Please standby. Good morning. My name is Amy and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsion's Second Quarter 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Mr. Jeffrey Church, Senior Vice President and Chief Financial Officer of Celsion. Please proceed.

Thank you. Good morning, everyone, and thank you for joining us today to discuss our second quarter 2016 financial results, which we announced this morning before the market opened. Today's call will be archived and the replay will be available beginning tomorrow and will remain available by phone until August 29, 2016, as well as available on our website for 30 days. Before we begin the call, we wish to inform participants that forward-looking statements will be made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. You are cautioned that such forward-looking statements involve risk and uncertainties, including, without limitation, the risk of clinical failures, delays or increased costs; unforeseen changes in the cost of our research and development activities and possible acquisition of other technologies, assets, business and possible adverse action by customers, suppliers, competitors, regulatory authorities and other risks detailed from time-to-time in the Company's periodic reports filed with the Securities and Exchange Commission. Following our formal remarks today, we will open the call for questions. I'd now like to turn the call over to Mr. Michael Tardugno, Celsion's Chairman, President and CEO. Mike?

Thanks, Jeff. Good morning. And I also want to thank all of you for joining us on today's call. As always we are delighted to have the opportunity to update you on our progress, and particularly now given all the positive developments that we've shared with you over this past quarter and I'd say this past year. Now please take some time to review today's press releases if you haven't already done so, I think they will give you a good breakdown on the progress the Company has made in this last quarter. Here with me today are Dr. Nicholas Borys, Celsion's Chief Medical Officer and Jeffrey Church, from whom you've just heard, our Chief Financial Officer. Today's call will focus on the two very important, and I'd say highly promising clinical trials of our lead product candidates. The first is our new adjuvant study in first-line ovarian cancer combining GEN-1 with standard of care therapy followed by interval debulking surgery. GEN-1 is our promising gene-mediated immunotherapy. The factored foundation is IL-12 supporting our program or encouraging orally studies that were pioneered by GOG, The Gynecologic Oncology Group; you know this to be a cooperative funded by D&H [ph]. To just give you an idea of the interest that the researchers and investigators at GOG have had and continue to have in GEN-1, virtually all of them have signed up and are interested to sign up to participate and interested in our clinical trials. The second indication, the second trial is in primary liver cancer, the OPTIMA study of first-line Phase III global study of ThermoDox in combination with radiofrequency ablation, standardized to a minimum of 45 minutes of timing of where we now know this ablation technology is most effective in combining and combination with ThermoDox. ThermoDox as you…

Thank you, Mike. Our balance sheet is well capitalized, we continue to operate in an efficient manner. We ended the second quarter with over $14.5 million of total cash and investments compared to $20 million in cash at the end of 2015. In June we completed a small registered direct stock offering yielding gross proceeds for the company, $6 million, while we were hopeful of raising more capital in this very difficult market, we were also mindful of dilution to our shareholders. So we opted for the current financing structure to minimize that warrant coverage. The offering was completed with one institutional investor who led the option to acquire an additional $6 million during the first half of 2017 if our share price improves in line with anticipated development milestones we expect in the second half of this year. For the second quarter ended June 30, 2016, we reported a net loss of $4.5 million or $0.19 per share, compared to a net loss of $5.7 million or $0.27 per share in the second quarter of 2015. For the six months ended June 30 of this year, we reported a net loss of $10.2 million or $0.43 per share, that compares to $12.7 million loss in last year for the same six month period. Cash used for operations in the first half of 2016 was $9 million, that compares to $11.6 million in the same period last year which is down over 22%. Of this $2.6 million decrease was the result of cost reduction efforts implemented last year, a tighter product development focus and prudent cash management. We operated with a lean organizational structure with over 80% of our spending is directed to research and development activities. Historically, our cash usage in the first quarter of each year is the…

Well, thank you Jeff. We always appreciate your comments. I would like to make one last point before moving on to questions and I think it follows on to very nicely to what John is talking about. With our earnings announcement we note that our year-over-year expenses have decreased by 20%. Once you know we continue to be vigilant, looking for opportunities to ensure efficient cash utilization while at the same time, focusing our resources on value creating progress. So continue to evaluate our current organizational structure and align our resources and clinical programs with our near term development objectives and without sacrificing our overall strategy. We have tightened and developed our focus on OPTIMA and DIGNITY for ThermoDox in advancing GEN-1 cancer. As a result of these actions we hope to realize additional cost reductions and annual operating expenses in the second half of 2016. Our goal is to ensure sufficient runway to achieve milestones of significance. So now, with that those are our prepared remarks. I would like to ask the operator to open the lines for your questions. I ask that you limit your questions to no more than two to provide everyone an opportunity to participate so, operator if you would open the line for question I would appreciate it. Thank you.

