Welcome to the Caladrius Biosciences' Second Quarter 2022 Financial Results and Business Update Conference Call. Currently all participants are in listen-only mode. Following management’s prepared remarks, we will hold a Q&A session. [Operator Instructions] As a reminder, this call is being recorded today, Thursday, August 4, 2022. I will now turn the call over to John Menditto, Vice President of Investor Relations and Corporate Communications at Caladrius. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Welcome to Caladrius' second quarter 2022 conference call to discuss our financial results and provide a business update. Joining me today from our management team are Dr. David Mazzo, President and Chief Executive Officer; Dr. Kristen Buck, Executive Vice President of Research and Development and Chief Medical Officer; and James Nisco, Vice President of Finance and Treasury. Shortly, before this call, we issued a press release announcing our second quarter 2022 financial results, which is available under the Investors and News section of the company website, along with a webcast replay of this call. If you have not received this news release or you would like to be added to the company's email distribution list, please email me at jmenditto@caladrius.com. Before we begin, I will remind you that comments made by management during this conference call will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Caladrius. I encourage you to review the company's filings with the Securities and Exchange Commission, including, without limitation, with Form 10-K -- sorry, 10-Q, 8-K and 10-K, which identify specific risk factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Furthermore, the content of this conference call contains time sensitive iteration that is accurate only as of the date of this live broadcast, Thursday, August 4, 2022. Caladrius Biosciences undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that, I will now turn the call over to Dr. Mazzo. Dave?

Thank you, John, and good afternoon, everyone, thank you for once again joining us today as we provide an overview of recent business highlights and discuss our second quarter 2022 financial results. I can say to you with much enthusiasm and certainty that 2022 is proving to be an outstanding year of progress for Caladrius as the proposed merger with Cend Therapeutics remains on track to close in the third quarter of this year, subject to approval by our stockholders. This transaction will be transformational for Caladrius creating upon closing a financially sound NASDAQ-listed company with a diverse product development pipeline, strong existing partnership and the potential for future attractive partnerships. The merged company will operate under the name Lisata Therapeutics, Lisata for short, and we'll focus on maximally exploiting the full potential of Cend's CendR Platform technology in a range of solid tumor indications while progressing Caladrius' current CD34-positive technology-based product candidates to their next development milestone. CEND-1, the lead product candidate from the CendR Platform has the potential to be combined with myriad of chemo and immunotherapeutic agents and could become an integral part of a revised standard of care therapy for many difficult to treat cancers. Coincident with the announcement of the signing of the definitive merger agreement back in April, we also announced that we had made a $10 million investment in Cend in order to maintain the momentum of development of CEND-1 and to allow for immediate collaboration between the companies. Since then, a number of achievements have been announced regarding CEND-1. For example, in June, it was announced that the first patient had been treated in the Phase IIb ASCEND study of CEND-1 in combination with gemcitabine and nab-paclitaxel for the treatment of first-line metastatic pancreatic ductal adenocarcinoma, mPDAC for short. This 125-patient study is a double-blind, randomized, placebo-controlled clinical trial being conducted at up to 40 sites in Australia and New Zealand, led by the Australasian Gastro-Intestinal Cancer Trials Group, in collaboration with the National Health and Medical Research Council's Clinical Trial Center at the University of Sydney. Additionally, groundbreaking data was recently published in The Lancet Gastroenterology and Hepatology journal from the Phase Ib study of CEND-1 in combination with gemcitabine and nab-paclitaxel for the treatment of first-line mPDAC. The results reinforce our belief that CEND-1 could become a transformative new medicine for the treatment of pancreatic cancer and other difficult-to-treat solid tumors. Imminently, we expect to announce the collaboration with a major pharmaceutical company regarding CEND-1 as well as advancement of our plans to initiate a registration-worthy study of CEND-1 in mPDAC next year, along with the basket trial, exploring the advantages of combining CEND-1 with current standard of care in a variety of other solid tumor types. With that, I will now turn the call over to James Nisco, our VP of Finance and Treasury, to review and provide commentary on our second quarter 2022 financial results. James?

