Imunon Inc (IMNN) 2007 Q4 法說會逐字稿

Good morning. My name is Carol and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter and fiscal 2007 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (OPERATOR INSTRUCTIONS). I will now turn the call over to Paul Henning of Cameron Associates.

Thank you. Good morning, everyone, and thank you for joining us for Celsion's conference call today. The call will be archived for replay beginning today at 2:00 p.m. until Thursday, February 28, 2008. The replay can be assessed at 800-642-1687 or 706-645-9291, conference ID 35634307. The call will also be available on the Company's website at www.Celsion.com for 90 days after 2:00 p.m. today.

On the call with us today is Michael Tardugno, President and CEO of Celsion, and Paul Susie, Interim Accounting Officer. Management will give their opening remarks and then we will open the line for questions.

Before we begin, we wish to inform participants forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. You are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, unforeseen changes in the cost 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 period reports filed with the Securities and Exchange Commission.

With that said, I would like to turn the call over to Mr. Tardugno.

Thank you, Paul. We appreciate your interest in Celsion and thank you sincerely for joining us. As Paul said, I am Michael Tardugno, our President and Chief Executive Officer. I'm here with Paul Susie, our Chief Accounting Officer. Nick Borys, our Chief Medical Officer, who would normally be on the call with us, is currently attending to another very important priority this morning. Nick is assisting in the initiation of our first Phase III liver study clinical site. So I hope you'll excuse his absence and join me in thanking him for his tireless effort to have our first patient enrolled in this study before the end of this quarter, which, I might say, by any measure of standard is a remarkable achievement given the fact that we received agreement with FDA on our Phase III study just a few short weeks ago.

It is a great time to be here with you this morning, particularly to discuss the new Celsion, a company with two agreed clinical pathways to bring its tumor targeting leading drug, ThermoDox, a drug that has shown demonstrated remarkable proof of clinical activity in Phase I trials through its pivotal program. It is an exciting time for us and I would be remiss if I didn't recognize the men and women of Celsion for all of their passion and commitment for the mission that we have to bring tumor-targeting drugs to treat life-threatening cancers.

As I have been counting, I want to start by saying this is my seventh conference with you since joining Celsion 13 months ago and, again, I want to repeat that I very much appreciate these opportunities to meet with you, to share our progress and to answer your questions. Your input over this last year has been invaluable to me. As always, we will make plenty of time at the end of our formal remarks to respond to questions and suggestions.

Today is, again, a full agenda. Paul Susie will provide comments on our third-quarter results, including a detailed review of the P&L and balance sheet. We will then cover the following topics -- first, I'll give you an update on the Phase III primary liver cancer program; second, an update on the progress that we have made in the recurrent chest wall cancer study; third, I will give you a brief update on the progress of our development program for our heat-sensitive liposomal technology platform.

Before doing so, however, I have a few general comments would like to share. Over the course of this past year, our shareholders have witnessed a remarkable transformation of their company. Just a short year ago, Celsion's business focus resented a confusing mix of a medical device business with marginal profitability, but with a promising oncology aspiration. For the investment community, we were difficult to judge. For our employees, it was very even more difficult post results. Consequently our challenges a year ago were many. Our financial resources, limited.

A year ago we set out to change all that. Immediately after joining the Company, in January, we announced a six-point plan to stabilize and focus Celsion. We accomplished all six of our milestones in a time frame that exceeded even my expectations. Doing so, we repositioned your company as a pure-play oncology drug development company committed to two major objectives. The first of is unlocking the promise of our lead drug, ThermoDox, for the benefit of those who have few medical options and, second, to drive shareholder value.

In the first half of the year 2007, we focused ourselves on mitigating risk to our company and clinical plans. On the financial side, we substantially reduced our planned spending and established a 30-month spending outlook that gives us confidence that we can bring ThermoDox through a pivotal program to a point where we have sufficient data to support an NDA. We insured our exposure to the remote potential of IP litigation that could reduce our cash payment from Boston Scientific. We established a $6.5 million line of credit to bridge us between payments from Boston if in the event we saw opportunity to accelerate our clinical program.

