Imunon Inc (IMNN) 2003 Q3 法說會逐字稿

Good day ladies and gentlemen, and welcome to the Celsion Regular Quarterly Shareholder conference call. At this time, all participants are in a listen-only mode.

My name is Mike and I will be your conference coordinator today. If at any time during the call, you require assistance, please press start followed by zero and the conference coordinator will be happy to assist you. As a reminder, this conference is being recorded.

I would now like to turn the program over to your host for today's conference, CFO Mr. Tony Deasey. Please proceed, sir.

Good morning and welcome to our regular quarterly conference call. Certainly, the - during the last four months since our last call, we've had some pretty exciting developments in the business. Our stock price is up by at least 170%. This morning it's moved up quite nicely as well. And our market capitalization is up by over 200%. Today, we've got close to $11 million on the balance sheet. When we spoke to you at the end of May, we only had $2 million.

The company has no debt and by the end of September, both our Series A and Series B convertible preferred stock will have been converted into common stock, thus eliminating the ongoing dilution from their respective 10 and 8% coupons. Along with this dramatic improvement in our financial status, we're also making real progress in the business. As Dan will tell you later in the call, the operational logistics associated with getting ready to launch the BPH product are progressing very well. Boston Scientific is proving to be a terrific partner and they're truly excited at the prospects of the product.

The process with the FDA is moving along and although there is no certainty about approval or timing of an approval, we're optimistic that we'll be in the market early next year.

Having freed up resources from the BPH trials, we're now making good progress with the breast cancer pivotal trials and to the prostate dose escalation study. We also announced this morning, and Dr. Cheung will address this in more detail, that we've strengthen our gene therapy portfolio with the acquisition of a license from the National Institutes of Health. However, all of these activities require resources to keep them moving forward.

Over the last three years, we've focused almost all of our resources behind getting BPH product approved and launched into the marketplace. Given our limited cash resources, this was appropriate, but it resulted in much slower progress than we would have liked on all our other technologies.

The BPH product has proven that when we put dedicated resources behind a project, we get results. So now that we have cash and anticipate, assuming a timely approval, that we get further milestone base cash injections from Boston Scientific, we're going to allocate dedicated resources to of our other technologies, including breast cancer, liposome developments and gene therapy.

We've already begun the recruiting process and met some terrific candidates for leadership roles in those businesses. We must also forecast in our expertise, particularly for liposome technology and scientific background and manufacturing management. We're confident that with modest additions to our staff, we'll be able to accelerate our progress.

However, none of this comes for free and it's likely that by early next year our cash burn will increase from its current level of around 700,000 a month.

Even so, we expect that our current cash plus future milestone payments will be sufficient to fund us for the next 18 months to two years, depending principally on the rate of enrollment in our Thermodox clinical trials.

In summary, the company is in a healthier condition today, both financially and from a development perspective than it has ever been during its history.

So now let me hand you over to Dan, who will update you on developments in the business.

Dan?

Thank you, Tony. As Tony indicated, I will address the following areas. First, update Celsion's BPH technology with respect to our interactions with the FDA and integration with Boston Scientific. Second, review the status of our breast cancer trials, including a discussion of our recent agreement with Duke for the technology developed by Dr. Thad Samulski. And three, review the status of Thermodox, our thermo-sensitive liposome encapsulated doxorubicin.

First, an update on Celsion's Microfocus BPH 800 Urethroplasty system. As you are aware, Celsion has submitted its clinical data to the FDA. We've had an ongoing dialogue with the FDA with respect to our submission. The dialogue has been constructive, and we are anticipating the approval around the end of this year. However, it goes without saying it's very difficult to predict FDA response times, but we continue to be optimistic.

With respect to the integration of our technology with Boston Scientific, things are progressing according to plan. Boston Scientific has been an excellent partner. We have participated in all of their marketing and sales strategy formation, promotion planning, and they have worked very closely with us through the regulatory process.

Transfer of our technology to OEM suppliers is going smoothly, and we anticipate being fully prepared for a successful product launch.

Second, I'd like to address our breast cancer trials. I am very pleased to report that patient accrual has increased substantially. We have been able to move the focus of our field clinical trial personnel from the intensive activity on BPH to the breast cancer trials. The increased patient accruals demonstrate the benefit of focus on that area.

