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Celsion Corporation (NASDAQ:CLSN)

Q3 2013 Earnings Conference Call

November 12, 2013 11:00 AM ET

Executives

Jeff Church - SVP, CFO and Corporate Secretary

Michael Tardugno - President and CEO

Nicolas Borys - VP and CMO

Analysts

Keith Markey - Griffin Securities

Bob Green

Leo Gibney

James Thomson

Operator

Good morning. My name is Steve, and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsion Corporation Third Quarter 2013 Financial Results 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 Mr. Jeff Church. Please proceed, sir.

Jeff Church

Thank you. Good morning, everyone, and thank you for joining us. Our third quarter 2013 financial results were released this morning before the market opened. We also filed our Form 10-Q for the quarter ending September 30, 2013 at the same time. The Form 10-Q is available on the SEC’s Edgar system, and the Company’s earnings release and Form 10-Q are both available on our website at www.celsion.com.

Today’s call will be archived, the replay beginning at 2 PM Eastern, and will remain available by phone until Tuesday November 26th, 2013, and will on our website for 30 days. Before we begin the call, we wish to inform participants that forward-looking statements 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, 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 and Exchange Commission.

Following our formal remarks today, we will open the call for questions. I’d like to turn the call over to Mr. Michael Tardugno, President and CEO of Celsion. Mike?

Michael Tardugno

Thanks Jeff, now before getting started, yesterday being Veteran's 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. Good morning and thank you for your interest in and support for Celsion, I'm joined today by Dr. Nicolas Borys, our Chief Medical Officer and Jeff Church, from whom you’ve just heard, our Senior Vice President and CFO.

Today I'd like to start with the review of three initiatives the company has been focused on since late January. Each one has been critical to properly positioning the company for the future and we believe and imperative to our success. First topic and most critical to our ongoing development plan is our ongoing development plan for ThermoDox, Celsion's lead drug candidate utilizing our proprietary tumor targeting lymphasomal technology and in particular its application in the treatment of HCC, or primary liver cancer, Hepatocellular Carcinoma as we will refer to it during the course of this call. The second topic is our corporate restructuring initiatives, actions we have taken to strengthen the balance sheet and our financing strategy. Our third topic is our strategic M&A program which capitalizes on our drug development competencies and is designed to expand our research pipeline, reducing enterprise risk, increasing the probability of significant returns to our shareholders.

I'd like to start first with an update on the Phase III HEAT study in primary liver cancer, where I want to take some time to discuss the rigor of our review. Currently the fifth most prevalent cancer with the fourth highest mortality, there are some three quarters of a million new cases worldwide, growing at 5% per year. HCC is projected to be the number one cancer by 2020 with median survival less than three years and less than 10% of patients surviving five years. There are few effective treatment options for these individuals particularly with those with intermediate and advanced cases, this is a tough disease, seven of seven of the most recent drug studies in HCC have failed to meet their endpoint objectives and unfortunately this includes the HEAT study. That said, the Phase III HEAT study is the largest trial ever connected in a difficult intermediate HCC population. The 700 patients in this two arm, one to one randomized protocol underwent a first line procedure radio frequency ablation with one arm including ThermoDox and the other was RFA alone. The clinical data generated is enormous with millions of data points and has provided the company, its investigators and the medical and scientific communities with invaluable strong hypothesis generating findings and insights.

We clearly know more today about the challenges in first line treatment of intermediate stage HCC than just about any company or research team on the planet. It’s also clear that the strength of our knowledge would not have been, would have been difficult to obtain in a smaller study with significantly lower power. As promised, we have provided timely, periodic updates from the ongoing analysis and findings as the data from the HEAT study matures. To ensure objectivity and sound science our work has not been independent, rather it has included the involvement of our investigators and some of the most important leading researchers in liver cancer. In addition, our principle investigators have evaluated our hypothesis and theories with the broader scientific community.

HEAT study findings have been presented to International Medical Associations throughout this year beginning in May at the World Conference of Interventional Oncology or the WCIO followed by the European Conference of Interventional Oncology, the ECIO and most recently in September at the International Liver Cancer Association or ILCA.

