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Executives

Jeffrey W. Church – Senior Vice President Corporate Strategy & Investor Relations

Michael H. Tardugno – President, Chief Executive Officer & Director

Nicholas Borys, M.D. – Vice President & Chief Medical Officer

Gregory L. Weaver – Chief Financial Officer & Senior Vice President

Analyst

Keith Markey – Griffin Securities, Inc.

Joe Pantginis – Roth Capital Partners, LLC

[Ren Benjamin – Burrows & Company]

Mara Goldstein – Cantor Fitzgerald & Co.

[Tron Gilhald – Heart Stone Capital Management]

Michael G. King, Jr. – Dawson James Securities

Celsion Corporation (CLSM) Q3 2012 Earnings Call November 12, 2012 11:00 AM ET

Operator

At this time I would like to welcome everyone to the Celsion Corporation third quarter 2012 shareholder conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question and answer session. (Operator Instructions) I would now like to turn the call over to Jeff Church.

Jeffrey W. Church

Our third quarter 2012 financial results were released this morning before the market opened. We filed our third quarter Form 10Q on Friday after the market closed. The Form 10Q is available on the SEC’s Edgar system and the company’s earnings release and Form 10Q are both available on the company’s website at www.Celsion.com.

Today’s call will be archived, the replay beginning today at 2 PM Eastern and will remain available by phone until Monday, November 26, 2012 and on the company’s website for 30 days. Before we begin the call we wish to inform participants that forward-looking statement are made pursuant to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. You are cautioned that such forward-looking statements involve risks and uncertainties including, without limitation, the risk of clinical failures, delays, or increased costs, unforeseen changes in the cost of our research and development activities, and clinical trials by others, possible acquisition of other technologies, assets, or businesses, and possible adverse action by customers, suppliers, competitors, regulatory authorities and other risks detailed from time-to-time in the company’s periodic reports filed with the Securities & Exchange Commission.

Today, in addition to discussing our third quarter financial results, we will provide you with a corporate update including an outline of the events ahead in our Phase III HEAT study as well as our overall ThermoDox clinical development program. We will then open the call for questions which we ask that you keep to no more than two. With that, I’d like to turn the call over to Michael Tardugno, President and CEO of Celsion.

Michael H. Tardugno

Thank you for your interest in and support of Celsion, a company I trust you’ll agree is one of the most exciting and compelling in this world of biotech drug development. I am joined today by Nick Borys, our Chief Medical Officer; Greg Weaver, our Chief Financial Officer; and of course, Jeff Church from whom you’ve just heard, our Senior Vice President of Investor Relations and Corporate Strategy.

Before I get started this morning, on this Veterans’ Day I’d like to give a special welcome to those of you who are veterans of the US Military and on behalf of all of us, thank you for your service to our country. This is a great time for Celsion and by extension for our shareholders. Your confidence in our clinical focus and support for innovative technology has brought us very near to the transformative event for our company which is the announcement of the results from the HEAT study because if we are right, and we have no reason to believe we will not be, we will bring to market more than the promise of just hope, we will bring to the market ThermoDox. A drug that will extend life and perhaps provide a cure with those diagnosed with HCC or hepatocellular carcinoma, as you know the largest unmet medical need remaining in oncology.

Completion of development and transitioning to the commercialization of ThermoDox is an exciting milestone for our management team and I can tell you this is what we signed on for. This is why we’re here. In a sophisticated industry of clinical science and medicine full of regulatory complexity it’s good to know that many of you have been with us and are here with us this morning.

As I have been saying and continues to be, we have never been so well positioned. In mid September, the HEAT study, our fully enrolled 700 patient Phase-III pivotal trial of ThermoDox in combination with radiofrequency ablation [inaudible] for the treatment of non-resectable patients in HCC completed its last intermediate DMC review prior to final data. Last week, Friday to be exact, we announced that 380 progression free survival events, that’s PFS events have been projected in the HEAT study.

According to the study’s protocol 380 events followed the trial and 80% showed a 33% improvement to the time to progression in the therapeutic arm over the control arm. The final data collection process is followed by query resolution, tabulation of summary, unblinding and final analysis results by the study’s independent data monitoring committee. Following DMC review the company will disclose top line results which we expect will be in January.

I will remind you that PFS in the HEAT study is the HEAT study’s primary end point which has been granted a special protocol assessment, that’s an SPA by the FDA. 33% improvement in the hurdle of clinical benefit that supports approval. This is an exciting time for the company, maybe even more so by the fact that we have the financial resources sufficient to see us through data and well beyond.

Now I’d like to start out with a question that is posed to me over and over and then I posed rhetorically last time we spoke, will the study be successful? I want to reiterate that we remain blinded to the results. The integrity of the trial depends on it. But, I want you to know that I have no reason to believe that the HEAT study won’t be successful but you don’t have to take my word for it, the evidence is clearly on our side.

