Imunon Inc (IMNN) 2010 Q4 法說會逐字稿

Good morning. My name is Kim and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsion Corporation year-end 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 David Pitts of Argot Partners. Please go ahead.

Thank you. Good morning, everyone and thank you for joining us. Our 2010 year-end 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 2 p.m. and will remain archived until April 1, 2011. The replay can be accessed at 1-877-870-5176 in the US and Canada, or 858-384-5517 internationally. The conference I.D. is 3852577. The call will also be available on the Company's website at Celsion.com for 30 days after 5 p.m. 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 of research and 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 other risks detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission.

With that, I'd like to turn the call over to Mr. Michael Tardugno, President and CEO of Celsion Corporation. Michael?

Thanks, David. Good morning to all and thank you for being with us, and for your continued interest in Celsion.

Before getting started, I'd like to first welcome David Pitts to the team. David is with Argot Partners and brings a wealth of IR experience. He and his colleagues at Argot have taken a deep interest in the Celsion story. I am confident that he will be of great help in facilitating shareholder communications.

I'm joined today by Jeff Church, our Chief Financial Officer, and Nick Borys, our Chief Medical Officer. It's good to have Nick here with us. As you know, he's missed a few of the past conference calls due to his travels and meeting with our investigators, and other work that's related to our clinical trials. So, Nick will be here also to help answer questions. And we're looking forward to that.

As always, we're delighted to be here with you to provide you an update on our work and answer your questions. Since our last conference call, as noted in our public announcements, we have made much progress.

For today's call, Jeff will provide comments regarding our fourth quarter and 2010 year-end results, including a review of the P&L and the balance sheet. Following that, Nick will discuss our progress in our global Phase 3 liver cancer and RCW trials. I will briefly discuss the expansion of our ThermoDox pipeline and platform, and other important clinical and research initiatives, and provide some concluding remarks. Following that, we will open the call for questions.

Just a few comments that I have before turning it over to Jeff. 2010 was a productive year for the Company and set the stage for what we expect will be a promising 2011. The centerpiece of our value model is the ongoing Phase 3 heat study for ThermoDox in primary liver cancer or hepatocellular carcinoma, or HCC as we'll refer to it throughout our comments this morning.

This study has enrolled nearly 90% of the total 600 patients -- 600 patients being a minimum requirement to complete the study. We have recruitment currently ongoing in 66 of 76 sites in 11 countries. We are completely focused on completing enrollment as quickly as possible, and have taken a number of steps to ensure the recruitment in the coming months. Nick will have more on that in his comments.

I am optimistic that this will occur by midyear, consistent with what we've been communicating beginning in January. More importantly, the study's Data Monitoring Committee will be in a position to conduct its preplanned, interim efficacy and safety analysis once this -- [its] enrollment and 190 events have been reached.

The analysis has three potential outcomes, including a recommendation for early filing based on overwhelming evidence of efficacy; a recommendation to continue the trial; or an assessment of futility, which we would believe, based on the numerous reviews that the DMC has had throughout the course of enrollment of our trial to date, we believe this to be very unlikely.

Either of the two positive outcomes of this assessment, we believe, signify strong positive momentum for the Company, the drug, and for the study. Throughout 2010 and in 2011, we have hit a number of important goals -- goals that have been communicated for the study and for our program in primary liver cancer -- positioning us for successful completion of the heat study, expansion of the ThermoDox program, and successful commercialization of ThermoDox, assuming, of course, we have a positive trial outcome.

Now these events include, first, NCI consensus designation of the heat study as a priority; clinical trial for HCC. This study is one of -- only of -- is one of only eight so designated by a panel of global liver cancer experts, after considering the potential of all the late-stage trials currently in progress to treat primary liver cancer. These are some of the most knowledgeable people in the field. Their endorsement provides the medical community with confidence that their therapeutic approach, our trial design, and our clinical strategy have significant merit.

Next, we received fast track designation from the FDA, which is additive to our special protocol assessment agreement with the Agency. These components provide us with the fastest pathway, as we have always talked about, the fastest pathway possible for regulatory approval of ThermoDox. Fastrack, among other things, provides Celsion with priority review and a PDUFA date certain of six months.

We're also eligible for, and certainly will take advantage of, a rolling submission. Additionally, China CDE and the Japanese PMDA have indicated their support for early NDA applications -- again, assuming, of course, that we hit our PFS endpoint.

We have initiated the NDA process and received positive guidance from the FDA that the Company's application for primary liver cancer will be accepted as a 505(b)(2) submission, which will streamline the approval process and remove a degree of regulatory risk based on the understanding that ThermoDox employs Doxorubicin, a previously approved drug. Additionally, we have reviewed our preclinical program with the Agency, and have an agreement that the studies have been conducted -- the studies that have been conducted are sufficient to support submission.

Lastly, we announced that the Company received orphan drug designation in Europe for ThermoDox to treat primary liver cancer. This is a goal that we had for last year and an important one to achieve. ThermoDox will have 10-year market exclusivity following the EMEA approval. This adds to orphan designation in the US, which provides seven-year marketing exclusivity following FDA approval.

The orphan drug designation also gives us access, without cost, to a Scientific Advice Committee Meeting in Europe, which will allow us to outline our registrational pathway. The Scientific Advice Committee Meeting is planned for later this spring, as early as -- could be as early as May.

