Good morning. My name is Emma and I will be your operator today. At this time, I would like to welcome you all to Celsion’s Third 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 Corporation’s conference call to discuss its third quarter 2019 financial results. As has been Celsion’s practice and as noted by the operator, 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 November 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 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.I also caution that the content of this conference call is accurate only as of the date of the live broadcast, November 15, 2019. Celsion undertakes no obligation to revise or update comments made during this conference call, except as required by law.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 is Jeffrey Church, Celsion’s Executive Vice President and Chief Financial Officer, who will provide a review of Celsion’s recent financial results in a few minutes. Also on the call for the Q&A portion are Dr. Nicholas Borys, our Chief Medical Officer. And I hope Dr. Khursheed Anwer, who is attending by cell phone. Dr. Anwer is on his way to an investigator site, to initiate it, for the OVATION Study and is dialing in by cell phone. So, Khursheed, we hope you stay connected.I’m going to apologize a little bit. I have a cold, if you can hear it. So I’ll do my best here.As always, it’s a pleasure to be speaking with you, particularly now as we approach the conclusive milestones, that have been made possible by the methodical and rigorous execution of our clinical development programs for ThermoDox and GEN-1.Today’s call will be mostly reassuring, as most of our prepared remarks are in the public domain already. I’m going to start with a comment that I’ve been making regularly over the past year: possible but not probable; you’ve heard me say that.This has been our guidance for the past year or so regarding the first interim analysis for our Phase III OPTIMA Study. We’ve also said that there is a higher probability of success at the second interim analysis, now anticipated by June of next year, just 7 or 8 short months from now. We stand by that guidance. There is a higher probability and I’ll point that out to you in my remarks.I will once again remind you that our fundamentals are sound. And overall, you should expect no surprises from this management team.Our meetings with various regulatory agencies have resulted in no significant issues. Our manufacturing…

Thank you, Mike. Details of Celsion’s third quarter 2019 financial results were included in the press release we issued yesterday evening and in our Form 10-Q, which we filed last night after the market close.As Mike stated, we made significant progress during the quarter in developing our lead products. Our ongoing focus on efficient cash management will allow us to reach key milestones over the near and intermediate term.As of September 30, 2019, Celsion’s cash and investment balance was $18.8 million. In addition, the planned sale of $4 million of New Jersey State NOLs this year and next, and the unused amounts available under our 2 existing equity facilities should allow us to extend our cash well into the first half of 2021.This timing will take us past the final endpoint of the Phase III OPTIMA Study, which is 197 events. If needed, our cap table is very clean and includes approximately 22 million common shares outstanding and only 600,000 warrants.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 2 equity facilities that allow us to raise capital in an opportunistic fashion with no warrants and a very low commission or fee.The first facility is a $10 million common stock purchase agreement with Aspire Capital. You may have noticed their filing with the SEC, in which we recently amended this agreement.Note that we have registered 4.5 million shares under this agreement. The second facility is a traditional at-the-market equity line with Jones Trading. The use of either one of these facilities is under the complete control and discretion of the company.Now turning to the third quarter financial results, Celsion reported a net loss for the third quarter of 2019…

Thanks, Jeff. I’m always amazed how you can bring so much life to the numbers of the company. Thanks, Jeff.I just want to say, I’m also very proud of all of our employees, who continue to work for you, and patients around the world, their tireless dedication. And I can attest to, to patient health, to our research, to finding a better way.I am confident we’ll make a great difference in the lives of patients, their families and the medical community. Let me close by saying we’ve been actively presenting the Celsion story to investors. And we’re looking forward to January, where we’ll be meeting with investors and analysts in San Francisco around the J.P. Morgan Healthcare Conference.We’d encourage you if you’d like to meet with us, if you want to arrange a one-on-one meeting, please do contact LHA. Kim is available to you, our Investor Relations firm to book a slot.So with that, we’ll now open the call to questions. Operator, please open the lines.

Thank you. [Operator Instructions] Our first question comes from Jason Kolbert with Dawson James.

Hey, good morning, guys. Mike and Jeff, thank you for your

Good morning, good morning. [Good to hear you] [ph].

