Analyst Conference Summary

conference date: August 15, 2019 @ 8:00 AM Pacific Time
for quarter ending: June 30, 2019 (second quarter, Q2)

Forward-looking statements

Overview: ThermoDox Phase 3 trial completed enrollment, with first interim data readout now expected in October 2019.

Basic data (GAAP):

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

Net income was negative $5.9 million, down sequentially from negative $2.4 million, and up from negative $8.2 million year-earlier.

EPS was negative $0.29, down sequentially from negative $0.12, and up from negative $0.46 year-earlier.

Guidance:

Has cash to last to Q1 2021 data. Expects cash burn to decrease, to $4 million per quarter in Q3 and Q4.

Conference Highlights:

Michael H. Tardugno, Celsion's CEO, said: "Celsion continues to execute its business plan for our ongoing clinical development programs with ThermoDox and GEN-1. We are exceptionally well positioned on the fundamentals with a strong balance sheet that is expected to fund our clinical programs through transformative milestones over the next 18 months. We look forward to the first of two preplanned interim efficacy analyses for the OPTIMA study expected in October 2019. At the current event rate, the second interim analysis, if needed, is expected to occur in early 2020. This global, pivotal study completed patient enrollment in August 2018." Expects to raise $4 million more in cash through further sales of NOLs (net outstanding losses).

The OPTIMA Phase III study of ThermoDox plus RFA for liver cancer is expected to get its first interim efficacy analysis in October 2019. 0.637 hazard ratio is the minimum goal, but if missed can still reach later (after 158 deaths), so likelihood of success is better with the second interim analysis in 2020. The trial 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. A final readout in 2020 will have the lowest bar for success and submitting an NDA. NIH article published in August 2019 key finding was that increased RFA heating time per tumor volume significantly improved overall survival (OS) in patients with single-lesion HCC who were treated with RFA plus ThermoDox, compared to patients treated with RFA alone. 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 completed dosing its first cohort. 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.

ThermoDox plus ultrasound for breast cancer study was approved to start in the Netherlands in June 2019.

Will meet with Chinese authorities in Q3 2019 to discuss potential for ThermoDox there. China has the largest HCC patient population, 75% of the world total.

Cash and equivalents ended at $21.8 million, down sequentially from $23.4 million. Debt includes $5.9 million milestone earnout liability and $9.6 million in outstanding notes. Expects to raise $4 million more in cash through further sales of NOLs (net outstanding losses) and has access to equity financing facilities plus a shelf registration set up.

Total operating expense was $5.7 million,consisting of $3.6 million for R&D and $2.1 million for general and administrative expense. Loss from valuation of warrant liability was $0.1 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:

Blinded data from ThermoDox trial, will RFA consistency contribute to efficacy? We can't answer with confidence, but we have discussed. We do not believe 45 minutes should always have been used, it is the proper use. If is unfortunate that was not known at the first trial. RFA alone has limited effectiveness. Final analsysis assumes 33% improvement in OS over control arm. We saw 55% in the original subgroup. So there is a margin that could allow for the higher-RFA control arm to do better.

Breast cancer trial timeline? Uses Hifu heating technology. Could be better than RFA, reduces the treatment time to deliver a high dose of ThermoDox. This is a post-masectomy study. Just 12 patients in cohort, but still could take over a year to enroll.

NOLs? Currently capped by New Jersey at $15 million per company, so we have $4 million still available.

If we need to move past the first interim analysis? We have not disclosed the death rate. It depends on that. Unfortunately we see about one patient per week to six per month die. So about 6 months between interim data reads.

Vietnam? HCC incidence is high in Vietnam. Met with Minister of Health. Started process right away. Started enrolling patients quickly, has extra independent oversight. Went back a month ago, doctor's impressions were very positive. Once we get an approval from any country, Vietnam will accept our application for accelerated approval.

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