On the CMC front, which is an important component of diligence with a licensed partner, which has caused us to accelerate our commercial manufacturing strategy and expand the number of contract manufacturing organizations. Our first registrational batch will be initiated later this year. Enrollment completion and a positive interim analysis are key milestones for the HEAT study, and will serve to reinforce our confidence in ThermoDox as a potential first-line treatment for HCC, as we work towards topline results from the study in 2012, and the expansion of our ThermoDox program into multiple indications, including secondary liver cancers, bone cancer, and recurring chest wall breast cancer in 2011.

As for our financials and financing efforts, our fourth-quarter expenses were well in line with our spending plans, including our investments in ThermoDox manufacturing and actions to accelerate enrollment in our HEAT study. That said, as always, we will continue to be judicious and cautious with expenses as we have always been.

As for our future financing needs, our strategy and approach remains unchanged. We will continue to seek to fund the Company on terms that are best designed to enhance shareholder value. Reflecting this are the various financing tools we have employed to date to fund ongoing operations. This includes our committed equity financing facility, which Jeff will discuss in some detail in a moment.

I want to just make a point -- it's not a means to finance the Company, but the committed equity financing facility does give us some flexibility, and plays an important role in our ability to take advantage of opportunity as it presents itself, and to ensure that terms for equity financing are in line with creating shareholder value.

Secondly, we completed a $5.1 million equity financing in January 2011, a transaction in which your management and Board members participated, and brought us some very good long-term investors. The amended agreement with Yakult Honsha provided us with an accelerated payment of up to $4 million against future milestone payments, including $2 million that was paid to the Company on January 12, 2011. This payment reflects -- and I'm sure you'll agree with me -- their confidence in the study, and was provided in exchange for a reduction in future milestone payments that were related to approval of ThermoDox in Japan.

We believe that Celsion as a development stage company should operate under a mantra of strict financial discipline and a firm commitment to shareholder value. We have, on a fully diluted basis, only 21.5 million shares outstanding, and we are executing a large international Phase 3 trial, a study that will be completed for less than $50 million; we've spent $40 million to date.

And we have developed plans to expand our platform and technology, and shown feasibility in some promising new compounds. And we've done that all with fewer than 20 employees. I think these figures speak for themselves and to the commitment of our team, and to the overwhelming promise of our technology.

And with that, I'd like to now turn this over to Jeff, who will cover our fourth-quarter and full-year financial results. Jeff?

Thank you, Mike. Our fourth-quarter and year-end 2010 results and continued news flow reflects the significant progress in the development activities for ThermoDox. both on the clinical side with their Phase 3 primary liver cancer study -- now approaching complete enrollment -- as well as on the manufacturing and regulatory front.

Celsion reported a net loss from operations of $5.3 million for the fourth quarter of 2010 compared to a $2.3 million loss from operations for the comparable period in 2009. This increase is primarily due to higher costs associated with the HEAT study and activities to accelerate commercial manufacturing of ThermoDox, offset by lower costs for the RCW trial, due to the utilization of internal resources during the current year versus an outside-the-CRO last year.

The prior-year financial results were also favorably impacted by two non-cash, nonrecurring items totaling $1.5 million. In the fourth quarter of 2009, we recognize a $732,000 gain on valuation of common stock warrants issued as part of a registered direct common stock offering in late September 2009, as well as an $800,000 income tax benefit recorded in the fourth quarter of 2009.

Now, for the full year 2010, Celsion reported a net loss of $18.8 million, or $1.52 per share, compared to a net loss of $15.2 million or $1.43 per share for the prior-year period. In 2009, the Company recognized a non-cash indemnity reserve benefit of $1.1 million, which related to the sale of the Company's medical device business in 2007. This reduced general and administrative expenses in the prior-year period. Also favorably impacting 2009 was the income tax benefit that I discussed earlier.

If we exclude these two nonrecurring items, operating costs were $1.7 million higher in 2010 versus 2009. This is primarily due to increased costs for investigator grants, monitoring costs, milestone payments to our contract research organizations, associated with the higher patient enrollments levels for the Company's HEAT study. Also contributing to this increase were activities associated with late-stage commercial manufacture for ThermoDox.

In 2010, Celsion also recorded in other income a $574,000 non-cash benefit related to a mark-to-market change in the common stock warrant liability related to that common stock offering completed in September of 2009. That compared to a $732,000 non-cash benefit in the prior year.

For the year ended December 31, 2010, net cash used in operations was $13.4 million. Of the 2010 net loss included $1.7 million of non-cash stock-based compensation expense, and approximately $2.5 million of accrued expenses associated with unbilled clinical trial costs and ThermoDox manufacturing-related activities. The Company's 2010 cash flow was also favorably impacted by the receipt of the $800,000 tax refund in the first quarter 2010.

We ended the year with $1.5 million of cash and investments. Since January 2010, the Company has completed the following transactions to address its future capital requirements. 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 a predetermined discount of 5% to 6%. The Company did not issue any warrants as part of this new facility, limiting its diluted impact. The facility provides an important backstop to enhance our other options for raising additional capital, either for through strategic licensing transactions or through the equity sale of stock.

