, um nicht verwässerndes Kapital zu beschaffen und den Fokus auf NXT 41X zu schärfen. Das Management berichtete von Interesse mehrerer Parteien, betonte jedoch, keine unattraktive Transaktion eingehen zu wollen.

Finanzierung und Liquidität

Elutia sicherte sich innerhalb von 51 Tagen 26 Millionen US-Dollar ohne Ausgabe von Eigenkapital:

• 10 Millionen US-Dollar wurden beim Abschluss einer Kreditfazilität über 15 Millionen US-Dollar von Avenue Capital ausgezahlt; weitere 5 Millionen US-Dollar stehen nach der FDA-Zulassung von NXT 41X zur Verfügung.
• 8 Millionen US-Dollar stammten aus dem Verkauf von SimpliDerm, zuzüglich eines Anspruchs auf bis zu 3 Millionen US-Dollar an Zahlungen für den Technologietransfer über 18 Monate.
• 8 Millionen US-Dollar gingen am 1. Oktober von Boston Scientific nach Freigabe des Einbehalts im Zusammenhang mit dem Verkauf des Bio-Envelope-Geschäfts im Jahr 2025 ein.

Zu den weiteren potenziellen Finanzierungsquellen gehören die an Bedingungen geknüpfte Avenue-Tranche über 5 Millionen US-Dollar, bis zu 3 Millionen US-Dollar an SimpliDerm-Zahlungen sowie Erlöse aus einer möglichen kardiovaskulären Transaktion.

Ausblick der Unternehmensführung

Die Unternehmensführung nannte folgende erwartete Meilensteine, die alle unter dem Vorbehalt der FDA-Prüfung und von Umsetzungsrisiken stehen:

• FDA-Zulassungsentscheidung zu NXT 41 im vierten Quartal 2026.
• FDA-Einreichung für NXT 41X im vierten Quartal 2026.
• Mögliche Transaktion für das kardiovaskuläre Geschäft, wobei der Zeitpunkt von akzeptablen Konditionen abhängt.
• FDA-Zulassung für NXT 41X im zweiten Quartal 2027.
• Schrittweise Markteinführung (Soft Launch) von NXT 41X in der zweiten Jahreshälfte 2027.
• Vollständige Markteinführung im Jahr 2028.

Bis Ende 2027 will Elutia 16 wichtige US-Vertriebsregionen abdecken, was einem Zugang zu rund 50 % des Marktes für Brustrekonstruktionen entspricht. Das Unternehmen plant den Einsatz überwiegend eigener Vertriebsmitarbeiter, ergänzt durch unabhängige Handelsvertreter in ausgewählten Gebieten.

Nach Angaben der Unternehmensführung besteht das Ziel darin, trotz der Vorbereitungen für die Markteinführung eine wesentliche Veränderung des Cash Burns im Jahr 2027 zu vermeiden. Der jährliche Budgetierungsprozess läuft jedoch noch, und es wurde keine konkrete Ausgabenprognose vorgelegt.

Risiken und wesentliche Aspekte

• Der Zeitplan für NXT 41 und NXT 41X bleibt abhängig von der FDA-Prüfung. Die Unternehmensführung räumte ein, dass die Zulassung früher oder später als derzeit geschätzt erfolgen könnte.
• NXT 41X ist eine komplexe Kombination aus einer biologischen Matrix und lokaler Wirkstofffreisetzung, was die regulatorischen und produktionstechnischen Umsetzungsanforderungen erhöht.
• Der geplante kommerzielle Hochlauf hängt von einer erfolgreichen FDA-Zulassung, Einreichungen bei den Value-Analysis-Ausschüssen der Krankenhäuser und einer zeitlich abgestimmten Einstellung von Vertriebsmitarbeitern ab.
• Zu den zusätzlichen Kapitalquellen zählen meilenstein- oder transaktionsabhängige Zahlungen, die nicht garantiert sind.
• Der Betriebsverlust und der bereinigte EBITDA-Verlust von Elutia weiteten sich aus, da die F&E-Ausgaben im Vorfeld der Einreichung und Markteinführung von NXT 41X stiegen.

