Al Kildani – Vice President-Investor Relations and Business Development Russell Cox – Chief Executive Officer Mike Swanson – Executive Vice President and Chief Financial Officer Rob Ashley – Executive Vice President and Chief Technical Officer Jan Stange – Chief Medical Officer Duane Nash – President.

Laura Chico – Raymond James Jonathan Aschoff – National Securities.

Good day, ladies and gentlemen, and welcome to the Vital Therapies' First Quarter 2018 Financial Results. [Operator Instructions] I would now like to introduce our host for today's conference, Mr. Al Kildani. Please go ahead sir..

Thank you, George. Good afternoon my name is Al Kildani, Vice President of Investor Relations and Business Development with Vital Therapies. Thank you for joining Vital Therapies' management team on our conference call to discuss the Company's operations update and results for the first quarter ended March 31, 2018.

On today's call are several members of the Vital Therapies senior management team, including Russell Cox, Chief Executive Officer; Dr. Duane Nash, President; Rob Ashley, Executive Vice President and Chief Technical Officer; Dr. Jan Stange, Chief Medical Officer; and Mike Swanson, Executive Vice President and Chief Financial Officer.

Before we begin, we'd like to remind you that some of the statements we make today will include forward-looking statements, such as statements related to the timing and conduct of our clinical trials, event rates, which may vary from projections; future clinical trial results, and whether such results will support any regulatory submission or approval; our plans for and the timing of certain development goals including regulatory submissions and approval strategies; our projected cash runway; potential product indications and market sizes; and plans and objectives of management for future clinical and market operations.

Forward-looking statements are subject to a number of risks and uncertainties that could cause actual events or results to differ materially, including the risks that our clinical trials program is delayed or is ultimately unsuccessful; the risk that our biologics license application or BLA takes longer or is more expensive to complete; or that we need additional financing sooner than anticipated.

Please note that these forward-looking statements reflect our management's views only as of today's date and we disclaim any obligation to update any forward-looking statements except as required by law.

Please refer to our SEC filings and our most recent 10-Q filed earlier today for a discussion of the risk factors that could cause actual events or results to differ materially.

Vital Therapies promptly makes available on its website reports that the Company files with or furnishes to the SEC, corporate governance information, press releases and other posters and presentations. A replay of this call will also be available on our website later today.

We encourage investors to use our Investor Relations website as a way of easily finding information about Vital Therapies. I would now like to introduce Russell Cox, Vital Therapies' Chief Executive Officer..

Good afternoon, everyone, and welcome to our first quarter 2018 update call. On today's call, I'll begin with some introductory comments, provide an update on the status of the VTL-308 trial, discuss some of the recent activities on the publications front and then I'll ask Mike to review our first quarter financial results.

And finally, we’ll open up the call for Q&A. I'm pleased to update you on the significant progress we're making here at Vital Therapies. This is my second call as CEO and with four months now under my belt I cannot be more excited about my decision to join Vital.

In case, you are new to the Vital Therapies story, we are a late stage biotechnology company developing ELAD, a cell-based therapy with the potential to save lives of people suffering from acute forms of liver failure.

With cell therapies emerging at the forefront of the biopharmaceutical innovation, we have a unique and exciting opportunity to put our stamp on this space. We believe, we're in the right place, at the right time and I'm thrilled to lead this Company as we enter what we hope is the homestretch of the clinical development.

I will now turn to status of our 308 Phase 3 clinical trial. We're pleased to announce that we completed enrollment at the end of March, with a total of 151 subjects. This included 78 subjects in the ELAD treated arm and 73 in the control arm.

As a reminder, the study was designed to achieve a targeted overall blended total of approximately 55 deaths at time of data lock. And the ability to enroll additional subjects if necessary.

As we stated in our last call, independent statistical experts evaluated the blended event rate in 308 based on data available through December 31, 2017 and concluded there was no need to expand enrollment beyond the Company's target of 150 subjects in order to achieve the target event rate by data lock.

