Imunon Inc (IMNN) 2021 Q1 法說會逐字稿

Good morning. My name is Olivia, and I will be your operator today. At this time, I'd like to welcome you all to Celsion's First Quarter 2021 Financial Results Conference Call. (Operator Instructions)

At this time, I would like to turn the call over to Kim Golodetz. Please go ahead.

Thank you, and good morning, everyone. This is Kim Golodetz with LHA. Welcome to Celsion Corporation's First Quarter 2021 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 session.

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 14, 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, Chairman, CEO and President. Michael?

Thank you for the introduction, Kim, and good morning, everyone. Joining me today are Jeffrey Church, our Chief Financial Officer, who will provide a review of Celsion's recent financial results; and Dr. Khursheed Anwer, our Chief Science Officer, who will address questions regarding our recently announced vaccine initiative. Also on the call for the clinical Q&A is Dr. Nicholas Borys, our Chief Medical Officer.

I'd like to start by saying I'm very pleased to report our progress during the first quarter and subsequent weeks of 2021. I want to relate to you that our confidence that Celsion is well positioned to achieve our development objectives during the remainder of this year and beyond is quite evident. It's clear to me that on the fundamentals, our company is sound. Here are some reasons to support that.

TheraPlas, our lead clinical product platform technology, is based on proven science and is supported by compelling data from our -- from GEN-1, our first product on this platform in the OVATION study, which includes our Phase I and Phase II studies in advanced ovarian cancer.

PLACCINE, a proprietary and smart adaptation of our TheraPlas technology is a next-generation vaccine platform designed with multiple viral antigens and with an immune modifier incorporated into a single plasmid. This is being evaluated for application as a vaccine platform, which may hold the promise for significant advancements over the highly efficacious new generation of mRNA vaccines.

Our very capable staff and research development team have shown extraordinary capability to expertly execute while following the rigors and demands of global drug development. These incredibly professional individuals are being reinforced with a complement of individuals whose experience and achievements in immunology and vaccine development are well recognized in the industry.

And last but not least, market conditions permitted the company to be thoughtful in strengthening our balance sheet with straight stock financings with minimal impact to shareholders. We have smartly tapped into the equity capital markets during the first 4 months of this year, raising over $60 million. This ensures funds for a rock-solid balance sheet and cash sufficient to see us through all of our immediate and anticipated major milestones, including PFS or progression-free survival data from our Phase II OVATION 2 study.

And so we move aggressively forward into 2021 with a great deal of confidence that the road ahead will be paved with value-creating announcements from OVATION 2, our GEN-1 in advanced ovarian cancer and from our Da Vinci Project, which is our plasmid DNA-based vaccine development initiative. Now I'd like to talk a little bit more about these 2 major programs.

The foundation of GEN-1, our DNA-based immuno-oncology candidate is TheraPlas. The TheraPlas nanotechnology is proven as a means to transfect cells with DNA payloads coded for proteins of therapeutic value. Unlike viral delivery systems that can only be administered once because of the body's immune response to the delivery system itself, TheraPlas is not subject to the neutralizing activity of the patient's immune system. It has been safely administered as many as 17 times weekly over a 6-month period in our ovarian cancer clinical studies.

To date, more than 100 patients have been treated with GEN-1 in our clinical trials. The results so far demonstrate excellent safety, translational data that clearly show activation of a significant immune response and dose-dependent improvement in clinical outcomes.

Our OVATION 2 study of GEN-1 is an open-label randomized trial in treatment-naive advanced ovarian cancer patients. This is a subset of patients whose tumor burden is too great for immediate surgical intervention. OVATION 2 combines GEN-1 with a standard of care neoadjuvant chemotherapy, the goal of which is to shrink tumor mass and drive as much as possible the fluid that accompanies the cancer to improve surgical results.

Following neoadjuvant chemotherapy and 8 weekly cycles of GEN-1, combined with neoadjuvant chemotherapy, patients undergo interval debulking surgery, which is then followed by 3 adjuvant cycles of chemotherapy and up to 9 additional weekly GEN-1 treatments. That's 17 GEN-1 treatments, once weekly over a 6-month period. Our goal is to delay progression, because you know that cancer progression portends a bleak outlook.

