Good day, ladies and gentlemen and welcome to the Histogenics Corporation Q1 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. I would now like to introduce your host for today’s conference Mr. Jon Lieber, CFO of Histogenics. You may begin.

Thank you and good morning everyone. Joining me today on the call is Adam Gridley, our President and CEO; Stephen Kennedy, our Chief Technology Officer; and Gloria Matthews, our Chief Medical Officer. A press release announcing Histogenics’ first quarter 2017 financial results was issued this morning. For those of you who have not had a chance to see it, you can find it posted in the Investors section of our website at www.histogenics.com. On our call this morning, we will share with you a business update and our financial results which will be followed by a question-and-answer session. Before we begin our prepared remarks, I would like to remind you that various statements we make during this call about the company’s future results of operations and financial position, business strategy and plans and objectives for our future operations are considered forward-looking statements within the meaning of the federal securities laws. Our forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions and uncertainties. These risks are described more fully in our SEC filings and are available on the SEC's EDGAR system and on our website. We encourage all investors to read our SEC filings. All the information we provide on this conference call is provided only as of today and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events or otherwise. Finally, please be advised that today’s call is being recorded and webcast. I will now turn the call over to Adam Gridley.

Thank you, Jon and thanks to our stakeholders for joining the call this morning. In the first quarter of 2017 Histogenics demonstrated continued solid execution on all fronts similar to our performance in 2016. Most importantly with 230 patients currently randomized the NeoCart Phase 3 trial is now almost 95% enrolled and we're coming down the remaining 15 patients required to complete enrollment. To that end we have another 19 patients in the pipeline with more being consented giving us confidence that the trial will be fully enrolled by the end of the second quarter of 2017 with an announcement planned in early July. As a reminder this timing leads us to an anticipated one year primary endpoint data readout in the middle of 2018, a BLA filing shortly thereafter, and a potential approval and launch in 2019. We believe that the completion of enrollment is a major achievement for Histogenics. Upon completion we will have succeeded where many others have failed by enrolling the largest prospectively designed, randomized clinical trial in North America evaluating treatment of cartilage defects in the knee against microfracture's current standard of care. We do believe that the cartilage repair market opportunity is currently underserved with patients, physicians and payers all seeking better alternatives, both in terms of short term recovery and durable results. We believe that NeoCart is unique in many ways compared to other products approved or in development and our focus is really on the majority of the market. Those patients with smaller lesions often considering or undergoing microfracture procedures. These patients typically go to a broader group of mainstream surgeons as compared to those with larger lesions that are often treated by a much smaller group of care wells that perform more complex procedures. In addition, because we're able to make…

Thanks Adam. For the quarter ended March 31, 2017 Histogenics reported a loss from operations of $6.8 million compared to $7.8 million for the quarter ended March 31, 2016. The decrease in overall operating expenses was attributable to a reduction in research and development expenses that was offset by a small increase in general and administrative expenses and is reflective of our efforts to aggressively manage our burn rate while advancing the NeoCart program. Moving on to some specifics the decline in research and development expenses in the first quarter of 2017 as compared to the first quarter of 2016 was due to a reduction in consulting and temporary labor costs as well as patient recruiting expenses related to the NeoCart Phase 3 clinical trial. This decrease was partially offset by a small increase in hiring fees. The small increase in G&A expenses in the first quarter of 2017 as compared to the first quarter of 2016 was primarily due to increases in stock-based compensation and repairs and maintenance expense that were partially offset by a reduction in hiring fees and consulting costs. Net loss attributable to common stockholders was $5.8 million in the first quarter of 2017 or $0.27 per share compared to $7.9 million or $0.60 per share in the first quarter of 2016. The decrease in net loss attributable to common stockholders is primarily due to the lower operating expenses just discussed and the allocation of a portion of the net loss to the Series A preferred stock that was issued to investors in connection with the private placement we completed in the third quarter of 2016. As a reference point, we currently have approximately 22.2 million primary shares outstanding and 42.2 million fully diluted shares outstanding. The 42.2 million fully diluted shares include 13 .4 million warrants issued in connection with the 2016 private placement. It’s important to remember that these warrants do not have a cashless exercise provision, so should the holders exercise those warrants part of their expiration we will receive approximately $30 million in proceeds. At March 31, 2017 Histogenics had cash, cash equivalents and marketable securities of $24.4 million compared to $31.9 million at December 31, 2016. Based on current operating plans and the expected timing of product development programs we believe our current cash position will fund our operations into the middle of 2018. I’ll now turn the call back to Adam for concluding remarks before we go to Q&A.

