Welcome to Mat Therapeutics conference call to discuss our financial results of the third quarter of 2016. At this time, all participants are in a listen-only mode, not a webcast as this call is available on the investor’s section of Mast’s website at www.masttherapeutics.com. This call is subject to copyright property of Mast Therapeutics. And recording, reproduction, or transmission of this call without the expressed written consent of Mass Therapeutics is strictly prohibited. As a reminder, today’s call is being recorded. I would now like to turn the conference over to Ioana Hone, Head of Investor Relations at Mast Therapeutics. Please go ahead ma’am.

Thank you, Amy. Good afternoon, and thank you for joining us on the call today. A press release announcing our financial results for the third quarter was issued this morning, November 8, 2016. In our quarterly report on form 10-Q for the quarter was filed with SEC this afternoon. Both can be found on the investor section of our website at www.masttherapeutics.com. Participating in today’s call are Brian Culley, our Chief Executive Officer, Dr. Ed Parsley our Chief Medical Officer, and Brandi Roberts our Chief Financial Officer. Please note that today’s conference call and webcast may contain forward-looking statements within the meaning of federal security [indiscernible]. Any statement made on this call that is not description of historical facts should be considered a forward-looking statement, which is subject to significant risks and uncertainties including what is described in the company’s quarterly report filed today. Actual results or performance may differ materially from expectations indicated by forward-looking statements due to those risks and uncertainties. We caution you not to place undue reliance on any of the forward-looking statements which speak only as of November 8, 2016. With that I’d like to turn the call over to Brian Culley, Chief Executive Officer of Mass Therapeutics.

Thank you, Ioana. Good afternoon everyone and thank you for joining today’s call. Before we review our financial results for the third quarter of 2016, I’d like to provide an update on the development of our lead asset AIR001. As we have shared previously, we believe our focus on our AIR001 program will provide a strong foundation from which we can seek to return value to our stockholders. As a reminder, AIR001 has demonstrated activity which includes dilation of blood vessels and reduced inflammation. Its hemodynamic benefits also include reductions in pulmonary capillary wedge pressure, right atrial pressure, and knee and pulmonary arterial pressure. Each of these features can potentially provide benefits to a heart failure population by reducing the pressure of a working heart. AIR001 currently is in Phase 2 clinical development for the treatment of patients with heart failure with preserved ejection fraction or what’s commonly known as HFPEF and is being evaluated in three separate investigator sponsored clinical studies at prestigious institutions in the United States. The first of these studies is a Phase 2 trial of AIR001 in subjects with pulmonary hypertension associated with HFPEF. This ongoing open label study is evaluating the effect of AIR001 in a dose escalating manner on change in pulmonary vascular resistance in approximately 50 patients with pulmonary hypertension or PH who undergo right heart catheterization. Of these patients approximately 20 are diagnosed with PH associated with HFPEF. Positive interim results from this study including data on 10 of the 20 PH HFPEF patients to be enrolled were published in the journal of clinical investigation just last week. In this study, AIR001 significantly lowered pulmonary right atrial and pulmonary capillary wedge pressures with a substantial increase in pulmonary artery compliance which was most pronounced in those patients with PH HFPEF. These…

