Good morning, and welcome to the Windtree Therapeutics, Inc. First Quarter 2016 Financial and Business Update Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to John Tattory, Chief Financial Officer. Please go ahead.

Thank you, Andrew, and good morning, everyone. During this morning's call, we will provide an update on the 2016 first quarter financial results, as well as provide key business updates. A replay of this webcast and slide presentation will be available on our website shortly after the call is completed. Before we begin, I want to remind you that today's conference call will contain forward-looking statements. These statements relate to future events or the company's future performance. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from any future results expressed in or implied by such statements, especially those inherent in the process of discovering, developing and commercializing our products. The listener is cautioned not to rely on these forward-looking statements, as actual results could vary materially from those described as a result of a number of factors, including those set forth in our 2015 annual report on Form 10-K and any subsequent SEC filings, including the Form 10-Q filed this morning, as they may have been amended. Joining me this morning are Craig Fraser, our Chief Executive Officer; and Dr. Steve Simonson, our Chief Development officer. With that, I'll turn the call over to Craig.

Thanks, John, and thank you all for joining the first Windtree Therapeutics earnings call. This morning, we will be providing you with a clinical, regulatory and financial update. Specifically, we will update you on the ongoing IIa trial on younger babies and the Phase IIb trial. We will update you on a recent meeting we held with the FDA to discuss these trials and the planning for Phase III. Additionally, Steve will review our initial findings from our observation study, which are proving to be informative for our efforts. John will provide an update on our Q1 financials and outlook, before I close the call with a statement about our focus. The past few months have been marked by solid execution leading to meaningful progress towards our objective. We recognize the importance of transparency and in doing what we say we will do. So I would like to begin by revisiting what we said would be the focus of our efforts in the last call. Our core focus is the timely and rigorous execution of our IIa study in 26- to 28-week infants in what was, at that time, the starting of the Phase IIb trial. We will update you on this progress as we continue to expect IIa results in Q3 and the IIb results in Q1 of 2017. We also noted a desire to expand the trial beyond the U.S. as we believe x U.S. sites represent the greatest potential for trial enrollments, return on our investments and support future value creation. I am pleased that we now have sites in 3 regions. As these efforts are showing this to be a smart move, we are redeploying our spend to fuel this strategy. Steve introduced you to 2 other important studies we are conducting, namely the observation study and the Lung Deposition Study in nonhuman primates. For the observation study, we said we expected results covering about 1,500 babies in the Q2 to Q3 timeframe. While the data is still fresh and being analyzed for future medical communication, I am pleased that today, in Q2, we will share some preliminary takeaway observations from over 1,700 babies. Additionally, the Lung Deposition Study is on track for sharing results in Q3. The work to conserve and possibly add to cash is ongoing and remains a priority. We have made progress this quarter to both conserve cash and refocus our existing investments to better align with our primary objective, obtaining the Phase II data. For further details on our clinical and regulatory programs, I will hand this over to Steve.

