Greg Schiffman - CFO Maria Fardis - President and CEO.

Jim Birchenough - Wells Fargo Securities Josh Schimmer - Piper Jaffray Boris Peaker - Cowen & Company Biren Amin - Jefferies Ed White - FBR & Company Madhu Kumar - Chardan.

Good afternoon and welcome to the Lion Biotechnologies First Quarter 2017 Financial Results Conference Call. At this time all participants are in a listen-only mode. Following the formal remarks we will open your call up for questions. Please be advised that the call is being recorded at the company's request.

At this time, I would like to turn the call to Greg Schiffman, CFO. Please proceed..

Thank you, Operator. Good afternoon everyone and thank you for joining us for Lion Biotechnologies first quarter 2017 financial results conference call. Joining me on today's call from Lion are Dr. Maria Fardis, our President and CEO; Dr. Michael Lotze, our Chief Scientific Officer; and Dr. Egor Gorbicheski [ph], our Vice President of Clinical Science.

This afternoon, we issued a press release that outlines some of the topics we plan to discuss today, which is available on our website at www.lbio.com.

Before I turn the call over to Maria, I would like to remind everyone that statements made during this conference call will include forward-looking statements regarding Lion's goals, business focus, business plans, clinical trials plan and results, potential future applications of our technologies, manufacturing capabilities, licensing and collaboration transactions, future update and cash usage forecast.

Forward-looking statements are subject to numerous risks and uncertainties many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today's call. We undertake no obligation to publicly update any forward-looking statements.

With that, let me pass the call over to Maria..

Thank you, Greg. It has only been eight weeks since our last quarterly call meeting and I'm excited to be able to discuss with you today, the strong progress we have made on several funds in just this short period of time.

As the outlined during our last call, 2017 is a year of execution of Lion, with an emphasis on removing manufacturing obstacles from our critical path, execution of our clinical studies and engaging in regulatory interactions based on available clinical data.

All of these key objectives leverage our efforts in 2016, including key hires on the staffing front, the relationships we established with our commercial manufacturing organizations, the development of a shorter manufacturing process for preparation of TIL and better and broader engagement of our clinical trial sites.

I'd like to start by discussing our recently announced strategic alliance with MD Anderson Cancer Center to conduct clinical trial, investigating TILs in patients with multiple solid tumor types. This collaboration allows us to access a rare patient population, as well as a new method of manufacturing TIL with the MD Anderson process.

MD Anderson is well known for cancer patients' care and we are pleased to add them to our roster of partners. Together, we will conduct multi-arm clinical trials to evaluate the safety and efficacy of TIL therapy in ovarian cancer, various sarcomas and pancreatic cancer.

TIL product for these studies will be provided by both Lion, as well as manufactured on site by MD Anderson. In addition the clinical research conducted jointly will allow for exploration of the expansion of TIL in rare tumor type. The clinical trials are expected to commence in late 2017.

We have now established strategic relationships with several leading academic and governmental institutions in the U.S. researching TIL technology and efficacy including the NCI, MD Anderson and the H. Lee Moffitt Cancer Center, as well as one of the leading institutions in Europe, the Karolinska Institute.

These strategic partnerships provide Lion stability to pursue a much broader clinical program than would otherwise be possible as a standalone company and allow us to collaborate the thought leaders in utilizing TIL to treat patients with various solid tumor indications. Let's now review the progress we have made in our clinical development programs.

We have recently initiated two new Phase 2 study, one, in head and neck and the other is cervical cancer, with multiple trial sites activated for each study. We are screening patients in both studies and have already enrolled first patient in the head and neck trial and expect dosing to occur next month.

Turning to our ongoing LN-144 melanoma study, we have completed the reception of all patients in our first cohort for the current protocol and would expect to complete dosing of this cohort next month. This first cohort utilizes a first generation manufacturing process, which takes approximately five to six weeks from reception to infusion.

Additionally, we have already initiated cohort 2 and have enrolled multiple patients into this cohort. For cohort 2, we are utilizing a generation 2 manufacturing process, where we have decreased the duration of the process down to just over three weeks. As a reminder, this manufacturing process includes cryopreservation of the outbound products.

