Imunon Inc (IMNN) 2020 Q4 法說會逐字稿

Ladies and gentlemen, good morning, my name is David, and I will be your operator today. At this time, I would like to welcome you all to Celsion's 2020 Financial Results Conference Call. (Operator Instructions) At this time, I would like to turn the conference over to Kim Golodetz. Please go ahead ma'am.

Thank you, and good morning, everyone. This is Kim Golodetz with LHA. Welcome to Celsion Corporation's 2020 Financial Results and Business Update Conference Call. As has been Celsion's practice and as noted by the operator, prepared remarks will be followed by a question-and-answer period.

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 are 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, March 19, 2021. 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. Good morning, everyone. Joining me today are Jeffrey Church, our Chief Financial Officer, who will provide an overview of Celsion's recent financial results. Dr. Khursheed Anwer, our Chief Science Officer, who will address questions regarding our recently announced vaccine initiative; and Dr. Nicholas Borys, who will join us for our Q&A. Dr. Borys is our Chief Medical Officer.

I'd like to start by saying that we kicked off 2020 with great hope in anticipation, never expecting to face a global pandemic or a complete refocus of our company, 2020 turned out to be a year of enormous challenge. I trust that you recognize that in many ways, we rose to the occasion. Today, the company is financially strong and focused on a pipeline of product candidates that have every potential to deliver significant value.

I'm proud of our staff and their ability to navigate the events of 2020. Their work has positioned us for the opportunities that we have outlined in our recent press releases and that I will be addressing on the call this morning. Importantly, we have been diligent in our capital formation responsibilities, using a broad range of facilities and incentives we have provided in the most shareholder-friendly ways, a cash runway that will see us through multiple anticipated value creating milestones.

Jeff Church will discuss these in more detail, but it's safe to say that our optimism that our gene-based immunology will benefit patients and shareholders alike, is supported with a strong balance sheet. I have to say that we grow more confident in our future, virtually each and every day.

We're advancing 2 immunology platforms, starting with TheraPlas, our novel synthetic nonviral delivery platform, a platform organically developed in our Huntsville, Alabama laboratories under the direction of Dr. Anwer. This has been his life's work and underlies the basis for our platform's first drug candidate, GEN-1, our DNA mediated IL-12 immunotherapy, now showing evidence of promise in later-stage clinical oncology trials.

An adaptation of the TheraPlas technology forms our second product initiative. This time, leveraging our delivery IP to unlock the potential of our novel multi-cistronic or multiple gene plasma technology, which has the potential for significant advancement over existing nucleic acid vaccine approaches.

As we envision it, the PLACCINE DNA technology platform represents a highly capable basis for the development of next-generation vaccines with the ability to target a range of infectious diseases, including SARS type pandemic vectors and the continuing mutations, which, as you know, have been wreaking havoc around the world.

Our TheraPlas technology is proven. It works. This nanoparticle technology provides a means to transfect cells with DNA payloads coded for proteins of therapeutic value. Unlike viral delivery systems that can only be administered once, TheraPlas is not subject to the neutralizing activity of a patient's immune system.

The beauty of our technology is that it does not have the risk of viral carriers and can be administered repeatedly as we have seen administered weekly over a 6-month period in our ovarian cancer studies. These characteristics make it ideal for titrating cancer treatments and particularly immunotherapy.

To date, approximately 100 patients have been treated with GEN-1 in our ovarian cancer studies, these results so far demonstrate excellent safety, translational data that clearly show activation of a significant immune response, and along with those dependent clinical observations suggesting potential patient benefit.

I'll come back to GEN-1 in the OVATION 2 Study in a minute. But first, I want to talk about our recent and exciting news. Let me just try to answer the question, why are we participating in this crowded space of COVID vaccine development. After careful evaluation of a number of nucleic acid based COVID-19 vaccine programs, we concluded that an adaptation of our TheraPlas technology may represent a significant advancement in this highly effective next-generation of vaccinology.

Frankly, after much consideration, we felt obligated to pursue proof-of-concept, I'd say even a moral obligation. I mean, how could we not? We trade named this adaptation of our proprietary plasma technology as the PLACCINE platform. And it's the subject of our recently filed provisional patent that was announced in January of this year.

