Debate Comes to a Swift End: Bears Win, ThermoDox Fails in Phase III HEAT Study

After months of anticipation (years for many of us longs), and a January 2013 that brought with it many nail-biting days of anticipation and some crazy trading days and events (Brean downgrade, Hisun developments), earlier this week Celsion reported that ThermoDox failed to meet the primary endpoint of achieving at least a 33% improvement in progression-free survival (PFS). Of course, it's a very unfortunate outcome for the company, and one, that in my opinion, puts the nail in the coffin for Celsion. I was clearly wrong in my bull thesis here, though I did do the very best I personally could possibly do in terms of research and highlighting risks. It just was not enough to compel me to take a net bearish position, and clearly, I was wrong here. 

We heard on the conference call an extremely depressed, downbeat management team. We know from CEO Mike Tardugno that the trial "wasn't close", though we did hear that the reported hazard ratio for the trial was "below 1.0", but they did not give us anything tangible (note, these had to be pried from management during the Q&A). A "modest benefit" was seen, per the CEO, and my guess is that the HR was around .90, falling way short of the 33% hurdle to meet the primary endpoint goal in progression-free survival. Management said the control arm did better than their expectations, and after I pressed them during the Q&A to say by how much, the approximate (unofficial, please note) median PFS of the control arm was ~20% better than the expected 12 months, or around 14.4 months. Let’s say ThermoDox did 10% better, that places the treatment arm at around 15.8 months, absolutely dismal results. Many of you recall my "#15v25" prediction for the HEAT trial. It appears I was actually near spot on with the "15" side of the equation given what we know about the control arm, I only wish for the sake of patients, investors, and company management, the 25 component came true. I have noticed that some media outlets are reporting that the control arm did better than the ThermoDox arm, which, in fairness, is simply not true. Still, it's a moot point altogether since ThermoDox failed to show any meaningful clinical benefit, and in fact, I question why this trial was not halted for futility at the first interim analysis back in November of 2011. Recall CEO Tardugno mentioning the chances of that were "de minimis" at the time, how on earth could he have known that at the time with such certainty if the trial turned out to be an utter failure?

One might ask what next for Celsion, perhaps there are subsets of data worth exploring, etc? To be brutally honest, as my friend @trondhildahl mentioned as well, I heard absolutely nothing on the call to make me think there may be any glimpse of hope in the HEAT dataset. Per my question on the call, we know distant progression, the biggest threat facing the study in my opinion as I have said 100’s of times, was higher than “expected”, though we never knew what they expected for distant or local progression. If local progression, at least, looked good for the ThermoDox arm, management would have volunteered that data, I have no doubt. Local, distant, even across both 3-5cm and 5-7cm groups, probably looked poor. Still, the "geek" in me is curious to see the full data set to see the actual complete ablation rates, adverse events, etc., and I hope that data is made available as soon as possible.

Why the trial likely failed (hat being tipped to bears):

1. Doxorubicin has always had modest response rates in HCC, despite being widely used in TACE and deb-TACE regimens. It was hypothesized by bulls that given sufficient concentrations and synergies with heat, efficacy could be significantly enhanced.  We now know this did not happen, at least in the adjuvant setting, for tx naive HCC patients with 3-7cm lesions it didn't. 
2. Doxorubicin concentrations may not have been enough and sustained for an ample amount of time, undermining the above
3. Distant progression jeopardized the trial, and from the CEO's comments on the call, I have no doubts that was a primary factor for the trial failing. This was probably due to ThermoDox not having a potent enough of a local impact to prevent some of the distant metastases emanating from the original ablation site. 

In hindsight as well, SA author Quoth the Raven also does point out a few "tells" that longs did not interpret as caution. Firstly, the supposed "bear raid" and the downgrade by Brean, secondly the Cowen conference cancellation which Jeff Church told me was due to board meeting conflict (that might be true still, who knows), thirdly results being delayed until the last day, and the Feuerstein-Ratain rule, which was discussed frequently leading up to the results. The ever increasing short interest, high cost to borrow, and seemingly absent institutional interest were also some additional tells that I will tack on to the list. Oh, the beauty of hindsight.

So, what next for Celsion? I told many of you that I would be as objective as possible, so here are my thoughts:

1. ABLATE trial is very unlikely to move forward. That trial has local progression at 1 year as the primary endpoint, but from what I heard on the call, ThermoDox likely had very little effect on local progression.
2. RCW Dignity Phase II study can be moved forward, but unless earlier line patients are selected, this will not complete enrollment for quite some time, perhaps as late as mid-2014. Even then, moving earlier line is no guarantee, since we have no evidence that ThermoDox works in early line RCW patients (for example, as the first chemo or prior to radiation). 
3. HIFU bone metastases Phase II study with Philips may move forward (and was expected to enroll first patient in early 2013 from prior guidance), but even if this moves forward and shows benefit, HIFU itself still has a huge adoption curve, and the commercial prospects of this indication would be not be realized for quite some time. 
4. LTSL platform is in jeopardy altogether given the above, particularly since we know from recent presentations that improvements are being made very rapidly in terms of other heat sensitive liposomes. For example, we know that while early stage still, some liposomes are being developed that are much more stable than ThermoDox, and release doxorubicin contents more efficiently. The ideal liposome would be 100% stable at body temperature (which ThermoDox is not), and release contents via some form of trigger, be it heat or some other source such as sound. Point is, the platform altogether might be in jeopardy given the aforementioned. 
5. I see bankruptcy in the very near future Celsion, and they would be wise to sell off rights to LTSL docetaxel and carboplatin for whatever they can get for it. HEAT was validation for the entire platform, and that failed miserably. Remember, it is not like they have that much time left from a patent perspective either (2021), and the above mentioned docetaxel and carboplatin LTSL products are still in preclinical stages.

The only wildcard that can possibly save Celsion as they stutter forward is if overall survival data somehow shows a significant benefit for the ThermoDox arm, which is highly, highly unlikely. That said, much to my amazement, the company questioned whether or not they would even follow patients in the HEAT study for overall survival, they alluded to that both in the PR and on the call. Though yes, this would be an added "cost" for the company when they clearly will have cash issues in the very immediate future, I have to say I was quite infuriated by this, as they owe it the medical community to follow these patients and report robust data from the largest study ever conducted in intermediate HCC using RFA. There is an overall lack of data in this space, and the least, the very least they could do to assist future research is to get crystal clear data from this study to pass on to the medical community. 

Overall, I am obviously disappointed by the HEAT outcome. But what I am proud of, from a personal growth perspective, is the experience this gave me. What started out as an investment very quickly turned into so much more, not a love story with the company, but a personal mission to cover the company and it's developments as unbiased and objectively as I could, while sharing everything I came across with the public. In that journey, I came across and met a diverse group of people, from highly respected journalists, company management (whom I have spoken to and interacted with many times), highly experienced traders, and made many friends along the road. I remained an open book in this process, never was anonymous, and completely transparent. I also went out of my way to point out risks, I mentioned that repeatedly to people, including some family and friends who bought CLSN as well. In the minutes prior to the closing bell on January 30th, I recall urging people to assess their risk tolerance and take something off the table if they were not comfortable holding. I can hold my head up knowing that I tried, and did my best. I said before this was always about the "process", and I wouldn't have changed a thing about how the story was covered. 

