Hello and welcome to the IsoRay's Third Quarter Fiscal 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note that this event is being recorded. I now would like to turn the conference over to Stephanie Prince from PCG. Please go ahead, ma'am.

Thank you, Keith. Good afternoon everyone and welcome to IsoRay's third quarter fiscal 2018 earnings conference call. With me on the call today are Tom LaVoy, Chairman and CEO; Bill Cavanagh, COO and Chief Scientific Officer; and Mike Krachon, VP of Sales and Marketing. IsoRay issued its third quarter earnings press release at 4:05 p.m. today after the market closed. For those of you who have not yet seen the release, it is available on the Investor Relations section of the Company's website at isoray.com. Before turning the call over to management, I'd like to remind you that today’s call contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These words include such as believe, expect, anticipate, plans, project, seeks, and other similar expressions that involve numerous risks and uncertainties. The Company's actual results could differ materially from those anticipated or implied as a result of certain factors set forth in the Company's filings with the SEC. The Company undertakes no obligation to update any forward-looking statements. With that, I'd now like to turn the call over to Tom LaVoy. Tom?

Thank you, Stephanie, and good afternoon everyone. Welcome to IsoRay's third quarter earnings conference call. I'll begin the call with an overview of our third quarter results and discuss developments that occurred during the quarter. I'll then turn the call over to Bill Cavanagh, our Chief Scientific Officer and COO. Bill will talk about the changes in prostate brachytherapy through the years and now its renaissance. He will address why the science is again supporting the use of brachytherapy for prostate cancer and why Cesium-131 is particularly well suited for this and other recurrent cancers. I will then end the call with a discussion of our third quarter results, operating initiatives, and guidance before opening it up for questions. IsoRay had another great quarter. Revenue in the third quarter was up 23% over last year's third quarter. This is the fifth consecutive quarter of increasing year-over-year sales and we're confident in the upward trend. Third quarter revenue of $1.57 million follows second quarter revenue of $1.54 million, and revenue of $1.20 million in the first quarter, and $1.37 million in the fourth quarter of fiscal 2017. 12-months trailing revenue is now $5.69 million, the highest revenue since 2008. Sales continue to be driven by increasing traction of our newest sales strategies that has resulted in expanding uses of Cesium-131 by existing and returning physicians in prostate as well as other cancers. We've also been adding new doctors to our customer list as they go to the process of training and licensing of new facilities. This process can take from six to 12 months and we have a large and growing pipeline of prospects that are converting to Cesium-131. We're pleased with the progress we've made over the last two years and we remain keenly focused on achieving our goals. As…

Thanks Tom. Hello everyone and I'd like to say it's very satisfying to see the hard work of the IsoRay team resulting in gains we've seen these past five quarters. It's very exciting time to be part of the team and I think the best is yet to come. Tom noted IsoRay's two-pronged strategy that we feel will bring continued growth now and in the future. First, we're actively participating in the reinvigoration of the prostate brachytherapy treatment market and the placement of IsoRay Cesium-131 based products right into this center of this resurgence. It may help to keep in mind that permanent implant prostate brachytherapy or seed implantation has been considered a viable approach to prostate cancer for nearly a 100 years. The idea that low energy radiation sources could provide very high therapeutic radiation doses to the prostate, while limiting potentially damaging doses to surrounding tissues is highly appealing for cancer treatment. The problem for sometime had been in the success replacement of these seeds in the prostate. The seed placement issue was overcome in the 1980s with the introduction of new ultrasound technology that allowed for careful placing of seeds into the prostate. At the same time, changes were occurring in diagnostic methods including the introduction of TFA that ended up in the diagnosis of a large number of men with early stage prostate cancers who could be treated with brachytherapy. From the 1990s through the early 2000s, the utilization of seed implants in the treatment of a new population of men with prostate cancer dramatically increased for those who chose to forego radical surgery and other treatment approaches that led to significant treatment related side effects. Importantly, during the 1990s, researchers were able to publish what we call 10-years study on outcomes following prostate cancer treatment…

Hey, thank you, Bill. I would now like to provide a little more color on our financial results. As I mentioned earlier, we reported sales of $1.57 million for the quarter, a 23% increase year-over-year and the fifth consecutive quarter of year-over-year revenue increases primarily establishing our upward sales trend. Sales were up 2% sequentially from the second quarter this year. The reason for the lower sequential growth in the quarter is that customer acquisition actually occurs in a step-by-step process. So as we bring on new customers we can increase in the revenues and the next growth level occur as other new customers come online. So as we noted in earlier, we have a developed pipeline with about six to 12 months sale cycle. Prostate brachytherapy accounted for 83% of our total revenue for the quarter this year compared to 88% in last year's third quarter representing good growth in other cancer treatment areas such as brain, gynecological, and head and neck in addition to prostate cancer growth. Gross profit continues to benefit from the manufacturing and process improvements and tight expense controls we put in place over the last two years. For the third quarter, gross profits reached $0.61 million more than double last year's gross profit and 15% higher than the second quarter. The gross profit margin was 39% for the quarter and compares to 23% last year and is the highest ever reached by the company. The plant automation project is being phased in during this year and next and as a result we expect additional sustainable improvements going forward in gross profits. Operating costs for the quarter were $1.95 million. Continued increases in research and development and sales and marketing expenses including higher headcount were muted by a decrease in general and administrative expenses which…

Yes, thank you. We will now begin the question-and-answer session. [Operator Instructions]. And the first question will come from Jason McCarthy with Maxim Group.