Recall that these data physicians did not have access to data by study arm and thus gained no insight on the outcome of the trial. We ended up enrolling one additional subject before closing enrollment. The trial enrolled subjects at a total of 38 sites in the U.S., UK, Germany, Spain, Austria and Ireland over the course of 22 months.

Just over 70% of subjects, were enrolled in the U.S. and the remainder enrolled in Europe. We looked to the current baseline characteristics for the 151 subjects enrolled in 308, not surprising what we found that they continue to fall within the required study inclusion and exclusion criteria.

And their means remain closely allied with those observed in the 208 reference population on which the 308 trial design was based. These updated baseline characteristics can be found in today's press release. Overall, we are pleased with how this trial has been conducted to-date. I would like to once again thank all those involved in the trial.

We expect to report top line results for 308 sometime in September, between now and then our clinical team will be working hard to complete the requirements of the trial.

We will conduct follow-up until 90 days after the last subject was enrolled, complete the process of monitoring the data and locking the database, which will be followed by a short period for the data to be analyzed by our third party statisticians. We very much look forward to this important event in September.

As, I mentioned last quarter, the rest of the team is transitioning its focus to preparations for the submission of the BLA away with the FDA. We would anticipate submitting the BLA approximately 12 months after top line results in the event of a positive outcome.

Looking, ahead we plan to take advantage of the experience we gained executing on 308 as we develop our plans for the potential commercialization of ELAD. Conducting 308 trial facilitated a number of important learnings that could prove helpful in the commercial setting.

We have developed solid working relationships with many of the liver transplantation centers in the U.S. and EU. And they could become commercial treatment centers for ELAD. We gained critical experience in managing the logistics of delivering a living cellular therapy in a timely manner to treatment sites on multiple continents.

We, also learned a great deal about how liver centers can establish the referral patterns to get severe alcoholic hepatitis or SAH patients to treatment sites where ELAD can be administered. For these reasons and more we believe our experience in 308 will prove invaluable as we put together a commercialization plans for ELAD.

Although, trial enrollment has been completed, we remain active on a number of fronts. As it relates to preparations for top line data and beyond. In late March, we attended a workshop titled clinical trial design and endpoints for alcoholic hepatitis and other alcoholic associated liver diseases.

Sponsored by The National Institute on Alcohol Abuse and Alcoholism or NIAAA, the FDA and the American Association for the Study of Liver Disease or AASLD.

The workshop brought together health agencies, clinical researchers, industry and patient-advocacy groups to discuss the issues surrounding alcohol related liver diseases and how they might be effectively treated in the future.

We're pleased to have the opportunity to present ELAD to an audience including many of the key stakeholders in the field of alcoholic liver disease.

In particular, it was heartwarming to see the attention and the time given to several patient advocates who were attending the meeting and who were able to provide unique insights into the challenges associated with dealing with severe alcoholic hepatitis in real life.

Overall, the meeting reinforced our views that there is a large unmet need for new treatments to address alcoholic hepatitis. This disease complex is unlikely to be successfully treated with the simple monotherapy, as this is now emerging as the consensus view of the medical community and the competitive position of ELAD remains strong.

We believe our cellular approach may overcome some of the challenges associated with using a single drug to treat a multi-faceted disease.

Were also encouraged that the developing consensus from this meeting regarding the definition of severe alcoholic hepatitis study population is generally consistent with the criteria we used in design of the 308 trial.

In April, we attended the International Liver Congress sponsored by the European Association for the Study of the Liver or EASL in Paris. We made a poster presentation in the conference titled Hepatoprotective Biomarkers, Amphiregulin and Soluble Fas increase during the ELAD treatment in alcoholic hepatitis patients.

At the meeting, we sensed a growing awareness of ELAD in the liver disease community. And we hope to build on that later in the year, where we hope to announce 308 top line results.

Our activities at upcoming medical meetings include poster presentations at the International Liver Transplantation Society 2018 Annual Congress in Lisbon, May 23 through 26; Digestive Disease Week in Washington DC, June 02 through 05; the 2018 Annual Transplant Congress in Seattle June 02 through 06; and these posters will become available on our Investor Relations website under the section titled clinical publications and presentations by the close of each conference.

