Ladies and gentlemen, thank you for standing-by and welcome to the Cytori Therapeutics Third Quarter 2014 Financial Results Call. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. (Operator Instructions) It is now my pleasure to turn the floor over to Mr. Marc Hedrick, President and CEO. Sir, you may now begin.

Thank you, Paula. Good afternoon everyone. Welcome to our third quarter 2014 conference call. My name is Marc Hedrick, I am the President and CEO. Very happy to have with me today our new CFO and VP of Finance, Tiago Girão. Tiago welcome, glad you are here and Steven Kesten, our Chief Medical Officer is joining us as well. Our press release was issued today and it's been posted on our website and also a copy of the transcript can be found there as well. Just a brief overview of call today, I’d like to focus on first our change of strategy and update you on the progress of that implementation. We particularly like to talk about some of the substantial expense reductions that and payment process over the last quarter so and are continuing today and I’ll ask Tiago to update you on our financials, dig in a little bit more on the expense reductions and then I’ll close out with an outlook for the remainder of the year and then we’ll go to Q&A. So first on the strategic side, as I promised since the CEO transition, myself in conjunction with the management and the Board comprehensively conducted a full strategic review of the company’s activities and it's areas of focus. That review is complete and honestly we've been off and running on that now for a few months. First let me be clear about how I feel and how management team feels about the technology. We really believe we have the winning return in medicine technology in Cytori's out there, never been more sure of that, that’s not the issue. The question has really always been how we’re going to unlock that value. And to us it's clear. Going forward our principal strategic objective needs to be…

Thank you, Tiago. So to wrap up and move to Q&A, I would like to just personally take a moment and acknowledge as a shareholder and a long-time employee of the company, that it's definitely been a tough year in many ways for Cytori, we've had big leadership changes, we've been trying to power through what's a weak balance sheet, the stock has obviously been under significant pressure, a clinical trial hold, you know the picture. However, I think as of this call, we've now shown evidence of the changes to which we are fully committed. We are much leaner, more focused enterprise than we've ever been and we are working as rapidly as we can through a current range of challenges. In the meantime, we've successfully completed many of the objectives I mentioned on our last call and for the remainder of the year and into early next year; we tend to do the following things. Report the final Japanese [indiscernible] laws discuss the implications once we understand it. A report on the ATHENA Phase II data and provide the readouts on the ACL repair in the advanced studies. We will finalize and report this proposed clinical development plan for urinary incontinence in Japan as soon as we know what that is. We will get our filing for Chinese FDA approval. We hope that will come quickly and trigger that key order for more. We're going to begin enrollment as soon as we can with a full focus on the ACT-OA trial, SCLERADEC II trial and complete the U.S. burn trial planning to coincide with the availability of the next generation of the system. We are going to finish the core R&D related activities for that system, so it can be available for that trial. I mean a number of our other near term priorities that we are working on. So I'd like to go ahead now, thank you for your time, turn the call back over to the operator to moderate the Q&A portion of the call. Paula.

The floor is now open for questions. [Operator Instructions]. Your first question comes from Joe Pantginis of ROTH Capital Partners.

Hey, guys. Hey Marc, hey Tiago. Thanks for the update; it's very, very through. And Marc, you've really been very thoughtful in your approach to the company so thank you for that. Two questions really. First for Tiago. You see guys and Marc your initiatives, you brought an expense of the lot but maybe you can just discuss a little more besides the sales and marketing expenses. How you might see managing the burn on the R&D side as you expect to see some increased clinical trial costs? And then the second question is regarding CTX 2. Maybe Marc if you could provide a little more color regarding the differences and the improvements surrounding this system.

All right, thank you, Joe. With respect to expense reduction, the critical areas that we targeted were certainly sales and marketing and G&A. We did optimize a few spend profiles on the R&D side but the significant portion out of the $8 million that Marc alluded to a little bit ago almost half came from sales and marketing, another significant chunk is coming from G&A and then a little bit of R&D. We do expect that R&D in 2015 is going to be over 50% of our total expenses, so the focus really is on G&A and sales and marketing.

Okay.