As of March 16, 2011, the Company has completed four draws under the facility totaling 1.3 million shares of common stock for gross proceeds of $3.2 million. This translates into an average per share price of $2.40, not far from our average share price over the last three to six months. Broker fees and other expenses associated with these draws totaled $104,000, or approximately 3% of proceeds. The proceeds were used to fund expenses associated with the acceleration of commercial manufacturing, related process development, and product specification activities.

The committed equity financing facility has proven to be a very effective financing option for Celsion -- not our primary means of raising new capital. It proved its effectiveness in late December to bridge the Company to the preferred stock offering we announced in early January 2011. As mentioned, in January, we did complete a registered offering of $5.1 million of convertible preferred stock and common stock warrants.

Concurrent with this financing, the Company amended its development product supply and commercialization agreement for ThermoDox with Yakult Honsha to provide for accelerated payment of up to $4 million in future milestone payments, including $2 million, which was paid to the Company on January 16 when we closed the financing. This was an exchange for a reduction in future product approval milestones that the Company may receive under the Yakult agreement.

Additional capital will be required to develop our product candidates through clinical development, regulatory approval, manufacturing and commercialization. Executing a multi-national Phase 3 clinical trial and preparing for NBA submission is a very costly endeavor. We will need to raise additional capital to cover our operating needs through the end of patient enrollment, data readout, and regulatory submissions.

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. We continue to evaluate financing alternatives to address our capital requirements, including private equity offerings, additional strategic alliances and licensing arrangements, collaborative arrangements, or some combination of these financing alternatives on an ongoing basis.

At this time I will turn the call over to Nick.

Thanks, Jeff. I'd like to start by addressing our pivotal program, the HEAT study. As Mike alluded to earlier, this study is advancing toward enrollment completion as well as other important milestones.

First, patient enrollment to date is approaching 90% completion. Efforts to stimulate enrollment toward our final milestone continue, with full enrollment expected by mid-2011.

Second, the study's independent Data Monitoring Committee unanimously recommended continuation of the Phase 3 HEAT study after review of 482 patients enrolled in the trial on February 2011. This is the final scheduled evaluation ahead of enrollment completion.

Thirdly, as a part of its commitment to Japan's Pharmaceuticals and Medical Devices Agency, the PMDA, the DMC also independently assesses patients randomized at Japanese clinical sites. At its most recent review, the DMC maintained its recommendation to continue an enrollment pause of additional patients in Japan, pending certain guidance from the authorities in Japan. We are optimistic that the DMC will agree to support patient enrollment in Japan. We are, of course, working toward this outcome with strong support from Yakult, our Japanese partner.

Fourthly, as previously noted, overall toxicities for patients in the HEAT study are consistent with Doxorubicin's labeled safety profile. Doxorubicin, the active agent in ThermoDox, is a widely-use chemotherapeutic agent with a well-known safety profile, and approved globally for use, including Japan, in many cancer indications.

Fifth, again, as Mike discussed earlier, the trial design and statistical plan for the HEAT study incorporates a preplanned inter-efficacy analysis by the DMC. After patient enrollment is complete and 190 progression-free survival events are realized in the study population, with the intent of evaluating safety and efficacy results to determine if there is overwhelming evidence of clinical benefit or low probability of treatment success -- in other words, a futility analysis to continue, modify, or terminate the trial.

Based on where the study stands, we expect that this analysis will take place shortly after enrollment is complete in mid-2011. With that said, patient enrollment is our key priority. Virtually the entire Celsion management team has traveled to all of our sites to meet with investigators, gauge their enthusiasm, ensure data quality, and address any outstanding concerns.

During the last year, we have held several mid-term investigator meetings and regional investigator dinners. These have all been well attended with enthusiastic participation. I can assure everyone that our investigators hold a high regard for Celsion, the HEAT study, and ThermoDox. Not a single investigator has withdrawn from our trial due to concerns with the study protocol or ThermoDox and its safety profile. We will continue to work closely with our investigators in order to facilitate patient enrollment and ensure high-quality data.

We remain encouraged with the potential of ThermoDox, not only in primary liver cancer but also in expanding the spectrum of indications. ThermoDox, when activated, has been shown to deliver approximately 10 times more Doxorubicin to the treatment area than one would expect from systemic dosing. By concentrating the drug in the desired target, we achieve a much more potent anti-cancer effect in the areas most susceptible to initial recurrence.

The rationale for this delivery method is clear for a number of cancers. In primary liver cancer, the literature points to a very high rate of recurrence within one year to the immediate area of the original ablated lesion. By incorporating this area into the initial treatment and following patients closely, as we do in the HEAT study, we are in essence moving HCC into a disease people can live with rather than die from. This reflects ThermoDox's potential value, being that it may help turn HCC into a chronic disease instead of a deadly disease.

Working with colleagues in the medical community, academia, and industry, we are looking to extend the potential reach of ThermoDox into other important indications. Among our efforts, we're pursuing indications of secondary liver cancers, recurrent chest wall cancer, and bone cancer.

Now, with regard to our program in recurrent chest wall breast cancer, the DIGNITY study, interim ThermoDox clinical data from our Phase 1/2 DIGNITY study was presented by Dr. O'Connor at the 2010 ASCO Breast Cancer Symposium and 2010 ASTRO Conference. The data presented included digital images and safety data after six cycles of the 40-milligram dose.

