Jeffrey Church - Senior Vice President and Chief Financial Officer Michael Tardugno - Chairman, President and Chief Executive Officer Nicholas Borys - Senior Vice President and Chief Medical Officer.

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

Good morning. My name is Isaac and I will be your conference operator today. At this time, I would like to welcome you to the Celsion first quarter 2017 earnings conference call. [Operator Instructions] At this time, I would like to turn the call 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 first quarter 2017 financial results, which we announced this morning before the market opened.

Today's call will be archived and a replay will be available beginning tomorrow and will remain available by phone until May 26, as well as available on Celsion's Web site for 90 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 risks and uncertainties including without limitation, the risk of clinical failures, delays or increased costs, unforeseen changes in the cost of our research and development activity, 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?.

Thank you, Jeff. Good morning, everyone and thank you for taking the time to join us. With me today on today's call is Dr. Nicholas Borys, Celsion's Chief Medical Officer, and Jeffrey Church, our Chief Financial Officer, from whom you just heard.

As always, we are delighted to have the opportunity to update you on our progress and importantly, to answer your question.

Seeing that our last conference call was less than six weeks ago and that we are just a few days away from our annual shareholder meeting, today's prepared remarks will be relatively brief and maybe a bit repetitive, but I hope that you will agree with me that some things, particularly good things like you will hear today are worth repeating.

Before getting started, however, I want to remind you that we have a number of important proposals to be acted upon during the annual shareholder meeting on this coming Tuesday, May 16.

The affirmative vote on each of these issues is recommended by your board of directors as they set the stage for the most important of future developments from your company. By this time next year we will be approaching full enrollment of our Phase III OPTIMA Study in primary liver cancer, also known as HCC or hepatocellular carcinoma.

We are now likely 18 to 20 months from the first preplanned interim analysis of overall survival. Assuming positive data, this event will no doubt be transformative. In support of these objectives, a proxy was mailed to you -- the proxy that was mailed to you includes two very important enabling proposals for shareholders to consider.

First is a proposal to authorize the board to effect a reverse split, ensuring that the company remains in compliance with NASDAQ listing requirements. The liquidity of our shares and our ability to raise capital will depend upon approval of this proposal by our shareholders.

The second proposal authorizes the company to issue more than 20% of our unaffiliated shares in a financing transaction of up to $25 million, with authorization for a discount as conditions warrant.

The objective of this one time authorization is to minimize, if not eliminate, the devastating small iterative financing to which the company has been recently limited. Shareholder support not only could get us to a more positive financing environment, it may well finance us properly the first data readout of the OPTIMA study.

The proxy was mailed to shareholders in early April. If you have not received it, please call and call right away. You can find our number on our Web site at www.celsion.com. We will help you to quickly register your vote if you should call. One last time. Vote matters. It's important. If you haven't done so, please vote.

On behalf of your board, I want you to know that your support is appreciated. Now with that public service announcement behind us, I want to focus my comments on our two very important product candidates, ThermoDox and GEN-1.

And this maybe a bit repetitive, as I mentioned during our year-end earnings call, the fundamentals of Celsion are sound, no doubt are sound. From an operating perspective, it's my view that we have never been in a better position. I want to share some examples of why you should believe this is so.

First, number one, operational risk associated with our Phase III OPTIMA study is virtually non-existent. This highly de-risked study of ThermoDox plus RFA in newly diagnosed HCC patients, which represents, as you know, the largest unmet medical need in oncology. This study is being conducted in an exceedingly professional and efficient manner.

And all of the heavy lifting has been done, including the following. We have established unparalleled support from the medical establishment and are conducting the OPTIMA Study with a public backing from some of the most respected researchers and institutions in the liver cancer world.

15 regulatory agencies from across the globe in all the major HCC markets, have reviewed and approved the OPTIMA study protocol. We have clinical trial agreements with some 70 of the leading hospitals dedicated to liver cancer research, backed by hundreds of highly respected investigators worldwide.

We have engaged internationally recognized world-class CROs, contract research organizations, and data management teams to ensure [GCP] [ph] and protocol compliance and high quality data analysis. We are enrolling patients on schedule at an excellent pace. But never satisfied, we are working always to do better.

We have a proven and highly reliable supply chain with three contract manufacturing organizations. One in China, two in the United States, that’s three, registered and capable to produce ThermoDox, providing a cost structure that all but guarantees enviable gross margins regardless of the local economy, regardless of the country.

So in summary, with minimal operation risk, we are now looking forward to study completion and data.

