Good day everyone and welcome to today’s call to discuss the Celcuity Release of Fourth Quarter and Fiscal Year 2019 Financial Results. All participants are in a listen-only mode. Later, you’ll have a chance to ask questions during the Q&A session. Please note today’s call will be recorded.

[Operator Instructions] And it is now my pleasure to turn the program over to Celcuity’s CEO, Brian Sullivan. Please go ahead..

Dr. Ben Park, co-leader of the Breast Cancer Research Program and Director of Precision Oncology at Vanderbilt University Medical Center; Dr. Filip Janku, Medical Director of the Clinical and Translational Research Center at MD Anderson Cancer Center; and Dr. Bora Lim, Assistant Professor, MD Anderson Cancer Center.

We’re excited about the opportunities to gain their insights, as well as to potentially collaborate with them on future clinical trials. The recent addition of Dr. Richard Buller former VP of Translational Medicine at Pfizer to our Board of Directors also provides great clinical and translational medicine experience to our company.

So overall, while we’re disappointed in the slower than expected enrollment of our first trial, we remain very excited about the progress we made during the quarter. So, now I’d like to turn it over to Vicky to review our financial results..

Thank you, Brian. Our fourth-quarter net loss was 1.81 million or $0.18 per share, compared to 1.83 million net loss or $0.18 per share for the fourth quarter of 2018. Net loss for fiscal year 2019 was $7.36 million, or $0.72 per share, compared to $7.48 million, or $0.74 per share, for fiscal year 2018.

Because these quarterly net losses include a significant non-cash item, which is 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 $1.45 million, or $0.14 per share, for the fourth quarter of 2019, compared to non-GAAP adjusted net loss of $1.57 million, or $0.15 per share, for the fourth quarter of 2018. R&D expenses decreased approximately $0.06 million during fiscal year 2019, compared to fiscal year 2018.

This was primarily due to $0.31 million decrease in compensation expense, primarily in payroll taxes resulting from utilization of research and development tax credits as authorized by the Path Act and a decrease of $0.16 million in non-cash stock-based compensation.

This decrease was offset by $0.41 million increase in clinical validation and laboratory studies, legal expenses related to patent cost and operational and business development activities.

The approximately $0.07 million decrease in G&A during fiscal year 2019, compared to fiscal year 2018, primarily resulted from a decrease in professional fees associated with being a public company. We ended the quarter with approximately $18.7 million of cash and cash equivalents.

The net cash used in operating activities for the fourth quarter of 2019 was $1.7 million. This was a result of non-GAAP adjusted net loss of $1.45 million and $0.35 million of working capital changes in prepaid assets and payroll tax receivable offset by depreciation expense of $0.1 million..

Thank you, Vicky. Operator, we would like now to open the lines for questions..

Certainly. [Operator Instructions] We will take our first question from Yi Chen with HC Wainwright. Please go ahead..

Hi. This is Boobalan dialing in for Yi Chen. I have a few questions.

So, with respect to the enrolment status, I know you briefly mentioned, but maybe you can elaborate a little bit more on that, so what’s the current enrolment status for the FACT 1 and FACT 2 study and whether there has been any destruction due to the coronavirus outbreak?.

Well, I think, I’d summarize the enrolment activity slower than we expected and we project, you know based on the enrollment rate what we expect the availability of a reportable data would be. We have not heard from our sites about any impact of COVID-19 virus, as you would expect, cancer patients treatment pretty much has to continue without delay.

So, I wouldn't expect although I could be wrong, but I wouldn't expect the treatment for cancer patients to be disrupted.

It may be the cancer patients, because they're particularly vulnerable to COVID-19 or potentially more cautious, and generally more concerned about the risk of COVID-19 to their health, because their immune compromised, but I'm speculating. I haven't heard that directly from folks..

Okay, understood.

So maybe – when could you announce the collaboration based on the CELsignia test?.