I guess this is how the story ends, and you can expect me to end coverage of Celsion from this day moving forward. Regardless of the outcome, I was going to move all my funds back to my Vanguard indices, so from a personal investing perspective, I am not going to be playing with biotechs anymore. That said, I may, MAY, continue to blog about other companies, if a compelling story comes along, and if I have the time and energy for it. I wish you all the very best, and want to thank each and every one of you who took the time to visit my blog and interacted with me in a number of different forums. I am just humbled by the amount of support and visits my blog received during my coverage, and for that, I thank you all greatly. Please do stay in touch. 

Best,
Siavoche

"Flash Crash" Causes Concern for Celsion Investors, Roth Issues New Report

I did not anticipate having any new blog posts until final data, but today's actions prompted me to give my blog viewers a quick update on a couple fronts.

1. A T7 halt was issued when shares of Celsion plummeted to an intraday low of 6.17. Flyonthewall issued this brief note as well. I reached out to management directly asking what had happened, and the response from Greg Weaver, Celsion CFO, was "We have no further information right now, and are in contact with nasdaq and trading desks to sort it out."  Celsion CEO also subsequently provided a brief, general follow-up saying "fundamentals here are strong and have not changed...Company remains on track." Nobody can be sure of what happened (leak, bear raid, whatever), but the responses from Celsion management do give me some reassurance.
2. Obviously lost in this news, Roth Capital issued a new report as well today, and the link is provided below. From the report, the author states: 
3. "In short, management has 
4. indicated that all is status quo in finalizing the HEAT data readout and that 
5. nothing has leaked out. 
Nasdaq has indicated its belief that the intraday drop was driven primarily by retail and some short interest pressure coming through. Recall that the stock performance has been strong and sustainable as of late as investors have been making bets on HEAT. Other feedback we received from investors was that if it was a leak or institutional selling, the negative stock pressure would have been sustained."

 I remain extremely confident in a positive HEAT outcome, despite the craziness we observed today. Fingers are crossed, wishing management, shareholders, and most importantly, potential future patients, the best of luck as we near data release.

Best,
Siavoche

"The message today is momentum" — Michael Tardugno, Q1 2012 Conference Call

I highly recommend everyone to listen to today's Q1 conference call, it was particularly detailed and the company sounded rather upbeat (link can be found here). Highlights from today's 2012 Q1 conference call (generally only highlighting what is unique and new):

• Moving forward with branding and payer research, conducting market research with key stakeholders
• NDA submission process--Engaged KOLs and moving forward with selection of a CRO with FDA portal access and using a common technical document approach as a basis for NDA and MAA filings.
• Multimodality approach is the future for a number of cancers, hyperthermia being a key component.
• On track for 700 patients by the end of Q2
• Approximately $2M to be paid to Hisun only after technical success (3 registration batches) and after unblinding of data. Registration batches expected to be completed "next year"
• Yakult remains enthusiastic and that initiation of bridging study will commence after successful HEAT data
• Ended first quarter with $24.6M dollars, sufficient to fund through Q3 of 2013. 
• Phase 2 RCW will recruit 40 patients
• CRLM, RCW, bone mets, and pancreatic cancer trials will "give the oncology a community a snapshot of the broad potential of ThermoDox while it's approval is being considered"
• Securing multiple manufacturers important for supply continuity. Hisun has recently invested significantly in expanding capacity in China.
• Next DMC meeting likely in September (DMC meetings are every 3-4 months roughly every 100 patients)
• Progression and event rates are "substantially following what they consider consistent with a successful trial"
• Approval for ThermoDox in HCC as early as end of 2013
• sFDA China regulatory review period could be "cut by half" from 12-15 months, due primarily to the severity and umnet need in HCC. Hisun will support the regulatory process in China. 
• Target number of patients for HIFU bone mets trial is "in the 20's"
• No presentations at ASCO or WCIO, first data to be presented will likely be data from RCW Phase 1 trial (my question was in regards to WCIO)
• Company cannot disclose the average lesion size in the trial (my question)
• The company would like a business card for "Odaat enterprises" (sorry, had to...that was quite funny...for those who don't know, Odaat is the individual from this blog post)
• As an FYI, this was the second time I noted both Cowen (Edward Nash) and Cantor Fitzgerald (Mara Goldstein) analysts on the call. 

Let me know if you have any questions or if I missed something. 

Best,
Siavoche

ThermoDox Reimbursement Deep Dive (Part 2)

While this follow-up is not quite the “Part 2” of the Reimbursement Deep Dive that I had in mind (my original intent was to walk through pricing and reimbursement in the EU-5 plus China), I do nevertheless want to take the time to highlight some of the components of the “pharmacoeconomic” puzzle that Celsion management will have to consider during the commercialization process of ThermoDox. In fact, forward-thinking biotechs and pharma companies now proactively plan for pharmaceconomics and reimbursement much earlier in the commercialization life cycle, in many instances making such considerations as trials are being designed.

Let me preface this by saying, boldly, that pharmacoeconomics is not entrenched in the fabric of the US health care system, though it is much more widely used and adopted in other developed countries (I personally think the US is in the stone ages in this regard, we have a lot to learn from Europe, I digress). While there have been uproars about the cost of products such as Erbitux, Avastin, and more recently, Provenge and Yervoy, for the most part, payers grudgingly cover them (particularly within oncology). Drugs might get certain utilization management restrictions in the US, but they still end up on the market. A payer might place a very expensive pharmacy benefit drug (recall the distinction I made in my first article between pharmacy versus medical benefit drugs, as this is a critical foundational piece to understanding pricing and reimbursement) on a 4th tier rather than 2nd tier, for example, and have a prior authorization, but the drug still makes it in to the market place, and is still relatively affordable by most with insurance. In contrast, in the UK, for example, the National Institutes for Health and Clinical Excellence (NICE) has a relatively rigid bar in terms of the required cost per quality adjusted life year (QALY) in order to recommend reimbursement of a particular drug. If NICE does not recommend the drug, it is technically on the market, but the government will simply not reimburse.

So, what point am I trying to make? The US is much more lax about even considering "cost" in determining access decisions for drugs compared to the EU. The difference between the US and EU is that while a pharmacy and therapeutics committee (health plans have P&T committees consisting of medical and pharmacy directors who make such formulary coverage decisions, hospitals almost always have their own separate P&Ts as well) at, Aetna, for example, can place restrictions on a product, payers rarely flat out do not cover something. In Europe, it is somewhat binary, coverage or no coverage.

Alright, now that I have gotten that out of the way, what is pharmacoeconomics? At its simplest, pharmacoeconomics takes into account two key components: cost and outcomes (For those seriously interested in diving into this further, I have several references I could guide you to). The above-mentioned cost/QALY used by NICE is one commonly used metric, though there are others as well.