This broad application covers a family of novel composition of multi-cistronic vectors and polymer nanoparticles that comprise PLACCINE for preventing and potentially simultaneously providing for their therapeutic activity for treating infectious agents, many of which have the capacity for global pandemics.

Our provisional patent construct and claims support the potential for multiple features and benefits, and I'd like to highlight a few of them for you now. PLACCINE may offer broad spectrum and mutational resistance against variants by targeting multiple antigens with a single plasmid vector. By including a potent immune modifier, like IL-12, that can be encoded into the single plasmid, the efficacy may be enhanced by improving humoral and cellular responses to viral antigens.

Being DNA based as opposed to RNA, PLACCINE produces cellular activity that may result in longer and more durable antigen expression, providing a robust vaccine response to infection. PLACCINE allows for stability across the reasonable and readily achievable temperature range, ambient to refrigeration that is compatible with global vaccine storage and distribution systems.

And PLACCINE is a synthetic delivery system that should require a simple injection, intramuscularly subcu or intradermally that does not require viral capsids or special equipment to deliver its payload like electroformation.

Going forward, we expect to complete our proof-of-concept work in the lab, followed by IND-enabling in-vivo small animal studies and nonhuman primate studies over the course of this year. If the results are encouraging, and we expect they will be, we will be immediately petitioning the FDA for an IND, and at the same time, look for development partners and then begin work on a whole range of unaddressed infectious diseases.

Exciting times for the company, and I promise you, we will keep you posted.

Meanwhile, we have the OVATION 2 study, a very important trial open-label, randomized Phase II study of GEN-1 in newly diagnosed advanced ovarian cancer patients. Patients whose tumor burden is too great for immediate surgical intervention.

Our OVATION 2 Study combines GEN-1 with a standard of care neoadjuvant chemotherapy or NACT, in patients with newly diagnosed Stage 3 and 4 ovarian cancer. The goal of NACT is to shrink the cancer and dry up the ascites as much as possible for optimal surgical removal of disease tissue.

Following NACT and concurrently 8 weekly cycles of GEN-1 are administered to patients. Patients then undergo interval debulking surgery, which is then followed by 3 adjuvant cycles of chemotherapy and concurrently up to 9 additional weekly GEN-1 treatments. The goal of our treatment strategy is to delay progression and improve overall survival.

OVATION 2 is 80% powered to show up an approximate 33% reduction in risk for cancer progression, otherwise known as progression-free survival or PFS.

To date, over 40% of the anticipated 110 patients have been or are being enrolled in the study among 23 active sites in the U.S. and Canada. Through mid-March, 28 patients have had interval debulking surgery, as we reported the following results are these: 13 of 16 or 81% of patients in the treatment arm had an R0 resection, which indicates a microscopically margin negative complete resection in which no gross or microscopic tumor remains in the tumor bed.

Only 58% of patients in the control arm had R0 resection. This interim data represents a 41% improvement in R0 resections for GEN-1 patients and is consistent with the reported improvement in resection scores noted in the OVATION 1 Phase I study, which has been submitted for peer review publication.

And as you know, R0 resections represent a good predictor for improved survival. 3 more sites are expected to be added by the end of April for a total of 26 sites. Recently, our clinical investigators held a virtual meeting and expressed their optimism for GEN-1's potential to improve treatment options for advanced ovarian cancer patients.

For only about 1/4 of these patients, there are effective immune therapies like PARP inhibitors. For the remainder, there are a few options. Our investigators believe that GEN-1 can stimulate the immune system for an improved result in a much broader group of patients.

Importantly, despite the challenges, and earlier delays posed by the COVID-19 pandemic, our PIs remain confident and committed to completing enrollment in the study well before the end of 2021. Assuming, of course, there are no surprises from the pandemic that would interfere with the trial.

We expect to release overall response rate and surgical resection scores as they become available during the course of 2021. Our model suggested the study's primary endpoint PFS will be announced in late 2022 or early 2023.

In recent weeks, we received Fast Track Designation from the FDA for the ovarian cancer indication, which is an extremely important step in the development of the drug and is not given freely, as you know. Assuming a positive trial outcome, this designation supports an expedited path to market. We are hopeful that GEN-1 represents a game changer for women with advanced ovarian cancer.

