Good day, ladies and gentlemen, and welcome to the Histogenics Corp’s 2016 Q1 earnings constant currency. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would like turn to turn to the host of this conference call, Mr. Jon Lieber, CFO of Histogenics. You may begin.

Thank you. Thank you and good morning, everybody. Joining me today on the call is Adam Gridley, our President and CEO; Stephen Kennedy, our Chief Technology Officer; and Gloria Matthews, Chief Medical Officer. A press release announcing Histogenics’ first quarter 2016 financial results was issued this morning. For those of you who have not seen it yet, you’ll find it posted in the Investors section of our Web site at www.histogenics.com. On our call this morning, we will share with you a business update and our financial results which will be followed by a question-and-answer session. Before we begin our prepared remarks, I would like to remind you that various statements we make during this call about the company’s future results of operation and financial position, business strategy, and plans and objectives for our future operations are considered forward-looking statements within the meaning of the federal securities laws. Our forward-looking statements are based on current expectations that involve risks, changes in circumstances, assumptions and uncertainties. These risks are described in the Risk Factors and Management Discussion and Analysis of Financial Condition and Results of Operation section of 10-K for the year ended December 31, 2015, which is filed with the SEC on March 10, 2016 and our Form 10-Q for the quarter ended March 31, 2016 to be filed with the SEC in the second quarter of 2016. Our 10-K and other reports are available on the SEC’s Edgar system and our Web site. We encourage all investors to read these reports and our other SEC filings. All the information we provide on this conference call is provided is only as of today and we undertake no obligation to update any forward-looking statements we may make on account of new information, future events or otherwise. Finally, please be advised that today’s call is being recorded and webcast. I’ll now turn the call over to Adam.

Thank you, Jon. And thanks to our investors for joining the call this morning. We’re pleased to announce that since the beginning of 2015, Histogenics has had one of the strongest periods of operational execution in its history. We achieved a number of important business objectives and executed on the plans we outlined in November 2015 and on our last quarterly financial call. Most importantly, we saw continued strength in enrollment of the NeoCart Phase III clinical trial and firmly believe that we have turned the corner with the completion of enrollment in sight. We also received important positive feedback from the FDA regarding the transition and regulatory approval for clinical supply of critical raw materials for NeoCart from third-party suppliers to our manufacturing facility in Lexington, Massachusetts. Finally, we acquired the Japanese development and commercialization rights to NeoCart from our longtime partner, Purpose Company Limited, and continue to make progress in our collaboration with Intrexon in the development of a next generation, one-step allogeneic NeoCart cartilage implant. Despite some of the challenges in the overall biotech market and our stock price, we believe our business is stronger than it’s ever been. The NeoCart target market is large, maybe as high as several billion dollars, and we believe it will continue to grow. We also firmly believe that the target market is in need of a better alternative and the benefits of NeoCart continue to resonate with the investigators and patients in the Phase III trial. So moving on to some additional color around our Phase III clinical trial, as you may recall, we had enrolled 132 of the 245 patients at the time of our year-end conference call in March after hitting our halfway mark for enrollment in February 2016. I’m very pleased to report that the positive momentum…

Thanks, Adam. For the quarter ended March 31, 2016, the company reported a net loss attributable to common stockholders of $7.9 million or $0.60 per share compared to a net loss attributable to common stockholders of $8 million or $0.60 per share in the first quarter of 2015. As a reference point, we currently have approximately 13.3 million shares outstanding. Total OpEx for the quarter ended March 31, 2016 was $7.8 million compared to $7.9 million for the quarter ended March 31, 2015. The decrease in operating expenses was primarily due to a slight decrease in research and development expense in the first quarter of 2016, which was offset by a small increase in G&A expense in the quarter. The decline in research and development expense in the first quarter of 2016 as compared to the first quarter of 2015 was due to the purchase of raw materials to support the NeoCart Phase III clinical trial in the first quarter of 2015 which were not repeated in the first quarter of 2016 and a reduction in consulting expenses. These amounts were partially offset by increased clinical headcount and clinical trial costs related to increased clinical trial enrollment in the first quarter of 2016 as compared to the first quarter of 2015. The small increase in G&A expenses in the first quarter of 2016 as compared to 2015 was due to increased recruiting fees and stock compensation expense, which were partially offset by decreased insurance premiums. At March 31, 2016, Histogenics had cash, cash equivalents and marketable securities of $22.9 million compared to $30.9 million at December 31, 2015. Based on current operating plans and the expected timing of product development programs, we believe our current cash position will fund our operations into the first quarter of 2017. We continue to aggressively manage our business and liquidity needs with a goal of getting to our expected trial enrollment by the end of the second quarter of 2017 with minimal additional capital. I’ll now turn the call back to Adam for concluding remarks before we go to Q&A.