In August, we had our best month ever, and September is on track to exceed August. Moreover, we have added a major new site on the west coast in Orange County. The investigator at this site is Dr. Jay Harness. Dr. Harness is distinguished among breast surgeons. He is a founder and board member of the American Society of Breast Surgeons. Thus, along with Dr. Dooley at Oklahoma University and Dr. Hernan Vargas at UCLA, Celsion is well-represented among the thought leaders in breast cancer. Our other sites are located at high-volume private practice centers.

In sum, we anticipate continued momentum in patient accrual. As many of you have seen from our press release in late July, the American Medical Association assigned a current procedure code, or CPT, code for our thermal therapy for breast tumors. This code is assigned to emerging technologies and used for tracking purposes so that reimbursement profiles can be established. This is a critical first step to obtaining reimbursement upon commercialization. Awarding of a code by the AMA is not an easy process. Celsion had to make presentations and apply in writing to support its case that we are in fact an emerging technology. We were happy to receive this designation and are actively using this code to support billing activities by our clinical trial sites.

Finally, in the area of breast cancer, and this was also highlighted in a press release in August, we obtained exclusive rights to the advanced phased array radio frequency technology designed by Duke University engineering professor Dr. Thad Samulski.

Dr. Samulski's technology has been adapted for breast cancer. The technology uses warm water in addition to relatively low frequency energy, which warms the breast to approximately 41 degrees Centigrade.

You will recall from our earlier conference calls and discussions, this temperature is approximately the ideal temperature for release of our thermal sensitive liposomes. In fact, Duke has completed a Phase I trial and is currently conducting a Phase II trial using Dr. Samulski's technology in conjunction with conventional liposome encapsulated form of doxorubicin in conjunction with Taxol for the management of locally advanced breast cancer.

The results to date have been have been extremely promising and the researchers at Duke anticipate even better results with the addition of Celsion's thermally sensitive liposome.

Thus, Dr. Samulski's technology for breast cancer offers an additional vehicle for providing heat for the release of the liposome, and therefore, another solid tumor target in addition to prostate cancer, which is currently in trials, and in liver cancer, which we plan to have in trials next year, which gets us to our next topic for discussion -- the status of Celsion's work in thermal sensitive liposomes.

Celsion's trial on prostate cancer is continuing. A second cohort of patients has been treated and patients from the first group are receiving a second cycle of chemotherapy. Completion of this Phase I trial is dependent on our determining the maximum tolerable dose.

After testing each cohort of patients, we must wait one month to assess side effects. Based on the results, we go to the next dosage level specified in the protocol. There's considerable excitement among urologists I speak with on the prospects for this technology as applied to prostate cancer.

It goes without saying that this is a significant commercial opportunity with prostate being number one in terms of the number of new cancer cases for men discovered each year. Our prostate cancer work has attracted a good deal of attention among a broader array of cancer researchers.

And organization founded by is devoted to the latest advances in prostate cancer treatment. It's called . They have an annual meeting where they review the developments in prostate cancer and an abstract on our research has been accepted for presentation later this month.

Another area in which we are actively pursuing the application of Thermodox is in conjunction with the National Institutes of Health. The plan is to use Celsion's Thermodox in conjunction with radio frequency ablation as a heating source in the treatment of liver cancer.

Preclinical work has been completed. We have already had a pre-IND meeting with the FDA and are following up on suggestions which they have made to us. Our protocol for treating patients in a Phase I study is in the final stages of internal review between the NIH and us. We anticipate filing the official IND with the FDA around the end of this year.

As you can see, we have a number of very exciting prospects going on in the company and are making progress in all fronts. At this time, I'd like to turn the meeting over to Dr. Cheung to discuss gene therapy.

Thank you, Dan. And good morning shareholders and friends of Celsion. I would like now to take this opportunity to summarize our progress in the development of our heat activated gene therapy technologies.

This morning, we announced that we have obtained an exclusive license from the National Institutes of Health to commercialize microwave heat activated gene therapy products based on a proprietary gene therapy technology package covered by a pending patent application filed by scientists there.

The patent covers the use of energy to activate and control gene therapy, and outlines the steps involved in creating temperature sensitive therapeutic genes.

The addition of the NIH technology will greatly strengthen Celsion activated gene therapy intellectual property portfolio.

The license gives us much greater freedom to develop and commercial products in the area of heat activated genetic cancer treatments.

Celsion's goal is to develop temperature sensitive therapeutic genes for cancer that performs therapy only when activated by energy focused at the tumor. In the approach described in the NI's patent, a temperature sensitive gene therapy construct is made with the attachment of heat shot promoter to a therapeutic gene.