Recurrent chest wall in this population is refractory to previous therapy. Local control is meaningful, provides clinical benefit, and is the registrational endpoint agreed to with the FDA for the Phase 2 portion of our trial. The last patient in the Phase 1 program has been treated in December at the 50-milligram per meter squared dose. No DLTs were reported at 50 milligrams, and we are asking the Data Safety Monitoring Board to review our data and declare the maximum tolerated dose for the remainder of the study. We expect this to be held -- which we expect to launch our Phase 2 segment of the trial with their approval. The DSMB is scheduled to meet in April this year.

With that, I will turn the call back over to Mike.

Thanks, Nick. Great report. An excellent report, thank you.

Just a couple more points on the RCW trial. I will remind you -- and I brought this up at previous conference calls -- that our objective in the registrational Phase 2 trial was to demonstrate a durable complete local response in 20%, 25% of a 100-patient population. As the trial is currently configured, we continue to project that enrollment will extend well into 2012.

As we have discussed in past calls, we have made certain contingencies. Due to the challenges of patient recruitment, we are looking at other options to open the trial to other superficial cancers, such as melanomas and carcinomas, for example. So we'll have more on this as we have reviewed the data with our DSMB and our investigators at the various sites that are enrolling patients in this trial.

With regard to our program in secondary liver cancers -- which are tumors from a different primary origin that have metastasized to the liver -- last year, 2010, we submitted our protocol for the Phase 2 colorectal liver mets to the liver trial as a follow-on to our Phase 3 primary liver cancer trial under our current IND. I'm pleased to report that it was accepted by the Agency without comment -- meaning we are free to initiate the trial as planned.

This is a meaningful outcome because, as you know, the FDA takes a great deal of time to review and accept new clinical trials. That said, we are gearing up and are girding our loins for this trial. We have begun the process of initiating the trial with IRB and trial agreement submissions at two sites. Our plans are fully ready to begin recruitment as soon as possible after the HEAT study has been enrolled. Our objective -- an important objective -- is to have MLC data for presentation in a timeframe that follows closely the approval of ThermoDox.

Now with regard to our program in bone cancer, on the last call, we noted that ThermoDox's potential as an effective therapy when delivery is mediated by focused ultrasound -- high-intensity focused ultrasound, or HIFU -- was highlighted in a number of abstracts presented at the Second International MR Guided Ultrasound Symposium. The potential of this approach was further discussed in a recent journal publication. The International Journal of Hypothermia published the article entitled, "Localized Drug Release Using MRI-Controlled Focused Ultrasound." Related, late-breaking abstracts will be presented at both the annual meetings of the Society for Thermal Medicine and the International Society of Therapeutic Ultrasound.

So, a lot of buzz around our work with Philips -- both the academic and medical communities have been very supportive of our work, and have targeted drug delivery applications using MRI-guided HIFU in general.

Most importantly, what I'd like to communicate to you is that what we have here is a program that was just a concept less than two years ago, and it's now progressing to human studies. Celsion and Philips Healthcare, with whom we have our joint research agreement -- and who, by the way, funds the majority of the costs associated with our preclinical program -- has submitted our preclinical findings with a request to initiate a clinical program in metastatic bone cancer to the FDA. Assuming we have an agreement -- and we have no reason not to expect that we won't -- we would anticipate initiating clinical studies that combines the promise of ThermoDox with the game-changing focused ultrasound technology developed by our solid partner in this program, Philips Healthcare.

Beyond Doxorubicin and ThermoDox, we have received a SBIR grant from the National Institutes of Health that supports the expansion of our technology platform to include Carboplatin. The focus of this work, which has begun, is to ensure efficient drug-loading formulation stability and efficacy in tumor regression studies in small animal models. We are delighted -- I'll say this again; I think we talked about this last time -- that the inventor of the heat-sensitive liposome, 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 coverage.

Now I'd like to make a few more points before opening the line for questions.

As a company, we remain well-positioned to deliver potentially one of the most significant new drugs for arguably the largest unaddressed cancer in the world. Furthermore, ThermoDox holds the potential to become a pipeline within a drug, addressing a number of significant unmet medical needs in a variety of cancers.

2011 will be a year in which we take key steps to delivering on these two important potentials -- completing enrollment in the HEAT study while moving toward final results, and significantly expanding the ThermoDox program to include superficial cancers, secondary liver cancers, and bone cancers.

The HEAT study remains a key focus of everyone at the Company, and we look forward to reaching an important enrollment milestone -- 600 patients. 600 patients, along with 190 PFS events, will trigger the interim analysis that Nick spoke of. In the end, however, PSF events are the primary objective of this study. As of today, we are likely to see enough events -- 190 -- for the interim analysis around the middle of the year, and completion of enrollment around the middle of the year, consistent with the timeframe of completion of enrollment.

And we're likely to see enough events -- that's 380 events -- for a study readout in nine to 12 months or following enrollment completion. All of this is bolstered with a streamlined global regulatory strategy, which is our country-by-country enrollment strategy, providing us with fastest pathway to approval in markets where ThermoDox may provide a life-saving treatment option.

