Imunon Inc (IMNN) 2017 Q1 法說會逐字稿

Good morning. My name is Isaac, and I will be your conference operator today. At this time, I'd like to welcome you to the Celsion First Quarter 2017 Earnings Conference Call. (Operator Instructions).

At this time, I'd like to turn the call over to Mr. Jeffrey Church, Celsion's Senior Vice President and Chief Financial Officer. Please proceed, Mr. Church.

Thank you. Good morning, everyone, and thank you for joining us today to discuss our first quarter 2017 financial results, which we announced this morning before the market opened. Today's call will be archived, and the replay will be available beginning tomorrow and will remain available by phone until March 26 -- I'm sorry, May 26, as well as available on Celsion's website for 90 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.

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

Thank you, Jeff. Good morning, everyone, and thank you for taking the time to join us. With me today on today's call is Dr. Nicholas Borys, Celsion's Chief Medical Officer; and Jeffrey Church, our Chief Financial Officer, from whom you've just heard. As always, we are delighted to have the opportunity to update you on our progress and importantly, to answer your questions.

Given that our last conference call was less than 6 weeks ago and that we're just a few days away from our Annual Shareholder Meeting, today's prepared remarks will be relatively brief and may be a bit repetitive. But I hope that you agree with me that some things, particularly good things, that you'll hear today are worth repeating.

Before getting started, however, I want to remind you that we have a number of important proposals to be acted upon during the Annual Shareholder Meeting on this coming Tuesday, May 16. An affirmative vote on each of these issues is recommended by your Board of Directors as they set the stage for the most important of future developments from your company. By this time next year, we'll be approaching full enrollment of our Phase III OPTIMA Study in primary liver cancer, also known as HCC or hepatocellular carcinoma. We are now likely 18 to 20 months from the first preplanned interim analysis of Overall Survival. Assuming positive data, this event will, no doubt, be transformative.

In support of these objectives, the proxy was mailed to you -- the proxy that was mailed to you includes 2 very important enabling

proposals for shareholders to consider: First is a proposal to authorize the board to effect a reverse split, ensuring that the company remains in compliance with NASDAQ listing requirements. The liquidity of our shares and our ability to raise capital will depend upon approval of this proposal by our shareholders.

The second proposal authorizes the company to issue more than 20% of our unaffiliated shares in a financing transaction of up to $25 million with authorization for this kind of conditions warrant. The objective of this onetime authorization is to minimize, if not eliminate, the devastating small interim financing to which the company has been recently limited. Shareholder support not only could get us to a more positive financing environment. It may well finance us properly to first data readout of the OPTIMA Study.

Proxy was mailed to shareholders in early April. If you have not received it, please call, and call right away. You can find our number on our website at www.celsion.com. We will help you to quickly register your vote if you should call. One last time. Vote matters. It's important. If you haven't done so, please vote. On behalf of your board, I want you to know that your support is appreciated.

Well, with that public service announcement behind us, I want to focus my comments on our 2 very important product candidates, ThermoDox and GEN-1. And this may be a bit repetitive. As I mentioned during our year-end earnings call, the fundamentals of Celsion are sound -- no doubt, are sound. From an operating perspective, it's my view that we have never been in a better position. I want to share some examples of why you should believe this is so. First, number one, operational risk associated with our Phase III OPTIMA Study is virtually nonexistent. This is highly derisked study of ThermoDox plus RFA in newly diagnosed HCC patient, which represents, as you know, the largest unmet medical need in oncology, the study is being conducted in an exceedingly professional and efficient manner.

And all of the heavy lifting has been done, including the following: We have established unparalleled support from the medical establishment and are conducting the OPTIMA Study with public backing from some of the most respected researchers and institutions in the liver cancer world. The regulatory agents from across the globe, in all the major HCC market, have reviewed and approved the OPTIMA Study protocol. We have clinical trial agreements with some 70 of the leading hospitals dedicated to liver cancer research, led by hundreds of highly respected investigators worldwide. We have engaged internationally recognized world-class CROs as contract research organizations and data management teams to ensure GCP and protocol compliance and high-quality data analysis. We're enrolling patients on schedule in an excellent pace, but never satisfied. We are working always to do better. We have a proven and highly reliable supply chain with 3 contract manufacturing organizations, 1 in China, 2 in the United States, that's 3, registered and capable to produce ThermoDox providing a cost structure that all but guarantees enviable gross margins regardless of the local economy regardless of the country.

So in summary, with minimal operational risk, we are now looking forward to study completion and data. We believe our many analyses that support the OPTIMA Study. Or if you have any confidence in the independent opinion of the National Institutes of Health, then you should -- have to agree that the chance of success with our OPTIMA Study is as good as it gets in our industry.

