Plus Therapeutics, Inc. (PSTV) Q2 2016 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen. Welcome to Cytori Therapeutics Second Quarter 2016 Earnings Results Call. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. [Operator Instructions]. Before we begin, we want to advise you that over the course of the call and the question-and-answer session, forward-looking statements will be made regarding events, trends, business prospects and financial performance, which may affect Cytori’s future operating results and financial position. All such statements are subject to risks and uncertainties, including the risks and uncertainties described under the Risk Factors section, including in Cytori’s annual report on Form 10-K and quarterly report on Form 10-Q filed with the Securities and Exchange Commission from time to time. Cytori advises you to review these risk factors in considering such statements. Cytori assumes no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made. It is now my pleasure to turn the floor over to, Dr. Marc Hedrick, Cytori’s President and Chief Executive Officer. Sir, you may begin.

Thank you, Kristen and good afternoon everyone. Thank you for attending the call. Welcome, my name is Marc Hedrick, I’m President and CEO of Cytori. Joining me on the call today is a big group, our Chief Financial Officer, Tiago Girão; our VP and General Manager of Cell Therapy, John Harris who is joining us from Japan; our Chief Medical Officer, Dr. Steven Kesten and also our Senior Vice President Clinical Affairs, Dr. Mark Marino is joining us today. Little bit about Mark, he joined us earlier this year and has brought a substantial background in the pharmaceutical industry and therapeutic development to Cytori. Mark’s a graduate of the United States Military Academy at West Point. He’s an internist, a clinical pharmacologist and after serving as Chief of Department of Pharmacology at Walter Reed and on the faculty at The Uniformed Services University of the Health Sciences and Walter Reed, he’s held a number of corporate executive leadership positions including the Global Head of Clinical Pharmacology for Eisai and Roche, Head of Research and Early Development in Mankind Corporation and VP of Clinical Development at Daiichi Sankyo. Welcome Mark. And want to let our listeners know that I’ve asked Dr. Marino to now take on our clinical affairs lead role as Dr. Kesten has notified that it’s time for him to retire after a very long career, as a well respected academic physician and highly productive executive in the biotech and pharmaceutical industry. Steven has graciously agreed to stay involved with Cytori as needed on a consulting basis as he transitions and we’re thankful to Steven for his service. We have recently issued our Q2 earnings release which is now posted on our website and a copy of this transcript will be available there soon as well. So the agenda for today’s call is similar in past quarters. First, I’ll discuss our pipeline progress including key updates in clinical programs; Tiago will then update on financials; John will discuss our commercial progress and then I’ll get back on and update on forthcoming milestones, and then we’ll have time for Q&A. So first on the clinical pipeline, in terms of scleroderma, in Q2 was a big quarter for us. We completed enrollment in U.S. Phase 3 approval trial called STAR or hence scleroderma. First I’ve got to say that we are really thankful to our patients here in the U.S., the advocacy groups that supported this trial and the investigators and the support teams for their enthusiastic support for the trial which really exceeded all our expectations. The enrollment was accomplished ahead of schedule and for the record, the last patient handled was on June 6, 2016. We ultimately enrolled 88 patients, eight more than originally planned. Thus far, to our knowledge, there are no safety concerns that have been noted in the trial thus far. And in fact last weekend, we were invited to present a poster at the Scleroderma Foundation National Meeting in New Orleans where we presented the poster outlining the trial protocol and the treatment approach to the patients and physicians that were in attendance. The data readout for STAR is expected to be mid-2017. Related to scleroderma and as a heads up, in Q2, we filed for U.S. orphan approval for scleroderma from the FDA. We anticipate hearing back from them in the second half of 2016 and the idea behind this which may not be immediately apparent is the downstream, potential retreatment strategies for scleroderma patients may need to incorporate the cryopreserved version of the ECCS-50 therapeutic which is to be studied in the current EU trial. We feel that this may qualify as an orphan drug in the U.S. as it is in Europe, and we have filed that paperwork with FDA and should hear back relatively soon, and we’ll keep you apprised to that. In Europe, in terms of scleroderma, as planned, we filed for scientific advice from the EMA in Q2 regarding conditional market authorization and we expect feedback in Q3 on that. The EU investigator initiated trial called SCLERADEC-2 is enrolling albeit slowly than we would like and slower than originally forecast. There is some 2016 risk on that milestone completion. As previously discussed last quarter however, the U.S. STAR trial enrolled ahead of schedule and will actually be the dataset that the company intends to use to seek EU approval as well as approval here in the U.S. which effectively mitigates any potential time risk to the SCLERADEC-2 trial. Now to osteoarthritis, I would like to begin by sharing the preliminary top-line findings from our 94 patient, Phase 2 randomized control trials, single administration of the autologous cellular therapeutic ECCS-50 for patients with knee osteoarthritis of moderate severity. In Q1 after the 24 week time point, we reported interim findings from a limited data unblind focused on safety, feasibility, primary endpoint readout and early trend to mean values between active and placebo in patient reported outcomes. The