Good day, everyone and welcome to Celsion’s First Quarter 2022 Earnings Call. My name is Alan. I will be your operator today. At this time, I’d like to remind everyone that this call is being recorded. I would now like to turn the call over to Ms. Monique Kosse of LifeSci Advisors. Please go ahead, ma’am..

Thank you, Alan and good morning everyone. Earlier today, Celsion issued a press release announcing financial results for the first quarter ended March 31, 2022. You may access that release on the company’s website under the Investors tab.

With us today are Michael Tardugno, Chairman, CEO and President of Celsion and Jeff Church, Chief Financial Officer. Following management’s prepared remarks, we will open the call for a question-and-answer session.

During this call, management will be making forward-looking statements regarding Celsion’s expectations and projections about future events. Generally, forward-looking statements can be identified by terminologies such as expects, anticipates, believes or other similar expressions.

These statements are based on current expectations and are subject to a number of risks and uncertainties, including those set forth in the company’s periodic filings with the Securities and Exchange Commission. No forward-looking statement can be guaranteed and actual results may differ materially from such statements.

In particular, there is significant uncertainty about the duration and impact of the COVID-19 pandemic. This means results could change at any time and the contemplated impact of COVID-19 on Celsion’s operations, financial results and outlook is the best estimate based on the information for today’s discussion.

Also, the content of this conference call is accurate only as of the date of the live broadcast today, May 16, 2022. Celsion undertakes no obligation to revise or update comments made during this call, except as required by law. With that, I would like to now turn the call over to Michael Tardugno, Chairman, CEO and President.

Michael?.

Thank you, Monique. Good morning, everyone. Joining Jeff and me today are Dr. Nicholas Borys, our Chief Medical Officer and Dr. Khursheed Anwer, our Chief Science Officer. Both of them will participate in the question-and-answer session at the end of the call. Jeff Church, of course, will review our Q1 financial results at the end of my prepared remarks.

While it has only been a few weeks since our year end earnings call, we have been busy as always and have much to – on which to update you.

Our Phase 2 clinical evaluation of GEN-1 in advanced ovarian cancer continues to make important progress as does our preclinical proof-of-concept DNA plasmid vaccine initiative, which I am delighted to say, is far exceeding our expectations. Let me begin the call with our lead asset, GEN-1.

GEN-1 is being evaluated in the randomized Phase 2 OVATION 2 study, a trial that combines GEN-1 with standard of care for newly diagnosed ovarian cancer patients with advanced disease.

Subjects are being actively recruited at 22 sites in the United States and Canada and with over 85% patient accrual, we continue to expect to complete enrollment in the third quarter of this year.

GEN-1 comprises our unique approach to capturing the ability of interleukin-12, that’s IL-12, to recruit the immune system in a number of very important ways to fight cancer without exposing the patient to serious systemic toxicities that have kept this promising therapy from the market for over 35 years.

The beauty of our approach is captured in our composition of matter of patents and that is to harness the capability of the patient’s own cells to safely produce therapeutic levels of IL-12 in the local region of the cancer.

Doing so, we avoid the systemic complications like cytokine release syndrome, for example, a life threatening systemic inflammatory reaction often associated with super physiological levels of the cytokine attained following recombinant IL-12 treatment.

OVATION 2 is designed to evaluate GEN-1 promise in patients whose cancer is too far advanced for immediate surgical removal and importantly, whose immune system has not yet been compromised by prior chemotherapy.

Our first line approach, as you know, requires patients, because it takes more time in many cases to enroll a patient and to reach the primary endpoint, but it only makes sense to evaluate an immunotherapy in patients with an intact immune system.

And if we are right, the progression-free survival is improved by a meaningful number of months, the patient’s outlook for a longer life will almost certainly improve. That’s our goal. OVATION 2 is supported with exciting translational data, encouraging clinical observations from our Phase 1 OVATION study.

It’s clear that the drug mechanism works as designed. Dose-dependent evaluation of the presence of IL-12 and the fluid sample from the patient’s abdomen shows a 25-fold increase and for interferon gamma, a 60-fold increase. Interferon gamma, by the way, is an important protein in this complex created by the cancer.