The OVATION 2 study is designed with an 80% confidence interval for an observed PFS hazard ratio of 0.75, which would mean an approximate 30% improvement in the risk for cancer progression. The study is progressing with more than 40% of the anticipated 110 patients having been enrolled in the study. I do want to say, however, that April was not up to our expectations, disappointing month in patient enrollments. We're not sure what was behind the blip, but we seem to recover this.

Once that's set, we're taking no chances, and immediately following this call, Dr. Borys, our lead PI; Dr. Thaker and I are meeting with a large group from the GOG Advisors Foundation. Our goal is to brainstorm with this group of ovarian cancer experts and to take advantage of our recent fast-track designation to ensure that we have significantly improved our time lines to reach regulatory approval. Fast-track designation from the FDA, among other things, supports an expedited path to market authorization.

Now a little bit more about the GOG Foundation and the GOG advisors. Our fast-track designation, in fact, brought GEN-1 to the attention of the GOG Foundation. This is a nonprofit organization with the purpose of promoting excellence in the quality and integrity of clinical and basic scientific research in the field of gynecologic malignancies. The organization is comprised of the leading gynecological oncologists in the United States and has a network of more than 400 trial sites. Clinical trials funded by the GOG Foundation have influenced the standard of care for numerous malignant gynecologic neoplasms.

Our meeting with the GOG is the first of many designed to accelerate our path to regulatory approval, as I said. We're delighted that the GEN-1 has come to the GOG's attention and believe that the organization's involvement further validates the medical need and the purpose of our work. I mean, frankly, why wouldn't GEN-1 have come to their attention? We've been reporting compelling clinical data, with results to date showing strong surgical outcomes. OVATION 2 study data now show R0 resections in 14 of 17 patients or 82% in the treatment arm compared with 7 of 13 patients or 54% in the control arm. The control arm is comprised of neoadjuvant chemotherapy alone, which is the standard of care for this patient population.

Physicians view R0 resection as a good predictor of survival, and at 82% R0 resections in the treatment arm, very encouraging thus far. These results also compare favorably with the R0 resection rates observed in our 2 earlier -- in our earlier OVATION 1 study where we reported 87.5% R0 resection in the 2 highest dosing cohorts of this Phase I dosing escalation study. Note historically, R0 rates is reported in 2 large papers by Vergote and Kehoe, that the neoadjuvant chemotherapy alone are approximately -- R0 rates are approximately 50%, which is similar as we're seeing to the control arm in OVATION 2 study.

A comprehensive manuscript of the OVATION 1 trial is currently under review at a major oncology journal, and we hope to have it published in the near future. I think the data that we are presenting in the paper will speak for itself.

One final GEN-1 note. Now there's been growing attention from strategic fund managers and clinical investigators expressing an interest in combining GEN-1 with other approved and investigative treatment regimens like checkpoint inhibitors as well as Avastin. Avastin is a multibillion-dollar oncology drug used for second-line treatment of ovarian cancer patients. So we're very excited about the potential for a combination with other agents, and we look forward to the prospect of providing GEN-1 and supporting the trial of GEN-1 with partners in upcoming months.

Now I'd like to turn our attention to the PLACCINE initiative. As I've said before, PLACCINE is an adaptation of the TheraPlas technology platform. And it forms our second product platform initiative, PLACCINE, this time, leveraging the knowledge of our plasmid vector construction, combining that with our proprietary delivery technology, which is the subject of TheraPlas, together to unlock the potential of our novel, multicistronic DNA plasmid technology.

So what's unique about this vector, DNA plasmid vector? Well, it's comprised of DNA, first of all, more stable than mRNA. This nonintegrating nucleic acid API has shown to function throughout the life cycle of the transfected cells. It also -- the construct is multicistronic, a term you may have heard, meaning that the plasmid is encoded for multiple proteins. In the case of our COVID-19 vaccine design, included are the following: the S or spike protein. This is the sole protein, by the way, the current mRNA vaccines rely on to develop immunity to the COVID-19 vaccine; relying on 1 antigen, the S protein.