Thanks, Jon. Our team of employees and investigators have accomplished a tremendous amount over the last few months, record monthly and quarterly enrollment, recent progress with the FDA in both the clinical and manufacturing areas, the acquisition of NeoCart Japanese rights, and the expansion of our pipeline with Intrexon. We firmly believe we are executing as indicated on our November 2015 conference call and against all of our 2016 corporate objectives. Despite this recent progress, we’re cognizant of and extremely disappointed in the recent decline of our share price. We believe the recent decline is the result of the press releases that were issued last week by two law firms reportedly investigating Histogenics. We do believe these releases are not related to the fundamentals of our underlying business and that we will be able to resolve any issues that may arise from the releases without a material impact on our business. We do think perspective is important here. We are a late-stage, Phase III biologics company with several near-term milestones, targeting a multibillion-dollar market that is in dire need of a better standard of care. With biologics regulatory pathway protection, long patent life, and compelling early data and trial design, we expect to redefine the standard of care and grow this market upon anticipated commercial launch, given the favorable demographics, patient value and robust reimbursement environment. We expect to achieve our near-term milestones, fund the organization through these milestones and further de-risk this important opportunity. Finally, we are continuing to manage our operating and capital expenses with the goal of getting to completion of enrollment with minimal additional capital. In addition, we will seek to leverage the advances in the NeoCart development program recently by exploring business development options that minimize our spend and bring in additional sources of non-diluted funding, including potential commercial partners in both the US and worldwide. While it’s always difficult to predict the timing of any such activities, we believe we can now begin to increase our focus on business development due to the progress we made on the enrollment and manufacturing elements of the program. Thank you for joining today’s call. We’ll now open up the lines for any questions. Operator, please go ahead and open up the lines.

[Operator Instructions] Our first question comes from Chad Messer of Needham & Company.

Hi. Thanks for taking my question. Congratulations on a good quarter. I would agree with your assessment that operationally it was certainly amongst one of your best. That said, no good deed goes unpunished. And on enrollment, your detailed disclosure of how well things went in March implies that April and early May were a little slower. So I was wondering if you could comment on whether that’s just noise and why you’re comping it that you are going to continue to enroll well in the coming quarters? I know there’s some seasonality in cartilage repair procedures and maybe spring and summer aren’t necessarily the best times.

Sure. Thanks, Chad. And, in fact, it is just noise. The confidence that we have is growing by the week, month and quarter given the recent results. There is a consistency as we look out over any four to six period where we are continuing to refill the pipeline. We will have weeks where we don’t have any patients and then we’ll have five in one week. And that’s just absolutely natural given the ebb and flow of the enrollment. I think what’s more important is to look at the mix and also to look at the pipeline. The mix continues to be spread across new investigators. March was a perfect example where half of the patients that came in were from new investigators. The other metrics that we did provide on the call is, are we refilling the pipeline. So besides the additional ten-patient slots that we have yet in May, we also have visibility to another ten patients past that or more that are just waiting to be scheduled. So on all metrics, we actually continue to be not only very pleased with the performance, but optimistic about the future.

Great. And then if we could just move on to the Japanese market and Purpose, if we may, I know you guys do it because I visited, I know you guys are responsible for a lot of the advances and process development and science yourselves, I was just wondering if you could clarify for me what it is that you’re licensing from Purpose out of all the things that comprise your technology.