If you believe our many analyses that support the OPTIMA study or if you have any confidence in the independent opinion of the National Institute of Health, then you should have to agree that there are chances of success with our OPTIMA study is as good as it gets in our industry.

A second example that our fundamentals are sound is in the execution of the OVATION. This is a Phase I study evaluating our highly innovative gene mediated immunotherapy, GEN-I in newly diagnosed ovarian cancer patients. This study is all but complete. From it we now know almost with certainty that GEN-I has significant promise.

There is no doubt that the production of therapeutic IL-12 in this patient population is dose related. We also see a clear relationship between dose and the activation of key elements of the immune system. More promising and importantly early clinical findings appear to tie this translational data to -- translational data tied to clinical finding.

Our findings from the OVATION study will be presented by our lead investigator, Dr. Premal Thaker, Professor of Medicine at Washington University in St. Louis, at the 2017 ASCO annual meeting this coming June in this very difficult to treat patient population.

An important Phase I study with a novel approach to harnessing a potent anti-cancer cytokine, IL-12 is all done door to door in less than two years for less than $2 million in total. I will give you a third example.

It's the European DIGNITY study, a refractory breast cancer patient study of population where we have seen ThermoDox plus hypothermia provide results that have been nothing short of remarkable. The study has been teed up. All the administrative IRV contract and protocol training and review issues have been completed.

Study is ready to go on five institutions in Europe and Israel, now just awaiting financing to initiate enrollment. The fourth examples is the work that we have done with our cost structure. The cost structure has been reengineered. Jeff Church will go over in some detail with you what that means financially.

But we are operating with 30% fewer employees than just 18 months ago. 30% fewer employees than just 18 months ago. All-in future spending on average will be approximately $1.3 million per months.

And that covers three clinical studies including a global Phase III pivotal trial, maintenance of two investigational products, not an insignificant task by any means, conducting trials in more than 75 clinical centers across 17 time zones in 17 countries.

So I hope that you agree with me and our fundamentals are sound with very little operational risk in trial management, PMC or regulatory compliance. You can be confident that our studies are professionally and rigorously managed and we are addressing potential billion dollar market opportunities.

And if we are right, these are the primary, liver cancer study OPTIMA, our ovarian cancer program demonstrates a meaningful clinical benefit. In our well controlled studies, we would expect global regulatory approval, rapid adoption and generous gross margin.

I would like to go into a little bit more detail with regards to ThermoDox, Phase III OPTIMA study has passed the midway point, on a track to complete enrollment of 550 patients on around the end of the second quarter next year. Our target is newly diagnosed, primary liver cancer patients or HCC, hepatocellular carcinoma patients.

We are evaluating the potential OS benefit of ThermoDox plus standardized RFA, as a first line combination treatment. The study is powered to show a 33% reduction in the risk for death. If achieved, ThermoDox will represent the only non-surgical curative option for HCC patients.

That’s a single dose of ThermoDox plus RFA properly administered, being potentially curative. So it's being conducted in over 60 clinical sites in North America, Europe, China and Asia.

A hypothesis for the OPTIMA study, I am continuing to say this is highly de-risked study, the hypothesis is supported with statistically significant sub-group data from or prior HEAT study. A 700 patient evaluation of ThermoDox in combination with radiofrequency ablation or RFA.

Failing to meet is PFS endpoint, as progression free survival endpoint, the multiple analyses and findings from our preclinical studies have shown the RFA to be effective in larger lesions, a minimum heating timing threshold is required. This finding is consistent.

With our understanding of the engineer design limitations of RFA and with ThermoDox's mechanism of action. This is understanding that has driven the design of, again, the highly de-risked OPTIMA study.

The final data supporting the OPTIMA study was derived from a subgroup of patients with single lesion, was treated with RFAs standardized for greater than 45 minutes.

In this large well bonded, well balanced subgroup of 285 patients, a group that we followed for over three years, received a treatment with a combination of ThermoDox and standardized RFA that’s greater than 45 minutes. Provided an average of 54% risk improvement and overall survival. The hazard ratio in this analysis is 0.65, with a p value of 0.02.

Simply put, this translates into a greater than two year survival benefit from the ThermoDox arm over the optimized RFA group only. And after 80 months, the median overall survival for the ThermoDox group still had not been reached.

Historically, median time to death in this population is around 36 months and 57 months in a comparable group from the HEAT study. The regulatory reaction for this analysis has been generally quite positive. No doubt, there will always be some concern with post-hoc analyses. But during the fourth quarter, for example, Dr.

Borys and I discussed the supporting data in the OPTIMA study with regulatory agencies in China and Vietnam. We reported on these meetings and just want to review with the conclusions or the results from these meetings again with you.

