Good morning everyone. Thank you for joining our call.

With me on the call today are Jim McGorry, our CEO; and Dr. Bill Fodor, our Chief Scientific Officer.

I'll start the call with a summary of the first quarter 2019 financial highlights, then I'll turn the call over to Jim and Bill for their comments. We have very productive first quarter.

Our team continued a significant set of proof-of-concept preclinical studies for pediatric esophageal indications and move forward operationally towards completing our pre-clinical data set in preparation for filing of our first IND for a Cellspan Esophageal Implant product candidate. We reported net loss of approximately $1.9 million for the first quarter of 2019 compared with a net loss of approximately $1.5 million for the first quarter of 2018.

The increase in year-over-year quarterly net loss was largely due to greater R&D spending. We had more employees working in R&D and had more pre-clinical studies ongoing in the first quarter of 2019 than in the same quarter last year.

We also augmented our internal team in 2019 with outside consultants to help in our effort to plan, organize, and execute the preparation of the company's upcoming IND. We consumed approximately $1.2 million of cash and operating activities during the first quarter of 2019 and we raised $1 million of cash proceeds from warrant period -- warrant exercises during the period.

At March 31st, 2019, the company had cash on hand of $1.1 million and we had no debt. Subsequent to the end of the first quarter, we received an additional $1 million in cash proceeds from the exercise of warrants.

And now, I'll turn the call over to Jim.

Thank you, Tom. Good morning everyone.

As we get started, I'd like to take a moment to briefly address the clinical indications we're pursuing with our two INDs and our financing strategy. From there, I'll hand off to our Chief Scientific Officer, Dr.

Bill Fodor, who will take you through the specifics of our upcoming IND in esophageal disease. We believe this is a key moment for Biostage because we have clear plans on filing two complementary upcoming INDs.

First, is the IND for esophageal disease which Bill will address, filing for the adult indication will allow us to show the FDA that our novel technology works and also importantly, that the product is safe in adults and children. Once the clinical studies show that the proof-of-concept in humans, this will make it easier to file our second IND in our primary product candidate in early 2020, the Cellspan Esophageal Implant to treat pediatric atresia.

Our strategy with our Q3 milestone has both IND's in mind. Additional work with the pediatric IND will be offset by our SBIR grant with the NIH and approval comes with an FDA priority review voucher.

Regarding financing, we plan to continue to bring in private placement capital to extend the company to and hopefully past our IND filings. We are now in the process of reengaging with the U.S.

capital markets and plan and up listening to NASDAQ in conjunction with a financing post-IND filings. With this plan in mind, Dr.

Fodor will share what is expected in our upcoming IND. Bill?

Good morning, everyone. Thanks, Jim.

My first comment is that the internal team here at Biostage is working extremely diligently and is completely committed to hitting this major milestone. This will effectively transition Biostage from preclinical company to a clinical stage company.

Now to get into some of the specifics, again Investigational New Drug application will target adult esophageal disease. It will be a range finding study and will be conducted at several centers in the U.S.

Just to review for you, the IND application contains five modules and again just to be clear, our product is a combination product that fits into this combination product category, which includes not only a device component, but also a biologic. As far as the status of these modules, several modules will be complete by the end of the month and will be undergoing regulatory review in the next two to three weeks.

The CMC section, which is probably the most complex section, which describes all our manufacturing, all our reagents, all our controls within the manufacturing process is continuing to improve. We've implemented several new improvements.

These included in process controls during the manufacturing of the cellframe scaffold. These controls allow us to release the cellframe scaffold into final product manufacturing.

We've set new release criteria in order to release the cellframe scaffold to our manufacturing facility in Houston. Most importantly, in response to an FDA recommendation following our pre-IND meeting, we have implemented a closed culture system with an automatic seeding device.

This ensures that we have a sterile product, minimizes the potential for contamination during the final product manufacturer. As far as the implementation of this and to execute this, there are process development runs that are currently ongoing at our contract manufacturing facility in Houston.

