Welcome to the Caladrius Biosciences 2016 Fourth Quarter and Year-end Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following managements prepared remarks, we will held a Q&A session [Operator Instructions] As a reminder, this conference is being recorded today March 17, 2017. I’d now like to turn the conference over to Anne Marie Fields. Please go ahead Ma’am.

Thank you. Good morning. This is Anne Marie Fields with LHA, Investor Relations firm for Caladrius Biosciences. Thank you all for participating in today’s call. Joining me from Caladrius Biosciences are Dr. David Mazzo, Chief Executive Officer and Joseph Talamo, Chief Financial Officer. Yesterday evening Caladrius issued a news release, announcing Hitachi Chemicals acquisition of the company’s remaining interest in its PCT subsidiary and earlier this morning Caladrius issued a news release announcing the Company's 2016 fourth quarter and yearend financial results. If you have not received these news release or if would like to be added to the Company’s distribution list, please call LHA in New York at 212-838-3777 and speak with Carolyn Currin or email update@caladrius.com. Because Caladrius's sale of its remaining interest in PCT is subject to stockholder approval, Caladrius intends to file with the Securities and Exchange Commission, allow its stockholders of proxy statement in connection with among other things to sale to Hitachi Chemical Company America Limited or the purchaser of the 80.1% membership interest in PCT that purchaser did not already own or close to sale. Indebtedness to stockholders of Caladrius are urged to read the proxy statement and the other relevant materials when they become available, because they will contain important information about Caladrius and the sale. The proxy statement and other relevant materials when they become available and any other documents filed by Caladrius with the SEC may be obtained free of charge at the SEC's Web site at www.sec.gov. In addition, investors and stockholders may obtain free copies of the documents filed with the SEC by Caladrius by directing such requests to Caladrius biosciences Inc., 420 Lexington Avenue, Suite 350, New York New York 10170. Attention Jacqueline Briggs or jbriggs@caladrius.com. And for telephone number, its 646-606-2221. Caladrius and its Directors and…

Thanks Anne Marie and good morning to everyone and to those who are celebrating Happy St. Patrick's Day. Thank you all for joining on today's call. Yesterday evening we announced an event that is transformational to Caladrius both in terms of our financial position and in terms of our business strategy. I’m delighted to report the entry into an agreement for the acquisition of our remaining 80.1% interest in PCT by Hitachi Chemical. This transaction has the potential to unlock the tremendous value of our PCT asset in a way that was unimaginable just a few years ago, and creates a well-capitalized debt-free pure play cell therapeutic development company with compelling opportunities for near and longer term value creation. Before getting into the financial results from 2016, let me begin by reviewing the terms of the agreement with Hitachi. Yesterday we signed a definitive agreement with Hitachi Chemical under which Hitachi agreed to acquire the remaining 80.1% of PCT that Caladrius owned. As you may recall, Hitachi Chemical purchased 19.9% of PCT in March of 2016. Under the agreement we announced yesterday, we will receive a $5 million payment immediately and $70 million is due upon the closing of the transaction. $5 million of which will be placed in escrow to cover indemnification claims if any. We expect the closing to occur in May following our annual stockholders meeting at which we will solicit approval of the transaction from Caladrius shareholders. Details regarding the sale will be included in the proxy statement, which will be distributed to Caladrius stockholders in the near future. In addition, we will receive an additional $5 million payment should PCT achieve a predefined revenue milestone by the end of 2018. And finally as part of this agreement, Caladrius will maintain a strong relationship with PCT…

Thank you, Dave, and good morning, everyone. Before I review the -- our 2016 financial results, I briefly like to touch upon the financial impact both immediate and upon closing of the agreement with Hitachi for the sale of our remaining 80.1% interest in PCT. Under the terms of the agreement, upon closing, we will have received a total of $70 million in cash, $5 million of which should be received in the next few days, plus an additional $5 million to be received at the expiration of the escrow period assuming no indemnification claims are made. It goes without saying that an infusion of non-dilutive capital of this magnitude enables us to fully fund our ongoing CLBS03 clinical development program to selectively and opportunistically invest in other pipeline programs and to pay-off the balance of our $5.5 million debt with Oxford. In addition, the agreement provides for the potential of an additional $5 million milestone payable if PCT achieves a predefined revenue milestone by the end of 2018. Lastly, this agreement will secure long-term manufacturing services with PCT in support of our T-regulatory platform development and manufacturing at very -- at a very attractive price point. Overall, this is a transaction that will substantially stabilize our financial position and will enable us to fully pursue our near-term initiatives with financial confidence. Lets now turn to our 2016 financial results. We’ve completed a very strong 2016 with full-year results meeting or exceeding our guidance established at the beginning of 2016. Fourth quarter 2016 revenues of $10.1 million, increased 35% compared with $7.6 million last year. Revenues for the full-year of 2016 increased 57% to $35.3 million due to higher clinical service revenues at PCT. Overall, revenues significantly beat our full-year guidance of greater than $30 million and better than 30%…

