Imunon Inc (IMNN) 2020 Q1 法說會逐字稿

Good morning. My name is Cassidy, and I will be your operator today. At this time, I would like to welcome you all to Celsion's 2020 First Quarter Financial Results Conference Call. (Operator Instructions)

I would like to turn the call over to Kim Golodetz. Please go ahead, ma'am.

Thank you, and good morning, everyone. Welcome to Celsion Corporation's Conference Call to discuss its First Quarter 2020 Financial Results. As has been Celsion's practice and as noted by the operator, prepared remarks will be followed by a question-and-answer period. Today's conference call will be archived, and the telephone replay will be available, beginning later today through May 29, 2020. The webcast will be available for the next 90 days on Celsion's website.

During this call, management will be making forward-looking statements regarding Celsion's expectations and projections about future events. Generally, forward-looking statements can be identified by terminologies such as expects, anticipates, believes or other similar expressions. These statements are based on current expectations and are subject to a number of risks and uncertainties, including those set forth in the company's periodic filings with the Securities and Exchange Commission. No forward-looking statements can be guaranteed, and actual results may differ materially from such statements. In particular, there is significant uncertainty about the duration and contemplated impact of the COVID-19 pandemic. This means results could change at any time, and the contemplated impact of COVID-19 on Celsion's operations, financial results and outlook is the best estimate based on the information for today's discussion.

I also caution that the content of this conference call is accurate only as of the date of the live broadcast, May 15, 2020. Celsion undertakes no obligation to revise or update comments made during this call, except as required by law.

With that said, I'd like to turn the call over to Michael Tardugno, Celsion's Chairman, CEO and President. Michael?

Thank you, Kim, and good morning, everyone. Joining me today is Jeffrey Church, our Executive Vice President and Chief Financial Officer, who will provide a review of Celsion's recent financial results in a few minutes. Also on the call for the question-and-answer portion is Dr. Nicholas Borys, our Chief Medical Officer.

As always, it's a pleasure to speak with you, but it's hard to believe, once again, I'm speaking with many of you who are confined to home as this COVID epidemic continues to impact our daily lives. I hope that all of you have remained safe and healthy and will continue to do so.

We've had a great deal of exciting news during the first quarter and recent weeks for both of our lead programs. First and critically important, our ThermoDox Phase III OPTIMA Study for the treatment of newly diagnosed hepatocellular carcinoma, or primary liver cancer, reached the prescribed number of events in April for our second preplanned interim efficacy analysis, and I will discuss this more in a minute. Equally important, however, is the wave of ongoing positive news that we reported regarding the development of GEN-1, an immunotherapeutic currently being evaluated in the OVATION 2 Study, a Phase I/II trial in newly diagnosed advanced ovarian cancer patients.

In addition to our steady drumbeat of positive clinical research news, as I've outlined in my letter to shareholders last month, after seeing the extraordinary volatility and signals of economic retrenchment, we have smartly taken steps in the most shareholder-friendly ways to strengthen our financial position. Jeff will talk about this more. But our goal, as you know, is to further assure that our cash runway extends into the second quarter of 2021, during which we expect to report several key milestone events.

I'd also like to report, as I have in the past and said many times, Celsion's fundamentals continue to be strong. Our advanced clinical programs are directed to large patient populations with unmet medical needs with poor prognoses. We have sufficient cash to see the company through several important value-creating milestones.

And execution of our clinical development programs, as I said before, have been with the utmost care and with a strategic focus, all supported with extraordinarily talented and loyal staff. So it's appropriate then to recognize our employees and include our partners, the research physicians and their staffs and our consultants and professional members of the CROs who are engaged in our studies and other development projects. We recognize that for the grace under pressure during the current pandemic, and to let them know that their dedication is very much appreciated, not only by this management team, by the medical community and the patients who ultimately will benefit from our research programs.

Now I'd like to start by discussing our Phase III OPTIMA Study of ThermoDox, our heat-sensitive liposomal formulation of doxorubicin for the treatment of primary liver cancer. We recently announced the study reached 158 events, or deaths, triggering our second preplanned interim efficacy analysis by the study's independent Data Monitoring Committee, or DMC. At the time of data cutoff, we actually had 160 deaths that will be reviewed by the DMC. The meeting of the committee members has been scheduled, data lock has been implemented, QC data is being -- data QC is being conducted and reports are being prepared. We expect to report the interim results following the DMC meeting early in July.

As I've said before, we believe that there is a very good potential for success at this analysis. But of course, it's not assured, the company remains blinded. I'd like to give you some insight into the support for our belief that the study is on track for success. Supporting our belief is our comparison of the threshold for success to the data from the OPTIMA -- for the data that the OPTIMA Study was based on. The p-value and the hazard ratio for OPTIMA success and 158 events are 0.022 and 0.70, respectively. The p-value for success is 0.022, the hazard ratio for success is 0.70, respectively. This compares favorably to the p-value and hazard ratio observed for the 285 patients in a prospective, I repeat prospective, subgroup from our earlier Phase III HEAT Study, upon which the OPTIMA Study protocol is based. This prospective subgroup from the HEAT Study demonstrated a 2-year overall survival advantage for patients treated with a single dose of ThermoDox when compared to the study's control arm, and a remarkable median time to death of more than 7.5 years. Why do I say remarkable? At the time the HEAT Study was conducted, median time to depth was expected to be only 36 months. The subgroup hypothesis and trial design were confirmed by the National Institute of Health. At the Institute's request, not ours, they asked us for the data to review independently in their independent review of the HEAT Study is 432 patients with single lesions, that's over 60% of the study population. They concluded that our thesis supporting the OPTIMA trial is valid.

