Plus Therapeutics, Inc. (PSTV) Q2 2017 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen. Welcome to the Cytori Therapeutics’ Second Quarter 2017 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 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, included in Cytori’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with 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, Jerrika. Good afternoon, everyone. Welcome to our second quarter 2017 earnings call. My name is Marc Hedrick, President and CEO of Cytori. Joining me on today’s call is our Chief Financial Officer, Mr. Tiago Girão. Also, we have with us our VP and General Manager of our Cell Therapy Business, Mr. John Harris. And also joining us is our Chief Medical Officer, Dr. Mark Marino and he will be available for any questions on our STAR trial and next steps in the Q&A period. On the call today, I am going to discuss the latest on our Habeo development program and other ongoing cell therapy trials as well as provide an update on our Nanomedicine program. John Harris will discuss the commercial-related activities and performance and Tiago will update on financial performance. Then Q&A will occur after which I will update on forthcoming milestones. So, let’s start out with an update on scleroderma. I will minimize the update, because we just had a report of the trial preliminary data readout. But on July 24, 2017, we did report top line STAR data. While we missed the primary and secondary endpoints in all-comers to the trial in the patients with diffuse cutaneous scleroderma the most severe variant of the disease. Habeo showed a strong trend towards clinically meaningful improvement in Cochin Hand Function, which was the primary endpoint and quality of life. Please recall that STAR was designed based solely on a small single center open label trial from Europe. Despite the miss from the primary, we consider STAR a successful Phase 2 trial. And specifically what I mean is in this trial we validated the appropriate endpoints, the proper dosage, the route of administration, the magnitude of a placebo effect and key endpoints, the viability and safety of the procedure in the U.S. healthcare setting, and very importantly, we found in a pre-specified subgroup, a clinically meaningful effect that approached statistical significance. On our previous call, I mentioned the next steps with our Habeo program and I would like to go ahead and reiterate those today. Obviously, the first to our business is full examination of the data, which is nearing completion, so that we can better understand the basis for the observed improvements, particularly in hand function and quality of life in the diffuse patients that I mentioned before. Then our plan is proceeding soon thereafter to the agency to chart the next steps. Second, we intend to submit a late-breaking abstract to the American College of Rheumatology to be held here in San Diego in November. Third, we plan to continue to support the SCLERADEC II in Europe now nearing full enrollment as it should provide valuable supportive data to STAR and also our regulatory efforts. Fourth, the STAR data should enhance our efforts to provide compliant access to Habeo for patients through our managed access partner in Europe called myTomorrows and John will provide more detail in his remarks that will be forthcoming. Fifth, we are in the process of obtaining a post STAR trial meeting with PMDA in Japan to clarify the path forward there based on the STAR data. And lastly, we will continue to actively explore business development discussions related to Habeo. Now, let me switch over to our thermal radiation injury program. The clinical trial known as RELIEF is a safety and feasibility trial of a single IV administration of our DCCT-10 cellular therapeutic rich in adipose derived regenerative cells for the treatment of deep partial thickness and full thickness thermal warrant wounds. We received FDA IDE approval for the RELIEF trial in April 2017. As previously reported, last quarter, we executed a contract option with BARDA valued at $13.4 million to fund the RELIEF trial related expenses and overhead. To review, the primary objective of the trial is to evaluate preliminary safety and feasibility of this DCCT-10 cellular therapeutic formulation via intravenous delivery in the treatment of deep