Let’s start with the regulatory community. They get it. Look at the support we’ve gotten from multiple regulatory agencies around the world, 11 in all and in particular the FDA. We have an SPA, we have fast track and orphan designation, we’ve agreed to a 505(b)(2) filing pathway and ThermoDox will be a candidate for priority review which we expect we will get on positive data. The reason for this support? Well, I think it’s two-fold. First, there’s no ambiguity, HCC is an enormous unmet medical need.

Let’s go through the facts once again, I do this almost every call, as they are sobering. ThermoDox’s principle indication HCC has been a challenge for even the biggest of big pharma despite of the hundreds of millions of dollars they have spent to find a therapy to improve outcome, HCC remains a large and deadly cancer. The selection of this indication by Celsion is not a coincidence. We chose it because we believe fundamentally in the science behind our drug technology and its ability to work in this setting.

HCC is the world’s fifth largest cancer and a disease with significant concern in the global oncology community and public health agencies. Incidence is approximately 28,000 in the United States, 40,000 cases in Europe and it’s rapidly growing at 5% worldwide from a base of 750,000 new cases annual. Over 50% of incidences in China emphasizing the importance of this market for us and a rational for a high concentration of our investigative sites in that country and I might add, the extraordinary support we receive from the People’s Republic of China SFDA and we’ll talk about this more in a minute and Nick will have some comments on this which I think will give you some confidence that we are on the right track in the PRC.

The World Health Organization estimates that HCC will become the number one cancer worldwide by 2020 surpassing lung cancer. For countries in the west and Japan during the 10 year period forecast ending 2019 incidents is expected to increase by 20%, prevalence by 47%. Our target population, median time to progression is 12 months with median time to death 30 months. Five year survival is in the single digits. I will remind you as I said last call, outcome statistics as we continue to remove them, they have remained constant since we began our research in HCC over six years ago.

A check in point I want to make and equally important to the regulatory support, it’s clear that the clinical evidence for a successful HEAT trial is on our side. We know that Doxorubicin, the anticancer agent in ThermoDox is active in liver cancer. We know that combining ThermoDox with radiofrequency ablation RFA, as shown remarkable potential in our early phase clinical studies to delay disease progression. We know that recurrence most often happens in the margins surrounding the ablated tumor where micro metastasis that go undetected or untreated can form new lesions.

We know unambiguously that ThermoDox will deposit and sequester a high lethal concentration of Doxorubicin in these susceptible margins following RFA. We also know that delayed progression, a meaningful clinical outcome is both sensitive and specific as a surrogate for overall survival, an important confirmatory endpoint particularly in the United States.

I cannot emphasize enough the significance of this study unlike almost all other cancers, HCC is growing in global prevalence, in mortality with few treatment options particularly for patients with non-resectable disease. The medical world, I daresay, is watching. So we continue to work diligently to avoid any missteps and to ensure no surprises with the clinical data set.

Through our clinical quality dashboard we have tracked and evaluated timelessness, [inaudible], and certain trends in the data set which are routinely scoured by our data management team. This information has been reviewed and discussed in each and every DMC meeting. We have instituted and completed a comprehensive remonitoring program for a number of high volume clinical sites to check and double check the data supporting proper study conduct.

We have also implemented a comprehensive clinical quality audit program as a check on our [CRO] and their work product. The goal here, as I said over and over again, is no surprises. Now, as we look to commercialization our early market research, market landscape analysis, and price ranging studies with physicians, key opinion leaders, and payers, has given us a better understanding of the patients’ journey as well as ThermoDox’s positioning and its value in the treatment of HCC.

On a preliminary basis, and once we have final data we’ll be able to give you some detail on this, but on a preliminary basis I can share with you that the feedback we have gotten is at the top of the chart. Of course, price and economics are greatly influenced by clinical benefit. After top line data are available in depth quantitative market analysis and pricing studies will be conducted.

I want to transition to the manufacturing front, an important element in our go to market strategy. We are establishing multiple manufacturing partners in the US, an import requirement to ensure supply continuity by most pharma companies interested in a commercial license of ThermoDox. In China, to ensure reliable quality supply chain with a cost of goods that support high gross margins regardless of the territory, we announced a commercial supply agreement with Hisun Pharmaceuticals, a highly respected Chinese company for the production of ThermoDox for the domestic China market.

A few more comments on CMC. We have now produced over 20 batches. I think Dr. [Reed] would tell me 22. We understand the manufacturing cost and we know how to make this product. We expect high gross margins. A registration batch to support the initial NDA and MAA filings are complete and on stability. Watch inventory production is planned to commence immediately following positive data readout.

Now I’d like to move on to regulatory affairs. Consistent with our global regulatory strategy, the HEAT study is designed to address as many markets as possible in a single study. In the EU we have EMEA [inaudible] advice confirming that the HEAT study will supply data acceptable as the basis for submission of an [MAA] for centralized filing and full approval. A single approval will give us access to 27 European countries.

