Earnings Call Transcript - IMNN Q2 2020

Operator, Operator

Good morning. My name is Cassidy and I will be your operator today. At this time, I would like to welcome you all to Celsion’s 2020 Second 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 call over to Kim Golodetz. Please go ahead.

Kim Golodetz, LHA

Thank you, and good morning, everyone. This is Kim Golodetz with LHA. Welcome to Celsion Corporation’s conference call to discuss its second quarter 2020 financial results. 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 August 28, 2020. The webcast will be available for the next 90 days on Celsion’s website. During this call, management will be making forward-looking statements regarding Celsion’s expectations and projections about future events. Generally, forward-looking statements can be identified by terminologies such as expects, anticipates, believes, or other similar expressions. These statements are based on current expectations and are subject to a number of risks and uncertainties, including those set forth in the company’s periodic filings with the Securities and Exchange Commission. No forward-looking statements can be guaranteed and actual results may differ materially from such statements. In particular, there is significant uncertainty about the duration and contemplated impact of the COVID-19 pandemic. This means results could change at any time and contemplated impact of COVID-19 on Celsion’s operations, financial results, and outlook is a best estimate based on the information for today’s discussion. I also caution that the content of this conference call is accurate only as of the date of the live broadcast, August 14, 2020. Celsion undertakes no obligation to revise or update comments made during this call, except as required by law. With that said, I’d like to turn the call over to Michael Tardugno, Celsion’s Chairman, CEO, and President. Michael?

