Kate McNeil - VP, IR Simon Pedder - CEO Chad Kolean - CFO

Good day ladies and gentlemen and welcome to the Cellectar First Quarter Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference Kathryn McNeil, Vice President, Investor Relations. Ma’am, you may begin.

Thank you. Good afternoon and welcome to Cellectar Biosciences' first quarter 2015 conference call and webcast. We filled our financial statements for the first quarter of 2015 along with amended statements for the third quarter and full year 2014 with the SEC following the close of the U.S. financial markets yesterday. These followings can be found on our website at www.cellectar.com as well as on the SEC website www.sec.gov Joining me from Cellectar this afternoon is Dr. Simon Pedder, Chief Executive Officer; Dr. Jamey Weichert, Chief Scientific Officer, Chad Kolean, Chief Financial Officer; Dr. Kevin Kozak, Chief Medical Officer and Dr. Cameron Szakacs, Vice President of Clinical Development. Before I turn the call over to Dr. Pedder, let me note that some of the remarks you will hear may contain forward-looking statements about the company’s performance. We may also make forward-looking statements during the Q&A session following our prepared remarks. These statements are neither promises nor guarantees and there are a number of risks and uncertainties that could cause actual results to differ materially from those set forth in these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements is contained in our filings and periodic reports with the SEC, copies of which as I mentioned are available on our website or maybe requested directly from the company. Forward-looking statements are made as of today’s date and we do not undertake any obligation to update any forward-looking statements made during today’s call. With that said, I will now turn the call over to Dr. Pedder. Simon?

Thank you, Kate and thanks everyone not only for joining us on the call this afternoon but also for your patience as we postponed our original call to address some accounting matters related to previous reported financial results. While the primary focus of today’s call is to provide a quarterly update on our development programs and financial results for the first quarter, we will also take this opportunity to walk you through recent changes in our accounting that led to the restatement filed yesterday. Following our prepared remarks we will take some time to answer any outstanding questions. Chad why don’t you go ahead and get it started?

Okay. Thanks, Simon. Before I get to the results for the quarter then I would like to take a few minutes to briefly discuss our restatement of our third quarter and full year 2014 financial results. As the restatement is on cash and [has] focus on the principal issues and the impact of the restatement and refer you to our amended filings to the complete details and the impact on those filed financial statements. As disclosed in an 8-K filed with the SEC on May 18, 2015, the Audit Committee in connection with an internal review conducted by our management team, determined that due to a misapplication of the accounting guidance related to certain previously issued warrants, restatement of our third quarter and full year financial statements was required. Let me give you a little background. On August 20, 2014 as part of our underwriting offering we issued approximately 3.8 million warrants to purchase shares of our common stock. We issued an additional 1.1 million warrants as part of our agreement with our debenture holders who also wants to participate in the offering, in exchange they extinguish the debentures that they held which represented approximately $4.2 million of principal amounted related to interest. So all of the warrants that I just mentioned have the same terms and conditions in exercised price, which is $4.68 per share. All of those warrants contain a cash settlement feature that would only apply in the event. There is no current perspective to support the issuance of registered stock and a warrant holder request gross settlement rather than the net settlement via cash flows exercise feature that is provided for in the warrant agreement. We believe that the confluence of these circumstances is highly unlikely. However, in such cases the technical accounting literature does not take probability into account and requires that such an instrument we presented as a liability on the balance sheet. After careful consideration the audit committee of our Board together with management determine that the financial statements we released subsequent to the issuance of those warrants, in other words statements included on Form 10-Q for the third quarter of 2014 and on Form 10-K for the year ended December 31, 2014 should be restated to reflect the warrants’ liabilities the subsequent changes in their estimated per value recorded as non-cash income or expense in each period. These restatements resulted in a non-cash, non-operating financial statement correction and have no impact on our current or previously reported cash position, operating expenses or total operating investing or financing cash flows. Now I would like to turn to the first quarter of 2015. For the quarter we reported a net loss of 2.3 million or $0.30 per share versus the net loss of 2.9 million or $1.03 per share for the comparable period of 2014. Research and development expenses for the quarter ended March 31, 2015 were 1.6 million as compared to 1.7 million for the first quarter of 2014. The slight decrease in first quarter 2015 R&D expense reflects the decrease in costs associated with supporting [investor grade sponsored] clinical studies partially offset by increases in personnel related cost. Our G&A expenses, general and administrative expenses for the first quarter of 2015 totaled $900,000 as compared to the $1.1 million reported for the comparable period last year. The decrease reflects lower consulting charges and legal fees partially offset by slight increase in travel related activities. Finally, we ended the quarter with 7 million in cash and cash equivalents, that’s compared to the 9.4 million in cash and cash equivalents we had at December 31, 2014. We estimate that available cash and cash equivalents should fund the company’s planned operations into the fourth quarter of this year and that additional capital will be required to complete all ongoing and planned clinical and pre-clinical trials. Now I’ll turn the call back over to Simon.

