Good afternoon, ladies and gentlemen. Welcome to the Cytori Therapeutics Third Quarter 2018 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 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. As such statements are subject to risks and uncertainties, including the risks and uncertainties described under the Risk Factor section, included in Cytori's Annual Reports on Form 10-K and Quarterly Reports 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.

Good afternoon, everyone. Thank you, Ian. Welcome to our third quarter 2018 earnings call. I’m Marc Hedrick, President and CEO of Cytori. Joining me on today's call is our CFO, Mr. Tiago Girão. On the call today, I’ll provide an update on the Company's Nanomedicine, oncology and cell therapy programs. Then Tiago will update you on the financial and commercial performance. After which, I'll update on the forthcoming milestones. And then we'll have time for Q&A. To begin with, Cytori is developing and manufacturing the chemotherapy drug ATI-0918, which is a generic pegylated liposomal doxorubicin hydrochloride, intended to be bioequivalent to the European reference drug. As mentioned on previous calls, we intend to position this as a high-quality U.S.-made product with maximal clinical effectiveness, primarily targeting breast and ovarian cancers. We have the goal to be the first or second generic on the market in Europe with the target launch in 2020 via commercial partners. Let me give you a few specific updates on the programs. The products proposed in this domain is currently under review by the mononuclear within the EMA. The product will be available in 10R and 25R vials, identical to the EU comparative drug and we are currently finalizing the packaging design. The program is in the manufacturing validation phase and once both manufacturers complete, we will outsource the bulk product for sterile filling, packaging, and product finish. The first finished slots will then be placed on stability testing. And the company is in the process of preparing its Marketing Authorization Application to be filed with the EMA. That will happen next year following six months of stability testing and other testing of our validated lots. The Company also continues to actively engage with the number of potential interested commercial partners for ATI-0918 and these discussions…

Thank you. Tiago. Operator, the Q&A, let me just update you on key forthcoming milestones as there a number that could positively impact the company. First of all, we intend to complete the ATI-0918 development program and the manufacturing activities required, so that we can complete the Marketing Authorization Application to file with M&A and then with anticipated commercialization plans 2020. We anticipate that we will receive 505(b)(2) pathway feedback regarding the ATI-1123 product from U.S. FDA in the first half of 2019. Also in the first half of 2019, we intend to report six-month and one-year Japanese ADRESU clinical trial data for post-surgical male stress urinary incontinence and make the requisite filing with the Japanese regulatory authority space in the data. We also hope to achieve and receive Japanese regulatory feedback on pending up classification from Class I to Class III on the solution system in Japan. Soon, we intend to fully activate all U.S. RELIEF clinical trial BARDA enrollment sites as mentioned on the call and enrolled 15 patients in the BARDA funded trial. Finally, we intend to evaluate and report investigator-initiated EU SCLERADEC II clinical trial data anticipated for later this year. Now with that, I’ll turn it over to Ian for any questions from the floor. Ian?

The floor is now open for questions. [Operator Instructions] And our first question comes from the line of Jason Kolbert from H.C. Wainwright.

Hi, Marc. Hi, Tiago. I got a bunch of questions for you guys. First, can you talk a little bit about what the EU filing for Scleroderma might look like and what the implications are for driving the U.S. program? Previously, I had those programs and kind of sync and it looks to me like if something's going to happen in Europe it will happen way ahead of the U.S. So help me understand the timing for ADRCs in Europe versus the U.S.?

Hi Jason. So with respect to the European trial, there are two parts of that trial. The first is the data as it relates to safety and efficacy. And as of three and six months that will be the initial readout and the expectation is we will get that by the end of the year. That's an investigator-initiated trial as I mentioned. We don't have the same line of sight in terms of timing, but we would have the Cytori sponsored trial. But that's the timing there. There's also a second set of data that we're expecting from that, which is the data on the prior preserved line. Recall that, in that trial, the patients that were randomized to placebo, we’ll give another [indiscernible] and then data will be coming downstream from that. So the thing that could potentially drive a decision to push this forward in Europe would be once we get the three and six months data. And then based on that, we'll just probably react to the data. It's hard to know at this point where that will go until we get the data and also we would propose that if we do anything that will be packaged with the data that we've already collected in STAR in U.S.

And so Marc, can you switch gears with me and focus a little bit on Japan and help me understand what the data from the ADRESU trial means. And if the data is good and meets its primary and secondary endpoints, what does the timeline for filing in Japan look like? And then what is the business model in Japan? Will it be consumables plus system? Will it be a therapeutic-based pricing? Help me understand what you're thinking in that scenario?

So Jason, it’s important to emphasize with respect to that program are the following. First of all, there's no approved treatment for these patients in Japan, unmet medical need. Number two, it's an under appreciated, under diagnosed clinical indication, as I mentioned in my prepared remarks. Unlike trials that we have been asked to perform in the U.S. or including scleroderma, this trial is essentially a responded trial, so there's no placebo group. The average of the urinary leakage volume as measured by the leakage is based on the improvements over baseline at 52 weeks after treatment. So it's a very different trial. It’s constructed in a different way and meet the bar is certainly achievable. Now in terms of the business model, it's a unique situation. So the nuance here is that this approval, if the data supports that would be as a Class 3 device. And so it really is within the current historic device-based regulatory approvals in Japan. The goal is to move our up classified current technology, and then later on claims for stress urinary incontinence. And as I mentioned, we anticipate having that data likely in Q2 timeframe and then immediately applying for expedited approval, which are already in communications with the authorities about that. And then I think the appropriate timing would be about a year to approval, perhaps less with the expedited timeline and then also we would hope to receive reimbursement shortly thereafter. We've done an analysis of historically approved although now often market treatments for stress urinary incontinence, and a price point between $5,000 per treatment or more, it’s something in the ballpark that we're looking at, that's not inconsistent with our current ASP for self-pay markets. And then that model will be based on the sale of the consumable bundle, not as a therapeutic.