Sure. Purpose actually had rights to the Japanese market. They are actually one of the original, I would say, technology development partners in close cooperation with Dr. Shuichi Mizuno, coming out of Brigham and Harvard, that was one of our cofounders. So they actually provide the tissue engineering processors, which is part of our secret sauce in the manufacturing. As part of the work and funding over many years, prior to many of us getting here, they had retained rights to the Japanese market and had contemplated potentially taking NeoCart through the regulatory process and then finding a partner. Over the last couple of years, as we’ve evolved our partnership, it became apparent that with our complex manufacturing capabilities, with the great data that we have from our Phase I and Phase II studies, it may be more applicable and relevant for us to take the lead and that’s exactly what happened in this partnership. So we basically flipped the rights where we now own the opportunity. We will take on the obligation of taking this through the clinical and regulatory process and they’ll end up with back-end remuneration associated with that. So our partnership, I think, still remains very strong. We will just be taking the lead because this is what we do. We’re running clinical trials. We have relationships with investigators. We’ve got strong partners and have already met with the PMDA. We think this will potentially accelerate that opportunity overseas.

Yeah. So on that, you’re calling this a re-engagement with Japanese regulatory authorities. You said you’ve been down there before. Can you maybe just summarize what your takeaways were from the meetings you’ve had to-date?

Sure. As we noted in the release that we put out on Wednesday, there are a number of new regenerative medicine laws that were put into place couple of years ago. And the opportunity exists for companies to receive conditional approval on a more limited data set, of course, with the probable benefits of safety and efficacy. And then that leads to potential full marketing approval later. And so, we actually had met with PMDA back in the fall of 2015 and outlined some of the data that were available already from the US, both from our Phase I and II studies and, of course, our ongoing Phase III study. The new management team here very much think about this from a global perspective and how do we utilize that strong data set and then, of course, all of the great quality and manufacturing data that is going to our August [ph] manufacturing process. In those discussions, we had outlined that there is likely an opportunity to more quickly engage and potentially run a smaller clinical trial in Japan to obtain conditional approval over there. So we’ve had those introductory informal conversations and have now queued up with our ability to lead this directive the opportunity to then engage with them again. The other takeaway is that there are a number of other precedents that are out there where folks have received conditional approval. You need to have good, robust data. But what we’re trying to do is leverage the ten years of data that we already have from our US experience and then take that into Japan. And I think, in that case, the authorities responded quite favorably. So our next steps would be to go back and start to engage on a more formal basis.

Great, thanks. And the last one, I feel it would just be remiss if I didn’t – I try to elicit some further comments on your balance sheet. By my calculations, you’ve got about seven or eight months of cash; as you’ve alluded, a few-month shortfall to data. You said you want to get there with minimal additional capital required. Can you comment on about how much you think you need and what the various possibilities you’re assessing to close that gap? Thanks.

Sure. Chad, no, it’s a totally reasonable question. Again, just to hit on – I think there is definitely a disconnect between the – irrespective of capital needs or not, between the valuation of the company and where we’re right now. We’ve got clear sight to completing the enrollment of the Phase III trial. As we said before, we expect to have it enrolled by the end of the second quarter of next year. We are, and as we’ve also said, running ahead of our internal expectations on enrollment. So there might be some upside there. So, really, when you think about it, there may not be that much capital required to get there; and candidly, we’re going to apply sort of, what I would call, an all-of-the-above strategy in terms of raising additional capital, some of which could be non-dilutive to minimize the dilution and that includes maybe some equity. We’re looking at some debt alternatives. We’re also looking, obviously, at business development licensing opportunities as well. And, of course, that’s why this Purpose announcement was actually so helpful in getting this deal done and why Purpose was so important in the first quarter because it opens up a lot more avenues to us. So I think from that perspective, that’s where we’re at and our goal is going to be to raising capital, get us through enrollment because we do think that’s a really, really important milestone and that will create a lot of value.

All right, great. Thank you.

Thanks, Chad.

The next question comes from Kyle Rose with Canaccord.