Taking all of this into account, so I'll kind of summarize by saying, the bar for success at this second analysis is lower than what was seen in the prospective HEAT Study subgroup, a subgroup again that was validated by the NIH, using a different slice of the data. So we look forward to receiving the DMC's recommendation and the potential for a positive outcome. Regardless, however, I believe the OPTIMA Study is ultimately well positioned for success. If a third and final analysis is necessary, it'll be based on 197 patient deaths. At that point, the bar for success will be even lower. The p-value and the hazard ratio required at the final analysis, if it's necessary, are 0.043 and 0.75, respectively, which is far lower than the values observed in the prospective HEAT Study subgroup. If it's necessary, we anticipate this final analysis will occur in the first quarter of 2021.

I will then remind you also that our confidence of any underlying hypothesis supporting the OPTIMA Study is not ours alone. Thought leaders from the medical community and distinguished scientists have weighed in. Conclusions from peer-reviewed manuscripts, including published preclinical data supporting the OPTIMA Study, the published HEAT Study manuscript, validating the subgroup results. And again, the NIH's published analysis in support of the HEAT Study's hypothesis, all point in the same direction. And we're further encouraged when we look at the trends comparing the OPTIMA Study's current combined time line for disease progression, PFS, and the patient death rates, both of which are tracking in line, almost perfectly, with the prospective HEAT Study subgroup.

I've been asked, has the COVID virus pandemic affected our OPTIMA study. I'll point out that our plan for the DMC meeting in July includes the impact of COVID-19, which accounted for a few extra weeks to ensure that all of the data input is clean and current before presenting to DMC. We discussed this during the last conference call. We took a few extra weeks just to make sure that all the monitoring -- the appropriate monitoring is complete, largely due to some of the restrictions for our monitors being able to visit the hospitals, in some of the areas of the world where restrictions where monitor restrictions were in place. Otherwise, other than this very short delay for the DMC meeting, the coronavirus has virtually had no impact on the conduct of the study or patient follow-up, despite many of the clinical trial sites being in China and other countries where the virus has had an impact.

Now I want to go into GEN-1. While we prepare for the DMC review, we continue to advance the development of our immunotherapy candidate, GEN-1, now will be evaluated, as I said, in the OVATION 2 Study, a randomized Phase I/II trial in newly diagnosed advanced stage ovarian cancer patients. In this study, GEN-1 is being combined with the standard of care, neoadjuvant chemotherapy, and compared to a control arm of neoadjuvant chemotherapy alone. There is a Phase I portion, as we've talked about, it's running at 100 milligrams per meter squared, 30% higher than the dose that concluded the first Phase I study of GEN-1. This Phase I study included 12 patients, 6 on the treatment arm, 6 on the control arm. Those 6 patients have been treated and enrolled and have been evaluated. We are now looking forward to Phase II and enrolling up to 100 -- 118 additional patients in the Phase II program for a total of 130 patients in this trial.

As for background, for those of you who are new to Celsion, GEN-1 is engineered using our proprietary TheraPlas platform technology. TheraPlas, as the name implies, is a nonviral nanoparticle gene delivery system that provides a means to transfect cells with plasmids coded for proteins of therapeutic value. GEN-1 incorporates the gene sequence for interleukin 12, or IL-12. It is administered local regionally into a body cavity, such as the peritoneum for ovarian cancer treatment. Following administration, cell transfection is accomplished among millions and millions of cells, resulting in persistent, durable local secretion of up to a week, secretion of up to a week of the IL-12 protein. IL-12 is well-known to be one of the master switches of the body's immune system, recruits the immune system, the entire immune system and is proven to be an effective means to fight malignancies. The beauty of this technology, and I said it over and over again, is that the durability of the response of a week, recruiting the immune system, and the ability of GEN-1 to be repeatedly administered in our Phase II study, will be administered up to 17 -- in 17 weekly cycles, the goal of which is to ensure that the immune system is sufficiently active to treat cancer cells that may have escaped either surgery or neoadjuvant chemotherapy. The initial results suggest that this mechanism is having an effect, and I'll talk about that more.

As I mentioned at the beginning of the call, we've had a steady stream of encouraging news regarding GEN-1 during the quarter. In February, the DSMB declared the 100-milligram per meter dose to be safe and recommend continued follow-up is required for protocol to ensure that the maximum 17 doses are safe, particularly following interval debulking surgery, which is a part of the treatment protocol for these patients. The final and next, evaluation of the 100-milligram per meter dose will be in approximately 2 weeks before we expect a recommendation from the DSMB to continue Phase II at 100 milligrams per meter squared, largely due to a very positive safety profile of our GEN-1 therapy.