The second example that our fundamentals are sound is in the execution of the OVATION Study. This is a Phase I study evaluating our highly innovative gene-mediated immunotherapy, GEN-1, in newly diagnosed ovarian cancer patients. This study is all but complete. From it, we now know almost with certainty that GEN-1 has significant promise. There is no doubt that the production of therapeutic IL-12 in this patient population is dose-related. We also see a clear relationship between dose and the activation of key elements of the immune system. More promising, and importantly, early clinical findings appear to tie this translational data to -- translational data tied to clinical findings. Our findings from the OVATION Study will be presented by our lead investigator, Dr. Premal Thaker, Professor of Medicine at Washington University in St. Louis at the 2017 ASCO Annual Meeting this coming June. In this very difficult to treat patient population, an important Phase I study with a novel approach to harnessing a potent anticancer cytokine, IL-12, is all done door-to-door in less than 2 years for less than $2 million in total.

The third example is the European DIGNITY Study, refractory breast cancer patient study, a population where we've seen ThermoDox plus hyperthermia provide results that have been nothing short of remarkable. The study has been teed up. All the administrative IRB contract and protocol, training and review issues have been completed. That is ready to go at 5 institutions in Europe and Israel, now just awaiting financing to initiate enrollment.

The fourth example is the work that we've done with our cost structure. Our cost structure has been reengineered. Jeff Church will go over in some detail with you what that means financially, but we are operating with 30% fewer employees than just 18 months ago. 30% fewer employees than just 18 months ago. All in, future spending on average will be approximately $1.3 million per month, and that covers 3 clinical studies, including our global Phase III pivotal trial; maintenance of 2 investigational product, not an insignificant test by any means; conducting trials in more than 75 clinical centers across 17 time zones in 17 countries. So I hope that you agree with me that our fundamentals are sound.

With very little operational risk into our management, DMC are regulatory-compliant. You can be confident that our studies are professionally and rigorously managed, and we are addressing potential billion-dollar market opportunities. And if we're right, either the primary liver cancer study, OPTIMA, or our ovarian cancer program demonstrates a meaningly -- sorry, a meaningful clinical benefit. In our well-controlled studies, we would expect global regulatory approval, rapid adoption and generous gross margin.

I would like to go into a little bit more detail with regards to ThermoDox. The Phase III OPTIMA Study is past the midway point and on track to complete enrollment of 550 patients on around the end of the second quarter next year. Our target is newly diagnosed primary liver cancer patients or HCC, hepatocellular carcinoma, patients. We're evaluating the potential OS benefit of ThermoDox plus standardized RFA as a first-line combination treatment. The study is powered to show a 33% reduction in the risk for death. If achieved, ThermoDox will represent the only nonsurgical curative option for HCC patients. That's a single dose of ThermoDox plus RFA properly administered being potentially curative. So it's being conducted in over 60 clinical sites in North America, Europe, China and Asia.

The hypothesis for the OPTIMA Study -- let me continue and say this, this is a highly derisked study. The hypothesis is supported with statistically significant subgroup data from our prior HEAT study, a 700-patient evaluation of ThermoDox in combination with radiofrequency ablation or RFA. Failing to meet its PFS endpoint, that's progression-free survival endpoint, the multiple analyses and findings from our preclinical studies have shown for RFA to be effective at larger lesions, a minimum heating time threshold is required. This finding is consistent with our understanding of the engineered design limitations of RFA and with ThermoDox's mechanism of action. This is the understanding that has driven the design of, again, the highly derisked OPTIMA Study.

The final data supporting the OPTIMA Study was derived from a subgroup of patients whose single lesion was treated with RFA standardized for greater than 45 minutes. In this large, well-bonded, well-balanced subgroup of 285 patients, a group that we followed for over 3 years, we see that the treatment with a combination of ThermoDox and standardized RFA that's greater than 45 minutes provided an average 54% risk improvement in overall survival. The Hazard Ratio in this analysis is 0.65 with a p-value of 0.02. Simply put, this translates into a greater than 2-year survival benefit for the ThermoDox arm over the optimized RFA group only. And after 80 months, the median overall survival for the ThermoDox group, it still had not been reached. Historically, median time to death in this population is around 36 months. It's 57 months in the comparable group from the HEAT study.

