Imunon Inc (IMNN) 2004 Q3 法說會逐字稿

Good day ladies and gentlemen and welcome to the Celsion Corporation quarterly shareholders' conference call. My name is Rachel and I will be your coordinator for today.

(OPERATOR INSTRUCTIONS)

Celsion wishes to inform listeners that forward-looking statements in the course of this conference call are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Listeners are cautioned that such forward-looking statements involve risks and uncertainties including, without limitation, unforeseen changes in the course of research and development activities and in clinical trials by others, possible acquisitions of other technologies, assets or businesses, possible actions by customers, suppliers, competitors, regulatory authorities and other risks detailed from time to time in the company's periodic reports filed with the Securities and Exchange Commission.

And now I would say I would like to turn the presentation over to your host for today's call, Dr. Cheung, Chief Executive Officer and Chief Scientific Officer. Please proceed sir.

Thank you. Good morning. When we last addressed our stockholders at the annual meeting just over two months ago, we announced that we have made significant progress in moving forward with our 5-year strategic plan which was established in 2001 to transform Celsion into an anti-cancer biopharmaceutical company.

I would like to take this opportunity to expand further on this topic. The strategic plan consists of four goals. Our first goal was get our BPH process approved, commercialized and monetized in order to fund the development of our cancer products.

Our second goal was to put Celsion on a sound financial footing, third was to develop a pipeline of quality anti-cancer products based on our heat-activated drug and gene delivery platform. And the fourth goal, which should flow naturally from the first three, was for Celsion to become a fully-fledged biopharmaceutical company by the year 2006.

We attained the first goal in February of this year with the receipt of the pre-market approval from the Food and Drug Administration for Prolieve, our minimally invasive BPH treatment system, following our engagement of Boston Scientific Corporation last year as our distributor for the product. Our ongoing relationship with Boston Scientific not only provides us with the validation of our technology, but also helps to put us in a sound financial footing.

It is encouraging to see, as reflected in our second quarter 10Q, that as of June 30th we had 17.8 million dollars in the bank. This includes cash infusion of 15 million dollars from Boston Scientific from licensing fees and purchases of our stock.

We also have begun to receive a stream of cash flow representing our share of sales revenue from Prolieve products and we anticipate that this cash flow stream will increase in the near future. We can expect to also receive an additional payment of at least 16 million dollars at such time as Boston Scientific exercises its option to purchase our BPH assets.

We anticipate that if Boston Scientific exercises this option the proceeds will provide a significant war chest to fund the development of our anti-cancer biotechnology products. In order to pursue -- persuade Boston Scientific to exercise this option, we need to make sure that we fully support Boston Scientific in the market launch of the Prolieve System and that we deliver a quality product to their customers. If we are successful, we believe that the decision to exercise the option should be a simple one.

Since 2001 Celsion has been preparing for its evolution to a biotechnology company that develops heat-activated drug and gene therapies for cancer. We have assembled the core infrastructure to support our cancer drug product development effort. Our current management team is experienced in pharmaceutical development. We have staffed our product development, clinical and regulatory areas with experienced professionals from the pharmaceutical industry.

In response to the warning letter earlier this year, we have submitted to the Food and Drug Administration a plan to put Celsion into full GCP and GMP compliance, Good Clinical Practice and Good Manufacturing Practice compliance as a drug development company by the end of October, 2004 and to ensure compliance thereafter and we presently are executing that plan.

Our immediate and most promising cancer product is ThermoDox, a heat-activated liposome drug encapsulating doxorubicin. We are seeking to develop treatment for three separate cancers using ThermoDox. We are in a phase I clinical trial of ThermoDox for treatment of prostate cancer. We are awaiting FDA clearance to begin a second phase I trial, this one using ThermoDox to treat liver cancer. We should be ready to treat liver cancer patients in this second trial by fall of 2004.

Liver cancer trials will be conducted under a collaborative clinical research and development agreement between Celsion and the National Institute of Health in Bethesda, Maryland. Under this agreement, NIH will provide the patients, the clinical and research staff as well as the facilities to conduct the study. Celsion will be responsible for providing the drug and for monitoring to ensure clinical and regulatory compliance and will provide financial support. Assuming these trials are successful, Celsion will eventually commercialize the product.

We are also exploring the possibility of a program with Duke University Medical Center to treat breast cancer using one of our heating systems in combination with ThermoDox.

At the annual meeting we also announced the suspension of two pivotal phase II breast cancer trials and since that time we have decided to close down both of these trials. We know that many of you will find this disappointing and may interpret it to mean that we have given up on our attempt to develop treatment for breast cancer.

This is not true. As I indicated above, we are seeking innovative ways to pursue our breast cancer program. This may include the use of ThermoDox, the use of our MIT adaptive phased array focused heating technology and the advanced phased array technology with what often refer as "booby jacuzzi" that we already have licensed from Duke University.

Meanwhile, our research collaborators at Duke are keenly interested in beginning development efforts to encapsulate drugs other than doxorubicin in our temperature sensitive liposome. This would, of course, further broaden the clinical application of our heat-activated liposome nanoparticle drug delivery technology platform.

In order to fully capitalize on the clinical potential of our heat-activated drug delivery platform we will need to develop additional heating systems capable of focused heating of deep-seated tumors. We are evaluating several heating systems currently being used clinically to induce heating to deep-seated cancers in critical organs such as lungs, liver, pancreas, kidney and ovary and bladder.