Right. So, we expect to announce at least a couple of collaborations before the end of the year. And so we were engaged in discussions with a variety of different pharmaceutical companies and leading medical centers. And those discussions require us to get a lot of different documentation finalized before the collaboration itself can be finalized.

And there are a lot of different groups and entities within these organizations that need to sign-off on them, so it's a process, but we're far enough along and have enough of them in process that allows us to feel very confident that we'll get to several that we think would be very important to us and we think very impactful for the long-term future of the company by the end of the year..

Wait. Yes, one final question. The ovarian cancer you mentioned, that's pretty exciting.

Maybe I'm curious whether you have any additional CELsignia signaling tests to be presented during 2020?.

Well, we referenced the addition of a fourth test for breast cancer. We are working towards being able to complete a characterization of that test by the end of this year. So, that would be the other test that we would expect to have data for before the end of the year..

Okay. That's it for me. Thank you so much for your time..

You’re welcome. Thank you..

And next, we'll go to Per Ostlund with Craig-Hallum. Please go ahead..

Thanks. Good afternoon, Brian and Vicky..

Hi, Per..

Brian, I'm going to follow – hi. I'm going to follow-up to the first question on FACT 1. And I know you – I know you've delved into it.

And I know that there are certainly frustrations around the ability to predict enrollment cadence and that sort of thing, but just thinking in terms of number of sites, I kind of went back to the third quarter call, and I think at that time, there were, I believe, there's 26 enrollment ready sites and a handful more in progress.

Did any sites ball off? And then I guess, then the Part B to that is in terms of going from 26 to 27, if none fell off, and there were a few in process, what are kind of the gating factors to the IRBs and the other bureaucracy that they've got to get to in order to get enrollment ready?.

Right. So, I mean, typically, you've got two committees internally that need to review and approve these, some of them do them in parallel, some of them in sequence, but that's an Institutional Review Board, which reviews the ethical considerations for fielding a trial.

And not most sites also have a scientific review committee, which essentially reviews the scientific validity of the hypothesis that is being proposed for study.

Then once you get that approval, you need to go through a series of steps with each of the investigators who may be participating, if it's with a center that has a lot of oncologists that want to participate, you need to get paperwork and training done with all of them and the center is 30.

You can't activate the trial until you have all 30 oncologists trained. So, in some ways, you have these very small items that can gate your ability to get the trial going. There's typically an extended process to negotiate or finalize a contract with the institution.

Even though there's a template that can be used to hopefully facilitate in most cases, those discussions lawyers do. And so it's never as straightforward as you would hope. And so those are the main items.

And as some of these committees only meet once a month, depending on the institution and so, the process of just getting an IRB approval can take, as I think we've discussed previously, six months, just from the time they review the materials, indicate whether how to submit it, who will be the sponsor, they have internal documentation, they have to prepare, not just our prior trial protocol.

And so, that's the type of thing that that takes place. And in some cases, I alluded to this, I mean, there is literally paperwork on one dock at a major center that's holding up the whole process. And we tell them, we're willing to get going with 29 docs.

We'll take 97% rather than 0% to get things going, but these sites got to decide that they like everybody to be able to go all at once. That's just how they're organized for some reason and not anything NSABP can do about that..

Sure. Okay. That makes sense. I guess, speaking of what people can do, and I know we've talked about this in past calls, and so I'd hazard that the answer is no different, but from the standpoint of activating the enrollment, so, let's say that the IRB’s are all in place and the sites enrollment ready.

From a promotional standpoint, your hands – Celcuity’s hands are pretty well tied, besides just being able to have documentation about your test, basically on hand for the clinicians.

What about the clinicians and what about your former collaborators? Where can they step in?.

Well, the collaborators – the pharma collaborators typically don't get involved, because they're really not supposed to be involved. These things to maintain the proper – well, this is an institutional. They –this is an NSABP trial. And so there are certain kind of guardrails that are put off.