On the development front, we aggressively pursued recurrent chest wall on a parallel path to our primary liver cancer program to ensure that we had at least two paths to bring ThermoDox through the clinical and regulatory pathway. We met with the agency to review our CNC brief to ensure that the FDA was in agreement with our process and specifications, methods, stability programs and that our quality was sufficient to support Phase III trials and eventual commercial production.

We focused our research on two narrow indications, both of which provide a clear, uncomplicated regulatory pathway. We stacked the Company and developed those competencies that we believe are necessary for success. We added individuals in clinical operations, quality and regulatory affairs with experience and demonstrated capability in drug development. We implemented a compensation program that rewards results, motivates high-performance and aligns our employees with the interest of our shareholders. In the second half of the year we focused on execution. We completed our Phase I primary liver cancer dosing escalation study and are working with our principal investigators at NCI and Queen Mary Hospital to ensure results are published in peer-reviewed journals and presented at international medical conferences. We worked aggressively with Duke to advertise our trial, our recurrent chest wall trial, and eliminate barriers to enrollment in our study and to bring on a second site to insurer we have safe and, we believe, a therapeutic dose for use our pivotal study.

We worked, literally, around the clock when it was necessary to bring our SPA submission for primary liver cancer to a successful conclusion. Concurrently, we completed all of the groundwork necessary to initiate our trial, literally, within weeks of FDA agreement. We successfully presented FDA with an argument that an open-label Phase II study with an endpoint other than survival could be the basis for ThermoDox approval for the treatment of recurrent chest wall cancer. We now count ourselves among the few who have an agreed SPA-sanctioned study and written agreement on a second clinical pathway to approval in a second indication.

We've established our heat-sensitive liposomal technology as a platform capable of delivering high concentrations of more than just doxorubicin. We developed formulations that include docetaxel and carboplatin and in the case of docetaxel, we have demonstrated a stable formulation with superior efficacy to free docetaxel in small animal xenograft studies.

We have moved our listing to the NASDAQ with the intent of providing our shareholders with the advantages of the electronic market and to encourage new investors who limit their portfolios to NASDAQ and New York Stock Exchange-listed companies. Being bullish in our company and our future, we took advantage of an opportunity to repurchase over 600,000 shares held by Boston Scientific at a price that we thought to be a bargain, reducing pressure on share price and freeing Celsion from its obligation to provide a right of first offer to Boston in the event of future licensing opportunities. Of course, if and when we need cash, we will always have the option to register and sell the shares and in fact, if we did so today, our $2.7 million purchase would net us a $1.3 million profit. Not bad.

So at the risk of minimizing all the effort, I would like to summarize our first 13 months in three headlines -- stabilization and focus; mitigation of risks, particularly those that plague development companies, particularly biotechs; and execute, execute, execute. I would conclude by saying that we are well-positioned to deliver on our strategy and aggressive goal to build a truly great company.

All that said, I would now like to ask Paul Susie to give you a detailed review of our financials.

Thank you, Mike. I would like to give a summary of our 2007 financial results.

Our 2007 research and development expenses were $2.2 million for the fourth quarter, which was an increase of $700,000 over the prior year's amount of $1.5 million. On an annual basis, 2007 R&D expenses were $8.2 million compared to $6.1 million 2006. Following the sale of Prolieve assets in June 2007, the Company focused solely on the clinical activities that further the development of our ThermoDox drug. So accordingly, the 2007 results include increases in pre-clinical and clinical costs, drug manufacturing costs, patient recruitment costs and additional clinical staffing.

Our general and administrative expenses were $500,000 for the quarter compared to $900,000 for the same period in 2006. The decrease was attributable to a reduction in accrued contingent liabilities. When comparing year-over-year, the G&A expenses increased $1.8 million, moving from $4.1 million in 2006 to $5.4 million in 2007. The increase was due in part to salaries and benefit costs, which included accrued severance costs of terminated employees largely associated with the sale of Prolieve. Additionally, we incurred higher professional fees, consulting fees and auditing fees in 2007 over 2006, again attributable to the Prolieve sale and the related proxy solicitation.