Thanks, Dave. I'm pleased to join today to present a summary of our second quarter 2022 financial results. Starting with operating expenses. Research and development expenses for the 3 months ended June 30, 2022, were $3.2 million compared to $4.3 million for the 3 months ended June 30, 2021, representing a decrease of $1.1 million or 25%. This decrease was primarily due to a decrease in expenses associated with HONEDRA in Japan. Revenue received from the collaboration agreement and one-off recruiting expenses in the prior year. Research and development activities in the current year period focused on the advancement of our ischemic repair platform and related to execution of the FREEDOM trial, including preparation for an interim analysis and execution of the Phase Ib proof-of-concept trial of CLBS201 as a treatment for diabetic kidney disease, which commenced in the first quarter of 2022 with the first patient in the study treated in April 2022 and study closeout activities and preparation for the pre-consultation meetings with the Japanese Pharmaceuticals and Medical Devices Agency, or PMDA, and for HONEDRA in critical limb ischemia and Buerger's disease in Japan. General and administrative expenses, which focused on general corporate-related activities were $3.5 million for the 3 months ended June 30, 2022, compared to $2.8 million for the 3 months ended June 30, 2021, representing an increase of 24%. This increase was primarily due to onetime professional fees associated with the proposed merger with Cend Therapeutics. Overall, net losses were 6.6 and $5.7 million for the 3 months ended June 30, 2022 and June 30, 2021, respectively. As previously communicated, Caladrius made an investment of $10 million in Cend, in addition to entering into a collaboration agreement with Cend to maintain the development momentum of the Cend pipeline. Turning now to our balance sheet and cash flow. As of June 30, 2022, the company had cash, cash equivalents and marketable securities of approximately $73 million, which is net of our $10 million investment in Cend and which we believe positions us well relative to the projected capital obligations for our existing development programs as well as our cash and investments balance target at the time of closing of the merger with Cend. That completes the financial overview. With that, I will now turn the call over to our Chief Medical Officer, Dr. Kristen Buck, for the review of our clinical development pipeline. Kristen?

Thank you, James, and good afternoon, everyone. Before I provide an update on our current CD34 programs, I will reinforce what Dave had mentioned regarding our progress with Cend. Work under our collaboration agreement has been nothing short of seamless and the collaborative effort has already yielded great progress. We are excited about this opportunity and look forward to reporting more accomplishments in the coming weeks and months, including the final coalescence into a singular cohesive development team post-merger closing. Turning to our current pipeline. As you know, Caladrius' current development portfolio features autologous cellular therapies designed to treat or reverse disease. Our belief is that curative cell therapy products when applied to the right indication can restore human health and potentially improve quality of life with a single administration as compared to a treatment that requires frequent re-administration. I will now provide a summary of progress and status for each of Caladrius' clinical programs. Kicking off with CLBS12, HONEDRA in Japan, our product candidate for the treatment of critical limb ischemia and Buerger's disease, HONEDRA was awarded a SAKIGAKE designation from the Japanese regulatory authorities for the treatment of critical limb ischemia and Buerger's disease, which is an orphan-sized subset of critical limb ischemia. The SAKIGAKE designation is akin to a regenerative medicine advanced therapy designation or an RMAT designation in the United States. SAKIGAKE designation affords the recipient prioritized regulatory consultation, a dedicated review system to support the development and review process, including the option of a rolling registration submission as well as a reduced review time of 6 months for the registration application once filed. Additionally, under Japan's regenerative medicine legislation, products such as HONEDRA are eligible for early conditional approval and possibly full approval in Japan based on the assessment of the data from the trial…

Thanks, Kristen. While we continue to make progress on our current Caladrius programs, a tremendous amount of work already has been conducted under our collaboration agreement with Cend. Over the next month or so, we will be working diligently with Cend and with you, our shareholders, to finalize the merger transaction and look forward to announcing the closing by our target of the end of September of this year. As I hope you appreciate, we are tremendously excited about and motivated by the prospects that this merger will bring for patients, our employees and our shareholders, and we look forward to providing additional updates in the coming weeks and months. And with that, operator, we're ready to take questions.

[Operator Instructions] The first question comes from Kumar Raja with Brookline Capital.

So first, with regard to the ASCEND trial, what is the expectation in terms of how soon this 40 sites can come on board? And also, when do you think potentially enrollment could be completed in that trial? And in terms of the merger process, what remains to be done so that it can be consummated?