Okay, understood. Thank you. Marc. Tiago, can you talk a little bit about the share count, both the weighted-average shares and the fully diluted shares? I see the share count stepped up. I also know there's been preservation of capital in the quarter. I assume that means that you're using the ATM facility. And then can you close with me a little bit about your plans to retain the NASDAQ listing? Thanks. Tiago Girão: Sure. Jason. So on the share count, just to clarify we had a significant increase on the share count right now because of the financing that took place in July. There were a significant number of conversion of the Series C that was issued and there were about 50% converted by the end of the quarter. So if you consider the current issued and outstanding share count on that was just filed on the 10-Q is 13.2 million. If I consider all the shares on a net debt converted basis from the Series B and Series C that are still outstanding, I get to approximately 18 million common shares outstanding. I also add to that the warrants and options that are outstanding for a total share count on a fully diluted basis of 27 million shares. But that's what we have when you add about $9.5 million – 9.5 shares of warrants and options. You are right that the Company has used its ATM as well as the Lincoln Park facility that it has currently put in place. It functions like as an ATM, but we can leverage one of the other depending on the quality of the volume of the day. We plan to continue to utilize those programs to maintain a stable balance sheet, throughout the balance of the year and 2019. On your last point is it relates to the NASDAQ listing. The Company has until about February and that we’re likely able to obtain an additional six month extension that would put us into the Q3, Q4 territory. And we will plan on balancing that those activities and depending on the readouts of these data, if the share price is don't resolve in itself on the performance of its own. We have been able to address that with NASDAQ in the past and will continue to ensure that the listing is preserved for the Company.

Perfect. Thank you guys. So one last question, can you just give us some hints as to how active the BD is around ATI-0918 and clearly there's a hope to monetize that asset and bring non-dilutive capital into the Company. Can you just give us some idea of how the progress is going in terms of that effort? Thanks. Tiago Girão: Yes. Anything about BD is always working problematic. But there is a lot of interest for that particular drug in Europe. You can imagine that there's – as I mentioned about a $120 million to perhaps as well over $200 million a year market opportunity with that drug. We think there is the opportunity to be the first or second generic. If we can monetize it in a way that we think it’s fair to the opportunity and shareholders in the near-term, we'll do it. However, we think that the longer we go, the closer we get to the goal line that the opportunities for that maybe improve as a little bit competition potentially for partners. So we're out there in the market aggressively talking about European licensure, but we'll wait for the right deal comes along. There's also interest in, call it tertiary market regarding that drug being a high quality U.S. maker drugs that it had a lot of stumbles were made in outside of the U.S., even in the U.S. Here is real opportunity to position that for outside of Europe, and there is some opportunities related to there. So we're actively engaged in weekly discussions with potential partners and developments related to that.

Marc and Tiago, thank you so much. I know how hard you guys are working to keep everything moving and it's really evident with a number of things you have going on. Thanks.

Thanks.

[Operator Instructions] Your next question is from the line of Yale Jen from Laidlaw & Company.

Hi, thanks for answering my questions. And I only have two here. Number one is the housekeeping one, in this quarter you have a beneficial conversion for the convertible. Is this the one-time item or this will be a continual elements in the P&L? Tiago Girão: Yale, thanks for the question. This is Tiago here. And there is a one-time hit to the P&L related to the beneficial conversion feature that exists on the Series C. Those shares were immediately convertible, and as a result of that, all of that charge was booked on the quarter, no more on a go forward basis.

Okay and what about the change in the fair value of warranty liability? Would that be a more continuous element? Tiago Girão: Yes. That is a continuing element. The warrants that were issued as part of the rights offering this past July included anti-dilution provisions and full ratchet provisions that caused these warrants to be classified as liability and those are mark-to-market every reporting period until they either get exercised or expired.

Okay, great. That's very helpful. Maybe one last question here, which is ATI-1123. Could you talk a little bit sort of market potential in the United States, particularly for this sort of generic or these drugs?

I: Is that we saw orphan status for that as a potential second line therapy that we think could be better than the only approved drug, which is [special CT-scans]. So second line therapy, orphan small cell lung cancer, competitors to special CT-scans, which has a very extremely high grade three, grade four neutropenia rate, that's probably about a $50 million to $80 million a year revenue opportunity. So relatively narrow, but a direct and targeted way to market. The other framework to look at that, which is as a competitor to tax or docetaxel on the ATI. There are several reformulations of docetaxel that are under development or thermal sensitive, other nanoparticle formulation. So right now we're in the process of doing a very detailed market analysis and just trying to determine which indication are the most promising for that drug outside of small cell lung cancer. We will have that data by the end of the year and we'll begin talking about that around January 1. At the same time, we're completing that very detailed market analysis. We're working with our external consultants on the 505(b)(2) pathway. And so we'll plan on bringing those two work streams in terms of a detailed market analysis in 505(b)(2) feedback from the FDA forward and hopefully around end of the first quarter, early second quarter and then we'll provide a much more detailed development plan for that drug outside of small cell lung cancer.

Okay, great. That's very, very helpful and best of luck for the progress forward. Thank you.

Thank you. End of Q&A

At this time, I'm showing that we have no further audio questions. I’d like to turn the floor back over to Dr. Hedrick for any additional or closing remarks.

Thank you, Ian. And just to – those are still on the call, on behalf of the Board and Management, we just want to thank you for your time this afternoon for your participation. The Company is very appreciative of those that continue to follow-us. We're very appreciative for the increasing number of patients and documents and now customers that trust us and our products and of course to our hardworking and dedicated employees in Japan, San Antonio and San Diego. 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.