In March, in another news release, GEN-1 in ovarian cancer was granted orphan drug status by the European Medicines Agency. You may know this is quite an accomplishment. So it's not just granted. It requires both the sponsor to supply incidence data from a variety of sources as well as some demonstration of efficacy of our drug in early-phase trials. The value of this designation is manifold. It provides for 10 years of market exclusivity following approval. It provides us with EMA's protocol assistance. It gives us access to a centralized procedure. This is very important, following immediate -- allowing for immediate marketing authorization in all of the member states of the EU. It will become eligible for a reduction of regulatory and marketing authorization fees.

I want to note also that the GEN-1 previously received orphan designation from the FDA, providing, among other things, a 7 years regulatory exclusivity from the time of approval, all very -- both very positive for GEN-1. In mid-March, we reported that pooling Phase I data from our prior OVATION 1 Study, with the 12 patients treated in OVATION 2 -- the Phase I portion of OVATION 2, the company announced highly encouraging dose-dependent tumor response and surgical scores, surgical scores being a predictor of an improvement in overall survival.

In late March, highly encouraging PFS, progression-free survival, findings were reported comparing OVATION 1 patients versus a statistically validated synthetic control arm. The synthetic control arm is provided to us by Medidata. Many of you may know their name. They are a world leader in clinical data management. This is a cutting-edge approach that's being developed by Medidata to clinical trial strategy, the goal of which is to provide a replacement for some or all of the control arm patients in a clinical trial. The hazard ratio that we saw when we compared our patients through the synthetic control arm in this Phase I study in 15 patients, the hazard ratio was 0.53, almost a doubling -- over a doubling, I'm sorry, of median time of progression.

And when we compare our patients treated with GEN-1 through the synthetic control arm, as I said before, this is quite remarkable, but it doesn't stand-alone. It's supported with impressive, published, translational and clinical data from our prior Phase I experiences. So we weren't surprised, we're surprised by the magnitude, we weren't surprised that PFS improved, largely due to the mechanism of action that we are seeing in the translational data and other clinical outcomes from our Phase I experiences. So we're very excited about these data. I hope you hear that in my voice, and we believe that they warrant strong consideration for strategies to accelerate the clinical development program for GEN-1 in newly diagnosed ovarian cancer -- advanced ovarian cancer patients by the FDA. And we've discussed for strategies with them in the past, and we are now submitting a brief based on these data to -- we have submitted a brief based on these data to the FDA, outlining the results and our point of view. I am encouraged and I'm expecting to post you on the agency's response in the next 30 to 60 days.

All in all, we're building the foundation for what we believe to be a lucrative asset worldwide, should GEN-1's development work continue as planned and show the efficacy that is being noted in our early work. But I do need to point out, as I suggested in an earlier call, there is a modest delay, and I'd say modest. During our year-end call in March, I pointed out that we did not anticipate any significant impact on our GEN-1 program due to the COVID issue. And as I pointed out that delays, if any, would not amount to more than a few months. Well, after assessing the evolving situation over the past 6 weeks or so, we've decided to delay the Phase II portion of the OVATION 2 Study by approximately 3 to 5 months. This delay is due to a decision made by the company, and largely made by me out of an abundance of caution. That's because we assure the quality of our investigational product to ensure that the product meets our finished -- our finished product meets our specifications and our quality requirements.

We have always mandated -- and it's true for ThermoDox as well as GEN-1, we've always mandated that our formulation scientists be present in the manufacturing facility during the manufacturing runs of our product. But with this COVID-19-related travel restrictions, and with some strict limitations on visitors to their manufacturing facilities by our contract manufacturing organizations, we were unable to have these technical resources on-site in the factories at this time. So I've decided to postpone manufacturing until we can be present. That delay may be up to September. It's incumbent upon us to make sure that we have investigational product available to treat our patients. So we have decided, again, with an abundance of caution, not to initiate Phase II until manufacturing has resumed in the next few months. As I said, this is cautionary, and frankly, it's just good practice. In the overall scheme, these few months are not material for success of our program, but a bad production line of GEN-1 would be material to the success, causing enormous delay.

Meanwhile, we're looking for ways to accelerate patient enrollment, so this few months delay may -- will have only a minimal impact, if any, on study completion. So to be precise, our guidance now is that the Phase II portion of OVATION 2 will commence in the fourth quarter -- early in the fourth quarter, where we had previously announced guidance that the second -- the Phase II portion would commence in the second half of 2020.