European approval in addition, or as an alternative to FDA approval provides the basis for international filings in countries that require a referenced approval known as a CPP, or a certificate of pharmaceutical product from a globally recognized regulatory agency. Bottom line here is we have more than one option for international filings.

Very recently, and Dr. Borys will talk about this more, I hope Dr. Borys and I and Dr. [Reed] met for almost half a day with the Chinese FDA Center for Drug Evaluation & Research or CDER. The meeting frankly was planned to be for just a little over an hour and we spent almost half a day. The outcome was positive, more than positive. That said, they will accept an NDA filing without the need for a reference country approval. This might be a first.

The fact that we can file directly in China goes to the strength of our strategy to enroll a minimum number of patients necessary for local registration, we’ve Dr. Borys to thank for that, and to engage a local manufacturer for the China ThermoDox market, and we have Dr. [Reed] to thank for that. Our smart approach will save us over a year in approval time lines.

In summary, we’ve a single global trial with agreements from local regulatory agencies that give us immediate filing access to some 29 countries around the world. We have started the NDA process. We have a CRO with FDA portal access and publishing expertise. We are using a common technical document approach known as a CTD as a basis for NDA and MAA filings. Using the CTD, it’s a template that is recognized virtually globally by all regulatory agencies as a basis for regulatory filings for new drug approval filings.

Using the CTD we would expect to file in the US and the EMEA on about the same timeframe followed by China. Nick will speak to this more detail and report top line progress on our clinical development program to evaluate ThermoDox in multiple indications.

The ABLATE study, randomized Phase-II study of ThermoDox in combination with RFA for treatment of colorectal metastasis is underway in four locations. Recruitment, as I have said in the past, is being limited by design to preserve cash. Following unblinding of the Phase-III heat study enrollment will be accelerated in this trial.

The DIGNITY study, a difficult and well traveled one that we refuse to give on, as I said in the past, particularly given the remarkable and strong results reported from the Duke Phase-I trial and from our Phase-I study, the DIGNITY study, an abstract of which was presented at the 2012 Congress for European Society of Medical Oncology this past September by Dr. Hope Rugo from the University of California San Francisco School of Medicine. The poster presentation is on our website. I’m sure Nick has more comments on this also. So we’re excited to continue into a Phase-II study where local control provides DIGNITY for these patients in a clinical meaningful benefit.

So I’ll point out that the evidence here is clear, we have a pipeline within this drug platform, within ThermoDox made even more exciting with the potential for a next generation treatment of four difficult cancers and that is combining ThermoDox with HIFU, high intensity focused ultrasound, acoustic energy. Our announcement of our research of Philips the maker of Sonalleve, one of the three HIFU devices in evaluation for oncology applications. The potential of these devices to non-evasively target and mediate drug delivery directly to tumors when combined with our heat sensitive liposomal technology has captured the attention of key opinion leaders on the leading edge of cancer research. With ThermoDox I believe may be exactly the therapy they seek.

This is being made clear with the growing list of collaborators. In addition to our joint research plan with Philips Healthcare initiatives and collaborations with some of the top institutions in medicine include pre-clinical studies at the University of Washington’s School of Medicine where we’re exploring the use of ThermoDox in combination with MR-guided HIFU for the treatment of pancreatic disease or pancreatic cancer. Pre-clinical and planned clinical studies at the University of Utrecht in the Netherlands under a $10 million European cooperative grant for MR-guided HIFU for the treatment of liver cancer.

We’re collaborating with the University of Oxford for a clinical study of ThermoDox in combination with ultrasound guided HIFU to treat metastatic cancer. I can tell you now there are others which we will announce overtime as our agreement contracts are negotiated and executed. Supporting all these efforts is a strong financial position.

As we have stated, the company has sufficient cash to fund its operations through 2013 and we have no current plans to raise capital prior to top line data release from the HEAT study. I will ask Greg to speak on our finances in more detail in a moment. But first, I want to turn the call over to Jeff Church.

Jeffrey W. Church

At this late stage in the development of ThermoDox drug product manufacturing and our ability to meet global demand is a key priority both for the commercial launch and for the regulatory steps that precede it. As we announced earlier this year we have in place a commercial supply agreement in China with Hisun Pharmaceutical for the production of ThermoDox for the domestic China market.

Hisun Pharmaceutical is one of the largest manufacturers and suppliers of chemotherapeutic agents globally and a go to partner for pharma companies in China including such companies as Pfizer and Eli Lilly. Our Hisun agreement in addition to providing the investment needed to support the production of three registration batches also provides certain regulatory advantages when filing for approval in China.

