Good morning, ladies and gentlemen, thank you so much for standing by, and welcome to the Cytori Therapeutics 2007 Year-end Results Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for your questions. (Operator Instructions). As a reminder, this conference is being recorded today, Wednesday, the 12th of March, 2008. I will now turn the conference over to Mr. Chris Calhoun, Chief Executive Officer. Please go ahead.

Thank you. Good morning and welcome to the Cytori Therapeutics year-end 2007 financial results conference call. The discussion today will include forward-looking statements regarding events and trends which may affect the company's future operating results and financial position. Some of the risks and uncertainties are described in the risk factors section in Cytori Therapeutics' 2007 Form 10-K and subsequent SEC filings available through either the SEC or Cytori's website. Cytori is now the first company to commercialize broad based products into the autologus and real-time cell therapy market. We are currently selling our Celution System products in Europe and Asia for soft tissue reconstruction and augmentation. Additionally, we are actively working with our partner, Green Hospital Supply, to sell our StemSource cell banking product in Japan. This important inflexion point for the company is a result of multiple achievements and progress achieved during 2007. We would like to highlight a few of the most significant accomplishments. First, we established a partnership with Green Hospital Supply Company for distribution of StemSource cell banking product in Japan, including the Celution 900 banking system. Second, Cytori received broad approval for stem cell products in Europe, including European approval for the second generation Celution stem and regenerative cell processing system. The Celution System was approved in Japan for stem cell collection and preservation. A 510(k) clearance was received in the US for adipose tissue processing system with related [cell] as reagent, and a 510(k) clearance was received for the Cytori Fat Process Transfer System, which is part of our ongoing US regulatory strategy. Third, the company initiated two cardiovascular trials. The PRECISE trial began enrollment in January for chronic ischemia. The APOLLO trial began enrollment in November for acute myocardial infarction or heart attack. Fourth, Cytori announced that adipose derived stem cells show promising…

Thank you. Ladies and gentleman this time we will begin our question-and-answer session. (Operator Instructions). Our first question is coming from Ren Benjamin with Rodman & Renshaw. Please go ahead. Ren Benjamin - Rodman & Renshaw: Hi, good morning, and thanks for taking the question.

Good morning Ren. Ren Benjamin - Rodman & Renshaw: Can you just give us little bit more of an update on the two ongoing cardiovascular trials; both PRECISE and APOLLO. Is this the rate of enrollment that you had originally envisioned, is it going slower than you had originally thought? And if you can just review that the details regarding the dosing and the cohort that would be a great start?

Hey Ren its Marc Hedrick. Ren Benjamin - Rodman & Renshaw: Hi Marc.

Thanks for the question. With respect to PRECISE, enrollment is proceeding roughly on schedule, but the problem is we only have one center involved, and we've been slowed by the Dutch regulatory and study approval procedures, but we anticipate that coming very soon and adding a third site. We are also boosting enrollment. So when you let everything out, we are behind from where we hope we would be, but we are doing everything we can to put the enrollment back on a reasonable curve. And I think that given the things that we're likely to accomplish this year, there's a solid likelihood that we can finish the study before year-end, and recall that we are right in the middle of these second dosing treatment cohort in that study. We did have a decision to make with respect to the study whether we expanded the enrollment criteria to speed enrollment or we continue to maintain a tight, well controlled study providing us with the best possible information and indication of efficacy. And our decision process really continues to lead us to the fact that we want to keep a very tightly controlled study so that we get the best possible information. So that's really the insight into our strategy. With respect to APOLLO, this study has been going on in the background. Remember it's the feasibility study like PRECISE, but we are proceeding cautiously. These are six patients; we are removing fat tissue from the patient and effectively a liposuction procedure in the first 24 hours, but enrollment's proceeding. We treated cases at both two sites and both sites were improved, and right now it is difficult to predict the enrollment rate in the study. PRECISE was actually enrolling ahead of other studies of a similar nature, but this study is really difficult to predict and hopefully in future calls we can be more specific. Ren Benjamin - Rodman & Renshaw: Okay. Can you just remind us again of the dosing cohorts, and may be, I believe there was some sort of an update regarding either the enrollment or maybe the first set of patients that were treated. I could be wrong on this; could you just clarify that for me?

