Thursday, August 16, 2012

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.


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