Michael Tardugno, Chairman, CEO, President

Thank you, Kim, good morning, everyone. It's always a pleasure to speak with you, especially now. Joining me today is Jeffrey Church, our Executive Vice President and Chief Financial Officer, who will review Celsion’s recent financial results shortly. Also on the call for Q&A is Dr. Nicholas Borys, our Executive Vice President and Chief Medical Officer. We have reported significant news during the second quarter and recent weeks regarding both of our main programs, particularly concerning ThermoDox, our Phase III OPTIMA study for newly diagnosed hepatocellular carcinoma, or primary liver cancer. I will touch on our position with the OPTIMA Study and some brief comments later, but first, I want to highlight the positive news about GEN-1, our gene-mediated immunotherapy now in the OVATION 2 Study. We successfully completed a Phase I run-in, and OVATION 2 has advanced to Phase II, actively recruiting patients with newly diagnosed advanced ovarian cancer. I am pleased to report that we initiated the Phase II portion of the trial in July, five months ahead of our earlier schedule. Our plans for OVATION 2 include an aggressive recruitment strategy with 10 active investigator sites, five that will be active imminently, and 10 more set to activate in the coming months. We expect to enroll approximately 105 patients over the next year. Additionally, we are considering using a propensity matched population of control patients from other randomized ovarian cancer studies to replace 50% of the control arm, around 25 patients. This innovative synthetic control arm will reduce trial costs and speed up enrollment. There is significant value in this approach; many patients joining a randomized study are concerned, as they seek investigational drugs but may be disappointed with only a 50-50 chance of receiving the treatment. For those unfamiliar with Celsion, OVATION 2 is a two-arm 1-to-1 randomized study, 80% powered to show a 33% improvement in progression-free survival, which is its primary endpoint. As it is an open-label study, we will provide ongoing clinical updates throughout treatment, including overall response rates and surgical resection scores, which are secondary endpoints and indicators of overall survival. We expect to have a good understanding of GEN-1's treatment effect as the trial proceeds. The study design involves combining GEN-1 with neoadjuvant chemotherapy, which is the current standard of care for patients with advanced disease where immediate surgery is not possible. Treatment arm patients will be compared to those receiving neoadjuvant chemotherapy alone. The aim of neoadjuvant chemotherapy is to shrink the tumors, improving surgical outcomes, particularly for achieving an R0 resection, which indicates complete removal of all disease. After surgery, patients will undergo three cycles of adjuvant chemotherapy and possibly up to nine weekly cycles of GEN-1 treatments if assigned to the treatment arm. The objective is to stimulate a high level of immune system activity over a six-month period, delaying progression, which we believe is critical since progression is associated with a poor prognosis. For those new to GEN-1, let me review its technology and mechanism. GEN-1 is created using our proprietary TheraPlas technology platform, a non-viral nanoparticle gene delivery system that can transfect cells with DNA plasmids coding for therapeutic proteins. Unlike traditional viral vectors, TheraPlas is not affected by the patient's immune system and can be administered repeatedly, making it ideal for titrating cancer treatments, especially immunotherapy. Multiple treatments are often necessary for effective results. Our first product on this platform is GEN-1, which uses a DNA plasmid coding for the pro-inflammatory cytokine interleukin 12, or IL-12. GEN-1 is administered locally into body cavities like the abdomen for advanced ovarian cancer treatment, avoiding the systemic toxicity tied to intravenous IL-12 administration. Our innovative approach improves IL-12 activity at the tumor site while reducing toxicities. Following administration, cell transfection occurs, resulting in a safe, persistent, durable local secretion of IL-12 for up to one week. IL-12 was identified as a potent immune system modulator in the 1980s and has proven effective in fighting malignancies by provoking a robust immune response. GEN-1 addresses the historical safety concerns related to IL-12, potentially offering a powerful cancer therapeutic. So where do we currently stand with programming? During the second quarter, we shared that the Data Safety Monitoring Board in its final recommendation supported advancing to Phase II with a higher dose of 100 milligrams per meter squared. They concluded that GEN-1’s safety profile is satisfactory, allowing for up to 17 weekly doses over a six-month treatment without dose-limiting toxicities. While the number of treated patients so far has been small, the results remain impressive. For instance, out of 15 patients in Phase I, nine received GEN-1 at a dose of 100 milligrams per meter squared alongside neoadjuvant chemotherapy, while six received chemotherapy alone. All patients successfully had their tumors resected, with seven out of nine in the GEN-1 group achieving an R0 resection, indicating no detectable tumor remains in the surgical margins. In contrast, three out of six patients in the control arm, or 50%, achieved R0 resection. Previous results from our Phase I OVATION 1 Study, involving patients with similar criteria, indicate dose-dependent efficacy when combining GEN-1 with neoadjuvant chemotherapy. Although not statistically significant due to small patient numbers, we