Imunon Inc (IMNN) 2021 Q4 法說會逐字稿

Good day, and welcome to Celsion's Fourth Quarter and Year-end 2021 Earnings Call. My name is Jess, and I will be your operator today. At this time, I would like to remind everyone that this call is being recorded.

I would now like to turn the conference over to Money Kosse, Life Science Advisors. Please go ahead, ma'am.

Thank you, Jess, and good morning, everyone. Earlier today, Celsion issued a press release announcing financial results for the fourth quarter and year ended December 31, 2021. You may access that release on the company's website under the Investors tab. With us today are Michael Tardugno, Chairman, CEO and President of Celsion; and Jeff Church, Chief Financial Officer. Following management's prepared remarks, we will open the call for a question-and-answer session.

During this call, management will be making forward-looking statements regarding Celsion's expectations and projections about future events. Generally, forward-looking statements can be identified by terminologies such as expects, anticipates, believes or other similar expressions. These statements are based on current expectations and are subject to a number of risks and uncertainties, including those set forth in the company's periodic filings with the Securities and Exchange Commission.

No forward-looking statement can be guaranteed, and actual results may differ materially from such statements. In particular, there is significant uncertainty about the duration and the impact of the COVID-19 pandemic. This means results could change at any time, and the contemplated impact of COVID-19 on Celsion's operations, financial results and outlook is the best estimate based on the information for today's discussion.

Also, the content of this conference call is accurate only as of the date of the live broadcast today, March 31, 2022. Celsion undertakes no obligation to revise or update comments made during this call except as required by law.

With that, I would like to now turn the call over to Michael Tardugno, Chairman, CEO and President. Michael?

Thank you, Monique. Good morning, everyone. Joining me today is Jeffrey Church, our Chief Financial Officer, who will review our fourth quarter and year-end results following my remarks. Also with us today are Dr. Nicholas Borys, our Chief Medical Officer; and Dr. Khursheed Anwer, our Chief Science Officer, both of whom will participate in the question-and-answer session at the end of the call.

As I look back on 2021, I have to say it was an incredible year. I'm pleased to report the significant progress that we have made as a company, particularly in our development programs. As noted in our press releases, we have observed important clinical results from our lead compound GEN-1 now being evaluated in our Phase II ovarian cancer study. And I can report that we've achieved key development milestones in our DNA plasmid vaccine initiative.

But before I go into more detail on our research and development progress, let me first discuss recent steps that we've taken to ensure the future of your company. During our February special meeting of shareholders, we received support from more than 85% of shares voted for our recently executed stock consolidation. The goal of which was twofold. First, and very importantly, the reverse stock split was necessary to maintain our listing on the NASDAQ Stock Exchange.

Second, by excluding the number of authorized shares from the stock consolidation, we have effectively freed up some 100 million shares now available to conduct ongoing business. For example, number one, to raise capital, if needed, to support our research; number two, to acquire assets to add to our pipeline; and/or number three, to provide shares in the form of options to hire new talent and to align management and employees with the interest of our shareholders.

We have also made sure that our balance sheet has remained strong, having raised capital opportunistically over the past few years on terms that I'm sure you would agree, we're very shareholder friendly. We closed 2021 with over $50 million in unrestricted cash and with the confidence that another $5 million in non-dilutive New Jersey net operating loss to sales can be completed. In all, our cash reserves plus NOLs provide an operating runway of 3-plus years, sufficient to cover the -- to fund the company through 2024 at current spending projections and enough to see us through the progression-free survival that's PFS readout of our Phase II ovarian cancer study, among other anticipated and important value-creating objectives.

Now turning to our development programs. We are advancing 2 of 4 technology platforms, both of which are focused on synthetic delivery of DNA plasmids for use in recruiting an important immune system response. Our first platform, TheraPlas, is our synthetic nonviral DNA delivery technology. Our first product candidate on the TheraPlas platform is an important immuno-oncology therapeutic that we call GEN-1. GEN-1 incorporates the plasmid coded for IL-12 and an impressive inflammatory protein and has shown promising ability to recruit the entirety of the immune system in early trials. And doing so, the tumor microenvironment becomes proimmune and replete with anticancer activity.

