Good afternoon, and welcome to the Cerulean Fourth Quarter 2015 Conference Call. This call is being recorded. My name is Carmen, and I will be your operator for today. With us today from the company are Chris Guiffre, President and Chief Executive Officer; Gregg Beloff, Chief Financial Officer; Adrian Senderowicz, Chief Medical Officer and Alejandra Carvajal, General Counsel. Mr. Guiffre, please proceed.

Good afternoon, everybody, and thank you for joining Gregg, Adrian, Alejandra and me for this call. To begin, I’ll ask Alejandra to comment on forward-looking statements that may be made during this call.

Certain remarks that we make during this call about the company’s future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of our most recent annual report on Form 10-K, which is on file with the SEC and can be accessed on our website. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today, March 10, 2016.

Thanks, Alejandra. In the year since I became CEO of Cerulean, our team has achieved a great deal. We strengthened the company's infrastructure in four key ways. First, we raise capital that takes us into 2017. Second, we added key members to the management team. Third, we strengthened our Board of Directors. And lastly, we relocated our headquarters to the AZ BioHub. Turning now to our clinical progress during this eventful year, we advanced CRLX101, our lead nanoparticle-drug conjugate, or NDC, in three areas. First in RCC by presenting single arm Phase 1b/2a data at ASCO and the Kidney Cancer Association annual meeting, and then by completing enrollment of our randomized Phase 2 trial. Second, in relapsed ovarian cancer by launching a clinical collaboration with the GOG Foundation and presenting promising data from stage one of a study at Mass General. And third, in combination with PARP inhibitors by announcing a collaboration with AZ and the NCI. During the same period, we advanced CRLX301 by declaring the MTD for a once every three weeks dosing regimen, and we began dose escalation in a once per week dosing regimen. Finally, in 2015, we continue to validate our platform in humans by presenting the clearest evidence to date that NDCs preferentially accumulate in tumors and spare healthy tissue. Now let's talk a little bit about the value and versatility of our platform. We make NDCs that are designed to concentrate anti-cancer payloads inside tumors while sparing healthy tissue. Unlike a liposome, for example, which provides burst payload release close to the tumor vasculature, NDCs penetrate deeply into tumor tissue where they are taken up inside tumor cells. Once inside the cells, NDCs slowly release their payload, providing a durable modulation of their targets. A key differentiator for our platform is the ability…

Thanks, Chris. CRLX301 is being studied in a Phase I/2a trial to evaluate the safety of the drug and to establish the maximum tolerated dosing, two different dosing schedules. First, we explored our ability using a once every three weeks schedule. We treated 20 patients in six dosing cohorts. In the 90 milligram per meters square cohort, we observed dose-limiting toxicity in two of six patients. The DLTs were reversible grade three stomatitis with grade two [indiscernible] which completely resolved without medical intervention and uncomplicated grade four febrile neutropenia. Also so far, at the MTD we have not seen certain adverse events that are commonly related to docetaxel- induced fluid retention and febrile neutropenia. It is premature to draw too many conclusions but in my clinical judgment, 301 is looking like it could be a better-tolerated taxane than docetaxel and that excites me. It is important to note that the PK data for 301 shows that it stays intact in circulation for extended periods of time as compared to docetaxel. That improved PK results in a greater plasma exposure and reduced distribution to normal tissue relative to docetaxel. The emerging data from these first 20 patients of delta [ph] 301 results in less frequent and less severe myelosuppression effects than historical data for docetaxel. These early data support our hypothesis that 301 will be combinable taxane which would represent a huge market opportunity. As a result of what we learned in Phase 1, we are moving into Phase 2a in the next month or so where we'll be looking for significant activity before we decide whether to move into a pivotal study. Taxanes, particularly Paclitaxel, appear to be more active when administered on a weekly basis. So we also are exploring the durability of weekly administration of 301. We dose our first patient in this arm of the trial last week. Once we have a recommended Phase 2 dose for the weekly dosing schedule, we will move that schedule into the Phase 2a as well. When we complete this trial, we'll have thoroughly explored both schedules and chosen our preferred schedule. Now, I'll turn the call over to Gregg for a financial update and a recap of upcoming milestones. Gregg?

