Good day ladies and gentlemen, and welcome to Vericel Corporation’s Fourth Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instruction will be given at that time. [Operator Instructions]. As a reminder this conference call may be recorded. I will now transfer the call over to Vericel’s Mr. Gerard Michel, Chief Financial Officer. You may begin.

Thank you, operator, and good morning everyone. Welcome to Vericel’s fourth quarter 2015 conference call to discuss our fourth quarter and year-end 2015 financial results, as well as the progress of our commercial business and development programs. Before we begin, let me remind you that on today’s call, we will be making forward-looking statements covered under the Private Securities Litigation Reform Act of 1995, and all of our projections in forward-looking statements represent our judgments as of today. These statements may involve risks and uncertainties that are described more fully in our filings with the SEC, which are also available on our website. In addition, any forward-looking statement represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. With us on today’s call are Nick Colangelo, Vericel’s President and Chief Executive Officer; Dan Orlando, Vericel’s Chief Operating Officer; Dr. David Recker, our Chief Medical Officer and Dr. Ross Tubo, Vericel’s Chief Scientific Officer. I will now turn the call over to Nick.

Thank you, Gerard, and good morning everyone. Before we discuss our fourth quarter and year-end financial results, I’d like to take a few minutes to review the business highlights for Vericel during the past year. While 2014 clearly was a transformative year for our company, 2015 is best described as a year in which we built a strong foundation for growth. We started the year focused on completing the transition for our single program development stage company to a stable commercial business with growing revenues and margins from our current marketed products. To that end, we’ve taken a declining business that had revenues of 42 million in negative parts 2013 and grown the business to over $50 million in revenue with nearly 50% gross margins in 2015, our first full year earning the business. With our recently announced clinical and regulatory achievements, we now have transitioned from a commercial turnaround story and positioned the company for both near-term and long-term growth. As we’ve discussed over the course of the past year, we’ve been focused on three clinical and regulatory priorities that would serve as drivers for significant growth. Bringing MACI, our investigational third-generation cartilage repair product to market in the US as rapidly as possible, expanding the labeled indications for use of Epicel to include pediatric patients, and completing the phase 2b ixCELL-DCM clinical trial in patients with advanced heart failure due to ischemic dilated cardiomyopathy. I’m very pleased to report that we’ve completed our significantly advanced each of these key priorities. With respect to MACI, the following discussion with the FDA, we announced in June last year that we plan to better Biologics License Application or BLA to the FDA by the end of the year. Our clinical and regulatory team met that goal and we were pleased to…

Thank you Nick. 2015 was indeed a productive year with the clinician and the Epicel HDE supplement, the BLA submission for MACI and the completion of the efficacy portion of the ixCELL-DCM product. Since the end of 2015, each of those achievements has already been eclipsed by even further progress in early 2015. The Epicel HDE supplement was approved by the FDA, the MACI BLA was accepted by the FDA for review, and we’ve announced positive topline results for the ixCELL-DCM product. Let me begin by providing further detail on the just ixmyelocel-T clinical trial results. The stage two ixCELL-DCM clinical trials was a multi-center, randomized, double-blind, placebo controlled phase 2b clinical trial designed to access the efficacy and safety and tolerability of ixmyelocel-T in patients with advanced heart failure due specifically to ischemic dilated cardiomyopathy or DCM. A total of 114 patients were treated in the trial at 28 sites in the United States. The trial met its primary endpoint of demonstrating a reduction in the total number of all-cause deaths, cardiovascular hospitalizations or unplanned outpatient or emergency department visits to treat acute decompensated heart failure during the 12 months following treatment ixmyelocel-T compared to placebo. All clinical events in the primary and secondary endpoints were adjudicated in a blinded fashion by an independent adjudication committee at the Brigham and Women's Hospital in Boston. From a safety perspective, the incidence of adverse events including serious adverse event in patients treated ixmyelocel-T was [culpable] to or lower than in patients in the placebo group. As announced last week, the full data result will be presented at the upcoming late-breaking clinical trial sessions at the 65th Annual scientific session of the American College of Cardiology on April 4, and subsequently be submitted for publication. We are very excited about the results…

Thank you Dave and once again congratulations on all of your accomplishment on our clinical regulatory objectives. Obviously the great news regarding the positive topline ixCELL-DCM study results creates an exciting opportunity for the company. We’ll now focus on determining the regulatory pathway for bringing the products out as rapidly as possible in each of the key geographies, including the US, Europe and Japan, and the optimal partnering strategy to do so in an efficient manner for the company and our shareholders. Turning to our commercial results, I am pleased to report that total Carticel and Epicel revenue for 2015 was $50.4 million, representing a 14% increase over net product revenues in 2014. Total Carticel and Epicel net revenues for the fourth quarter were 15.4 million, an increase of 5% compared to the fourth quarter of 2014. Overall, Epicel clearly is driving most of the revenue growth, while Carticel revenue has been stable and represents a strong foundation for building our cartilage repair franchise with the potential launch of MACI in 2017. Carticel net revenues increased 1% for 2015. Although we would have liked to have seen more growth in Carticel, we’ve been successful in arresting what had been steady erosion in revenue prior to the acquisition, and we’ve done so with approximately 20% fewer Carticel territories than existed prior to the acquisitions. Moreover, 2015 was a transition year of rebuilding the foundation of Carticel commercial organization as approximately one-third of our Carticel sales representatives and two-thirds of the Carticel leadership in 2015 were new. As our new sales professionals are now established in their positions, we’re seeing renewed momentum and we’re confident in our plan to grow Carticel revenue ahead of the potential MACI launch. From a physician perspective, there’s a core group of orthopedic surgeons who use Carticel…