Thanks, Joe. As the Hitachi Chemical agreement has the potential to redefine Caladrius as a pure play cell therapy development company, let's turn now to a discussion of our business strategy. Our clinical strategy is to develop select assets and to advance them to the next development milestone representing a significant increase in value, most often to proof-of-concept demand. Our long-term goal will be to partner those assets for further clinical development and ultimately commercial sale. We believe this strategy will create value for our shareholders, first, by virtue of simply achieving development maturation and derisking and then through the ultimate economics associated with partnering them. As I noted earlier, last year we identified our immune modulation program based on T-regulatory cell technology and as one with significant competitive potential across multiple indications and we made CLBS03 our primary clinical focus. CLBS03 is a personalized autologous cell therapy consisting of each patient's own regulatory T-cells or T-Rex, which have been expanded in number and functionally enhanced by a proprietary method developed through the collaboration with renowned researchers at the University of California, San Francisco or UCSF. The program is supported by promising published early clinical work conducted by respected leaders in the area of T-regulatory cell science. In a Phase 1 open-label dose escalating study using a product analogous to CLBS03 and conducted at UCSF and Yale University evidence for safety and tolerability of autologous expanded polyclonal T-regulatory cell therapy in 14 adults with established Type 1 diabetes were shown. Supportive to the follow-up data from this study were published in November 2015 in the peer-reviewed journal Science Translational Medicine. Additionally, early evidence of utility of T-Rex for Type 1 diabetes was provided by a study of pediatric patients age 5 to 18 with new onset Type 1 diabetes as…

[Operator Instructions] Your first question comes from the line of Keay Nakae from Chardan. Your line is open.

Yes. I know you’re not giving guidance for the obvious reasons, but at least for the things you are committed to doing such as the continuation of the T-Rex study, what do you think the R&D spend allocated to that will be in 2017?

Keay, thanks for joining and thanks for the question. I will let Joe, perhaps embellish upon what I’m about to say, but as you know we're not prepared to give specific guidance. And one of the reasons is that as those who have paid attention to the terms of the CIRM grant recognize that there are two conditions within the CIRM grant, which determine exactly how much of the $12.2 million, if not all, that that we will receive during the course of the trial. One of those conditions is that the manufacturing cost that is the preparation of clinical supplies will basically be covered for all patients going forward because we do our manufacturing in California. The other condition is that the clinical costs for those patients who are enrolled in California will also be covered and given that we don't know exactly at this point in time how many patients we can project in California, because we're presently opening additional sites in that state. It's difficult to provide exact guidance, but I think it's fair to assume that the majority perhaps certainly a good portion of the CLBS03 R&D spend in 2017 will be offset by the CIRM grant. Joe, would you like to add anything?

No, nothing. That’s great.

Okay.

Okay. And then, with respect to the Hitachi purchase going through, other than shareholder approval, are there any other conditions that need to be satisfied that if not prevented from going through?

No, it's just a customary closing condition. The specific details are in the filings that we made, but no it's really just the shareholders wealth [ph] that is I would say, the critical path to closing.

Okay. And then with respect to the CLI study in Japan, what other work needs to be done before you commence that study again predicated on the Hitachi transaction being completed?

Right. The rest -- the only work that remains is sort of the typical operation planning and startup work for study. So, we already have an arrangement with a manufacturing facility in Kobe that we help to establish and is basically standing by, ready and we'll just have to then initiate sites -- identify and initiate sites, but all that planning work can take place now, it really costs nothing other than internal effort. No capital will be outlaid until the closing of the Hitachi deal and then we will be poised hopefully to initiate patient enrollment fairly quickly after that.

Okay. And while 35 patients doesn't sound like a large study, given the criteria no option patients with what degree of disease and, I guess, at the of the day, what I’m looking for is how difficult will it be to actually sign these patients to participate in the study?

The -- our Chief Medical Officer is actually on a flight at the moment unfortunately, otherwise I would defer to him to give you the specifics of the scoring criteria necessary for the patients to enroll. But based upon previous work done in this population, in Japan by the person who will be the principal investigator for our study we believe that the study will enroll very readily, especially given that in conjunction with the agreement with the Japanese PDMA. This is an open-label trial typically the difficulty especially in Japan of enrolling patients has been due to the previous requirements of the regulators to have a double-blinded trial and people with no option CLI who are facing amputation and perhaps death as a result of their disease are generally not enthusiastic about joining a trial where they might be randomized to placebo. So this open-label trial should also enhance our ability to enroll this program relatively effectively.