Thanks, Craig. The IIa study in 26- to 28-week gestational age babies is looking at 2 doses of AEROSURF compared to a control group receiving nasal CPAP alone. Each dose group will include 8 babies on AEROSURF and 8 control babies for a total of 32 patients. We have separated out of the 26- to 28-week babies in this study at the request of the FDA to begin our program in older gestational age babies, 29 to 34 weeks, and then after establishing safety and tolerability in that group, extend the program into the younger gestational age group. We have previously shared the results from the older babies that have allowed us to progress into the younger, more premature babies. The objective of this trial is to evaluate the safety and tolerability of AEROSURF in this younger population; and secondarily, as in the previous study, obtain evidence that the aerosolized surfactant is getting into the lungs to produce the expected changes from surfactant administration. Our hope is to find a generally similar adverse event and serious adverse event profile between the 26- to 28-week gestational age and older 29- to 34-week gestational age babies from our previous IIa study. We would also like to see that multiple doses are well tolerated. We know that complications of prematurity are more frequent in the younger gestational age group, but we expect that the treated babies would generally be similar to the control group. This is a small study with just 16 active and 16 control babies, so our ability to assess clinical outcomes will be limited. However, we hope that we will get similar reports of treated babies pinking up and not having to work as hard to breathe as we did in the previous IIa study. We also hope to see quantitative changes in oxygen requirements and carbon dioxide levels. While the trial is progressing nicely given the relatively smaller prevalence of 26- to 28-week gestational age infants and variable birth census, it is difficult to predict last patient in and we may see enrollments spill into July. Nevertheless, we continue to expect to see data readout in Q3. For Phase IIb study, we'll enroll up to 240 babies from 26 to 32 weeks gestational age. There will be 2 AEROSURF doses and a nasal CPAP control group. The trial be looking to demonstrate an effective AEROSURF on the time to intubation and CPAP failure, and to decrease the need for intubation and mechanical ventilation as a consequence of CPAP failure. The trial is beginning with the 29- to 32-week age group and will include the 26- to 28-week group when the IIa safety and tolerability study is complete. While this trial got off to a slower-than-anticipated start, we have successfully met our goal of expanding the program outside of the United States, so that now we are also enrolling in Poland and Canada and have sites up and active in Chile. We are continuing to expand outside the United States, and hope to have sites enrolling in additional countries in Europe and Latin America soon. Last month, we had a meeting with the FDA to discuss several aspects of our clinical development program, such as patients to study, end points and trial procedures. We were very pleased with the interaction, and in our assessment, the discussion confirmed our current and planned direction for the clinical development program. In addition to our AEROSURF Phase II program, we are conducting a non-interventional, prospective observational study to collect data on the treatment and outcomes of babies in the gestational ages we are studying in the AEROSURF clinical program. Some of our goals are to gain further understanding of nasal CPAP use, oxygen requirements, intubation practices and other therapies that may impact nasal CPAP success or failure and the need for intubation. We have included approximately 1,700 babies so far and data collection is still ongoing. Upon completion of the data collection, we plan to prepare this project for presentation and publication in the scientific clinical arena. Although our analysis of the data is preliminary and not complete, the data we have obtained has helped us to identify important characteristics of the patient pathway from delivery room to the neonatal intensive care unit. These data have already helped us with some operational aspects of our trials and provide new insight into the scope of unmet medical need in these premature babies. We are discussing these findings with our Steering Committee. Some of the initial observations from this data set have been very interesting. For example, babies who had a very low oxygen requirement, less than the 25% oxygen we have used in our clinical trial program, still had a significant need for intubation. And this was also seen in babies who are on room air and had no need for supplemental oxygen. Furthermore, the vast majority, or 3/4 babies in the 26- to 28-week gestational age group, required intubation. Early application of AEROSURF may be appropriate for many of these babies to attempt to preclude the need for intubation. And very importantly, there appears to be a greater clinical need and opportunity for AEROSURF in the older gestational age babies than previously thought. It is well known that a lower proportion of infants in the 29- to 34-week gestational age group require intubation. But the number of babies in this category is much larger than the number of babies in the younger gestational age category, and actually accounts for more intubations. This can be seen in the following diagram. On the left, you see in 2 shades of green the total number of babies in the 29- to 34-week category, and the 2 -- and then the 2 shades of gray, the size of the 26- to 28-week group. The bright green shows the fraction of babies that required intubation in the older babies and the dark green represents those older babies who were not intubated. Similarly, the light gray wedge of the pie represents the proportion of younger babies requiring intubation, and the dark gray, those younger babies that did not need to be intubated. This shows you that a large percentage of the younger babies need intubation, whereas a smaller fraction of the older babies do. On the right pie diagram, you can see how this plays out in the overall numbers of intubations. Of all the babies requiring intubation, 60% of them are in the older gestational age category and 40% come from the 26- to 28-week group. So even though the younger babies are likely to have a greater degree of surfactant deficiency and a greater likelihood of needing intubation. Because there are so many more older babies, the absolute number of intubations are greater in the older babies. This could be very important in the overall therapeutic opportunity for AEROSURF. Another area of insight from our observational data is around the timing of intubations in premature babies, and the impact of this on our trial recruitment as well as a therapeutic opportunity for AEROSURF. The majority of babies enrolled in our AEROSURF trial are brought in between 2 and 6 hours of life. Data from our prospective study has led us to believe that there is an opportunity for AEROSURF use in babies earlier than we are currently enrolling them into our clinical trial, and we're evaluating operational strategies to include babies in our trials earlier after birth. The data behind this shows that many RDS babies are intubated for surfactant administration before they can be enrolled into our clinical trial. This could include 10% of the babies in the 29- to 34-week gestational age group, and perhaps as high as 40% of babies in the 26- to 28-week group. Many of these babies may be candidates for AEROSURF. One of the reasons for the time interval to enroll a baby in a clinical trial is the task that are required in a research study compared to routine medical use of a therapy. In the clinical trial setting, obtaining informed consent, assembling the research team and meeting the inclusion criteria for the study over a required period of time sometimes preclude a rapid enrollment of babies into a clinical trial. Strategies to circumvent this challenge will be very beneficial for trial efficiency, and we're working on this with our Steering Committee. And if AEROSURF were approved, clinical use would not require these research-associated activities and treatment could be instituted earlier, potentially further decreasing these early intubations. So you can see that the observational study has provided a more granular look at the premature babies we are studying in our program. Insights into oxygen requirements and CPAP failure, timing of intubations and the number of intubations across gestational ages have come out of this first look at the data. Craig, additional comments?