complete trial readout is scheduled for 48 weeks follow-up. And as a reminder, the primary purpose of the trial is to establish safety and feasibility but also we assess the effects of two therapeutic doses, export a number of pre-specified secondary endpoints potentially useful in subsequent trials as potential primaries, and we tested for significance for the pain on walking single question on the KOOS scale at 12 weeks which is already press released back in Q1 earlier this year did not reach statistical significance. So now regarding safety and feasibility; we can say that inter-articular application of a single dose of ECCO-50 is feasible and safe in an outpatient base setting. So the feasibility issue, the trial enrolled ahead of schedule and a greater number of patients than originally planned were enrolled. And in fact, up to three patients were treated in a single day without problems. To the safety issue, there were no SAEs related the fat harvest or ECCO-50 administration. There were some minor imbalances in non-serious AUs[ph]. As to the patient reported outcomes, specifically on dosing now, we found which was consistent with our overall preclinical and clinical experience thus far and frankly consistent with the threshold dosing paradigm that we hold in cell therapy, there was no clear benefit in using 40 million cells versus 20 million cells. That being the case for the purpose of reporting preliminary findings, we focused our evaluation on pooled active and pooled placebo groups as a comparative assessment. In terms of the pre-specified exploratory endpoints, relative to potential follow-on trials, we found that in each of the following time points 12, 24 and 48 weeks, there were consistent trends suggesting symptomatic improvement and the target need of the treated group relative to placebo control after single administration of ECCO-50. Positive trends were seen in the following endpoints of the three time points in terms of total KOOS, all individual KOOS sub-scores, KOOS subscale question pain on walking which as mentioned was selected as a primary, pain on walking 50 feet, OA activity osteoarthritis activity, osteoarthritis disease severity, OARSI-responders and then the need for rescue medications. Only pain on standing and SF-36 did not consistently favor the active arm. As of note, these trends were observed despite lower need for analogies with rescue medication in the actively treated group. In general, the magnitude of the mean changes observed in the trial from baseline to the various time points were substantial, consistent with placebo effect or saline effect as reported in recent med analysis. In comparison, the difference between active and placebo at various time points were all consistent was relatively small. Some comparisons between active and placebo for patient reported outcomes approached and in some cases reached statistical significance. While the ECCO-50 showed signals as to improvements in patient reported outcomes, as a potential regenerative therapy for these patients that uses living cells, MRI valuation of joint pathologic changes were an important aspect of safety and exploratory analysis of this trial. To that effect, we use blinded expert MRI readers to evaluate the MRI Osteoarthritis Knee Score in this case MOAKS to evaluate a possible effect of the overall disease severity of the knee. The MOAKS analysis system device in the 15 anatomic subunits and measures various parameters that correlate with both early and late joint dysfunction. And longitudinal studies to detect changes MOAKS is generally used to follow patients out well beyond two years to establish trends and it can also be used as a prognostic tool for the need for total knee arthroplasty. This trial showed consistent trends in all six pre-specified MOAKS classification score and it’s important to note and in particular emphasize that while preliminary and further analysis is warranted, this suggests that the therapy may result in an effect on the target knee joint pathologic features at 48 weeks from treatment, for the treated group relative to placebo control group after single administration of the therapeutic. Specific anatomic subunit analysis is important here and correlation with symptom improvement data is ongoing to further characterize the nature of any cell effect. For the record, specifically the six features we assessed and trended positively were inpatients were the number of bone marrow lesions, the percent of bone marrow size, the size of bone marrow lesions as a percent of the sub-region, the percent full thickness cartilage loss, the cartilage loss as a percent of surface area and the size of the largest osteophyte. The safety profile coupled with observed trends in patient reported outcomes and joint imaging favoring cell therapy in its first trial in patients with this indication are encouraging and particularly intriguing in the context of the potential imaging benefits in the joint itself, the correlation is -- though. So what are the next steps? Our advisors have recommended further and deeper examination of the data in particular correlations of the patient reported outcome and MRI data and looking at specifically at anatomic sub-regions which requires of actually raw data set and those analyses are being considered. We have an awful lot of data here. So, from a strategic perspective, what is the preliminary data meaning for the company in terms of our overall plans? Well as mentioned previously, our corporate focus remains on targeting niche orphan indications that can be brought to market quickly and cost effectively, scleroderma is the prime example there. However, knee OA -- a dispute is a compelling opportunity and building on this trial with further development, we feel it’s warranted but will require partner support. Our intention is to reach out to those with whom we’ve been in contact, that have had interest or may be interested in this data and we’ll share the full dataset with them. But also, and I think this is an important point, we will work