Okay. That's all I have. Thanks.

Thanks, Keay.

Your next question comes from the line of Steve Brozak with WBB. Your line is open.

Hey, congratulations, Dave. Getting an 81% premium to your entire market cap on PCT is obviously an accomplishment. Let me ask you, because obviously Caladrius's has been known for as a research entity, a clinical entity and/or manufacturing entity. How would you describe yourself going forward in terms of you still have an expertise in understanding of the manufacturing requirements for cell based therapies? How would you describe yourself going forward as far as that goes? And I’ve got a follow-up question on different programs, please.

Sure. Thanks, Steve. I appreciate your comments, and thanks for joining. I think as my introductory comments indicated, we will be describing ourselves as a pure play cell therapy development company, one with we hope will have a very attractive and promising pipeline of a variety of clinical programs and one I think that will be noted that will be still very conservative in the way that we deploy capital even though we will now be in a much more favorable capital situation than the Company has been maybe ever, but certainly over the course of the last several years. The arrangement with Hitachi both in terms of our -- I would say commitments to continue to work on CLBS03 and the T-regulatory platform with them, the favorable rates ironically post-closing, I think we'll actually -- have less expenses associated with manufacturing of those products than we did pre-closing. I think all of those things will allow us to maintain a certain level of manufacturing and CMC expertise on the Caladrius side of the business using PCT as many of our current clients do as that arm of the business, but without the burden of having to try to support and grow that business due to the -- very, very large capital needs necessary to remain competitive. So I think that we will be a pure play cell therapy company, one that is well-capitalized and one that I hope people will see will have a diversification of risk as we spread our capital across several programs, across several cell therapy platforms and where we will be exploiting maximally our ability to acquire non-dilutive support through partnerships and grants.

Actually you just hit on the topic that I wanted to ask about. On the non-dilutive supports and grants, you probably have more collaborations than any other company, certainly any other cell therapy company. What do you think this is going to add as far as your ability to go out there and just focus on additional collaborations and the ability to go out there and raise additional funds on a non-dilutive basis?

Well, in some cases our ability to attract some non-dilutive grants was hampered by our capital shortage, because in some cases not always, but in some cases the grantor requires a contribution to the program -- of capital contribution from the company to which the grant was made and in the past we've had such a shortage of capital that we weren't able to actually take care of that. Going forward now, we will be able to very carefully and judiciously decide how much of our capital that we may want to contribute to certain program, but that will now open the door to a wide variety of grant -- substantial grants that we really consider. In the past, I think that the fact that we also in the past at times had our financial viability questions by granting agencies you can imagine that -- whether it’s a government agency or an NGO that’s providing millions of dollars of support for a clinical program to a company they want to be sure that that company is going to stay in business throughout the life of the trial that they’re supporting and with this transaction a lot of those concerns dissipate in fact I think they’re eliminated and as a result that will I think also open the door to our ability to collect grants from more conservative agency. So I think, in overall, the simple answer to your question I think this is going to help us.

Well, again congratulations on the transformation and look forward to all the results in 2017. Thank you.

Thank you, Steve.

And your next question comes from the line of Robert LeBoyer with Aegis Capital. Your line is open.

Good morning and congratulations on this transaction. My question has to do with the pipeline and some of the products that may be moving into clinical work advancing through more preclinical stages. There was a mention of Dr. Bluestone's work and I was wondering if you could just briefly elaborate on that or any other products that you call our attention to in order to get an idea what the pipeline looks like?

Sure. Thanks, Robert, and thanks for joining this morning. I appreciate it being on the line. So, the pipeline obviously will develop and mature and we will be able to provide a lot more specific information over the coming weeks and I'll just add that a lot of what I'm about to say is contingent upon the closing of the transaction. But our vision of a post transact -- a post-closing Caladrius obviously encompasses a fully funded CLBS03 T-Rex program and Type 1 diabetes and I'd say that the strong possibility that we will engage at least one other clinical indication for that technology we have in the corporate presentation that will be made available in the coming days sort of a pallet of those autoimmune diseases where we believe T-regulatory cells could play a therapeutic role and we will be looking at which of those indications make the most amount of sense from a clinical perspective based upon a set of criteria that will include the commercial viability, the size and extent of the unmet medical need, the competitive environment in which we would work and the time necessary to get to a meaningful clinical result. The availability of accepted regulatory and medical endpoints in those state [ph] and the ability to enroll those studies relatively quickly and easily and ultimately how much those studies would cost and our ability to garner perhaps partnerships in there. And so among the things that we will be looking at will be a variety of autoimmune diseases, but I think that there's a -- an interest at the moment in the orphan disease neuromyelitis optica that could be one that meets all of our criteria and one for which there may be some grants collaboration available. And so we will be exploring…

Okay, great. Thanks. And just one other question about the transaction. In terms of the assets that are being transferred, could you just specify which laboratories and the asset values that have been assigned to them?

