Mike Houston – Vice President-Commercialization Sonny Bal – Chairman and Chief Executive Officer Ty Lombardi – Chief Financial Officer.

Jeffrey Cohen – Ladenburg Thalmann Anita Dushyanth – Zacks Investment Research.

Good day, ladies and gentlemen and welcome to the First Quarter 2016 Amedica Corporation Financial Results 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 follow at that time. As a reminder this conference is being recorded.

I would like to introduce your host for today’s conference, Mr. Mike Houston, VP of Commercialization. Mike, you may now begin..

Thank you, Mike and good afternoon. Welcome to Amedica Corporation’s first quarter 2016 earnings conference call. On the call with me today are Dr. Sonny Bal, our Chairman and Chief Executive Officer; and Ty Lombardi, our Chief Financial Officer.

By now, everyone should have access to the earnings release for the period ended March 31, 2016 that went out this afternoon at approximately 4:00 PM Eastern Time. If you have not received the release, it’s available on the Amedica’s website at www.amedica.com. This call is being webcast and a replay will be available on the company’s website.

I’d now like to remind you that certain items that may be discussed in today’s call are not based entirely on historical facts. These items should be considered forward-looking statements, and are subject to many risks, uncertainties and other factors that are difficult to predict and may affect our businesses and operations.

As a result, our actual results may differ materially and adversely from those expressed or implied by our forward-looking statements. A discussion of some of these risks, uncertainties and other factors are set forth in our SEC filings.

We undertake no obligation and do not intend to update any forward-looking statements, as a result of new information or future events or circumstances arising after the date on which it was made. With that, I would now like to turn the call over to Dr. Sonny Bal. Dr.

Bal?.

Thanks, Mike and good afternoon to everyone listening. Let’s begin with an update of recent events and then describe Amedica’s outlook and strategy for 2016. I will then follow with the financial results for the quarter with Ty. In 2016, we have focused on four key areas that I want to cover. First and foremost we have improved our financial position.

Specifically since my joining the company about 18 months ago, our debt is lower by almost 50%. Operational cash burn is lower by 52% and we have a stable capitalization structure and that’s remarkable. These changes will undoubtedly prove their value for the company and the years to come.

Second, we have focused on expanding sales in the healthcare market that is changing and challenging and evolving.

Toward the last part of the year in 2015, we adjusted and expanded our sales forces in key geographic areas throughout the United States, some of those personnel changes impacted of our revenues for the quarter, but I’m absolutely confident that going forward once our enhanced sales strategy is fully implemented revenues will stabilize and grow with new distributors.

We are bringing on additional sales professionals to expand and diversify a surgeon and hospital base and we have new data and messaging to support our direct and private label sales going forward.

Point number three, we have advanced and validated our science at worldwide forums thereby increasing the visibility, success and outcomes of silicon nitride.

This portfolio publication and science have been instrumental in gaining the attention of other large companies in healthcare and outside, who are now starting to explore our material for their own specific needs.

These scientific advancements and visibility will continue this year complemented by clinical reports that we are publishing now that further validate our material claims. Point number four, we have shown as have others that our material is equally advantageous in non-medical i.e. industrial applications.

It’s just as strong as any other industrial material is not better. This expansion into the larger space of non-medical users of our material such as the aerospace industry and electronics industry has just begun, and it’s a very promising development for our future.

And this is initiated that Mike mentioned by our very successful attendance and very warm reception at two major meetings at ceramic manufacturers. Now let me expand on the four focus areas that I just mentioned.

In terms of sales outside the United States we signed a non-exclusive private label agreement with WinnTi Medical it’s fast growing of the company in China at the end of 2015. Last month, we also have announced an exclusive 10 year partnership with Weigao Orthopedics of China.

And this is consistent with our goal of expanding market awareness and penetration of silicon nitride, our Chinese partner Weigao has familiarity with the Chinese regulatory landscape, which is an important consideration whenever one is considering a foreign market.

You’re working with a Chinese partner toward a submission to the Chinese FDA and hope to announce a clearer timeline for our material to be cleared into that market.

