Imunon, Inc.
Q3 2020 Earnings Call Transcript

Published: 16 Nov 2020

[Operator:]

Please standby. Good morning. My name is Casey, and I will be your operator today. At this time, I would like to welcome you all to Celsion’s 2020 Third Quarter Financial Results Conference Call. All lines have now been placed on mute to prevent any background noise. Following the speakers’ remarks, there will be a question-and-answer session. At this time, I would like to turn the conference over to Kim Golodetz. Please go ahead.

[Kim Golodetz:]

Thank you, and good morning, everyone. This is Kim Golodetz with LHA. Welcome to Celsion Corporation’s conference call to discuss its 2020 third quarter financial results and business update. As has been Celsion’s practice and as noted by the operator, prepared remarks will be followed by a question-and-answer period. Today’s conference call will be archived and the telephone replay will be available beginning later today through November 30, 2020. The webcast will be available for the next 90 days on Celsion’s website.

[Michael Tardugno:]

Thank you, Kim, good morning, everyone. Joining me today is Jeff Church, our Executive Vice President and Chief Financial Officer, who will provide a review of Celsion’s financial results in a few minutes. Also on the call for the Q&A portion is Dr. Nicholas Borys, our Executive Vice President and Chief Medical Officer. I’ll start by saying in July, we announced wholly unexpected incredibly disappointing news. After reviewing the Kaplan-Meier fails for the Phase III OPTIMA Study, the DMC found that the study had narrowly crossed the futility boundary, albeit with a highly uncertain p-value, P equals the point both -- P equal to 0.524, that leaving the decision of whether to continue or terminate the study up to the company. I will discuss this more later in my remarks. But I’ll start with this fact, because I’m sure it’s on the minds of many of you, because I want you to know that we have immediately taken a number of critical steps in the wake of this announcement. One, first is to redirect our resources and accelerate the OVATION 2 Study, our exciting Phase II trial in ovarian -- in advanced ovarian cancer. The second was to stabilize and ensure a strong and restructured balance sheet. The third is to reduce our current and projected spending. Fourth to evaluate our current portfolio, including adaptations of our existing platform technologies for application in new indications and new therapeutic areas. And fifth and finally, to fully interrogate through independent means the data from the Phase III OPTIMA Study.

[Jeff Church:]

Thank you, Michael. Details of Celsion third quarter 2020 financial results were included in the press release we issued this morning and in our Form 10-Q which we filed today before the market open. As Michael indicated, the company ended the third quarter of 2020 with $18.3 million in cash and cash equivalents, coupled with the recently approved sale of our New Jersey net operating losses of approximately $2 million that we plan to complete before the end of this year, we believe we have sufficient capital resources to fund operations into the first quarter of 2022. During the first nine months of 2020, net cash used for operating activities was $11.9 million, compared with $14.6 million for the comparable prior year period. That’s a 19% decrease. The company has taken significant steps to reduce operating expenses moving forward, while maintaining a tight focus on key value drivers. With respect to future funding flexibility, we have a $75 million shelf registration statement on file with the SEC, with over $40 million remaining on that facility. We also have a traditional after market facility with JonesTrading that allow us to raise money opportunistically with no warrants and at a very low commission. Now let’s turn to the third quarter P&L. For the quarter ended September 30, 2020, Celsion reported a net loss of $8.1 million or $0.24 per share. This compares to a net loss of $5.5 million or $0.25 per share for the quarter ended September 30, 2019. Total operating expenses were $4.3 million for the current quarter, down 22% from $5.5 million for the third quarter of 2019. Research and development expenses were $2.5 million, compared to $3.7 million a year ago. The $1.2 million decline was partially due to a $700,000 decrease in clinical development costs for the Phase III OPTIMA Study. The OPTIMA Study was fully enrolled in August 2018. Virtually all regulatory and manufacturing related activities associated with the ThermoDox development program have been put on hold while we await the findings from the two separate analysis being conducted by the statistical experts and the NIH. Costs associated with the OVATION 2 Study were $200,000 in each of the third quarters of 2020 and 2019. Other costs related to ThermoDox in GEN-1 clinical development programs decreased to $1.3 million in the current quarter, down about $100,000 from $1.4 million in the third quarter last year. This is largely driven by lower regulatory costs for ThermoDox, partially offset by higher manufacturing costs for GEN-1 clinical supplies needed for the Phase II portion of the OVATION 2 Study. General administrative expenses were flat year-over-year at $1.8 million. These lower operating costs were offset by two non-cash charges -- emphasize non-cash charges. The first was a $1.1 million charge for the change and evaluation of the earn-out milestone liability related to the GEN-1 ovarian cancer program. And the second was a $2.4 million charge related to the impairment of in process R&D assets. This related to the division element of the company’s GBM or brain cancer product candidate. The company incurred interest expense of $500,000 during the third quarter of this year versus interest expense of $300,000 in the comparable prior year period. This was related to the Horizon venture debt, which we restructured and the restructured $5 million loan provides for a one year interest-only payment period followed by a 21-month amortization payback period thereafter. We anticipate that our net cash usage for the fourth quarter of 2020 will be approximately $3.7 million, noting that cash used for operating activities year-to-date was $11.9 million, compared to $14.6 million in the same period of 2019. We expect full year cash utilization of between $15 million to $16 million in 2020, with the cost of continuing to follow patients in ThermoDox, being minimal and largely behind us. In closing, we believe that further progress with GEN-1 and advanced ovarian cancer, with data being reported periodically will provide additional opportunities for building shareholder value. I now like to turn the call back to Michael.