Great. Thanks. Can you hear me all right?

We can.

Great. So a lot of questions already asked, but I want to circle back on enrollment here. I believe, in the last call, you talked about 132 patients enrolled to-date and you had a similar pipeline of ten patient scope. So if we think about the 85%, 90% pass-through to actually enrolling in the trial based on what you said there, it really only implies five to seven new patients as of the last call. So the remainder in March, all of April and then the beginning of May. So I’m trying to understand – I understand there’s seasonality and there’s lumpiness in the enrollment, but really just trying to understand what kind of brought that slowdown after – we think about the robust cadence in January, February and then the first half of March. So just really want to try to understand that a little bit more. You talked about the ten patients with trochlear lesions that are now enrolled in the trial. I’m just trying to understand if maybe we saw a pull-forward or a pent-up demand for some of these other patients that may have been screen failures previously and that really drove some upside in the Q1 enrollment and we’re going to taper off or are we going to re-accelerate here? Just really trying to understand what’s giving you the confidence that we’re going to get to the end of the year.

Sure. So, first, maybe just a clarifying point, we actually didn’t slowdown whatsoever. At the March 10 call, we had 132 patients and we had guidance for up to another 10 patients. And we absolutely hit that goal, which was way ahead of plan. And, in fact, we ended up with 12 patients for March in total. We had five patients in April and then we’ve got an acceleration here over the next couple of weeks. This is just the typical process that happens with each of the investigators. They take a bit of a breather. They bring more folks in. You’ve got simple things such as spring breaks for people who don’t have procedures for a week or two. But we’re actually tracking very much along the same lines as we did in the first quarter and, in some cases, continuing to make additional progress. So just to clarify, we actually had enrolled 15 total patients in the last two months since the last call. So that was ten in the remaining weeks of March, five in April, and then we’ve got another ten plus here over in the next couple of weeks, including a couple of them today. So this is, I think, very much normal course. The overall mix is changing dramatically, and so I think that gives us confidence. And then, of course, we gave guidance to the additional visibility of people who have already consented, but haven’t actually yet scheduled. So on top of the ten plus that we have just over the next couple of weeks, which is, in many cases, two to three times that we ever saw six to nine months ago, we also have people waiting in the queue that could be scheduled in May, June or out in July. So those are a couple different metrics that we look at. But in all cases, I can tell you, internally, there is no slowdown. We are racing here to keep up with the pace of enrollment. And I think that’s a very positive sign.

Great. I appreciate the additional color there. And then just – you talk about the sites that are enrolling five or more. I think you said around 40% of all sites. That kind of implies 13 to 14, I guess, which is up from 11. So just want to understand, if we take it like one level further there, how many are at five and how many are at something like eight. Just trying to understand how many of the sites really stick out from a volume standpoint.

Yes. So this is Gloria, Kyle. So we have – I’m just looking at the sheet. So about eight are at the level of eight or more. And we will actually – based on what we have scheduled thus far, if we were to successfully enroll all of them under a schedule for arthroscopy, three more sites will hit five this month and two more sites will be one away from five. So we’re really focusing on those sites that have less than five and it’s really starting to pay off because those are starting to come up to the five or more level.

I was also going to say, what we’re also seeing is, compared to a year ago, and we are very candid that we’re highly reliant on about two to three sites that have been around for a while, that mix, the upper end, as Gloria just described, is changing dramatically as well. So not only at the high end do we have new sites that are then getting up to the levels of some of the original sites, these groups that are right on the cusp of five are ones that came onboard in the fall or as recently as a couple of months ago. And they’re rapidly contributing quite a bit. So it also leads to our increased confidence. In all of these cases, we’re less reliant on the one, two or three sites, which would cause us some concern as we move in to, let’s say, summer months or other variable times. That mix is just so entirely different from what it was in the past. And frankly, there’s a competition that is taking place right now and this is, I think, a good thing. Folks are seeing that they’re being passed, who have been sitting around for a while. They don’t want to be in the lower tier and so we’re creating that healthy competition and folks are turning quickly patients from potential into consented and identified and then quickly refilling the pipeline.

