Welcome to the Caladrius Biosciences First Quarter 2018 Financial Results and Business Update Conference Call. At this time, all participants are in listen-only mode. Following management's prepared remarks we will hold a Q&A session. [Operator Instructions] As a reminder, this call is being recorded today, May 10, 2018. I will now turn the call over to John Menditto, Executive Director, Investor Relations and Corporate Communications at Caladrius. Please go ahead, sir.

Good afternoon and thank you all for participating in today's call. Joining me today from our management team are Dr. David Mazzo, President and Chief Executive Officer; and Joseph Talamo, Chief Financial Officer. Earlier today we filed our 10-Q and issued a news release, announcing our financial results for the first quarter of 2018. If you have not received this news release or if would like to be added to the Company's email distribution list, please call our Investor Relations firm, LHA in New York at 212-838-3777 and speak with Carolyn Currin or e-mail update@caladrius.com. Before we begin, I will remind you that comments made by management during this conference call will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Caladrius. I encourage you to review the Company's filings with the Securities and Exchange Commission including without limitation the Company's Forms 10-K, 10-Q and 8-K which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast May 10, 2018. Caladrius undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that said, I will turn the call over to Dr. Mazzo. Dave?

Thanks John. Good afternoon, everyone and thank you for joining us. I'm pleased to be reporting on a busy and productive quarter. Since January, we reported results from the prescribed interim analysis in the Sanford Project T-Rex Study, dosed the first patient in a Phase 2 clinical trial in Japan with CLBS12 for the treatment of critical limb ischemia or CLI and enrolled the first patient in a Phase 2 study of CLBS14 in coronary microvascular dysfunction or CMD. We also acquired an exclusive worldwide license to data and regulatory filings from Shire for a late-stage CD34 cell therapy program for treating chronic myocardial ischemia targeting refractory angina for which we now have successfully reactivated the associated IND with the U.S. Food and Drug Administration. Also on the regulatory front we received recently SAKIGAKE designation from the Japan Ministry of Health, Labor, and Welfare for CLBS12 in the treatment of CLI. The combination of this designation for facilitated regular interaction and expedited review and pending a successful outcome, the consideration for early conditional approval in Japan in CLI provide us with the prospect of an exciting and potentially nearer term commercial opportunity than might otherwise be the case. Before I provide more detail on our overall progress, provide additional insight into our ongoing and planned trials and discuss some upcoming milestones, I'll turn the call over to our CFO, Joe Talamo, for his review and commentary on our financial results. Joe?

Thanks Dave and good afternoon everyone. I'm pleased to provide an update on our first quarter financial results highlighted by the advancement of our R&D platforms, our continued cost management efforts and our overall strong financial position. Please note that my commentary will only focus on our results from continuing operations compared with the prior year. As a reminder, our 2017 financial results also include the operations of PCT, our former subsidiary that was sold to Hitachi last year. These results are now reported as discontinued operations in the 2017 comparative financial statements. Now turning to our financial results, our net loss from continuing operations was $5 million or $0.52 per share for the first quarter of 2018 compared with $6.6 million or $0.78 per share a year ago. Total operating expenses of $5.2 million in the current year quarter comprised of R&D and G&A expenses, declined 20% over the prior year. Our R&D expenses were $2.3 million in the first quarter of 2018 compared with $3.7 million in the first quarter of 2017. This 39% decline in R&D was driven by a significant reduction in our CLBS03 T-Rex study related costs which were partially offset by higher costs in our ischemic repair platform. As previously disclosed, we completed enrollment and all manufacturing related activities in the CLBS03 clinical study in December 2017 and accordingly our CLBS03 study costs dropped significantly in the current quarter. We are now in the 12-month follow-up phase of the study and expect to spend less than $3 million to complete the study. Within our ischemia repair platform however we incurred higher cost due to the initiation of our Phase 2 study of CLBS12 in critical limb ischemia in Japan in late 2017 and initiation related program expenses associated with our Phase 2 study for…

