Imunon Inc (IMNN) 2013 Q4 法說會逐字稿

Good morning. My name is Yolanda and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsion Corporation fourth-quarter 2013 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 would now like to turn the call over to Jeffrey Church, Senior VP and CFO. Mr. Church, please go ahead.

Thank you. Good morning, everyone, and thank you for joining us. Our 2013 financial results were released this morning before the market opened. We also filed our Form 10-K for the year ended December 31, 2013 at the same time. The Form 10-K is available on the SEC's EDGAR system and the company's earnings release and Form 10-K are both available on our website. Today's call will be archived, the replay beginning today at 2 p.m. Eastern and will remain available by phone until Thursday, March 27, 2014, and will be on our website for 30 days.

Before we begin the call, we wish to inform participants that forward-looking statements are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. You are cautioned that such forward-looking statements involve risks and uncertainties, including without limitation the risk of clinical failures, delays or increased costs, unforeseen changes in the cost of our research and development activities, possible acquisition of other technologies, assets or businesses, and possible adverse action 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.

Following our formal remarks today, we will open the call up for questions. I'd like to turn the call over now to Mr. Michael Tardugno, President and CEO of Celsion. Mike?

Thank you Jeff. Good morning. Thank you for joining us and for your interest in and support for Celsion. I'm joined today by Dr. Nick Borys, our Chief Medical Officer, and by Jeff Church from whom you just heard is our Senior Vice President and Chief Financial Officer. It's good to be with you this morning to review the progress that your company has made in 2013, a year which we all acknowledge is a critical one for Celsion, and to provide you with our outlook for 2014. And in particular I would like to largely focus on our recently announced OPTIMA study.

Let me start by saying that 2013 was a year of recommitment. We have taken a number of measured steps to position Celsion, both financially and with a strong encouragement of the hepatocellular carcinoma research committee, that's HCC, to conduct -- or has the potential to be a most important study today in HCC.

I dare say we are strongly encouraged by our clinical research data. We have a detailed roadmap. We may know more about the first line treatment for this enormous population with the unmet need of intermediate stage HCC than just about company on the planet. And it is with this knowledge that we have engineered our adult development program for ThermoDox, our lead drug candidate utilizing our proprietary tumor targeting heat sensitive liposomal technology that we exclusively license from Duke University.

So as we announced last month, we are moving forward with the OPTIMA study, our Phase III trial in HCC. The OPTIMA study is a well powered two-arm double-blind randomized study of ThermoDox combined with optimized RFA. We are going to define optimized RFA for you in a moment.

And as we also announced late last month, we conducted the study with the enthusiastic support of our investigators and medical advisors worldwide.

Before going into the OPTIMA study, I'd like to reflect on 2013 for a moment and remind you of the three key priorities we promised to deliver on just a year ago. They are these. First, grow protocol, and at the urging of our medical advisors and steering committee, we committed ourselves to conduct a thorough and comprehensive review of the data from the HEAT study, our large randomized trial ThermoDox in combination with simple RFA to treat HCC. As I discussed, we used the learnings from this analysis to inform and design the OPTIMA study.

Our second priority was to restructure, align our resources with our immediate mission and, in doing so, significantly reduce expenses. I can report this morning that we completed our corporate restructuring in an efficient and effective manner. But we did not stop there. In addition, we took actions to significantly strengthen our balance sheet by raising some $50 million over the last year and then took steps to improve overall financing strategy generally. Jeff Church will cover this in more detail shortly.

Third, we implemented our strategic M&A program which capitalizes on Celsion's development competencies and is designed to expand our research pipeline, reducing enterprise risk, increasing the probability of significant returns to our shareholders. We have been disciplined throughout our process this past year. Being mindful that no deal is better than a bad deal, I am confident that this project has the potential for success.

Now, I'd like to focus on ThermoDox and ThermoDox Phase III program for primary liver cancer. As many of you know, we announced topline results from the HEAT study just 14 months ago. The study was powered with 700 patients, utilizing two-arm one-to-one randomization scheme, each subject undergoing RFA as a first-line procedure, one arm with ThermoDox, the other with RFA alone.