Additionally at ILCA, we convene a Steering Committee, one of the most notable experts in HCC research review our data and development plans. We were very encouraged with the feedback we receive from the committee and from the captains (Ph) presentations. And instrumental in getting our development plans in clinical protocols is done as we go forward now for FDA and other worldwide regulatory agency agreement for clinical studies.

Now, let me talk about the findings. [Indiscernible] the top line data from the HEAT study on January 31, 2013 we stated that we will continue to follow our patients to the study secondary end point overall survival for OS. And that we would analysis the data to determine why the HEAT study did not made his primary TFS endpoint and to assess the future strategic value of ThermoDox there is what we know so far.

Our key subgroup analysis is based on sizable population some 285 patients, 41% of the patients in the HEAT study. Take a single HCC lesions ranging from 3 to 7 centimeters and have been treated with radiofrequency ablation for greater than 45 minutes.

Findings strongly suggest that the 45 minute are great in heating markedly improves the coming patients with single lesions. This appears to be true for RFA alone and particularly true when RFA is combined with ThermoDox. The outcome is potentially better by substantial amount, multi-way analysis do not appear to discount this finding in anyway.

We have demonstrated that these findings are consistent with the mechanism of our heat activated liposomal technology or longer heating times activates drug release that is concentrated in tumor margins and the surrounding liver tissue. Our hypothesis appear to strengthen as the data matures. We have conducted three quarterly overall survival data sweeps, since the top line data was released. The first OS data sweep was conducted at the end of March, the second din June and the latest in September with each OS data set, in single lesion greater than 45 minute subgroup, the data improves in both benefit and significance.

Most recently, we reported the Hazard Ratio of 0.63 and the ThermoDox arm whose RFA procedure lasted longer than 45 minutes compared to a Hazard ratio of 1.187 for the less of 45 groups. The value now is approaching significant at 0.056. The median at however will remind you in the subgroup has not been reached.

I also want to teach something that I said in pervious calls and discussions. Post-hoc analysis are typically performance to provide important news items for the development of a new drug treatment particularly in a difficult treat cancer like HCC, I’ll be clear and then particularly with retrospective analysis. Any announcement of a trend or positive single has to be reviewed with caution. As we are consistently pointed out much of what we are discussing has not made a threshold or statistical significance and in the case of the OS has not reached the median.

That said, we along with our investigators and experts [indiscernible] strong survival trend wants additional clinical development of ThermoDox and HCC.

However to further ensure how much standing of the mechanism in and further support of clinical seasonal plans for clinical trial submissions for FDA agreement we have completed our nonclinical program and an effort to prove our hypothesis regarding the impact of longer RFA heating signs.

Recently completed computer stimulation study shows a direct correlation between increased heating time and then increased concentration of drug deposited in the tumor margins. Results from the recently completed 21 subject HEAT study also demonstrated that longer RFA heating time results in higher local tissue concentration of ThermoDox and the margins surrounding an ablation.

So with that next steps are these, we will present all of these findings clinical supported with nonclinical and our proposed pivotal phase III protocol to the FDA this morning. As we envision it the study will prior to show approximately 30% improvement in OS with PFS primary end point.

The proposed statistical plan will be based on the supported data from the HEAT study. We work at the agency on a basis to add forward for the next clinical study. Once we have U.S. agreement our plans how to present our clinical trial proposal to the Chinese FDA or the CFDA and hopes for the quick review and a clinical trial approval, China is only being a key market but also a lynchpin in the timely completion of the study. We have listed the enthusiastic support of Hisun Pharmaceuticals to join our meeting with the CFDA to discuss regulatory strategy.

You’ll recall in the third quarter we signed a memorandum of understanding reaffirming our development and manufacturing collaboration with Hisun Pharmaceuticals Company.

Dr. Borys and I just returned this past weekend, frankly, from China after meeting with the Hisun to discuss our collaboration as well as the HEAT study data. In a word, I can report to you, they’re excited. Hisun had indicated their interest in actively participating in the upcoming study. I also wanted to mention that we’d shared our plans generally with investigators from the U.S., Korea, China and the EU, all appear to be anxious to join the next trial. That said, assuming if the agreement, we anticipate initiating the multicenter global trial in the first half of 2014.

