Welcome to the Caladrius Biosciences Second Quarter 2019 Financial Results and Business Update Conference Call. Currently, 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, Thursday, August 08, 2019. I'll now turn the call over to John Menditto, Vice President of 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 issued a news release announcing our 2019 second quarter financial results. If you have not received this news release or if you would like to be added to the company's email distribution list, please email me at jmenditto@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 it'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, August 08, 2019. Caladrius Biosciences 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'll turn the call over to Dr. Mazzo. Dave?

Thank you, John and good afternoon, everyone and thank you for joining us for this midsummer company update. I’m once again pleased to be reporting on a productive quarter in recent few weeks. Over the past several months, we continue to advance our clinical initiative and are especially pleased to report that after close collaboration over the last several months, we have received clearance from the FDA for confirmatory Phase 3 trial for CLBS14, our product candidate for treatment of no-option refractory disabling angina or as we refer to it NORDA. I will discuss the details of the study a bit in a few -- a bit further in a few moments. In our ongoing clinical programs, enrollment continues in Japan as we work toward our target of data from that study of CLBS12 for critical limb ischemia by mid-2020. Also as recently announced, the European Medicines Agency granted the advanced therapy medicinal product classification to CLBS12 for the treatment of CLI. This classification sets the stage for us to work closely with European regulators to define the most expeditious development and regulatory plan to registration for CLBS12 in the EU. In addition, data continues to trend positively and we remain on track with our current expectation to report results for the CLBS16 ESCaPE-CMD trial in the U.S by the end of 2020 or in early -- by the end of 2019 or in early 2020. Before I provide more details on the overall progress of our therapeutic product candidates and offer additional insights into ongoing and planned trials as well as some upcoming milestones, I will 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 2019 second quarter and first half financial results highlighted by our two ongoing clinical study CLBS12 in critical limb ischemia and CLBS16-CMD and activities associated with the preparation and initiation of our NORDA program with CLBS14. Overall, our net losses were $5.1 million and $9.5 million for the three and six months ended June 30, 2019 compared with $4.1 million and $9.1 million for the three and six months ended June 30, 2018. Moving to our operating expenses, R&D expenses were $3 million and $5 million for the three and six months ended June 30, 2019, compared with $2.1 million and $4.4 million for the three and six months ended June 30, 2018. R&D expenses in all periods were primarily focused on the advancement of our ischemic repair platform. In our ongoing study of CLBS12 in critical limb ischemia in Japan, we continue to focus spending on patient enrollment with the goal of delivering results in mid-2020. We expect to incur less than $5 million of additional spend to complete the study. In our ESCaPE-CMD study, we completed enrollment in May and together with significant NIH grant supporting this program, we’ve funded nearly all study related costs as we target data readout in late 2019 or early 2020. Lastly, we’ve continued to focus efforts on the preparation and initiation of the Phase 3 NORDA clinical trial for CLBS14 and with the protocol for this study now finalized, we currently project that the trial will cost approximately $70 million in external expenses over the next several years to complete. This estimate includes our recently announced agreement with Cognate Bio Services, a leading contract development and manufacturing organization in the global cellular therapies industry to produce trial materials…

Thanks, Joe. Let me begin by providing a summary of the basis of our CD34 positive cell therapy platform. To repeat my comment from previous quarterly call, our CD34 positive cell technology has led to the development of therapeutic product candidates designed to address diseases and conditions caused by ischemia. The condition in which the supply of oxygenated blood to healthy tissue is restricted. Previously published animal and human studies have demonstrated that the administration of CD34 positive cells induces angiogenesis of the microvasculature that is that these cells prompt the development of new blood capillaries thereby contributing to the prevention of tissue death by facilitating blood flow to the area of ischemic insult. We believe that several conditions caused by underlying ischemic injury can be improved through the application of our CD34 positive cell technology, including but not limited to critical limb ischemia, coronary microvascular dysfunction and refractory angina. Now to the specifics of our three CD34 development programs, beginning with our most clinically advanced CD34 positive cell therapy product candidate in the U.S., CLBS14. CLBS14 is being developed to address no option refractory disabling angina by stimulating the growth of new microvasculature in an oxygen deprived heart in those patients who have had large vessel disease treated with all available therapies, but still have debilitating angina. Our confidence in this program is based on a series of published Phase 1, 2 and 3 study results that indicate a consistency of therapeutic effect of CD34 positive cells to increase exercise tolerance, reduce incidence of angina and decrease long-term mortality associated with the condition. Since acquiring the rights to the data and regulatory filings for CLBS14, we have successfully reactivated the IND and received Regenerative Medicine Advanced Therapy or RMAT designation from the FDA. The RMAT designation affords us the…

[Operator Instructions] Our first question comes from Jason Kolbert with Dawson Securities. Your line is open.

