Jeffrey Church - SVP & CFO Michael Tardugno - Chairman, President & CEO Nicholas Borys - SVP & CMO.

Jason McCarthy - Maxim Group Keith Markey - Griffin Securities Barry Rubin - Arsenal Investments.

Please standby. Good morning. My name is Amy and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsion's Second Quarter 2016 Earnings 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 conference over to Mr. Jeffrey Church, Senior Vice President and Chief Financial Officer of Celsion. Please proceed..

Thank you. Good morning, everyone, and thank you for joining us today to discuss our second quarter 2016 financial results, which we announced this morning before the market opened.

Today's call will be archived and the replay will be available beginning tomorrow and will remain available by phone until August 29, 2016, as well as available on our website for 30 days.

Before we begin the call, we wish to inform participants that forward-looking statements will be 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 risk 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 and possible acquisition of other technologies, assets, business 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 now like to turn the call over to Mr. Michael Tardugno, Celsion's Chairman, President and CEO.

Mike?.

Thanks, Jeff. Good morning. And I also want to thank all of you for joining us on today's call. As always we are delighted to have the opportunity to update you on our progress, and particularly now given all the positive developments that we've shared with you over this past quarter and I'd say this past year.

Now please take some time to review today's press releases if you haven't already done so, I think they will give you a good breakdown on the progress the Company has made in this last quarter. Here with me today are Dr. Nicholas Borys, Celsion's Chief Medical Officer and Jeffrey Church, from whom you've just heard, our Chief Financial Officer.

Today's call will focus on the two very important, and I'd say highly promising clinical trials of our lead product candidates. The first is our new adjuvant study in first-line ovarian cancer combining GEN-1 with standard of care therapy followed by interval debulking surgery. GEN-1 is our promising gene-mediated immunotherapy.

The factored foundation is IL-12 supporting our program or encouraging orally studies that were pioneered by GOG, The Gynecologic Oncology Group; you know this to be a cooperative funded by D&H [ph].

To just give you an idea of the interest that the researchers and investigators at GOG have had and continue to have in GEN-1, virtually all of them have signed up and are interested to sign up to participate and interested in our clinical trials.

The second indication, the second trial is in primary liver cancer, the OPTIMA study of first-line Phase III global study of ThermoDox in combination with radiofrequency ablation, standardized to a minimum of 45 minutes of timing of where we now know this ablation technology is most effective in combining and combination with ThermoDox.

ThermoDox as you know is our elegant heat sensitive liposomal dosage form of Doxorubicin. I will also take some time to review with you the significance of our strategy with the Chinese pharma company, Hisun, and I have a few comments about expenses in cash management at the close. So we have a lot to cover so I want to get right to it.

During the following months you know Celsion is exceptionally well positioned with a solid balance sheet and clinical trials addressing two of the most globally prevalent cancers of our lifetime, both recognized as being indications with high unmet needs.

Ovarian cancer, for example, is the eight most diagnosed cancer among women with a quarter of million global new cases every year. Virtually every one of us knows or knows someone who mother and daughter, sister, grandmother or friends life has been shorter by this malignancy.

And primary to liver cancer, by 2020 with 850,000 incidences growing at 5% annually, it will be the world's number one cancer according to the World Health Organization. Our incremental advances in interventional techniques have improved overall survival somewhat in this indication. HCC remains the largest unmet need in oncology today.

So it's clear to me and I trust to you that Celsion's work is off significance, important medicine and mutations [ph] worldwide, and if we're right, should our clinical research be successful in either of both indications, not only will we bring ground breaking therapies to physicians and patients, we'll be looking at new drug entities each with billion dollar revenue potential.

So as arising in the question, we could ask will we be right. The answer to that question of course is the subject of our clinical research but we can say now however, and we'll allow and share with you; it's based on yearly evidence, perhaps remarkable evidence. We have every reason to believe that we will be successful.

Let me start with GEN-1 and ovarian cancer. Now bear with me. Some of you may be new to the story; I'm going to go into some detail. As you may know, immunotherapy has taken a premier position in oncology research.

Largely based on what 10 years ago would have been called miraculous, I mean all the big companies and a number of small development stage companies are involved with immuno-oncology research and so the New York Times and it's above the full series suggest that new oncology maybe the key to successful cancer treatments of the future.

Now we call of our entry into this future of medicine GEN-1; GEN-1 is a gene-mediated immunotherapeutic which we put virtually all the mechanisms of the immune system to fight cancer.

GEN-1's foundation is the DNA plasmid coded for cytokine, approaching cytokine Interlukin-12, IL-12 as it's called, is the plasma that's incorporated into the non-viral nanoparticle system. It's a proprietary system called TheraPlas that's used to deliver this plasma into a viable, healthy and diseased cells.

When this is administered, the system is administered locally into a body cavity; it could be into the peritoneum of the gut, the bladder, even the cavity that is created by the surgical removal of tumor mass.