[Operator Instructions] And our first question today is from Jason McCarthy from Maxim Group. Please go ahead.

Hi guys, thanks for taking the questions. Michael can you just give us an update on the enrollment in the optimal study, you know what percent of the study has been enrolled? Do you remain on track to complete enrollment next year and just thought I will stick in the second question now. Jumping over to GEN-1, I know you have the third cohort of patients who have been treated, can you give us a sense of when we could see the data from that cohort and when we are going to see histology data, will it include T cells and the full immune profile? Thanks guys.

Okay. So, let me start with your first question. I think in my prepared remarks I announced Jason that we were well over a third enrolled in the study. We continue to add new investigative sites and we have about 50% of the Chinese sites up are running. And the balance of the sites another 7 or 8 will be on board over the next few months. In addition to that we have been exploring Vietnam and concluded that the standard of care, the quality of medicine, the capability of researchers in Vietnam to participate successfully in the Phase III study is consistent with our objectives. We will be adding hopefully before the end of the year, maybe leading it to next year, 4 sites in Vietnam perhaps some additional sites in Europe. All that said is we are on track, we expect to have approximately 50% enrollment by the end of this year. And we are on a pace that appears that we are going to, we are going to meet that. The overall objective is to complete the enrollment of the study by the end of 2017 or could squeak into early 2018 but at the moment, that's where we are with regards to enrollment. We are not giving specific numbers, we think it provides too much opportunity for some inappropriate conclusions with regards to the value or potential of the study and our DMC doesn't like it frankly. With regards to the third cohort as you know, we have identified three patients. They are being treated. The course of treatment extends over to an 8 week to 9 week period followed by surgery. The surgery that occurs usually within a week or two following chemotherapy and immunotherapy so at the earliest that we would be reporting the…

It does. Thank you for taking the questions.

Thank you.

And next from Griffin Securities, we have Keith Markey.

Thanks for taking my questions. I was just wondering given the data you had so far in the first two quarters, looks quite impressive. Could you give us the thought on that, what you might be doing in the next clinical trial of GEN-1?

So, I am going to start this answer and I am going to ask Nick to jump in because I am going to miss some of it. I am seeing the ninth commission in the room here. Seems to me that we are seeing such a dramatic response from the first six patients, if it continues Keith and if we can develop with FDA an end-point that gives us the reasonable assumption that we can read these study results in a reasonable amount of time, it would make sense to us to continue the current new adjuvant study in an expansion format -- expanding to a Phase II at the dose or maybe with as many as 70 patients. But that will depend on some agreement with FDA. I know our investigators are there. Nick do you have?

Yes. Keith this is Nick. I think these are exciting times for the new adjuvant program. As you know we get very interesting data from the baseline on these patients and then at the time of debulking we get the tissue samples as well. So as Mike said, we are going to be in discussions with the FDA for the most efficient way to move forward in these studies so I think you just have to keep an eye on our announcements in the future as we feel with discussions but with this early data, I would imagine we should have some pretty interesting designs coming in the near future.

Great. Thanks. And then…

Sorry, I just want to add to that. I hope you don't mind Keith. Assuming we have full support from the FDA, we are not going to assume a lot of risks without support from the FDA, it doesn't make any sense to us. And once we have complete support, we will continue our current strategy which is to establish in dose this new edge of a study, use that as a starting dose in plasmid resistant patients. Second line, combining GEN-1 with Avastin and Doxil which is the standard of care in these patients who have failed the first line of treatment. So that would be, we would be making the announcement I am sure following our conversations and discussions with the FDA certainly before the end of the year.