Our second topic, the corporate restructuring program which has been fully implemented. Cost reduction and corporate realignment steps were taken shortly after the topline HEAT study data announcement to adjust spending levels and conserve our cash resources, while maintaining the necessary competencies important to execute Celsion’s current business strategy and its plans for the future.

In April, we implemented a program to restructure the company to ensure resources and current work plan were aligned; doing so we eliminated about one third of our FT workforce as well as several fulltime consultants. Our head count is now is at approximately 14 fulltime equivalents, a number which is consistent with the personal levels we have effectively operated with over the past four to five years.

We’ve also deferred cost associated with the ABLATE study and other contract work and will do so until such time as we better understand the path forward for the evaluation of ThermoDox in HCC. In all, these measures have brought our operating expense to $100 million per month , and we have begun to see – if you’ve seen our recent press release and financials, we’re going to see the full benefit of the cost reduction program in this past quarter.

I want to be clear that our restructuring program has had no effect on the continued enrolment of the DIGNITY study, and other key development projects and our continued sponsored research and development of our various high proof programs. We are actively enrolling Phase II trial for recurrent chest wall breast cancer at five clinical sites with the goal of expanding study to two additional sites. This is an open label study evaluating multiple cycles of ThermoDox plus hyperthermia in refractory patients with superficial recurrence. So this is an open label study. I am hopeful to begin reporting limited case histories next year.

We announced in September, that the combined clinical research from the company’s and Duke University’s Phase I study in this cancer indication will be presented by Dr Hope Rugo of the University of California San Francisco, at the St. Antonio Breast Cancer Conference in December. We are looking forward to presenting and publishing our presentation.

I will also not that we are supporting R&D initiative to advance the development of ThermoDox with high flu; three that I can mention. The first is at the Centre for Translational on Molecular Medicine in University of Utrecht. We have completed our preclinical work and now has been advised that they will move to a clinical program in the near future. Second, is at University of Washington under the direction of Dr. Huan Weng. We have a preclinical program evaluating high flu plus ThermoDox to treat pancreatic cancer. And recently we have been supplying ThermoDox to a sponsor lead preclinical study to evaluate ThermoDox to treat patients with glioblastoma at the Brigham and Women's University Hospital.

Now I would like to make a few comments on our financial strength. Our balance sheet is strong as you all know, at the end of the quarter with over $45 million in cash to fund future operations. We’ve accomplished this through timely smart equity financings during 2013. Our current year fund raising efforts only reflects the investment communities’ confidence in our management team, but more importantly ensures that we can effectively and efficiently advance our ThermoDox program among other things.

Sure thing I would like to mention is our comprehensive strategic acquisition program which is designed to identify new technologies and products for our development pipeline. This program is progressing. Our experienced management team, cash reserves and our vibrancy as a public entity provides us with a strong cash position to fully explore M&A opportunities. Doing so, we expand our -- we’ve the goal of expanding our product pipeline and reducing our exposure to a single development program.

We have been working closely with Cantor Fitzgerald to assist us with a comprehensive and systematic review of merger and acquisition opportunities with the goal of identifying novel products or companies with near-term value creation potential for Celsion to acquire. Our review so far has been comprehensive, international in scope and has included both private and public companies. We have continued to be cautiously optimistic that we will find it complementary synergistic and accretive deal turnouts in the next several months.

In summary, with over $45 million of cash at the end of the third quarter, we have sufficient resources not only to execute a well measured ThermoDox program, but also to identify and acquire additional products and technologies. I’d like to say that we are excited with the potential for ThermoDox. We are strategically focused, well financed and optimistic with our plans for the future.

So with that now I will turn the call over to Jeff who will provide an overview of our third quarter financial results. Jeff?

Jeff Church

Thank you, Mike. Starting with cash; we reported total cash and investment at September 30, 2013, of $45.5 million as compared to $23 million at the end of 2012, an increase of $22.5 million in the first nine months of 2013. We finished the quarter with a much stronger balance sheet following the execution of our current year financing strategy which puts us in a strong strategic position to continue the development of our LTSL technology platform as well as to explore acquisition of other promising clinical stage products.