Nanoparticles invade the local original cells, taking over the metabolic machinery of the cell turning each into a factory for sustained local production of the IL-12 protein. Just visualize that with me, if you will, so now you have got the cells high IL-12 and sustaining therapeutic quantities. The question is how IL-12 affects the immune system.

So I will talk little bit about that. IL-12 is an inflammatory protein or a cytokine as considered by many to be a master switch of the immune system and as historically has been recognized. There is a great deal of research on this. As one of the powerful immunotherapies and oncology, it functions at multiple levels.

First, it takes to break up the immune system. And you probably know these cancer cells are smart. They create an environment by upregulating something called the T-REG [ph] cells which put the brakes on the immune system.

So one of the first actions or one of the first mechanisms the IL-12 has to down regulate these T-REG cells which takes the breaks of the immune system. Secondly, it upregulates the production of the Interferons. Interferon has the effect of inhibiting blood vessel growth. And third and fourth, it powers up the immune system.

It puts the inept and tumor specific cell mediated immune activities into overdrive. So, this we know, we have known them since the 1980s. Question is why hasn't it been developed further. And that's really a function of the pharmacokinetics of Interleukin-12.

Its utility as a therapeutic has been compromised by a serious toxicities associated with a very short half-life or poor pharmacokinetics as the scientists recall it, as the physicians recall it.

It's very short half-life requires very high doses of IL-12 in order for it to be have a chance to be effective in stimulating the immune system but in high doses it can be seriously toxic. IL-12 for the most part has been on the shelf for twenty or more years. Now we have GEN-1. GEN-1 has been specifically designed to overcome these limitations.

These limitations are short half-life and poor pharmacokinetics by promoting the production of endogenous IL-12. Endogenous meaning body produced itself as we described it by invading cells with this IL-12 plasmid. IL-12 is then produced in a controlled and localized manner.

In a delivery factor in this non-viral nanoparticle whilst for repeated administration and in effect maintenance therapy so we can repeatedly administer IL-12 or GEN-1 to produce IL-12 and as result continuously stimulate the immune system to effectively treat cancers.

So where is the proof? In addition to some impressive clinical findings, translational data from our December 2014 GOG study in platinum-resistant ovarian cancer patients, this translational data earlier data were announced earlier this year, we demonstrate that Interferon-newly administered GEN-1 appears to live up to its designed promise.

Pathology, histology and analytic results from a 17-patient trials confirm the production of an immunologically distinct IL-12 protein. It is localized in the tumor in its vicinity. It lasts for up to 1 week after a single treatment.

Additionally, dose dependent on increases in Interferon we talked about an Interferon and TNF, Tumor Necrosis Factor, indicates that the IL-12 produced is immunologically active. Importantly, the absence of overlapping toxicities, allow for combination therapies.

Our target indication is, we have been talking is, ovarian cancer or the resistant urgent need for new treatment options. Again, 1.25 million new patients are diagnosed every year with 5 year survival less than 45% and because it is symptomatic, and it's in stages patients are often diagnosed as difficult to manage stage 3 & stage 4.

This is our current target population. We call our trial on this population, the ovation study. Ovation was initiated in quarter 4 last year and is expected to be completed by the end of this year. It's a Phase I dose escalation trial, a newly diagnosed stage 3 and stage 4 ovarian cancer patients.

These patients present with a great deal of disease in their belly as a great deal of cancer in the peritoneum. So, prior to debulking they are treated with multiple courses, typically treated with multiple courses of platinum and taxane, the goal of which is to improve the surgical outcome by shrinking and drying the disease tissue.

So in our trial to this regiment, we are adding 8 weekly cycles of GEN-1. That then is followed by interval debulking surgery. The trial is designed to enroll 3 to 6 patients per cohort as the dose escalation study increasing the dose by 30% with each escalation.

Its goal is to evaluate safety and efficacy as well as defining an optimal dose for an upcoming registrational program that we are looking forward to evaluating GEN-1 in combination with Avastin and Doxil; we'll talk more about that in a minute.

Ovation's PIs are currently treating 3 patients in the third cohort, so we have completed cohort 1 & cohort 2 and now in the third cohort assuming no DLTs, Dose Limiting Toxicities, in September, we will ask the DSMV to allow for the fourth and final cohort.

In the meantime, we have reported very, I'd say very encouraging results from the six patients in the first two groups and we announced that in a press release. I want to quote the lead principal investigator, Dr. Premal Thaker, Associate Professor in Gynecologic Oncology at Washington University School of Medicine.

And she as I said is our new lead investigator and I quote, “The totality did available to-date from the first six patients, suggests that GEN-1 holds great promise, great potential. Its service is effective, safe IL-12 immunotherapy in ovarian cancer.

We have seen dramatic decreases of 95% or greater in a cancer antigen 125 protein levels in all subjects which served as a key indicator of the presence of ovarian cancer cells as well as impressive pathological response data which is associated with prolonged survival.