Our Hisun relationship is also important in that it illustrates the careful attention to cash management in the period leading up to data. This balance between advancing the largest study ever conducted in intermediate stage primary liver cancer and maintaining a strong cash position has allowed us to develop what will be a registration stage product, potentially one of the most important new therapeutic introductions in oncology without giving away any global rights outside of Japan.

The level of interest for a billion dollar product with near term approval potential in the US, Europe and emerging markets such as China and Asia Pacific is high. China and the rest of Asia Pacific are key markets for ThermoDox as they represent over 70% of the global incidents for HCC. The appetite among both large multinational pharmaceutical companies as well as major domestic Chinese pharmaceutical companies has continued to increase as we approach final data readout.

Companies are looking for large new product opportunities like ThermoDox in emerging markets like Asia Pacific to replace revenues from many of their products coming off patent. Now, Greg will provide an overview of our third quarter financial results.

Gregory L. Weaver

We reported total cash and investments at September 30th of $22.7 million which compares to $24 million at the end of the second quarter which reflects a net change in total cash of just $1.3 million in Q3. During the third quarter the company received the benefit of proceeds of $4 million from investors’ cash exercise of common stock warrants along with some stock option share purchases by company insiders.

The total use of cash for operations in the third quarter was $5.25 million which is down from $6.9 million in Q3 last year. The reduction in cash usage was a result of the continuing trend in the drop of operating expenses which is consistent with our prior guidance which is driven by HEAT study CRO costs globally trending down as we completed enrollment in the study in June of 2012 and are now moving in the next stage of the study approaching end of trial results.

This is reflected in the numbers with Q3 total operating expenses dropping to $4.9 million which is down from $5.7 million in Q2 of this year and down from $6.8 million in Q3 of last year. Given our current operating assumptions, we expect to end the calendar year 2012 with cash sufficient to fund the full year of 2013 and beating street estimates.

Q3 2012 R&D expense of $3.5 million reflects a decrease year-over-year of 35% which is down $1.9 million from $5.4 million the same quarter last year and down 15% from $4.1 million in Q2 of 2012. Our management of clinical activities for the HEAT study continues to trend down as expected partially offset by the increases in our development of the US commercial manufacturing activities for ThermoDox.

General and administrative expenses of $1.4 million were flat year-over-year compared to Q3 2011 and are down from the $1.6 million in Q2 of this year. To summarize, we completed the third quarter with cash and investments of $22.7 million as compared to $24 million at the end of the second quarter. This provides the runway to fund operations and debt service through 2013. As we pointed out on last quarter’s call, one important element of our culture here emphasizes the wise use of cash and cost controls and our ability to make cash and by extension our equity work as hard as possible but not at the expense of our commitment to clinical research and growing of shareholder value.

I would add we also have an additional $5 million available from our loan facility with Oxford and Horizon following positive clinical data from the HEAT study which adds to the strength of our balance sheet at a relatively low cost of capital. To reiterate, we have no current plans for issuing new equity under the HEAT study data disclosure in January.

Now, I’d like to turn the call over to our Chief Medical Officer Dr. Nick Borys.

Nicholas Borys, M.D.

In my review with you today I would like to focus on our current and recent efforts of ThermoDox development. The HEAT study as part of its special protocol assessment as agreed to with the FDA and endorsed by the European regulatory authorities is designed not only to show statistical significance with our results but clinical significance as well. In other words, positive data means that our results are not only meaningful to regulatory authorities and statisticians but meaningful in the clinical treatment of HCC.

The team here at Celsion is working diligently to prepare for our regulatory submission. Supporting this goal are a number of key designations including special protocol assessment and a 505(b)(2) agreement with the FDA as well as fast track. After our NDA submission is accepted we expect to secure a priority review in line with FDA’s current PDUFA performance goals.

We have confirmation from the European regulatory authorities that the HEAT study provides the basis for a centralized European filing application or MAA. We will be afforded many of the same priority review benefits through what European regulatory authorities call a full mixed review registration process.

As Mike mentioned earlier we have recently met with the Chinese regulators and came to an agreement that the HEAT study would also serve as an adequate basis for market approval and because of our relationship with local manufacturing of ThermoDox we would be eligible of submitting a Chinese NDA in parallel with the US NDA submission and the European submission.

So primary liver cancer is a priority or Celsion. ThermoDox’s unique properties support its potential use beyond first line treatment in HCC. As Mike mentioned, we’ve announced several important new collaborations recently that underscore not just our belief in this potential but support for it within academia and industry. First we announced this quarter FDA clearance to advance a joint development program for ThermoDox combined with Royal Philips Electronics’ Sonalleve MR HIFU technology in the [inaudible] of painful metastasis to the bone. We expect to initiate a Phase-II study in this indication in early 2013.