To highlight our financing activities in the first nine months of 2013; just wanted to comment that Celsion raised net proceeds of approximately $30 million from three financing transactions this year. The latest of which we completed in June the June financing was executed at the market with no discount and no warrant coverage. The financing terms for this transactions were very attractive and provides the company with additional cash reserves to executive its business strategy.

In July, at the company’s annual meeting our shareholders overwhelmingly supported a reverse stock split strategy. 75% of the votes were in favor of this proposal. In October 2013, the company implemented a one for 4.5 share reverse stock split. This was done for the following proactive reasons; to provide the company with additional authorized shares that will allow us to accretively expand the company’s business and product pipeline through strategic acquisition or merger; to increase the share price for the company’s common stock making it more attractive to a broader range of institutional and other investors; and, as we all know through experience that a weak balance sheet can be fatal to a development stage company. So when we need to, and it’s appropriate, reverse stock split provides the company with access to additional capital resources and flexibility sufficient to execute our business strategy.

As of today we have a total of 13.6 million shares of common stock outstanding. Outstanding warrants and stock options totaled 3.9 million, which brings our fully diluted shares to 17.5 million. We have no outstanding preferred shares as all previous to the issued preferred stock has been fully converted to common shares.

Net cash used for operations was 6.4 million in the first nine months of 2013, which compares to 16.2 million used to fund operations last year. This $9.8 million decrease was driven by the continued drop in operating expenses coupled with the $5 million non-refundable cash payment received from Hisun in the first quarter of 2013. Our lower operating costs are the result of the continuing downward trend in drug development expenses and the results of our previously announced corporate restructuring program.

Regarding the expense control program, which we initiated in the first half of this year, we have taken the appropriate steps to manage our costs; first, we reduced our compensation related expenses by about a third on an annualized basis; next, we reduced various administrative costs and curtailed clinical development activities related to the ABLATE study.

The combination of these measures has reduced our cost significantly and in combination with the downward trend in clinical costs, we expect our run rate moving forward to be a $1 million in monthly operating expenses. This reflects a drop in overall expenses from prior year levels of about a third and more importantly provides cash efficient execute next steps for ThermoDox development program.

In the third quarter ended September 30th, the company reported net loss of $4.1 million compared to a net loss of $6 million in the third quarter of 2012. In the current quarter, the company reported a loss from operations totaling 3.5 million, which was offset by a non-cash charge of $518,000 from the quarterly change in valuation of warrant liability associated with prior equity financing transactions.

For the nine months ended September 30, 2013, the company reported a net loss of 4.3 million compared to a net loss of 18.3 million in the comparable nine month period last year. The loss from operations in the first nine months of 2013 was 12.1 million, which was offset by a non-cash benefit of 8.1 million from the change in the warrant liability associated with the prior equity financing.

The net loss for the nine months ended September 30, 2013, was reduced by a one-time non-cash deemed dividend of 4.6 million related to the convertible preferred stock offering completed in February 2013. This accounting treatment records the imputed value of the convertible preferred stock and the warrants issued in this equity offering. To be perfectly clear, the preferred stock issued in February paid no cash dividend and had no other preferences. This deemed dividend entry is entirely driven by the accounts rules. R&D and G&A cost decreased by $1.3 million, 20% in the current quarter, reflecting the impact to the company’s restructuring program announced earlier this year.

I will now turn the call back to Mike.

Mike Tardugno

Thanks Jeff for your consultation encouraging update that sounds good to hear from you. So our shareholders appreciate your insights. As I trust you -- Celsion is moving forward and focused on its future, we've completed our analysis of the HEAT study, now with our collaborators and partners to discuss our latest findings and prudently determine our next steps. Over the next several months we will seek the input from regulatory agencies around the world and reengage with our investigators to conduct the next pivotal Phase III HCC study.

We have a strong balance sheet and a flexibility to consider a number of strategic options. Our partnerships continue and we expect will remain strong. We'll continue to focus on our critically important work and look forward to reporting our progress as we have throughout this year. Our goal is to create value for our shareholders and most importantly make out significant difference in the lives of patients and their families. As always we greatly appreciate your interest in the company and we look forward to updating you on our progress.