with our current commercial partners in Japan that have obtained approval to treat OA patients under provisions, under the new regenerative medicine law and are interested in the clinical use of this product and moderately severe osteoarthritis patients. This safety and feasibility data will use to help support that effort. Finally, we intend to detail the study results via academic presentation and publish that in a peer review journal, if and when accepted. So let me move on to brief update on our urinary continence trial, the ADRESU trial continues to enroll, that’s a funded trial by MHLW, which is enrolling at four sites in Japan. It’s a 45 patient open label approval trial to assess the safety of the ECCI-50 combination cell tissue therapeutic for male urinary incontinence after prosthetic intervention. The timeline of present enrollment rates suggest that we still look for data to be available some time in 2018. In terms of our thermal and radiation injury program, supported impart by Health and Human Services and BARDA, we can report that we believe that we now have alignment with the FDA regarding our application for IDE approval on intravenous administration in acute burns. So therefore [indiscernible] ways, we anticipate approval toward the end of 2016 and enrollment beginning in mid-2017, and that timeline is looking increasingly clear to us. Approval of this trial is linked to further milestones and expanded development efforts under our existing contract with BARDA. Furthermore, this is also important as a new trial for us because this is the first use in the U.S. of our intravenous formulation of ADRCs administered intravenous with inpatients which represents a significant new clinical R&D opportunity for us in patients that have an ongoing active systemic inflammatory process. So with that, I’ll turn the call over to our CFO, Tiago Girão. Tiago? Tiago Girão: Thank you, Mark and good afternoon everyone. During Q2, we continued to fully invest in our key R&D programs, while working to reduce our losses and operating cash burn and improving our operating performance. Our operating cash burn in Q2 was $5.7 million which is slightly higher than planned, mostly due to our accelerating enrollment of the STAR Phase 3 trial. Our net loss continues to trend in the right direction. When adjusted for non-cash charges related to changes in fair value of warrant liabilities and a beneficial conversion feature charge on preferred stock, net loss was $6.4 million in Q2, a 26% decrease when compared to $8.7 million loss in Q2 of 2015. For the six months ended June 30, our net loss when adjusted for non-cash charges related to changes in fair value of warrant liabilities and a beneficial conversion feature charge on preferred stock was $11.7 million as compared to $15.2 million for the same period in 2015, representing a 30% decrease. As outlined by Marc, our primary corporate focus is to bring an approved therapy to market in the U.S. and to that extent, in Q2, our research and development expenses, excluding share-based compensation was $5.1 million, or a decrease of 13% over the $5.9 million spent in Q2 of 2015. The decrease in spend from 2015 to 2016 is primarily related to the higher number of patients enrolled by the OA trial in Q2 as compared to the STAR trial in Q2 2016. We continue to optimize our sales and marketing activity and related expenses, which excluding share-based compensation was approximately $800,000 this quarter, as compared to $600,000 in Q2 2015. The increase is mainly attributable to the ongoing investments in the Managed Access Program and our sales operations in Japan. G&A spend during this quarter, when excluding share-based compensation, was down to $2.2 million compared to $2.3 million in Q2 2015. Although we will continue to focus on reductions in discretionary spend, we expect G&A expenses to stay relatively consistent at current levels. With respect to our revenues, in Q2, we recognized total revenues of $2.8 million compared to total revenues of $3.5 million in Q2 2015. Note that in Q2 2015 included approximately $700,000 related to the initial order from Lorem Vascular which did not recur this quarter. Product revenues were $1.1 million during this quarter compared to $1.6 million in Q2 2015 or $900,000 when excluding the initial order from Lorem Vascular, so there was $200,000 increase quarter-over-quarter. Japan revenues almost doubled during the quarter, growing from $352,000 in Q2 as compared to $690,000 in 2016. John Harris will provide a bit more color on this later on the call. Contract revenues were $1.7 million during the quarter as compared to $1.8 million a quarter last year. Turning to the balance sheet, at June 30, we had $20 million in cash and $17.7 million in debt. In addition, during this quarter, we paid off the remaining outstanding obligations related to the acquisition of the Cytori Olympus joint venture. Based on our current projections, we believe such cash balance provide liquidity for at least 12 month of operations and through scleroderma data. Operationally, we are later focused on the execution of our key clinical objectives and will continue to emphasize on our Phase 3 scleroderma program. With respect to the 2016 financial guidance, for the balance for the year, we believe we can realize further additional improvements in operating efficiencies and expect to continue to narrow our losses and operating cash burn. With that, we are reiterating our operating cash burn guidance of approximately $18 million to $20 million and we’ll continue to expect total revenues to range from $12 million to $14 million, with growth coming primarily from product revenues from Japan and our Managed Access Program. Looking beyond 2016, based on our current projections, including recent Japan achievements, operating cash burn trends were significantly improved on a year-over-year basis, narrowing our losses into breakeven territory by the end of 2018. And with that, I’ll turn over to John Harris, our VP and General Manager for Cell Therapy. John?