Thanks Nick. Total revenues for the quarter ended December 31, 2015 were approximately $15.4 million and included $11.3 million of net sales, Carticel implant and surgical kit, and $4.1 million of net sales of Epicel. Total Carticel and Epicel net product revenues in the fourth quarter increased approximately 5% over fourth quarter net product revenues since 2014. Total net revenues for the year ended December 31, 2015 were approximately 51.2 million including approximately $35.2 million of net sales of Carticel implant and surgical kits and approximately $15.2 million of net sales of Epicel, compared to total net revenues of $28.8 million for the seven months of sales in 2014. Total Carticel and Epicel net product revenues for 2015 increased approximately 14% over pro forma Carticel and Epicel net product revenues for 2014. Total revenues for the quarter and year-ended December 31, 2015 included approximately $100,000 and $700,000 of revenues respectively from our marrow donation business which ceased operations in December 2015. Gross profit for the quarter ended December 31, 2015 was $8.2 million or 53% of total net revenues versus $8 million or 54% of total net revenues in the fourth quarter of 2014. Gross profit for the year was 24.7 million or 48% of total revenues versus gross profit of $11.5 million or 40% of total revenues in 2014. R&D expenses for the quarter and year-ended December 31, 2015 were $7.4 million and $18.9 million respectively compared to 5.8 million and 21.3 million for the same period in 2014. The fourth quarter R&D expense included $2.2 million in MACI BLA and Epicel HDE supplement regulatory consulting expenses and a $2.4 million PDUFA filing fee. SG&A expenses for the quarter and year-ended December 31, 2015 were 5.7 million and 22.5 million respectively, compared to 4.5 million and 13.8 million for…

Thanks Gerard. In summary, 2015 was an extremely productive year during which we completed our corporate transformation in to a sustainable and growing commercial enterprise, substantially increase revenues and gross margins and made significant progress on our clinical and regulatory objectives that would drive near-term and long-term growth for the company. Our success during 2015 is a reflection of our unwavering focus on execution and the commitment of an extraordinary team of clinical, operations and commercial professionals to our mission to build a new leading cell therapy company. With a growing commercial business, with revenues over $50 million and a high potential pipeline supported by robust clinical data, we believe that we in fact positioned the company as one of the leading cell therapy companies in the industry. In the year ahead, we’ll continue to focus on strong revenue growth and on generating operating profits from our commercial business, preparing for the potential launch of MACI in early 2017, and determining the best regulatory and partnering strategy to advance ixmyelocel-T market as rapidly and efficiently as possible. That concludes our prepared remarks. Now I’d like the operator to open the call to your questions.

Thank you. [Operator Instructions] our first question comes from the line of Chad Messer of Needham. Your line is now open.

Any guidance or help you can give us on potential price increases for Epicel and pricing of MACI versus where Carticel is?

In terms of price increasing on asset sale fairly we’re glad to have flexibility, its critical. We continued the growth we have on the product for much longer. We probably would have to reduce price as volumes increase. Frank fully we are no longer out facing that situation. This is a lifesaving therapy that’s incredibly valuable, and at some point it does probably warrant some price increases, again at some point. I think we want to be careful and prudent, as to when we take that step, given the current political environment and also given the fact that we have the MACI BLA currently being reviewed by the same division that gave us pediatric [limitation]. So we’ll do what’s best for patients and the business overall but I don’t think I want to forecast exactly what we’ll do and when.

And then maybe you can talk about MACI versus Carticel? MACI is a next generation improved product than - it’s expected to have a broader label. So just wondering how we should think about pricing there?

Clearly MACI will definitely bring incremental value in terms of reduced procedure time, patients hopefully less invasive procedure, so we see some rational there as well. It is also important to keep in mind that Carticel right now is head and shoulders above any other product used to treat [cartilage] defects in terms of pricing. We are doing our analysis on that, and I think it’s a little too soon to offer any guidance on that. We do believe there is some room for a premium, but exactly what that means is to be dealt.

I think I intuited the answer from comments that were made, but would you expect a complete cannibalization of Carticel by the MACI business? One has a front and one has a second line, if you will, indication, just wondering if there room for Carticel and the MACI?

Chad, this is Dan Orlando. In regards to Carticel and the transition to MACI, we expect that the 100 week will have [PDUFA] as you know now early 2017, and we are planning for an effective strategy to implement the complete transition from Carticel to MACI.

I know this is probably even harder than the other questions I’ve asked to answer, but I got to ask it, MACI obviously a product that’s been around and had approval in Europe for quite some time. You guys effectively taking that over and making great progress with the FDA, where Genzyme and Sanofi didn’t make progress. What’s your secret skill over there, and why have you guys been so successful where a major pharmaceutical power house wasn’t?

Well Chad thanks, that’s a good complement to Dave and his team, and I think it starts with, as we will do with ixmyelocel-T really understanding the data, developing a strong strategy and having a relationship where we work to partner with the FDA. And Dave and his team have demonstrated that whether in the regulatory form or even in the case of ixmyelocel-T, where the company previously struggled a bit on clinical execution. And like the commercial organization you build relationships with surgeons and in this case with our investigators, and I think that’s what allows the team to be as effective as its been in the clinical and regulatory rounds.

[Operator Instructions] And I’m showing no further questions at this time. I’d like to hand the call back over to management for any closing remarks.

Well thank you for your questions and continued interest in Vericel. We’re really excited about the opportunities ahead and we look forward to be reporting on our progress in our next call. Have a great day.

Well ladies and gentlemen, thank you for participating in today’s conference. That does conclude today’s program, you may all disconnect. Have a great day everyone.