partial and full thickness thermal wounds. Preclinical studies indicate that intravenous delivery of the cell therapeutic is as effective as topical administration. Also clinical studies we performed show that IV delivery provides a more seamless integration into the current thermal burn treatment environment and also minimizes OR times. The trial design is a prospective open label parallel group usual care controlled multicenter randomized safety and feasibility study targeting thermal burns with a randomization scheme that’s 2 to 1 active to usual care alone. Subjects will have at least one deep partial or full thickness burn wound of greater than 250 square centimeters that is to be autografted it with a split thickness skin graft mastered matched at 2 to 1 or 3 to 1. Subjects randomized to usual care will not undergo our harvesting procedure. Up to 30 patients will be enrolled. Each subject will contribute up to three qualified wound areas for the analysis. Randomization will be stratified to ensure that the numbers of wounds treated with 2 to 1 and 3 to 1 grafting are balanced across the treatment groups. In the trial, we plan to include up to 10 burn centers here in the U.S. and also include some key primary endpoints around safety and feasibility. We also have some key secondary endpoints, which will include the present epithelialization of the graft at day 5 through to 4 weeks post grafting assessed by surgeon visual evaluation and blinded independent review of standardized photographs. Number two, we will also look at the percent take of the graph at Day 5 through to 4 weeks post grafting. And then, finally we will look at a percent of the group with complete wound healing at weeks 2 through week 12 post grafting. As you know for those of you did follow us, we have a number of investigator-initiated trials going on at any one time. I want to focus on a couple. In Japan, our ADRESU trial is a potential approval trial for our cellular therapeutic and male post-prostatectomy patients with stress urinary incontinence. That trial is primarily funded by the Japanese government through AMED and continues to roll with all sites. Here is the timeline on this trial. So, the plan is to complete enrollment in 2017. We have 4 active sites that are enrolling patients and the trial is approximately 70% enrolled. So, we think we are on track to be fully enrolled by the end of the year. The clinical study report is anticipated in 2018 and the regulatory path anticipated to be in Japan is a Class 3 medical device. We also have interest in the investigator-initiated trials that is growing in the U.S., Japan and the EU and our plan is as usual is to update you as these trials receive the relevant IRB and regulatory approvals. Now, let me give you just a brief update on our Nanomedicine business. Recall in February that we closed on the acquisition of a private company in Texas called Azaya Therapeutics, the lead asset that we acquired is called ATI-0918 which is a nanoparticle or liposomal doxorubicin that has been shown already to be bioequivalent to the current reference listed drug in Europe. The global market for this drug is large, it’s continuing to grow and it’s been chronically supply constrained over the past number of years. Things are going well with our Nanomedicine business in San Antonio and we remain on track to achieve our 2017 milestones related to ultimately achieving EU approval, including completing the facility validation of the manufacturing plants and getting our in-house manufacturing ramped up, manufacturing the appropriate registration lots and then fulfilling other key preparatory activities for a planned EMA filing in mid-2018. In the meantime, we are also looking at identifying a commercial partner that can commercialize that for us, with us being the manufacturer in the European market and we are actively engaged in that process today. Finally, another drug that came to us by virtue of that acquisition is ATI-1123 and that’s our Phase 2 ready liposomal formulation of docetaxel. We are continuing to work through our clinical plan for this drug which is nearing completion. It will be complete in Q3 and then we will be ready to proceed to Phase 2 pending funding of course. Now, I would like to turn the call over to John Harris to update on the commercial activities. John?