The gene construct is then enclosed in a virus for delivery to the cancer site through injection. Focused energy activates the heat shot promoter, which in turn triggers this therapeutic action of the gene selectively at the tumor site.

After the treatment, when the body temperature returns to normal, the action of gene therapy stops.

We have been working with scientists from Memorial Sloan-Kettering Cancer Center and Duke University Medical Center in the development of heat-activated gene therapy for cancer treatment.

In the press releases in June 2003, we announced a publication in cancer research of the pre-clinical results by at Memorial Sloan-Kettering of the development of a heat-activated anti-sense genetic biological modifier that will inhibit the repair of caner cells. The multiplier has the potential to develop into a very potent radiation sensitizer that will enhance the advocacy of and greatly reduce the toxicity and side effects associated with radiation therapy for cancer treatment.

A patent on this invention has been filed by Sloan-Kettering and Celsion has entered into an exclusive license agreement with Sloan-Kettering for the commercial rights to this product.

At the same time, scientists at Duke University has been actively pursuing the development of heat-activated and genesis and immunotherapy. Results from preliminary animal studies demonstrated the feasibility of this concept. Results were published in cancer research article in 2000, and then another article on heat regulated immunogenic therapy was also published in the International Journal of Hypothermia in year 2002.

Patent applications for this technology have also been filed. Celsion has also entered into an exclusive option with Duke University for the rights to license its patents and technology's for commercial development.

Several steps remain before this exciting gene therapy technologies can be evaluated in patients. We are actively working with scientists from Duke and Sloan-Kettering to prepare GLP grade genetic materials for additional pre-clinical efficacy and toxicity study on larger animal models required to support an IND application before we can evaluate this product in humans. And we will update you periodically on our progress. Thank you.

Well, that's it for our formal presentation. Before we get into the questions, I'd like to remind you of the Safe Harbor statement and that except for historical information, the statements made in this presentation are forward-looking statements - are forward-looking statements involving significant risks and uncertainties. These risks and uncertainties, including those related to future financial position and business strategy of the company are detailed in the company's filings with the Securities and Exchange Commission.

So, Mike, if you could now open the call up to questions, we'd be happy to answer any questions shareholders have.

Sure. Ladies and gentlemen, if you wish to ask a question, please press star, one on your telephone. If your question has been answered or you wish to withdraw your question, please press star, two. Once again, please press star, one to ask a question.

And the first question comes from with Funds. Please proceed.

Thanks. Thank you for the update, gentlemen. I had a question about the timing and market size on the BPH product. I wonder if you could comment on that, please.

I think we indicated in the presentation that we were optimistic about launching the product early next year. The market size for BPH - right now it's a $3 billion market of which roughly $2 billion is covered by drug therapies. So the minimally invasive segment, which is where we're going to be entering, right now is about a $35 to $40 million market, which has showed tremendous promise for growth and we hope to deliver that growth.

So there would be milestone payments?

Under our - under our agreement with Boston Scientific we have milestone payments due when the product is approved and when we launch the product into the marketplace.

Thank you. Good luck.

Thanks.

And the next question comes from , private investor. Please proceed.

Good morning, guys. A couple questions, first on the patent from the NIH. The package of technologies the NIH created, I know that I've seen the research documents for Sloan and Duke. Are they published for this package of technologies that we're getting from the NIH?

Well, those - well, that technology package was not published. The technology was, you know, covers a lot of the work that we, you know, we actually are doing at Sloan-Kettering and at Duke. It's a patent that they applied for and that covered the technology and in the - in the press release, we actually outlined what it is. It detailed the use of heat energy to activate and control gene therapy and the construction of various heat-sensitive gene therapy constructs. That's what the patent is about.

OK. So it's a broad patent, which is intended to be inclusive of the Sloan and Duke-type biological modifiers. Is that correct?

Right. And that really will cover anyone who wants to use it to activate gene therapy.

Great. So being broad, it covers everything and is not in any conflict with the ...

No.

... with the ...

It does strongly enhance our position and will strengthen our intellectual property portfolio.

Great. Next question I have is the breast cancer trial's numbers you say have increased substantially. August was our best month yet. Do you have a figure for how many patients? And let's just take the small leg, tumor leg, of that study for August.

Tom, in August we accrued to both trials 12 patients.

