Jeffrey Church - Chief Financial Officer, Senior Vice President, Corporate Secretary, IR Contact Officer Michael Tardugno - Executive Chairman of the Board, President, Chief Executive Officer Nicholas Borys - Senior Vice President and Chief Medical Officer.

Jason McCarthy - Maxim Group Keith Markey - Griffin Securities Joe Pantginis - Rodman & Renshaw.

Good morning. My name is Denise and I will be your conference operator today. At this time, I would like to welcome you to Celsion's fourth quarter 2016 earnings conference call. Today's conference is being recorded. 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. [Operator Instructions]. At this time, I would now like to turn the conference over to Mr. Jeffrey Church, Celsion's Senior Vice President and Chief Financial Officer. Please proceed, Mr. Church..

Thank you. Good morning everyone and thank you for joining us today to discuss our year-end 2016 financial results, which we announced this morning before the market open.

Today's call will be archived and the replay will be available beginning tomorrow and will remain available by phone until March 30, 2017, as well as available on Celsion's website for 30 days.

Before we begin the call, we wish to inform participants that forward-looking statements are 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 involving without limitation, the risk of clinical failures, delays or increased costs, unforeseen changes in the cost of our research and development activities, possible acquisition of other technologies, assets or businesses 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.

At the conclusion of today's formal remarks, we will open the call for questions. I would now like to turn the call over to Mr. Michael Tardugno, Celsion's Chairman, President and CEO.

Mike?.

Thanks Jeff. Good morning everyone and thank you for taking the time to joins us on this morning's call. With me today are Dr. Nicholas Borys, Celsion's Chief Medical Officer and Jeffrey Church from whom you have just heard, our Chief Financial Officer. As always, we are delighted to have the opportunity to update you on our progress.

Today, I would like to primarily focus on two topics. First, our incredibly important clinical trials. And second, I have a few comments on our upcoming Annual Shareholder Meeting now scheduled for May 16. And that's just two months from now. But first, before going in to those topics, I would like to comment on the status of the company.

Without a single doubt, the operating fundamentals of our company are solid. Our highly derisked Phase 3 study in the largest unmet medical need in oncology is, for the most part, on cruise control with virtually no operational risk. That doesn't mean we don't have to manage it, because we do. But all of the heavy lifting is done.

For example, we have support and validation from some of the most respected researchers and institutions in oncology. 14 regulatory authorities and dozens of IRBs have approved the trial. We have contracts for our study with 60 of the best hospitals and hundreds of investigators worldwide in liver cancer research.

We have engaged world-class CROs and data management teams to ensure compliance and high-quality analyses. We are enrolling patients on schedule at a reasonable clip, but never satisfied. We are always working to do better. We have a proven and highly reliable supply chain.

Not one, not two but three CMO's, contract manufacturing organizations, with a cost structure that all but guarantees enviable gross margins regardless of the local economy. In summary, no operational risk in the OPTIMA study. Now we wait for data.

And if you believe our many analyses supporting the study or if you have confidence in the NIH, the National Institutes of Health's opinion, then you have to agree that the chances of success are as good as it gets in our industry.

Moving on, our Phase 1 study evaluating a highly innovative gene mediated immunotherapy in first line ovarian cancer patients is all but complete. Early findings are promising. Operational risk is zero. Results will be presented at ASCO this June.

We will talk more about it later, but the clinical reports are impressive in this very difficult population. Study is all done, door-to-door in less than two years for less than $2 million total.

The European DIGNITY study of refractory breast cancer patients, a population where we have seen ThermoDox plus hypothermia provide results that are nothing short of remarkable. The study is teed up and ready to go at four institutions and soon to be five and is now just awaiting financing to initiate enrollment.

And we taken some measures to improve our cost structure. Our cost structure has been reengineered. We are operating with 30% fewer employees than just a year-and-a-half ago. All-in, spending on average is less than $1.4 million per month.

That's three studies, two products, 65 centers 17 time zones in 17 countries, virtually in every hemisphere, $1.4 million per month. My point is this. Celsion's fundamentals are sound and with our studies, there is very little risk in trial execution, CMC or regulatory compliance. With our world class U.S.

and international contract manufacturing partners, our experienced disciplined and global CROs, some of the very best in this challenging industry, you can be confident in studies that are professionally and rigorously managed and address potential $1 billion market opportunities.