Thanks Mark. Our commercial area is our emphasis for the balance of 2017, are commercial cell therapy with two discrete areas of focus, our partnership with myTomorrows for an expanded managed access program for Habeo in Europe, Middle East and Latin America and continuing strong double-digit consumable utilization growth in Japan. We also have targeted the Nanomedicine partnership for the EU and we have ongoing business development efforts to secure the right commercial partner in Europe by the time we have submitted the EMA approval with ATI-0918. I will address each of these in more detail later in my remarks, but first allow me to highlight the results of our second quarter. 2017 Q2 product revenues were about $1 million. Year-on-year revenue gains in Japan of 21% were offset by deferred capital equipment sales in placements from Q2 to Q3 which moderated the overall results for the quarter. Consumable utilization in Japan continues to grow. Q2 year-on-year was up by over 30%. Consumable utilization outside of Japan is off to a very good start in Q3. As was the case in 2016, we see some seasonality. There is less cosmetic surgeries that are done in the summer, but we anticipate a strong finish to the year in terms of device installations and consumable utilization. As Mark mentioned earlier in the call, with the encouraging clinical results for patients with diffuse cutaneous scleroderma in the STAR trial, Cytori will be scheduling a meeting with the FDA to determine the best pathway forward in the U.S. for Habeo. In parallel, the U.S. commercial readiness plan for Habeo that I outlined in the last earnings call included some milestones and preparatory spend in the first half of the year such as our attending the Scleroderma Foundation Patient Education Conference and receiving new CPT-3 codes from the AMA. For the second half of the year, our planned spending can be steered with favorable timing and will potentially adjust future milestones after our meeting with the FDA. In the meantime, our near-term commercial focus remains unchanged. Launch of Habeo with our new managed access partner myTomorrows continued commercial growth of Cytori cell therapy in Japan and securing the right commercial partner for ATI-0918 in Europe and in other regions. We announced in mid-June a new and expanded managed access program partnership with a company called myTomorrows for Habeo. myTomorrows is a globally active, innovative and fully integrated early access provider with the goal of delivering fully compliant choice to patients while simultaneously creating value for physicians, pharmaceuticals, payers and regulators. myTomorrows’ cutting-edge support infrastructure leveraging both pharma and technology puts patient at the center of a nexus of patient advocates, pharma, regulators, governments, payers and physicians. Their ability to connect these dots through a combination of feet on the street and their proprietary search engine and knowledge bank is the significant improvement over our previous map arrangement. Our partnership with myTomorrows includes expanded geography that adds the Middle East and Latin America in addition to Europe. This will enable Habeo to be available to more patients in a fully compliant fashion. Previously, clinicians only had the Scleradec I data to evaluate when considering map for their patients. The STAR trial data offers more rigorous scientific evidence and further supplements the profile of the procedure. Therefore, with more focused and geographically widespread support from myTomorrows, we anticipate expanded compliant access for patients with diffuse cutaneous scleroderma. We are encouraged by the year-on-year revenue and consumable utilization growth in Japan. Solution technology is widely accepted in Japan as evidenced by the number of users and multiple clinical trials including the ADRESU approval trial for stress urinary incontinence that is partially funded by AMED Japan’s version of the NIH. The results of the STAR trial will be complementary to our ongoing efforts in Japan. We are already engaged with scleroderma KOLs in Japan and anticipate approaching the PMDA to determine the approval pathway for diffuse cutaneous scleroderma in Japan. In parallel to our clinical development plans, our current base of business witnessed strong year-on-year quarterly growth for both revenue up 21% and consumables over 30%. Another important metric we track are the number of approvals our customers have achieved under the Japan’s regenerative medicine law, as of the end of June there are well over 70 regenerative medicine law approvals in Japan for our technology in key indication. For example our customers have approval for both fresh and cryopreserved ADRCs to treat knee osteoarthritis, periodontal disease and peripheral artery disease to name a few. This serves as a real-time and profitable clinical development engine of applications of our technology that are in full compliance with the Japanese regenerative medicine law. Our objectives with Cytori nanomedicine remains unchanged, our primary target is the $300 million EU market for liposomal doxorubicin which is growing at a 5.7% compounded annual growth rate. Third-party estimates of the global market suggest that it will reach $1.4 billion by 2024. Now this will be accomplished through commercial partnerships for ATI-0918. The EU is our primary target for partnership, but we are also evaluating opportunities in the U.S., China and Japan. In parallel pursuing