I also want to elaborate on what was included in our press release, the return of the $630,000 SBA loan made to us under the Payroll Protection Program of the CARES Act. We believe our loan application was more than justified and consistent with our understanding of the intent of Congress and the administration, very clear to us. But after some consideration and consultation with counsel, it become increasingly clear to me that the guidance for loan qualification continues to evolve. As late as yesterday, I think we've gotten some recent guidance, not only from the SBA, but also from the SEC. So rather than subject the company to decision uncertainty after the fact, we have decided to return the funds within the deadline provided by the U.S. Treasury Department. That occurred yesterday. Now to compensate, we've taken steps to offset this modest financial impact through some payroll adjustments and temporary reductions, and we're taking other actions to improve cash flow. My colleague here, Mr. Church, for example, has renegotiated the deferral -- or negotiated deferral of principal payments under our Horizon venture loan, that once the documents are signed here, may more than offset, more than offset the $630,000 that we've returned to the government. Our goal, as always, as I've repeated many times, is to ensure that we have a cash runway through the many major milestones that we expect to achieve before the end of the quarter, second quarter of 2021. And we will, I commit to you, do everything in our power to ensure that, that happens.

So I want to conclude with a few points here. What I've been saying for some time now, your company's fundamentals are sound. And as each day turns, we grow stronger, our meetings with previous regulatory agencies, which have been regular, have resulted in no significant issues, and in fact, have been quite encouraging, as shown in our recent orphan drug designation for GEN-1 from EMA. Our manufacturing strategy can be characterized as solid. Our focus on redundancy during this pandemic has served us well, as I pointed out in our last year-end discussion. Our product costs or cost of goods is enviable, with the promise of high gross margins, no matter the market or the region. You know, for example, that ThermoDox addresses HCC, a malady that's highly concentrated in China and Southeast Asia, 4 countries, frankly, where the low cost of goods assures us good gross margins, but more importantly, the ability to provide this life-saving, potentially life-saving drug to HCC patients worldwide.

As Jeff will point out, our spending and cash management have been tight and focused. And each of our 2 investigational products, I'll conclude with this point, I've said it over again, each of our 2 investigational products have blockbuster market potential by any one's standard or measure. The OPTIMA Study is on the cusp of generating important and potentially transformational results. We have every confidence in our trials, our investigators and our collaborators, our product technologies, and most importantly, our employees. Despite the COVID-19 turmoil, Celsion looks forward with laser focus to the balance of 2020, a year that we have every reason to believe, will be transformational for patients, the medical community and our investors.

Now with these comments, I'd like to turn the call over to Jeff. Jeff?

Thank you, Mike. Details of Celsion's first quarter 2020 financial results were included in the press release we issued this morning and in our Form 10-Q, which we filed today before the market opened.

As Michael stated, in recent weeks, our clinical progress has accelerated as we near the important milestone for the second preplanned interim data review, which is expected to occur in less than 2 months. In the meantime, we've been smart about raising capital and keeping tight control on all of our corporate expenses. We have also kept a careful eye on cost of goods while making sure we're able to tap into adequate supplies of our lead compounds, both in the U.S. and abroad.

As of March 31, 2020, Celsion's cash, short-term investments and interest receivable were $15.7 million. In addition, we had a receivable of $1.8 million from the sale of our New Jersey State net operating losses, which we were able to monetize in April, bringing our cash balance to $17.5 million. Our quarter-end cash position includes $6 million in net proceeds from the sale of equities during the first quarter, which includes $4.3 million from the registered direct offering of stock and warrants, priced at the end of February.

We have opportunistically strengthened our balance sheet to buffer against the potential for continued erosion of our share price in the face of current public market uncertainty while we complete the OPTIMA Study. Our current cash plus future planned sales of our New Jersey State NOLs will extend our operating runway through the second quarter of 2021. Importantly, this is well beyond the final data readout of the OPTIMA Study, which, if needed, would occur during the first quarter of 2021.

Our cap table includes approximately 29.3 million common shares outstanding at approximately 3.6 million warrants, of which 3 million of these warrants are exercisable at $1.24 a share, beginning in early September 2020. These are the warrants associated with the February equity raise. Note that the share price now is above this exercise price, so these warrants may provide additional capital in the coming quarters to further extend our cash runway.

With respect to future funding flexibility, we have a $75 million shelf registration on file with the SEC. We have $60 million left on that shelf. We also have a traditional at-the-market facility with JonesTrading that allows us to raise money opportunistically with no warrants and a very low commission. The use of the ATM facility is entirely under our control.

Turning now to our first quarter financial results. The operating expenses were $4.9 million in the current quarter, which represented a 2% decrease from the $5 million in the first quarter of 2019. During the current quarter, we incurred $0.5 million in noncash stock option expense compared to $700,000 in the prior year. Research and development expenses were $3.1 million compared to $2.8 million in the first quarter of 2019. Of this, clinical development expenses for the OPTIMA Study were $700,000 in the first quarter of this year compared to $900,000 last year. These costs have decreased as expected as the trial has moved into the follow-up phase after full patient enrollment was announced in August 2018. Expenses associated with the OPTIMA 2 Study increased to $300,000 in the first quarter of 2020 compared to $100,000 in the same period last year.

The company announced initiation of the follow-on Phase I/II OVATION 2 Study in September 2018, with full enrollment of the Phase I portion of this trial completed during the first half of 2020. The expenses associated with research and development activities for GEN-1 and TheraPlas increased to $900,000 in the first quarter of this year compared to $600,000 last year as the company continued to expand its manufacturing capability and implement programs to reduce manufacturing costs for GEN-1.