I can give you the general rule. I’m not sure that the values assigned to them is public and I will let Joe comment in a moment. But generally, the agreement defines or describes the acquisition of our 80.1% share of PCT by Hitachi Chemical. PCT comprises a two manufacturing facilities. One, in Mountain View, California, which is the least facility and of course all the personnel equipment and know-how that goes with that facility, and our flagship facility in Allendale, New Jersey, which is an owned facility and all of the personnel equipment and know-how that goes with that. And so that's basically what what’s being transferred at the closing of this. Joe, I don’t know what we can say about value other than its valued at $75 million plus $5 million is the milestone, its net.

Yes and Robert there will be more clarity coming through we -- when we do put out our proxy statement that will include the carve [ph] out information and provide a little more granularity around the operations of PCT that’s being sold. And the assets for the most part are fixed assets [indiscernible] on the books are largely on the PCT side and that is going to be purchased by Hitachi with the remainder of this. So you'll see that the Allendale side as you know is owned, so that's going to go with the transaction as well. So there will be more granularity that you will be able to see once we put the proxy on.

Okay, great. Thank you. Just anticipated my next question, so I'll just thank you very much and congratulations again.

Thanks, Robert.

And your next question comes from the line of Yi Chen with H.C. Wainwright. Your line is open.

Thank you for taking my questions. First question just to clarify, you have already received $5 million from Hitachi and you expect to receive the rest $70 million in May, is that correct?

Hey, Yi, good morning, and thanks for joining us. To be technically correct, the first $5 million is expected to be transferred today and so I haven't had a chance to speak with our treasury function. So I don't know if the wire has come through, but that’s the agreement, $5 million should arrive today and then the remainder arrives on the day or within a couple days of closing.

Yes, and just $1.5 million of the remainder would be placed in escrow for 12 months, so 60 -- so of the total $75 million, $70 million of that amount will be available to us on closing.

Okay. So for the second quarter of 2017, on your income statement you were still recognized part of the PCT revenues, is that correct?

Yes, so we’ve both a first quarter and a second quarter impact here. This is scheduled to close in the second quarter. We would report the PCT operations through the closing date. We would expect, beginning with the first quarter that the PCT operations would be reported as discontinued operations, but will clearly that the 10-K was filed last night and it is still as you’ve seen in the past. But effective with the first quarter of the presentation of all the PCT operations will be potentially -- its likely to be collapse into discontinued operations.

Okay. Thank you. Regarding the ongoing CLBS03, before the interim data analysis which can potentially reported in late 2017, do you still plan to report some initial biomarker analysis from the first cohort in near-term?

We haven't yet decided on that and one of the reasons why is that we are actually working on the partnership for the generation of that data that may affect the timing of when that information from the first cohort would actually be available for public consumption. So I think that as we identify material or noteworthy information that we can communicate, we certainly will do so.

Okay. Got it. So for the Phase 2 trial of CLBS12 in Japan, do you plan to fully fund that trial yourself or do you -- are in the process of looking for some partnership in Japan?

We've actually had partnership discussions ongoing for a while with two categories of potential partners. One would be, I guess, under the general category of pharma companies and the other the general category of venture capital or something or just financial capital. And so, our plan is to initiate the trial using the capital proceeds or a very small portion of the capital proceeds from the closing and at least to plan to fund the trial to its first year and probably the first, roughly third of the patient enrollment. Although there is still a possibility that a partnership could be consummated that would allow us to minimize or even avoid any capital outlay ourselves, but the goal would be if nothing could be consummated under terms that we find acceptable prior to the closing, then after closing we will initiate the trial ourselves and we believe since its open-label as we generate data that would be positive enthusiasm for the product from potential partners and our ability to negotiate a partnership that is attractive to us and our shareholders will increase with time. So, our initial commitment is $2.5 million or less and we will play it by year after that.

Got it. And escrow is likely to be starting in the second half of 2017, right?

Yes, correct.

Okay, got it. Thank you.

All right. Thanks.

This concludes the question-and-answer portion of the presentation. And I will now turn the call back over to Dr. Mazzo, for closing remarks.