"We have never been so well positioned"— Michael Tardugno, Celsion Q3 conference call

While I was unable to listen live and participate in the Q3 conference call, after listening to the replay, I was extremely impressed with the tone and confidence exuded by management during the call. Of course, most investors already received the news they wanted to hear in the press release last Friday (380 realized, or projected to be realized, and data due in January), still, the company provided updates on a few fronts worth noting. For the most part, yesterday's call was a strong reiteration of many of the things management has said before.

A transcript from Seeking Alpha can be found here, but note that there are some egregious mistakes made throughout the transcript. As an example, in some places, Greg Weaver's name is used in place of Dr. Borys, so please re-read this carefully. Even better, I encourage you to listen to the replay, linked here.

• CEO described ThermoDox as a drug that could potentially "extend life and perhaps provide a cure" for those with HCC. The "C" word is not one to be used lightly, so those are some pretty strong words. That said, bulls shouldn't get too excited over this, since RFA by itself is meant to be a "curative" treatment. We know most patients will recur even with ThermoDox, so it is really a question of how long progression is delayed. Remember, HCC is the result of underlying liver disease, the manifestation of which is in a lesion. 
• Regulatory support for ThermoDox and the HEAT study again strongly re-emphasized...per the CEO, "they [regulators] get it."
• Re-affirmation that it is the company's expectation that the control arm in the HEAT study will have a 12 month median PFS time, and OS ~30M. Per the CEO, "outcome statistics have remained constant since we began research in HCC over 6 years ago." The expectations of the performance of the control arm will forever be debated until top-line data is finally released, but management has never once qualified or stepped back from that 12 month number. For what it is worth, I personally think PFS will come in around 15-16 months, with OS up closer towards 40 months. As some of you know, many (including Mangrove Partners' Nathaniel August and several others) have tried "modeling" the HEAT study using enrollment data and events recorded at the interim analysis date and now for 380. According to some, if the control arm is truly 12 months, the separation in the curves could be fairly large due to unconfirmed guesses/estimates by many that the pooled median for the entire trial is in the 20-25 month range. I try not to speculate at all in this area (everything is purely just that, speculation based on fancy excel spreadsheets), as it is not an area of expertise of mine nor do I think such models carry much utility given all the variables that need to be accounted for. Sorry for the digression on this point. 
• Stressed the importance of data quality, exhibited by frequent checks and reviews of data timeliness, concordance/discordance, and audits of their CROs...again, a theme we have heard before from the company, "no surprises." With a radiologic endpoint such as PFS, the importance of data quality is critical. Shareholders can be confident, in my strong opinion, that Dr. Borys and Celsion management have placed data quality as perhaps the highest priority in executing the HEAT study. 
• Payer/market access research reveals potential pricing is at the "top of the charts" for ThermoDox. "Top of the charts" in my opinion likely means a price $25,000-$50,000 per dose. Being able to speak to this given that I have some background in this area, you can bet that Celsion conducted this market research (through a consultancy) with medical and pharmacy directors from various public and private payers. 
• Half day meeting (in what was supposed to be a 1 hour meeting) with Chinese sFDA recently conducted. The fact that China will accept an NDA without the need for a reference application is a significant development, make no mistake. This approach in China was largely due to the company's partnership with Hisun, which the company has mentioned before, would afford them regulatory pathway benefits in the country. We are already seeing the fruits of their investment in that partnership (see here and here for good primers on drug approvals in China). Now, I will point out, approval is one thing, reimbursement is another, same as is the case in Europe, so that remains to be seen in China. 
• In reference to Hisun, while Jeff Church has mentioned before that Hisun has a relationship with Pfizer (this was noted in the Celsion Hisun PR as well), I found it interesting that he also called out their relationship with Eli Lilly, a first if my memory serves me right. 
• Started the rolling NDA process using a common technical document (CTD). In Q&A, noted that first 2 modules can be filed at the time of top-line data release in January assuming the FDA allows rolling submission (I don't see why this is even a question, should be a given as a function of fast-track). The company expects to file in the US and EMA in same time-frame as previously guided, then China shortly thereafter. 
• ABLATE is underway in 4 locations, recruitment being limited to preserve cash. Will ramp up after HEAT study.
• Company will be announcing additional research collaborations for HIFU in combination with ThermoDox...."I can tell you now there will be others", something that has been telegraphed before by the CEO on prior calls as it relates to HIFU research partnerships. 
• No current plans to raise cash before HEAT topline results. Once again, re-stated several times. I have been telling many publicly that it was my firm belief the company would not raise cash ahead of the top-line data, and this appears to be set in stone at this point. 
• $22.7M in cash to end the quarter (partly due to $4M from warrants). Company has an additional $5M loan that can be drawn from Oxford assuming a positive HEAT study. Per the CFO, "emphasizes the wise use of cash and cost controls and our ability to make cash and by extension our equity work as hard as possible"
• HEAT study designed to show statistical and clinical significance per Dr. Borys. With regard to OS, CEO said that "survival trends" might be available at the time of FDA approval, which is expected for end of 2013 at the earliest. Previously, the company said mid-2014 for OS data, perhaps this timeline has changed. Further adding to this, Dr. Borys said they "have very high confidence" in confirming OS assuming assuming positive PFS data, largely a function of the company's strong belief that PFS in the HCC setting is an especially strong predictor of survival. 
• Philips phase II study to begin in "early 2013". It is worth pointing out in honesty this does represent a slip on management's original timeline to have first patient enrolled by the end of 2012. I'll give them a pass on it, mainly because the fault could be with Philips for all we know, and secondly, because I want their attention on HEAT anyways. 
• Per the Q&A, priority review will be conditioned upon the outcome of a pre-NDA meeting with the FDA. This is interesting, as management has slightly changed their tone from priority review being a "given" as a function of fast-track, to being "conditioned" on the pre-NDA outcome.
• Licensing interest remains very high, but management basically reconfirmed that they won't sign any license deals until data is released in January, at which point, the company would be "entertaining multiple term sheets". Its been a while since management has promised a large second deal, but they "expect our [their] patience to pay off" when it's all said and done. I personally think a licensing deal will RAPIDLY follow announcement of top-line results with a major big pharma company seeking aggressive expansion in emerging markets. As I have said before, ThermoDox presents the best of both worlds for big pharma, a very attractive oncology asset in China, and one which will receive considerable off-label attention in the developed regions of the world for CRLM. 
• Company is definitely considering commercializing the US market on their own, which is nothing new. I think the company will in fact retain the US market for themselves (or do some form of co-marketing agreement as mentioned on the call). 
• In response to one of the questions posed to management about the extent of data that would be released in the top-line data PR, the company reiterated that they will be seeking publication in a major medical journal, and of course, will be limited in the amount of data they can,or would want to disclose, before peer-review. Expect median PFS times in both arms and a hazard ratio to go along with it, nothing more. 
• A fellow shareholder (Trond Hildahl, whose name SA butchered on the transcript!) asked a question which danced around a topic I was hoping to ask management re: the number of RFA treatments performed within the first month/month and half following initial treatment. Management simply said that RFA is repeatable, which it is, and ThermoDox does not change that. What Trond's question was getting it is the number of RFA treatments necessary to achieve technical success, or an initial complete ablation. I will boldly predict that there will be some significant differences here between the 3-5 and 5-7cm lesions in BOTH arms in terms of technical success, while I expect ThermoDox to slightly improve complete ablation rates. The 3-5cm group will likely have an 80% complete ablation rate after 1 treatment, and that number will go up to ~95% following the second treatment to achieve a complete ablation within that first month and half per protocol. I expect the ThermoDox arm might achieve closer to 97-98% complete ablation rates in the 3-5cm group. The balance of these patients are considered treatment failures, and immediately have PFS events at time = 0. The 5-7cm group will likely have a 65% complete ablation rate initially, and this number will likely go as high as 80-85% in the control arm with the second treatment per protocol, again, with the balance being immediate treatment failures. So, yes, between 15 and 20% of control arm patients in the 5-7cm will immediately event at time = 0 in my opinion. In the ThermoDox arm, I would be really happy to see complete ablation rates ~90% in this cohort after 2 initial attempts. By the way, these numbers were not just pulled out of thin air, please review for yourself some of the literature on my blog for support of this.
  So, that gets at Trond's question. My question is including both these initial treatments to achieve technical success, how many RFA's are patients receiving POST-PROGRESSION in both arms? Again, this becomes a critical, critical driver in the derivation of revenue estimates for ThermoDox, and one that all analysts have overlooked for some reason. While I want management to speak to this for the HEAT study in particular themselves, I would expect patients receive at least 2-3 RFAs during their entire course of treatment, some as many as 5 or 6 in total. Keep in mind, not all patients will remain eligible for curative treatments such as RFA following progression, some immediately would go to TACE or Nexavar. The specific patterns of progression exhibited in each arm is something I anxiously await to see in the full data set presented for publication. 

