Good day, ladies and gentlemen and welcome to the Amedica Corporation First Quarter 2015 Financial Results Conference Call. At this time, all participants have been placed on mute. Later, we will conduct a question-and-answer session and the instructions will be given at that time. [Operator Instructions] Please note, today’s program is being recorded. I would like to introduce our first speaker, Mr. Mike Houston, Director of Marketing and Communications. Sir, please begin.

Thank you, Rowan. Good afternoon, and welcome to Amedica Corporation’s first quarter 2015 earnings conference call. On the call with me today are Dr. Sonny Bal, Chairman and Chief Executive Officer; and Ty Lombardi, Principal Accounting Officer. By now, everyone should have access to the earnings release for the period ended March 31, 2015 that went out earlier this afternoon. If you have not received the release, it’s available on the Amedica’s website at www.amedica.com. This call is being webcast, and a replay will be available on the company’s website as well. I’d like to remind you that certain items that maybe discussed in today’s call are not based entirely on historical facts. These items should be considered forward-looking statements, and are subject to many risks, uncertainties and other factors that are difficult to predict and may affect our businesses and operations. As a consequence, our actual results may differ materially and adversely from those expressed or implied by our forward-looking statements. A discussion of some of these risks, uncertainties and other factors are set forth in our SEC filings. We undertake no obligation and do not intend to update any forward-looking statements, as a result of new information or future events or circumstances, arising after the date on which it was made. With that, I would now like to turn the call over to Dr. Sonny Bal. Dr. Bal?

Thank you, Mike. Good afternoon everyone. Welcome to this earnings call. I will begin by providing an overview of the Amedica’s first quarter business highlights afterwards Ty will give details on the quarterly financial results. Then we will open the call for questions. In prior calls, I’ve outlined three focal points that we are executing in order to accelerate our vision of silicon nitride becoming the premium biomaterial of choice. Those areas of focus remain key to our success as we made great progress on them to date. First is executing our private label and OEM strategy. Second is strengthening and nurturing our relationships with surgeon and distributor our customers. Third is to focus on clinical and research data so that we can validate the established foundation of basic material science work that we have completed and published. I’m pleased with the attention we have continued to receive this year with potential private label and OEM partners as we continue to selectively invest in the organization to support our growth. We have begun a couple of feasibility studies. We are close to finalizing agreements with other private label and OEM partnership and we hope to announce those soon. With the recent AAOS and AANS professional meetings behind us and as we get closer to announcing additional partners, I would like to provide some visibility around the discussions we’ve been having. As a result of the restructuring announcement made this past January, interest in silicon nitride and Amedica has increased yielding many discussions each with differing levels of interest. Our business development team has given many presentations sharing why we and others recognized in those silicon nitride as the ideal biomaterial, very differentiated from everything else out there. We presented to marketing and business development teams to senior management teams to…

Thank you, Dr. Bal. I am pleased to discuss the financial results of the company during the first quarter 2015. Our total revenue for the quarter was $4.7 million driven by 7% growth in our silicon nitride products but more than offset by a decline of 37% in our non-silicon nitride sales which was primarily driven by lower metals business. Total revenue for the quarter decreased by 18%. As for product mix, our silicon nitride products were responsible for 56% of our overall product revenue during the quarter compared to 44% of our overall product revenue in Q1 of 2014. Our metal sales during the quarter declined by 40% year-over-year. This decline was due to a lack of sufficient diversity in our customer base and as the level of activity declined amongst key surgeons it greatly impacted our top line results for the quarter. Furthermore, given the important role our metals products play and pulling through additional silicon nitride sales we are working to diversify our metals user base. We are also investing in our metals portfolio in order to improve surgeon ease of use and bring it on par with other products used in the market today. Excluding the impact of excess or obsolete inventory for both years' first quarter 2015 gross margins ended at 75% of total sales as compared to 79% during the prior year period. Although we have reduced our product cost in production efficiencies and our overhead costs, the decline in gross margin was due to private label sales during the first quarter of 2015, which had lower gross margins due to lower selling prices, but higher operating contribution margin since no commissions were paid and there are less operating expenses required to support these sales. Our manufacturing team continued to drive efficiencies and cost…

Thank you, Ty, and operator can you please instruct the callers on how to join the queue for questions at this time.

[Operator Instructions]. Our first question comes from the line of Mike Matson with Needham & Company. Your line is now open. Your question please.

Yes. Thanks. I guess just -- I understand you took your guidance down on the overall and specifically on silicon nitride, but it only grew 7% this quarter, so I’m just wondering how you plan to hit that 15% to 20%. I mean, what’s going to happen that’s going to cause that growth to pick up?

Well, there’s a number of short-term, long-term milepost that we’re looking forward to. Number one, continued growth of silicon nitride through existing sales channels there’s a lot of interest in the material, number two, upgrading our metal systems and that was a keenly needed variable that we had not done for a long, long time. Then we have the OEM private label agreements coming up. Finally, we’ve seen meaningful progress in Brazil where we will recognize additional revenue in the back half of this year once the instrument sets are cleared and they should be cleared. So that coupled with the private label OEM partnerships which we’ll announce soon position us for our strong future. Very importantly, one more time, I think it’s the upgrading of the metal systems that from my view is a key move that we made that was a long overdue.