We look forward to the completion of the study and learning more about how GEN-1 performs in this population.” So let me talk a little bit more about the findings from these first six patients. So in addition to what Dr.

Thaker points out the reduction in every case, 95% - 96% reduction in every case is CA-125 and by the way a 50% reduction is considered to be clinically significant. In addition to this reduction in CA-125 we get reports from radiologists, from the surgeons and from the pathologists.

From the radiologists, of the six patients involved we observed 100% disease control rate with one patient demonstrating a complete response of CR, two patients a partial response and three patients demonstrating a stable disease and its population of what we expected a 50% or less disease control rate.

From the surgeons, surgical assessment, five patients had successful resection of their tumors, two patients having an R0 which indicates a microscopically negative margin resection which no gross or microscopic tumor remains in the tumor bay. And we have three patients with an R1 indicating microscopic residual disease.

Now, the one patient in the second cohort that was ineligible for debulking surgery was of course ineligible due to a medical complication unrelated to the study. And we have report from the pathologist. And this may be the most impressive. Of the five surgically treated patients, one patient demonstrated a pathological complete response, a pCR.

Two patients with 40% demonstrated a micro-pathological response a microPR, and two patients demonstrated a macroPR. These data compare favorably to historical data which indicate that pCRs are typically seen in less than 7% of the patients receiving new vitamin chemotherapy followed by surgical resection.

pCRs have been associated with a median overall survival of 72 months which is more than three years longer than those who do not experience pCR. In addition, microPRs are seen in approximately 30% of the patients and are associated with a median overall survival of 38 months.

So we find, our physicians find, the clinicians involved find these results to date in a small population to be extraordinary. But before you can expect clinical findings from the third cohort, patients being currently treated, in the fourth cohort, if it's allowed by the DSMV, will be announced as soon as the data is available.

We will provide that along with translational results. Then from the tissue samples that have been taken from these patients, in September and again study them. For us and under leadership of Dr.

Borys, we believe that continued strong data suggests us, to Celsion to expand the trial of the therapeutic dose, maybe the appropriate strategy to accelerate development, we will see. We have requested and have been granted a telephone meeting with the FDA, to review this option along with discussion of an appropriate study and plan.

So fingers crossed, our continued strong data may result in the expansion of the current trial which as you know continued trial is much more time effective than completing a small Phase I study and stopping and restarting other trials so inertia is not on our side.

Continuing to study will allow us to enroll patients without interruption and expansion of the trial. In the meantime however, you know that we have been interested in combining GEN-1 with Avastin and Doxil, Doxil being ubiquitous in oncology. It's a $6 billion therapeutic.

Pre-clinical data showing extraordinary tumor inhibition was presented from our frequent research at AACR, the data showed that the three drug combination, Avastin and Doxil and GEN-1 demonstrated the statistically significant greater than 98% reduction in tumor burden as compared to control and a statistically significant greater than 92% reduction in tumor burden as compared to the combination of Avastin and Doxil alone.

Impressive enough that few big pharma companies picked up the phone as there is more about it. Assuming we have a dose invasion [ph], we remain on-track for an IND submission for a Phase II clinical trial or recur ovarian cancer. That's the one we just talked about Avastin, Doxil and GEN-1 by the end of this year.

In support of our strategy to develop GEN-1 as a global therapy, this is important. It's not to be missed. It's an announcement that we made with the Zhejiang Hisun Pharma company. For the production of GEN-1, production and global supply of GEN-1. This agreement provides for tech transfer and I can say at a very reasonable cost.

It also provides clinical, commercial supply prices, are prices to Celsion. Although have a lot of Celsion to answer virtually every world market. An expectation of significant gross margins.

An enormous advantage in what we are seeing and I know other companies are also, is with all this research now focusing on biologics limited capacity to produce these type of investigational products. Prices are going up dramatically.

We saw this coming folks and so about 7 or 8 months ago we began a process of more cost effective, very high quality supply. Importantly, prices for genuine to supply our clinical trials will be affordable.

Almost, well I am sorry I can't give too much away but believe me the prices for clinical trial supplies will be a fraction of the cost of what we, or other companies are currently experiencing. The move to Hisun was carefully considered from our past work with them.

We do know that this is a company with state of the art manufacturing and with an excellent quality reputation and ethics.

In return for this deal, which seems to be so favorable to advantage the Celsion and our shareholders, we have committed the certain percentage, a percentage certain of the commercial volume of GEN-1 so it's approved that I can ensure you that we will always maintain two, if not, three suppliers.

So in summary, let me just summarize GEN-1, it's one of the most exciting areas of therapeutic development in a generation.

Really results treating Phase III and IV ovarian cancer patients are nothing short of remarkable, our future trails for the past component of GEN-1 with the most successful oncologic advance in the 6 billion drug as I said, and we are positioning GEN-1's cost structure to support global markets. I hope you feel good about GEN-1, we do.

