Good afternoon, ladies and gentlemen. Welcome to Cytori Therapeutics Second Quarter 2016 Earnings Results Call. 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]. Before we begin, we want to advise you that over the course of the call and the question-and-answer session, forward-looking statements will be made regarding events, trends, business prospects and financial performance, which may affect Cytori’s future operating results and financial position. All such statements are subject to risks and uncertainties, including the risks and uncertainties described under the Risk Factors section, including in Cytori’s annual report on Form 10-K and quarterly report on Form 10-Q filed with the Securities and Exchange Commission from time to time. Cytori advises you to review these risk factors in considering such statements. Cytori assumes no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made. It is now my pleasure to turn the floor over to, Dr. Marc Hedrick, Cytori’s President and Chief Executive Officer. Sir, you may begin.

Thank you, Kristen and good afternoon everyone. Thank you for attending the call. Welcome, my name is Marc Hedrick, I’m President and CEO of Cytori. Joining me on the call today is a big group, our Chief Financial Officer, Tiago Girão; our VP and General Manager of Cell Therapy, John Harris who is joining us from Japan; our Chief Medical Officer, Dr. Steven Kesten and also our Senior Vice President Clinical Affairs, Dr. Mark Marino is joining us today. Little bit about Mark, he joined us earlier this year and has brought a substantial background in the pharmaceutical industry and therapeutic development to Cytori. Mark’s a graduate of the United States Military Academy at West Point. He’s an internist, a clinical pharmacologist and after serving as Chief of Department of Pharmacology at Walter Reed and on the faculty at The Uniformed Services University of the Health Sciences and Walter Reed, he’s held a number of corporate executive leadership positions including the Global Head of Clinical Pharmacology for Eisai and Roche, Head of Research and Early Development in Mankind Corporation and VP of Clinical Development at Daiichi Sankyo. Welcome Mark. And want to let our listeners know that I’ve asked Dr. Marino to now take on our clinical affairs lead role as Dr. Kesten has notified that it’s time for him to retire after a very long career, as a well respected academic physician and highly productive executive in the biotech and pharmaceutical industry. Steven has graciously agreed to stay involved with Cytori as needed on a consulting basis as he transitions and we’re thankful to Steven for his service. We have recently issued our Q2 earnings release which is now posted on our website and a copy of this transcript will be available there soon as well. So the agenda…

Thanks, Tiago and good afternoon everyone. Today, I’d like to cover three topics, first I’ll provide you more detail surrounding the regenerative medicine law approval in Japan for osteoarthritis and how the ACT-OA data will support our efforts. I’ll also cover and update on where we are today, with regards to the Managed Access Program or MAP in your Middle East and Africa and last thing I’ll do is provide a few more details surrounding our commercial activities in Japan and elsewhere. Now as Marc mentioned earlier on the call, the ACT-OA preliminary data shows safety, feasibility and consistent trends that favor the ECCO-50 product over placebo. In particular, the preliminary imaging results perhaps showing a benefit in the knee joint itself are things that our customers in Japan are most concerned to patients. Furthermore, market research has validated the opportunity to offer the ECCO-50 therapeutic to clinics and patients with osteoarthritis. Therefore, we feel this is an opportunity today to help patients and expand the use of Cytori technology for these patients. Based on customer feedback, ACT-OA trial preliminary findings are consistent with the feedback we’ve gotten in Japan thus far. For example, our leading clinic partner is now treating their backlog of patients. I wanted to quickly reiterate a few items relative to Cytori’s path to market for OA and other conditions and first, Cytori’s Celution System was granted a Class I notification originally in 2012. Now in November of 2014, the Japan government passed the regenerative medicine law and that law was enacted in November of 2015 which substantially restricted the use of cell therapies. However, it provides a mechanism for healthcare facilities in Japan to use certain regenerative medicine technologies deemed innovative and safe by the regulatory authorities for particular indications if approved by an accredited…