As we have heard from the CDC and medical experts alike, it causes concern that viral variants may ultimately evade immunity acquired by the vaccination. So our design also includes a code for the M or membrane protein of the COVID-19 virus, representing a backup strategy in an event that the S protein is no longer recognized by the body's immune system.

And also, as I mentioned earlier, our design includes the code for IL-12, a potent immune system recruiting cytokine. Recruiting the immune system at the same time providing 2 antigens, primary in a backup, we believe is a powerful combination. In summary, our design includes 3 proteins, 2 of which are viral antigens and 1 is an immune system accelerator.

Our approach, as described in our provisional patent filing has the potential to be advantageous to the commercially available mRNA vaccines in a number of ways. Let me spell this out for you. First, our multicistronic multiple-antigen approach reduces the possibility, as I pointed out, that virus variants like those from South Africa or the United Kingdom or others, will escape vaccine dependent immunity. Second, because the DNA plasmid may function throughout the life cycle of transfected cells, the durability of response may improve memory T cell activation, establishing a longer-lasting immunity. Third, the concomitant expression of IL-12, along with the presence of antigens and its well-established capability to recruit the immune system may result in a higher quality vaccine.

And the last point I'd like to make is PLACCINE offers a proof stability. We know this. The stability at commercially viable temperatures has been demonstrated with GEN-1, our lyophilized DNA nanoparticles. We've shown that it can be successfully stored at refrigerated temperatures for extended period of times and at ambient temperature or room temperatures for very workable periods. This is very important when considering the various environments of a global pandemic.

So we're late to the party. And you may be asking, why now, since the current mRNA approaches are so effective? What is our chance of commercial success? These are 2 very important and fundamental questions, and I'll try to answer them with our plan.

First, our immediate goal is to validate our vector and delivery technology hypothesis in preclinical studies using the mRNA vaccines as comparators, as standards, to demonstrate the capability of our DNA multi-cistronic approach and its projected advantages. Once our hypothesis is proven, if there is a commercial possibility, we intend to seek development partners for COVID-19 clinical trials.

Second and more importantly, once our hypothesis has proven, we'll begin development of vaccines to address a broad range of other infectious viral agents, for example, hepatitis C or herpes simplex or even the seasonal influenza, among others.

Third, and this is something that excites us, I believe, and our advisors and our researchers the most, we may be on the horizon of a real breakthrough. Combining antigens with IL-12 has the potential to be both prophylactic and therapeutic. The development of vaccine technology that has the potential to be truly therapeutic could revolutionize the world of treating infectious disease.

Our progress so far is quite encouraging. As I mentioned, we've submitted a provisional patent. We have established a research platform. We've recruited scientists with expertise and experience in vaccinology and immunology. We've established relationships with high-profile medical and scientific advisors. We've developed analytical methods necessary to evaluate the progress of our work. We've developed strategic partners that will support wide-ranging vector development. And we've demonstrated in vitro that our multi-cistronic, that's the multi-protein vector, design will produce proteins it is designed to express.

Most importantly, and I'm very happy to report, that in vitro work with our third-generation vector has shown that an S1 antigen and M1 antigen and the IL-12 protein can be successfully expressed from a single plasmid incorporated into one of our proprietary delivery platforms. We should know soon if antibodies specific to the antigens are expressed in mouse models, in the same mouse models that were used in the development of the COVID-19 vaccines that many of you may have already received.

So from our perspective, this is very exciting, folks. Hopefully, there's much more to come on these developments in the near future. We promise to keep you updated.

Now with that, I'll turn the call over to Jeff.

Thank you, Michael. Details of Celsion's first quarter 2021 financial results are included in the press release we issued this morning and in our Form 10-Q, which we filed today before the market opened.

