Good day, and welcome to Celsion’s Fourth Quarter and Year-End 2021 Earnings Call. My name is Jess and I will be your operator today. At this time, I would like to remind everyone that this call is being recorded. I would now like to turn the conference over to Monique Kosse, LifeSci Advisors. Please go ahead, ma’am.

Thank you, Jess, and good morning, everyone. Earlier today, Celsion issued a press release announcing financial results for the fourth quarter and year ended December 31, 2021. You may access that release on the company’s website under the Investors tab. With us today are Michael Tardugno, Chairman, CEO and President of Celsion; and Jeff Church, Chief Financial Officer. Following management’s prepared remarks, we will open the call for a question-and-answer session. During this call, management will be making forward-looking statements regarding Celsion’s expectations and projections about future events. Generally, forward-looking statements can be identified by terminologies such as expects, anticipates, believes, or other similar expressions. These statements are based on current expectations and are subject to a number of risks and uncertainties, including those set forth in the company’s periodic filings with the Securities and Exchange Commission. No forward-looking statements can be guaranteed and actual results may differ materially from such statements. In particular, there is significant uncertainty about the duration and impact of the COVID-19 pandemic. This means results could change at any time and the contemplated impact of COVID-19 on Celsion’s operations, financial results and outlook is the best estimate based on the information for today’s discussion. Also the content of this conference call is accurate only as of the date of the live broadcast today, March 31, 2022. Celsion undertakes no obligation to revise or update comments made during this call, except as required by law. With that, I’d like to now turn the call over to Michael Tardugno, Chairman, CEO and President. Michael?

Thank you, Monique. Good morning, everyone. Joining me today is Jeffrey Church, our Chief Financial Officer, who will review our fourth quarter and year-end results following my remarks. Also with us today are Dr. Nicholas Borys, our Chief Medical Officer; and Dr. Khursheed Anwer, our Chief Science Officer, both of whom will participate in the question-and-answer session at the end of the call. As I look back on 2021, I have to say it was an incredible year. I’m pleased to report the significant progress that we have made as a company, particularly in our development programs. As noted in our press releases, we have observed important clinical results from our lead compound GEN-1 not being evaluated in our Phase II ovarian cancer study. And I can report that we’ve achieved key development milestones in our DNA plasmid vaccine initiative. Now, before I go into more detail on our research and development progress, let me first discuss recent steps that I’ve – that we’ve taken to ensure the future of your company. During our February Special Meeting of Shareholders, we received support from more than 85% of shares voted for our recently executed stock consolidation, the goal of which was twofold. First, and very importantly, the reverse stock split was necessary to maintain our listing on the NASDAQ Stock Exchange. Second, by excluding the number of authorized shares from the stock consolidation, we have effectively freed up some 100 million shares now available to conduct ongoing business. For example, number one, to raise capital if needed to support our research; number two, to acquire assets to add to our pipeline; and/or number three, to provide shares in the form of options to hire new talent and to align management and employees with the interests of our shareholders. We’ve also made…

Thank you, Michael. Details of our fourth quarter and year-end 2021 financial results were included in the press release we issued this morning and in our Form 10-K, which we filed before the market open. Celsion ended the year with $56.9 million in cash, short-term investments and interest receivable. In January 2022, we completed a registered direct offering of convertible redeemable preferred stock raising an additional $28.5 million before deducting placement agencies and other offering expenses. On March 3, 2022, we redeemed all outstanding shares of the preferred stock. Preferred stock has been retired and is no longer outstanding. The company’s only outstanding securities are our common stock. Also adding to our cash position was $1.4 million in non-dilutive funding from the sale in February 2022 of their New Jersey State net operating losses. We’ve raised over $16 million from the sale of these NOLs, which is equivalent to one full year of operating expenses. We anticipate an additional $3.5 million in proceeds from this innovative program in the 2022 to 2023 timeframe. We believe we are an excellent position with respect to liquidity to support us through several important value-creating milestones. We have sufficient capital resources to fund our operations through the end of 2024. Now let me turn to a review of our year-end financial statements. For the year ended December 31, 2021, Celsion reported a net loss of $20.8 million, compared to a net loss of $21.5 million in 2020. Operating expenses were $21.5 million in 2021, which represented a $2.5 million, with 13% increase from the $19 million we reported in 2020. Research and development expenses decreased $700,000 from $11.3 million last year to $10.6 million in 2021. Costs associated with the OVATION 2 study were consistent year-to-year at $1.3 million. Other clinical and regulatory costs were $2.5 million in 2021 and 2020. Research and development costs associated with the development of GEN-1 to support the OVATION 2 study as well as development of the PLACCINE DNA vaccine technology platform increased to $4.3 million in 2021, compared to $3.1 million in the same period last year. CMC costs decreased by $1.5 billion in 2021, compared to $2.1 million in 2020 due to lower levels of manufacturing the clinical supplies. General and administrative expenses increased to $10.9 million in 2021, which compares to $7.6 million in the prior year. This increase was primarily attributable to higher non-cash stock compensation expense of approximately $1.3 million and increase in professional fees of $1.5 million. And this is largely legal fees to defend various meritless suits filed after the announcement in July 2020 of the OPTIMA Phase III clinical results and an increase in premiums on director and opposition insurance of approximately $300,000. With that, I’ll now turn the call back to Michael.

