Operator: Thank you all for joining us this morning for the Biostage 2017 Second Quarter Financial Results Update Conference Call and Webcast. At this time, all participants are in a listen-only mode. [Operator Instructions]. As a reminder, this conference is being recorded. Today's webcast will be accompanied by a slide presentation that can be found under the Investor Relations section of the company's website, www.biostage.com under Events & Presentations. At this time, I'd like to remind our listeners that remarks made during this call may state management's intentions, hopes, beliefs, expectations, or predictions of the future. These are forward-looking statements that involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the federal securities laws. These forward-looking statements are based on Biostage's current expectations and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are disclosed in the periodic reports Biostage files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully. Following the company's prepared remarks, the call will be opened for a question-and-answer session. It is now my pleasure to turn the call over to Chief Financial Officer of Biostage, Mr. Tom McNaughton. Please go ahead, sir.

Tom McNaughton: Thank you. Good morning, everyone and thank you for joining our call. This is an exciting time for Biostage and we're very pleased to be able to share with you a summary of our second quarter activities and recent advances we've made to relieve financial overhang and drive Biostage towards our first commercial product. Also in the call this morning are Jim McGorry, our CEO, Dr. Saverio La Francesca, our President and Chief Medical Officer; and Chip Greenblatt, Principal at First Pecos, LLC and Investor. Earlier this morning, we reported our second quarter 2017 financial results and update on our recent operational progress and commentary on our product development program prioritization. As a preclinical biotechnology company, we are measured more against progress towards our strategic milestones and a bit less on our quarterly P&L. Therefore, I'll first give an overview of our second quarter financial results, and then I'll turn the call over to Jim. Jim will walk you through the company's recent developments and our business outlook. Chip and Saverio then also comment on the business's priorities and direction. So let me get started. We reported a Q2 2017 net loss of $3.6 million or $0.10 per diluted share compared with $2.7 million net loss or $0.17 per diluted share for Q2 2016. The $49 million year-over-year change was primarily attributable to $1 million greater R&D spending and $200,000 decrease in SG&A spending. Our six months year-to-date net loss was $7.4 million or $0.23 per share compared with $5.2 million net loss or $0.35 per share for the same period of last year. The $2.2 million increase loss was caused by $1.7 million of greater R&D spending and $0.9 million change in the fair value of warrant liability, which is a non-cash item, being partially offset by a $300,000 decrease in SG&A spend. We recently announced a financing arrangement with First Pecos, LLC, including a $3 million private placement, the commitment by First Pecos to back up to two subsequent rights offering to raise additional proceeds of up to $14 million over the next two years. Gross proceeds, combined with the exercise of the company's outstanding warrants, should those exercises occur, potentially fund the company's operations through 2019. We're excited about securing staff related to our greater funding run rate than we've ever had previously and Jim and Chip will speak further on the financing in their comments. And I'll just turn the call over to Jim.