It has shown to stimulate cytotoxic T-cell activity and suppressed tumor blood vessel formation, starving the cancer of the essential nutrients it needs to continue to grow.

Immunosuppressive biomarkers in the same patients are reduced by clinically significant amount, as is CA 125, a cancer antigen closely associated with ovarian cancer tumor activities and a recognized prognostic indicator of disease progression.

Small patient numbers, but clinical observations nonetheless, all trend in the right direction in the OVATION 1 study, including a progression-free survival, objective tumor responses, surgical resection scores and chemotherapy response scores, again, all in the right direction.

We are further encouraged by the support that we received by the key opinion leaders in the field. As we have said in the past, the Gynecologic Oncology Group’s leadership expressing an interest in GEN-1 is partnering with us to develop a registration strategy to improve GEN-1’s time-to-market should, of course, our trial be successful.

Interest from another major comprehensive cancer center has resulted in a Phase 2 protocol combining GEN-1 with Avastin that was recently accepted by the FDA. We expect this Phase 2 study will be partially supported with non-dilutive grants.

All-in, the medical community’s interest should provide GEN-1 with a substantial commercial springboard again, should our study be successful. And we continue to be excited about this program has potential to be meaningful for patients with ovarian and other intraperitoneal cancers.

We look forward to completing enrollment and the eventual readout of PFS from OVATION 2 later next year.

Now, moving on to our proof-of-concept vaccine program, as you know, Celsion recognized some of the potential limitations of the highly effective mRNA vaccines well before the data supporting the emergency use authorization, or EUA, for COVID-19 was announced.

Among them, we can see the formulated plasma DNA approach that might have advantages in a number of areas and I will just highlight three of them. First, the potential for waning protection of the – as a function of time.

We know that the protective capability of mRNA vaccines as measured by neutralizing antibody titer steadily wears down after 6 months. I think a DNA vaccine could improve it – have a better durable protective capability over mRNA.

Second, the inherent nature of a pathogen to rapidly evolve as we see with the many variants that have spun out of the wild type COVID-19 in a very short period of time. The DNA vaccine has the potential to mitigate this problem associated with rapid evolution of the virus.

And lastly, number three, the minus 70 degree storage temperature issue that makes global distribution challenging, if not expensive.

Our goal has been and is to demonstrate that our approach of vaccine-based on a plasmid DNA incorporated into a synthetic delivery polymer and an adjuvant can address these limitations when compared to the authorized mRNA vaccines. Our progress to accomplish this in less than 16 months has been nothing short of remarkable.

We have designed and evaluated some 40 plasmid DNA vectors, some expressing a single variant antigen, other expressing antigens with multiple viral variants. We have evaluated multiple transcription elements in the gene expression cassette, with a goal of enhancing plasmid gene expression activity.

We have evaluated multiple delivery formulations in vaccine adjuvants and refining the top candidates to improve vaccine immunogenicity. We have leveraged our QC experience in bioassay capability to ensure our ability to properly and timely evaluate in vitro and in vivo data for well-designed experiments from our in-house vivarium.

In less than 2 years, the progress we’ve made is undeniable. Data from our early vaccine concepts was highlighted at the World Vaccine Congress held in Washington, D.C. in April.

These data foretell a platform that can allow for rapid design and development of vaccine with design capability to target one, two or more different pathogen variants in a single-vaccine formulation.

We presented preclinical data that has shown a single vaccine that elicits an immune response as measured by antigen-specific immunoglobulin G and neutralizing antibody levels against two variants. Our confidence in the DNA approach is based on our long experience with TheraPlas and our synthetic DNA platform and with GEN-1.

We know, for example, that DNA will actively produce antigens for a week or more and perhaps even longer in skeletal muscle. We hypothesize that longer time of expression will result in more durable protection against the subject pathogen. We will soon – we will soon see.

We know that GEN-1 is stable for up to 5 years at minus 20 degrees C and workable for weeks at normal refrigeration temperatures. We expect to see the same from our vaccine formulation.

And we are moving the program forward quickly and anticipate having proof-of-concept data by the middle of this year, mid-2022 from two COVID-19 challenge studies that are currently in progress.