The regulatory reaction to this analysis has been generally quite positive. No doubt, there will always be some concern with post hoc analysis. But during the fourth quarter, for example, Dr. Borys and I discussed the supporting data in the OPTIMA Study with regulatory agencies in China and Vietnam. We reported on these meetings. I just want to review with -- the conclusion or the results from this meetings again with you. CFDA, the Chinese Food and Drug Administration, informed the company that condition on the strength of the data, if the Phase III OPTIMA Study is successful, this trial could serve as the basis for a direct regulatory with an NDA filing in China without the need for prior approval in the U.S. or the European Union. This prior approval, known as CPP, which is a -- this is currently required for foreign companies to file an NDA in China. So this will allow us to underscore the significance of our work as we interpret it, no doubt, and will allow us to accelerate our commercial plans for China. Why is this important? Well, as you know, as we've said, China represents what is perhaps the most significant market opportunity for ThermoDox in the world. There's approximately 50% of the 850,000. More and more new cases diagnosed each year originate in China, in this market, the future largest market for pharmaceuticals in the world. And I have to say to you, I believe -- I hope you agree, the company is well positioned.

And as I discussed on the year-end earnings call last November, Dr. Borys and I also met with the Minister of Health in Hanoi, Vietnam, and I'm fond of saying that, that meeting occurred on a Sunday. That's how interested they were in meeting with us. Well, based on the very positive meeting, we received regulatory approval to initiate 5 additional clinical studies in that country in record time. A clinical team -- now that was in November. A clinical team has already activated 4 sites, enrolling patients in a very productive manner. Our clinical team is active -- is expected to activate the fifth and final site in Vietnam in the next few weeks. Why is this important? Vietnam represents a significant market for ThermoDox, where HCC incident rates are among the highest in the world.

The last point I want to make on OPTIMA and ThermoDox -- and this is a key point. We've talked about this. The OPTIMA Study continues to be supported by a growing body of peer-reviewed research. And I'll point to the National Institutes of Health, who conducted an independent analysis of the supporting data on their own. As for the data, we didn't ask them to do this. They presented their findings through oral sessions at the RSNA Conference in Chicago last December. So the NIH -- in their analysis, independently saw direct respectively evaluate the correlation between RFA burn time, that's the dwell time, the 45 minutes that we talk about. They evaluated that per tumor volume and compared it to clinical outcome in patients treated with ThermoDox as compared to patients treated without ThermoDox. Their conclusion was both statistically significant and very straightforward. And I quote from their presentation, "As you increase RFA burn time in a patient treated with ThermoDox, Overall Survival improves. The same is not true for patients treated with RFA alone." The NIH's independent assessment provides additional confirmatory support, I hope you agree, consistent with our own findings, indicating that the use of RFA for more than 45 minutes and treat -- patients treated with ThermoDox in lesions, of course, larger than 3 centimeters, it's our focus group. That's the group that we're enrolling in our study. And these patients treated with RFA for more than 45 minutes with the addition of ThermoDox can impact favorably overall survival.

In this presentation, as I represented, which was a full house. A very large presentation room. My guess is well over 500 attendees. The NIH concluded this discussion with a very clear and convincing support for the OPTIMA study. So this independent analysis strengthens our confidence as I believe it should yours. Now as an aside, and talking about the NIH, while they continue to evaluate many potential applications for ThermoDox, I think their excitement with this very unique and novel means of delivering known chemotherapeutics in the case of ThermoDox, doxorubicin, I think their excitement is something like I've never seen.

They recently published the preclinical results of ThermoDox for treatment of bladder cancer in the International Journal of Hyperthermia. The article describes the results of in vivo pig studies to evaluate ThermoDox in combination with hyperthermia for targeted drug delivery to the bladder walls as a potential treatment for bladder cancer. It's a very underserved population. Doxorubicin accumulation and distribution within the bladder wall with ThermoDox has a function (inaudible). Plus, mild bladder hyperthermia was achieved at concentrations 10x higher than with free intravenous doxorubicin combined with mild hyperthermia. So the mechanism, as we have been talking about for years now, is clear. ThermoDox administered systemically intravenously warm with mild hyperthermia to the bladder increases the drug concentration in the wall of the bladder -- muscle wall in the tissue of the bladder 10x greater than free doxorubicin.

There's approximately 90,000 incidents in the U.S. This is an important unserved need, and the data that we're looking at could very well provide a basis for a clinical program of ThermoDox in bladder cancer. More to come on that issue. Dr. Borys, Nick and I are meeting with key opinion leaders at the AUA2 Conference this weekend to discuss the potential for clinical research. And by the way, the meeting that -- these KOL, the opinion leaders, and bladder cancer research have -- for all intents and purposes, asked us to conduct. Based on their research, the NIH is, no doubt, as I said earlier, excited with ThermoDox' potential. In addition to HCC, bladder and some work they've done in recurrent chest wall breast cancer under our CRADAs, the NIH is now conducting a Phase II study in pediatric solid tumor patients at the Children's Hospital. Pretty exciting stuff.

