Brian Sullivan - Chief Executive Officer and Co-Founder Vicky Hahne - Chief Financial Officer.

Kevin Ellich - Craig-Hallum Capital Group LLC.

Good day everyone and welcome to today's Celcuity Release of First Quarter of 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call may be recorded.

I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Brian Sullivan, CEO..

Thank you and good afternoon, everyone. We announced the financial results of our first quarter ended March 31, 2018 a few minutes ago. Before we begin though, I'd like to remind listeners that our comments today will include some forward-looking statements.

These statements involve a number of risks and uncertainties which are outlined in today's press release and in our reports and filings with the SEC. Actual results may differ materially from those in the forward-looking statements. On this call, we'll also refer to non-GAAP financial measures.

You can find a table reconciling the non-GAAP financial measures to GAAP financial measures in our earnings release for the first quarter ended March 31, 2018, which was included in today's press release. Today's press release is available on our website, www.celcuity.com, under the Investors section.

I also have on the call with me today Vicky Hahne, our CFO. I'd first like to make some comments on our first quarter results, Vicky will follow with more details on a few items, and then we'll open up the like for questions.

As we've previously disclosed, completing development in additional signaling pathway test for breast cancer is one of our primary objectives in 2018. And I'm excited to announce that we completed development of our second CELx test for breast cancer during the first quarter of 2018.

This new test evaluates independent c-Met pathway signaling activity and its involvement with HER family signaling in HER2-negative breast cancer tumor cells. Abnormal c-Met signaling, including cross-talk between c-Met and HER family receptors, has long been suspected of playing a role in a variety of cancer types.

To treat c-Met involved cancer, a number of pharmaceutical companies have developed c-Met targeted therapies. Today though, clinical trials evaluating investigational anti c-Met therapies alone and in combination with other targeted therapies have produced mostly negative results.

And since these subjects enrolled in these trials were primarily ones with c-Met protein over expression or gene amplification, I'll suggest that alternative biological factors should be measured such as c-Met signaling activity to identify patients eligible for treatment with c-Met therapies.

We intend to combine the c-Met signaling function test with our current HER2 signaling function test to create the CELx Multi-Pathway or MP test. With this next generation CELx test, we plan to provide an analysis of HER1, HER2, HER3, and c-Met signaling activity with a single patient tumor specimen.

We demonstrated the role of abnormal c-Met signaling as a cancer driver in breast cancer in a mouse xenograft study performed at the University of Minnesota. A breast cancer cell line determined by the CELx MP test to have normal HER2 signaling, abnormal HER1 signaling and abnormal c-Met signaling was studied.

Mice were randomly assigned to either a control group or a treatment group that received either the pan-HER inhibitor, neratinib, the c-Met inhibitor, tepotinib, or the combination of neratinib and tepotinib. We measured tumor volumes receiving both neratinib and tepotinib in the control.

We note that the tumor volumes in the mouse arm receiving both neratinib and tepotinib shrank significantly more than the tumors in the study arms that received neratinib or tepotinib alone. In the xenograft, tumor reduction results were consistent with those produced by our CELx MP test.

In an internal study with breast tumor specimens obtained from 74 HER2-negative breast cancer patients, we found that approximately 15% to 20% of them had abnormal c-Met signaling that was co-activated with abnormal HER1 signaling.

Our internal studies further characterize the co-involved [ph] nature of the signaling activity and the efficacy of several c-Met and HER family drugs.

And we believe this provides strong evidence that the sub-group of HER2-negative breast cancer patients with these abnormalities may respond treatment with the combination of HER family and c-Met inhibitors.

We will see collaborations with pharmaceutical companies to field clinical trials that evaluate the efficacy of combining HER family inhibitors and c-Met inhibitors in breast cancer patients who gave abnormal c-Met and abnormal HER1 pathway activity.

The FDA has approved two c-Met inhibitors and six HER family inhibitors for cancer treatment, there are number of additional investigational c-Met and HER family inhibitors being evaluated in current clinical trials. Several pharmaceutical companies possess both the c-Met and the HER family inhibitor.

And through collaborations, we hope to help these pharmaceutical companies obtain new indications for targeted therapies to treat this new cancer sub-type. We are also excited about the quality of sites for the clinical trial we are fielding in collaboration with the NSABP Foundation and Genentech.

This clinical trial, which we refer to as FACT 1 is designed to evaluate the efficacy of two of Genentech's HER2 drugs, Herceptin and Perjeta in HER2-negative breast cancer patients selected by our CELx HER2 signaling function test.

We believe that we'll get interim results from this trial in the first or second quarter of 2019, instead of the end of 2018, as originally anticipated.

The longer timeline is primarily due to more sites opting to rely on their internal institutional review board or IRB, instead of the central IRB that has already approved our clinical trial protocol.

We originally anticipated that approximately 80% of the expected sites would utilize the central IRB, and we now believe that number is approximately 25% of sites. The internal IRB process typically takes several months, and which will cause the bulk of our sites to begin enrolling patients later than originally projected.