All subjects in the treatment arms in these studies will receive a minimum of two inoculations, a primate and a boost, of our experimental vaccine candidates. Then the animals we exposed to are challenged with the live COVID-19 virus.

The first study is a mouse model evaluating two different doses of a vaccine candidate with a plasmid DNA vector expressing both the alpha, that’s the D614G variant or the European variant in the more advanced Delta variant.

In the second study, we’re evaluating our vaccine candidate in a non-human primate model, evaluating two different doses of the candidate expressing antigens of a single variant, the D614G variant, that’s the European variant.

This experiment includes an arm that will be followed for a minimum of 6 months, the goal of which is to establish the protective capability of our vaccine candidate at 6 months and beyond. Durability results will be available late in the fourth quarter of this year.

Importantly, this study also has an mRNA comparator arm, and we look forward to the data. Now let me move on to some of the work that we’ve been doing operationally to ensure and enhance our development capabilities.

First, we are making a minority investment in a small private company that offers an array of gene editing, gene modulation and other expression tools and services. This company has the technology to rapidly design and develop a plasmid DNA antigen vectors for both our vaccine and our immuno-oncology interests.

With this relationship, assuming we have a successful proof of concept, we expect to have the capability to construct and develop vaccines against a range of vaccine targets and their eventual variants. Along the same lines, we are executing plans for in-house plasmid manufacturing, and we’re doing this economically.

This capability will cover our clinical needs for both GEN-1 and plasmid products while providing both at a cost and flexibility and with flexibility advantages to successfully enter the commercial markets, again assuming, of course, successful trials and regulatory approvals.

I’ll close my prepared remarks by saying that our balance sheet is strong, with over $47 million in cash at the end of the first quarter. Add to that, the net proceeds from our equity raise in April of $6.5 million and nearly $3.5 million in planned future sales of our State of New Jersey net operating losses.

We have a cash position that carries us well beyond the PFS readout for our Phase 2 ovarian cancer study and among other anticipated and important value-creating milestones. We’re excited by the opportunity before us and believe we are on the path towards scientific and commercial success with two potential blockbuster approaches.

We are strategically and methodically building the capabilities internally for success, deepening our R&D bench and manufacturing capabilities, along with our longer-term view that our approach has meaningful commercial opportunity. With that now, I’ll turn the call over to Jeff Church for a review of our financials.

Jeff?.

Thank you, Michael. Details of our first quarter 2022 financial results were included in the press release we issued this morning and in our Form 10-Q, which we filed today before this call. Celsion ended the quarter with $47.3 million in cash, short-term investment and interest receivable as of March 31, 2022.

In April, we raised an additional $6.5 million in net proceeds from the sale of equity. This offering was done at the market and had no warrants. Also adding to our cash position, we anticipate an additional $3.5 million in sales proceeds from our New Jersey net operating losses in the 2022 to 2023 time frame.

We believe we are in an excellent position with respect to liquidity to support us through several important value-creating milestones. We have sufficient capital resources to fund our operations into the second quarter of 2025 at current spending projections. Let me now turn to a review of our quarterly financial results.

For the quarter ended March 31, 2022, Celsion reported a net loss of $10.5 million compared to a net loss of $5.7 million in the comparable prior year quarter.

The loss in the current quarter is not typical and should not be annualized because a number of one-time expenses were incurred, which related primarily to the Special Shareholders’ Meeting in February 2022. Operating expenses were $6 million for the first quarter of 2022, which represented a $500,000 or 8% increase from the $5.5 million in 2021.

Research and development expenses were $3.1 million for the first quarter of 2022. That was also an increase of $0.5 million or 20% from the $2.6 million in the comparable period in 2021.

These costs were primarily associated with the development of GEN-1 to support the OVATION 2 study as well as development of the plasmid DNA vaccine technology platform, which increased to $1.9 million in the first quarter of this year compared to $1.4 million in the same 3-month period in 2021.

Costs associated with our now closed OPTIMA study were $100,000 in each of the first quarters in 2022 and 2021. Other clinical and regulatory costs were $800,000 for the first quarter of the – 2022 and $600,000 in the prior year quarter. General and administrative expenses were $2.9 million in each of the first quarters of this year and last year.