So now let me turn to GEN-1, our immuno-oncology candidate developed for -- developed on our TheraPlas technology platform. As you may recall, GEN-1 is a gene-mediated immunotherapeutic, which recruits the entirety of the immune system to fight malignancy. GEN-1's active agent is a DNA plasma that's coded for the cytokine interleukin 12, or IL-12. The IL-12 plasma is incorporated into this TheraPlas platform. It's a nonviral nanoparticle delivery vector. When administered locally into a body cavity like for a vein in the bladder or even into a cavity that's been created by the surgical removal of a tumor mass, these nanoparticles invade the surrounding cells, take over the metabolic machinery, turning each of these cells into many factories for the sustained local production of IL-12. It's a protein that's a powerful inflammatory protein well known to recruit the immune system to fight cancer.

Our first indication for GEN-1 is ovarian cancer, as we've talked about. For patients newly diagnosed with this malignancy, there's less than a 45% chance of surviving 5 years. One of the major reasons is that diagnosis is made when patients are symptomatic at Stage III or more when the cancer is advanced. In trials in this patient population conducted by the GOG prior to our involvement -- the GOG was handling all the clinical trials, the Gynecologic Oncology Group. a cooperative funded by the NIH. So in these trials, when GEN-1 was used either as a monotherapy in combination with chemotherapy, findings appeared to us to be quite promising, so much so that we continued the research. Celsion's first trial in this indication, we call the OVATION Study, is fully enrolled, with the last patients currently being evaluated for treatment. Initial clinical findings and translational data will be presented in June at ASCO. We are also following these patients for an important regulatory end point of progression-free survival. OVATION was initiated in the fourth quarter of 2015, so that's less than 2 years ago. It's a Phase I study in newly diagnosed Stage III and IV ovarian cancer patients, late-stage patients, or individuals who unfortunately have large tumor mass in the abdomen. So these patients present this -- with this heavy disease burden, prior to debulking surgery, which has indicated they're treated with up to 3 cycles of carboplatin and taxane, the goal of which is to improve the surgical outcome by shrinking these tumors and drying up the ascites. So in this population, in this regimen, we are adding 8 weekly cycles of GEN-1, which is then followed by the integral rebulking surgery.

I want to review quickly, we've issued a number of press releases. While we review quickly -- so as summary of the data that we have issued via press releases during 2016 and 2017. So this -- I'll remind you, of the first 13 patients dosed, we saw 100% disease control rate and a 92% objective response rate, as measured by RECIST. All 13 patients had resections of their tumors, as reported by the surgeons. 54%, 7 patients, had a R0 resection, a margin-negative resection. 4 patients had an R1 resection, and 2 patients had an R2 resection. By the accounts from the surgeons who we talk to quite regularly, well, they are highly optimistic with better-than-expected outcomes in these patients, again, with advanced disease. From the pathology reports of the 12 surgically treated for protocol, 1 patient demonstrated a pathologic complete response (inaudible). So the surgeon found no evidence of cancer. And in the pathology, it appeared that there were no living -- there was no living cancer tissue. 1 patient demonstrated a pathologic complete response. 6 demonstrated a micro pathological response, and 5 demonstrated a macro response. These numbers are small, but better outcomes than what have been anticipated based on the historical understanding of patients at this stage. Small numbers, again, but impressive based on what was expected and anticipated from the surgeons and from the literature.

So from the patients' labs, all 11 patients who completed treatment follow-up experienced a dramatic -- that's a greater than 90% reduction throughout -- in the cancer antigen protein 125. The CA-125, as we've talked about, is present in a higher concentration in ovarian cancer cell than in a healthy cell. A 50% reduction. A 50% reduction is considered meaningful -- clinically meaningful. In all of our patients, a greater than 90% drop.

So we've also reported preliminary translational data from the OVATION study, focusing primarily on positive treatment-related changes in the immune environment in tumor tissue. And in the tumor size, that's the fluid that accompanies tumor mass. These data demonstrate clearly dose-dependent increases in IL-12 and interferon, corresponding -- and corresponding decreases in VEGF. VEGF, as you know, is part and parcel responsible for advancing vascular growth that supports tumor expansion. So a decrease in VEGF can be meaningful in inhibiting blood vessel growth that supports tumors.

We also saw an increase on hidden tissue -- tumor tissue of tumor-fighting T-cells and a corresponding decrease in Treg cells. These Treg cells are responsible for suppressing the immune system.

So just a quick summary. While GEN-1 and ovarian cancer patients from our study is biologically active, appears to have an immunostimulatory effect in the peritoneal fluid in a dose-dependent manner, it promotes pro T-cell activity in tumor tissue itself while taking the brakes off the immune system by decreasing the Treg cell density. All in all, I'd say our Phase I study, pretty impressive.

