Analyst Conference Summary

conference date: May 15, 2019 @ 8:00 AM Pacific Time
for quarter ending: March 31, 2019 (first quarter, Q1)

Forward-looking statements

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

Basic data (GAAP):

Revenue was $125 thousand, flat sequentially from $125 thousand and flat from $125 thousand year-earlier.

Net income was negative $2.4 million, sequentially from negative $na million, and up from negative $4.5 million year-earlier.

EPS was negative $0.12, up sequentially from negative $na, and up from negative $0.25 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: "Celsion continues to make significant progress with our two ongoing clinical development programs for ThermoDox and GEN-1. With sound fundamentals and a strong balance sheet, we are well positioned to see our clinical programs through transformative milestones over the next year. We are looking forward to the first of two preplanned, interim efficacy analyses for the Phase III OPTIMA Study expected in the second half of 2019 and mid-2020, respectively. This global, pivotal study completed patient enrollment in August 2018 at over 65 clinical sites in 14 different countries, including all of the markets where primary liver cancer is a major problem. Our Phase I/II OVATION 2 Study in newly diagnosed ovarian cancer is now recruiting patients and continues to work through the activation of up to 31 clinical sites by the end of this year. Importantly, enrollment of patients in the Phase I portion of the study is expected to be complete and initial data reported by the end of 2019. This promising clinical development program in immunotherapy has generated impressive results in previous trials."

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. Issued U.S. Patent No. 10,251,901 in April 2019.

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 and should report data by the end of 2019. Will have 130 patients total. Phase 2 could start in early 2020. The FDA showed interest is developing future trial designs, including a randomized placebo group, that could support accelerated development.

Had a call with FDA on Friday, March 22, 2019 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.

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 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. Additionally, the Amendment extends the Earnout Term as it applies to the Ovarian Cancer Milestone from 7 years to 8 years from the original signing date. As consideration for entering into the Amendment, the Company will issue to EGWU 200,000 warrants to purchase common stock with an exercise price of $0.01 per share. The Company recorded this transaction in the first quarter of 2019.

Cash and equivalents ended at $23.4 million, up sequentially from $22.0 million. Debt includes $5.8 million milestone earnout liability and $9.5 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 expired in April 2019 as they have exercise prices over $6.00 per share. In May 2019 announced has almost no warrant overhang.

Total operating expense was $5.0 million,consisting of $2.8 million for R&D and $2.2 million for general and administrative expense. Gain from valuation of warrant liability was $3.1 million; loss from impairment of in-process R&D $0.4 million; interest and other expense net $0.2 million.

Celsion continues to pursue non-dilutive sources of financing.

Expects to use abut $4 million in cash per quarter for the rest of the year.

Q&A:

Logistics of Gen-1 placebo controlled subset? The agency left that decision to us. The study is randomized, including in Phase 1. That will establish the dose. We would like to submit data with about 25 patients.

Resection score use? The FDA were positive about that. PFS is likely if resection score is good.

Ovation site activation? The NIH disbanded the recombinate committee review of trials, making it difficult for us and other gene therapy companies. Now requires all investigator sites receiving NIH funding maintain their own clinical trial committees. This has slowed site approvals. We think we are through the worst of it, with most sites having committee reviews complete. Hope to have all 30 sites up and running by the end of 2019.

Cannot predict whether the Phase 2 Ovation study would be sufficient for filing. We hope to increase the size of the patient population to power the trial sufficiently for this.

In the U.S. for HCC there is a range of treatments. The most effective, based on need to retreat patients, is radio frequency ablation. So improving on that procedure, which is already the most effective on a cost basis, we should have good pricing power for ThermoDox.

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