Thanks, Adrian. I'll briefly highlight our financial results for the fourth quarter of 2015, which are included in the form 10-K that was filed after market closed today. For the fourth quarter, we had a net loss of $10.7 million compared to a net loss of $7.5 million for the fourth quarter of 2014. The increase in net loss for the 2015 period was due principally to expenses associated with our ongoing clinical development program, specifically costs related to our randomized Phase 2 RCC trial for 101 and a Phase 1/2a trial for 301, both of which commenced in 2014. We ended the fourth quarter with cash and cash equivalents of approximately $75.9 million. We believe that we will have cash necessary to fund operations into 2017. We expect to achieve a number of milestones within that same period. In particular, we expect to achieve the following milestones in the first half of 201, top line data from the randomized Phase 2 trial of 101, plus Avastin in RCC; data from the ongoing Phase 1b trial with the GOG Foundation of 101 plus weekly paclitaxel in ovarian cancer. Data from the 301 Phase 1 trial will be presented at the 14th International Congress on target anti-cancer therapies, AACR and ASCO. First patient will be dosed in the Phase 2a portion of the 301 trial, and we will have the first patient dosed in the Phase 1b/2 trial of 101 and LYNPARZA. Additionally, we expect the following milestones in the second half of 2016. Data from the weekly dosing trial of 101, alone and in combination with Avastin, additional interim 101 data from the ovarian and rectal IST. And finally, pending a review of the randomized Phase 2 data, we expect to initiate a Phase 3 trial of 101 plus Avastin in advanced RCC. With that, let's open up the call for Chris, Adrian, and me to take your questions. Carmen, please prepare the queue.

Thank you. [Operator Instructions] And our first question is from the line of Joe Pantginis with ROTH Capital Partners. Please go ahead.

Hi, guys. Good afternoon, and thanks for taking the question. Chris, maybe…

Hey, Joe.

Hey there. Maybe would like to dive into a little bit in the third, fourth line RCC, as you described the other drugs that have been approved or should be approved shortly. I want to focus on the immunotherapy aspect. So if you consider something like NEVO being used off label in the later indications like third or fourth line, I think the role of Avastin can also play a great role along with your product to create epitope spread with your product, as well and something like Avastin that has known capabilities when you inhibit VEGF, which is a known inhibitor dendritic cell function. So wanted to focus on how the landscape you think can play out in that direction using more IO type of approaches?

Sure. So I will make a few comments and then I'm going to turn it over to Adrian to see if he has any responses as well to add. But the first thing I'm just going to say, Joe is, we try very hard to talk more about what we know than what we speculate. And so I'm delighted with all of the opportunities that you are suggesting. I'm not sure we can prove that any of them will come to fruition, but I will say the following about the whole changing landscape. First, everyone knows that the most important approval in the history of RCC treatment was the NEVO approval this last fall. The data, as you know there were quite compelling. The trial stopped early because of the obvious overall survival benefit. It was approved in second line. That's where they studied it. They're also studying, as you know, and first line right now, but it's already being used in first line. And I think it is not at all difficult to speculate that it will be used more and more in first-line. So whether we will IO [ph] drugs used in second, third, fourth line, that’s a question I just don't know that I can answer for you. But what I will tell you, as we do expect quite convincing and we think our KOLs agree with us on this that IO drugs will take over first-line and do it relatively quickly. That's not particularly good news for students, but it's certainly good news for patients. Then as we said in our script, we are very confident, and we've been saying this for a while that both CABO and lenvatinib will be approved this year. There are new TKI's that represent a dramatic improvement over standard of care and second line for these patients now. So we feel quite comfortable settling in in third and fourth line in this changing paradigm. Whether or not we'll be used in earlier settings, whether or not other drugs will be used with us or in place of us or after us in later settings, that’s where I just don't feel confident giving you much more of a prediction than what we've done already. But let's just see if Adrian has anything he'd like to add. Adrian?