Jim McGorry: Thank you, Tom. Good morning everyone. I'm delighted with our progress in Q2. Back in March, we said 2017 would be a transformational year where Biostage would emerge as a clinical stage company. I'm pleased to report that we're making substantial progress towards that goal. For the first time a patient has successfully received our Cellspan Esophageal Implant in a procedure approved by the FDA. This is a big milestone with a strong preclinical data now supported by a successful use in a patient, we're more confident than ever that our implants work as designed. So today, I have three points to summarize for our progress this quarter. First, Biostage has secured it's financial runway through 2018 and possibly beyond, and really we are excited about this. Second, we further increase our scientific and clinical validation with these new results. And number three, after reviewing our platform we decided to now prioritize Esophageal Pediatric Atresia as our lead indication. With the support of Chip Greenblatt and our shareholders we're paving the way through our next inflection point. You'll directly hear from Chip in a minute as well as from our President and Chief Medical Officer, Dr. Saverio La Francesca. It was announced this morning but I'd also like to take a second to congratulate Chip and Saverio on their appointments to Biostage's board of directors. All of this funding which includes the upcoming rights offering for our shareholders gives Biostage the financial stability to execute on our most valuable indication Pediatric Esophageal Atresia. Our Cellframe technology has the potential to give these kids a dramatically improved option for treating their life threatening condition. Right, quick key question, so why are we bumping up Pediatric Atresia to our lead program? Well, as the press release said and explained, it's a combination of our data, our science, and the strong input from our advisors and surgeons. The high quality value option for you, our shareholders, is in making the kids our top development priority. Our Cellframe technology has crossed data support across different indications, so research in one area can help support the filings in another. The pediatric indication will use much of the data and knowhow generated in the Esophageal cancer indication. This exchange of information is an increasing value of our platform approach. But what are our goals? Given our platform and multiple indications let's review those goals. We're trying to address the largest unmet medical need and have the strongest level of critical clinical support and further get a product approved to commercialization in the shortest amount of time. To summarize, the Pediatric Atresia program meets our strategic goals. As such, we're now focusing on the pediatric program in favor of the previous plan to file an IND into Q3 for the adult indication. But as stated, we will still continue to develop the adult indication. We're now just prioritizing Pediatric Atresia as the lead program. Another advantage to holding off on the adult IND is to ensure that Biostage remains eligible for the FDA's priority review voucher. In the long run this is a win for the company, the patients, and our shareholders. Thank you everyone for the opportunity to share with you today our plans. Much has recently come together in this strategic moment. As our plans unfold in short order, we will be sharing with you the details of the rights offering. Our financial support has given us the runway and courage to move forward with an updated plan. Let me now turn the call over to Chip for further insights. Chip?

Chip Greenblatt: Thanks Jim. I'm happy to formally join the team and I first want to congratulate Dr. La Francesca on the first successful implantation surgery of a lab grown organ. It is analogous to our Los Alamos atomic bomb test and just as world changing. Dr. La Francesca has our full trust and support in implementing Biostage's strategy as he determines without any micromanagement from us. In the past months, he has graciously answered all of our questions. And, as you all know, over the last several months First Pecos has examined Biostage's records and business plans in a minute and perhaps excruciating detail. Now I will discuss our view of the revised business plan and the financial plan. We're very pleased that Biostage in a collegial consensus manner has adopted our view that Pediatric Atresia goes first. In our view, it doesn't delay the date of the approval of our products, and absolutely maximizes the likelihood of obtaining the priority review voucher and First Pecos's estimated value of this based on historical sales is $150 million. The FDA will review this submission through Pediatric Atresia as to the risky involved as always and also towards safety to juveniles. The safety factor has been demonstrated by prior human and animal model surgeries with human data obviously far more heavily rated. The patient operated on in May is one data plain, as we will do the surgery through ribs Dr. La Francesca traveling to the EU later this month in preparation. There may be other opportunities to prove the efficacy of our product there. Additional compassionately used patient's actual (phonetic) lives at the rate of one, two a week and Biostage has -- already had similar queries since the initial surgery. Biostage will provide its products to help save these lives should need arise and a doctor request to receive FDA approval. This would have high dataset supporting Biostage's application. First Pecos believes that these demonstrations adds significant value to shareholders and thus of course to us. Now I will briefly talk about the financing. Our financing plan is designed to remove any uncertainty that Biostage has financial wherewithal to get to the finish line. Summarizing the next four quarters, Q3's cash requirement is from cash on hand, Q4 is from the First Pecos' placement, Q1 from our rights offering, and Q2 where we intend to exercise our grant. For Q3 2018 and thereafter, it could be anything but our rights offering plan ensures that there will be money available and if they wanted to exercised that's an added plus. The company have to exercise of those more right warrants would result in $8 million of cash to Biostage, while it's unknown what time that will be exercised the higher the stock price the more likely the exercise. To the extent these are exercised the right offerings may be put off or not used at all depending on availability of our grade financing. FP backstop the rights offering as necessary, the rights offering is non-dilutive to shareholders and will have overallotment provisions, warrants participants -- warrant holders participating in the rights offering because of terms of the warrant, so the rights offering is on a fully dilutive basis. The total grant at First Pecos' discussion to the extent it provides the backlog -- backstop and the timing and placement is depending on market conditions especially how the market receives news of our additional human surgeries, if any, and the warrant exercise rate. I believe still the end of year 2019 product commercialization and the most important thing to remember is that we already know our product mix. Thanks, Jim.