I definitely digressed more than usual here, but hopefully it was helpful in some ways. I also had some questions that I was hoping to get answered on the call yesterday (like the average # RFA question above), and to that end, I have reached to management to see if they could give me 15-20 minutes to discuss some of the questions I posted. Should I get that opportunity, I will update this post with what I hear. 

After a lot thinking, researching, interacting with other shareholders, physicians, Celsion management, questioning my own thoughts, and actively soliciting opposing views, I continue to come to the same conclusion when it is all said and done: Celsion will unveil a new standard of care for 1st line intermediate HCC come January. 

Best,
Siavoche
#15vs25

UPDATED- Celsion Pleasantly Surprises Investors with 380+ PFS Event Confirmation, Final Data Targeted for January. Griffin Securities Reiterates $18 PT

Needless to say, today's PR was quite a surprise and I think the market liked what they heard. I don't have much to say here other than to re-post the PR and highlight some key areas for investors. This is significant since I was under the strong impression that management had no intentions of PR'ing the 380+, exactly as they did prior to the interim analysis last November. You can bet the final number of events will be well over 380 just to be extra safe, I would count on 400 events or so being the final count.

My own takeaways from the PR:

1. Management listens to investors, I have said this before as well. I can bet this is not necessarily what they wanted to do (who knows, maybe they had intentions of under-promising and over-delivering on this topic as well, as they have been doing for much of 2012 to be honest), but they knew it would be received well by the investor community. 
2. The company absolutely will not be raising money, period. For a development stage biotech facing life and death here, this is a major, MAJOR sign of confidence. HEAT failure means bankruptcy before the end of 2013. If they wanted to, management could have easily issued 10M shares when the stock was 5 or 6, and had plenty of cushion for several years to come. The fact that they did not, in my humble opinion, speaks volumes about their own sense of confidence in the HEAT study, and reaffirms that they are actively keeping in mind delivering maximum value to shareholders.
3. Data will be out in January, plain and simple. It's very possible data could be out before opex (10 weeks from now takes us right to op ex), but that is pushing it given the holidays, etc. Of note, the PR did say that they "project" that 380+ has been realized, so it is very likely this has not yet been confirmed per se, but that is likely a formality at this point. 

From today's PR (emphasis, colors mine):

LAWRENCEVILLE, NJ--(Marketwire - Nov 9, 2012) - Celsion Corporation ( NASDAQ : CLSN ), a leading oncology drug development company, today announced that it projects that a minimum of 380 events of progression have been realized in the Company's pivotal, Phase III HEAT Study, a multinational, double-blind, placebo-controlled, pivotal study of ThermoDox® in combination with radiofrequency ablation (RFA) for the treatment of hepatocellular carcinoma (HCC), also known as primary liver cancer. According to protocol, 380 events of progression, subject to confirmation by the Study's independent Data Monitoring Committee (DMC), trigger the data collection process, unblinding and final analysis of the results by the DMC. Progression Free Survival (PFS) is the HEAT Study's primary endpoint. The HEAT Study has been granted Special Protocol Assessment by the FDA. Following DMC review, the Company plans to disclose top line results, an announcement that is expected to occur in January 2013.

"The HEAT Study addresses a significant and growing global unmet medical need in oncology, primary liver cancer. With a positive outcome, ThermoDox® will become the most important 1st line therapy for patients with non-resectable disease," said Michael H. Tardugno, Celsion's President and Chief Executive Officer. "The positive implications of this study, for patients and their families, the healthcare community, our investors and employees, cannot be overestimated."

Mr. Tardugno added: "We enter this transformative period from a position of financial strength, having taken ThermoDox® through to pivotal data while maintaining full worldwide rights outside of Japan, a minimal number of shares outstanding and a strong balance sheet." The Company ended the second quarter of 2012 with $24 million in cash, subsequently supplemented by $4.7 million in option and warrant exercises. Celsion also has available to draw an additional $5 million from a $10 million loan facility with Oxford Finance LLC and Horizon Technology Finance Corporation, pending positive data from the Phase III HEAT Study. "Consistent with our previous guidance, we have no plans to raise additional capital before disclosing top line data from the HEAT Study which, if positive, will vastly expand the Company's strategic and financing options."

Just moments after this PR, a note was issued by Keith Markey from Griffin Securities re-affirming their $18 price target on the stock. Now, I have brought this up before, but even though Griffin has the highest price target on the stock, I will boldly say they are most accurately capturing ThermoDox' true valuation compared to the other analysts from Rodman (formerly I suppose at this point), Brean Murray, and Roth Capital. Keep in mind this valuation from Dr. Markey STILL does NOT include any revenue from the RCW indication, but it does include off-label colorectal liver mets revenue. As I have mentioned here, it is my strong belief that off-label use for colorectal liver mets will be a given if the HEAT trial succeeds. Another factor to be aware of, Dr. Markey is being conservative by only assuming one treatment per patient based on an incidence model, and does not reflect that many patients will receive as many as 5 RFAs potentially through their course of treatment (more likely, between 2-3). So, again, while his target price is high, it is still a very realistic one. I thank Keith again for allowing me to post his note here for my blog viewers.


I am excited, and looking forward to Monday's Q3 conference call and the Lazard Conference presentation as well. As mentioned, I will be updating my list of questions for management ahead of the Monday call as well.

Best,
Siavoche
#15vs25

Guest Author Post: Celsion and the Risks of Clinical Trials- By Phil Kobierowski (@philkobi)

Several weeks ago, I invited viewers of my blog/twitter-verse to submit articles representing "rational bear views" for Celsion. Some have questioned why I am doing this, and the answer is very simple and straight-forward. From my very first blog post, I made clear that this would be a forum to provide investors with as much information as possible regarding Celsion, and to share with you resources/research that have guided my own investment rationale. I have never been one to shy away from potential bear views, and have used them, in fact, to help with my own due diligence. Why have I historically brought up concerns over PFS as the endpoint in the HEAT study, intrahepatic distant spread vs local progression, competition with TACE, etc? These were entirely guided by me second guessing my own views of ThermoDox and the HEAT study, and because of it frankly, I think it has given me an even greater confidence and comfort in my investment rationale (see my bulls/bears article for more on this). Separate from the above, I am also thankful for the many tweets/feedback I have received regarding my blog, including from the likes of Adam Feuerstein (and Celsion management for that matter), for being an "informative" site, and in some cases, the site to look at for Celsion. That is truly humbling and means the most to me, primarily because I never envisioned this blog to be a tool for "pumping", never, EVER, despite my own personal, long bias. To that end, an "informative" site needs to convey all angles, and while I have made every effort on my part to do that, I wanted to open the doors for you to express your opinions as well using this blog as a platform to reach other Celsion investors/stakeholders. Transparency and objectivity mean everything in biotech investing, literally, so this is an exercise I am proud of doing.

Sorry for the long introduction, I'll jump straight into my first guest author blog post from Phil Kobierowski (@philkobi on twitter). I don't know Phil personally, but have exchanged several tweets with him over the last several months. It did not take long for me to realize that he is both an intelligent and very respectful guy, and I am pleased to share with you his "bear views" on Celsion. Note, his disclosure is listed at the bottom of the post.

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Celsion and the Risks of Clinical Trials

By: Phil Kobierowski, @philkobi (celsion.blogspot.com guest author)

As we near the results of the pivotal, long-awaited, Phase III "HEAT" clinical trial for Celsion Corp’s ThermoDox, optimistic investors might want to take a step back and consider why they are holding shares of Celsion (CLSN) and evaluate the potential risks associated with clinical trials.