So the next step in our clinical strategy, assuming -- and this is evolving. We're seeing such a positive data set coming out of the study, we may evolve our thinking with regards to the next steps. But as of now, assuming we have a dose from the OVATION Study, we will remain on track for an IND submission for a Phase I/II clinical trial combining GEN-1 with Avastin and DOXIL in a recurrent population of ovarian cancer patients.

So with that, now I'll turn the call over to Jeff, who will review our financial results. Jeff?

Thank you, Mike. During the first quarter of 2017, we continue to efficiently utilize our cash as we effectively execute our clinical development activities. We remain confident in our ability to continue to manage our personnel and overhead costs while we focus on advancing our 2 lead products through clinical testing. We ended the first quarter with $4.5 million in total cash.

During the first quarter, we announced a secondary public offering with both institutional and retail investors, whereby we raised gross proceeds of $5 million to fund operations into mid-2017. Celsion's 2017 first quarter financials were included in the press release, which was issued before the market opened this morning. Our first quarter, 10-Q was also filed at the same time.

We continue to monitor our cash expenditures to ensure the most efficient use of cash to create shareholder value. Our clinical focus, as Mike reviewed, is squarely on the enrollment of our pivotal Phase III trial for ThermoDox in primary liver cancer and the early-stage studies for GEN-1 in ovarian cancer.

In order to fully execute the patient enrollment of the OPTIMA Study, we will need to strengthen our balance sheet by accessing the capital markets, smart utilization of our ATM facility and through potential strategic investments and collaborations. While we are hopeful of raising more capital in term -- when terms are more favorable to the company and shareholders, the current market -- capital markets continue to be quite challenging. We are always mindful of dilution to our shareholders and are carefully exploring various financing alternatives.

Cash used for operations in the first quarter ended March 31, 2017, was $3.1 million compared to $4.7 million in the prior year. This decrease was the result of our cost reduction efforts implemented during 2016; a tighter product development focus, as we talked about earlier; and prudent cash management. We operate with a lean organization. Now less than 20 full-time equivalent employees. Over 75% of our spending is directed to research and development activities. We expect our quarterly cash used for operation to be under $4 million per quarter for 2017 and '18.

As we look forward, we believe that maintaining a strong balance sheet is important to our shareholders and to continue the strong development momentum we had built. For the quarter ended March 31, 2017, we reported a net loss of $5.2 million or $0.12 per share compared to a net loss of $5.7 million or $0.24 per share in the same prior year period. We continue to evaluate our current organizational structure and have aligned our resources and clinical programs with our near-term development objective. We hope to realize additional cost reductions in annual operational costs going forward into 2017.

Our research and development costs were $3.5 million in both the first quarter of 2016 and '17. Our research and development expenditures in the current quarter were clearly focused on the continuing enrollment and treatment of patients in the OPTIMA Study and the completion of the enrollment in the Phase I OVATION Study using GEN-1 to treat ovarian cancer patients.

General and administrative expenses for the first quarter were down over $400,000 or 20% from $1.9 million in 2016 to $1.5 million in the current year. This decrease was primarily the result of lower personnel and operating costs, resulting from the reorganization and staff reductions previously announced, lower insurance premiums and professional service costs and a tighter clinical development focus on those programs, as we've mentioned, that we see is driving value in near term through the end of -- or through the readout of pivotal Phase III OPTIMA Study anticipated around the end of 2018.

Our nonoperating expenses decreased by $200,000 in the first quarter of this year, primarily a result of lower interest expense on our venture debt facility with Hercules. This borrowing facility will be fully paid off in the second quarter.

I'll now turn the call back to Mike.

Well, thanks, Jeff. Great job. Now that's the conclusion of our prepared remarks. I'd like to ask the operator to open the lines for your questions. (Operator Instructions) So, operator?

(Operator Instructions) And we'll take our first question from Joe Pantginis with Rodman & Renshaw.

It's Joe Pantginis. A couple questions, if you don't mind. First, Mike, you just recently announced the increased enrollment for the OPTIMA Study in China and Vietnam. Can you discuss the importance of this increased enrollment? Also, the potential for -- sorry, the time lines for interim timing of the OPTIMA Study?