GEN-1 represents our entry into the future of oncology. And despite some significant challenges warranted by the COVID-19 pandemic, we have made significant progress moving this exciting product date forward in clinical trials.

Our Phase II OVATION 2 study in women with newly diagnosed advanced ovarian cancer is over 80% enrolled and is expected to complete enrollment in the third quarter of this year. We have seen encouraging results among the first 39 patients who have undergone interval debulking surgery. These patients, as reported, demonstrated that the GEN-1 treatment arm is showing a 27% improvement in our 0 resection scores over the control arm.

As we have reported previously, and R0 resection portends a significant improvement in patient survival as well as PFS, the primary endpoint for the study. Now under Dr. Borys' direction, our clinical development team is focused on completing enrollment of the study, leading no stone unturned and taking action to meet our targets. He has arranged this coming month for an insert in the USA Today paper entitled a novel treatment for ovarian cancer needs patients for clinical trial. This will be issued in print in all markets where the OVATION 2 study is being conducted.

The advertorial highlights our trial and notes the benefit of participating in a clinical study. We've also created a complementary website. Let me say that for you, it's www.ovariancancerstudy.com. I'll repeat that, www.ovariancancerstudy.com. I encourage you to go to that site. It informs patients in our trial and the potential of becoming a study participant. I think you'll find it quite attractive in explaining our study and the requirements to become a participant.

And OVATION 2 will recruit a minimum of 110 patients and up to 130 patients if time allows. And by that, I mean we expect to complete the study in the third quarter, no later than the end of August. If we achieve 110 patients before the end of August, we'll continue enrolling for up to 130 patients. We remain optimistic that the study is on track to complete enrollment in the third quarter. We anticipate final progression-free survival that's PFS data when 80 PFS events occur or 16 months median time on the study among all patients occurs whichever comes first.

This puts the data readout around the third quarter of 2023, which provides a potential to highlight results at various GOG and other scientific meetings. Favorable results from the trial will also mean we would pursue an accelerated registrational study for the indication and evaluation of the application of GEN-1 for other intraperitoneal cancers.

Moving on to our second technology platform, which is an adaptation of our TheraPlas technology that we call PLACCINE. And I can say our experience with this technology is certainly paying off. PLACCINE is our proprietary next-generation vaccine platform that has the potential to express multiple antigens for one or more pathogens in a single plasmid.

Our first product candidate on this platform is being developed for evaluation in a preclinical proof-of-concept initiative using a highly effective commercial mRNA vaccine formulated for COVID-19 as the baseline comparator. Our goal is to demonstrate the potential superiority of a DNA-based vaccine over an mRNA vaccine, which, among other attributes, such as independents from virus delivery vectors or the need for a device to administer DNA. We expect to show the value of a vaccine that can protect against multiple variants of COVID-19, improved stability at normal storage and distribution temperatures as a function of time, longer-lasting protection as a function of DNA's longer-lasting expression of the COVID-19 antigens and cost-effective flexibility with simplified manufacturing to quickly respond to the ever-changing viral morphology.

We will be announcing at various upcoming vaccine conferences our preclinical results showing production of antibodies and cytotoxic T-cell responses specific to the spike antigens of COVID-19, along with our plans for nonhuman primate studies over the next 3 to 4 months. I'd ask you to stay tuned as our goal to develop and optimize the most flexible vaccine with the ability to address an evolving virus quickly and easily has resulted in some impressive accomplishments.

To that end, I'd like to point out that over the past 12 months, we have successfully produced 36 different DNA plasmid vectors, a handful of which have the ability to express antigens from 2 or more viral variants. Our preclinical data shows vectors addressing 2 variants have the antibody titer equivalent to both commercial -- the highly effective commercial DNA and mRNA vaccines. These data, by the way, have been shared with our scientific advisers and supported in our discussions with them.

As we continue forward, our competencies now include in-house analytical methods for product analysis and evaluation. We now have a strong internal scientific team with 6 new scientists having vaccine background supported by an (inaudible) Scientific Advisory Board. We have established relationships with companies that have enabling vaccine discovery and development capability. And finally, we have applied for patents for novel vaccine compositions in their use.

