Imunon Inc (IMNN) 2010 Q3 法說會逐字稿

Good afternoon. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsion Corporation third quarter 2010 shareholders 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 would now like to turn the call over to Tricia Swanson of The Trout Group. Please go ahead.

Thank you. Good afternoon, everyone, and thank you for joining us. Our third-quarter results were released today and are available on the SEC's EDGAR system and on the Company's website. Today's call will be archived, the replay beginning today at 6.00 pm, and will remain archived until November 22, 2010. The replay can be accessed at 877-870-5176 in the US and Canada, or 858-384-5517 international. The conference ID is 4428936. The call will also be available on the Company's website at www.celsion.com for 30 days after 5.00 pm today.

Before we begin the call, we wish to inform participants that 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 and research development activities and clinical trials by others, possible acquisitions of other technologies, assets, or businesses, and possible actions by customers, suppliers, competitors, regulatory authorities, and the other risks detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission. With that, I would like to turn the call over to Mr. Michael Tardugno, President and CEO of Celsion Corporation. Michael?

Thank you, Tricia. Operator, before we get started, Tricia's voice broke up a little bit as we heard it. Please make sure that our call is optimized, if you can. Operator?

Yes, sir.

Okay? Am I coming through okay?

Yes, sir, you are.

Okay. Thank you. So, thank you, Tricia, and good afternoon, all, and thank you for being with us and for your continued interest in Celsion. I am joined today by Jeffrey Church, our Vice President and Chief Financial Officer, and Timothy Tumminello, Celsion's Controller and Chief Accounting Officer. Dr. Nicholas Borys, our Vice President and Chief Medical Officer who usually joins us for these calls, is traveling today.

We're delighted to be here with you this afternoon to update our progress and answer your questions. Since our last conference call, as noted in our public announcements, Celsion has made much progress. Before I get started, I just to want apologize a little bit for the voice. I am dealing with a -- somewhat of a head cold, so I will try to keep it as loud and as lively as possible here.

So for today's call, Jeff will provide comments regarding our third-quarter results, including a review of the P&L and balance sheet, following which I will cover a number of topics including our progress and our global Phase III primary liver cancer trial, an update on our Phase I/II recurrent chest wall breast cancer study, soon we hope to be called a Phase II study exclusively, and the steps that we are taking to prepare for commercialization of ThermoDox. We will then have time for questions.

As usual, before turning it over to Jeff, I do have a few comments. I again want to recognize Celsion employees for their commitment and all of their hard work. We continue to make impressive strides in our clinical programs, preparation for regulatory submissions, and ThermoDox commercial manufacturing. I commend each for their efforts. Every day I am reminded of the pleasure it is to be a part of this small team here in the center of Maryland, executing our clinical programs in business discussions, literally across 17 time zones around the globe.

We have had a very productive quarter, as was noted in our press release. Patient enrollment in our Phase III HEAT Study, it's our primary liver cancer study, to date is approaching 80% completion. Efforts to stimulate patient enrollment continue, with full enrollment now expected early in the first quarter of 2011. The Independent Data Monitoring Committee unanimously recommended continuation of the Phase III HEAT Study after review of 401 patients enrolled in the trial. That's 200 patients approximately treated with ThermoDox, and we can conclude, I believe, that safety is a de minimis issue at this point.

Fast-track designation was received from the FDA for our Phase III study. Along with our special protocol assessment with the agency, we have clearly defined the fastest pathway possible for regulatory approval. Fast track, among other things, provides Celsion with priority review and a PDUFA date certain of six months. We are also eligible for a rolling submission, of which you can count on the fact that we will take advantage. Just to be clear now, from the agency we have an SPA, we have fast track, we have orphan designation, and accelerated trial, accelerated view, with extended exclusivity. Additionally, China CDE, after formal conversations with Dr. Borys, and the Japanese PMDA have indicated their support for early NDA applications -- assuming, of course, that we hit our PFSM point.

As I mentioned on our last call, the NCI consensus published in the Journal of Clinical Oncology recommended that our Phase III HEAT Study is a priority trial for primary liver cancer, one of only eight so designated by a panel of global liver cancer experts after considering the potential of all of the late stage trials currently in progress to treat HCC. These are some of the most knowledgeable people in the field. We should conclude that their endorsement provides the medical community with confidence that our therapeutic approach, our trial design, our clinical strategy, have significant merit.