Now to ThermoDox, our most advanced product candidate now in a Phase III study, over one-third in a row evaluating our well founded thesis that RFA administered for a minimum of 45 minutes will significantly improve overall survival and newly diagnosed primary liver cancer or HCC patients.

The evidence here is mainly that RFA, a standard interventional first-line treatment for HCC if used within its engineered limitations will mediate a clinically effective local concentration of Doxorubicin when combined with ThermoDox.

I will remind you; this is not a conclusion that was derived simply from the sub-group analysis of the HEAT Study data, far from it. We've done a great deal of work here.

It has been all but confirmed than a perspective preclinical study work, a human equivalent dose of ThermoDox was evaluated during RFA heating times and healthy in liver of healthy pigs. Clearly, clearly -- and this is published report, longer heating terms resolves in a significant increase in Dox concentration around as in tissue.

This supported by a computational model funded by the NIH through CREDA [ph] independently developed by world recognized research where the University of South Carolina Medical School again showing the value of longer heating times.

It was evaluated in a multivariate Cox Regression Analyses guided by one of the most important names in HCC research where we concluded it was determined was significant that healing time only is responsible for the dramatic improvement and overall survival in HEAT Study subgroup.

So this thesis has been presented and challenged that -- it presented four challenge at six international medical conferences and through study-specific symposia. The conclusion from all these presentations is we are on the right track. We get a great deal of support from the HCC research community for the OPTIMA study.

Last quarter I referred to -- I referred you to an article that was written by our own Dr. Borys. In the online journal of Advanced Healthcare Network entitled Testing a Cure for Hepatocellular Carcinoma Analyzing the Use of Lyso-thermally Sensitive Liposomal Doxorubicin.

A link to this article is posted on our website, I encourage you to read it -- excuse me, the basis for our confidence in the OPTIMA study some of which I just covered. I believe you will all appreciate his insights. More recently in June, Ricardo [ph] and some of his fellows are again looking at our data and our thesis.

We're pleased to announce the expansion of peer reviewed research report supporting the findings from our H-study. It was reported in the Medical Journal of Hepatic Oncology publishing a comprehensive overview of each study, most notably, highlighting the curative potential underlined of ThermoDox and primary liver cancer.

The article detailed many of the insights obtained from the HEAT Study, particularly the post-Hoc analysis, the basis for the OPTIMA study.

The group that we had been following which reinforces the potential efficacy of ThermoDox and its principal mechanism of action affirming that increased tissue exposure to heat will amplify the tissues concentration of Doxorubicin.

And now for the past three years we've been following this well balanced, well bonded subgroup of patients from the HEAT Study who RFA treatment time was greater than 45 minutes.

This morning once again, now for the eight time we presented findings from this three year follow-up announcing that the data continue to show us statistically significant improvement in overall survival consistent with so far a two year median survival benefit from treatment with ThermoDox plus optimized RFA, that's greater than 45 minutes RFA.

And when I say so far is because we -- keeping in this ThermoDox plus 45 minutes RFA we still haven't seen they breach immediate and these patients are living more than 80 months. We try draw the line item would be more than 90 months.

We will see, I mean we've completed our overall survival suites over working with delivery [ph], how significant this is since optimistic. So I think it's -- we choose to close down the study now after three years from the initial announcement.

So bottom line here, we know more about RFA and intermediate stage HCC than just about any company on the planet. You've heard me say that before, but we know that RFA must be used within its engineered design limitations to be effective. For tumors greater than three centimeters, the treatment time becomes exceedingly important.

When we add ThermoDox to a procedure of 45 minutes or greater, the outcome is extraordinary. So with conviction, I say on behalf of my colleagues here and our research is with conviction, we are continuing to execute our Phase III OPTIMA study in primary liver cancer.

Just quickly on the design and -- I've talked a lot about this and you probably know it but the OPTIMA study is powered and designed in a way to set ThermoDox combination with RFA plus 45 minutes.

That's -- and all investigators and all sites, we control for that heating time in lesions three to seven centimeters, and that's where we believe ThermoDox can be the most effective versus standardize RFA alone.

The study is planned to enroll 550 patients globally, and upto 75 sites we continue to enroll sites, we're not looking to expand our study into Vietnam where HCC is an erythema [ph], I mean it's a major problem.

We have clinical sites in North America, as we said, Europe, Asia Pacific and China; China representing an extraordinary market opportunity for 50% of the world's incidence over 425,000 new cases diagnosed every year.

We're expecting strong participation from the Chinese and we're starting together now with the cohort -- the study cohort and China is up in the line. With the basis for the study, we've talked about 285 patients that represent 42% of the HEAT Study 700 subjects, not an insignificant number.

The most recent data suite this morning, just little bit more detail on that -- we've alluded to it.