I also want to remind you that GEN-1 has received orphan designation from both the U.S. FDA, and the EMA which enhances the commercial value of GEN-1, in particular, the orphan designation received from the EU in 2020 provides for, among other things, 10 years of market exclusivity following market approval.

In the U.S., orphan designation provides 7 years market exclusivity following marketing approval.

Now before I turn the call over to Jeff Church to review the financial results and our strong balance sheet. I want to remind you of one thing, in a critical study like the Phase III OPTIMA study does not mean a failed drug. Celsion continues to work closely with and supports clinical and nonclinical investigator-sponsored ThermoDox studies throughout the world in indications like breast cancer, pancreatic cancer, renal cancer, rectal cancer, GBM and solid tumors in children.

Following inquiries from the NIH we intend to renew our Cooperative Research and Development Agreement, CRADA, with the institutes at a nominal cost. One goal of which is to pursue their interest in a study of ThermoDox to treat patients with bladder cancer.

To accommodate this research, Celsion is developing an economically efficient business model to support these investigator-sponsored studies in a manner that will not interfere with the company's new focus on our GEN-1 programs in our vaccine development initiative.

We'll have more to say about that in the coming months.

With that, I'll turn the call over to Jeff. Jeff?

Thank you, Michael. Details of Celsion's 2020 financial results were included in the press release we issued this morning and in our Form 10-K, which we filed today before the market opened. As Mike indicated, the company's balance sheet is as strong as it's been in many years, and we ended the year 2020 with $17.2 million in cash and cash equivalents, this compares to $14.9 million at the end of 2019.

Shortly after year-end, the company took steps to streamline our capitalization table and extend our cash operating runway which I will discuss in a moment. For the full year 2020, net cash used for operating activities was $15.6 million. This is down from $20.3 million used in 2019.

Total cash provided by financing activities during the year was approximately $18 million and that was the result of $22.8 million of net proceeds from sales of common stock less, as you'll remember, a $5.2 million related to the repayment and restructuring of our venture debt with Horizon Financial.

The company recognized a $1.8 million income tax benefit from the sale of New Jersey net operating losses during the fourth quarter of 2020 and 2019. In late 2020, the New Jersey state legislature expanded the technology business tax certificate transfer program by increasing the limitation from $15 million per company to $20 million per company.

We took significant steps in 2020 to reduce our operating expenses while maintaining a tight focus on our key value drivers. Subsequent to year-end, we raised over $43 million in gross proceeds from the sale of common stock and when factoring in an estimate of first quarter spending, we currently have approximately $56 million in cash on our balance sheet. This provides an operating runway through 2023 at our current cash usage of $4.5 million per quarter.

We expect to receive net proceeds of $1.8 million from the sale of our New Jersey State NOLs before April 15, 2021. Also recall that during the third quarter, we restructured our venture debt with Horizon thereby reducing our outstanding debt obligation from $10 million down to $5 million.

Let me now turn to a review of our 2020 operating results. For 2020, the company reported a net loss of $21.5 million or $0.67 per share. This compares to a net loss in 2019 of $16.9 million or $0.77 per share. Operating expenses were $19 million in 2020, which represented a $2.1 million or 10% decrease from the $21.1 million reported in 2019.

Let me break this down by line item. Research and development expenses were $11.3 million compared to $13.1 million a year ago, a 14% decrease. Clinical development costs for the Phase III OPTIMA study decreased by $1.9 million to $2.2 million in 2020.

Costs associated with the OVATION 2 Study GEN-1 in ovarian cancer, increased to $1.3 million in 2020 compared to $600,000 in 2019 as enrollment of the Phase II portion of the study commenced in the third quarter of 2020.

Other costs related to our clinical development programs decreased by $700,000 in 2020 due to lower regulatory costs for the ThermoDox development program. General and administrative expenses were $7.6 million in 2020 compared to $8 million in the prior year. This 5% decrease was primarily due to lower compensation costs, including noncash stock option compensation expense compared with 2019.

Now these lower operating expenses were offset by 2 noncash charges in 2020. The first is a noncash charge of $1.3 million related to the potential milestone payment for the GEN-1 ovarian cancer product candidate; and the second is a noncash charge of $2.4 million related to the impairment of certain in-process R&D assets.