regional partnerships we are tracking towards completing in-house manufacturing activities such as validation builds and stability testing. Now while – in conclusion, while we reassess our approach in the U.S. with Habeo, we have clear focus on our priorities for the balance of 2017. First, we will obtain FDA feedback on Habeo next steps. Second, launch of our expanded management access program with our new partner myTomorrows. Third, execution of our commercial strategy in Japan. And fourth, seeking partnership discussions in Europe for ATI-0918 and continued ramp up of our manufacturing infrastructure. Now let me hand off to Tiago. Tiago Girão: Thank you, John and good afternoon everyone. Our primary focus continues to be the development of our late stage clinical pipeline and related commercial preparatory activities with the objective of driving shareholder value. In parallel, we are wisely managing our resources to continually improve our operating performance despite the additional new investments in our recently acquired assets from Azaya, operating cash burn was reduced to $5 million in Q2 2017 from $5.7 meeting in Q2 2016. The reduction in cash burn was mostly related to reductions in operating expense. Net loss totaled $6 million in Q2 2017 or $0.19 a share as compared to $6.4 million or $0.43 a share in Q2 2016. For the year-to-date period net losses when adjusted for a non-cash charge of $1.7 million associated with an IP R&D assets part of the Azaya acquisition was $11.9 million or $0.44 a share as compared to $11.7 million during the same period in 2016. For research and development expenses, in Q2 our R&D expenses excluding share based compensation were $3 million versus $5.1 million in expense for the same period in 2016. The decrease in R&D spending is due to the completion of enrollment in our Phase 3 STAR clinical trial as well as completion of option one period under the BARDA agreement, offset by our initial investment into ATI-0918 the nanoparticle doxorubicin. As a percentage of overall spend, our R&D expense for Q2 was 48% of total operating expense, when excluding share-based compensation. This is in line with our plans and indicative of our focus in late-stage clinical programs. Furthermore, as outlined during our Q1 call, our year-to-date figures include a non-cash charge of $1.7 million related to in-process research and development intangibles acquired as part of the Azaya Therapeutics. We are following the accounting literature. We accounted for such item as an operating expense and such intangibles would otherwise have been capitalizing our balance sheet if we had determined the transaction was to be accounted for as a business combination. And to be clear, this is a one-time non-cash R&D charge. Now, into sales and marketing, our sales and marketing activities and related expenses increased in Q2 to $1.2 million as compared to $800,000 in Q2 2016. This increase is mostly related to completed Habeo pre-commercial activities, mostly in the U.S. as outlined by John earlier on this call. G&A expenses, excluding share-based compensation, was $2 million this quarter as compared to $2.2 million in Q2 2016. The continued tightening of G&A expenses was related principally to reductions in salaries, benefits and discretionary spend. Now, with respect to revenues. Q2 total revenues were $1.5 million as compared to $2.8 million in Q2 2016. Product revenues were approximately $1 million in Q2 2017 compared to $1.1 million in Q2 2016. Despite the global product revenue decrease of $100,000, Japan grew by over 20% and more importantly continues to show substantial growth in consumable utilization, up over 30% from Q2 2016 and supportive of our focus to grow our technology penetration into that marketplace. Overall, we continue to expect product revenues to reflect at least a double-digit growth of consumables in Japan, where we have regulatory approval. Government contract revenues related to our activity supported by BARDA and resulted in $0.5 million in Q2 2017 compared to $1.7 million in Q2 2016. The decrease is attributed to the completion of RELIEF IDE activities as we anticipated transitioning to the clinical phase of this contract. As mentioned earlier by Mark, the FDA approved the IDE for release in April of 2017 and we negotiated a BARDA option, option number two of the contract in this past May, where we were awarded approximately $13.4 million. We are gearing towards contract negotiations with the CRO and other vendors to begin enrollment of the RELIEF trial and hope to provide more update to you later in Q3. Turning to the balance sheet, as of June 30, we had $9 million of cash and $14.2 million of debt. We plan to balance our ongoing capital requirements through several target activities. That includes revenue growth, business development opportunities, operational efficiency measures and working capital management in addition to accessing the capital markets in the second half of 2017. Our 2017 financial guidance has recently been updated and we expected to now be a range between $20 million and $23 million for the full fiscal year 2017, which is an improvement from our initial guidance of $26 million to $29 million for the full year. A sizable portion of the reduction in operating burn guidance comes from pre-commercial Habeo activities that can be deferred pending feedback from the FDA post STAR trial meeting we expect to have later this quarter. And with that, I will turn over the call back to Dr. Hedrick.