Net interest income was $146,000 in the fourth quarter of 2007, compared to a net interest expense of $170,000 in the same quarter of 2006. Annually, the net interest expense for 2007 was $26,000 versus $467,000 in 2006. This is due to the elimination of the loan that was previously due to Boston Scientific. In 2007, the income from discontinued operations was $208,000 for the fourth quarter and $50 million for the year, which included the gain on the sale at $48 million.

So in summary, we ended the year with $6 million in cash and $30 million in receivables. These amounts, plus the line of credit facility of $6.5 million, provide us with liquidity necessary to further our clinical trials as planned. We will continue to carefully manage our cash, focus our resources only on those activities that afford our strategy.

Now with that, I would like to hand it back to Mike.

Let me give you an update on our Phase III liver cancer program. On January 18, we were delighted to announce that the FDA had agreed with our pivotal study submission. It took 3.5 submissions and almost nine months, but the effort, I can say confidently, was worth it. We believe that we have an agreement on a quality study that we can stand behind and show definitively whether or not our belief that ThermoDox can be effective treatment for primary liver cancer is true. From what I've seen, my confidence improves everyday.

In our announcement, we recognized FDA for their collaborative approach. I can honestly say that throughout the process, the FDA's project team took all of our meetings and calls and offered constructive recommendations as well as, I believe, some very insightful questions. We do appreciate their supports and, frankly, I have to say I'm very proud of our relation with the agency and the credibility that we've established over the last number of months. I am confident that the work that we've done with them will bode well as we continue to work with FDA in our registrational programs.

Concurrently, with our submissions and responses, we will diligently organizing and preparing for success. As a result, form the time we received notification, we had contracts with all of our CROs in-place. We have established roles and responsibilities for a very complex global trial. We initiated regulatory approvals in countries outside the U.S., initiated pre-study site visits, submitted draft protocols for review as possible.

As a result, I can share with the today that we do have an approved IND in China. That is not a small accomplishment. We have IRB approval at Northshore Long Island Hospital, which means, in fact, that our study is in progress. Our clinical supplies will ship to depots and to Northshore Long Island Hospital early next week and patient screening is currently in progress. Our goal is to have two sites up and operating in March and by the end of the year 25 to 30 sites recruiting patients in seven countries.

While we were planning to enroll this study -- and we have done a very careful job of looking at enrollment based on feasibility work that was done earlier last year. We plan to enroll the study over an 18-months period and based on the literature, we expect to enough events -- remember this study is based on an endpoint, or an accelerated endpoint of progression, progression being an event -- we expect to see enough events in 14 to 16 months thereafter to conclude whether we have seen the delay in progression in the active arm as compared to the control arm of the study, sufficient to claim success.

With respect to our Phase I RCW study, since we spoke last, we have seen an acceleration in enrollment. We now have 11 patients in the study and the trial is in the 40-milligram cohort is nearing completion. Let me restate that, the 40-milligram cohort is enrolling and nearing completion. Our second site, NYU, their IRB is reviewing our revised protocol. The protocol was revised in light of some of the information we were getting back in our conference with FDA on a Phase II pivotal study for this indication. Following approval, NYU will begin enrolling patients. Assuming that the safe dose is established 50 milligrams -- and there may be some debate on what ultimately the therapeutic dose is or the safe therapeutic dose is for the Phase II pivotal study, but assuming that it is 50 milligrams, we expect that we will complete the Phase I program in quarter three.

In the meantime, we are again preparing for success as we did with the liver program. We have begun planning for our pivotal Phase II study. We do so as a result of FDA's agreement that the study as we proposed last November accomplishes three things. It focuses on a population of patients who have no other medical options. It provides an endpoint, the endpoint being a durable complete response that addresses clinical benefits sufficient for approval and that the results from the study, depending upon the data -- of course obviously the results have to be there -- would provide a basis for an approvable NDA submission.