As you know, we are enrolling cohorts in China, South Korea, Taiwan, and Japan that will support filing without the need for additional bridging studies, as is commonly required. To ensure that there's no surprises with data or with protocol compliance I've communicated in the past, we completed a rigorous audit of our highest-enrolling sites and continue to follow those audits. Data entry and accuracy, which can delay an NDA filing, is being monitored carefully by Celsion, by our CRO, and of course, as a major function of the regulatory meetings at the DMC.

Our mature Phase 3 asset continues to attract interest from potential partners. We will continue to evaluate such opportunities, the timing of which would be dependent on terms that represent value for our Company and for our shareholders.

In closing, I'd like to say we've made significant strides in a number of critical areas, including CMC, clinical operations, and certainly on the regulatory front -- all of which positions your company very well for commercialization of ThermoDox. In support of our key research leaders, Philips Healthcare and Yakult, we've advanced our platform and our technology; and we know that beyond ThermoDox, there is enormous value in dosage forms that include other therapeutics, such as Carboplatin and Docetaxel.

Our strategy is clear -- as is our immediate focus, and that is completing the enrollment in the HEAT trial. In the meantime, however, the Company will continue to progress its research programs, and we'll work to make sure that the news flow properly reflects our accomplishments and advances in bringing ThermoDox to market through the rigor of well-executed clinical programs -- can't say that enough -- well-executed clinical programs in a well-defined regulatory pipeline.

I again want to recognize Celsion employees for their commitment and all their hard work. We continue to make impressive strides in our clinical efforts, preparations for regulatory submissions, and in commercial manufacturing. I commend each for their efforts and all for achieving as much as they have with such focus and attention. Every day, I'm reminded of what a pleasure it is to be a part of this team.

That concludes our formal comments and now we'll move to questions, in which I'd like to ask you to limit your questions to no more than two each. So, operator, if you would, please, please open the line for questions.

Thank you. (Operator Instructions). And I have no questions at this time, but I'd like to give everyone another opportunity. If you have a question today, (Operator Instructions).

So, please let me encourage questions also.

And I do have some questions now. First question will come from [Ciovache Ciosi], a private investor.

I want to thank you, the entire Celsion management team. You guys have done an absolutely fantastic job, so please keep it up.

So assuming a successful HEAT trial in primarily HCC, I'd like to know exactly where you see ThermoDox fitting in within the current treatment paradigm? I mean -- you know, I'm well aware of the trial's inclusion criteria, but is the idea really to supplant transarterial chemoembo, which, as you know, is referred to as TACE?

Yes, that's a great question. Nick, do you want to take that?

Sure. The area that we're looking to establish ThermoDox with RFA, is to extend the reach of the curability of patients. So currently, when you look at HCC, when lesions are up to about 3 centimeters in size, as you might know, they're still considered curable. And as they get larger, that's where it's more difficult to treat these patients, and that's where, for example, you pointed out that TACE is used.

We believe that with using RFA in those larger lesions in combination with ThermoDox will improve the cure rate in those patients that have lesions greater than 3 centimeters. So, in essence, what we're trying to do is improve upon RFA's ability to cure the disease, and then also extend the ability for improving the rate of recurrence in the disease. So, in other words, just turning HCC into a chronic disease.

Got you. So, I mean, it sounds like implicitly -- I mean, TACE is probably going to be here to stay. I mean, as you know, a lot of your investigators are also involved in looking at TACE plus Sorafenib. So, it sounds like it's -- TACE will probably remain well entrenched in the treatment paradigm, but -- and there has been some literature looking at RFA plus TACE. I mean, can we expect that type of data, RFA plus TACE-like data, with ThermoDox?

Yes, I think that's a very good point. I don't think RFA and ThermoDox is competitive with TACE. I think, in the future, you'll see it as complementary, where we could look at TACE being done at various combinations with RFA. Currently, a common way to do it is TACE to shrink the tumor and then following that with RFA. And then we could do a cocktail approach with ThermoDox as well. So there's many different paradigms you could look at for that, and I think we're going to see an interesting future with that.

Excellent. Thank you so much. I appreciate it.

[Phillip Wellman], private investor.

My question is, as we wind down the 600 enrollment, what should we look at for our cash flow numbers? We've been using $1.2 million, $1.3 million a month. We have two new trials that will begin. What should we use to model your cash expenditures in the future?

Yes. So, I'm going to -- I want Jeff to speak to that, but I just -- I mean, it's a good question and allows me a bit of room here to talk more about cash, cash management, and expenses, if you don't mind.

So I think it's easy to track our history of using cash in our Company. Over the last four years, I think our total cash consumption has been something in the neighborhood of about $60 million. I think you'd agree with me that that's a very efficient use of cash to get the Company to a point where we're now looking at completing a very large trial across 11 countries and 17 time zones -- nearly enrolled -- taking ThermoDox from a faltering Phase 1 program almost to now where we're about to see topline results.

Now that said, I mean, we're as efficient in our cash usage as possible. That's a function of our budget. So we spend a lot of time as a team, evaluating where we want to make investments. So as you talk about the horizon beyond ThermoDox, we've included our assumptions for expanding our research interests and our investments in other protocols, in other trials; we've included those in our budget.

So with that, Jeff?

Yes. As Mike indicated, we operate with very strict financial discipline. We embarked upon a three-year detailed financial plan; completed that for 2011 through 2013. What we will see is, in 2012, costs associated with the HEAT study will begin to come down as enrollment is complete and we move into a follow-up phase with the patients. So we'll balance that with other activities to identify new product candidates.