Thank you, Brian. First let me begin by discussing our third quarter 2016 operating results. We recognize $45,000.00 of revenue for the third quarter of 2016, this revenue represents reimbursement of costs related to the non-clinical study of vepoloxamer that is being funded completely by the NIH grant Brian mentioned previously. We recognize no revenue for the third quarter of 2015. Research and development expenses for the third quarter of 2016 were 5.1 million, a decrease of 2.2 million or 31% compared to 7.3 million for the same period in 2015. This decrease was due primarily to decreases of 1.6 million in external non-clinical studies, fees, and expenses, 400,00 in external clinical study fees and expenses, and 200,000 in personnel costs for the 2016 period. The decrease in external non-clinical studies, fees, and expenses was primarily due to lower research related manufacturing and non-clinical costs for vepoloxamer Selling general and administrative expenses for the third quarter of 2016 2.1 million, a decrease of 400,000 or 13% compared to 2.5 million for the same period in 2015. Interest expense for the third quarter of 2016 was 900,00 compared to 100,000 for the same period in2015. The increase in interest expense was primarily due to two reasons, 1) a full quarter of interest expense on a $15 million principal balance under our dent facility in 2016 versus only a partial quarter in 2015 and 2) increase amortization of debt issuance costs due to amortization scheduled changes that were related to the prepayment of 10 million on our debt facility that was made in October of 2016. Our net loss for the third quarter of 2016 was 8.2 million a decrease of 1.7 million as compared to a net loss of 9.9 million for the same period in 2015. We ended the third quarter of 2016 with $27 million in cash, cash equivalents, and investment securities. Our working capital was 7.4 million. We expect that our full year two thousand and sixteen operating expenses excluding shared based compensation expense will be in the range of $31 million to $32 million dollars with fourth quarter expenses of approximately 4.7 million to 5.7 million. We have been working diligently to reduce our operating expenses by closing out all clinical studies of vepoloxamer as efficiently and cost effectively as possible. Additionally, because we need less personnel to advance the AIR001 program in 2017, we have been reducing our workforce to preserve resources. In October we eliminated 10 positions across the company which represents a 38% reduction in our workforce. Severance expenses related to these reductions were included in our fourth quarter estimate of expenses. Going forward our primary spend will be on the advancement of AIR001. As Brian previously mentioned we believe that our spend for the full year of 2017 excluding share-based compensation expense will be approximately $8 million to $9 million Let me turn the call back to Brian to conclude our call.

Thank you, Brandi. Looking ahead, clearly there remains a lot of important work to be done. We will continue to reduce expenses to preserve capital. The good news there is that we believe we can advance the AIR001 development program with a small and dedicated team which is reflected in our estimated expenses of just $ 8 million to $9 million for next year. And as a reminder, the majority of expenditures related to the clinical development of AIR001 are currently being funded independent from the company. Additionally, and I want to place greater emphasis on this than I may have before. We also are exploring a range of strategic opportunities from collaborations and licensing arrangements to being acquired in a merger or a sale of part or all of our assets. And as part of our commitment to create value this way. We recently engaged an investment bank as a financial advisor to assist in identifying evaluating and negotiating these opportunities for Mast, which we believe can establish a new and exciting future for current Mast shareholders. We intend to work diligently to build the company and raise its value in the marketplace, and we appreciate your continued patience and support. And with that I'd now like to turn the call back to the operator for any analyst question.

Hi guys it’s Jason Kolbert and Jason McCarthy. And I just wanted to ask you some NO questions. What’s the half-life of the NO and kind of what are the key concentrations, and are their concerns about NO interfering with the rigidity of the vascular structure, because we've seen the other side of this equation as we've seen a lot of NO scavenging that tends to, you know, make the vasculature very rigid versus making it very relaxed. So, if you could just help us understand both the half-life kind of the impact on the rigidity, and then I actually have a partial pressure question on how, you know, high concentration of NO might change the partial pressure of dissolved gases whether it be CO2 or O2 thanks.

Yes. Thank you, Jason. Fortunately, Ed, is on the call with us, and it's an important question because people sometimes get mixed up around the differences among and between nitric oxide, nitrite inhaled, injectable, and so forth. So, Ed, did you hear the question well? I know you’re off site relative to myself and Brandi. Hold on just a second Jason. We’ll make sure we’ve got Ed still connected here.