[Michael Tardugno:]

Thanks, Jeff. Now before going to questions I want to close by saying that Celsion continues to have the greatest potential to create value for shareholders and a highly capable staff committed to bringing life saving medicines to market. We have two extraordinary platform technologies, one on the legacy of medicine and the other in the exciting future of nucleic acid therapies. Our development competencies span the scope of what is required to rigorously evaluate drug candidates. Our relationships with regulatory authorities both in and outside the U.S. are exemplary and encouraging and we have sufficient cash and with smart spending and cash management, we expect to deliver on our promises. Now, we will open the call to questions. Operator, would you do so please?

[Operator:]

Yes. Our first question comes from Hartaj Singh with Oppenheimer.

[Hartaj Singh:]

Thanks.

[Michael Tardugno:]

Good morning, Hartaj.

[Hartaj Singh:]

Thanks for taking our questions. I guess, first, can you talk about how you plan to monitor the ThermoDox study for fatality, or I should say, whether it will be done at the end of the number of events or just in real time? Thank you.

[Michael Tardugno:]

Hey. Nick, do you want to take that. Question was how do we plan to monitor on the ongoing basis?

[Dr. Nicholas Borys:]

Yeah. Thanks, Hartaj, for your question. On how we plan to monitor, we continue to have our electronic data system capturing the data from all of our sites involved in the OPTIMA Study and where you have a particular focus on the overall survival data. So that continues to be ongoing. The rest of the data in terms of cognates and all the other detailed data is been minimized to-date. However, if we get interesting data that we could restart that all over again. Hope that answers your question.

[Hartaj Singh:]

Yeah. Thank you. That’s helpful. And then regarding your ex-U.S regulatory interactions, any updates from pathway ex-U.S. or we should think that’s pretty consistent with your strategy here was that clear with U.S.? Thank you.

[Michael Tardugno:]

Yeah. I’m sorry. We don’t have a good connection? Could you just repeat the first part of that question, please, Hartaj?

[Hartaj Singh:]

Yeah. Just regarding your ex-U.S. since its global study, right? I mean, regarding your ex-U.S. regulatory interactions, how we should think about strategy there or we should -- it’s quite similar to your strategy here with the U.S. FDA agency?

[Michael Tardugno:]

Yeah. So, I want to start to restate your question. So what is our regulatory strategy outside the United States with regards to the Phase III OPTIMA Study? Assuming that we …

[Hartaj Singh:]

Yes.

[Michael Tardugno:]

Assuming that we continue? So the first point, I think is, my last point is probably the first point. If we have sufficient evidence that we should continue that evidence coming from the independent analysis being conducted by the CRO that we spoke of and the NIH, our first step will be to meet with the FDA. This is a very unusual situation that we’re in. We can find no other comparable circumstance under which a sponsor has been unblinded with an indeterminant recommendation from a DMC. So we’re doing our very best here to maintain a blind among our investigators, while at the same time evaluating the efficacy of the drug based on the survival information. Assuming that we understand why we had this sidestep in the second interim analysis, that understanding leads us to believe that ultimately the study has the potential to be successful and then we meet with the FDA, along with we will bring our -- absolutely bring our consulting statisticians and present the case to them. We don’t know what the outcome will be. But we’re very confident, the study it will not be in any way compromised. This is an overall survival study or less is a definitive endpoint that we have no ability to be able to influence. The study has been fully enrolled. So there’s no possibility that the investigators in the study could also the treatment of care for the patients. So we’re pretty confident that we can provide an explanation and a rationale to the FDA that allows them to believe that we can submit an NDA if the data supports it. That would be our first step. Our second step then following that would be to me with the NMPA in China. They have a similar discussion, followed by a meeting with the EMA for similar discussion. Our first movement here -- our first activity will be to meet with FDA. And of course, explain to the investment community simultaneously what we’re doing and why we’re doing it. Hope that answers your question?

[Hartaj Singh:]

Yeah. Thanks, Michael. And then last, just wondering, have you made any updates in your thinking of how OVATION 2 has conducted, especially given the ongoing and kind of resurge in pandemic over the -- or here in the U.S.?

[Michael Tardugno:]

That’s an interesting question. And Dr. Borys reports that. In his discussion with the principal investigators we are seeing a reduction in the -- substantial reduction in the number of patients across all oncology indications, reporting to the hospital for with symptoms. We also heard from a key opinion leader at the Mayo Clinic that their visits -- their hospital admissions and visits for oncology cases have dropped dramatically. And that being said, we still believe with the number of investigator sites that we intend to enroll, it’s up to 25, that the study enrollment will be completed by mid next year. The enthusiasm for the study is not at all been affected by the pandemic among our investigators. So I’ll make that comment, and Nick, if you want to add anything to that please do?