Twelve patients to both. And September is on an even better pace than that?

That's right.

Do you anticipate that this will even continue to accelerate?

We certainly hope so. We've focused lots of attention on our sites. We've been going out there, visiting them, working with them on recruitment strategies. And from what I can tell, it's certainly paying off. So we anticipate continued improvement.

Great. The other question I have, pertaining to the code that was assigned by sort of -- for the breast cancer treatment. You said that you had to present arguments for assigning of this code. It's not an easy task. In our arguments, did we also need to include actual data from the ongoing trial?

Yes we did, actually.

OK. Guys, that's all I have. Doing a great job. Keep up the good work. Thank you.

Thank you, Tom.

And the next question comes from , private investor. Please proceed.

Yes, good morning. Thank you for that nice briefing. I just would like to say for about two seconds my own interest in the company dates back for well over four years now, and I've stubbornly continued to hold and expand my -- the amount of investment I have in the company for two reasons.

One, because I just think the whole technologies you're developing are marvelous and they're going to go ahead and do all the transformations to the field that you think you're going to do, and secondly, that I think that the stock is going to up because it's going to be reflected as the public and the investors begin to see the great potential of this.

That brings me to the comment/question that I have. As we read in your various articles that you put out on the Internet, and as I listen to the reports that you've just given, the company is getting into so many different activities, all of which are tremendously exciting, to use your words. And it looks like they're all going to have great payoffs. I just look at this now, and I think I'm seeing from what was said you're going to hire a few more people. But I just want to be reassured that the focus on each one of these steadily growing numbers of activities, which are highly technical and highly scientific are going to have a champion within the company.

You know, any business that does well in any particular area has to really have a champion and that champion concentrates only on that one area. And I'm hoping as Celsion gets bigger and you have more people coming in, that you're going to be able to do that.

I don't know, do you want to take it? , why don't you?

Yes, why don't I. Yes, I'm the founder of Celsion. This is Dr. Cheung. Now, you say your perception that we are doing too many things. Our technology is all focused and centered around focused energy. Celsion is very good, very broad base of collaborators from major universities and research institutions to help us develop these products. Now, when they're near commercialization, we are in the process of trying to hire people who's sole responsibility is to make sure that each of these areas will be developed properly according to the commercial guidelines.

Do you want to add anything?

Yes, we recognized that when we brought Dan in to focus on BPH, we really made terrific progress on that. We'd have liked if it had been quicker, but the FDA process is always uncertain.

We believe that if we bring in people who are focused in the other areas such as the heat activated liposomes, the breast cancer trials, the gene. And then below them, experts in liposome technology and manufacturing then we will make good progress in the business.

One of the advantages that we have is that we have a product pipeline which has product nicely spaced. So, we don't have to put high level people on every business.

But, you know, we have our priorities very clearly set. The first thing is to get the BPH product to market -- and we're really focused on doing that. Behind that, we have the prostate and potentially liver cancer. And the breast cancer products, which are ongoing and then behind that the genes.

So, yes, we intend to bring people in who will be focused and who will be champions of those products to try and make sure that we get them to the market and achieve their potential.

I like the answer. That's great. That's what I think -- I didn't want, as Dr. Cheung said, I said there were too many products. I just hope that, you know, what you just said is that you're going to have a team looking at each one individually. As I used the word champion -- whatever word you use it doesn't matter.

No, that's fine. I'm reassured. Thank you.

No, you said the right word and that's our idea.

Thank you.

Thank you.

And the next question comes from , Private Investor. Please proceed.

Yes, I'd to congratulate you on the progress made so far. And I was wondering if you could tell us how many shares are currently outstanding?

There are currently -- approximately 140 million shares outstanding.

OK. And if all the convertible preferred stock, warrants and options were converted, how many shares would be outstanding at that point?

On a fully diluted basis including the items you talked about and employee stock options we'd be at about 170 million.

OK. So, there's still 30 million authorized shares beyond that, right?

Yes, approximately. I don't have the ...

Yes, I understand. I just wanted approximate. And if the warrants and options outstanding were all exercised, how much more money, approximately, would that bring into the company?

If the warrants were exercised then we'd bring in probably about 5.5 to 7 million. And I'm hedging because we just did ...

I understand.

... warrants at $1.20 and I'm not sure proceeds that those ...

Yes, somewhere in that area. And the options, of course, would be a much smaller amount, right? Because the exercise price is probably much lower?

