Jules Abraham - Principal at JQA Partners, LLC James Caruso - President, Chief Executive Officer and Director Chad Kolean - Vice President and Chief Financial Officer Jarrod Longcor - Senior Vice President, Corporate Development and Operations

Wangzhi Li - Ladenburg Thalmann & Co., Inc.

Good day, ladies and gentlemen and welcome to the Cellectar Biosciences Fourth Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Jules Abraham, of JQA Partners. Sir, you may begin.

Thank you, Valerie. Good afternoon and thank you for joining us to review the financial and operational results of Cellectar Biosciences for the fourth quarter and year-end 2016 on this conference call and webcast. Earlier today, the company filed its financial statements for the fiscal year ending December 31, 2016 with the SEC which can be found both on the SEC website, www.sec.gov and the Investor Relations section of the company's website, www.cellectar.com. In addition, a replay of this conference call will be available on the company's website. Joining me today from Cellectar are Jim Caruso, President and Chief Executive Officer; Chad Kolean, Cellectar's Vice President and Chief Financial Officer; and Jarrod Longcor, Cellectar's Senior Vice President of Corporate Development and Operations. Before I turn the call over to Mr. Caruso, please note that some of the remarks you will hear today may contain forward-looking statements about the company's performance. Additionally, there may be forward-looking statements during the Q&A session following our prepared remarks. These statements are neither promises nor guarantees. And there are 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 the company filings and periodic reports filed with the SEC. Copies of which are available on its website or may be requested directly from them. Forward-looking statements are made as of today's date and Cellectar does not undertake any obligation to update any forward-looking statements made during today's call. With that said, I now turn the call over to Mr. Caruso. Jim?

Thank you, Jules. And thank you to all participants for joining us today for our year-end 2016 call. 2016 has been an important year for Cellectar. Last January, we established ambitious annual objectives. And while we have executed versus these objectives extremely well, we have much more work to complete and upside to achieve. However, we are pleased with the progress Cellectar has achieved to date and we are focused on building upon our performance in 2017 that includes, but it's not limited to advancing our therapeutic phospholipid drug conjugate or PDC assets, specifically our lead product candidate, CLR 131, as well as our CLR CTX chemotherapeutic conjugate program. Before we continue, I'd like to share some of the many milestones we achieved this past year. As it not only illustrates the impressive progress we have made over the course of 2016, it also sets the stage for our 2017 performance expectations. Specifically, from a clinical perspective, we advanced our lead PDC CLR 131 through the second cohort of our Phase 1 clinical trial in multiple myeloma as well as initiated and nearly completing Cohort 3, as we continued to see impressive safety results and positive indications of efficacy. Jarrod Longcor will speak to the results of that trial today. But we are now into the fourth trial cohort, a full quarter ahead of schedule. In addition, we received a $2 million NCI Fast-Track contract for our Phase 2 trial of CLR 131 in multiple myeloma and other hematologic malignancies. We announced the Phase 2 study protocol and accelerated study initiation to the first quarter of 2017. We look forward to sharing the completion of that milestone with you, when it occurs. Further, in collaboration with the University of Wisconsin and as part of a prestigious SPORE grant, we plan to investigate CLR 131 for solid tumors in conjunction with external beam radiation with a treatment of head and neck cancer. From an intellectual property perspective, 2016 was also an important year, as we received a total of nine positive actions, including eight from the USPTO from multiple assets. These include an issuance for the delivery vehicle in cytotoxic conjugation for our CTX program, a patent granted for CLR 1603 and an issuance for CLR 125 and CLR 131 in combination with radiotherapy for the treatment of solid tumors. In addition, we received a method of use allowance for CLR 124 for the detection of radiation and chemo-sensitive cancers for cancer metastasis. We are also granted method of use patents for both CLR 131 and CLR 125 in a broad range of solid tumors as well as several ex-U.S. patent allowances for our optical assets. I would also like to reiterate the importance of the licensing agreement that was negotiated during 2016 and that we announced last week. We have now acquired the remaining rights to the use of CLR 131 in multiple myeloma. The Wisconsin Alumni Research Foundation, an important investor and partner, maintains part ownership of this use of patent. Therefore, this license acquisition now provides us with complete control over the product development and commercialization of CLR 131 in multiple myeloma and all other potential indications. Finally, and not to be understated, during 2016 we raised more than $17 million and remained focused on the judicious investment of these funds that optimize Cellectar's R&D advancements. Now, I'd like to quickly outline the rest of today's agenda. We will begin with our CFO, Chad Kolean, providing the fourth quarter as well as the year-end financial summary. Jarrod Longcor, our Senior Vice President of Corporate Development and operations, will then provide a detailed update regarding CLR 131 for both our ongoing Phase 1 clinical study for the treatment of relapsed refractory multiple myeloma and the initiation of our NCI-sponsored Phase 2 clinical trial for multiple myeloma and other selected orphan-designated hematologic malignancies. Following that, he will provide an update of Cellectar's ongoing collaboration with Pierre Fabre, after which I will provide closing comments. As always, at the conclusion of the call the executive team will be available to answer your questions. At this time, I'd like to turn the call over to Cellectar's CFO, Chad Kolean, for an overview of the fourth quarter and year-end 2016 financials.