Jim McGorry: Saverio.

Saverio La Francesca: Thank you, Jim, Tom, and Chip, and good morning everyone. First of all, let me stress again how much pleased we are with the expanded access use. This patient is now alive over three months after the surgery. The patient was affected by a cancer that required removal of a portion of his lung, removal and reconstruction of a part of his heart, and removal of a segment of esophagus in the chest. Our Cellspan Esophageal Implant has been used for the first time in humans in order to reconstruct the esophagus after removal of the cancer. As we are bound to respect patients' confidentiality, specifics regarding their diagnosis, as well as the surgery, along with details regarding the post-operative course and the patients' current status in general can only come from the hospital where the patients underwent the surgery. We consider these expanded use milestone in the field of regenerative medicine. To our knowledge, this is the first time that a temporary bio-engineered implant comprise of both synthetic and autologous cells is used to promote the re-growth of a patient's own esophageal tube after a full circumferential resection, therefore, avoiding the need for the use of the stomach or the intestine. On a similar note, this expanded use is also an evident testimony to the fact that Biostage has been working on its careful manufacturing process and its quality management systems and that has allowed for the higher level of control necessary to release our combination product candidate for use in humans according to the FDA requirements. In this regard, the collaboration with Dr. Cox, Pediatric Surgeon in Houston, has been key. Dr. Cox directs the children's regenerative problem at the University of Texas Healthcare System in Houston. Houston is one of the largest medical center in the world; the GMP Cell [cold] facility at the University of Texas has successfully processed the cells for the expanded use. And under our technology transfer collaborative agreement will be our main GMP cell processing facility for the pilot trial. Now just Jim and Chip had done, let me also address how the esophageal pediatric indication has taken the lead. As Jim had mentioned, our platform allows for different indications in different hollow organs or tubular organs, as we may describe that. It is crucial that in our platform, a lot of the preclinical data and regulatory pathways are similar and exchangeables. As far as the pediatric indication is specifically concerned, I must say in the past few months there has been a mounting interest from physicians and patients' families as well towards our technology. Esophageal atresia is a congenital abnormality where a baby to born without a fully developed esophagus. In fact, a portion of it is completely missing. The treatment of this disease is now standardized at all ranging from a tenth to physically stretch the esophagus in order to fill the void together positioning of the stomach or part of the intestine of the baby in the chest. These operations offer full quality of life and a full outcome at best with main failures in need for repeated surgeries. In other words, we believe that this is definition of a truly unmet clinical need. As you may know, recently Dr. Finck surgeons in Connecticut Children's Hospital has reported some data from our collaborative study where we had determined the ability of the Cellspan Implant to replicate our previous large body of preclinical data in a specific piglet model. Also, more data will soon be available on another piglet study that Dr. Finck has just concluded all this in collaboration with Biostage. The ability to regrow esophageal tissue in a piglet model is a true regenerative medicine breakthrough, as it demonstrates for the first time, the ability of the Cellspan implant to stimulate the re-growth of esophageal tissue that keeps on growing as the animal grows, which is a clear proof that the newly grown tissue is fully integrated in a response to the normal physiologic [scars]. In conclusion, the preclinical data along with the clear unmet need all point in the direction of our lead program that is the pediatric application of the Cellspan esophageal implant. Jim?

