Why Is Biologics-Focused Elutia Stock Trading Higher Today?

Elutia Inc ELUT announced a private placement financing of approximately $10.5 million in gross proceeds. 

The full exercise of warrants included in the financing would add $15.8 million for total gross proceeds of $26.2 million. 

Last week, Aziyo Biologics changed the company's name to Elutia Inc.

Monday, Elutia announced to divest its Orthobiologics business unit to Berkeley Biologics, a wholly owned subsidiary of GNI Group Ltd. 

Elutia will receive cash proceeds of up to $35 million, comprised of an upfront payment of $15 million plus potential earnout payments of up to $20 million over five years. The transaction is expected to close in the fourth quarter of 2023.

This transaction marks a significant milestone in Elutia's journey to advance the field of drug-eluting biomatrices. 

The company is seeking FDA clearance for its flagship drug-eluting product, CanGaroo RM. 

CanGaroo RM is a biomatrix technology incorporating the antibiotics rifampin and minocycline (RM), providing prolonged protection for cardiac pacemakers and defibrillators. 

This addresses a substantial $28 billion market. Elutia has set its sights on launching CanGaroo RM in the first half 2024. 

Additionally, the company's pipeline includes an RM version of its SimpliDerm biomatrix designed for breast reconstruction procedures.

Cash raised from the PIPE financing and the Orthobiologics business unit divestiture will support the company's advancement of its drug-eluting biomatrix products for the cardiac pacemaker and defibrillator market and breast reconstruction post-mastectomy.

Price Action: ELUT shares are up 30.2% at $1.61 on the last check Tuesday.