So I think the guidance of roughly [$1.1 million] to [$1.5 million] a month -- it sort of bounces between those two, depending upon activities -- is a good guidance for the next few years. And we'll balance that against monies that we raise through equity, through collaborations; and if there's an opportunity to accelerate a program, we'll certainly do that.

As a follow-up to my question, you kind of open the door to other products. Besides Carboplatin and ThermoDox, are there other things that you're investigating?

Yes. So, we've shown feasibility in Carboplatin; we've shown feasibility in Docetaxel. I can tell you that the -- under our credo with the NCI, Docetaxel is being evaluated in combination with a HIFU in small animal models. We should see a publication on that very soon, I'm told.

So our work there -- I mean, we're trying to be efficient -- again, focusing the majority of our cash resources on the HEAT study; but we haven't completely dropped the ball on either of these two compounds -- Carboplatin, as I mentioned in my comments, received a grant for which we will use to improve the formulation and loading, and has the potential, again, as I mentioned, to provide us with some important patentable discoveries. So, I mean, those are two compounds that we can talk about.

I think I mentioned sometime earlier there was a third compound that we see is pretty promising, that we were asked to evaluate by another partner. As soon as that partner feels comfortable that they want to pursue this compound further, we may be talking about that -- one we think is very interesting.

There's no doubt -- I mean, I just -- it's clear to us, there's simply no doubt in the value of this platform beyond Doxorubicin. In our 3-lipid form -- and we can get into a little bit of the technical detail -- we're able to efficiently incorporate water soluble agents. And our 4-lipid form -- which, by the way, if the patents are granted, we'll have a patent life to 2024 -- we're able to incorporate fat soluble molecules.

So we're pretty excited about those opportunities, but we don't want to get distracted at this point, Phil, with new research until we deliver the, I think, the most important value driver here, and that's that results from our Phase 3 trial.

Well, I appreciate you spend the money very wisely, and I understand that many other things you'd like to be doing if you had ample reserves. And I applaud the efforts of all the employees and management team of Celsion. Thank you very much.

Thank you, Phil. Thanks for your support.

[Mitch Langraph], private investor.

Thank you for the great call. Once again, I just want to praise the progress. We have a lot of neat irons in the fire, each has their own planned development.

Just kind of want to talk about connections between the average retail investor and leadership of the Company. If I'm not reading it wrong, the conversions that were just put out recently didn't seem to be mandatory. And from my point of view, that is a real sign from the leadership of this Company that they are aligned with the average investor, and share hope and positivity, just like we do about the potential of our approach.

I also am just curious -- and I'm sorry to take any cat out of the bag -- but a lot of us also in that joining would like to come to the shareholders meeting. And I'm wondering if you have a timeline for when the date or time might be announced for the upcoming annual meeting?

Well, let me just address your first comment. I know it wasn't a question, but I do want to comment on our insider conversion from preferred shares to common shares. We had an opportunity to invest in this last round that -- I mean, just was broadly participated in by our executives and our Board members. As you point out, we have every confidence in the Company and our clinical approach, and I think our continued investment, not just this one but shares purchased on the open market, reflect that.

The conversion from preferred to common really reflected our view that executives and Board members shouldn't participate in the dividend that's supplied to preferred shareholders. So -- yes, so that was our point of view. It's always good to get those shares out to the float, also. So that was what was behind that.

As far as the annual shareholder meeting, we encourage you and everybody on the phone to join us. I think it's an opportunity for us to meet you, and share with you face to face and in person the enthusiasm we have for the Company. So, I'm going to ask Jeff if you've got the details of the meeting?

Sure.

You don't have the location, I don't think.

Yes, the location hasn't been nailed down yet but the date is June the 10th. And we will be issuing the proxy statement probably within the next three to four weeks. So that will be mailed out and that will have all the details. But mark the calendar for June the 10th.

Would it be presumptuous to think that it will likely be in Baltimore?

Well, it's going to be in Baltimore.

Okay. Well, thank you very much and thank you on behalf of all affected by cancer and shareholders for the incredible work you are all doing.

(Operator Instructions). [Louis Morofi], private investor.

Thank you very much for all your hard work; very excited about the direction of the Company, and your good stewards of our -- of the technology and our money.

To understand the future, I think, is to understand a little bit about the past. And there's maybe just a few items I'd like to address and ask you to be a bit more transparent.

Two areas specifically. First, with respect to the recent CEFF draw.

Sure.

Just not too long ago, about a month ago, I think there was SEC filings and whatnot indicating we had enough cash to get through enrollment. And I'm just curious why we needed another CEFF draw at such a low offering price. That's question number one.

Okay. So let me try to address that for you. And if I miss anything here, Jeff, will you jump in?

Sure.

So the CEFF has never been intended to be a primary means to finance the company. We use it opportunistically. I think more importantly, we've used it as a backstop against any financings that we don't think are in the best interest of shareholders.

We get comments in both directions about the Committed Equity Financing Facility -- from some of our institutional holders, they like it, they like the iterative process of continuing development with a low number of shares outstanding, a high rate of dilution associated with big financing, so it's efficient. And some don't like it. Some -- we get some pretty strong comments. And we take them very seriously. And maybe you're one of these investors who believe the CEFF puts some downward pressure on share price.