What is clear is the trial did not meet the primary endpoint of progression free survival. For protocol however and, again, at the urging of our medical advisors, we continued to follow patients to determine an overall survival benefit, which is the secondary endpoint of the study. And here is where the promise of ThermoDox has the greatest potential.

Our analyses show that a key well bonded well-defined subgroup of 285 patients representing some 41% of the patients in the HEAT study with single HCC lesions ranging from 3 to 7 centimeters, they were treated with RFA for greater than 45 minutes. This is what we call optimized RFA, treated for greater than 45 minutes. These patients benefit with significantly longer median survival.

Improved survival appears to be true for RFA alone when conducted optimally, and particularly true when optimized RFA is combined with ThermoDox. The outcome is potentially better by a significant amount.

In addition, when we looked at all the factors that could contribute to this phenomenon, multi-varied analyses do not appear to discount this finding in any way. So, to assure objectivity and sound science, our analysis has not been conducted independently, but rather they have included the involvement of our investigators and some of the most important leading researchers in liver cancer in the world.

Our findings have been pressure tested at three international medical conferences and separately the subject of a symposium led by Professor Joseph Llovet M.D. at the ILCA conference last September in Washington, DC. ILCA is the International Liver Cancer Association focused exclusively on research in HCC. And if Professor Llovet's name sounds familiar to you, it's because he was the lead author of the HCC's sorafenib paper and a distinguished researcher among his fellows in HCC.

Further, in the most recent OS update announced this past January, just two months ago, the patient subgroup treated in the ThermoDox arm whose RFA procedure lasted longer than 45 minutes, optimized RFA, experienced a 55% improvement in overall survival with a hazard ratio 0.64 and, for you statisticians, a P value of significance of 0.0495.

I will point out however, we are moving close to the medium, we have not reached the median overall survival for this subgroup just yet. We could very well reach that median in the next OS sweep which will occur in the next few months. Notwithstanding this full factor analysis, the data is striking in that it has remained consistent with each of the quarterly analyses and our hypotheses appear to strengthen as the data matures. Our latest data, the data we just talked about, is from the fourth quarterly overall survival data sweep since topline results were announced 14 months ago.

The first OS data sweep was conducted at the end of March 2013, the second in June, the third in September, and the most recent in December, reported in January as I said. With each data set, OS in single lesion greater than 45 minutes optimized RFA subgroup improved in both benefit and significance. Moreover, these data are consistent with the mechanism of action of our heat activated liposomal technology, for longer heating times activate drug release, concentrating it in the tumor margins and surrounding liver tissue.

Now let me just share a quick anecdote with you. Among our many reviews of the data with our investigators worldwide, Dr. Borys and I met with a Chinese contingent in Beijing. After all the data were presented and discussed, Professor [Chin Min La], our lead principal investigator in China and the author of the definitive academic textbook on RFA in China, stepped up to the microphone and scolded her colleagues, saying in essence of course we should have known this. RFA has to be used within its design limits to treat larger tumors, larger tumors meaning those greater than 3 centimeters.

What you can take from that is this -- RFA works well for treating smaller tumors, less than 3 centimeters, but for larger lesions, although they are included in our study greater than 3 cm, longer ablation times are necessary for an effective outcome.

I want to be clear in particular with this or in any retrospective analysis, an announcement of a positive efficacy signal, even if statistically significant, should be reviewed with caution. And as I have pointed out consistently and I will point it out again before this conference call is over, OS has not yet been reached in this -- the median OS has not yet been reached in this study for this cohort. That being said, the clinical data generated has provided invaluable findings and insights. I suspect RFA practitioners will be changing their practice once the data is all out. And we, along with our investigators and experts, believe that the strong survival trend warrants additional clinical development of ThermoDox and HCC, to say the least.

