Imunon, Inc. (IMNN) Q2 2019 Earnings Report, Transcript and Summary

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 3 study will begin reading out in October of this year. First data from our Phase I/II OVATION 2 study by the end of the year. We have taken the necessary steps to ensure robust and cost-efficient supply chains for our two lead product candidates. Gross margins for ThermoDox will be impressive no matter the market or the local economy. Our gene-mediated immunotherapy will enjoy product cost at a small fraction of other plasmid-based drugs. Both product candidates have multiple sourcing options to ensure continuity of supply and competitive costs on going into the future.Our capitalization structure is as clean as it gets. We've taken steps to ensure that. We trade only in common stock and virtually with no warrants to leverage or hedge a short position. And I hope you will agree our financing initiatives have been nothing short of investor-friendly. With very little dilution over the past two years, we closed this quarter with $22 million in cash on the balance sheet, over $23 million if you consider prepaid expenses and we look forward to adding another $4 million more through the sale of our New Jersey net operating losses. We have more than enough cash to see us through our key value drivers over the next 18 months. In addition to all this we continue to garner the support of key opinion leaders -- global leaders in their fields of medicine and science, witnessed by our recent press releases announcing the talk given by Dr. Premal Thaker regarding the promise of GEN-1 for ovarian cancer patients and the dramatic potential for ThermoDox and hepatocellular carcinoma or HCC or primary liver cancer as it's known. As carefully described by researchers at the NIH and their independent review of our 700-patient HEAT Study data.We could not be more pleased and confident. So much so that we have begun writing as I told you in our last conference call, we began writing the NDA for ThermoDox and HCC. Frankly, we could have not started soon enough because if we're right, we are well-positioned to deliver what may be among the most important new oncology medicines in a generation.The second quarter in recent weeks were highlighted by number of announcements that demonstrate our progress with both ThermoDox and GEN-1 development programs. One of the most important or significant pieces of news was announced in August 5th, when we disclosed that we had reached the number of events necessary for our first off to allow in our statistical plan agreed to with the FDA. But our first pre-specified interim analysis of data from our Phase 3 OPTIMA study in HCC. This trial is evaluating ThermoDox in combination with a minimum of 45 minutes of standardized radiofrequency ablation, also known as RFA in treatment-naive newly diagnosed HCC patients.The database was locked in 128 deaths, which represents a slightly higher number than the minimum number required to conduct this assessment and is within the range agreed to in our statistical plan. I'd like to note that 128 deaths is 65% of the total necessary for the final analysis at 197 deaths and provides for a hazard ratio of 0.637 in order for the trial to be successful. Say that again, the 128 deaths the first interim analysis to be successful has to reach a hazard ratio of 0.637. A hazard ratio of 0.6377 represents an approximate 57% improvement in immediate survival over the control arm. And this is largely consistent with the 0.65 or 55% improvement that we saw or observed in the prospect of HEAT study subgroup on which we based the optimist study trial design. So if I can translate that I know there's a lot of information. We have to do just a little bit better in terms of median survival than we saw in the prospect of subgroup, the group that was used to base the study design for the OPTIMA trial in order for us to be successful at this first interim analysis on trial.So the trial's independent data monitoring committee or the DMC as we call it will meet before the end of October to review the interim data. We expect to announce their recommendations as soon as possible thereafter. If the study has not reached the threshold for success at this first interim review, a second pre-specified interim analysis will be conducted after 158 deaths. At this analysis, the hazard ratio necessary for success is 0.70 which represents a lower threshold for success. A hazard ratio of 0.70 represents an approximate 42% improvement in the median time to death over the control arm, which as you can see, has a much greater potential for success when you compare it to the data that the study was based on. So I want to reiterate our previous guidance for the first interim analysis.While it is possible for OPTIMA study to be declared successful at the first interim, the probability of success improves with the number of patients evaluated. While we remain optimistic for a positive trial reserved in October the likelihood of success is much greater at the second interim analysis, which is expected to occur in the first half of 2020 assuming the current rate of death that we're seeing in the trial