Taking advantage of fast track, we initiated our new drug application discussion with the FDA and have received positive guidance that the Company's application for primary liver cancer will be allowed as a 505(b)2 submission. Additionally, we have reviewed our preclinical program with the agency and have agreement that the studies that have been conducted are -- the preclinical studies that have been conducted are sufficient to support submission, eliminating one more element of uncertainty in the filing process.

We announced last week that the Company received a positive recommendation from the Committee for Orphan Medicinal Products from the European Medicines Agency on our application for orphan drug designation for ThermoDox to treat HCC. Positive opinion by the COMP -- that's the Committee for Orphan Medical Products, typically and normally immediately precedes official orphan drug designation by the EMA. This will provide Celsion with ten months of -- ten years, I'm sorry, ten years of market exclusivity in the European Community after product approval, also allows for consultation with the Scientific Advice Committee, and provides for centralized submission, which is the most efficient means of bringing a new drug to market in the European Community. Our plans now are to meet with the Scientific Advice Committee in early 2011 to chart our regulatory pathway more specifically and in more detail.

On the CMC front, given the level of interest that we have for a license, we have accelerated our commercial manufacturing strategy and expanded the number of CMOs -- that's contract manufacturing organizations -- qualified to produce ThermoDox. Our [first-rush] registrational batch will be initiated in the near term, perhaps before the end of the year.

Clinical data from our Phase I/II recurrent chest wall breast cancer study was presented by Dr. O'Connor at the 2010 ASCO Breast Cancer Symposium and at the 2010 ASTRO conference. The data presented included photographic evidence of local tumor control and tolerability after six cycles at the 40-milligram dose. These are both very encouraging conclusions. RCW, as you know in this population, is refractory to previous therapy. Local control is meaningful, provides clinical benefit, and is the registrational end point agreed to with the FDA for the Phase II portion of our trial.

Continuing on, ThermoDox's promises of potentially effective therapy when delivery is mediated by HIFU, that's high-intensity focused ultrasound, was noted in a number of abstracts presented at the second international MR-Guided Ultrasound Symposium. I will just give you a quick update where we stand with our program to evaluate this combination therapy with Philips Healthcare. Free clinical studies have been completed, with very encouraging data. We have formally requested a Type B meeting with FDA, and together with Philips we'll present our Phase II protocol for metastatic bone cancer. Timing for the meeting will be at FDA's discretion, but I would expect a response relatively soon. We will keep you posted.

We received an SBIR grant to support the expansion of our LTSL technology -- that's lysolipid thermally-sensitive liposome technology platform -- to include carboplatin. The focus of this work will be to ensure efficient drug loading, formulation stability, and efficacy in tumor regression studies. We're delighted that Dr. David Needham from Duke University will be leading this research, which among other things will provide us with the opportunity to file patents that could significantly enhance and extend our patent coverage.

Now, I will also note that we presented at two healthcare conferences in New York City. I would characterize our reception as positive, particularly the Rodman conference. The room was full. Sid Taubenfeld, as you know, joined Celsion as a lead person in business and development and in faster development. His work is helping to ensure that the audience for Celsion is broader and deeper than ever, and certainly it was evidenced in both of these conferences.

I want to talk about financials -- our financials, and financing, before turning it over to Jeff for a more detailed review. Our third-quarter expenses are in line with our projections, including our investments in ThermoDox manufacturing and actions and activities to accelerate enrollment in our HEAT Study. That said, we will continue to be judicious and cautious with the expenses, as we always have been. As for our future financing needs, our strategy and approach remain unchanged. We will seek to fund the Company on terms that are best designed to enhance shareholder value. We will always look for events that have the potential to minimize dilution or can be accretive in order to enhance shareholder value.