If we can gain rights to these systems and adapt, modify or improve one or more of them to create an acceptable heating profile for drug and gene activation, we will utilize this system in conjunction with and to facilitate commercialization of our tumor-targeting drug and gene therapy.

During the last stockholder meeting I also announced that I had requested that our board of directors initiate a search for a new CEO. This is also part of my plan for Celsion. In my view, my value to Celsion lies primarily in scientific knowledge and technical leadership. I believe that I will serve the company best as a board member and as Celsion's Chief Scientific Officer.

Between 1986 and 2000 as Chief Scientific Officer I completed the development of the APA heating technology with MIT. Then working with Duke and Sloan-Kettering we created the heat-activated drug and gene delivery platform.

Now we are again focused on the development of heat-activated drugs and genes as part of our tumor-targeting cancer treatment. Given our current postures and scientific needs, my knowledge in hyperthermia design, focused heating system design and heat-activated cancer treatment as well as my scientific leadership is much in demand. If I'm able to relinquish the duties of CEO I will be able to devote all my time and attention to the development of Celsion technologies and products.

Over the last two years we have been researching the potential of outsourcing the development of heating systems, clinical feasibility studies and clinical trials to China to reduce both cost and development time.

China joined the World Trade Organization recently and as a matter of policy it is improving national health care by opening up the healthcare industry to allow foreign company participation. Treatment of cancer is one of the primary focuses of China's healthcare development.

To provide better regulation of commercial healthcare products China created a State Food and Drug Administration, the SFDA, which is modeled after the U.S. FDA. As a result, the potential exists for Celsion to conduct clinical trials and clinical feasibility demonstrations to commercialize healthcare products in China by following the SFDA guidelines and, at the same time, generating clinical results which are in compliance with the FDA rules and regulations.

While it is not clear to what extent the FDA ultimately will accept clinical results generated in Chinese trials, the trial would have the potential to produce acceptable results in patients at a much lower cost and over a much shorter timeframe than would be possible in the United States.

In 1984 I was invited by the Chinese government as a hyperthermia expert to introduce the concept of hyperthermic treatment of cancer to the Chinese medical community. Today heat, or hyperthermic treatment, is an accepted modality for cancer treatment.

I have established an extensive network of personal contacts with physicians, researchers engineers, investors as well as government officials in China for Celsion. I anticipate that we may well be able to utilize Chinese hospitals and research laboratories within this network to accelerate collection of human data for our drug and gene therapies and outsource or develop unique heating devices to trigger release of drugs and genes.

As most of you are aware, we have entered into a joint venture in China to facilitate our China efforts. We have hired staff and recruited an experienced general manager who will join the joint venture this fall.

The outlook of Celsion is very positive and exciting. However, during the transition period Celsion's business will focus only in three areas. Tony Deasey, our Chief Operating Officer, will address these three areas and provide you with an update on the progress in each of these areas. He will also update you on certain areas of our business and on our financial status. Tony.

Good morning. As Dr. Cheung indicated, I'm going to cover three items -- the FDA warning letter, the launch of the Prolieve system and the status of our evolution to a biopharmaceutical company.

We received the warning letter from the FDA on May the 7th. And at the stockholders' meeting we indicated that we were committed to respond to the FDA with a timetable and milestones to address their concerns and ensure that we are operating in a GCP-compliant environment.

We submitted our initial response to the FDA on May the 27th. We have advised the FDA of these actions and the organizational changes which we'll be taking and have committed to have all our actions completed by the end of October.

We're communicating with the FDA regularly and delivering evidence of our actions at the end of each month. We have delivered milestones promised to the FDA for the end of June and the end of July. We are continuing to operate our clinical and regulatory organizations.

At the beginning of July we added an experienced pharmaceutical professional to our regulatory team. Later this month we expect to add a GCP auditor to our regulatory staff to be sure that we're complying with GCP on an ongoing basis.

We're also adding a Director of Clinical Operations to manage our clinical staff and oversee our monitoring of our sites. The Director of Clinical Operations will also be charged with helping us to choose the clinical sites best suited to specific trials which should accelerate enrollment of patients and ultimately completion of our studies.

We have also decided to outsource all of our monitoring and in preparation for this we're auditing all of our current studies to ensure that they are compliant and, where necessary, we're taking corrective actions to ensure that our programs remain fully compliant on a prospective basis.

There is no doubt that the warning letter was a very serious event and that responding to it thoroughly and completely has absorbed significant resources and will continue to do so for some months to come. However, the same actions that will permit us to address fully the matters raised by the FDA will make us a much stronger company for the future.

Our second area of focus has been the successful introduction of Prolieve, our minimally invasive treatment system for Benign Prostatic Hyperplasia. On the earnings call last week, Boston Scientific's management said that Prolieve was ahead of plan. While many of you may have expected faster results, such expectations have been unrealistic.

Introduction of a totally automated medical treatment system is complicated. In the first place, the entire Boston Scientific urology sales force had to be trained in the use of the system and had to demonstrate their proficiency. When a machine is placed we have to train the staff at that site. This in itself is a significant exercise.

Additionally, once the system is in the hands of novices unforeseen issues arise. And although they may not be serious, each one has to be analyzed and then addressed in terms of modifications to training routines, or in some cases to the system or operation thereof. This too takes time.

We agreed with our partners at Boston that a controlled roll-out was the best way to approach this introduction. We currently have 34 machines in operation. We expect the pace of the roll-out to accelerate this quarter and through the balance of the year and are confident that if no additional major issues arise, we should have over a hundred machines in service by the end of the year.