population. Should we achieve the hazard ratio at either interim analysis, the DMC will recommend unblinding the study and meeting with the FDA to request accelerated approval. Now as a reminder, the OPTIMA study was fully enrolled in August 2018 with 550 subjects, as I said, from 65 clinical sites and 14 countries. Those countries represent all the major markets in the world for primary liver cancer. Doctor's study is based on a prospect of 285-patient group from each study -- subgroup from each study.And I say perspective, I want to repeat this, I say at every conference call. Different than other subgroups, we identified a metric 45 minutes of heating to be critical for ThermoDox in combination with RFA to improve survival. We identified those patients in the study who had been treated with 45 minutes or more of RFA plus-minus ThermoDox. And then we followed them for 3 years to determine an overall survival benefit. And what we saw is I'll repeat again is nothing short of remarkable. In this prospective evaluation of patients who are treated with standardized RFA more than 45 minutes, they demonstrate a median survival of more than 7.5 years when they combine this standardized RFA with ThermoDox. And that's a survival benefit of more than two years of the control group who received 45 minutes or more of RFA alone. I hope that's clear.As the Tuesday's press release points out and if you haven't read it, I hope you will. I suggest that you do. The National Institutes of Health suggests that we have some cause to be optimistic. An independent analysis conducted at the NIH's request, not on our request, their request. The analysis of the entire data set from the HEAT study was performed and it has confirmed that an RFA procedure of increasing heating time for ThermoDox resulted in a statistically significant improvement in overall survival. This past Tuesday, August 13th, we announced the publication of the results from this analysis. Now in the online journal -- the peer-reviewed Journal of Vascular and Interventional Radiology. The NIH's evaluation included survival data from all patients with single lesions. So all the patients, single lesion. They use single lesions because they could determine with specificity the amount of time that tumors retreated with radiofrequency ablation. That was 437 patients representing almost 63% of the study population.This analysis established an improvement of over two years versus the control arm when the heating time of the tumor is greater than two and a half minutes per milliliter of tumor -- of volume of tumor. Which if you do the math, is largely equal to 45 minutes for a three-centimeter tumor. This finding is consistent with what I told you earlier, with the company's own results. Imagine that. Independently evaluated from the full data set but different look, 437 patients, concluding the increasing heating times, substantially improves survival and it appears that inflection point turns out to be about 45 minutes for a three-centimeter tumor. In which case, if that's follow the patient's survival benefit over the control arm is more than two years, median time of death is never reached. 65% of patients are still alive after 7.5 years. I hope that it's convincing in some way, mitigating some of the risk associated with the trial design as we have presented it.In parallel with this trial evaluation, we are putting everything in place for product manufacturing and commercial launch. As you know we have three manufacturers for ThermoDox, two in the United States, one in China. And we will be meeting with the USFDA late in August. We've already set the date for what I'm calling a pre-NDA meeting review of the manufacturing CMC in our pre-clinical modules. We've conducted a GAAP analysis. We'd like to make sure that when we do file the NDA that there is nothing missing. The last thing we want is a complete response letter. So your company is acting very proactively in this regard. We will also be meeting as I'd mentioned to you in previous conference call. So we're meeting with the NMTA formerly the CFDA formerly the SFDA. That's the Chinese regulatory authorities. We're planning for this meeting in the third quarter to discuss our filing strategy for ThermoDox in China.As I mentioned earlier, the Chinese authorities have expressed great interest in our most recent meeting with them and finding a means to be able to accelerate data review. And given that over 400,000 new cases are diagnosed every year in China, you can understand their impatience for the data from this study, which not only has the potential to have significant clinical benefit but the pharmacy -- the pharmacoeconomics for ThermoDox plus RFA are nothing short of astounding. Many of these patients are treated surgically or with multiple cycles of chemoembolization, which require long hospitalization and long recovery periods. As I told you in the past, RFA plus ThermoDox, in many cases, an overnight procedure. In some hospitals can be in the future, even an outpatient procedure.Another point and then we're going to move on. The commercial opportunity I want to reiterate by our conservative model and we just reviewed this again yesterday, exceeds a billion dollars worldwide. Some 750,000 patients are diagnosed annually with HCC. Approximately in -- mortality here is significant, approximately 700,000 patients die annually from this disease. 