In the meantime, we continue to believe that our $15 million equity financing facility provides us with an alternative and the ability to be judicious in evaluating financing options. As we elect to use the facility, the number and price of shares sold in each draw is at a prenegotiated discount. That discount is between 5% or 6%, depending upon our market cap. The cost of the transaction is exceedingly low, the placement agent receives a fee between 0.5% and 1% of the draw amount. All in all, this equity line provides us with a financing option that competitive cost of capital with no warrants and should strengthen our position and licensing in future financing negotiations. Now I will ask Jeff to cover our third-quarter financials. Jeff?

Thank you, Mike. Our third-quarter results and continued news flow reflects the significant progress in the development activities for ThermoDox, both on the clinical side with our Phase III primary liver cancer HEAT trial now approaching 80% enrollment, as well as on the manufacturing and regulatory front. Celsion reported a net loss from operations of $5.2 million for the third quarter of 2010, compared to a $4.7 million loss from operations for the comparable period in 2009. This increase was primarily due to higher costs associated with the HEAT Study and activities to accelerate commercial manufacturing of ThermoDox, offset by lower costs of the RCW trial, due to the utilization of internal resources during the current year versus an outside CRO last year.

In the third quarter of 2010, Celsion, as other income, recorded $453,000 noncash benefit related to mark-to-market change in the common stock warrant viability, related to the registered direct stock offering in March 2009. Celsion reported a net loss from operations of $14.2 million for the nine-month period ended September 30, 2010, compared to a $13.2 million loss from operations for the comparable period last year. This increase is again related to higher costs associated with the HEAT trial, as new clinical sites were added to the clinical development program and costs associated with commercial manufacturing activities.

In the first nine months of 2010, Celsion recorded a $712,000 noncash benefit related to the change in the common stock warrant liability. In the same period of 2009, the Company recorded a noncash indemnity reserve benefit of $1.1 million related to the sale of its medical device business, which reduced general and administrative expenses in the nine-month period of that year. Cash used in operations totaled $10.6 million during the first nine months of 2010, or approximately $1.2 million per month, focused primarily on the HEAT Study and related manufacturing and commercialization activities. These operating expenses are expected to pay dividends in the near term.

The Company ended the quarter with $3.2 million in cash and investments, which should be sufficient to fund operations to the end of 2010. The Company has a $50 million shelf registration statement in place that allows us to issue any combination of equity security to fund future development costs. In June 2010, the Company entered into a committed equity financing facility to sell up to $15 million of common stock over a 24-month period at prenegotiated discounts of 5% to 6%. Just to remind everyone, the Company did not issue any warrants as part of this new facility. This CEFF adds another important leg to the Company's financing strategy moving forward.

During the third quarter, Celsion raised $1.4 million from two draws under the CEFF. The average price per share for these two draws, after the 6% discount, was $2.95. The proceeds were used to fund discretionary expenses associated with acceleration of commercial manufacturing activities and related product development specifications. The CEFF provides an important backstep to enhance our other options for raising additional capital, either through a strategic licensing transaction or through the sale of stock. On November 1, 2010, we announced the award of a $244,000 grant under the Qualifying Therapeutic Discovery Project Program under the Patient Protection and Affordable Care Act of 2010. This maximum grant amount for a single program was awarded to Celsion for ThermoDox clinical development program. These funds will be used to fund future drug development expenses.

Additional capital will be required to develop our product candidates through clinical development, regulatory approval, manufacturing, and commercialization. We continue to evaluate financing alternatives to address our capital requirements, including public and private equity offerings, additional strategic alliances and licensing arrangements, collaborative arrangements, or some combination of these financing alternatives on an ongoing basis. We will continue to balance our need for capital against the timing of development activities and business development initiatives, with the goal of enhancing shareholder value. At this time, I will turn the call back to Mike.

Thanks, Jeff. I'd just like to make a few more points before opening the line for questions. While we continue to make progress in the HEAT Study, while enrollment is a key metric, PFS events are the primary objective. Assuming we continue to enroll -- our enrollment rate is at the current rate, which is approximately 0.9 patients per day, we're likely to see enough events as 380 events for the study to read out in the next 14 to 16 months. That said, continuing to improve enrollment is our singular focus as a Company. So I would like to report the following.

The HEAT Study has been expanded to include 76 additional sites in 11 countries worldwide. The latest new site is in Italy, we initiated that site about 1.5 weeks ago. This is a national liver cancer referral center and is expected to be productive in patient recruitment. In addition to the US, the HEAT Study is designed with a concentration of sites in countries where HCC is a serious problem, including China, Japan, Taiwan, and South Korea.