And then any expectations for data presentations at the summer’s sports medicine meeting?

The abstracts that are due for that are due so far in advance that the answer to that unfortunately is no. So we’re looking at presenting more of the five-year data, including the outcomes data as well as the MRI data later in the fall and maybe into the spring. But unfortunately the AOSSM has a very long lead time for their abstracts, so those were not prepared at that point.

Separate from that, given that the five-year data is an editorial review, as that becomes available, either through Epub or other, we will, of course, make sure that is available and distribute that via press release as well. So we do expect continued updates as we get that data besides some of the scientific presentations.

I appreciate the color. And then just last one, just to circle back on the balance sheet, I just wanted to understand – I know you’ve laid out the different options as far as non-dilutive – the business development agreements versus issuing new equity. As you look over the year-to-date, the pullback in the shares, how has that changed your mindset regarding how you’re going to go in and restructure the balance sheet and just what your plans are for the coming six months to get people a little more comfortable. I know the capital overhang is there. So trying understand, with the new pullback in the share price, how has that impacted your plans? And I’ll hop back in queue. Thank you.

Thanks, Kyle. And I think it’s a very fair question. I think, the other way to be thinking about this and something that is really important is the increased confidence that we have. So six months ago, we had reset our strategy. It was uncertain whether it was going to be successful. And in this particular case, we’re more confident than ever. The business is stronger than it’s ever been. We’ve gotten good feedback from the agency. So along those lines, independent of the pullback in the shares, our confidence has risen dramatically. And we believe that investors will see that as well. So we’re trying to make sure that investors also see the shorter-term benefits. We’re, obviously, sensitive to dilution. And as Jon mentioned earlier, I think the recent strategic transactions, the recent FDA approval of manufacturing, which was a big risk for a lot of central partners, now starts to open up a lot of additional non-dilutive opportunities as well. Jon, anything you’d like to add?

I would just say one other thing, Kyle, and for the others on the call. We, obviously, continue to aggressively manage our operating expenses. I would point out, we significantly increased our enrollment in the first quarter of this year relative to last year and we maintained basically a flat OpEx line item. And so, I think we’re going to continue to look to do – ways that we can do things more efficiently, looks for ways to cut costs going forward. And I think that is the other side of the equation which I didn’t talk about before, which I think is also going to be an important element going forward.

Thank you. Our next question comes from Chris Hamblett with Cowen.

Thanks for taking the question. And nice enrollment momentum. How much of this do you think is from the FDA protocol amendment to get in more patients? Is that, do you think, just going to incrementally gain you a few more patients between now and the end game or have those changes kind of really opened up things here?

That’s a great question. Since the amendment was approved, we’ve enrolled 33 patients and 10 of those have been trochlear lesions. So that’s approximately a 30% uptick from the trochlear piece of the amendment. We have one patient that was added that was now eligible because of the extension in age of those 33. So that gives you an idea of how that’s performing.

Got it. Do you expect that kind of percentage moving forward to be similar?

It appears to be. So the investigators that were languishing somewhat are doing – are re-engaging because of the trochlear lesion. So a number of sites have said now they can really start to enroll some cases. So we’ll see if that’s really true, but it seems to be going in that direction.

We did have a couple of patients, Chris, that were sort of, let’s say, stalked by a couple of physicians and we then would expect that trend to continue [indiscernible] over the next couple of quarters to complete enrollment.

Okay, great. And then on the Intrexon collaboration, it seems like things are going very well there. You’re going to meet with the regulators here in Q2. What are your expectations going in to that meeting and maybe what you hope to gain there? Do you still think there is the potential to not have to do a full trial here for the US with the second-generation product or how are you thinking about that?