Hey guys, thanks for taking the question. Tom, can you just elaborate a little bit more on the progress with GammaTile. I know you had mentioned submitting to the 510(k) this year; can you give us some more color on what IsoRay expects in terms of timing for potential approval and commercial launch as well as reimbursement discussions?

Yes, thank you, Jason. The GammaTile 510(k) application was initially submitted in March of actually 2017 last -- in August or June of 2017 the FDA had reviewed our submittal and had requested that we do biocompatibility testing on the DuraGen Cesium product. So we have stated in the past that activity, that biocompatibility testing began in January of 2018 scheduled for approximately four months and that -- after that biocompatibility testing would be complete, the results would be reported, and then, resubmitted to FDA and FDA then would have a certain amount of time to approve that. So we're moving through that process as we expected. We stated in this call that we feel confident that we are on track. But again as with all applications with the FDA nothing is certain until everything is clear. So we believe we're still on track for mid-2018 which is not too far away.

Perfect. As if I can go, I'll just go back to prostate cancer and the brachytherapy space and where we're really saying some resurgence there. With all of the 10-year data, long-term data showing combination of external beam and Cesium being made available, can you discuss a little bit about any potential sort of changes to current treatment guidelines? Is there going to need to be more data that has to emerge? Can you just explain a little bit how that thinking could shift amongst KOLs and treatment guidelines?

I think I'll turn that one over to Bill. Bill, do you have a comment regarding that?

Sure. Well our position in general is that the data out there is very unequivocal in terms of recommending the addition of prostate brachytherapy to external beam in these high risk cancers. I think these cancers are where there's a significant volume of cancer in the prostate and this combined approach makes a lot of sense theoretically and the data coming out is very compelling. The Journal article studies very large studies continue to come out including one recently in The Journal of the American Medical Association. So we're where we think our job to do with the absence of a lot of leadership in the field as Tom has pointed out is bit of a vacuum in the field at the moment that we're seeking to fill. And that's going to require discussions with the societies, physician groups and others to raise awareness of this fact that the very compelling data out there and the long-term data with Cesium combined together makes for a case we think that's very difficult to dispute, it’s just a matter of we think getting out there and raising awareness.

Okay. And just one last question on the financial side, Tom, your gross profit margin rose to 39% over 23% last year. Do you expect that number to continue to rise or where do you see it plateauing based on your cost of goods for Cesium?

Yes, so I mean right now the reason we’re seeing this change and improvement is because we do have a plant here in Richland, Washington has capacity -- significant capacity and currently with automation that we’re working on, we believe that we can leverage the plant, labor, and one of really the only incremental costs going forward is going to be the isotope cost that we have to buy for the product. So we believe that over the next couple of years as we scale the plant up, we should continue to see good improvement in gross profits and really not, we don't have it -- it's hard to predict exactly but we believe that the when it scaled up the gross profit margin should be somewhere between 50% and 60%.

Thank you. And the next question comes from Ed Woo with Ascendiant Capital.

Thank you for taking my question and congratulations on the quarter. My question is as these studies are released on terms of the 10-year data, you mentioned that within next year, how quickly do you think you're going to start to see rapid adoption by providers of brachytherapy?

Edward, I think that's a great question. What we're currently doing I mean right now the industry is accepting Cesium-131. I mean we -- the current change in revenue that we've seen over the last two years is from the industry, it's a niche industry with somewhere between 300 and 500 radiation oncologists, practitioners that do brachytherapy. We have three-year data. We have five-year data and now we're starting to see seven and nine year data. I think there's a number of them that have adopted. I think there's a number of them that are waiting for a little bit longer term data and again as we do a good job in the marketing of our product and the sales of our product, again 10-year data will only help us. So we will continue to get more and more adoption of Cesium-131 and more market share because of our 10-year data, but also because of our sales and marketing team. We also have seen really one of the biggest differential factors in prostate cancer treatment has been the side effect profile that Dr. Benoit, University of Pittsburgh Medical College has published in the Red Journal last year which again shows this three to six months back to baseline for urinary side effects when using Cesium-131. And one of the biggest issues in treatment of prostate cancer with brachytherapy over the last 20-plus-years it's been that side effect profile. And so with Iodine and Palladium that side effect profile is somewhere between 12 and 18 months and now that they're getting this data and showing that those urinary side effects are relieved much faster, I think as that data gives out and that continues to get published that again will give more traction for us in the marketplace. So there's a lot of different factors 10-year just help us go to the next level with the number of doctors maybe that have been waiting for 10-year data but we've been getting adoption over the last eight or 10 years but now we hope to see a faster adoption.

Great. As you get the message out about Cesium-131 is there change you could decrease the six to 12 month sales cycle and implementation cycle.

Yes, I think that as more and more of these practitioners start to convert there could be a pretty significant word of mouth it is again a niche industry with again 300 to 500 significant doctors and again it's as if there's a pretty small society of doctors that again once there's more -- once there is more and more adoption I think it could shorten that sales cycle.

Thank you. And the next question comes from Doug Williams with TGPC LLC.

Hello, Mr. Tom Congratulations on another nice quarter. My question is about your listing status is it in jeopardy.

No, that the New York Stock Exchange listing requirement is a $6 million equity number at the end of the quarter and on our balance sheet we noted it was $6.6 million.

Okay, that was it, just a simple question.

All right. Thank you.

Thank you. As there are no more questions at the present time, I'd like to turn the call to Tom LaVoy for any closing comments.

All right, well thank you for joining us on our third quarter conference call. IsoRay’s momentum continues to build and we're excited about our future outlook. We look forward to speaking with you again for our year-end conference call on early September. Have a good night and thank you very much for joining us.

Thank you. The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.