Thanks, Tiago and good afternoon everyone. Today, I’d like to cover three topics, first I’ll provide you more detail surrounding the regenerative medicine law approval in Japan for osteoarthritis and how the ACT-OA data will support our efforts. I’ll also cover and update on where we are today, with regards to the Managed Access Program or MAP in your Middle East and Africa and last thing I’ll do is provide a few more details surrounding our commercial activities in Japan and elsewhere. Now as Marc mentioned earlier on the call, the ACT-OA preliminary data shows safety, feasibility and consistent trends that favor the ECCO-50 product over placebo. In particular, the preliminary imaging results perhaps showing a benefit in the knee joint itself are things that our customers in Japan are most concerned to patients. Furthermore, market research has validated the opportunity to offer the ECCO-50 therapeutic to clinics and patients with osteoarthritis. Therefore, we feel this is an opportunity today to help patients and expand the use of Cytori technology for these patients. Based on customer feedback, ACT-OA trial preliminary findings are consistent with the feedback we’ve gotten in Japan thus far. For example, our leading clinic partner is now treating their backlog of patients. I wanted to quickly reiterate a few items relative to Cytori’s path to market for OA and other conditions and first, Cytori’s Celution System was granted a Class I notification originally in 2012. Now in November of 2014, the Japan government passed the regenerative medicine law and that law was enacted in November of 2015 which substantially restricted the use of cell therapies. However, it provides a mechanism for healthcare facilities in Japan to use certain regenerative medicine technologies deemed innovative and safe by the regulatory authorities for particular indications if approved by an accredited regenerative medicine committee. Such approvals under this legislation however are not reimbursed by the Social Healthcare System and the patients will be responsible for the cost of such treatments. It’s important to note here however, that the nature of the current existing reimbursement system in Japan relies on substantial copayments by the patients about 30%. So they are used to paying a sizeable contribution to their own healthcare expenses. Now, as we announced previously, Cytori Cell Therapy was first approved on June 24, 2016 to treat knee osteoarthritis at the Tokyo Osteoarthritis Clinic under the recently passed regenerative medicine law. This approval does not restrict the Tokyo Osteoarthritis’s number of patients treated at their clinic and is applicable to all faculties under hospital or a clinic umbrella. Since our recent release, the second hospital group has now received approval and we are now actively engaged with other interested facilities to support their use of our technology for the sizeable group of patients. I’m encouraged by both the positive response from new potential customers and investments thus far from existing customers and their growth plans. The approximately one quarter delay in the approval process has created some lag in our forecasted adoption, but we are rapidly returning to plan. I will continue to report progress on a quarterly basis. Now we have the moderate ECCO-50 growth baked into our forecast, but I believe some upside opportunities exist in Japan under the new regenerative medicine law. And next, let me give you a status and a few highlights regarding our Managed Access Program in Europe. To recap, our MAP is intended to provide patients and their healthcare providers with early, ethical and extended access to therapies for rare and serious diseases in advance of marketing authorization when no satisfactory alternative treatments are available. Let’s keep in mind that patients with hand dysfunction related to scleroderma don’t have good treatment options and that the 24 months data from the 12 patient open label SCLERADEC-1 Trial from France reported a positive risk management profile. Our partner in Europe Idis is a market leader in these types of programs and they continue to make progress in laying the foundation for facilitating patient enrolment in this program. Furthermore, we’ve completed an in-depth pricing analysis of the European market including broad discussions with payers, KOLs and hospital administrators. Results from that analysis validate the current approach and our pricing strategy for the EU that appears to be valid and consistent with analogs, not only just for math program but for when we receive formal marketing authorization as well. Now of course, this program has some inherent challenges that we’re working through. These challenges include country-by-country confident authority approvals, logistics, doctor and patient awareness, advising interested physicians needing to work through the process and obtaining funding from MAP, amongst other things, and important challenge is that the country specific regulations dictate the regulatory mechanism for access which could either be an individual or a group approach. Now we have contacted all competent