As you know, the Chinese market is an enormous opportunity with a growing middle-class, expanding healthcare high growth and we are particularly proud and happy to have a market leader such as Weigao as a partner who is active throughout the country.

Once the Chinese FDA clearance is in place the minimum annual purchase order requirements of 20,000 units, reflects a huge opportunity, particularly since it took us five years to cross that number after receiving FDA clearance here in the United States.

The six year minimum annual purchase requirements of 225,000 over the life of the partnership reflects the growth of healthcare in China as our nation expands particularly is middle class as I mentioned. To repeat the cumulative annual and minimums over the life of the Weigao partnership mark almost a tenfold expansion in the unit sales today.

Now this deal with Weigao is a direct result of our efforts to get out there to increase awareness acceptance of the advantages of silicon nitride not to keep it a secret, this is a subject that has been the focus of our R&D efforts internally ever since I joined the company.

We anticipate a number of additional OEM and private label partnerships during the rest of 2016. And as we advance discussions with several companies both large and small who see the differentiation and advantage in using our material in their products.

I will mention that we’re also seeking regulatory approval in Japan with a couple of partners working with us in that country. Next despite the political turmoil in Brazil that you all read about orthopedics lead as a strong market, we anticipate additional growth from our partners in Brazil this year.

The limits of plastic, polymer, metal spin cages are well known to the sophisticated Brazilian orthopaedic surgeons who are very accepting and welcoming to our ceramic products particularly silicon nitride and understand its advantages and driving better surgical outcomes.

Accordingly we’re optimistic and anticipate growing sales in Brazil with our partners in that country well into the future. As you know we’ve committed a lot of our resources to further understanding the science behind silicon nitride.

In addition, we are driving awareness of the material is that other advantages one of them being, we discovered that we could engineer the surface chemistry of the material that tailor make it for specific applications. For example we develop the second generation material by just changing some manufacturing steps just last year.

This new material, which is still silicon nitride with the surface chemistry alerted show the three-fold greater bone affinity in our early studies, which is absolutely remarkable considering the already excellent natural affinity of our existing silicon nitride for bone cells.

Now enhancing bone fusion and bone healing has been a dream of orthopedic surgeons introduce us to material strategies is a big cost advantage in the healthcare system especially in today’s cost conscious world.

The surface engineering of a biomaterial to enhance specific bioactivity targeted at clinical solutions is a novel strategy, pioneered by Amedica and very well received at every scientific forum so far while we have presented our data.

Now let me go on to testing our claims before rigorous peer review that’s a very key part of our strategy we’re a science company and materials company and basically we develop a material for medical and non-medical applications.

I mentioned earlier in previous call, we are on track to publish 15 manuscripts and procedures to industry journals for this year. That’s a remarkable achievement for any company big or small, in fact remarkable even for a university academic department.

For anyone interest in learning more these publications are on a newly reinvent website and there is an easy to read narrative summary which captures all of our knowledge of silicon nitride that makes person a very good reading.

Now one recent publication are in the considerable media attention and that was a paper showing how silicon nitride could help fight bacteria that cause gum disease of major worldwide problem. Gum disease and tooth loss and serious ugly problems with no satisfactory solution. A member of our Scientific Advisory Board, Dr.

Giuseppe Pezzotti from Japan from the Piezotech Institution show that contact with silicon nitride surfaces has a lethal effect on bacteria associated with severe gum disease.

Now this type of work attracts that have the intention of partners throughout the dental industry as an example and we were also invited by the media to do coverage on this and you can Google this subject and you’ll see a lot of hits, all related to our company.

Now importantly there is one thing to make a claim of the company, but a very big and difficult step beyond that to work toward identifying the exact mechanism, answering the why.

Why does silicon nitride work against bacteria? And Professor Pezzotti and his team and our partners at the University of Rochester have done just that leading to their findings being published in very prestigious forms with the major attention.

Next, additive manufacturing which is also called 3D printing that you hear about is very well accepted as a future efficient and lower cost manufacturing innovation. We tried and we became the first, this past quarter to treat in silicon nitride.

Aside from lower cost in the future this innovation opens a door to more complex shapes and sizes of silicon nitride products for a variety of partners, opening many more potential markets. This is a serious development, this development lead to interest in our material and 3D printing methods from a number of partners.