The HEAT trial is Celsion’s double-blinded, placebo controlled Phase III trial for the treatment of primary liver cancer, or hepatocellular carcinoma (HCC).  Here are five reasons that would dampen my enthusiasm regarding the upcoming HEAT trial results that are expected to be announced around December 2012:

1. The first item worth noting is that I should have been writing this almost two years ago.  What that means is that Celsion management has been notorious in missing their forecasted milestones.
   
   The HEAT trial seemed to start well.  On a press release issued September 24, 2008 "Celsion reports that site initiation and patient enrollment are tracking well against its most recent projections." This led to their forecast 19 months later in May 13, 2010 that predicted the trial ending a year and a half before Celsion’s current December 2012 forecast: "Celsion expects the study could be completed by the middle of 2011, and pending positive data, a New Drug Application would be submitted to the FDA before the end of 2011". September 21, 2009, is another example of HEAT trial delays, this time regarding patient enrollment completion: "We expect to complete enrollment in the spring of 2010."  Then, in an August 24, 2010 press release, we see Celsion’s expected enrollment completion pushed-back over half a year: "With nearly 70% of patients enrolled in the trial, Celsion is targeting to complete patient enrollment by year end 2010." When did full enrollment finally happen?  July 2011 for the initial target enrollment of 600, and May 2012 year for the full target of 700.
   
   Granted, if the HEAT results are solid, these delays are a moot point.  Delays in clinical trial completion are not rare and certainly not proof of problems with the trial.  Nonetheless, if Celsion management has significantly missed their forecasting of how the HEAT trial would progress, what other parts of the trial might they be missing or will be a surprise to investors?  For example, is the control arm of the trial significantly exceeding Celsion’s expectations when compared to the ThermoDox arm?
2. The noticeably low market cap of Celsion has long been a mystery, for me at least.   Despite the share price tripling from June to September of this year (followed by the recent pullback), the current $145 market cap is paltry for a company with a promising, late-stage product that is a potential first-line standard of care treatment for a major cancer.
   
   Is this a hidden opportunity, or is there a hidden, unpublicized reason for this?  Has the aforementioned timeline delay in the HEAT trial’s completion caused a lack of credibility with, or lack of interest from, investors?  After so many years of developing ThermoDox, medical conference and Wall St road show presentations, etc, it's hard to think that the low market cap is due to the market being really unaware of Celsion.  So what is the reason?  The voice in my head (one of them at least) brings to mind to adage: “if you don't know who is being set-up as the dupe at the poker game, then it's you”.  I’m just sayin’…
3. There is a shortage of evidence supporting the efficacy of ThermoDox.  Celsion's Phase I clinical trial for ThermoDox in liver cancer showed very promising results, no doubt, with a very compelling dose-response correlation.  But with only 7 of the 20 patients enrolled in the entire trial (plus 4 who were censored from results) who were diagnosed with HCC (the HEAT trial indication), and with the lack of a Phase II trial because Celsion moved from their Phase I right to the Phase III HEAT, well, … you get the point.
   
   Some could argue that Celsion’s recently released DIGNITY Phase I trial results (using ThermoDox for the treatment of recurrent chest wall breast cancer – another of several indications being considered for ThermoDox) looked encouraging, and therefore, would be reconfirming of ThermoDox’s’s potential.  But, there is really no way to compare the results of the small, 11 patient group in the DIGNITY trial - who were all previously treated with harsh chemotherapy and/or radiation treatments - to those in the 700 patient HEAT trial where ThermoDox is a front-line, induction therapy.  Further, the trials are conducted on completely different indications and are evaluated by very different endpoints.  It is just 2 totally different situations.
4. The HEAT trial is only 80% powered for its endpoint of a 33% improvement in progression free survival (PFS) over the control arm.  This means that even if ThermoDox could produce such a 33% PFS improvement if used as a global standard of care, and the HEAT clinical trial procedures, protocols, etc, have no glitches; there is still a 20% chance that the HEAT trial is not powered sufficiently to demonstrate that its primary endpoint is met.
   
   Granted, if ThermoDox’s actually efficacy far exceeds this 33% PFS improvement (as it very well may) then the powering of the trial becomes less of an issue.  But, there is still an unavoidable element of random luck involved and the potential of a steep drop in share price if things don’t work out.
   
   Further, the HEAT trial is being conducted in 79 different, globally located, clinical sites, of which only nine are in the United States.  The administration of radio frequency ablation (RFA) is a key component in both the ThermoDox arm and the control arm in all the study sites of the HEAT trial.  (Both arms use RFA to burn cancer tumors, the heat of which triggers the injected ThermoDox – which is technically a temperature sensitive liposome that encapsulates doxorubicin – a common chemotherapeutic agent, to release its chemotherapeutic payload at the tumor site.)   The effectiveness of RFA may significantly be determined by the skill and practice of the individual interventional radiologist performing the RFA in the HEAT trial, who are located in, and have been trained, from all parts of the globe.  Considering this, and that ThermoDox may have little effect on any cancer cells located away from the ablated tumor(s), it becomes evident that there are many elements that will affect the results of the HEAT trial, perhaps negatively, that have nothing to do with ThermoDox.
5. Will the unique requirements for administering ThermoDox restrict its adoption?  ThermoDox is not a cure, but only a treatment that hopes to post-pone the recurrence of cancer by several months longer than current treatments (such as RFA alone).  As mentioned above, ThermoDox is administered in conjunction with a heat source; RFA in the case of the HEAT trail.  ThermoDox is injected intravenously (IV), then 30 minutes after the IV, the RFA procedure must be initiated.  Any period outside this 30 minute window reduces the optimal pharmacokinetics, and thus the effectiveness, of ThermoDox.
   
   One under-publicized concern is the extra logistical effort required coordinate this: two different procedures, conducted at two different locations by two different staffs at a hospital or oncology center.  All within a very tight timeframe.  The poster presentation of the aforementioned DIGNITY trial acknowledges this challenge with ThermoDox:   "CHALLENGES - Infusion of cytotoxic agent in chemotherapy suite followed by transfer to radiologic oncology to administer hyperthermia."  Such a challenge is seemingly manageable in a clinical trial setting where there are just a few patients and where it is possible to get simultaneous coordination from all needed medical staffs. But how will this translate as a standard of care, where care centers are large, understaffed, and unexpected delays are the norm?  

For the sake of Celsion, its investors, and most importantly for the benefit of the tens of thousands of patients that could benefit from such a potentially beneficial treatment as ThermoDox, we should all hope for positive data results from the HEAT trial. And I acknowledge there are many reasons (that I have not discussed here) to believe that it may. But that should not preclude each investor from objectively assessing the risks inherent to any investment.

Disclosure: I am a long-term Celsion shareholder with no plans to initiate a net short position.

Questions for Celsion Management During Upcoming Q3 CC

[NOTE: LIST WILL BE UPDATED AS CC APPROACHES] As per usual, I have a laundry list of questions for Celsion management during the upcoming conference call (likely mid-Nov, tbd for now). Especially since this will likely be the last time we hear management until the much anticipated top-line results from the HEAT study are announced, I pulled out all the stops in terms of questions for the company. Many of these are very "forward-looking" if you will, and are only relevant if ThermoDox succeeds (who cares if patients were treated on an outpatient basis versus inpatient if the study fails, right?), at the same time, these are geared towards getting investors thinking about the challenges that may come down the road from a competitive/marketing perspective assuming ThermoDox passes this critical upcoming test.