If we are right, if either liver cancer, ovarian cancer study demonstrates a meaningful clinical benefit, we would expect global regulatory approval, rapid adoption and generous gross margins. Now I would like to go into a little more detail starting with ThermoDox.

ThermoDox, as you know, is our most advanced investigational product and is currently in late stage trials in both primary liver cancer and recurrent chest wall breast cancer.

During 2016, we made significant progress with our lead trial, the Phase 3 OPTIMA study, which is evaluating ThermoDox in combination with optimized RFA, optimized meaning standardized to a minimum of 45 minutes across all investigators at all sites for treating larger single lesions greater than three centimeters versus optimized RFA alone in the same population.

The study is powered with 550 patients in up to 60 or so clinical sites in North America, Europe, China and Asia-Pacific. The hypothesis for the OPTIMA study is supported with statistically significant subgroup data from the prior HEAT study, a 701 patient evaluation of ThermoDox in combination with RFA.

Now while failing to meet its PFS, progression free survival, endpoint, findings from the HEAT study have greatly expanded our understanding of RFA and the intermediate stage HCC of which I can say without reservation, we know more about RFA's clinical application in HCC than just about any other company on the planet.

Most importantly, what we have learned is that in larger lesions greater than three centimeters for RFA to be effective a minimum heating time threshold is required. This is the understanding that drives the design of what we consider to be the highly derisked OPTIMA study. Final supporting data from the HEAT study was announced in August.

In the large, well bounded, well balanced subgroup of 285 patients that represents over 41% of the HEAT study patients, a group that we have been following virtually every quarter for almost three years we see that treatment with a combination of RFA optimized at 45 minutes in ThermoDox provided an average 54% risk improvement in overall survival compared to optimized RFA alone.

All that for your status three statisticians, the hazard ratio in this analysis was 0.65 with a PO of 0.02. More simply, all this translates into a greater than two-year survival benefit of the ThermoDox arm over the optimized RFA group only. And after 80 months, median survival for the ThermoDox group still had not been reached.

The regulatory reaction to this analysis has been generally positive. No doubt, there will always be some concern with the post-hoc analyses. But during the fourth quarter, for example, Dr.

Borys and I discussed the retrospective OS analysis, overall survival analysis, of the HEAT study in the OPTIMA study design with regulatory agencies in China and Vietnam. Now I want to report to you the following.

CFDA was presented with the final overall survival data from the China patient cohort of the HEAT study, which demonstrated survival benefit equal to the general, if not better than the general population while in the study in patients treated with ThermoDox plus optimized RFA alone in the Chinese cohort of 223 patients.

Those who received optimized RFA treatment for a minimum of 45 minutes showed a 53% improvement in overall survival when treated with ThermoDox plus optimized RFA.

These findings, by the way, were highlighted in late October at the 3rd Asian Conference on Tumor Ablation, the ACTA conference, by our leading liver cancer expert and lead OPTIMA investigator, Professor Won Young Tak, at Kyungpook National University in South Korea.

During our meeting with CFDA, the agency informed the company that condition on the strength of the data, based on what we have seen so far, condition on the strength of the data, if the Phase 3 OPTIMA study is successful, the trial can serve as the basis for a direct regulatory filing in China without the need for CPT or prior approval in the U.S.

or Europe, as is customary. Those prior approvals are typically required for an NDA submission in China for a global study.

So this unique allowance allowing us to file directly underscores the significance of our work, the strength of our data to-date and will allow us to accelerate our plans by years to enter the largest market in the world for HCC and that's China.

Why is this important? So I said, China represents with perhaps the most significant opportunity for ThermoDox globally. Approximately 50% of the 850,000 new cases diagnosed each year occur in China. In this market, the largest future market for pharmaceuticals in the world, I would say that it's for you to conclude that we are well positioned.

Not only with our clinical trial, but one of those three contract manufacturing organizations is located in China, that's Hisun a premier world-class pharmaceutical company, domestic pharmaceutical company in China. Moving on, as I said earlier, Dr. Borys and I met with the Ministry of Health in Hanoi, Vietnam on a Sunday, no less.

I think that would suggest the importance of our study to the health authorities in Vietnam. And based on that meeting, we will move forward with launching additional trial sites for the OPTIMA study in Vietnam. The company now expects will have five additional clinical trial sites in Vietnam activated in April and May.