CFDA, the Chinese food and drug administration informed the company that conditioned on the strength of the data, if the Phase III OPTIMA study is successful, this trial could serve as the basis for a direct regulatory NDA filing in China without the need for prior approval in the U.S. or the European Union.

Now this prior approval, known as CPP, which is currently required for foreign companies to file an NDA in China. So this allowance underscores the significance of our work as we interpret it. No doubt that will allow us to accelerate our commercial plans for China.

Why is this important? Well, as you know, as we have said, China represents what is perhaps the most significant market opportunity for ThermoDox in the world, as approximately 50% of the 850,000 of more new cases diagnosed each year originate in China in this market. The future largest market for pharmaceuticals in the world.

I have to say to you, I believe, I hope you agree the company is well positioned. And as I discussed on the year-end earnings call, last November, Dr. Borys and I also met with the Ministry of Health in Hanoi, Vietnam and I am fond of saying that that meeting occurred on a Sunday. That’s how interested they were in meeting with us.

Based on the very positive meeting, we received regulatory approval to initiate five additional clinical sites in that country and record time. The clinical team, that was in November, our clinical team has already activated four sites. They are enrolling patients in a productive manner.

The clinical team active expects to activate the fifth and final site in Vietnam in the next few weeks. Why is this important? Vietnam represents a significant market for ThermoDox for HCC incident rates are among the highest in the world. And the last point I want to make on OPTIMA and ThermoDox, and this is a key point. We have talked about this.

The OPTIMA study continues to be supported by a growing body of peer reviewed research. And I will point to the national institutes of health, to conduct an independent analysis of the supporting data on their own. As for the data, we didn’t ask them to do this.

They presented their findings during oral sessions at the RSNA conference in Chicago last December. But the NIH in their analysis, independently saw to retrospectively evaluate the co-relation between RFA burn time, that’s the dwell time, 45 minutes that we talk about.

They evaluated that per tumor volume and compared to the clinical outcome in patients treated with ThermoDox as compared to patients treated without ThermoDox.

Now their conclusion was both statistically significant and very straight forward and I quote from their presentation, "As you increase RFA burn time in patients treated with ThermoDox, overall survival improves. The same is NOT TRUE for patients treated with RFA alone." The NIH's independent assessment provides additional confirmatory support.

I hope you agree, consistent with our own findings, indicating that use of RFA for more than 45 minutes in patients treated with ThermoDox in lesions of course larger than 3 cm, is our focus group, who are enrolling in our study.

In these patients treated with RFA for more than 45 minutes with the addition of ThermoDox can impact favorably overall survival. In this presentation, as I have represented, what was a full house, very large presentation room. My guess is well over 500 attendees.

The NIH concluded its discussion with very clear and convincing support for the OPTIMA study. So this independent analysis strengthens our confidence as I believe it should yours. Now as in a sight, in talking about the NIH, they continue to evaluate many potential applications for ThermoDox.

I think their excitement with this very unique and novel means of delivering known chemo-therapeutics in the case of ThermoDox, doxorubicin, I think their excitement is something like I have never seen. They have recently published preclinical results of ThermoDox for the treatment of bladder cancer in the International Journal of Hypothermia.

The article describes the results of in vivo pig studies to evaluate ThermoDox in combination with hypothermia for targeted drug delivery to the bladder walls as a potential treatment for bladder cancer. A very underserved population.

Doxorubicin accumulation and distribution within the bladder wall with ThermoDox has a function, plus mild bladder hypothermia was achieved a concentration ten times higher than with free intravenous doxorubicin combined with mild hyperthermia.

So the mechanism as have been talking about for years now is clear that ThermoDox administered systemically, intravenously, warm with the mild hypothermic to the bladder increases the drug concentration in the wall of the bladder. The muscle wall, the tissue of the bladder ten times greater than free doxorubicin.

With approximately 90,000 instruments in the U.S., this is an important unserved need and the data that we are looking at could very well provide a basis for clinical program of ThermoDox and bladder cancer. More to come on that issue. Dr.

Borys Nick and I are meeting with key opinion leaders at the [ADA] [ph] conference this weekend to discuss the potential for clinical research. And by the way the meeting that these KOL, key opinion leaders, in bladder cancer research have [indiscernible] asked us to conduct.

Based on their research, the NIH is no doubt, as I said earlier, excited with ThermoDox in addition to HCC bladder and some work they have done on recurring chest wall breast cancer. The NIH is now conducting a phase II study in pediatric solid tumor patients at the children's hospital. Pretty exciting story.