You bet. So I think you are alluding to PRECISE study, which is the study directed towards patients who have chronic ischemic cardiac disease, and that study was designed as a double-blind, randomized prospected study, but the dose escalation component and that we'd start out with a low dose, and try to build to the maximum tolerated dose through three different dosing regimes. And the specifics of the dosing regime are fairly complicated, and I prefer not to go into those right now. But suffice it to say that in the precise study, 12 patients randomized between controls and treated, blinded to us and to the investigator. And then that's reviewed by our Data Monitoring and Safety Board, and upon successful completion of that first 12, we go to the next 12 which is at a higher dose, and a similar process occurs at that middle dose, and then, hopefully, we move on to the third dose. And so we're right in the middle of that second dose and the study is going well. APOLLO has a similar design in that we do a truant of patients at a low-dose, go back to the DMSB and then ask for approval to go forward to a higher dose, again, the goal being just getting to the maximum tolerated dose. Ren Benjamin - Rodman & Renshaw: And when might we see even preliminary data from these trials. I know you mentioned that you hope to complete enrollment in 2008. Do you think we might be able to see some preliminary results from maybe the earlier cohorts this year or do you plan on reporting it all together in 2009?

The study is really designed to report the data all at once. It's really difficult to draw conclusions based on the way the study was constructed, to minimize the number of patients and to maximize the statistical power. It'd be impossible to get any meaningful interpretation by peeling away one cohort. So with respect to PRECISE, I believe we could get enrollment done by the end of the year based on the things that we're implementing. The key time point is at six months, following treatment on an individual patient basis. So, we'll have to wait till the last patient was treated and then wait additional six months and then another two months after that or so, where we work with the CRO and the investigators to analyze and then report the data. So, we're getting into the middle of '09 before we know what that date is and can report it. Ren Benjamin - Rodman & Renshaw: Got it, okay. There are a couple of questions then on the revenue side. Can you talk a little bit about either your interactions with Green Hospital or what's your preliminary impression of the launch in Japan, I guess you've had close to two months or are getting close to launching. Can you give us just some more clarity as to what exactly is happening in Japan?

Hi Ren, it's Chris Calhoun. Ren Benjamin - Rodman & Renshaw: Hey, Chris.

I've spent a lot of time working with our team in Japan, we have Seijiro Shirahama and also Hideki Hukaro, who is a physician working closely together with the Green Hospital team. And so, we've been able to be pretty involved in the sales process and we have a nice funnel of hospital candidates that we're working with. And, this is a multi-million dollar sale into the hospital, so the process takes a few months and we're just now starting to understand what the sale cycle look likes. But I can tell you, the interesting thing is that each of these hospitals has a specific area of interest for adding a stem cell bank to their facility. Be it a regenerative medicine center, or they have a breast cancer center, or a variety of different things and maybe an ageing center. So that the stem cell bank really enables them to anchor this regenerative medicine opportunity within their area of interest. We've got a number of hospitals that are deep in the funnel. We think there are several that are very near to completing that process and getting the final orders signed and announced. And then I think we've got a nice funnel looking very positive for the year that gives us the confidence to reiterate our guidance. So in working pretty closely with both Green and many of these hospitals, I think we are very confident that this banking model is going to be a success in Japan. Ren Benjamin - Rodman & Renshaw: Great. And as for you, I think at least previously you've mentioned that you think revenues will start to come in the first quarter. Can I assume, kind of like what you guys did with Europe and the Asia Pacific, as far as reporting that you have received orders. Could I assume the same sort of press release or announcement once the first unit is placed in Japan?

Yeah. We think that's an important milestone, and once we have absolutely finalized the contract, we will announce that. Now, the revenue from that may get posted some time later once the bank is installed and signed off, based on revenue recognition guidance from our auditors. But we will absolutely announce the signing of our first bank. Ren Benjamin - Rodman & Renshaw: Great. Thank you, guys, very much and good luck.

Thanks, Ren.

Thanks, Ren.

I think your next question is coming from the line of Daniel Mallin with WBB Securities. Please go ahead.

Yeah. Hi, guys. Thanks for taking my question. I had a quick question, if you can add some color to your guidance. I know you are selling the banking system in Japan, you also have the Celution launch in Europe. Do you have any division of revenue in terms of how much you think is going to come from the European sales versus Japan, if this is taken into your projections?