Given that Prolieve is the fifth BPH treatment in the market, and that in many cases we will have replaced competitive machines, this would be a phenomenal achievement.

Boston Scientific is very pleased with how the machine is working and with treatment results to date. And we are delighted with the investment that Boston has made in Prolieve and the support that it is planning to give this system as we move forward. We could not have chosen a better partner.

The third focus has been to move forward the evolution of our company from a device company to a biotechnology company. Dr. Cheung has addressed some aspects of this area strategically. Our objective over the next three years is to prove that our heat-activated liposome is an effective means of targeting drugs to tumors at specific sites or organs in the body.

We believe that this should enable us to deliver lower systemic doses and thus increase effectiveness while reducing side effects. In order to prove that this thesis is correct, we need to show that the liposome can be used to deliver drugs to treat cancer in several organs.

The first indication we selected is prostate cancer. Our Prolieve system can deliver the requisite heat to induce our drug ThermoDox to release its contents of doxorubicin. The phase I dose escalation study has been underway for some time, but enrollment has been slow. Currently this sluggishness is exacerbated by the summer slowdown and by the need to focus our resources on our response to warning letter issues.

We expect that enrollment at our existing sites will pick up later in the fall and intend to increase enrollments still more by adding at least two additional specialized cancer sites with track records for enrolling patients in prostate cancer trials. Additionally, we believe that we are approaching our maximum dose. And if correct, that should, we should get this trial finished as quickly as possible.

The second indication we selected is liver cancer. We filed an investigational new drug application with the FDA in December and thereafter, the FDA requested additional preclinical work. We have completed that work and have filed the results with the FDA. By the middle of this month we hope to get clearance to start the trial and be ready to begin treating patients in the fall.

This trial is partly funded and will be conducted by the NIH under a cooperative research and development agreement. We and our investigators at NIH are excited to be starting this study, which if successful could provide relief for victims of liver cancer who currently have few alternatives in their fight against this deadly disease.

Finally, we are hopeful that by the end of this year, we'll initiate a breast cancer ThrermoDox program in cooperation with Duke University. This will provide us with a third indication for which we are attempting to prove the effectiveness of heat in combination with our heat-activated liposomes in targeting and delivering drugs to tumors.

We filed our second quarter 10Q this morning. It's exciting to be able to report a 342% increase in sales to 443 thousand dollars. It's also exciting to report that our net loss for the quarter reduced to one cent per share from four cents per share in the first quarter of this year and three cents per share in each quarter last year.

As revenues increase, we are confident that our net cash, our average net cash burn, equal to operating expenses less gross margin, should average out at close to 800 thousand per month that we have anticipated.

Our quarter end cash balance was 17.8 million dollars. Without taking into account any cash generated from Prolieve sales or from any other source, this balance should be sufficient to fund us through the end of 2005.

I would like to conclude our prepared remarks by commenting on the stock price movement since the approval of Prolieve. It is very disappointing for management to see the stock continually slide. We believe that the company is in the strongest position in its history in that it has at least 18 months cash on hand, has generated revenues, has started to generate revenues with the expectation of increased revenues to come, has a very exciting focused cancer program and has assembled a strong industry-experienced management team.

Some people have attributed the slide in our stock price to short selling on the Berlin Exchange. Although we have so far been unsuccessful in our attempts to de-list our stock, we have also examined trading patterns in relation to that listing and have concluded that the Berlin listing has probably not been materially responsible for the decline in our stock price.

We are continuing to build our business on the progress we have made over the last three years and are confident that by the end of October Celsion will be a GCP/GMP compliant drug development company with a seasoned management team, an exciting product in the market and a very promising product pipeline.

Thanks for your attention; we will now take your questions.

(OPERATOR INSTRUCTIONS)

Your first question comes from the line of Alec Roberts, a private investor.

Yes, good morning. I've been an investor with you for over five years so I'm in for the long run. And of course I've been, along with many other people, extremely impressed with all the work that you've done.

It seems to me however that we've arrived at a somewhat different juncture with the introduction of the Prolieve and it's very discouraging for someone like myself who's far away from the center of action to get very little news about what's going on.

We hear a lot. We've just heard a lot on this conversation, but it seems to me that there should be a -- it's been an R&D company almost exclusively up until now. And now we're more or less into a partial marketing mode and the company, what we're doing, all these wonderful things that are happening, need to be known by more people.

And it's very frustrating when I look at the news every day and I see absolutely nothing. And the stock price going down and nothing about what's going on is being said. I would suggest that perhaps there should be some new emphasis on marketing, perhaps, for example, you could call upon the services of your former CEO, Mr. Spencer Volk on a part time basis to get you going in this direction. But certainly I would think that something like that should be done.

Thank you for your comment. It's very difficult for us to go out with press releases and news about Prolieve when we are not, in fact, marketing the product. Boston Scientific is marketing the product for us. They're our distributor and they have full rights.

I can assure you that Boston sees this as a great opportunity for them and thus for us. But the focus of this company is to be a product development company and to focus on our cancer therapies. We've really outsourced the marketing of this product.

So I understand people want news on a regular basis, but we can only put out news in cooperation with Boston Scientific. And we will do that quarterly, but I'm not sure there's an opportunity to report more often than that.

I had understood that there was -- maybe I misunderstood -- that there was going to be sort of a kickoff to the program of the Prolieve where there would be a little bit of fancy bells and whistles and so on with Boston Scientific and yourself and I don't believe that ever happened, did it?