Wichtigste Punkte aus der Analysten-Fragerunde

Die Unternehmensführung nannte geistiges Eigentum, Geschäftsgeheimnisse, regulatorische Anforderungen und Fertigungs-Know-how als wesentliche Eintrittsbarrieren für Wettbewerber. Laut Elutia befindet sich die NXT-41X-Plattform seit sechs Jahren in der Entwicklung und erfordert, dass Antibiotika gleichmäßig aus einer biologischen Matrix in einer für Chirurgen akzeptablen Form freigesetzt werden.

Hinsichtlich der Vermarktung plant das Management, vor der Markteinführung Vertriebsführungskräfte und -mitarbeiter einzustellen, rechnet jedoch erst im zweiten und dritten Quartal 2027 mit nennenswerten Neueinstellungen. Das Unternehmen möchte vermeiden, eine große Vertriebsorganisation zu unterhalten, bevor die Krankenhäuser ihre Produktprüfungsprozesse abgeschlossen haben.

Bezüglich der FDA-Einreichung erklärte das Management, dass die wesentlichen Testarbeiten abgeschlossen seien. Das Produkt befindet sich weiterhin in Stabilitätsprüfungen, während das Team den voraussichtlich mehrere tausend Seiten umfassenden Zulassungsantrag zusammenstellt und die erforderliche GLP-Dokumentation fertigstellt.

Vollständiges Transkript der Telefonkonferenz

Vollständiges Transkript der Telefonkonferenz

Ausführungen des Managements

Operator

[Operator Instructions]

Please be advised that today's call is being recorded. I would now like to hand it over to our first speaker, [ Bernadette Eutroniak ]. Please go ahead.

Unknown Speaker

Thank you, Operator, and thank you all for participating in today's call. Earlier today, Elutia released financial results for the third quarter ended September 30, 2026. A copy of their 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 fact or relate to expectations of [ Federal Security Service ] are not subject to [ Federal Security ] 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 differ from those anticipated or implied by these forward-looking statements.

Accordingly, you should not place undue reliance on these statements. For lists and descriptions of the risks and uncertainties associated with our business, please refer to the risk factors section of our public filings with the SEC, including Elutia's annual report on Form 10-K for the year ended December 31, 2025, and in our subsequent periodic reports on Form 10-Q and current reports on Form 8-K, accessible on the SEC's website at www.sec.gov. Such factors may be updated from time to time in Elutia's other filings with the SEC.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 5, 2026. Elutia 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 on the company's financial results release for the third quarter ended September 30, 2026, which is accessible on the SEC's website and posted on the Investors page of the Elutia website at www.elutia.com. And with that, I will turn the call over to Elutia's CEO, Randy Mills.

Unknown Speaker

Thank you, Bernadette, and thank you all for joining us today. It is an exceptionally busy and exciting time for us at Elutia, and I'm eager to get you up to speed on our progress. Here's how we'll spend our time. First, the need. It is serious and the lack of attention being paid to it by industry is astonishing. Infection was a major focus at last month's meeting of the American Society of Plastic Surgeons in Houston. It came up in every one of the 11 breast research sessions, yet commercial products addressing it and no company on the exhibit floor was talking about a solution. That market dislocation has created a tremendous opportunity for Elutia.

Second, we'll review the great progress the team is making on NXT 41X. Our key GLP antimicrobial study met its predetermined endpoints. Surgeon feedback on the actual product was very favorable, and NXT 41X is set to head to the FDA this quarter. Then Matt will walk you through how we funded ourselves through launch without an equity offering. He'll also cover our cardiovascular business and its remarkable growth, take you through the third quarter results, and end with the milestones ahead. Then we'll open the line for your questions, including some that were actually brought in by you. Let me start with the need, because that is where everything at Elutia begins.

