Good day, ladies and gentlemen, and welcome to today’s PolarityTE Inc. Third Quarter 2019 Earnings Call. As a reminder, today’s program is being recorded. And at this time, I’d like to turn the floor over to Rich Haerle, Vice-President of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning and thank you for joining PolarityTE's call to discuss third quarter 2019 results. I'm Rich Haerle, Vice President of Investor Relations. With me today are members of the Office of the Chief Executive which includes David Seaburg, President, Richard Hague, COO; and Paul Mann, CFO. Before we begin I would like to remind everyone that today's discussion will include statements about the company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. We caution that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated. These forward-looking statements are based on our current expectations and may differ materially from actual statements due to a variety of factors that are more fully detailed under the caption “Risk Factors” in our filings with the SEC including our quarterly report on Form 10-Q for the quarter ended September 30, 2019 to be filed with the SEC later today. Any forward-looking statements made on this call speak only as of today's date Tuesday, November 12, 2019 and we disclaim any obligation to update such statements to reflect events or circumstances that occur after today's call, except as required by law. I'd like to highlight to investors that the call is being recorded. We are making it available to investors and the media via webcast and a replay will be available on our website in the Investor Relations section shortly following the conclusion of the call. Additionally, it is the property of PolarityTE and any redistribution, retransmission or rebroadcast of the call in any form without PolarityTE's expressed written consent is strictly prohibited. I would now like to turn the call over to David Seaburg, President.

Thanks Rich. Good afternoon everyone and thanks for joining us. This has been an exciting and transformative quarter for PolarityTE. On our last quarter's call, we identified three strategic priorities for the company; namely, the commercialization of SkinTE, the prioritization of our pipeline and fiscal discipline. Today's call we will focus on the progress we made during the quarter to execute on those priorities. After my opening remarks and commercial update, our Chief Operating Officer Richard Hague will provide details on our R&D and clinical trial efforts, followed by Paul Mann, our Chief Financial Officer who will review PolarityTE’s third quarter financial highlights. I will then return to open the call for questions. Let's move on to commercial. As we've mentioned during last quarter's call, the office of the Chief Executive defined and targeted three areas of focus, with the commercialization of SkinTE being our number one priority. We successfully executed on the commercial strategies that we identified during our second quarter call, which led to our commercial success in third quarter. Last quarter we highlighted four key metrics by which to measure our success. We are pleased to provide the following quarter-over-quarter results in those metrics. SkinTE revenue grew 66% from 504,000 to 839,000. Paid cases grew 76% from 46 to 81. Repeat paid users grew 64% from 14 to 23 and new paid users grew 71% from 14 to 24. We believe the three biggest contributors to these results was an increased market awareness, wound specific product positioning, and a productivity increase across our sales organization, based on optimized hiring and training. We are encouraged by the trajectory and consistency of the increases across these four categories. Although we will say that and we said this on other calls, there may be in a quarter variability with those metrics. As we move forward, we continue to focus on the following; one, driving clinical evidence through our two ongoing multicenter randomized clinical trials for diabetic foot ulcers and venous leg ulcers, two increased market awareness, penetration and adoption and trauma and surgical wounds, through conferences, our newly implemented speaker's bureau program and the generation of clinical data, three, providing the sales and clinical teams with more intensive and focused training, field materials in targeted sales strategies, and finally four, engaging with thought leaders and clinical advisors to optimize SkinTE and large burns. It is this strategy in combination with the hard work from the entire organization that helped to drive some of the commercial traction we witnessed in the third quarter. And we look forward to building upon that growth, as we mature as an organization. While there is considerable work to do, our number one focus remains on the adoption and growth of SkinTE. We are pleased with our third quarter progress. And now, I'd like to turn the call over to Richard Hague to provide an update on our clinical trials in R&D activities. Richard?