This increases our manufacturing capacity, while providing greater flexibility for physicians and patients in scheduling the time of the infusion of the TIL product in the hospital. Our current manufacturing organizations including Lonza, Wuxi AppTec, and H. Lee Moffitt Cancer Center.

As we plan for the opening of clinical trial sites outside of the U.S. we recently announced that the selective PharmaCell as our manufacturing partner in Europe, granting us access to clinical and commercial suites ex-U.S.

We have begun the process of transferring our technology to PharmaCell and expect patient dosing using products manufactured at PharmaCell in late 2017. We will keep you informed of our progress, as we work to expand our studies in Europe.

We have also initiated discussions with various regulatory authorities to gain clarity on the possible registration path or melanoma. This includes reaching agreements on the patient population and the nature and size of the registrational clinical program. We expect to be able to publicly provide an update on our regulatory pathway later this year.

Finally, I am very pleased to inform you that we will be presenting clinical data from our melanoma study at ASCO as a poster. This will be the first presentation of data from a Lion-sponsored clinical trial using our contract manufacturing infrastructure and GMP process with the multi-site clinical study investigating TIL.

Last month, we announced that data from a new translational study regarding cervical cancer patients was published in the Journal of Science. This work was supported by CRADA within Lion from Dr. Steven Rosenberg and was from a clinical trial of TIL therapy for the treatment of advanced metastatic cervical cancer conducted at the NCI.

The data included two durable and sustained complete responders who continue without recurrence from the nine patients treated TIL. We had noted that during 2017, we will be publishing our clinical and preclinical data regarding TIL therapy at key medical meetings.

As part of this initiative, later this month we will be presenting findings at the American Association of Immunology Annual Meeting showing that activation of potassium channel with the potassium channel agonist enhances TIL expansions with the less depreciated phenotypes.

As you can see, we have been very busy executing on the 2017 goals and objectives we laid out during the last conference call and you should expect to see us continue to execute on our clinical and regulatory agendas over the next several quarters. I would now like to turn the call over to Greg for a discussion of our financials..

Thanks, Maria. Our GAAP net loss for the first quarter of 2017 was approximately $20.7 million or $0.33 per share. In the first quarter, there were approximately $3.3 million of non-cash charges related to stock-based compensation.

We are providing both GAAP and non-GAAP financial information as we believe it is important for you to understand the trends in our financial statements excluding these non-cash charges. Our non-GAAP net loss for the quarter was approximately $17.4 million or $0.28 per share.

As I indicated, the non-GAAP adjustments are all associated with non-cash stock-based compensation charges. For the first quarter of 2017, we had a cash usage of approximately $19.3 million ending the quarter with the cash and cash equivalents of approximately $147.2 million.

This cash value was slightly higher than our guidance of approximately $17 million. The increased spending is almost all associated with prepaid expenses for both clinical manufacturing and CRO activities.

Our prepaid expenses grew by approximately $2.4 million, increasing from approximately $3 million at year end to approximately $5.4 million at the end of the first quarter. These prepayments are for work that will be performed later this year and next.

We are projecting some growth in our quarterly cash expenses going forward, much of this growth will be dependent on the timing and speed of enrollments into our clinical trials.

For the second quarter of 2017, we are now projecting a cash usage of approximately $24 million giving us an expected earnings cash balance mid-year of $123 million, leading us with the strong balance sheet to continue to fund our clinical activities.

The increase in spending over the first quarter is driven by increasing clinical and manufacturing activity, as well as the upfront cash being paid to MD Anderson.

As part of the recently announced strategic collaboration and upfront payments being made to PharmaCell as we look to bring them onboard as part of our goal of expanding our clinical programs into Europe. I'll now turn the call over to the operator for your questions.

Operator?.

Thank you. [Operator Instructions]. Our first question comes from Jim Birchenough with Wells Fargo. Your line is open..

Yes hi guys, thanks for the update. Just a couple of questions, just first on manufacturing, I was hoping for a big picture, you've got a number of contract manufacturers and academic centers you are working with.

So is there some plan to have a central manufacturing process or do you think you're going to continue to expand in terms of individual sites that you're going to be working with? And then I have a follow-up thanks..