So now, let met turn to GEN-1, our immuno-oncology candidate developed on our TheraPlas technology platform. As you may recall, Gen-1 is a gene-mediated immuno-therapeutic which recruits the entirety of the immune system to fight malignancy. Gen-1 active agent is a DNA plasmid that’s coded for the cytokine interleukin 12, or IL-12.

The IL-12 plasmid is incorporated into this TheraPlas platform. It's a non-viral nanoparticle delivery vector.

When administered locally into a body cavity like the peritoneum of the bladder or even a cavity that's been created by the surgical removal of a tumor mass, these nanoparticles invade the surrounding cells and take over the metabolic machinery turning each of these cells into a mini factories for the sustained local production of IL-12.

It's a protein, [indiscernible] inflammatory protein, well know to recruit the immune system to fight cancer. Our first indication for GEN-1 is ovarian cancer, as we have talked about. For patients newly diagnosed with this malignancy there is less than a 45% chance of surviving five years.

One of the major reasons is that diagnosis is made when patients are symptomatic, at stage three or more, when the cancer is advanced. In trials of this patient population conducted by the GOG, prior to our involvement, the GOG was handling all the clinical trials, it's the gynecologic oncology group. They are a cooperative funded by the NIH.

So in these trials when GEN-1 is used either as a monotherapy or in combination with chemotherapy, the findings appear to us to be quite promising. So much so that we continue the research. Celsion's first trial in this indication, we called the OVATION study. This is fully enrolled with the last patients currently being evaluated for treatment.

Initial clinical findings and translational data will be presented in June at ASCO. We are also following these patients for an important regulatory endpoint of progression free survival. OVATION was initiated in the fourth quarter of 2015. So it’s less than two years ago.

It's a Phase I study in newly diagnosed stage three and four over cancer patients, late stage patients. Individuals who unfortunately have large tumor mass in the abdomen.

So these patients present with heavy disease burden prior to debulking surgery which is indicated they are treated with up to three cycles of carboplatin and taxane, the goal of which is to improve the surgical outcome by shrinking these tumors and drying up the ascites.

So in this population, to this regimen we are adding eight weekly cycles of GEN-1, which is then followed by the interval of debulking surgery. I want to review quickly. We issued a number of press releases here. So I will review quickly a summary of the data that we have issued via press releases during 2016 and 2017.

So with this I will remind of the first 13 patients dosed, we saw 100% disease control rate and a 92% objective response as measured by RECIST. All 13 patients had resections of their tumors, as reported by the surgeons. 54%, 7 patients had an R0 resection. That’s a margin negative resection.

Four patients had an R1 resection and two patients had an R2 resection. I provide the accounts from the surgeons whom we talk to quite regularly. They are highly optimistic with better than expected outcomes in these patients, again with advanced disease.

From the pathology reports of the 12 surgically treated protocol, one patient demonstrated a pathologic complete response, very rare in this indication. So the surgeon found no evidence of cancer and in the pathology it appeared that there was no living cancer tissue.

One patient demonstrated a pathologic complete response, six demonstrated a micro pathological response and five demonstrated a macro response. These numbers are small but better outcomes than what had been anticipated based on the historical understanding.

The patients at this stage are small numbers but again quite impressive based on what was expected or anticipated from the surgeons and from the literature. None of the patients lapsed. All 11 patients who completed treatment follow up experienced a dramatic, that’s a greater than 90% reduction drop in the cancer antigen protein 125.

CA-125, as we have talked about, is present in higher concentration in ovarian cancer cells than in healthy cells. A 50% reduction is considered meaningful, clinically meaningful. In all of our patients, greater than 90% drop.

So we have also reported preliminary translation data from the from the OVATION study focusing primarily on positive treatment of related changes in the immune environment and tumor tissue and in the tumor ascites that accompanies tumor mass.

These data demonstrate clearly dose dependent increases NIL-12] [ph] and interferon and corresponding decreases in VEGF. VEGF as you know is part and parcel responsible for advancing vascular growth that support tumor expansion. So a decrease in VEGF can be meaningful, [indiscernible] growth that supports tumors.

We also saw in increase in the tumor tissue of tumor fighting T cells and a corresponding decrease in Treg cells. These Treg cells are responsible for suppressing the immune system. It's just a quick summary of GEN-1 and ovarian cancer patients from our study.

It is biologically active, appears to have an immuno-stimulatory effect in the perinephric fluid is a does dependent manner. It promotes a protein cell activity in tumor tissue taking the brakes of the immune system by decreasing the Treg cell. All in all, I would say from the Phase I study, we are pretty impressive.