Thank you, Jim. Let me start by discussing the financing activities that have occurred since our last earnings call. First, I will summarize the offering that we completed on November 29, 2016. This was a fully underwritten public offering that generated gross proceeds of $9.2 million and net proceeds of approximately $8.3 million. We sold the following securities in the offering: 1.6 million shares of common stock; 68 shares of Series A preferred stock that in the aggregate were convertible into 4,533,356 shares of common stock and 6,133,356 Series C warrants to purchase shares of common stock with a strike price of $1.50 each in a five-year expiration. Between the date of the closing in December 31, 2016, 51 shares of the Series A preferred stock were converted into 3,400,017 shares of common stock. The remaining 17 Series A preferred shares were converted into 1,133,339 shares of common stock during the month of January 2017. As a result, there are no longer any shares of Series A preferred stock outstanding. In addition to the proceeds that we received initially from the financing, over the past month there have been exercises of slightly over $1.3 million of the Series C warrants from the November offer, which speaks to the performance of the stock since the financing was completed. These exercises have generated an additional $2 million in funding for the company during the first quarter. Now, for an overview of our operating results for fiscal year 2016. Research and development expenses were $4.8 million, a decrease of $0.4 million from the prior year. This reduction is largely a result of lower personnel cost in 2016, partially offset by the increasing cost to support our clinical trials. As we announced at the end of October, we are initiating a Phase 2 clinical trial in hematologic malignancies this quarter in addition to our ongoing Phase 1 trial in relapsed refractory multiple myeloma. And we are incurring incremental cost to support that effort. General and administrative expenses totaled $4.7 million, which is an increase of $1.3 million from 2015. The main components of the increase were consulting fees related to finance reporting and investor outreach, and increased personnel costs. Approximately, $0.5 million of these costs were transitional in nature and are not expected to recur going forward. During 2015, we incurred $0.2 million for restructuring charges related to the elimination of certain physicians. There were no restructuring charges incurred during 2016. We generated a loss from operations of $9.4 million in 2016, while in 2015 our operating loss was $8.8 million. Other income for the year was $3.3 million, which is consistent with 2015. As I have mentioned in previous earnings calls, these amounts result from changes in the value of securities treated as derivative liabilities on the company's balance sheet. It is important to note two aspects here. First, while the income generated from these derivative securities in the past two years has been relatively substantial, it is non-cash in nature. Secondly, we do not believe these securities will generate income at these historical levels going forward, due to the renegotiation and subsequent reclassification to equity of the warrants issued in 2015 and the substantially reduced liability related to the remaining derivative liability we have in our balance sheet as of December 31, 2016. Our net loss for 2016 was $6.2 million or $1.36 per share. In 2015, the net loss was $5.5 million or $7.03 per share. As of December 31, 2016, we had $11.4 million in cash and cash equivalents on hand. While as of December 31, 2015, we had $3.9 million in cash and cash equivalents. We estimate that our available cash including the cash that has been generated from warrant exercises in the first quarter should fund the company's planned operations into the first quarter of 2018. Additional capital will be required to complete planned preclinical research and further clinical development of our anticipated products. With that, I will turn the call back to Jim.