Thank you, David. And good afternoon, everyone. As David mentioned, we recognize that the generation of meaningful clinical data is key to the broad adoption of SkinTE. To that end, I would like to update you on our progress based on specific wound types. In chronic wounds, as referenced in slide four, we have previously reported the positive data from our DFU and VLU pilot studies and are expecting publication of these data in the very near future. Our DFU randomized control trial is actively enrolling across 14 sites, and we anticipate the readout of interim data in late Q1, 2020. It is our feeling that the combination of the published pilot data and the interim RCT data will allow us to have meaningful dialogue related to skin TU reimbursement with key pairs during the first half of 2020. Our VLU RCT is also ongoing, and we expect to hit interim enrollment late in the second half of 2020. Another area of focus and of high interest in the chronic wound spaces with pressure ulcers. Early results with SkinTE in this challenging population have been very encouraging. And as a result, we are in discussions with key centers to generate data for this important and hard to heal patient population. We hope to initiate this study in the first half of 2020. Specific to trauma wounds, in order to further enhance our value proposition in this space, as shown in slide five, we expect to initiate a 20 patient lower extremity, prospective traumatic wounds study in early 2020. In burns, we have concluded our head-to-head trial. We had initially anticipated presenting this positive interim data by year-end 2019. However, due to the scheduling conflicts on the part of the investigators, we are now targeting the data to be presented at the March 2020 American Burn Association meeting. And to fine tune and accelerate our strategy in large burns, we recently created a SkinTE advisory board made up of highly respected KOLs from top burn centers in the country. The feedback from our initial meeting was very informative and it has helped to fine tune the protocol for our perspective burns study, which we anticipate will kick off in the first half of 2020. I would now like to transition to our research and development activities. As stated earlier, accelerating adoption and growth of SkinTE remains our number one priority. As highlighted in slide six, we have prioritized two projects that we believe will assist in achieving this goal. The first is SkinTE cryo. We have substantiated our ability to cryopreserve SkinTE final product for up to three months and are currently working to extend that out to six and possibly 12 months. SkinTE cryo would allow us to offer multiple deployments from one original harvest. We anticipate this being a valuable offering and several instances first, patient susceptible to multiple chronic wounds. Second, in patients that provider suspect might require a second deployment of SkinTE due to past non-compliance with rehab protocols. And third, in large wounds where due to wound location or patient circumstances a provider may prefer a stage deployment regimen. We expect SkinTE cryo to be available in the mid 2020 timeframe, and plan to finalize our business model and launch plan in the coming months. Second, is a development of a SkinTE point-of-care device that could potentially allow for the processing and deployment of SkinTE immediately following the initial harvest at the point-of-care. While in early stages, we have made progress and moving towards the development of working prototypes, and we look forward to reporting future updates on this project in the coming quarters. Lastly, we have an active development project underway related to our unique bioactive dressing platform. And finally, we remain encouraged by the SkinTE scientific evidence that continues to build and the awards that SkinTE has received. I won't read through the entire list, but as you can see in slide number seven, we are proud that our work has been recognized on multiple times over the last few months. In summary, I am very encouraged with the progress we're making on the clinical trials in R&D front. We remain confident that the successful execution of our strategy in these areas will significantly enhance future shareholder value. Now I'd like to turn the call over to Paul Mann for a financial update.

Thank you, Richard. And good afternoon, everyone. For the third quarter of 2019, we reported approximate $1.4 million in total revenues, which includes revenues from SkinTE, which we refer to as products in 10-Q and our contract service organization, which we refer to as services in the 10-Q. Revenues from products during the quarter approximately $839,000 were up approximately 66% versus Q2. Revenues from services were approximately $556,000 down approximately 32% versus Q2. It is important to note that our contract research organization continues to run at full capacity. However, we are currently prioritizing the facility to advance our own pipeline, while we cannot work for external customers. For the third quarter 2019, cash used in operations was $11.86 million, approximately $3.95 million per month, a 3% improvement relative to the cash used in operations during the second quarter, and a 28% improvement relative to the cash used in the first quarter. We finished the third quarter 2019 with approximately $45.9 million of cash, cash equivalents and short term investments on our balance sheet. As mentioned, cash used in operations during the third quarter was $11.86 million, and we believe there's sufficient liquidity in the balance sheet to fund our operations beyond the next 12 months. Please turn to slide nine. As you previously mentioned, one of the three key mandates of the OCE is fiscal discipline. We remain very focused on this initiative. Since the OCE took control of the management of this company in June, we've implemented a significant reduction in cash manufacturing costs. Combined with improved volumes, this is translating into gross margin improvements. And we achieved a 62% gross margin for our product division in the third quarter. As you will see from the incremental gross margins achieved between the second and third quarter, at current average wound size, approximately $0.90 of every incremental dollar, revenue falls through to gross profit. We believe this is highly unique to the wound care industry, which typically operated at a 50% to 60% gross margin. Our aim has always been to create a company that provides the best patient outcomes, with the best economics of providers and payers, whilst achieving the highest margin for shareholders. We will continue to remain very focused on costs. Gross margins are a function of product size. We also anticipate reductions in cash manufacturing costs during the next six months. In addition to improvements in cash manufacturing costs, we've also cut headcount and expenditure. It is in the business such as software engineering, and design technologies. These are not core competencies for a biotech company and the OCE decides that outsourcing these roles have a significant benefit on our cash burn, while having little to zero impact on the customers experience and our growth. I’ll close by saying that we remain steadfastly focused on fiscal discipline and the commercialization of SkinTE and we are encouraged by the initial progress we have made to manage costs in the third quarter. I’d now like to turn the call back over to David Seaburg for some concluding remarks.