Yes, thank you. I want to echo what Chris stated. It is my understanding by DMS is that at least in the US approximately 60% of first line patients are using NEVO at this stage. So we believe that the IOs, NEVO and others will capture the first-line setting. I would say that if I understand your question correctly, you see NEVO in later stages. I don't think that's going to be the case, particularly because if you want to reconstitute the immune system, it's better to do it in early stages as opposed to late stages when it may not be the case ever. So I think in principle theoretically there may be a possibility and also is what we call, you know, toxicity. I mean, if you have spent a significant amount of value worth of money in the first, it would be difficult in principle to re-challenge patients in the third, fourth line setting. However, the way that Chris said, the idea for us is to capture third and fourth line and then we are obviously thinking about how to capitalize early, stages of RCC in different combinations that we have not disclosed. I hope that I was able to address these issues.

It does. Thank you very much, guys, for the added color.

Thank you.

Thanks, Joe.

And our next question is from the line of Jon Eckard with Barclays. Please go ahead.

Good afternoon, guys. Thanks for taking my question.

Hi, John.

Hello. Quick question. Is it based on what you've seen with 301 in animal models, is it reasonable to think that the MTD in your - this is for 301, for the MTD, would it be reasonable to think that at that level there should be a pretty high amount of docetaxel in the patient's tumors. Is that the right way to be thinking about this?

I think that's exactly the right way to think about it. But let me turn over to Adrian. Adrian, do you want to take that from here?

Sure, my pleasure. Yes, indeed we believe that although we haven't tested clinically, we have data clinically that we have at least 10 times as much docetaxel in tumors, as opposed to the docetaxel. And that we are actually - our thought is that in the Phase I trial, these patients are unfortunately quite advanced. They might already have failed or progress in different taxane's already. So the main purpose of the Phase I was to determine durability, and we are very happy that the 301 is very tolerable. The main issue is that after we've already reached recommended phases of doses every three weeks, we would now go to every week. And we want to test in patients with taxane-naive to demonstrate how active this 301 in those particular taxane-naive patients, because as you said, having a much higher concentration of docetaxel in tumors, that taxane-naive we should have much higher anti-tumor activity. I don't know if that helps you.

Great. Yes. I mean, you kind of answered my second question, which is in the 301 trial - in the 301 dose escalation or expansion aspect, were the patients that were enrolled, was there any selection for cancers that are recognized for being sensitive for docetaxel, even if they previously received it?

Well, this was actually and often – it was an old commerce. Many of these patients were actually quite advanced. And they were - didn't have any alternative for immunotherapy’s. So we didn't anticipate having, you know, great responses. However, at the Phase 2a, we are going to select a few more types that are taxane sensitive, and we have to be taxane-naive because we need to understand their anti-tumor activity in the phase 2a.

Great. Last question for you again, Adrian, is that you guys outlined quite a few presentations, data presentations throughout '16. If you could list your top three that you think based on what you expect to be - the type of data that you expect to be in these presentations, which would be the top three that you are most excited about, you know, seeing the final results you see published? Whether it be the part 101, whether it be yours with IDO, whatever three you think of the most meaningful?

Well, we're going to have many presentations in the first half, we have not announced the ones in the second half. So it will be hard to tell you right now. But let's focus in the first half. There is going to be, certainly, the 301 presentation that's going to be at PARPs [ph] in the next few weeks. I think that's going to be a very interesting presentation for 301. The second presentation will be for clinical data for 101 in collaboration with PARPs and IDOs at the AACR. And I think the third will be a presentation with the GOG collaboration as we promised at the end of June. I think that that will be the third. You know, it's hard. It's so much data, so great data. I don't know, Chris, I mean, you're welcome to disagree with me as you do everyday.