So, what will forward looking payers in the US and Ex-US countries consider from this perspective in evaluating ThermoDox, and what types of data must Celsion be prepared to share in such dossiers/analyses?

Costs (some are incremental reductions/additions)

• Drug price
• Obviously, this is the big one. We still don't know definitively where ThermoDox will be priced, and again, I hope the company is proactively studying/gauging payers to see what type of price could be "digested" for a given level of benefit. My complete wild guess is that in the US and EU, $10-$20K, while in China, it will be 1/3 to 1/5 of that cost, unless the company is willing to "skim" the Chinese market and simply target affluent, self-paying individuals and forget about getting provincial formulary coverage.
• Pre-RFA visit fees (if needed) 
• Pre-RFA prophylaxis (I believe this was protocol in the HEAT study)
• Additional length of stay potentially to monitor for side effects (for inpatients)
• This can be significant. (Described below, every additional penny counts in the inpatient setting since reimbursement is fixed for the entire inpatient stay, you can conservatively count each additional inpatient day as an ~$2000 cost to hospitals)
• Drugs to treat chemotherapy-induced neutropenia (CIN)
• I am going to elaborate on this one a bit, because I think this is going to play into the “cost” of ThermoDox. Payers will often look at the experience of patients in clinical trials for guidance as to what to expect in the real world, although this can often be misleading for a number of reasons (topic for another discussion). I have no doubt that a good portion of patients in the HEAT study will require granulocyte colony stimulating factor (G-CSF) agents for CIN. Neulasta (once/cycle, ~$2,800 average sales price) and Neupogen (daily injections, ~$260-$414 depending on dose), marketed by Amgen, dominate the G-CSF market, but there are others as well, including biosimilar filgrastim and pegfilgrastim in the EU. These are not cheap, and payers will factor them in to the “total cost of care”, costs that would otherwise not be needed for RFA alone.
• Other drugs needed to offset other chemo side effects (nausea for example) 
• RFA Procedure cost
• If ThermoDox patients require fewer RFA to achieve complete ablation, this would be an incremental cost reduction, however, the data will tell us the story as to complete ablation rates in both arms. Similarly, avoidance of future RFA to reduce local recurrence would be yet another potential significant source of cost reduction for ThermoDox patients. 
• TACE avoidance (ThermoDox might preclude need for TACE in some instances) 

Potential Incremental Outcome Improvements

• Prolonged PFS 
• Extended OS 

What complicates this story is that the above-mentioned “costs” vary by site of care. Recall in the first part of my reimbursement deep dive I highlighted that inpatient versus outpatient sites of care are very, very different for drug reimbursement, given that in the former, drugs are bundled into a DRG (flat cost) for the entire hospitalization visit. In that instance, an extended stay, ThermoDox drug price, etc., would all be “swallowed” by the hospital, as they would not be able seek reimbursement for those separately unless the DRG is modified, or under the very rare circumstance that ThermoDox would be given a new technology payment. So, in that setting, the payer could care less, but in the outpatient setting, those would all be billed separately, and the payer would have to take them into account. As I have said before, Celsion’s pricing flexibility will be significantly limited (de facto as a function of reimbursement to providers) if most utilization is going to come from inpatient versus outpatient use of ThermoDox (not good news). This is the same as what I have said before about Delcath’s ChemoSat procedure, which by definition has to be done on an inpatient basis. Absent a compelling clinical story, inpatient adoption of very expensive drugs relative to the total DRG payment will be difficult.

The “gist” of what I am trying to get at with this article is that sophisticated payers won’t just look at the cost of the drug when making access decisions. Compared to patients who just receive RFA alone, as you can see, payers (and hospitals) will have a wide range of incremental costs (and reductions) to consider, not the least of which is the cost of the drug itself. As I have pointed above, this incremental cost story is nothing from a pharmacoeconomic perspective without knowing the incremental outcome benefit (however that is defined) for ThermoDox as well. For that, standby for final phase III data, which the company has firmly guided would be on hand by end of year.

I have personally advised Celsion management, if they have not already done so, to strongly consider engaging experts in the field to carefully craft their “payer engagement” strategies and devise a crisp, articulate value proposition for ThermoDox. While US payers will welcome this (some much more than others), it is simply a matter of necessity in the EU. Furthermore, contrary to what most people think, the EU is very heterogeneous in terms of reimbursement (unlike most EU countries, UK and Germany have "free" pricing for example, but as you saw in the UK example, the NICE cost/QALY is the de facto price regulator. Other countries such as France, Italy and Spain have "fixed" pricing for the most part). So, admittedly, I have not done justice in fully describing the EU system. Additionally, pricing and reimbursement in China is still extremely challenging, due in most part to a still fledgling, third party reimbursement system that is slowly beginning to take shape in China with national health reform changes.

I hope by now the reader has a much better picture of the complexities management will face during the commercialization process of ThermoDox (hopefully, a big pharma partner will be by their side as a partner during this process)

As always, feel free to ask any questions.

Siavoche

HIFU for Bone Metastases - Brief Overview and Implications for ThermoDox

As many of you know, Celsion has a partnership agreement with Philips Healthcare to jointly research the use of ThermoDox in combination with Philips' high-intensity focused ultrasound device (Sonalleve) in a few different indications. The most immediate potential indication would be for the treatment of bone metastases, and by "treatment", I should qualify that to pain palliation in particular. More to come on that.

To back things up a bit, I have had quite a few links regarding Philips' HIFU technology all over my blog, but I have not really gone into much detail yet (too occupied with the HEAT trial!). With that said, let's take a brief elementary look at what HIFU is with a few key questions:

What is HIFU?
As mentioned above, HIFU stands for high intensity focused ultrasound. It is a way of delivering focused energy, either to generate mild hyperthermia or high temperatures for ablation, completely non-invasively. HIFU can be conducted either via ultrasound (US), or via MRI (you may have seen the term MRI-HIFU), with the latter being inherently more precise from an imaging perspective. HIFU made a nice splash at TEDMED 2011 in a presentation by Insightec's (see below) Yoav Medan.

What are some potential indications HIFU is being tested/used in?
Indications of interest for HIFU include the following:

• Bone metastases
• Brain tumors
• Epilepsy
• Essential tremor
• Liver tumors
• Neuropathic pain
• Parkinson's Disease
• Prostate tumors
• Uterine Fibroids

Is HIFU approved in the US/EU/Ex-US? Who are the key players?
Yes, HIFU devices are available in the US, but I think it is safe to say that "early adopters" are the ones championing its use still, and I would venture to say that most utilization is taking place for the treatment of uterine fibroids. One of the drivers behind the formation of the Focused Ultrasound Surgery Foundation (highly recommend you visit this site if you are interested) is to drive use of this technology. Globally, there are a few players, but the main two you will hear about are Israel-based Insightec (GE owns 20% of the company) and Philips. Insightec's Exablate 2000 system was approved in the US in 2004 for uterine fibroids, a very common condition for women, and has received a CE mark in Europe. In January of this year, Insightec submitted the very first oncology PMA (pre-market application, that is essentially an NDA-equivalent in device speak) for the treatment of painful bone metastases. Philips' system is not yet cleared for approval in the US, but does have CE mark in Europe, most recently for bone metastases pain palliation in April of 2011. Per this article as well, it is interesting to note that Philips only has 22 systems installed world-wide at the moment, though I expect we will see growth here in the years to come. Oddly enough, and usually in stark contrast to what one would expect, experts have commented that adoption of HIFU is largely being driven within the Asian markets.