So the next step in our clinical strategy assuming -- and this is involving seeing such positive data set coming out of this study, we may evolve our thinking with regards to the next steps.

But as of now, assuming we have a dose from the OVATION study, we will remain on track for an IND submission for a Phase I/II clinical trial, combining GEN-1 with the Avastin and Doxil in the recurrent population of ovarian cancer patients. So with that, now I will turn the call over to Jeff who will review our financial results.

Jeff?.

Thank you, Mike. During the first quarter of 2017, we continued to efficiently utilize our cash as we effectively our clinical development activities. We remain confident in our ability to continue to manage our personnel and overhead cost while we focus on advancing our two lead products through clinical testing.

We ended the first quarter with $4.5 million in total cash. During the first quarter we announced a secondary public offering with both institutional and retail investors, whereby we raised gross proceeds of $5 million, to fund operations in mid-2017.

Celsion's 2017 first quarter financials were included in the press release which was issued before the market opened this morning. Our first 10-Q was also filed at the same time. We continue to monitor our cash expenditures to ensure the most efficient use of cash to create shareholder value.

Our clinical focus, as Mike reviewed, is squarely on the enrollment of our pivotal Phase III trials of ThermoDox in primary liver cancer and the early stage studies for GEN-1 in ovarian cancer.

In order to fully execute the patient enrollment of the OPTIMA study, we will need strength in our balance sheet by accessing the capital markets, smart utilization of our ATM facility and through potential strategic investments and collaboration.

While we are hopeful of raising more capitals on terms more favorable to the company and shareholders, the current markets, capital markets, continue to be quite challenging. We are always mindful of dilution to our shareholders and are carefully exploring various financing alternatives.

Cash used for operations in the first quarter ended March 31, 2017 was $3.1 million compared to $4.7 million in the prior year. This decrease was the result of our cost reduction efforts implemented during 2016, a tighter product development focus as we talked about earlier, and prudent cash management. We operate with a lean organization.

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 operation to be under $ 4 million per quarter for 2017 and '18.

As we look forward, we believe that maintaining the strong balance sheet is important to our shareholders as we continue to strong development momentum we have built. For the quarter ended March 31, 2017, we reported net loss of $5.2 million or $0.12 per share compared to a net loss of $5.7 million or $0.24 per share in the same prior year period.

We continue to evaluate our current organization structure and have aligned our resources and clinical programs with our near-term development objective. We hope to realize additional cost reductions in annual operational cost going forward into 2017. Our research and development cost was $3.5 million in both the first quarter of 2016 and 2017.

Our research and development expenditures in the current quarter were clearly focused on the continued enrollment and treatment of patients in the OPTIMA study and the completion of the enrollment in the Phase I OVATION study using GEN-1 to treat ovarian cancer patients.

General and administrative expenses for the first quarter were down over $400,000 or 20%, from $1.9 million in 2016 to $1.5 million in current year.

This decrease was primarily the result of lower personnel and operating cost, resulting from the reorganization and staff reductions previously announced, lower insurance premium, and a tighter clinical development focus on these programs as we have mentioned, that we see is driving value in the near term through the readout of the pivotal Phase 3 OPTIMA study anticipated around the end of 2018.

Our non-operating expenses decreased by $200,000 in the first quarter of this year, primary a result of lower interest expense on our venture debt facility with Hercules. This limited facility will be fully paid off in the second quarter. I will now turn the call back to Mike. .

Well, thanks, Jeff. Great job. So now that’s the conclusion of our prepared remarks, I would like to ask the operator to open the lines for your questions. I will ask as always that you limit the number of questions no more than two which will provide everyone with an opportunity to participate in the Q&A session.

So, operator?.

[Operator Instructions] And we will take our first question from Joe Pantginis with Rodman & Renshaw. Please go ahead..

Couple of questions, if you don’t mind. First, Mike, you just recently announced the increased enrollment for the OPTIMA study in China and Vietnam. Can you discuss the importance of this increased enrollment and also the potential for -- I am sorry, the timelines for interim timing of the OPTIMA study. Thanks..

Okay. So the importance of enrollment in China. I think, Joe, you are hitting the two very -- I mean it's two very important markets for us. China has over 50% of the world's incidence of HCC. That’s a 425,000 patients. If we are right, I mean if ThermoDox shows a positive outcome in the OPTIMA study, we have every reason to believe that it will.

The addressable market in that population represents above 30% of those newly diagnosed. It's a big number. It's a number that overwhelms the medical community in China. Nick and I visit these hospitals. It's incredible. The number of patients that are waiting to be treated, waiting rooms are -- it's just hard to explain.