Thank you, Paul. I'd like to quickly address the recent decision of our board of directors to implement a shareholders rights agreement. As stated in our press release last week, the plan was put into place to ensure that all PolarityTE stakeholders receive fair treatment in any potential transaction. It allows our board and management adequate time to make informed strategic decisions. Importantly, the rights agreement is not intended to deter offers that are fair and otherwise in the best interest of our shareholders. Beyond the press release, and 8K issued last week, and these remarks, we have nothing further to add regarding the shareholders rights agreement at this time. And in conclusion, I'd say based on our third quarter results, and what was presented here today, we are clearly making progress executing the strategies we put in place. We recognize the SkinTE brand is having tremendous value. With our growing body of successful patient outcomes, strong scientific evidence, and numerous industry awards and recognitions, the wound care industry has taken notice. We believe SkinTE will continue to deliver positive outcomes for patients, and has the potential to provide considerable savings to payers and providers, while generating significant returns for shareholders. Thank you for joining our call today. I'd like to open up the call for Q&A. Operator?

Thank you, sir. [Operator Instructions] All right. And first from Oppenheimer we’ll hear from Kevin DeGeeter.

Thanks for taking my questions. And definitely congrats, some good progress here. Can you just comment with regard to the fourth quarter recognizing it's early in commercial adoption, but any sense is whether there's some seasonality to, end market demand for SkinTE in terms of, your current users of the product?

Hi, Kevin, this is Richard. Hey, thanks for the question. Yeah, you can see that for certainly this time of the year, with thanksgiving in, and Christmas and New Year's that can come into play and impact the amount of not only selling days if you will, but also for treatment visits by patients. So that can come into play in Q4 for sure.

And, and turning to some of the lifecycle management, initiatives you described, with regard to the, the cryo product that you're talking about potentially having an update in 2021. Can you just kind of walk us through what the incremental steps in terms of what might be required what we might or might not see in terms of data on that next generation, products prior to potential commercial introduction?

Sure, it's really not what we would describe as next generation. It really is a matter of just capabilities of being able to validate the, the cell viability in terms of the cryo preservation process. We have been able to do that for a three month period and we're literally in the process of doing that, and believe we can do it for six months and potentially longer. We are also upgrading our facilities in order to have the right equipment in place to be able to handle and store the product. And we're getting that online early next year. So as we finalize the validation process and the storage will work through in the interim, the launch plan, so it's coming together nicely. And we expect that we can get this product out there, as I said, mid-year and we feel like it's going to have some very nice, upside potential.

And then maybe just one more for me, then I'll get back in the queue. Can you just comment on the current size of the commercial sales force and whether or not there are any open territories or whether you are in fact, fully staffed in terms of the Field Sales Force?

So right now we have approximately 20 sales people and an additional 10 clinical science folks that support the sales team. Certainly, we believe that we can expand the sales force more aggressively to cover open territories. But in terms of having a full staff, based on what our goals and objectives are for this period of time, we're fully staffed. So we feel good about that, in terms of the coverage that we have in key centers, but we certainly believe there's an opportunity going forward to look at an expansion.

Thanks for taking my questions.

Of course.

And moving on from Cantor Fitzgerald, we have Kristen Kluska.