Well, the options would be a smaller amount. The exercise prices aren't that much lower.

OK.

I think the average employee stock option is around 68 to 70 cents.

OK. And the other thing that I've never been able to get clear in my mind is the agreement that you have with BSX covers all areas but parts of Southeast Asia and parts of South America?

Yes, in the Boston Scientific agreement, we carved out gray to China, which is China, Hong Kong, Taiwan and Macao, and we carved out Central and South America.

OK, now if Boston Scientific were to exercise the option that they have, would we still have rights to make a deal in those areas or does their exercise of the option take the whole word into consideration.

Their exercise of the option takes the whole world into consideration.

OK, so once they exercise that option, if no agreements have been made with that part of the world, then there would be no revenue coming in from those sources to CLN. Is that right?

Right, if they exercise to purchase the BPH assets, they would own the BPH assets worldwide.

Suppose you were to make an agreement with that part of the world and received a dollar amount for that agreement, would that reduce the option price that BSX has to pay this year?

No, and I, no, I mean, if BSX exercise their option, they're going to want to have global rights.

I know, yes, I know that, but I didn't know whether, it seems to me like there's still some hope that some deal will be made in that part of the world for BPH procedure.

Yes, there is, but we still expect to do deals in those part of the world for BPH.

But if we don't, if we were to get a dollar amount for those rights or isn't there any intention to get dollar rights just maybe royalties for the year.

Our plan for those markets would be to set up, basically distributors in those markets.

OK, and not receive money for, from them for that right, then?

Right. And just to go back, I just got the numbers on the warrants and options. If all warrants weren't exercised, including employee stock options in the latest warrants that we just issued, proceeds would be $18 million.

Wow. OK. Well that answers my questions and again, I'd like to congratulate everybody for your fine job you're doing for the stockholders, and for those in need of cancer treatment and BPH. Thank you.

Thank you.

The next question comes from with . Please proceed.

Hey guys, just first of all, wanted to congratulate you on getting that balance sheet looking nice and strong again.

I got a two-part question. First of all, what's your time frame as far as the breast cancer and prostate cancer, as far as market viability? Assuming everything goes well with the trials as they have, how many years out are we looking before that would be a viable, possible product.

This is Dan. Breast cancer, I'll answer that one first. You know, it looks like there's a possibility for a commercial product sometime at the end of 2005 beginning of 2006 in that range. We expect to be able to complete the trial, depends, we're seeing variable accrual rates. We're seeing much faster accruals in the small tumors than the large tumors, because there are many more women in that category, fortunately.

So we can see that trial over early sometime next year, if we keep the kind of momentum we're getting. And then obviously have to go through the FDA approval process, so 2005 would be a reasonable, sometime in '05 would be a reasonable target.

For prostate cancer, we're only in a Phase I dose escalation, so you still need to go through Phase II trials, Phase III trials and the FDA approval process. So you're talking more like 2007, 2008 range, in terms of an approval.

OK. Also, as far as the Street is concerned, what have you been doing to kind of get yourself out there and known, not just with doctors and investors, but, I mean, with the brokerage firms?

Since May of this year, we have been focusing on talking to institutional investors. I think we probably have spoken to 30 to 40 institutions since May. And, in fact, on Thursday, I'm presenting at a conference - the Red Chip Conference in New York, which is an organization which focuses on stocks. Stocks and - like ours and with valuations in same range as ours. So we are, now, that the balance sheet is stronger and that we are further down the development cycle, turning our attention to try and get more institutional ownership and coverage.

Fantastic.

Thank you.

And the next question comes from , private investor. Please proceed.

Yes. Thank you, gentlemen. One of my questions have already been answered, specifically on what we could anticipate on the international front and revenues therein. And also the warrants and the options. Tony, I think you indicated that the present burn rate is $700,000 a month, anticipating to increase shortly. When would you anticipate it to increase and what - at what level?

The increase will probably start in October as we start adding people. And, you know, we're in the process of putting together the budget for next year and the following year. I expect that the burn could up from - to somewhere in the region of $900,000 to a million - that sort of range. But the burn is really dependent, principally, on enrollments in Thermodox trials because those trials are quite expensive. Each patient costs somewhere in the region of $30,000. So if that enrollment increase, our burn goes up. But if the enrollment increases that gets us to market quicker. So it's, you know ...

We don't mind paying that money.