1. Has 380 PFS events been confirmed, triggering data analysis?
• Can we still expect DATA by end of the year?
2. ***[NEWLY ADDED] There is a clear consensus amongst journalists and analysts that a successful HEAT trial will immediately march the stock upwards to the $500M+ mkt cap range. Why do you think that despite being a late stage oncology company with a 1st line therapy for one of the largest unaddressed cancers, Wall Street places such a low valuation on the company? Does the company have any comments on this?
3. Without speculating about the treatment arm, how surprised would the company be, especially given the firm and repeated stance of a 12 month estimate for the control arm, if the control arm came in 50% greater than the 12 month estimate the company provided, or 18 months? Given that control arms of clinical trials can, and often do, outperform "historical controls", how likely is this in the HEAT study, particularly when the focus is around a procedure in RFA that is highly influenced by operator skill and experience?
• ***We know that the HEAT trial sites are some of the best and most reputable sites in the world with significant experience with RFA. For this same reason, is it fair to say that a real possibility exists for the control arm to significantly outperform the 12 month PFS guidance the company has provided? If not, why?
4. Can we assume that most HEAT patients are in the 3-5cm cohort? What proportion of patients roughly are in each cohort?
5. I read in an analyst report that 90% of patients in the HEAT trial are Child-Pugh A, can you confirm this? Clearly, there is a big difference in outcomes between A versus B patients.
6. Can you tell us how many RFA treatments a typical patient has received in the HEAT study, approximately? As you know, every analyst covering the stock has assumed only 1 RFA treatment per patient, which we know with certainty fails to accurately reflect the number of RFA treatments patients receive throughout their overall HCC treatment.
7. On your RCW poster presented at ESMO, the company highlighted what I like to call a "logistical" challenge for getting the timing of ThermoDox aligned with hyperthermia treatment, specifically, "infusion of cytotoxic agent in chemotherapy suite followed by transfer to radiologic oncology to administer hyperthermia." How has this noted challenge played out in the HEAT study specifically, and how do you expect this to play out in the real world? What implications does this have for how the company educates and targets future customers?
8. [NEWLY ADDED] The company clearly made some assumptions when designing the HEAT study, such as the hypothesized effect ThermoDox would have in reducing local and intrahepatic distant spread. What assumptions did the company make in terms of ThermoDox' ability to reduce intrahepatic distant spread, both within the same liver segment, and in other liver segments? As an aside, I personally expect ThermoDox to reduce at least 80% of "true" local progression, but struggle in assigning a number in terms of hypothesized reduction in intrahepatic distant spread. Again, and again as I have stated, this will make all the difference in the world in terms of yielding great results versus spectacular results when it comes to PFS in particular. 
9. ***Just to confirm, were most patients treated in an outpatient versus inpatient setting? Within outpatient treated patients, what was the distribution between physician offices versus hospital outpatient settings? What percentage of patients, if any, in the HEAT study required any sort of post-treatment observation?
10. ***[NEWLY ADDED] Can you comment on the average number of RFA treatments (factoring in those who will need additional RFA for technical success within the first month as well as downstream post-progression RFA treatments) a typical patient has received in the HEAT study right up until they no longer are eligible for RFA? Some clarity on this would be greatly appreciated, as you know, most analysts are assuming one, single, treatment per patient, which from my understanding, grossly underestimates the number of RFAs a typical patient receives as part of their treatment for HCC. Perhaps even more importantly, this significantly underestimates the revenue estimates analysts are placing on ThermoDox. 
11. [NEWLY ADDED] It is a given that the ThermoDox arm, by definition, will have more adverse events than the RFA-only arm, as a function of the known side-effect profile of doxorubicin. Clearly given all the DMC reviews, these side-effects have been managed appropriately and are relatively minor. That being said, does the company expect any challenges/pushback from clinicians in the real-world with respect to managing side-effects for this population following RFA/ThermoDox?  
12. ***[NEWLY ADDED] If the HEAT study comes close, but ultimately, fails to hit its PFS endpoint in January, would the company still make a case to seek approval? In that scenario, how important does the yet to be mature OS become?
13. ***Let's assume ThermoDox is on the market. If I am a physician about to treat a patient with a 7 cm lesion not amenable to transplantation or resection, tell me exactly why I should use RFA plus ThermoDox as opposed to doxorubicin eluting beads (DEB)-TACE followed by RFA alone? What is the specific point of differentiation here? (to answer my own question for starters, TACE is another cumbersome procedure)
14. What do you expect the bridging study in Japan to look like from a trial design perspective? The company said differences in "SOC" lead to the decision to halt enrollment. Well, what differences in SOC will be reflected in this new bridging study?
15. What would success in the HEAT study mean in terms of potential success in the ongoing ABLATE study? In that context, how does the local progression only primary endpoint in the ABLATE trial affect that trial's chances for success?
16. At the FUS foundation 3rd symposium, some data was presented around a novel thermosensitive liposome with some suggested improvements over Celsion's LTSL in terms of serum stability. Elsewhere, we have seen some data for a "HaT" liposome with apparently much greater serum stability than ThermoDox and improved release dynamics (more than happy to send you the papers). Granted, these products are several years away from clinical application, nowhere near ThermoDox, but how does the company view these newer thermosensitive liposomes? By the same token, do these products present opportunities for the company in terms of next steps for clinical development?

I intend to send all of these to management personally ahead of the call [Already sent earlier draft to management, resent updated list 11/11/2012]. Again, many of these questions are simply not important for the task at hand: making sure ThermoDox hits its PFS endpoint. That is really all that matters here. But, nevertheless, I want these items to stay top of mind for investors/management. 

Best,

Siavoche

FUS Foundation 3rd Symposium Kicks Off: Relevant Highlights for Celsion Investors to Note

Today marks the official kick-off of the Focused Ultrasound Foundation's (FUS) 3rd international symposium taking place from October 14-17th. The FUS foundation really has been the academic vehicle pushing for the adoption of high-intensity focused ultrasound, and its many applications, both in research and clinical settings. This is relevant for Celsion investors because as many of you know, HIFU truly represents the optimal heating modality with which to pair with temperature-sensitive liposomes such as Celsion's ThermoDox. Celsion has 3 ongoing HIFU clinical programs underway, the most advanced of which is the planned Phase II study examining Philips' Sonalleve MRI-HIFU with ThermoDox for the pain palliation of bone metastases. Other trials include an early stage pancreatic cancer study looking at HIFU and ThermoDox in collaboration with the University of Washington, and a study at Oxford University (currently pending IRB approval)  in liver metastases using ultrasound-guided HIFU plus ThermoDox.

The below program includes all the abstracts and poster sessions for the FUS symposium, and while the entire program is extremely interesting from the perspective of seeing HIFU's clinical utility mature across many indications, I would draw interested Celsion stakeholders to the following pages:

• Page 54 - Differences in Intratumoral Distribution of Doxorubicin Releeased from Temperature-Sensitive Liposomes During Hyperthermia, Ablation and Combined Treatment: Highlights the effect of different heating modalities on the release of doxorubicin from ThermoDox (presumably, though cannot confirm) using HIFU. Of interest for future clinical applications using ThermoDox is the finding that a combination of ablative and mild-hyperthermia are optimal to enhance drug delivery.
• Page 55 - Ultrasound-Triggered Release of Doxorubicin from Thermosensitive Liposomes Modified with Poly Copolymers for Cancer Therapy: Demonstrates a next generation temperature sensitive liposome with a more responsive drug release profile than the comparator "temperature-sensitive liposome (TSL)" product, presumably ThermoDox. This is still very early stage, so from a competitive standpoint, it is not clear how this could affect ThermoDox.
• Page 85 - Phase II Trial Design of MRI-Guided High Intensity Focused Ultrasound and Lyso-thermosensitive Liposomal Doxorubicin for Palliation of Painful Bone Metastases: This is not new, as I have talked about this before, but this will be a nice forum for Celsion to discuss their planned joint PII with Philips. The proof of concept of using MRI-HIFU for bone metastases in general was highlighted on Pages 80-82 (page 80 shows outcome of a multi-center PIII trial amongst patients for whom radiation therapy was contraindicated)
• Page 91 - HIFU Ablation for Hepatocellular Carcinoma: Updated Applications: While this presentation does not address temperature sensitive liposomes in any direct manner, it is nevertheless important since it establishes the use of HIFU, along with HIFU in combination with TACE, for the treatment of HCC. As I mentioned before, it is important for HIFU to establish itself on its own two feet before future applications with ThermoDox begin to take off. The same type of proof was required for radiofrequency ablation for HCC, which is now considered a standard of care in its own right. This is a great step in that direction for the use of HIFU for HCC.
• Page 92 - Magnetic Resonance guided Focused Ultrasound (MRgFUS) Treatment of Primary Pancreatic and Hepatic Cancer: Preliminary Experience in Tumor Control: Same as above, except this goes one step further and examines the use of HIFU for pancreatic cancer as well.
• Page 93 - MR-Guided Focused Ultrasound Induced Hyperthermia for Enhancing Drug Delivery in a Pancreatic Cancer Mouse Model: Note that one of the authors of this study is Joo-Ha Hwang from the University of Washington, and Philips/FUS funded this work. I would venture to say this is directly related to the aforementioned pancreatic cancer HIFU study Celsion announced earlier this year. Using Philips' Sonalleve MRI-HIFU, the study demonstrated strong proof of concept for local drug release from ThermoDox (again, presumably) in a pancreatic cancer mouse model.
• Page 102 - MRI-HIFU Drug Paintbrush: Large Volume, Conformal Mild Hyperthermia with MRI-HIFU Used to Trigger and Monitor Release from Image-Able, Temperature-Sensitive Liposomes: Clearly, this is my favorite potential application of ThermoDox, and it involves Celsion's next generation "4 lipid" version of ThermoDox in which an imaging agent would be combined with the drug to monitor in real-time, uptake of drug using MRI-HIFU. The study shows that lesions of variable shapes can be targeted with MRI-HIFU, and drug release from the "image-able" liposome can be well characterized. This application of ThermDox gets me most excited, I have to say.
• Page 104- Targeted Drug Delivery By Focused Ultrasound Mediated Hyperthermia Combined with Temperature Sensitive Liposomes: Again, this is presumably speaking about ThermoDox, and this somewhat ties back to Page 54 from the above. Using a mathematical model, this study demonstrated that hyperthermia followed by ablative temperatures yielded much more drug from the liposome (40%) compared to mild hyperthermia alone. This has implications for future clinical applications to optimize the delivery of hyperthermia for use with ThermoDox. 

Again, there are a lot of other interesting pieces of data being presented this week pertaining to HIFU, and I only meant to highlight a select few. While my attention remains focused on the HEAT study, it is nevertheless encouraging to see Celsion's technology being used in various applications with HIFU. Let's see how the market reacts to any potential "buzz" coming out of the FUS Foundation 3rd Symposium.

Best,
Siavoche

The Importance of the Phase II ABLATE Study for Understanding ThermoDox's Market Potential

Let me just make one quick point before I even begin discussing the Phase II ABLATE study for patients with colorectal liver metastases (CRLM): Celsion is banking everything on the Phase III HEAT study, so all of this goes out the window in the (dare I say unlikely) event that the HEAT study fails to hit its PFS endpoint. Rightly so, the focus should be on the HEAT study, and every investor should focus their attention on the impending Q4 PIII data coming out of it. I think its important to preface the article this way, as it should tell you how high the stakes really are for Celsion as we come down home stretch.

Now, on to the article.

Celsion initiated the Phase II ABLATE study in February, with Dr. Steven Libutti as principal lead investigator. As of right now, I am not sure how many patients have been enrolled in the study, but we do know that management has made clear they have been deliberately slow in recruiting patients/expanding sites to conserve resources for in anticipation of a successful HEAT trial and commercial preparations. The study, randomized and double-blind in the same manner as the HEAT study, seeks to enroll up to 88 patients with colorectal metastases to the liver (CRLM). That said, this study does have some salient distinctions (clinicaltrials.gov link here):

1. The primary endpoint is local recurrence within 1 cm of the ablation site at 1 year (the ideal endpoint for ThermoDox)
2. The inclusion criteria allows for patients to have tumors as small as 2 cm. Some of you might recall I questioned the company on this decision on a prior conference call, since local recurrence from what I have read is not a significant problem in patients with lesions under 3 cm. Dr. Borys responded that physician input during the design phase of the study lead to this, as clinicians are still not satisfied with local recurrence outcomes in CRLM patients even for lesions as low as 2 cm, suggesting that the literature might over-estimate clinician ability to control smaller CRLM. Either way, the good news is that this means a larger patient pool to enroll from, and presumably, faster enrollment. 

I have said it before and will say it again, initiation of this trial before HEAT results was a very precocious move by management for several reasons. Firstly and most importantly, it is an indirect signal of the confidence that management has in the ongoing HEAT study, since the effect ThermoDox will have in this setting is very similar to that in HCC (more to come on this below). Secondly, it leverages the experience the company has from the Phase I study, in which more than half had metastases to the liver rather than HCC (8 with CRLM). Thirdly, from a timing perspective, date from the ABLATE study is expected around the time ThermoDox hopefully receives FDA approval, so the medical community will have yet additional data supporting the product's broad potential in indications outside of HCC right when the product is expected to hit the marketplace.

I will boldly say that the analysts who have covered Celsion, with the exception of Keith Markey from Griffin, are significantly undervaluing the company by excluding the colorectal metastases indication (yes, only Griffin has included off-label CRLM in their valuation of Celsion). I have characterized the off-label potential in CRLM before as an "inevitable reality" assuming the HEAT study shows success. So, why am I so excited over this market for Celsion?

• Big market, VERY big market: Yes, the colorectal liver metastases population is a very large one, but one that needs to be carefully examined in order to identify real-world patients who would be candidates for ThermoDox. Let's start from the top looking at all colorectal cancer patients. In the US, the incidence is 141K cases, Europe 436K cases, and 811K cases rest of world, so ~1.4M cases globally.
  
  
  From that, we have to be very careful how we arrive at the number of patients who would be eligible for local treatment for liver metastases. As I have mentioned before, the key is to arrive at patients who have confined liver metastases. While a significant number of patients will eventually develop metastases to the liver (50-75% in total, 25% at diagnosis), local treatment will likely not be used to treat the liver if the disease has metastasized to other parts of the body. However, in total, we can confidently say that ~25-30% of patients will have confined liver mets (refer to the articles below).
  
  The next step is to squarely identify the proportion of these patients who would receive the gold standard treatment, surgery. Recent advances have allowed a solid ~25% of this population to be eligible for surgery to remove their hepatic tumors, leaving us with ~18-23% eligible for some form of non-surgical treatment such as RFA, microwave ablation, cryoablation, etc.
   
   You can do the math on 18-23% of 1.4M global cases. Just looking at the US and EU, that is ~120K patients who realistically (not pie in the sky numbers) are eligible for RFA every year.
  
  As a point of comparison, looking at HCC just in the US and EU, there are ~65K patients, of which 25% are initially eligible for RFA (underestimates the true number of RFA patients though, since patients who undergo surgery very often undergo RFA at some point in their prognosis as well, but lets be conservative), leaving us with 15K eligible HCC patients. As you can see, in the Western world, there are 8x more (120K vs 15K) CRLM patients than HCC patients who are squarely candidates for RFA treatment.
• Unlike HCC, CRLM market is in geographies where Celsion is expected to have greatest pricing power for ThermoDox: The focus above on the US and EU was done on purpose, again, mainly because these will be regions in which Celsion will have the most pricing power for ThermoDox. The population of HCC patients in China is significant, but pricing and reimbursement  there is the wild card, whereas in the US and EU, this is relatively straightforward (assuming Celsion and their future partners can successfully navigate the health economic "exercises" necessary in the EU, up to $30K per administration would not be out of question depending on the strength of the data). From a commercial perspective, make no mistake that potential license partners are keenly aware of this "favorable" patient distribution reality in the CRLM indication.
• Should the HEAT trial show positive data, savvy investors will know immediately that the ABLATE study, too, will be poised for success: I've alluded to this a few times before, but if ThermoDox can improve PFS in HCC (likely mainly be reducing local and related distant recurrence), you can be fairly certain ThermoDox will have similar activity in colorectal liver metastases. Actually, scratch that, you can be 99% certain that ThermoDox would hit its endpoint focused entirely on local progression in the CRLM population.
  