Jim McGorry: Thank you, Saverio. You can just see our clinical and financial validation talked about by Chip and Saverio. You see a summary slide that sort of talks through first-in-patient, our proof-of-concept and our strong -- just a strong support from our surgeon community and our financial community with Chip in First Pecos. So hopefully you will see our strategy on how it's unfolding. Chip talks you through few quarters, you can see what's in front of us and we will continue to be able to keep all of you informed as we go through with our rights offering, and then further clinical development into this space. I wanted to take a moment to be able to highlight our relationships. Look at the relationships that have advanced into the company, our relationships with Mayo Clinic and the Chairman Dr. Dennis Wigle, with Connecticut Children that Saverio just talked about Dr. Christine Finck that you're going to be hearing more about that work in Pediatric Atresia. Dr. Cox is not only a cell expert, but he is a pediatric surgeon and so is Dr. Jay Vacanti, the Chairman of our Scientific Advisory Board, with Stephen Badylak, a Veterinarian, a PhD, an MD. We have some of the best people in regenerative medicine guiding us, working with us, and collaborating with us. And we know that we could not due to HIPAA reason recent share a number of things with the patient. But look at what Saverio said in terms of how remarkable this moment is in building on the work here at Biostage. So, in summary, you can see this value creation moment that we have, the confluence of our clinical and financial validation, our focus on growth and transforming to a clinical stage company; the strong surgeon support is one of our driving areas and we're following our data, the data now in humans, the data in preclinical to make informed choices going forward. So you'll see much more about expanding our partnership and expanding our development. So thanks for the opportunity to share with you our plans. And now, operator, we would like to open up the call to Q&A.

Operator: [Operator Instructions]. Our first question comes from the line of Laura Engel with Stonegate Capital Partners. Please state your question.

Laura Engel: Good morning. Exciting news this quarter so that's always fun, but wanted to see as far as just the change obviously that's a big item for this quarter. In the press release, it says that by bumping this, the pediatric program, ahead of the adult esophageal it's more likely to ensure eligibility for the pediatric doctor program. Can you just tell me a little bit more of what the benefits are and how that makes that more likely win for you all with the FDA?

Jim McGorry: Yes, Jim. Thank you, Laura. That is one of the drivers, a real financial bonus that comes with the pediatric indication is the eligible -- is our eligibility for a major incentive program for the FDA to be able to develop products in kids. And let me just also comment we have orphan designation in the esophageal, deferred esophageal indication and that indication stands from congenital abnormalities all the way through -- all the way through esophageal cancer. And so with that we have a large area. We are also now putting in for a pediatric rare disease designation which is also the one-to-one ratio from the FDA with being eligible. We thought that if we move forward with our IND into the adults that we would possibly affect the order and our eligibility and that was one of the other financial reasons why we thought, Laura, to bump this piece up. As stated, we're continuing to move forward on to the adult, lever those data both ways, but the best thing for both our financing, our shareholders, and for our company, was to focus on the Pediatric Atresia. Thank you.

Laura Engel: Okay. And just one follow-up to that, is there -- so you're saying the IND data is indefinitely on hold for now or do have any theoretical timing on that as we look maybe the longer-term.

Jim McGorry: Yes, let me again try to be able to reinforce that point of view. We are continuing the development on the adult esophagus; it is not on hold. We are continuing in parallel that with the pediatric area, but we are prioritizing the pediatric area to be in front of that with our dialogue with the agency.

Laura Engel: Perfect. Okay, great. I'll get back in the queue and again really, really exciting quarter so and good job and thanks for all the information.

Jim McGorry: Thank you.

Operator: Thank you. [Operator Instructions]. Our next question comes from the line of Daniel Cotlar, Private Investor. Please state your question.

Daniel Cotlar: Yes, hello, this is Daniel. Congratulations on all the progress and been following this company for a long time now, and very excited also about the additional security that Chip is adding. Roughly how many cases of esophageal atresia are there in the U.S. per year because on the expectation that's always combined for cancer and atresia?

Jim McGorry: Yes, Daniel. Thank you and thank you for being a longstanding shareholder of Biostage. And so the one incidence that we see very, very consistently is esophageal atresia has about a one in 2,500 to one in 4,000 births. That's what atresia effects. We are currently going through the further segmentation of both long gap atresia, short gap atresia complications et cetera to be able to hone in on the exact number of procedures. But so, if could just say it is a large market, it has been a problem for a long time, for a lot of the surgeons unfortunately having to treat these children and it seems to be a very, very effective use of our technology into the space.

Daniel Cotlar: Okay, great. And there was a brief mention of Saverio travelling to the EU for a further surgery. In which area will this be? Will this be in cell and the pediatric product and the arrow product?