Infection in plastic and reconstructive surgery is common. It is serious and it remains unsolved. Over the next few slides, I'll show you what surgeons themselves presented on at this year's national meeting because their data and insights make the case better than we ever could. The ASPS meeting in Houston was last month, and to me, one of the most astonishing things that stood out above the rest was infection. There were 11 scientific sessions devoted to breast research. Infection risk and prevention were discussed in every one of them. Of the 135 research presentations, 70, or 52%, addressed infection.

Infection wasn't only covered in the research sessions, however. The conference included an entire course called 28 Years Later: Current Strategies in Salvaging the Infected Implant. Think about that. Surgeons have been fighting implant infection for decades, and it is still one of the biggest problems plastic and reconstructive surgeons face today. The data presented at the meeting were sobering. Investigators from UCSF reported on 1,094 breasts that underwent immediate implant-based surgery. In women who did not receive chemotherapy before surgery, 17.6% developed an infection. In women who did, it was 23%.

That is nearly 1 in 4. A second study from Miami Cancer Institute looked at 419 breasts. Every one of those patients received antibiotics before and after surgery, and 19.3% still developed an infection. These are leading centers following current best practices and infection still approaches 1 in 4, but in most cases, these are women who are already fighting cancer. Think about that. So why not just do what we normally do and give patients more antibiotics? Because it doesn't work. A 20-year multi-center study presented at the meeting answered that question definitively. It looked at 4,647 patients across 170 healthcare organizations. Extending antibiotics past 24 hours did not reduce infection at 30 days, 60 days, or 90 days.

And the biology explains why. Systemic antibiotics travel through the blood. A mastectomy closes off the very blood vessels that would carry those drugs to the surgical site. You can give more drug, but it can't get to where it needs to go. Which brings me back to what struck me most in Houston. In the session rooms, in the hallways, at the receptions, surgeons were focused on infection. 70 presentations across all 11 breast research sessions. I walked onto the exhibit floor and found a sea of commodity surgical matrices. There were literally 25 on the market and none are demonstrably different from the next. But no commercial offering for infection. No one was even talking about it. On one side you have surgeons and their patients living with this problem.

On the other, an industry that hasn't offered them a solution. That gap is the unmet need. It is the reason Elutia exists, and it is exactly what we intend to fix with NXT 41X. Now let me turn to how we intend to close that gap. NXT 41X is our lead drug delivery program. Our key GLP study is complete. Our manufacturing is set for commercial production, and we plan to submit NXT 41X to the FDA this quarter.

Let me walk you through where our programs stand. We currently have 2 product development programs, and both are on track. I want to be clear that they are on separate submissions on independent timelines. First, NXT 41, our biological surgical matrix without drug. The 510(k) is submitted, the review is progressing as expected, and we anticipate a clearance decision this quarter, and we have every reason to believe it will be favorable. However, it is largely academic at this point. NXT 41 has already done its job, which was to discover and answer FDA's questions about the base matrix.

We have no intention of commercializing NXT 41. It broke the regulatory ice for NXT 41X. And everything that we learned from it has been built into the NXT 41X platform. The more material submission is NXT 41X, our lead drug delivery program. Our key GLP study met its predetermined endpoints, and we plan to submit NXT 41X to the FDA this quarter. From there, we anticipate a clearance decision in the second quarter of 2027, a commercial soft launch in the second half of 2027, and a full commercial launch in 2028. That timing reflects our current expectations and is of course subject to FDA review.

All in all, it is a very busy but exciting time in R&D and regulatory. This is the study that supports our submission, and it is pretty cool. In a GLP rabbit implant study, NXT 41X met its pre-specified performance endpoints. We challenged it with MRSA, a drug-resistant gram-positive form of the most common pathogen in breast surgery, Staph aureus. We then challenged it with E. coli, a particularly nasty gram-negative rod that can cause serious infection and lead to sepsis. And we didn't make this easy. We put the bacteria on the uncoated side of the matrix, away from the drug, and we added a lot of them.