authorities in each of the 38 countries across EMEA and have thus far received 17 responses and the results thus far consistent with our expectations. Of the 17, nine countries have confirmed the ability to provide access to and charge for ECCS-50 therapy via the MAP program. Four have asked for further information for which we are actively providing and four small countries have responded that the program cannot be charged at this time and then the balance we’re currently working on and of course, we are focusing our direct efforts today on the nine affirmatively responding countries and Idis is interfacing with interested provider request in those areas to facilitate treatment. As other countries come online with the MAP, we will expand ourselves to include them as well. Now while exhibiting as the Systemic Sclerosis World Congress, the British Society of Rheumatology Annual Conference and also the Annual European Congress of Rheumatology, Cytori received many inquiries from physicians representing patients for the treatment becoming available by rheumatologist in multiple countries across EMEA and some physicians have already initiated the process to secure funding. Cytori Cell Therapy has recently been listed on the CheckOrphan website which will highlight the treatment availability through MAP directly to patients. Cytori plans to continue its outreach with additional European organizations, societies advocating for patients with rare diseases. First patients are likely to be treated this year with ECCS-50 and the hope is that the MAP program will continue to write ethical access to patients afflicted by this debilitating disease in 2017 and 2018 as Cytori positions itself for full marketing authorizations in the U.S. and EU. Fortunately, as Marc mentioned earlier in the call, with the STAR trial enrolling earlier than we had planned, the clock to product -- have already started, of course provided that the STAR trial results are in line with expectations. We have begun planning activities for our go-to-market strategies in the U.S. in the anticipation of the STAR readout next year and that includes payer, KOL and hospital administrator discussions, coding strategy development and relevant financial modeling and launch planning. Now I’ve spent the frontend of my remarks today focusing on the osteoarthritis opportunity in which we feel is significant and I’ve just outlined to you the MAP program status in Europe, but we feel that there are some other commercial developments in Japan and elsewhere that warrants some attention. So first, we have the small aesthetic business in Japan that continues to grow steadily. We established two new centers with related device sales but our focus is really on the utilization thus far, and year-on-year consumable sales utilization was up 163%. This consumable utilization figure and again, 163% growth year-on-year is particularly encouraging as it’s providing support that changes to our business model in Japan are providing an impact in validating that the therapy has a broader application. Our customer funnel in Japan is growing and for the second half of the year, we are forecasting continued growth in support of our 2016 objectives. The team in Japan has been focusing on streamlining the organization and our processes so that we’re fully prepared to meet the growth that we anticipate while carefully adding new sales personnel. And we’ve continued our dialog with scleroderma KOLs in Japan along with consultations with PMDA[ph]. Our market analysis for scleroderma suggest that in Japan it’s an attractive market for ECCS-50, bringing this product to market in Japan will benefit the Japanese patients suffering from this debilitating disease. Our partner in China, Lorem Vascular, remains in our rears on purchase obligations. We are stepping up our efforts to bring the situation to a resolution and we think there are commercial opportunities in the licensed territories that are now going unfulfilled. Lastly, we are seeing an uptick in distribution interest outside the EU and Japan and this should provide Cytori with upside revenue opportunities in 2017 and 2018. I started with Cytori little more than 10 months ago and in many ways has breezed by rapidly. Over this time, I’ve been able to interface with tremendously capable people in the U.S., Europe and Japan who are committed to our mission of enhancing lives through novel cell therapies. We did some terrific and important clinical milestones for example the fully enrolled Phase 3 trial in the U.S. and a few recent publications have shown multiple indications that Cytori Cell Therapy may have a positive effect on patient pathophysiology for instance, the MRI information that Marc shared earlier today and also sinus lift application. Consumable utilization in Japan is up and continues to flow in a positive direction. Seeing all of these proof points in real-time, I remain excited in looking forward to helping Marc and the entire team shout our course to fulfill the tremendous potential of this therapy in multiple disease stage. It’s a great time to be at Cytori Therapeutics. Now back over to you Marc.