Our tech transfer to cGMP and those qualification runs will commence upon completion of the process development runs. With respect to the other modules, we’re finalizing all our GLP animal reports, a critical component to demonstrate that proof-of-concept establishes not only safety, but efficacy in an appropriate animal model.

Those will be done -- those will be completed at the end of the month in the first part of June. In addition, we've established the necessary mechanical assessment of the tissue post implant.

This is a critical aspect of our research throughout the course of 2018 and is in response to an FDA question from our pre-IND meeting to establish that the integrity of the tissue is strong enough to withstand physiological conditions. We've now demonstrated that the tissue at 90 days post implantation is two times stronger than native tissue, so it can withstand not only the manipulations of stems, but also balloon dilation as well as normal physiologic function.

And finally just to reiterate what Jim said, filing as adult IND will piggyback onto our second IND in the first part of 2020 which is targeted towards pediatric atresia. And we have ongoing proof-of-concept pre-clinical studies that demonstrate that the CEI not only works in adult animal models, but also now works in pediatric animal models in establishing safety as well as efficacy in that model.

I'll now turn the call back over to Jim. Thank you.

Yes. Thank you, Bill.

So hopefully you see that we are focusing on the IND, we are focusing on two INDs and trying to be able to capitalize on these opportunities, and again, the esophageal disease and pediatric atresia. I know we said earlier that we were looking to file by mid-year, but then with the specificity going over it and doing these things that Bill talked about in terms of release criteria, closed system, automatic seeding, we felt it was best for both INDs that capitalize on this opportunity.

So thank you for the opportunity. We’ll open our call to questions and answers.

Great. Congratulations on the fantastic progress over the last year.

Can you start maybe talking about the market opportunity in pediatric atresia, both in terms of the underlying revenue and profit opportunity is there -- for that indication as well as the added value that the priority review voucher that you would receive for getting FDA approval would bring to you?

Yes. Thank you, John.

And so, it seems a little bit backwards that we're focusing on filing the pediatric or -- sorry, the esophageal disease IND first, but our total opportunity in our first product candidate is to move the pediatric atresia as our first filing. And so, the FDA clearly told us, in order to move in pediatrics, you must focus on safety and you must show safety in adult first.

So that's a little bit of the nuance of the background around this. Having just been in animal studies, this path over last week with Dr.

Christine Finck at Connecticut Children's, we're very encouraged by our progress in pediatric atresia. Let me just describe, again, one out of every 3,000 kids born with this gap, but our product, the length of it, within five centimeters, five and six centimeters, how it works into these kids, is a very, very big unmet medical need.

And it really has all the drivers of what you want to bring an innovation into in this area. The current way these kids are treated right now, they have a long gap atresia and other areas.

These kids just face a real uphill battle. And then, so in the early parts of their life and then continuing to gone on repeat surgeries and long stays in both the hospitals as well as the ICU, it's estimated in some of our early clinical economic work that the burden -- the economic burden of these kids is over a $0.5 million.

And so, with it, we believe that it's a clear on medical need. We are working now with the top pediatric people around this to include Dr.

Christine Finck at Connecticut Children's. We are now with the top pediatric people around this to include Dr.

Christine Finck at Connecticut Children's. We are now presenting at APSA, the American Pediatric Surgical Association next week that will be all the pediatric surgeons in the U.S.

and around the world. One of our people – sorry, Dr.

J. Vacanti who is the Co-Chairman of our Scientific Advisory Board will become the new President of the APSA.

So it is a real need, John. We see that -- that market that currently right now there's a real backlog of patients and ongoing patients that we represent that could be a thousand patients a year.

So in U.S. we think alone, in the U.S.

in pediatric esophageal atresia that it's a $100 million market. And we believe that the priority, we voucher which is a program under the 21st Cures Act allows us to be eligible for this with our orphan designation and other on that format that we're currently working with.

So we're really excited about this. This is our key area that the clinical indication, the need of our product and a real unmet medical need all comes together.

So thanks for the question on pediatric atresia.

