Marc H. Hedrick - President and CEO Mark E. Saad - Chief Financial Officer.

Joseph Pantginis - ROTH Capital Partners Jason Kolbert - Maxim Group.

Good afternoon, ladies and gentlemen. Welcome to the Cytori Therapeutics First Quarter Earnings Results Call. (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 and business prospects, which may affect Cytori's future operating results and financial position.

Some of these risks and uncertainties are described under the Risk Factors section in Cytori's Securities and Exchange Commission filings, which Cytori advises you to review. 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. .

Good afternoon. Thank you Lacey and welcome everyone to our first quarter 2014 conference call. My name is Marc Hedrick, President and CEO. Joining me for the call is Mark Saad, our CFO. A press release was issued today and has been posted on our website and also we'll have a copy of this transcript that will be found there tomorrow.

On today’s call Mark will lead off and review our financials and then I will come back on line, review the status of our key programs both in cardiovascular disease and thermal and radiation injury. Then I will update you on our pipeline development activities, then provide an outlook for the remainder of the year and then we’ll have time for Q&A.

So with that Mark let me turn the call over to you and Mark Saad will explain our financial results for the quarter. Mark..

Thank you Marc. In the first quarter we recognized $1.4 million in product and contract revenues compared with $1.9 million in the first quarter last year. Product revenues were $1 million in the quarter under a revised or more conservative recognition policy compared to $1.4 million last year.

For our previous statements in March we changed our internal accounting policy effective Q4 of last year and this was to defer new customer revenues until collections are received.

This is a relatively common practice of larger multinational companies and we rely heavily on international markets, particularly Japan where unique language, culture and business practices exist. While our prior practice was U.S.

GAAP compliant this is one of a number of elements the management has implemented to reduce future bad debt risk as we grow, and pursuant to this new revised policy we deferred recognition of an additional $3.4 million of product orders that were shipped to new customers predominantly in Japan in late 2013 and early this year and which we do anticipate recognizing this year.

Another way we will reduce collections risk and improve cash flow is by establishing a customer financing agreement and we have done just that with Sumitomo Mitsui Banking Corporation which is a leading bank in Japan.

This is a great arrangement where SMBC will directly provide capital lease financing to our Japan customers for purchase of solutions products and simultaneously provide accelerated payment terms to Cytori.

Now our first shipment in Japan under this arrangement actually occurred in the first quarter and pursuant to our revenue policy, as SMBC was a new customer we deferred recognition till collection and that was in fact received in Q2.

So moving forward this arrangement can provide both significant benefits to our customers in Japan that want access to our technology but provide them with payments options and this if adopted would also shorten our sales cycle and reduce days receivable. So we are excited about the potential for this.

For the remainder of 2014 we anticipate modest year-over-year growth consistent with the current focus on bigger tickets sales. Gross profit of $0.6 million was consistent with 2013 and this was due to a larger margin increase to 59% in Q1 of 2014 compared with 46% last year.

This margin improvement is due principally to product mix and can be expected to vary quarter to quarter. With respect to our U.S.

government contract with BARDA we recognized $0.4 million in contract revenues this past quarter compared with $0.5 million last year and the reduction in the most recent quarter is really reflective of the company’s substantial completion of activities under the initial $4.7 million proof-of-concept phase of the $106 master agreement.

Going forward the announced June 10th meeting is when Cytori is prepared to meet the range of possible outcomes and we have expanded our government-related contracts management capability accordingly.

Regarding operating cost we increased R&D expenses to $4.3 million and this compared with $3.7 million last year and was due largely to increased ATHENA enrollment as well as expenses associated with the BARDA contract.

We continued managing down sales in marketing costs and those were reduced by 15% year-over-year to $1.9 million compared with $2.3 million in Q1 of ’13. G&A increased to $4.3 million compared with $3.8 million last year.