Siavoche, you have a million journal articles on your blog. If you had to point me to a single one that gives me a great overview of HIFU, its clinical applications, and experience to date, which would it be?
Here you go, a read I highly recommend if you are interested in HIFU.

Let's take a closer look at the bone indication for HIFU, as this would represent the most immediate opportunity for Celsion's ThermoDox within the clinical setting alongside this novel procedure. For starters, this is a very different type of opportunity, and a more challenging one from a commercial perspective than with RFA for liver cancer. As indicated above, HIFU is still slowly gaining adoption, and ThermoDox is not even on the market yet, which stands in stark contrast to RFA, which is considered the standard of care for a segment of primary and metastatic liver cancer patients. So, the heating "modality" in HIFU is not as widely used, nor accepted at the moment, so again, a very different dynamic. Incidentally, RFA and cryoablation are being used increasingly for bone metastases, but that is the subject of another post.

The other observation investors should note is that similar to the recurrent chest wall trials, the use of HIFU plus ThermoDox is not for treatment of the underlying disease, rather, it will be for palliative purposes. The RCW trial is looking at durable local response, which in that setting, is considered clinically meaningful. However, unlike RFA plus ThermoDox in primary liver cancer, the clinical setting for both RCW and bone metastases pain palliation is one marked by very late stage disease with patients refractory to multiple lines of treatment already.

All that said, a very large proportion of patients with cancer (about 15-20%, primarily those with breast, prostate and lung cancer) develop metastases to the bone, while many have primary cancers originating in the bone. The market for the treatment of bone mets is a large one, as evidenced by Amgen's denosumab label expansion (Prolia for PMO, Xgeva for cancer indications) and a host of other competitors vying for a share of this market. A critical distinction to make is Amgen's Xgeva, for example, is only indicated for the prevention of bone mets (also called skeletal related events, which would be fractures resulting from such mets) rather than for palliation of pain associated with the onset of such metastases.

Typically, the standard of care for patients requiring palliation of pain from bone mets is external beam radiation therapy (EBRT), which is also a non-invasive procedure similar to HIFU. However, 20-30% of patients who undergo radiation therapy do not experience pain relief, and thus, are left with no options after that. Thus, the vast majority of studies to date with HIFU in bone mets have included patients in this setting, who have failed external beam radiation. In this setting, the primary endpoint is typically the visual analog pain score (VAS), reduction in pain medications, and local tumor control.

Before I litter you with what I would consider the cream of the crop of papers from trials conducted to date (see below, as per usual, I don't like to "cherry pick" data out, rather, I will leave it to you to read the abstract and or full report for yourself), I should also point out that there is an ongoing trial by Insightec comparing their HIFU technology head to head with external beam radiation therapy. The trial is currently enrolling patients, and should have data by Q1 of 2013. This is a significant trial, in my opinion, because it effectively seeks to supplant external beam radiation therapy, which would significantly elevate the status of HIFU in bone metastases, and dramatically expand its commercial potential.
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So where does all this leave ThermoDox? I am near the end of this article, and nary a mention yet. The reason for that is I think HIFU first needs to become entrenched as a mainstay of treatment for pain palliation in general, and then we can worry about adding additional treatments in combination with it. I try to be brutally honest with my readers, and at the moment, there is a steep adoption curve that will have to take place for HIFU alone, so that is where investors should keep their focus on for the time being.

Assuming HIFU takes off, which I truly think will happen (as evidenced by the significant investigator interest and trials with HIFU, not just in bone use), ThermoDox will come along for the ride and very quickly. What is interesting to note is that the vast majority of patients in the trials cited above received adjuvant and/or systemic chemotherapy, so the notion of adding ThermoDox would be a seamless transition for practitioners, particularly since the doxorubicin would be heavily concentrated locally where it would be needed most.

I will leave you with a final paper, which was very recently published online ahead of print in Radiology, another high-impact journal. The results from this animal study of ThermoDox for bone mets, in my opinion, are highly suggestive of potential clinical activity when and if the Philips/ThermoDox Phase II trial gets underway sometime by the end of the year (per Celsion, the wait is on Philips' end, as the FDA is still seeking additional safety data for Sonalleve. Remember, Sonalleve is not yet approved in the US). The results indicate that the delivery of significant concentrations of doxorubicin locally via ThermoDox is feasible (8 and 16 fold increase compared to unheated regions in marrow and muscle respectively).

(Edit: Addition 3/25) One area that I will press the company for some clarity in the coming months is specifically what they expect the trial design of their planned Phase II with Philips to look like. All we know to date is that is going to be a phase II and focused on pain palliation, however, what I would like to know further is the following:

• What line of therapy is the trial going to be focused on? As I have outlined before, my suspicion is that its inclusion criteria will be patients who have failed EBRT.
• Is the trial going to consist of a single arm, or will there be a control group?
• If there is going to be a control group, what is it going to be? HIFU plus a placebo? The problem with that is that I believe there would be specific target temperatures planned a priori for use with ThermoDox, whereas without ThermoDox, the goal would simply be pure ablation at high temperatures. This would make it hard to compare arms since the HIFU would not be held "constant".
• What are the primary and secondary endpoints? I will venture to say, as I pointed above, VAS score will be the key measure here.
• How many trial sites and in what geographies? 
• How many patients would be enrolled? 
• How long from the time of initiation of the trial to expected complete enrollment, and how long until final data? The good news here is that once all patients have been enrolled and treated, it will likely not take long for final data to accrue. 

I will return to the HIFU topic in the future, as I left out a lot of information pertaining to the use of HIFU in liver and other solid tumors (this is really taking off in Asia). I will make no bones about one thing, however, and I have mentioned this to other fellow shareholders: If Celsion's Phase III HEAT study does not succeed (10%-15% chance in my opinion), even though it is an entirely different clinical setting, I think we can forget about ThermoDox in these other uses such as RCW and HIFU (simply because the company would not be in a viable position anymore in my opinion). That is also why I have not put much emphasis to date on HIFU on my blog. As we approach what I believe will, in fact, be fantastic final HEAT data, I think it is now time to turn our attention to these other innovative areas of use for ThermoDox.

As always, feel free to leave me any questions or comments.

Best,
Siavoche

Interview with Celsion Investigator Dr. Steven Libutti

This interview with Dr. Steven Libutti, conducted by Rodman & Renshaw's Reni Benjamin on 3/12/12, was recently posted by Celsion on their website and announced via a press release. For those of you new to the Celsion story, I highly encourage you to listen to this in its entirety. Dr. Libutti not only touches on the promise of ThermoDox, but gives a highly informative overview of the HCC treatment paradigm, his own research interests, and future therapies on the horizon. Note that Dr. Libutti was not an investigator in the Phase III HEAT study, but will be leading the Phase II CRLM ABLATE trial.