So from December to April initiating sites that's light speed in clinical trial time. with the support of the Ministry of Health and some of very committed investigators, we will move forward in Vietnam, a market that is significant for ThermoDox where HCC incidence rates are among the highest in the world.

The last point I want to make on OPTIMA and ThermoDox and this is key and it's simply this, well, the OPTIMA study continues to be supported by a growing body of peer reviewed research.

The National Institutes of Health, the NIH, conducted an independent analysis of the data from our HEAT study with its three terabytes of data and they presented their findings during oral sessions this past November at the RSNA, that's the Radiological Society of North America held in Chicago, the largest medical conference in North America and under the direction of Dr.

Brad Wood, a leading researcher in radiofrequency ablation and a director at the NIH. The NAH independently reviewed the retrospective data and sought to correlate, evaluate the correlation between RFA burn or heating time per tumor volume and the clinical outcome in patients treated with ThermoDox.

Their conclusion was both statistically significant and very straight forward and open quotes from their presentation. "As you increase RFA burn time in patients treated with ThermoDox, overall survival improves.

This is not true for patients treated with RFA alone." As you increase RFA burn time in a patient treated with ThermoDox, overall survival improves. This is not true for patients treated with RFA alone.

NIH's independent assessment provides additional confirmatory support consistent with our own findings indicating that the use of RFA for more than 45 minutes in patients treated with ThermoDox can have a correlative impact on overall survival in patients with primary liver cancer.

NIH concluded its discussion in a very well attended to a large audience, concluded this discussion with clear and convincing support for the OPTIMA study.

We believe that this analyses not only advances our understanding of ThermoDox and its potential curative implication, that's not our words we hear that from researchers and presenters quite regularly now, the curative implication of a single dose of ThermoDox in combination with controlled RFA in patients with larger lesions, larger HCC lesions, the curative potential.

It also strengthens our confidence in our ongoing global Phase 3 OPTIMA study. So we are very encouraged by the progress of the study to-date and remain on track cautiously to complete enrollment by mid-2018 with a first preplanned interim efficacy read to follow hopefully later in the same year, later in 2018.

In addition to the OPTIMA study, we have also advanced our development program in recurrent chest wall breast cancer building upon encouraging data from our earlier U.S.

trials, the EURO-DIGNITY study as we are calling it, will evaluate complete and partial responses after six cycles of ThermoDox plus hyperthermia and standard radiation treatment as well as evaluating local tumor control. Well, the study is teed up and ready to go, as I mentioned earlier at four institutions, soon to be five.

We have investigators requesting participation in the trial. It has been our decision to limit on this study start up to getting the administrative functions behind us. Enrollment will start once we secure additional funding.

And it's safe to say to say we have a very motivated group of investigators to address a form of cancer that has little few treatment options. We look forward to providing you updates on this particular study as the year progresses. Turning now to a GEN-1, our immunooncology candidate developed on our unique TheraPlas technology platform.

As you may recall, our GEN-1 is a gene mediated immunotherapeutic which recruits the entirety of the immune system to fight malignancies. GEN-1's active agent is a DNA plasmid that's coded for cytokine interleukin 12, that's IL-12. The IL-12 plasmid is incorporated into our proprietary nonviral nanoparticle delivery system.

When administered locally and by locally I mean into a body cavity like the peritoneum of the bladder or even a cavity that's been created by the surgical removal of tumor tissue, the nanoparticles invade surrounding cells.

They take over the metabolic machinery of those cells turning each into a mini factory for the sustained local production and secretion of this inflammatory protein IL-12. IL-12 is well known. It's been around for a generation. It's a protein that functions at multiple levels to activate the immune system.

First, by down regulating cells that hide the cancer, essentially taking the brakes off the immune system, those Treg cells that hide the cancer from the immune system. Second, it up regulates the production of interferon.

And as many of you know, interferon is an anti-vascular growth protein inhibiting the formation of blood vessels that support tumor growth.

And third and fourth, it powers up the innate and tumor specific cell mediated immune activity, essentially putting the immune system into overdrive, taking the brakes off the immune system, up regulating a protein that inhibits the formation of tumor supporting blood vessels and activates the cytotoxic T cells.