The company ended the first quarter with $54.6 million in cash and cash equivalents and a receivable for the sale of New Jersey net operating losses. We raised an additional $13.9 million in net proceeds from common stock sales during the early part of the second quarter. We also announced earlier this week that we received $1.85 million in net cash proceeds from selling approximately $2 million of our unused New Jersey net operating losses, which is the receivable we booked at the end of the quarter.

Over the past 3 years, we have sold $15 million of net operating losses, equivalent to almost 1 full year of operating expenses without any dilution to our shareholders. And we have an additional $5 million of unused NOLs available to the company for sale in the future. At current spending levels, we have sufficient cash to fund operations through 2024. So as Michael indicated, we have sufficient runway to see us through several value-creating milestones.

Let me now turn to turn to a review of our first quarter financial results. For the quarter ended March 31, 2021, the company reported a net loss of $5.7 million or $0.09 per share. This compares to a net loss of $5.1 million or $0.20 per share for the quarter ended March 31, 2020. Operating expenses were $5.5 million in the first quarter of this year, which is up $600,000 or 13% from the operating expenses of $4.9 million in the first quarter of 2020.

Breaking this down by line item. Research and development expenses were $2.6 million in the first quarter. This compared to $3.1 million a year ago. It's a decrease of about 16%. Clinical development costs for the Phase III OPTIMA Study decreased by about $600,000 from the prior year quarter.

Research and development costs associated with GEN-1 to support the OVATION 2 study as well as the development of the PLACCINE DNA vaccine technology platform increased to $1 million for the first quarter of 2021 compared to $900,000 for the same period last year. Other costs related to the company's clinical development programs decreased by $200,000 in the first quarter of this year due to lower regulatory and manufacturing costs primarily related to ThermoDox program.

General and administrative expenses were $2.9 million for the first quarter of 2021 compared to $1.8 million for the first quarter of 2020. This increase is primarily attributable to higher noncash, emphasize noncash, stock compensation expense of $800,000, an increase in professional fees of $200,000 and an increase in premiums on our director and officers' insurance.

Net cash used for operating activities was $4.7 million for the first quarter of 2021 compared with $5 million for the comparable prior year period. Total cash provided by financing activities was approximately $40.5 million in the first quarter. This resulted from $39 million in net proceeds from the sale of common stock and $1.5 million from the exercise of common stock warrants.

Before I turn the call back over to Michael, I wanted to highlight our recent proxy filing. The company's Annual Shareholders Meeting is scheduled for Friday, June 4, and shareholders of record at the close of business on April 5 will be asked to vote on 4 proposals. Three of these proposals are routine and require only a plurality of votes cast in favor to pass. However, to pass proposal 3 requires a favorable vote by more than 50% of the outstanding shares. That outstanding shares stood at approximately 86.6 million shares on the record date. Proposal 3 will increase the number of authorized shares from 112.5 million shares currently to a proposed 172.5 million shares.

The Board of Directors and management believe the proposed increase in authorized shares will provide the company with the ability to support our future anticipated growth and will provide us with greater flexibility to consider and respond to business opportunities and needs as they arise, which would include stock-based acquisition of new technologies or product development candidates as well as equity financings. The availability of additional shares will permit the company to undertake certain of these actions without the delay and expense associated with holding a special meeting of stockholders to obtain approval each time such an opportunity arises.

With that, I'll turn the call back to Michael.

Thanks, Jeff. And I just want to say publicly, your work to strengthen our balance sheet on a -- with a very investor-friendly approach is well appreciated.

Thanks.

Thank you. I also want to just reemphasize what Jeff just noted, please vote your shares. As Jeff points out, access to additional capital to support our research is dependent upon your approval to increase our authorized shares. It's never been easier to vote your shares. In your proxy, you have instructions on how to vote via the website. You can also mail in your ballot. And if you've lost your ballot, let me -- if you have a pencil, please take down this number, you can call us, we'll get you another one, telephone number (609) 896-9100. That's (609) 896-9100. Please do vote your shares.

I want to close our prepared remarks today by underscoring that Celsion holds great potential to benefit patients in need and to create value for our shareholders. As I've said, and we said often, we have a highly capable team of researchers and clinicians who are committed to bringing life-saving medicines to market.