Hi, Dan, it's Mark Saad.

Hi, Mark.

We have not provided any additional color there and while we are genuinely enthusiastic based on the early progress in both areas, our sense was, it will be difficult to provide further guidance given just the inherent variability of a first-in-class product in these markets. Our sense is that, it's likely that the majority of those revenues that certainly come from Japan given the scale and the magnitude of an individual sale for each of these Japanese hospitals, just a couple hospitals and you get close to that revenue number, and certainly a disproportionate share of that revenue. So, it made empirical sense that it could likely be that the majority of those revenues will come from Japan. And the activity in Europe is certainly a targeted activity, and we are not trying to suggest that we are out there trying to sell the system for all applications. In the contracts we're going for very specific area that we believe the data supports a successful market introduction and to really use that as an on ramp to a major market. So, let's see how it goes, but it's very much qualitative as much as quantitative looking at the success that we are seeing in Europe. So, we think there could be meaningful revenue there, but think that it's very possible that the majority of the revenues could come from Japan.

If take that a step further you had stated that the Celution system is currently being used or targeted it will be where a lot of development work or the clinical trials where. You also have units placed in Tel Aviv and in Tokyo, Japan, and that's basically for a cell transplant application. What is the regulatory status in Japan relative to Europe in terms of an approval for cell transplant applications for the Celution system.

Hi, this is Chris. We are working with our regulatory consultants in Japan and our partner Olympus Corporation to put together a regulatory strategy related to the device and therapeutic claims in Japan, and that's actively going on right now. But it's possible under the Japan regulatory laws for physicians using their doctors' license to import approved products from other places in the world. For example we have the CE Mark, so it allows and enables the physicians to import that product under its doctor's license and use it legally in the country. So that's how Dr. Kamakura has been able to bring a new system and use it to treat patients there.

So under that regulation, it's conceivable that physicians in Japan could look at what's going on in Europe and say, they want to be the leading center and they want to basically have access to their technology without a specific regulatory approval in Japan.

That's correct.

Okay, that's it. Thank you and congratulations on a really productive year.

Thank you.

Well, thank you. Our next question is coming from the line of Jason Napodano with Zacks Investment Research. Please go ahead.

Hey guys thanks for taking my questions. Just a little bit more here on the guidance. I'm wondering, how we should be thinking about sales of the consumables relative to some source in Japan, or sales of Celution System in Europe. And to that avail, approximately how do you think their consumable sales will ramp, for example, if a hospital in Japan does decide to purchase the StemSource System or do you have some early adopters in Europe. Approximately how many consumables per system do you think would be sold along with that and then how would that ramp throughout the year?

Hi Jason, it's Mark Saad. I think long-term we all believe that a lot of the long-term value certainly is in the consumable portion of the equation. But given how early this is, as far as procedures go, for the first period of time we really are looking at systems as the driving source of initial revenues, and then overtime as those systems are installed, experience is achieved both in the StemSource banking market as well as in the therapeutic use that we currently have in Europe. I think it's going to take a little time before we can really get good guidance in terms of what, how you see that ongoing per unit utilization number as some kind of a predictive part of the equation. It would be really difficult to do that and we think it's a big part of the long-term value, and I think I would start with what's the potential per system just given a specific field of medicine and how many times you can really run that system practically within the hospital to clinical setting. Just given the practical reality of the procedure flow, I think a couple of runs a day is certainly achievable per system. So, I think it sets up opportunity that per system, how many per day, per week, per month etcetera, could certainly be an ultimate goal. And then the question is, how do you get adoption per system, and we'll track that as best we can and provide all the guidance we can there. For the early period of time both on the banking side certainly, as well as on the reconstructive surgery opportunities, I believe that we will see most of the revenues from the system sales along with an initial albeit moderate order of consumables. We wouldn't want to get ahead of ourselves and have a lot of inventory per site. We would want to start people off with a certain number and then get to where there is an ongoing flow based on realistic experience. So I think early on, we should just focus on the systems with the knowledge that it's going to shift overtime, and as soon as we can give you good guidance there, we'll do that.