Now we'll go to question which I will ask you to limit to no more than two to give everyone a chance to get answers. Operator if you will open the lines for questions please.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question is from Keith Markey from Griffin Securities. Your line is open.

Keith Markey - Griffin Securities

I was wondering -- I am sure that you must have a sense as to what you are going to be doing in terms of the clinical trial that you will discuss with the FDA. I was just wondering if you could possibly guide us to what the R&D expenditure might be like in 2014.

Jeff Church

So we’re in the process Keith of putting together our budget for 2014, it might be a little premature to give you a number that we later on may have to revise. Our goal here is to initiate the study in the first half of the year, the end of the first half of the year. There are some expenses that we incur in initiating the study which our essentially down payments on future work that's supplied by our consultants and CROs. It's not an insignificant amount of money but it doesn't break the bank either.

So we're trying -- if I would have ask you to postpone this question to the next time we meet I hope I am not pushing it.

Keith Markey - Griffin Securities

Not a problem. I had a feeling that might be a little bit premature.

Jeff Church

Another thing is the design of our study being informed by a very large trough with an impressive data study. The design of our study suggest to us that the cost for this second trial will be quite a bit less, may be as much as a third loss or more than the previous year study.

Keith Markey - Griffin Securities

That's very helpful, thank you. And then I was wondering you mentioned during your presentation Hisun if I can kind of paraphrase support the next trial. And I was wondering is that a financial kind of support or is that more of a guidance kind of support or just what would their involvement be?

Jeff Church

I think their interest might be both, but it’s premature for us to conclude that, Hisun does have a financial interest, they have paid enough for fee to -- for license to develop their manufacturing capability for ThermoDox, they have also indicated as we have noted in our press releases an interest in a commercial license, whether or not that happens really will be a subject of a negotiation.

That said as their interest as is ours is fully lined with ours in completing a trial -- pivotal trial that can provide us with access to the China markets as quickly as possible.

Operator

(Operator Instructions). Our next question is from [indiscernible] Management. Your line is open.

Unidentified Analyst

This is more just sort of clarification, in the breast cancer trials and this could be bad information but in the breast cancer trials I noticed you were using microwave hypothermia. And then I think your devices come from Covidien, they make both RF and a microwave ablation device. And I am just confused as to why -- is there a difference between microwave ablation and RF ablation devices in your particular case and if so could you explain little bit about what it is?

Jeff Church

Certainly we can and there is a little bit of confusion on your part, let me see if I can clear it up. So we're using a heating mechanism that's superficial, it’s not ablative. The heating mechanism one of two being used in the trial. One is manufactured by a company called the DSD Medical. It is a plate essentially a 9/9 inch plate that is placed in the proximity of the lesion, I believe a water bolus is used, and that plate provides microwave energy to heat the surface of the skin which has the diseased tissue.

The other device that we used is an acoustic energy device known as Sonatherm, essentially the same mechanism what we’re doing is placing a device close with very close proximity to the chest wall, separated with a water bolus again and in this case acoustic energy is used to heat the surface tissue, 2 by 3 cm deep, 4 cm deep. The temperature that we’re trying to achieve for the diseased tissue is something above the transition temperature of ThermoDox which is about 40 degrees centigrade. I believe, we try to control the devices to a temperature that’s within, its hot enough [indiscernible] within a reasonable comfort range for the patient which is or not above the discomfort range, let me say in that way, which is about 45 degrees centigrade. So there is no ablation involved, it’s not microwave ablation or RF ablation. It’s a completely different heating mechanism.

Unidentified Analyst

So it doesn’t really matter whether it’s microwave or radiofrequency as long as you can reach the 40 degrees C?

Michael Tardugno

Yes, I don’t know that we can comment with the Thorium microwave, to be honest with you. We have not evaluated that in great detail. We do, we are encouraged, I think at some points assuming we have, and we reasonably will be successful with assuming successes with the HEAT study. I believe, its Dr. Boris is intent to evaluate other ablated technologies including high flu to treat patients with cancer lesions in the liver.