The MRSA challenge was 8 logs, that is 100 million bacteria. The E. coli challenge was 6 logs, 1 million bacteria. Both represent far more contamination than would normally be present in the operating room, creating true worst-case conditions. So, the results: after 7 days of implantation, we recovered 0 viable bacteria from the NXT 41X samples and surrounding tissue, 0. Contrast that with the matrix without antibiotics. Every animal implanted with the matrix alone developed fulminant colonization by those same pathogens versus 100%. Pretty cool. Data matter. But the surgeon's opinion matters too, since they are the ultimate decision makers.

While we were in Houston, our NXT 41X Surgeon Steering Committee met in person, and their feedback on the design, handling, and performance of NXT 41X was both informative and very positive. And while we talked about a number of different product attributes, 2 really stood out as the difference makers. And I wanted to share them with you since this is how a surgeon takes a look at a product like 41X. They put it simply, it's about the drug being in the right place at the right time. Right place to them means powerful antibiotics that are uniformly distributed across the entire surgical site. That's exactly where systemic antibiotics fail to reach. The right time means 30 days of coverage. Why? Because that carries them through drain removal, which usually happens somewhere around day 17.

It was simple, and it was a powerful message for us to hear, and it was gratifying for the team since that's what we designed NXT 41X to do. And we're ready to make it. Our automated drug coating system is set for commercial production. It gives us at least $300 million in revenue capacity at launch and is designed to support a gross margin above 80% at scale. That matters for 2 obvious reasons. First, we certainly don't want to be supply constrained as the product is launching. Second, we want to be able to make money with this product, and the margin profile we wanted was built into the manufacturing process from day 1.

So when you take a step back and you look at it, I hope you can see what we're creating here: a product for a true unmet medical need, one that already has been proven with our own technology that our own technology can answer, and one that we can make money with. And we have the capital and team and intellectual property to see it through. And with that, I'll turn it over to Matt to close out and then be back with you for Q&A.

Matthew Ferguson

Okay, thank you, Randy, and good afternoon, everyone. I'll start with our balance sheet because over the last 3 months we did just what we said we would do. We added $26 million without an equity offering. We believe that funds Elutia through the anticipated clearance of NXT 41X and the first year of commercial launch. On our August call, we named 3 near-term funding milestones, and I'm pleased to report that all 3 are now complete. First, on August 11, we closed a $15 million loan facility with Avenue Capital Group. We received $10 million at closing, and an additional $5 million becomes available following NXT 41X FDA clearance.

Second, on August 17, we closed the sale of our SimpliDerm business to Solution Biologics and received $8 million at that closing. We're also eligible to receive up to $3 million in contingent technology transfer payments over the next 18 months. Third, on October 1, Boston Scientific released the full $8 million holdback from the 2025 sale of our bioenvelope business with no claims and no deductions. Together, that's $26 million in just 51 days. That was a busy couple of months. We also have additional sources of capital that we expect will contribute to our runway. There's a $5 million second tranche from Avenue Capital and up to $3 million in SimpliDerm milestones as well as proceeds from a potential cardiovascular transaction should that happen.

As one of our remaining legacy businesses, I'd like now to focus a bit more on our cardiovascular business. Third quarter revenue there grew 20% year over year to $1.1 million. And for the first 9 months of 2026, revenue was up 65%. Third quarter adjusted gross margin was 85%. This business is performing well, but it is ultimately not where we're going as a company. As we've previously discussed, we've been pursuing a divestiture of this product line. We believe the sale makes sense for the company both as an additional source of non-dilutive capital and to provide strategic focus as we get closer to the launch of NXT 41X.

We've had significant interest in this asset from multiple parties, and the strategic process remains on track. Now, turning to a brief summary of our financial results. All the figures I'll go through are for continuing operations compared with the third quarter of 2025. Net sales were $1.1 million, up 20% from $0.9 million. Gross margin on a GAAP basis was 61.7% compared with 52.8%. The adjusted gross margin, which excludes non-cash amortization of intangibles, was 85.5% compared with 81.3%. Total operating expenses were $7.6 million compared with $6.4 million.