However of this $0.8 million related to one time professional service fees and a non-cash bad debt charge that was largely attributed to certain 2012 sales. So excluding those items G&A was actually reduced by 8% year-over-year. Going forward R&D expenses may increase or decrease in 2014 and this really depends on the outcome of the BARDA decision.

So we will see where that stands in June. Otherwise we anticipate reduction in non-BARDA, non-ATHENA R&D related expenses and this includes the elimination of certain non-core studies.

Sales, general and administrative expenses will continue to be pushed downward due in part to reduced non-transactional related professional services and a transition to a less expensive Japan headquarters and overall just improving operational efficiency continues to be a top priority that we will increasingly emphasize over the remainder of the year and intend to continue the cost reduction trends that we’re showing.

I’ll now move to our cash, as of March 31 Cytori had $12.8 million in cash and equivalents in additional to $3.6 million in accounts receivable and the additional $3.4 million in product shipments that we described from Q4’13 and Q1’14 for which collections are anticipated and some were received since the quarter end.

We are in need of additional cash and estimate requiring additional 25 million to fund both operations and debt obligations into 2013 and enable the company to meet the importance stated near term objectives.

Management is actively underway with both financial and strategic opportunities that we believe have the ability to more sustainably fund the company beyond the key near term objectives and to target commercial and operational improvements in 2013.

We have recently replaced our expiring Shelf registration statement and added and ATM facility which remains [inaudible] around anticipated key operational milestones as one of multiple options that we intend to have available to strengthen our financial position. So with that I will turn the presentation back over to Marc..

Thanks a lot Marc. So let me switch gears and talk about our cardiovascular program. I think as everyone knows the current cornerstone of what we’re doing in cardiovascular these days is related to our U.S. ATHENA trials for heart failure.

The ATHENA trials continue to enroll pretty steadily at about two to four patients per month during 2014 and as we stand we’ve enrolled 29 patients; 26 in ATHENA 1, three in ATHENA 2, on site but on the whole seven sites are really doing provide share.

As we mentioned previously on other calls an average of about half a patient per site per month is really the best reasonable enrollment strategy I think we can expect to see with the trial like this.

I do see an incremental increasing trend towards that higher enrollment rate and expect that to continue, particularly as two new sites become active and all the sites will benefit from handful initiatives that began this year targeted to help trial enrollment but these things to be clear for all of the HUB enrollment they should not impair quality of the data.

Also as mentioned, which is good news the FDA has allowed us to expand two sites in ATHENA I and from 10 to 12 sites in ATHENA II once we’re able to get often running in full speed with ATHENA II. The new sites on ATHENA I will be Swedish Medical Center in Seattle and the Christ Hospital in Cincinnati.

They should both begin screening in the May, June timeframe and both are experience de novo sites which is method of delivery that we use for ADRCs.

I can also tell thus far and very consistent with experience of PRECISE trial that the BAT harvest procedure that we utilized in the trial as well as the inter myocardial injection procedure as well as the self-processing it seems clearly feasible within the same day clinically and can be performed thus far with an acceptable safety profile.

The six month ATHENA I data as expected approximately eight months ATHENA I enrollment could be and I think one can reasonably expect enrollment to be complete this year best estimate right now in sometime Q4 but we’re working feverishly to finish as soon as possible.

For now, we attend to keep only a single site active in ATHENA II and that's [Cape Western] and we intend to do that until ATHENA I gets, since we fully enrolled at 45 patients and then the highest enrolling site with ATHENA I will then get the opportunity to become ATHENA II and the plan is to transition seamlessly from really one week to the next between the ATHENA I and ATHENA II and up to 12 sites, and maintain that enrollment rate throughout.

Also recall that on April 14th, we issued a press release that the long waited data from our European predecessor trial to ATHENA which is called PRECISE with peer reviewed and published in American Heart Journal.

In this trial, safety was measured after three years and efficacy would followed out to 18 months and briefly the study shows both long term, 36 months safety data was continue to show safety in the patients and the statistically significant efficacy signal was observed in the clinically meaningful end point at 18 months and this paper can now be found in draft form online at the American Heart Journal.