So with that, now I would like to discuss the OPTIMA study in more detail. This trial was designed, as we said earlier, with extensive input from globally recognized HCC researchers and clinicians, and after formal consultation with the US FDA. It is a robust trial, make no mistake about it.

We expect to enroll 550 patients globally with up to 100 sites in North America, Europe, China and Asia Pacific. In the two-arm study, we are comparing ThermoDox in combination with optimized RFA, so RFA greater than 45 minutes, which will be standardized to a minimum of 45 minutes across all investigators versus optimized RFA alone. The primary endpoint is overall survival, or OS. The study is powered at 80% show an OS improvement at 197 deaths with a peak of 0.05. The statistical plan calls for two interim efficacy analyses by an independent data monitoring committee and can be stopped for efficacy, meaning success, at either 118 deaths or 158 deaths. Before you ask the alpha spend to conduct these interim looks is minimal, less than 0.005.

The trial incorporates input from FDA but does not have a special protocol assessment, or an SPA. It was accepted in February with minor comments. We have selected our CROs. Investigational drug is being manufactured, a DNC has been appointed. The CTAs are being -- clinical trial agreements -- are being followed worldwide. All in all, we have initiated the study and are hopeful to enroll the first patient in the coming months.

Now, to ensure that the study design is sufficient to support registration following an NDA in local markets, we have been meeting with other regulatory agencies. For example, we recently met with the China state Food and Drug Administration, or CFDA, to discuss our study, Nick Borys and I. We discussed the study, an outline of the study and our goals, including a minimum patient enrollment required for ThermoDox's NDA should we be successful. We were very pleased with the outcome. And based on those discussions, the company is submitting next week an IND, an application which accelerates CFDA approval to begin the study in China. And with China as you know being the largest -- the world's largest HCC market with over 400,000 new patients each year, representing about 50% of the world's incidents, timely agreement to move forward with the study is a very important goal and objective for the company.

I'd like to move on to some of our other clinical programs and preclinical programs. In parallel with our efforts in HCC, we continue to advance ThermoDox in recurrent chest wall breast cancer., so very impressive if not remarkable results to date.

The DIGNITY study, as you know, has been a very difficult study to enroll. But I have to tell you, this management team refuses to give up on this study. How can we? This is a very needy population. These patients, these women, have had a mastectomy. They failed two to three lines of chemotherapy. They likely have failed radiation. And many of them are bravely facing the end-of-life. And when we look at the data, the limited data that we have, how can we give up?

To share with you, in December, combined clinical study data results from Celsion's and from Duke University's Phase I studies, open-label studies, were presented by Dr. Hope Rugo of the University of California San Francisco at the premier San Antonio Breast Cancer Conference. The two similarly designed Phase I studies enroll patients with highly resistant tumors found on the chest wall, and who had progressed on previous therapy, including chemotherapy, radiation therapy, and hormone therapy.

ThermoDox plus mild hypothermia was evaluated in these patients in up to six cycles. There were 29 patients in the two trials living in our DIGNITY study and 18 in the Duke study.

Now, here's the punchline. Of the 23 evaluable patients, a local response rate of over 60% was reported in 2014 with five complete responses in highly refractive cancer, five complete responses and nine partial responses.

So, we are now actively enrolling, under the direction of Dr. Borys, patients in the DIGNITY Phase II trial. We are approximately 50% enrolled at five clinical sites. I will remind you this is an open-label study evaluating multiple cycles of ThermoDox plus HIFU (inaudible) in this refractory population with superficial recurrence.

In this population, my view, in this population, even minimal tumor response might be considered a win. That said, we recently reported from the Phase II that a local response rate of 80% has been observed in the five evaluable patients with refractory disease, notably two complete responses, two partial responses, and one patient with stable disease.

With support of our press release, Dr. Rugo noted that "This data is early but impressive, especially given the patient population and the consistency of results with the Phase I study demonstrating strong efficacy signals in this difficult to treat patient population."