Thanks, Kumar. Appreciate your questions, and hope you're enjoying your summer. I'll take them in reverse order. So first, as far as the merger goes, things are working very well down the check list of activities that are required to consummate the legal transaction. What remains now is the final vote by shareholders of both companies and then the final legal transaction document signing that will occur once the shareholders approve the transaction. We collectively had filed the new proxy, the S-4 and a mailing of that document has gone out to all the Caladrius' shareholders. And beginning next week, we expect that shareholders will have the opportunity to begin to vote either online, by telephone or through the normal mail. And we hope that we will accumulate sufficient number of votes such that the voting will be completed, and we will announce an approval of all the resolutions at the currently scheduled special shareholder meeting for September 13. And then within 24 to 48 hours after that, assuming everything is approved, the legal documents will be completed, and we will be then officially Lisata Therapeutics trading under the ticker symbol LSTA on the NASDAQ. Now going back to the ASCEND trial, the Phase IIb trial. This is a trial that's being run by the AGIGT -- I'm sorry AGITG in Australia. They just began enrolling patients just a month or so ago. And the expectation is that it will take probably a couple of years to complete enrollment. I don't have the specifics yet of when all 40 sites will be online. But we will expect to do our next conference call as Lisata Therapeutics. And at that point in time, not only will we have additional information and all the specifics about the CEND-1 programs, but we'll likely invite the CEO of Cend, who will be the President and CBO of Lisata to the call, and he'll be able to speak to some of these things as well.

Finally, as a follow-up, you alluded about the pharmaceutical collaboration. Anything additional you can share about it.

The only thing, I can say is if everything goes well, watch the news wires for next week. That's all I can tell you.

[Operator Instructions] Our next question comes from Pete Enderlin with MAZ Partners.

On XOWNA, your commentary was that you expect a decision on the next steps by the end of this year. And my simple question is whose decision are we talking about? I know it's sort of a collaborative process, but are you saying the FDA makes a decision, you make a decision and then go to them? Whose are we really talking about as the initial decision maker in that situation?

Pete, thanks for your question. In these kinds of situations, the FDA, the only types of decisions that FDA takes would be decisions related to safety and putting a company on clinical hold. Otherwise, it's up to the sponsor to take decisions about treating patients, conducting their trials and spending their money. The decision to which I refer is a decision that will be a Caladrius decision or if it occurs post-merger, it will be a Lisata decision, and it will be based upon an analysis of the data from the interim data analysis that's ongoing as well as any discussions that may be considered appropriate with the FDA. And so that's why we say we've given ourselves time to have those discussions with the agency should we need them. And that's why we projected having the answer by the end of the year, but it could come much sooner than that.

Okay. And there was a comment about some revenues from the collaborative agreement with Cend. I mean I know you gave them $10 million, but what are we getting back must be fairly small because it was a factor in the reduction of R&D. But can you be a little more specific about that?

I will. And this is really my apologies to James, our Vice President of Treasurer and to the Grant Thornton team, our auditors. But this is a bit of an accounting game, if you will. As part of the collaboration agreement, we have allocated resources from Caladrius to help work on the Cend programs. And until we are a single company, we are accumulating a set of charges for the time spent by Caladrius employees working on the Cend program at some sort of flat rate. So for the time being, those are being booked as a payable by Cend and a receivable by Caladrius, but also as part of the collaboration agreement as soon as the merger goes together and we combine the books from both companies that cancel each other out. So it's really not something that anybody should spend any time on.

Okay. And then the trial in Australia and New Zealand, is that because Cend had a historical relationship? Or is there some other specific reason to pick those particular venues?

Well, there are a couple of reasons why that venue was chosen, but this is a program that was initiated by Cend Therapeutics, and it's based upon existing relationships that they had in Australia, but also with a particular lead investigator who was able to procure additional funding to help support the further development in that geographic area. So that's why it's being done in Australia and New Zealand.

Are there differences in how to work with the regulatory agencies over there? Are they easier to work with? Or is it similar? Or are there any other significant differences?

The Australian regulatory authorities have standards and practices that are similar to the FDA and the other Western European regulatory authorities. I think the main reason why people choose to work in that venue besides it being an interesting market for a product once it's ultimately approved, is that they -- the Australian government offers an R&D credit for work done in Australia that makes things financially attractive to do research there. And for some indications, they have a higher prevalence of disease, which makes recruitment a little bit easier as well.

Okay. I'll get on the queue to have maybe one more.

Thanks, Pete.

[Operator Instructions] This concludes the question-and-answer session. I will now turn the call back to Dr. Mazzo for closing remarks.

Again, thank you all for participating in today's call. We look forward to speaking with you again during our next quarterly conference call, which we expect will be conducted under the banner of Lisata Therapeutics to continuing to provide updates on our achievements and progress. We remain grateful for your continued interest and support. Stay well. Have a good evening, and enjoy the rest of your summer.

This concludes today's conference call. Thank you for participating. You may now disconnect.