Good morning. My name is Travis and I will be your operator today. At this time, I would like to welcome you all to Celsion Second Quarter 2019 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the call over to Kim Golodetz. Please go ahead, ma'am.

Thank you and good morning, everyone. This is Kim Golodetz with LHA. Welcome to Celsion's Corporations conference call to discuss its second quarter 2019 financial results. As has been our practice prepared remarks will be followed by a question and answer period. Today's conference call will be archived and the replay will be available beginning tomorrow through August 29, 2019. And the webcast will be available on Celsion's website for the next 90 days. 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 expect, anticipate, believe, 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.With that said, I'd like to turn the call over to Michael Tardugno, Celsion's Chairman, CEO and President. Mike?

Thank you, Kim. And good morning everyone. Joining me today are Jeffrey Church, Celsion's Chief Financial Officer, who will provide us with a review of the financials. And Dr. Khursheed Anwer, Celsion's Chief Science Officer, both of whom will be available for questions during the call. Dr. Nick Borys, our Chief Medical Officer, who normally joins us for calls is on a well-deserved vacation today so he won't be with us for the call. I'd like also to welcome Kim Golodetz and LHA colleagues to their first quarterly call with us. We have recently engaged LHA as our IR partners and are looking forward to the value that I know that they will bring to our interactions with the investment community. As always, it's a pleasure to be speaking with you particularly now as we close in on key milestones that we will have achieved through rigorous execution of our clinical development programs of ThermoDox, a tumor-targeting chemotherapy and GEN-1 our elegant gene-mediated immunotherapy. For several quarters I've reported that our fundamentals are strong and I can report even stronger now with key events expected in the third and fourth quarters of this year.All the cash is sufficient to support an operating one runway well into 2020. Well beyond the major milestones of our clinical programs. Jeff will cover these financials in more detail during his report. Now as I begin my formal remarks, I'd like to make you aware of important themes of the company. First, I'd like to say again, we are well-positioned to achieve our objectives. We have the resources, the relationships, the personnel, the technology and the capital to continue to deliver them as we have been over the past few years. Our clinical development programs continuing to advance as promised. Our global 556 patient Phase…

Thank you, Mike. Details of Celsion's second quarter 2019 financial results were included in the press release we issued yesterday evening and Form 10-Q which we made available last night after the market closed. As Mike stated we made -- we had made important progress in preparing for the significant milestones that are now drawing closer. Ongoing focus on efficient cash management will allow us to reach several of these key milestones over the near and intermediate term. As of June 30, 2019, Celsion's cash and investment balance was $22 million. In addition, the future plans sale of New Jersey State NOLs of $4 million and the availability under existing equity lines should allow us to extend our cash runway into the first half of 2021. This timing will put us past the final endpoint of the Phase 3 OPTIMA study which is 197 events if we need to go that far.Our clean capitalization table includes approximately 21 million shares of common stock and only 600,000 warrants which have an exercise price above the current market price. I'm also pleased to tell you that the current share position of approximately 1% of our shares outstanding is an all-time low for the company. With respect to future funding flexibility, we have a $75 million shelf registration statement on file with the SEC to sell registered shares at the appropriate time. We also have two equity facility -- financing facilities in line that affords us the opportunity to raise additional capital in an opportunistic fashion with no warrants and a very low commissioner fee.Turning now to the second quarter financial results, research and development expenses decreased $1 million to $3.6 million in the second quarter of 2019, compared to $4.6 million in the second quarter of last year. Clinical development costs for…

Thank you, Jeff. As always a lively and vivid discussion of the financials to bring the numbers to light. Thank you. Before going on to questions I want to close with two points. By the way, Mr. Church does a great job for us and I want to thank him for that. I also want to point out that I'm very proud and I hope you are too of all that our employees continue to achieve through their tireless dedication to patients. And on your behalf, I want to thank them very much. Second, we want you to know we have been very active in presenting the self-same story to investors and analysts through non-deal road shows and presentation and investor conferences. During the quarter we presented at I think Equity Conference in New York City and the Deutsche Bank 44th Annual Healthcare Conference in Boston. And we thank them. We look forward to participating at Dawson James and Charting Conferences in October. We're also very pleased that Dawson James has picked up coverage on the company. I thank them very much for their interest. And we're delighted. Now, we have four research analysts covering the company. We hope that they're insights into our programs and our capability and our potential, give you a reason to take a very good look at Celsion as an attractive investment opportunity.So with that, I'll stop there and ask the operator to open the call for questions. Operator?

[Operator Instructions] We have a question from Hartaj Singh, Oppenheimer & Co.