Now I want to provide you with a quick update on our platform development activity. As we announced last November, confirming studies in mice were completed, demonstrating their heat-sensitive liposomal formulation of docetaxel has a statistically significant superior anti-tumor affects when compared to the free-form and a more traditional liposomal formulation of docetaxel. We have also confirmed that the formulation is stable and reproducible. Our next steps were announced in our press release and they are in progress. We have begun transferring the formulation technology to our labs in Columbia to further optimize the formulation for manufacturing and we will begin a second round of preclinical studies and toxicology work in the second half of 2008. Our goal is to have sufficient data to file an IND in 2009.

Our active tumor-targeting program, based on a peptide ligand of six amino acids that have an affinity for EGF receptors inherent in many solid tumors, continues to progress well. Our immediate focus is on formulation development. What I mean by that is combining the ligand with our unique liposomal structure. As you recall, we have an exclusive option to acquire this technology and have filed U.S. and international patents give us a broad set of claims, should we exercise our options acquire this technology.

Last November, I mentioned in our quarterly conference call that we were discussing a joint development agreement with a major medical device company -- I believe I called it a blue-chip medical device company -- that addresses potential for a non-invasive, high-intensity focused ultrasound, otherwise known as HIFU, to open up a broad range of indications for which ThermoDox could be studied. I can report today that we have had a number of very productive discussions and working sessions and expect to have an agreement with this company in the reasonable near-term. If there are some questions about this, I may not be able to talk anymore about our discussions on this point more than I have commented here. Though we will certainly entertain questions.

The goal of all of this work is to demonstrate through feasibility the potential of our platform. What I mean by that is its depth and its breadth. We will not, however, let this development work distract us from our primary mission, and that is bringing ThermoDox through our clinical trials. So our work, at least at this juncture, will be to demonstrate the promise and the potential of the Company, its technology and that will largely be a function of our ability to execute, which I believe we demonstrated in the second half of 2007 to be consistent with some of the very best companies in our industry.

So, that concludes our formal comments and now I am prepared to take some questions.

(OPERATOR INSTRUCTIONS) Ruthanne Roussel, The Robbins Group.

Actually, I am here on behalf of both The Robbins group and Catalysts this morning. I just had a couple of sort of housekeeping questions here. First of all, the endpoint for the RCW study wasn't quite clear on my line. I understood that it was durable something response.

Objective response.

Objective response, I'm glad that I asked, because that would not have been my first guess, although I know we have talked about that before. Second of all, now that you are a focused development company, we are going to be asking questions like your burn for the fourth quarter was about $2.3 million. I would expect that that might go up, broadly speaking, in the next coming quarters with the start -- with the trials really getting underway.

That is correct. I think -- I have answered this question a number of times and the nature of these clinical studies is such that there are boluses of activity, for which we either reimburse directly to the CROs or to the clinical sites, that make for a very uneven spending pattern over the course of a fiscal year.

So, I have been asked the burn rate. I continue to ask that our investors and analysts look at or listen more carefully to our general overview that the money that we have, the funds that we have, including our receivables from Boston Scientific, are sufficient to accomplish a number of objectives. The first objective is, of course, to bring ThermoDox through the primary liver cancer study, pivotal study, to a point where we have seen a number of events sufficient to be able to conclude whether we can file an NDA or not. Second is to bring our RCW program to a Phase II pivotal study. The third is to ensure that we have a manufacturing capability of quality and reproduceability to be able to support our human trials, our Phase III trials and to ultimately scale the manufacturing process to a point where we could support commercial production. The fourth is to establish the feasibility -- or establish the platform capability of our technology through some fundamental feasibility work, which I commented on during my formal remarks. The fifth is we set aside a sufficient amount of funds, we believe, to be able to credibly pursue business development and out-licensing activities.

The spread on that spending is, again, it's uneven, so if you look at burn rates on a quarterly basis, it may confuse you, but we are happy to, in these quarterly conference calls, talk about -- and as we go forward talk about the difference in spending patterns quarter-to-quarter and the reasons behind it.

All right, so from a modeling point of view, it sounds like I should focus more on trying to get it right on a year-by-year basis and then if there's some lumpiness from quarter-to-quarter, it should even at the end of the year, basically.