That's really interesting, because regardless of how successful or not you think, the revenue opportunity is by virtue of getting to market. You're going to get a priority review voucher which I believe has traded recently anywhere from $80 million to $120 million, which relative to your market cap is too profound return just for getting to market and then whatever additional upside you might get it to be on top of that.

So I think that's quite an interesting setup. Let me ask you another question.

I believe that the best validation that you can get for your technology is when highly regarded thought leaders in regenerative medicine or in pediatric surgery talk about your products in a scientific conference or in other venues. Can you talk about some of the notable presentations that might have occurred in the past 6 or 12 months, where one of these highly regarded researchers has highlighted or talked about your product or science?

And also can you discuss whether or not, the investors who have been participating in these private financings over the past year have been able to interface with any of these thought leaders as part of their due-diligence? And if so, can you paraphrase it kind of a key highlights from those exchanges?

Sounds like a question for my wife, it has about six comments into it, but all fine. Let me let me comment, John.

Sorry for my bad joke. And so look, I know that the investors, the parties, the people that are interested into our company are looking at it.

I know that we looked at it and we've said for a while that we're looking to file an IND. You're just trying to really look at a real moment to say, where are you guys right now?

Give me a gut check on this. And are these people standing behind our product?

And so let me just comment on a few. So first of all, a compassionate use surgery that I think some of the folks know was done at the Mayo Clinic and just into January into this year and it's not just anything or any hospital, it's the Chief of Thoracic Surgery, Dr.

Dennis Weigel presented at the Society of Thoracic Surgery Tech-Con Meeting, the results of the first patient. That the product work, worked that it showed that that it worked in humans the same way in a tremendously different -- difficult case just like the animal studies.

We're working – and Dennis is a Ph.D M.D. We're working with Dr.

Aho at his institution. So it was a great opportunity.

And also I mentioned earlier this APSA meeting. The Pediatric Surgical Association is just that is the spot on audience who is focused on atresia and really a dedicated group of surgeons that focus -- and physicians that focus on kids.

Dr. Christine Finck is presenting at that meeting, doctor gave a copy the father of tissue engineering, again, a Co-Chairman of our Scientific Advisory Board is -- will be -- will further introducing the session, I should have commented to that Dr.

Weigel that a manuscript on that patient has now been submitted to the New England Journal of Medicine. And so, yes, it has to be picked up.

Yes, it has to be published, but that's where we're focused on to it. And with this, particularly, as we went to be able to move forward on the IND, as you know Bill has been my partner and with our regulatory agency BBA and all the work that we have done, we've talked -- we've worked now with top clinicians around the country.

Chief of Thoracic Surgery at Brigham and Women's right now that we're talking to Dr. Raphael Bueno, we're talking to now that the Head of Medicine, the Chief of Medicine at Dartmouth-Hitchcock, Dr.

Rich Rothstein. We've been talking to now that Chief of Thoracic Surgery at University of Michigan, Dr.

Andrew Chang. These are all people who have been guiding us around the IND, guiding us on the clinical protocol, and working through that.

So, John, I know it's hard to be a preclinical company and not have all of the sort of milestones and things that you can go out and talk about, but we now really have gone out to talk to a lot of key physicians and we feel much more confident in our technology, the direction where we're going around esophageal disease, and pediatric atresia. So, those are just a few examples, sir.

Fantastic. Thanks a lot.

Yes, thank you, operator. We appreciate the -- the folks on the call, we appreciate our investors who have stood by us.

We know that we're reengaging back with others in the U.S. Capital Markets and we hope to be able to show you the material facts that we have really advanced this technology that we really see that these INDs, the indications, the markets, and things will continue to involve -- evolve.

The pediatric esophageal atresia really is our sweet spot and that's where we're going. And then with our continued feedback in esophageal disease, we've also then come up with new intellectual property around tubular organs and to be able to have our product delivered endoscopically, non-surgically.

So, we are focused to where the market is going and we are moving in that direction in both cases. We thank you for this opportunity and look forward to talking to you further.