observed a significant improvement in progression-free survival when comparing our study patients to those in a propensity score matched synthetic control arm from prior studies. We reported a hazard ratio of 0.53, suggesting a doubling of time to progression. While small, this is approaching statistical significance, especially when considering supporting translational data. Tissue samples from earlier trials demonstrate that GEN-1 is significantly active, with our other Phase I experiences showing dose-dependent tumor responses. The synthetic control arm comparison holds promising potential and a compelling foundation for launching our Phase II trial. To conclude on GEN-1, we are establishing a foundation for what could become a critical global asset. If GEN-1 continues to demonstrate efficacy as indicated in early work, we are optimistic about the future. Additionally, we have received Orphan Drug Designation from both the FDA and the European Medicines Agency, which enhances GEN-1's value. The EU's Orphan Designation grants 10 years of market exclusivity, while in the United States, it provides seven years following NDA approval. Before I discuss ThermoDox, I want to reiterate our financial position following our recent call, assuring you that we are taking necessary steps to ensure the company's stability regardless of the OPTIMA Study's outcome. We have started cutting all non-essential ThermoDox expenditures, which unfortunately includes some layoffs, anticipating savings of approximately $8 million to $9 million over the next 18 months compared to our budgets. These plans will enable us to secure enough capital to complete enrollment in the OVATION Study. We look forward to sharing updates on this Phase II study as it progresses. Now, regarding ThermoDox, we are engaged with experts and advisors, and while we do not have complete clarity yet, we are actively analyzing data. Remember, ThermoDox is our heat-sensitive liposomal formulation of doxorubicin for treating primary liver cancer. In July, we shared that the independent Data Monitoring Committee for the Phase 3 OPTIMA Study advised us to consider halting the study, leaving the final decision to us. This recommendation followed their second planned interim safety and efficacy analysis, which indicated that the boundary for stopping the trial for futility had been crossed. However, the p-value of 0.524 creates uncertainty regarding the actual hazard ratio. In an unprecedented move, the Data Monitoring Committee left the final decision about whether to stop the study to our discretion. As we review the data, there seems to be merit in the Data Monitoring Committee's recommendation, although we have not reached a conclusion. We are continuing to analyze the unblinded data and have updated that we will follow patients for overall survival, recognizing that the marginally crossed futility boundary might be tied to data maturity. Furthermore, we noted that the 26th consecutive deaths, exclusively reported in the second analysis, behaved differently from earlier cohorts, reversing previous favorable trends. Those deaths occurred between September 2019 and March 2020. Removing them from the interim analysis changes the OPTIMA Study’s overall survival trajectory, similar to results from the HEAT Study subgroup upon which OPTIMA is based. After the second interim analysis, we recorded eight additional patient deaths in a 3-to-1 ratio favoring the control arm, further raising concerns about data maturity. Currently, we report 168 deaths, suggesting a hazard ratio of 0.875, indicating an improvement of about eight months in survival compared to the control arm. However, we are mindful that OPTIMA sites in China and Vietnam enrolled more than 30% of trial patients, joining approximately 12 and 18 months after initiation. The Kaplan-Meier curves for these sites showed maturity issues compared to HEAT Study subgroup results. The China sites exhibited negative Kaplan-Meier curves but showed a 56% improvement in the treatment arm, while the Vietnam sites demonstrated only a marginal benefit with a 45% improvement. Reconciling this discrepancy likely requires longer follow-up. We are consulting with statistical experts about these proportionality issues between OPTIMA and HEAT Kaplan-Meier projections and conducting sensitivity tests for additional insights. We have also submitted all clinical trial data, including CMC data, to the National Institutes of Health for independent analysis, including CT scans. This process may take some time. Depending on observed trends in the overall survival follow-up, we may decide to discontinue the study. At this moment, I cannot definitively state our path forward, but I assure you of our commitment to transparency. Our August 7th press release indicated that the trial outcome predicted by the second interim analysis may not shift, and we may face futility, albeit the possibility of beneficial clinical results remains. If we see significant positive clinical outcomes during our monitoring, we will review our options with the FDA and other regulatory agencies globally. The ongoing backing from our research investigators and clinical advisors is crucial. Before I hand over to Jeff, I'd like to emphasize that Celsion’s fundamentals remain strong. The OVATION 2 Study targets a large patient population with essential unmet medical needs and poor prognoses. Our manufacturing strategy is robust and includes redundancy, and we will continue to execute our development programs with care. Our relationships with regulatory agencies are solid and encouraging. We are managing our cash wisely, expecting to fulfill our commitments. With those remarks, I'll turn it over to Jeff. Jeff?