There are between 300,000 to 500,000 patients with bone metastases. Many of these patients experience excruciating and unrelenting pain and are often treated with powerful analgesics such as opiates resulting in only modest benefit. External beam radiation therapy is effective in palliating painful bone metastases but is limited by accumulating toxic affect to healthy organs. The Sonalleve HIFU system has the potential to non-invasively target lesions with acoustic energy creating sufficient heat to activate ThermoDox and preferentially release high concentrations of Doxorubicin in a targeted treatment area. This multimodality approach may have the effect of creating a next generation non-invasive treatment for this condition. It may also have other treatment potential.

We announce a collaboration with the University of Oxford and began a close study of ThermoDox and HIFU in the treatment of metastatic liver cancer. Trial, which is ordered by the UK’s National Institute for Health Research will be carried out as a multidisciplinary collaboration between Celsion, the Oxford University Institute of Biomedical Engineering and the Oxford University Hospital [inaudible]. [Inaudible] will require approval from [inaudible] committee. [Inaudible] targeted over the next four months. The details of this study will be made public following approvals from the University.

Lastly we are working with [inaudible] pre-clinical study designed to explore the use of ThermoDox in combination with MR-guided HIFU for the treatment of pancreatic cancer. The [inaudible] University of Washington School of Medicine [inaudible]. [Inaudible] expected to include animal models [inaudible] HIFU to trigger high concentrates of Doxorubicin in proprietary pancreatic cancer [inaudible].

Our company sponsored studies [inaudible]. We recently expanded the number of individuals participating in the ABLATE study, our multicenter randomized Phase-II trial to up to 80 patients [inaudible] colorectal cancer metastasized to the liver. Primary [inaudible] for this study [inaudible] treatment. Our goal with ABLATE is to enroll patients more rapidly once following positive data from the HEAT study such that the study will mature around the predicated time of approval for ThermoDox.

[Inaudible] breast cancer [inaudible], we continue to move forward with our Phase-II DIGNITY study. The DIGNITY study builds upon promising data from Phase-I which was presented at the European Medical Oncology Conference. In the Phase-I portion of the DIGNITY study a highly treatment refractory [RCW] patient population was treated using ThermoDox in combination with mild local hypothermia for superficial lesions that had failed standard treatment.

Clinically meaningful responses were observed including a target lesion response rate of 45% without local progression that included a complete response of 9.1% and four partial responses. As we have said in the past the Phase-II study has been limited to 40 patients with this form of breast cancer. [Inaudible] enroll patients who received but failed prior treatments. Again, this study will accelerate with completion of the HEAT study.

Our ThermoDox research program at this phase is deep and diversified. We have laid the ground work for moving forward with multiple company sponsored studies on a schedule of our choice. With that, I look forward to the announcement of the HEAT study results and return the call to Mike.

Michael H. Tardugno

As I hope our remarks make clear, with your support we’ve worked and are prepared for what will be the most important event in Celsion's history and that is the validation of our technology platform and lead therapeutic ThermoDox and to launch what may be one of the most important new therapies in oncology in a generation. The culmination of many years of work and preparation from a small but very dedicated team.

We will continue to focus on our critically important work and look forward to reporting to you on our success. In doing so, we expect to create exceptional value for our shareholders and most importantly make a significant difference in the lives of patients and their families. As always, we greatly appreciate your interest and support and we look forward to updating you on our continued progress.

Now, we’ll go on to questions which I’d like to ask you to limit to no more than two to give everyone a chance to get answers. Operator, please open the line.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Keith Markey – Griffin Securities, Inc.

Keith Markey – Griffin Securities, Inc.

Just a couple questions, I was wondering if you could tell us do you think the top line data will include the trend in survival?

Michael H. Tardugno

That’s a hard question to answer at this point. Certainly, we’d like to report as much information as possible. I think we want to be mindful of the fact that we don’t want to deliver results or information prematurely so we’ll want to make sure that the data is mature enough to be able to share the trending information, if it’s available, with the general public and with our shareholders.

I think as Dr. Borys would point out, reserving as much important clinical results as possible for publication and for our conference presentation is important. So we’re going to go through a very structured process evaluating what we can and what we will and can share to one which is most importantly to ensure our investors know the results with some confidence that they can continue to support the company. But at the same time we have to balance it with our scientific and academic obligations to preserve and update so that the paper and the presentation is accepted by the highest of top level forum.

Keith Markey – Griffin Securities, Inc.

Then I was just wondering, can you remind us of the timeframe you expect to file the documents with the different regulatory agencies?

Michael H. Tardugno

I don’t think we’ve given any guidance on that point just yet but we will be moving as quickly as possible. As I said in my remarks and Nick reconfirmed, we have already begun developing the NDA, it’s being written as we speak. At least one, possibly two sections will be ready for submission. If the FDA allows for a rolling submission we’ll be able to do so quite quickly.

