Good day, ladies and gentlemen and welcome to the Q2 2016 Edge Therapeutics Inc. Earnings Conference Call. 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] As a reminder, today's conference is being recorded. I would now like to turn the conference over to your host Greg Gin. You may begin.

Thank you, operator. Good morning everyone and thank you for joining us today. During this call, we will report on Edge Therapeutics' results for the second quarter of 2016. Joining me this morning are Brian Leuthner, President and CEO; Andrew Einhorn, Chief Financial Officer; and Dr. Herbert Faleck, Chief Medical Officer. Brian will provide opening remarks and share second quarter and recent progress. Andy will then provide a brief financial overview. At the end, we'll open up the call for questions. Before we get started, note that the press release we issued this morning is available on our website at www.edgetherapeutics.com. In addition the live webcast of this call is also available on our website. To access the website, click the Investor's link on the top navigation menu, then click on New & Events, then Events & Presentations on the left navigation menu. There will be taped replay of this call which will be available approximately two hours after the call's conclusion and will remain available for 14 days. The operator will provide the replay instructions at the end of today's call. Today's conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent that any statements made on this call contain information that is not historical, these statements are forward-looking and are not guarantees of future performance and involve risks and uncertainties including those noted in this morning's press release and Edge's filings with the SEC. Investors, potential investors, and other listeners are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. Edge specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. I will now turn the call over to Brian Leuthner.

Thank you, Greg. Good morning and thanks for joining us today. Edge has made significant progress on multiple fronts since our last call. Our clinical progress is highlighted by the initiation of our Phase 3 study of EG-1962 in aneurysmal subarachnoid hemorrhage. And then on the financial side, we recently announced the closing of a $20 million debt facility. At the same time, we continue to build out our management team with the necessary experience and leadership to help us advance our promising therapies to the patients in need. So, let's get started with the progress of our clinical efforts here at Edge. As most of you know, our top priority is advancing our lead clinical program EG-1962 in aneurysmal subarachnoid hemorrhage. Aneurysmal subarachnoid hemorrhage is also known as ruptured brain aneurysms are the sudden and catastrophic medical emergencies that have particularly poor outcome and limited treatment options for patients to-date. In fact, if you look around the world, over 600,000 people suffer a life-threatening ruptured brain aneurysm each year. In the U.S., over 35,000 patients annually make it to the hospital after aneurysmal subarachnoid hemorrhage and nearly all of these patients receive a medicine called Nimodipine. Now despite this treatment and doctor's best effort, 75% of patients that suffer an aneurysmal subarachnoid hemorrhage will be permanently brain damaged or worse within 30 days. While oral Nimodipine has been the standard-of-care for almost 30 years to prevent delayed neurological deterioration in the days and weeks following this ruptured brain aneurysm, its primary limitation is that it cannot be administered in sufficiently -- in sufficient doses to be more effective due to dose-limiting side effects namely hypotension or lowering of blood pressure. What we're attempting to do here at Edge is to address this significant unmet medical need with EG-1962. And…

Thank you, Brian. I'm pleased to report that Edge continues to be in a strong financial position. As Brian mentioned, we recently closed a $20 million debt facility with Hercules Capital. This strategic debt refinancing increases our cash position at an attractive cost of capital. We believe this non-dilutive funding enables us to continue investing in our pipeline and extends our cash runway in order to meet our corporate growth strategy. Importantly, we believe this credit facility will strengthen our financial position at the anticipated completion of the pivotal Phase 3 NEWTON 2 study. The debt facility is structured in two tranches; with $15 million drawn at closing and an additional $5 million available to be drawn between now and mid-June 2017. Proceeds are used to refinance approximately $4 million of existing debt and for general corporate purposes. As of June 30, 2016, we had $111 million in cash and cash equivalents. During the quarter, research and development expenses were $6 million, inclusive of approximately $600,000 of non-cash stock compensation expenses. This compares to $5.3 million of R&D spending for the first quarter of 2016. General and administrative expenses were $3.3 million for the second quarter, including approximately $800,000 in non-cash stock compensation expense, as compared to $3.7 million for the first quarter of 2016. We reported a net loss of $9.4 million for the second quarter, as compared to a net loss of $9.2 million for the first quarter of 2016. This increased net loss in the second quarter reflects the aforementioned higher levels of R&D spending. As we look at the balance of 2016, we expect operating expenses to increase as we progress our NEWTON II Phase III study of EG-1962 and as we continue to advance our programs. Based on our current plans, we expect our cash and cash equivalents, inclusive of the proceeds of the new debt facility, to be sufficient to fund our operations through the full data readout from our NEWTON II study. As of July 31, 2016, we had 28.9 million shares outstanding. And now I’ll turn it back over to Brian.

Thanks, Andy. So to summarize, we are continuing to advance the clinical progress for EG-1962. We’re also focused on advancing cisternal administration of EG-1962 into the clinic in the second half of this year, and finally we further strengthened our financial position for the coming years. So we look forward to meeting with investors and analysts over the coming months and plan to be at the Credit Suisse Small and Mid-Cap Conference in September, at Credit Suisse Healthcare and Jefferies Global Healthcare Conferences in November, and then off to the Guggenheim Healthcare Conference in December. So with that, operator, we’re ready to take questions now.

Thank you. [Operator Instructions] Our first question comes from the line of Joseph Schwartz with Leerink Partners. Your line is now open.

Good morning and congrats on all the progress. I was wondering, first of all, if you could talk a little bit about the sites that you're activating for Phase III, how many of these will be in common with Phase II. And I know that these types of patients are treated by super-sophisticated specialists, but what kind of training are you doing in order to ensure that the site's try to apply the same kind of principles that were used in your successful previous NEWTON study.