And Joe on the CTX inside, a little bit careful about some of the specific technical aspects because the device is really a game changer, it substantially decreased the time, the volume range that it can process is very wide, so we can go down to very small volumes and do very large volumes, so it can accommodate really the full whatever you can imagine treating, the volume range will accommodate it. It increases the number of cells per unit of tissue in place which effectively means that you can take less tissue from patients making it what is not very burdensome procedure, even less burdensome and pushing it more to the lunch time sort of harvest. And then finally and this is really important and we got hung up on this when we started to try to sell the initial research based version in the [indiscernible] market, the cost in some of the other processing parameters didn’t really support profitable sales in that market. The cost of this is such quick consumable and the device such that you really can contemplate a launch of this device into an aesthetic based market and be competitive with other treatments that are out there. So it really is a game changer for us and then downstream, there is some unique connectivity technology that we can add that can make it more of a cloud based interactive system which opens up some new possibilities for us as well.

Your next question will from the Jason Kolbert of Maxim Group.

Hey Marc, thank you so much. I appreciate the refocusing and the efforts on the company. I have a couple of questions. Can we talk a little bit about BARDA milestones and when you think that next BARDA milestone could come to Cytori and how that milestone will be used, how should we kind of view that funding and that tranche of capital.

Jason it’s actually pretty simple now, it was super complex in the base period. So I guess the more money you get the less complex it is. But they freed up $12 million for development programs and as I mentioned that sort of clean up development to get us ready for what BARDA thinks we need for clinical for the FDA and that’s simply clinical and frankly some development work specifically related to delivery of cells into the burn environment and thus to be ancillary products downstream and other areas as well but that money has already been it’s been allocated and released. The milestone relates to getting IDE approval of a trial and we've shown that we’re good at getting IDE approvals in the U.S. for trials so I don’t think that gating item, the gating item is really completing the CTX 2 development, getting through Phase 3 development locking design, finishing the documentation and then sending that file to FDA. At the last minute the FDA, the BARDA pulled out some of the funding for BARDA, it’s a little bit of a challenge on the timeline to deliver the system on time without that additional funding, but we’re hoping for some additional funding that’s our really a milestone that would be really a separate funding but that will give (inaudible) speed up the timeline. So really the key milestone in summary is when the device is ready and we’ll be able to file for IDE approval, we’ll get IDE approval and that frees up another 8 million and then that will be down to treat potential opportunities with further clinical studies.

Okay, great, thank you so much and let’s talk a little bit about Japan, I know you’re going after urinary incontinence there and we’re looking for revisions in regulations. So how should we be thinking about clinical trial timelines and the reimbursement strategy associated with the outcome of that trial and what does that mean for the potential placement of units and/or therapeutics in Japan?

Yes, touch on a lot of things there. I want to be clear about the Scleroderma trial, that’s not a primarily Cytori response to trial, that’s a government sponsored trial. So our ability to move that thing forward on our timeline is limited. The dialog with NHLW, PMDA and also with the university is that they would like to do an approval study that allows for reimbursement and specific claims for that using a device based pathway. So we have device everywhere in the world, we have a class one approval in Japan and it would be potentially providing class three approval for that narrow group of patients, men with incontinence. Part of that I hope would be some increasing feasibility work and women that have incontinence to work out the details of how we can make this therapy successful for them, that would be our goal but then again that’s not a Cytori responsive to trial. We haven’t made any comments about any Cytori response to trial, we’re waiting to see what the device, the new regulation shows, we anticipate that there will be a new legislation around regenerative medicine products and there will be streamlining of the device related regulations, making it more like Europe with notified bodies and so forth. That’s what we anticipate. But we don’t know for sure. For us, we’re locked in as a device. So we have class one approval, we do clinical trial, we get claims and then the claims come with reimbursement with the social system there. We think we’ll have the option to go down regenerative medicine product pathway if it’s advantageous but right now it’s unclear whether that would be an advantage or disadvantage. Right now, in terms of sales, the impact of that will be primarily that it will clear the table of all of the regulatory uncertainty of the past, provide a very clear regulatory pathway. We should continue to have class one approval, that should allow physicians to buy the technology with relatively limited if not zero headache from the government and begin to use it clinically. There’s going to be some sites in Japan and Osaka and around Haneda airport that will be tourist or medical tourism areas of interest that will have even more free reign about what they do clinically. And we hope to better to leverage those opportunities as well. So it’s so complex, there is a lot of going on and I think we'll just kind of play read and react until we see what the rule is.