The submission date will be conditioned. We have our plans but I think it’s important to recognize that the submission ate will be conditioned on the outcome of our pre-NDA meeting with the FDA. We’ve already had conversations, written exchanges, let me say it that way, with the FDA regarding our expectation for data availability and what our plans are for filing. As we expected and as we looked forward to, they reminded us that pre-NDA meetings would be necessary in order to ensure we are addressing all of the issues in an appropriate manner to ensure a quick and timely review of the application in line with our expectation and I’m sure their expectation that we will have a priority review agreement.

Until we have met with FDA, and we will have a similar meeting by the way with EMA and with FSDA. Until we’ve met with these agencies [inaudible] just a little bit of pause here to give you any firm dates with regards to our expectation of filing but you can rest assured that it filing timelines are a subject of regular review and conversation within the company.

Operator

Your next question comes from Joe Pantginis – Roth Capital Partners, LLC.

Joe Pantginis – Roth Capital Partners, LLC

My two questions are I was wondering first can you provide a little more color with regard to the great amount of background logistics that are going on right now? Obviously, you’ve been having a great amount of work through the entire trial, through your clinical quality dashboard but what new things are coming up now to be able to finalize data from this international study? Obviously, you have a lot of geographies to compile the data in a centralized location.

Michael H. Tardugno

That’s a good question. Collecting data from 79 sites in 11 countries and I think we have 16 different languages that we’re working through is not a trivial task by any means. The clinical group here regularly and frequently meets with our CRO and the extended group. I mean, we reached down right into the countries speaking directly to our CRAs in the countries with regards to collecting data in an efficient but more importantly in a quality manner. As you know, we will be locking the database at some point in order to ensure that there can be no changes following the collection of data and the summary of information that is provided to the DMC ultimately provided to regulatory agencies.

But it is a sophisticated and complex endeavor. Nick, do you want to maybe just talk through some of the elements of data collection in the far reaches of the world?

Nicholas Borys, M.D.

Sure. For the data mangers out there, as you probably know, we are now completing our final data sweeps with a focus on survival sweeps and imaging sweeps to ensure that our PFS events and survival events can be well determined and confirmed by our DMC. You also probably know, as Mike has mentioned on many occasions, that the data is always checked and rechecked. As this data goes through the checking process queries arise where if something is not exactly clear we have go to back to the site and rediscuss it with the investigators and clarify them all.

All of this has to be finalized to a point where we can declare a data lock and at which time we can prepare all of the documents, and the tables, and the graphs that are necessary for our DMC that will eventually come to go out to the regulatory authorities for an approval process. So it’s a multilevel effort that’s being done by multiple vendors and it’s being monitored by us here at Celsion. It is a very exciting time for us so everything so far so good.

Joe Pantginis – Roth Capital Partners, LLC

My second question I guess if you can link you’ve talked about some of your pre-commercial and your pre-regulatory plans, anything you can add regarding potential business development activities?

Michael H. Tardugno

I don’t think at this point we’re in a position to really talk anymore about interactions with other companies. Although, they are happening and they are frequent and they certainly take some of our precious time and resource, but a priority for the company nonetheless. Our expectation is that post positive data will be entertaining multiple term sheets. Now, whether those terms sheets will address a regional license or larger, will really be the function of other company’s interest. Our sense is on positive data the company will realize the best terms for license. So we’re operating with some patience and expect that our patience will pay off.

I wanted to make another point on licensing and I think this maybe further addresses some of the comments that Jeff made. A very high concentration of patients are in Asia Pacific and so when we look at prioritizing our time and effort as it relates to diligence which you probably know is time consuming, the majority of our work and the majority of the interest that we’ve seen is in that region of the world.

Operator

Your next question comes from [Ren Benjamin – Burrows & Company].

[Ren Benjamin – Burrows & Company]

Could you talk to us a little bit about the role of overall survival in the entire sort of context of the data package? And maybe help us understand how we should be thinking about overall survival from a regulatory point of view and then maybe from a marketing point of view?

Michael H. Tardugno

Let me start with the second part of your question first. It’s very clear that a survival benefit will certainly be recognized as a clinical benefit that provides substantial pricing power. There is simply no doubt about it. We are anxious to see the survival trends which we would expect to have, maybe not enough events of death to be able to conduct a proper statistical analysis, but we’ll be looking forward to some survival trend which we would expect to have certainly by the time the application has been reviewed and approved by the US FDA.

Survival benefit is important in the overall equation for the market value of ThermoDox, there is simply no doubt about it. Let me just come at it from another way, with regards to PFS as a primary end point, outside the United States we know that particularly in our indication which may be different than quite a few others that have had some notoriety of late, patients in our trial have had no metastases of cancer, no evidence of cancer outside the liver. Post RFA treatment, all of their lesions have been addressed and eliminated. So they are leaving the physician post treatment with no evidence of cancer.