Below are some of the salient highlights from this hour long interview, specifically as they pertain to ThermoDox:

• Margins of ablation are "main Achilles heel" for RFA 
• Temperature zone that activates ThermoDox extends "several centimeters" out from center of ablation
• "Very reasonable safety profile"
• "We saw interesting increases in the ablation zone, above and beyond what you would get with RF alone"
• "PFS is an important endpoint for both HCC and metastatic liver disease"
• "Plan is to get around 6 sites in the ABLATE trial...I believe Cleveland Clinic will be the next one"
• "Ablative technologies like RF ablation and ThermoDox might be prime for the addition of an agent after the ablation to try [a la Bayer/Onyxx STORM trial] to hold the response...that is potentially an ideal use for pathway targeting therapies [i.e. like Nexavar, other TKI's, etc.]"

It does not get any better than hearing directly from a key opinion leader in the field, particularly from someone with a specific interest in locoregional treatments of the liver such as Dr. Libutti. 

Siavoche

Quotes from the 2/13/12 BIO CEO Conference Presentation by Michael Tardugno

I thought CEO Mr. Tardugno did a very good job presenting an overview of Celsion at the BIO conference earlier this week on Monday. See below for some "quotables" I pulled directly from the presentation:

"We are delighted to have an audience….for a change."

"I want to make one comment. Your company is in the best position it has been since it transitioned to a development company. On the financials and fundamental perspective, the company is strong."

"From the beginning, we thought it was important to position our study with every potential for success."

"The trial is powered at 80% to show a 33% improvement. Interestingly, more than interestingly, one of the things we are quite proud of is this trial has a p value on this data set of .05."

"We’ve conducted ongoing meetings with the agency [FDA]. Every time we call they pick up the phone, every time we’ve asked for a meeting they’ve given us a meeting. I’d like to think that’s because of the quality of our management but I think it is, more importantly, a function of the disease we are studying and this wonderfully innovative approach that we are taking to treat tumors."

"The [HEAT] study has been the center of our life."

"We have asked the DMC to assess risk-benefit on an ongoing basis, as well as a panel of quality metrics. Given our radiologic endpoint, we wanted to make sure our data coming from our investigator sites are consistent with a quality data set that we can file with the FDA…this trial has been monitored frequently and regularly by the DMC and the most recent outcome was, in November, when we announced the successfully pre-planned interim efficacy analysis. What we expected happened, we had a unanimous recommendation from the committee to continue, meaning no evidence of futility or safety problems. What was unexpected is that the DMC indicated to us that we presented them with a model for unblinding at the interim analysis that allows the company to take multiple looks at the data without any significant alpha hit. That’s unusual….on that basis we have submitted a letter to the FDA requesting within the SPA their view and support for a second interim analysis. I get asked all the time when is that going to happen…frankly, we are breaking new ground here as a company, and I think even for the agency. So, we are hopeful to have an answer from the agency in the relative near term. If we do, then I suspect that we could be looking at a 2^nd interim efficacy analysis about the middle of the summer. I want to point out that our independent statistician attached the DMC pointed out to the company, after reviewing enrollment rates and event rates, that the company could expect top-line data by the end of the year."

"The drug works, it simply works, there is no doubt about it."

"It’s on that [Phase I data] basis that we are so excited that the Phase III trial has a great chance to be successful. I want to say that to you, a great chance to be successful. When we look into the eyes and listen to the voices of our investigators who we meet with on a regular basis, we know they are interested in seeing data from this trial, and we clearly know they are interested in enrolling patients in this trial."

"If we make some very conservative assumptions, we are talking about capturing about 12.5% of this population, penetrating the market over a 5 year period, with some very conservative pricing assumptions, It’s a billion dollar opportunity. And that’s not just our assumptions. We have had multiple multi-national companies conduct their own due diligence and they have come to the same conclusion."

"Partnering is very important to us. We have had multiple and currently have multiple partners doing diligence. What you can expect from us in terms of a license is something that not only represents value to us, but to our shareholders."

"We have more than 6 quarters worth of cash going forward, more than enough to see us through top-line data from the trial."

Celsion 2012 Anticipated Milestones and Events

While it is hard to predict with any measure of confidence, below are my own estimates of potential company news releases from Celsion, and approximately when we can expect them in 2012. Note that many of these are "carryovers" from milestones that were expected to happen in 2011. The timing attached to each of these is simply a guess from my end, so do take it with a grain of salt. The wild card I see here is, of course, the Phase III HEAT SPA amendment process, as well as the timing for a potential 2nd licensing deal. At the rate things have been going from a business development perspective in the biotech world to kick off 2012, a 2nd license agreement could come any day it seems. That said, I think it will follow closely in the timeframe of the potential 2nd interim analysis.

When I spoke to CEO Michael Tardugno just before the Christmas break, he made it very clear that the company is squarely focused on the tasks ahead of them. As is evident from this list, there are a lot of things on the company's plate. 

• Q1 2012 
• Manufacturing of 3 registrational batches of ThermoDox complete 
• Treatment of 1st (of approx. ~90 planned total) patient in ABLATE randomized Phase II CRLM study 
• Announcement that HEAT enrollment of 200 patients in China has been completed 
• Go-forward decision for RCW Phase I/II protocol 
• Update on potential SPA amendment process for Phase III HEAT study 
• Update on Philips IND process for ThermoDox + HIFU in bone metastases
• Key meetings: BIO CEO Conference Presentation (2/13), FY 2011 company call (mid-March) 

• Q2 2012 
• Realization of sufficient PFS events (275-300 in my opinion) for potential 2nd interim analysis in HEAT study 
• Results from potential 2nd interim analysis 
• Update from Yakult-Honsha regarding new study of ThermoDox in HCC in Japan (Note: Newly added after original post, how could I forget about this one?)
• Initiation of newly expanded RCW trial (Phase I/II TBD, likely not registrational anymore) 
• Rolling NDA initiation for ThermoDox in HCC
• Update on carboplatin preclinical work 
• Update on mystery “product #4”, and potential partner behind this initiative 
• Publication/presentation of RCW Phase I data at a selected medical conference
• Potential 2nd licensing deal announced for all ex-US geographies, or for select ex-US regions 
• Key meetings: Q1 2012 company call, Annual Shareholders Meeting, ASCO, WCIO 

• Q3 2012 
• Initiation of Philips/Celsion Phase II bone metastases study (although, again, I have seen some reports putting this at Q4 of 2012, no update on the company regarding this discrepancy yet) 
• Unfortunately, if no 2nd license deal, potential share offering at this point (Note: Upon second thought, moved this to Q3 from Q2)
• Key meetings: Q2 2012 company call

• Q4 2012 
• If trial successfully stopped at 2nd interim analysis, NDA submission complete by this time 
• If trial did not stop at 2nd interim, or no SPA amendment granted at all, realization of 380 PFS events in HEAT study
• Key meetings: Q3 2012 company call

I know a lot of savvy investors visit my blog, so if I missed anything, please let me know and I will update this list accordingly. 