Operator

Our next question is from Carolyn Stewart [indiscernible]. Your line is open.

Unidentified Analyst

Hi, thanks for taking my call and congratulations, I know the progress you’ve made during the course of the year. Just a really quick question, I know that opportunity in China is obviously enormous, I know you can you give just a little bit more clarify or detail on what the pathway of life there and what we may or may not get to expect that you know the Chinese authorities would expect and potential timelines there? Thanks.

Michael Tardugno

What is a great question, Nick Borys and I just got back from China. We spent a week there actually. That is key market for us. Over 50% of incidents HCC is in China, it’s a disease of significance that has captured the attention of the government and health agencies. And certainly the investigators and physicians in China are very interested, very, very interested in finding a better way to treat patients who largely present with lesions that are beyond ultimately to treat with surgery. I guess, what they want [indiscernible] little more to your question, we had a meeting with investigators who participated in our Phase III trial. They largely accounted for about 80% of the 220 patients that we enrolled in China.

We have reviewed our clinical program with them are largely looking for input on the design in the structure and its durability, patient enrollment, the statistical plan alike – I guess I could take up my whole time here but I want to ask Nick Borys to give you some color on the conversation that we had with our investigators, I think that’s important for it, but your need to understand because that leads into the next, which really answered you question what can you expect from us in China.

Nicolas Borys

Thanks Mike. As Mike said we had been meeting with investigators that were involved in the HEAT study. After we presented our official data at the last International Liver Cancer Association meeting held in Washington few weeks ago. So we wanted to personally meet with all the investigators, go over the data in detail with them, with also post-hoc analysis that we have been publishing.

So we have done that with our Chinese investigators, with all the Chinese investigators presenting the overall data Dr. Min Wu Chan (ph) and also discussing the future design strategies for the next ThermoDox trial, and as Mike said, our data was met with initial disappointment from the HEAT study, but people understand where the areas that need to be optimized we could take place and it makes sense to them and we’re very encouraged by that.

So our plan is to move forward the study, finalize it, submit it to the FDA. As Mike stated and then proceed with initiating new study early next year then I guess for the rest of your questions I’ll turn it over to Mike

Michael Tardugno

Yes, the question Caroline was I think on what can we expect in terms of regulatory strategy. So China offers the CFE offers an interesting opportunity. And we have positioned ourselves to be able to take advantage of two pathways our full registration; one is a pathway that includes a local manufacturer, that’s Hisun; and the other is the pathway that includes importing ThermoDox from U.S. manufacturing sites. Our plan is the, and the fastest path is to use a local manufacturer.

Our plan is to submit to the assuming we have clearance from the U.S. FDA. Our plan is to submit a clinical trial applications in parallel, two clinical trial applications in parallel one with local manufacturer with Hisun support and the second is using product that’s manufactured in United States. The goal here would be to complete the trial and then assuming we have a sufficient cohort patients who have been treated with product that’s manufactured locally and to submit an application with an IND that is supported with the local manufacturer. That could give us the quickest turnaround on an approval. As far as timelines go, we would expect assuming the FDA clearance in December for our protocol, we would expect to meet with the CFDA in late January, maybe early February next year.

Unidentified Analyst

Great, and sounds like there is a lot of milestones coming up in the near future. That’s very exciting.

Operator

Our next question is from John Bown (Ph). Your line is open. Mr. Bown your line is open.

Unidentified Analyst

The name is Quanlen (Ph) but that sounds like things are got a full plate there. Congratulations on a attractive quarter. One question you mentioned I think [indiscernible] women’s and some investigation in their glioblastoma. And if you could maybe add a little more to that if you can?

Michael Tardugno

I mean that’s a very early, there is an investigator we won’t name him but we’re hopeful to be able to make a more formal announcement. There is an investigators who approached us some months ago with the strategy for valuating in a preclinical setting on the combination of RFA plus ThermoDox to treat again preclinical to treat research animals who have been [indiscernible] cancer medicine their brain tissue. That preclinical work is ongoing. We are currently supplying a little bit insight but more importantly we’re supplying the investigational product for preclinical work assuming we see, we have a confidence that the combination of RFA plus ThermoDox can be safety administered in animals and we’ll move to the next steps of preclinical study. And that’s what I’m hopeful that we’re able to announce in more detail the nature and the scope of the research.