And going forward we will develop and refine 3D printing, as our manufacturing platform to leverage all of the advantages of this significant innovation. So briefly our R&D goal is to lead in silicon nitride promote awareness of what our material is and its capabilities.

And make a very broad range of products for a variety of medical and non-medical partners. As you may know silicon nitride is used across many, many industries worldwide and worldwide demand for the material outside of medicine is growing.

In medical applications our goal is to educate surgeons of the natural advantages of silicon nitride for human implants. Namely things we've talked about bone affinity, bacterial rejection, biocompatibility, improved wear, superior strength and most importantly a unique combination of properties there is no other biomaterial can match.

Now one important objective measure of the quality of science and R&D coming out of a company. Its acceptance rate at top rate blinded peer-review meetings and on that front Amedica is unsurpassed. We have had every single presentation, accepted at every single meeting where we have submitted our work.

With the authors to lead it, that's what blind peer-review is. This is all the more impressive considering we target only the top tier professional meetings. At more than one meeting our presentations have been upgraded without our request at the invitation of the meeting organizers.

To these featured talks of full length symposium of key note presentation that we are very proud of that. Our unique strength is in leading the development and commercialization of silicon nitride for the widest audience of partners. This is a big change from 18 months ago, when we were a biomaterial company focused only on spine.

To-date all of us [indiscernible] and we have many have shown only advantages, no disadvantages. And many previously unidentified advantages that this remarkable material brings to the technological table in answering future needs whether an industry or medicine and we are justifiably very excited. We have a number of new product launches.

These are keys to expanding our sales going forward. Now in terms of a composite ceramic spinal fusion device, the first of its kind anywhere by anyone, as you know we submitted our 24 month clinical data to the FDA for a 510 clearance in the United States.

And to remind you the clinical results show that porous silicon nitride and that’s the only porous ceramic available out there. Fuse the cervical spine as well as the patient’s own bone with no added bone graft of biological arguments that’s a first.

These results are not surprising to us given our understanding of the surface chemistry and biological attributes of silicon nitride as published in many papers. We would have predicted this outcome.

During the first quarter the FDA asked us for further subgroup statistical analysis on our data, which we have completed following an in-person meeting with the FDA. We will submit our analyses by the end of May and expected determination by the FDA in 60 days.

I have no doubt about our clinical data or its integrity and we have encouraged the principal investigators of the study to present the data at worldwide forums in front of peers and they have done so. The data speak for themselves. With a composite device that does a way with expensive bone grafts.

Our total addressable market should double to $4 billion as the biologics market in orthopedics and neurosurgery comes into play. This device will simplify, speed up and increase the safety of orthopedic surgery specifically fusion surgery.

We have prepared to launch porous silicon nitride and specifically our composite device shortly after receiving clearance from the FDA. It’s worth emphasizing that unlike a one hit biopharmaceutical style company have future does not rest with one device.

From solid as far as silicon nitride to oxygen-rich silicon nitride to nitrogen nil silicon nitride to polished barring silicon nitride to porous compositions to a newly explored work in metal ceramic brazing for aerospace and electronic applications with the major partner.

We will continue to work on all fronts to deliver on the full promise of silicon nitride and I believe we still have a ways to go. We have made strides in a non-ceramic business and metals business also, which has a pull through effect on ceramics during spine surgery and which is needed routinely whenever ceramic implants are being used.

A new type of screw fixation system and updated instrumentation have attracted a lot of surgeon interest and we are on schedule for a launch at the NASH meeting later this year. Feedback continues to be very positive in the updated instruments of being introduced into the field already.

The unique attributes of a modular screw design and tensioned head body are unique in the industry and they allow for additional surgeon ease of use while reducing over time that’s something that’s a factor to all surgeons. With that being said, I’ll turn the call over to Ty Lombardi, who will discuss our financial results.

Ty?.

Thank you, Dr. Bal and welcome everyone as I discuss some greater detail our first quarter financial results for 2016. Our first quarter total revenue was $4.2 million a decrease of 12% from the first quarter of 2015 primarily driven by lower private label sales during the quarter and implementation of our commercial sales plan which is Dr.