Hey, Brian. Yes, I heard the question. Hey, I heard the question very well. So first I want to reiterate what Brian had said about - we were talking about nitrite as an n ion versus nitric oxide. So, nitrite is a precursor and the body’s largest pool of nitric oxide, but it is not directly through or directly just generating nitric oxide. That's really not what's happening when we administer inhaled nebulized nitride. Nitrite has a plasma half-life of about 43 minutes. However, the hemodynamic half-life appears to be much longer. The drug is really - it’s actively in its present form as nitrite. It can result in the generation of nitric oxide particularly as part of hypoxic’s beta signaling. So, hypoxic vascular signaling depends on the generation of nitric oxide as a local invasive dilator in ischemic let’s say, you know, muscle or ischemic areas, because the traditional formation of nitric oxide requires oxygen. So, this bypasses the nitric oxide [indiscernible] pathway and is able to augment local nitric oxide production through reduction of nitride to nitric oxide. But what we're seeing hemodynamically is the hemodynamic effects are much longer than the plasma half-life. We see after repeat dosing that other longer lasting nitrosyl pathway molecules go up like as nitro [indiscernible]. So this has more profound effects on the nitric oxide pathway, but not just to generate nitric oxide. Your question about actually causing stiffening, we've seen the opposite. There are some good animal data looking at aged animals, you know, at aortic stiffening in aged animals who have high cholesterol and high blood pressure. And what we see is that aortic compliance actually gets better using nitrite. In the first study that Brian described that is the ascending dose those study where it's an open label study but we’re giving ascending doses. In that study, we compare directly to nitric oxide. So we have a nitric oxide phase. We have a nitrite phase. And we see differing hemodynamic changes. For instance, nitric oxide alone causes pulmonary capillary wedge pressure to rise, which you don't want to happen because that’s, you know, causing alveolar flooding, increasing left atrial pressures, and back pressures in the lungs, and it actually worsens HFPEF. We see the opposite effect. So, we see venodilation. We see decreases in pulmonary capillary wedge pressure that we feel will result in improved exercise tolerance. So to get your third point, effect on other dissolved gases, we immediately after giving nitrite, we can measure exhaled nitric oxide increase from the lungs. We can measure that, but that effect is around seven minutes. By 15 minutes most of it’s gone and absorbed into the circulatory system. So, we don't have an effect on oxygenation. We don't have an effect on carbon dioxide or other measures like that. Did that answer your question with way too many words?

No, it wasn’t way too many. It was exactly the right number of words. Thanks. I really appreciate it. I’m going to have to kind of think a little bit about this. But I think it’s very interesting and there’s certainly a lot of science building, you know, in this direction. So, I’m excited to see where the program goes.

Yes, Brian. It’s Jason McCarthy. It’s really good to hear from you. I’m glad that, you know, the company’s moving forward in heart failure. It could be a really interesting approach. You know, definitely give us a call. We’d like to chat with you further, you know, after this or tomorrow would be great. But it’s good to hear from you.

We will set it up. Thank you.

The next question is from Michael Higgins ate Roth Capital Partners.

Thanks operator. Hi guys. A couple questions this afternoon. Brandi, I’ll start off one with you if I could you. In terms of 2017, if you could break that out a bit further for us. I’m assuming it’s rather flat across the and I think it would be a little heavier in G&A versus R&D. We just wanted to check in with you.

Yes. I think that makes sense. I think, yes, you know, the year’s going to be pretty consistent as Brian mentioned. We expect to get data from the vepoloxamer study in the fourth quarter of 2017. So, we expect that our expenses will be pretty steady across the quarters, and yeah a little heavier in SG&A just to keep the company running in a public company capacity.

Got you. And then a couple on 001. If you could walk us through the nebulizer a bit, where that’s come from and where that's headed if you have plans to continue to improve upon that and where the current nebulizer is from.

Yes, Ed, did you get that question.