Yes. Thanks, Steve. We look forward to seeing the rest of the results in the future presentation and publication. Considering our previously reported IIa results and what we have now seen in the observation study, there are a few summary learnings related to our AEROSURF program. We previously thought the medical need in intubation numbers in older babies would not be as great as the younger babies. The company also believed the treatment effect in these 29- to 34-week infants would not be as large. And beyond this, we had far less visibility and insight outside our and typically other studied populations from trials. More recently, we've learned a few things. The data we are generating has provided useful insights in the treatment and opportunity in RDS. There appears to be a greater clinical need and potential market in the larger population of 29- to 34-week babies than previously considered. And this was the group that we studied in our first IIa trial and reported a 49% relative reduction in CPAP failures in the combined 45- and 60-minute dose groups, which was higher than trial planning assumptions. We are now seeing across RDS treatment timing and pathways, and believe the future addressable market extends lower in initial severity at initial presentation in the NICU, and also earlier in the treatment pathway including into the delivery room. We are assessing how to access appropriate patients in these areas in the course of our development, as Steve mentioned. These and other observations help inform our current and future trial related to things such as oxygen requirements for enrollment, mix of age groups and so forth. So with that, Steve, you want to give an update on the Lung Deposition Study?

Yes. We've also told you about a nonhuman primate Lung Deposition Study we are doing in order to characterize the overall and regional deposition of aerosolized KL4 surfactant delivered by the AEROSURF Delivery System. This project is a series of experiments that we hope will show a uniform deposition and distribution of aerosolized surfactant throughout the lungs. We are on track to complete these experiments in Q3 and report our top line data then, as well as preparing the data for presentation at scientific meetings and publication. The preliminary data from this project are very encouraging. I'll now hand off to John Tattory, our CFO, to review our financial data.

Thanks, Steve. We ended the first quarter with $29.4 million in cash and cash equivalents, which we continue to project is sufficient to fund our operations through the first quarter of 2017, which will include the expected completion of the AEROSURF Phase IIb trial. In addition, we reported accounts payable and accrued expenses of $14.6 million, and long-term debt with Deerfield of $25 million. The Deerfield debt is payable in 2 $12.5 million installments in February of 2018 and February of 2019, with the 2018 payment subject to potential deferral to achieve a certain market cap milestone. From an operating perspective, we reported a first quarter operating loss of $13.9 million compared to $11.2 million in the first quarter of 2015. The change in the operating loss was primarily the result of an increase in R&D due to higher expenses associated with the AEROSURF Phase II clinical trials, including patient enrollment costs, ongoing clinical site initiations and the manufacturing of clinic-ready AEROSURF Delivery Systems. Interest expense for the first quarter was $600,000 compared to $1.2 million for the first quarter of 2015. The decrease in interest expense was due to the July 2015 restructuring of our debt with Deerfield, which resulted in the write-off of previously capitalized debt discount costs, which are being amortized to interest expense. Overall, the company reported a first quarter 2016 net loss of $13.9 million or $1.70 per share compared to a net loss of $12.2 million or $1.96 per share for the comparable period in 2015. Net cash burn for the first quarter of 2016 was $9.3 million and included $1.5 million in 2015 employee incentive comp payments. We are forecasting a second quarter net cash burn of approximately $8.5 million, and as I mentioned, continue to project that current cash resources are sufficient to fund the company through the first quarter of 2017. As Craig mentioned in his opening remarks, we have identified and are in the process of implementing actions to further mitigate risk and ensure we have the strongest possible focus on the timely execution of our AEROSURF trials. In order to optimize the investment in our clinical trial priorities, we have reallocated cash resources of approximately $2 million into more of these risk-mitigation activities. I'll note that just over 50% of the reallocated cost is represented by a reduction in headcount. The impact of these actions on our financial position is included in our current cash forecast. As we mentioned in our previous call and Craig mentioned in his upfront comments, a key objective for 2016 remains to identify and implement actions to conserve existing cash and to further extend our resources without impacting our AEROSURF Phase II trial execution. And with that, I'll turn the call back over to Craig.