Thank you, Tiago. Jerrika, I will turn it back over to you for any questions that we may have.

[Operator Instructions] Thank you. Our first question is coming from the line of Jason Kolbert with Maxim Group.

Yes, I am here with Dr. McCarthy and we have a bunch of questions in a bunch of areas. I guess, I would like to go back and talk a little bit about the data was first released, what additional nuances can you provide to help us understand what the totality of the data says where I am really going with this is until you have the meeting with regulators, I have been hoping that there is still a window based on the data and based on changing legislative pathways that in the best case scenario, regulators could actually accept the data. So, help me understand what additional nuances you have seen from the STAR trial and kind of what your senses for the strategy going in with regulators. And I have a couple follow-up questions.

Hi, Jason. Thank you. And I will turn that question over on the data specifically to Dr. Marino our Chief Medical Officer is here with me, Mark.

Yes, thanks Marc. Looking into the data further and as we dig into it we are looking at the difference between the diffuse group and the limited groups. So, the diffuse group are those patients who have more extensive disease and a disease process that’s more prone to fibrosis versus the limited group which does have finger involvement, but less general fibrosis and less severe skin changes and much lower propensity to develop fibrosis throughout the body. When we look at these two groups, we are seeing a clear response in the diffuse group that is treated with Habeo as compared to the placebo. And what that response is looking like, it’s looking like the placebo group, subject to the diffuse group don’t respond as well. And this is probably a manifestation of the fact that this is more of a fixed disease and that they have more severe vasculopathy as well as much more significant fibrosis.

Mark, I just want to interact with you, because I want to make sure I understand what you said, which is that the more severe patient, the diffuse group, which is the group that I would expect to see the greatest benefit do not react as well. So, can we just go back to that, because it’s not intuitive?

Sure. Well, what we are finding is that the placebo response is much less in the diffuse group than it is in the limited group.

That I would expect.

Right. And that is what is producing the difference between the two and this is as I mentioned we think it’s more much more of a fixed disease and much less prone to placebo response.

So, if we were to look at the data and analyze the data, I mean the placebo response was not – was that out of sight of your expectations in terms of the total trial and in terms of the limited group versus diffuse group. You are saying that placebo group was actually different meaning you have less of a placebo response in these more sick patients?

That is correct. Now, from our previous – well, from the previous Scleradec-I study, there was no placebo units, so we did not have a priority estimate of what the placebo response would be.

Right. Hi, it’s Jason McCarthy. I was just wondering is there how much subjectivity is in versus objectivity in their placebo response, I will try not tease out their placebo effort or is there just such a big difference in fibrosis between diffuse and limited groups with a placebo effect is just different?

Well, what I can tell you is that the Cochin Hand Function score is a patient reported outcome, so you asked patient aching different questions about how well their hands are functioning. So, this is obviously fairly subjective. But when we looked at some of the other factors in these groups, we could see – now, this is all preliminary data exploration that we are finding and obviously, we will have final reports and discuss that with the FDA, but what you can’t see in this group is that there are less of a formation of new ulcers. There is an increase in their actual physical ability to extend their hand and there are improvements in the quality of life measures that are indirectly and actually not directly related to their hand function, so refining these in the [indiscernible] scores as well as EQ-5D scored. So we think that evidence combined is suggestive of the reason why we find few responding better than the limited group.

And so Dr. Marino if you had your druthers and regulators agree would you run essentially a – I hate is the word bridging study, but almost an adjunctive study to kind of go after and repower the diffuse group as a clinical pathway towards approval, is that one part – is that one strategy that you guys are considering now?

Yes, there certainly is strategy and before concluding anything on the strategy I would really emphasize that we need to get down and get those data in front of the FDA and have a full discussion as to the best pathway forward.

What’s the difference percentage wise in the scleroderma population between diffuse and limited?

Our study it was around 60% diffuse and 40% limited and that mirrors what we would anticipate as folks that would be eligible for this type of therapy.

Right. So statistically if it’s 60-40, if the study had enrolled twice as many or X number of patients more whether they fit the statistical significance?

Well, I have to – those are hypothetical questions.

But data clearly would have been better if you had a higher percentage of diffuse patients, I think it’s safe to say that no?

I think that’s a strong possibility, but once again hypothetical question.