Hi, good afternoon and congrats on the progress this quarter. Are you able to comment on some of the specific metrics outside of users and revenue that you have observed since restructuring about half of your sales team over the summer? So, for example, maybe the average time you're getting the product to use at these centers for a trial?

Sure, Christian, it's David Seaburg. I’ll start by saying like from the beginning of Q2 through Q3, what we've observed is the new reps hired in the platform, there was an improvement by roughly one month for their first case. For our seasons rep, the overall case volume between that same time period improved by roughly 87%. So, all this is really driven by educational and sort of training programs that we put into place. We've been utilizing a lot of data to identify appropriate targets and also marketing. Our marketing effort has picked up dramatically, and we absolutely have much more awareness within the market. So I think the combination of all that has really helped us drive the metrics, this this past quarter. And we're still very, very steadfast about making sure that we continue to push that process.

Great, thank you. And then for the repeat users of the product, can you talk about how SkinTE is changing their treatment regimens? Are they using SkinTE in situation where other therapies have failed? Or are they using it as a first line following product or is it a mix of the two?

Ye, hi, this is Richard. That is a great question. It's really a mix of the two. I think early in the trial process, they actually throw SkinTE at the kitchen sink so to speak, patients that have failed other procedures difficult, hard to heal patients. And when they see positive outcomes from those types of patients, then obviously that opens up their thought process to using it more broadly. So we're seeing a mix at this point.

Great, thank you.

[Operator Instructions] We'll move on to Tyler van Buren with Piper Jaffray.

Hey guys, good afternoon. I want to ask about the mix of acute chronic and burn wounds this quarter. Last quarter based upon the numbers looks like it was about $11,000 paid case. It's pretty similar, maybe closer to $10,000 this quarter. I guess that indicates that you're getting a pretty even mix between acute and chronic wounds. So I guess, would you agree with that? Were there? Was there even a single paid case of a burn wound? And I guess, how do you see that changing in the coming quarters?

Yes, again, this is Richard. Yes, we did treat some burn patients in this quarter. Obviously, they can vary by size. Sometimes people perceive burns always be large, but of course, they can be small as well. And I'd say the mix is pretty consistent as you described. Right now, it's, from a number of cases treated chronic wound is still the primary application, but we're getting some nice uptake and trauma and we're seeing that revenue number would increase, obviously, as those sizes increase. So it's it. I think the mix is consistent as you described.

Can you give us a sense of how big those smaller burn wounds are?

Really vary. I don't know the numbers off the top of my head. I mean, we track burns is a general category. And these sizes can vary. So one large room can skew the average size considerably.

Sure, sure. Okay. And then, with respect to the burn trial, you mentioned the results were positive. I know we have to wait for the full day to read out but since you said they were positive. Can you give us any, any color at all on the results of that trial?

Yes, so I probably would refer that question to Dr. Nik Sopko, who's also on the line remotely. Nick, can you? Can you respond to that, please?

Yes, absolutely. And you know as we mentioned we plan on having a full readout in March, but taking a look at what we know now the things we're really concerned with of course our safety and things like graph take. And with our current understanding, the data that was very promising and encouraging. And hence we made the decision to move forward with the larger perspective trial.

Got it? Thanks for taking the questions.

And moving on from H.C. Wainwright, we have Sean Lee

Good afternoon and thanks for taking my questions, guys. My first question is on the SkinTE cryo. Could you provide a little bit more color on the product? How is it differentiated from SkinTE? What kind of wounds do you think it's probably the best for stuff like that?

Yes, it's actually the exact same product. Simply what happens is when the provider sends in a harvest, we process that harvest as we would normally. However, we're able to hold aside a certain portion of that product, that final product. And that's the product that we cryopreserved. So upon the providers need for additional product, we can sell that product down and eventually ship that product out. So that the provider does not and the patient does not have to go through another harvest. But it's basically the same product. It simply is a -- it's a convenience aspect that allows the physician to treat the same patient more than once without having to harvest more than once.

I see. Just as a follow-up on that, my understanding -- okay, so how many times can a patient be treated from each harvest? Or is -- or is it because you will be able to improve the yield of the product or how is this managed, I’m just wondering?

Dr. Sopko, would you like to respond to that?

Yes, absolutely. As regard -- is regarding the number of times, because we're able to treat large wounds with a pretty small sample of skin. There's often plenty of skin available to harvest. And so in this case, especially if you can anticipate, let's say, a large burn, you can take a bit of a larger, slightly larger harvest than you normally would and then be able to freeze down the parts that you don't need immediately.