General and administrative expenses were $1.8 million in the first quarter of 2020 compared to $2.2 million for the first quarter of 2019. This 17% decrease was primarily attributable to lower personnel costs and other expenses related to noncash stock compensation, which was partially offset by increases in premiums on our D&O insurance in 2020.

Other expenses included a noncash charge of $41,000 for the change in valuation of the earn-out milestone liability for the GEN-1 ovarian cancer candidate. This compares to a net cash gain of $2.7 million, net of a charge of $400,000 for warrants issue related to an amendment for the earn-out milestone payments for GEN-1 during the first quarter of last year.

The company realized $100,000 in interest income from its short-term investments in both first quarters of 2020 and 2019. And in connection with our venture debt facility with Horizon, we incurred interest expense of $300,000 during both first quarters in 2020 and 2019.

In summary, Celsion is in excellent financial shape with sufficient capital to fund operations through the second quarter of 2021. We anticipate that our net cash usage for the second quarter of 2020 will be approximately $4.3 million, which is in line with our full year budget, with calls for keeping operating expenses and cash utilization at approximately $4 million per quarter. We anticipate that our net cash during the second quarter -- or uses during the second half of 2020 will be approximately $7 million or $3.5 million per quarter.

In closing, we believe that a successful clinical outcome for ThermoDox opens up a $1 billion market opportunity and will result in a significant value inflection point for the company as well as you, our shareholders.

I'd now like to turn the call back to Mike.

Thanks, Jeff. Well done. Before we open the call to questions, I want to remind you all of the memorandum of understanding that we signed last year with officials from the Hangzhou Yuhang Economic Development Area to establish a subsidiary in the Yuhang district of Hangzhou. The MOU, I'll remind you, provides the company with significant financial incentives. The area for the subsidiary is located in one of China's biotech hubs, where the Chinese government has made development of advanced medical technologies that address unmet patient needs a high priority. These -- the primary purpose of this new subsidiary is to commercialize innovative cancer therapy, starting with ThermoDox. In addition to China, the subsidiary will focus on all nearby developing markets, including the Philippines, Malaysia, Thailand and Vietnam. Hisun, our local manufacturing partner for ThermoDox, is expected to provide an economically viable cost structure by establishing a low-cost and has established a low-cost production for these geographies. Registration of the subsidiary has been completed. The subsidiary's name in English, if you see it, is Celsion Hangzhou Pharmaceutical Limited.

Best point. We've begun drafting, as I said, the NDA and the MAA for Europe for ThermoDox and HCC. Our goal is to have both sufficiently prepared to complete a filing within 6 months with the unblinding of the OPTIMA Study. For example, if we announce positive data from the second interim analysis in July, we would hope to have a filing made around the beginning -- the very beginning of 2021.

We remain active with investors, albeit by telephone during this time. We will continue to remain so as we have so many exciting milestones ahead of us this year.

Now with that, we'll open the call to your questions. Operator?

(Operator Instructions) First questioner, your line is live.

It's Hartaj Singh with Oppenheimer. Just a quick question --a couple of questions on ThermoDox. And then on GEN-1. And by the way, congratulations for all the good work that you're doing, following through all of the expectations that you had set, and we do understand the delay with COVID-19. I think that almost every company that we know is having some kind of impact.

So on ThermoDox, can you talk a little bit -- you've been updating investors with the OPTIMA-blinded PFS over the last couple of years. Can you talk a little bit about how that has changed since the last interim when you did the first interim, the blinded PFS that you've been monitoring for the OPTIMA Study? And then also, could you specifically talk about, while you will be working -- drafting the NDA, the MAA, assuming OPTIMA is successful, what are the specific rate-limiting steps -- what are the things that take those 6 months to get you to that early 2021 filing, assuming this interim is successful? And I just got a couple of quick follow-up on GEN-1.

Yes, sure. Great questions. Thank you very much. So with regards to the blinded PFS data, the most recent information comes from the first interim analysis. So we don't do the comparison, except for -- otherwise, it may not be accurate, except for presentation to the DMC. In that analysis, we saw that when we pooled the 2 arms from the HEAT Study subgroup, 285-patient prospective subgroup, median time to progression for the 2 arms together is 16.8 months. When we pooled the 2 arms of the 556 patients in the current OPTIMA study, median time to progression is 17.2 months. So they're virtually on top of each other. So the basis for the study was the Kaplan-Meier that we generated from this 285 patients showing a 2-year improvement in overall survival. We -- as a marker, now our following PFS submit group is compared to the OPTIMA Study, and we see it is following almost exactly. And recall that the threshold for success for the OPTIMA Study is lower than the hazard ratio in the -- it has a higher p-value, but a lower threshold than what we saw in the HEAT Study subgroup. So we're encouraged, we're really encouraged by that.