The first indication for GEN-1 is ovarian cancer for patients newly diagnosed with this malignancy. The prospects are dim. There is less than a 45% chance of surviving five years. One of the major reasons is diagnosis is made when patients are symptomatic. At that point, they are typically at stages three and four and the cancer has metastasized.

In trials of this population conducted by the GOG, the gynecologic oncology group, when GEN-1 is used, either as a monotherapy or in combination with chemotherapy, the findings appear to quite promising. Our Celsion sponsored first trial in this indication is called the OVATION study. It is fully enrolled, as I mentioned earlier.

This study is fully enrolled with the last two patients currently receiving neoadjuvant chemotherapy plus GEN-1 treatment and will surely undergo debulking surgery. Clinical findings and translational data from this study will be presented in June at ASCO. OVATION was initiated last year. Let me correct that. It was initiated in October 2015.

It is a Phase 1 dose escalation trial in newly diagnosed stage three and four patients, as I said.

These patients present with heavy disease burden who prior to debulking surgery are treated with up to eight cycles of platinum therapy and a taxane, the goal of which is to improve the surgical outcome by shrinking the tumor and eliminating the fluid that accompanies before drying up the ascites.

To this regimen in our trial, we are adding eight weekly cycles of GEN-1, then this cocktail platinum and taxane and GEN-1, then after this cocktail the patients are debulked or the tumors are debulked through surgery.

We have recently reported findings from the first 12 patients enrolled in the studies at the ASCO Clinical Immuno-Oncology Symposium in this past February in Orlando. And I just want to give you some highlights of what was presented.

Of the first 12 patients dosed, we saw 100% disease control rate and 75% objective response rate, as measured by RECIST. All 11 patients eligible for surgery had successful resections of their tumors, as reported by the surgeons. Six patients had an R0. Four patients had an R1. And one patient had an R2.

Overall the surgeons who meet very regularly with Dr. Borys and our study manager, they indicate their optimism for this treatment with much better than expected outcomes for these patients.

From the pathology reports on these patients of the 11 surgically treated and evaluable patients, one patient demonstrated a PCR, pathologic complete response, which is very rare in this indication. A pathologic complete response is typically associated with over 70 months of survival benefit.

So one patient demonstrated a pathologic response, five demonstrated a micro pathological response, where viable tumor tissue is only seen under a microscope and five demonstrated a macroPR. So I tried to put it in perspective for you. The observation of our surgeons is highly optimistic view of the therapy.

Their point is, these are much better than expected outcomes in this patient population. Small numbers, but impressive. And from the labs, we reported in past conference call, all 11 patients who have completed treatment and follow-up experienced dramatic at greater than 90% drop in a cancer antigen 125.

CA-125 is present in greater concentrations in ovarian cancer cells than in other cells. Notably 50% reduction in CA-125 levels in this patient population is considered to be meaningful. And we have seen virtually in every patient a greater than 90% drop.

We also reported preliminary translational data from the OVATION study focusing primarily on the treatment related changes in the immune activating and the immune suppressive T-cell populations in tumor tissue and the levels of relevant cytokines in the tumor fluids, the ascites that accompany the tumors, the fluid in the belly that accumulates as this malignancy advances.

Specifically what was reported is that GEN 1 plus neoadjuvant chemotherapy, that's taxane and platinum chemotherapy resulted in a dose dependent increase in interferon gamma. Interferon, as we have talked about earlier, has the effect of decreasing VEGF levels, which reduce the potential for vascular growth.

This outcome is consistent with results obtained from recurrent ovarian cancer populations treated with GEN-1 in the past and in combination with standard chemotherapy and in previous preclinical models that the company has conducted.

Also reported was an immunohistochemical analysis of tumor tissue for various T-cell populations showing a reduction in immunosuppressive T-cell phenotypes in most patients. The ratio of the cytotoxic T cells to the immunosuppressive T cells.

So ratio of the cytotoxic, the active anti-cancer cells to immunosuppressive cells, that ratio was increased in the majority of patients. A very promising outcome.

And in plasma samples, blood samples, there appears to be no significant change in T-cell density following treatment, reducing the concern for systemic cytokine toxicities essentially improving the safety profile. The local treatment stays local.