When we look ahead to our anticipated accomplishments, it's helpful to remind you of all of the assets that reside within your company. We have 2 versatile technology platforms in the exciting area of nucleic acid therapy and vaccination. Our competency span the scope of what's required to rigorously evaluate these drug and vaccine candidates. Our relationships with the regulatory authorities and medical advisors in the medical community, both in and outside the United States, are as good as they get. And with smart spending and prudent cash management, we have sufficient capital to deliver on our promises.

So with that overview of our business and our financials, I'd like to now open the call to questions. Olivia, would you open the lines, please.

(Operator Instructions) Our first question is coming from Kumar Raja with Brookline Capital Markets.

First, with regard to the PLACCINE platform, maybe you can tell us about what needs to be done, what stage are we right now, what needs to be done before it can be dosed in humans. And will this be an intramuscular injection? And what do we know about the expression of this -- uptake of this plasmid as well as expression in those cells?

So Khursheed Anwer is on the line. Khursheed, I want to say a couple of things about the -- to answer these questions, and maybe you can finish up with some answers to the questions.

So we're still in early phase development, Kumar. The preclinical work that's ongoing is -- our goal is to establish proof of concept. And once we have sufficient proof of concept, our intention is to meet with the agency to discuss the requirements for an IND. And our expectation then is once we have an understanding of those IND requirements is to complete the preclinical work to support a clinical program. We expect, our hope, is to have a meeting with the agency in the -- late in the third, early in the fourth quarter this year, and to move forward with an IND application around the end of the year or early in the first quarter of next year.

With regards to methods or routes of administration, we're very encouraged. And we think the -- we're evaluating multiple approaches. And with that, what I'd like to do is ask Khursheed to jump in. Khursheed?

Great. Thank you, Michael. Thank you, Kumar, for your question. Yes, as Michael said, we're developing vaccines that are based on route of delivery that could be easily and conveniently administered. So we're looking at intramuscular and also other routes such as subcutaneous and eventually intranasal as well.

The intramuscular program is more so injecting DNA, a formulated DNA to the muscle would lead to uptake by muscle cells, skeletal muscle cells. But also the DNA is taken up by -- through the lymphatic system into the lymph node. We have seen that from our GEN-1 plasmid.

So essentially, we believe that muscle will express the protein on its surface through MSC class 1 molecule that leads to T helper cells and T cell-mediated responses. So these antigens could be secreted and then antigen-presenting cells could also pick it up and lead to the B-cell response, antibody response. And then the formulation could itself be taken by genetic cells outside the muscle. So it's a multiple cell types that could be involved in taking -- picking up the DNA and expressing the antigen and causing downstream immune responses.

Before we -- can I just -- I just like to add a little bit more. So the big breakthrough here, Kumar, is the -- is what I spoke about in my prepared remarks.

So we have a single plasmid that's encoded with multiple promoters. It's encoded for actually 4 proteins, 2 of which form the basis for IL-12. And now we're seeing the expression of the subunit of the spike protein and also the M antigen. This is -- I mean, this is a breakthrough, we think, in plasma development. And if we're right, our next sequence of experiments to demonstrate the presence of antibodies and eventually neutralizing antibody should tell us whether or not our proof-of-concept is ready to move forward into some pretty well-designed animal models.

So we're excited, frankly, to have this breakthrough that shows a single plasmid with this highly capable potential.

Okay. And moving on to GEN-1. In terms of enrollment, what kind of variations are you seeing in different sites? You talked about this a little bit in the prepared remarks. So how are you trying to optimize enrollment in these sites?

Yes. So I think Pareto is a concept that's not unique to mathematics. I mean, it just -- it plays itself out well in virtually every clinical study that we've been involved with. So we get about 80% of our patients from about 20% of the sites. We currently have 23 sites active, 1 more in Canada to be activated. Our goal with the discussion with the GOG advisors this afternoon is to explore if there are other network opportunity -- other opportunities within their network to add additional sites.