Yes. Right. So, the current nebulizer we're using for a long term study that is more than single dose study, is a compact portable nebulizer being provided by Philips So, it's called the Philips’ I-neb. The Philips’ I-neb is portable. It will allow the patient to take about three days’ worth of treatments without charging the device. It records up to 3,000 treatments, so that the physicians can actually download from the device and see, you know, that patients are taking their medications as directed. We have the exclusive rights to this device for the use with any nitric oxide or nitrite, nitrate, anything that would affect the nitric oxide pathway. This nebulizer has been on the market. It is a restricted-use nebulizer. We require and nebulizer that’s highly efficient, and that gives precise doses. So, if you think about all the nebulizers you see out there, most of those ultrasonic nebulizers administer actually 3% of the drug that you pour into the cup. This nebulizer is breath actuated and delivers 87% to 90% of a dose that’s placed inside the nebulizer. So, we have requirements for a highly specialized nebulizer. Our goal is to get through this proof of concept phase with the NA, NB study and the enable study. There are some new nebulizer technologies coming to the market that are smaller, that are Bluetooth wireless, that have all the bells and whistles that we would like. I bet for future Phase 3, work I would probably transition to another one just for a patient ease of use, and size, and mobility. Our present one’s about the size of a Coke can, but there are newer devices coming onto the market that, that are … they will have the same efficiency, but are much smaller mechanically. Part of the issue you run into with nebulizer company is that they all want a piece of development and many of them cannot, you know, globally service let’s say a clinical trial needs. And so we really came to the Philips I-neb because of its track record for excellence, and that it is a global company that can support the device around the world.

Okay. Thanks [indiscernible]. Thanks you guys. Very helpful. In the medical [indiscernible] one he did want through maybe the next event, something by your end, then what’s looking, what is [indiscernible] like in first half of ‘17 for next events in the program [indiscernible]. Clearly the back half year-end ‘17 with the 100-patient study, and what will be mostly looking to, but if there’s any insight prior to that would be helpful.

So, Michael the only thing that we’ve disclosed publicly so far is the data from the ME study in Q4 of ‘17. So, that's the only update that I can provide for you at this time.

Okay. And then my last question would be the comments on the strategic opportunities. You know, we’ve got the vepoloxamer. There may be some additional [indiscernible] military parties or some other intentions, different capacities. Amy insights you want to provide us as to what, you know, you’re looking at and your comments on these strategic opportunities.

Really that they’re broad based. You know, we added the additional disclosure that we had engaged an advisor to put a finer point to make sure people knew that it wasn't just talk, that we have a serious commitment to increasing value to business and, you know, it's difficult to predict exactly what shape or form that's going to look like, but we're being thorough and broad based. And, you know, we’ll have to stay tuned to see what comes of it. But, you know, I think it's a good process. I think that, you know, Mast Therapeutics has a lot to offer, and, you know, we’ll forward to, you know, evaluating opportunities that that are identified for us.

Very helpful. Thanks guys.

The next question is from Yale Jen at Laidlaw.

Good afternoon. This is actually Olivia Lamb covering for Yale. I just had a question - for, well, do you need any… Or sorry. Do you anticipate needing any additional cash infusion before you guys getting [indiscernible] the data readouts primarily I guess in first and second half of 2018.

So, the answer as the answer always is, is it depends. I spoke in some terms of possibilities that we may have to monetize the database, to monetize other assets, to engage them in M&A discussions. There is always the possibility of a capital raise. And clearly the numbers that have been shared and updated for the quarter do not fund the company all the way through to the end of 2017. So, that that will need to be addressed. How we address that remains up in the air. So, as we go through this process with the financial advisor, and look at what's available to us as we work through that process that I alluded to with respect to a couple of the leads we have, with some multinationals we’ll have a greater clarity on our plans as those events unfold.

Okay. Great. Thank you very much.

Thank you, Olivia. Now, Operator, are there any additional analyst questions today?

This concludes our question-and-answer session. So, of you’d like to make any closing remark.

Well, thank you. I just want to mention that I’m going to reiterate my view that AIR001 was largely overlooked while we were working quite notably in sickle cell disease. And I’m very excited about Mast Management getting out and having an opportunity to talk about what we’ve been doing with AIR001 and what we intend to do with AIR001. I think there’s lot of possibility here. So, thank you for being some of early adopters of that interest. And we look forward to continuing the process with those of you who joined us today.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.