So now let me switch gears talk about thermal and radiation injury the other big program that’s of critical importance to us. That program is currently being funded in large part by the U.S. government. Lastly, to an investor note we announce that we have a scheduled date for our in process review meeting in June 10, of 2014.

Just so you can now understand what the objective of the meeting is, the goal is that we can demonstrate to the milestone decision authority that we have successfully achieved the goals of the base period of the contract which as you recall hopefully from the investor note there were three key components of that, and if you are ready to move forward and execute the next option under the contract and that’s fully warrant to the that’s optional one.

What we didn’t say which I think is worth pointing out and that’s it’s time typically the data that was generated under the base period is very promising both in terms of confirming the biological activity of ADRC.

So we got ample evidence that these work clinically but to have this sort of robust preclinical data, this magnitude funds by the government is really great thing for us.

So if we have shown that scientifically that biological activity is preserved in thermal wounds the cleaning nodes that are compromised by radiation industry which is critical from the government perspective and then also confirming the effectiveness of our next generation device technology which was part of the base objectives.

So maybe a little color on the large animal preclinical data.

So we have actually completed four multi-arm preclinical studies, two of which the animal subjects were radiated and two of them were non-radiated and in all four studies we observed that the adipose derive regenerative cell treated subjects showed an increase in the rate of [aptealization] which is little enclosure and we also observe an improvement in the wound vascularity and other parameters in the wounds in the treated animals versus the ones that got placebo.

We also showed an improvement in the same aspects in those animals that received a very widely used synthetic skin substitute which is part of our research program with respect to BARDA. So on the whole our review of the scientific data is robust, rigorous, publication quality data we hope to submit for peer review publication in the near future.

As for timing of next steps with BARDA in the first weeks after the meeting we hope to have a pretty good idea if we are going to be entering the option one phase of the contract and then the magnitude of the funding that the government may provide.

As regard the option one in the original statement of work with BARDA was budgeted up to $36 million, of course we will strive to get that amount completely in this option one period but at this point no commitments have been made.

In parallel to the base contract objectives and that research that's been going in the background, a BARDA team and a Cytori team have met with the FDA to discuss the clinical pathway for our technology in burning treatment.

I was actually there at that meeting, it was productive meeting and I think the minutes should positively, should reflect the positive impact in decision process with BARDA.

So I think bottom line is from Cytori's perspective I would define success as receiving additional funding support for ongoing development of the next generation technology further clean-up pre-clinical work and then ultimately for U.S. clinical.

So now let me discuss our clinical pipeline and the future plans for this and I think this is an area where we intend to make some changes. As you know aside from the two significant programs I mentioned before there are number of investor initiatives studies that are active around the world.

I believe we are deploying our corporate development where we just absolutely must translate this feasibility work into a clinical development pipeline that can both grow in importance and enhance shareholder value and by that I mean good data that's driving towards reimbursement and I think market will appreciate that.

We are currently evaluating which indications represent the greatest commercial opportunities, identifying the most direct path in the market and then we can drill down and focus on their development and I'll update you on the progress as we make determination about the pipeline.

In the meantime we are going to continue support in as cost efficient manner as possible the active studies that we have underway, at countries around the world and even consider exploring new areas.

Specifically, I like to just update you briefly on three of those studies that have shown both clinical feasibility in my mind and also have shown promising efficacy signals. In Spain Dr. Ramon Cugat studying the use of ADRCs for an interior crucial ligament repair, 20 patients scheduled to be treated.

He's far along in that study, enrollment's expected to be completed in the second-half of the year and that's a milestone that we anticipated announcing when complete and also when the data is available. In France Dr.

[Gi Megalon's] study of the use of ADRCs in patients with hand manifestations and disability from an auto immune disease called Scleroderma, the hand disability called is [sclerodactly].