Jeffrey Church, CFO

Thank you, Michael. Details of Celsion’s second 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 opened. As of June 30, 2020, Celsion’s cash and short-term investments were $25.5 million, which includes net cash proceeds of $1.8 million from the sale of our unused New Jersey net operating losses, or NOLs. We fully anticipate that an additional $2 million of unused New Jersey NOLs will be sold in the second half of this year, further increasing our cash reserves on a non-dilutive basis. Bottom line, we believe we have sufficient capital resources to fund our operations into the fourth quarter of 2021. We are currently evaluating our venture debt facility with Horizon, including retiring all or restructuring a portion of the loan. This will not impact our projected cash operating outlook. During the second quarter of 2020, net cash used for operating activities was $7.9 million, which compares to $10.2 million in the comparable prior year period, a 22.5% decrease. With respect to future funding flexibility, we have a $75 million shelf registration statement on file with the SEC, with $45 million remaining. We also have a traditional after-market facility with JonesTrading that allows us to raise money opportunistically, with no warrants and at a very low commission. Turning now to our second quarter P&L, for the quarter ended June 30, 2020, including non-cash expenses, Celsion reported a net loss of $5.3 million, or $0.18 per share. This compares to a loss of $5.9 million, or $0.29 per share for the quarter ended June 30, 2019. Operating expenses were down 14% from $5.7 million last year to $4.9 million in the current quarter. Research and development expenses were $3 million compared to $3.6 million a year ago. Our clinical development costs for the Phase III OPTIMA Study were $600,000 in the second quarter of this year, down from $1.2 million last year, which was due to the completion of patient enrollment in August of 2018. Costs associated with the OVATION 2 Study increased modestly to about $200,000 in the second quarter, compared to $100,000 in the same period last year. Other costs related to clinical supplies and regulatory support for both of our programs increased to $2.3 million in the current quarter from $2.2 million a year ago, driven largely by planned manufacturing costs for the GEN-1 clinical supplies needed for our Phase II portion of the OVATION 2 Study. General administrative expenses were $1.9 million in the second quarter of this year compared to $2.1 million for the same period in 2019. This 11% decrease was primarily attributable to lower professional fees. Other expenses included a non-cash charge of $300,000 for the change in the valuation of the earn-out milestone liability for the GEN-1 ovarian product candidate. The company incurred interest expense of $300,000 during the second quarter of this year in connection with our venture debt facility with Horizon, comparing to $400,000 in the comparable prior year period. We anticipate that our net cash usage for the third quarter of 2020 will be approximately $3.5 million and this aligns with our revised spending plans, which call for keeping operating expenses and cash utilization at approximately $15 million for the full year 2020. The cost of continuing to follow patients in the ThermoDox trial, the OPTIMA Study, is minimal and largely behind us. In closing, we believe that further progress with GEN-1 in late-stage ovarian cancer, with data to be reported periodically, will provide additional opportunities for building shareholder value. Now, I'd like to turn the call back to Michael.

Michael Tardugno, Chairman, CEO, President

Thank you, Jeff. As always, a very good summary of our financials. We appreciate that. So operator, we'd like to now open the call for questions.

Operator, Operator

Our first question comes from Justin Kim of Oppenheimer & Company.

Justin Kim, Analyst

I just had a question on GEN-1. Could you just walk us through the improvements made to the manufacturing process and any future plans to further refine the process?

Michael Tardugno, Chairman, CEO, President

That's a good question, Justin. Our strategy all along for all of our investigational products, including GEN-1, includes redundancy. Particularly now since many of these contract manufacturing organizations, particularly those that are quite sophisticated, like the parental injectable drug manufacturing facilities, are being acquired and consolidated by venture capitalists, creating somewhat of an oligopoly. In that environment, you always have to worry about supply and price. So we've taken the initiative, as we've talked about earlier, to work aggressively both inside the United States and outside with some Chinese-based manufacturers to reduce the cost of our major components for GEN-1. There are two: the polymer that uses this transfection factor in the plasmid. I can tell you with confidence the cost of our plasmid has been reduced by almost an order of magnitude as a result of the work that we're doing to develop a competitive quality manufacturing system for the plasmid. We're seeing costs come down both with our current manufacturer in Europe and as a result of this work that we're doing to finalize the process for plasmid manufacturing outside the United States in China. We've taken the step again and a redundant approach to provide two sources for the polymer, again, one in China, one in the United States. Interestingly enough, competition works. And by the way, we have been successful with the transfer to the Chinese, using that polymer in current manufacturing for investigational products for the Phase II portion of the study. But interestingly enough, as I said, the competition works, and it looks like the U.S. manufacturer not only will reduce their costs but may be substantially lower than the Chinese manufacturing. Finally, the third component is finishing its fill and finish and lyophilization. Again, the second manufacturer has become our primary source of this product in China. Again, a high-quality manufacturer that currently ships product to the United States for commercial sale, recently expanding its facilities at some of the state-of-the-art facilities, which have been recently evaluated by the FDA and other regulatory agencies. And, interestingly enough, in an island off of the coast of China, not even near or close to any of this COVID virus pandemic. Their cost of manufacturing is again almost in order of magnitude lower than a supplier that we've qualified in the United States. Our goal here is to have a redundant system and competitive manufacturing at low cost because you know that our treatment paradigm for GEN-1 requires a large volume of plasma. One patient will receive up to 500 vials worth of product over the course of a six-month period. So getting the cost down is not only important to the company's financials, but it's very, very important to ensuring that we have a commercially successful product.