  From all the different papers I have seen and amassed on my blog, it is crystal clear to me that the approach and process for treatment of an HCC lesion versus a CRLM lesion are identical. In fact, many papers simply lump these two populations together for the purposes of determining local control using RFA. Of course, treatment of the originating colon cancer necessitates an entirely different approach, so again, I am only talking about the treatment of the liver tumor burden.
• Experience with 700 patient HEAT trial plus 88 patient ABLATE study will preclude the need for a registrational PIII CRLM trial: My suspicion is that Celsion management has zero plans to conduct a registrational PIII CRLM trial, simply because the value-add of doing so would be minimal. As outlined above, treatment of localized CRLM and HCC via RFA are very similar. And successful completion of both the HEAT and ABLATE trials will mean 788 total liver cancer patients, treated in a robust, randomized and double-blind manner. The only other liver-focused trials we are likely to see will be those focused on other heating modalities (such as HIFU) or those eventually focused on the 4 lipid platform combined with an imaging agent, further down the road.
• ABLATE trial is more than enough to drive inevitable off-label use (at least in the US): In part related to the above point, it is obvious to all familiar with pharma and the US health care system that off-label use can be more than secured with PII data. In fact, 50-75% of all chemotherapy utilization is prescribed off-label. In addition to cancer-specific state mandates to cover off-label drugs which are present in most states, Medicare reimburses for off-label use if peer-reviewed data supports its use (inevitable for positive ABLATE data by itself, specific journals are listed in the JOP article below) or as long as the drug is listed in one of four compendia:

1. The American Hospital Formulary Service – Drug Information (AHFS-DI) 
2. Elsevier Gold Standard’s Clinical Pharmacology 
3. The National Comprehensive Cancer Networks’ Drug Information & Biologics Compendium NCCN 
4. Thomson Micromedex’s DrugDex
   
   Granted, it is not automatic that a drug gets compendia listing, but I think it is very safe to say the trial design of the ABLATE study will quickly translate into compendia listing, assuming positive data of course. See the below references, the one from Formulary is a great read on this topic.

• Same physician targets as for HCC, interventional radiologists: This may be one of the most important reasons why off-label use in CRLM will be inevitable for ThermoDox. Aside from the fact that an RFA treatment session is nearly identical for an HCC and CRLM patient, remember, we are dealing with the exact same physician target audience: interventional radiologists. So, while the referral source of patients are likely to be different (hepatologists versus gastroenterologists), the same interventional radiologist will be conducting the RFA and injecting the ThermoDox. So, this is not like other drugs where off-label use is being driven by an entirely different prescribing physician base. From the perspective of "marketing" and physician education, you can see how straight-forward this will be for Celsion, especially given all of the above. 

Again, investors' focus should be on the HEAT study, but I maintain that this small 88 patient trial in CRLM patients will go a very long way for Celsion valuation. You can bet the company will significantly ramp enrollment in the trial once positive HEAT data is collected, and a robust CRLM data set along with positive HEAT data gives potential big pharma the best of both worlds: A vast HCC market in emerging market China, and an equal number of off-label patient candidates between the US and EU. Like I said, the stakes are very high with the impending HEAT data.

Best,
Siavoche

Invitation for Guest Authors Regarding Celsion, Seeking Rational Bear Views

For those of you who follow me on twitter (@magicsia), you may have seen earlier today the following tweets:

I meant every word in this series of tweets, and I would like to formally "open up" my blog to those of you who would like to "guest author" thoughts or ideas around Celsion. I am not necessarily seeking "positive" articles on Celsion, to the contrary, I want my blog to serve as a forum to communicate well-articulated, researched, and thought-provoking "bearish" views on Celsion. No name calling or ad hominem attacks, but rather, rational views on ThermoDox, the HEAT study, or anything else Celsion-related. Perhaps you want to reference articles listed on the blog as well, that would be all the more better.

As you have seen before, I have laid out bull and bear views on the company several different times, and have reminded you that my DD is guided by trying to prove myself wrong. Hence, the bear view is always on my mind.

The blog has continued to attract new visitors and interested stakeholders in the company, and for that, I thank you. If this site will continue to be a source of DD for new investors, then I have an obligation make sure both sides are heard as loudly and clearly as possible. And for that, the doors are open to you. Please either tweet me, email me or reply on a comment below if you would like to guest author a post. This won't be the wild west, so there will be a quick editorial "process", if you will. Hopefully, between now and final HEAT data, we can have a couple "bear" views posted for myself, and viewers, to react to. I encourage it, and I envision forwarding such views on to management for their reaction as well. 

As always, let me know your thoughts, have a great weekend.

Best,
Siavoche

Final HEAT DMC Meeting Results in Expected Unanimous Recommendation to Continue, 380 PFS Still Projected for Q4

This morning, investors woke up to a highly anticipated press release from Celsion in regards to the outcome of their regularly planned, independent Data Monitoring Committee (DMC) routine safety review for patients in the HEAT study. This was one of 7 (maybe 8, I lost count to be honest) such reviews conducted by the DMC throughout the duration of the trial, so what made this one so important? Management has mentioned in prior calls that they would update the investor community if the timing for 380 PFS events, originally estimated for "Q4" with data to follow (also in Q4) changed significantly following this DMC review.

So, what did we get in the press release?

"Celsion reconfirmed that 380 PFS events are projected to occur in the fourth quarter of 2012, with top line results announced following DMC review and confirmation."

Couple things to note about this wording from the PR:

1. The guidance has NOT changed, this is the same thing we have heard for some time now. I take that as being status quo. Celsion CEO has stated numerous times that the company's "best guess" for top-line data is in Q4, so my assumption is they are expecting 380 PFS to be confirmed early to mid Q4, just enough time for the 8-12 week process of compiling and tabulating the data.
2. Some might suggest the wording "opens the door" for data to bleed into 2013. It certainly IS possible, especially if 380 PFS is not confirmed until late December, as an example. 

Beyond this DMC PR, I know many (voiced loudly by many I interact with on twitter) WILL want to know exactly when 380 PFS is eventually confirmed in Q4. Perhaps this will be something the company speaks to during the Q3 quarterly call (likely in early November) and reiterates in upcoming SEC filings. Not for myself (still long my original shares, holding thru data, makes no difference to me), but for the sake of traders who want to plan and execute their trading strategies leading up to final data, I also do hope the company gives some more clarity on when the 380 has been confirmed. Not to worry, all of this really is a "timing" game. Worst case scenario, 380 PFS occurs on New Year's eve, and we get data in February.

 

The outcome of the HEAT study looms, and as Adam Feuerstein points out today in his latest mailbag, Celsion is either "uncared" for or "unknown" to Wall Street. As I have said before (one of several reasons Celsion was attractive to me in the first place), I suspect the latter, but we will ultimately have to wait for final data to make that determination. 

Best,
Siavoche

Celsion Energizes Investor Community with Q2 Update, Griffin Securities Raises Price Target to $18

Well, here we are again with the stock back to near $4. I think it is safe to say the Q2 quarterly call was one of the best calls the company has hosted to date, with management providing a clear and enthusiastic update to investors. Many of the questions I submitted were also incorporated into the company's prepared remarks (thank you management). At a high-level, here were the takeaways:

• Reiteration that 380 PFS events are projected in Q4, with data to follow. The company continues to use 380 PFS and final data interchangeably, nevertheless, I personally expect DATA by the end of 2012.
• DMC is meeting mid-September, at which point, they will provide an update to management regarding confirmed PFS and OS events. If the timeline for 380 PFS events changes following this, the company will let the investment community know. My guess is that we will get an update on events in the PR the company will issue after the DMC outcome. 
• Twice, and firmly, the company said they have no plans for equity financing before final HEAT data. This was significant given the recent $75M shelf filed that got investors nervous. The company added that the timing of the shelf was done to avoid potential review by the SEC if done near the time of final data. I know we have to take company comments with a grain of salt, but I absolutely did get the sense that they truly have zero plans to do a raise pre-data.
• Company alluded to additional partnerships for conducting clinical research with HIFU. Outside of Philips, the other big name in this space is Israel-based Insightec (20% owned by GE). 
• Assuming positive data, NDA in the US and MAA for Europe are expected to be filed around the same time (my guess, by May/June of next year)
• Celsion CEO reiterated that outcomes data for the population being studied in the HEAT study have remained the same, again reiterating an expectation for a 12 month PFS median in the control arm, and median OS of 30 months. (My personal guess is that the HEAT control arm will come in at ~16 months median PFS)
• Company does not anticipate being in competition with Nexavar, even if STORM trial shows positive data as an adjuvant therapy
• When data is presented (from analyst question, seemingly taken right off of my list of questions!), company will present PFS data for sure, but other data (such as complete ablation rates, local/distant recurrence, etc.) is likely to be preserved for publication. OS trends may be highlighted in the final data PR as well. 
• Celsion CEO noted that a key Chinese KOL in ablative techniques will be updating her publication to include data from the HEAT study. Per the CEO, this individual is a global authority on RFA. 