Lower non-cash stock compensation expense of approximately $400,000 was offset by higher salaries and benefits, higher professional fees and hired director and officers’ insurance premiums. Other non-operating expenses increased to $4.6 million in the first quarter of 2022, which compared to $300,000 in the comparable prior year.

Interest expense increased by $4.5 million resulting from the sale and then the subsequent redemption of $30 million of Series A and B convertible redeemable preferred stock during the first quarter of 2022. With that, I’ll now turn the call back to Michael..

Thank you, Jeff. As always, well done. Now I’d like to thank everyone, our patients, clinicians, shareholders and Board members for their unwavering support as we proceed in our goal of developing our platform technologies, TheraPlas, and gene-mediated immunotherapy and PLACCINE, our vaccine initiative.

We look forward to providing you with exciting updates. And with that, I’d like to now open the call for questions and answers.

Operator?.

Thank you, sir. [Operator Instructions] We will take our first question from Emily Bodnar with H.C. Wainwright..

Hi, thanks for taking the question..

Good morning, Emily..

Good morning. Do you plan on providing any other R0 resection rate or ORR data this year? And if so, I guess, at what point? And then could you just maybe put into context the 27% improvement that you’ve seen so far in the OVATION 2 study and how that makes you more confident hitting the PFS endpoint? Thank you..

The 27% improvement is in our zero resection scores, right? That’s what you’re talking about, yes?.

Yes..

Sure. Thank you, and give – Dr. Borys to answer that question..

Thanks very much for that question, Emily. So I guess your question is how does that translate into our confidence. Number one, we get that data directly from the surgeons that are doing – that are involved in the study, and that’s something that they haven’t experienced in their routine practice.

So, they are very happy to see these patients have such a nice response as a result after the surgery. And there is data in the literature to show that patients with an R0 also do better long-term. Right now, we are at a point in our study that only the PFS data is just starting to come in. We just have just a handful of that data at this point.

We are monitoring out throughout the year. And once it comes to a point that the company feels that there is robust data for public release, that’s what I guess we will show it. But there is different conferences and meetings coming up, and we meet with our investigators regularly to review the data, and we hope to share that with you soon..

Yes. And Emily, going back to your question, R0 reporting. As investigators become confident in the results from the surgery, we compile it. We are likely to release some more data later this year. But the PFS data – the final PFS data is not due until sometime mid next year.

And I am going to apologize for stumbling here a little bit, as you probably can tell from my voice, I have a sinus infection. It’s not COVID-19 tested me multiple times this week..

Sorry about that.

And just one other question, for the GEN-1 and Avastin study, what line of therapy are you planning to evaluate that? And is that kind of the more post-platinum setting or like a maintenance therapy?.

Hi Emily, this is Nick Borys again. I will take that question as well. That study is going to be very much modeled after a current OVATION 2 study. As Mike mentioned in his introductory remarks, the idea of adding Avastin or bevacizumab to GEN-1 is data that we developed from our Huntsville development program, and it was very exciting.

So, once we show some activity and safety and efficacy with GEN-1 by itself, in addition to standard chemotherapy and first-line treatment, adding some other technologies to it could only enhance it. So, we hope to prove that in the near future by the addition of Avastin. So, we are pretty excited about that..

Okay, great. Thanks for taking the question..

Sure. Thank you, Emily..

Alright. Next, we will go to Kumar Raja with Brookline Capital..

Hi. I am Subhendu [ph] for Kumar. Thanks for the update. So, for the COVID-19 vaccine program, what are the next steps for a potential FDA approval? Are you thinking in terms of conducting clinical trials or can you share some timelines with that? Thank you..

Good question. So and I am delighted to respond to this one. So, our initial thought was that evaluating what we perceived to be some of the limitations of the messenger RNA approach. And again, this is before data, before the emergency you thought the authorization application.

We understood that there has some – there would be some potential limitations. And I outlined three of them, storage temperature, I mean that’s a commercial issue, a rapidly evolving variant and the relative inflexibility of developing related mRNA-specific vaccines.