Thank you, Chad. Shortly, I will be providing a snapshot of our 2017 objectives. Prior to this, I'd like to point out some important relationships Cellectar developed during 2016, which we believe will be instrumental to our future success. First, we secured a partnership with INC Research, which will be essential to executing the protocol of our Phase 2 trial for CLR 131 in multiple myeloma and other select hematologic malignancies. INC is a well-respected contract resource organization with extensive experience in the execution of hematologic cancer trials and we are pleased to have them involved into trial. In addition, we identified Canadian radiotherapeutic specialist, CPDC, a well-respected GMP manufacturing organization, specializing in radiopharmaceuticals as a supplier of the company's lead phospholipid drug conjugate, CLR 131. We believe that CPDC will provide a cost effective and long-term solution as it will establish a manufacturing capacity at a level sufficient for both a pivotal trial in future large-scale commercial production. CPDC's development of further production capability for CLR 131 will significantly enhance the company's ability to support the anticipated clinical trial activity as it progress this through 2017 while also preparing for a pivotal study and ultimately commercialization. I'd now like to turn the call over to Jarrod Longcor, who will provide a more detailed discussion of our research and clinical development program, including both our ongoing Phase 1 clinical study and our recently announced Phase 2 clinical study in multiple myeloma and other hematologic malignancies for CLR 131. He will also provide a brief update on our progress with Pierre Fabre. Jarrod?