Hey, John, thank you. So, now let me just discuss near-term milestone and specifically now on the second half of 2016. So number one, we anticipate as I mentioned the first patient’s treated for scleroderma under our compassionate use plan. Number two, we expect EMA feedback on conditional marketing approval in Europe. We expect feedback from the U.S. FDA on our orphan designation request. We also expect FDA feedback on our IDE request and anticipate that that should be approved around the end of the year. And then finally, we continue to look for full enrollment of the EU scleroderma trial as mentioned. Obviously, 2017 is six months away but it’ll be here before you know it and that’s an important year for us as we look forward to potentially having U.S. PMA approval related to scleroderma, conditional marketing approval in EU for scleroderma by the Phase 1 trial fully funded enrolling and potentially full enrollment from the ADRESU approval trial in Japan for urinary continence. And with that, Kristen open the call up for Q&A.

The floor is now open for questions. [Operator Instructions]. Our first question comes from the line of Jason Kolbert with Maxim.

Thank you very much. Marc, Tiago, congratulations on so much progress in the quarter. A couple of questions across a couple of areas, let’s start with osteoarthritis first. Help me understand a little bit, it sounds like the totality of the data was very positive, talk with me a little bit about what the primary endpoints exactly means? It just seems like our very high threshold to have that single point measurement associated with pain. And if you were to do with a partner a pivotal trial down the road, what would be an endpoint that we could expect for a trial like this?

Jason, thanks for the question. So in terms of the OA trial and the primary endpoint, I think you obliquely hit on an important point and this was the first ever OA trial for us in U.S. or anywhere frankly. So, we were trying to accomplish many things here. From FDA’s perspective, we needed to show safety and feasibility. First time we had done this in this indication and then the FDA also wanted us to examine cell dosing. So we took our other clinical data to cell doses with our reasonable and examine those. From the Cytori perspective, a key was to explore the combination so not just kind of one area of endpoints but explore the combination of symptom reduction with joint benefit. It’s our belief that the market doesn’t need another pain medication for OA, we wanted to do something that will have a patient impact symptomatically, but also a joint benefit that might create a pharmacoeconomic impact to society and may be push -- places. That’s really kind of was in the back of their mind. However, in terms of the primary endpoint which was surely the basis of your question, we took a gamble. We said okay, let’s do it. If you look at some HA and other products that are on the market injectables, if -- we can look really early limited unblind 12 weeks, if we saw a profound effect in that, we might go ahead and accelerate our discussions with the FDA immediately and around what a pivotal trial might look like but we’d still have to wait for the full year data and that was the idea behind it. Now we sort of rolled the dice a little bit and picked something we thought might show -- have the chance of showing statistical significant benefit, it didn’t. So in terms of future endpoints, I think that approval based on symptomatic endpoint initially is something worth exploring. It will take a long time to show an effect on the joint pathology such that you can show -- that you can push out new replacement for example which should be the Holy Grail. So one might envision a strategy where in a non-inferiority based trial, that you get approval, get the product on the market and then examine that longitudinal data related to joint imaging and potential longer term benefit in terms of total knee arthroplasty. I think that’s a reasonable strategy here but again, this is early. We’re still looking through the data, things I can say just to sum up is if the data supports partnering discussion which we’re not prepared to proceed with our partnership given our focus on niche orphan diseases. I think this data helped us in Japan with our commercial activities. There’s a lot of receptivity to this over there given the population and so forth that it has a way and it gives you an opportunity commercially this data could help that.

Marc, thank you and I don’t want to spend a lot of time on OA I do have more questions, but I’d like to transition to something else you mentioned that’s kind of tickling me, it’s very exciting and it’s the intravenous administration of cells around kind of inflammatory disorders whether it be burns, whether it be kind of systemic inflammatory disorders. And more importantly, when I think about data beyond scleroderma and beyond the digits, I’m wondering if there isn’t kind of a secondary indication beyond approval and the primary indication that might speak towards the kind of disease course and what the expected deterioration would be these patients and whether this systemic administration of cells isn’t kind of a natural follow on indication beyond the primary indication. Is that something that you and your team are now beginning to look at?