Great. Thanks. And then as for the follow-up, I was just wondering if you could give us an update on the early access program for ThermoDox?

Yes. Sure, I think we have seen a great deal of interest in investigators. Like the biggest challenge for us with the early access program has been to negotiate all pricing that works for us and for the investigators. We continue to explore options to make the early access program successful and not a cash problem, a cash generator for the company. And so, that's about Mike, that's something we can give you at this point. This early access program is important to the company and important to medicine and certainly to patients. We know that ThermoDox incorporates Doxorubicin which has been an oncologic agent for generations. Our safety profile is consistent with Doxorubicin if not mildly better. Using ThermoDox in patients with primary liver cancer has only upside, only upside as we see it. And I think in amongst positions to have been introduced to our EAP [ph], the problem -- there is a problem, it comes down to pricing in here. We have to be very careful that we don't set a price ceiling by providing a discount for ThermoDox in the early access program and that's about what we are dealing with at this point.

Thank you.

And our next question is from Ramekin [ph] from H.C. Wainwright.

Thank you. This is R.K. from HCW. How are you doing Mike this morning? Just a couple of question. In the Heat study data you announced this morning, I believe the Chinese cohort represents close to the treatment parallel of OPTIMA. If that's true then what's the survival benefit you saw in the Chinese cohort and is there a meeting or publication that you have been doing where you can present the full data set from this new analysis?

Yes. Nick, do you want to take that?

Yes. I think your question is what is the survival data in the Chinese cohort? So, the statistics in the, when you break them out for the Chinese patients, we have well over 200 patients in the Chinese cohort which is, at that point gives us regulatory muscle and in China is consistent with the overall cohort. And so if you look at the overall data that Mike discussed early in his presentation, it's consistent with that. But by itself, as a small breakout, we don't have the number, the numbers are little bit more unstable than the overall cohort so all I can say is that it's consistent.

Okay.

I would say I would like to add to that a little bit, if I can please. So part of our strategy in working with Hisun is to have a local manufacturer for ThermoDox and I can say, just as I sat here, the product manufactured by Hisun is good as anything if not better than anything that we've produced in the U.S., state-of-the-art manufacturing, high quality and cost that provide us with gross margin potential and just works for every major market. That said, there are two pathways as you probably know for registering a drug in China; one is a multinational company, typically requires a CPP or Certificate of Pharmaceutical Product, from an approving agency outside of China, along with the data from a global study. Next, typically those global studies as you know are empowered for a P-value and clinical benefit that is acceptable clinical benefit. The other approach in China -- any quest around that track, we have a global study in progress called the OPTIMA study. The other approach is submission as a local manufacturer and that's along the values of working with company like Hisun as a local manufacturer. Assuming we have a commercial license with them and that's a big assumption at this point. We -- I believe that although the data is not enough, it's not powered enough from the Chinese cohort, there is only 200-plus patients, it's not powered enough for statistical significance. I believe as Nick pointed out, the results are generally consistent with the subgroup that we've been -- the largest subgroup that we've been following. So that implies a two-year plus survival benefit. So we believe that there is enough here, there is enough evidence here; we have a local supplier, Doxorubicin is an approved drug in China, in their dosage form, improved significantly and it's valued to treat a highly profuse organ like the liver, HCC is a major problem in China. If we have support from our Chinese manufacturing partner, we are likely to present evidence to the CFDA that we believe that there may be an opportunity for some consideration of -- I don't know, PV condition or some kind of opportunity to bring ThermoDox to market in China sooner rather than later. So that's really what we're looking at in this dataset, we can provide you with a little bit more detail from the Chinese dataset. We do have some upcoming Medical conferences, it may make sense to break out separately, although it's going to be -- has been working with medical conferences and skeptical oncologists who are all trained to be skeptical, God knows, they should be. When you present small datasets, a P-value then it becomes sometimes a debate that you don't want to have. So, I hope that answers your question. We really go through the heart of what's the value of the Chinese cohort at this point.

Thank you. And then on the new DIGNITY study, can you define for us the design and the endpoints that you have in the study? Again, I think you us in the opening remarks but when is it that we'll start seeing some additional data?