We are now moving forward with a 5-arm nonhuman primate study, that's NHP in the scientific vernacular. Moving forward with a 5-arm nonhuman primate study. The study is designed with a control and a commercial mRNA vaccine comparator. We plan to begin inoculation tomorrow and expect preliminary data in the second quarter with additional response durability data in the fourth quarter of this year. What I mean by response durability, we're looking to see the lasting a potential of vaccine production among these NHP animals over more than a 6-month period.

Assuming success, we look forward to partnering discussions for commercial application of the COVID-19 vaccine. Obviously, it requires a strong competency in commercialization to bring a product like COVID vaccine to market given the current competitors in the marketplace. But more importantly, our success would mean that we would expand the development of our platform to address a range of infectious disease with epidemic or pandemic potential.

Very exciting opportunity for the company, again, assuming that we're successful, I can't tell you how, how excited the company is with this potential opportunity and the support that we've gotten from the investment community for our research in this area.

As we look forward towards developing these 2 world-class technologies, we have initiated a project in-house for in-house plasmid manufacturing that will cover our clinical needs for both GEN-1 and plasmid products. With internal manufacturing capabilities, we have both a cost and flexibility advantage to successfully enter commercial markets and assuming, of course, successful trials, the FDA and European Medicines Agency's approval.

Now before I turn the call over to Jeff, I would like to note that we will be holding our 2022 Annual Shareholder Meeting on June 13, where we welcome the opportunity to discuss our platform technologies and progress with you. Our current thinking is to hold this meeting in person. We hope the circumstances do not change. But if we do hold it in-person as we have in the past, we welcome you to join us and participate in the meeting.

We're excited by the opportunity before us. We believe that we are on the path towards scientific and commercial success with 2 potential blockbuster approaches. We are strategically and methodically building the capabilities internally for success with a deepening R&D bench and manufacturing capabilities with a longer-term view that our approach has meaningful commercial opportunity.

With that, I'll turn the call over to Jeff Church for a review of our financials. Jeff?

Thank you, Michael. Details of our fourth quarter and year-end 2021 financial results were included in the press release we issued this morning and in our Form 10-K, which we filed before the market opened.

Celsion ended the year with $56.9 million in cash, short-term investments and interest receivable. In January 2022, we completed a registered direct offering of convertible redeemable preferred stock, raising an additional $28.5 million before deducting placement agent fees and other offering expenses.

On March 3, 2022, we redeemed all outstanding shares of the preferred stock. Preferred stock has been retired and is no longer outstanding, the company's only outstanding securities for our common stock. Also adding to our cash position was $1.4 million in nondilutive funding from the sale in February 2022 of our New Jersey State net operating losses. We have raised over $16 million from the sale of these NOLs, which is equivalent to 1 full year of operating expenses. We anticipate an additional $3.5 million in proceeds from this innovative program in the 2022 to 2023 time frame.

We believe we are in excellent position with respect to liquidity to support us through several important value-creating milestones. We have sufficient capital resources to fund our operations through the end of 2024.

Now let me turn to a review of our year-end financial statements. For the year ended December 31, 2021, Celsion reported a net loss of $20.8 million compared to a net loss of $21.5 million in 2020. Operating expenses were $21.5 million in 2021, which represented a $2.5 million or 13% increase from the $19 million we reported in 2020.

Research and development expenses decreased $700,000 from $11.3 million last year to $10.6 million in 2021. Costs associated with the OVATION 2 study were consistent year-to-year at $1.3 million. Other clinical and regulatory costs were $2.5 million in 2021 and 2020. Research and development costs associated with the development of GEN-1 to support the OVATION 2 study as well as development of the PLACCINE DNA vaccine technology platform increased to $4.3 million in 2021 compared to $3.1 million in the same period last year.

CMC costs decreased by $1.5 million in 2021 compared to $2.1 million in 2020 due to lower levels of manufacturing and clinical supplies. General and administrative expenses increased to $10.9 million in 2021, which compares to $7.6 million in the prior year. This increase was primarily attributable to higher noncash stock compensation expense of approximately $1.3 million, an increase in professional fees of $1.5 million. And this is largely legal fees to defend various meritless suits filed after the announcement in July 2020 of the OPTIMA Phase III clinical results and an increase in premiums for directors' and officers' insurance of approximately $300,000.