It shows that overall survival in the ThermoDox plus standardized, that's 45 minutes RFA ARM maybe significantly greater than 80 months which by any standard and measure should be or would be considered conserved curative and an indication where curative treatments in patients within immediate sized lesions are unprecedented.

To be clear, ThermoDox plus standardized RFA shows an improvement in the subgroup consistent with a two-year plus benefit over all current interventional procedures. RFA plus 45 minutes alone and key mobilization and radiation strategies, a benefit of two-year plus over everything that's being evaluated or used to treat patients newly diagnosed.

And for successful I can say one more thing here, the strategic positioning of our global clinical trial sites will allow for filings and approval in all major markets including China, Southeast Asia, South Korea, the European Union, Canada and United States, small company but the global ambition for ThermoDox and you can say we just talked about our positioning or global strategy for GEN-1.

Also I want to make one more point here and this maybe a little bit premature with regards to the HEAT Study and ThermoDox, but we also -- I think I mentioned this before, looking forward to an independent confirmation of our hypothesis that longer heating time when activating ThermoDox translated into significant improvement in overall survival.

At Celsion, as you probably know, has accredited with the NIH under which the three terabytes of data from the HEAT Study, the entire country population has been independently analyzed by the researchers at NIH.

I understand the findings will be ready for presentation in an upcoming medical conference if consistent with our thesis, support from our study will be unprecendented.

So in summary, primary liver cancer represents the largest unmet medical need in oncology, we are committed to fully exploring the potential of ThermoDox which has demonstrated thus far and we are pleased with further progress we've seen in our OPTIMA trial and remain on-track to complete enrollment and/or in or around the end of 2017 followed by a preplanned interim efficacy analysis, hopefully the first and only but we have two preplanned in the study followed by the preplanned interim efficacy analysis read on in 2018.

I'll just quickly in addition, OPTIMA, as you know that we've been advancing a program in recurrent chest wall breast cancer; finding, supporting in our European dignity study are extraordinary, and were presented at the San Antonio Breast Cancer Conference.

If you need a demonstration of the value of ThermoDox, just look at the pictures on our left side.

Whoever [ph] have been treated with refractory disease, these terrible lesions spreading on their chest treated with ThermoDox and three cycles or four cycles, in some cases saving a complete response, although tumor being resolved, the healthy tissue replacing the diseased tissue.

We note that in this highly refractory group of patients that put calling your life and little bit treatment options result in very, very poor existence and so FDA has agreed with us that local tumor control in this population provides benefit sufficient to warrant a registrational application if we're successful, the challenge has been enrolling patients in the U.S.

so we've gone to Europe. As you know, we've talked about new dignity studies expected to start up in quarter three of this year, has been slowed down a little bit, mostly because of our focus on GEN-1 and the OPTIMA study. Again, we expect to be up and running at quarter three. This is a Simon two-stage; I believe 70-patient study.

We expect the first interim efficacy and futility analysis by mid-2017 on the schedule that we are currently looking at. So we remain very excited about the therapeutic programs and our potential and look forward -- really look forward to presenting update since we've progressed in advancing our pipeline.

So with that I'm going to turn the call over to Jeff who will review our financial results and then I'll come back with a few final comments before questions.

Jeff?.

Thank you, Mike. Our balance sheet is well capitalized, we continue to operate in an efficient manner. We ended the second quarter with over $14.5 million of total cash and investments compared to $20 million in cash at the end of 2015.

In June we completed a small registered direct stock offering yielding gross proceeds for the company, $6 million, while we were hopeful of raising more capital in this very difficult market, we were also mindful of dilution to our shareholders. So we opted for the current financing structure to minimize that warrant coverage.

The offering was completed with one institutional investor who led the option to acquire an additional $6 million during the first half of 2017 if our share price improves in line with anticipated development milestones we expect in the second half of this year.

For the second quarter ended June 30, 2016, we reported a net loss of $4.5 million or $0.19 per share, compared to a net loss of $5.7 million or $0.27 per share in the second quarter of 2015.

For the six months ended June 30 of this year, we reported a net loss of $10.2 million or $0.43 per share, that compares to $12.7 million loss in last year for the same six month period. Cash used for operations in the first half of 2016 was $9 million, that compares to $11.6 million in the same period last year which is down over 22%.

Of this $2.6 million decrease was the result of cost reduction efforts implemented last year, a tighter product development focus and prudent cash management. We operated with a lean organizational structure with over 80% of our spending is directed to research and development activities.

Historically, our cash usage in the first quarter of each year is the highest due to certain one-time payments. We expect our quarterly cash used for operations be approximately $4 million for the balance of the year. We continue to monitor our cash expense just to ensure the most efficient use of cash to create shareholder value.

R&D cost was $3.3 million in the second quarter of 2016 compared to $3.6 million last year. R&D cost was $6.8 million in the first half of 2016 that compares to $8.1 million for the same period last year.