Thanks Chad. Following our more comprehensive year end conference call in late March, today’s discussion will be comparatively briefly. However there are some key updates to each of our development programs I’d like to touch upon. Without question the most noticeable update since our last conference call is the initiation of a therapeutic trial, evaluating I-131 in patients with relapsed or refractory multiple myeloma. We currently have two of our three intended clinical sites operational and have been pleased by both the interest and the screening activity we are seeing at both. Based on the current activity and small cohort size we currently anticipate completion of the first cohort and the initiation of the second cohort this year. As we have previously indicated we believe the starting dose is sufficient to allow us to see evidence of clinical activity relatively early in the dose escalation process. Therefore expect to have meaningful data from this study well before the completion of this open label trail. Turning our attention to the I-124 program as we indicated in this afternoon's press release we are contemplating changes to our ongoing Phase II trial of glioblastoma, accrual into this trial continues to like behind the plan despite the actuation of additional clinical trial sites during the first quarter and an increase in screening following these site activations. As we continue to see value not only in I-124 as an imaging agent, but specifically as an imaging agent in glioblastoma we are seeking to leverage significant supplemental data stemming from multiple investigator sponsored imaging trails using this agent to image brain cancers including glioma. Thus we feel there exists the opportunity to utilize this data to determine the appropriate dosing and imaging parameters of I-124 in future studies. While a final determination has yet to be made, we are exploring options to leverage existing [investigator] generated data to modify the trial design to facilitate completion of this study. We believe that even with the potential modifications, the trial can still yield meaningful insight into the efficacy of I-124 relative to the standards of care MRI for the imaging of glioblastoma. We believe the comparison of the pathology data generated in this trial along with the data from investigator led studies will continue to provide an opportunity to validate the accuracy of our technology, potential competitive advantage and the merits of continued developments in this indication. Finally as I mentioned on our last call during the first quarter we submitted our IND to the FDA to allow for initiation of the Phase I proof of concept trial of CLR1502 our tumor illumination agent in breast cancer patients undergoing lumpectomy. The trial is intended to establish the safety and tolerability of CLR1502 while demonstrating its utility in the real-time identification of malignant tissue. The review of this IND application is still in progress, specifically we are currently working with the FDA to determine if CLR1502 should be evaluated as an imaging agent through the center for drug evaluation and research known as CDER or as a combination product along with an imaging agent i.e. the light source through the center for devices and radiological health. We see a strong rational to the evaluation of CLR1502 to be evaluated through CDER as an imaging agent. However we recognize this is the new and evolving field and the FDA has limited precedent to which make such a determination. It should be noted that in the course of these discussions the agency has also stressed that a combination product designation can be revised later in our development program and that we are not necessarily precluded by designation this early in the process from filing a standalone NDA in the future. We continue to work closely with the agency and hope to have determination soon. Barring any unforeseen complications we believe we should be able to initiate our proof of concept study in the second half of this year. As we have said in the past because of the small size of the study and the availability of patients with the indication qualities of the centers participating in the study we expect that once initiated [in roman] should move along fairly quickly. Going forward execution remains our top priority, advancing our ongoing therapeutic trial and obtaining preliminary proof of concept for I-131 as a therapeutic for multiple myeloma will be critical and a defining milestone for the company. Similarly evaluating data of I-124 in patients with brain tumors collected under investigator led clinical studies as a means to supplement data from our Phase II study in glioblastoma patients should help us move towards validation of this development program. Initiating our Phase I of CLR1502 in breast cancer surgery will mark the compelling expansion of the potential applications of our highly selective cancer-targeting phospholipid technology. We remain committed to these goals and look forward to their execution. With that all said Chad, Jamey, Kevin, Cam and I would like to open up the call to Q&A. Operator do we have any questions at this time? Question-and-Answer Session.

Thank you. Ladies and gentlemen. [Operator Instructions]

Simon. We have received some questions via email and can begin here while we see if there are any additional questions from listeners dialed in to the call. The first question is as follows. Are there limits on the size of the payload carried by CLR1404? In other words so far as you are only attaching radioiodine which is very small, could you attach something like the M-1 or MMAE without impacting the tumor targeting properties of CLR1404?

Well. That's a good question and one we have touched on in the past. I think I'll ask Jamey to review what we know of potential payload size and how early investigations of this question led to our current product candidates. Jamey?