The second and I think -- I believe it was one of the rate-limiting steps for filing the NDA. So much of the rate-limiting activity has to do with engaging with the FDA, Hartaj. So if tomorrow, we were to have a positive result from the DMC, we would immediately place a call to the FDA. We would love the FDA know that we have a positive outcome and would like to have a pre-NDA meeting with them. We give them some idea of the top line that we have to submit a formal letter to the FDA requesting this meeting. And we're drafting that letter as we speak. It takes a little bit of time to make sure we're asking the right questions. So this meeting, this pre-NDA meeting, usually accompanies a series of questions, along with the top line data from the trial. Scheduling that meeting takes about 60 days, and in some cases, 90 days, almost half of the time to prepare the NDA. Once we have the FDA's understanding of what they're looking for, then we can finalize the NDA, which is probably another 2 to 3 months.

Great, Mike. And then just on that specifically, in terms of just -- I know an NDA or an MAA would have presections, right, the preclinical CMC and clinical. So I assume your preclinical and CMC section should be good to go. I mean the OPTIMA trial has been going for a while. It's really the clinical section and the results from the OPTIMA second interim that you will need to discuss with the regulators, correct?

Correct. And yes, I should have mentioned that. So for the most part, the preclinical and CMC sections are complete. So in the narrative for the clinical section, we have in draft. It's just a matter of populating it.

Great. Okay. And then on GEN-1, I was noticing that you have those good hazard ratios against the synthetic control study, which is really interesting, I think, the future of clinical trials will see more of those. But one question I had was, why did you see such a big dispersion? When you look at the hazard ratios, and it's reflected in the p-values being 0.1 and above 0.1, the hazard ratio were dispersed from like as little as 0.15 or 0.16, all the way up to 1.7. Why was that happening? Is it just small numbers? Or what was the reason for that?

Yes. So I'm not sure I understand the question completely. The hazard ratio that we just discussed was 0.53, 0.53. The p-value…

The confidence is -- right, the confidence intervals around that are pretty wide. So that's I'm asking, where is that coming from?

I think it's largely due to small numbers. I mean Dr. Borys -- Nick, do you have any insight?

Yes, that's correct, Mike. When I discussed that with the statisticians from the -- when I talked -- from the Aspen Group, I'm sorry, (inaudible) percentage relatively due to (inaudible). And in this type of analysis, they told me that the p-value really shouldn't be the focus for the hazard ratio. So we think that the hazard ratio is quite

(technical difficulty)

Unfortunately, Nick, you're breaking up a little bit.

I'm sorry. We talked both with the -- our in-house statisticians and the statistician from Medidata, and they agreed that the p-value was due to a small number.

Great, great. And then just for future purposes. So I know that OVATION 2 is designed with a hazard ratio of 0.75. Is there any kind of -- from this synthetic control arm study, will you be able to show why some of the patients that were showing a poor hazard ratio, why they were performing as such? Because, again, my only concern is that you've got a really good hazard ratio, but if the dispersion is pretty wide, it'd be kind of interesting to see why the patients that had a suboptimal hazard ratio, why they had it, if possible?

Nick, do you want to field that?

Yes. I think that's why it's important to work closely with the FDA. And currently, our next phase study is a 130-patient study, which will address all the variabilities that we see in the biological system, such as a cancer. And that's where I think you'll start seeing tighter p-values and a stronger HR.

Great. All right. And I understand that. And my last question is, I appreciate all the questions. It's just the delay, which is completely understandable, Mike, we've seen it with a lot of other companies, in fact, most of our companies. But one question I want to have is, you're manufacturing lots. Can you just talk about how many lots you need for the Phase II? Where are you with that manufacturing campaign? And then why specifically do you want to have the formulation scientists on-site? I mean, will this be an ongoing issue, meaning if OVATION 2 is successful, maybe you get breakthrough therapy, I mean, will you always need to have formulation scientists at the manufacturing site in order to be able to produce these lots?

Yes, sure. So we manufacture the clinical supplies in relatively small batches and sufficient size to be able to scale within the FDA's limitation. So we're able to scale 10x the clinical batch size, assuming that, that clinical batch size has been properly engineered, that it's validatable and it has the -- established its quality through registrational studies. The infrequency of manufacturing clinical supplies is the issue. That's if we were a regularly produced product by a CMO, I would have no hesitation of producing commercial product without having a person in the facility. But clinical supplies are produced infrequently. And in many cases, there are minor adjustments made to the batch records when -- during the course of manufacturing, particularly at Phase I and Phase II. So we think it's important. Not all companies do this. This is maybe an obsession on my part, but we think it's important to have an individual in the plant during these infrequently manufactured products because manufacturing people are -- they're exposed to multiple many, many, many kinds of manufacturing. And they lose some of their knowledge as a function of time, whether the time is 6 months or 9 months or 12 months. So having our experts on-site, makes sure that -- assures us that we are not losing product due to this infrequency of manufacturing. That's simple, yet.

And for GEN-1, this is a particularly important issue. It takes about a year -- historically, it's taken about a year, not for us, but for every manufacturer or a sponsor whose product includes a plasmid or some gene therapy, takes almost a year to schedule a batch. So if we were to consume some of our plasmid in the finished product manufacturing that did not meet our requirements, and we had to dispose of it, we have to throw it away, we would be waiting a long time and a very high cost for a subsequent batch to fill up the requirements for the clinical trial. And we just don't -- we think that's a risk. Even if it's a small risk, it's a risk that we can't take.