We are hopeful with the DIGNITY study, that we complete enrollment in a reasonable period of time. We have seen an uptick in enrollment, frankly, since the presentation of data in our recent press announcement showing the response rates, these impressive response rates.

Another indication for what ThermoDox may hold some promise in is brain cancer, also known as GBM, or glioblastoma multiforme. In January, this past January 2014, we formalized the development program for this indication. As a part of this effort, we are supporting preclinical studies in collaboration with Dr. Costas Arvanitis at the Brigham and Women's Hospital at Harvard Medical School. Experiments will use -- experiments will study the use of ThermoDox in combination with MR guided high intensity focused ultrasound or high food to treat brain tumors initially in animal models.

So, that's my report on our clinical and preclinical programs and now I want to move, to turn to the balance sheet. In November, we increased our financial flexibility with a $20 million loan facility that Jeff Church brought to us. It's an agreement with Hercules Technology Growth Capital. And we ended the year with over $43 million of cash to fund future operations. And in January, this past January, we raised an additional $15 million through a register direct offering at market price.

Our fundraising efforts not only reflect the investment community's confidence in our ThermoDox program and the future direction of the company, but it also provides us with the resources to effectively implement our M&A strategy. I have to say we have full confidence in the ThermoDox program, especially given how the program has developed over the last year. However, as I said previously, we recognize the need to expand our pipeline and reduce the risk and exposure inherent with a single program, and so we are seeking to expand our pipeline through the strategic acquisition of new technologies and products that may be both synergistic and complementary to our current product pipeline and our internal capabilities. So we continue to work closely with Cantor Fitzgerald to assist us with a comprehensive and systematic review of merger and acquisition opportunities with the goal of identifying novel products or companies with near-term value creation potential for Celsion to acquire.

And before turning it over to Jeff, I'd like to summarize my comments by saying our efforts over the past year have paved the way for our future growth. We are beginning 2014 well-positioned to execute our clinical, regulatory, and corporate objectives. The compelling data emerging from the HEAT study analysis provides a strong rationale for continued investigation in primary liver cancer, or HCC. With OPTIMA, we are moving forward with a well-designed trial and with the support of key industry experts and regulatory agencies, we are well-funded with a clear strategic direction and committed to maximizing shareholder value, and we are optimistic with our plans for the future.

Now, I'll ask Jeff to provide an overview of our fourth-quarter 2013 financial results. Jeff?

Thank you Mike. Starting with cash, we reported total cash and investments at December 31, 2013 of $43.1 million. That compares to $23.1 million at the end of 2012, an increase of approximately $20 million.

Subsequent to year-end, we completed a $15 million registered direct common stock offering which was priced at the market with minimal warrant coverage. We enter 2014 with a very strong balance sheet with cash of approximately $57 million. In addition, we have another $15 million available to us under the loan facility with Hercules Technology Growth Capital announced in the fourth quarter of 2013. Our financing strategy puts us in a strong strategic position to continue the development of our heat sensitive liposome technology platform as well as to explore the acquisition of other promising clinical stage products.

Since the beginning of 2013, we have secured approximately $50 million and increased our financial flexibility in four strategic transactions, the most recent being the $15 million aftermarket registered direct offering in early 2014.

In November, as Mike mentioned, we entered into a strategic loan facility agreement with Hercules that would allow up to $20 million of financing in multiple tranches. We drew down the first $5 million in November and used $4 million to repay the outstanding obligation under our loan agreement with Oxford Finance and Horizon Technology Finance Corporation. We would use any additional funding provided under the agreement for working capital or to support our strategic acquisition initiatives.

Net cash used for operation was $9.5 million in 2013, which compares to $22.3 million used to fund operations last year. This decrease was driven by the continued drop in operating expenses, coupled with the $5 million nonrefundable cash payment received from Hisun Pharmaceutical Company in the first quarter of 2013. Our lower operating costs are the result of a continuing downward trend in drug development expenses and the results from the corporate restructuring program we announced in April 2013.

