Lori Freedman - VP of Corporate Affairs and General Council Dr. Paul Ashton - President and CEO Len Ross - VP Finance.

Matt Kaplan - Ladenburg Thalmann Suraj Kalia - Northland Securities.

Good day ladies and gentlemen. And welcome to the Fourth Quarter 2014 pSivida Corporation Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). As a reminder, today's conference is being recorded.

I would now like to turn the call over to Lori Freedman..

Thank you Jaime. Good afternoon everyone and thank you for joining us. After the market closed today, we released our fourth quarter financial results for fiscal 2014. A copy of the release is available in the Investor section of our website at www.psivida.com. On the call with me today is Dr.

Paul Ashton, President and Chief Executive Officer and Len Ross, Vice President, Finance. Before I hand the call over to Paul, I need to remind everyone that some of our prepared remarks are and answers to your questions may be forward-looking in nature. Forward-looking statements are inherently subject to risks and uncertainties.

All statements other than statements of historical facts are forward-looking statements and we cannot guarantee that the results and other expectations expressed, anticipated, or implied will be realized. Actual results could differ materially from those anticipated, estimated or projected in the forward-looking statements.

For a more detailed discussion of risk factors that could affect our future results and financial conditions, I refer you to our filings with the SEC including our Annual Report on Form 10-K for the fiscal year ended June 30, 2013.

We undertake no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after this conference call. With that, I’d like to turn the call over to Paul..

During the year, we also enhanced our liquidity with the sale of common stock ending the year with $18.3 million. I'll get into some of the details shortly and then turn the call over to Len who will take you through the financials. But first, I want to review the company's strategic direction.

In the recent industry review, we were described as the leading technology provider in ophthalmology and we’ve got reasons. We've invented and we’ve partner developed three of the four FDA or EU approved sustained release products for the back-of-the-eye.

Recognizing the [disease], our goal going forward is to become one of the leading product providers. Now, we've done a great job working with partners such as Alimera, Bausch & Lomb and Pfizer; we’ve developed products and catch received from the partners now propel us forward.

Over the last six years, we have received approximately $55 million from partners. And if we get a favorable review from the FDA, we expect that figure will probably increase to $80 million and hopefully beyond it. So, partnerships are important and we still plan to partner some technologies and products.

We expect to look for partners in fields that are outside already of expertise or the custom complexities of developing a product or multiple products, too much company of our size.

But we will increasingly look to develop our own products, ideally where there is a highest probability of success and where the cost of developing the product is manageable. Medidur for posterior uveitis is a great example of such product. We expect Medidur will be effective in treating posterior uveitis.

Because Medidur uses same micro-insert used in ILUVIEN that uses the same drug, same polymers, same dose, same design. Because of this the FDA has confirmed that we can reference data in Alimera’s NDA filing of ILUVIEN for DME in support of our own applications of Medidur in posterior uveitis. That’s a big saving of time and money.

Because we can reference this data, we’re now planning to seek FDA approval on the basis of a single Phase III trial. A similar strategy has been used previously to gain FDA approval for another product for uveitis.

We have redesigned the application used in sub Medidur into the eyes using a smaller 27-gauge needle of the type more commonly used for standard in traditional injections. So in addition for the safety and efficacy data from the Phase III, we’ll need study to provide data on the new. We planned to meet with the FDA to confirm our strategy.

Obviously, if we’re able to get U.S. approval with one Phase III trial, it will reduce our development cost and reduce time to approval. We’re also optimistic about the likelihood that Medidur will be efficacious and safe.

It delivers (inaudible) cost of steroid, which is the same drug delivered by Retiser, our FDA approved implant for posterior uveitis. So we know the drug can be effective. And although Medidur delivers the lower dose, we expect to see similar efficacy from Medidur as we’ve seen for Retiser.

However, due to the lower dose and based on the clinical trial results for ILUVIEN and DME, we expect side effects from Medidur in posterior uveitis will be comparable to potentially fewer than those seen in the ILUVIEN trials. And they were far fewer than those in the Retiser trials.

Now interim data from an investigator sponsored Phase 1/2 study reported last year was consistent with this hypothesis. Those data show the non advantage received in Medidur has a recurrence of the disease and increases in intraocular pressure were limited.

We expect the Phase 3 trial for Medidur to complete enrollment sometime in the first quarter of the next calendar year. As the trial has a primary endpoint of recurrence of disease at 12 months the first data read out is expected in 2016.

A quick word about posterior uveitis it’s a very unpleasant disease characterized by chronic inflammation of the uveitis as far as the inner layers of the back of the eye and it affects approximately a 175,000 people in the U.S. but it’s responsible for blindness in about 30,000. Now let’s move on to our partner product ILUVIEN.

If you have followed pSivida all our partners in this program Alimera Sciences you will know that ILUVIEN is now approved for the treatments of vision loss associated with chronic DME being insufficiently responsive to available therapies it’s approved in 10 EU countries with approval in another seven expected.

Alimera is selling the product in Germany and the UK and they expect to commence sales in France and Portugal by the end of 2014. In the U.S., Alimera resubmitted the NDA for ILUVIEN and received the PDUFA date of September 26. Alimera reported labeling discussions with the FDA so we are optimistic for an approval.