Our next question comes from Matthew Cross of JonesTrading.

First off, I guess, I'll kind of start with OPTIMA, given that it sounds like the next time we may be talking about this program, you may have a positive result here, hopefully. And so I just wanted to get kind of a reiteration of your plans regarding commercialization. I know you've previously spoken to wanting to handle things in the U.S. internally and partner out in places like Europe and China. Just wanted to get kind of the latest on that positioning given -- taking into account COVID and this kind of ever-changing landscape. And then the second was one on GEN-1. I was hoping you could kind of remind us of what -- any plans that you might have to look at longer-term follow-up from the Phase I portion of OVATION 2, maybe to confirm some of the benefits of maintenance dosing and potential read through to the Phase II portion, I guess, particularly because maintenance dosing is the more novel exploratory part, so to speak, of OVATION 2 relative to OVATION 1.

Yes. Good questions. Thank you. So let me just start with the commercialization of ThermoDox. I don't see, under any circumstance, the COVID situation affecting our commercial plants. In -- as you consider the time lines from a positive readout of the study to launching a product, it could be 12 to 14 months from the time you have a fast track, even for the biggest of companies, 12 to 14 months before you're prepared to launch. And that's assuming that the FDA or other regulatory agency gives you a fast track priority review. So hopefully, this COVID situation will be better understood by the medical community and better managed. And not -- if it's persisting another 1.5 years out here, we've got more problems just further than just ThermoDox.

This -- ThermoDox addresses the largest unmet medical need remaining in oncology. By the time this drug is approved, there will be close to 1 million incidents worldwide. A highly concentrated and the most strategic market focus right now for big pharma, and that's China. So you can imagine, China being the potential for the largest pharmaceutical market on the planet, with 50% of the global incidents of the largest unmet medical need with I mean literally no therapeutic options for newly diagnosed patients. They have treatment options but no drug options for newly diagnosis patients. So there's a great model of interest for this drug to -- in that particular population. And when you look at it globally, I mean the -- our business models are very conservatively, as Jeff pointed out, blockbuster, $1 billion-plus market. So I don't think we're going to have any difficulties with finding suitable partners. I mean we'll have our choice, really. I'm sure that partners who we believe have the best capability to launch this product at the optimum prices, given them all the market diversity that we're seeing, with the fastest penetration in the strongest sales and marketing organizations. As you've mentioned, we are preparing, however, to bring ThermoDox to market ourselves in the United States. That's an ambition that we have. We think we can handle, we'd be the best stewards for ThermoDox in the United States. However, it's going to sound trite, but I think it's important to mention. We will do what's best for shareholders. If there's a licensing opportunity that we believe both reduces the risk -- financial risk for launching the product and improves what this company could provide in terms of penetrating the market, then -- and gives a better return to investors, then we will certainly see that as an important consideration. But we have made no expenditures other than some market research and a pricing research. At this point, we're conservative with our cash. Assuming a positive outcome, however, we'll be quite a bit more aggressive in developing our marketing plans for the U.S. as a lead approach but may turn out to be the white -- dark horse in the race really in finding the best strategy to bring ThermoDox to market in the U.S.

With regards to your question on GEN-1. We have talked about maintenance therapies. And what you assume, what you're talking about is continuing to treat patients, following the full cycle of treatments in the current protocol, at some schedule, at some frequency, to continue to recruit the immune system over a longer period of time. I think that's a very interesting strategy. But we haven't explored it with any sufficient consideration at this point to present anything. I mean -- Nick, you're online, do you have any thoughts on how a maintenance program beyond the 17 doses might look like for patients in our study?

Yes. I agree, Mike. It's a very interesting opportunity for GEN-1. We're already proving that the drug has a very nice safety profile, both in patients that have bulky disease presurgery, and now we're proving post-surgery that the drug has a nice safety profile. So it is very well positioned for looking it as a maintenance therapy. So it's the data that we're establishing through seeing our synthetic control arm, the data from the first Phase I. If all that keeps on lining up the way we're seeing it right now, there are further opportunities, as you suggest.

And just to add to Nick's point. Nick has been instrumental in developing a kind of a home health care approach. We've been working with a third-party who prepares IV type of administrations for home administration. So just thinking about it more broadly that this strategy really fits nicely into a commercial potential where patients would be required to administer this -- the GEN-1 on some frequency throughout the course of the rest of the life, perhaps.

Our next question comes from Raja Kumar of Brookline Capital Markets.

So first, regarding the -- following the 158 patient deaths, what are you seeing in terms of further follow-up? Are you seeing events as expected? And if you need to stop the trial for efficacy, how long will these patients continue to be followed up and are there any changes expected because of the COVID-19 situation?

Yes. I think -- are you asking if the trial is successful, will we stop the study and stop following patients? Is that -- was that the question?

Yes. Kind of sense of whether you stop following the patients or if you follow, how long you will be following? And whether there will be any changes because of this COVID situation?