75% of HCC cases are in China and Asia more than 30,000 new cases in the U.S. 45,000 in Europe. The cancer incidence of HCC is increasing by 5% annually. HCC is on the minds of every health agency in the world, including NIH and FDA and CDC and EMA and others, certainly the Chinese. To the few other key statistics here, I just pointed out to you. So what's the -- I mean what -- So let's assume ThermoDox is successful, what's the future here? HCC is the third leading cause of death in the world. The major risk factors for HCC are hepatitis B and C. And I'm going to give you one summary statistic.Approximately one-third of a billion patients worldwide are infected with hepatitis B or C. A major risk factor for primary liver cancer. So clearly, we're addressing a pressing medical need with hopes that -- and confidence, so let me say it that way, that the studies that we're conducting will provide a therapeutic that can be significant in changing the outcomes for these patients. So let's just summarize. ThermoDox, we're very, very excited. We believe this could be an exceptional -- exceptionally valuable asset, as more data is generated for HCC. And as I've told you before, there's other solid tumor indications for which, assuming we're successful in primary liver cancer, which will immediately turn to evaluate where we've seen some potential for success and other solid channels. And so while ThermoDox and OPTIMA are the immediate focus for some investors, we believe that GEN-1 holds equally compelling promise and is of great interest to investors’ folks in gene-based and immunotherapy.Early in development, though, GEN-1 is being evaluated as you know in a Phase I/II study called the OVATION 2 study. These are of newly diagnosed treatment-naive late-stage -- stage 3 and 4 ovarian cancer patients. We're evaluating GEN-1 in combination with the standard of care, you know, Agilent chemotherapy, prior to surgery, treated with this cocktail of chemotherapeutics and amino therapeutic. The goal of which is to improve surgical outcomes and to delay progression. GEN-1 is RILPLG mediated immunotherapeutic. This is a very elegant approach to taking what science and medicine have recognized that the very potent anti-cancer cytokines planetary protein with some serious side effects. Our scientists in Huntsville under Dr. Anwer direction has developed a very safe local administration of this therapeutic, which show -- is showing great promise from our early studies and particularly for our Phase 1 trial that was completed a little over a year ago. The data from which has been presented multiple times.We want to say gene therapeutic is always concerned about safety. We have completed five GEN-1 trials in ovarian cancer. Safety is unequivocal. I mean, there's no question about it. A biological and clinical activity, it's been demonstrated in virtually every study. Much of this was published in Future Oncology in October 2018. Again, I suggest you read it. It's available on our website. While the article describes our therapist platform, this is a synthetic, non-viral vector, nanoparticles for the delivery of the plasmid that transport cells that creates these bio pharmacies that produce therapeutic levels of interleukin 12. The beauty of this technology and what attracted us to it was it's not only a safety profile but importantly, its potential to be administered over many, many cycles as we've seen in our evaluations, without interference from the immune system, which makes it an ideal candidate for immunotherapy.During the first quarter of this year, we reported final data from its Phase 1b study, the OVATION 1 trial. And I'll remind you of the compelling small but compelling nonetheless, data from the study had a very top line. And by the way, the study manuscript is being finalized and hopefully will be published in the relative near-term [ph]. A 100% objective response rate we saw in patients who were treated at the highest -- two highest cohorts, 8 of 9 patients treated at two highest cohorts had an R zero surgical resection score. Now zero is not expected in these patients and it's predictive of significant improvement of PFS and overall survival. R zero means translated in layman's terms when the surgeon comes out of the operating room and he goes to the patient's next of kin and he says I got it all. I removed all of the diseased tissue from the patient.We saw remarkable 75% improvement in medium progression with PFS increasing from 12 months to -- which would be expected and I think all of the literature -- historical literature supports this. 12 months so we saw 21 months among the 14 patients treated according to protocol. All this supported by some very impressive translational data that was evaluated for us at Roswell Park Cancer Institute under the direction of Dr. Repasky KOL in the area of immunotherapy, particularly in ovarian cancer. Repasky provided us with data to demonstrate a significant reduction in immunosuppressive activity across -- of this cancer across multiple biomarkers, including PD1, PDL1 and others. And importantly, increased activity of both the adaptive and the innate components of the immune system. Together representing a marked immune anti-cancer shift in the tumor micro-environment. So I'm not an immunologist, I'm not going to try to convince you that I understand this to the level that an immunologist would. But this is what the immunology community is looking for. This shift in the tumor micro-environment that hides itself very nicely from the immune system, as it gets a foothold to become a malignant and lethal mass.So we're very excited about the translational data supporting clinical data. We've moved to a Phase I/II study at the recommendation of our advisors. We have a Phase 1 running and we talked about that. The OVATION 2 study as we're calling it I reported to have a very difficult startup, largely due to some changes in the approval process for gene-based therapies from a centralized review at the NIH through a decentralized review, which took many study sites over a year to establish. That along with some review after review by scientific committees, et cetera. In any event, we have momentum moving in our direction. We're delighted to report now we've enrolled the first of two cohorts in the Phase 1 portion at 10 trial sites. We fully expect to have 20 trials -- 25 trial sites active and recruiting patients in the Phase 2 portion by year-end. Overall early into next year about 30 trial sites. The goal of which is to complete enrollment 130 patient in this study by the end of next year as we had promised.If you recall, the study was originally designed with 10 sites. We then created the 30 sites to ensure that we had somewhat of a higher cost but the goal here is to ensure that we complete enrollment on the trial on a timely basis. The trial DSMV will meet in September to evaluate the first cohort of patients. The second cohort will be completed as soon as the DMC is okay. We'll begin rolling patients. We expect to have the second cohort enrolled and evaluated for objective response and surgical outcomes by the end of the year. So when we've achieved the dose of 100 milligrams per meter square, we'll begin enrolling the Phase 2 portion in early 2020. This is again, as I said 130-patient trial. It's randomized one to one so we'll have a control arm for the first time for this trial candidate to determine its efficacy and we are excited really to begin to evaluate ThermoDox compared -- I mean GEN-1 compared to a control arm.These patients will also be receiving a maintenance therapy after surgery. Our goal is to continue to recruit the immune system to prevent a recurrence of this cancer because we know the link recurrence, improving progression-free survival as a direct and immediate impact on overall survival. As I reported, we spoke to the FDA earlier this year, regarding our interest in breakthrough therapy and accelerating our development program. The meeting could not have been more successful, in my opinion, one of the most productive exchanges with the FDA in my career. Once the FDA report -- suggested to us once the dose is established in our Phase 2 study the FDA indicated that they would be interested in a face to face meeting with the management and our team and our scientists to discuss trial designs potentially to accelerate development if we so choose. They also asked that we develop supportive randomized data from the small subset, the Phase 1 portion of the study, combine it with the OVATION 1 data and submit it for our breakthrough consideration which we plan to do. So we're very excited in that regard. And with the FDA's interest in GEN-1 and IL-12 ovarian cancer.For the Phase 2 study overall, the primary analysis for primary endpoint is progression-free survival of PFS. That will be conducted after 80 patients -- at least 80 patients have progressed after all patients have been followed for at least 16 months, whichever is later. Under this open-label design, clinical data will be disclosed throughout the execution of the trial as it's released by the study's investigators. We've done that. We've evaluated and released data from the OVATION 1 study. And as soon as it's available to us, we'd like to make it available to the investment community so that you can make your judgment on the potential of this program. We remain optimistic here that the study of being enrolling will be completed by 2020 but even more so that GEN-1 will fully find its place in the treatment [indiscernible] for ovarian cancer. So now before I turn this call over to Jeff to review our second quarter financial results, I want to emphasize that Celsion has the potential for transformative announcements. I hope you can see that in my comments. From both of our -- or either of our clinical studies later this year. Underpinning our fundamentals is a strong balance sheet. And we have access to capital at very reasonable rates, very reasonable economics to continue to expect to create significant value for our shareholders, for patients and for the medical community. And with that, I will take a deep breath and turn the call over to Mr. Church. Jeff?