So all that said, is the latest CEFF draw reflected our view that there's some uncertainty into this next $2 million milestone payment from Yakult; although, as Nick indicated, we're optimistic. And by the way, I just want to share this with you -- throughout this disaster in Japan, this unfortunate occurrence in Japan, our Yakult team has been working on this issue to get their study sites up and running again. I think that's -- I can't think of a better partner to have, frankly.

But despite -- so we see some uncertainty associated with this $2 million. We also, as we pointed out, we budget very carefully here. We make commitments. And we think it's important to have enough wherewithal to be able to honor our commitments, particularly from a financial point of view.

In this particular case, we made some commitments to continue to accelerate our manufacturing program, which includes process development, validation of the processes, finalization and validation of our analytical methods, and production of a registration batch this year. So we've made some commitments there, and we thought it would be important to -- so that we don't disrupt anything -- to ensure that we had this small amount of cash -- relatively small amount of cash in hand, to be able to follow through with those commitments and not cause our vendor partners to take a bet with us that their -- that the finances would be there.

So that was what was behind it. We think that's important. We think it's good to show continuity to our vendors. We think the CEFF represents an efficient way but not the ultimate way to finance a Company. And that's it.

Jeff, I mean, would you add anything more to that?

I think it's a good overview. We -- you always want to be in a position that you not only get to the endgame, but you have sufficient capital beyond that to be able to execute on the objectives of the Company.

Okay. Very good. That was my first question. Second question, in that you called a milestone payment uncertainty might be the perfect segueway into the second question. And that has to do with the transparency or various comments that are made from time to time on when enrollment in the HEAT trial will be concluded.

About this time last year, February of last year, the comment was made that enrollment would be done within the next two quarters. Obviously, that's come and gone, and now we're looking at sometime mid-2011. Why does that goal line keep moving? And does that -- is that really the reason why there's uncertainty in the -- Yakult?

Well, I'm going to answer the second piece first -- that, no, this enrollment goal line moving is not at all associated with Yakult's -- any uncertainty from Yakult. Not at all. Not in the least. Yakult advanced us $2 million against a $4 million commitment of future milestone payments. They are as close to the study as we are, and in some cases, maybe even closer.

(multiple speakers) So let me just say this to you -- credibility is very important, extremely important for a non-revenue-generating company. Some time back, we decided that we wanted to be completely transparent with our shareholders. And we try to do that. I mean, I think you'll agree with me, the news flow from our Company and the detail to which we provide information about what's coming forward is extraordinary, and maybe unique in this entire biotech world. We've had some -- very early on, we had some guidance from the old sages in this business that the last thing you ever want to talk about is enrollment -- and particularly, to the enrollment rates; particularly to the details that you guys do.

We -- but regardless of that sage advice, we decided that we would provide our investors with the means to gauge what we're -- the progress of the Company as we see it. But credibility takes a number of forms here, and I just want to share this with you, is that -- financially, we are tied to hitting enrollment objectives. Dr. Borys and I and the clinical team, we look very carefully at enrollment rates, with investments we're making in bringing on new clinical sites around the world. We added 40 last -- I think it was 40 last year.

We talk carefully with our investigators; we try to gauge what we think from all of that information is the best estimate of when we would expect to complete a trial. So we don't shoot from the hip. We tie those targets, what we communicate to you, we are tied to them financially from a compensation standpoint. So our bonuses, 40% of the bonus payout to this Company are tied to meeting our enrollment objectives that we communicate to you.

In addition to that, some of us have forgone increases in our salary base as -- and those are not forced; those are voluntary -- until we hit enrollment; until we hit the enrollment target. So we try to give you as much guidance as transparently as possible and infinite detail. And we make -- we stand behind it with our financial reward that the Company provides us.

In addition to that, our agreements with our CROs provide penalties for not hitting enrollment targets that we communicate to you. And I can tell you, our largest CRO, one that manages the global study, has taken over $1.5 million in penalties as a result of not hitting targets.

So we're not casual with it. And I know that -- it kind of gets to this notion of credibility -- but I try to explain -- what I've tried to explain to you is that our transparency, our best estimates, our internal objectives, our compensation programs, our vendor contracts, are all tied together.

So I can tell you, from our perspective, the Company has completely focused its intention on meeting these enrollment objectives. And we do that with the very best interest of our shareholders, and with the idea that the sooner we get this done, the more quickly we can get onto some of the more important things that can create enormous value for our shareholders in the pipeline of opportunities.

Michael, I never thought that you would be casual -- you're ever casual about number. But just so we understand, is there like a top three reasons why enrollment keeps moving downfield?

Yes. So, I mean, you can take the first one, the Japanese loss is pretty evident. We have -- Pareto works in a clinical study like it does in anything else. So we have some of our higher enrolling sites; we made a decision about a year and a half ago that we wanted our higher enrolling sites not to enroll any more than 10% of the total patient base. We think that's important for a quality study. We don't want to put all of our eggs in one basket. And so some of those -- a few of those enrolling sites are beginning to peak out at this 10%.

And as we're seeing -- there's actually four reasons I'll communicate -- is we're seeing the -- we have a very complex trial that requires an enormous amount of discipline. And I think beyond the discipline, an enormous amount of work in patient follow. We're not giving an oral dosage, an oral solid dose to a patient then following the patient. We have a very complex program for following patients to progression that involves contacting and reminding patients to come back in for CT scans, because the primary endpoint is the function of radiologic progression, filling out hundreds of pages of CROs.