Thank you, Jim. Despite recent advances and expansion of treatment options for multiple myeloma, this disease remains an area of high-unmet medical need. And that the course of the disease results in nearly all patients experiencing multiple rounds of relapse or the development of refractory disease with the time to progression accelerating with each successive round of therapy. The greatest needs remain the development of therapies that can provide improved progression free survival and extension of the life expectancies for these patients. Given that currently there are limited treatment options available that offers significant improvement on overall survival in the refractory setting and based on the clinical benefits related to overall survival and progression-free survival already observed with CLR 131 in this heavily pretreated relapsed refractory patient population, we remain optimistic regarding the potential clinical and quality of life benefits CLR 131 may provide to patients with relapsed refractory multiple myeloma. As Jim stated earlier, we completed the third cohort and since initiated the fourth cohort of our Phase 1 clinical study in this difficult to treat patient population, evaluating the safety and tolerability of escalating doses of CLR 131. Based on our evaluation to date, both safety and efficacy signals are extremely encouraging. This is particularly important when you factor in that this performance reflects a 30-minute infusion of just a one single dose of CLR 131. For reference, our Phase II trial will also include a potential second dose and we are exploring the benefits of both approaches. It is also worth noting that the overall clinical benefit rate for this study is 86%, despite patients receiving an average of four prior treatments including stem cell transplantation and triple drug combinations. As of March 2, 2017 the patients in Cohort 1 and Cohort 2 have demonstrated post treatment median overall survival of 17.7 months and 8.4 months respectively. The median overall survival for all evaluable patients in both cohorts continues to increase. And we will continue to follow them to determine overall survival benefit. Currently, the final median overall survival for each cohort is not yet evaluable as all patients continue to be followed. All evaluable patients in the clinical study have experienced progression-free survival as well. In Cohort 1, subjects experienced a median progression-free survival of 93 days, while patients in Cohort 2 have already achieved a median progression-free survival of 133 days and counting as of February 28, 2017. The average and median progression-free survival on Cohort 2 is still increasing, because one of the four patients in that cohort continues to experience progression-free survival. I would like to point out that with a 50% increase in the dose from Cohort 1 to Cohort 2, CLR 131 produced a 45% increase in the median progression-free survival and over a 50% increase in the average progression-free survival experienced by these patients. As we previously stated, while it is premature to report survival related efficacy data from Cohort 3, all patients in Cohort 1 and 2 continue to experience overall survival benefit. Patients from Cohort 1 who received a single 12.5 millicuries per meter squared dose have experienced to date the median overall survival of 17.7 months. Cohort 2 patients who received a single 18.75 millicuries per meter squared dose have a current median overall survival of 8.4 months. To put this in context, while no head-to-head studies have been conducted between CLR 131 in other therapies, a 2016 article published in the peer reviewed journal Bone Marrow Transplantation did show that those patients evaluated that, where refractory to both proteasome inhibitors and immunomodulatory drugs have a median overall survival of 9 months and a progression-free survival of only five months. All patients enrolled in Cohort 1 and Cohort 2 were previously treated with both proteasome inhibitors and immunomodulatory drugs and experienced these progression prior to enrollment in our Phase 1 study. In addition, as we recently announced similar to the comparison of Cohort 2 versus Cohort 1, patients in Cohort 3 experienced a more substantial and sustained reduction in the surrogate marker M-protein. The average reduction of M-protein in Cohort 3 peaked at Day 43 and was nearly a threefold increase in the reduction seen in Cohort 1, and nearly a twofold increase in the reduction over Cohort 2. Patients' M-protein levels continue to be well controlled from a single 30-minute infusion of CLR 131, through Day 64 post-infusion with patients experiencing greater than a twofold reduction in M-protein at this time point in Cohort 3 over both Cohort 1 and Cohort 2. M-protein is one of several surrogate markers of efficacy that we have been using to predict potential future results. And we are very pleased with the outcomes to date in this regard. As impressive as our efficacy data has been, the demonstration of efficacy is a secondary outcome in the Phase 1 trials. The primary endpoint is the identification of the maximum tolerated dose and an understanding of the safety and tolerability of CLR 131 in the previous doses. To date, we have not reached the maximum tolerated dose and we have observed an excellent safety profile, which has been similar for all three cohorts to date. Patients in Cohorts 1, 2 and 3 expand an average of 4.75, 4.25 and 7.0 adverse events per patient respectively. The average of severity grade of the adverse events per patient were 2.05 and 2.71 in [Technical Difficulty] and 2. While in Cohort 3, the average grade was 2.57 per patient. It is important to note that while the average number of adverse events per patient increased in Cohort 3, the severity of these adverse events decreased from that seen in Cohort 2. We believe that this favorable adverse event profile is due at least in part to our PDC targeting of the tumor and sparing healthy tissue. Our most common adverse events continue to be select cytopenias that have not resulted in any clinically relevant events. As discussed, we have completed the safety evaluation portion of the third cohort, which had - was a single 25 millicuries per meter squared dose. The data monitoring committee deemed this dose to be safe and well tolerated and we have therefore initiated enrollment of the fourth cohort at a single 30-minute infusion of 31.25 millicuries per meter squared, which represents a 25% increase from the 25 millicuries per meter squared dose used in cohort 3, and a 150% increase over Cohort 1's dose. We plan to provide a data update on the fourth cohort and third cohorts later this year. Equally as important at the beginning of quarter four, we announced the design of our NCI-supported Phase 2 study of CLR 131 in relapsed/refractory multiple myeloma in other select hematologic cancers. Originally, the company provided guidance that this study would be initiated in the first half of 2017. Thanks to a collective team effort, which includes Cellectar employees, our contract research organization, investigators and consultants, we accelerated our study initiation guidance to the first quarter of 2017 and announced that preliminary efficacy data was expected in the second half of 2017. The Phase 2 study design was carefully constructed to optimize our understanding of CLR 131 by further defining its clinical benefits in both a single and multi-dose regime for the treatment of relapsed/refractory multiple myeloma. The results of which we believe will be instrumental in the design of a pivotal clinical trial. Based on our evaluation, we believe CLR 131 may also provide therapeutic benefits in a number of orphan-designated, difficult to treat hematological cancers that are clinically and commercially attractive in design, the Phase 2 study to rapidly and cost effectively explore the drug's broader clinical utility. The Phase 2 study will be conducted in up to 15 centers across the United States. We expect that all patients will receive a single dose of CLR 131 at 25 millicuries per meter squared infused over approximately 30 minutes, with the option of a second dose occurring between 75 and 180 days later, based upon physician assessment. Currently, those patients in the trial with multiple myeloma will also be receiving 40 milligrams - I'm sorry about that - concurrently those patients in the trial with multiple myeloma will also be receiving 40 milligrams oral dexamethasone weekly for up to 12 weeks. The primary endpoint for the study is Objective Response Rate or ORR; secondary endpoints include progression-free survival, median overall survival and other measures of efficacy. In relapsed/refractory multiple myeloma patients' efficacy responses will be determined according to the latest International Multiple Myeloma Working Group Criteria, while those in the lymphoma arms efficacy will be determined according to the Lugano criteria. Now I'd like to transition to provide a brief update on the progress in our development collaboration with Pierre Fabre. As reported in December, we have completed work on producing multiple phospholipid drug conjugates with the compounds provided by Pierre Fabre, and are under way conducting our in vitro and in vivo screening studies for a variety of solid tumors. We will continue to provide updates on those studies as the data become available. With that, it's my pleasure to turn the call back to Jim.