Best,

Siavoche

Attention Stats Gurus - Is it Possible ThermoDox Hit its PFS Endpoint at the Interim?

I won't even try to act like I am a statistics guru, but I want to bounce a particular journal article off my blog viewers to read. I received an email from another fellow shareholder (whose name I will not disclose) who directly influenced me to send Celsion CEO Michael Tardugno one of the several questions I recently posed to management:

It's clear from the recent CEO letter that the "no statistical penalty" verbiage from the interim PR was changed to "de minimis". I take this as reinforcing that the alpha penalty is negligible. Is the alpha spent on the next interim any less than the normal Lan-Demets because the company is able to "buy back" the alpha spent on the previous interim and redistribute it the new interim?

So, why, might you ask, would the DMC recommend the trial to continue even if the PFS data was strong? There could be many reasons:

1. An early unblinding may have muddied the waters in China, as recall, the company continues to enroll patients in the HEAT trial in China such that a sufficient number of patients are enrolled to meet SFDA filing requirements. 
2. PFS may have been strong, but there may not have been a well defined OS trend established. (though one could argue PFS and OS are strongly correlated)
3. Unblinding does present some problems in terms of OS as well, since patients in the control arm who have recurred (but remain eligible for RFA per inclusion/exclusion criteria of the trial), would be given ThermoDox. This could ultimately impact the confirmatory OS results upon realization of 372 events.
4. More generally, the DMC could not justify an early unblinding due to the risk-benefit profile established at the time, which would include number 2 above certainly.

Anyways, the point is there may have been a myriad of reasons why the DMC may have used their judgment to recommend the HEAT trial continue even though PFS may have been strong. And for the record, even if a 2nd interim analysis is done, many of the same issues above may still apply (although I would imagine China would be fully enrolled by then).

The shareholder in question who I referred to above, by the way, was particularly intrigued by the CEO's comments in the initial press release that there would be "no statistical penalty" (later revised to "de minimis" penalty in the CEO letter) if a 2nd look was conducted after having received approval from the FDA via a SPA modification to do so. 

I can't stress enough...the company was extremely conservative before the interim analysis in ensuring that the trial, in it's entirely, be conducted to the highest of standards, which includes not "tampering" with the original SPA. That tune has completely changed, and I would imagine that as of right now, they are in discussion with the FDA to do just that.

The paper below (Note the name of the author, Lan, as in "Lan DeMets") strikes at this precise issue in question. I want to emphasize that I am by no means asserting this is indeed what happened during the interim analysis. We don't know, and the company is only going off of what the DMC has recommended to them.

Best,
Siavoche

Some Great New Year's Reading, Quick Thoughts on ABLATE

What a better way to start the new year than with more reading materials? :-)

In all seriousness, I continue to add journals to the links at the top of my blog, and I recently came across some fantastic reads that span a few different areas of interest. A couple of these articles really dive into the "nitty gritty" of thermal ablation, and in particular, draw upon the potential synergies seen with adjuvant therapies in the "sub-lethal zone" of ablation. I have also posted a very recent review of locoregional treatments in general for HCC, and have included some articles to get your interest brewing in the ABLATE trial Celsion recently initiated, focusing on the role of RFA for colorectal liver mets.

On the topic of CRLM, just keep in mind that while the population of patients with colorectal cancer is significant, and about 40-50% of them get liver mets at some point in their prognosis, it is confined liver mets (~25-30% of all patients, see the second to last reference below) where local treatment, such as RFA or surgery, would be used (this is reflected in the ABLATE trial protocol as well). This, of course, has implications for the "treatable" CRLM population with ThermoDox, impacting market potential estimates. Going even further, around 25% of that 30% are now treatable with surgery, so that leaves a little over 20% of patients that could receive some form of local treatment for colorectal liver mets (TACE, RFA, PEI, etc.), excluding surgery. Still, the numbers are significant from a market potential perspective for ThermoDox. Even if we say Celsion captures 10% at peak share capture, in the US alone, that is ~15,000 patients. Those numbers are even more important since the CRLM incidence primarily comes from the Western world, where Celsion is likely to have a more aggressive pricing strategy as well.

In regards to the ABLATE trial, I anxiously await news from the company in terms of a "first patient treated" press release, as I believe this should be imminent (in fact, this should have happened before end of 2011).


Chem Physics Lipids- (in press) Synergy Lipo Thermal Ablation 2011.pdf



Surg Oncol Clin- Basic Research in Thermal Ablation 2011.pdf


Can Treat Rev- Locoregional radiological Tx for HCC Which When How 2012.pdf


J Surg Onc- RFA of CRLM Dec 2010.pdf


J Surg Onc- Tx of CRLM Role of lap. RFA, Micr 2010.pdf


Cancer Control- Resection of CRLM Current Perspectives Jan 2006.pdf


Cancer Control- RFA of Liver Metastases Jan 2006.pdf


Int. J Surg Onc- Colorectal Liver Mets Review- Dec 2010.pdf (Added 1/2/12)


Enjoy the articles. I look forward to a busy 2012 for Celsion.

Best,
Siavoche

Recent Questions Posed to Celsion Management

Many people have asked about the specific questions I recently sent (on 12/8 to be exact) to Celsion management. See below for these 14 questions, which includes one very recent addition to the list (for a total of 15 questions). During a recent discussion I had with Celsion CEO Michael Tardugno, he made clear that the company would seek to address them using the proper channels (i.e. a press release, conference call) in the near future, which complies with full disclosure rules amongst others. As I have said before, the management team has always been highly accessible and transparent to me, and I trust that they will address these questions.