Enrollment in this country was for reasons of administrative reorganization at CFDA was held up with country approval. Not for just us, I mean everybody was applying for clinical trial. We lost almost a year in China. Regardless, we have made it up with activity in other countries. But the important thing is, for us to enroll 200 patients in China.

That’s the minimum required to submit an NDA as we currently understand it. There is some room there, I think, but for the most part the regulatory authorities have been fixing at 200 patients. So since initiating the study, which we are currently now in 14 sites, soon to be more. We continue to explore.

The enrollment rate has -- it actually surprised us. In a very short period of time, we were well over 50 patients in China. And I suspected the current rate by the time we reach 550, which is the target for enrollment in a study, again which could be about 14 or so months from now. We should be very close to 200 patients target in China.

And if we are not, we will continue to enroll new patients in the China cohort until we do reach 200. So rapid pickup. Very enthusiastic group of investigators. We have met with them in China. It is a group twice when we come again this summer. And we have great expectations for that group.

In Vietnam, we decided to include the Vietnamese market in the study later, largely as to help make up for the late start up of China, is what I said due to the delay in regulatory approval. What we found in Vietnam, was a highly underserved market. Statistics coming out of the country like Vietnam just aren't clear to us.

I mean what's reported appears to be fraction of what the incidence is. Again, we visited a number of hospitals along with the minister of health. The patients waiting rooms are overwhelmed with patients. Study enrollment there in a very short period of time. Two hospitals up and I think we have got seven or eight patients very quickly.

Our expectation is that Vietnam will contribute a substantial number of patients over the coming 12 to 14 months. Again, the goal here is to build an important market for us. We had always thought it was important market but getting a firsthand view it appears to us that ThermoDox will play a very important role in medicine in Vietnam.

Again, assuming we have a positive trial outcome. With regards to timeline. So as I said, we have exceeded the 50% enrollment point. Enrollment rate continues to improve month after month after month. This month we will likely be the biggest of all.

So we continue to be very confident that we are on the track to complete enrollment on or above the end of the second quarter of next year. Assuming that, Joe, based on the -- what we believe the death rate will be to overall survival, calculations will be based on first interim analysis. Based on 118 deaths.

P value we are looking for to unblind the study in a 118 deaths with a [indiscernible]. I am sorry, the hazard ratio, 1.6 with a p of 0.05. I think as I pointed out in my prepared remarks, the data supporting the study is essentially spot on with the 285 patients that we have been following, the hazard ratio was 0.65 with a p of 0.02.

So while there is never going to guarantees, I think we are optimistic that we will be close with first, if not, hit it directly head on with the first interim analysis..

No, thanks, Michael. The additional details. If I could just switch quickly to the GEN-1 program.

Can you discuss both the importance of the local IL-12 delivery versus systemic implication as well as the comments you made on the call versus the importance of the, I guess, you could call it the observe T regulatory decreases versus the base line in the OVATION study. And I would appreciate that. Thanks a lot..

Yes. I am going to ask Dr. Borys to chime in on this but I just want to say this, IL-12 was recognized as a [indiscernible] anti-cancer agent back in the 80s. Dr. Rosenberg Laboratory in the NIH. The problem with IL-12 has been its pharmacokinetics. It's half life [is very short.

So the protein itself administered as a therapy with a very short half life doesn’t have a therapeutic effect. It order for it to be effective, it has to be delivered in very high doses. The problem for systemic dosing of IL-12 in high doses as I understand it, is that it has some very very serious side effects, including the potential for death.

The cytokine response syndrome. So local production is important. It eliminates the potential for the cytokine storm and maybe you want to comment a little bit more on that, Nick..

That’s exactly the reason why we try to take advantage of our technology for local administration into the perineum for GEN-1, where we watch carefully to see if there is any systemic exposure through our blooded serum samples and if we see minimal to non-existent exposure in that area.

Meanwhile, to the targeted area in the perinephric fluid, in the tumors we are seeing activity. And all I can say is, keep an eye out for our posters at ASCO, we will be reporting on the details of that.

And I think, again, as Mike mentioned, our technology is able to focus the IL-12 to the targeted area where we can get very nice increased concentration. And I think the data once we publish it will be very interesting to you..

The Treg cells, so a little bit over my head here. But I think just generally, we all know that the Treg cells in their various forms, I think there is FOXP3 and others. Various forms have the effect of inhibiting the immune systems effect on malignant cells.

What we have seen in this is, not unexpectedly, it's been in the literature in early development of IL-12, is a suppression of the density of Treg cells in the immunohistochemistry samples that -- tissue samples there were taken during surgery. We compare that decrease in Treg cells to the increase in T cells.