Progression is a meaningful event in that situation, in that setting. That was recognized very clearly by the EMA in our scientific advice meetings with the EMA they made it clear to us that PFS alone in this setting may be sufficient for unconditional approval, or final approval of ThermoDox for the European community. We think that’s right.

In the US it’s reasonably clear to us, given the construct of the trial as negotiated with the FDA in our SPA negotiation, that a confirmatory end point survival needs to be part of the trial. So we’ll be following our patients to establish a confirmatory end point. What the hurdle will be for OS support PFS I think is yet up in the air. But, we know that the trial is powered in a way to show us 30% improvement in overall survival from a statistical standpoint.

Before we leave this question I want to ask Nick if he has anything to add to that?

Nicholas Borys, M.D.

One thing I think is very important for everyone to know is number one, FDA has committed to approval the drug based on PFS and then later on we’ll continue following our patients for OS which is again a confirmatory end point as Mike has described. PFS in itself is a very important clinical end point as the European authorities have recognized.

You can imagine that if we are able to control the disease at the liver before progressions continue, that increases the chance for patients to get other curative treatments such as transplantation. So PFS by itself is very important in liver cancer and that might offer a contrast for other cancers as well. So from my point of view, from a clinical point of view, from a regulatory point of view, getting that PFS is very important, confirming it with OS later on we have very high confidence.

[Ren Benjamin – Burrows & Company]

Just another question, kind of the flip side of what Joe had asked regarding partnering, can you talk to us a little bit about how you’re thinking about commercialization? So do you have to get a partner? Is that the primary goal of the company of if the economics just don’t seem to be right are you willing to go it alone? If you are, what does the company look like if you’re willing to go it alone?

Michael H. Tardugno

I think that’s a good question. It’s been our point of view that to be successful we need [inaudible] areas in development and commercialization for which we have expertise and confidence. Sticking to our meeting I guess, is the saying as it goes it comes to mind. Outside the United States it’s pretty clear to us that we do need a partner to have the maximum potential for success. I do not have any questions that post positive data that we have partnership relationships that we can come to the conclusion we’ll have terms, economics that benefit the company. I’m not overly concerned about that.

In the United States however, our view point is quite a bit different. We are prepared to bring ThermoDox to the market in the US ourselves. It may be our first line strategy and in fact, we put quite a bit of time behind assembling this strategy and we think we have a reasonable approach that manages risk, manages the amount of cash necessary to bring ThermoDox to market in a very responsible way. So unless we see term sheets for the US that would provide shareholders with a better return on investment than what our management team could do alone in bringing ThermoDox to market ourselves, we are likely to commercialize ThermoDox in the US ourselves or potentially in some kind of co-marketing or co-distribution arrangement.

Operator

Your next question comes from Mara Goldstein – Cantor Fitzgerald & Co.

Mara Goldstein – Cantor Fitzgerald & Co.

Just two things, the first is I understand you’re limited to what you might be able to say in terms of how much data will be released at first flush but do you think you’ll have regional stratification when you release the top line data? Then secondarily, I just wanted to confirm that you said the trial was 30% powered to show an improvement in survival?

Gregory L. Weaver

That’s right. The first question is are we going to release regional results, that I think for at the time we’re going to be releasing top line results we will probably not be drilling down to a lot of detail. Again, as you know, what we’re trying to do is protect the data in order for it to first undergo a peer review process and that will afford us to get publications in very high quality journals. Again, as you know, journals will not publish data if it’s already been publically released.

So for me I’ll be very jealous of releasing much data after that before it goes to a regulatory review and before it goes to a peer review. Again, if you look at other examples of great drugs that work in the area of liver cancers and other cancers you’ll see that that is usually the path that is followed. Now, for the second part of your question I think what Mike was quoting was the statistical power for PFS not necessarily for OS.

Mara Goldstein – Cantor Fitzgerald & Co.

That’s 30% or 33%?

Gregory L. Weaver

33%.

Operator

Your next question comes from [Tron Gilhald – Heart Stone Capital Management].

[Tron Gilhald – Heart Stone Capital Management]

I do have two questions, maybe even three or four if I can pack them in there. I hope you don’t mind a softball question to lead off here, but is some concern amongst analyst and journalists about the ability of micro and small cap biotechs that navigate a successful course through the FDA, I’d like you to review your management staff experience in prosecuting drugs through the FDA approval process?

Michael H. Tardugno

Well it’s an evolving environment but historically we have had our hands in one way or another from a variety of functional areas on over 27 NDA submissions. I can’t off the top of my head tell you have many have been successful but I suspect it would be a good numbers of those that had been successful.

[Tron Gilhald – Heart Stone Capital Management]

I just wanted to have it on the record that you’ve done it before.