Justin Kim, Analyst

I guess then maybe just shifting gears. Could you talk a little bit about the OPTIMA continuation? And is there a threshold of observation that might be meaningful and what sort of timeframe might be a better period to assess the potential for data maturity issues?

Michael Tardugno, Chairman, CEO, President

Yes. So we're looking at this on a number of fronts. I hesitate to give you a date; I mean the easiest answer would be to continue to follow patients until we have a sufficient number that makes it very, very clear that this study is either going to result in a failed trial or there's a potential for a positive trial. The death rate in the study is the determiner for that. As it appears now, we could have an answer sometime in the fourth quarter if we only take that stuff. The other steps that we're taking and looking at some of the discontinuities that I pointed out earlier are those that could immediately give us some hope that the state of maturity issue is very real, and predictable on a statistical basis. If in that case, we conclude the sensitivity analysis has identified the discontinuities, we may take the immediate step to begin to meet with the FDA to discuss the direction of the study. And then we'll, of course, provide feedback to the investment community as soon as we know something from the agency. That's pretty much your strategy.

Justin Kim, Analyst

And maybe just a final question before I hop into the queue. On that point with conversations with regulators, have you had any initial conversations regarding the study and just what the perception of the positive results might look like in light of the unblinding of the study?

Michael Tardugno, Chairman, CEO, President

Yes, so we have not had that conversation with the regulatory agencies. We'd like to know more. We'd like to have a better understanding of some of these so-called discontinuities. So, we want to understand them a little bit more and have a better idea of the trajectory of the trial before we meet with the agency.

Operator, Operator

Our next question comes from Raj Kumar of Brookline Capital Markets.

Raj Kumar, Analyst

With regard to the OPTIMA trial, the patients from China and Vietnam, what percentage of these patients make up the whole trial? And in terms of the 26 deaths that are different, how does that compare with the eight patients later on? How do you see that evolving?

Michael Tardugno, Chairman, CEO, President

Yes. So we can give you some good detail on both those questions. 37% of the patients enrolled in the study were enrolled by the Chinese and the Vietnamese investigators, with about an equal amount, a few more patients from China than from Vietnam. As I pointed out, there seems to be a dichotomy here between the median time to death compared to what the Kaplan-Meier curves are suggesting, which leads us to believe that the data is quite immature to reach a conclusion. Regarding the 26 patients, the study had been tracking, as we mentioned in an earlier press release, on a positive trend. The separation of the two arms appeared to mirror what we have been seeing in the HEAT Study subgroup, that prospective subgroup of 285 patients. In it, the first interim analysis, we did as much as we could to compare the same time points. In the first interim analysis, we saw a hazard ratio of about 0.78. Subsequently, as I mentioned earlier, a total of 32 additional patients were enrolled for the second interim analysis. Among those 32, 26 consecutive patients showed a complete reversal of the treatment arm versus the control arm. The reverse trend included the majority of those 26 patients, with 17 out of 26 deaths happening in the treatment arm, which is a complete reversal as seen in a confined time period. Additionally, when looking at the Kaplan-Meier curve, it's just very hard to understand how that could happen. It's a phenomenon that may be maturity related, but we are also looking at other causal factors. When we take those 26 patients out of the analysis, for the most part, the Kaplan-Meier curves are very much on track with what we would have expected when we compare them to the HEAT Study subgroup Kaplan-Meier curves. Subsequently, as I mentioned in my prepared remarks earlier, following the interim analysis, there have been eight more patient deaths reported and those patients are in a ratio of three control arm deaths for every one treatment arm death, effectively changing the hazard ratio from previously noted 0.903 to 0.875.

Raj Kumar, Analyst

So, in terms of these eight patients, what is the split, the geographic aspect, whether they are from China or Vietnam? And also in the future, is the expectation that where these patients are from will drive the differences?