These promising findings demonstrate and tend to support our hypothesis that GEN 1 plus neoadjuvant chemotherapy will reprogram the immune microenvironment towards a more potent antitumor response. The next step in our clinical strategy combines GEN-1 with Avastin and Doxil in second line patients in platinum resistant patients.

The preclinical data supporting our strategy were presented at AACR showing that this three drug combination demonstrated 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.

Assuming we have a dose from OVATION, we remain on track for an IND submission for a Phase 1/2 clinical trial in recurrent ovarian cancer by year-end. And if we are right, future trials will have the possibility of combining GEN-1 with one of the most successful oncologics ever, that's Avastin, a $6 billion drug.

Before I turn the call over to Jeff for review of our financials, I want to comment on our Annual Shareholder Meeting. Well, the meeting this year, as I mentioned earlier, will be held on May 16. That's a month earlier than usual. I want to make you aware of that. For those of you who would like to attend, we encourage you to do so.

The location this year will be in Princeton, New Jersey. As we are approaching the conclusion of our Phase 3 HCC study, the OPTIMA study, now just 18 to 20 months before first interim data, this meeting takes on more significance. Importantly, the proxy will include two issues for shareholders to consider.

First, a vote to authorize the Board to affect a reverse split and I stress only if we needed ensuring that the company remains in compliance with our NASDAQ listing requirements. Of course you know, the liquidity of our shares and our ability to raise capital will depend on approval on this proposal form our shareholders.

The second proposal that I want to want to mention authorizes the company to issue more than 20% of our unaffiliated shares in a financing transaction of up to $25 million with the potential for this, if the conditions warrant, the objective of this one-time authorization is to minimize if not eliminate the devastatingly small iterative financing to which the company has been recently limited.

Shareholder support could not only get us to a more positive financing environment, it may well finance us properly for first data from the OPTIMA study. So the proxy will go out at the end of this month. We have outlined these issues in some detail. I will ask you to read the proposals very carefully. As always, your support is appreciated.

Now I will turn the call over to Jeff for review of financials.

Jeff?.

Thank you Mike. We continue to operate in an efficient manner with a focus on advancing our two lead product candidates through clinical testing. We ended the fourth quarter with $4.3 million in total cash and investments.

In February 2017, we announced a secondary public offering with both institutional and retail investors whereby we raised gross proceeds of $5 million to fund operations into mid-2017. We continue to monitor our cash expenditures to ensure the most efficient use of cash.

Our clinical development focus is squarely on the enrollment of our pivotal Phase 3 trial for ThermoDox in primary liver cancer and the earlier Phase studies for GEN-1 in ovarian cancer.

We will need to strengthen our balance sheet by accessing the capital equity markets, smart utilization of our ATM facility and through potential strategic investments and collaboration. With additional funding, we expect to initiate the Phase 2 EURO-DIGNITY study later this year.

During 2016 and in the first quarter 2017, we completed three financing yielding gross proceeds to the company of approximately $13 million. While we were hopeful of raising more capital in terms more favorable to the company and its shareholders, the current capital market has been very challenging for smaller cap biotechs.

We are always mindful of dilution to our shareholders and are currently exploring various financing alternatives with more fundamental investors who see Celsion as a long-term investment opportunity. Cash used for operations in 2016 was $18.4 million. This compares to $20.8 million in the prior year. So the cash utilization was down over 12%.

This $2.4 million decrease was a result of our cost reduction efforts implemented during 2016, our tighter product development focus, as I mentioned earlier and prudent cash management. We operate with a lean organizational structure with now less than 20 full-time equivalent employees.

Over 75% of our spending is directed to research and development activities. We expect our quarterly cash used for operations be under $4 million per quarter in 2017 and 2018. As we look forward, we believe that maintaining a strong balance sheet is important to our shareholders and to continue the strong development momentum we have built.

For the year ended December 31, 2016, we reported a net loss of $22.1 million or $0.85 per share, compared to a net loss of $22.5 million or $1.03 per share in the prior year. We continue to evaluate our current organizational structure and have aligned our resources and clinical programs with our near-term development objectives.

We have tightened our development focus for ThermoDox on the OPTIMA study. We will continue to advance GEN-1 in ovarian cancer. We have to realize additional cost reductions and annual operational costs going forward into 2017.

