Analyst Conference Summary

Celsion
CLSN

conference date: November 15, 2019 @ 8:00 AM Pacific Time
for quarter ending: September 30, 2019 (third quarter, Q3)


Forward-looking statements

Overview: ThermoDox Phase 3 trial completed enrollment and the first interim data readout was consistenet with earlier data, so the trial continues.

Basic data (GAAP):

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

Net income was negative $5.5 million, up sequentially from negative $5.9 million, and down from negative $4.7 million year-earlier.

EPS was negative $0.25, up sequentially from negative $0.29, and up from negative $0.26 year-earlier.

Guidance:

Sale of net operating losses expected to fund operations into first quarter of 2021.

Conference Highlights:

Michael H. Tardugno, Celsion's CEO, said: "With the first of two preplanned interim efficacy analyses for the OPTIMA Study successfully behind us, we look forward to the promise and potential for success at the 2nd preplanned analysis, now expected to occur in the second quarter of 2020. "

The OPTIMA Phase III study of ThermoDox plus RFA for liver cancer is reported its first interim efficacy analysis in early November 2019. Trial will continue. Likelihood of success is better with the second interim analysis in 2020. The trial completed enrollment in August 2018. 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. anticipates it will be able to transfer this current year credit for approximately $2.0 million prior to the end of 2019.

There is a higher probability of success at the second interim analysis which should take place around June 2019 (at 158 patient events). We always described success on the first interim as possible.

In November 2019 the data monitor to continue to enroll patients in the Phase 1 portion of OVATION 2 of GEN-1 for ovarian cancer. 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. 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.

In August 2019 the Journal of Vascular and Interventional Radiology published "RFA Duration Per Tumor Volume May Correlate with Overall Survival in Solitary Hepatocellular Carcinoma Patients Treated with RFA Plus Lyso-thermosensitive Liposomal Doxorubicin," which discussed the NIH analysis of results from 437 patients in the HEAT Study (all patients with a single lesion representing 62.4% of the study population). The key finding was that increased RFA heating time per tumor volume significantly improved OS in patients with single-lesion HCC who were treated with ThermoDox plus RFA, Thus, the NIH analysis lends support to the hypothesis underpinning the OPTIMA Study.

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

Met with Chinese authorities in Q3 2019 to discuss potential for ThermoDox there. China has the largest HCC patient population, 75% of the world total. Is considering a compassionate use program there.

Cash and equivalents ended at $18.8 million, down sequentially from $21.8 million. Debt includes $5.9 million milestone earnout liability and $9.7 million in outstanding notes. Expects to raise $2 million more in cash through further sales of NOLs (net outstanding losses) in Q4 2019 and $2 million more in 2020 and has access to $10 million in equity financing facilities plus a $75 million shelf registration set up [WPM: but that is more than current market cap, so would likely only be used after a good data report results in an increase in the stock price].

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 summary:

Potential for success at the next interim analysis? All the signals are in the right direction. Hazard ratio has a better margin for success than in the first interim. P Value. The median time of follow-up, Kaplan-Meier curves, starts to separate here. But this assumes no dramatic change in the control arm. PFS is tracking with the target numbers. But of course there are no guarantees.

China? We get a lot of interest from both Chinese and international companies for our therapy in China. There is ongoing diligence. But no real move until we get positive data.

Looking for ways to accelerate the ovarian cancer program.

Partnering for commercialization in U.S.? We will not market Thermodox outside the U.S. we will take one or more partners. We may market in the US ourselves, but that requires capital, so we could partner.

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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