Yeah it is and we expanded our capabilities I think from a personnel perspective to begin to look at some of those things and may be even going back to some preclinical work as part of our BARDA contract and things may be that aren’t related to BARDA that could consider addressing it in form those clinical decisions. But you hit on a point which I think is crucial, the IV administration is very interesting and it’s sort of confluence of three things coming together related, burn is -- thermal burns create systemic inflammatory response. So just narrowly speaking in terms of that trial, these patients have burns, their pulmonary conditions and renal failure and other things and there is an opportunity to look at biomarkers to assess the influence of unique cell population with a lot of immunologic effect. It comes from an immunologic organ by the way which is the adipose tissue and the real opportunity to look at that but also if you look at autoimmune conditions, there is an opportunity there and then, also on potential IV treatment in terms of some of these rheumatologic conditions that we’re looking at. The fingers are great, delivery site for cells because it would stick around, may be the joints not a great place. So may be intravenous delivery can beneficially affect that as well. So I think there is a strategy behind this as you’re sort of getting to and we’re really looking forward to exploring some opportunities there.

Let me transition a question our Head of Finance, Tiago. Talk with me a little bit about your cash balance and I believe you also have an alternative vehicle available I’d just like you to mention that. And then in my model, I really haven’t been forecasting BARDA contract revenues for ‘17 and ‘18 and beyond. How should we be thinking about BARDA contract revenues as we start looking into ‘17 and ‘18? And with that, I’ll get back in the queue. Thanks guys. Tiago Girão: Thank you, Jason. I appreciate the question. So first let me address the BARDA revenue question. We are currently working with the U.S. government on getting the IDE filed and approved by the FDA. That should open up to around $8 million in funding that will be spend in the next couple of years. So when you think about what it is that the revenues in ‘17 and ‘18 are going to be are mostly going to be bit related to this clinical trial related to burn in the U.S. So we should have if we are successful in expediting that trial and enrolling very fast, we should have at most to $8 million. If we spend that over and consider that the enrollment is slightly going to take over about a year or so, it’s going to trickle into the two year period, so roughly $4 million to $5 million in year one 2017 and the balance on the second year. And following that would be the follow-on trials and activities that will go on as BARDA pending data on this trial. So that’s pretty much what we have for contract revenue with the U.S. government. With respect to our current cash position it’s $20 million. We believe that current cash position alone is sufficient to fund the operations for at least the next 12 months and remember that since we finish this scleroderma trial, the last patient in was on June of 2016 we should have data by this time around -- this time next year. We believe we have enough cash for that but as you mentioned, we do have an ATM facility in place that if needed we can tap on a little bit here and there to facilitate additional funding going into that milestone.

[Operator Instructions]. We also have a question from the line of Steve Brozak with WBB Securities.

Hey, good afternoon gents. Obviously the technology that you guys have spearheaded has now been around for good bit of time. And you’ve gotten multiple indications and you’ve learned a great deal probably one of the most significant things has been the learning curve which you’ve gone up. And looking at regenerative medicine, looking at how you’ve gone out there and covered indications across the board between burn and OA, scleroderma, what are the clinicians coming back with? Because you had mentioned that you had one urology trial that you were looking at, when are you starting to -- you’ve obviously always gotten feedback, but what are you starting to come back with as the most important point that you want to highlight? I’m kind of curious about that. And then I’ve got one follow up question after that.