R&D costs were fairly constant year-to-year 2016 to 2017 with the continued enrollment and treatment of patients in the Phase 3 OPTIMA study that more than increased our R&D cost as would be expected.

The completion of enrollment of patients in the Phase 1 OVATION study is now complete and we will be evaluating those results mid-year, as well as the completion of our preclinical IND supporting studies for GEN-1 will be the other focus, to combine GEN-1 with Doxil and Avastin for platinum resistant ovarian cancer.

General and administrative expenses were down over $200,000 from $6.7 million in 2015 to $6.5 million in the current year.

This decrease was primarily the result of lower insurance premiums, lower personnel and operating costs, resulting from the reorganization and staff reductions previously announced and tighter clinical development focus on these programs that will drive shareholder value in the near-term through the readout of the pivotal Phase 3 OPTIMA study anticipated around the end of 2018.

Operating expenses decreased by over $200,000 in 2016 primary as a result of lower interest expense on our debt facility with Hercules. This limited facility will be paid off in the second quarter. I will now turn the call back to Mike..

Well, thanks Jeff. As always, a great overview. We covered a lot of ground. Just let me summarize by saying that, the fundamentals of our company, your company are sound. Our trials are progressing based on some very promising data. All of this is happening on a very cash efficient platform.

So now, with the conclusion of our prepared remarks, I would ask the operator to open the lines for your questions. I ask that you limit them to no more than two to provide everyone an opportunity to participate in the Q&A session. So with that, operator, please open the lines..

[Operator Instructions]. Our first question today comes from Jason McCarthy with Maxim Group. Please go ahead..

Hi guys. Hope all is well. Two questions, one for each of you.

Michael, can you give us an update on where you are in enrollment in the OPTIMA study? What percentage of that is in China? And for Jeff, can you give us a sense of what the operating expenses are going to be in 2017 now that you are operating much more efficiently, as you said? Thanks guys..

Sure Jason. [indiscernible] here to get some percentages. So the OPTIMA Study is approaching 50% enrollment, 550 patients. Of that, 50% enrollment approximately less than about 8.5%, a little over 40 patients, I believe have been enrolled in China, maybe more than that, Jason.

The number of patients being treated in China is picking up just about every day. As you know, bringing trial sites on in China has been probably the only, if not the biggest, disappointment in the study. It took us well over a year to gain CFDA approval for the study and it wasn't unique to us.

As I mentioned in prior calls, the CFDA has been backed up. At one point, I think I mentioned they had 18,000 application for clinical trials. So after a protracted time to review our study with very little comment, they approved the clinical trial following which we go through a process with each of the centers.

There are 14 identified and possibly more will join this study. Nick and I and our study team just returned from a meeting with our investigators in China. It was attended by all of the Chinese investigators, all of them along with four up to five new sites in Vietnam. I can tell you, the enthusiasm is nothing short of remarkable.

So we have got a little bit about a short or slow start out of the gate with China. I am confident, however, based on the conversation and the presentations made by our lead investigators during the meeting that the rate of enrollment in China will pick up quite substantially.

Our goal, as you probably know, is to enroll 200 patients which is a threshold, it's not an absolute but it's a threshold that the CFDA requires, typically requires for submission of an NDA. So we expect to achieve that.

If we are at a little bit over 40 patients in China, that would leave another 160 patients to recruit over the next, what, 15 months. We think that's very achievable frankly. So I hope that answers your question..

It does. Thank you..

With regard to the question on operating cost, as I mentioned, the company is operating at a level of about $1.3 million to $1.4 million per month in 2017. We expect that number to hold fairly constant as we continue the enrollment on the OPTIMA study.

As we all know, in studies like that, there is a large startup effort, but with the continued enrollment coupled with additional studies in the ovarian cancer, we think that $4 million a quarter is fairly good guidance for both 2017 and 2018..

Thank you Jeff. Thanks guys..

Yes. And I just want to add to that. So our budgeting is a very, very comprehensive. It's built from the bottom up.

I think any of you following the history of the company, when we give you a projection of cash usage, which is not typical but on occasion, when we are asked the question, I think you will find that our history of cash usage is completely consistent with the numbers that we provide you. Next question please, operator..

Our next question comes from Keith Markey with Griffin Securities. Please go ahead..