No, I'll disagree with you some other time, but not on this one, Adrian. Actually, those are three very important ones at conferences. The only thing I'd add, of course, is we will not have our RCC data out in the conference in the first half, we will release that data, top line data, via press release, and then the idea would be to present that data at ASMO [ph] later this year. But, so I would just start with the RCC data and then mention the three conferences that Adrian just talked about.

Perfect.

I thought there was one conference. Sorry, I apologize. I thought was only one conference

Thank you very much. Very helpful.

Thanks, Jon.

And our next question is from the line of Debjit Chattopadhyay with Janney. Please go ahead.

Yes. Can you hear me?

We can hear you. Hi, Debjit.

Good afternoon, guys. Thank you. Let's talk of 301 first. The way I understand it right now, the entity is about roughly 20% higher than standard dose, and at that level, is there a linear relationship between dose and response rate, or should we think about it more in terms of concentration in the tumor because of the unique chemistry of the nanoparticles?

Well, I think you should - it's the latter, Debjit. I actually just want to make sure correct something. I don't think it's accurate to say that were 20% higher than the standard dose of docetaxel. We are at the standard dose of docetaxel, so we didn't raise the MTD. But what I think Adrian was talking about was in his – in his clinical judgment, he believes that he is seeing that 301 is better tolerated at the same dose then docetaxel is. So that's quite promising for a number of reasons, which we've already talked about. But I think that the point you are making about what to expect to see, I think that goes back to if you think about what our platform does, our platform puts more of the anticancer payload in the tumor than would otherwise be there, that preferential concentration that comes from targeting the leaky vasculature, and then sparing healthy tissues. So we've talked a lot on this call about the tolerability benefit that comes from sparing the healthy tissue, and what I believe John and Adrian were just talking about is now that we're moving out of the all comers phase of this study into the Phase 2a where we can go into taxane-naive patients, we'll be looking to see if we see increased anti-tumor activity that results from the improved PK that is a byproduct, if you will of our platform. So does that make sense, or did I miss the point of your question?

No, that makes sense. Thanks. Then onto CRLX101, are you seeing some sort of an overflow from the CABO and the NIVO studies into your study? I understand the study is completely enrolling, but did you – or do you think you have some patients who have rolled over from the previous studies and if so, how does that impact your stats in terms of FS and OS?

Sure. So I am not aware of the particular stats on this. I think, Adrian, you're welcome to comment on it, but we should just be very general about it rather than giving any details about any particular patient or number of patients and so forth. So Adrian, it's up to you.

Yes. So we don’t – as Chris says we don't have specifics. Obviously, we have accrued patients from the major centers that many participated in those trials. And you know, one of the interesting things that we have seen in retrospective analysis at least for PD1 is our patients who actually progressed from PD1, do actually better after some – after TKI's so and so, et cetera. So ware not concerned about that, actually we still proceed with that. We believe that potentially we will be doing better after PD1, for CABO we are not much. But, you know, we have at least clinically worked in synergistic effects in all TKI tested and all VEGF, TKI and you know, [indiscernible] as well models. So I don't anticipate any negative connotation that patients have progressed. I assume the mechanism – the system is the same, one of other relationship as most other PKIs or other VEGF drug measures.

Great. And the – sorry, go ahead.

So, Debjit, I was just going to say, what you can take from that is we do believe that it is possible that we could have patients in our study who are either previously on NEVO or CABO, or lenvatinib, but I think we're going all to have to wait for the poster and test mode to understand how many them there were and whether there is interesting subset analysis that can be drawn from that.

Great. And you need about almost 17 events for the underlying thing of the study?

That is correct.

And based on what you are seeing right now, how confident are with not the control arm, which is like you don’t perform. I understand the confidence there was from prior studies have been really tight on the FX numbers?