Operating expense decreased from $22.1 million in 2012 to under $16 million in the current year. This 30% reduction was in line with the guidance we provided back in April.

Research and development costs were $9.4 million in 2013, $6.4 million lower when compared to the prior year, due in large part to the completion of patient enrollment in the HEAT study in the first half of 2012. With the initiation of the OPTIMA study in the first half of this year, in 2014, and the continued evaluation of ThermoDox in the DIGNITY study, we expect research and development costs to increase in 2014.

G&A expenses were relatively constant at $6.5 million in 2013 compared to prior-year levels as a result of the corporate restructuring program implemented last year.

For the full year 2013, the company reported a net loss of $12.9 million compared to a net loss of $26.6 million in the full-year 2012. The company reported a loss from operations totaling $8.3 million, which was offset by a non-cash charge of $4.6 million related to a deemed dividend from the beneficial conversion feature associated with the preferred stock financing we completed in February 2013.

I will now turn the call back to Mike.

Great report, Jeff. Thank you. On behalf of all of us, your stewardship of the company has been terrific.

Thank you.

Celsion is moving forward and focused on its future, as you can tell. We have completed our comprehensive analysis of the HEAT study. We met with our collaborators, partners, and regulators to discuss our findings, and based on those discussions, we are moving forward with our pivotal OPTIMA study.

We have a strong balance sheet and the flexibility to consider a number of strategic options. Our partnerships continue and remain strong. We commit ourselves to our critically important work and look forward to reporting our progress as we have -- this year as we have through our past years. We hope to create value for our shareholders and, most importantly, make a significant difference in the lives of cancer patients and their families. As always, we greatly appreciate your interest in the company, and we look forward to updating you on our continued progress.

Now, operator, we will go to questions. To the audience, I'd like to ask you to keep -- limit your questions to one with a follow-up if you would, please, to give everyone a chance to get answers. Operator, if you will open the line.

Certainly. (Operator Instructions). Keith Markey, Griffin Securities.

Good morning. That's very good news about your clinical progress. I was just wondering if you could tell us a little bit about what the accelerated approval in China is going to mean to you. For instance, will the Chinese FDA make a decision independent of the US FDA?

Could you repeat that last part of your sentence please?

For instance, I was wondering if the Chinese regulatory agency would make their determination independent of the FDA, the US FDA.

Let me answer that second part first. That's yet to be seen. There are multiple avenues for an NDA submission in China. I think we've talked about those in the past. One avenue is for a multinational company that is not headquartered in China to file an NDA. That's a fairly lengthy process. It takes a long review, and it involves a complete review of the CMC portion of the application, along with the clinical data.

There are other avenues that include companies like us having a local presence, legal entity presence in China, and even a faster path for an NDA in partnering with a company, a domestic pharmaceutical company like Hisun, one of our manufacturing partners in China.

It's too soon for us to tell which avenue we would take. Certainly, we would like to take the fastest route, but the fastest route, if it includes a domestic partner, would require us to negotiate terms for a commercial license with that partner that we believe represents fair value for our shareholders. So that's some of the complexities in the multiple pathways to get an approval.

As far as the clinical trial agreement approval, which is separate from an NDA, is to conduct a clinical trial successfully before you can submit an NDA. There are multiple pathways there too. The pathway that we had chosen to take was recommended to us by the Deputy Director of CDE, the Center for Drug Evaluation of the CFDA. Madame Yang, (inaudible) our CLO and manufacturing partner Hisun met with CFDA early in January. The CDE outlined for us an accelerated pathway, which could -- there's no promises -- we're dealing with a regulatory body, so there never really can be an absolute assurances. But it could accelerate the review and approval of our clinical trial applications through something known as an IND, investigational new drug. It's a process that we did not use the last time because it wasn't available in our last application in China because it was not available to us. Assuming an IND is accepted, it goes through a little bit of a bureaucratic review before the ultimate evaluation is made by CDE. So assuming the IND route is made available to us, it will shorten the approval time by a significant amount.