Boston, at the AUA in May, we were with Boston Scientific on their stand and the product was very heavily featured. We basically, they have had all their sales force in for training on several occasions. We've basically taken the decision that the best way to get this product into the market is to roll it out four or five sites at a time.

If we get a hundred machines in the market by the end of the year, that will be a terrific achievement. The major competitor in the market has 414 machines out there after five years. So we believe, and we've done this in consultation with Boston, that the best way to get this product into the market is to roll it out on a site by site basis. And that roll out is accelerating.

I won't take up anything more, but one comment is, my comments were not directed completely at the Prolieve. It's just that all of the things that the company are doing, we're not hearing, it seems to me, enough about. And I know you're under restrictions with the FDA and so on. But is there some way that more can be made of what we're doing so that the average investor or some investors at least, will take more notice of the company?

Yes, we provide a regular conference call and we file our 10K/10Q, as well as when any significant event happens we put out press release. I think that we have done our best to, and we occasionally will also send our shareholders letter to provide additional news.

So we are doing the best we could to communicate to the extent that, since we are a public company there's rules and regulations on selective disclosure. And I think that if you're in for the long run, you need to be patient. It takes a lot of effort to develop a drug for treatment of cancer, for very severe, drastic cancer like liver cancer.

But we, all you need to know is that we are making very good progress and we will continue to inform you with the progress. And we will, so that you know that every quarter you will be hearing from us.

Thank you.

Your next question comes from the line of Mark Steinberg of National Securities.

Good morning gentlemen.

Good morning Mike.

Congratulations first of all on some very, very positive results. I was rather impressed. What I did want to ask about is I heard with regards to the Berlin Stock Exchange that to date you've been unsuccessful in getting de-listing from the Berlin Stock Exchange. And my question is what, if anything, can or what, if any thing is, being done to further that objective to avoid any future problems with something like naked shorting?

We have had our law firm and our corporate counsel in constant communication with them. Right now we have been told by the exchange, just so people understand the rules, anybody can list a stock on the Berlin, any broker can list a stock on the Berlin Exchange.

Our stock was actually listed in 2001 on that exchange, but by a brokerage firm. The Berlin Exchange has told us that we have to get that brokerage firm to have us removed from the exchange. And the brokerage firm right now is refusing. We've threatened legal action. And we would keep working to try and get ourselves removed.

I do have to say though, we can see the activity on the exchange and there is very little activity on that exchange. And I know all the ways people have talked about this potentially affecting us, but it's our judgment that this is not impacting our stock.

Alright, thank you.

Thank you. Your next question comes from the line of Martin Walsh, a private investor.

Hello. I've been concerned for some time with the information that's posted on your website regarding the breast cancer trials. This confusion that I have might be generated by myself, just misunderstanding what I'm reading, but ever since you announced suspending the trials and then subsequently you announced terminating the trials, the website seems to indicate that you're still recruiting patients for the trials. Could you please comment on that, clear up the confusion?

The website needs to be updated and it will be updated today. But the situation right now is that we are not conducting any clinical trials on breast cancer. We are discussing, principally with Duke University, undertaking a trial in combination, heat in combination with ThermoDox which we think is strategically right where we need to be.

And we believe that when we, once we've worked through all the planning and we're in a position to announce exactly what we're doing, that we have the potential for a very exciting indication using both one of our heating technologies, one or more of our heating technologies and ThermoDox. But for the website, we've been remiss in updating it and it will be updated today.

If I might just comment, that is and I could echo the first caller, that is one of the frustrations that we as private investors are continuing to have regarding communication and accuracy on the information we're getting from the company.

I originally invested in CLN because of the promising initial results of the breast cancer data and was disappointed to see it end. But I know you guys have probably made the right decision and we're looking forward to seeing it combined with the ThermoDox and seeing what that will bring about. However, if you guys could please just do something about the communication.

We feel like we are not updated regularly enough and Dr. Cheung you mentioned that you provide press releases, but I'm not certain that that's accurate. We have not seen a press release updating us when you guys were made aware that the Prolieve units were ahead of plan. And we didn't get a press release on the FDA letter. All these things we're discovering at conference calls and so forth. So please continue to keep us updated.

We'll commit to keep you updated on material news, but there's a balance. So we're aware of the shareholder concern. My, what I would like the most is to be able to have a stream of news releases about developments in the business. And I think that would benefit all of us.

But right now we, you know we just have been in a period since the stockholder meeting when we really haven't had any reportable news. And I think it's a combination of the slide in the stock price and the lack of news frustrates investors. We understand that. We're aware of it and we'll commit to keep investors fully aware, which we believe we've done, fully aware of developments in the business.

Well thank you very much and we do agree that the company is looking good and strong right now and the prospects are still optimistic.

Good, thank you.

Thank you.

Thank you.

Thank you. Your next question comes from the line of Howard Cognac (ph), another private investor.

How you doing Augie? I haven't heard from you in a while.

How are you doing, Howard?

Very good, everything seems to be going good for you folks down there. The one question I did have is with regard to the FDA warning. Why weren't we following the GCP protocols from the beginning and allowed this to blindside us right after we get the FDA approval?

I think, as we said at the stockholder meeting, the issue was that Celsion, if you remember, at the backend of 2001 or backend of 2000, we had 10 people at Celsion. We had very limited funds. And it wasn't until 2001 that we could afford to bring in a medical director and, well actually 2002. And so by that time people at Celsion had pitched in and with their knowledge of GCP and monitoring gotten the trial done.