Yes. So I appreciate you asking the question, and I think that you're referring to the very recent and very large study that Novartis did of dovitinib versus sorafenib. And yes, the confidence intervals were quite tight. We've looked at other studies and, I guess all I can say on this is we feel fairly confident that we know what happens in third and fourth line, whether you use TKI or an mTOR or Avastin. And there are seven options, four of them are TKI, as you know, two of them are mTORs and then Avastin, all seven of those were available to doctors and patients in our study, all seven of them were used to different degrees, and we don't think that there's any reason to suspect that any one of the seven or in aggregate the group would sort of vary from what we've seen historically. But that's why you run the studies. We just have to wait and see what the results are before I can answer whether standard of care did exactly what it was intended to do or not.

Great. And one must question, for the [indiscernible] at what point do you think you can start talking about ovarian cancer study, as opposed to just a small cell lung cancer?

Excellent question. I hope rather soon, but I hope you can understand that that's not entirely up to us. This is - it takes three to tango in this particular study. The NCI, AstraZeneca, and ourselves, I can tell you, AstraZeneca is interested in ovarian cancer, and you can see that for yourself, right. I can tell you that we are interested in ovarian cancer, and I can tell you that the NCI is interested in ovarian cancer. So there's an obvious unmet need. The combination of a PARP inhibitor and a Topo inhibitor in ovarian cancer makes great sense. But the first phase of the study is merely dose escalation in all comers. The next phase will be an expansion cohort into small cell lung cancer, and then, you know, future expansion cohorts or other company-sponsored trials remain to be seen. Okay?

And our next question is from the line of John Newman with Canaccord. Please go ahead.

Hi, guys. Thanks for taking my question.

Hi, John.

Hi. The question is, Chris and Adrian, could you talk a little bit about as much as you can, why CRLX101 could be synergistic with the PARP inhibitor in a way that's different from some of the other chemotherapies that have been tested with PARPs? Thanks.

Yes, excellent. So what I'm going to do is I'm going to try and give you a fairly high level answer to that, and if you feel that it's appropriate to go into slightly greater depth, we will. But I think for a call like this going too deep into the weeds may not be in anyone's best interest. At the highest level, as you know, John, many people have tried different Top 1 inhibitors with different PARP inhibitors because the rationale is clear. We discussed that in the prepared comments. The common problem, each and every time people do this is that you get synergistic cell killing whenever you combine a Topo inhibitor and a PARP inhibitor. And that's the reason why people combine the two. You're looking for that synergistic cell killing in the tumors. The challenge, of course, is that you also get both agents into the bone marrow. And when you get the synergistic cell killing in the bone marrow, there in lies the problem, and that is what it has been, what has plagued the combinations that have been tried to date. So where do we fit in? Are we just another Topo 1 inhibitor that is likely to have the same problems as other Topo inhibitors? I suppose it's theoretically possible, but I think part of the reason that we are so optimistic and the reason that I believe AstraZeneca is so optimistic is that our Topo 1 inhibitor is very different than the other Topo 1 inhibitors in the way that it is delivered. So when you dose CRLX101, it goes into both the bone marrow and into the tumor tissue. After a relatively short period of time, what you see is it clears the bone marrow and stays in the tumor tissue for a prolonged period of time. That's part of the elegant design of our NDC platform. By keeping the Topo inhibitor in the tumor tissue and not keeping it in the bone marrow, you have the opportunity to then deliver a PARP inhibitor at a period of time where it will synergize in the tumor and not synergize in the bone marrow. That is our special thoughts, if you will. That's the reason why I think we've seen quite successful results pre-clinically, and you can take a look at those when AstraZeneca presents them at AACR. And that's why we're fairly optimistic about what will happen in the dose escalation that we're about to start in the next month or so at the NCI. But, of course, nothing is guaranteed, and that's why you run the clinical study. We need to find out if we can do this in humans as we've done in rodents.

Okay, Great. Thank you.

Let me add something else. That this has happened not only with lenvatinib, but with most other PARP inhibitors it’s not the only collaborating with effects with 101, but it has happened with most PARP inhibitors in preclinical. So we are – that actually derisking further that this is a clear synergistic effect with any PARP inhibitors for 101 in multiple recent tumor models. Thank you.