On the R&D front, I'm pleased to announce we’ll be holding an analyst R&D day the morning of Thursday, March 24, to do more of a deep dive on some of the recent R&D conducted by the Company. Particularly, with respect to the mechanism of action and how we believe it may impact the pathophysiology of SAH.

We also have a couple of clinical experts speak at the meeting. This event will be webcast live and then archived on our Investor Relations website. Please keep an eye out for details on this event, as it will be a terrific opportunity to learn more about our technology and about the treatment of liver disease directly from clinicians in the field.

As I mentioned earlier, we're also beginning to take steps towards potential commercialization of ELAD. As we prepare for that, we are pleased to see a manuscript accepted for publication in the peer review journal alcohol, titled Mortality and Costs Associated with Alcoholic Hepatitis that evaluates the burden of illness.

The lead author of the paper Dr. Julie Thompson of the University of Minnesota is a principal investigator in the 308 trial. This research was supported by Vital Therapies. The analysis of our evaluated dataset encompassing commercial insurance claims for from 2006 to 2013 representing over $40 million insurance enrollees per year.

To our knowledge, this is the first time insurance claims for this specific disease population has been studied in such a detailed manner. There were some important findings that emerged from this analysis. First, this analysis supports our view of the size of the SAAH market in the U.S.

Nearly 30,000 patients each year are estimated to suffer from a particularly debilitating form of severe alcoholic hepatitis associated with significant mortality and a hospital stay of at least three days. Second, the annual cost for treatment of this population is extraordinarily high.

In fact, the average annual per treatment cost for an alcoholic hepatitis patient were found to be higher than those for heart failure and diabetes patients. This does not take into account the additional impact of alcoholic hepatitis unproductivity and the families of patients.

We intend to incorporate these findings into or commercialization planning. We encourage you to read the paper on your own as it provides a greater understanding of the disease population we hope to address with ELAD. I’ll now turn the call over to Mike for a discussion of our first quarter financial results..

Thank you Russ. We ended the first quarter with cash and cash equivalents of $43.6 million. Our average monthly cash usage for operations and capital expenditures during the first quarter was approximately $4.4 million.

The increase in average monthly cash usage as compared to prior periods is due to the payment of incentive compensation in the first quarter. Our use of cash will continue to vary primarily on the timing of expenditures related to our VTL-308 clinical trial and on the timing of expenditures in anticipation of a future BLA for ELAD.

Based on our current level of operations limited BLA and commercial related expenditures our quarter-end cash balance would fund our operations through the first quarter of 2019. Summarizing our results for the quarter ended March 31, 2018, the Company reported a net loss of $14.4 million or a $0.34 basic and diluted loss per share.

This included non-cash expenditures for stock-based compensation, depreciation and amortization totaling $1.9 million. This compared to a net loss of $12.6 million or a $0.39 basic and diluted loss per share for the first quarter of 2017, which included $1.6 million for the same non-cash expenses.

For more details on these financial results, please refer to our press release and our quarterly report on Form 10-Q. With that I’ll turn it back over to you Russ..

Thank you. Mike. Although 308 enrollment has completed, we have much to look forward to between now and the release of our top line results.

On May 24, we will hold an Analyst R&D Day, that should be a great opportunity for those interested in a more detailed understanding of SAH, and how we believe the mechanism of action of ELAD may impact the pathophysiology of the disease.

We are transitioning, our preparations for submitting the BLA for ELAD, which we hope to do sometime in 2019 assuming positive trial results. We’re also beginning to lay the groundwork for a successful commercial launch in the event of positive data and regulatory approval by leveraging our learnings from the conduct of the 308 clinical trial.

And of course, sometime in the third quarter probably September, we expect to announce top line results from 308. I'd like to open up the call for questions. In addition to Mike joining me for the Q&A portion of our call are Dr. Duane Nash, President; Rob Ashley, Executive Vice President and Chief Technical Officer; Dr.

Jan Stange, Chief Medical Officer. Operator can you please provide instructions and open up the call for questions..

Thanks, very much for taking the question and good afternoon. I guess, Russell as you mentioned, you're transitioning the focus towards the BLA. I'm wondering if you could elaborate a little bit in terms of what are some of the activities that you are considering the highest priority at this point.