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 the Phase 3 OPTIMA study decreased $800,000 in the second quarter of this year and that was due to the completion of enrollment in this trial in August 2018. Costs associated with the OVATION 2 study were $100,000 in the second quarter of 2019. Other costs related to the clinical supplies and regulatory support for the ThermoDox and GEN-1 clinical development programs increased by $300,000 in the current quarter, compared to the prior year. In the second quarter of 2019, non-cash stock compensation expenses decreased by $2.6 million compared with the same period last year.General and administrative expenses were $2.1 million in the second quarter of this year, compared to $3.5 million in the same period last year. The decrease was primarily attributable to a $1.8 million decline in non-cash stock compensation expense, offset by a $200,000 increase in professional fees primarily related to recruiting fees for several new positions to support anticipated regulatory and commercialization efforts for ThermoDox. In connection with the June 2018 venture debt facility with Horizon, we incurred interest expense of about $300,000 during the second quarter of 2019. This compared to only $15,000 of interest expense last year. For the second quarter 2019, we reported a net loss of $5.9 million or $0.29 per share, compared to a net loss of $8.2 million or $0.46 per share in the same period of 2018.Operating expenses were $5.7 million in the second quarter of this year, which represented a $2.4 million or 30% decrease from the $8.1 million in the same period last year. Net cash used for operating activities was $4.7 million in the current quarter and this compares to $4.2 million used to fund operations in the second quarter of 2018. Cash provided by financing activities during the second quarter were $2.7 million, which included opportunistic sale through the equity facilities I mentioned earlier. In June, we filed an application to sell additional New Jersey State NOLs for $2 million to raise non-dilutive capital, which we plan to monetize in the fourth quarter of 2019.We anticipate that our net cash usage for the second half of 2019 will be approximately $4 million per quarter. Our current cash together with the NOL sales and the modern selective use of the ATM Equity Line is expected to provide us funds into the first half of 2021. Balance sheet and business fundamentals are strong. Capital structures claim with only 21 million shares outstanding and virtually no warrant overhang, including a successful outcome for ThermoDox, a potential billion-dollar commercial opportunity will be a significant value inflection for the company, as well as the shareholders.I'd now let's turn the call back to Mike.

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 about 57%. It's a P equal to 0.637. So, just a little bit better. Let me try to put that in more concrete terms. If the control arm median time to death is two years, then the first analysis, the therapeutic arm, medium term death would have to be 37 months. So 24 months versus 37 months.If we're not successful at the first interim, the second interim is planned at a lower threshold, being equal to 0.07 or 42% improvement in the therapeutic arm over they control arm. In that case, again, assuming we had the median time of deaths in the control arm of two years of 24 months, the 34 months are in the act of arm would be report to be successful. Less than the 37.5 months that we had seen and would I've seen in the subgroup. In the final analysis, as I said the hazard ratio is 0.75, the object that translates into about a 33% improvement in the median time to death. So again, assuming the control arm is 24 months, we would have to see an eight month improvement in the median time of death to be successful. That compares to the subgroup of 37 months. So, there's a good margin here that we believe can provide us with some confidence that somewhere along the line here, we would be successful.So I know that may sound confusing. So in the subgroup we saw 55% improvement at the first interim, 57% improvement would be required for success, or just a little bit better than a subgroup. If we're not successful there at 42% improvement, at the second interim, if we're not successful there, then only a 33% improvement is required for us to be successful.

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 intensely on trial compliance and data management. We brought in experts from South Korean and the United States and the Philippines to make sure that the RFA procedure is being conducted correctly.We evaluated all of the RFA procedures, through our independent radiology review of the CT scans, make sure there was not -- we weren’t missing anything. The bottom line was we enrolled almost 100 patients in Vietnam in a relatively short period of time. Of which some of the most enthusiastic investigators we went back just a month ago, Dr. Boris and I, to thank the investigators for all their work to review with them the case studies to get their impressions of where we stood with radiofrequency ablation and thermal docks. Just impressions because it's a blinded study, they're all overwhelmingly positive with the trial and the outcome and their patients' recovery and progress.We presented the results from this enrollment -- to the Minister of Health once again, who advised that once we have an approval from any country, China, United States or the EMEA, that they would immediately accept our application and accelerate it through an approval process. So that's where we stand. It's been a very gratifying part of the work that we're doing. This among other countries, and I don't want to take up your time with some boring conversation here. But we have -- I was telling Dr. Boris if we've done nothing else we've improved the standard of care in Asia Pacific and China and in a very material and measurable way that this little company has brought the rigor of Phase 3 studies, to some most important institutions in Asia Pacific and China. The quality of care they're getting as a result of the standardization of radiofrequency ablation is remarkably better. The impact of ThermoDox will believe will improve it even more.So the feedback from the regulatory agency in Vietnam and from the investigators was very, very positive. And I can tell you, I mean, you're buying our stock your money, your investment in this company is helping to improve the quality of care for it's going to be millions of people, regardless of how the ThermoDox thing turns out, although I'm sure it will be very -- I'm highly confident it will be successful, your investment has allowed this little company to bring modern medicine, there's some places where HCC is an enormous problem. So we thank you very much. So, thank you very much, Barry. And we really appreciate your support and attention.

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.