Michael Tardugno, Chairman, CEO, President

Yes. So I know, it could be a regional issue, like maybe that's what you're getting to. It also may be a time-dependent issue; this may be a phenomenon that we're seeing as a function of a period of time during which these patients were being treated or followed. So it could be both regional and time-dependent, but we don't know yet. That is some of the sensitivity work that we have yet to complete. I don't know off the top of my head where the eight patients came from, but they were primarily from the China and Southeast Asia area.

Raj Kumar, Analyst

Okay. And in terms of GEN-1, what kind of protocol deviations do you expect due to COVID-19? And have you anticipated any?

Michael Tardugno, Chairman, CEO, President

Yes. So I believe Dr. Borys is on the phone, and we have been very careful about this COVID issue. Nick, are you in a position to answer that question, please?

Nicholas Borys, Executive Vice President, CMO

Yes, thank you. In terms of the COVID-19 impact on the OVATION 2 Study, we've been discussing this quite extensively with all of our investigators and our lead investigators. They are aggressively seeing a lot of patients that meet our study criteria and they are anxious to get those patients into the study. The way we're designing moving forward with COVID is that we will be following ASCO guidelines for treating patients during this COVID period, testing them for COVID and taking precautions throughout. So I do not see any significant major protocol deviations. There might be challenges and occasional visits being missed, but the impact on the endpoints, I would expect to be minimal.

Raj Kumar, Analyst

Okay. And in terms of the NIH analysis, what kind of expectation do you have from this analysis by the NIH?

Michael Tardugno, Chairman, CEO, President

So, the NIH had a different lens on the data and it was published by the company. Recall, our look at the subgroup was confined to those patients who had more than 45 minutes of heating time. The NIH conducted a side-by-side analysis looking at the intent-to-treat population, for patient populations in the study, as a function of single-agent patients, those are the ones that you can measure the heating time with precision. They developed an algorithm that shows the relationship between longer heating time and survival. What we expect from the NIH, since we do have this concern for data maturity, is to plug this data into their model. By the way, I missed an important point here: they will be evaluating heating times as a function of tumor volume. We want them to plug it into the model; they may have to make some modifications. Our expectation is that this model will either confirm that we should wait or there may be a data maturity issue. Or it could confirm that the futility analysis has a high potential of being correct. So that's really what we're expecting from the NIH. We also separately are looking for PFS. We would like to know in their model looking at PFS whether or not the PFS that we are currently seeing from the investigator-reported events is accurate. Nick, again if you're still on the phone, can you address the use of the radiology in evaluating patients in the overall study by the NIH?

Nicholas Borys, Executive Vice President, CMO

Yes. As Michael stated, NIH’s particular interest was to take a different view of the data, a different slice, meaning they did a volume-based analysis. So, as Michael said, the first question is going to be for them to reproduce the same analysis that we did in the HEAT Study and apply it to the OPTIMA Study. This will help us to determine whether the curves are similar or different, and from there we'll look at investigator-rated PFS versus central lab-rated PFS that would be done by the NIH to see if there's any significant differences from what we're expecting. The data will be a treasure trove of how to really take a good look at the OPTIMA data and compare it to what we learned in the HEAT Study.

Operator, Operator

Our next question comes from Mitch Landgraf, a Private Investor.

Unidentified Analyst, Private Investor

As a cancer patient advocate and Celsion investor, I want to appreciate and commend efforts of the company to work with all the regulatory bodies. However, it's possible to hopefully bring this drug to market. We know the fact that it's safe. We also know based on the HEAT Study and from patients' and investigators' anecdotal evidence that it works. My question is probably more for Dr. Borys. Seeing this anomalous data from those 26 patients, which is totally different from our entire experience with ThermoDox to date. Seeing that its time period was from December to March, I'd like to ask whether the COVID-19 had an effect. I was wondering if there are any thoughts on the possible causality that the hypothermia itself, the radiofrequency ablation, or the interaction of an anthracycline on the immune system is potentially interplaying with the treatment arm in relation to COVID-19, and whether the company knows whether any of those patients tested positive or possibly perished because of complications from COVID-19?

Michael Tardugno, Chairman, CEO, President

That's a great question. I will turn it over to Dr. Borys.