Good morning. I had a couple of questions. One pertains to the direct regulatory filing in China. I was just wondering if you could tell us whether or not the CFDA is requiring the same level of efficacy to be shown there as the FDA would.

And secondly, I was wondering if you could give us an update on the status or some details about the Phase 1 trial of ThermoDox with the Children's Research Institute? And I will turn the -- I have some questions on the ultrasound..

Yes. Two very good questions. Thank you Keith. So it's really interesting, if you were asking this question about the CFDA seven years ago, it's some eight years ago when we met them, I would not have been able to answer the question with as much confidence.

CFDA has done a marvelous job bring their standards for the conduct of trial and the evidence required for approval bringing it up to modern regulatory standards, typically very consistent with the requirements of the EMA and FDA.

So when Nick presented the trial design for the OPTIMA study to Madam Yang, the Director of CDE at the CFDA, it well received.

They spent a little bit of time talking about clinical benefit and the objective of the study which the final objective, of course, is a 33% improvement in overall survival, if I can say it that way, statisticians talk about reduction in risk for death. So 33% improvement in overall survival of the ThermoDox arm over the control arm.

I suspect that's a standard that is important to the CFDA. What Madam Yang said to us was that, just almost as I said in my prepared comments, condition on the strength of the data they would be willing to accept an application directly. So 33% improvement on patients who are living four years is not insignificant. That's over a year.

So there may be some room, I don't know that I want to bet on that, but there may be some room for some variation around 33% but the agency in China now is expecting statistical significance and you guys know how all that works.

The study has to be properly powered to show the improvement with confidence and that's what we would expect from the CFDA..

Okay. Thank you..

With regards to the Children's Hospital, I think things are up and ready to go and I don't have the latest update for you.

Are you able to comment on that, Nick?.

The only thing I could say is, as Mike says, the study is open at Children's Hospital. They are looking to recruit patients. And at this time we don't have any further details on that. But we do keep in regular contact with them. So as soon as something is out there, we will be sure to get it out there..

Great. Thank you very much..

I think in this study, we did see sometimes companies like ours are reluctant to get involved with studies that are for the most part being managed as an investigator of the study.

In this particular case and Nick might want to comment on that, there is a very compelling argument here that ThermoDox has the potential to be effective in treating the disease tissue without having the long-term effects that other cytotoxics will have, particularly in this population, right Nick?.

I mean, this study is exciting on a few levels. Number one, we are now going to learn in great detail, the activity of ThermoDox in children. So that's very important for us and also really very important for the children that have very difficult to treat tumors.

And bringing the technology of HIFU, for those of you that are not familiar with that, that's high-intensity focused ultrasound, where this can noninvasively treat a tumor, meaning perhaps if a patient is not a surgical candidate, they could use something like this that could attack a tumor, this high-intensity focused ultrasound.

Combining that with ThermoDox brings that much more efficiency and activity on to the tumor. So we are pretty excited about it. They are looking for particular cases that are difficult to treat at Children's Hospital. There is a number of other centers that are looking at this in Canada, in other parts of the country that may join later on.

So we are very happy to take part in this. This was business initiated by the doctors there and we are looking forward to getting those results. It could take a little time, but it is going to be very exciting data. Thank you Keith. Next question, please, operator..

[Operator Instructions]. Our next question comes from Joe Pantginis with Rodman & Renshaw. Please go ahead..

Hi guys. Thanks for taking the question. So I want to do a little bit more macroscopic question specifically on the NIH analyses. I guess I would ask how have those analyses resonated with peers in the HCC space, whether it be investigators on the OPTIMA study or in general? Thanks..

That's a great question. Let me just preface the answer to that, I am going to ask Nick to jump in here also, with a comment whether this is well received or not, it's just my view, the medical community gets it. They really do. They understand the value of ThermoDox.

Certainly doxorubicin is a well recognized, well understood cytotoxic, broad-spectrum cytotoxic. In our dosage form activated with showing some evidence here, very clear evidence that can be effective in difficult, very difficult indications.

Before I talk about the NIH, I alluded to the fact that investigators now presenting the data and there has been many of them, Lencioni and Tak and others. When they talk about ThermoDox, they talk about its potential to be curative in a disease that just seven, eight years ago, newly diagnosed patients have about 36 months of prediction of survival.