Bal outlined we believe we should be fully implemented during the first half of this year. The decrease in revenue for the first quarter 2016 was also attributable, in part, to continued market pricing pressure and hospital vendor consolidation. Silicon nitride sales decreased by $400,000 or 16% as compared to the same period in 2015.

This decrease is in part due to the timing of an initial private label order last year which is sizable as compared to the replenishment orders received this quarter. As you bring on additional private label and OEM partners we anticipate this type of activity with large initial orders to fill inventory banks.

Then more moderate replenishment orders to maintain proper inventory levels. Our cost of revenue decreased $0.6 million, or 41%, as compared to the same period in 2015. The decrease in cost of revenue was primarily a result of the change in sales during 2016 as compared to the same period in 2015.

Excluding the impact of the provision for excess and obsolete inventory our growth profit as a percentage of product revenue increased by 13 points to 88% as compared to 75% during the prior year period.

The increase in gross margin is primarily attributable to lower private label sales during the quarter and the moratorium on the medical device excise tax in addition to receiving the refund of medical device excise taxes. Research and development expenses for the quarter decreased $300,000 or 13% as compared to the same period in 2015.

This decrease was primarily due to $200,000 decrease in stock-based compensation and $500,000 decrease in personnel related and other development costs. This is partially offset by a $400,000 increase in operating expenses that could not be allocated to inventory as compared to the same period in 2015.

This is due to the improvements that we have made in our management structure and manufacturing processes which has resulted in lower overhead rates and lower inventory costs. And these are the lower inventory production in 2016 as compared to 2015. General and administrative expenses decreased $400,000 or 20% as compared to the same period in 2015.

This decrease was primarily due to a $300,000 decrease in stock-based compensation and a $300,000 decrease in personnel related costs. This is partially offset by a $200,000 increase in patents and legal cost as compared to the same period in 2015. Sales and marketing expenses decreased $800,000 or 24% as compared to the same period in 2015.

This decrease was primarily due to $100,000 decrease in stock-based compensation, a $300,000 decrease in commissions due to the change in sales, and a $400,000 decrease in personnel related costs. Operating expenses decreased $1.5 million or 20% as compared to the same period in 2015. This decrease is primarily due to the items mentioned previously.

Net loss for the first quarter 2016 was $3.4 million compared to $5.4 million in the prior year period. The reduction in net loss of $2 million was primarily due to decrease in operating costs and personnel related expenses in the quarter.

Expenses related to the convertible feature in the Magna Mill also decreased due to the extinguishment of the convertible feature during 2015. As of May 11, 2016, we have approximately [indiscernible] common stock at outstanding and approximately 14.8 million shares on a fully diluted basis.

Adjusted EBITDA, which is defined as earnings before deductions for interest, taxes, depreciation, amortization, non-cash stock compensation expense, change in fair value of our derivative liabilities, offering costs, loss on extinguishment of derivative liabilities and loss on extinguishment of debt for the first quarter 2016 was a loss of $1.9 million, compared to a loss of $2.9 million for the same period in 2015.

As of March 31, 2016 our cash and cash equivalents totaled $7.9 million. We reduced our total operating cash driven by $1.5 million in first quarter 2016 or 51% as compared to the prior year period. Total principal debt obligations as of May 3, 2016 were $12.9 million a decrease of $11.4 million or 47% from June 30, 2015.

We are pleased with the success that we’ve had in reducing our debt obligations during 2016 and we remain committed to improving our current debt position and unlocking additional working capital, which we believe should increase shareholder value.

As mentioned earlier in the call, our year-to-date operational cash burn improved by $1.5 million or 51% and continues to improve as we remain committed to conserving cash for opportunities, a yield with greatest return.

These financial improvements speak to the wonderful job our teams have done in reducing operating expenses and profitably managing cash levels to-date. This quarter mark another important step toward reducing the uncertainty associated with our capitalization structure.

To reduce our total debt from $26 million in July 2014 to less than $13 million within two years and get to a position of certainty in our capitalize table at the end of March is a testament to the hard work each team member has put in to get us to where we are today.