So the reason -- people thought they were complying. But what we've tried to do over the last, since the beginning of this year, is we've been bringing in professionals who are experienced in that area. With the benefit of hindsight I'm sure there's a lot of things we could have done. But at the time we were doing the best with the resources we had to get a product to market so that we could generate value for shareholders.

It's very unfortunate that the warning letter came immediately after approval. But it was related to activities that took place in 2000 and 2001.

Maybe I can just add something. There was -- a lot of them were on our phase I trial. That was, that had taken place a long time ago and some under phase II obviously. But we have to look at this warning as a -- from also a positive view. It, you know (inaudible) a very, what I call conscientious response for the company to make sure that we go out of our way to audit everything we do to make sure that moving forward we are in full compliance.

We'll be a much better and stronger company to undertake this tremendous task of proving that we have exciting cancer drug. So I understand that some of you might be a little bit disappointed. But we, also I think that it brings a lot of good, I think, effort from the company as a result.

No, I agree. The confusing issue was, that I had and some folks behind me, was how can the FDA give you an approval and then three months later tell you you're not in compliance?

The way the process works is that before the FDA gives you an approval they do an audit of all your manufacturing, GCP, all the data. And the fact of the matter is, the FDA reviewed our data. They did issue us a 483, which is a notice that we were not complying with some of the regulations. But despite that -- and we responded and they accepted our response and they gave us an approval.

However, the FDA is following up. We're a small company. And the warning letter's designed to make sure that going forward we do everything properly. And we have every, we had every intention before of doing it. We thought we were doing everything properly. But now with experienced staff in place, we will do everything properly going forward.

So the FDA are aware of, were aware of the deficiencies when they issued the PMA. So this is really a follow-up from the FDA. And we are absolutely committed to make sure that we are 100% compliant.

And they can't pull that at any time they want now that you're rolling this out with Boston Scientific?

They always have the right to pull the PMA.

But the idea of, if they determine that we ignored them, I think that might be bad. But I feel we are really doing our best to comply with the situation.

At this point in time we don't believe that, well, we don't -- The PMA's not in danger but the FDA have the right at any time with any product in the market, to withdraw approval.

Right.

And you should have this out of the way by the end of October you're talking.

We are gonna get this, we are going to be 100% compliant, as much as we can. We're gonna have it out of the way by the end of October.

OK. Thank you very much.

OK, thanks Howard.

Thank you.

Thank you. Your next question comes from Tom Dunnough (ph), a private investor.

Good morning guys.

Good morning Tom.

Good morning Tom.

First question I have is if you go back historically, BPH phase II, we started off the first six months we had 17 patients done, figured out we needed not to rely on a single site. Got some high volume sites going, some advertising, we did a hundred in the next six months, correct?

We did, I don't have the exact number in front of me Tom, but we did most of the patients or treated most of the patients and randomized most of the patients in that study between July and November.

Right.

2001.

Exactly. And, of course when we started the ThermoDox study for prostate cancer we expended a whole, almost a whole year, a good eight months just waiting for a single site to get through their process, to get on board and we know who that site is. And they've not really produced much numbers for us since then. And we are going about adding new sites so we can get through the prostate cancer study phase I.

What I'm looking at is once we get into liver cancer study with ThermoDox we are giving it over to the NIH. This is our phase I study. And of course since they're paying for it, we really don't have a lot of leverage.

What I'm concerned with is that history repeats itself and that we get mired in a situation where nothing's getting done and a lot of time is wasted when we should be looking ahead and getting multiple sites on board with the phase I study so it doesn't languish. Are you looking at that?

Well (inaudible) the NIH you know is incorrect. We have to pay for, we have to support those trials financially. So we have control over the development effort. Now again, The NIH branch that we are working with is a very progressive branch called Experimental Cancer Treatment Plan.

We are, many, many patients come from all over the world for innovative treatment. That's where most patients can get treatment that is innovative but otherwise not approved which is, they assure us that we have talked with all the clinicians, and we have looked at the chart records. They say the patient approval for the phase I is not a problem.

Now, however, when we start getting slow enrollment we probably will extend to other trials but NIH is a, you know, is taking the lead. And obviously, when we go phase II will be multiple trials, multiple sites.

Let me say Tom; once bitten, twice shy. We're very aware of the slow enrollment on prostate cancer. And we will do everything in our power to make sure that that's not repeated. We've been assured by the NIH and we believe it to be true that they will get the patients for this study. They're very excited to be doing it. So we understand your concern and we are very committed to get this done rapidly.

OK, Did I here Augie, did you say that we are again actively pursuing our efforts in gene therapy?

I did not say that but, you know, the gene therapy is always like, you know, Celsion. If you look at the tradition (ph) of Celsion, we are a cancer treatment company. Our purpose is to develop minimally invasive therapy for cancer that is noninvasive, minimally invasive, lack of toxicity, all these good things. And definitely the availability of gene therapy will be in the future plans for Celsion.

And we are, we have a small effort in gene therapy and we are continuing on a very small basis at this point. But we are excited about all the results. Now, in the future we might be able to work out some kind of innovative means of getting the clinical trial accelerated, but right now the company is focusing on the single most important product which is the ThermoDox.

I understand.

We really feel that that is our emphasis.

OK. You did mention that we are looking at heating systems for deep-seated cancers?

Right.

We do have a prototype torroid type device.

Yes we have.

Are we referring to that device, or are we talking about --

In order for us to represent to people that this ThermoDox is a versatile tool for cancer treatment, we need to encapsulate more drugs. We need to have the heating system to provide the capability to reach all the cancer sites that are suitable for this drug.