Great. Hey, guys. Thank you. Thanks for the questions and the really comprehensive update. Really appreciate it and also looking forward to work with LHA. They always do a very good job. Just a couple of questions. One is like, I know that you've been presenting the blinded data from the ThermoDox trial. Is there you know -- one question that we've gotten from investors is that because physicians are giving I'll say more consistently, is there a probability that just the overall patient population will do better? Of course, I mean, assuming that the patients on ThermoDox will do even better than the ones just on our trail. But do you think that part of the reason why we're seeing a -- the blinded kind of overall OPTIMA curve like being greater than that probably one part could be just that the RFA procedures they've been doing more -- has been done more consistently at 45 minutes at minimum? And then I just got a couple of follow-ups.

I think that's a very interesting question. And I -- we can't answer with the absolute confidence. Dr. Borys and I and a few of our PIs have discussed that at some light. We don't believe that there's any reason to believe that for those positions who have historically used RFA for 45 minutes in this technique for larger tumors which we believe is the correct technique and should have always been used that way. We don't believe that there's any advanced in that regard, Hartaj. There are some academic books on the use of RFA for these larger tumors that describe the proper use of this technology, this heating technology. It's unfortunate in the first study, that these academic treaties were not available to all the physicians. I suspect if it was, we might have had a successful trial. But my sense is the limitations of RFA remain limited and not the technology. After a discussion with our PIs the technology or the use of the technology, it's not improved dramatically over the subgroup. And so our sense here is that if there is an improvement, it's a modest one. And I'll point to the study -- the final analysis and I'd like to discuss this more at some point. But the final analysis assumes that we'll see a 33% improvement in the overall survival versus the control arm. And I recall, we based the study on a hazard ratio of 0.65 that we saw in the prospect of subgroup or proxy 55% improvement. So there is a margin of safety that would allow for and if indeed, there was some modest improvement in this technique that would allow for the study to be successful we believe. So I hope that answers your question.

Yes. I didn't know. That helps a lot. I mean, I do think that your subgroup in HEAT they separated so clearly and I believe the patients there were on the 45 minute also at minimum, right. So, I mean, we will know shortly and I think that this therapy should, as you say, be a real advance for those tens of thousands of patients’ primary liver cancer. Another question I have is, interestingly, you restarted your primary -- the breast cancer trials in a single-center ISP in Europe. Can you just give a little bit of an idea as to what are the expectations -- the timing there on the 12 patients and then what would be potential next steps if that's successful?

Yes, I can -- I just want to add one more point to the first question. One of the things that we measure is the treatment failure of radiofrequency ablation. There's a percentage of patients that have to be retreated according to protocol if any living tissue remains after the first RFA. The percentage of patients who require a second treatment is literally no different. When we look at the subgroup versus the OPTIMA literally not different, so that sincerely that suggest to us that the use of RFA and 45 minutes is reasonably consistent between the two groups. But with regard to the breast cancer study that is being conducted in Utrecht, this is the heating technology known as HIFU. We've always been very excited about HIFU. There's been limitations with the commercial availability of high intensity focused ultrasound, largely based on cost and the time it takes to completely ablate a tumor. But we've proposed over a long period of time and discussing with various manufacturers the value of combining ThermoDox with HIFU in a non-ablative mode. In a hyperthermia mode, which would reduce the time required to treat a tumor at elevated temperatures sufficient to deliver a local high dose of ThermoDox. This has always been a very interesting combination for us under the work at Utrecht that's been ongoing, I think for now about 7 or 8 years. We finally got an approval -- they finally got approval to evaluate breast cancer patients. This isn't a breast conservation approach. So the goal here is to complete a lumpectomy and then treat the remaining tissue with a combination of ThermoDox and HIFU in multiple cycles. Primary endpoint here would be a progression for your survival. So that's what we're looking forward to. We know that the study now is just -- the IRB or ethics committee in Europe, it's called prove the study and the trial now is just to begin to recruit patients. Our sense is that the 12 patients required to complete the cohort could take 12 to 14 months to completely enroll. Or we talk to the investigators. They believe they haven't enough potential patients to enroll potentially one a month or one every other month. So that's our best estimate at this point.

Great, Mike. And I mean, that's the program you and I have talked about previously. I've always been really interested in because again, the unmet market [ph] you could actually argue is even higher than probably primary liver cancer. So that's great. And then it looks like you've got a pack with the ThermoDox. A new top navigation that pushes it out to 2033. It looks like a method of use pattern. Can you just talk a little bit about that path and specifically in the method of using? Then it seems that there's a new formulation of ThermoDox there so did you have to do any kind of bridging studies between the current formulation using an OPTIMA versus this new version? And I just got one last question on for Jeff. And thanks again, for the question.

