Welcome to the First Quarter 2015 pSivida Corporation Earnings Conference Call. (Operator Instructions). I would now like to introduce your host for today's conference, Lori Freedman, Vice President of Corporate Affairs. You may begin.

Thank you Nicole. Good morning everyone and thank you for joining us. After the market closed today, we released our first quarter financial results for fiscal 2015. A copy of the release is available on the Investor section of our website at www.psivida.com. On the call with me today is Dr. Paul Ashton, President and Chief Executive Officer; and Len Ross, Vice President, Finance. Before I hand the call over to Paul, I need to remind everyone that some of our prepared remarks and answers to your questions may be forward-looking in nature. Forward-looking statements are inherently subject to risks and uncertainties. All statements other than statements of historical facts are forward-looking statements and we cannot guarantee that the results and other expectations expressed, anticipated, or implied will be realized. Actual results could differ materially from those anticipated, estimated or projected in the forward-looking statements. For a more detailed discussion of risk factors that could impact our future results and financial condition, I refer you to our filings with the SEC including our Annual Report on Form 10-K for the fiscal year ended June 30, 2014. We undertake no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after this conference call. With that, I would like to turn the call over to Paul.

Thank you Lori and welcome everyone as we discuss the results of our fiscal 2015 first quarter. This was another very good quarter for us, our ILUVIEN product was finally approved by the FDA for the treatments of Diabetic Macular Edema. We’re in 25 million milestone payment resulting from the approval and we continue to make good progress on the development of Medidur and posterior uveitis and our preclinical development program. So I will go in some of the details behind the headlines before handing the call over to Len who will take you through the financial. First then let's talk about ILUVIEN, on September 26th, ILUVIEN was approved by the FDA for patients with DME, Diabetic Macular Edema, who have undergone a cost of treatment with corticosteroids without experiencing an increase in intraocular pressure. This is a broad label that was approved in Europe. Now typically no more than 30% of patients experience significantly elevated IFP cellular [ph] treatments. This indicates around 70% of patients with clinical significant DME would be a candidate for ILUVIEN. We’re optimistic that doctors will use ILUVIEN to treat this substantial group of the DME population as ILUVIEN has a number of advantages in comparison to the standard of care the anti-VEGF treatments. First the treatment of a majority of DME patients is not optimized with anti-VEGFs so ILUVIEN offers a valuable alternative and secondly ILUVIEN provides three years of prescription of single injection. This compares to regular intravitreal injections which are often done monthly of anti-VEGFs will be attending issues of non-compliance and infection. Our non-compliance is particularly at risk for patients who had diabetes for a while because of the high rates of core morbidities that can make (indiscernible) very difficult. So we’re optimistic that this product will do well in the…

Thank you, Paul. Good morning everyone. I will briefly review our first quarter fiscal 2015 results reported earlier today starting with our financial position. As Paul noted, at September 30, 2014, we had cash, cash equivalents and marketable securities of $14.3 million, which was further enhanced in October by the receipt of the $25 million ILUVIEN FDA approval milestone, a great source of non-dilutive financing for pSivida. We believe these capital resources are sufficient to fund our current and planned operations into calendar year 2017. This does not include any net profits that we may earn on sales of ILUVIEN, the timing and amounts of which we are unable to predict, for other cash receipts under existing collaboration agreements including Retisert royalty. Cash used in operating activities for the quarter was $4 million, an increase of 200,000 over the prior year quarter. We expect our cash use from operations to be variable quarter-to-quarter, particularly with respect to the timing and amount of payments under our Medidur clinical development program, as well as the impact of payments received from collaboration partners, such as the $25 million FDA milestone that we received in October Turning now to our first quarter fiscal 2015 results, revenues totaled $25.3 million for the quarter ended September 30, 2014, compared to 597,000 for last year's quarter. This increase predominantly reflects revenue recognition up to $25 million ILUVIEN FDA approval milestone, net of an approximate $200,000 decrease in Retisert royalty income. Research and development totaled $2.8 million in the current quarter, an increase of 280,000 or 11% compared to $2.5 million in the prior year period. This increase was primarily attributable to higher contract research organization costs for clinical development of Medidur, as well as Tethadur preclinical research. General and administrative expense decreased by $77,000 or 4% to $1.7 million for the three months ended September 2014 from $1.8 million in the prior year quarter primarily due to lower professional fees. Income tax expense of 226,000 from the three months ended September 30, 2014 compares to an income tax benefit of 30,000 in the prior year period. The current period expense primarily resulted from a 260,000 federal alternative minimum tax accrual based on projected U.S. taxable income for our tax year ending December 31, 2014 which includes the $25 million milestone. In addition, tax benefit amounts in both periods consistent of foreign research and development tax credits. Net income for the quarter ended September 2014 was 20.6 million or $0.67 per diluted share compared to a net loss of 3.7 million or $0.14 per share for the prior year quarter. I will now turn the call back over to Paul.