Unidentified Analyst

Okay, thank you very much. Good luck. And the [indiscernible] women’s in Boston.

Michael Tardugno

That would be in Boston, yes.

Unidentified Analyst

Good luck and thanks again.

Operator

Our next question is from Bob Green. Your line is open.

Bob Green

Question on the TDOX trial, is that going to include both size cohorts, three to five and five to seven multiples or single or a better description of that trial if we could?

Michael Tardugno

I think Dr. Borys can take you through that.

Nicolas Borys

Yes, thanks for that question. As you may have read our original heat study identify that the patients with the single lesions benefited most. So after reviewing our data with the lever experts with our steering committees and also as you just heard with our original investigators it looks like we’re agreeing that all the single agent patients no matter what their size is an intermediate meaning from three to five and five to seven we’re considering including in the study. Of course all of this depends on after our FDA submission and the comments from the regulatory authorities. But our intention is for lesions to be size from three to seven, single lesion and optimally heated with RFA.

Bob Green

And the second question could we get little estimate on the overall survival median? When do you think we’ll reach that?

Michael Tardugno

We mentioned last call that we expect for the overall population the median to be reached in the next few quarters so this is another quarter in later. And quarter or so would be the median for the overall trial. For the cohort specifically that we are talking about the, the subgroup that we’re talking about that we will focus on in the next study. It could be a little bit longer than that.

Bob Green

At least in the first quarter of next year?

Michael Tardugno

Yes. It could be. We are certainly encouraged by the survival benefit that we are seeing in this sub group, and as Church pointed out to me this morning, it’s the longer these people lived, the better off we. Certainly they are. But the more confidence we have in the outcome of the study.

Operator

Our next question is from Leo Gibney, your line is open.

Leo Gibney

Can you hear me? I want to make sure my speaker phone is on. Thank you for taking my call. My question have to do of course with this very important variable that you discovered the RFA to dual time which I think makes perfect sense and there is good signs behind it. I guess the question I have is, let’s say for a given lesion size, I am picking one of random thing, 4 cm. In the current trial what are the factors that guided some operators to do those procedures for, let’s say 60 minutes, rather than 45 minutes; while others may have done it for 30 minutes. I am talking about the same lesion size. Because obviously that’s where you are finding this difference and I am wondering which factors sort of guide the operators, the oncologist who performed the procedures, for how long they would actually do it. Because it is my understanding that the company did not give any guidance for RFA dual time, just wondering if that question makes sense, and if you can speak through it?

Michael Tardugno

Well that question makes perfect sense and it’s been a part of our, actually our dialogue in investigation for the last four to five months. We are going to view the number of our investigators, but I am not the one to speak to that. Nick you want to try that?

Nicolas Borys

That is a very good question, as you emphasized before, the company did give guidance on doing the RFA but it was guidance through on the lines of that all the RFA users had to follow manufacturer’s instructions and also in the literature at the time we designed the study the guidance was that they had to do at least the one centimeter margin around the ablation zone in order to get good margins on the tumor. Since that time a lot of research has gone on and after seeing our own data which has reinforced our thinking, what we saw in terms of the differences that derived your question is the geometry on how people do the ablations.

When a lesion is three centimeters or less, most RFA equipment can easily ablate the tumor with one cycle of the ablation. Once the tumor gets beyond three centimeters, then you have to do multiple cycles. And some authors in the literature, and you could easily look this up yourself advocate doing anywhere from four to five to six to many as high as 14 cycles ablating tumors of various sizes. So the example you gave of four centimeter diameter tumor; one thing you have to take into much consideration there, not all tumors are perfect spheres. Tumors could be hotdog shaped, they could be oval shape there could be all kinds of shapes.

So the geometry of the tumor really dictates how you approach it and then there is many other factors as well. Whether the tumor is near a vessel, whether it is near a critical structure in the liver, and the tear and the profusion in the area also dictates how long the profusion takes. So our guidance is going to focus on the minimal number of ablations or cycles that each tumor requires. And at the moment the guidance we’re looking at is probably about four cycles and in order to achieve four cycles it will take at least 45 minutes. So we feel that has a very safe and practical to HEAT the tumor in an optimal way.