I see. Thanks for the additional color on that. My second question is on the burn studies. You mentioned that the first study is completed with [Indiscernible] thinking next year, and you plan to do a larger perspective study as well. So could you tell us – walk us a little bit on the design, focus on the design of the larger studies? And what are there -- are there any differences doing that and the completed one?

Nik Sopko, you want to answer that?

Yes, absolutely. The key differences between the different trials, with that initial head-to-head trial that we called it is one of our first trials and it was very conservative and we were treating a relatively small area with the SkinTE. And so this next trial will be a single arm, multi centered, open labeled trial. And that's because there's such good historical data on burns, we don't necessarily need a direct competitor. And but the big difference will be – we’ll be treating, much larger areas with the SkinTE and collecting the high quality data, things such as patient outcomes, and as such.

I see. That’s all I have. Thank you for taking my question.

And next we'll move to, back to a follow up from Kevin DeGeeter with Oppenheimer.

Hey, guys, just one follow up from me. Could you provide us an update with regard to interaction with the USPTO with regard to patent filings and sort of how to think about a general timeline for just some sort of potential decisions there.

Sure, we have Jen Burdman, our IP Attorney, here right now actually to answer this question. Jen?

Thanks so much for the question. The IP program is going according to plan. The patent applications that have been filed with the US Patent and Trademark Office remain pending, really can't give you a timeline for when they would be granted. A lot of that has to do with the USPTO. But nothing has been abandoned, and nothing has been terminally rejected.

Thanks for that. That's all for me.

Okay, and now, I'll turn the floor back to Richard [Indiscernible] who I believe has a question that was submitted via the webcast.

Yes, thanks, operator. So the question relates to what metrics you plan on using going forward to measure your success. And I'll turn that over to David.

Yes, I mean, I -- we identified it. I believe very clearly last quarter, when we laid out the metrics that we believe were the most valuable metrics to really measure our success. We did talk about it again in this presentation. Paid cases, repeat paid users and new paid users and obviously, revenue is the most -- are the most important drivers in our opinion. I think we were pretty clear on the metrics that we had in place prior to this may management team taking over. We're not incredibly helpful to investors to really kind of paint a path for them to understand the traction that we have in the marketplace. So we decided to make sure that we stuck with some clear metrics that gave investors much more, clarity around that. So we do intend to stick with those metrics, moving forward.

All right. And it looks like we also do have a follow up question from Kristen Kluska at Cantor Fitzgerald.

Hi. If I may squeeze in just one last question. So for the second stage of your adoption data, which type of cases do you see SkinTE mostly being used for new product evaluation phase? And because it's the first time you're using, how do you think this influences how that treating physician or surgeon could use for future cases once approved?

Yes. Thank you for that question. It really varies by the point of care and the specialist. So if you think of the outpatient setting, where the majority of patients are chronic wound patients, it's generally the recalcitrant patient that is initially treated with SkinTE or a patient that might have a deep wound down to underlying structures. And as I said earlier, it's the, it's the approach that the first time user wants to try SkinTE on some of the most difficult cases to see how we’ll respond there. And when they respond, when they -- when those patients respond positively, that leads to broader use and then that can be used, throughout a treatment algorithm for a physician in the chronic wound space. In a traumatic wound space, it really varies considerably, because you can see a variety different types of wounds, whether they be accidents or actually surgical reconstruction. So really the first level of abuse is tied to a particular doctor and the type of patients they happen to see at a given point in time when they're in communication with us. So that can really vary. But again, it's the same approach. They are open to utilizing SkinTE, because there's not a lot of great choices for those types of patients. And when they see that type of success, at least in more than one patient, we have seen those physicians then broaden their usage and the types of patients that they wanted to apply SkinTE too. So it really does vary by specialty and by point of care. But it's a great question and one that we're excited about in terms of the adoption, accelerating, especially as reflected by our number of repeat users.

Thank you.

All right, ladies and gentlemen, that will conclude the question and answer portion of today's call, and bring us to a close of the PolarityTE third quarter 2019 earnings call. Once again, we do thank you all for joining us. And that concludes the program today. You may now disconnect.