We are confident in our ability to continue improving our balance sheet and income statement. Furthermore management and the board are currently evaluating numerous additional financing opportunities and due to certain regulatory restrictions we are not at liberty to discuss those in detail today.

We anticipate providing an update prior to the end of May as to how do we plan to further improve our capitalization. I’d like to reiterate we are very confident in our ability to sufficiently finance our business client but want to make sure we engage in the best structure possible to provide a long-term shareholder value.

Given all that we’ve been able to accomplish in such a short period of time, I’m extremely optimistic throughout the future holds.

And although we had a good portion of the heavy lifting behind us, we remain focused on continuing down this positive trajectory to reduce total cash burn and achieve operational cash flow breakeven and maintain the certainty of our capitalization table. Thank you.

Operator, will you now please instruct the callers on how to join the queue for questions..

Thank you. [Operator Instructions] Our first question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question..

Hi, Mike, Ty and Sonny. Can you hear me? Okay..

Yes, we can hear you..

Wonderful. So Sonny, you talked about some of the questions that the FDA had about the fusion device.

Could you talk a little bit about that I know that you said further subgroups, statistical analysis? And can you give us a flavor of as far as the data that was submitted? What levels were they on as far as cervical and thoracic?.

These were cervical levels, Jeff and not thoracic and the study, they outward the single level fusion as most of us know, people rarely have one level disease. In fact my own neck has two level disease but no surgery yet. So what the FDA had specific questions about and we have to present all the data and I give some of the data.

So, anything at three months, six months, 12 months, 24 months it’s all going to be there in every single dimension. And the question is mostly related to differences in subgroups at earlier time formats six months, 12 months.

And so we had to take a deeper dive into patient by patient to see, which group was a little older than the other group and which one had maybe more than one cervical level disease.

In other words look at confounding variables that explain specific changes or differences at specific time points, run statistical analyses and show that the reasons for some observed changes were indeed related to statistics and now because of changes in that – not because of the differences in devices.

To my knowledge there weren’t any questions at 24 months as a final endpoint. So really this involves getting a hold of our statistician, communicating with the FDA as we’re clear on what they want and running the analyses and I’m satisfied with that work..

Sorry.

And you’ve been then pretty confident that you’ll submit the work back in the end of this month?.

Yes. We more than confident by the end of this month because all the – this is a team effort I mean we’ve got professionals and consultants and statisticians all working at it. So everybody’s moving along at the right speed in fact we’re maybe a little ahead. Now we just have to compile the response and it’s all on target..

Okay. Ty, could you give us a little more color as far as the balance sheet goes so as of the end of first quarter, it was $7.9 million in cash and $14.8 million in debt. I see that there was an interest came in at $900,000 for the first quarter.

What might that look like at the end of second quarter assuming the burn rate is consistent with the first quarter?.

Yes. I would anticipate that our cash is – position now it’s everything stays the same as they are now that our cash position would be close to $5 million and that our debt could be closer to $12 million in debt principle outstanding..

Okay from – so $2.5 million off on debt and $3.5 million off on cash approximately. Okay, I got it.

And could you give us a little more color as far as the 3D printing goes, as far as what type of equipments being used and how you’re dealing with the various forces and key involved in that?.

Yes. I’m glad you asked because I spent some time at Rolla campus with the scientists there. 3D printing or additive manufacturing in another career has already done in bioactive glasses. And so the 3D printing of ceramics and particularly this ceramic with this complex composition was a challenge I just got to the chase I think we got very lucky.

The first time we did it with a technique called Robocasting the parts were done in one location and then shipped over here by FedEx to be fired. So my one concern was maybe just handling and FedEx might knock a few of them out or want to fire them then you cut the pieces and look at them understanding electron microscopy.

The material maybe a little different than what we’re used to, I think that was right on – right on target. So let’s chop it up to luck, now to get serious about it as a manufacturing substitute. Will take some time and it takes additional validation and we’re looking at a number of techniques.

The common one that people recognize our Robocasting that’s one technique we are investigating and there are several others from companies in Austria for example.

And it’s a dynamite technique it’s something smaller than the size of a refrigerator that’s sitting there, spitting out either custom parts or spitting out ten thousand of the same parts and with much less labor and much less variability.