Yes. I don't see COVID impacting this or our OVATION studies at all, frankly. But I -- that's a question that we'll ask the FDA. I think our point of view is that we will continue to follow patients for survival. And I think it only strengthens our hand.

But Nick, do you want to weigh in on that?

Yes. This is Nick Borys. And I agree that we're going to take the counsel from FDA. And also, remember, as Mike mentioned earlier in the presentation, we are also looking to submit in China and Europe. And the Chinese authorities may want to see continuation of some of their patients or other regions as well. So we're going to leave that option open to whatever the best science is and whatever the regulatory authorities are indicating to us.

And with regard to GEN-1, once you start manufacturing, at what time point do you think you will be comfortable to reinitiate the Phase II?

Well, as soon as we start manufacturing, I don't see any real potential of manufacturing failure. It's just a matter of having a person in the facility to provide the guidance, the institutional knowledge to assure that the setup is correct at the times. There's some time dependencies and temperature dependencies that we don't want to be overlooked. So as soon as we are ready to manufacture, so we can put a person in the facility. And it could be as early as September, we'll initiate the Phase II program.

And you also talked about continuing to screening the patients, so what do you expect in terms of bolus of patients at that time point once you think of resuming the Phase II?

Yes. So we have a model that we've developed. Now we have a little bit of experience with recruiting patients. The model suggests that we can expect to recruit approximately 1 patient per month per site. We currently have activated 19. I believe the number is 19, don't hold me to it, 19 sites or pretty close to 19. Our expectation is to enroll up to 25 sites in the U.S. and 2 more in Canada. We're just kind of on a slow walk here, given this COVID situation in initiating those -- the balance of those sites. But that could happen very quickly once we -- once the Phase II is initiated again. So we would expect all of the study sites that have been initiated to begin recruiting patients immediately. And as I said, our model shows about 1 patient per month per site.

In the meantime, however, we don't want to lose any momentum and enthusiasm among our investigators. And that's a big -- and I think it can be a big problem for us. So this company has taken a position that this is a modest delay, but it could have an effect. So Nick and his clinical operations people have organized an investigator meeting that will be on the cusp of initiating Phase II, the goal of which is to remind everybody what the requirements are, to quickly go through the protocol one more time, so we haven't lost any knowledge of how the program should be. These physicians see patients who have a limited life span. I mean when they -- very, very few patients have any expectation of living more than 3 years from diagnosis. So I mean it's grim. It's really -- it's grim. And when they get together, we've seen this. When they get together in our investigator meetings, the enthusiasm that they generate among each other for our product and these similar kinds of trials, is extraordinary. And so our goal here is to continue to motivate our investigators. We have a good number of sites that are ready to go. We'll be adding a few more sites once the manufacturing has been initiated, and we'll kick this thing off as quickly as we can.

I think there is one outlier that we don't know. But part of our discussion with FDA is if they agree with us, we'd like to substitute some of the control arm patients, organically recruited control arm patients with synthetic control arm patients. Not all of them, but if we could replace 25% of the control arm patients, it would immediately reduce the number of patients that we have to recruit into the study, and that would accelerate its completion. If we could get 20 or 25 control arm patients from the synthetic group, that would be a big boost to getting the trial enroll more quickly. So that's part of the focus.

Our next question comes from Mitch Landgraf, a private investor.

I'll try to be brief. One question. Mike, in regard to the few extra weeks that were wisely taken when you're getting -- making sure that all information was correct for the submission for the OPTIMA trial. Just curious, was data already locked? Or is there a chance that those few extra weeks actually provided a little bit more time of separation of the 2 arms, which I think would be good in our case?

Yes. Well, yes, the answer to that is yes. A few extra weeks allows the more maturity and a few more patients into the evaluation. The patients -- a few more patients have died. So the number that the DMC will be reviewing is, I think in my prepared remarks, I said was 160 patients.

Yes. That actually bodes well from even slightly increased likelihood of success at this interim -- coming interim review, which would be awesome. Finally, not a complaint, just some feedback. I'm not sure if there's a technical issue on the website. I can just share from my own direct experience and also that of other individual private retail investors, there seems to be a difficulty with getting any kind of response to nonmaterial, just every day individual investor, retail investor questions that are being submitted through the web portal or phone calls to Mr. Church. And again, that's not meant to be a personal -- I don't think that it's feedback to the company, but somehow that communication channel isn't working. I do appreciate that you take individual investor questions on these calls. In the past, an investor-friendly thing you used to do is to limit questions even from financial advisers to 2 to afford the opportunity for everyone to get in, that also would be appreciated. So didn't know if you want to address that or just as a quick feedback to the company that's something and somewhere in that communication chain, there's a breakdown.

Well, we -- I was not aware of any particular problem. We'll look into it, Mitch. Thanks for pointing it out.

And at this time, we have no further questions in the queue. I'd like to turn it back over to today's speakers.

Okay. Well, thank you all very much for your time and your interest in the company. This morning, we could not be more excited about our prospects and the work that we're doing to make such a huge difference in the lives of cancer patients. And I hope before long with positive results that we will be seeing some of you face-to-face. But that we again wish you health during this COVID virus pandemic. Stay safe. Thank you.

Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.