He's treated 12 patients, that study is complete, we actually reviewed the 12 month data and it's been submitted for publication and this an area where we are considering potentially further expanding the clinical development program and that’s under view right now. The third is Dr. Momokazu Gotoh study, Dr.

Gotoh from Nagoya has studied ADRCs stress and urinary incontinence. We originally had positive results from 11 male patients published in the International Journal of Urology in 2013 and more patients have also been treated beyond this.

So MHLW, an arm of the Japanese government has agreed to fund that study which should be pivotal trial in Japan going forward and we are currently under negotiation regarding the details of that trial with Nagoya University MHLW and ourselves and I expect I will be updating you later in 2014 as we work toward our clinical development timeline for that and I'll convey that to you when available.

So let me move to the pipeline and discuss briefly product sales. Our commercial team remains very small and focused really on one thing and that's supplying the demand of providers and institutions for ADRC in cell therapy. Some are used in trials, our investigator-initiated studies and some are actually being used in routine clinical therapy.

For 2014 our strategic sales goal is to generate clinical safety and efficacy research that can supplement our therapeutic pipeline. And really it's constitutes a very economically simple way to do that. In addition we have a broader financial goal to achieve a positive contribution margin at the same time.

On the later goal, I think we are moving in the direction and that we have reduced SG&A over the past few years by 34% while modestly increasing product sales into the research demand that we see.

It's important that we are also continuing to re-access the revenue and cash management component related to these as Marc mentioned, which the transactions are often very complex global transactions and we have implemented a variety of policy and procedure and practice changes to improve our functioning in that area.

Going forward I believe the commercial organization can generate a positive contribution back to the company in the relatively near future and I am monitoring that closely and we'll provide specific updates in this going forward. Longer term of course our aspiration is to be the commercial leader in cell therapy.

And now come about by virtue a strong clinical data either reimbursement for identifying some key self-pay market. This is critical to our overall strategy and not to be forgotten as we talk about the more immediate product sales numbers.

But in the interim we have several potential upside commercial opportunities that could possibly impact sales and contribution in late 2014 but more likely in 2015. I'd just like to mention a few of the notable. First is Okyanos Heart Institute.

They are a customer that has built what I consider a top notch team and facility in a well regulated market that's in proximity to the U.S. and they are anticipated to come on line later this year. A few months ago we met to Lorem Vascular, our South East Asia partner and they are on track with us to file for Chinese FDA approval later this year.

We also anticipate that as a result of new regenerative medicine laws, the details of that become more clear that we will be able to identify and drive new Japanese customers as a result. And then for more downstream we hope the U.S.

government could be a customer and then other things that we are working on behind the scenes that we’ll update you as they become real.

A key component of our ability to grow revenue over the long term and create downstream value that's having a robust point of care, ADRC cell processing platform that offers number one, viable economics consistent with the global current healthcare economic realities.

Two, they provide favorable features and benefits for the customer to position and the hospitals that will buy the technology. And then finally something important for us that it's scalable and can go global. I think we have that technology, it's well under development and it's been partially funded by the U.S. government.

The pace of the progress to bring that to the market will be partly driven by the funding we receive from BARDA that we’ll continue to invest in that as we move forward. Finally I’d like to just mention what’s going on from a regulatory perspective particularly in Japan.

We’ll continue to participate in the dialogue around the new regenerative medicine law. Last week the draft guidelines were released in Japanese; we haven’t had a chance to review those but we will.

And as we continue to better understand what those mean and as we go through the public policy and public comment period we’ll continue to collaborate with the Japanese government as we are doing now and continuing to participate with various industry groups as we are doing now and then we’ll update you as we know more.

So looking forward what all I think is important for the remainder of the year. I think first we are going to report on BARDA progress after the June meeting as soon as we can and have clarity on next step. Completing enrolment for ATHENA I is critical and then rolling directly into ATHENA II.

As Mark mentioned and also as I mentioned we hope to improve the efficiency of our operations and the financial strength of the company. We are focusing our pipeline activities in a few meaningful indications that are both valuable and might be achievable.