Thanks, John. We are making progress to maneuver the company into a strong value-creating position for our shareholders, with hopefully solid Phase II data, corporate development activity, commercial needs integration into development and achieving a state of true Phase III readiness upon anybody's evaluation in the course of next year. In the coming months, our main focus remains the rigorous execution of our Phase II program by completing the 26- to 28-week infant trial and getting new trial sites operational, particularly in international areas. We also plan to complete and report on the Lung Deposition Study in nonhuman primates. Lastly, we are managing our business and finances smartly, as we look to extend our cash runway further into 2017. In closing, I would draw your attention to the Windtree TX website, and specifically the vision of striving to deliver hope for a lifetime. This is appropriate as it relates to our work to provide breakthrough clinical solutions for our most precious patients, premature babies. This mission helps drive us to execute with the highest level of integrity and performance. With that, I will open it up for questions. Operator?

[Operator Instructions] The first question comes from Tom Shrader of Stifel.

I have some questions about the Phase IIb trial and the 2 different groups of babies. So is there a minimum number of babies for the younger group? How is that going to work? And are you going to report aggregate results or will the results -- is it really 2 trials now? And what happens if one is compelling and the other isn't? One group is compelling and the other isn't?

Tom, this is Steve. As an enrollment strategy, we initially adopted a stratification of a greater proportion of the babies being enrolled in the 26- to 28-week gestational age group. And this was done because younger babies were felt to be more surfactant-deficient, or at least to a greater degree, and might have a tendency to show more improvement with AEROSURF treatment. And that strategy was put forward before we had the benefit of the 2-way results. And as you know, in that trial, we saw a control group CPAP failure rate of 53% and then the relative reduction in that of nearly 50% with the AEROSURF group. So a larger effect in the older babies than perhaps had been anticipated. So in light of that, as well as now with the insight that we've gained from the prospective observational study, we don't need to adopt that degree of stratification as an enrichment strategy in the IIb study. And we've incorporated an ability to adjust the proportion of babies in each gestational age group into our protocol. And we'll reconsider the stratification proportions when we have the IIa data in the 26- to 28-week babies in hand. So no, it won't be like 2 separate trials. We will, as we've said, begin with the 29- to 32-week babies, and as soon as we get the IIa trial done in 26- to 28-week babies, begin enrolling them in the IIb study as well. So we'll look at the overall performance of AEROSURF, as well as by gestational age.

I think what we're expecting, both in terms of time and data readouts from the study, of course there'll be a lot of different ways to slice it, but that pretty much remains unchanged. It's just the pathway of getting there and what flexibilities you have from these learnings.

Correct. We have a bit more flexibility perhaps than we've talked about.

And do you expect Phase III might be the same thing, you'd be ready for Phase III in one group before the other? And that is it possible one Phase III would be in one group and one Phase III would be in the other group? Or I guess implicit in that question, is there a chance that this Phase IIb is going to be one of your pivotal studies? What are you comfortable saying in that regard?

Our plans right now are to get the entire gestational age range completed in our Phase IIb program, and we are executing this trial to be a very important piece of supportive data for our Phase III and registration program. And at the present time, we plan to study the gestational age from 26 to 34 weeks in our Phase III program.

Okay. And then just the primate study, I guess, how does that -- I guess I'm not sure -- it seems like it would've been done a long time ago. And I'm just curious how you're integrating that into what you're doing now, because kind of everything you would've learned for that study, you've already -- you're already past that. So if you'd just explain what's going -- why are you doing that study? I assume it's probably pretty expensive.

No, the nonhuman primate study is perhaps not as expensive as you might be thinking. But it's -- we felt it's an important part or important piece of information to have as part of our package. And this will serve us, not only in being able to demonstrate that our delivery technology is getting surfactant into the lung and getting it to all regions of the lung, which is something that hasn't been demonstrated before with the surfactant given in this fashion, it will have other utility as we take our program forward beyond the -- beyond this initial release of distribution. And it will certainly be important as we progress with our device development and continue down that path.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Craig Fraser, CEO, for any closing remarks.

Thank you. And again, thank you for joining the first Windtree Therapeutics call. We'll make ourselves available for any additional one-on-one calls. And again. I'm pleased with the team's execution right now, at this point in time, and the progress towards making our goals. This should be a big year in front of us with regard to the various milestones, and we're executing against them. So thank you. And everybody, have a good day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.