Thanks Jon. The first quarter of 2017 was a continuation of our strong performance in 2016 and our employees, investigators, and their coordinators who have done an incredible job taking us to the cusp of a fully enrolled U.S. clinical trial. In addition, we received agreements with PMDA on the regulatory pathway for NeoCart to gain full marketing approval in Japan and generated valuable data to support the NeoCart platform, all while continuing to manage our operating expenses. We now turned our focus to the top line data readout in the middle of 2018 and the preparation of our BLA application for NeoCart. We continue to believe that a quicker recovery, faster surgeries and less reliance on difficult rehab protocols in conjunction with a strong safety and one year efficacy endpoint will provide the boost needed to grow and expand the cartilage repair market. Our market research in Japan was surprising in that it was so remarkable consistence with the feedback from the U.S. physicians. It’s simple, due to unsatisfactory treatments, particularly for smaller lesions this is a market that has yet to be defined. It’s true that the market today is small, but we firmly believe that this is due in large part to the limitations of current treatment alternatives. Most patients are still sitting on the sidelines choosing not to receive treatment. Based on the data generated to date and the feedback we've received from our investors and collaborators, we do believe that NeoCart will provide an early and robust clinical response from pain and function and eliminate unnecessary and costly additional surgeries. And given the strong correlation of osteoarthritis which a potential market in billions of dollars each year surgeons will finally be able to responsibly recommend a treatment such as NeoCart. That if approved may have a dramatically difference performance profile than any product in the market for end development. So thank you everyone for joining today’s call. We will now open up the line for any questions. Operator, please open up the lines.

[Operator Instructions] Our first question comes from Chad Messer with Needham & Company

Great, good morning, thank you for taking my question and congrats on delivering another good quarter and getting the end of trail enrollment right in sight here.

Thanks Chad.

You are very welcome. On the Japanese market I would like to discuss that a little bit more. So it sounds like they do current standard of care is less basically than we have here. Can you talk about that and whether that is a good or bad thing for your product and also who sees the patients, is it the same mix where the small lesions are being seen by more generalists and then also is microfracture a significant part of the treatment landscape right now?

Great questions Chad and thank you for joining the call this morning. We have actually been surprised by the commonality and response from surgeons, from regulators regarding the challenges of the market. It’s the same problem whether you’re in Japan or the United States whether it’s just a lack of good treatment alternatives and in most cases you are treating pain only. So the first part of your question was what is standard of care, I think the gold standard still I microfracture, although I think it's sort of recognized as sort of the least of many evils in that process where you have a long rehab, a lot of variability, and if at all surgeons will do it they'll often do it very reluctantly only when there is no other choice. We also know that there is a significantly smaller percentage of patients who have access to pain medications unlike here in the United States, I think that’s something that is very different where given the opioid crisis that we are dealing with here in U.S., there aren’t the same level of access in Japan and so therefore, you've got a greater number of patients who are dealing with a lot of pain and many are still sitting on the sidelines. So, I think there is heightened awareness. I think there is high-level of frustration I think the Japanese surgeons see very much the same landscape as we see here in the United States. And as we go to the second part of your question, it is a combination of sort of GPs and orthopedic surgeons very similar to what we see here, so you have people that are going in talking to their GP about pain. We know that for example, osteoarthritis is a big issue of viscosupplementation products in many cases are used in a large percentage there. And so there is a great awareness and a very robust referral pattern. The only problem is on the backend, there aren’t a lot of good products. And, so hopefully that gives you a sense of the market need, certainly the percentages that we saw from mark-to-market research we didn’t expect them to lay up as closely as what we’ve seen here in the United States, where you have half or 60% of the patients just sitting on the sidelines doing nothing. And then you still have a large portion of patients who are choosing that microfracture because that’s all they’ve got. The last point that I would mention is, the regulatory agency has also I think recognized that there is a desire to come up with better products, with a clear mechanism of action and so while they want to see a competitive trial against microfracture, I think they also are looking to bring innovative products to the market.

Thanks, and congrats again on the progress on the quarter.

Thanks, Chad.

Our next question comes from Josh Jennings with Cowen & Company.

Hi, good morning gentlemen, thanks for taking the questions and echo the congratulations on the progress that's been on the home stretch of enrollment here. I wanted to just ask now that enrollment is nearing completion, you mentioned Adam on the call just about some other data supporting the BLA submission, you detailed some published studies , are there any other preclinical or other data that you need to generate to support this submission? I know, you still have some time here with the follow up period. And then also anything else that's needed to support the BLA submission, if you could just detail that, that would be great?