You may recall the HEAT study approval took -- one of the reasons why there was a lengthy time to enrollment study, but the clinical trial agreement in China was compromised by a number of political events, and a natural disaster in China. I think it took us about 14 to 16 months to finally not only get approval but enroll our first study site from the time we had approval from the US FDA. Our hope is to cut that in less than half, taking the IND route with the support of the CDE.

Great. Thank you for that.

Did that answer your question?

Yes, absolutely. I'm sorry. I misspoke when I said NDA. I'm a little ahead of the game here. One last question is --

(technical difficulty)

I am sure. One last question along the same lines. Can you just lay out what you see as the regulatory path forward, the DIGNITY oriented research program that you're working on, the recurrent chest wall breast cancer?

I think the regulatory pathway -- and unusually we don't have an answer to that, an absolute answer to your question. I think our regulatory pathway will really be a function of the strength of the data, if with any luck we'll be able to complete enrollment in this relatively small Phase II trial, if the data continues to hold up, I'm sure Dr. Borys is going to want to meet with our FDA to review the data and chart a path forward. I think that's his intention. Do you want to comment?

Yes. I think, number one, from a regulatory point of view, we want to establish strong data for the indication. And then based on the fact that this is a relatively rare indication, it's an orphan drug indication, it's in high need in the US, in fact are going to revisit that with the FDA at a later date and discuss the data and see what's the best path forward.

Very good. Thank you so much.

(Operator Instructions). Reni Benjamin, H.C. Wainwright.

Good morning. Thanks for taking the questions. Can you talk to us a little bit about the learnings from the HEAT study in terms of variability in procedure and not just mandating 45 minutes worth of RFA, but anything else that you might have learned, and how you will be trying to control that more in the upcoming OPTIMA study?

I think that Dr. Borys will answer that, but I want to make a comment before he does. I think we've learn quite a bit. And my sense is that once the data is published from the HEAT study, that there will be quite a bit of reflection on the current standard of practice, maybe ultimately evolving into a standard of care that standardizes RFA particularly in patients who have lesions that are greater than 3 centimeters, where we know this procedure can be effective.

If you recall, the assumption that we made based on historical information was that the medium time to death in this population, 3 to 7 centimeters, we forecasted to be what our medical experts and from the data, we forecasted it to be 30 months. Under the watchful eye of our monitors and in our protocol, we see that simple RFA, simple RFA, has a median time to death quite a bit more than that. And when you use optimized RFA, the median time to death without ThermoDox is even better. And when you add ThermoDox, it's a hypothesis that we'll see even a better outcome.

So we are very mindful of how important this aspect is to the success of the future trial. Nick has engaged one of our leading experts to write the guidance document that each and every one of our investigators will be required to review, do some web-based training. We will document that training, and document their understanding of it with an online system which will become a permanent part of the clinical study trial -- master trial. So we are very conscious of it. We have learned a lot. Like I said in my opening comments, we may know more about how to treat patients in this category 3 to 7 centimeters with greater frequency ablation than any other company on the planet. So I mean -- I hope I didn't take all the thunder there, Nick. I almost did.

Thank you very much for that question. I think the learnings from RFA from the HEAT study will be the subject of a number of papers. We can talk for a very long time about what we've learned from there, but the key lines are the ones that Mike mentioned.

Number one, what I think is important for you to know is that what we learned is that if you apply the RFA treatment, whether you're in China or Italy or the US, for at least 45 minutes, the patient will benefit. So what we learned is that now we have a data-driven approach to how we manage RFA. And so when we apply that, we feel confident we're going to see good outcomes in the study. And so before the RFAs, there were publications on the importance of multiple overlapping oblations and timing to those oblations but they were not data-driven. And now our protocol is based on that data, so that's why we have this confidence.

And I guess just as a follow-up to the accelerated strategy in China, you're talking about the IND, this new path forward. Should we be considering it as a separate clinical trial altogether that can move at its own pace and secure approval on its own, or is it part of the OPTIMA study and it depends on the entire trial and the entire enrollment?