Got you. Do you still think looking at Japan, you guys have said, you'd like to try to capture somewhere in the area of 250 hospitals maybe by 2012. Do you guys still see that as a realistic goal?

As Chris said, the initial marketing process is going very well to our estimation. We've been on the ground with our people side-by-side with the Green team and have seen this first time. So, we believe that the opportunity that was presented before is the opportunity we see being realized, and so yes, I think we are consistent with that. And by the way that wasn't a Cytori number; that was a Green Hospital number. They're a public company, they made that may provided that guidance. So that’s their corporate goal to reach that number. So we know no reason, why they have changed that guidance.

Got you. And then just one final question. I missed the end of the year cash balance.

We ended the year with $11.5 million and we bolster that with a strategic equity agreement for an additional $12 million subsequent to that.

Right. Okay. Thanks, I appreciated.

Thanks. Thanks.

Thank you. Our next question is coming from the line of [Buzy Northan] with Thompson Davis Asset Management. Please go ahead.

Good morning. A month ago we did our DO with Green Hospital as you've talked about with the sale of 2 million shares. Could you comment a little bit about this transaction and what Green's thinking going forward? Just give us a little color on these transactions?

Hi Buzy, it's Chris. Good morning.

Good morning.

I think that fundamentally the Green equity investment, first, it shows confidence in Cytori and the banking opportunity and I think even more broadly our platform. Secondly, the deal expands on the relationships that we have, the pattern of sort of starting with an equity agreement, adding commercial opportunity, followed then by more equity and then ultimately potentially even additional commercial opportunity. So if you look back at the Olympus relationship that was the pattern. It was equity, then we did a partnership and then they put in more equity, and then we had another partnership after that. So this is a pattern where once these companies begin to, we form a relationship, we prove our value together, we build on that relationship, then we add opportunity, and I think that Green is following that same course. And we are excited that Green has been a fantastic partner and we are really excited to be working together. And as I mentioned earlier, personally I am working pretty closely with the team in Japan and with Green, and we are very excited overall about the opportunities with them.

That’s great. And one more, since you bought up Olympus. Can you comment how the relationship is today and your confidence in Olympus being able to be ready for the commercial rollout of the Celution Systems?

I think equally exciting is the ongoing relationship with Olympus. So we are now many years into this relationship. I think we are closer and tighter than ever. Our teams work very closely. There is invariably, Olympus team here in San Diego working with us. We are there together working them. I think on the development side for the next generation device, we are making a tremendous amount of progress. Timing wise, we sort of said 2009 is when we are going to begin to launch that first product from Olympus. I think we are still on target for 2009, now whether that’s early in the year or late in the year, it's a little too soon to be able to really accurately project that. But the relationship is very strong and that we are working together in multiple areas with Olympus, not only on the device development, but on some of these potential clinical opportunities that they are looking at. So we are very pleased with the ongoing relationship with Olympus.

That's great. We are looking forward for more news in '08.

Study.

Thank you. We have follow-up from Ren Benjamin. Please go ahead. Ren Benjamin - Rodman & Renshaw: Hi. Thanks for taking a follow-up. Just regarding the financing, so why is it being giving in two tranches, and is there some sort of stipulation that it's a milestone or if something is a hit that one of the tranches is taken away? And then from a regulatory point of view you guys have done just really well ex-US. I just wanted to get your thoughts may be going into 2008, sort of what your plans are for here in the US, what sort of data you want to bring forth to the regulatory agencies and just get some clarity there?

Hi Ren, it's Mark Saad. I will take the first part of that question regarding the equity finance. It’s a binding equity agreement there are no outs it is purely a timeframe of closing that was modified. It was modified at the request of Green and they provide us their reasons which we reviewed and choose to accept. We believe those reasons are not due to anything negative related to our relationship with the transaction anyway, that is likely attributable to the fact that they do a certain amount of corporate development activity in each of their fiscal years. They have a March 30, yearend and so this allows them to spread the investment over the two fiscal years, which for their purposes we believe, our understanding is that it is advantageous for them. So, for us it was a reasonable request and as our partner we honored their request and opted to modify the agreement. But as I said before this is a binding equity agreement there are no doubts under circumstances. Ren Benjamin - Rodman & Renshaw: Great.