FDA approval importantly with a title off to a 25 million milestone payment from Alimera, we would also be entitled to 20% of net profits from Alimera sales of ILUVIEN on a on quarter-by-quarter, country-by-country basis.

Now moving onto Tethadur, this is our platform technology designed to deliver peptides and proteins including by the way antibodies. We're continuing our preclinical testing of Tethadur and we are optimistic that we'll select the product candidate and be in clinical trials within the next year.

We're also continuing our work with global biopharmaceutical company using Tethadur in ophthalmology and that work is also progressing well. We believe there is a huge and unmet need for a stand delivery system for peptides and proteins. Now I’ll just give you an idea of the scale of the opportunity.

Two biggest groups in ophthalmology right now are proteins that need to be injected directly into the eye typically as record eight weeks. If these injections could be administered less frequently, for example eight to six months. It will potentially be a big clinical advance as well as competitive advantage.

Going beyond the formality in the biotech world, there are a very few life cycle management tools available, we think the Tethadur, if we could provide a convenience and sustained lose option resulting in fewer injections on maintain steady growth across the levels.

We believe Tethadur could be extremely valuable in the bio-similar and bio-method based either to expand extend patent life or to provide product differentiation for (inaudible). Finally turning to financial results, we ended the year with $18.3 million of cash and no debt. I'll turn the call over to Len to take us through the financial..

Thank you Paul and good afternoon everyone. I will briefly review our fourth quarter and fiscal year 2014 results reported earlier today, starting with our financial position. As Paul noted at June 30, 2014 we had cash, cash equivalents and marketable securities of $18.3 million, an increase of $8 million compared to $10.3 million at June 30, 2013.

The most immediate variable in our liquidity picture is the potential $25 million milestone from Alimera.

Without this payment or any net profit payments from Alimera, we anticipate that our existing capital resources and expected cash in flows under existing collaboration agreements will enable us to fund our current and planned operations through the third quarter of calendar year 2015.

This estimate includes our expected cost of clinical development of Medidur. If we receive the $25 million Alimera milestone payment, we believe it will extend our capital resources into calendar 2017.

Alimera has not yet reported quarterly net profits as defined from its sales of ILUVIEN in either the UK or Germany that would result in payments to us. And we do not yet know when or if we will receive any such net profit payments. Turning now to our full year fiscal 2014 results.

Revenues increased by $1.3 million to $3.5 million for the year ended June 30, 2014 compared to approximately $2.1 million for the same period last year.

This increase primarily reflected $1.5 million of consideration that was recognized in our fiscal third quarter upon resolution of a contingency associated with completion of a feasibility study agreement. Research and development totaled $9.6 million for fiscal 2014, an increase of $2.6 million or 37% compared to $7 million in the prior fiscal year.

This change was primarily attributable to a $3.3 million increase in contract research organization or CRO costs for our Medidur Phase III clinical trial, partially offset by $665,000 decrease in personnel costs including stock based compensation.

General and administrative expense increased by $300,000 or 4% to $7.5 million for fiscal 2014 from $7.2 million in the prior year, primarily due to increased stock-based compensation and professional fees.

Net loss for the year ended June 2014 was $13.4 million or $0.49 per share compared to a net loss of $11.9 million or $0.52 per share for the year ended June 2013. Turning to our fourth quarter results. We reported revenues of $292,000 compared to $492,000 for the same period last year.

The decrease predominantly related to collaborative research and development revenue largely resulted from lower amortization of deferred revenue balances. Research and development totaled $2.3 million in each of fiscal 2014 and 2013 for the quarters.

Increased CRO cost related to the Medidur trial in the fiscal 2014 fourth quarter were substantially offset by lower levels of personnel costs and professional fees.

General and administrative expense decreased by $153,000 to $2 million for the three months ended June 2014 from approximately $2.2 million in the prior year quarter, primarily attributable to lower professional fees partially offset by increased stock-based compensation.

Net loss for the fourth quarter of fiscal 2014 was $4 million or $0.14 per share compared to a net loss of $3.9 million or $0.17 per share for the prior year period. I will now turn the call back over to Paul..

Great. Thank you Len. So to sum up, it’s been an excellent year and quarter for us.

Key points are one, the continuing enrollment of our Phase III trial of Medidur for the treatment of posterior uveitis which we plan to complete in Q1 calendar 2015; two, our revised regulatory plan for Medidur for posterior uveitis seek FDA approval based on the single Phase III trial with additional data on the new inserter; three, ILUVIEN now approved in 10 EU countries and marketed in two; four, the FDA’s PDUFA date for ILUVIEN in the U.S.

is just two weeks away; and five, continued optimism for Tethadur based on our own pre-clinical research and our work with the global biopharmaceutical company. At this point, we will be happy to take your questions.

Operator, will you please initiate the Q&A portion of the call?.

(Operator Instructions). Our first question comes from Matt Kaplan from Ladenburg Thalmann..

Hey guys, can you hear me?.

Yes Matt, how it’s going?.