And what’s the -- I mean, are those upgraded metal implants available now or what’s the timing back? I guess I thought it was going to be later this year or something.

It’ll be -- where the process -- there are number of strategies we could have done, we could have simply private labelled somebody else’s metals. But as it turns out the feedback we got from our surgeons was that our system was superb and probably better than anything else out there simply needed to be brought into the modern times. So we focused on that and that will be toward the end of this year into next year that we will introduce our upgraded metals line. But that has built up the enthusiasm among surgeons and the distributors that we’re committed to doing so.

Okay. And I mean, just from a cash burn perspective I mean, you’re saying it looks like your cash declined by about $3.3 million this quarter, so I think you are saying expected it to drop the burn – quarterly burn rate to drop to $2 million to $2.5 million, so I mean, you’re looking at kind of like $6 million to $7 million more for the remainder of the year, is that $7 million roughly?

Yes. Yes. That would be correct. So, we – Q1was a little higher than we anticipated in future quarters due to the severance-related and payments as well as benefit associated with that and so which approximated $700,000. And so in the future quarters, we don’t anticipate that much expenditure and expect our total cash burns to reduce as compared to Q1.

Okay. So what’s your normalized quarterly operating expense run rate then if you back out although, if you take into account the cost cuts implemented and the one-time things you had in the first quarter, I mean, I guess you used sorry, you lost about – or use about $7 million on operating expenses, $7.2 million, so what do you expect to be at in the next three quarters roughly per quarter $6 million range, $6.5 million seem reasonable?

That would be reasonable; however, a lot is also dependent on sales, the commissions associated with sales as the large chunk of our operating expenses. And so that will definitely vary depending on the sales numbers. but those amounts that you indicated seem a reasonable number to anticipate in future quarters.

Okay. And then just on the share count, I mean, so you’re basically – you ended the quarter, you’re currently at like 55 million roughly speaking, so that all we should be modelling for the remainder of the year somewhere in that range?

Yes. We are currently at 55 million and it is – no, there are still some warrants that are outstanding as I indicated, there is 3.5 million of warrant from the secondary offering in November there are still outstanding and so those could be exercised to be a cashless – via the cashless exercise provision, which could depending on where the stock price is and the exercise could be around 3 to 1. So that could impact as well as the convertible notes that we have outstanding in it.

Okay. All right. And then I guess, I just wondering on you talked about Brazil, but I mean just given the position you’re in here with limited cash and the fact that you’re barely growing in or you’re declining in the U.S. I mean, wouldn’t the dollars be better spent on trying to fix the U.S. and trying to invest in these emerging markets?

That is a good point and that’s definitely something that we have looked at. We had already – we spent the last two years trying to get this clearance down in Brazil. So we have received that clearance and so there isn’t a whole of additional costs that are required to further that development in Brazil and so we are determined and there is excitement down there in Brazil for our product. And so it made sense that to move forward on that and furthermore, the initial purchasing will be of our Gen-1 product which isn’t – we are not selling as much here in the United States, it’s an opportunity to sell some of the Gen-1 product.

Okay. All right. That’s all I have. Thank you.

Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Greg Simpson with Dawson James Securities. Your line is now open. Your question please.

Okay. Thank you. Good afternoon guys. Sonny, first on [indiscernible] maybe characterize the questions, you’ve gotten from the FDA and whether they’re just random, ordinary questions or anything more significant than that.

Yes. I’ve looked at it myself and there are several of them mostly bureaucrats speak random questions, a few relevant to the clinical situation, a few technical questions nothing that we can’t answer.

Okay. Great. And does that approval – will that approval give you the chance to market the CASCADE results, really kind of hammer those with surgeons?

And that’s exactly what I would do. I mean, their products are already in use and approved overseas so this would give us a leg in the United States to directly market and promote it to surgeons here.

Okay. And then on a related note, can you realize the timing of the CASCADE data presentation late in the quarter. Can you maybe give just anything anecdotal as to the early reaction to the CASCADE result?

It’s very positive in terms of surgeon interest, in terms of surgeon’s reaching out with design variations, with future studies and certainly in terms of the benefits of the disk device in terms of its being able to cause bone healing in the absence of bone void fillers, which is very relevant in today’s cost conscious market. And more importantly that new to the market technology has generated a lot of interest from our OEM partners as well.

Okay. All right. Thanks very much.

Thank you. I am showing no further questions in the queue at this time. I’d like to hand the call back over to Dr. Sonny Bal for any concluding remarks.

Thanks to everyone who participated on the call. I would like to reiterate my excitement, genuine excitement for this year. We truly, truly believe that the market is at an inflection point and is looking for innovation, which has been evidenced in our recent discussions with potential OEM and private label partners as well as with surgeons and distributors worldwide. This is a great opportunity for Amedica to prove the benefits of silicon nitride and to get wider adoption of the material. I’m very optimistic that our team can take advantage of that opportunity and I look forward to providing another update in August. Thank you.

Ladies and gentlemen, thank you very much for your participation. This does conclude the program. You may now disconnect.