Yeah, thank you so much. And, by the way, thank you so much for supporting me and presenting Jeff down in Florida. You did a great job. There’s been a lot of interest. And we’re actually very excited to be covering Celsion.Mike, you mentioned something that I just wanted to go back on, which is the potential for success at the next interim analysis. That’s very exciting. Can you expand upon that comment?

Yeah, I can. I think with all the signals pointing in the right direction. I’d start first with the hazard ratio of 0.7, and the groups seem to be comparable, very comparable when we look at the demographics, the OPTIMA group and the subgroup that we plan this on. So the hazard ratio is somewhat better, quite a bit better, than the hazard ratio that we saw. I mean, better being it, it gives us a greater margin for success at 0.7 versus 0.65 from the subgroup.The p-value, we have a pretty tight p-value in these first interim looks in order to preserve alpha. The p-value that we saw with the subgroup was 0.2. The p-value allowed at the second interim analysis is 0.0244. So there is a hurdle here for success that seems to us to be achievable. So let’s start there.Then we look at the median time to follow-up. If you look at the Kaplan-Meier curves, in the published manuscript for the HEAT Study, you see that at about 35, 36 months that the separation becomes pretty significant. And that’s about the time, the median follow-up will be about that time for the second interim analysis.So we’re assuming, of course, that nothing has dramatically changed with the control arm. But everything seems to be moving in the right direction in that regard. I mean, we also have the other soft indicators. PFS looks to be tracking almost perfectly with PFS in the subgroup. The best that we could tell, although it’s immature, survival data, I mean, deaths are tracking reasonably well.The trend is following the subgroup, the best we can tell almost exactly, so. And the event rate, so the deaths are occurring as almost right on track with the subgroup. So that for us gives us some confidence that this next [look] [ph] has a greater potential to be successful; no guarantees, obviously, but much greater potential to be successful.

Mike, given the desperate need in China and kind of the state of healthcare reform there, you must be in very active discussions, not only with the FDA but with multiple partners in China. Can you talk a little bit about kind of what your sense is of the market and the ability to do a BD deal related to China?

It’s a great question. So we do have a lot of interest. We get a lot of incoming from, not only from Chinese companies, but also from multinationals. Just our business development person just came back from the BIO BD conference in Europe with, again, of course, a great deal of interest. The regional interest in China and the countries that are nearby is palpable.We haven’t – and there is some ongoing diligence. I can tell you that. We haven’t seen any deal structure from the Chinese companies that would be – we think would be appropriate. For the multinationals, I think they’re taking a little bit more of a wait and see attitude. They’re doing their diligence, but it won’t – before there’s any real move, there’s going to be the need for some positive data.But I can tell you this, if you open your medicine cabinet, you’d see the names of a lot of the companies that have asked for updates and signed confidentiality agreements with us.

Got it. Thanks, guys. I really appreciate all the reports.

Thank you.

Thank you. We’ll take our next question from Matthew Cross with Jones Trading.

Hi, Matt.

Hey, guys. Congrats on the recent progress for both programs and thanks for taking my question. Starting out with GEN-1, I had a couple questions related to the upcoming readout from the OVATION 2 Study, as you progress through the Phase I portion.First off, is there any guidance you can provide on approximately how many patients we should have response rate, surgical status, et cetera on at this time point, and maybe an average of how many cycles of GEN-1 these patients will have received by that time, or if that’s something that will be described at the time of presentation?

I’m going to ask Nick to jump in. Yeah, it’s going to be a minimum of [four a site] [ph].

Yeah. This is Nick Borys. In regards to the number of patients we’ll be looking at, we’re randomizing this study from the beginning. So as Mike mentioned before, it’s a 1:1 randomized design. So for the safety purposes we will be looking at, at least 6 patients to confirm our 100 mg/m² dose. And we’ll be tracking our primary endpoint, which is progression-free survival out from there.And the median time to progression, at least in the biggest studies that we’ve seen until recently would be about 12 months. So whether we have some PFS data at that point might not be too much. However, one nice indicator to keep an eye on, that we think is indicative, is how many patients come out of surgery with no tumor in the margins, meaning the R0 effect.So we saw 100% R0 at our highest dose in the last study, which was 80 milligrams. In this study, we’re looking at very good indicators, again from the 2 patients that got surgery. And so that’s something to keep an eye on when we make the announcement later on at that first analysis after the first 6 patients have 100 milligrams.