Saverio La Francesca: I think that's what Chip was referring to is that as in the past few months literally we've been receiving a lot of interest from -- from patients' family and therefore we, yes, we are talking about the pediatric indications. And as from physicians as well. And the reason is, is simple. And you just asked for the incidence and Jim gave you a range and see that's an interesting range already, so that says it all, because it's an unmet need, you don't even have precise numbers and if you look at it read all the articles coming from seminal articles not just things here and there you will see that there is no even agreement on defining what a long gap is versus a short gap is. So if you can start from that you can imagine how there is really no treatment from the dice at all. And when you start hearing that sometimes the surgeons' preference, as a surgeon let me tell you that you should be ready to run because you can tell that obviously those studies are just not prospective studies and their results are all over the place. So this is not very technical, but it tells you that this is an real unmet need.

Daniel Cotlar: Okay, okay, excellent. And finally, you have this November 13 delisting deadline, and it depends a lot on what the market does and maybe it's less than $4 now nevertheless what would be kind of the story was like you turn and let there now regarding why the stock price would be at $1 within such a short time span, given that kind of the prior story was the IND for understandable reasons is less relevant now.

Jim McGorry: Yes, I'll start, and then anyone wants to be able to dovetail on. I think that, Daniel, what you continuing to hear is we really have very strong line of sight on to our most valuable and fastest move forward. We have tremendous continued interest of surgeons wanting to be able to use our product. We are dialoguing with the FDA along those areas. We continue to be able to have a plan around all of these areas to be able to move it forward. But we believe that hopefully as full value will start to come in as we continue to be able to move data forward that we will cure our NASDAQ pieces on both the stock price and shareholder equity and then continue to gain our listing. So thanks.

Operator: Thank you. Our next question comes from Brian Brennan with National Securities Corporation. Please state your question.

Brian Brennan: That's a terrific news on every front, it seems like I just -- Tom real quick, on the -- are you able to maybe give us little color on if any of the current warrants have come in at all, I didn't see anything kind of highlighted in the press release for additional cash into the company?

Tom McNaughton: Sure, Brian. This is Tom. Thanks for your question. Yes, there have been some warrant exercises with the recent higher price with people came and the money. I even disclosed that probably not disclosed in the Q at this point, but it's, yes, we have warrant proceeds at this point.

Brian Brennan: Excellent. My follow-up on is with the exciting news that the in-patient surgery that took place, I know you are maybe limited but are you guys comfortable enough that sometime in the near future we could see some further validation on that patient and any more information that the market is maybe looking for?

Jim McGorry: Yes, Brian, first of all thanks for yourself being a long-term shareholder and we appreciate it. Let me turn that on your good question over to Saverio, sir.

Saverio La Francesca: Well, Brian, Saverio here. For sure, the thing is that there is no really contractual commitment and you wouldn't want to go there meaning the institution, the hospital they have their own kind of timeline where they want to go ahead and talk about things and that, it's a little bit of a mixture of the policies that the surgeons, how the surgeon feels when he wants to do the administration, so we can't really have totally when that is going to happen but it will happen needless to say. I don't know to really answer your question but we truly can't. For sure the institution will, there is no doubt about it's just that their timeline is different they don't go by SEC rules, right, so really they can wait for another month and that's okay too. At the end of the day I know and it's kind of especially for me and I know surgeons are used to brag about things, so push your stuff in my shoes I'm very uncomfortable right now just saying the patient is alive. I know it's not sufficient, but for the time being it is right to suffice.

Brian Brennan: Excellent. Well thank you, gentlemen, great work.

Saverio La Francesca: Thank you, Brian.

Operator: Thank you. There are no further questions. That does conclude our question-and-answer session. At this time, I will turn it back to management team for closing comments.

Jim McGorry: So thank you very much. I hope I really appreciate Saverio just really talking about what we're doing in a remarkable way. I think hopefully folks have seen our rationale for doing it, I think Chip and First Pecos for their support in our company and a new day for Biostage. We've had a financial overhang, yes, we come out with new things, so we've never really had the runway to execute on what we needed to do and that's the moment that we find ourselves right now. Looking forward to keeping you informed about the rights offerings, any other in terms of compassionate used patient, development updates, and partnerships and collaboration that we will get back to you on. Thank you very much.

Operator: This concludes today’s conference. Thank you for your participation. You may disconnect your lines at this time.