Well, just on a napkin, with $11 million in cash at 700 - at the present rate of $700,000 - that's 16 months of burn rate. You bump it up to a million a month. How - just hit me again, one more time, how the business ...

If you bumped it up to a million a month immediately, that would basically mean you'd have around $11 million. But then assuming that we get approved and Boston Scientific start distributing the product, we get around $10 million from milestone payments there. So that would get us another 10 months, I guess, to 21. And we won't get to a million dollars burn rate in the next month. It's going to take awhile to ramp up to that. So that's how I get to 18 to 24.

OK. Thank you, gentlemen.

Thanks.

And the next question comes from , private investor. Please proceed.

Yes, sir. First of all, gentlemen, I want to thank you for a great update today and also to congratulate you on the progress that you've made since the last call. The question I have and possibly you can't answer this, but I'll ask it anyhow. And I'm not looking for a yes or no type of answer, but just kind of a gut feel answer. And that is would you think that our chances in the cancer trial probably more likely in the liposome area, might qualify for fast-track with the FDA at some point?

Well, I think you could -- yes, I would say -- if you're talking about. We talked about this as a potential strategy, and it probably applies more to liver cancer, because for these patients who have multi-focal disease, lots of tumor sites, in other words, on their liver, there aren't a lot of options out there. And if we start to show some success in that area, we think that could be a fast-track area. It's a relatively small market, but it's one that gets a great deal of attention. So, to answer your question, liver cancer certainly has that prospect, and it could move on a faster timetable than the prostate cancer that I talked about.

That's great. That's really the only question that I had left. Everything else has been answered. So thanks again, fellows.

Thank you.

Thank you.

And the next question comes from , private investor. Please proceed.

Yes, gentlemen, thank you very much. You had mentioned that the company was working actively with the FDA on getting approval of the BPH product. And just curious, can I assume that that means that the FDA has indeed come back with additional questions to your last, final submission. And have we indeed responded to those questions?

The answer is yes. They had some questions and yes we've responded.

OK. Your gut feeling. Do you believe we'll get additional questions from the FDA, or do you think it's going to be smooth sailing at this point?

Yes, more than likely, there'll be some additional questions. That's my gut feeling.

OK, great. Thank you very much.

And the next question comes from , private investor. Please proceed.

Yes, in terms of that FDA approval, a follow up to the last question, you indicated I believe that you would anticipate, which is somewhat guesswork, by the end of the year. Is that possible that that would be quicker, more like October? Or is it your soonest expectation the year end?

I think we said around the end of the year. And that's what we're going to stick to. It's guesswork, in terms of trying to pin down the FDA.

When would you anticipate receiving additional questions?

Any time.

We could get them, I think, probably any time now, we could get some additional questions.

But I assume you're optimistic in the final analysis that you'll be able to answer all their questions in a ...

Oh, yeah, we're optimistic. We think we have a great product and we think the trial demonstrates that.

I mean, you think -- you're optimistic you will ultimately obtain FDA approval, as I understand it.

Absolutely. Yes.

OK. Thank you, and congratulations on a great presentation.

Thank you.

And the next comes from David Weinstein with National Securities. Please proceed.

Good morning, gentlemen. I have three questions. The first question is regarding your continual visits to China. I'd like to know what the scope of your activities in China are, and if you could explain briefly about what those are in relationship to the SFDA?

Basically, we've been visiting China for two reasons. One is that we have used China as a source for raising equity.

And secondly, the secondary we've worked on is that we want to basically get our BPH products approved and distributed in China. We've talked to the and basically, when we get approval in the U.S., then we will undertake a study in China.

We've identified potential partners to help us distribute the product in China. And then, ultimately, we believe that there could be a possibility that if we could setup a relationship in China, then we could use that to accelerate getting human data specifically in the liver trials.

We're in negotiations with people, but things in Asia take a long time. And it's not possible right now to predict when those discussions will come to a conclusion.

OK. The second question is really for Dr. Cheung. If you could explain how the gene therapy is going to work in people, what the time line to human clinical trials is? And if you could also explain the significance of the recent option you obtained from Duke University?

Yes. You know, we all know that our gene therapy product development focused on the use of focused energy. Celsion has the technology to be able to heat a tumor anywhere in the body.

We want to make use of that ability and develop temperature sensitive gene therapy materials that will be activated by the action of focusing at the tumor. And the, you know, we have the NIH patent together. You know, we have Sloan-Kettering, which, I think, is covered in the press release.