Thanks Joe. Allow me to start our business review with the progress we've made with our CD34 technology. Heart attack, congestive heart failure, angina, critical limb ischemia, and stroke, are often caused by an acute or chronic deficit in the supply of oxygenated blood. The decrease in blood supply is typically due to disease in the large and small blood vessels that serve the target tissues. There has been an historic focus on strategies to address the problems in large vessels leading to the use of clotbusting drugs, angioplasty, and stents to treat heart attack, and percutaneous and surgical revascularization for chronic ischemic conditions. Yet to date no therapy has been designed specifically to address the defects in the small blood vessels which contribute to the overall impairment of patients with acute and chronic ischemia. One of the body's natural responses to such coronary disease is the recruitment of CD34 cells to ischemic tissues. CD34 cells are preprogrammed to repair damage to the small blood vessels or microcirculation in all tissues. CD34 cells have also been shown to induce the development of new blood vessels, thereby preventing tissue death by improving blood flow. We are currently advancing two proprietary CD34 clinical programs namely CLBS12 as a treatment for critical limb ischemia and CLBS14-CMD for the treatment of coronary microvascular dysfunction. Additionally, as we have announced during the quarter, we were delighted to expand our CD34 cell therapy platform with the recent acquisition of a late-stage CD34 cell therapy program as a treatment for refractory angina. To begin advancing this program we are pleased to report that we have reactivated the associated investigation of new drug application with the FDA for the treatment of chronic myocardial ischemia targeting refractory angina. As we disclosed at the time of the transaction, under the…

[Operator Instructions] And your first question comes from Keay Nakae with Chardan.

Yes, two questions for you guys today. For the CLI study in Japan, how many centers are involved and how many are currently in orientations?

Hey Keay, it’s nice to hear from you, thanks for your questions. As it relates to the CLI program, we're targeting to open upwards of about 10 centers in Japan and at this point we're early in the process, somewhere between 30% and 50% of them are actually open and enrolling.

Okay, and to get the remainder up and running is that sort of a near term accomplishment or will it take longer than that?

No, I think it's the focus of us that we'll expect to have accomplished in the near term.

Okay and for the CLBS14-CMD study can you tell us what the primary endpoint in that study is?

Well, there will be a number of endpoints of the study, but among them will be the typical endpoint in an angina study which will include things like the exercise tolerance and the six-minute walk test, frequency of angina episodes, severity of angina and quality of life questionnaires and a number of other things. I think we will provide some more detail on the specifics of the protocol and the endpoints in upcoming calls.

And measured at what point of follow-up time?

Well, I think the primary endpoint is a six-month follow up endpoint.

Okay, that's all I have.

All right, thanks Keay.

And your next question comes from Pete Adeline [ph] from Miz [ph] Partners.

Good afternoon and thanks for taking my question. Hi Dave?

Hi Pete, how are you?

Good and looking at the stock, the long term question becomes, what would be the size of these potential markets for you guys? In general, can you sort of give us some sense of how the company tries to assess the ultimate size of these potential new products for each of your four programs? I mean, I guess you need to start with the size of the patient population, but then how does the company plan strategically as far as the, what market share you might achieve with the pricing of those products and all those kind of things? I realize this is in some sort a very premature set of questions, but I'm just trying to get a sort of a general impression of how you guys look at those things.