We intend to discuss the final Japanese regenerative medicine laws as it becomes clear and its impact on us file for Chinese FDA approval related to the Loren Vascular relationship. We intend to move part of our manufacturing to lower cost region that will both reduce our cost and overhead but open up potential new market opportunities for us.

And then finally finish the core R&D activities related to our next generation functions. So for the patients, those who are on call now I would like to turn call back to the operator Lacy to moderate the Q&A and Mark and I will be here as we answer your questions. Thank you for your attention. .

(Operator Instructions). Thank you our first question is coming from Joe Pantginis with Roth Capital Partners. .

Hey guys thanks for taking the question and congratulations on the progress so far. A couple of questions if you don’t mind.

Regarding BARDA with regards to the upcoming meeting for lack have better word I guess you had a lot of interactions with them, but what would you say is the rate limiting step in everything that you had to provide to the agency in order to move to option one? And then following the meeting is there a defined time that BARDA has to get back to you with an answer?.

Hi Joe, it's Marc. I think the next step has been time and probably along with that just following the regimented governmentally dictated process to get to an IPR meeting, that’s really been it and so I think having that date on the calendar is an important milestone.

The second question was related to, sorry can you just repeat?.

Sure.

I was just saying, is there a required timeframe that they need to deliver an answer?.

No, there is not, I think as I mentioned I think it should be probably on the order of weeks but we have been in constant negotiations and the goal to try to do as much of that before the meeting as we can. So can move relatively quickly to decision and announcements but no, there is defined statutory timeline..

Right, but you just touched on, I mean it’s important to highlight as you said that you’ve been in constant talk, you guys haven’t been operating in a vacuum so you pretty much know what to expect from them so be able to deliver it, so that’s a good point.

With regard ATHENA, I guess if you give sort of the shorter answer because we’ve gone over in the past, but based on the update today can you just remind us high level what some of the initiatives that you put in place regarding trying to boost enrollment. .

Sure. I think you could divide them up really in three areas. The first is protocol-related changes and I think everyone is aware that we went back and shifted things within the protocol at the end of the 2013 that I think are now paying dividends and facilitating enrollment.

The second thing is some things we can do at the site level to make it easier to drive the throughput of enrollment for example in listing the help of more plastic surgeon so there is more, a lot of time available or catalog time available so that you can find areas which you can schedule patients because these are elective case.

So you just need time for the physicians to schedule patients. Things like that over multiple areas are things we can do on the site related basis that we got to be valuable in the site gotten to be valuable. The third thing we can do is we can help recruit patients and there are good ways to do that and bad ways to do that.

So if we can drive an extra half a patient per site per month per quarter patient per site per month we can make a big impact in the study until 45 patients. So we are actively participating with the sites in ways that they think will be most useful to help drive new patients to the site.

And we just take a constrained based approach to the problem what are the constraint at the sites, constraints in the trial and then just steadily we knock those down and get closer we can benefit in terms of steadily increasing the enrollment rates..

Great. Thanks a lot Marc..

Our next question comes from [Yale Taken from YY1 Company]..

Hi, good morning. Just quickly two questions, number one is that could you develop -- I mean you mentioned about that some revenue will be recognized in the subsequent quarter, I think second quarter and third quarter of this year, could you give me little bit more color in terms of what that might be and I have the follow up after that..

I’m going to ask Mark Saad to answer that question for you..

Hi. The $2.4 million of shipments are effectively waiting we decided to just defer recognition under the new market policy because those are international sales to new customers.

And we are going to treat all of those no matter how large and financially capable those customers are, some of these are very large hospital companies irrespective of that we are just growing recognition to collection.

So we have line of sight to that we’re working with those customers it is make sure that they get what they need and they pay for the contracts and as they do we will then recognize we anticipate recognizing under the policy.