Now, with Duke University we have an option on some of their very exciting work. Now, Duke University has been focused on the activated immuno-therapy. And again, their work is targeting tumors.

And we believe that, you know, that one has a lot of promise, you know, to be used in conjunction with our existing system for treatment of, you know, like maybe more serious tumors and you know, target tumors that are hard to treat. There are many of those tumors around.

And we hope to be -- now, in terms of getting to the market, you know, gene therapy, you know, takes a long time, you know, the regulatory atmosphere is very uncertain. But we know that there are several steps that must be made.

First, we need to do a large animal toxicity study to show the lack of toxicity for these genes. And then we need to establish manufacturing. And all those are going to take us at least a year to a year and a half before we can complete.

Now, we are working with doctors from Duke and from Sloan-Kettering on planning the patients' files. And I would say that we will not make a guess. We maybe able to do Phase I, you know, provided that we receive clearance of the FDA in patients and in therapy maybe in the year 2005 or later.

All right, Dr. Cheung, let me ask just one clarifying question regarding gene therapy. I understand that your gene therapy differs from other gene therapy basically because it's used in conjunction with chemotherapy. Is that true?

It doesn't have to be, now -- for gene therapy, what we tried to do is again like for example, what we do is for Memorial Sloan-Kettering something's that sensitize radiation, we try to have gene therapy materials that is non-toxic, or you know, something that is very, you know, activated by focus heat. And so I don't know how they different, other than that you know, we can target gene therapy where we want it and turn it on when we want it and turn it off when we don't want it, and supposedly this technology address the major concerns, current major concerns gene therapy, how do you deliver it, how do you control it.

I think the ability to use focus energy to control gene therapy, turning it on when we want it, put it where we want it, it's the unique aspect of our gene therapy.

Now in terms of this technology, it's a , obviously, we can attach it to any gene therapy material, practically, but company again, must focus on resources and we are working on area that we have systems to heat.

Now does the vector from Duke differ from the one that Dr. Lee has been using?

Well, you know, they, everybody have some vector and they have developed some vector that may be able to less toxic, you know, and targeting tumor more freely, targeting, tumor targeting virus, but that still in early stage of development. We hope that we will be able to, you know, know more and provide you more information once we find out exactly you know, what are the potential.

OK, and then my last question is for Dan. On the small tumor cancer trials for breast cancer, what is the endpoint, how many patients does the trial call for and how many have you treated to date?

David, the trial calls for about 220 patients. They're randomized 50-50 to lumpectomy alone versus heat plus lumpectomy. So we've done about 60 patients so far.

Are most of those recently?

Well, since the beginning of the trial, we've done 60 patients.

And, but you've been ramping up in the last two months?

We've been ramping much more rapidly, exactly. And the endpoint is, we're looking at second incision rates, re-incision rates, and percentage of tumor , so that we actually, what we're trying to demonstrate and we've talked about this in previous calls, is that one of the problems with lumpectomy currently is that when they go in and do a lumpectomy, they do the post-treatment, post-surgical pathology, they look at whether the margins are clear of cancer cells. In some of, it's been published up to 55 percent of the time, they have to go back in and do a re-incision, because the margins aren't clear. Now what we've been able to demonstrate in the dose escalation portion of our trial is that if you get the appropriate thermal dose of microwave, focused microwave, you can essentially ablate all the tumor in the margins and cause substantial of the actual primary tumor itself, and that's what we're attempting to establish.

Great, now I just have one last question, this is back for Tony, going back to the question regarding activities in China. Have you given any thought to what form a partnership might take, and would the scope go beyond BPH?

We are considering a number of different formats and quite likely we'd do some sort of a joint venture, and most likely it could beyond BPH.

And is the cost of treating the patients cheaper in China versus the U.S. and can the data cross over back into the United States?

When we look - take, for example, liver cancer. One, there's a much higher incidence of liver cancer in Asia. And so, there's a greater number of patients available to treat and two, the cost of treating patients in China, in a clinical trial, is much lower than the U.S. If we went down the route of trying to enroll patients, our first objective will be to prove - to get early human data. And then, if we could get the data collected in a way that would satisfy the FDA requirements, that would obviously be a benefit because it would enable us to speed up and reduce the cost of doing the clinical trial through FDA purposes.

But this is really early, David, and, you know, we're talking to a number of people and nothing, at this point in time, is concrete.

OK.

So it's really a work in progress.