[Dr. Nicholas Borys:]

Yeah. That’s a very important question these days. We’re very fortunate. Our study centers are distributed throughout the country and Canada. And what we’re seeing is, wherever we see hotspots of COVID, maybe some of the enrollment might decrease but other sites have seen increases. And so we’re hoping that because we’re nationally distributed in terms of sites that will help us in our enrollment and with the recent good news, also we could we could see more of enrollment going into the future.

[Hartaj Singh:]

Right. Great. Again, thanks for all the question.

[Michael Tardugno:]

Thank you.

[Operator:]

Our next question comes from Kumar Raj (sic) with Brookline Capital Markets.

[Raj Kumar:]

Hi. Thanks for...

[Michael Tardugno:]

Hi, Raj.

[Raj Kumar:]

Hi. Thanks for taking my questions. So I would also like to continue with regard to the COVID-19. So does this take into consideration that hospital will be allowing elective procedures?

[Dr. Nicholas Borys:]

Well, we take that into consideration. I think in our case, the interval debulking surgery is not exactly considered an elective procedure. So these are absolutely necessary procedures and we review with every sight that’s involved in the study to make sure, number one, that they have COVID based procedures in place. We collect all the deviations that might be associated with COVID. For example, if there’s -- if it’s necessary for a patient to delay or miss a visit, all that is accounted for in our startup with every hospital and in the protocol design. So, this is done in conjunction with FDA guidelines, NIH guidelines, and the number one issue is getting patients not afraid to come in for their initial diagnosis, that seems to be the biggest problem. But once they come into the system, the patients are very motivated to move forward with their treatment, not to skip any treatments, and indeed, to get their interval debulking surgery, because here this is very life threatening.

[Raj Kumar:]

Okay. And in terms of the powering the control arm include the synthetic controls too? Is that based on that?

[Michael Tardugno:]

In terms of the powering, I am sorry, we are having a little bit of a communication issue? Could you repeat that place?

[Raj Kumar:]

No. Like, you guys are saying the powering of the OVATION Study? Does that powering is it based on including synthetic controls in the placebo arm?

[Dr. Nicholas Borys:]

No. The way the protocol is designed is, at the moment, we’re not going to be using our synthetic controls. We’re studying this. This is very exciting technology. But we’re using actual patients in our randomization scheme. Maybe later on, we’ll take another look at it. But as Michael mentioned before, we have a very enthusiastic pour of investigators and they’re very anxious to enroll both actual patients into the control arm and into the treatment arm so that we have real data.

[Raj Kumar:]

Okay. If you include synthetic control, how is that expected impact powering up the trials?

[Dr. Nicholas Borys:]

The impact of synthetic control arm would be just another way to look at the data. I think everyone would agree that when you have actual patients enrolled in the study, that’s going to be our strongest data. The synthetic control arm will help -- be helpful in case we run into a major problem in patient enrollment. We hope that we don’t have to resort to that. It’s an interesting technology. We continue our discussions with the vendor that’s involved in that. I think their data has been very good directionally. But our commitment right now is to actual patients.

[Raj Kumar:]

Okay. Finally, in terms of GEN-1 manufacturing and the amount of drug supply you have. Can you provide an update on that? Thanks.

[Michael Tardugno:]

Yeah. That’s a very timely question. So, the components for the GEN-1, we have multiple sources for. The plasmid, for example, is manufactured currently in an approved site in Europe. Secondary site is being developed in China. Now the plasmid materials sufficient to enroll the Phase II to study have been fully manufactured. The polymer that’s the synthetic non-viral delivery platform, the polymer has been fully manufactured in two locations, one in China and one in the United States. Those materials are all available for the finished product. We just completed manufacturing of four lots enough to complete the enrollment of the Phase II study. The last lots was produced I think last night at our manufacturing partner in China Poly Pharm and by the first reports on that manufacturing are all been very positive. We don’t see any interruption potential in the supply chain, I guess, to the bottomline, because we have backups in second sourcing and the current very reliable supply chain. Hope that answers your question.

[Raj Kumar:]

Yes. Thank you so much.

[Operator:]

This concludes today’s question-and-answer session. I will now turn it back to today’s speakers for closing remarks.

[Michael Tardugno:]

So I want to thank all of you for your time this morning. We continue to be driven by our commitment to bring new medicines to the medical community and by the work of our talented scientists, clinicians, technical and administrative staff. We look forward to keeping you appraise of our progress. We’ll speak with you again when we report our 2020 fourth quarter and full year financial results. In the meantime stay safe. We hope you have a great nice afternoon. Take care.

[Operator:]

Ladies and gentlemen, this concludes today’s call. Thank you for your participation. You may now disconnect your phone lines.