Hey, John, thank you. So, now let me just discuss near-term milestone and specifically now on the second half of 2016. So number one, we anticipate as I mentioned the first patient’s treated for scleroderma under our compassionate use plan. Number two, we expect EMA feedback on conditional marketing approval in Europe. We expect feedback from the U.S. FDA on our orphan designation request. We also expect FDA feedback on our IDE request and anticipate that that should be approved around the end of the year. And then finally, we continue to look for full enrollment of the EU scleroderma trial as mentioned. Obviously, 2017 is six months away but it’ll be here before you know it and that’s an important year for us as we look forward to potentially having U.S. PMA approval related to scleroderma, conditional marketing approval in EU for scleroderma by the Phase 1 trial fully funded enrolling and potentially full enrollment from the ADRESU approval trial in Japan for urinary continence. And with that, Kristen open the call up for Q&A.

The floor is now open for questions. [Operator Instructions]. Our first question comes from the line of Jason Kolbert with Maxim.

Thank you very much. Marc, Tiago, congratulations on so much progress in the quarter. A couple of questions across a couple of areas, let’s start with osteoarthritis first. Help me understand a little bit, it sounds like the totality of the data was very positive, talk with me a little bit about what the primary endpoints exactly means? It just seems like our very high threshold to have that single point measurement associated with pain. And if you were to do with a partner a pivotal trial down the road, what would be an endpoint that we could expect for a trial like this?

Jason, thanks for the question. So in terms of the OA trial and the primary endpoint, I think you obliquely hit on an important point and this was the first ever OA trial for us in U.S. or anywhere frankly. So, we were trying to accomplish many things here. From FDA’s perspective, we needed to show safety and feasibility. First time we had done this in this indication and then the FDA also wanted us to examine cell dosing. So we took our other clinical data to cell doses with our reasonable and examine those. From the Cytori perspective, a key was to explore the combination so not just kind of one area of endpoints but explore the combination of symptom reduction with joint benefit. It’s our belief that the market doesn’t need another pain medication for OA, we wanted to do something that will have a patient impact symptomatically, but also a joint benefit that might create a pharmacoeconomic impact to society and may be push -- places. That’s really kind of was in the back of their mind. However, in terms of the primary endpoint which was surely the basis of your question, we took a gamble. We said okay, let’s do it. If you look at some HA and other products that are on the market injectables, if -- we can look really early limited unblind 12 weeks, if we saw a profound effect in that, we might go ahead and accelerate our discussions with the FDA immediately and around what a pivotal trial might look like but we’d still have to wait for the full year data and that was the idea behind it. Now we sort of rolled the dice a little bit and picked something we thought might show -- have the chance of showing statistical significant benefit, it didn’t. So in terms of future endpoints, I think that approval based on symptomatic endpoint initially is something worth exploring. It will take a long time to show an effect on the joint pathology such that you can show -- that you can push out new replacement for example which should be the Holy Grail. So one might envision a strategy where in a non-inferiority based trial, that you get approval, get the product on the market and then examine that longitudinal data related to joint imaging and potential longer term benefit in terms of total knee arthroplasty. I think that’s a reasonable strategy here but again, this is early. We’re still looking through the data, things I can say just to sum up is if the data supports partnering discussion which we’re not prepared to proceed with our partnership given our focus on niche orphan diseases. I think this data helped us in Japan with our commercial activities. There’s a lot of receptivity to this over there given the population and so forth that it has a way and it gives you an opportunity commercially this data could help that.