One of the things that the HEAT study did is, it's provided some guidance in the use of RFA, frankly, that has open RFA up to a greater number of patients with a wider range of tumors with a more beneficial outcome but the notwithstanding that, the evidence for ThermoDox is clear. It's convincing to the medical community, no doubt.

I attended the presentation. It was part of a series of discussions on HCC. The NIH data was presented by the researchers at NIH. The room held about 800 people. The room was full with people sitting on the floor and standing up in the back. At the conference, the reception to the information supported by follow-on discussion was very well received.

We presented this information to our investigators.

And I think maybe, Nick, do you want to comment on that?.

I think this is a very good question, because it addresses two very important things on how hepatocellular cancer is being treated today. And for anybody that studies this area, you are very familiar with what's called the BCLC criteria.

And what our data is doing and what the NIH data is also supportive of this is pointing towards is there should be a change in the way BCLC should be structured. And what our data is saying is that patients treated with our technology can do a lot better when heated with 45 minute RFA and ThermoDox and you could look at curing those patients.

When you look at the BCLC, they are saying, well, those patients with the intermediate size, they should be considered for treatment that just would be what's considered palliative or just sort of prolonging the life of the patients and not expecting much more.

So when you can talk to our investigators and you talk to people that are still with the dogma, there might be a little bit of a debate going on. So for us, this is a very exciting time.

And getting to the conclusion of our data that's supported in this forward-looking manner in our current study could potentially change how HCC is going to be treated. So that's recognized by our investigators. That's increasingly recognized by the people at the NIH with this new data.

And I ask you to wait for the full paper to come out, which we are expecting and I think we are going to be changing things the way HCC is treated. So I think this is exciting times for us..

Yes. And I will add just maybe a couple more comments to show that are relevant as I am thinking about your question. We have had a few skeptics in the tumor review boards that assess patients and their eligibility for a trial. And they are typically surgeons whose first reaction to the lesion is to cut it out.

And so we compete our trial, in many cases, compete with surgeons for patients.

I think there is more than one example where the evidence now supports not only our analyses, in multiple analyses of the supporting data for OPTIMA, but now the evidence is supported with the NIH's conclusion that there is more than one example here of study sites now being more productive, particularly in Europe.

In Germany, the NIH information I think has had a very positive impact, for example. In Italy, there have been two conferences held.

At the request of our investigators, local conferences, where they invite symposium, let me call them that, where they invite their referring community to these attachment hospitals, these big institutions where they treat difficult cancers.

So in Pisa, for example, they invited some 30 referring physicians to the symposium to review the study design, the internal data that supported it and a good overview of the data provided by the NIH. And as a result, we are seeing more productivity in Pisa.

Similarly, a hospital in Rome, Italy, at a company called Mio Live and I forgot exactly what Mio Live stands for. That's interventional oncology something, Mediterranean Interventional Oncology. It's a local symposium. It's held annually. They asked us if what we would provide the data for discussion on the trial.

And it asked specifically for us to include some of the NIH's observations and the nature of their design. So I am just adding to what Nick said. I think the NIH's analyses, in a way that's completely different than we look at it, has had a positive effect across the board with our investigators and the medical community generally..

That concludes today's question-and-answer session. Mr. Tardugno, at this time, I would like to turn the conference back to you for any additional or closing remarks..

Thank you operator and thank all of you for joining us today. We covered a lot of ground. As I said, our fundamentals are sound. Our trials are progressing with a lot of confidence from your management team on data that we think is as good as it gets in our industry. We hope you share that view.

Please, if you ever have any questions or comments with regards to data supporting our clinical programs, feel free to reach out to us. We are operating at a cash efficiency level that I think has the potential to be the envy of our industry. With that, we remain very excited about the potential of our programs.

We look forward, as always, to providing you with updates as we advance these programs and the development on what could be one of the most promising pipelines in chemotherapy and in the future of medicine and immunotherapy.

We value your support in this common goal that we have for delivering innovative oncology therapeutics to address some of the most important cancers of our lifetime. Well, the proxy for this year will be in the mail soon. As I mentioned, there are some important issues for our shareholders. And we ask you to read it carefully.

And as always, we are available to answer questions. We certainly appreciate your support. Thank you again for joining us for today's call. And with that, the meeting is adjourned. Thank you..

That does conclude today's presentation. Thank you for your participation. You may now disconnect..