Thanks, Simon. So this is really an excellent question. And we continue to build on our structure-activity database with our PLE carrier platform in order to assess the sub-cellular fate of these molecules we initially replaced the item with a small fluorophore that is compatible with confocal microscopy. We were a bit surprised that the fluorescent version of the molecule displayed similar broad scope tumor selectivity as the [ionaded] compounds. So we attached the much larger near-infrared fluorophore IR-775 which also displayed similar tumor targeting properties. This molecule CLR 1502 was the focus of our recent neurosurgery cover paper February 2015, and will enter clinical trial soon for real time surgical tumor margin illumination, as Simon stated previously in breast cancer lumpectomy patients. Our observations led both 1501 and 1502 display similar tumor targeting as 1404 demonstrates that the PLE delivery system tolerates considerable variations in [payload steric bulk]. We share the questioner's interest in additional compounds exploiting this observation and currently have an active research [active] along those lines. Frankly, this concept opens the possibility for broad application of the PLE targeting technology to potential vast array of both clinically proven and clinically abandoned cytotoxins like both suggested in the question. It’s also expected they stimulate numerous opportunities for collaboration between Cellectar and other companies. We’re excited about this opportunity. Kate?

Great. Thank you, Jamey. Our second question is as follows. There is evidence that dexamethasone inhibits complement activation in the anti-tumor immune response to radiotherapy in mouse models. If no response is observed in a multiple myeloma study until dose escalation is complete and the study transitions to the no dexamethasone arm, what would that do to study timeline?

Thanks Kate. I think there we can only estimate in the general sense the impact of timing. But clearly this is a question I’m going to ask Kevin to address with the role of A - no dexamethasone in the treatment of multiple myeloma in general and in our study in particular. Kevin?

Thanks, Simon. In short as a primary end point of the myeloma study of safety and tolerability, the presence or absence of responses with or without concurrent dexamethasone will have no direct impact on study timeline. But this is a really interesting question and probably deserves a little broader response. So I presume the questioner is referring to the very elegant work by [indiscernible] and colleagues published last month in Immunity. As is the case of all good science and devil is in the detail, it’s important to note that the vast majority of work reported by the [indiscernible] Group has performed in [miring] myeloma an entity knowing to be exclusively sensitive to immunotherapy both pre-clinically and clinically. This of course is reflected in the activity of nivolumab. The limited work beyond myeloma was restricted to a [miring] colorectal cancer cell line and here again there is an evidence that antibodies that [may] complement or active such as panitumumab and cetuximab. Of source it’s debatable whether or not complement activation is a significant contributor to the activity of these drugs given the [KRAS story] line but that’s pretty beyond the scope. Moreover in this study as is often the case that's preclinical model of radiotherapy, fraction size is employed where at least five grade and most commonly 20 grade, these doses are known to exert different biological responses and more typically employed clinical radiation doses. In the very limited human data presented the author simply demonstrated not frankly very surprisingly that radiation is co-inflammatory and a listed complement activation. Moreover these samples were in two cases in melanoma, three cases of basal cell carcinoma and one case of squamous cell carcinoma. For a moment it is getting a little deeper in to the [weeds] it's at least a little bit curious that tumors in C3 [indiscernible] in that study grew more slowly than tumors in [wild type]. With all the interpretation of such findings in transgenic raises a challenge this has two immediate implications at least for me. First, it argues that C3 and the complements to some plays really a limited role of tumor control at least in the absence of treatment. Second as the questioner is certainly aware more rapidly growing tumors tend to respond more robustly to radiation. So one is left to wonder whether or not the observed tumor growth delay and the effects of complement are simply a factor of tumor kinetics rather than the influence of hypofractionated radiation therapy or complement activation. While the authors indirectly addresses with the use of exogenous complement blockade but it remains an interesting detail. Globally there is certainly a lot of enthusiasm forming the emerging evidence concerning the interactions between ionizing] radiation and immunotherapies, but the story remains murky and it’s worth mentioning that there is omni-clinical data supporting the use of cortical steroids in conjunction with radiation and suggesting that radiation will actually be more effective or more toxic in the immune suppressed patients most notably in the HIV positive [indiscernible] population. But getting back more specifically to myeloma dexamethasone is independently active in this disease and I frankly think there is going to be limited applicability of [Indiscernible] very fine work to the results of DCL14002.

Thank you, Kevin. Operator do we have any additional questions at this point?

I'm showing no questions at this time. I would like to turn the call back to Simon Pedder for closing remarks.

First of all I would like to thank the person who sent in the questions via email. I'd like to thank everyone again for joining us for today's call. Hope you will continue to follow our progress and we look forward to speaking to you all again soon. Have a wonderful evening.

Ladies and gentlemen, thank you for participating in today’s conference. This thus concludes today's program. You may all disconnect. Everyone have a great day.