Sure, the formulation panel that we think provides us with the best protection for exclusivity relates to the method of the manufacturer. And it uses a loading technique that fundamentally improves the quality of our drug. So currently, the quality of our drug is very high quality. I don't want to suggest that it's not but it's maintained at minus 80 degrees centigrade and a relatively high cost. So maintaining it at this minus 80-degree centigrade prevents the degradation -- actually, it's edema that's formed. Prevents the formation of edema of doxorubicin which is an impurity. The change in this means of manufacturing allows us to produce a product at a lower cost and stored at refrigerated temperatures which not only has the potential to improve the drug quality because there is no potential for the formation of this impurity but also reduces storage and handling costs. So we think it's a big advantage. The guidance that's provided by the FDA for comparability is not easy, frankly. But it does require some assessment of efficacy. We believe that that assessment of efficacy can be established in a crossover study in breast cancer. We've done that before. That's how we've qualified the second suppliers. It does take some time but in the past, the crossover study that we use to qualify its second supplier, I believe we enrolled about 15 patients over 18 month period. And that would be the strategy that we would use. And I'm just saying that off top of my head because we'd have to discuss it with the agency but that's the strategy that we'd use. They accepted it in the past and I think is something that this company is prepared to move on very, very quickly, assuming we get approval for ThermoDox in its current dosage form.

Yes, that makes sense, Mike. And so just to be clear, what you're saying is you'll likely get ThermoDox if OPTIMA is successful and you get approval, its current form and then after approval, you will go to this new formulation?

Immediately, yes, immediately. But I just want to say one more thing. There's another pen that we haven't discussed and this is -- it's called the [indiscernible]; it allows us to expand the use of this heat-sensitive liposome into therapeutics that are not aqueous. So they're hydrophobic compounds. And so we see the ability to expand the range of drug products that can be included in this heat-sensitive liposome in a pipeline of products for non-chemo therapeutics. We're really excited about the potential. We're only limited by our balance sheet with the potential of this platform.

Yes, that's great, Mike. My last question for me and that is that -- Jeff, I know you're getting the $4 million from New Jersey. The State of New Jersey has been very good to small-cap biotech by allowing this kind of funding approach you've gotten money previously also. Any potential for more of this or this would be pretty much the sum total of what you can -- how far you can go with the NOL. Again, thank you for all the questions.

Sure. The current program offered by the State of New Jersey does cap that amount at $15 million per company. There is some discussion that that limit may be raised to $20, but right now, we can sell an additional $4 million after what we had sold last year.

Our next question comes from Jason Kolbert, Dawson James.

Hi, guys, and congratulations on all the progress. Very exciting. And, Jeff, congratulations on getting a handle on kind of a top structure funding and the strong balance sheet. And I can certainly appreciate the flexibility that that provides you particularly being funded through so many catalysts. Mike, you and I have talked a little bit about this. And I know you opened the call with it. Can you take some time and go through the powering calculations that went into the trial, you mentioned the house ratio at 0.65% and the delta between active and control at 33%. Can you just kind of help me connect those two things and so that I can understand the probabilities around the powering and the probability that you get a P-value in terms of the current trial design? Thank you.

Thank you. And it's good to hear your voice on our call once again, Jason. Thank you for your interest in the company. And I want to say support, you've given us some good counsel over the years. So, let me just start with the study is 80% power. And I'm going to use my words here. It's not the statistically elegant words, but it's 80% power to show a 33% improvement in overall survival and the final analysis that says 197 deaths. The P is equal to 0.05 if we took no locks, if we took no interim locks.We do take an alpha hit with the interim locks but the interim locks are based on something called the land-to-match [ph] protocol. And so, the alpha hit is the minimum. So, if we proceed with the two interim analyses, the first one and the second one, we're not successful either. The P available to us at the final analysis will be something like 0.042. So, you get a sense of what our health span is. So, 80% power to show a 33% improvement, yet the final analysis. The study was based on this prospect of subgroup that we followed very carefully that demonstrated a 55% improvement in overall survival of therapeutic arm versus the control arm. So you see there's quite a bit of margin there to be successful at the final analysis.The interim analysis, the first enter of analysis is what was planned at 60% of the final analysis, 60% of the effects of deaths. That was 118 deaths. The way that we followed patients by the time we get a confidence that we had the right number of deaths we were at 128 deaths. And 128 deaths, the improvement over the control arm necessary for success calculates to…

It's a great recap of the numbers. And you and I talked about this, I don't think there's just an appreciation of what a good design that says, and the kind of wiggle room that you've built into it. So you and I work together to kind of raise people's awareness on that and thank you so much for your support. And I'm so excited to be following the company and reconnecting with you too. Thank you

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

Thanks for taking my questions, and congratulations on all the progress. So following the interim analysis, if we need to move forward, what is expectation in terms of rate [indiscernible] for the future data readout?