So some of that has picked up in Q2 already and we think reasonably soon we should be picking up three or four as well as some new sales for new customers we would defer to the subsequent quarter when collections are received for those.

So once we get on to a track of where we’re now collecting on the former shipments and we have new shipments going out that we would defer it becomes we think more of a predictable cycle..

So, for the final revenue of $1.1 million this quarter the last quarter I should say they also contain some of recognition from let's say fourth quarter of last year, is that right?.

Yeah, there were some of that. So we have some of that -- some of that million was pick-up from Q4. The majority of Q4 was not picked up and we will see more of that hopefully this quarter and in the next quarter and then we have some additional shipments in Q1 that as per policy we were pushing out.

An example of that was the SMBC relationship where SMBC financed to hospital customer in Japan as a results we did not recognized that in Q1 even though it was shipped and obviously very financially sound situation but just per the new policy we wanted to see the collection with SMBC to confirm that we now have in fact a solid -- we are building a solid track record.

So collection was in fact received in Q2 so, there is one sale as example that I say we likely certainly we will see that Q2 so, at that's how we look forward..

Okay, great, Thanks a lot, that's helpful. To follow-up anther question basically is that you mentioned that you are looking to some investigators sponsored study and try to move some of these activity forward in terms of automating [inaudible] those activity.

So what might be the selection criteria or assessment criteria for these various studies you based upon at least going forward?.

You know there will be things that are familiar to everyone, size of the market the regulatory path, the relative need in the market for therapy, what will be ultimate pricing in the market justify, its use, feedback from key opinion leaders, the scientific merits of the available pre-clinical and clinical data, our relative IP position.

So we'll look at a myriad of factors that will all play in and then we'll pick from that basket one or more and then we will move those rapidly through not only in the U.S. but perhaps in other market as well..

And most of those once you decide that would that be more on the companies on the budget or that will still be more financed by the government public funding by various company government or not?.

I think it could be both where we have built a government based infrastructure that we can accommodate government contracts and our goal is to leverage that infrastructure and so that will be part of the analysis criteria but I think as you alluding to we'll have to be capitalized such as we can commit to this program and commit to see it to value creating milestone so, capitalization will certainly be part of the decision making process..

So lastly the potential any of these development could potentially provide upside I guess in 2015 and beyond instead of something immediately in this year, would that be fair?.

Can you just restate the question?.

I mean any kind of financial upside due to these further development probably will more likely materialized I mean to say 2015 and beyond instead of this year, would that be fair?.

It would be 2015 and beyond..

Okay, great. Thanks I appreciate it..

Our next question comes from Jason Kolbert with Maxim..

Hi, Marc.

Can you talk a little bit about the timeline I mean they have been shifting pretty steadily and we are now talking mid-2015 and can you help me understand how you are going to drive this company differently than Chris Calhoun, who I certainly liked Chris but it's different management, help me understand how committed you are to the timelines that you are presenting to us today?.

Well, Jason I'm committed to the timelines. And the timelines I'm presenting to you today are based on real live, actual enrollment data that we are seeing at the sites.

If you go back to you know where this trial was a year ago where there we couple of sites that were -- that were the 2PI’s before we had created that, before we had gone back and re-changed the protocol. I think there was a lot of ambiguity in our forecasting with relates to trial. So we were giving you best data at the time.

So I have a greater degree of confidence now in these numbers because they are based on real enrolment data, based on now having seven sites that are active. So I think that sort of speaks for itself. You mentioned what things may change in light of the recent CEO transition.

I could tell you that I am going to focus on things that I believe will really drive shareholder value and particularly the interest of institutions. Now those are things like ATHENA enrolment, BARDA and developing a valuable pipeline. Those are kind of the things that are going to be priorities to me.

Second thing is I want us to function as a company operationally in a very efficient way. I want to keep our cost down as low as possible and still hit our objectives on time. And then I think finally and perhaps a little more stylish in communications I will be as clear and transparent as I can, given the data I have.