So, Chris, I think that’s absolutely our going-in assumption and the reason and the basis for this is that we’ve only changed one of the components of our manufacturing process. And I think that’s the benefit of the very robust manufacturing process that we have, with all of the release criteria that we have upon sending NeoCarts out. And so, very quickly, at a bench level, or bench scale, we are able to run the Intrexon iPSC-derived NeoCart, let’s call it, the second-generation NeoCart right up against our currently manufactured NeoCart. So along those lines, we believe and our strategy would be to engage with the agency about thinking about either a supplemental BLA or some sort of equivalent study. We don’t in any way believe that this is a de novo clinical development path and we’ll be able to, in fact, leverage the compendium of data that comes out of our Phase III clinical trial. So I don’t know exactly what the timing and the data and, of course, how many patients will be required, but do not believe this is your typical sort of starting over [indiscernible] development pathway. We can very much leverage the existing data that is out there with NeoCart. There are a number of alternatives that have actually been cleared without additional clinical data. So this is where we’d like to explore with the agency sooner rather than later and socialize with them our strategy.

Okay, makes sense. And it sounds like there could be an expedited path for a second-generation too in Japan, if I read that right. And once you get to that level of data, are you likely to re-seek a commercial Japanese partner toward kind of the end game or later stages of development?

Yeah, I think that’s right. So there’s two parts to the question. One is that it’s fairly well understood that the Japanese regulators, given that much of the technology was developed over there, are probably much more open to cell therapy applications. And, in fact, that was part of the intent of the regenerative medicine law. We’ll just start accelerating the review and regulatory approval pathway which is through the conditional approval process. So one of the opportunities that we’ll probably pursue in panel regardless is, as we are talking to PMDA about today’s NeoCart, is also look at what the development pathway would be for an additional clinical trial, let’s say, with the Intrexon-derived iPSC technology. So I think that’s something that is very much open for discussion. And I think the other part of your question, which is also critical, was the control of manufacturing, the control of clinical data and being able to supply a robust data package to the Japanese PMDA is going to be critical for any partner. Besides that, we’re going to need to have the appropriate feedback on what it takes to get that approved. We’ve got a very clear indication and pathway on what it takes and we think this accelerates some of the commercial partnering discussions. I think [indiscernible] typically over in many of the Japanese markets, you’re going to want to have either an in-country pharmaceutical organization, orthopedic organization who can distribute this commercially, we’re also going to want to make sure that we have the capabilities to have someone that can do the manufacturing technology transfer as well. Steve, anything that you would add given you’ve been leading this program?

No, I think [indiscernible] I can’t really add too much to it. I think that, obviously, it’s very encouraging from a manufacturing standpoint to be able to leverage everything that we’ve learned to do over the last three years [indiscernible] from a technology standpoint. So…

Excellent. And I think a final point that I would add is that it’s clear in each of our conversations that there was a desire to make sure that the data we’re generating today and sort of everyday as we’re making NeoCarts here in Boston and in conjunction with our communications with the agency that that would be available. So this is really, how do the leverage all the good work that is happening here and has been happening here over the last ten years, and I think the regulatory authorities were pleased to know that they’d have full visibility to much of the data based on the work we’re doing here in the United States. And we think that creates a lot of value for our partner. In all of these cases, these aren’t new conversations. This isn’t new data that needs to be generated. It’s nearly leveraging the great compendium of data that’s available.

Okay, makes sense. And great updates there. And then just one last one, if I may, any updates on the competitive landscape this quarter that were meaningful?

Sure. So I think in the first quarter, there were a couple of meaningful updates that we think are actually great for Histogenics and NeoCart, and that is that MACI, which is a second-generation product to Carticel, originally developed by Genzyme and now marketed by Vericel, had their BLA accepted for filing. We, obviously, have no visibility to what that data looks like and whether they will gain approval. But two important points came out of the public guidance that was provided. One was that there was roughly a ten-month PDUFA review; and second was that indications were that no advisory panel would be needed. So given that our trial was prospectively done very different time under the guidance documentation, and we think is as robust, if not much more, we think that this provides great clarity for our post-BLA submission and timeline for approval. And then the second is, some of the data that we’ve received both in cooperation with some of our collaboration partners, and that’s been available, I think continue to demonstrate the continued benefits of NeoCart and potentially some of this peer data that we would have at the time of filing as compared to the competitors. They are just very different products. And we’re making tissue unlike anything else that others are developing in the market. And absolutely that we would be able to go head-to-head upon potential launch of NeoCart. Gloria, anything you’d want to add to that?