Thank you, Jeff, for your very comprehensive and exciting overview of our financials. In closing, I’d like to thank, everyone, our patients, clinicians, shareholders and Board members for their unwavering support as we proceed in our goal of developing our platform technologies, TheraPlas and immune-oncology, in our gene-mediated immunotherapy and PLACCINE our vaccine initiative. We look forward to providing exciting updates. And with that, I’d like to open the call now to Q&A. Operator, would you open the lines, please?

Certainly. Thank you. Our first question comes from Kumaraguru at Brookline Capital Markets. Your line is open. Please go ahead.

Thanks for taking my questions. So with regard to the OVATION study, what are you seeing in terms of PFS so far? And also, the expectation is that you have to follow these patients for 16 months, because I think that’s where you are going to look at it right the later either at PFS event for the 16 months?

Yeah. So I’m gong to ask Dr. Borys do a comment on PFS. I think we just have a handful and the – we’ve asked our statisticians to give us a look. But Nick, would you care to answer that, please?

Yeah, thank you very much for that question. So we started gearing up to be monitoring the PFS results. And as you know, the average PFS and many of these patients or median PFS is around 12 months. And so we expect to get the bulk of that maybe 16 months after the last patients enrolled. At this very early time, we have maybe around 19 or 20 events to date. We are showing a better trend for the GEN-1 arm. And I don’t have the exact numbers in front of me. But as you could probably tell, it was way too early to speculate on which way that would go. But early results look interesting and promising and we’ll be reviewing that with our GOG Partners at the ASCO meeting. And as the data becomes more mature, we’ll be sure to share that with you.

Okay. So the assumption of data in third quarter is it’s based on the 16 months of follow-up for all these patients.

In the 16 months median time on the study.

Okay, got it. And with regard to the PLACCINE platform, what construct are you going to look at this primate studies?

That’s a good question. I think we had a long discussion with our scientific advisory group on this and we considered a number of different options. And we concluded the most important option would give us a one-to-one heads on comparison with the comparator with the mRNA comparator. Khursheed here on the line, can you – could you address that in more detail, please?

Yes. Thank you, Michael. Kumar, so, as Michael said, that one of the goals for this study NHP is to do a conformational proof-of-concept into larger animals NHP moving from mouse through excellent data. And the vector would be the one that expresses D614G at the European variant, very close to the Wuhan wild type virus that the commercial vaccines are a game. So I think that not only the goal is that to demonstrate activity in larger animals going from mouse, but also to compare it with the commercial vaccine, where the right comparison would be the variant that’s very close to identical to the commercial vaccine. So you have apples-to-apples comparison, although we do have multiple chronic factor with multiple antigens, that’s our lead vector, we’ll eventually test that as well. But compared to purpose, that’s the vector, an antigen that’s very close to the commercial vector.

And Khursheed, can you give us a little overview of what the various arms of the study are comprised of and what they’re addressing, please?

Yes. Thank you, Michael. We will. So there are five arms of the study Kumar. One is the placebo. Of course, non-vaccinated animals. Our second group is the mRNA comparator at the human dose that’s been given if that vaccine. Then our vector expressing a single SARS-CoV-2 antigen comparable to the comparator antigen at two doses. So dose one and dose two, and then the fifth group is – so these fourth group, these four groups will demonstrate the ability of the vaccine to make antibodies IgG. And then their ability to protect against the viral infection, which means at some point after the antibody levels have built up, then you will challenge them with the virus. And then look at the neutralization of viral titer compared to the control animals that have not been vaccinated, compared to the mRNA competitors, and see if the viral titers are affected by our vaccine at two doses. And that reduction, how does that compared to mRNA vaccine. And then the fifth group would be the durability. They’re also injecting animals to see if we can take the duration of response to at least six months or beyond. So we will be collecting blood and measuring antibody levels up to six months. And then we’ll challenge at that time, that fifth group. So three objectives, confirmatory from mouse to NSB; secondary, how does it compare to the comparator; and third is the durability.