There was a lot more, but these are the highlights that come to mind. I absolutely recommend anybody with an interest in the company to listen to this call, and I have embedded it here for your convenience:

Outside of the conference call, today, the investment community woke up to a boosted price target from Griffin Securities analyst Keith Markey. The upgrade from a $10 target to $18 seemed to open a lot of eyes. From the second I heard of this in the morning, I suspected the primary change in the valuation was pricing, and indeed, Keith assumed a $20K per patient per year for the US, up from $9K (Keith kindly sent me the report, thank you Keith). The RCW indication was removed entirely, but colorectal liver mets revenue from off-label use is assumed. Outside of the $20K price per patient per year assumed for China (I think pricing in China will be no more than half of what it is in the US to be honest), his assumptions (share capture, etc.) are quite conservative.

Moreover, I confirmed with him via email that he is only assuming 1 RFA per patient per year, which itself is a conservative number. Why? At a minimum, I can almost guarantee that roughly 15% of patients will require a second ablation within the first month to achieve a "complete" ablation, or technical success. Also, if ThermoDox is working as good as I suspect it is, patients hopefully won't require another RFA until progression well beyond 1 year, but still, some patients will recur within the first year and remain eligible for RFA. Thus, for modeling purposes, taken together, I would assume 1.5 RFAs per patient per year. That said, it certainly does not hurt to err on the side of conservatism. 

See below for a link to the report (again, thank you Keith):

With September right around the corner, and Q4 looming, we approach the outcome of the HEAT study, something I have personally looked forward to for a very, very long time (and, having come across a recent report by Dr. Lencioni highlighting that distant recurrences occurring within the first 2 years may be more closely related to the original lesion than I originally suspected, I am now even more confident in a positive trial outcome). Bull or bear, place your "bets", this binary event is well within reach now.

Best,
Siavoche

Upcoming Q2 Conference Call: Questions for Celsion Management

As we near the Q2 conference call next week, in what has become a ritual it seems, I have devised some questions to relay to Celsion management ahead of the call, both for them to address during their prepared remarks, or for shareholders to follow-up on during the Q&A session. It is worth mentioning again that Celsion management, coming from the CEO directly, has invited such questions ahead of conference calls. As I also mentioned before, I maintain frequent communication with other Celsion shareholders who I deeply respect, and the questions below represent our collective thoughts (thank you fellow shareholders, you know who you are):

• With Q4 right around the corner, and event rate projections relatively clear at this point, can the company still confirm DATA, not 380 PFS events, will be due by end of 2012?
• Although it has been asked before, it still bears asking again: have any new studies or data come up that make you question the historical guidance for 11-12 months median PFS for the RFA-only arm?
• What level of detail can we expect in terms of data when top-line results are finally revealed? In addition to median PFS times and hazard ratios for the whole trial, can we expect:
• Average tumor size for the trial?
• Complete ablation rates for both arms?
• Rates of local versus distant recurrence (MOST interesting for me personally)?
• OS events and trends to date?
• Side effects/Adverse events?
• Break-out of data for 3-5 versus 5-7 cm groups?
• Is the next DMC meeting still scheduled for mid-September?
• Is it the company’s expectation that 380+ confirmed PFS events will have been reached by the time this meeting occurs?
• I have asked before about the average lesion size in the HEAT study, and I know the company did not want to yet report this data. Can you at the least give us a sense for the % proportion of patients in the 3-5 cohort versus 5-7 cohort? Is it safe to say the vast majority are in the 3-5 group, or are they evenly split?
• What timeline can the company provide for when the full 372+ OS data would be made available?
• Do you believe Yakult will be able to work on a new Japanese trial with the data available from top-line?  Or will they need to wait until all (including greater-matured OS) data is available?
• Ongoing Phase II colorectal liver metastases ABLATE study:  Can the company report current enrollment in this trial (and number treated, if different)?
• The company will eventually have 3 ongoing HIFU studies with ThermoDox, one in Pancreatic cancer at University of Washington, one for liver metastases at Oxford, and the PII w/Philips for bone metastases.
• Pancreatic HIFU trial: As I understood from the press release, this will start with preclinical work in animal models, not human patients. Can you provide additional color on the types of questions that will be explored during these studies? Is it possible that future trials in humans involve ThermoDox plus other agents, such as gemcitabine?
• Liver metastases HIFU trial: What phase study will this be, how many patients, will this look at metastases from any primary site or specified sites (colorectal, melanoma, etc.), expected timeline for completion and what primary endpoint? Will this have the same primary/secondary endpoints as the ongoing ABLATE study in CRLM?
• Have there been any updates from potential licensing partners? Is the company still leaning towards keeping rights to the US market?
• Does the company have any updated views on potential pricing of ThermoDox®?
• Does the company expect cash burn to increase following top-line data due to NDA preparation?
• Will an MAA in Europe be pursued concurrently to the NDA in the US, or after the NDA?
• As the company is likely well aware, obtaining European marketing authorization is one thing, but reimbursement is a local, country by country game. A common theme throughout Europe is having health economic data to support reimbursement. Has the company proactively thought about/started developing such data for ThermoDox®?
• I have assumed that upon NDA submission and acceptance, a priority review of 6 months is essentially guaranteed from the FDA as a function of fast-track status. Can the company confirm that this is the case?
• Per Onyx’ recent conference call, it appears data from the adjuvant Nexavar trial following resection or ablation won’t be available until 2014. What competitive threat does the company perceive from early line use of Nexavar in the adjuvant setting?

I look forward to what should be a very interesting call, as there have been new developments on a couple fronts (Philips HIFU PII, RCW abstract acceptance at ESMO, etc.), and I expect we will get some more color on the HEAT study. As a reminder, it is scheduled for this coming Tuesday, the 14th, at 11AM ET/8AM PT. 

Best,
Siavoche

Celsion Bulls and Bears: Balancing Investor Views Heading into Final HEAT Data

There appears to be a resurgence of interest in Celsion at the moment. Perhaps some new investors have stumbled upon my blog as of late, learning about Celsion via the recently conducted interview CEO Michael Tardugno had with Reuters or after reading the newly released CEO letter on the corporate website.

Celsion- June 2012

As I have said in my very first blog post and reiterated during subsequent posts/tweets, I am very optimistic and confident in the potential of ThermoDox®, and this is what shaped my initial investment in Celsion. That being the case, I would caution any investor who simply seeks out data/opinions reinforcing their own personal opinions, and this is even more important in pharma/biotech investing. Thus, my approach has been to challenge my investment thesis from day one, “prove myself wrong”, if you will, and this has given rise to a solid appreciation for some of the “bearish” views that some might have on Celsion.