As I have said in the past, our goal is to enroll a study cohort in each country sufficient to support registration, avoiding the need for a separate local study that is typically required for foreign country drug approval. While we have achieved the enrollment target in Korea and Taiwan, China now is enrolling approximately 15% of our total patients. In the DMC that is now evaluating safety in 18 Japanese patients as requested by the PMDA, the added safety review should be completed this week. I mentioned before, our country-by-country enrollment strategy provides Celsion with a fastest path to approval in markets where ThermoDox may be, and may provide, a life-saving treatment option, and early access to significant market opportunities.

To ensure that there is no surprises with data or with protocol compliance, we have completed a rigorous audit of our highest enrolling sites. Data entry and accuracy is being ensured. Last, as we reported earlier, our DMC has reviewed unblinded data from approximately 401 patients, and has recommended study continuation. Looking forward, the DMC will conduct an interim analysis once the study has enrolled 600 patients and has reached 190 events. For review, the blinded Celsion will include efficacy, futility, and a safety analysis. This review, this analysis is likely to occur late in quarter one next year.

Now, to turn to our recurrent chest wall breast cancer program. The last patient in the Phase I has been treated at 50 milligrams per meter squared. Assuming that there are no DLTs, 50 milligram will be declared the [NTD] for the remainder of the study which will be the Phase II segment of the trial. I will remind you that our objective in the registrational Phase II is to demonstrate a durable, complete local response in about 20% to 25% of a 100-patient population. As it appears now, we can -- we continue to project that enrollment will extend into 2012, and as I said on our last call, we have made contingencies due to the challenges of patient recruitment. We are looking at other options to open the trial to other superficial cancers such as melanoma and sarcoma, and we will have more on this, as I mentioned, before -- once we have reviewed all the data in the enrollment trends following our DSMD review later next month.

Now I would like to outline quickly as what we see as milestones ahead. We will submit our Phase II colorectal [metastatic] liver trial as a follow-onto our Phase III HCC trial under our current IND this month. Our plan is to initiate sites and begin recruitment as soon as possible after the HEAT Study, the HEAT trial has been completely enrolled. And, we continue to believe that a second license for ThermoDox will be negotiated. Timing will be dependent on terms that represent value for our Company and our shareholders.

In closing, I would like to say that our strategy is clear, and that our execution is showing results on all fronts. We are well-positioned with a promising -- potentially one of the most significant new drugs for arguably the largest unaddressed cancer in the world. In the meantime, however, your Company will continue to progress its research programs, and will work to make sure that news flow properly reflects our accomplishments and advances, and bring ThermoDox through the rigor of a well-executed clinical program in a well-defined regulatory pathway. Now with that, we'll go on to questions. I'd like to ask you to limit them to no more than two, please. So operator, if you would open the line to questions.

(Operator Instructions) And we will take our first question from Keith Markey with Griffin Securities.

Good afternoon, Keith.

Hi, Mike. How are you?

Great. Thank you. Other than this cold, I am terrific.

Yes. I hope that's -- I hope you get over that quickly. Just wondered if you might be able to elaborate a little bit on what the Japanese regulators will determine once they have had a chance to review the safety part of your study there?

Yes. The PMDA, as a condition of allowing sites in Japan to enroll in our Phase III trial, asked for a very careful assessment of safety in a cohort of patients. We initially thought that cohort of patients was 12, but looking back on it, and with the input from our DMC, we realized that the most probable request here was that it was 12 patients treated with ThermoDox. So the safety analysis is actually being conducted by our DMC. The DMC will then have the -- will make a recommendation as to continuing enrollment in Japan. Our suspicion -- we have seen all the data. I am going to speak for Dr. Borys here, but we have seen all the data, and our suspicion is that next week after the DMC sees the follow-on data from these patients that we will continue to enroll in Japanese patients.

Is it -- did you mean that once they have approved or passed on the safety data, that you might be able to add additional sites?

Well, actually, that's in progress, Keith. That's a good point. We initially started with six sites. Our partner, Yakult, is expanding the trial to ten sites.