With that, I'll now turn the call back to Michael.

Thank you, Jeff, for your very comprehensive and exciting overview of our financials. In closing, I'd like to thank everyone, our patients, clinicians, shareholders and Board members for their unwavering support as we proceed in our goal of developing our platform technologies, TheraPlas in immuno-oncology and our gene-mediated immunotherapy, in PLACCINE, our vaccine initiative. We look forward to providing exciting updates.

And with that, I'd like to open the call now to Q&A. Operator, would you open the lines, please?

(Operator Instructions) Our first question comes from Kumar Raja at Brookline Capital Markets.

So with regard to the OVATION study, what are you seeing in terms of PFS so far? And also the expectation is that you have to follow these patients for 16 months because I think that's where you are going to look at it, right? The later either the 80 PFS events for the 16 months?

Yes. So I'm going to ask Dr. Borys to comment on PFS. I think we just have a handful and we've asked our statisticians to give us a look at it. Nick, would you care to answer that, please?

Yes. Thank you very much for that question. So we started gearing up to be monitoring the PFS results. And as you know, the average PFS in many of these patients, or median PFS, is around 12 months. And so we expect to get the bulk of that maybe 16 months after the last patients enrolled. At this very early time, we have maybe around 19 or 20 events to date. We are showing a better trend for the GEN-1 arm. And I don't have the exact numbers in front of me, but as you could probably tell, it's way too early to speculate on which way that would go. But early results look interesting and promising and we'll be reviewing that with our GOG partners at the ASCO meeting. And as the data becomes more mature, we'll be sure to share that with you.

Okay. So the assumption of data in third quarter is it's based on the 16 months of follow-up for all these patients?

That 16 months median time on the study.

Okay. Got it. And with regard to the PLACCINE platform, what construct are you going to look at this primate studies?

That's a good question. I think we had a long discussion with our Scientific Advisory Group on this, and we considered a number of different options. And we concluded the most important option would give us a 1-to-1 heads-on comparison with the comparator with the mRNA comparator. And if Khursheed, you're on the line, could you address that in more detail, please?

Yes. Thank you, Michael. Kumar, so as Michael said that one of the goals for this study NHP is to do a confirmational proof of concept into larger animals, NHP moving from mouse (inaudible) excellent data. And the vector would be the one that expresses D614G at the European variant, very close to the Wuhan wild-type virus that the commercial vaccines are a game.

So I think not only the goal is that to demonstrate activity in larger animals going from mouse but also to compare it with the commercial vaccine, where the right comparison would be the variant that's very close to or identical to the commercial vaccine. So you have an apple-to-apple comparison, although we do have multi-cistronic vector with multiple antigens. That's our lead vector, we'll eventually test that as well. But compared to purpose, that's the vector, an antigen that's very close to the commercial vector.

And Khursheed, can you give us a little overview of what the various arms of the study are comprised of what they're addressing place?

Yes. Thank you, Michael. We will. So there are 5 arms of the study, Kumar, one is the placebo, of course, non-vaccinated animals. Our second group is the mRNA competitor at the human dose that's been given of that vaccine. Then our vector expressing a single SARS-CoV-2 antigen comparable to the comparator antigen at 2 doses. So dose 1 and dose 2. And then the fifth group is -- so these fourth group -- these 4 groups will demonstrate the ability of the vaccine to make antibodies, IgGs and then their ability to protect against the viral infection, which means at some point after the antibody levels have built up, then you will challenge them with the virus.

And then look at the neutralization of viral titer compared to the control animals that have not been vaccinated, compared to the mRNA competitors and see if the viral titers are affected by our vaccine at 2 doses and that reduction, how does that compare to mRNA vaccine. And then the fifth group would be the durability. We're also injecting animals to see if we can take the duration of response to at least 6 months or beyond. So we will be collecting blood and measuring antibody levels up to 6 months and then will challenge at that time that fifth group. So 3 objectives: confirmatory from mouse to NHP; secondly, how does it compare to the comparator; and third is the durability.

