Elutia (NASDAQ:ELUT) Chief Executive Officer C. Randal Mills said the company is focusing its strategy on combining antibiotic delivery with implantable biological matrices, with its next major opportunity centered on breast reconstruction following mastectomy.
Speaking at a company presentation, Mills said Elutia’s technology platform was first demonstrated through EluPro, a drug-eluting envelope designed for implantable pacemakers. The product incorporated the antibiotics rifampin and minocycline into a biologic envelope intended to stabilize a pacemaker while delivering antibiotics locally at the surgical site over several weeks.
Breast Reconstruction Targeted as Larger Market
Mills said breast reconstruction represents a $1.5 billion market in the United States, compared with what he described as a roughly $300 million market for pacemaker envelopes. He said the need is also greater, citing postoperative infection rates of 15% to 20% in breast reconstruction, compared with about 3% in pacemaker procedures before EluPro.
According to Mills, approximately 320,000 new breast cancer cases are diagnosed annually in the U.S., leading to about 162,000 breast reconstruction surgeries. He said biological mesh is already standard of care in 85% of breast reconstructions and has an average selling price of about $8,500 per breast.
Mills emphasized that Elutia is targeting reconstructive procedures after mastectomy, not cosmetic breast augmentation. In response to an analyst question, he said the infection risk in reconstruction is driven by the mastectomy, which removes blood supply to the front side of the breast. In augmentation, he said, that blood supply is generally not removed and infection rates are more typical.
Local Antibiotic Delivery Presented as Key Differentiator
Mills said systemic antibiotics are often unable to reach the surgical site effectively after mastectomy because of the loss of blood supply. He said literature has shown little difference in infection rates between patients receiving high doses of antibiotics and those receiving none after breast reconstruction, though systemic antibiotic use may lead to more resistant organisms.
The company’s breast reconstruction product, referred to in development as NXT-41X, is designed to place rifampin and minocycline on the underside of a biologic matrix facing the implant. Mills said the product is intended to provide sustained antibiotic coverage for about four weeks after surgery, including during the period when surgical drains remain in place. He said drains stay in place for an average of 17 days, creating an opportunity for ascending infection.
Mills said the approach is designed to fit into existing surgical practice, replacing the non-drug-eluting biological mesh already used in the procedure rather than adding a new product. He said that could make the product cost neutral for hospitals while addressing infection-related costs that he said are not reimbursed under current payment structures.
Regulatory and Commercial Timeline
Mills said Elutia has submitted the base matrix, called NXT-41, to the U.S. Food and Drug Administration and expects clearance in the fourth quarter of this year. He said the company plans to submit the drug-eluting version, NXT-41X, immediately afterward and expects clearance around this time next year, followed by a targeted launch in the second half of next year.
The CEO said Elutia is manufacturing the product at its GMP facility in Gaithersburg, Maryland, using an automated robotic process. He said the company expects gross margins in excess of 80% while maintaining a cost-neutral proposition for hospitals.
Mills also highlighted the concentration of the breast reconstruction market, saying 75% of procedures are performed at 585 hospitals, with the top 50 centers accounting for 38,000 cases annually. He compared that with EluPro’s adoption curve, saying the company gained access to 50 hospital value analysis committees within three months and 172 within a year. He said EluPro reached an $18 million run rate in nine months using 12 direct representatives and 20 independent representatives.
Balance Sheet and Additional Opportunities
Mills said Elutia has $36.5 million on its balance sheet and no debt, which he said is sufficient to carry the breast reconstruction product through launch. He also said the company has two non-core commercial products that do not elute drugs and expects to divest them in the next few months, potentially adding $10 million to $20 million to the balance sheet.
In response to an analyst question about other possible uses, Mills said the company could eventually apply the technology in areas such as orthopedic trauma, ventral hernias and contaminated abdominal wounds. However, he said Elutia is currently focused on breast reconstruction because of the size of the market and the clinical need.
Asked whether Boston Scientific has rights to the breast reconstruction program, Mills said it does not. “They got one product,” he said, referring to EluPro. “We did not sell them the rest.”
About Elutia (NASDAQ:ELUT)
Elutia, Inc is a biopharmaceutical company focused on the development of novel nitric oxide therapies based on its proprietary polymeric nitric oxide platform. This technology is designed to enable sustained, controlled release of nitric oxide to targeted tissues, potentially overcoming the delivery challenges associated with gaseous nitric oxide and small?molecule donors.
The company’s lead program is in preclinical development for pulmonary arterial hypertension, with additional research efforts aimed at other cardiovascular and respiratory conditions.