Our R&D expenditures this year will be focused on the continued enrollment and treatment of patients and in the Phase III optimal study, the enrollment of patients in the Phase I of Ovation study using GEN-1 to treat ovarian cancer, can push your pre-clinical IND supporting studies for GEN-1 in combination with Doxil and Avastin in plasmid resistant ovarian cancer and the production of clinical supplies to support the clinical initiatives.

General & Administrative expenses were $1.5 million in the second quarter of this year compared to $1.8 million last year. G&A costs were $3.4 million in the first half of 2016 compared to $3.8 million last year.

This decrease was primarily the result of lower insurance premiums, lower personnel and operating costs resulting from the reorganization and staff reductions announced in the second half of last year and a tighter clinical development focus on these programs that we believe will drive shareholder value in the near term through the first planned interim read-out of the pivotal Phase III optimal study anticipated in 2018.

I will now turn the call back to Michael..

Well, thank you Jeff. We always appreciate your comments. I would like to make one last point before moving on to questions and I think it follows on to very nicely to what John is talking about. With our earnings announcement we note that our year-over-year expenses have decreased by 20%.

Once you know we continue to be vigilant, looking for opportunities to ensure efficient cash utilization while at the same time, focusing our resources on value creating progress.

So continue to evaluate our current organizational structure and align our resources and clinical programs with our near term development objectives and without sacrificing our overall strategy. We have tightened and developed our focus on OPTIMA and DIGNITY for ThermoDox in advancing GEN-1 cancer.

As a result of these actions we hope to realize additional cost reductions and annual operating expenses in the second half of 2016. Our goal is to ensure sufficient runway to achieve milestones of significance. So now, with that those are our prepared remarks. I would like to ask the operator to open the lines for your questions.

I ask that you limit your questions to no more than two to provide everyone an opportunity to participate so, operator if you would open the line for question I would appreciate it. Thank you. .

[Operator Instructions] And our first question today is from Jason McCarthy from Maxim Group. Please go ahead. .

Hi guys, thanks for taking the questions. Michael can you just give us an update on the enrollment in the optimal study, you know what percent of the study has been enrolled? Do you remain on track to complete enrollment next year and just thought I will stick in the second question now.

Jumping over to GEN-1, I know you have the third cohort of patients who have been treated, can you give us a sense of when we could see the data from that cohort and when we are going to see histology data, will it include T cells and the full immune profile? Thanks guys. .

Okay. So, let me start with your first question. I think in my prepared remarks I announced Jason that we were well over a third enrolled in the study. We continue to add new investigative sites and we have about 50% of the Chinese sites up are running. And the balance of the sites another 7 or 8 will be on board over the next few months.

In addition to that we have been exploring Vietnam and concluded that the standard of care, the quality of medicine, the capability of researchers in Vietnam to participate successfully in the Phase III study is consistent with our objectives.

We will be adding hopefully before the end of the year, maybe leading it to next year, 4 sites in Vietnam perhaps some additional sites in Europe. All that said is we are on track, we expect to have approximately 50% enrollment by the end of this year. And we are on a pace that appears that we are going to, we are going to meet that.

The overall objective is to complete the enrollment of the study by the end of 2017 or could squeak into early 2018 but at the moment, that's where we are with regards to enrollment.

We are not giving specific numbers, we think it provides too much opportunity for some inappropriate conclusions with regards to the value or potential of the study and our DMC doesn't like it frankly. With regards to the third cohort as you know, we have identified three patients. They are being treated.

The course of treatment extends over to an 8 week to 9 week period followed by surgery. The surgery that occurs usually within a week or two following chemotherapy and immunotherapy so at the earliest that we would be reporting the clinical results from these patients, probably the end of September, early October.

In the meantime, with regards to translational data we are looking at into two chunks, I guess, best way to say it. We have submitted the, our tissue samples, from the first six patients to [indiscernible] where the translational data is being evaluated. And the tissues being analyzed from the translational data.

It will take four or five more weeks before we have that available to us and the reports have been quality assured or checked for quality so I would suspect at this point, probably September before the first look at the translational data for six patients.

Our translational data from the entire study given that we decided to move to fourth cohort, we originally had conceived this trial to be three cohorts, three dose increasing cohorts.

The fourth one now and the encouragement of our investigators will, the enrollment rate, will complete the enrollment in probably treating patients high into January of next year. Then you could expect about six weeks before translational data.

So if I got there right, probably end of February, early March for the translational data from all patients that have been treated in the Ovation study.

Does that answer your question?.

It does. Thank you for taking the questions. .

Thank you. .

And next from Griffin Securities, we have Keith Markey. .

Thanks for taking my questions. I was just wondering given the data you had so far in the first two quarters, looks quite impressive.

Could you give us the thought on that, what you might be doing in the next clinical trial of GEN-1?.

So, I am going to start this answer and I am going to ask Nick to jump in because I am going to miss some of it. I am seeing the ninth commission in the room here.