Hello. This is Alex for Jason. Congratulations on finalizing the NORDA protocol. It's a large trial and equals 400. Can review with me on how that number was calculated?

Sure. Thanks, Alex, for the question and our regards to Jason as well. So the number is based upon a statistical analysis of previous data including the reported Phase 1 and especially the randomized Phase 2 trial, which then yielded an effect size and based upon that effect size we have calculated statistical power that would -- which yields the number of patients necessary to study. And so that's how we've included those numbers. The 50 patient in the standard of care arm is not really based upon a statistical analysis, but more on a agreement with the FDA.

What is the power in equal 400 that you mentioned?

Off the top of my head I don't have that right now. But I believe we're calculated to have 90% power, but we can confirm that in the future call.

Awesome. Also on good data, would you need to run a second trial?

It is our understanding at this point in time that good data as you have characterized in combination with the previously filed Phase 1, 2 and partially completed three data, will be sufficient for the filing and review of the BLA.

Perfect.

Your next question comes from Pete Enderlin with MAZ Partners. Your line is open.

Hi, Pete.

Thank you. Good afternoon, Dave and Joe. Maybe this first question is for Joe, actually. R&D in the quarter was up about a $1 million from the first quarter. So can we infer that was primarily all due to the preparations for NORDA for getting ready for this upcoming trial?

That’s correct. A lot of -- yes, the shift has clearly been focused over to the NORDA program as we did complete the enrollment on the CMD program in May. So our efforts have shifted to NORDA.

And if its 400 patients and $70 million, [indiscernible] is a $175,000 per patient. I mean, I know there's a lot covers into that. But what if anything -- does that indicate about the potential long-term pricing structure of this product?

Actually it indicates nothing, Pete.

Okay. Good.

That cost is -- it involve the cost of tech transfer, validation at the commercial site, preparation for BLA filing at the commercial site, as well it also includes a number of other development activities and all of these things are being done at the research level and research scale. So it is really no direct correlation to future pricing or future cost of goods from this particular study. And that’s the case for most clinical studies, the cost per patient is always much higher in the clinic when it is for the ultimate treatment in the commercial marketplace.

I mean, even just the manufacturing costs, obviously, from Cognate would -- probably would be a lot harder than with the [indiscernible], if I guess right?

Typically, yes. Typically clinical trial manufacturing costs are much higher than commercial manufacturing costs.

And then just to confirm the cash sufficiency through the middle of 2020, that includes the NORDA program that’s -- up to that point …

Correct.

… that’s already in there -- okay.

Yes.

How -- can you -- what can you tell us about the enrollment of CLBS12 in Japan right now? I mean, I know you're still expecting it to be [multiple speakers].

Right. We are on track for our target completing enrollment no later than the end of this year or early in 2020, and then having results to report in mid-2020. So that remains our consistent projection.

Okay. Thank you. And then CLBS12, what’s the status of the RMAT application in this country?

We are in communication with FDA and we are in the -- what I would call the question-and-answer phase relative to that application. So I would expect that if FDA is able to adhere to their typical timelines that sometime in the fall, we should have the final -- a final response on that.

Okay. On CLI, you mentioned that the endpoints, I guess, you said freedom from pain and ulcers healing and all that. Just sort of a curiosity question, why wouldn't an endpoint be the one that you show in your slide deck, not as an endpoint, but just as a real indication of the efficacy, which is the laser Doppler imaging. Is there some reason why that wouldn’t be included as an endpoint?

Well, for a number of reasons. First of all, as far as patients and clinicians are concerned, if there's increased perfusion, but no improvement in clinical symptoms and nobody cares, so it's more about the patient's reaction to that. So the laser Doppler imagery is considered secondary. But if -- and so far it correlates well with decrease in pain and improvement in healing of ulcers as you might expect, because the blood flow is one of the critical factors. But in and of itself, it's not an endpoint.