If I could add to that, so we’ll have our first look at a comparator group that large at 6 and 6. Now, this comparator group, if it shows what we expect that GEN-1 is providing some advantage. What we intend is, as we had mentioned in the earlier call, to share that information with the FDA. And we are looking for ways to accelerate our program.And the agency has indicated to us in a, was it type D teleconference meeting, that they would be interested in helping us find a way to do so.

Perfect. That’s great color. I appreciate it, Nick and Mike. And then, kind of a follow-up to that, as we’re lining up these initial results with what was seen in OVATION 1, clearly, part of the promise of OVATION 2, is this evaluation of further maintenance doses of GEN-1 following neoadjuvant chemo.And I wouldn’t expect you to really be too far into this portion of the protocol by the time of readout this quarter. So, if you’re treating with a higher 100 mg/m² dose without really entering that maintenance-dose period just yet, would you consider it fair to kind of more-or-less compare these initial results to those OVATION 1, apples-to-apples; of course, taking into account these are still early insights in – as you just pointed out – just 6 patients in that group?

Oh, yeah. I think that’s a great question. This is Nick Borys again. Of course, we’d like to compare it to what we saw in the OVATION 1 what we saw. I think we’re pretty excited to see activity continuing on and GEN-1 contributing to that anti-tumor activity during the maintenance period.I don’t know if we emphasized enough that the drug really is very well tolerated by the patients, has minimal side effects, the DMC is very comfortable with that. And that seems to be a theme in immuno-oncology right now with the new generation of medicines. And I’m very glad that GEN-1 is a part of that. So we will be comparing the data. We’ll probably learn a lot of what works well and what doesn’t. So it’s going to be interesting data in the future, I agree.

I should also say, Matt, that the tissue samples, taken at baseline and during surgery, will be sent to Roswell Park for interrogation for the immune system activity, immunohistochemistry data as well as blood and fluid samples. So we’ll be able to – shortly thereafter, we should be able to report some translational data on these 12 patients.

Great. Glad to hear it. Looking forward to that data and glad to hear that things are, the safety profile is still continuing to be quite well tolerated, given that you’re now increasing the dosage a little bit here, and obviously, glad to see that.If I can squeeze in one more quick one on ThermoDox, obviously, as we’re coming up to the next interim readout from OPTIMA, which is as you’ve communicated and we would agree, appears to be the first likely opportunity to be successful, could you give us and update on your take regarding the commercialization of ThermoDox?Maybe kind of in relation to some of the earlier questions, I guess, you’ve spoken to the manufacturing efforts to entice large pharma licensing, but do you consider all options on the table, specifically within the U.S. market? Or do you expect you’d only be comfortable bringing ThermoDox to market here with a partner given that you’ve guided to having cash in the first half of 2021?I’m kind of wondering if those factors in scaling up a commercial team here in the States or if that – this also maybe indicates you prefer not to go alone here? China, obviously, most likely a partnering opportunity, as you’ve alluded to.

Yeah, I can say with some confidence, outside of the United States, we know what we’re good at and we’re also very conscious of what we’re not. And marketing a product like ThermoDox outside of the United States would be a great challenge for a little company like ours.So our complete expectation is that ThermoDox will be licensed either to a single agent for the global market outside of the U.S. or regionally. And I think there’s a regional probability here that could be very beneficial to shareholders and the company. For the United States, we’re always going to do what’s best for shareholders. I mean, I think in our heart of hearts, we think we could be the best stewards for ThermoDox and in the commercialization in the U.S. market.But that requires capital and risk and some hiring challenges that are always some – have some difficulty. And the big pharma is a machine, when it comes to, for bringing a drug like this to market, particularly in underserved market, there is no competition. This is the first and only first line therapeutic for HCC. So, on the one hand it makes it very attractive for us to think that we could do this alone.On the other hand, I suspect it’s going to be very attractive to commercial partners. So our objective really is to do what’s best for shareholders. And if we get a good deal for the U.S., that’s certainly would be the focus of the company. Does that make sense?