Thank you very much for that, Adrian. I want to be very clear. I was not suggesting that the problem is limited to elaborate. The problem is a class effect and all the other PARP inhibitors are dealing with the same thing.

Great. Thank you.

[Operator Instructions] And we have a question from the line of Michael Schmidt with Leerink Partners. Please go ahead.

Hi, guys. This is Varun Kumar, on behalf of Michael Schmidt. I have question on…

Hi, Varun.

Hi, how are you?

Good, thanks.

I have a question on CRLX101. I was wondering if you could provide some color on – or phase its trial design. And so I have two related questions. First, what will be the control arm for Phase III and the second one is how are you guys thinking for patient recruitment, specifically in terms inclusion criteria with respect to specific brand line of therapies? Thank you.

Sure. So at some level, this is information that is not finalized. And so what I will do is give you the best I can to try to be responsive to your question, but I think until we announce the specifics of our Phase III trial design, there is a limit to how much I can share with you. So the first one you raised is a very good question, and that is what's the comparator going to be? As you know, in the current Phase II study, we randomize against dealer's choice standard of care, the seven agents that are used in third and fourth line RCC. That is so that we can demonstrate that regardless of what is used in that setting and in that setting all of them are used, there is no one that really dominates over the other. That our combination of 101, plus Avastin can beat standard of care regardless of what it is. It also created an advantage for us in terms of accelerating enrollment, and we were eager to get to a demonstration - of a randomized demonstration of our ability to beat standard of care as quickly as possible, so that we have the information necessary to launch a Phase III with some confidence. So that was Phase II, dealers choice standard of care. In Phase III, however, that the pivotal study that will be designed to serve the purposes of registration. And therefore, it's important for us to demonstrate that our combination 101 plus Avastin is better than a Avastin alone. So while not all of the details, for instance, the number of patients or the delta and so force for the Phase III are finalized and won't be finalized until we see the Phase II data. What I can tell you is we have already confirmed with the agency under fast track that the appropriate comparator for Phase III is Avastin, and that's what we'll do. Okay? In terms of the inclusion or exclusion criteria for patients, I think that was your second question. I think it's premature to discuss that in too much detail right now. But what I can tell you is that we anticipate that the most important inclusion criteria would be that patients will have need to have seen both a TKI and PD1. And I believe that's probably why you asked the question, so I want to address that, but I think any other details on that topic will have to wait until the Phase III trial design is finalized.

That's great, yes. I mean, I think you hit the point, so I was wondering as you get target in third and fourth line, a good response, especially in a patient who has seen drive safety of PKI and PD1 would be great, so thanks for that. My last question is on 301. Just wondering if there are any other docetaxel far more list on out there or you guys have the only one just industry form?

Yes. So what I will tell you, there are many people working on 301. It’s a very successful oncology product. Its - I'm sorry, docetaxel, excuse me. It's a successful oncology product. There are many people who have worked on reformulations. There are other companies that have worked on to create nanoparticles or conjugates. I think everyone understands it's an active drug and it has a somewhat undesirable tolerability profile and people looking to improve it. So rather than being a free commercial for all the other folks working on it, I'll just say that none of the potential competitors of which we are aware cause us considerable concern. Because, number one, we think there's plenty of room for improved taxanes in the market and there may be more than one, I hope there are more than one. And whether there are more than one or not, we feel very confident in what we've seen so far pre clinically with 301. And as Adrian explained earlier, we're quite pleased to see that our hypothesis at least is early on for the first 20 patients about making a better tolerated and more combinable taxane, that seems to be translating in the clinic so far.

Great. Thank you. Thanks for taking the questions.

Thank you. Have a good night.

And I'm not showing any further questions in queue. I would like to turn the call back to the President and CEO, Chris Guiffre. Please go ahead.

Okay. Thank you all for joining us tonight. We look forward to reporting on continued progress in May. Have a good night.

Ladies and gentlemen, thank you for participating in today's conference. This concludes program, and you may all disconnect. Have a wonderful day, everyone.