The increase was driven by $1.9 million of higher research and development spending on NXT 41 and NXT 41X, partially offset by a $0.7 million reduction in net litigation costs. In other words, our spending is shifting toward the programs that are creating value. Loss from operations was $6.9 million compared with $5.9 million. Net loss from continuing operations was $6.5 million compared with $1.0 million. The prior year figure benefited from a $5.1 million non-cash gain on the revaluation of warrant liabilities. Adjusted EBITDA was a loss of $5.6 million compared with a loss of $3.4 million. Reconciliations of our non-GAAP measures are included in today's earnings release.

We ended the quarter with $29.1 million in cash and cash equivalents, and that balance does not include the $8 million Boston Scientific holdback, which we received 1 day following the end of the quarter on October 1. To close, here's what our capital is funding. We had 3 funding catalysts that are now behind us: the Avenue loan, the SimpliDerm sale, and the $8 million Boston Scientific payment. 6 catalysts lie still ahead. This quarter, we expect an FDA clearance decision on NXT 41. We plan to submit NXT 41X to the FDA, and we have the potential to complete a cardiovascular transaction. In the first half of 2027, we anticipate an FDA clearance decision on NXT 41X.

A commercial soft launch follows in the second half of 2027, and our full commercial launch hits in 2028. And in closing, I'd like to mention a couple of investor events that are coming up. The first is a fireside chat with Dr. Al Hassanein, Associate Professor of Plastic Surgery at Indiana University. Dr. Hassanein is a pioneer in local antibiotic delivery for prevention of infection risk and breast reconstruction. He's also very knowledgeable about our development process for NXT 41X and its most salient features. This event is taking place on November 20 and is being hosted by Frank Takkinen of Lake Street Capital Markets. The event is open to Lake Street clients, but please contact Frank if you're interested in attending.

And the second event is the annual J.P. Morgan Healthcare Conference in San Francisco. We'll be hosting meetings there in our own space on January 11 and January 12. If you'll be there and you'd like to meet with us, please email ir@elutia.com. And with that, operator, please open the line for questions.

Operator

[Operator Instructions]

First question from Frank Takkinen from Lake Street.

Unknown Speaker

Hi Randy and Matt, can you hear me?

Unknown Speaker

Hey, how's it going?

Unknown Speaker

This is Sam Knapp on for Frank Takkinen. First, could you talk a little bit more about the barriers to entry and IP that you think will protect your competitive position? It would be interesting to hear where you think the strongest defenses exist, whether that be regulatory, product design, manufacturing know-how, or a combination of all of the above. Any color would be appreciated.

Unknown Speaker

Yes, Sam. So, you know, when you sort of look at the question of, so why can't competitors come in and do this, there's 2 fundamental reasons that prevent that from happening. The first is we have built a very substantial intellectual property platform. Some of that we have chosen quite intentionally to keep as trade secrets. Some of that we have filed patent protection on and actually we continue to file and add patent protection to. And while the idea of a drug delivery matrix is nowadays beyond patentability itself, we think the features that we have designed into 41X, that we have intellectual property for [ Equidi matrix ] around, that we have patent protection around, are actually going to set what's going to be the only acceptable standard going forward and give us some really very meaningful protection in the marketplace. That's one.

Two is the reality of it. It's been 25 years. Infection's been known to every relevant player in this field for the past 25 years, and no one's done anything about it. And the reason they haven't done anything about it is because it's really, really hard to do. Our team here makes what we do look really easy. They are a group of flat out geniuses that have solved some very complex problems with some very sophisticated solutions. And sometimes perhaps I gloss over it a little bit too much, Sam, and almost make it sound too easy. It is not easy. This product platform has taken us 6 years to get to where we are today.

And so even if there were somebody that were going to decide to get involved in it, it is a long, hard road to figure out how to get powerful antibiotics to uniformly elute off of a biological matrix in a delivery form that surgeons will accept. And so we feel very, very confident that we have both an intellectual property and a regulatory barrier to entry that are going to keep us pretty much alone in this market for a while.