It's Marc. With respect to the US regulatory question, while in Europe we've had comprehensive regulatory success and kind of a one step process. In the US, it's a little different. It's a more complex regulatory picture in a way with respect to cell therapy as you know well. We have had incremental success and under the radar screen with three 510(k)'s on different components of the system. We have four 510(k) pending in front of FDA relating to that process. We are more comprehensive regulatory approval on the system we are in communication with them relatively constantly. Our big picture strategic goal really is pretty simple and that is to keep this family of products regulated where it should be and that said CDRH and their advantageous to being regulated "as a device". So with respect to 2008, our plan is to get this 510(k) on the more comprehensive system and then broaden the dialog with FDA with respect to how do we take that 510(k) on a comprehensive system and begin to get clinically directed therapeutic claims in certain areas. And prioritizing the areas number one is plastic and reconstructive surgery, building on the clinical cases and success that we will have in Europe. The goal is to be able to take that clinical data from Japan, from Europe and be able to leverage that within the US to get to a more rapid approval and reimbursement in the US and that really 2008 should be a really exciting year with respect to our regulatory progress. Ren Benjamin - Rodman & Renshaw: Okay, great. And I guess just one last question. Can you comment at all regarding your inventory to meet demand both in Japan and EU, because I remember you had quite a few machines that were ready to go at least by the end of last year? If I am wrong, please correct me, but if you can give us an update on that that would be great.

Ren, this is Chris. As we mentioned we've now transferred all of the development to production and that was a lot of the cost we saw in the fourth quarter kind of ramping up for that and getting everything finally validated and so forth. We're now actively in production, and we're trying to kind of match our production schedule with the demand that we're seeing. And I think so far we've done a good job with that, and part of that demand is also for systems that are going to support a lot of the clinical trial work that's going on. So we have demand for systems that are commercial and also demand for systems that are going to support the clinical work for RESTORE II, for VENUS, APOLLO and PRECISE. So I think we're well positioned in our manufacturing capability, and then I think as Marc described its on ramp to the bigger markets, picks up speed, then Olympus will kick in and certainly they'll have the capacity to really meet the global demand that we'll see going forward. Ren Benjamin - Rodman & Renshaw: Have the 11 orders that you received, have they already been shipped out or do they plan on going out by the end of the quarter or the second quarter?

Many of those will ship this quarter, as well as some additional orders that we're working on right now. So we will see these shipments in Q1. Ren Benjamin - Rodman & Renshaw: Terrific, great. Thank you, guys.

Thank you. (Operator Instructions). Management, there are no further questions. Please continue with any closing comments.

Okay. Thank you, and thank you for some great questions. We look forward to growing the business across multiple fronts. Milestones, you can expect us to achieve over the next 3 to 18 months are proceed with the first StemSource Cell Bank orders, continued StemSource orders through 2008. Additional Celution 800 orders in Europe and Asia through 2008. Initiation of the RESTORE and VENUS studies, reporting six months follow up data from these studies in 2009. Completing enrollment for PRECISE during 2008. Reporting six months safety and feasibility data for PRECISE by the end of Q3 2009, reporting of 12 month spinal disc data from a large animal preclinical study in 2008. Progress in therapeutic and other partnering discussions, strengthening our IP portfolio though anticipated device patents in 2008. Receipt of additional regulatory clearances and approvals in the US and abroad, and booking revenues of $10 million to $12 million for the fiscal year 2008. We believe these are all material milestones that should increase the intrinsic value of Cytori. I'd like to thank all of our employees for their time, dedication and commitment to our success. Our engineer, scientist, regulatory, quality, marketing and manufacturing teams have achieved the tremendous goal of commercializing a product that began many years ago with the concept and hope. This required the investment of tens of millions of dollars which resulted in a novel product that now has the potential to positively affect millions of lives. We thank you for your time today and interest in Cytori as we now begin to commercialize our exciting products. Thank you.

Thank you. Ladies and gentlemen, this does concludes the Cytori Therapeutics 2007 yearend results conference call. If you would like to listen to our replay of today's conference in its entirety you can do so by dialing 303-590-3000 and put the access code 11109084, once again our number 303-590-3000 and put the access code 11109084. ACC conferencing would like to thank you very much for your participation and you may now disconnect. Have a very pleasant rest of your day.