Your next question comes from Yale Jen of Laidlaw & Company. Yale Jen - Laidlaw & Company: Good afternoon, and thanks for taking the questions. Just one question I have, first question I have is that for all of the studies, clinical studies, you plan to do are sponsored by others. Do you anticipate any of the study may be able to use the next generation CDx or you think CDx will come out much later for complete that?

Thanks Yale. The BARDA related trial is predicated on the new system, so that will likely be the first trial that would use the new system. We anticipate it getting the osteoarthritis trial up and running long before that’s ready and we’ll use the current system for that Phase II. We’re confident we’ll show equivalence in terms of out, but the performance obviously of the other system will be much greater. Any subsequent cardiovascular study would be with the new system. The scleroderma study will likely be with the current system but could be with the new system. And then it depends on the time line of the Japanese study and how quickly we’re able to get class one approval and how the regulation shake out as to whether that would be. So just the bottom line is we want to -- soon as we get the CTX2 ready, we'd like to do every trial with that but we won’t be able to do every one, but we’re just moving as fast as we can on that. Yale Jen - Laidlaw & Company: Okay, great. Thanks. And the next question I have is that from a recent 8-K I think the NASDAQ stock market has some concern about the listing of the stock. Any plans that you guys may have to sort of resolving that?

The answer is yes. We think there is a lot of opportunity to hit milestones that will bring us above that level. But one can never predict what the future holds, so we’ll be ready for any eventuality. As you know, those things take long period of time as a launch year period, of about half a year before any decisions are being made. So, we’re going to just continue to operate the company. We’ll be as fast as we can hitting as many key milestones as we can. Do everything we can to not make a stage in terms of a split or so forth. But we’ll be ready in any eventuality.

Your next question comes from Dan Trang of Stonegate Securities.

Hi guys. Thank you for taking my question. Regarding the clinical pathway for the hand disability trial, wondering what are some of your concerns of sizing the cost, was there and is there some possibility for you to free up those costs possibly do a joint venture and just would like a little bit of color behind that?

I'll introduce Steve Kesten, our Chief Medical Officer, who has been very involved with the investigators in France and setting up that trial, Steve?

So there is two areas where we’re exploring; one is the clinical trial that Marc described in France. And we are supplying scientific and some financial support to that. But it’s relatively modest when you consider the trial itself. So, that we think it is an efficient way to get a very, very high quality trial done from seasoned investigators. Now in the U.S., you really have to wait some of the ongoing discussions with the FDA on defining the path forward in this and we think we have an infrequent if not rare indication here in that and if the path is streamlined and the number of patients required to show to satisfy safety and [efficacy] requirements in the FDA are modest, then that really impacts the efficiency and cost of trial. On the other hand if they handle it more to regular routine pathway, the numbers are going to be quite a bit large, so we can’t really say until we really work with the FDA and get their guidance on the path forward.

[Operator Instructions]. Your next question comes from Keay Nakae of Ascendiant.

Yes, thank you. Just wondering if you can give us a little more clarity on how the 12 million from BARDA for option one will be recognized as revenue starting in Q4 and over the next say several quarters? Tiago Girão : Sure, Keay, so this is Tiago. We have started already [indiscernible] on that 12 million, we expect that this coming quarter we'll have activities that will support roughly 1.5 million to $2 million worth of activity from BARDA and then in the coming year anywhere between six and eight. So total 12 million is going to get mostly spent between 2014 and 2015.

Well, in 2015 you just said, you said 6 million to 8 million, can you help -- that’s for the full year? Tiago Girão : That’s for the full year, correct.

This concludes the Q&A session of today’s conference. I would now like to turn the floor back over to management for any additional or closing remarks.

Thank you, Paula. As always we really appreciate the thoughtful questions and the continued interest in our company and technology. If you remember from last quarter I said we would narrow our focus which we have. I said we'll reduce our expenses, we have and we’re substantially on track with regard to our forecast and milestones. I hope you're beginning to see what I can see, which is a Cytori few quarters down the road that has multiple Phase II trials, that has substantial partnering potential, has profitable sales with growing contribution margin and has a much reduced cash burn in a substantially strengthened balance sheet. We’ll keep you updated as we make progress towards that and really once again thanks for your continued interest and support. Have a good evening.

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful evening.