And we see a positive ratio among this population of patients that’s been treated. We believe that positive ratio and activation of the immune system via T cells with regulation or of the [indiscernible] that are put on the immune system, we see that as a positive event. Positive data set..

And we will take our next question from Jason McCarthy with Maxim Group. Please go ahead..

And maybe I missed it as part of Joe's question. Where is the total percent enrollment in the OPTIMA study now? And my second question is related to GEN-1. What are the plans going forward for the next trial and in the OVATION study, there a couple of patients that did have R1 resections and there were some residual tumor there.

Are those patients going to be tracked for progression? Will you give us an update on all of those patients and how there clinical outcomes are going forward. Thanks..

Okay. So let take the second quarter first.

Do you want to comment on that Nick? Did you get that?.

Okay. So in our OVATION study it's part of the protocol that we are going to be following all the patients for progression free survival. So we have regular calls with the sites that review the patient status and see how they are doing. And so we will be reporting that through the months ahead of us.

So that’s, I mean particularly in all the patients, so whether they had R0, R1 or R2 disease..

So just to continue around the GEN-1 and your question, Jason. So I am probably going to get some evil eyes here, but given the, what appears to be some very impressive translational data. It seems to me, we have always talked about the next step in the development of GEN-1 going to a recurrent population.

Platinum resistant or platinum refractory patients. Combing GEN-1 with newly approved Avastin and of course Doxil.

But the clinical data along with some of this, what appears to be very impressive translational data, suggests to me, I am trying to make my case to our Chief Medical Officer and doctors here, -- or medical advisors, that continuing to treat patients with GEN-1 post-surgery maybe a very interesting way to stimulate the immune system in patients who have the potential for recurrence.

So that’s a subject I think that we would like to explore with our medical advisors. We know what we know about this newly diagnosed patient population, is that their immune system has not been severely compromised with prior chemotherapy.

Using GEN-1 in a newly diagnosed population seems to be the, or has the potential to be most effective while the immune system is still relatively intact. That fact that we have patients now where we removed substantially all of the malignancy.

In some cases with no visible or microscopic or tumor tissue left, seems to be that continuing to recruit the immune system maybe an important strategy for preventing recurrence or delaying recurrence of the cancer.

So that’s a subject that we want to discuss but in the mean time our formal answer is the step is a Phase I/II study, combining GEN-1 with Avastin and Doxil in a recurrent population. Now to your first question, where do we stand. We are not giving exact numbers. I would be more than happy to but we did so at our prior studies.

Having people constantly nagging us for numbers and trying to reverse engineer what the PFS rates were, is just not productive for investors and certainly not for the company. But I will say to you, we are well past the 50% mark in anticipation of completing enrollment over the next few months..

And we will take our next question from Keith Markey with Griffin Securities. Please go ahead..

I was just wondering if you might be able to talk a little bit about the HEAT study subgroup. Obviously, you are getting, you are continuing to follow or you did continue to follow them for a long time.

Is it fair to begin to talk about potential curative use of ThermoDox for that group of patients that you have been targeting and that were specifically in that subgroup..

You know the subject of ThermoDox being curative in this population was not -- it didn’t first come from the company. We heard more than one opinion leader when they were reviewing the data with their peers in medical conferences and a couple of symposiums that we sponsored, and most recently at the RSNA, by the way.

Where we had, following the NIH's presentation, we had one [indiscernible] one of the pioneers in our RFAs, stand up amongst this group of interventionists and others, say we think we may have a curative alternative to surgery. So it's always going to depend on the strength of the data Keith.

But in this population that we did follow for over three years. Now the study has ended. It has to end at some point. So in the patients that we follow for three years, the ThermoDox arm which represented about 50% of the 280 or so patients, about 140 patients, never reached the median and we were at 80 months.

I think the medical community considers 60 months survival to be cure.

So I don’t believe we continue to follow these patients, do we Nick?.

Yes. We are not following them..

So the manuscript for the study is written and we had a few questions coming from reviewers. I suspect we will be resubmitting it here if we haven't already. And we will be looking forward to the publication..

Very good. Thank you. And then given the very successful -- the success you achieved with that subgroup population, it would seem to be that assuming that that stands up in the OPTIMA study, you are going to have a fairly decent flexibility in pricing ThermoDox for its use with RFA. I am sure you have begun to think about it.

I know it is a bit premature. But in the area of what appears to be value based medicine that’s emerging here in the United States and has been used in different parts of the world already. I would think that, ThermoDox would offer a very competitive approach to a variety of cancers including hepatocellular carcinoma and bladder cancer possibly.