Yes. So, the death rate -- we really haven't really disclosed it in absolute numbers. So -- we're currently at 128 deaths, the next analysis would be triggered at 158 deaths. That's about 30 more. We may choose to allow for an increased numbers just to assure we're not -- we have the minimum amount. We're seeing about one patient per week expire, unfortunately. But that's the way the way it works. So that's been historically most more recently in the last few months, that's ramped up a little bit. So it's more like six patients per month. So it's somewhere between four and six patients a month we think we can count on, Kumar. That's why we're projecting about a six-month period or so to accumulate the next number of deaths. And that's about six weeks after this prepare the data for the DMC.

And in terms of the breast cancer trial, how does the combination of HIFU plus ThermoDox compare versus the combination RFA? And also in the Phase 1 trial, how is this going to be optimized?

So, that's part of the strategy. The optimization really is a function of drug time. And there's a limited capability to be able to sample tissue for drug concentration. But the optimization really it's been a function of the preclinical work that we've done in large animals. So, there is some expectation, Kumar that the 45 minutes is the right number. We saw in a previous study of breast cancer patients, this is recurrent chest or breast cancer patients who are refractory to chemotherapy, refractory to surgery, obviously, they failed surgery, refractory to radiation that the response rate was 100%. And we provided hyperthermia, microwave hyperthermia locally to the cancer lesion.So, this 45 minutes to an hour trigger we think is the right time and that's what we applied to these patients following surgery. So the goal here is to remove the tumor mass and then create this local deposition of drug with a hyperthermia level of energy from the high food device. Not with a blade of energy but with hyperthermia level energy.

And in terms of the ovation trial enrollment, what are the sites? Are you seeing more site coming on board? When do you think you'll have all the party sites on board?

So, we're not stopping. I mean, we started with 10. We have an objective to enroll 30 sites, we've identified now 36 sites, so it's likely to be more than 30.On the calendar now we have initiation, site initiation plans for 25 sites. We have 10 currently 15 more sites before year end. And then five more sites, not yet on the books, but in the process of being qualified in the first quarter of next year. So the goal here is to have enough site to be able to enroll the balance of the study that 118 patients over the course of 12 months at 30 sites. And you can do the math. That's one patient per site every three months. We think that makes a great deal of sense.

Our next question comes from Barry Rubin [ph], Private Investor.

Mr. Tardugno, thank you for all the progress and my usual quarterly shout out to Mr. Church for always answering my questions. Before I ask my -- I just have one business question. About an hour ago I picked up 1,000 shares more because the price didn't make any sense at $1.66#. So when something is on sale to pick it up, but my business question, you were in Vietnam when? Last year or this year?

Both. Actually, we just got back from Vietnam.

Okay, so I'm just wanting out of curiosity, because I know there's a big HCC business opportunity there. What's going on over there with your communications with them? And is there any way to get expedited approval over there? I was a little confused on that. Thanks for taking my question. And always a delight speaking with you.

And so I'm delightful speaking with you. This is really interesting. As we know, we had a significant delay in the approval of our OPTIMA protocol in China. And it had nothing to do with our company. I mean, there were 18,000 applications and we're in line with everybody else. To offset the delay, we decided, kind of reluctantly, to be honest with you, Barry, because of some of the reports that we got on data quality, we decided to go to Vietnam where the incidence rate is quite high. Vietnam has one-third of the -- less than one-third, 25% of the population in United States and about 20% more cases of HCC. So you can see it's a big problem.We met with the Minister of Health, we asked if they would meet with us to discuss their trial design, and he brought with him some of his experts in clinical trials. And Dr. Boris and I met with them a few years ago. We presented the trial, we told him that we were there not only to conduct research, but if we were successful that we bring this drug to market in Vietnam right away. Typically, he told us it takes about 18 months to get a trial approved. But he picked up the telephone right in front of us and started calling the major hospitals on a Sunday, the doctors at the major hospitals and began the process on Sunday, we're -- I mean, we're in awe actually, at how supportive the Minister of Health was.We got the trial approved within four months. We started enrolling patients. I think we met with them in December and started enrolling patients in April. And Vietnam was very productive. We watched them very carefully. We hired a second CRO to focus…

Thank you.

So, I operator, there's no more questions we'll move on to closing out the call.

There are no further questions. Go ahead.

Thank you. And thank everyone again for your time this morning. We believe that the work that we're doing is meaningful, your support has been nothing short of rewarding for us, we continue to ask you to stay with us. I hope that we've demonstrated our comment that the next few months has the potential to be extraordinary, extraordinarily exciting, and hopefully, extraordinarily rewarding. We're now beginning to see the light at the end of the tunnel. And speaking on behalf of everyone here at Celsion, we hope that the approach that we've taken and the potential that we created will result in a transformative outcome.Meanwhile, we stay focused on executing our plan and presenting our accomplishments and our milestones. We look forward to our next meeting. And we hope you have a great, great afternoon. Thank you. Call has ended.

Ladies and gentlemen, that concludes our teleconference. You may now disconnect.

Thank you.

Welcome, sir.