I believe that is the appropriate way to look at it.

Okay, and one last question, when we say that the joint development agreement for HIFU, which I think is a very exciting possibility, can be expected in the reasonable near-term, this is kind of like foreseeable future. You have to ask yourself how much of the future is really foreseeable? I could walk out of year and who knows what happens. Are we thinking first half of 2008, for instance? Would that be a fair guess?

That would be a very fair gas. I would be very disappointed if it took us that long. We are working with a fairly large company with a number of corporate and divisional approvals as we have work through a process of, first, conceptualizing how a joint developed agreement would work, secondly, how we would focus that join development agreement on specific feasibility studies in later indications that we could agree as two separate companies with a common interest represent the best investment or the best return for our investment.

Our goal here is to leverage what we have seen as the demonstrated capability of our drug technology by encouraging companies who have major investments in these hyperthermic and ablative technologies by encouraging them to study the use of their devices in conjunction with the promise of our drug technology platform. In doing so, our expectation is that, at least in the early phases of this kind of joint development work, the preponderance of feasibility costs would be disproportionately shared by our development partner.

Okay, thank you, Mike. No further questions.

Holt [Faircloth], private investor.

First of all, thank you for all that you are doing. As an investor, we are extremely excited in seeing great progress, so thank you there.

You are more than welcome.

A couple, like she said, housekeeping questions. One, you mentioned the number of people in the RCW trial, 11 patients to date. Am I assuming then that they did not do a second cohort at 30 milligrams?

A second cohort? Yes, the 30-milligram cohort was an extended cohort. This is a difficult population of individuals are in advanced state of disease. So some of the individuals who enroll in the study are not evaluable or dropout.

But you then have a full cohort of three in the 40-milligram now?

No, I think my comments were that we expect to complete the 40-milligram cohort relatively soon.

The enrollment of it?

Yes.

All right.

Then the patients become evaluable at the point at which they receive a third treatment.

Certainly look forward to seeing those results after the great results at 30-milligram. Next question --

Let me just make another comment, while I'm thinking about it. I -- we are asking -- we always do a courtesy in making press releases, but I think I'm safe and advising the group on the phone that -- I did get a question from another individual, either through e-mail or by telephone, regarding the upcoming ESHO conference. I would like to say that Dr. Ellen Jones has been invited to present to give an oral update on the progress of this Phase I study. I have seen the abstract. I cannot comment on it, but I think we will be quite happy with the presentation.

Another question that perhaps is slightly off topic, it's a dreamer's question. Do we know what the dollar value all of the doxcil market is?

Not with absolute certainty. I hesitate to -- I hesitate to provide that information. We have a working number. Its accuracy is a little bit suspect, but we do have a working number. It is not a small market. It is a fairly large market.

Okay, I hope we take it all from them. Anyway, thank you very much, gentlemen.

You are more than welcome.

(OPERATOR INSTRUCTIONS) Vincent [Dempsey], private investor.

Congratulations on everything you've done. I've got a very simple question. You have an exact date when that presentation is being made in India?

We do. It's Thursday of next week. So what would that date be? It would be the 27th and I don't have a calendar in front of me, but we -- a couple of us will be attending that conference and Dr. Ronnie Poon will be presenting the results from the Phase I study. As we announced, he was invited to present at the award session, which only 5% of the submitted abstracts are invited to present at. So we're really looking forward to hearing Dr. Poon's comments.

I think that's actually the 28th, but I can doublecheck that. Thanks a lot. I appreciate it.

(OPERATOR INSTRUCTIONS) I am showing that we have no further questions at this time. Do you have any closing remarks?

I certainly do. Again, I want to think thank all of our shareholders for their continued support and interest in Celsion. I can tell you on behalf of all of the employees of your company we are passionate about what we're doing, working hard every day to deliver ThermoDox through this clinical program and, equally importantly, to make sure that our shareholders are getting the very best of our talent as we continue to drive a return on your investment. So thank you very much. Have a nice day.

Thank you for participating in today's teleconference. You may now disconnect.