So I’m very optimistic we’re on track to make this happen and we’re looking at some federal grants to even push the technology further but I think in terms of 3D printing silicon nitride we definitely, we are the crown..

Great, okay. Just a couple more could you talk about – you called out one specific geography being weak as far as revenue for the quarter.

Could you provide a little more detail there?.

So I think it relates to the particular geography. I mean, we wouldn’t provide any details beyond that but I – we will say that we’ve got in place an individual that we still can, now we stabilize the sales to turn that trajectory around in that particular area.

Such that it allows us to minimize some of the choppiness that we’ve had in monthly sales for the last several months. So clearly to expand in other geographic areas as well to allow us to further stabilize an increased sales in the commercial side of the house..

Okay got it.

And lastly if you could provide a little more information as far as the metals that you’ll be introducing at NASH specifically screws, lumbar screws as per sizes and rods and what other ancillary items?.

Yes. So it will be entire pedicle screw system with the complimentary instrumentation that goes with it, focused more on degenerative type cases. So kind of your one to four, five level cases where our silicon nitride interbody devices could also be used.

So the pedicle screw a number of updates to that include a modular head with a tension head bodies that allows the surgeon to fix the head in a position and keep it there.

So they’re working their way down the construct of the spine it allows for better surgeon ease of use as they’re getting those rods in there and shaping the spine that they need to.

So the modular head body is itself a cannulated screws so amenable to MIS procedures and using instrumentation such as the major robot [ph] any type of guidance hardware that’s out there in the market today. So I think those are the key points that we’re really looking to announce here at NASH and really have that official launch occur.

And then shortly thereafter have a limited launch at the end of this year and begin a full grown launch at the beginning of next year and have that use a phased approach in that matter..

Okay, the screws will be all cannulate or will you be using some screws as well?.

It will be all cannulated we have in our preference tooth systems, screws that are solid so its – there is particular surgeon that would still like the all fillet screw, we’d direct them to their preference tooth system at first. But we really think the markets going to go to the cannulated option and to have that in a modular system.

We feel it’s a competitive benefit to surgeons out there..

Okay, perfect. Thanks, guys, that’s it from me..

Thanks, Jeff..

Thanks, Jeff..

Thank you. And our next question comes from the line of Anita Dushyanth with Zacks Investment Research. Please proceed with your question..

Hi, good afternoon. Thank you for taking my question.

First one is just wanted to know if you have any news on whether you have to conduct clinical trials for the CFDA and what would be your financial objectives for 2016?.

So it’s still a bit early to tell on that one, we’re working with way out right now to pull together the packet that will be submitting to the CFDA and hope to get in front of that body shortly. As it – as it stands right now we’re not entirely sure whether or not we’ll have to do a clinical with the CFDA.

Our hope is that our existing body of data allows us to quite honestly accelerate the process. But still that’s unknown and we’ll be able to know more once we submit and get in front of the FDA after which time we’ll be able to update the market..

I might add, we’ve got 25,000 implants plus in the field for the last eight years with no failures related to the implants. So we have plenty of clinical….

Okay, thank you..

Thank you..

Thank you..

Thank you. This does conclude today’s teleconference. I would like to turn the call back over to management if there any closing comments..

Yes, thanks Mike. Thanks to everyone who participated on the call, a very special thank you to a lot of our shareholders and the growing family of our partners. In closing I’d like to restate my optimism for 2016 and well beyond. Worldwide demand for silicon nitride is growing, you can look at any research paper and you can find that out.

And that’s because technology itself grows and becomes more sophisticated with time and different companies identify complex product need the niches which they have to fill. And silicon nitride is a natural.

Our OEM, private label partners, surgeons, distributors and a larger ceramic industry in silicon nitride extremely compelling opportunities for a small company like ours. We are very well positioned, we lead in science and development and we are uniquely structured for this huge market space.

With our improved financial position thanks to the help of everyone at Amedica. And the best-in-class material solutions we should be very, very successful. I will look forward to providing another update next quarter. Meantime, thank you everyone for your continued support..

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. We thank all of you for your participation..