Yes. No, absolutely. Got it. That’s very helpful. I appreciate all the responses from everyone and [really] [ph] appreciate it. Thanks.

Thank you.

Thank you. We’ll take our next question from Kumar Raja with Brookline Capital Markets.

Thanks for taking my questions. So with regard to the second interim analysis, obviously, I understand that it’s going to be at 158th event. So it would be very similar in terms of the DSMB would be doing a blinded analysis, and based on their findings they would decide whether to un-blind the study or continue further, that’s the expectation there?

Yeah. So with the DMC, so the DMC has access to un-blinded data, Kumar. So they will be looking at the tables, listings and graphs of the overall study, along with a number of different slices that they like to look at, in order to determine the success of the trial. So they get a complete and comprehensive dataset.So they’re – I mean, and that’s Dr. Borys’ point of view. And so we need to give them everything that we could possibly believe that’s important to making a good decision with regards to un-blinding the study, because let’s assume that they do recommend un-blinding the study, we want to be in a position to be able to present all of this information, which eventually will be acquired by the FDA. And they’re going to be looking to slice and dice it on a number of things: regionally, by site, by gender; I mean, it’s just kind of work that they do, by tumor size.So we want to be prepared to present to the agency a sufficient dataset to make sure that we can go forward with an NDA without question.

And in terms of the alpha spend, what was alpha spend in the first versus the second? And also, in terms of the insight from the first interim analysis are in line, are they all in line with the expectation in terms of what all data you were able to access and analyze?

Yeah, so the alpha spend is very, very small. I think, because we’re not un-blinding the study, and we’re using this Lan and DeMets approach, if you’re familiar with that. But in the end, that we will have something like 0.45 of spending, alpha spending available to us.So between the 2 – I don’t know how it breaks down off the top of my head – but between the 2, our spending is, the hit is quite small. See that. We can get you the detail on that separately and happy to make it available to anyone.

And in terms of GEN-1, have you had any further impacts with the FDA, since you upgraded last or no?

I’m sorry. Could you repeat that? In terms of ?

Have you had any further interactions with the FDA, with regard to GEN-1, since the last update last quarter?

Not since the last quarter. I think what we reported on the last call is that we had a – we submitted a briefing document to the agency, largely focused on how can we – given the promise and the data that we saw in the Phase I portion, is there an opportunity for us to accelerate this program, either through breakthrough designation or otherwise.And what we reported at that time. That’s not too long ago. When we had that meeting, was it in July? The agency, I think we reported, what was supposed to be a 30-minute call turned into almost an hour. In their first opening salvo to us with this, they’re very excited, they’re very encouraged. They want us to continue.They’ve asked us to – the only outlier here is, they’d like to see is some comparator information, that control, some control. So we asked if we could get back to them once we have some data from the current study, with the comparator control arm. So we’re looking forward to that. As soon as we can show some comparison data from this study, we’ll summarize it with the data that we sent to them previously. And I’m sure they’d be ready to take another call from us.

And with regard to the investigator sponsored trials in breast cancer in Netherlands, any updates on that trial? I mean, in terms of data, when can we expect to see some data from that trial?

Yeah, so for the breast cancer study, for the most part we have, in the interest of conserving cash, we have put that on hold. I think the company is not in a position to fund much more than we’re currently talking about. We have a number of investigator sites in Europe who would be delighted to move forward.But right now, it’s the cash resource. And we’re not prepared to raise capital that to fund that research at this point.

Okay, great. Thanks for taking my questions.

Hold on. I’m sorry. Nick has another comment on that. I’m sorry. You want to talk about Utrecht?

Yeah. I think you mentioned the Netherlands. And which I believe might have indicated you were interested in the progress at Utrecht, which is an investigator-driven study in breast cancer. And so, that’s moving on. They have a very long administrative and IRB process. But I think they’ve gotten all their approvals. They recently sent me a notification that they’re looking to begin recruiting patients early in the New Year. So we’re pretty excited about that as well.As you know, this is involving high-intensive focused ultrasound therapy with ThermoDox. There’s been very interesting clinical data and a great indication for breast cancer. So hopefully, in year, you’ll be hearing more.

Okay. That sounds great.