Unknown Speaker

That makes sense, I appreciate it. And then one other one, once NXT 41X is submitted, how should we think about hiring expectations in advance of approval? I mean, how large of a commercial team will you hope to have in place at the time of the launch? And then maybe for Matt, in light of that, any initial thoughts on how we should think about OPEX going forward without SimpliDerm and the ramp-up investments in front of NXT 41X?

Unknown Speaker

Yes, so I will, you know, I'll do the play-by-play here. Matt will do color commentary on the financial implications for it. But Sam, at the end of 2027, heading into the first full year of launch in 2028, we anticipate having the top 16 territories covered. The top 16 territories in the U.S. give us access to approximately 50% of the breast reconstruction market. We intend to do the vast majority of that through direct representation. We'll use 1099s to fill in some of the spaces in between, but we really want to own the major markets.

You may have seen, I know we have gotten questions about, and our HR department is flooded with applications, we have started the recruitment process for both sales leadership as well as direct sales representation in these markets. The plan is, by the way, not to bring them in too early, but to identify the best candidates in the markets that we need and go through the proper courting and vetting process to make sure that we're onboarding them when the time comes.

So that recruitment process has started, but we don't anticipate bringing on a real heavy recruitment share until really the second and the third quarters. We don't have any need to bring them on too early, since at least the third quarter of next year, if everything's on schedule, the third quarter of next year is going to be an exercise in VAC submissions. And, you know, sometimes VAC submissions are like watching paint dry, and there's no sense in having an elaborate and expensive commercial force sitting around with nothing to sell.

So 16 is where we're going with that, with the appropriate sales leadership, but we're not going to go crazy with it. We're not going to add too early. We think we're going to have great visibility into the 41X regulatory process as we begin to do that. So, if there is an unforeseen change in the timeline, we'll have the ability to adjust, but that's what's the plan for the year, Sam. Oh, you want to talk about money? Sure.

Matthew Ferguson

Sam, yes, I think a lot of what Randy talked about really are the indicators for what spend will look like. And those relate to the concentrated market that we're entering into, the fact that there's no change to the physician workflow, so the sales cycle should not be particularly long, and we're really going to be standing alone in terms of offering a product that there's a great need for in the market right now. So all of that we believe translates to what should be a pretty rapid ramp once we launch with high gross margins and a relatively small commercial organization needed in order to serve that market.

What that ultimately translates to, you know, we're going through our 2027 budgeting process right now, so it's a little bit too early to speak in specifics, but, you know, our goal really is to not have our burn rate change that much if we go through next year and actually start launching the product. So we'll see how that plays out. We'll have a little bit more specificity that we probably can offer on our next call. But we feel good about where we are and the cash that we have in the bank and the ability for that to fund us through the launch of NXT 41X.

Unknown Speaker

Awesome, I appreciate that. And then just one more, on NXT 41X, what is left to be completed prior to the official submission? Is there any outstanding testing that could take a little longer, or are you pretty much just packaging the final submission packet?

Unknown Speaker

Yes, the heavy lifting testing for NXT 41X is now complete. And what I mean by that are the pivotal performance studies, the studies that, you know, are the large animal studies that can go on for 6 months or longer. The product is up on stability testing now. This is when we do the final actual commercial-grade manufacturing of the product, take it through the entire cycle, and then test it over periods of time for shelf life. That will be an ongoing program. And so, you know, that will actually run, that will actually continue to run, we hope, long after approval of the product as we continue to extend the date. But the stability program is just an ongoing study that will continue to happen.

The rest of the data for the product is done or is being packaged. We have no more study. So, Sam, have you ever been sort of around some of these things? We're talking about all GLP studies that are done for every one of these things. Every one of them requires numerous types of sign-offs from the contract testing laboratories that do them in order to meet GLP processes. And so those types of things take a little bit of time. It is a massive submission, so it's, you know, something, it's thousands and thousands of pages. And so it is a big deal for our team to put together. I'll make it sound really easy, but nothing big outstanding at this point. Sam, that's why we're pretty excited about it.

