Tuesday, November 13, 2012

"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. 



  1. Are you aware of an example of a single chemo dose having effect in any cancer? I like $CLSN but can't think of any comparable one-off chemo treatment other than http://tinyurl.com/9w9qfg2

    Traditional chemo is usually multiple doses/cycles and I'm a little worried a single (albeit high) dose may not make it?

  2. Sia,
    first, thanks for all your work!
    Could you include more information about "treat failure" during ablation or failure to achiever complete ablation after a second attempt. The study states: "If a complete ablation is not achieved after these two study treatments, the subject will be considered a treatment failure and the patient will be discontinued and followed for survival only." Since the primary outcome will be progression free survival and not TTF will this in fact mean that patients with "treatment failure" will be assigned Time=0 in this circumstance.
    I think this is an important point and can't find any information that confirms how this situation will be handled.

    1. No problem, thank you and happy new year! Yes, treatment failures after 2 initial RFA attempts to achieve complete ablation are considered progressions at time = 0. This was confirmed by company management to me a long time ago, and is an important question for sure. Not too many of the 3-5cm control arm patients will be treatment failures (maybe 8%), but the 5-7cm group may have 15-20% as treatment failures. So, for the 5-7cm cohort in the HEAT control arm, we are talking about 15-20% immediately having a PFS event. These are tough to treat lesion sizes.

  3. Thanks for your research. Been seeing some crazy stat estimations predicting success. My concern is impact of ethnicity on liver biology. Any ethnic imbalance between control and treatment groups could skew PFS rates and chance to meet 33% improvement.

    My take on data so far is at least 40% PFS improvement barring any control imbalances. Probability calcs for treatment survival over control even more encouraging. Wish I had the rest of the data.

  4. The thing I would like to know about the final trial results more than any other issue is whether or not the company actually used time = 0 for treatment failure after 2 initial RFA attempts. My personal opinion was that the trial could not successfully reach endpoints without this method of grading the results. It is clear that company management confirmed this important question but I have not particularly trusted them for a couple years now. The wording for the trial seems to indicate that time does not = 0 in this instance and I believe that, for this reason, the issue has been particularly confusing one.