Going well; thanks Paul. Just question, trying to get a little bit more detail on the Medidur program. And I guess congrats on your new strategy there.

In terms of the timing of your planned meeting with the FDA to confirm your revised regulatory strategy for one study and then could you give a sense of that when we would have that kind of locked in?.

Yes, we will have that, we’ll request a meeting with them after the PDUFA date or it will be in MD&A..

Okay, very good.

And then in terms of the redesigned applicator, what type of study or what type of data would you need for the applicator, is it just user usability type of study or what would you name?.

Usability..

Usability?.

Yes..

So that’s something that you could do rather quickly and trade for?.

Exactly..

Good. And then in terms of just going back to ILUVIEN, in your prepared remarks, you mentioned Alimera has started on some discussions, labeling with the FDA.

At this point, have they gotten a draft label from the FDA, can you comment on that?.

I cannot comment on that..

Okay, fair enough.

And then in terms of Tethadur, what are you thinking right now in terms of some of the leading potential product candidates that you will bring into the clinic in the next year?.

Well, the two separate applications there I think. One is an intraocular application where we will be looking to deliver an antibody or antibody type molecule, so we can guess this one we might be thinking of..

Sure..

Try to get and extend it to this [note]. And the other is a subcutaneous administration. If something can release the drug into the back-of-the-eye, it’s then the same technology should be useful for the subcutaneous administration.

And if you’re looking at a drug or a compound that’s typically injected once a day; moving it to once a week that would be a big event. So, we're looking at a couple of different possibilities..

And are you thinking about injection and directly into joint perhaps or something like that as well or?.

Injection of possibility Tethadur into joints is intrinsically tricky..

Okay..

Because joints tend to react very unfavorably; it's really easy to trigger and inflammatory reaction if you got full into joint. This is even reports the possibilities (inaudible), which is a steroid, this powerful dose can actually trigger and inflammatory response. So, influent joint is a big trickier..

Okay, alright, good. Well, again thanks for taking my question and congrats on the [promise you made]..

Thank you..

The next question comes from Suraj Kalia from Northland Securities..

Hi, Paul..

Hi, Suraj..

Can you hear me alright?.

Yes..

My apologies if there is some background noise. So Paul, I want to go back to Medidur. Now, the new strategy is predicated only on a single Phase III study, maybe I didn’t follow it Paul.

Is this something that was decided on after some preliminary discussions with the FDA? And I am curious about the inserter, what all transpired that made your belief we can go down a single Phase III patch now?.

Without getting to too many specifics, we can get out a test with a single Phase III. The best example of this, I can point to is, (inaudible) was initially approved for vein occlusion based on two Phase III clinical trials in vein occlusion and a total of approximately 1,000 patients in each trial.

And again subsequently was able to reference that data file sNDA (inaudible) on the basis of single Phase III trial of 370 patients. So, in our case we have the ILUVIEN device [Technical Difficulty] Phase III clinical trials in 1,000 patients.

Referencing that data and using that to support a single Phase III trial, using that sort of in conjunction with a single Phase III trial in uveitis (inaudible)..

Okay. And Paul obviously in your prepared remarks you have mentioned about Alimera getting into labeling discussions.

And I know this might be a slightly unfair question, but I'll still ask, if or how would you qualitatively and possibly qualitatively characterize the market for ILUVIEN, is it insufficient to responsive is included the label? And also if it is excluded from the labels how do you see that at least in your own internal strategic analysis, how do you see inclusion and exclusion of these two words in the label?.

Well, obviously you want to spend the label, but being more conservative, I think it's difficult and frankly I'd be much happy if I have some of the session access September 25. One way or the other..

Fair enough. Paul those are all the questions I have for now. Thank you..

Thank you..

(Operator Instructions). The next question comes from Orlando from MLV & Co..

Hi guys, thanks for taking the question..

Hi Linda..

Hi, how are you?.

Good. Thank you..

Thank you.

Can you help us understand maybe some of the US versus new markets for uveitis in particular you I think it's unfair that you guys might be able to use only one Phase III trial is that true in Europe as well?.

It's not, we won't be able to think the Phase II trial in addition to the U.S. we haven’t had that conversation yet with the European regulates..

So, I think which -- I guess do you plan to and if so, what is the timing basically about that?.

And we have plans to have inspections following the PDUFA here in the U.S..

And then on the EMEA markets in both the U.S. and Europe, can you maybe help us understand some of the discussions that you’ve been having I know you don’t you can’t say that much but if there is something that you can help with from….

I am sorry, I cannot hear you..

Sorry.

Is this better?.

Yes, it is thank you..

Okay. So, on the U.S.

and European DME market I know you can’t talk about discussion specifically but maybe can you help us understand what some other differences might or similarities might be between Europe and U.S.?.

I can’t comment I'm afraid, I do apologize..

It’s all right. I will ask you offline..

I still won’t be able to comment..

Okay. Thank you..

And I am showing no further questions. I would now like to turn the call back over to Paul for closing remarks..

Okay. Well thanks you all very much for joining us today. I look forward to speaking to you again in the next quarter. In the meantime if you have any additional questions please feel free to contact us. Thank you..

Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day..