Now Celsion has adaptive phased array torroidal heating system, but there are many, many heating systems out there that were approved world wide for hyperthermia treatment. They were not very effective, not because the device is bad. They were not effective because of the limitation of the temperature. You see, in order for hyperthermia to be effective, that the adjunct radiation temperature on the tumor must average over 43-44 degrees.

A lot of these very good systems, well-designed systems are incapable of delivering those temperatures. But now with the availability of drugs and genes (inaudible) primarily, we are looking at temperature profile of 40 and 1/2 to 42. It fit right into the range. A proven capability from these many sources that have already been developed, clinically tested and is still being in use clinically. They have certain degree of efficacy and you know, used world wide.

So Celsion must be open-minded. We will be looking at our system, but we should not limit ourselves to things that we invented here. We have the capability of adapting any system to make it, to dispense it, to provide the drug release. So we are opening up our horizon and looking at other systems available. Why build it again if it's already available?

Makes sense. OK, that's all I have guys, thanks.

Dr, Cheung: Thank you.

Thanks Tom.

Thank you. Your next question comes from the line of Mark Weiss of Luma (ph) Sales.

Yes gentlemen, good morning.

Good morning.

Good Morning.

Quick question for you, can you comment on the number of machines for the Prolieve, I believe you said you had 34 in place and you're expecting possibly a hundred at the end of the year. Can you comment on projected revenue and the licensing agreement you have with Boston Scientific on that and any projections for revenue a little further out into 2005 and so forth?

We're taking the position that we will not project revenues for this system because we don't control the sales. When we ship product to Boston Scientific, they're controlling the sales and marketing. So we've taken the position that this company is a product development company.

The Prolieve product has been developed and is going to be used as a means to fund the rest of the business. And so, although it's a really good funding source, we think it would be a distraction to getting into projecting sales of that product.

OK, fair enough.

Thanks.

Thanks.

Thank you. Your next question comes from the line of Steve Simmons, a private investor.

Good afternoon gentlemen.

Good afternoon.

I'm interested to know, you had mentioned in the conference call something regarding the encapsulating your doxorubicin, the nanotechnology? Does this nanotechnology, is this proprietary or are you subcontracting this out to another company?

No, liposome, the -- currently, the liposome we use, its size falls into the range of nanoparticles.

Excuse me, that's right, that's right. You said nanoparticles.

See nanoparticle is just a general term for drug delivery, the reason they are very small so that it can be delivered through the bloodstream. That is the promise of nanotechnology and our liposome fall into that range. So it's a nanoparticle delivery system.

OK, very good. And another question is, are you engaged in any material way in conversation with Boston Scientific regarding a potential buyout of the entire company?

We have no comment.

No, we cannot comment on that. They have a, we have an agreement with them. They have the first right to look at our product, right? But other than that, there's no serious negotiation or anything.

And something you had mentioned also in the conversation with Howard Cognac earlier, you had mentioned you had only 10 employees at the end of 2001?

No, at the end of 2000.

2000.

Did that, did you actually reflect that in your website or in, when I check on the, I believe it's the Yahoo website and then I click on the summary for the details of the company, you had always indicated approximately 26 employees. I don't ever remember --

First thing, I don't think we had a website at the end of 2000.

I think that also you might see when we made (inaudible) our 10Q, they're including consultants. There might be that kind of number --

We have disclosed quarterly our number of employees. The number of employees has been increasing as we increase the development of the business. At the end of 2000 we had 10 employees, now we have 32.

Oh, OK, now you have 32. Wow. OK gentlemen, thank you and good luck. I'm extremely hopeful that we'll have something significant in the near future.

Good.

Thank you.

Thank you.

Thank you. Your next question comes from the line of Paul Irvin, a private investor.

Yes gentlemen, I'm interested in a little more information on what's going on in China. We've given out a good percentage of the company's interests through warrants and stock issued and have heard very little. It was good to hear today that a manager had been hired. But could you keep us better informed on what's going on in that part of the world as far as this company's concerned?

Yes, to this point we have set up a joint venture. We have, as a result of that joint venture we've contributed equally to that joint venture. The company we've invested with, Asia Pacific Life Sciences, has a number of investors who have also invested significantly in Celsion, and at significantly above current market prices.

The work we've been doing to date has been exploratory work. Dr. Cheung has set up a really good network of researchers, investors, doctors and hospitals. And we're seeing some really interesting developments that are happening in China.

Our first objective there is to get our BPH product approved and we've started the process for that. But the first thing we had to do was to find a really good general manager. And we believe that we have found that person. That person will join us later in the year. We can't announce who he is right now because he's under contract to another company. But we're very excited about what's going on and as things develop, we will advise shareholders.

OK, and as far as Boston Scientific is concerned, they've made in the past I think some kind of a projection on what they hoped sales would be in the future. I think when they announced --

The only projection that I've heard Boston Scientific make publicly about the sales was in February they had an analyst, I think they call it an analyst day and on that date they put out what they classified as high and low side projections for various businesses. And they put out a number at that call where they said they thought the high side, or the low side I think was 16 million in 2006 and the high side I think was 46 million in sales. That's the only projection I've heard from Boston Scientific publicly.

OK. It would be helpful if we could encourage them, and of course they're having a little bit of trouble with their stents as far as publicity is concerned. So I would think that if things are going better than they projected we hopefully could get them to make some kind of announce, progressive announcements maybe from month to month on --

I think that would be nice but I think it's highly unlikely when you think that their sales for this year are projected to be 5.6 billion.