The company incurred $1.3 million of interest expense and $1.4 million in the prior year. Our interest income was $100,000 in 2020 compared to $500,000 in the prior year.

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

Thank you, Jeff. I want to close our prepared remarks by underscoring that Celsion has great potential to create value for our shareholders and future patients and a highly capable staff committed to bringing life-saving medicines to market.

We have versatile platform technologies in the exciting area of nucleic acid therapy. Our competency span the scope of what is required to rigorously evaluate our drug candidates.

Our relationship with regulatory authorities, both in and outside the United States are exemplary. And as Jeff pointed out, we have cash sufficient and with smart spending and prudent cash management, we expect to deliver on our promises over the next 3 years.

During the months, when we were working hard to refocus on the company, we're relatively quiet, as you know, particularly with respect to our activities and with the investment community. I'm pleased to note that we did recently participate in the 33 Annual Roth Conference, held virtually this week, including one-on-one meetings.

We expect to be participating in additional conferences as the year unfolds, we will keep you posted. We also plan to conduct virtual non-deal roadshows and ultimately, hopefully, back to live events before the end of the year.

So with that as an overview of our business and our financials, we'd now like to open the call to your questions. Operator?

(Operator Instructions) Our first question comes from with [Shubhendu Sen Roy] with Brookline.

I'm Shubhendu on behalf of Kumar from Brookline. Appreciate the business update. I was just -- I had a question with regards to the vaccine program. Now assuming that -- assuming that the preclinical data for the COVID vaccine study turns out to be promising.

Now in terms of enrollment of patients later for the clinical trials downstream, do you anticipate challenges, especially for older patients now that we already have a few vaccines out there?

And that's a good question. Nick, do you want to try to address that, please?

This is Nick Borys. Yes, that's a very good question. And as you know, the way we're dealing with the COVID is an evolving issue. The U.S. FDA has published guidance documents on and for consideration and when doing clinical trials with the next-generation of agents.

So part of this might not require the same type of very large patient populations that you've seen with the previous virus development plans. So we'd be working closely with the FDA to find the most efficient patient population. And depending on the aim of our vaccine, will work with the FDA accordingly.

But I think you'll see in the future, there will be different types of clinical trials, probably not as large as what we've been seeing in the past.

I'd like to add to that also. And maybe more broadly, more strategically. This is a very crowded field, as I pointed out in my prepared remarks. And we're -- as you know, I mean, we're very new to this vaccine, vaccinology technology.

And our immediate goal here is to establish proof-of-concept and to petition and receive approval for an IND from the FDA. I think at this point, the company's -- the company will obviously outline a clinical pathway, trial pathway going forward, as Dr. Borys pointed out.

But truly, I think, given the advantages that we anticipate from a DNA vaccine approach, particularly using a single plasmid multi-cistronic as we or multi gene as we talked about it, we will be looking for development partners at that point, particularly among those players who have -- already have a foothold in the market.

And so the company is very realistic, very, very realistic about the potential for challenges with a clinical program for COVID-19. I think more importantly, however, more broadly, however, once we've established proof-of-concept in a SARS-like environment, we intend, as I said earlier, we intend to leverage that to begin addressing a number of unaddressed vaccine or vaccine opportunities.

And I think before we get off the call, since there's not been a lot of questions in the queue. Maybe Dr. Anwer. Khursheed, could you talk about some of the other vaccine opportunities that this DNA, single plasmid, multi gene approach could address?

Yes, Michael, clearly, using DNA based vaccines, we have advantage over some of the traditional way of vaccinating against pathogen. So as Michael said, once we have proof-of-concept, we could really expand technology into other pathogens. And clearly, that's something is under consideration in-house and we could really consider 2 different directions, go after pathogens such as CMV, RSV and factions that there is no vaccine, and so that could be certainly those type of pathogens and seasonal flu also where still where traditional type of vaccines are used.

So those are some of the areas under consideration now, but that's sort of a dynamic area, and we are sort of constantly looking into what could be the potential market based on the potential partner also. So yes, CMV, RSV, seasonal flu those are some of the -- what I could say, type of pathogens we could go after.

I just had a quick question with regards to the approval of GEN-1. Now from a regulatory standpoint, I believe you'll have the ORR and PFS data by the end of the year, so would that be sufficient for the expedited approval plan?