Sure, so I mean, we employ a methodology for that, that is I would say standard throughout the pharmaceutical industry and somewhat independent of the therapeutic focus, the kind of technology or even the size of the company. You're absolutely right, you start first with the prevalence of the disease and the territories in which you're looking and then you work from that down to patients who are actually diagnosed and then to the attraction of patients who are treated you then use an assumption that's often based upon market research that involves questioning, key opinion leaders, payers and other experts in the field to get a sense for based upon your target product profile which often includes sort of an estimate of the magnitude of the therapeutic effect as well as the safety of the product, how often physicians might choose to use your therapy in comparison to other comparative therapies that might be there or might actually be in competitive development. And from that you can then focus down to what you believe is a treatable population for your drug in the context of the prevalence and the competitive environment and then using an estimate of pricing, which often is derived from a combination of cost of goods and comparison to analogues in the field and also whether a premium to pricing can be applied because you have a premium effect on the disease that you're after that you can then create a model for how much each patient is worth so to speak, and then using typical, statistical uptake algorithms, you then calculate an NPV for the product and the peak sales for the product based upon how long it typically takes for new products to be adopted in a given field and that becomes the model. And so we typically look at these things and obviously they get refined with time, the closer you get to registration, the closer you get to your final data, the more accurate those estimates are. But they're technically fairly accurate at least from an order of magnitude perspective right from the beginning and you're in a position then to estimate whether or not the money that you expect to spend to get to a registration will actually yield a reasonable and reasonable to find in the context of other pharmaceutical products return on investment. And if it is something that looks like you will get a nice return, then we typically would continue these development and pursue it. If at some point it looks like for whatever reason the expenditures are going to eclipse the return on investment, then you typically move away from that program for strategic reasons.

That's very helpful. Given that all of that, how would you rank the potential of the four programs that you have at this time in terms of your strategic planning?

Well, the one that has the largest potential market in the long run is the newest program we’ve acquired which is CLBS14-RfA, refractory angina affects a large number of people and that represents a multi-$100 million and maybe even a multi-billion dollar market globally. So that is something that is the biggest of them. Following that the CLBS14-CMD in coronary micro-vascular dysfunction is a program that also has a large market potential because currently there are no products approved for the treatment of that disease and so you would expect that successful therapy would have a very large dominant market share in that particular situation. The CLI program also has a large worldwide opportunity. The market size in Japan is somewhat restricted given that the population in Japan is seen as being smaller than obviously many other countries of the world, but the fact is that Japan represents still the third largest overall pharmaceutical market and it’s an area where we believe that we still have a multi-$100 million market opportunity for that product in that indication and especially with the help eventually on the ground Japanese commercial partner. And then the diabetes program ultimately is one that has also a fairly large potential that is an orphan drug and so the size of the market potential will ultimately be determined by the durability and the magnitude of the therapeutic effect. So that one remains to be qualified a little bit further once we get better data out of the ongoing T-Rex trial.

I’m not a real biotech expert in any sense and I understand that you call the CLBS03 your lead drug so to speak, but in terms of the market sizes that you just roughly sketched out, why would that be designated that way?

Well if you notice in the current Q and unless you are a speed reader, you obviously haven’t read it yet, but even in our press releases and our commentary, we no longer refer to the CLBS03 program as the lead clinical development program. And that designation, I want to be very clear, I don't want people to think that we're backing away from program. It is just simply lead in our minds meant that it was most advanced clinically and so when in the past this CLBS03 has completed enrollment and is in the follow-up stage of a Phase 2 program, so that was the most clinically advanced because the CLI program even though it is Phase 2 is just beginning enrollment as is the CMD program. I think in the context of that definition, the refractory angina program is actually the most advanced clinically and may become the lead clinical program because it's already been studied in a Phase 3 program by its original sponsor and as you pointed out it does also have the largest market potential. So I think in that categorization you'll ultimately hear us talking about the ischemic repair program and specifically refractory angina as the lead program, but that in no way diminishes the importance or the value of the other programs in our pipeline.

Okay great, thanks for the clarification Dave.

Thanks Pete.

[Operator Instructions] This concludes the question-and-answer portion of today's presentation and I'll now turn the call back over to Dr. Mazzo for closing remarks.

Thank you, and again I'd like to thank all of you on the line for participating on today's call. We look forward to speaking with your again our second quarter conference call and continuing to bring you news of our treatments in progress. We remain grateful for interest in and support of Caladrius Biosciences and we wish you all a good evening.

Thank you. This does conclude today's conference call, you may now disconnect.