And so we thought it was important for the company, knowing that what we know about DNA vaccine, our DNA plasmid approach, important for the company to evaluate what we thought was a potential mRNA pattern. So, we embarked on this program initiative to develop a – or to a proof-of-concept to evaluate whether our hypothesis were correct or not.

We believe that we will show in these areas of limitation an improvement in the vaccine. And so as a small company like ours, is going up against the big juggernauts who have been in the market of the COVID-19 vaccine, it would be very difficult for us to do that alone.

So, we are hoping that once we have proof-of-concept, through these NHP studies, that we will have a collaborator, co-developer for an ongoing clinical program. But more importantly, once we have established this platform capability of a DNA approach, we look to evaluate and develop vaccines for other unaddressed pathogens.

So, that’s really our goal is to establish the platform, develop a relationship with a deep pocket large pharma, who has worked in the area of vaccine commercialization and to evaluate the development of vaccines for other unaddressed potentially pandemic pathogens..

Okay. Thank you. Yes, that was useful. And just one last question, what can you share with regard to the ThermoDox studies ongoing in bladder cancer? Thank you..

Yes. So, well, I can tell you for – I just left the NIH, I spent some time with our investigators there last week. The program has not – I mean, that clinical program has not yet been initiated. Preclinical data supporting bladder cancer trial is quite robust. They are very, very interesting.

We expect that the NIH, along with support from the company, will begin a bladder cancer trial early next week – early next year..

Okay. Thank you. Thanks for taking my questions..

Alright. Next, we will go to David Bautz with Zacks Small-Cap Research..

Hi David..

Hey, good morning everyone and thanks for the update this morning. So, I got two questions on the PLACCINE technology.

The first one is, do you anticipate a superior or any type of different T-cell response to DNA vaccine as compared to the mRNA vaccine? And then kind of following up on next steps, do you foresee any type of CMC issues, manufacturing issues that will need to be handled before the vaccine can move into the clinic?.

Khursheed, do you want to take the first part of that question, please?.

Sure. So, I mean DNA is, David, historically known to elicit very potent MHC Class 1 response, which is really a T-cell response. So, that’s clearly one advantage. We expect to have more potent T-cell response, although mRNA also elicited that.

Second is the durability of gene expression from DNA is much longer than mRNA, irrespective of the antigen or the gene. So, we anticipate a longer exposure of the gene through a DNA approach versus mRNA could also maintain a prolonged T-cell response that normally veins off earlier on in the kinetics.

So, these are the two advantages to more potent and more durable with the DNA approach..

Okay. Does it cover that question for you, David? I can address the CMC portion of that, if you would like..

Yes. No, that was good for the first part. Thanks..

On the CMC side, we do have a well-developed supply chain actually supporting our GEN-1 program. We have a manufacturer of plasmids and the polymers for formulating the GEN-1 therapy, along with the fill and finish operation that’s quite robust. These are all third-party operations.

We expect to be able to leverage those relationships to produce a commercial vaccine now anytime. As I mentioned in my remarks, we are developing an in-house capability to produce plasmids. Probably not in sufficient quantities the [indiscernible] commercial launch.

In all cases, we have to increase our capacity or the licensee or our collaborator would have to increase their capacity to support our global launch. Although we do have in place the capability to be able to produce significant quantities of a formulated vaccine..

Alright. It sounds good. Thanks for taking the questions..

Thank you..

Alright. It looks like we have no further questions at this time. So, I would like to turn it back over to Mr. Michael Tardugno for any closing remarks..

Okay. Well, again, I want to thank everyone for joining us on the call this morning. I hope you see from our remarks that the company is making a great deal of progress, both in our gene-mediated immunooncology program in ovarian cancer.

Very exciting results to-date, closing in on completing enrollment in this important randomized Phase 2 study, a study that will give us a great deal of information with regards to next steps for registrational program and beyond.

And as I pointed out earlier, the progress we are making – remarkable progress we are making in advancing our vaccine initiative through proof-of-concept now coming to fruition as we are expecting data from our challenged studies later this year. All-in-all, we are very, very excited with the progress that the company is making.

We hope that you are, too. And we look forward to keeping you informed and updated as events occur. Thank you very much, and have a good day..

And that does conclude today’s conference. We thank everyone again for their participation..