Okay. So importance of enrollment in China. I think, Joe, you're hitting the 2 very important markets for us. China is over 50% of the world's incidence of HCC. That's 425,000 in patients. If we're right -- I mean, if ThermoDox shows a positive outcome in the OPTIMA Study, we have every reason to believe that it will, the addressable market in that population represents about 30% of those newly diagnosed. That's a big number. It's a number that overwhelms the medical community in China. Nick and I visit -- we visit these hospitals. It's incredible. The number of patients that are waiting to be treated in the waiting rooms, just hard to explain. Enrollment in this country was, for reasons of administrative reorganization at CFDA, was held up with country approval not for just us -- I mean, for everybody who's applying for a clinical trial grants. We lost almost a year in China. Regardless, I mean, we've made it up in activity in other countries. But the important thing is for us to enroll 200 patients in China. That's the minimum required to submit an NDA, as we currently understand it. There is some room there, I think. But for the most part, the regulatory authorities have been distant on (inaudible) 200 patients. So it's initiating a study, which -- we're concurrently now in 14 sites. Soon to be more. We continue to (inaudible). The enrollment rate is -- it can actually surprise us. In a very short period of time, we're over 50 patients in China. And I suspect that the current rate, by the time we reach 550, we'll be -- which is the target for formal enrollment in the study, again, which could be about 14-or-so months from now. We should be very close to the 200-patient target in China. And if we're not, we'll continue to roll in patients in the China cohort until we do reach 200. So a rapid pickup, a very enthusiastic group of investigators. We've met with them in China as a group twice. We'll meet with them again this summer. And we're -- we have great expectations for that group. In Vietnam, we decided to include the Vietnamese market in the study later largely as a -- to help make up for the late start-up of China, as what I said to the delay in regulatory approval. What we found in Vietnam was a highly underserved market. The statistics coming out of the country like Vietnam just aren't clear to us. I mean, what's reported is -- appears to be a fraction of what the incident is. Again, we visited a number of hospitals, along with the Minister of Health. The patient waiting rooms are overwhelmed with patients. Study enrollment there in a very short period of time. Two hospitals are up, and I think we got 700 patients very quickly. Our expectation is that Vietnam will contribute a substantial number of patients over the coming 12 to 14 months. Again, the goal here is -- this is an important market for us. We had always thought it was an important market. But getting a first-hand view, it appears to us that ThermoDox will play a very important role in medicine in Vietnam, again, assuming we have a positive trial outcome. As with regards to time line, so as I said, we have exceeded the (inaudible) path to 50% enrollment point. Enrollment rate continues to improve month after month after month. This month will likely be the biggest of all. So we're -- we continue to be very confident that we're on a track to complete enrollment on or about the end of the second quarter of next year. Assuming that, Joe, based on the -- what we believe the death rate with be -- overall survival calculations will be based on first interim analysis based on 118 deaths. The P-value we're looking for to unblind the study at 118 deaths is a little more than 6(inaudible) looking for -- I'm sorry, the Hazard Ratio of 0.6 with a p of 0.05. I think as I pointed out in my prepared remarks, the data supporting the study is essentially spot on with that. 285 patients that we've been following. The Hazard Ratio is 0.65 with a p of 0.02. So while it's never going to be guaranteed, I think we're optimistic that we will be close with the first, if not by hit it directly head on, with the first interim analysis.

That's very helpful, the additional details. If I could just switch quickly to the GEN-1 program. Can you discuss both the importance of the local IL-12 delivery versus systemic implications as well as the comments you made on the call versus the importance of the, I guess, you could call it the observed T regulatory decreases versus the baseline in the OVATION Study? And I'd appreciate that.

Yes. I'm going to ask Dr. Borys to chime in on this. But I'll just -- let me just say this. IL-12 was recognized as a potent anticancer agent back in the '80s in Dr. Rosenberg's laboratory in the NIH. The problem with IL-12 is -- in its pharmacokinetics, it's half-life is very short. So the protein itself administered as a therapy with a very short half-life doesn't have a therapeutic effect. In order for it to be effective, it has to be delivered in very high doses. The problem for a systemic dose and -- of IL-12 at high doses, as I understand it, is that it has some very, very serious side effects, including the potential for death with cytokine response syndrome. So local production is important. It eliminates the potential for a cytokine storm. And I -- maybe you want to comment a little bit more on that, Nick.

That's exactly the reason why we try to take advantage of our technology for local administration into the peritoneum for GEN-1, where we watch carefully to see if there's any systemic exposure through our blood and serum samples, and we see minimal to nonexistent exposure in that area. Meanwhile, to the targeted area in the peritoneal fluid, in the tumors, we're seeing activity. And all I can say is keep an eye out for our posters at ASCO. We'll be reporting on the details of that. And I think again, as Mike mentioned, our technology is able to focus the IL-12 to the targeted area, where we can get very nice increased concentration. And I think the data, once we publish it, will be very interesting to you.