Leo Gibney

Thank you, that makes sense, and to the point, this will be my last one question, because you anticipated my next one, about what guidance you will give for the follow on trial. But to the extent that the FDA carefully reduced the data’ do you anticipate any problems with them asking about, okay, to your point that where the lesions that were four centimeters to seven centimeters, whatever you found are ThermoDox, then if it is longer RFA, have you sort of able to control for that so that any of those sort of geometric differences that you described just sort of randomized between the procedures that were with less than 45 minutes work is more?

Michael Tardugno

Yes. I think we addressed that through our multi-varied analysis and when you check out the different bias or the influences in a result, I think our data still hold strong and I think Mike alluded in his remarks. So we feel pretty confident that when our analysis and guidance document, it could be held up directly to regulatory scrutiny. I think if anything the regulators will be happy to see it. Because then it’s going to bring some standardization to the field of RFA, so we feel good about that.

Leo Gibney

Excellent, thank you very much.

Operator

And we’ll take our final question from James Thomson. Your line is open.

James Thomson

The person that I answered my question about the median time but I’m just wondering if the median were to be reached, are there any surprises that would benefit ThermoDox even further than what you guys are looking at right now or and that’s first and then are there any surprises that would help the stock actually the stock now is just valued at its present valuation pretty much on cash that would give it a better valuation than it is receiving now? Those are my two questions.

Michael Tardugno

So, can you be a little bit more clear about what you mean by surprises?

James Thomson

A surprise being like the median like every time you give your presentation about the P value and statistical significance you always clarified at the end we haven’t reached our median, so could there be a surprise that once the median is reached the P value becomes statistically significant and this is really something that the FDA is going to want to look at strongly quicker than what they’re looking at now? Because my assumption is if the overall survival is benefiting why would you have to go to another whole trial, another couple of years that type of scenario if you can give me. Am I making my sub clear or no?

Michael Tardugno

No, you’re. So if the surprise were to be that we’ve reached not only the median but we showing statistical significant and the clinical benefit is enormous would there be some opportunity for us to short cut the regulatory, the clinical trial and short cut the regulatory process, I think that’s what you’re asking.

James Thomson

Correct.

Michael Tardugno

I mean I think it’s pretty clear to us that retrospective analysis regardless of the strength of the data and the confidence level is always viewed with some caution. The studies been on blinded typically, the study is on blinded for retrospective analysis. And so the agencies are looking for, they're always looking for a prospective study to confirm would you conclude it or your hypothesis as a function of the retrospective analysis. So I don’t think is a faster way for us to provide an NDA submission to the agency other than to complete another trial.

Now that said the size of the trial and meaning the number of patients really is a function of the strength of the data the information that we have derived from the first trail. And so as Nick first pointed out this trial going forward will be approximately a 500, 550 patient trial largely based on the strength of the survival data we see from the study. So I think that’s the best they can, the best way for me to answer that. As far as negative surprises go I mean there is always the potential there could be a negative surprise. We highly doubt, highly doubt it on this end. Every time we have looked at the dataset from the subgroup the clinical benefit has improved as well as the P value. And so that the trend in those directions now reaching the latest P value we reported was 0.056 I believe and proven over the last data-suit we are reaching statistical significant.

So the potential for a negative outcome is getting to the point of being the minimums. But we need to give you these cautions we think it’s appropriate to do so. We’d like to ask you to look at the data very carefully yourself as we present it and ask these kinds of questions.

James Thomson

Thank you very much. I appreciate your time and efforts.

Michael Tardugno

So operator there are no more question I think I will close out the call by thanking all of you who have joined us. On behalf of the entire staff here at Celsion, we want you to know that we appreciate your interest, your support and very much appreciate your questions. They give us quite a bit to think about and certainly help us to construct our plans and strategies going forward.

We do look forward to meeting with you again and hope that you will join us in the next quarterly conference call. Thank you very much.

Operator

This does conclude today’s program. You may now disconnect at any time.

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