Analyst Conference Summary

Celsion
CLSN

conference date: March 29, 2019 @ 8:00 AM Pacific Time
for quarter ending: December 31, 2018 (fourth quarter, Q4)


Forward-looking statements

Overview: ThermoDox Phase 3 trial completed enrollment, with 2 interim data readouts expected in 2019.

Basic data (GAAP):

Results for Q4 were not released. See full year 2018 results below. Q4 4evenue was $ thousand, flat sequentially from $125 thousand and flat from $ thousand year-earlier.

Net income was negative $ million, up sequentially from negative $4.7 million, and up from negative $ million year-earlier.

EPS was negative $, up sequentially from negative $0.26, and up from negative $ year-earlier.

Guidance:

Has cash to last to 2020 data points. Expects cash burn to decrease.

Conference Highlights:

Michael H. Tardugno, Celsion's CEO, said: "Among our many accomplishments, enrollment of our pivotal 556-patient global Phase III OPTIMA Study in HCC was completed ahead of projections, in August 2018. We are now looking forward to the first of two preplanned, interim efficacy analyses for the OPTIMA Study expected in the second half of 2019 and mid-2020, respectively. Our Phase I/II OVATION Study was initiated in the second quarter, as planned. This promising clinical development program in immunotherapy has generated impressive results. During the first quarter of 2019, we reported final data from our Phase 1B immunotherapy program (the OVATION I Study) in ovarian cancer. These data showed a significant improvement in progression-free survival in patients treated per protocol, 100% objective response rate (PR/CR) in patients treated at the two highest dose cohorts and 88% R0 surgical resection scores in patients treated at the two highest dose cohorts,"

The OPTIMA Phase III study of ThermoDox plus RFA for liver cancer completed enrollment in August 2018. On December 18, 2018, the independent Data Monitoring Committee (DMC) for the Company's study recommended that the study continue according to protocol to its data readout. The DMC review showed that median PFS for the OPTIMA Study had reached 21.2 months as of October 4, 2018, above that found for the subgroup that was the basis for the new Phase 3 trial. Initial interim readout should be in Q3 2019, but has a relatively high bar for success. A final readout in 2020 will have the lowest bar for success and submitting an NDA. NIH opinion is the chances of success are high, based on analysis of the data from the HEAT study. ThermoDox has both fast track and orphan drug designation. Analysis of the failed HEAT study indicates the OPTIMA study of a sub group could succeed.

Celsion sold its Net Operating Losses (NOLs) to the State of New Jersey for about $10.4 million in cash, before the end of 2018. May seek additional NOL sales in 2019.

On March 28, 2019, the Company entered into an amendment to the June 6, 2014 Asset Purchase Agreement for the acquisition of substantially all of the assets of EGEN, Inc. The Amendment provides that payment of the $12.4 million earnout milestone liability under the Asset Purchase Agreement related to the Ovarian Cancer Indication can be made, at the Company's sole discretion, in the following manner: $7.0 million in cash to EGWU within 10 business days of achieving the milestone; or $12.4 million to EGWU, which is payable in cash, common stock of the Company, or a combination of either, within one year after achieving the milestone.

In March 2019, Celsion announced final clinical results from the dose escalating Phase IB OVATION I trial of neoadjuvant chemotherapy (NAC) and GEN-1 in newly diagnosed patients with Stage III/IV ovarian cancer. Demonstrated median PFS of 21 months in patients treated per protocol (n=14) and 17.1 months for the intent-to-treat population (n=18) for all dose cohorts, including three patients who dropped out of the study after 13 days or less, each of which compared favorably to the PFS historical average of 12 months for women with Stage III/IV ovarian cancer. Of the 14 patients who were evaluable for response, 100% of patients administered NAC plus the two higher doses of GEN-1 experienced an objective tumor response (defined as a partial or complete response) compared to only 60% of patients given the two lower doses. OVATION 2 dosed its first patient. The Phase I part of this study will allow for a higher dose than in the OVATION study. Will have 130 patients total. Phase 2 could start in Q2 2019. In October 2018, an overview of GEN-1 was published in the peer-reviewed journal Future Oncology.

Had a call with FDA on Friday, March 22, about GEN-1 which was positive; they suggested having some control arm for the Phase 2 study and said that might allow for accelerated approval. But the budget for the study is a difficulty and there have been other delays, including expanding to 30 sites. Recruitment is underway.

Early in 2018 met with China FDA, which confirmed that an NDA in China can be filed using survival rates, which should be a lower threshold for success than OS (overall survival).

Cash and equivalents ended at $27.7 million, up sequentially from $22.0 million. Debt includes $8.9 million milestone earnout liability and $9.4 million in outstanding notes.

In October 2018 a warrant exchange agreement was made to issue 820,714 new shares of company stock in exchange for the 2017 warrants, at 0.5 shares for each of 1.64 million warrants. At November 14 Celsion had 18.7 million shares and 1.6 million warrants outstanding. 1.2 million outstanding warrants will expire in April 2019 as they have exercise prices over $6.00 per share.

Q4 results not separated, see 2018 results below. Total operating expense was $ million,consisting of $ million for R&D and $ million for general and administrative expense. Gain from valuation of warrant liability was $ million; loss from impairment of in-process R&D $ million; interest and other expense net $ million.

Still has $? million available in ATM from Cantor Fitzgerald. New facilities for $15 and $16 million each were established.

For the full year 2018, revenue was $0.5 million. R&D expense was $11.9 million, SG&A expense $9.7 million, total operating expense $21.6 million, other expense net $1.2 million. Income tax benefit $10.4 million. Net loss $11.9 million. EPS losss $0.68. $7 million net cash used by operations in 2018.

Q&A:

GEN-1 tumor microenvironment? We have not measured the duration of those changes. We only measure at initiation and debulking, so timing is hard to determine. In Phase 2 study the control patients will allow us to make a comparison.

100mg/m^2 dose will be the dose for Ovation 2 study. We think that is maximum biological activity level.

We are on track for timing in the Optima ThermoDox study.

Glioblastoma plans? Those plans are on hold due to progress at a competitor with a similar therapy. Xiopharm.

GEN-1 enrollment? To early to establish a timeline.

Because the ThermoDox trial is event-driven (deaths), the exact date for reviews and data is approximate. The slippage is due to a lower than expected death rate, which corresponds to PFS extension.

Hazard ration for success at first interim is .61, then increases with each iteration. This minimizes the penalty for taking an interim look. We don't expect to stop the study for success after the first interim, we have a better chance at second with ratio of 0.7.

Prepping with education for commercial sales? Our clinical researchers now include hundreds of physicians. We have presented at multiple medical conferences. We believe the drug can be applied beyond liver cancer once we get an approval. The big push will be to educate RFA practitioners on the technique for using ThermoDox. We believe our therapy will be cost efficient.

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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. These are my personal notes which I share with other investors and which I use as the basis of my blog and Seeking Alpha articles.

Copyright 2019 William P. Meyers