Have you given much thought to how it would be used and pricing it in various markets around the world?.

I would tell you the short answer to the question is, yes. I will give you some color although we have a lot more market research and pricing research to do the majority of the research that we commissioned, really focused on progression free survival as the primary endpoint.

And what we know from that research is that PFS, as much as I think we were looking for, you know a six month or four month improvement. Even a four month improvement in PFS was very valuable in the -- and similarly at somewhat of the discount for the European market. Probably that is valuable in the Asian markets.

We have done some follow up on the top line as to continue to give us some guidance, it's important for us to know the value of the assets, particularly in conversations with a potential licensee. So we have done a little bit more work given an overall survival endpoint.

And you know, I mean this is really -- it's pretty amazing -- if uninhibited with government controls outside the United States, the value of extending a person's life with a single dose of ThermoDox for over 80 months is almost incalculable. It’s a big number.

That being said, we are mindful of the limitations that we could be faced with in pricing ThermoDox, particularly outside the United States and particularly in economies where the standard of living is modest or third world.

One of the reasons why we developed this manufacturing capability with Hisun China, was to give us a cost of goods that would allow us to have very good margins in countries, Malaysia, Philippines, China. So very good margins. And I would say, probably close to 90 margins in those countries.

So I didn’t give you a number on pricing but we are very carefully considering both from the local economics, from the regulatory aspect. In the United States we will be mindful of the incidence rate and the demand that ThermoDox, the pressure that ThermoDox will put on the healthcare system.

I think, all in all you can carefully think of -- you can clearly think about ThermoDox as a billion drug, globally. A billion dollar plus drug globally if we do hit our endpoint..

Yes. That’s great. Thank you. I look forward to that as I am sure a lot of the investors out there.

I was also just going to follow up and ask you whether or not you have had any discussions regarding reimbursement from any of the -- in any of the third world countries or developing nations, and as well as the United States?.

Well, we have not. Just to be very Frank, we have not. We believe it's premature. I think before we set expectations, we really should know the strength of the data. Now for the most part, pricing is a function of the strength of the data.

If we set the pricing expectations too soon and find ourselves with a more valuable outcome, we maybe at a disadvantage..

And we will take our next question from Joe Pantginis with Rodman & Renshaw. Please go ahead..

I want to follow up on the GEN-1 opportunity with regard to -- you know a lot of these patients are experiencing prior chemotherapy versus the potential for immune system benefit. And I am really focusing on the potential for things like [epitop] [ph] spread and factors that would be able to impact the immune system.

And I would appreciate your insight on this. Thanks a lot..

Nick, do you want to take that?.

Yes. I am not so familiar with what you are driving at in terms of the [epitop] [ph] spread but our data does cover, going from newly diagnosed which is these patients that we are looking at right now to patients that have been platinum failures.

So we have a full range of data and looking at the immunological spectrum on this is going to be a big focus for us this year, particularly now that we have this translational data where we could look at the different markers and we could look at the impact on the regulatory cells.

So we are also mindful of the recent success with PD1s and we see a potential partnership with that. Mike also discussed before the potential application in terms of the VEGF inhibitors as in the Avastin work. So our preclinical data strongly supports that scenario.

I think there is lots of possibilities once we understand this translation data and once this PFS data comes through..

And it appears there are no further questions at this time. I would like to turn the conference back over for any additional or closing remarks..

Thank you, operator and thank all of you on the phone for joining us this morning. We certainly do appreciate your interest and your support. I can't tell you how much that helps to inspire this team.

We remain excited as I hope you take from our comments, about the potential for ThermoDox and this very novel and could be very important immunotherapy GEN-1. We are focused on these programs like laser beam.

I hope it's clear that these two product candidates are demonstrating significant potential as we approach completion of what could be one of the biggest transformational events in biotech, completion of our Phase III study perhaps as late as the end of next year.

So we are excited with our progress and look forward to providing you with updates as always. As we have information available to us and we think it's important, we will get it out to you via press releases and certainly on these calls. As always, your support, as I said in your answers, is appreciated and meaningful.

My last comment is the comment that I opened up with. Please vote. If you haven't received your proxy, we are available to you literally 24 hours. Your vote is important to us. It matters. Your board of directors as you are considering voting if you haven't, recommends that you consider an affirmative vote on all of our proposals.

So, again, thank you for joining us on today's call and we look forward to speaking with you at the shareholder meeting on Tuesday if you are there..

And this concludes today's call. Thank you for your participation. You may now disconnect..