Thank you for very thorough synopsis of our progress with CLR 131, Jarrod. As previously stated, our focus remains on the successful execution of a clinical development of CLR 131 with the treatment of multiple myeloma and other selective hematologic malignancies. We're very pleased with the progress we have made and look forward to sharing future updates. Having provided a top-line overview of our 2016 performance results, I'd like to reiterate key clinical expectations for 2017. Building upon momentum from an exceptionally robust fourth quarter, we have started the year in strong fashion. We successfully concluded the third cohort of our Phase 1 multiple myeloma trial, provided an overview of safety and initial efficacy results, as well as initiated the fourth cohort of our Phase 1 trial of CLR 131, a full quarter ahead of schedule. We announced two additional patent actions and completed the WARF license agreement as discussed earlier in the call. This has consolidated our control over multiple myeloma, cementing our control over the development of CLR 131 in all therapeutic areas. We have also cited that we anticipate the initiation of our NCI-supported Phase 2 clinical trial of CLR 131 in multiple myeloma and other hematologic malignancies during this current quarter with trial updates expected in the second half of 2017. During the course of the rest of the year, we expect to provide additional updates on the fourth cohort from our Phase 1 clinical trial, as well as updates on the progress of our in vivo studies of PDCs for select solid tumors in collaboration with Pierre Fabre. As always, you may also count on our announcing any additional milestones and events as they occur. In conclusion, I'd like to thank you very much for your participation on this call, and for your continued interest in Cellectar. At this time, Chad, Jarrod and I welcome any questions that you may have.

Thank you. [Operator Instructions] And our first question comes from Wangzhi Li of Ladenburg. Your line is open.

Hey, good afternoon. Thanks for taking my questions and congrats on all the progress made. So just first I want to confirm that the Phase 2 study is started already.