Thanks, Len. So to sum-up it was an excellent quarter for us, key points are one, ILUVIEN, DME was approved by the FDA with a broad label positioning it well to the U.S. launch. Two, $25 million milestone payment we received, enhanced our cash positioning, funding our planned operations into calendar 2017. Three, enrollments of our Phase III trial for Medidur for the posterior uveitis continued on pace and we plan to complete it in the first half of 2015. Four, we believe ILUVIEN's approval improved the prospect of our regulatory strategy for seeking FDA approval for Medidur based on the single Phase III trial with additional data on the new (indiscernible). Five, patent protection for Medidur and ILUVIEN now extends to August 27 and six, continued progress in our preclinical development program using Durasert and Tethadur and our work with a global biopharmaceutical company. At this point we will be happy to take your questions. Operator, would you please initiate the Q&A portion of the call? Question-And-Answer Session

Thank you. (Operator Instructions). Our first question comes from the line of Matt Kaplan of Ladenburg Thalmann. Your line is now open.

Couple of questions, just to follow-up on, obviously congrats on the ILUVIEN approval. A follow-up there in terms of the label. Now the label says prior steroid use, is it any particular steroid or is it just a broad?

Just broad.

Just broad? Okay, very good. And then can you give us any details as this is more kind of Alimera's front but any details on the commercial plans and status of preparations to the launch and when we should potentially start to see some revenues and royalties following to you guys?

Well I would actually suggest you have a listen Alimera's call yesterday where they gave fairly detailed description of their plan for rolling of the product.

Just to shift gears a little bit in terms of something under your control, the Medidur Phase III program. Can you give us a little bit more detail on the Phase III design and particular end points you’re looking for and little bit more detail in that design?

Yes sure. It's a very similar trial design, so the design which was used for the Retisert product. Patients in the study will have a history of the current posterior uveitis, they enter the study and the truth about randomization to Medidur versus sham procedure which is opening the eye with a [Technical Difficulty]. Patients are then followed for three years but the primary endpoint is a number of recurrences of recurrence at or within the first 12 month period of time. So with Retisert not quite the same but with Retisert the recurrence rate in the fellow eye was approximately 50%. And that seems to be consistent with other trials that we have seen published such as I don’t know if you’re familiar with Luke's [ph] biosciences' meta trial cicloferon and -- or cicloferon product and they are controlled with [Technical Difficulty].

Over 12 month period?

Yes. So we saw reduction in that.

And you’re powering to see what sort of reduction?

Studies also show that sample size is -- approximately a 20% difference with extreme treatments in control. Now the Retisert studies are actually quite specular. Treatments eyes had a percent recurrence rate. So it's 5 versus 50, so they were overwhelmingly statistically significant.

And just curiously in term of the definition of recurrence?

Recurrence is measured by two step increase in vitrase.

Okay and no visual acuity changes or?

Those are all secondary endpoints.

Vitrase, drives the endpoint?

Yes, or else the patient happen to be bailed out in which case -- if the physician decides of any to the -- uveitis is as such that they need to be treated with something else.

Some sort of rescue.

Yes. So that would be. You would fail but if you have a recurrent disease or else you’re bailed out.

And the secondary as you said you’re looking at visual acuity and other endpoints as well?

Yes.

And in terms of getting into the data that you need to supply to the FDA, it appears as though what you said, it looks like you’re likely going to have to just do one Phase III trial and be able to leverage the ILUVIEN safety database. What type of data do you need for the insert?

For the insert itself?

Yes, so you said you also had to provide them with insert data or the device.

So we will plan to have a meeting with the FDA to confirm what they are going to need from us. Typically those studies however would be relatively short term, ex-number of patients are injected and the physician would report any problems they had with the inserter. So it's not a one or three primary endpoint study it's just did the inserter work and did it deliver the insert into the eye. So those are much shorter term.

And you can incorporate that into your Phase III, that’s a separate study altogether?

Well at this time it would be bit tricky because you don’t want to do anything that would cloud the data analysis of your Phase III. So from an abundance of caution, it's better to do as a separate study at this point.