Okay. And then just one last one for me. When does the stock purchase window reopen for you guys?

So, typically its four days after the filing of our quarterly filing. So it would open up next week.

Okay. So that means at this point there's nothing that’s [indiscernible] waiting to happen in terms of regulatory actions or anything like that, that would keep that window closed?

We -- no, we just filed the filing of the Q today that [indiscernible] all pertinent information.

Okay. Thank you very much.

Okay. Thanks, Pete.

Your next question comes from Joseph Pantginis with H.C. Wainwright. Your line is open.

Hello and thank you for taking the questions. This is Emmanuelle [ph] for Joe Pantginis. I was wondering going back to the CLBS14 NORDA study, you mentioned you only need one, like -- very likely you are going to need only one [indiscernible] upon delivery of good data. Would good data mean primary endpoints match or are secondary endpoints and specific secondary endpoints important for approval.

Thank you for calling and please send our regards to Joe, Emmanuelle [ph]. We -- our understanding is that the -- that it's really only about the primary endpoint as long as all of the secondary endpoints move in the correct direction, of course. But it will be the analysis with the primary endpoint as far as we understand that will be the deciding factor.

Okay. Thank you for that. And also going to 2D, CLBS12 trial, what would make you happy in terms of results?

What would make us happy would be a continuation of remission rate that we're seeing here. So, in these studies, previously we've seen response rates that that average around 80% of all patients treated at about 1-year, but I think anything above 50% would be considered a major step forward in treatment options for these patients, especially in the Buerger's cohort. So -- so far what we've seen to date and what we reported publicly is trending clearly in that direction and that’s we’ve got all the such smiles on our face as a result at this point.

Sure. And, I guess, related to that, what do you think the -- to what extend do you think the result of this study would be informative for designing [indiscernible] for U.S tabulators?

Actually quite informative. We’ve already begun discussions with U.S regulators about study design and really the discussion there is going to be around endpoints. Historically, the FDA has preferred amputation free survival as an endpoint. We’ve actually done studies and reported them where our product has met that endpoint in a statistically significant matter in a Phase 2 trial. But the result out of Japan, I think will be clearly informative in that regard.

Great. Thank you very much and congratulations on the progress.

Thanks so much.

Your next question comes from Steve Brozak with WBB Securities. Your line is open.

Hi, Steve.

Hey, Dave. Thanks for taking the call, of course. Dave, can you just iterate given the fact that you’re proceeding as you’ve been intending to do. What potentially you might have for collaboration in -- at any stage going forward? And you can be as specific or as 40,000 feet as you like on that, because I’m really curious about that right now?

All right. Well, thank you. So, we have -- collaboration can come at a variety of levels. So we do have a research partner, Sanford Research Foundation, which was previously principally involved in our T regulatory cell program, but remains a strong supporter of the company, and will likely remain involved going forward in all of our CD34 platforms. We also are in, I would say -- will use the word advanced late stage discussions with potential partners in Japan relative to a commercial agreement for the sale of CLBS12. And of course, consummating those deals is probably going to be contingent upon completing this study and getting an approval, but those conversations are going as we expect. We are also in, I would say, earlier stage discussions which are becoming more focused from our perspective on development partners for CLBS14 for NORDA. $70 million is a big price tag for a company of our size and while we see that there are a number of ways that we could fund this study, doing the study with a partner, or having a partner fund most of it would be the ideal way. And so we’re looking in that regard. And then on CLBS16, there are also a number of other foundations who are interested, including those that are dedicated to women's health. So we’ve a variety as Joe pointed out of partnering up -- possibilities that could result in dilutive or non-dilutive tight arrangements relative to our funding.

Again, thanks for taking the question, and of course thanks for the update on that.

Okay. Take care. Thank you.

This concludes the question-and-answer portion of the presentation. I will now turn the call back over to Dr. Mazzo for closing remarks.

Okay. Thanks everyone. Thank you for participating on today’s call and we look forward to speaking with you again on our third quarter conference call in a few months, and to continuing to bring you news of our achievements and progress. We remain grateful for your continued interest and support of Caladrius Biosciences. We wish you a pleasant rest of summer, and a good evening. Thank you and good bye.

This conclude today’s conference call. You may now disconnect.