Okay. So, Marc one other things that and Marc Hedrick, one other things that you were talking about a little bit on this call and I was paying close attention as both the efforts in Japan, the efforts with BARDA, but I think what I as an analyst and I think what most investors are looking at it is they are trying to understand the pathway forward on scleroderma and when I hear you saying is it’s still early, you are still accumulating data but Marc Hedrick, please help me understand is your intention to absolutely come up with a pathway and move this forward and in scleroderma and particularly and as we focus on the manifestations and in the hands?

Yes. Jason so yes despite the miss in the combined groups and Mark kind of clearly mentioned that the diffuse looks like where there is potential, there is safety and potential efficacy in that subgroup. There is some important factors to consider in this disease, it’s clearly unmet, there is nothing approved in the U.S. It’s a rate disease. We are device not a drug in the U.S. And as Mark Mike didn’t mention this, but we mentioned this in the other call, we are very close to statistical significance in the primary and secondary end point in the diffuse group in an underpowered population as Mark said. So we are absolutely once we get the final data, we are going to go right to the FDA and chart the next steps. And there are several ways this could go and it’s premature to talk about that. but in the U.S. our plan to get in front of the FDA as quickly as possible, we have also had discussions with PMDA the clinical trial process for regenerative medicine is very different as you know and our plan is to work with her four KOLs in Japan and also get in front of PMDA. And then finally, as you kind of come full circle as John said we actually have a manage access partner in Europe. We think there is an opportunity for compliant access. We think this data strengthens the argument that this might be useful to script patients. And we are interested in pushing that forward as well. So we are planning on moving forward this therapy, but really starts here at home with the FDA.

Thank you, Marc. And so let me transition a little bit to nanoparticle doxorubicin, I mean the Azaya acquisition was very strategic and of course Cytori is in kind of a critical juncture right now in terms of having enough capital to move the company forward in terms of strategy and I am one that I always believe that there is a lot of value in ATI-0918, so help me understand, I understand you are looking for EMA submission next year, what other activities and what other elements should we be focusing on how do we unlock the value that exist in nanoparticle doxorubicin, because it seems almost buried under the regenerative medicine side of Cytori, so I guess if you could lay out for me the catalysts and some of the business development, could you just give me a sense for the temperature of business development, are you seeing a lot of inquiries I mean you are now at kind of a sweet spot where you should be able to start unlocking some of that value?

So I think you are right on, so I think with this asset is extremely promising, we brought it in at a very favorable valuation, it does sort of get lost in the cell therapy, part of that’s because a lot of energy behind getting to the readout which is now behind us, but in the background we have been busy working to hit the key milestones in this, with this 0918 product that we are on track. So the key milestone really is getting the manufacturing facility which we don’t talk about, what we bought $3.5 million brand new manufacturing facility for liposomal cytotoxic therapeutic based in San Antonio. So that plant is online. We just built out analytical chemistry lab. We are in the process of preparing to manufacture the key stability lots that want to go stability testing and that will be starting later this year with a plan on once we have those lots manufactured and after six months of stability testing we would be filing with the EMA middle of next year. So key milestones, number one, get the drug manufactured. Number two middle next year file for approval. In the meantime we are trying to identify a partner, it’s a little bit early in the partnering process, but we have had good interest. Partners see what we see and that is a market that has been underserved because of chronic supply issues. Anticipated 5% to 8% year-over-year growth in that market and this drug is not going away and it’s anticipated to be well over $1 billion drug in 2024. So it’s a difficult drug to make. The company we acquired has experienced running two successful trials. We have gotten largely that key team back together and we are on track. So we will be talking more about the 0918 drug as things move forward. And let me just sway one other thing about the other drug. The ATI-1123 drug is very promising. There is a number of preclinical studies that have been performed suggest that it may have advantages over docetaxel alone [indiscernible]. There has been a completed Phase 1 that shows up promising results that are early, but potentially in it’s improve safety profile. And we think this drug may have ability to address some key unmet needs in the oncology space. And I think [indiscernible] kind of announcing what our plan is there and so we kind of finished our evaluation in Q3. But we will have a plan related to this and of course we will be funding dependent. But we are excited about that drug as well.

Marc, Jason McCarthy, once you do submit to EMA next year, how long is the review process in Europe and what do you think the timing for potential commercialization is?