The Treg cells, it's a little bit over my head here. But I think just generally, we all know that the Treg cells in their various forms, I think there's approximately 3 others (inaudible) the various forms have the effect of inhibiting the immune system's effect on malignant cells. What we've seen, and this is not unexpected, and it's been in the literature in the early development of IL-12, is a suppression of the density of Treg cells in the chemistry samples that -- tissue samples that were taken during the surgery. We compare that decrease in Treg cells to the increase in T-cells. And we see a positive ratio among this population of patient that's been treated. We believe that positive ratio and activation of the immune system in the T-cells with the down-regulation of the breaks that are put on the immune system, we see that as a positive event, a positive data set.

And we'll take our next question from Jason McCarthy with Maxim Group.

And maybe I missed it as part of Joe's question. Where is the total percent enrollment in the OPTIMA Study now? And my second question is related to GEN-1. What are the plans going forward for the next trial? And in the OVATION Study, there are a couple of patients that did have R1 resections, and there was some residual tumor there. Are those patients going to be tracked for progression? Will you give us an update on all of those patients and how their clinical outcomes are going forward?

Okay. So let's take the second question first. Do you want to comment on that, Nick? Did you get that? The first question?

Okay. So in our OVATION study, it's part of the protocol that we're going to be following all the patients for progression-free survival. So we have regular calls with the sites to review the patient status and see how they're doing. And so we'll be reporting that through the months ahead of us. So that's -- and then in the -- particularly in all the patients. So whether they had R0, R1 or R2 disease.

Yes. So just to continue around the GEN-1 in your question, Jason. So I'm probably going to get some evil eyes here. But given the -- what appears to be some very impressive translational data, it seems to me -- we've always talked about the next step in the development of GEN-1 would be going to a recurrent population, platinum resistant or platinum refractory patients, combining GEN-1 with the newly approved Avastin plus DOXIL. But the clinical data, along with some of this what appears to be very impressive transitional data, suggests to me -- we try to make my case to our medical and our doctors here that -- or medical advisers that continuing to treat patients with GEN-1 post-surgery may be a very interesting way to stimulate -- continue to stimulate the immune system in patients who have the potential for recurrence. So that's a subject, I think, that we'd like to explore with our medical advisers. We know what we know about this newly diagnosed patient population. It's that their immune system has not been severely compromised with prior chemotherapy. Using GEN-1 in a newly diagnosed population seems to be the -- has the potential to be most effective while the immune system is still relatively intact. The fact that we have patients now where we've removed substantially all of the malignancy, in some cases, with no visible or microscopic tumor tissue left seems to me that continuing to recruit the immune system may be an important strategy for preventing recurrence -- or delaying recurrence of the cancer. So that's a subject that we want to discuss. But in the meantime, our formal answer is the next step is on a Phase I/II study combining GEN-1 with Avastin and DOXIL in a recurrent population. Now the -- to your first question, where do we stand? We're not giving exact numbers. We've -- I mean, I'd be more than happy to, but we did so at our prior last -- in our prior studies. Having people constantly nagging us for numbers and trying to reverse engineer with the PFS rates were just not productive for our investors and certainly, not for the company. But like -- I'll say to you, we are well past the 50% mark, and the test will be completing enrollment over the next 14 months.

And we'll take our next question from Keith Markey with Griffin Securities.

I was just wondering if you might be able to talk a little bit about the HEAT study subgroup. Obviously, you're getting -- you're continuing to follow the -- or you did continue to follow them for a long time. Is it fair to begin to talk about a potential curative use of ThermoDox for that group of patients that you've been targeting and that were specifically in that subgroup?

The subject of ThermoDox being curative in this population was not -- it didn't come -- it didn't first come from the company. We heard more than one opinion leader when they were viewing the data with their peers in medical conferences and a couple of symposia that we sponsored and most recently, at the RSNA, by the way, where we had -- following the NIH's presentation, we had one of -- Lencioni -- Professor Lencioni, one of the pioneers in RFA, stand up among this group of interventionists and others saying, "We think we may have a curative alternative to surgery." So it's always going to depend on the strength of the data. In this population that we did follow for over 3 years -- now the study has ended at some point. So in the patient that we followed over 3 years, the ThermoDox arm, which represented about 50% of the 280-or-so patients, are 140 patients. I'll never reach the median. And we were at 80 months. I think the medical community considers a 60-month survival for the cure. So I don't believe we're -- continue to follow these patients. Are we, Nick?

No, we're not following anymore.

So the manuscript for the study is written, and we had a few questions coming from reviewers. I suspect the -- we'll be resubmitting it here if we have it already, and we'll be looking forward to the publication.

Very good. And then given the very successful -- the success that you achieved with that subgroup population, it would seem to me that assuming that, that stands up in the OPTIMA Study, you're going to have a fairly decent flexibility in pricing ThermoDox for use with RFA. I'm sure you have begun to think about it. I know it is a bit premature. But in the era of what appears to be value-based medicine that's emerging here in the United States and has been used in different parts of the world already, I would think that ThermoDox would offer a very competitive approach to a variety of cancers, including hepatocellular carcinoma and bladder cancer, possibly. Have you given much thought to how it would be used and pricing it in various markets around the world?