Hi, Jim. Thank you for the question. So we do have a central manufacturing just because we are using one clinical site as a GMP manufacturing site, it does not mean that we have a decentralized manufacturing process.

All of them are following the same GMP process that we have developed here at Lion through our sample facility, which has been tech transferred into the GMP facilities. I just want to make sure that that's clear, this is not a site-by-site manufacturing, they are all central manufacturing processes and products..

And then just on what you should expect at ASCO, I didn't see anything for LN-144, so just wondering if we should expect that at a future meeting like EORCC [ph] and just better sense of what incrementally we might expect at ASCO? Thanks..

Thanks, again. I did actually just announce that we have an ASCO poster that will be presented as part of the conference. The name LN-144 is not in the title is in the abstract itself. But if you are using iPlanner it might not show up, but it is already announce, the title has already been announced..

Got it.

And then just finally in terms of cervical cancers and head and neck cancer, what's the time line in terms of seeing clinical data?.

So, we certainly haven't put any specific guideline in terms of enrollment of any of our studies. So I won't be able to commit to a specific timeline. We are trying to make sure that we get the first patients on and we are on the site activation mode. So, I can share that maybe with you in the later part of the year..

Okay, thanks for taking the questions. I'll join the queue again..

Thank you..

Thank you. Our next question comes from Josh Schimmer with Piper Jaffray. Your line is open..

Great, thanks for taking the question. I hope you can hear me okay.

So across the various LN and academic TIL programs, is the lymphodepletion and IL-2 activation post infusion consistent and identical thread or are there any other trials looking at different approaches there?.

Really good question, thank you Josh. So we started the process with an identical lymphodepletion, the [indiscernible] flu process that NCI has used and has been pretty broadly used in therapy with TIL. The IL-2 therapy is quite similar, we have however catch the maximum number of doses to six for our protocol..

Okay, great.

And then for the pancreatic cancer trial can you discuss some of the logistical challenges in terms of getting tumors biopsy samples from the patients, what percent have accessible tumor for biopsy?.

I can tell you that we have started our understanding of TIL growth from pancreatic cancer and so far we have not had any issue in receiving a tumor, appropriate tumor or growing them growing TIL from such tumors. So, if you want to elaborate, I'm happy to answer further, but as of now we have not had any logistical issues with pancreatic cancer..

Okay, got it.

And then on the ASCO poster subject now what should we expect to see at the conference?.

Sure, it's clinical responses as you would expect to see from a study it's early data that we have put into the abstract and the poster will show the responses as well as of course safety information and patient demographics in terms of their number of prior therapies otherwise. It should be fairly familiar in terms of the flow of information..

And that will be for the first 20 patients in the cohort A?.

We've not disclosed how many patients are in there, the abstracts would be available online on 17th of May..

Okay, great. Thanks very much..

Thank you. Our next question comes from Boris Peaker with Cowen & Company. Your line is open..

Great, thank you for taking my questions.

I'll start on the melanoma study; can you remind us how many patients were in the first cohort and what the criteria were for initiating the second cohort? And the bigger question maybe on the melanoma study also is how this particular study fits into the regulatory part to get LN-144 approved?.

Really good question, thank you. So the first study if you recall, the original study design was a single arm study with 20 patients only. The current study design that we are pursuing is a three arm study. Cohorts 1, 2 and 3. Cohorts 1 and 2 are each 20 patients and cohort 3 is a retreatment cohort of 10 patients.

The purpose of the cohorts are cohort 1 was going to explore the original manufacturing process of five to six weeks long with fresh tumor and fresh product being shipped to the patients, cohort 2 is our new improved shorter manufacturing process, which is just over three weeks and has cryopreservation at the back end.

So both cohorts will explore different manufacturing processes. In terms of how it fits into our regulatory strategy, there was a number of different purposes for this study.

Obviously trying to make sure that all of the data that has been produced over the decades of TIL can be done through one GMP facility at multi-site clinical trials being involved was top priority for us.

We also are collecting safety data, which obviously would be part of your ISF, which is part of any DLA, as well as looking at the efficacy of the patient population that is now being seen, which is slightly different than the patient population that might have been available prior to checkpoint therapies being available..

Got you. So two follow-ups I guess on that.