Okay, great. Thanks. And if I could ask one other question.

Sure.

I was just wondering if you could tell us a little bit about the continuation of the trial in a sense with the metastatic colorectal cancer. It sounds as if the -- once the HEAT trial is completed, then you're going to be able to start up the CRC trial at maybe the same sites, is that the idea?

Yes, that's pretty close. First, let me just say this. We have a protocol that's been reviewed by the key investigators who will join the trial. We have had a lot of interest from our current investigators in the HEAT trial to be -- to take part in this metastatic liver cancer program. We will likely limit the number of sites to three or four. We may expand it to five, depending upon our -- I guess our ability, frankly, to initiate sites quickly enough, and the geographic location of the fifth site.

So, one of the sites will be new to the trial for sure. It is -- the principal investigator there is familiar with ThermoDox. He was involved with a Phase I trial at the NCI, and has been really the strongest proponent for evaluating ThermoDox plus radio frequency ablation to treat metastatic disease. So, we're well-positioned. The only thing that we have been reluctant to do is initiate this -- and I have been clear about this, I believe, in virtually all of our calls. We're reluctant to dilute our energies with another trial until we complete enrollment in the HEAT Study.

That makes good sense. Thank you very much.

Thank you.

And we'll move on to our next question from Vincent Dempsey, private investor.

Yes. Hi, Mike. Listen, I have been with this Company a long time, and I have been behind you the whole time. But at this point in time, I have an observation, essentially, I would like to address. It seems to me when there is dilution, it occurs either that day or prior to our knowledge. But when you talk about a business deal, it is so far off on the horizon, it complicates matters, and I feel it is misleading and I think it sows confusion and disappointment. So I would like to hear what you have on say on that subject.

Yes, I think that's a reasonable point of view. Our sense is that we would like to provide investors with the very best information that we have as we're moving forward. We have worked very hard with a number of potential partners to provide information with regards to their due diligence -- that due diligence continues. It continues at a pace, frankly, that consumes a lot of our time and resources. It is not in our intention to create confusion with regards to financing. But it certainly has been our objective to keep investors apprised of the events that are occurring in the Company.

Well, it is in your hands. But, at this point, all I see is the stock going down. Since I have held it, it has gone down in value. So, I am having a hard time seeing results in terms of anything that's accretive to my situation, whereas your situation, I am sure from your perspective you are doing the best you can. I have no doubt about that. But, I guess in the future, if you're going to do a business deal, I would rather have you get it on the dotted line and sign it and tell us about it rather than projecting it off into the future. That's where I stand on the subject.

Well thanks for your point of view.

Okay.

(Operator Instructions) And we'll pause just briefly to assemble the queue. And, Mr. Tardugno, it doesn't look like we have any more questions at this time.

Let's just wait a minute. Any more questions, please? Okay, well --

And sir, we do have one question online right now. And we'll take the question from Mitch Landgraf, with -- a private retail investor.

Good afternoon, Mitch.

Hi, Mr. Tardugno, how are you doing?

Good.

Wish you felt better. A quick question. You mentioned early on in the call about making up a registrational batch of ThermoDox, and some changes in regard to our manufacturing capability or -- for sites or whatever. Can you elaborate a little bit, or maybe Dr. Borys, about what that means as far as a registrational batch? Is that a -- does that make a time delay, or is it just a matter of taking care of something ahead of time to save us time in our process later?

No. Well, Dr. Borys is not here, Mitch.

Oh, that's right.

But a registrational batch is -- typically, three registrational batches are required, the data from which is used in the submission of the NDA. So we will produce three registrational batches, perhaps more depending upon the number of manufacturing sites. We'll produce at least three registrational batches, from which we will be submitting data with regards to stability specifications, manufacturing process controls, and the like. So, it is a part of our commercialization -- or our filing activity.

Okay. Thank you very much.

Thank you.

And once again, Mr. Tardugno, we are at no questions at this time.

Okay. Well, on behalf of the management team and employees here at Celsion, we continue to appreciate your support and interest in the Company, and look forward to our next opportunity to speak with you. Thank you very much.

Ladies and gentlemen, that does conclude today's conference call. Thank you for attending.