Nicholas Borys, Executive Vice President, CMO

Thank you for that question. Let me just state that all possibilities are being evaluated right now. Certainly, COVID was an important consideration during the study. As we were collecting data, we were carefully watching to ensure there wasn't an impact. We are reviewing the causes of death for these patients, and we're interviewing the investigators to gain further insights.

Operator, Operator

Our next question comes from Judson Porter, a shareholder.

Unidentified Analyst, Shareholder

Good morning, gentlemen, and thank you for holding the call. A couple of questions. First, I want to ask you for a statistical projection. If the balance of the deaths continued to the end of the study to be in a 3-to-1 ratio as the recent eight deaths have been, what hazard ratio would that produce?

Michael Tardugno, Chairman, CEO, President

Yes, I don't know that we can give you that exact number off the top of our heads. However, if it continues at this rate, I believe we would be looking at a successful trial.

Unidentified Analyst, Shareholder

Secondly, can you clarify the information that points out the dichotomy between the second 26 grouping deaths and the experience of percentage improvement in overall survival? The overall survival numbers presented in the press release from OPTIMA and HEAT, from both combined, show over 50% increase in overall survival in China or Vietnam and over 40% in the others?

Michael Tardugno, Chairman, CEO, President

Got it. So what you're referring to is this apparent dichotomy. When we talk about a 50% improvement, actually it’s a 56% improvement in the treatment arm compared to the control arm in the median time to death; that comes from the OPTIMA Study, with those patients treated in China. We take all the Chinese patients and plot them on a Kaplan-Meier curve. It goes through that complex algorithms; we see that actually a negative result occurs where the treatment arm crosses the control arm pretty early on in a small number of patients. Nevertheless, concerning nonetheless; then when we look at each of the patient’s median time to death or time to death and we take the median, there's a contradiction—it improves by 56% in the treatment arm, despite the negative result seen in the Kaplan-Meier curve. Those comparisons—the Kaplan-Meier curve and the overall survival median—are from the OPTIMA Study in those regions, in Vietnam and China.

Unidentified Analyst, Shareholder

That's very encouraging to hear. One more question, and I know this is speculative, and you may have already responded to it. If, in the end, when the study is complete, you wound up with a hazard ratio of 0.78 instead of 0.75, which is the excess, that's still a very substantial improvement in survival and there is no other treatment. Is it reasonable to assume that your discussions with the various approval arms would still consider that to be successful enough to go to market?

Michael Tardugno, Chairman, CEO, President

This is a debate we have quite a bit. The end is very important here. You can have a hazard ratio that looks very good but not statistically significant due to not having enough patients to establish a confidence of p equal to 0.05. However, to your point, if we see a 0.78 or something closer to 0.8, given what we've seen in the treatment arm, where median time to death for the control arm is approaching 60 months, then we will demonstrate a very substantial improvement. We believe that this deserves a discussion with the FDA. It may not be well received, and we may have to have further dialogue with an ODAC committee. We do believe that the magnitude of effect—returning to that conversation around the magnitude of effect—is fundamental in determining whether or not ThermoDox should become a commercial product, particularly considering the product’s safety profile. We know that ThermoDox is being administered now to well over 700 patients, and the safety profile for this drug is quite manageable.

Operator, Operator

At this time, we have no further questions in the queue. I'd like to turn it back to today's presenters.

Michael Tardugno, Chairman, CEO, President

Thank you very much, operator, and to all of you who are on the call, we certainly appreciate your support and your attention and your interest in the company. As you can see, we're going through some challenging times. However, I want to point out the GEN-1 has great potential in ovarian cancer. Please, as you're thinking about the company, don’t dismiss that by any means. As we continue to evaluate the OPTIMA data, as I said earlier, we will be very transparent with our analysis and what we expect to do as a result. We will continue to be driven by our commitment to these therapeutics. We know there's great potential to make a difference for patients and clinicians, and families of cancer patients. We are committed to that. Thank you very much for your time, and we look forward to keeping you apprised of our progress. Thank you.

Operator, Operator

Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.