So if we are able to get the drug manufactured shows six months of stability testing which will be roughly around mid-year, next year, if we remain on track again. Then we would file and then we would file a supplement regarding our additional six months, we would have 12 months of safety testing. We would file that when it’s available presumably the EMA would have a chance to evaluate our filing prior to presenting that that second six months of stability testing. So conceivably we could have approval for the end of next year or early 2019. And then in the meantime as I mentioned we will have a commercial partner in place to commercialize that in Europe and related markets that recognize European approval.

Marc, I remember the day when Genentech announced data on Avastin and it failed and analysts were downgrading the stock and we all know what happened there, so I want you to know why I really have my fingers crossed on not just for Cytori, but for patients too, because I do believe there is a real signal here and I give you a lot of credit for just standing up and facing the music, so that you continue to operate the company and drive towards these goals. Thanks so much for taking all my questions. Thank you, Marc.

Thank you, Jason.

[Operator Instructions] Your next question comes from the line of Andrew D'Silva with B. Riley.

Hi, good afternoon. Thanks for taking the questions. Just a couple short ones here, most of them were already answered. As far as the – I don’t have the data in front of me from your pivotal trial, as far as the primary endpoint goes was that supposed to for at six months or 12 month and were you approaching statistical significant at 12 months or six months or both?

Alright. Mark Marino here, so we utilized the Hartford statistical procedure where we can look at either the 24 week or the 48 week data on the primary analysis for the combined group of [indiscernible] diffuse versus placebo it did not reach statistical significance. If you look at the diffuse group and this was pre-specified, but several lawyers down on the pre-specification P value for the 24 weeks period was 0.11 and for 48 weeks period it was 0.07.

Okay, alright. So I hope everything was consistent I know it was just the diffuse group study maybe double the group and you might have hit at that 24 possibly, okay. And then as far as partnerships or any sort of strategic things that are going on any entities that you chatted with in the past come forward now that you have at least had some data that’s positive for a defined subgroup within your Habeo trial or has that – has there been anything evolving over there at all?

Yes, I think there is – it’s a difficult question to answer concretely. But yes I think this is an unmet medical need. There is nothing approved. This is a very rigorously designed trial which in a pre-specified subpopulation Andy shows right at statistical significance and the primary endpoint and in fact key secondary endpoint quality of life showed statistically significant benefit. So there is interest, certainly interest in our part of moving it forward and getting in front of the FDA, I think that will help partnership once they know kind of what our plan is with the FDA. So we are here and we are gauging those dialogues and we think that there is interest.

Okay, great. And then as far as financing goes, is there any caveats or restrictions with the Lincoln Park I guess on ATM, but it kind of resembles an ATM, are you able to access this at any price or are there times where you are not able to? Tiago Girão: Andy, this is Tiago here. Thanks for the question. Yes, so the ATM doesn’t have any specific price limitations. But we – because our market cap is below $75 million, we operate under Baby Shelf Rules. And those Baby Shelf Rules [Technical Difficulty] is a third of our market cap under S-3 which is where the ATM is at. And right now we have exhausted that one-third and every month there is a little bit that gets trickle in into based on what we have done in the past. So we will continue to monitor and provide updates to that. I want to emphasize we finished the quarter with $9 million in cash. We have raised some funds since the end of the quarter. We do have a long standing relationship with our lenders. We have significantly reduced our burn as indicated. And we have significantly reduced our burn forecast for the second half of that year. We are running very lean and very enthusiastic about the prospects of the business. That said, we will likely need to raise more capital in the second half of the year.

Okay. And last question we are thinking about the BARDA contract and associated revenues with that and this is just a modeling question, obviously I guess the bottom line impact is de minimis over the long-term with this, but was the downtick in that line item Q2 related to the negotiation that was taking place and then should we expect a significant up-tick in Q3 and then obviously more so in Q4 and onward into ‘18?