And Kumar, if I may, I just want to ask Khursheed to address another the hypothesis for our assumption that a DNA vaccine may have a more durable protective capability. Can you speak to that a bit please, Khursheed?

Sure, Michael. So Kumar, if we inject, say, antigen protein, or mRNA, encoding an antigen protein or DNA into muscle, and you’ll see a very clear distinction in expression profile at times. So protein disappears very quickly in a matter of hours, mRNA lasts for a couple of days, expression from mRNA off the antigen protein that you’re building immunity against. But with DNA, it’s very well known. Inherently, DNA become episomal in the nucleus and muscles don’t divide. So the expression lasts for a very long period of time. You do get expression as early as 24 hours or less. So that’s also important to kick off the immune response, but a sustain or at least long-lasting antigen exposure could, could translate into longer durability of immune responses like they’re boosting, right? So the antigen exposure is probably gone. You do as a boost, second or third, whatever boost. But if the antigen lasts for a long period of time, you could, in theory, sustain the immune response to the antigen for longer period of time.

That’s very helpful. Thank you.

And of course, the two shortcomings that – our two major shortcomings among others that we’re attempting to address here is the certainly the durability of response, I think everybody can agree that they’re subjecting ourselves to a vaccine that requires revaccination every three or four months is challenging, commercially challenging. So and that’s the one major issue that we’re attempting to address. The second is the ability of a vaccine to address more than one variant. We see this virus, this particular virus and others have the ability to change in construct. And as a result, the protective capabilities, as we see in our hands for some of these new variants may not be quite as strong as what the vaccine is originally designed for. So exciting times. And in our hands, I just have to say for everyone in our hands, this is – in many ways vaccine, the vaccine development program is new to us. But in another way, our experience with plasmid DNA and delivery with synthetic methods have put us ideally in a position to address a potential superior approach to nucleic acid vaccines.

Okay.

We’ll go next to David Bautz with Zacks Small Cap Research. Your line is open. Please go ahead.

Hey, good morning, everyone. Thanks for the update this morning. So my first few questions are on the OVATION 2 study. I’m curious if we’re going to see any additional data on surgical resection. And I’m also curious if you’re having trouble getting patients enrolled into the study, because you mentioned that you were going to be putting ads out for recruitment.

Yeah. So let me address the first question or the last question first. And that’s recruitment. I don’t – we’re a little disappointed with recruitment. When we originally initiated the Phase II portion of the study about a year-and-a-half ago, maybe a little longer than a year-and-a-half ago, we expected at the 22 or 23 sites that we’re enrolling patients to complete enrollment in the first quarter of 2022. The resurgence of the Omicron variant or the surgence of the Omicron variant caused a number of our institutions to focus their healthcare resources on patients who are presenting with the virus. At the expense of enrolling patients in our study, we know that for a fact, we’ve talked with our investigators multiple times on this, that the direction from the hospitals with focus on the pandemic. As a result of that, we are now projecting, we’ve seen a resurgence in activity. We’re now projecting with a bit of confidence that we will conclude enrollment in the third quarter. The opportunity to recruit more patients than our target makes a lot of sense to us. The study can enroll as many as 130 patients. We think it’s a – bigger N is always better, gives us more information and more data. Dr. Borys has been lobbying that from right from the beginning. And so at a relatively nominal cost and I have to say, Nick, Nick negotiated all of this. But in a relatively nominal cost, this advertisement, let me call it a advertorial, made a great deal of sense to us. We didn’t get more patients in during this relatively short time period before we conclude the study. We just think we have a better chance to evaluate the GEN-1 to treat these patients. So all in all, it was a cost-effective way to increase the N. We think it’s the right thing to do. I think, by the way, it gives us more exposure to assuming we’re successful with the Phase II study gives us more visibility, more opportunity to recruit a Phase III trial. I think that probably answers your question. But Nick, if you – do you want to add any more to that?