That's a good question. I don't know that it's really clear to us whether or not we can consider the Chinese cohort independently in this global trial and submit an application without the full data set to the Chinese government. We certainly would like to explore that further. It's been part of our discussions. It's just not clear to me, based on the response, that we can say with assurance that that's a probability or a possibility.

I think we do understand that if we were to partner with a domestic Chinese company, commercial with a domestic Chinese company, and that's an if -- that's a real if on the commercial side because we want to make sure we are getting the best branded marketing capability for this important new drug in every region of the world, including China, the biggest market. So, we would have to have license terms and confidence in the capability of a domestic Chinese company to bring ThermoDox to market in a very responsible fashion.

So assuming we can do that, that path that you just alluded to where we could focus on the Chinese cohort independently may become a reality. More likely, however, and I want you to count that in as this is an absolute. More likely, however, we will complete the study. As a part of completing the study, we will assure that we have a minimum of 200 patients required by the Chinese government for submission and based on the totality of the data, submit an application to the Chinese government. This is a faster path. We'll do it, but we won't make any compromise on the ultimate value of our product in order to get a faster response from China, at least that's my point of view at this stage.

Excellent. Thank you and good luck.

(Operator Instructions). Ken [Poli], private investor.

Thanks for taking my call. I want to first say I'm really impressed by the level of commitment that management has displayed in trying to get ThermoDox approved. You don't really see that a lot of times with a lot of companies.

The one area that I have concerns with is the moving for an acquisition of another company. My concern is this. Given the limited resources that the company has on hand right now, and I know you guys have done a lot of funding and so forth, I'm not so sure if that's necessarily the right approach. Where I'm coming from on that is that, as a shareholder who has held shares now for quite a long time, we've experienced significant dilutions and reverse stock splits. And if ThermoDox is the wave of the future, I just have concerns that that's necessarily going out after other companies is diverting resources and time to getting the drug approved that we know is going to be successful, if that's the case. I'd like you to just discuss that in a little bit more detail if possible.

I'm happy to do that. First, let me thank you for your longtime support of the company. It's people like you who make it easy for us to get up in the morning and come to work. We need that support and that backing (inaudible) the rigors of this business sometimes can be challenging. Knowing that there are people like you behind us makes the job all that much more attractive or worthwhile.

So we didn't take this idea of expanding our pipeline lightly. I want you to know that. Frankly, if there was assurances, high assurances, if ThermoDox absolutely or unequivocally would be successful, we likely wouldn't take this path.

But clinical research, in spite of the value and the quality and efficacy of our trunk, clinical research sometimes does not result in, at least initially and sometimes even if or many times even if the drug works, it doesn't result in a positive outcome, at least not initially. We've seen what that can do to this company, frankly. And so, a negative outcome can be devastating for our shareholders, for our employees, certainly for cancer patients. Even if the percentage, the chance is small.

So, I just want to assure you that we have been very careful about the types of companies that we are looking at, all in oncology. We have been careful to set up what we think are the right requirements for consideration, companies that would add a measure of resources to the company to support the incremental research. But very importantly, we are focused on -- we are focusing our research on technology, and maybe not entirely companies, but maybe in just products that we believe would be accretive in that it would bring more value to the company on their own merit. And that accretive value, that additional value to the company would and should be sufficient to support the research for that product on its own. So that's how we think about it.

I can promise you that we will not make a deal to make a deal. We will not make a deal that we don't believe is in the best interest of the company and our shareholders. We are looking for value creating opportunity. And as I said earlier in my comments, and this is shared by our board, is that no deal is better than a bad deal.

I hope that answers your question. And again, thank you for your longtime support of the company.

Yes, that does answer my question. The follow-up question is are you guys looking at a partnership possibly for the breast cancer with a major pharmaceutical company? Is that on the list too?