That's why we're kind of hands somewhat kept at arm's length by NSABP with some of the stuff. But what we try to do, we have materials, we have a patient brochure, which attempts to help the patient understand the potential benefit to them. The potential benefit to all women with breast cancer at the trial successful.

There's limited amount of promotion that you can do, because there are no guarantees for these patients and you can't unduly pressure them. They're vulnerable – people in a vulnerable state, it’s a lot of complexity. So, you can't make declarative statements.

So, a lot of – as I think, I've mentioned what you can communicate to these patients is very watered down. And you're really limited and promoting it. You can educate, but you can't sell it. You can appreciate that distinction.

You're dependent really as well on how effectively the nurses, who do the, in many cases, manage the patients and kind of get them up to speed. How engaged particular oncologist is in bringing patients in the loop about clinical trials. So, there are a lot of variables that we do not control. Actually, most of the variables we don't control, in fact.

So we're doing what we can. We – we've gone out and we'll continue to go out, where we are able to connect with the docs and the nurses at these sites to meet with them give them a presentation if we can.

In fact, try to get to be top of mind to the extent you can, but, along with complaint, again, I'm just rehashing what I think many people have heard either from me or from others. One of the bigger challenges in medical research is the challenges of getting patients to participate in clinical trials.

And it's particularly challenging when you have a new technology or drug that doesn't have a proven outcome to point to. If you're evaluating a drug that has already been evaluated and has favorable clinical results, it's a lot easier to enroll patients, because you can point to that data.

When you don't have that data, you're really speaking to a concept and you're pointing to other data, but it's certainly not as direct as data from a clinical trial. So, again, I'm just giving people a sense of the dynamic and we were aware of that dynamic going into this trial. So, it's nothing that surprised us.

It's – I think the surprise has been the slow, general uptick and ability to get patients on Board. I think because of the clinical trial as well, the criteria of patients is fairly – was very strict, which limits the range of patients that can participate.

Patients have to come up with a certain set of criteria that don't necessarily represent the range of woman who ultimately would be eligible for the test, for the drugs, if we want to make it to that stage.

So, the trials, again, you're dealing with a narrow group of patients, early stage, you don't have the same sense of urgency, and you're executing through a number of folks who you have, in our case, we have really no day-to-day contact with. So, we can't affect the visibility very easily. Although, we do what we can wherever possible..

Okay, that makes sense. Real quickly on Puma, I know that, again, that's as of the last call, there had been the delay getting access to Nerlynx, but I think that that had been remedied at that point.

So, is this just also kind of enrollment…?.

There's a similar dynamic. We're talking to them about possibly adding some sites to that trial. West Clinic is a very significant clinic that covers a good chunk of Tennessee, and – but we think there's some sites that we've had discussions with that would like to participate.

So, we might be able to essentially affect that enrollment rate by adding sites, but again, that's – that doesn't happen overnight, either. So, in that case, because we – we’re working directly with the principal investigator. We can communicate a little bit more directly.

And – but again, the similar type of, I don't want to say restrictions, but just challenges, because, again, limited patients necessarily qualifying and ones that may have other considerations that prevent them from not participating, et cetera..

Last one real quick.

And anything as you look into 2020 from an expense standpoint that deviates from the very steady cadence you've been on the last handful of quarters?.

Not that we expect, no. No, we think – we're, as you know, and we talked about, we want to be good stewards of the capital and we have very focused R&D projects and we kind of we think do a pretty good job of budgeting those and have a pretty good handle on all the other expenses.

So, we feel very comfortable with our cash burn rate staying about where it is. Yes..

Okay. Thanks a lot, Brian. I appreciate it..

You're welcome..

[Operator Instructions] And we have no further questions in queue at this time..

Okay. Well, I appreciate everybody's participation on the call. I look forward to speaking with you, again, in a few more months. Take care..

Thank you. This will conclude today's program. Thank you for your participation. We will now disconnect and have a wonderful day..