And I will communicate on the timing based on when I feel like it's appropriate. So expect clear transparent communications from me including things about enrolment and that just laid out like it is and we will do everything we can do be an efficient strategic corporation focused on creating shareholder value. .

Thanks I do appreciate that. I would like to ask we’ve been talking about a lot of different trials but we haven’t been talking so much about the ligament trial and that study.

Can you give us a little more of an update where that is? And then I’d like to ask Mark Saad a little bit I understand there was news that just crossed the paper regarding what looks like an ATM facility and I'd just like to ask you about your cash plans given the fact that you burned about $9.5 million cash in the quarter and I believe you ended the quarter with about $12.8 million.

.

Sure Jason. Yeah the hamstring study the feasibility study in U.S. to study muscular and tendon injuries, we have two simultaneous clinical paths to investigate in our mind whether this hamstring tendon based injury is feasible and something we may want to pursue. There was a U.S.

trial and there is a study going on within Europe using investigator initiated study. It just so happens that the European investigator initiated studies as I mentioned before, Dr.

Cugat and there are others that are moving quickly and in a way kind of validates having to CE marketing being able to get some market relatively quickly whereas here in the U.S. we are very restricted as you know in terms of what we can do because of the different regulatory situation and the FDA.

So in my mind we are getting that feasibility data in Europe and I will report on that when we have that. But given my expressed focus and commitment to containing cost I am not sure whether the utility that study make sense in the process of reviewing that and I’ll let you know what we decide to do about that study as soon as we make a decision. .

Thank you..

Hi Jason it's Mark. So on the cash question you are right so in the quarter, first quarter tends to be the higher burn quarter just based on timing of some of payment to go on an annual basis. So Q1 does look large but it's consistent with other Q1s that we’ve had.

Some of the changes that we’ve implemented or in processed on in addition to the seasonality effect anticipate having that number being closer to $7 million on a cash operating basis in the near term.

So first I think you’ll see that, that number is going to drop fairly considerably and then secondly it does still create a cash need, we think around $25 million to get into reasonably comfortably into '15 where between now and then we have several milestones that should fundamentally have the ability to validate the company more significantly and thus create greater opportunities going forward.

So that’s kind of the goal, interim goal really for the year. If you compare that Jason to last year we raised probably closer to $35 million without going to the markets, through strategic transactions as well as the refinancing of the loan.

And so those are very much in play for us right now and I think our priorities continue to be bring the money in for the best available source. We do have additional more partnering type transactions that are core focus priorities for us.

At the same time we need to have a variety of mechanisms available particularly if there is a scenario in which we think we can see some operating milestones deliver, increased institutional interest in the company which we think is possible.

So as a result renewing our Shelf which was what we did, we had an expiring Shelf, we put in a new one to replace it and then the facility is a mechanism as you know to be able to opportunistically take some down.

It's one of multiple things we expect to have in place certainly not the only thing but one that we think could be valuable particularly if we are able to achieve on the operating side or strategic side that could be a nice complement to that. But that’s really how we look at that.

But you are right at the beginning is making sure that the costs are carefully managed which we are, I think we’ve done some things and we’ll continue to do some more things that help you see that number come down fairly soon. .

Thanks for the guidance. Appreciate it. .

At this time there are no additional questions. I will now turn the floor back over to Dr. Hedrick for any additional or closing remarks. .

If you look at safety, like we’ve shown that ADRCs are clearly safe in animals and in humans; if you look at efficacy in all the patients that we’ve treated around the world I think we’ve shown that T cells have profound biologic activity; the BARDA relationship is just continuing to support the fact that T cells do work.

And I think around the business model we’ve shown that these ADRC therapies are economically viable via very straight forward device consumable based mode.

And I can tell you that our team is fully committed to creating that path to value and we’ll work round the clock, redouble our efforts to make that a reality and I will try to be as clear and transparent as possible in my communications with you along the way. So again thanks for your time, for your interest and have a good evening. .

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