Well, I mean, that's another good question. We're conducting a randomized Phase II study. We were likely not in -- under the current construct, likely not to have enough patients for a definitive result. But Dr. Borys is exploring an adaptation or an adaptive approach. Maybe you want to talk a little bit about that, Nick?

Yes, sure. As you mentioned, the data that we have immediately right now is to see the extent that the surgeons could remove the tumor at interval debulking. So our R0 rates are very good. And the primary endpoint of the study is progression-free survival.

So that takes place many months after the patients complete their chemotherapy. So we are exploring other avenues where we could use an accelerated process with the FDA on getting an approval type design for a study. There's much to be explored there, maybe using combination endpoints and seeing if we could accelerate that.

So I think we'll be talking much more about that in the near future.

Our next question comes from stockholder A.J. Emmanuel.

So you spoke of ThermoDox in that you guys have -- are not planning to give up on that technology, and I applaud that. Can you talk a little bit more about some of the other use cases, you are a little bit more in-depth about other directions you think that you may be taking that? You briefly touched on that, but I was hoping you might elaborate a little bit more.

That's a good question. And as I said earlier in my prepared remarks, an equivocal study does not mean a failed drug. And we know ThermoDox quite well and feel that its mechanism has some potential value in medicine. Unfortunately, we did not demonstrate efficacy in primary liver cancer, and we can all speculate about the reason behind that.

But -- so our role here going forward will be limited. We have a number of, I call, premier investigators who've expressed an interest in continuing their research in both preclinical and clinical situations or trials. We have promised them, and we'll continue to support these trials with our institutional knowledge. And with product, we have a solid supply chain and can continue to support these activities.

But there are -- I mean, we've talked about some work that's being done in Utrecht, some work that's being done in Oxford more recently, a very strong interest, almost and let's call it a demand, frankly, and I say that kind of tongue and cheek from the NIH. And maybe, Nick, you can talk a little bit about the Oxford and the Utrecht studies, if you don't mind.

Sure. As you know, Oxford University has probably the most experience in terms of the clinical experience with ThermoDox. They published in the Lancet 2 years ago on their work in liver cancer. And now they'd like to apply that work into pancreatic cancer using this new cutting-edge technology called HIFU or high-intensity focused ultrasound.

This is a new way of heating deep structures into the body. They're very excited about that. I think you'll be hearing more about that again this year. We also have work that's being initiated in Utrecht and this is what Mike was alluding to in terms of breast cancer. And the idea would be that ThermoDox can important role in patients that are interested in having lumpectomies instead of radical surgery.

So this is where, again, HIFU is being applied, ThermoDox is being applied and it might be a great alternative for patients that are good candidates for lumpectomy. So we're -- we continue to be excited about the future for ThermoDox and so are many of our investigators, as Mike said.

Yes. So I just close this out with -- we will -- you probably won't be hearing much from us with regards to ThermoDox going forward. The company's focus really would be in this area of immunology and vaccinology. Unless, of course, there are some breakthroughs that are important for medicine, frankly, from these investigator-sponsored studies.

At this time, we have no other questioners in the queue. So I'll turn it back to our speakers for closing comments.

Well, I want to thank all of you who participated in the call this morning. I want you to know that we are very committed to our work, we're driven by this commitment to bring new medicines to patients in need. And by the work of the talented clinicians and scientists and the technical staff that participate in our trials and our preclinical work. We think we have something very, very important in terms of platform technologies that can add immeasurably to the exciting new generation of vaccines that are currently addressing COVID-19.

If we're right, the advance that we make provides -- can provide substantial improvements in durability, range of treatments, in capability to address the mutational capability of pathogens. So we'll continue our work there, along with our very important work in oncology, this Phase II study for ovarian cancer patients is extremely important to us, certainly very important to the investigators and the patients with this newly diagnosed, very difficult-to-treat indication.

We will look forward to keeping you appraised of our progress. And as always, we are available to you for questions. We'll speak again shortly after the first quarter, I will present to you our 2021 first quarter results. We trust you'll have a nice afternoon. Thank you very much.

Ladies and gentlemen, that concludes this morning's presentation. Thank you for your participation. You may now disconnect.