It certainly would be. I think it's premature, given the limited data set. In parts of a limited data set, I think it's something that we would bring to the top of our priority list. Completing a Phase II trial with impressive results I think we would begin to market if we have to, market the program in a business development strategy. Yes.

Thank you for taking the time, and I know you guys are working hard, and I know it's a difficult process getting drugs approved. And I don't think we would be as far without your level of commitment and your team's as well. So thank you for taking the time and taking the call and the questions.

You're very kind. Thank you on behalf of all of us. Operator, we have time for one more question.

Bob Green, private investor.

Good morning. Two quick questions. Before you move into the OPTIMA study, will you wait for the overall survival, median survival, for the HEAT study before we move forward?

So we are very, very close to the median. I think I wanted to point out the median because the numbers could wobble, but could they wobble so much so that we would not consider the OPTIMA study? I think the chances of that are very, very slim to none. The data is very impressive.

I want you to know committing funds to a study is done on an incremental basis. We are initiating the study based on what we see, which we think is very impressive. It's impressive to our investigators; it's impressive to the medical and scientific community globally. It's been accepted by the regulatory community. I think that's strong validation that we are on the right track. But goodness knows, if there is something very unusual, highly unexpected that would cause us to rethink whether or not we want to continue with the OPTIMA study, we would always be honest with you and with ourselves and we would reconsider continuing.

What numbers represent overall survival in the HEAT that you're looking for for a median?

So, what we currently have is extraordinary. So we're talking about a subgroup from the HEAT study. It's a subgroup of patients who have single lesions in the range between 3 and 7 centimeters who have been treated with RFA for greater than let's call it optimally been treated with an optimized RFA, that's RFA greater than 45 minutes. The rationale behind that is RFA is good to treat small tumors. It works well in treating small tumors. To treat larger tumors, you have to ablate overlapping oblations which extends the time to heat and kill these tumors. So in that subgroup, small lesions, between 3 and 7 centimeters, greater than 45 minutes radiofrequency ablation, we are seeing an improvement in the arm -- over the arm that is RFA optimized RFA alone. When we add ThermoDox, we're seeing an improvement of 55%. In months, that's almost two years. In months, that's almost two years. In months that's almost -- over 24 months.

I guess I didn't ask the question right. Obviously --

That's a big deal. Let me just say this. Sorafenib, Nexavar, which is the only approved drug for HCC, it was approved for late-stage, advanced stage disease, was approved on less than three months' benefit. So, we had powered the OPTIMA study to reflect a clinically relevant outcome of -- with a huge safety margin between what we are observing in this cohort, 55% improvement, and what we think could be a blockbuster outcome.

One last question then. In the new study, in the OPTIMA study, you're going to have the DMC look at stuff at 118 patient deaths, was that right?

Yes. So we plan to, there's no absolute assurances, but we plan to, as part of our trial submission, look at the data at two stopping points before the final analysis. One at 116 -- 118 deaths? And one at -- the next one at 158 deaths.

I just wanted to verify --

So there are two opportunities before the final data to stop the study for efficacy if we show significant clinical benefit. And that will be the purview of the DMC.

I just wanted to verify those numbers. The number of deaths for the median overall survival in the HEAT were almost there. I was wondering what those numbers were looking -- what numbers would drive that median?

So the median -- so it is a larger study, so there's 285 patients, then the median would be, gosh, that's -- so the median is probably close to 250 patients.

Okay.

We have 227 now, I think. So don't hold us to those numbers. They're ballpark. We think the latest report was based on 227 patients, I believe, and to get to the median, we need about 20 more or so.

Okay. I see. Those are the numbers I was looking for sir. Thank you very much.

That will conclude our question-and-answer session for today. I Would like to turn the call back to our speakers for any additional or closing comments.

So I want to thank all of you for joining us this morning on the conference call. As you can see, the company continues to move forward. We are very, very enthusiastic about the future of the company and we look forward to continuing to update you on these quarterly calls. Thank you very much and have a good day.

That will conclude today's conference. Thank you all once again for your participation. You may now disconnect.