Rather than a high-level bulls/bears piece, I thought I would get very specific, and look at this from multiple perspectives. Again, arming investors with as much information as possible has been the intent from day one with my blog. With that said, the table below summarizes this assessment:

"Bullish Views"	"Bearish Views"
General Very low market cap for a late-stage Phase III oncology company, "dirt cheap". Sufficient cash on hand until mid-2013, reiterated multiple times by the company. Low burn rate of $5M/quarter. Very low/negligible debt Analyst targets several multiples of current price (click here for a comparative review of Griffin Securities, Rodman & Renshaw, Brean Murray and Roth Capital analyst reports) Recent large investment stake by Orbimed Advisors Steady and consistent insider buying, not a single insider sale. Positive HEAT trial outcome should fetch anywhere from 250M-600M (in my humble opinion) market cap valuation Apparent sentiment shift post-ASCO, reflected in recent strength in stock price Strong management team, company encourages questions from shareholders (I can personally attest to this) 6/29/2012 Update--> $10M loan agreement announced (first $5M tranch now, second $5M only after positive HEAT data), in my opinion, completely eliminates nagging dilution concerns pre-data, a major positive for shareholders. Total of 102,740  warrants issued as part of this deal.	General Wall Street may be pricing Celsion appropriately given the level of risk in the HEAT trial, "efficient markets" at work? The "Feuerstein-Ratain Rule", might it be at play here? Admittedly out of necessity, company was trigger happy to raise money in 2011, sometimes at unfavorable prices (Note to Celsion--> If you repeatedly insist you have enough cash on hand, don't be surprised if shareholders get upset if another raise is made pre-data). Large-scale recent exits by Mangrove and Ayer capital, large institutional holders. Institutional ownership remains relatively low (~15%, though I suspect that will change nearing data)
ThermoDox® as an Asset / LTSL Pipeline ThermoDox® enjoys every available regulatory advantage available (SPA, orphan designation, fast-track, accelerated endpoint, priority review) A “pipeline within a product”, ThermoDox® has demonstrated clinical potential in multiple indications, including liver mets and recurrent chest wall breast cancer. Pancreatic cancer and bone metastases to be examined further downstream. Company specifically targeting high-unmet need areas within oncology Platform can be triggered by all available approved sources of hyperthermia (RFA, Microwave, HIFU), "heat is heat is heat." HIFU adoption in particular is inevitable given completely non-invasive approach, ability to monitor temperatures in real-time marries this technology to ThermoDox® Platform focus is on established chemotherapeutics, limiting risk and accelerating approval process (505b2) Patent protection to 2021 and 2024, respectively, for 3 lipid and 4 lipid Needham family patents Fully paid off patent, licensed from Duke Other pipeline products include docetaxel and carboplatin, as well as combining agents for real-time monitoring Use of hyperthermia growing in oncology regardless of ThermoDox®, this trend clearly bodes well for Celsion.	ThermoDox® as an Asset / LTSL Pipeline Celsion essentially banking everything on ThermoDox®, only late-stage asset Colorectal liver metastases (CRLM) trial deliberately slow to enroll patients, recurrent chest wall (RCW) will not be enrolled until end of 2013 earliest. All platform products limited to indications where hyperthermia is already part of SOC, places finite parameters around market size. Adoption of microwave and HIFU still slow in the US. Liposomes accumulate in the liver, thus, while ThermoDox® ideal for liver applications, accumulation outside of liver largely dependent upon leaky tumor vasculature. Improving delivery of old chemos not as "sexy" as new molecular entities, and in my opinion, payers not as willing to accept significant price premiums for them either. Docetaxel and carboplatin pipeline products still very early stage, years away from the market Modest (~5%) royalty due to Duke
HEAT Study and Outcome Phase III predicated on a Phase I trial demonstrating strong dose response relationship, particularly in patients who had failed multiple lines of therapy Robust trial design using PFS as an accelerated endpoint, and OS as secondary confirmatory endpoint Overwhelming majority of literature (please do look for yourself on my blog) points to local recurrence originating precisely where ThermoDox® activates via RFA sub-lethal zone Largest study in intermediate stage HCC, data from HEAT study will be "bullet-proof" and widely accepted by regulatory authorities. Succeed or fail, this trial will be a major contribution to the medical literature. Company and Chief Medical Officer in particular continue to stress importance of data quality, particularly given the radiologic PFS endpoint. Builds off of an existing standard of care for unresectable HCC in radiofrequency ablation (RFA), synergy potential very evident. Study has cleared multiple DMC reviews for safety, all unanimous recommendations to continue. ThermoDox® likely very safe. No protocol changes since trial initiated. Successful interim efficacy analysis completed November 2011, key endorsement that efficacy on the right track. According to the recent CEO letter, Celsion's anticipated timing of 380 PFS events (an event that will be PR'd, my guess sometime in early Q4) is "reasonably consistent with the assumptions that we made in constructing the HEAT study" Initiation of the CRLM trial (granted that trial is purely looking at local progression) before HEAT data can be viewed as a sign of confidence, mechanism of action for ThermoDox's proposed efficacy exactly the same. Further, recurrence patterns are very similar between CRLM and HCC, in fact, CRLM tougher to treat in general. Fair to say company has maintained a very close working relationship with the FDA, company prides itself on sharing this relationship with investors. Company lead investigators, all prominent KOLs, continue to express optimism about ThermoDox® and ongoing HEAT study.	HEAT Study and Outcome Phase I study small (24 patients), most patients were not HCC, progression times largely incomparable to established literature. No Phase II conducted. PFS not the "ideal" endpoint for a drug with a predominant local effect such as ThermoDox®, it simply is not. Implicit assumption of the trial is that local progression (and technical failures) will account for a sufficient number of events such that ThermoDox® can make an impact. Distant intrahepatic progression outside of ThermoDox®' "reach" remains the biggest threat jeopardizing the trial's outcome, something I have mentioned repeatedly. Trial did not include microwave ablation, which is also emerging alongside RFA as another ablative approach for HCC and liver mets. Enrollment paused/halted in Japan due to differences in SOC (bridging study to commence after HEAT results, partner Yakult still very much engaged, however)
Competition and Commercialization A good analog to point to for commercialization success is Doxil, another liposomal encapsulation of doxorubicin. Very large potential patient population in initial HCC indication. Current HCC treatment paradigm is very unclear, HEAT study will add tremendous clarity and confidence to medical community about RFA's potential in combination with ThermoDox® 1st line therapy in HCC and liver metastases, limited competition. Aggressive pricing potential given expected outpatient, rather than inpatient, utilization Attractive licensing asset (J&J and Merck marketed Doxil/Caelyx, now solely J&J), ThermoDox® is a "green-light" into emerging markets for big pharma Attractive deal in place for Japan with Yakult-Honsha Significant milestone achieved with signing of Chinese manufacturing partner Hisun (in many ways, this is much more than simply a manufacturing agreement) Significant (and I would argue, natural) off-label potential with CRLM, especially given strong HCC data Adoption facilitated by ease of incorporation into existing SOC, simple intravenous (IV) infusion (This is clearly not Delcath's ChemoSAT system)	Competition and Commercialization Most HCC patients are in China, difficult market for pricing, penetration, and IP protection. Entry into Japan, another key market with relatively flexible pricing potential, delayed by at least 1-1.5 years relative to US/EU. RFA alone + TACE also being used for similar tumor sizes, early stage Sorafenib might also be source of competition. Pricing too aggressively can lead to restrictions from payers (prior authorizations, step edits, etc), payers beginning to scrutinize medical benefit oncologics more closely in general. Aggressive pricing very problematic in fixed reimbursement, inpatient settings. Company should consider not only the obvious Nexavar and Doxil as pricing analogs, but also, TACE, doxorubicin-eluting beads (DEBDOX), Therasphere, SIR-spheres, and RFA itself, all as potential analogs to base pricing on. Matter of necessity for Celsion to secure a large partner to commercialize Ex-US, no licensing deals outside of Japan yet Impact of IV drug administration within interventional radiology suite will likely require some physician education, particularly to ensure compliance with optimal "timing" of administration and heat source

So what does all of this give you? Why should you care? Plain and simple, if you are bullish, be mindful of some of the potential bear views, and if you are bearish, know that a compelling bull case can be made to invest in Celsion. You all know where I ultimately stand on this, I think the HEAT trial will succeed, despite the risks I point out inherent in the trial, and ThermoDox® will very rapidly make its way as a first-line standard of care for unresectable HCC patients not eligible for transplantation. More importantly, I do think the management team is well aware of some of the “bear concerns” I have raised, and I am optimistic about their confidence in ensuring they are addressed/mitigated to the extent possible.

Risks remain, as they do with every biotech, and for that, I encourage everyone to continue their DD. At the same time, I would challenge investors to identify a company with a better risk/reward than Celsion. The market, dare I say, is beginning to take notice of the company's potential.

As always, please let me know if you have any questions or comments.

Best,
Siavoche