Just trying to understand it. Thanks very much, guys.

Thanks.

And the next question comes from , private investor. Please proceed.

Hi, guys. I'm back with a couple more questions. I'd like to clarify that, as we know, the BPH buyout to Boston Scientific is a minimum of $60 million, higher upon exceeding certain sales thresholds, correct?

Yes.

And although a buyout would include any BPH partnership in Asia, would it be true to say that any revenues produced in Asia or South America would be accretive to the buyout price and add to that buyout price?

Any revenues generated in Asia or South America would be included in the revenues used to calculate the buyout price.

Great. OK. Next question I had is you referred to a burn rate activity for next year going up. The Thermodox trials that we anticipate to be in for Phase II next year for the prostate cancer, are we going to go that alone or will we solicit a partner?

Our intention all along has been to basically get a partner. We may have to do early Phase II trials to see the impact of the - of the Thermodox on patients before we bring a partner in. So we could start the Phase II trials on our own.

I understand. With respect to the so-called by , if - well, not if, but when we decide to launch human trials with Thermodox, not the standard liposomes as is in progress now, will we need to begin a large animal study first with the and Thermodox, or are existing large animal studies sufficient to cover that?

That's a good question, . We believe that the existing study should be sufficient, but until we sit down and have a pre- meeting with the FDA, we can't definitely answer that question.

Even as much as we may like to launch a study next or a human study there, we have to wait and see when that could be done by getting together with them.

Correct.

OK. With respect to the previous questions, the investor just asked about the liver trials and other work that could be done in China. Does the fact that the - their equivalent of FDA approval of the , which replaced our former standards of the mark and the fact that China is now in the World Trade Organization make crossing over, any test performed there any easier for us to get them approved in the U.S.?

Yes. Let me just comment, Tom, it's, you know, China - a lot of people are very skeptical about data from China, a lot of people are very skeptical about data from China, except that recently, in the past three years, China has made tremendous progress by joining WTO. And they have set up something called the SFDA which is the state drug -- you know, FDA, now they call SFDA. And they are going to regulate drugs and approval -- I saw equipment approval. And they are copying all the USA standards. And because of that, we believe that overtime the standards -- since the standards of the U.S. is being followed, the data that we obtain should be useful to U.S. application.

However, it our intention not to do any single study trial in China. We will work together with institution, the USA here will be the principal investigation site, and we will add additional China sites to make sure. And then we probably will utilize the services of to make sure we get the data the way we want it in the format which it should vote for the FDA approval.

But definitely, I think that a lot of companies are now looking at doing clinical trials in China, and then the is there to help and obviously is a cost benefit and a time benefit there. But we must be very diligent to make sure that the data come out right and support the FDA study.

But I have to estimate, , we're still a ways away from being in a position to do any trials in China.

Understand that down the road it's something we're working on, but not imminent, we have other things to cook right now. Thanks very much.

And the next question comes from , private investor. Please proceed.

Gentlemen, I have a follow up question to the burn rate that I asked earlier. This is more of a tough love kind of question because I appreciate the Celsion technology and I am a rooter of the Celsion business model. However, as an investor, I have a question specifically about some of the sensitivity assumptions that may be made. For instance, if Boston Scientific's payment does not materialize, what is presently being done on a contingency basis to fund the business?

I think obviously we have considered that, and our first priority is to make sure that the BPH product gets approved. Second priority is to keep these liposome trials moving forward, because we believe that if we are making good progress, then that should be reflected in our stock price. And if the Boston Scientific cash is not forthcoming, then we would likely have to go back to the market to raise equity, but we would do it at a higher price than we have in the past. Or, if the data are good enough, we could bring in an alternative partner on BPH, or maybe bring a partner in on one of the other technologies that we're working on.

So we're looking at a number of alternatives if that scenario was to unfold.

How large of a setback would that be as far as advancing the business model and the various technologies you're trying to move downfield?

It would be a bump in the road. It's difficult to quantify.

Bump, or a big pothole or a sinkhole?

I would classify it as a bump in the road. We have managed through many hurdles and issues in the past and we've managed through that. And we believe we have a tremendous technology on our hands with a terrific value. And we would just keep moving forward.

OK, thank you.

And there are no further questions at this time.

OK, well, thank you all for your interest and thanks for calling in and we look forward to updating you again in about three months. Thanks very much.

And this concludes your conference call. Thank you for your participation today. You may now disconnect.