Letter from CEO
March 1, 2007
Dear Fellow Celsion Shareholder,
I'm Michael Tardugno, your company's President & CEO. I recently joined the Management Team, and want to take this opportunity to express my confidence in Celsion and excitement for the promise of our technology. If you didn't have the opportunity to participate in our February 22nd Quarterly Conference call, I invite you listen to it by accessing the call on our website at www.Celsion.com. Our remarks and the question and answer period will give you an in-depth review of our financial situation and some insight into my thoughts concerning our focus for the immediate future, which I am summarizing in this letter.
The Financial Front
We have a lot of good news on the financial front. Our fourth-quarter sales of $4.5 million were a record for Celsion. So far this year, they are on track with a year-end 2007 sales estimate of $17 million to $18 million. Gross margins improved by 10 percent, largely on the strength of our cost reduction associated with a new contract manufacturer. And our operating losses for the quarter were reduced by almost 50 percent, in line with spending controls and operating margin improvements.
ThermoDox and our Technology
ThermoDox's clinical trials are also promising. Recently, the National Cancer Institute presented a positive interim report, which would not normally be presented at this stage of a Phase I NCI study. Recurrent chest wall cancer trials continue to progress with seven patients enrolled and we intend to present our Phase III protocol to the FDA for review through their Special Protocol Assessment (SPA) by the end of this quarter. This will ensure that we have agreed endpoints before we start the study. It's these kinds of exciting possibilities that attracted me to Celsion.
Our Distinctiveness
What also attracted me most to Celsion were two distinctive propositions: Celsion's therapeutic focus and Celsion's drug technology.
Concerning Celsion's therapeutic focus, our ThermoDox development program has the potential to improve treatments for two diseases that currently have limited effective treatment options: primary liver cancer and recurrent chest wall cancer. People are desperate to see improvements in the available treatments for these devastating diseases. ThermoDox has the potential to help.
With regard to ThermoDox's drug technology, we've encapsulated a powerful anti-cancer agent and can deliver it to targeted regions, releasing it in high concentration to do their work most effectively. With this drug technology, we can improve the value of known agents. This makes Celsion's development strategy relatively low risk since we are not inventing any new chemical entities and taking on the associated high cost and approval risk. The safety, efficacy and tolerability of the agents we are using are well known. We are improving their value. It's a product technology I can only describe as elegant.
Our Path Forward
Celsion's dedicated staff and talented board of directors share a common vision and strategy for the future. It's my intention to leverage that vision to build a results focused company with a six-point plan, which I hope will make it clear that my number one responsibility is to you, our shareholders, and to improving the value of your investment in Celsion.
My six-point plan is as follows:
1. Eliminate undue risks to our oncology program and our financial plan. Our recent success in settling the AMS lawsuit is a good example of this. Instead of doggedly defending our non-infringement position and risking the uncertainty of a trial and its costs, we chose to settle. This will allow the company to focus on ThermoDox and doing what we can to encourage an early purchase of our Prolieve franchise by Boston Scientific. We settled the lawsuit with the participation and approval of Boston Scientific, at a royalty that will have no impact on sales growth and minimal, if any, impact on the profitability of Prolieve.
2. Focus on our priorities: ThermoDox liver cancer and recurrent chest wall programs.
When I arrived, it seemed to me that we were attempting to do a lot. A company our size must prioritize. The operating principle is simple: "less is more." By focusing we will deliver higher quality results on time, on budget.
3. Monetize our Prolieve assets and use the proceeds to accelerate ThermoDox development.
We will do this by continuing to reduce the cost of goods to improve our cash position. We'll also focus on eliminating any barriers to an early purchase by Boston Scientific.
4. Build organizational competencies by adding qualified staff to our Clinical Operations, Regulatory Affairs and Quality functions without increasing headcount.
Consistent with this, we have hired two people in the Clinical Operations area: Juan Carlos Jaramillo, M.D. as Director of Clinical Operations. Henry Castro, M.D. from the Georgetown Medical Center will join Dr. Jaramillo's staff as Associate Director of Clinical Operations. Additionally, Mark Italia will be joining us from Gilead Sciences to be our new Head of Quality Assurance. Mark has a PhD in analytical chemistry and has experience in liposome manufacturing.
5. Ensure an environment that values results, accountability and transparency.
I've been working with our compensation committee to implement plans and objectives that reward our staff for these values.
6. Improve communications with our current and future shareholders through such things as webcasts, newsletters and something I'd like to try -- a weekly blog or similar format. Look for more information on this at our spring shareholders' meeting.
I'm confident this plan will help us build on a very successful fourth quarter for 2006. Thank you for being a part of Celsion's achievements and I look forward to your continued support and to speaking more with you in the future.
Sincerely,
Michael H. Tardugno
President & Chief Executive Officer
celsion.com |