Michael H. Tardugno

Let me just go beyond that, we do have a great deal of experience in filing NDAs from an executive level, from a hands on level, from writing documents, various sections of the documents. But we were also smart enough to know it is an evolving market. We have multiple consultants who are very close to the FDA in terms of current filings. One of which has an expertise in publishing and submitting data through this electronic common technical document approach. The other consultant has a great deal of experience in oncology, in messaging and positioning, and certainly in dealing with ODAC which we don’t expect will be a requirement for approval of ThermoDox but certainly we’re preparing for it.

So I think the bottom line is we know what we know. We have a great deal of experience but we’re also smart enough to know that staying current requires a lot of effort and so we are bringing into the company experts in the area that have had very recent interactions with the FDA in oncology applications.

[Tron Gilhald – Heart Stone Capital Management]

The second question is to the HEAT protocol. I was looking at the clinical trials just the other day to review the protocols for it and something struck my eye. It says, “Incomplete ablation start over basically in the same arm.” In other words, if the next visit they find they didn’t get all of the tumor they can go back in and go through the same process within the same treatment arm they were assigned. So that necessarily mean that some ThermoDox patients may have received two doses. I’m wondering if you know the numbers of those and if you have guesses of how that may either help the patient again, from maybe Phase-I trials, how it helps patients or it may add to adverse effects?

Michael H. Tardugno

We certainly do know the numbers but with regards to how [inaudible] you’re asking us to speculate a little bit here.

Nicholas Borys, M.D.

As Mike said, yes we know the exact number of patients who are getting multiple doses of ThermoDox and we will be following them and we have followed them carefully and we will be reporting them both to the regulatory authorities and in our subsequent publications. I think one of the great things about RFA as a procedure by itself is that you can do repeat administrations and nothing to date suggests that ThermoDox changes that. We still consider that RFA will continue with ThermoDox giving multiple applications in order to keep the tumor in check and so our data will show the feasibility of that and the safety of that.

Also, back to the previous question, again to confirm there are scenarios also in the OS where we are going to be showing with the power of 80% a hazard ratio of 1.33 or 33% improvement for the statisticians there.

Operator

Your next question comes from Michael G. King, Jr. – Dawson James Securities.

Michael G. King, Jr. – Dawson James Securities

Just to maybe follow up on the OS line of questioning I was wondering if Dr. Borys could help us understand how post treatment mortality is treated from a statistical standpoint? In other words let’s say patients either in the control arm or the placebo arm go on to subsequent therapy and then expire subsequent to that. Are those events censored or are those events counted in the intent to treat analysis?

Nicholas Borys, M.D.

I think you’re touching on one of the issues that surround OS as an end point where particular patients that have a long survival from when they progress to the time they die, because they get multiple interventions in between that’s sometimes considered a confounding effect on OS. I think in our case that is less of a concern because, as I think all of us know, the treatment options for people that have progressive HCC are relatively limited.

You have perhaps, if the disease is still localized or you have minimum volume disease, maybe you’d be considered for [inaudible]. But generally, the alternative would be going on to [Sorafenib] particularly if you have extrahepatic disease. So I don’t see any confounding issues there. Our rules for censoring patients are quite clear and established for both the PFS end point and the OS end point and I don’t think I’m in a position right now to go through all the censoring rules.

Michael G. King, Jr. – Dawson James Securities

Then just maybe a question for Mike and/or Greg, you’ve done an admirable job controlling costs and a lot of that obviously due to the wind down of HEAT but looking forward to 2013 and beyond I would imagine that you’re going to be expand trials for perhaps breast and liver, you may have some post approval commitments for HCC. I’m just wondering if you can give us a thought just kind of longer term where R&D levels start to scale back up and if we should think about that as far as building our models are concerned?

Michael H. Tardugno

I think your point is well taken. Post positive data we certainly will be investing in additional clinical programs that support the broader use of ThermoDox. While we’ve been very cautious about investing in the trials we have initiated to preserve our cash to ensure that we have a runway to complete our trial, to be able to negotiate a license from a position of financial strength and if and when the time does come to raise additional capital through an equity offering to do it in a manner from a position of strength. But we do see, as we pointed out, and I think that was a very important part of our discussion with investors today, we do see a very broad opportunity for the utilization of our underlying technology and in particular ThermoDox to treat some very difficult disease.

It changes the paradigm so we’re spreading our interests across a number of researches again, priming the pump following which, upon positive data, you would expect to see this company investing pretty aggressively in those trial models.

Operator

That is all the questions we have for you today.

Michael H. Tardugno

I want to thank all of you for your interest and support of the company and your time and attention for this quarterly conference call. Again, as we close down the call we would like to give a special recognition to our veterans on this Veteran’s Day and thank them for their service. On behalf of all of us we appreciate what you’ve done for our country. Beyond that, we look forward to our next conference call with you which should be following the public announcement of the results from our HCC trial. Thank you very much. Have a great day.

Operator

This does conclude today’s Celsion Corporation third quarter 2012 shareholder conference call. Thank you for your participation.

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