Marc, thank you and I don’t want to spend a lot of time on OA I do have more questions, but I’d like to transition to something else you mentioned that’s kind of tickling me, it’s very exciting and it’s the intravenous administration of cells around kind of inflammatory disorders whether it be burns, whether it be kind of systemic inflammatory disorders. And more importantly, when I think about data beyond scleroderma and beyond the digits, I’m wondering if there isn’t kind of a secondary indication beyond approval and the primary indication that might speak towards the kind of disease course and what the expected deterioration would be these patients and whether this systemic administration of cells isn’t kind of a natural follow on indication beyond the primary indication. Is that something that you and your team are now beginning to look at?

Yeah it is and we expanded our capabilities I think from a personnel perspective to begin to look at some of those things and may be even going back to some preclinical work as part of our BARDA contract and things may be that aren’t related to BARDA that could consider addressing it in form those clinical decisions. But you hit on a point which I think is crucial, the IV administration is very interesting and it’s sort of confluence of three things coming together related, burn is -- thermal burns create systemic inflammatory response. So just narrowly speaking in terms of that trial, these patients have burns, their pulmonary conditions and renal failure and other things and there is an opportunity to look at biomarkers to assess the influence of unique cell population with a lot of immunologic effect. It comes from an immunologic organ by the way which is the adipose tissue and the real opportunity to look at that but also if you look at autoimmune conditions, there is an opportunity there and then, also on potential IV treatment in terms of some of these rheumatologic conditions that we’re looking at. The fingers are great, delivery site for cells because it would stick around, may be the joints not a great place. So may be intravenous delivery can beneficially affect that as well. So I think there is a strategy behind this as you’re sort of getting to and we’re really looking forward to exploring some opportunities there.

Let me transition a question our Head of Finance, Tiago. Talk with me a little bit about your cash balance and I believe you also have an alternative vehicle available I’d just like you to mention that. And then in my model, I really haven’t been forecasting BARDA contract revenues for ‘17 and ‘18 and beyond. How should we be thinking about BARDA contract revenues as we start looking into ‘17 and ‘18? And with that, I’ll get back in the queue. Thanks guys. Tiago Girão: Thank you, Jason. I appreciate the question. So first let me address the BARDA revenue question. We are currently working with the U.S. government on getting the IDE filed and approved by the FDA. That should open up to around $8 million in funding that will be spend in the next couple of years. So when you think about what it is that the revenues in ‘17 and ‘18 are going to be are mostly going to be bit related to this clinical trial related to burn in the U.S. So we should have if we are successful in expediting that trial and enrolling very fast, we should have at most to $8 million. If we spend that over and consider that the enrollment is slightly going to take over about a year or so, it’s going to trickle into the two year period, so roughly $4 million to $5 million in year one 2017 and the balance on the second year. And following that would be the follow-on trials and activities that will go on as BARDA pending data on this trial. So that’s pretty much what we have for contract revenue with the U.S. government. With respect to our current cash position it’s $20 million. We believe that current cash position alone is sufficient to fund the operations for at least the next 12 months and remember that since we finish this scleroderma trial, the last patient in was on June of 2016 we should have data by this time around -- this time next year. We believe we have enough cash for that but as you mentioned, we do have an ATM facility in place that if needed we can tap on a little bit here and there to facilitate additional funding going into that milestone.

[Operator Instructions]. We also have a question from the line of Steve Brozak with WBB Securities.

Hey, good afternoon gents. Obviously the technology that you guys have spearheaded has now been around for good bit of time. And you’ve gotten multiple indications and you’ve learned a great deal probably one of the most significant things has been the learning curve which you’ve gone up. And looking at regenerative medicine, looking at how you’ve gone out there and covered indications across the board between burn and OA, scleroderma, what are the clinicians coming back with? Because you had mentioned that you had one urology trial that you were looking at, when are you starting to -- you’ve obviously always gotten feedback, but what are you starting to come back with as the most important point that you want to highlight? I’m kind of curious about that. And then I’ve got one follow up question after that.