The recruiting trajectory, I mean call it that, up until the last 2 months, March and April, had been very encouraging. There's some discussion among our investigators that COVID-19, some of the restrictions associated with controls that hospital has put into place and maybe some of the anxiety among patients is limiting the number of patients that they've seen. And so as I said, we've seen a disappointing April, but May seems to be rebounding very nicely.

So I'm going to ask Dr. Borys to comment here, but I think we're very much back on track to complete enrollment before the end of the year. We've got about 60 or more patients to recruit in that time period, about 65 patients to recruit in that time period. And we think the chances of us achieving that objective are pretty good. So Nick?

Yes. The only thing I could add to Mr. Tardugno's comments are that we are also in discussions with employing professional agencies that specialize in patient recruitment to do direct patient outreach. And also, we're working directly with investigators. We're now increasing our frequency that we communicate with sites, provide more information about the studies.

And as also, as Michael mentioned in his prepared remarks, once some more data comes out into the field regarding the activity of GEN-1 in our OVATION 1 studies, we think that, that will gain more attention, not only with our investigators, but also with potential patients.

So with all those activities going on, I think we're going to see a nice bump in our recruitment as time goes on.

We don't want to leave you with the impression that we're facing a study that's failing by any means. I think I just want to point out, the trials and tribulations of recruiting patients, particularly in this COVID-19 environment, are not unique to the company. And we think, honestly, Kumar, we think we understand these dynamics, and we don't expect any significant delays in getting this study fully enrolled.

Okay. And finally, with regard to GEN-1 and combination plans, what preclinical data or data and literature do we have with regard to combination with Avastin or with immuno-oncology agents? And initially, what would be the plans in terms of moving forward with this combination?

So Khursheed, I think you'd be very excited to talk about our -- some of our combination data, preclinical data.

Yes, of course. Kumar, so we have done some extensive preclinical investigation of combination therapies. Of course, GEN-1 combination with chemotherapeutic agents have been published and that formed the basis of the ongoing study.

With Avastin, we found really interesting results. The Avastin by itself at multiple doses was effective in controlling the growth of ovarian cancer in a mouse model. When we combine with GEN-1, we saw synergistic response. And in fact, at much lower doses of Avastin, we got good response that could perhaps, down the road, suggest that Avastin dose could be lowered. But clearly, there's a convincing data in multiple set of experiments that Avastin plus GEN-1 combination is synergistic. Chemotherapy, we have shown before. There's some data with checkpoint inhibitors also, not with us, but with IL-12 in different forms of delivery has been shown to synergize.

So I think the key point here is that GEN-1 treatment of intraperitoneal cavity with ovarian cancer, we have seen a conversion of a very immunosuppressive, highly immunosuppressive environment into immunostimulatory. Now that would be conducive to any immunotherapeutic agents that requires that condition, for example, checkpoint inhibitors, in areas where they don't work. It's because to immunosuppressive environment, T cells are not there, they're not active. So we have seen it now with our study IL-12 does that.

So I think based on this immune profile that we have seen with OVATION data, some of these combinations that are logical, such as checkpoint inhibitors and Avastin, as I told you, we have data ourselves. So these are the possible avenues or venues where we could -- thinking about developing GEN-1 down the road beyond the chemotherapy combination that's in progress.

Thank you. That will conclude today's question-and-answer session. Mr. Tardugno, at this time, I will turn the conference back to you for any final remarks.

Thank you, Olivia. I just want to say again, thank you all for your time this morning. At Celsion, we continue to be driven by our commitment to bring new medicines and now vaccines to patients in need, and this is exemplified by the work of our talented scientists and clinicians and our technical staff and our support people. We are fully committed. And we absolutely appreciate the support of our investors and the investment community.

We look forward to keeping you apprised of our progress throughout the year, and we'll speak to you again when we report our 2021 second quarter financial results in August. In the meantime, don't forget, we have our Annual Shareholder Meeting on June 4. Please do vote your shares. Thank you very much. Have a good day.

Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.