Yeah. Thank you, Kumar. Thanks for the questions.

Thank you. Our next question comes from Jackie Yan with Oppenheimer.

Hello, Jackie.

Hi. Hi, Michael. This is Jackie with Hartaj today. Thanks for taking my questions. Could you maybe talk a little bit more about the compassionate use in China, and any fast-to-market strategy there in China?

Yeah, so this is a compassionate use program. I think it’s as exciting as it gets. So what we have is an installed base of investigators. I believe it is 16 sites that were active in the OPTIMA Study. Virtually every site provided patients to the trial.One site, we weren’t too happy with, so we probably won’t include them, but 15 to 16 sites. And we’re going to take a slow roll on this, because we want to make sure that the drug is being used properly. But you want to mention how we’re going to – Nick Borys will talk to you a little bit more about how we plan to move forward with the compassionate use program.

Yeah. This is a brand new program in China. I think they’re learning from the U.S. and European experience on this. And interestingly, going to the meeting with Mike a few weeks ago in China, one of our investigators was with us and she brought up the need for compassionate use of the drug. So the regulators followed her lead and recommended to us that we do compassionate work.So, we’re looking to, as Mike said, start small, look at, work with the investigators, see what populations that they have would most benefit from ThermoDox use with their RFA. So we’re going to take very deliberate steps on this, work closely with the regulators. Again, this is a new program in China. So we want to make sure it gets done correctly. We’ll be collecting a lot of good safety information.We’ll probably see potential areas of other interest with the investigators who’ve used our drug. And so, it’s hard to predict right now what kind of patients we’ll be getting or how long it’s going to take. But we’re going to make very deliberate efforts in that direction.

All right, that’s very helpful. I mean, and for the filing strategy, should we expect you’re going to file ThermoDox in China before you’re filing in U.S.?

So that’s been our strategy and it will continue to be. It’s going to be largely on the strength of the data, Jack. So the stronger the data, the more opportunity we have to get a – and have a strategy that involves China first. So in our discussions with the Chinese authorities, they know that our plan is to file an NDA.They actually, as I mentioned, they see 2 modules, 2 and 3 are virtually complete. Well, so filing an NDA with a common technical document, it’s not that difficult anymore to file globally in a relatively short period of time. But at the moment, it’s China first, followed by the U.S. and then the European MAA filing.

Got it. And maybe if we switch gear to GEN-1, any update on the scaling work being done with GEN-1, if there are any specific processes, you can comment on refining the further improve-upon view?

Refining what, I’m sorry? Refining...?

Sorry, all right. Any scaling works have been done for GEN-1 like from Phase I to Phase II?

Scaling work? You mean from a trial-design standpoint?

Yeah.

The trial design, it’s powered to show a 33% improvement. And I think we’re – the p here is 0.1 in a Phase II study. So we’re looking at 130 patients. We’re going from literally 16 patients to 130 patients, half of whom will be in a control arm, the other half in the therapeutic arm. What we’d like to be able to do, in our heart of hearts here is, if we have some positive data and the agency agrees, is just to expand this trial, so that we have enough power to assume it’s a registrational study.

Got it. And then last one is how should we expect updates from the open-label Phase II portion of GEN-1?

How? You know what, if it follows the way we presented data from the Phase I study, as soon as the investigators are comfortable with the results, it’s the surgical results, the tumor responses, we have been – and some of the other markers like CA-125 and the like. As soon as we have that information and the investigators are confident, we present it.So, throughout the course of the year, we will. And it’s likely to come in groups, so that there’s enough comparator information that the investors and analysts like yourself, can begin to draw some conclusions.

Got it. Thanks very much.

You’re welcome.

Thank you. [Operator Instructions]

So I think see if – operator, we’ve exceeded our time here. So I think we’d like to close off the conference call at this point.

Thank you, ladies and gentlemen. This concludes today’s teleconference. You may now disconnect.

I’m sorry. Before we – I just want to say a couple of last words. I’m sorry. I just want to thank everybody for their time this morning. We could not be more excited about the prospect that Celsion holds in its 2 investigational programs. We look forward to keeping you updated, because the potential here is that we will make a huge difference in the lives of cancer patients. Have a great afternoon. Thank you, operator.