Ladies and gentlemen, thank you for standing by. Welcome to Vericel’s Second Quarter 2015 Conference Call. At this time all participants are in a listen-only mode. I would also like to remind you that this is call has been recorded for replay. I will now turn the conference over the Vericel’s Chief Financial Officer, Gerard Michel. Sir, you may begin.

Thank you, operator, and good afternoon, everyone. Welcome to Vericel’s second quarter 2015 conference call to discuss our second quarter 2015 financial results as well as the progress of our commercial business and development programs. Before we begin, let me remind you that on today’s call, we will be making forward-looking statements covered under the Private Securities Litigation Reform Act of 1995, and all of our projections in forward-looking statements represent our judgments as of today. These statements may involve risks and uncertainties that are described more fully in our filings with the SEC, which are also available on our Web site. In addition, any forward-looking statement represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. With us on today’s call are Nick Colangelo, Vericel’s President and Chief Executive Officer; Dan Orlando, Vericel’s Chief Operating Officer; Dr. David Recker, our Chief Medical Officer and Dr. Ross Tubo, Vericel’s Chief Scientific Officer. I will now turn the call over to Nick.

Thank you, Gerard, and good morning everyone. Vericel had an outstanding second quarter generating strong revenue growth in commercial business results and significantly advancing our key regulatory initiatives. From a commercial perspective, total Carticel and Epicel net revenues for the second quarter was 13.4 million, representing a 31% increase compared to pro forma net product revenues in the second quarter of 2014. For the first half of 2015, total Carticel and Epicel net revenues increased approximately 17% over pro forma net product revenues for the same period in 2014. This substantial revenue growth is a result of several sales and marketing initiatives that we’ve implemented over the past year. Growth was especially strong for Epicel, which is benefiting from the three new sales representatives that we recently added to restore previous levels of commercial support and our continued focus on increasing Epicel utilization by targeting institutions that previously used the product. Our second quarter results demonstrate that both Carticel and Epicel have significant future growth potential as we continue to enhance our commercial efforts. In addition to grow revenues, the key component of our plan to drive the business to operating profitability has been to improved gross margins. We continue to achieve gross margin improvement, this gross profit was 49% of total net revenues for the second quarter and 50% of net product revenues for the core therapeutics business, which included 2.5% reduction in gross due to a one-time inventory adjustment. As a result, our second quarter operating loss of 2.3 million was significantly lower than the second quarter operating loss of 8.5 million in 2014, consistent with our forecast of lower quarterly losses and sales volumes increased and R&D cost decline. In summary, we’re very pleased with our strong second quarter commercial result as we continue to demonstrate our…

Thanks Nick. Total revenues for the quarter ended June 30, 2015 were approximately $13.6 million and included $9.1 million of net sales of Carticel implants and surgical kits, $4.3 million in net sales of Epicel and approximately 300,000 installers in sales from our Marrow Donation business. Total Carticel and Epicel net product revenues in the second quarter increased approximately 31% over pro forma second quarter net product revenues in 2014. For the first half of 2015, total Carticel and Epicel net product revenues increased approximately 17% over pro forma net product revenues for the same period of 2015. Gross profit for the quarter ended June 30, 2015 was $6.7 million or 49% of total net revenues, including sales by the company's Marrow Donation subsidiary. Gross profit for the core therapeutics business for the quarter was 50% of net product revenues. Gross profit for the quarter was reduced by 2.5% due to an inventory adjustment resulting from the implementation of our enterprise resource planning system. R&D expenses for the quarter ended June 30, 2015 were $3.4 million versus $4.4 million for the same period a year ago. The decrease in research and development expenses is due to a reduction in expenses associated with the ongoing ixCELL-DCM clinical trial, offset by the addition of personnel and other expenses associated with Epicel, Carticel and MACI. Selling, general and administrative expenses for the quarter were $5.6 million compared to $3.6 million for the same period a year ago. The increase in SG&A expenses in the second quarter is primarily due to incurring a full quarter's sales and marketing expenses associated with the acquired business in the second quarter of 2015, compared to one month of sales and marketing expenses for the same period in 2014. Loss from operations for the quarter was $2.3 million…

Thanks, Gerard. Our financial results reflected very strong quarter with our marketed products which are performing well. Our near-term priorities are to maintain upward momentum with the commercial business, complete the ongoing Phase 2B ixCELL-DCM clinical study with ixmyelocel-T and submit the MACI BLA and Epicel HDE supplement to the FDA by the end of this year. That concludes our prepared remarks. Now, I’d like the operator to open the call for your questions.

[Operator Instructions] Our first question comes from the line of Kevin DeGeeter of Ladenburg. Your line is open.

With regard to the 31% pro forma year-over-year growth, can you kind of comment as to the contribution of price increases versus volumes within the growth trajectory?

Sure Kevin, without going into the specific numbers, I think the majority of that growth was driven by Epicel volumes. Probably the second component of that would be the Epicel price increase. And then the third component would be kind of net Carticel price and volume, in that order priority.

Okay. That's very helpful. I guess kind of a line of thinking with regard to -- here with the really impressive growth for Epicel, is there an opportunity here to further accelerate that growth with perhaps, you have the addition of one or more additional sales people, or you feel pretty good with the number you have at the moment?

Yes, thanks Kevin. As you know earlier this year we added an additional sales rep and as we’ve talked previously, employing experienced burn nurses calling on institutions that have used the product in the past, I think it led to some of the impressive growth we’d seen. So we continue to evaluate opportunities to add additional sales reps and obviously they’ll do that when we believe which I think is the case that we’ll get a quick return on that investment.

And couple of housekeeping items here with regard to -- I know you don't provide forward guidance, but should we assume that there is a $2.3 million PDUFA fee that will run through our day sometime in the fourth quarter?

That's a very good assumption, yes, subjected according to the -- any price increase that the federal government decides to lay on it.

Right, which I actually I think is what 2.4, or something like that. It’s been -- which is going for next year.

2.4 exactly.

Great and then Gerard just to make sure I’m doing my basic math here correct. I believe you said there, inventory had a 2.5% hit to gross profit so that translate sort of less than $200,000. Is that correct?

I think it was slightly different number, but you are in the ballpark, so yes.

And then just last one and I’ll get back in the queue. I recognize that a growing business needs, you had to build some working capital, but your $3 million your step-up in the quarter I guess is pretty material. Just how should we think about working capital, requirements, as the business growth going forward and just kind of get through the issue of collection tier overtime as well?

Yes, certainly. So the working capital increase is a function of a couple of dynamics. First, this is a very seasonal business. So whenever we have a strong growth quarter, you are going to see working capital climbing, jump up versus the prior quarter, and when we have a lighter quarter probably it go to zero or perhaps the other way, you know likely that might even go the other way. The second dynamic, which was unique for this quarter is coming off of kind of some of the arrangements we have with Sanofi; they effectively were floating some payables for us. And nothing purposely, it's kind of worked out that way. So that has worked its way through the systems too, so that gave us a bit of an extra pump in the working capital requirement for this quarter.

[Operator Instructions]. And I am showing no further questions in the queue at this time, I would like to turn the call back to management for closing remarks.

Thank you operator and thanks to all for your questions and your continued interest in Vericel. We are excited about the opportunities ahead and look forward to reporting on our project in our next call. Thank you. And have a good day.

Ladies and gentlemen thank you for participating in today's conference. This does conclude the program you may all disconnect. Everyone have a wonderful day.