No, I think that covers it.

All right, thanks for answering the questions, guys. And congratulations on the progress.

Thanks, Chris.

The next question comes from Sean Lavin with BTIG.

Hi. This is actually Ryan on for Sean. Can you guys hear me okay?

I can. Hello, Ryan.

Good, great. So just want to dig a little deeper on one thing, maybe beating a dead horse here, but on the existing doctors at the enrollment sites, how would you kind of characterize the pace of the enrollment for doctors? On some of those sites that have five or more or eight, nine patients, are those multi-doctor sites? And are you seeing any acceleration and ramping in certain doctors relative to maybe stagnation in others? And any just color there would be helpful.

Yeah, that’s an intricate question, so I’ll try to answer it as concisely as possible. It’s interesting there’s a lot of variability. So there are multi-practice sites that are not producing as much as we’d like or that could align to the pipeline, but then they never actually make it to their arthroscopies because they weren’t well-chosen to begin with. Other multi-doctor sites are doing great. We have some private practices that are a one – they have more than one surgeon, but there’s only one surgeon doing our study on the protocol. Some of them have been in the trial a year or less and are just hitting amazing numbers. So it’s a very different profile, just depending on the area and the investment of the investigator. So there’s not one formula for that. We’d love to try to understand why some sites – we’ve initiated a site that has many, many cases and they’re having a hard time finding a single case to be in this study. So it just varies a lot. There is a lot of re-engagement of sites that were previously languishing. And I think the addition of trochlear lesions has helped with that to some extent as has our fairly aggressive hands-on approach where we’re actually targeting sites that have been slow in their enrollment and trying to help them in any way we can. And in many cases, it’s been remarkably rewarding.

Great. And then, just lastly, and I’ll hop back in queue here, just the marketing activities, you guys talked a little bit about it in terms of filling the pipeline of potential patients. As we think about that through the rest of the year, do you see the need to increase it at all or accelerate that spend to continue filling that pipeline?

We have, in fact, been increasing a bit recently because we want to make sure that we’ve banked enough patients to not get any sort of summer lag. As some other people have brought up, there can sometimes be a holiday or summer lag and we don’t want to see that. So we’re already booking patients in June and will continue that process each month, booking into the next month to try to make sure that we can keep the momentum where it is now. And marketing is part of that. So we have actually started ramping up at each site, those campaigns.

And, Ryan, along those lines, the other thing that we’re finding here over the last couple of months is there are some things that work really well, some things that don’t work so well in certain areas. So, I think, the takeaway is we continue to be flexible. We continue to move very quickly. It’s very similar to a commercial call point where if you’re sending patients into the doctor that they are going to use your product. And in each of the geographic areas, there are different things that will work. So we’re learning a lot from the things that are working well and we are doing much more of that and there are some things that traditionally just aren’t working so well. And in those cases, we are probably ramping those down. So I think it’s a delicate balance and it’s not just the recruiting. It’s also, let’s say, the commercial mindset that Gloria’s team has been exhibiting. When you’re visiting the sites, you’re staying there and making sure that you’re visible and helping them build their practice, so they are more apt to use your product. Across the board, we hear from physicians. They love to use the product. They love doing the procedure. They like how NeoCart looks. It’s a quick and easy procedure. Their patients respond appropriately. But there also needs to be that continued support, both from a personnel perspective and from a recruiting perspective. And so, that’s why I think we’re hitting them hard on each of these elements.

That’s great. Thanks for taking the questions today.

Thanks, Ryan.

Our next question comes from Sherry Grisewood with Dawson James Securities.

Hi, guys. Great quarter on the enrollment. I have two follow-up questions that haven’t been already covered. One is on the second-generation product using iPSC. I was wondering – because it’s fairly complex working with iPSC, so I was wondering if the company had done any research on an opportunity to see whether enough of those [indiscernible] patents had expired to be able to use just MSCs in your second-generation product which would be much simpler.