So, Josh, I think the quick answer is that there is no sort of major preclinical or other studies required to the best of our knowledge. We obviously have been in clinical development for over 10 years at this point. Our preclinical packages were developed many years ago using sort of the appropriate standards. And, so I think we’ve got a large body of evidence both preclinical and then certainly from our Phase 1 and Phase 2 clinical studies. The other element that we’ve been doing a lot of work on which I think investors have heard about is our qualification activities to bring the critical raw materials online. And we’ve been very open about the submissions and the agency, our Type C discussions, and so there is still work to be done to be able to complete validations, but a lot of the sort of open ended questions about strategy and other have been answered. So, the team here is gearing up for a tremendous amount of work and a huge push here over the next sort of 14, 16, 18 months to prepare for that BLA submission, but we do believe that these are all known validations and process work and other such activities that are normal for preparing for the BLA. I think we also have the benefit of seeing sort of great product that is may be being recently approved and getting a sense for the types of questions that came up in that review. And I think what we’re seeing is the regulators are working closely with companies and we expect to do the same as we move into the BLA process.

Great, and just looking past BLA submission and potential approval, and you touched on the call briefly just about moving forward building on the commercialization infrastructure, can you just give us some insights on how you are thinking about that, the timeline of spend? And then also just on the manufacturing capacity front, where are you and how should we think about that being built out as well?

Sure, so let’s start with the commercialization question, we are thinking about that all the time because Gloria’s team who is managing the clinical trial as a reminder we do not use a number of CROs. We have clinical research specialists who are medical science lays on, this is the way they think about them as well, that partner with our investigators to bring NeoCart into the clinical trial. To a certain extent as I think everyone knows, these are tough trials to enroll and we've put into place a lot of unique clinical marketing activities to regroup patients in. And so, I think we’ve already started to lay the ground work for some of those commercialization activities. To be clear, outside of the United States, we have communicated that we will pick partners, whether it be in Japan, Europe, other areas of the world, just due to our expense. And in the United States we think that this is something that can be easily commercialized due to a couple of factors. One, the operating margins that we think that we will be able see upon launch allow us to afford those sales force. And then secondly, we believe that the ease of the procedure allows us to build a small footprint. We are not exactly sure, exactly how many sales reps that we would be thinking about, but because many of our investigators have given us feedback in the clinical trial that this doesn’t require any unique training, this is something that they can do in 20 to 30 minutes. We think that a commercialization strategy will be much more about practice building. That’s exactly what we’ve done in the clinical trial. We don’t have a long surgery. You don’t have to suit up and get into the OR.…

Excellent, and just wanted to wrap up, you know great news on the Japan front, you guys have talked about being in early partnership discussions on previous call as well. You now have this clear path forward that’s been approved by Japanese PMDA, can you help us think about where you are in these partnership discussions, what the partnership could look like and how competitive is the process? Thanks for taking the questions.

Sure, so where we are at in the partnership discussions, it’s early days. We did discuss over the last couple of quarters that we had a sort of two-part strategy. First was to make sure that we had regulatory clarity and take that question off the table. The new Regenerative Medicine pathways have been sort of very intriguing, but not a lot of folks have been through it yet. So, we wanted to make sure from a diligence perspective we had absolute clarity on what was required to bring this product to market and with the news that we got just over the last couple of weeks we think that’s excellent news. The second was market research and have completed that as well. So, over the last two months we really formalized our partnership discussions. We have a number of parties that are actively doing work on this and are interested. As you know this is a long-term relationship that we’re building as well. So, our expectation is that over the next couple of quarters we would hope to be able to generate enough interest to bring someone on board. This is a long-term partnership and one that is a platform opportunity, not just NeoCart today but potentially future products indications. So we are been thoughtful about how we work through that process. I would say this is competitive and there is possibly two groups of potential partners that are out there and that will speak to the type of deals. So, you have your typical ortho pain type focused organizations that this would be a great product to add to their bag, has a natural call point. It’s high science, it’s innovative, and it’s regenerative medicine and so there is a great desire to bring personalized cell therapies to the Japanese market. That then speaks to the other potential type of partner where you have a let's say a larger pharmaceutical company that may be interested more in regenerative medicine and this is a really rapid way to develop a footprint. There is strong PD and PK capabilities driven by speed teams and that may allow them to accelerate their entry into the regenerative med market. So these are probably the two types of partners we are looking at and that could lead to a typical sort of licensing agreement which may have some upfront, may have some sort of milestones and then support to run a clinical trial. We would want to make sure the Japanese partner was helping to lead that in conjunction with Gloria and her team and that way they can be able to develop some market awareness and prepare for any commercialization. So, I think the traditional biotech deals are the way to be thinking about it.