I'll answer the last question first. You should begin to see treating patients, it's not a labelled study, it's powered with I believe 100 patients. As the physicians become comfortable with the findings and per patient basis for happy to report the results as we go. The trials are organized little bit differently than the DIGNITY study in the U.S., these are patients who are little bit earlier in the treatment of their recurrence but they are still eligible for radiation. So this study is designed as a trimural therapy, it's a chemotherapy, plus thermal therapy plus radiation being the new addition. The study will begin enrolling somewhere in the last chance here of completing some of the regulatory submissions. The study should begin enrolling patients in the fourth quarter at the latest, and hopefully we'll begin to present results as we're going to be treating patients up to six cycles -- six weekly cycles, and then assessed for tumor response. So it could be by the end of the year or early next year, we're reporting findings from a patient, an individual patient, individual cases. The endpoints in the study are many fold. And maybe, Nick, if you remember the endpoints, can you talk about that please?

Yes, so as Mike alluded to, the basic design of the study is that we're looking now at patients that are initially diagnosed with recurrent chest wall disease. And currently the standard of care in these patients is to give them radiation -- external radiation. And you typically see maybe around a 60% response rate in these patients. We believe we can improve that once you add heat and ThermoDox to that. So the study is designed to look at those response rates, we have assigned a two-stage design, it's a Phase II, single-arm study, and I think we'll be seeing results as Mike said, relatively soon. And I think it will be a nice boost to see greater response rates in this difficult-to-treat population.

Okay, thank you very much.

So, operator, we have time for one more question.

And that will be from Barry Rubin with Arsenal Investments.

Hi, good morning. Thank you again for the great progress, and hopefully more people will see it. And it was a pleasure meeting you at the annual meeting. Just one quick question to end the hour. The company, if I'm correct, about a year ago, I went to the previous meeting, said that maybe in the future at some point that we'd be getting a collaboration. With all the great news on GEN-1, what's holding it up? I mean, I'm probably missing something and you'll elucidate further, but do you see anything perhaps happening this year? Or what holding back a nice collaboration with somebody?

Okay, that's a good question. It's not for a lack of interest. I think we take calls regularly and we have an outreach program also, some business development mode presenting of the opportunity for both indications, for both drugs, both GEN-1 and ThermoDox. I can tell you we have interest and I can tell you that that interest translates into ongoing discussions. The reason for, if I could generalize here, the reason that we haven't proceeded further, one, and with ThermoDox, we have something to prove to be honest with you, Barry. It's a -- but the point I was making in my prepared remarks here is that this is not just a subgroup thesis that supports our OPTIMA study. We have completely encircled this hypothesis with every means to validate it that we can -- we could possibly bring to bear here. Notwithstanding that, I think we find companies -- large pharma companies need a little more reassurance and I think that's coming. With regards to GEN-1, we might be a little early in the development cycle, the first study is at Phase I, so don't give up hope. We're -- we see more human data our interest in GEN-1 continues, we'll continue to grow on that. The area where we had the most hope, well, I guess the most progress, was with the third platform that we did not talk about this morning, and that's with TheraSilence. This is a platform that provides lung-specific delivery of RNA therapeutics for a variety of indications, oncology and otherwise. And we have some very solid data, preclinical data for the most part, in nonhuman primates and a variety of small animals, supported with peer-reviewed publications. We've had more than one very interesting collaborations; one's still ongoing evaluating the RNA therapy, where we don't own the RNA IP, it's owned by the development companies. The RNA therapeutic in an oncology setting, a lung cancer setting, we've been evaluating it collaboratively and there's always the potential here that that will result in the kind of meaningful partnership that we've been talking about.

Okay, thank you ever so much.

So I think that, given its 12 o'clock, and there's no burning questions, we're going to conclude this call with a sincere thank you to all of you who participated and I want you to know that we truly value the support that we get from our shareholders and your interest in the company. We look forward to providing you updates on ThermoDox and GEN-1 and the rest of our research, as the company progresses in these critical areas of oncology research. So you can expect from us a continued dialogue through press releases and we look forward to talking with you on our next quarterly conference call. Thank you very much. And with that, we're concluded. Thank you.

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