Final results would still be expected approximately six months following interim results. Finally, we continue to make progress developing tests for new tissue types. And our goal, as we previously stated, is to complete the development of these tests by the end of calendar year 2018.

And these tests will further expand the range of collaboration opportunities, we can pursue with pharmaceutical companies. So overall, we're very excited about the progress we made during the quarter. I'd like to turn it now to Vicky, who will give you a rundown briefly on our financial results..

Thank you, Brian. Our first quarter net loss was $2 million or $0.19 per share, compared to $1 million net loss or $0.15 per share for the first quarter of 2017. Because these quarterly net losses included significant non-cash items, stock-based compensation, we also included in our press release non-GAAP adjusted net loss for the quarter.

Our non-GAAP adjusted net loss was $1.6 million or $0.16 a share for the first quarter of 2018, compared to non-GAAP adjusted net loss of $0.9 million or $0.14 per share for Q1 2017. The approximate $0.6 million increase in our Q1 2018 R&D versus Q1 2017 R&D expense, primarily resulted from increased personnel cost.

Legal expenses related to patent cost, start-up clinical trial cost. And business development activities also contributed to the increase.

The $0.4 million increase in our Q1 2018 G&A versus Q1 2017 G&A expense was primarily related to increases in expenses associated with being a public company, such as professional accounting and audit fees, director and officer insurance, and employee-related expenses including approximately $0.2 million of stock-based compensation.

We ended the quarter with approximately $30 million of cash, cash equivalents and investments.

Brian?.

Great. Thank you, Vicky. Operator, we'd now like to take questions..

[Operator Instructions] We'll take our first question from Kevin Ellich with Craig-Hallum. Please go ahead. Your line is open..

Hey, guys, good afternoon. And thanks for taking the questions..

Hi, Kevin..

Brian, hey, congrats on the development of the second CELx test. I wonder if you could start off there.

You gave us some good color in your prepared remarks, but could you talk about the potential for this test and the Multi-Pathway Test? Will you remain focused on breast cancer or should we be thinking of other solid tumor types? And the reason I ask, I just notice one of the drugs, neratinib, I think that's part of the Puma study for colorectal.

Is that just a coincidence or should we be thinking kind of along those lines?.

Well, yeah, as we've mentioned, I think previously we have three product-development-related goals for the year. One was development of the next test for breast cancer, and this is kind of following - or fulfilling that objective. The second, two were related to tests for new tissue types, which is what you're alluding to.

So we're continuing to focus on those, but we've been pursuing these programs in parallel. And as you can imagine, our goal is to identify as many patients as possible, to diagnosis as many patients as possible with our test.

And as we've discovered previously, we have identified other pathways that abnormally signal, and we've been conducting studies to confirm that and then to conduct animal studies as well to demonstrate the ability to reduce tumors with the c-Met - addition of c-Met to these cells.

And so, the end result for us is that it significantly increases the number of collaboration opportunities for us. There are a lot of different companies that have c-Met inhibitors. I mean, ultimately, I think there are six that we've zeroed in on, six different companies c-Met inhibitors. Two of them are approved.

There are, as I mentioned, six approved for two therapies. There are also a number of HER family of therapies. There are also several additional HER family of therapies that are under investigation. So the combination, those what we would hope it would do, which is create opportunities for more new drug approvals or new indications for approved drugs.

And then that in turn increases the range of business opportunities, collaborations, potential partnerships we can pursue..

That's helpful. And then, I guess, wanting to flip over to the FACT 1 study.

Again, good color there, but the thing that jumped out to me is, is there a reason why more sites are relying on internal IRB instead of central IRB?.

No, I mean, that's one of those things that it really - each side kind of has its own rationale. And it can just be - it's not something that we've been given any color about. But it has nothing to do with the protocol. People are trying to read between the lines and wonder whether this reads on the protocol or anything about the study itself.

That would be incorrect. It really is just the specific situation of each sites and whatever decision process they have to decide, whether to use a central IRB or an internal IRB..

Got you. Got you. And then just wondering if you had any commentary in terms of how discussions are going with other potential partners or collaborators for your technology..

Well, we're continuing to have those conversations, so we're happy about that. But as you know, I mean, we can't really disclose anything until we have something that's finalized and kind of definitive. But we have a good target list and we understand who to speak to. And we are engaged in ongoing discussions with folks.

But as folks who've participated in the pharmaceutical industry know, the processes can be quite extended. And we're often times dealing with very large companies, and those processes just can stretch out. But - so we have a good target list. We have a good understanding who to speak to and how to engage them and we're continuing to work away..

And you still plan on - expect to have one more collaboration announced this year, is that right?.

Yes..

Okay, great. That's it for me now. I'll hop back in queue. Thanks, guys..

Okay..

Thank you. [Operator Instructions] It appears there are no other questions at this time. So I'll turn the call back to Mr. Sullivan..

Okay. Well, I appreciate everybody's participation in the call. And look forward to - excuse me - to updating you in the future. And thanks for your involvement and interest in Celcuity. Take care. Good bye..

This does conclude today's program. Thank you for your participation. You may disconnect anytime and have a wonderful day..