Sure. Hey, Joe. This is Brian. Thanks for the question. So to answer the first question, there's a tremendous overlap of sites that were used in the NEWTON study and the NEWTON II study sites. Almost all of those sites will be rolled into the Phase III. Regarding training and things, you're right, these are what I call centers of excellence kind of sites. So as you know, all of these patients get sent these major centers for doing it. So the good thing is all of these sites or almost all of these sites have work on subarachnoid hemorrhage studies in the past. They’ve worked with Dr. Macdonald on other studies outside of Edge, and we're doing all types of video training at the sites and also in person, including investigator meetings. So we're doing the personnel training, we're doing the video training, and again most of these sites have been in the Phase II and then almost all of the sites have worked with Dr. Macdonald on other studies in the past on subarachnoid hemorrhage. So we know the centers and we feel there is very good homogeneity or -- it’s a homogeneous group as far as how they're treating these patients.

Okay. Great. That's helpful. Thanks. And then as a follow-up, can you give us an update on your intracisternal work and is there anything that gives you confidence from preclinical or even clinical data that this approach could work in several economic emerged patients on 1962 given their that way.

Sure. Yeah, absolutely. And so first thing is, yeah, we actually looked at it and animal or a preclinical subarachnoid hemorrhage study, and we saw some favorable results their. Way back several years ago, you know, we actually treated five patients previously prior to the new study cisternal only all those patients were sick patients, they did well, so and we didn't see any safety issues. So, again, we believe that this will provide another alternative for patients that don't have an external ventricular drain that could potentially benefit from EG-1962. So what we'll be doing is doctors will have the ability when their micro surgically clipping these patients to actually put 1962 down around where much of the blood and the arteries are caked in that blood. So, you know, we're optimistic that this would provide another potential opportunity for these patients.

Okay. And at what point do you advance into more patients in the clinic for that approach?

So, right now, as we spoke about we're looking by the end of this year to start -- to start our study, and then we'll have data. That's going to be an open label study so we will have data in 2017. I think, you know, once we get read out that data we will kind of evaluate what the next steps are from them.

Super. Helpful. Thanks for taking my questions.

Absolutely. Thanks, Joe.

Thank you. And our next question comes from the line of Jason Butler with JMP Securities.

Hi, Jason.

One moment. Your line is now open, Jason.

Hi. Thanks for taking questions. So, Brian, first question just in terms of the center -- the U.S. centers in the Phase III trial, can you give us an idea of, of the roughly 15,000 patients with subarachnoid hemorrhage who have an EDV, what percentage was patients or what number of patients are treated annually at the hospitals that you're enrolling at?

So, we think they're about 17,500 patients, so about half of those 35,000 annually that that will get an EVD. So what percent -- I have to say Joe, we don't -- we haven't done -- not Joe, Jason -- we haven't done that math. We do know that we are targeting the centers that do see high volume, so that's one thing that we do know is we have a sense for how many subarachnoid hemorrhages are treated institutions throughout the country and we will -- we're going after those high-volume centers so.

Okay. Helpful. And then I guess just a question on reimbursement and wanted to come back to the pharmacoeconomic data that you presented earlier this year. Can we -- can you maybe just give us an impression of what the conversations you've already had with hospital formulas or how they're going to evaluate this therapy relative to -- the relatively low cost of Nimodipine? If you talk to them about any of your pharmacoeconomic data since you presented it.

Yes, so, Jason, we haven't had these conversations with hospitals yet. Our focus has been getting the study up and rolling. Yeah, I know we've discussed -- yeah oral Nimodipine generic still cost, you know, somewhere we think around $3,500 to $4,000 and then the suspension is around, you know, $10,000 to $15,000. So what we're focused on right now if we continue to mine the data from the new study to see if there are other health economic areas that we could use, you know, in addition to just ICU length of -- ICU length of stay, hospital length of stay and we're actually like I said we're looking at other parts of the new study to see if there are other things that we can take away from health economic saving standpoint. So we're doing some of the health economic work right now, the market research and talking. But we're preparing for those discussions right now.

Okay. Great. It’s helpful. Thanks for taking questions.

Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Vamil Divan with Credit Suisse. Your line is now open.

Hi this is actually [indiscernible] in for Vamil. Congrats again on the progress that you guys made this quarter. I wanted to follow-up on a previous question on the intracisternal approach, can you just give a little more of your thoughts on the market opportunity there the patients that don't need the EVD? And then secondly, just wanted to ask about the data that you guys will have with the cisternal work? What is your sense of I guess sort of clinical relevance if you guys show an efficacy of exercise I guess maybe in the 50% versus over 20%.

Sure, so. Let's I'll answer the first question. With regards to cisternal, you know, of 50% that did not have an external ventricular drain we think with cisternal we can capture maybe some of that portion. We're still doing some analysis on it. But I wouldn't say we clearly -- you know, there are people that don't have an EVD that undergo microsurgical clipping. We're still trying to look at the numbers and really hone in on what that potential would be. So -- but it's clearly not all of them. It is much purer than them. And then I think the second question was?

The clinical relevance of the interim, we have efficacy between 10% and 15%.

Well, as we said in order for the study to stop at the interim analysis, we will need to see an absolute difference greater than 20%. So if we don't achieve that point then the study will either go to 300 subjects or 375 subjects or 374. So if we go all the way out to 374 what we would need to see is a difference of 15%, an absolute difference of 15% to be statistically significant. So that's really what we're shooting on. And when we talked to doctors and this market research that's what they view as a clinically meaningful difference.

Okay. Great. Thanks.

And I am showing no further questions in the queue. I would now like to turn the call back over to management for any further remarks.

Well, I'd like -- again just like to thank everyone for taking the time. You were obviously quite excited here at the Edge to start the study and we will continue to give progress as we can over the course of time. So, thank you everyone.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.