The short answer to the question is yes. I'll give you some color. We have much -- we have a lot more market research and pricing research to do. The majority of the research that we commissioned really focused on progression-free survival as the primary endpoint. And what we know from that research is that PFS, as much as -- I think we were looking for a 6-month or a 4-month improvement. Even a 4-month improvement in PFS was very valuable in the U.S. market. And similarly, somewhat of a discount to the European market. It's probably not as valuable in the Asian markets. We've done some follow-up, out of the top line is a -- continue to give us some guidance. It's important for us to know the value of the asset, particularly in conversations with a potential licensee. So we have done a little bit more work given an overall survival endpoint. And this is really -- it's pretty amazing. Uninhibited with government controls outside the United States. But the value of extending a person's life with a single dose of ThermoDox for over 80 months is almost incalculable. It's a big number. With that being said, we're mindful of the limitations that we could be faced with in pricing ThermoDox particularly outside the United States, and particularly in economies where the standard of living is modest or Third World. One of the reasons why we developed this manufacturing capability with Hisun in China was to give us a cost of goods that would allow us to have very good margins in countries like Malaysia, the Philippines, China. So very good margins. And I would say, probably close to 80 -- close to 90 margins in those countries. So I didn't give you a number on pricing. But we're very carefully considering both from the local economics, from the regulatory aspect in United States. We will be mindful of the incidence rate and the demand that ThermoDox will put -- or the pressure that ThermoDox will put on the health care system. I think all in all, you can carefully think of -- you can clearly think about ThermoDox as a $1 billion drug globally, a $1 billion plus drug globally if the -- of we do hit our endpoint.

Yes, that's great. I look forward to that as I'm sure a lot of the investors out there. I was also just going to follow up and ask you whether or not you've had any discussions with -- regarding reimbursement from any of the -- in any of Third World countries or developing nations and as well as the United States yet.

We have not. To be -- just to be very frank, we have not. We believe it's premature. I think before we set expectations, we really should know the strength of the data. For the most part, pricing is a function of the strength of the data. And if we set pricing expectations too soon and find ourselves with a more valuable outcome, we may be at a disadvantage.

And we'll take our next question from Joe Pantginis with Rodman & Renshaw.

I wanted to follow up on the GEN-1 opportunity with regard to a lot of these patients are experiencing prior chemotherapy versus the potential for immune system benefit. And I'm really focusing on the potential for things like epitope spread and factors that would be able to impact the immune system. And I'd appreciate your insight on this.

Nick, do you what to take that?

Yes. I'm not too familiar on what you're driving at in terms of the epitope spread. But our data does cover going from newly diagnosed, which is these patients that we're looking at right now, to patients that have been platinum failures. So we have a full range of data. And looking at the immunological spectrum on this is going to be a big focus for us this year, particularly now that we have this translational data where we could look at the different markers and we could look at the impact on the regulatory cells. So we're also mindful of the recent success with PD-1s, and we see a potential partnership with that. Mike also discussed before the potential application in terms of VEGF inhibitors as -- in the Avastin work. So our preclinical data strongly supports that scenario. I think there's lots of possibilities once we understand this translational data and once this PFS data comes through.

And it appears there's no further questions at this time. I'd like to turn the conference back over for any additional or closing remarks.

Okay. Thank you, operator, and thank all of you on the phone for joining us this morning. We surely do appreciate your interest and your support. I can't tell you how much that helps to inspire this team. We remain excited, as I hope you take from our comments, about the potential for ThermoDox and this very novel and could be very important immunotherapy, GEN-1. We were focused on these programs like laser beam. I hope it's clear that these 2 product candidates are demonstrating significant potential as we approach completion of what could be the -- one of the biggest transformational events in biotech, our Phase III -- completion of our Phase III study perhaps as late as at the end of next year.

So we are excited with our progress and look forward to providing you with updates, as always. As we have information available to us and we think it's important, we will get it out to you via press releases and certainly, on these calls. As always, your support, as I said, and your interest is appreciated and meaningful.

My last comment is the comment that I opened up with. Please vote. If you haven't received your proxy, we're available to you literally 24 hours. Your vote is important to us. It matters. Your Board of Directors, as you're considering voting if you haven't, recommends that you consider an affirmative vote on all of our proposals.

So again, thank you for joining us on today's call, and we look forward to speaking with you at the Shareholder Meeting on Tuesday if you're there. Thank you.

And this includes today's call. Thank you for your participation. You may now disconnect.