So Steve, two weeks ago I think we put out an investor note to help investors understand how management looks at an increasing number of investigator initiative trials with our technology. We’ve talked often about a limited commercial opportunity to sell in to the research markets and help guide and lead early adopting physicians into new indications. So, we continue to do that but we do it increasingly more selectively and we increasingly say no. To the degree we say yes, the three areas that are increasingly interested give us the really core mechanism of the technology if you question about what we’ve learned over the last few years or so and it seems as the primary most important impact to the cells on tissues in organs that ischemic, instances of chronic inflammation and where there are excess scarring of -- body conditions. It just so happens, suppose if the three name features of scleroderma which is why we think that’s such an interesting alternative. Now, we as a company, we can’t target everything. So from a pipeline perspective, we remain committed to this sort of niche and orphan space, it grew on to something really big in scleroderma here potentially and also in the hand. There are a lot of hand conditions that satisfy that Troika thing I just mentioned. We are doing some strategic planning related to where our next steps with that pipeline. We like the synergies in the three – patterns in rheumatology and in the hand, there’s a lot of economies of scale there and I would expect that you’ll hear more in the not too distant future about the pipeline new indications and some really creative ideas that our teams come up with in terms of how to make this business model work and remain at a premium pricing sort of approach, work within some of the regulatory situations that we see in different countries. I think we’ll scratch new surface to see what’s possible.

And you actually mentioned something that I wanted to ask a follow up question on, on the orphan side, often we see orphan indication is something we’ve got something where you’re dealing with chronic treatment. Can you tell pretty much how you’d differentiate yourselves and what you’ve looked at and what your approach would be in terms of having more of a curative nature to what you do and how that the differentiator might be where you could look at the premium pricing hey look on the [indiscernible] approach you’re talking about how do you justify something, if you’re talking about a curative or restorative type of therapeutic, there’s a big difference. Can you look at that and tell us how you model that and I’ll hop back in the queue please.

Sure. I think the way this changes the question a little bit I think for one of these conditions right now the way the technology stands and the things that we are looking at and the degree of difficulty, we’re I’d say cure would be great, just being able to put some of these conditions in the “remission” or create some degree of modification of the disease would be a great benefit to these patients, in other words, going beyond just the symptomatic improvement and going to something that’s more disease modifying. I think in scleroderma for example, we see some hints of that still early into our patients, we got to get through our trial, looking the data so forth, but we see some hints to that. And I think that’s where and I think we like to lean into that area and try to figure out okay, well what’s the duration affecting scleroderma? Is it two years, three years? What is it? And then you’re putting those patients effectively in remission or some of those patients whose responding, how they’re responding and what do we need to do in terms of retreatment may be keep them in remission or start to make really more of a long-term impact on them. And those are things that we don’t want to rate our screen, but yeah there’s a lot there to cover. I appreciate the question.

Thank you. I will now turn the floor back over to Hedrick for any additional or closing remarks.

Well again, thank you on the call and thanks for listening after the fact and for your interest and support at Cytori. From my perspective, the company controls a terrific cell therapy platform and technology that we’ve shown that can product cost effective therapy and it’s been shown to be very safe and have a number of potential clinical opportunities that can help patients. So, our challenge with so much opportunity out there to help patients is how do we stay focused on what we ultimately believe will drive shareholder value. And just -- at the risk of being a broken record continue to focus on getting something approved and reimbursed, a product in the market to U.S. is critical for us. And then secondarily how do we get those companies to breakeven by 2018 and we talk about that all the time, every day in the company. Those our main two goals. So we’ll continue to focus on that and as I close, I just want to few thank you to make, first of all shareholders thank you for your long standing support to the company and its mission. I want to pay special thank you to the patients that increasing their trust -- in larger trials and their participation and confidence in the technology. I want to say thanks to our advisors and analysts thank you of course to our employees who just seem to continue to work ever hard to make the company vision a reality and if Dr. Kesten’s on the phone, I want to be sure and thank him for his service and dedication to the company. He’s in many ways a doctor first and his dedication to patients and the virtue of all that hard work to shareholders. If you put it in athletic terms, you would call Steven a really player. So with that, thank you and have a good evening.

Thank you. This does conclude today’s conference call. Please disconnect your lines at this time and have a wonderful day.