Great, thanks for the answers.

Thanks, Josh.

Our next question comes from Ryan Zimmerman with BTIG.

Great, can you hear me okay?

We sure can, how are you?

Great, thank you, guys, congrats on the final stages of trial enrollment work in the home stretch area. So, just wanted to ask about the Japanese trial, do you have any sense of what the total expense associated with that confirmatory trial would be? And then subsequent to that question, given the puts and takes early on in the U.S. trial and the Phase 3 trial with clinical sites and trial enrollment, how do you take what you’ve learned here in the U.S. and kind of transfer that to the Japanese market, I mean how many sites should you be thinking about it, and getting those 30 patients enrolled and completed at a fairly rapid phase that would be helpful? Thank you.

Excellent Ryan, great questions and so I will take the first part of the question then hand over to Gloria for the next part. She has been thinking about this a lot and has been working closely with a number of Japanese investigators who have also trained here in the United States. First on the expense side, this is actually a relatively inexpensive trial to run. It would be the same protocol. We know exactly how much these cost and we would be manufacturing this from our site here in Boston, something that we do every day. So we think it’s less than $5 million in total. Now, given sort of our current operating plan we would expect that this is something we would wait for our partner to do. We would want in sort of ball on the ground capabilities to augment the current staff that we have here that can help train and help educate and use much of the same material. So, what’s nice about this is it’s not necessarily de novo clinical trial. It’s really an extension of what we are doing here in the United States already. The protocol is done; all of the training materials are ready. It’s really just setting up the right number of sites. We have sort of brainstormed with a number of folks that this is probably fixed to ten sites in the Japanese market. It also depends on what a commercial partner would want. It’s possible that they may want some additional care wells to gain experience. And we have two investigators that Gloria actually brought over to the United States and have trained here in the United States. They were also with us at the PMDA meeting and those would potentially be two of the investigators. Gloria, do you want to add some thoughts about how you think about this and my sense is much of what we’ve learned in the United States would be applicable in Japan as well.

Yes, I agree with that, I think Adam covered it nicely. The other thing that we can do in Japan is most of the physicians that we would be targeting are very high into the Japanese Orthopedics Association, that would be even more so than similar or in patients in the U.S. So, it’s easier to access through right physicians, don’t have the complete protocol [indiscernible] now we're building that. So I think we are definitely on the right track to getting this enrolled fairly efficiently.

Great, and then just as a follow up on the U.S. clinical sites, while they wait for data, I am just curious how you think about remaining top of mind with those physicians as I suspect those will potentially be customers when you do become commercial. I figure they are going to have some down time between trial enrollment completion and then not only data readout but then potentially commercial availability?

That’s a great point. We’ve already started those efforts actually, we’ve started to build from our internal group, and not adding new people, but from our internal group we expect to transition some of the people into sort of the MSL [ph] and training role. And we have a full slate of conferences and training events that we are planning over the next year once the enrollment is complete. And then there will also be opportunities to continue to interact on margins [ph], and direct preparations for the final one year endpoint we have into the sites. So, there is actually a large body of activities on that front.

Okay, and then Ryan, keep in mind one more thing, these patients come back for their six months follow up, their one year follow ups et cetera, they will also, you know the commissions will also be seeing those folks over that same timeframe as well.

Fair point, I appreciate that Jon. And then just lastly from me and I will hop back in queue. We didn’t hear anything on Intrexon in the prepared remarks. Any updates there with the partnership?

Sure, Steve, do you want to take that?

Yes, thanks for the question, and I think the major thing is we're really turned the crank on the technical side on this right now. We for example were working with Cornell University as you know on the biomechanical testing and we've been running the Intrexon constructs. Through that battery of tests we're pretty much done with it and we're trying to decide now how to publish or how to share that data. But bottom line is the Intrexon cells work just as well and just the same as our autologous cells. So we're very encouraged by the continuing data that we are generating and basically we're at with somebody from a technical standpoint.

And Ryan that takes into potential regulatory discussions which continue as part of our planning process pathways overseas possibly do that in the United States and we're looking to see clarity on that in the coming quarters.

All right great, and congrats on the execution and look forward to trial enrollment completions.

Thanks Ryan.