So, Sherry, I lead off and then hand off to Steve and Gloria to the extent they’d like to comment further. It’s much more about the appropriate technology to be able to make chondrocytes from various donors. So, as you know, we are reprogramming and we’re looking at cell viability, we’re looking at reproducibility. MSCs have actually been filed in a number of different indications. You’re right. There’s a pretty broad patent estate available, or sort of lack thereof from a protection perspective. So we’re looking much more about what is going to be the best technical solution and that’s where I think we very much toned into the iPSC side. We, of course, are very cognizant and watch the patent estate as well. Given the strong patents that already cover NeoCart here and the manufacturing process, that, in combination, with the careful work that we do with Intrexon, I think give us still a lot of opportunity to explore this arena. We have looked at MFCs. We’ve looked at a number of different opportunities as well. And in many cases, we think this is going to be far superior.

And do you think that the FDA has become comfortable enough with iPSCs that you will avoid the de novo filing?

So we’re looking to engage with the FDA sooner rather than later to look at that. One of the interesting opportunities with cartilage or chondrocytes, in particular, if you were to look at a very sort of low-risk area, as you know, sort of cartilage and chondrocytes have been demonstrated to be immunoprivileged. There isn’t a lot of concern because it’s an avascular area. There are, in fact, already some products and/or tissues that are approved for use in that particular area. So if I were to look at this versus, let’s say, an oncology indication, dramatically different risk profile and that combination of our controlled manufacturing environment plus the immunoprivileged area, we think, actually creates real unique opportunity to have that conversation.

Great. And then second question – sorry, go ahead.

This is Steve Kennedy. Just to add to what Adam has said, I think – and maybe kind of just a little bit further on your question, one of the unique things about Intrexon’s approach to this project is what they are doing is they are taking donor chondrocytes and they reprogram those two iPSCs. So that’s a subtlety that we don’t really talk about a whole lot, but it does add tremendous simplicity to the project – to reprogram the chondrocyte donor cells to iPSCs, proliferate those cells and then re-differentiate back down to chondrocytes. So it’s a subtlety that – based on your question [indiscernible] understand the technology quite well and I think it’s one of the things that Intrexon has been quite clever about. And it demonstrates and underscores their technical capability here.

Thank you. That is a nuance that I didn’t appreciate and I can see how that would get around some of the issues of reprogramming and then maintenance of phenotype post-programming. So that does help quite a bit. I did want to just follow up on whether you could give us a little more clarity on the circumstances that preceded the law firms’ press release.

Thank you for that question as well. To that point, company has seen a couple of press releases that were issued last week. We’ve received the litigation demand from one of the shareholders objecting to the recently disclosed reversal of the clerical error that we had already filed with the SEC. There, the company applied the inadvertent reverse stock split figures at the time of the IPO. And we think that this is very much corrected. We believe the demand to be without merit and, of course, intend to vigorously defend ourselves.

Okay, thank you.

Excellent. Thank you, Sherry.

[Operator Instructions]. And I’m not showing any further questions at this time. I’d like to turn the call back to Adam for closing remarks.

Thank you, Kevin, and our investors for listening in today. We are appreciative of the patience and support from our stakeholders as we finally turn the corner on this important therapeutic clinical trial on patient demographic. You will hear from us regularly as we execute on our short-term milestones. Today was a good example of that. We had indicated publicly that previously we needed only a 20% to 30% increase over the rate that we had in 2015 to hit our new target enrollment and we are well ahead of that. We expect to be able to execute on our short-term milestones. We’re confident that the NeoCart file will be fully enrolled. We’ve seen that the BLA has been further de-risked and our pipeline opportunities will grow. All of these we think have the potential to create tremendous value for our stakeholders. So the transition and pace of relentless execution is really a testament to our employees and our investigators and we’d be remiss in not thanking them for accomplishing already, I think, what most in the industry have said we could not do. I think the benefit to these efforts will be clear for years to come and we look forward to updating you on our next call regarding our continued momentum as we bring this important therapy to our patients. Have a good day everyone.

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect. And have a wonderful day.