Seems to me that we are seeing such a dramatic response from the first six patients, if it continues Keith and if we can develop with FDA an end-point that gives us the reasonable assumption that we can read these study results in a reasonable amount of time, it would make sense to us to continue the current new adjuvant study in an expansion format -- expanding to a Phase II at the dose or maybe with as many as 70 patients.

But that will depend on some agreement with FDA. I know our investigators are there.

Nick do you have?.

Yes. Keith this is Nick. I think these are exciting times for the new adjuvant program. As you know we get very interesting data from the baseline on these patients and then at the time of debulking we get the tissue samples as well.

So as Mike said, we are going to be in discussions with the FDA for the most efficient way to move forward in these studies so I think you just have to keep an eye on our announcements in the future as we feel with discussions but with this early data, I would imagine we should have some pretty interesting designs coming in the near future. .

Great. Thanks. And then….

Sorry, I just want to add to that. I hope you don't mind Keith. Assuming we have full support from the FDA, we are not going to assume a lot of risks without support from the FDA, it doesn't make any sense to us.

And once we have complete support, we will continue our current strategy which is to establish in dose this new edge of a study, use that as a starting dose in plasmid resistant patients. Second line, combining GEN-1 with Avastin and Doxil which is the standard of care in these patients who have failed the first line of treatment.

So that would be, we would be making the announcement I am sure following our conversations and discussions with the FDA certainly before the end of the year. .

Great. Thanks.

And then as for the follow-up, I was just wondering if you could give us an update on the early access program for ThermoDox?.

Yes. Sure, I think we have seen a great deal of interest in investigators. Like the biggest challenge for us with the early access program has been to negotiate all pricing that works for us and for the investigators. We continue to explore options to make the early access program successful and not a cash problem, a cash generator for the company.

And so, that's about Mike, that's something we can give you at this point. This early access program is important to the company and important to medicine and certainly to patients. We know that ThermoDox incorporates Doxorubicin which has been an oncologic agent for generations. Our safety profile is consistent with Doxorubicin if not mildly better.

Using ThermoDox in patients with primary liver cancer has only upside, only upside as we see it. And I think in amongst positions to have been introduced to our EAP [ph], the problem -- there is a problem, it comes down to pricing in here.

We have to be very careful that we don't set a price ceiling by providing a discount for ThermoDox in the early access program and that's about what we are dealing with at this point. .

Thank you. .

And our next question is from Ramekin [ph] from H.C. Wainwright. .

Thank you. This is R.K. from HCW. How are you doing Mike this morning? Just a couple of question. In the Heat study data you announced this morning, I believe the Chinese cohort represents close to the treatment parallel of OPTIMA.

If that's true then what's the survival benefit you saw in the Chinese cohort and is there a meeting or publication that you have been doing where you can present the full data set from this new analysis?.

Yes.

Nick, do you want to take that?.

Yes. I think your question is what is the survival data in the Chinese cohort? So, the statistics in the, when you break them out for the Chinese patients, we have well over 200 patients in the Chinese cohort which is, at that point gives us regulatory muscle and in China is consistent with the overall cohort.

And so if you look at the overall data that Mike discussed early in his presentation, it's consistent with that. But by itself, as a small breakout, we don't have the number, the numbers are little bit more unstable than the overall cohort so all I can say is that it's consistent. .

Okay. .

I would say I would like to add to that a little bit, if I can please.

So part of our strategy in working with Hisun is to have a local manufacturer for ThermoDox and I can say, just as I sat here, the product manufactured by Hisun is good as anything if not better than anything that we've produced in the U.S., state-of-the-art manufacturing, high quality and cost that provide us with gross margin potential and just works for every major market.

That said, there are two pathways as you probably know for registering a drug in China; one is a multinational company, typically requires a CPP or Certificate of Pharmaceutical Product, from an approving agency outside of China, along with the data from a global study.

Next, typically those global studies as you know are empowered for a P-value and clinical benefit that is acceptable clinical benefit. The other approach in China -- any quest around that track, we have a global study in progress called the OPTIMA study.

The other approach is submission as a local manufacturer and that's along the values of working with company like Hisun as a local manufacturer. Assuming we have a commercial license with them and that's a big assumption at this point.

We -- I believe that although the data is not enough, it's not powered enough from the Chinese cohort, there is only 200-plus patients, it's not powered enough for statistical significance. I believe as Nick pointed out, the results are generally consistent with the subgroup that we've been -- the largest subgroup that we've been following.

So that implies a two-year plus survival benefit. So we believe that there is enough here, there is enough evidence here; we have a local supplier, Doxorubicin is an approved drug in China, in their dosage form, improved significantly and it's valued to treat a highly profuse organ like the liver, HCC is a major problem in China.

If we have support from our Chinese manufacturing partner, we are likely to present evidence to the CFDA that we believe that there may be an opportunity for some consideration of -- I don't know, PV condition or some kind of opportunity to bring ThermoDox to market in China sooner rather than later.