Our next question comes from Swayampakula Ramakanth with HC Wainwright.

Thank you. Good morning Adam, how are you doing?

I'm doing well, how about yourself?

Most of my questions have been answered, but I have a couple of really quick ones. So in terms of expanding your product portfolio either by bringing in or generating new products within the company organically or trying to expand the indications of the NeoCart product, do you have any thoughts about that and anything we could be potentially seeing in the near term?

I think that's a great question and I'll tell you that working about it constantly because the work that we've done over the last couple of years around raw material, around the Intrexon program actually start to enable a number of near-term opportunities. Now we're sensitive to focusing first on completing the NeoCart clinical trial, getting to that top line data with our current operating burn. But by virtue of the investments we've made over the last 10 to 15 years, we now are able to start to think about different size scalpel for example to go into different indications. If you can take the cartilage in the knee you can fix that anywhere. In the past we were restricted by scalpel size, thickness and supply. That no longer is the case. The second is, can you create one step allogeneic opportunities and of course that's the focus of the Intrexon program, but then there's a lot to the next step which is interstitially [ph] next generation tissue. So we're doing quite a bit of work through some sponsored research agreement. It is all exploratory at this point, but one could naturally think about looking at other tissues where you take that combination of cells, scaffold and bioengineering and our [indiscernible] manufacturing process provides a really unique way for us to be able to measure efficacy before we even go into preclinical studies. So this platform I think has a long tail [ph] to it and we're obviously trying to balance the near-term focus on NeoCart, but I would expect over the coming sort of years so, we'll start to better define what that additional landscape looks like and of course we'd want to make sure that we have the funding in place to be able to develop some of those other capabilities.

And then RK I would just add one thing to that if you think long term what's nice about it is that it enables us and again short term it is all about finishing the NeoCart trial, getting the data, long-term it really does help us so when we think about leveraging infrastructure. So leveraging commercial infrastructure eventually for NeoCart and leveraging manufacturing really help us get a lot of operating leverage down the road. So I think that from a cost perspective down the road things like that could be extremely helpful.

And Gloria, I think from an unmet need perspective we hear this all the time, what else could you do with this technology and what's next after NeoCart, because of the anecdotal feedback that we're getting? And any areas that you sort of touched on in terms of indication or other that I think there's so many, but where would you be thinking about sort of the next big unmet need from a surgeon perspective?

Yes some of the things we've talked about certainly are in foot and ankle states and also recently had fruitful conversations at our meeting that included shoulder sports med, people that they do have some challenging lesions that they really don’t have great solutions for. So I think shoulders have been we need to really seriously consider as well. And we also continue to think about pediatric and other locations and the knee although it’s likely to – we would actually get a full knee. So I mean we may not have to worry so much about that.

And RK, well it's very clear this is biologic and any sort of second or third indications would require additional clinical development. The way to be thinking about each of these is the same underlying – if the safety would be confirmed we would obviously want to verify that, but this is not another 10 years to develop a new indication. These are quickly add-ons that one could develop not only with their internal team, but also it is the same call point based on the discussions we are having today.

Yes, I know, that’s very helpful. One last question is, how just to keep everybody interested in the story, so what are some of the catalysts or events that we could be looking for over the next year or so six to twelve months?

Sure, so I think you’re going to continue to see a team of a couple items. So one is enrollment and that's eminent, we will be announcing completion of that in early July. From there you would expect to see additional data, both at the bench level, at the clinical level we're continuing to build out that compendium of data to be able to support our medical science initiatives as well as any commercialization. We would expect to see potentially additional news on Japan and at some point probably additional news on the platform as well. So what's neat is we're finally within that potentially 14-15 months from top line data. We never thought we would actually get to a spot where we would have been countdown to top line data and I don’t think anyone in the industry though either. And so I think that will be the continued driving force for looking to continue to augment the story for our investors. The focus continuous to be on NeoCart, but there is definitely sort of a long opportunity here and we want to make sure that we make the most of it and then of course communicate that to our investors.

Thank you, congratulations on where you have gotten so far and good luck.

Thank you.

[Operator Instructions] And I’m not showing any further questions at this time. I would like to turn the call back over to Adam for closing remarks.

Thank you, operator and thanks to our shareholders for participating on the call today and we look forward to announcing continued progress with NeoCart and the completion of enrollment in early July. This leads to our top line one year data in mid 2018. So we look forward to updating everyone on that continued progress and have a great day.

Ladies and gentlemen this does conclude today’s presentation. You may now disconnect and have a wonderful day.