And obviously the rate (indiscernible) probably for this program is the Phase III data. So this can work in between?

Yes.

Can you talk a little bit about the IP that you mentioned for the applicators for dose Medidur and ILUVIEN, what is the IP that you were able to get?

We have most recently had a patent issue that is on the Durasert device and that covers both Medidur and ILUVIEN. So when once designing a patent strategy you can have a nest of patents and you start up with some very broad patents that cover pretty much anything that you can think of and then you try to get additional more finely tuned patents that are providing greater coverage for the product you’re planning to sell and this is just an example of one of those patents just being issued. We’re going to continue to seek additional patent coverage for these products.

And just going back to Medidur, when do you plan to meet with the FDA to consolidate your understanding of what's necessary?

When they tell us. We have requested a meeting, so we will see when we can have that meeting.

And then I guess for your preclinical pipeline, any color on the timing of potential INDs?

Pretty much yes for that. We’re very excited the progress we’re making with several products at this point but research is never over until it's over.

And when we think about the focus on wet and dry AMD and glaucoma, osteoarthritis, any particular products or compounds that you’re contemplating combining with your technology?

It's kind of competitive information at this point I'm afraid.

Thank you. Our next question comes from the line of Suraj Kalia of Northland Securities. Your line is now open.

First and foremost congrats, it's been a three year wait so you guys deserve it, it's being a long time coming. Paul let me start off with what color can you give us about OZURDEX. How do you see it shaping up in the field?

Well you’ve to realize you’re asking an extremely bias person, number one. So for people who are listening who don’t know what OZURDEX is, OZURDEX is a biodegradable implant that releases steroid dexamethasone for a relatively short period of time. Opinions are divided on how long that might be. OZURDEX has recently approved for DME, I believe that the side effect profile is somewhat similar to ILUVIEN, it's difficult to compare efficacy because the study populations were quite different. But I believe that it is not as efficacious as ILUVIEN, no doubt I will begin from Allergan disagreeing with that system sincerely but I believe that it seems to be less efficacious than ILUVIEN and has shorter term duration. So you would be looking at more frequent injection. Now it could be very useful because it's a relatively short time delivery system [ph]. It could be useful if someone want to try a patient out with an OZURDEX device to see if they have a elevation of IFP and if not then they would be candidates for ILUVIEN. You can probably do the same thing with an injection of (indiscernible) although that is probably had a longer duration, again the one we will have to check with our friends at Allergan for relative durations (indiscernible).

Paul, maybe I missed the numbers in your prepared commentary, I know you said enrollment for posterior uveitis Medidur trial would be complete, I believe second half of calendar '15, have you given the specific enrollment numbers?

We haven't given the enrollment numbers and also I said the first half of 2015.

Paul, remind us with your licensee, Alimera, I guess there is a change in control, your 20% of net profit still flows through despite a change in control. I presume there is a stipulation to that effect?

I will hand you over to Lori Freedman, who -- Lori negotiated a lot of that deal.

So, yes Suraj that’s correct.

If Lori has negotiated it's got to be rock solid. So Paul, in terms of the 25 million you obviously received, is it safe for us to assume that could potentially help you all sped up some of the new product development in the pipeline? And I'm very curious on your antibody and your peptide programs, you know are you all thinking about going it alone (indiscernible) and at the same time, dose this infusion of cash help you -- push on the accelerator?

Yes. No it's a planned push on the accelerator, we were anticipating in getting the money. So absolutely a lot of things we wouldn’t have been able to do without it. So we’re looking at programs in wet AMD, dry AMD and glaucoma. Those are the three areas that could be very interesting and it's certainly going to help develop those products.

And Paul, the game plan is still for Medidur to go to market, pSivida itself will take Medidur to market assuming approval everything in uveitis?

Yes at the moment, yes.

Okay, and finally Paul, when can we expect a new partnerships if at all in some of the new programs -- in programs in works? If Alimera is the only thing, probably see Pfizer and Bausch and Lomb and all the new programs are going to be direct or we could potentially get something with the likes of Genentech, Regeneron, what might have you.

Yes it's also going to depend on the program, it's always very difficult predict when a new license will come in because as we have discovered over the 20 odd years, one can think on very, very close to getting the licensing build on and then someone quits or gets a new job in the other company and you are back to square one. So I wouldn’t want to make any predictions on timing for that.

(Operator Instructions). And I'm showing no further questions at this time.

Great. Thank you all very much and I look forward to speaking with you again next quarter. As always in the meantime should anyone have any questions please feel free to contact us. Thank you.