Yeah. To the recruitment question, absolutely, we’re very pleased that we have an opportunity to advertise. Meanwhile, we’ve done everything we can to use social media and so forth. But I think anybody in the medical world knows that during COVID, many people have been hesitant to go in for their checkups, follow-ups. And as a result, there’s been a decrease in cancer incidence over the last year. And so that’s been well reported. And that as a result hits clinical research as well. So hopefully, the world recovers very quickly from this COVID impact and clinical research. And we can get back to normal recruitment rates. Meanwhile, Celsion is going to do everything possible to create awareness and get patients into our studies.

And, Nick, you also along those lines and this is just a little bit of more information than your question. But from our physicians, patients who are delaying seeing their doctors are presenting with more advanced disease, right?

Yeah, that’s correct. And so, again, to anybody listening here, if it’s time for your checkup, please do it. You don’t want to delay anything if in terms of checkups and follow-ups and screening. So that’s very important because especially in ovarian cancer, as you know, 80% of the cases in ovarian cancer present with advanced disease. And the longer you wait, the tougher it is to treat you. So I think that’s very important for everyone to know and understand that it impacts on many fronts. Going to your first question, you’re asking about surgical resection rates. As Michael reported in his prepared comments, we continue to see an improvement in the GEN-1 patients with surgical resection rates. We – he reported today that there’s a 27% improvement. And that was the catalyst that that prompted the company to do its Phase II trial, and for the GOG Partners to join us in helping us manage the study and prepare for the future registrational studies. So that is an important point. But it’s a secondary endpoint because it’s not recognized by the FDA. Our primary endpoint is the PFS. So that’s the data that’s going to be very important to us. The surgical resection rate is very encouraging and we continue to see an improvement.

And just to your – specifically to your question, the – as we get another bolus of patients who have had interval debulking surgery, we will be prepared to report some additional information.

Okay, great. Thanks for that. And in regards to the non-human primate study that’s going to be getting underway, I’m sorry, if I missed this, but what strain of SARS-CoV-2 are going to be using for the challenge study?

Sorry, D614G, I believe, is that right, Khursheed?

Yes, Michael. This is the single mutation that happened to the Wuhan wild type virus and appeared in Europe first where the sporadic acid was mutated glycine at 614 position. So that’s the string. Very close to the alpha is string.

Okay. Is there a reason why you didn’t want to test for Omicron since it’s the strain that’s out there right now?

Yeah. As Michael pointed out earlier that we have made 36 different vectors. We have made vectors with Omicron. But one of the important goals for this study was to have comparison with the commercial vaccine. And with a lot of internal discussion and discussion with our Scientific Advisory Board, it was advised that if you want to make a comparison with a competitor than commercial one, then it should be on equal footing at least the same strain of the virus. So that’s the reason for that purpose. But also, we do not exclude enrolling some more subjects down the road with our bicistronic vector, or maybe a new variant. Of course, Omicron is the talk of the town today, but of course, it may change to a different variant. Our goal is to show the proof-of-concept of our vaccine technology and relation to a competitor, but clearly, Omicron is prevalent today. We have a vector. Michael, do you want to add anything to it.

I do. I just don’t want to say it another way is the vaccines that have been approved for emergency use are designed to address the D614 variant. And the – in order for us to clearly establish equivalence or superiority, we wanted to test our plasmid coded for the same variant. So our goal here with this study is to show superiority over the existing vaccines. There’s nothing to prevent us from in the future, developing a vaccine that has a plasmid that’s coded for the Omicron variant.

Okay. If you were going to move this vaccine candidate into the clinic, would you only do that with a partner? Or would you do it alone potentially?

That’s a question that we – we’re discussing internally. We think the opportunity to go to the clinic with a partner makes the greatest potential for success. You can do it a lot more quickly. Our experience in clinical research is largely in cancer. So it’d be a new area of clinical research for us. It’s not that we couldn’t do it, we would just take a little bit more understanding on our part. So our goal will be to look for a partner for clinical research.

Okay, well, great. Thanks for taking the questions this morning.

Thank you.

With no other questions holding, I’ll turn the conference back to Mr. Tardugno for any additional or closing remark.

So again, I want to thank all of you very much for attending our conference call and for your interest in Celsion. I hope as you can see that we are very excited about the work that’s being conducted by the company in two very important indications. We look forward to continuing our progress and to advising you as the developments occurs. So as I said in my earlier remarks, stay tuned. We do expect to be presenting some very interesting updates in the relatively near future. Thanks again very much. And with that, we will end our call.

Thank you. Ladies and gentlemen, that does conclude today’s call. We thank you for your participation. You may disconnect at this time.