Right.

I can't, you know, if we're a roaring success it's unlikely there's going to be a material to Boston Scientific as a whole. I expect, I would think that when they have their analyst call next year they will put out some sort of an update and - during that call. But I don't think, well I know they're going to put out monthly projections of their sales.

OK, well I appreciate what the company's doing. We always want more information than the company can provide, but I think anything that could be done when it becomes somewhat material. We know that you're interested as we are as investors. But it took the two of us to get as far as we are you know.

I, like the first caller. Have been an investor both through the company's PP and buying it in the open market so it's a little disappointing not hearing a little more information as we progress whether the news is good or bad making it more timely even though your company providing quarterly meetings even is much better than other than other companies do. But that doesn't mean that we wouldn't like to know even more.

Our objective is to keep our shareholders fully informed of what's going on in the business. And we, whenever there is material developments we'll put out, we'll inform you through a press release or a conference call or whatever's appropriate at the time.

OK, well I'd like to make it very plain that the investors certainly would appreciate it, any time something is forth coming. Thank you very much.

Thank you.

Thank you. Your next question comes form the line of Celeste Wren, a private investor.

HI. I think my question was answered. It wasn't really a question, I just wanted to, from my understanding, you know when the warning letter came out and that's when the stock really slid. Is that, just to simplify it, that's just, that was just really in layman's terms just a bookkeeping warming letter was about more or less about bookkeeping, not about the safety or efficacy of -

Yes, I don't want to minimize this in any way.

Right.

The (inaudible) letter is very serious. But it was related to record keeping and oversight, not the data.

Right, not to the safety or the efficacy -

Right.

Right, correct.

OK, great. That's all I wanted to add or to simplify because everybody else just seems to understand so much more, but I had spoken with Doug one time and you just took so much time on the phone with me. I can't thank you enough. One time I called you a few weeks ago and I've been a stockholder for a while and I'm very excited and my, about everything that you're doing. And now we just got some sad news that a friend of ours has liver cancer so, you know, I just, I, they give him about a year. And you're right there's so little that can be done. So my hopes are with you and thanks.

Thank you.

Thank you so much. Talk to you later.

Thank you. Your next question comes from the line of Bob Green, a private investor.

Good morning.

Good morning.

I have a couple questions. One on Prolieve; what's the CL (ph) intake on each treatment?

The arrangement with Boston Scientific is that we share the revenues from the sale of the catheter. So we get half of the revenues from the sale of a catheter. When we sell a machine we get half of the profit generated on the sale of that machine.

So would, could you put a dollar number on that?

The catheters are anticipated to sell in the thousand to twelve hundred dollar range. So we would get between 5 and 6 hundred dollars if they sell in that range. And on the machines, it's, we're going to make 4 to 5 thousand dollars a machine.

So, on each treatment we could look for maybe 12 - 15 hundred?

No, on each treatment we would make, the catheter would sell for about - let's just assume their sold at a thousand. We would get 500 dollars. Out of that we have to pay for the catheter. So on each treatment, depending on the price of the catheter; we'll make whatever the profit on that is. And I expect that by the time the product is well established we should make a good 60 - 65 percent margin on the sale of the catheter.

OK. On the sale on the Boston Scientific buyout, could you explain that more, just how that's going to work?

Well Boston Scientific have a purchase option for 5 years from the launch of the product under which they can buy our BPH assets for the minimum of 60 million dollars or 4 times sales.

Four times sales, that would be 4 times what sales can receive, or 4 times -

Four times total trailing sales of the product.

So whatever, now that's-

Including their sales.

Including theirs. So whatever the total sales is -

Well actually the sales that they'll be working on are their sales. They'll effectively buy the catheter from us. So it's 4 times their sales for the previous 12 months.

What happens if they decide to buyout before you get 12 months of records -

Then they pay 60 million.

OK. On the prostate trials, is there any numbers on that, how many we've treated?

We have not disclosed numbers recently. We've treated patients at, I think we said at the stockholder meeting at 30 milligrams per meter squared. We're working up towards the maximum dose. We don't know how many patients we'll have to treat in order to get to the maximum dose.

OK. On the CEO venture, is we getting close to anybody there?

We have, the board of directors has retained a search firm and they're in the process I believe of identifying candidates for the board to interview and assess.

Thank you much sir, that's all I need.

OK, thank you.

Thank you. As a reminder ladies and gentlemen it is *1 to ask a question. Your next question comes from the line of Bill Clacken (ph) of Continental Mortgage.

Yes, good morning gentlemen. One of my, one of the questions was answered about the CEO. And I guess, is there a timeframe? Is there any urgency? That's one question. Another question would be hiring of other staff members for the company. The third question would be: is it your goal to remain independent, as an independent research firm? And lastly, I voice what other folks have mentioned about public relations. It just seems to be a recurring question. With the exciting technology that you possess, it would seem it would be a great idea to tap into some major media like the Wall Street Journal or Fortune magazine, someone like that that would really help you get the word out. And those are my questions.

OK, in terms of the CEO search, that's really dependent on the quality of candidates that we can attract.

Yes sir.

We have to find the best candidate we can. So it's very difficult to put a medium on that. I would like to say it's not urgent form the point of view that I think we're building a really good team here right now. We've filled a number of positions.