Yes. Andy, so we as you remember I think we got FDA clearance on the IVE back in April. We got the contract signed at the end of May. So definitely, there was some time that was spent during Q2 that we could not get the efforts in. As I indicated in my remarks initially, we have working with the CRO, get that contract in place, get the sites initiated and all those activities are going to start to happen now in Q3 as well as through the end of the year. Our goal continues to be to enroll the first patient on the trial before year end. That’s our goal and that should definitely continue to show some efforts on generating revenues and contributions to the bottom line from the BARDA contract. I do expect the second half of 2017 revenues from BARDA to be higher than the first half of ‘17.

Okay, perfect. Thank you very much. Good luck going forward guys.

And your next question comes from the line of Joseph Pepe and he is a Private Investor.

Yes, hi. Can you guys hear me?

Yes. Who is this sorry?

My name is Joseph Pepe, I am not affiliated with the firm. I am a private retired investor. Can you just clarify, can Tiago or someone clarify for me, I am not really very familiar with the Linkin Park arrangement. You had mentioned that you are going to need to raise some additional financing as we approached the latter part of this year. Can you just recap for me how the Linkin Park thing works and how much financing you think you are going to need later this year?

Sure, Joseph. I appreciate the question. So, the Linkin Park Capital just to recap for you at the end of the year, we entered into a $20 million equity line with Linkin Park. We have used a portion of that equity line over the past couple of months and we have not just a couple of months, sorry. Since Q2, we have used a portion of those equity lines. There is still a significant amount of funds available. There are restrictions as it relates to that – as it relates to that equity line and one of which is the restrictions around the number of shares that we can issue and the other relates to share prices. And at these current levels, that facility is not available to us. From needs or the capital needs of the company on a go forward, it’s going to depend and I am not prepared to answer that question in a very solid way. I think the major reason for that just to be clear it’s all leaning towards what are we going to hear from the FDA, what is going to be the answer for the FDA and what are we going to do with respect to scleroderma. We are very optimistic about the results of the trial. Of course, disappointed that we didn’t hit the primary and the secondary endpoints, but…

But you are not expecting to hear back from the FDA on the scleroderma in the next 6 months, are you?

Yes.

Okay. And you mentioned that there is obviously some constraints around the Linkin Park Capital equity line, which probably so you need to basically have a reverse split would release that constraint I would imagine?

I am not prepared to indicate we have not received any notices from NASDAQ. So, it’s not something that I am prepared to answer.

Yes, I understand, but you are going to receive a notice from the NASDAQ just like they send everybody else. So, you are going to have to reverse split the stock at some point in time. Once you do that, I don’t know when it’s going to be, but once you do that then enable to access the equity line from Linkin Park Capital.

Yes. If we do a reverse split, we would then be able to access the equity line with Linkin Park Capital. But I want to remind you and just to indicate to you that usually when the company does receive a notice there is a 6-month period that the NASDAQ provides for you to care and that process is going to take long. So, I am just not prepared to commit to anything at this point with you.

And there are no further questions at this time. Are there any closing remarks? Tiago Girão: Jerrika, thank you.

Yes, I’d just like to finish up. Once again, thank you for the questions. And I’d just like to layout our forward-looking milestones for the remainder of 2017 and this is really a summary of what we discussed during the call. First of all, first and most importantly, meet with the FDA and determine the next steps for our Habeo product in the U.S. As John mentioned, we are in the process of rolling out the formal managed access program with our new partner myTomorrows. We intend to have the first patient in, enroll for the BARDA funded RELIEF trial in the second half of the year, when the process of completing the facility validation, manufacturing and related activities for a nanoparticle doxorubicin product and preparing for an EMA filing and seeking potential partners simultaneously. We also plan to complete and will announce our marketing clinical evaluation plan for the ATI-1123 liposomal docetaxel product. And then also as mentioned, we plan to complete enrollment in the Japanese ADRESU SUI, stress urinary incontinence pivotal trial in the EU Scleradec-II trial. End of Q&A:

So, I would like to conclude by just saying on behalf of the board and the management, thank you for participating in this call. The company is very appreciative of the patients. They have trusted us for these various clinical trials, our advisors and it takes most of all to our hardworking and dedicated employees. Please, have a good evening. Thank you.

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