All right, sure. First of all, Wangzhi, thank you for your coverage of the company and we appreciate your recent update note. It's very comprehensive and very much appreciated. Our Phase 2 - the guidance that we provided relative to the Phase 2 study was initiated - was initiation in the first quarter of this year. It has not currently been initiated and we will announce that event as it occurs. We fully anticipate to achieve the objective that we set for ourselves. Just as a reminder, we did accelerate guidance from the first half of 2017 to the first quarter.

Okay. Got you. So you're - I mean, you basically expect to initiate in the next two weeks, right?

Based on my full understanding of the calendar that we use you are correct. Being in the middle March, [and this is the area of 15th, 16th] [ph]. You are correct. We fully anticipate to make that announcement. Thank you.

Okay, great. And I know it is early, but any guidance in terms of timeline to complete the trial. It's like can we - I mean, you said initial data in second half of this year, when do you think you can complete the trial like [December 2018] [ph] or something like that?

Yes. We believe we will complete the trial in the 2018 timeframe and roughly we believe it's approximately a year-and-a-half or so to do that, approximately 18 months. Jarrod, any thoughts?

Yes. And I would just like to make sure that for those folks that may not be quite as clear on the study design, the way the study is designed is that we - with each of the cohorts or each disease group, we are able to complete those individually and progress - based on data review, progress free into future studies in those various disease cohorts without waiting for the rest of the study to complete.

So you can just expand cohort right identifier activity there?

Yes. So just for clarity, say, the multiple myeloma cohort, say, right now we could expanded up to a number, we allow each cohort to be expanded. But just say we've got to 40 patients in the cohort we felt confident with the data, we could then close that cohort, lock that dataset and go forward with the FDA into an end-of-Phase-2 meeting or a Phase 2b, Phase 3 adaptive pivotal design sort of approach. Something of that nature could happen with that cohort or any of the other three cohorts in the study.

Okay. Got you. So got you - and in terms of the endpoints, I mean the primary endpoint is overall response rate and the secondary is time to progression, right, for the…

You mean in the Phase 2 study one of the endpoints?

Yes. The Phase 2 study, the primary endpoint is the ORR and secondary endpoint is time to progression, is that correct?

Secondary is more than just time to progression. We have a few secondaries. But, yes, the primary is overall response rate. Secondary, one of which is progression free survival, one of which is overall survival, and that we do have time to progression as an endpoint we're monitoring as well as some others. So we are trying to evaluate the potential endpoints that could be used to differentiate the drug in a pivotal study.

Okay. So a question for that is you have four different cohorts like the - maybe the importance of different endpoints where it's a little bit differently among the different cohorts. For example, the multiple myeloma maybe the ORR is less, critical versus the PFS, right? As for CLR maybe the ORR is more important. So I just wonder, if you thoughts on that on those aspects like how to - and if you use the same primary endpoint for different cohorts?

I'm saying - everybody is looking at me, because I'm trying to think about what you just said and I make sure I captured it correctly. So I'm going to repeat what I think you asked.

So - yes, I can - sorry, I can repeat. What I mean, like you for the different cohort, different disease, they - in terms for evaluating the benefits like ORR response versus PFS, right, the importance may be different for these indications. For example, multiple myeloma, the PFS and OS is more important than the response rate, right? But for CLR and maybe others the ORR I think is very commonly used as a primary endpoint in pivotal studies. So I just wonder - in your Phase 2, of course, I understand for specifically you want to get different cohort by you use the same primary endpoints for different cohorts.

Yes.

So just if I have any thoughts on that how do you value that different endpoints in different cohorts when you readout the data?

Yes, I think that it will be dependent upon the exact data. I think, yes, as we reported in the earlier and today's call, we are seeing an 86% overall response rate essentially in the Phase 1 study overall clinical benefit. And I think that as we look at the overall response rate, I agree with you that when it comes to multiple myeloma survival endpoints, progression-free survival or median overall survival more importantly are the more important endpoints. But when you do shift to some of the lymphomas overall response rate becomes more relevant, because some of them are of a nature where the patients' survival goes out quite a number of years. That said, what we've done is try to create a large enough, what I'll call, bucket endpoints that we are able to monitor all of these under one study and then use the various ones to report out and as a guide - as guidance for what we would do in a pivotal study design.