So I give you that as a backdrop. So, as enrollment increases at a number of sites, the workload goes up -- not even geometrically; it goes up exponentially. So that's a third reason.

The fourth reason is we've seen a lot of new trials -- not competitive with our focus -- but a lot of new trials being implemented in some of our more important sites. And they have limited resources, so they begin to distribute their resources not over one trial, or not over two trials, but over three or four trials. And in doing so, it limits the amount of total patient mode that any clinical trial site can bring on.

So we're dealing with all of that. And as I said, we saw some evidence of that last year, and -- actually, earlier than last year -- and responded to it by bringing on, I think it was 40 additional sites into the trial. Our partners in Japan, as once enrollment restarts in Japan, they've added some additional sites. We're considering adding a few additional sites that could rapidly -- we want to extend this any further than we can -- but a few additional sites that could rapidly begin to enroll patients; along with our ongoing communication efforts, dinner meetings, symposia that we conduct, conferences that we conduct.

So we have some sense here, as Nick pointed out, that there isn't any one critical issue that concerns or any multiple critical issues that concern our investigators. They are very enthusiastic, and I can tell you, as a group, want to get this study completed as quickly as possible.

Okay. Thank you for articulating the challenges. I appreciate it.

I think -- it's new. And I'd like to ask that we just take one or two more questioners. And I don't know what the backlog looks like, but if there are any questioners we do not get to, we're certainly open to receiving your calls later today, or Monday, if you'd like.

So, Operator, if we could take one more call. And if it's a short question, then we may be able to take a second.

All right. And that next question will come from [Mike Sebeck], a private investor.

Hi, Mike. (multiple speakers) Good to hear your voice again, Mike.

Hey, thanks for the thoroughness of this call. And I got to admit the questions that are being asked are very thorough, also. So it's pretty useful.

Well, we think we have a very good group of investors. I would say the envy of the business. You follow us carefully; you ask good questions; and frankly, those questions cause us to think and motivate us to do the right things. So, please, go on.

Well, I can hear your stomachs growling, so I'll try to be quick here.

Actually, we have another meeting -- I'm sorry about that. We have (multiple speakers) --

No, I'm like -- I'm just trying to make a little light. The metastatic bone cancer, that indication is something you're putting together with Philips' HIFU System?

Yes.

Okay. That has, in my very limited understanding of it, has the potential to ratchet up the understanding of this Company's potential. So that sounds pretty exciting. The question I have, is that considered one of these unmet medical needs where the structure of the trials and stuff could be set up to be Fastrack or expeditious in any manner, given the fact that I think the active ingredient is Carboplatin?

Well, it's going to be Doxorubicin.

Oh, it's going to be Dox, okay.

Yes. So this will be a Phase 2 trial. Let me -- Nick, do you want to talk about the value of this study in metastatic bone disease?

Yes. I think the value here, what we're seeing here is that, number one, this is going to be a proof of principle study. We're proposing a Phase 2 design to the Agency. And in this area right now, the way these patients are being treated, we're talking about patients that have either primary prostate cancer or lung cancer or breast cancer that metastasizes to the bone, and it's painful. Currently, these patients, if their analgesics are not doing the job, then they're considered generally for external beam therapy -- radiation therapy, in other words.

And we think with the successful results of this study, we could be moved a little bit earlier in when these patients are being treated -- where they're being treated with gentle heat and administration of Doxorubicin, and hopefully, that could hold them for quite awhile or maybe alter the course of the disease, if the data turns out very promising. And then external beam can be used as a backstop for these patients.

So that's sort of our initial look at how this would fit in, into the treatment regimen. I hope that answers your question.

Yes, pretty much. So that -- would the quality of life be pretty much the -- one of the endpoints or the determinations of efficacy?

Yes, exactly. I mean, if you ever met any of these patients that have painful bone metastases, that's their number one issue, is taking care of that. And so that is a primary endpoint. Other drugs and procedures have been tested using these kinds of endpoints. So we're not doing anything new in that regard.

Okay. And the last question I have is on the Carboplatin featuring Dr. Needham --

Yes.

-- who will be leading that. Has any -- I'm just -- I really don't know a lot about this stuff and I guess I'm curious as to what type of targets you're looking to identify in terms of indications?

Yes, so Carboplatin provides a broad range of targets. I mean, head and neck cancers, [private] compounds are used in treating lung cancers and others. I mean, it's a broad -- it's a fairly broad range.

Okay.

Okay?

Super.

I'm going to apologize if there's anybody else on the line waiting for a question. We do have another commitment.

I'd like to thank everybody for their time, for their great questions, for listening to us in this conference call. We're pretty excited about what we're doing. We are very, very, very focused on getting this Phase 3 study enrolled, because the future, really, of the Company can be completely enhanced with our focus on continuing to evaluate the LTSL platform that's our heat-sensitive liposome platform, and ThermoDox generally in a broad range of other diseases.

So I want to thank you very much for your time and we look forward to seeing some of you at the upcoming shareholders meeting. So, Operator?

Thank you. That does conclude our conference call today. Thank you all for your participation.