And Kumar, if I may, I just want to ask Khursheed to address another the hypothesis for our assumption that a DNA vaccine may have a more durable protective capability. Can you speak to that a bit, please, Khursheed?

Sure, Michael. So Kumar, if we inject this antigen protein or mRNA [encoding] and antigen protein or DNA into muscle, and you'll see a very clear distinction in expression profile. So protein disappears very quickly in a matter of hours, mRNA lasts for a couple of days. Expression from mRNA of the antigen protein that you're building immunity against. But with DNA, it's very well known. Inherently, DNA become episomal in the nucleus and muscles don't divide, so the expression lasts for a very long period of time.

You do get expression as early as 24 hours or less. So that's also important to kick off the immune response, but a sustained or at least long-lasting antigen exposure could translate into longer durability of immune response, just like they're boosting right? So because the antigen exposure is probably gone, you do a boost second or third, whatever boost. But if the antigen last for a long period of time, you could, in theory, sustain the immune response to the antigen for a longer period of time.

And of course, the 2 shortcomings that -- 2 major shortcomings, among others, that we're attempting to address here is the -- certainly, the durability of response. I think everybody can agree that the subjecting ourselves to a vaccine that requires a revaccination every 3 or 4 months is challenging, commercially challenging. So that's one major issue that we're attempting to address.

The second is the ability of a vaccine to address more than one variant. We see this virus, this particular virus and others have the ability to change in construct. And as a result, the protective capability, as we've seen in our hands for some of these new variants, may not be quite as strong as what the vaccine is originally designed for.

So exciting times. And in our hands, I just have to say for everyone in our hands, this is -- was, in many ways, vaccine, the vaccine development program is new to us. But in another way, our experience with plasmid DNA and delivery with synthetic methods put us ideally in a position to address a potential superior approach to nucleic acid vaccines.

We'll go next to David Bautz of Zacks Small-Capital Research.

Thanks for the update this morning. So my first 2 questions are on the OVATION 2 study. I'm curious, if we're going to see any additional data on surgical resection? And I'm also curious, if you're having trouble getting patients enrolled into the study because you mentioned that you were going to be putting ads out for recruitment?

Yes. So let me address the first question -- or the last question first. And that's recruitment. I don't -- I -- we're a little disappointed with recruitment. When we originally initiated the Phase II portion of the study about 1.5 years ago, maybe a little longer than 1.5 years ago. While we expected at the 22 -- or 23 sites that were enrolling patients to complete enrollment in the first quarter of 2022.

The resurgence of the Omicron variant or the [surgence] of the Omicron variant cause a number of our institutions to focus their health care resources on patients who are presenting with the virus at the expense of enrolling patients in our study. We know that for a fact. We've talked with our investigators multiple times on this, that the direction from the hospitals is focused on the pandemic. As a result of that, we are now projecting, we've seen a resurgence in activity. We're not projecting with a bit of confidence that we'll conclude enrollment in the third quarter.

The opportunity to recruit more patients than our target makes a lot of sense to us. This study can enroll as many as 130 patients. We think it's -- a bigger end is always better, gives us more information and more data. Dr. Borys has been lobbying that right from the beginning. And so at a relatively nominal cost, and I have to say, negotiated all of this. But at a relatively nominal cost, this advertisement, let me call it, a advertorial, made a great deal of sense to us.

We can get more patients in during this relatively short-time period before we conclude the study, we just think we have a better chance to evaluate the GEN-1 to treat these patients. So all in all, it was a cost-effective way to increase the (inaudible). We think it's the right thing to do. And by the way, it gives us more exposure to assuming we're successful, with the Phase II study gives us more visibility and more opportunity to recruit a Phase III trial. I think that probably answers your question. But Nick, do you want to add any more to that?

Yes. To the recruitment question, absolutely, we're very pleased that we have an opportunity to advertise. Meanwhile, we've done everything we can to use social media and so forth. But I think anybody in the medical world knows that during COVID, many people have been hesitant to go in for their checkups, follow-ups. And as a result, there has been a decrease in cancer incidents over the last year. And so that's been well reported. And as a result, hits clinical research as well.