Unknown Speaker

Fantastic. Well, thank you for answering my questions, Randy and Matt, and congratulations on the progress so far.

Unknown Speaker

Cool. Thank you. Thank you.

Operator

Thank you. And now I'd like to turn it back over to Randy for closing remarks.

Unknown Speaker

Okay, thanks, and we actually are going to try something out here that I really like. We received a number of questions ahead of the call, too many to go through, but I thought I'd take a couple of them and answer them, and this is something we'll do on future calls. So on a future call, as long as you get your question to us ahead of time, we'll be glad to throw it into the queue.

Now a lot of questions we got, basically I'm going to pick a couple of questions here that were the most commonly asked questions, because there seems to be some confusion around those things. That lies with me, that's on me, so I need to do a better job communicating these. So let's start with the first one, which is please clarify the timelines for NXT 41X and how they relate to the NXT 41 regulatory process.

Well, first, I hope that what we had in the presentation helped a little bit there and described that they're both on independent timelines. I think that's the first really important point. NXT 41 and NXT 41X are on 2 separate development pathways. NXT 41X is not dependent on NXT 41. So we will file NXT 41X as soon as that regulatory file that Sam just mentioned is complete and it's ready to go.

Some sort of sub-questions I got: it seems like it's probably going to take like 9 months for NXT 41, and we're anticipating 6 months for NXT 41X. How do you reconcile those? Well, a couple of things. First is, just to clear up some things on the timing of NXT 41, NXT 41 was submitted by us in February, but it actually wasn't accepted into FDA until later in March, believe it or not. And that is when they started their review clock. So just so everyone knows, it isn't taking some unusually long time. The FDA just gave themselves a little bit of time to check our 510(k) submission into their process.

They're our friends. With regards to 510(k), I also think it's important to say that we're anticipating a second quarter submission. Why? Because we don't have any big studies to do. We're not waiting on any data. So we think the second quarter is the most likely time. We think they're going to ask us some questions in the first quarter. We think we'll be able to answer those questions in the second quarter and have our clearance in the second quarter of that year.

But you have to know that's an estimate. It could be earlier. It could be as short as 3 months, you know, and sometime come in April maybe. It could come in sometime in September. So it's our best guess at it, but there is certainly a range around it. We're dealing with a really complicated product and we're dealing with the Food and Drug Administration. So I wouldn't be setting your watch by the exact day, but it is our best guess at this point on what it would be. So thank you for that question of the people who submitted it. And I hope that clarified some of those points.

Okay, 1 more question, and that centers around the cardiovascular process. So where are we on the sale of the cardiovascular business? If it's not sold, what are the plans going forward? This is a great question. We have a great product with our cardiovascular product. In fact, it is the Cadillac of products that are out there for cardiovascular repair. It is a very sticky business. It is one that you've seen in our reporting. It's not just maintaining, but it's actually experiencing some very healthy growth since it returned back to the company from LeMaitre, and it has exceptional gross margins. So this is a product with 80%, 85% gross margins.

We make money with this product. So as you would expect, we have received interest in it, but here's what we're not going to do: we're not going to do a bad deal. If we have a serious acquirer that will complete a transaction that could have value for us, well, will have value for us, obviously, in terms of the cash that would bring in, but also value in terms of strategic focus, then we would do that, and we will do that, you know, as soon as we would be ready to do that deal, right? If that happens this quarter, then we're ready to go.

But we're not going to rush to get a bad deal done. There's a saying a friend of mine taught me: if you want a deal done badly, that's how you get it done. And we're not in a rush to do it because it's a great business and it's a growing business. And frankly, it's not that big of a headache and it's not a distraction for us. And so it is a milestone that we will meet, but only if we end up with the transaction that makes sense for us to do.

So, I hope that clarified it. I encourage you to ask questions, submit questions ahead of time. We'll have information about how to do that in the next press release. It's kind of fun. I like it and lets me know what you're thinking about and what you're worried about and, frankly, what I'm doing a bad job communicating on. But with that, I think we are done, and I will turn it back to the operator to close the call.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

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