So Steve, two weeks ago I think we put out an investor note to help investors understand how management looks at an increasing number of investigator initiative trials with our technology. We’ve talked often about a limited commercial opportunity to sell in to the research markets and help guide and lead early adopting physicians into new indications. So, we continue to do that but we do it increasingly more selectively and we increasingly say no. To the degree we say yes, the three areas that are increasingly interested give us the really core mechanism of the technology if you question about what we’ve learned over the last few years or so and it seems as the primary most important impact to the cells on tissues in organs that ischemic, instances of chronic inflammation and where there are excess scarring of -- body conditions. It just so happens, suppose if the three name features of scleroderma which is why we think that’s such an interesting alternative. Now, we as a company, we can’t target everything. So from a pipeline perspective, we remain committed to this sort of niche and orphan space, it grew on to something really big in scleroderma here potentially and also in the hand. There are a lot of hand conditions that satisfy that Troika thing I just mentioned. We are doing some strategic planning related to where our next steps with that pipeline. We like the synergies in the three – patterns in rheumatology and in the hand, there’s a lot of economies of scale there and I would expect that you’ll hear more in the not too distant future about the pipeline new indications and some really creative ideas that our teams come up with in terms of how to make this business model work and remain at a premium pricing sort of approach, work within some of the regulatory situations that we see in different countries. I think we’ll scratch new surface to see what’s possible.

And you actually mentioned something that I wanted to ask a follow up question on, on the orphan side, often we see orphan indication is something we’ve got something where you’re dealing with chronic treatment. Can you tell pretty much how you’d differentiate yourselves and what you’ve looked at and what your approach would be in terms of having more of a curative nature to what you do and how that the differentiator might be where you could look at the premium pricing hey look on the [indiscernible] approach you’re talking about how do you justify something, if you’re talking about a curative or restorative type of therapeutic, there’s a big difference. Can you look at that and tell us how you model that and I’ll hop back in the queue please.

Sure. I think the way this changes the question a little bit I think for one of these conditions right now the way the technology stands and the things that we are looking at and the degree of difficulty, we’re I’d say cure would be great, just being able to put some of these conditions in the “remission” or create some degree of modification of the disease would be a great benefit to these patients, in other words, going beyond just the symptomatic improvement and going to something that’s more disease modifying. I think in scleroderma for example, we see some hints of that still early into our patients, we got to get through our trial, looking the data so forth, but we see some hints to that. And I think that’s where and I think we like to lean into that area and try to figure out okay, well what’s the duration affecting scleroderma? Is it two years, three years? What is it? And then you’re putting those patients effectively in remission or some of those patients whose responding, how they’re responding and what do we need to do in terms of retreatment may be keep them in remission or start to make really more of a long-term impact on them. And those are things that we don’t want to rate our screen, but yeah there’s a lot there to cover. I appreciate the question.

Thank you. I will now turn the floor back over to Hedrick for any additional or closing remarks.

Well again, thank you on the call and thanks for listening after the fact and for your interest and support at Cytori. From my perspective, the company controls a terrific cell therapy platform and technology that we’ve shown that can product cost effective therapy and it’s been shown to be very safe and have a number of potential clinical opportunities that can help patients. So, our challenge with so much opportunity out there to help patients is how do we stay focused on what we ultimately believe will drive shareholder value. And just -- at the risk of being a broken record continue to focus on getting something approved and reimbursed, a product in the market to U.S. is critical for us. And then secondarily how do we get those companies to breakeven by 2018 and we talk about that all the time, every day in the company. Those our main two goals. So we’ll continue to focus on that and as I close, I just want to few thank you to make, first of all shareholders thank you for your long standing support to the company and its mission. I want to pay special thank you to the patients that increasing their trust -- in larger trials and their participation and confidence in the technology. I want to say thanks to our advisors and analysts thank you of course to our employees who just seem to continue to work ever hard to make the company vision a reality and if Dr. Kesten’s on the phone, I want to be sure and thank him for his service and dedication to the company. He’s in many ways a doctor first and his dedication to patients and the virtue of all that hard work to shareholders. If you put it in athletic terms, you would call Steven a really player. So with that, thank you and have a good evening.

Thank you. This does conclude today’s conference call. Please disconnect your lines at this time and have a wonderful day.