Okay. Got you. Great. And maybe one more question for the clinic side, the Cohort 3 in terms of the update on the PFS and OS, you mentioned that the second quarter, but I guess it's more like the late, right, late second quarter like May or June.

I mean, what we did the guidance - good question, Wangzhi. The guidance that we had provided was multiple updates in the first half of the year. We've already have done that relative to some of these surrogate efficacy markers as well as the adverse event profile. Those are easy to calculate and compile early on. To your point, the survival markers will be more challenging and need more time to obviously mature, right. So I would not expect to - I don't to provide any guidance. But I would not expect to see that in the near-term.

Okay. Got you. Great. And maybe now a financial question for, Chad. So you - I'm trying to figure out the EPS for the fourth quarter. So you're finding in the press release, you provided the numbers for the full year 2016. Specifically, the shares used for EPS calculation is a 4.5 million shares, right, for 2016. How exactly is that - has been derived, because you have increased a lot of shares in the fourth quarter, right, because of financing? And what's your number should I use for calculating the EPS for the fourth quarter specifically and what is the EPS for the fourth quarter?

I don't have the EPS calculated sitting in front of me at the moment. But I will say this. The thing you need to factor in to your analysis is the fact that we closed the financing on November 29. What you have to do is you have to include the entire impact of all the common shares that could be issued as a result of the issuance of the preferred shares during the entire period. In other words, you don't include the preferred shares as converted. You treat them as being converted upon the date of closing. And that I think is going to close the gap in your analysis. Beyond that, again, I don't have it right at my fingertips, but certainly if that doesn't provide you with the solution, I can follow up offline with you and essentially you would be able to calculate fairly easily either by backing into it based upon taking off the first three quarters or I can - we can identify the calculation as a result of the timing of the financing, which is really the only impact in the fourth quarter of [any sorts] [ph].

Okay. Great. Thank you. And then in terms of the R&D cost, any color for 2017? I mean, you initiate the - [if it's too study] [ph] to expect the R&D cost to increase, but any color on how much like, what's the degree of increases with the model mean? And how - for the 2 million grant, how you will you get the money? It's more like based on patient enrollment for reimbursement or you get the money before you actually spend it.

So before we have Chad discuss how the NCI reimbursement works. I mean, we haven't provided guidance, specific guidance relative to R&D. What we have provided, Wangzhi, is that our current cash position carries us into the first quarter of 2018. So I think that will allow you to work backwards. I will also say we have put out in the public domain that the cost, approximate cost of the Phase 2 is $4 million. And so, the NCI grant for background will cover 50%, that is approximately $2 million. So, Chad, perhaps you can talk to some of the logistics associated with the NCI.

Right. So I agree with Jim's perspective. I want to be responsive, but at the same time, we have not provided a breakdown of P&L at that level. I will say there is an increase in R&D spend related to the fact that we essentially have two clinical trials running during 2017. As Jim indicated, we have approximately 50% of the Phase 2 clinical trial is going to be recovered through the NCI grant. From a timing of the cash perspective, you are partially correct that patient enrollment does influence the timing of that reimbursement. There are other factors that are embedded in the agreement that we have with NCI. But at a high level, I think you can presume that we expect to see the majority of the NCI funds come in during 2017. And obviously, those will be used to reduce the spend for the trial itself. And just a point of clarification here, that will not be considered revenue. That will be considered a reduction of the R&D spend itself. So that, hopefully, at least gives you a high level. And as Jim said, that coupled with the anticipated runway that we've disclosed already, should give you a sense of how those costs will roll out during 2017.

Okay. Got you. That is very helpful. Thanks very much for answering my questions, and congrats again on the progress.

Terrific. Thank you, Wangzhi.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.