1. Let’s put this issue to rest once and for all, if I may. Dr. Borys and Jeff Church recently (12/6 phone discussion) mentioned to me that the decision to pursue an additional interim look at the data was driven entirely by the company. Can you provide any additional clarity as to what specifically you meant when you said the company has “sufficient rationale” to do so in the PR? Many of us inferred from the PR that this was making an allusion to the strength of the data, and perhaps, being very close to the boundary.
2. The interim PR specifically said there would be no “statistical penalty” for doing another interim look. Many fellow shareholders with a strong grasp of statistics have stated that would be impossible, since alpha would have to be spent in another interim look. What exactly did you mean by this?
3. [This was sent to Mr. Tardugno on 12/20, following our discussion, of course, after the recent CEO letter was released with different verbiage around the statistical considerations of potential second interim analysis] It's clear from the recent CEO letter that the "no statistical penalty" verbiage from the interim PR was changed to "de minimis". I take this as reinforcing that the alpha penalty is negligible. Is the alpha spent on the next interim any less than the normal Lan-Demets because the company is able to "buy back" the alpha spent on the previous interim and redistribute it the new interim?
4. Without getting into details that you cannot provide, what is the high-level process for the company to seek an amendment to the SPA to conduct the additional interim look? How long should this process take, and will the company issue a PR when/if the SPA is amended?
5. Considering that doing another interim has real costs in terms of time, alpha, and potential global regulatory relationships, is it even worth doing another interim look, when final data would presumably be only 6 months away?
6. In your opinion, when would a second interim look take place (i.e., after how many events? 300? Etc.), considering the recent rate of PFS events? Is it within the realm of possibility that a second look would be dependent upon a specific number of OS events, rather than PFS events?
7. Is it within the realm of possibility that Thermodox hit its PFS endpoint at the interim, but the DMC nevertheless decided to recommend a continuation of the trial due to other factors?
8. Coming out of the interim analysis, are you still as confident as ever in the market potential of Thermodox, specifically in HCC?
9. If you had to play devil’s advocate and think of reasons why the HEAT trial would not succeed, what would it be? As I have made clear in prior assessments, my own devil’s advocate view is that intrahepatic distant mets unrelated to the local Thermodox effect, captured by virtue of the PFS endpoint, may put the trial at Jeopardy. Alternatively, some have mentioned improvements in RFA alone that may put the success of the trial at risk. What keeps you up at night most in thinking about potential scientific reasons why the HEAT trial would not succeed?
10. MANY shareholders, including myself, have wondered why the company recently raised money, particularly when only emphasizing on the Q3 call to have sufficient cash needs for the remainder of 2012? Obviously, we don’t want to “scrape the barrel”, but the company should have had a good cushion (~18M). While the company might argue that cash is needed to have “leverage in discussions with potential partners”, others would submit that the need for cash means a partnership is a long ways away. How do you reconcile those views?
11. You were quoted in the Q1 conference call as saying you were “confident” a 2nd deal could be made following the interim analysis. In hindsight, were you assuming a halt/early NDA in mind when you made that comment, or do you still think that elusive deal is within immediate reach now that the interim is complete?
12. When the topic of potential competition for Thermodox in liver cancer arises, I have to say that I disagree with the company’s assessment that there is nothing in the short or intermediate horizon to compete with Thermodox. As you know, in the STORM trial, Nexavar is being studied as an adjuvant to local ablation, with data I believe due by end of next year. Outside of Nexavar, the company must believe there is inevitably going to be competition between combination TACE + RFA treatment, particularly as doxorubicin-eluting beads (DEB) TACE becomes much more common. Is it not true that absent Thermodox, the standard of care is evolving to RFA plus TACE for the population being studied in the HEAT trial? Coming out of the symposium in Hong Kong with your clinical investigators, the company must have a further refined view of what Thermodox will be competing against in real-world clinical practice.
13. What is the status of the DIGNITY Trial, and what tradeoffs is the company considering in deciding to bring Thermodox to earlier line use vs. expanding to other cancers vs. keeping the protocol as planned originally?
14. What is the status of the MRI-HIFU bone mets trial? R&R, in a recent analyst report, put the start date at Q4 2012 for that trial, which is WAY off what the company has said previously. Where do you stand in the IND process? Is the hold-up entirely on Philips’ end due to questions around Sonalleve?
15. Lastly, while I know you may not be at liberty to speak to this, does the company have any comments about the recent Mangrove allegations of bribery? My own assessment is that standstill agreements of the kind offered to Mangrove are commonplace between companies and large shareholders. Those were some very harsh words, and the floor is yours to provide any additional comments.

Clearly, these questions can be prioritized in terms of those that shareholders probably care most about, but either way, I look forward to responses to as many of these as possible in upcoming releases from the company. I remain as confident as ever in the prospects of ThermoDox, and expect the company to execute with laser focus on hitting critical milestones in the next 12 months. Unquestionably, 2012 will be make or break for Celsion, and you can count that I will be covering the company with the same level of rigor as I have done before.

I hope all of you enjoy the holidays, and as always, please feel free to leave any questions or comments.

Best,
Siavoche

The Celsion HEAT Trial Interim Aftermath: Follow-up with Management

As a follow-up to my most recent article, I thought I would provide readers an update on some of the key questions I posed to Celsion management. Today, Dr. Borys (Chief Medical Officer) and Jeff Church (Chief Corporate Business Strategy and Investor Relations Officer) from Celsion reached out to me to to give me a quick update on some of the key questions I had.

Let me remind everyone that this is exactly why I have such high respect for the management of this company. While I no doubt have recently criticized the company, respectfully, for their recent financing and for "exhausting their benefit of the doubt allowance", I maintain that we have an extremely talented and dedicated team working on behalf of shareholders. They have their work cut out for them, as I mentioned in detail, as many milestones await their successful completion. Let's not also forget that Celsion management is a small group of individuals tasked with some extremely complicated activities and work streams spanning clinical trial execution all the way to key opinion leader (KOL) relationship building. 

That said, let's dive right into some of the questions I had and the clarification Dr. Borys and Jeff Church gave me:

Q: When was the Lan DeMets implementation decided upon, and who decided on that (company, DMC, FDA)? Was this part of the original statistical analysis plan (SAP) or was this something newly decided during the interim analysis? Did the DMC make this recommendation?
A: As I was somewhat expecting, Dr. Borys made very clear that the Lan DeMets implementation was in place well before the interim analysis, as it was pre-specified in the SPA. So, no, this was not suddenly decided upon by the DMC or the company, it was the agreed upon protocol all along with the FDA.

Q: What exactly does the company mean by "sufficient rationale" to conduct another interim look? Was a second look a specific recommendation made by the DMC on the basis of the strength of the data? Or is this entirely an assumption of the company looking at blinded data?
A: To my surprise, Dr. Borys made clear that we should not read too much into the verbiage of the PR. They clarified that the company, even before heading into the interim, was exploring conducting an additional interim look at the data. To make it very clear, the sufficient rationale did not come from the DMC. As such, I take that as meaning that we should not infer anything about the underlying "strength" of the data from the "sufficient rationale" wording.

Q: The company historically has maintained an estimated 12M time for the control arm PFS. Having gone through the interim, has the company adjusted this internal working assumption?
A: Dr. Borys re-confirmed, yet again, that he and the company stand by a 12M expectation for the control arm, even after having gone through the interim analysis. Of course, the company does not have access to any unblinded data, so to confirm, these are expectations from historical data. As I pointed out in my article, many of the models I have seen point to a median PFS time for the pooled data in the mid 20's (months). If the control arm is indeed at 12M, then it might very well be that the PFS threshold was hit at the interim, but some other factor (perhaps establishing a clear OS trend) was missing to prevent an early unblinding. I am speculating here. All I can confirm is the company still firmly stands by a 12M expectation for the control arm.

Q: What is the proposed timeline for modifying the SPA with the FDA? Has the company initiated this process already?
A: Very bluntly, Jeff mentioned that the company would announce anything involving the potential SPA amendment and interaction with the FDA. I completely understand that.

Q: What is the status of the ABLATE study? The trial has been on ClinicalTrials.gov since early November, but no PR as of yet for treated patients.
A: Dr. Borys said the trial was not "delayed" by any means. He said the some patients have been screened already, and we "should not be surprised" to hear a PR for the first treated patient by end of year.

Q: What is the company's expectation for the performance of the control arm in the ABLATE study (local recurrence at 1 year)?
A: After being put on hold for the two to discuss, they were unable to share with me their own internal guidance on this, which was a bit surprising to me. However, I don't take this to mean that they did not want to share this information, rather, my takeaway is that they are still gauging the medical literature to identify precisely their expectations for the control arm. I will eventually put a lot of focus on this issue as ABLATE gets up and running.