We think we are close to having the senior management team in place that would report to the CEO. And I think the quality of people that we're attracting is really excellent. And you can see some of the people we've recruited over the last 3 or 4 months are really, really strong candidates. So I think that covers the CEO search.

In relation to the PR, over the last 18 months I must have made a hundred to a hundred and fifty presentations to different institutional investors and conferences to get the story out. We have a person who is engaged in taking our story to all sorts of publications. We have taken it to the Wall Street Journal. I actually visited the Wall Street Journal in Boston.

We've taken it to Forbes, we've taken to Fortune. This is a long-term process and there's a lot of competition. And we're in early stages on our cancer business. I'm confident that as we make progress in proving that our heat-activated liposomes in combination with heat are an effective way of delivering chemotherapeutic drugs, that we will get a better reception from the media as a whole. But we are working that constantly and we will continue to do so.

Yes.

Did that cover all of your points?

I guess the other two issues would be hiring of additional staff members and also is there an attempt to remain independent? I other words --

Our objective is to create the greatest value for shareholders.

Yes.

And whether that's independent or bought by somebody else, our objective is just to create the greatest value for shareholders and we have no vision beyond that.

OK.

And in terms of additional staff, I believe that we're close to getting the requisite staff on board. And I don't envision in the short term that our head count will increase dramatically from where it is.

Thank you for your time.

OK, thank you.

Thank you. Your next question comes from the line of Jay Sloan.

Good morning everybody.

Good morning Jay.

Jay.

How are you? I've been a stockholder for like almost twenty years I guess and I know everybody so I just wanted to ask the question. And mention that this is a great meeting and I'm very happy with our situation. But I wanted to ask, the meeting has produced a lot of information. And with the stock around 60 cents, could you just, Tony, could you just review how the company is being evaluated in the stock market compared to other BPH companies with all the cancer possibilities we have, with all the money we have in the company, why it's being situated around 60 cents.

I can't comment on the stock price Jay.

Yes.

All I can say is that if you look at Celsion, we have a BPH business that has a minimum buyout value of 60 million. We have 17 million in the bank. We have the potential of revenues to come from the BPH product as we go forward. And if you put those three together you're at 77 plus whatever the revenues may be and our market valuation at 60 cents is 92 million.

To me that says that the market is putting almost no value on our cancer business. And given where we are, that is very frustrating.

That's what it looked like and I just couldn't understand it anymore because it keeps playing games around 60 cents. I never thought it would go down that low again. But I just wanted to, thanks for a good meeting and I appreciate the answer.

OK, thank you Jay.

Thank you.

Thank you. Your next question comes form the line of Martin Walsh, a private investor.

Hello again. You've already updated us on the number of units placed so far on Prolieve. Do you have any numbers on how many patients have been treated to date and also, are you getting any feedback from patients on their satisfaction with the process?

I don't have numbers for the number of patients treated. It's in the hundreds. But the general word I'm getting is that the treatment regimen is going very well and the majority of our patients are leaving the doctor's office having been treated and they're not being, the majority are not being catheterized. So --

Super.

We're delivering what we thought we would deliver.

Alright, great. Thank you.

Thank you. Your next question comes from the line of Tom Jenna, a private investor.

Hi. Tony, just one quick question; the revenues produced by the sales of the machines themselves, and not the catheters, is that included in the formula for the 4 times trailing revenues?

Yes, total revenues Tom.

Yes.

OK, total revenues. OK, that's all I've got. Thanks guys.

OK, thanks.

Thank you. And your next question comes form the line of Paul Irvin, another private investor.

Yes, I forgot to ask a question about South America. Is there anything going on in that area? I know that Boston Scientific receives any benefits from sales there and everything from BPH, but is Celsion itself doing anything in that area?

Yes, we have appointed a distributor for Mexico. And we're in the process for getting approval for the product in Mexico - for the BPH product in Mexico.

OK. And one other thing, as far as public relations is concerned, I think everybody that's an investor worries about burn rate changing. And I know that some interesting things could come up where you would want to fund it and everything. But if you could even keep us updated on that, that you're meeting expectations or there's some unusual feature, that would be helpful for the worried stockholders.

OK, In terms of burn, I have been saying pretty consistently -

Right.

-- that I thought our net burn would be about 800 thousand.

Right, I caught that.

I'm still confident that's where we'll be.

Yes, OK. Stockholders sometimes need encouragement down the road, a month or two months from now, saying we're meeting expectations or something like that would be helpful that's all.

OK, we appreciate that, thanks.

Thank you. And your next question comes from the line of Jay Sloan, a private investor.

Hi Tony.

Hi Jay.

I forgot to ask about Boston Scientific. Do they have any interest in the BPH cancer studies or cancer revenue?

They have a right of first offer on all of our technologies. And I'm sure they're watching our development in both the BPH and certainly the liver studies. Where in BPH they have an option to purchase the BPH asset, and in liver cancer they have a radio frequency oblation device that's been approved for the treatment of liver cancer. So I'm sure they're watching developments very closely.

But that has nothing to do with the 60 million, the cancer?

No, it doesn't.

That's extra revenue that might -

The sixty million is purely BPH assets.

And that's it, so there could be extra revenues from that.

Could be (inaudible).

Sure, yes there could.

Alright, thank you.

Thank you. And gentlemen at this point you have no further questions. Would you like to make any closing remarks?

Well, thank you very much and we will try to talk to you again very soon. Hopefully we can provide you with more updates. Goodbye.

Thank you.

Ladies and gentlemen thank you for your participation on today's conference. This does conclude your presentation and you may now disconnect. Have a great day.