So that's really what we're looking at in this dataset, we can provide you with a little bit more detail from the Chinese dataset.

We do have some upcoming Medical conferences, it may make sense to break out separately, although it's going to be -- has been working with medical conferences and skeptical oncologists who are all trained to be skeptical, God knows, they should be.

When you present small datasets, a P-value then it becomes sometimes a debate that you don't want to have. So, I hope that answers your question. We really go through the heart of what's the value of the Chinese cohort at this point..

Thank you.

And then on the new DIGNITY study, can you define for us the design and the endpoints that you have in the study? Again, I think you us in the opening remarks but when is it that we'll start seeing some additional data?.

I'll answer the last question first. You should begin to see treating patients, it's not a labelled study, it's powered with I believe 100 patients. As the physicians become comfortable with the findings and per patient basis for happy to report the results as we go.

The trials are organized little bit differently than the DIGNITY study in the U.S., these are patients who are little bit earlier in the treatment of their recurrence but they are still eligible for radiation. So this study is designed as a trimural therapy, it's a chemotherapy, plus thermal therapy plus radiation being the new addition.

The study will begin enrolling somewhere in the last chance here of completing some of the regulatory submissions.

The study should begin enrolling patients in the fourth quarter at the latest, and hopefully we'll begin to present results as we're going to be treating patients up to six cycles -- six weekly cycles, and then assessed for tumor response.

So it could be by the end of the year or early next year, we're reporting findings from a patient, an individual patient, individual cases. The endpoints in the study are many fold.

And maybe, Nick, if you remember the endpoints, can you talk about that please?.

Yes, so as Mike alluded to, the basic design of the study is that we're looking now at patients that are initially diagnosed with recurrent chest wall disease. And currently the standard of care in these patients is to give them radiation -- external radiation. And you typically see maybe around a 60% response rate in these patients.

We believe we can improve that once you add heat and ThermoDox to that. So the study is designed to look at those response rates, we have assigned a two-stage design, it's a Phase II, single-arm study, and I think we'll be seeing results as Mike said, relatively soon.

And I think it will be a nice boost to see greater response rates in this difficult-to-treat population..

Okay, thank you very much..

So, operator, we have time for one more question..

And that will be from Barry Rubin with Arsenal Investments..

Hi, good morning. Thank you again for the great progress, and hopefully more people will see it. And it was a pleasure meeting you at the annual meeting. Just one quick question to end the hour. The company, if I'm correct, about a year ago, I went to the previous meeting, said that maybe in the future at some point that we'd be getting a collaboration.

With all the great news on GEN-1, what's holding it up? I mean, I'm probably missing something and you'll elucidate further, but do you see anything perhaps happening this year? Or what holding back a nice collaboration with somebody?.

Okay, that's a good question. It's not for a lack of interest. I think we take calls regularly and we have an outreach program also, some business development mode presenting of the opportunity for both indications, for both drugs, both GEN-1 and ThermoDox.

I can tell you we have interest and I can tell you that that interest translates into ongoing discussions. The reason for, if I could generalize here, the reason that we haven't proceeded further, one, and with ThermoDox, we have something to prove to be honest with you, Barry.

It's a -- but the point I was making in my prepared remarks here is that this is not just a subgroup thesis that supports our OPTIMA study. We have completely encircled this hypothesis with every means to validate it that we can -- we could possibly bring to bear here.

Notwithstanding that, I think we find companies -- large pharma companies need a little more reassurance and I think that's coming. With regards to GEN-1, we might be a little early in the development cycle, the first study is at Phase I, so don't give up hope.

We're -- we see more human data our interest in GEN-1 continues, we'll continue to grow on that. The area where we had the most hope, well, I guess the most progress, was with the third platform that we did not talk about this morning, and that's with TheraSilence.

This is a platform that provides lung-specific delivery of RNA therapeutics for a variety of indications, oncology and otherwise. And we have some very solid data, preclinical data for the most part, in nonhuman primates and a variety of small animals, supported with peer-reviewed publications.

We've had more than one very interesting collaborations; one's still ongoing evaluating the RNA therapy, where we don't own the RNA IP, it's owned by the development companies.

The RNA therapeutic in an oncology setting, a lung cancer setting, we've been evaluating it collaboratively and there's always the potential here that that will result in the kind of meaningful partnership that we've been talking about..

Okay, thank you ever so much..

So I think that, given its 12 o'clock, and there's no burning questions, we're going to conclude this call with a sincere thank you to all of you who participated and I want you to know that we truly value the support that we get from our shareholders and your interest in the company.

We look forward to providing you updates on ThermoDox and GEN-1 and the rest of our research, as the company progresses in these critical areas of oncology research. So you can expect from us a continued dialogue through press releases and we look forward to talking with you on our next quarterly conference call. Thank you very much.

And with that, we're concluded. Thank you..

Thank you. This concludes today's call. Thank you for your participation and you may now disconnect..