And then as a quick follow up, I'm just curious, are you keeping sites open at this point or is there any potential for you to have any expanded access to ELAD at this stage..

Thanks Laura for the question. So in terms of what are the priorities on the BLA, I think the first thing for us to make sure that we had a great handle around was exactly what are those things that we can do in parallel path and what is on critical path.

So, we have probably three or four things that we would identify as being on critical path that are getting the largest focus at this point in time.

As you can imagine those a lot of those are sort of on the manufacturing front, but having said that there's nothing in the BLA, that is unique or different that would allow us to – have to look at this different than any other BLA filing.

And then in terms of keeping sites open, we obviously are doing data clean-up and spending time in the sites doing that. But we are – obvious closed for enrollment.

And then in terms of expanded access, I think that as we look at all the different things that we would like to do in terms of preparing for commercialization, there is some consideration to whether that might be something that we could do down the road but nothing that we're willing to commit to at this time..

Okay, understood, and I guess one quick follow-up, you mentioned the investor event that, you'll be hosting in a couple weeks. What are the key focus there? It sounded like there would be a little bit more detail around perhaps the disease state itself but also towards the mechanistic application of ELAD.

Just curious, if there's anything else in terms of highlights that we should be expecting..

Yes, I think you called it correctly. I mean clear emphasis on the science around what we have learned from MOA perspective and I think you’ll find that very interesting.

In addition you're going to get a chance to hear from clinicians who are in the field and who are actually familiar with ELAD and can kind of give a flavor for severe alcoholic hepatitis and what that actually looks like. So, I think that will be a good learning..

Thanks very much..

You bet..

And our next question comes from Jonathan Aschoff [National Securities] Your line is now open..

Thanks, hello guys. I was just curious, were the patients assessed for how well they fit the entry criteria, that was at the clinical trial site or at the doctor site where they originally presented..

Yes. So let me let me turn that question over to Rob. He can probably give you a little bit more granularity on exactly how we did that..

So the specific characteristics of the patient that enabled them to be enrolled were assessed at the site where the treatment was being planned to take place.

However, there was clearly a review and a discussion which took place between the investigator and the referring site as to the likelihood that somebody would be eligible once referred but the final determination of eligibility was carried out at the treatment site immediately prior to randomization.

Jan, I don’t know whether you have something to add to that..

Yes. So the final determination actually did happen at the trial site. And then the team of Chief Medical Officer, who would review the charts and make sure all the criteria are met, there was no waiving or anything..

Okay, thanks. I was just making sure that was the answer. So it didn't really matter how long it took them to go from the site of original presentation to the treatment site, which I mean, clearly sounds like that didn't matter because you assessed them at the site right before treatment..

Yes, usually that would happen in a quite short time so they didn’t stay around for one or two months at the referring site, if they were meeting the criteria, they were pretty fast at the trial site..

Okay, just because that time lapse was a problem, was one of the 208 problems. But thank you very much guys..

Hey, thanks Jonathan. Maybe Duane can add something to that as well..

Yes, Jonathan. So to clarify, the baseline characteristics that are listed in the press release, those were as of time of randomization. And so at that point, they're already in the trial site at the hospital enrolled and they had to actually meet the criteria at time of randomization.

So you can imagine them referring hospital at that point, they will look like alcoholic hepatitis but the time we actually or the time the site actually pulls the trigger is when they have to meet all the criteria. They have to meet them all at the same time and that’s those are the numbers that we publish as baseline characteristics.

Does that make sense?.

Absolutely. Thanks guys. I’ll see you in a couple weeks..

Sounds good..

I am showing no further questions at this time. I would like to turn the call back over to Mr. Kildani for closing remarks..

Again thank you, everyone for joining our 2018 first quarter update call. We look forward to speaking to you again in August. Between now and then, we will be presenting at the Bank of America Merrill Lynch 2018 Healthcare Conference in Las Vegas on May 17; and then the Jefferies Healthcare Conference in New York on June 8.

So everyone, please have a great evening. Thank you..