First is, what is the purpose of the third cohort and also with only 20 patients in each arm, I mean what kind of response do you anticipate to actually see? And how can you really compare between such small study groups to really conclude the differences or similarities between the two manufacturing processes?.

Okay. So, just to remind ourselves, this is not exactly a bio cohort study in terms of study designed a proper bio cohort would look a little different, I agree. I do want to share that we are planning on expanding this study we are in the process of amending the protocol.

So there will be additional patients into this study enrolled, so we are not done with this study as if. The purpose of cohort 3 was to offer retreatment of patients upon new lesion being developed upon either progression or stable disease to offer the patient say rebiopathy or re-resection and retreatment with TIL. That's the purpose of cohort 3..

Got you, okay.

And I guess my last question is what do you anticipate the first indication to be for the FDA approval, just want to kind of get a better sense of the actual path to getting this to market?.

We clearly have our internal plans and it might rather obvious just from the wealth of the data where it is. But we are definitely moving on multiple fronts in order to get opportunities for at least one label maybe more than that to be possible from the agencies.

So which one would end up being the first one maybe a little difficult to predict right now. I think I have noted that we will be engaging FDA and others by year-end for the registration program discussion. And so I should be able to share latter part of this year a more clear path.

We obviously have our wish list where we want to be show we have alignment with health authorities..

Great, thank you very much for taking my question..

Thank you. Our next question comes from Biren Amin with Jefferies. Your line is open..

Yes, thanks for taking my questions.

Maria, just want to confirm for the melanoma trial as Lonza Walkersville well is that one of the sites where the TILs are being manufactured?.

Yes absolutely. Thank you, Biren..

And I don't know if you heard about this or not, but there was a 43 issued on that site.

Will that impact at all trial enrollment in your study?.

Yes, I am definitely aware Lonza has shared that information with us, live as the events were transpiring there was not an impact on their cell therapy unit.

In addition that is exactly why we have more than one manufacturing provider available to us, should there ever be any issues of this nature, we have other lines that we can shift our manufacturing too. So there was not a direct impact in any way from Lonza's 483 [ph] and investigation by FDA on Lion..

Okay, that's fantastic to hear.

And then just on - as far as trial designs for regulatory approval, how should we think about given the current landscape of treatments what you would propose to FDA?.

So the trial design always is a function of unmet medical need in the patient's population. We have spoken about what patient population would allow you to have a faster path versus a broader patient population, which would require a randomized setting.

So we obviously would propose to the agency a combination of both it obviously is also prerogative of the agency to consider the patient population and despite which direction they would be open to us exploring. I can definitely provide additional feedback, when we have better information from them, later part of this year.

But that would be our strategy on our side..

Got it.

And then with regards to the MD Anderson collaboration, how many patients are you planning to enroll in each of the cohorts ovarian, panc and other various tumors?.

We have not disclosed the specific design of the study, but I can tell you it likely would be as same as two stage design where we look at a certain number of patients upfront. And then it would expand based on potential responses that are seen.

But because there is a number of cohorts that are available we are able to move the patients where we see better responses..

And I'm going to assume that's based on the first gen manufacturing process and not second gen?.

Very good question. Yes, currently it's based on first gen until we prove otherwise for second generation..

Okay, great. Thank you..

Sure..

Thank you. Our next question comes from Ed White with FBR & Company. Your line is open..

Hi, Maria, thanks for taking my questions.

So just going back to the third cohort, the patients that are being re-treated are they're going to be re-treated with the same manufacturing process, or could you do a crossover where you use the old process for some of the patients and then use the new process in the retreatment arm?.

Thank you Ed, I'm going to refer to Egor for this question actually..

Yes, thank you. Patients who received TIL infusion will be re-treated to exactly the same manufacturing process in cohort 3..

Okay, thank you..

Thank you. Our next question comes from Mark Breidenbach with ROTH Capital Partners. Your line is open..

Hey guys, this is Matt [ph] on for Mark.

Kind of taking back to one of the former questions, could you just elaborate on this MD Anderson manufacturing protocol? Is it anything different than what you're using in LN-144 and if it is, could this potentially impact the development of LN-144 going forward in melanoma?.