So hopefully, the world recovers very quickly from this COVID impact in clinical research, and we can get back to normal recruitment rates. Meanwhile, Celsion is going to do everything possible to create awareness and get patients into our studies.

And Nick, you also along those lines, and this is just a little bit of more information than your question. But from our physicians, patients who are delaying seeing their doctors are presenting with more advanced disease, right?

Yes, that's correct. And so again, to anybody listening here, if it's time for your checkup, please do it. You don't want to delay anything if in terms of checkups and follow-ups and screening. So that's very important because especially in ovarian cancer, as you know, 80% of the cases in ovarian cancer present with advanced disease. And the longer you wait, the tougher it is to treat you. So I think that's very important for everyone to know and understand that it impacts on many fronts.

Going to your first question, you were asking about surgical resection rates. As Michael reported in his prepared comments, we continue to see an improvement in the GEN-1 patients with surgical resection rates. He reported today that there's a 27% improvement. And that was the catalyst that prompted the company to do its Phase II trial and for the GOG partners to join us in helping us manage the study and prepare for future registrational studies. So that is an important end point, but it's a secondary endpoint because it's not recognized by the FDA. Our primary endpoint is the PFS. So that's the data that's going to be very important to us. The surgical resection rate is very encouraging, and we continue to see an improvement.

And just to your -- specifically to your question, as we get another bolus of patients who have had interval debulking surgery, we will be prepared to report some additional information.

Okay. Great. And in regards to the nonhuman primate study that's going to be getting underway, I'm sorry if I missed this, but what strain of SARS-CoV-2 are going to be using for the challenge study?

Sorry, it's D614G, I believe. Is that right, Khursheed?

Yes, Michael, this is the single mutation that happened to the Wuhan wild-type virus and it appeared in Europe first, where the [aspartic] acid was mutated the glycine at 614 position. So that's the strain. It's very close to the alpha strain.

Okay. Is there a reason why you didn't want to test for Omicron since it's the strain that's out there right now?

Yes. As Michael pointed out earlier, that we have made 36 different vectors. We have made vectors with Omicron. But one of the important goals for this study was to have a comparison with commercial vaccine. And with a lot of internal discussion and discussion with our Scientific Advisory Board, it was -- drives that if you want to make a comparison with the competitor than commercial one then, it should be on equal footing, at least the same strain of the virus.

So that's the reason for that purpose, but also we do not exclude enrolling some more subjects down the road with our [bicistronic] vector, or maybe a new variant. Of course, Omicron is the talk of the town today, but of course, it may change to a different variant. Our goal is to show the proof of concept of our vaccine technology and in relation to a competitor. But clearly, Omicron is prevalent today. We have a vector. Michael, do you want to add anything to it?

I do. And just I want to say it another way, is the vaccines that have been approved for emergency use were designed to address the D614 variant. And the -- in order for us to clearly establish equivalents or superiority, we wanted to test our plasmid coated for the same variant. So our goal here with this study is to show superiority over the existing vaccines. There's nothing to prevent us from in the future by developing a vaccine that has a plasmid that's coated for the Omicron variant.

Okay. If you were going to move this vaccine candidate into the clinic, would you only do that with a partner? Or would you do it alone potentially?

That's a question that we're discussing internally, we think the opportunity to go to the clinic with a partner makes the greatest -- the greatest potential for success. We could do it a lot more quickly. Our experience in clinical research is largely in cancer. So it would be a new area of clinical research for us. It's not that we couldn't do it. We just take a little bit more understanding on our part. So our goal will be to look for a partner for clinical research.

With no other questions holding, I'll turn the conference back to Mr. Tardugno for any additional or closing remarks.

So again, I want to thank all of you very much for attending our conference call and for your interest in Celsion. I hope, as you can see that we are very excited about the work that's being conducted by the company in 2 very important indications. We look forward to continuing our progress and to advising you as the developments occur. So as I said in my earlier remarks, stay tuned. We do expect to be presenting some very interesting updates in the relative near future. Thanks again very much. And with that, we will end our call.

Thank you. Ladies and gentlemen, that does conclude today's call. We thank you for your participation. You may disconnect at this time.