Hi Matt, thank you for the question. Yes, the process is slightly different, there is additional agents that are being used in that particular process, and we have not completely disclosed and we might be able to inform at an upcoming venue somewhere else. But yes, the idea for us was to have access to additional methods of manufacturing.

As you might have noticed in our grid of increasing clinical indications as well as increasing our access to various methods of making TIL, we have been making progress in both fronts. As you see within Lion we have generation 1 and generation 2 where we go to a shorter and hopefully a more nimble manufacturing process.

And we have also put on the contract additional manufacturing process one through Karolinska and one through MD Anderson.

So the idea is that we will run trials in a way that we are able to judge the benefit of these additional manufacturing processes, but we are hoping to have access to additional backup plans if they show better efficacy in the same type of indications..

Okay, great that's helpful. Thanks. And one more if I may, you mentioned you had some fruitful regulatory discussions and I understand it's an ongoing process. But can we assume for initial approval is this going to be at the monotherapy or is a combination with checkpoint still potentially on the table? Thanks..

Sure, thanks for that again. I didn't say actually that we had fruitful just want to be sure I didn't say it was fruitful, the regulatory interactions. It is an ongoing process and we have certainly had discussions started with both U.S. and ex-U.S. health authorities.

The question that was earlier posed there is always an oncology setting nowadays if you are in a linked Lion therapy an option of a single arm study is always open for an unmet medical need followed by a randomized study.

So that's something that has been sort of well-known well established with the oncology division CEDAR has been greatly open about it. We would need to discuss this obviously with CEDAR. So combination or anything of that nature remains completely open as far as I'm concerned all options remain open..

Great, thanks so much..

Thank you..

Thank you. [Operator Instructions]. Our next question comes from Madhu Kumar with Chardan. Your line is open..

Hi, thanks for taking my question. So how do you - what is the kind of decision calculus for data signal justifying going after a defined indication in melanoma or in any of the other indications.

How much data do you feel kind of gives that signal, is it just that if there is any signal or an indication you can than go after unmet need? Or do you need like - just can elaborating kind of how - what your general strategy is for starting in a cancer type seeing data and then going after a kind of pathway for approval?.

Thank you for your question. There is not a specific threshold that is defined by any regulation as to how many patients, what patient population, what line, what [the status] there is not such clarity.

It has to do again with if you are in an undefined patient population in the sense that there is no available therapies, you can approach the agency through different venues and check whether a small sample size of patients is adequate for them to consider a potential registration path.

But it's something that you develop in negotiation with health authorities, if there is not - there is not such a thing as predefined space, you have to negotiate it with the agency. Now having said that, I think one point worth noting here, in the face of TIL there is a significant amount of data already available.

There is prior lines that have been treated with, there is a number of different combinations that we either have access to or ongoing. So there is quite a wealth of data and part of our collaboration efforts in the past year or so has been trying to have access to all such data.

So that data ultimately will have to decide where we would take this the direction of future collaborations with either the academic institutions or even discussions with health authorities..

Okay. The other kind of question I had kind of in line with this was, I mean there is work from [indiscernible] Group about the idea of using various types of check point drugs or rather that to immune stimulator agents to kind of prime TIL collection. So thinking about checkpoint blockade or like cancer - these kind of sequence base cancer vaccines.

How you guys thought about methods like ways to prime the TIL response in patients ahead of TIL collection?.

Yes great question. And we have talked about it a little bit before. I know Mike Lotze called this the pre-TIL strategy. So we have been thinking about how to prime the tumors better, we have to think about that that's considered some type of the combination.

So there is a balance in increasing the response versus going into a combination studying that we have to carefully sort of tread the lineup.

So, we are very interested, we are looking at possibilities of this type of clinical trials, we will be also have to stay laser focused on what would give us the immediate label and what trials would support registration of LN-144 and 145..

Okay, great. Thanks very much..

Thank you. I'm showing no further questions at this time. I would like to turn the conference back over to Dr. Maria Fardis, President and CEO for closing remarks..

Thank you so much. I would like to thank you for joining us today for our first quarter 2017 conference call. And I look forward to updating you on our continuing progress for our next quarterly call. Thank you..

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone, have a great day..