Hopefully, investors found this update informative.

I want to conclude by saying I was extremely excited (and beyond humbled) to learn today that Celsion CEO, Michael Tardugno, has accepted to do an interview with me that would be made available to visitors of my blog (hopefully over the next two weeks). (12/7 CORRECTION: My discussion with Mr. Tardugno is not meant to be a formal interview per se. I incorrectly mischaracterized the nature of this upcoming discussion, which will indeed still take place. That said, Mr. Tardugno invited me to send him questions, which I have already done, and he will respond to the ones that he can speak to. Understandably, full disclosure is a top priority for the company, and he made that very clear during my exchange with him) Staring at the stock price just hovering over $2, some might be tempted to think the CEO is doing "damage control" by reaching out to me. I highly doubt that, as the company has always been very transparent and accessible with questions that I have posed to them. This is obviously a much bigger forum, but nonetheless, consistent with how the company reacts to questions from their shareholder base. For that, we should all applaud Celsion management, and Mr. Tardugno.

Best,

Siavoche

The Celsion HEAT Trial Interim Aftermath: Science, Leadership, and Transparency

The return from Thanksgiving break brought upon a whirlwind of news and changes for Celsion, directly and indirectly impacting shareholders, employees, global clinical collaborators, and just about any other stakeholder with an interest in the company. I have waited patiently, trying to digest everything as it happened, before taking an opinion on what has unfolded recently. Needless to say, there has been a lot of news, and understandably, lots of investor confusion and, perhaps, apprehension. I would advise readers right here to take a deep breath; things are not going out of control by any means. It all boils down to three very simple words that I know have been central tenets to this company, and I hope, they remain that way.

1. Science
2. Leadership
3. Transparency

Let's start with the Science, and dive right into the interim analysis. 

Much has been discussed about the outcome of the interim analysis. Well, the DMC formally recommended the trial to continue after a review of 613 patients, with a total of 219 progression-free survival events, a great outcome no matter how you look at it. Absent two small Phase 1 trials with a total of 24 patients and largely incomparable data, this is without a doubt a resounding endorsement that ThermoDox is delivering on its promise, as I have outlined in detail in my prior scientific overview article. The 219 figure was much higher than I thought, but I have gone on record many times saying I was confident that the interim would include >190 events. There seems to be a consensus from the models I have seen that the median PFS time (months) for the entire trial population is in the mid-20's, let's say 24-25. I think we can assume with certainty that the control arm of the trial, a central focus of the articles on my blog, is performing much better than the 12 months management has projected. Had the control arm been 12 months, undoubtedly the DMC would have made a recommendation to halt the trial. 

What we do know, however, is that something has changed significantly in the tone of the company, and I would argue, this speaks to the strength of the data underlying the DMC analysis. Recall as I summarized in the Q3 cc write-up, management was heavily emphasizing that they would not do anything to sully the respect/credibility they have earned from global regulatory agencies in how they have conducted and executed the HEAT trial. The company, in many ways, was speaking to Mangrove Partners' verbiage from their original 13D filing, in which they proposed the company seek a SPA modification to take a "second look" at the data in the event that the interim did not justify a halt. At the time of the 13D, and re-emphasized during the Q3 call, the company all but dismissed such ideas. For the conservatism expressed at the time, I applaud the company.      

Well, if the company's mantra has been adhering to the Special Protocol Assessment (SPA) agreed to between the company and the FDA, we now see a much more drastic change in direction, and it is a great sign I would argue.

From the 11/28/2011 Interim PR:

Celsion also announced today that the DMC, in its review, followed a statistical boundary determined by the Company using the Lan DeMets implementation of the O'Brien-Fleming spending function. This approach allows for the Company to conduct additional interim efficacy analyses prior to final data read-out at 380 PFS events with no increased risk of statistical penalty. The additional analyses may allow for earlier stopping of the study. Additionally, based on its internally modeled estimates of PFS events, Celsion reconfirmed that 380 PFS events are projected to occur in late 2012.

"The DMC's unanimous recommendation is a significant achievement for Celsion based on the most comprehensive review of the HEAT Study to date, including the first-ever review of efficacy results," said Michael H. Tardugno, Celsion's President and Chief Executive Officer. "Critically, we have the potential to realize a successful outcome to the study prior to its planned completion. We are encouraged by what may be sufficient rationale for conducting an additional preplanned efficacy review prior to the 380 events called for in our protocol, and will seek to amend our Special Protocol Assessment Agreement with the FDA accordingly. We thank the DMC for their work and thorough review, and are grateful for the continued support and enthusiasm from the healthcare community, regulators, our investors and our employees."

What is not clear from this PR is whether or not the Lan DeMets implementation was just now introduced, or was this the agreed to protocol in the trial's statistical analysis plan (SAP)? From my understanding, with Lan DeMets, they can conduct as many interim analyses as they would like, but will have to pay an alpha penalty (contrary to what the PR says). What the company needs to elaborate on is, where did the "sufficient rationale" come from? Is that simply a function of using Lan DeMets, or was that a loud and clear endorsement from the DMC that the data is probably very, very close to the boundary? I would think the latter, but this ties into my "transparency" section later on. The summary from this link is quite an interesting read on Lan DeMets, in that it clearly says Lan DeMets is used when the trial is "close to crossing the boundary." I think the PFS data is likely very strong, but just missed the required statistical threshold needed for an interim halt, hence, the sudden change in tone to approach the FDA and modify the SPA to get a second look at the data.

While on the topic of the interim and potential additional looks, if we assume the company hit 219 events in mid-September, and they once again maintain that 380 events would occur in late 2012, let's say, November, that is 14 months away from September. With 380-219 = 161 additional events remaining, divided by 14 months, we get roughly 12 events per month between now and then. That would imply that as we hit mid-December, we should be at around 255 events. If a second look is agreed upon by the FDA, it is very likely that could come at ~300 events, the mid-point between the 219 and 380 for final data. Folks, very realistically, we could have another look at data within 5 months maximum. Mr. Tardugno's quote from above indicates there is a very real chance that the next look could bring the trial to a conclusion. That is certainly a far cry from prior public comments around the first interim analysis, in which a halt was "unlikely."


The interim, for the reasons mentioned above, is a major accomplishment for the company, a critical milestone no doubt. I was surprised by the knee-jerk, "give me my toys now", mentality the market reacted with when the news was released. Of course, if things were only about the interim analysis this past week.

Leadership

One of the reasons why I have been so attracted to Celsion is my positive impression of management to date. Certainly, the company has made promises on timelines that were at times, borderline ridiculous, starting with enrollment of the HEAT trial (to be fair, many biotechs suffer from the exact same problem). Of course, it hasn't just stopped there, the timing of the interim analysis ("September to "Q4"), IND process for the Philips/HIFU trial, update on the DIGNITY study, and more recently, the ABLATE trial, have all been delayed it seems once again (see my prior article on end of year catalysts). ABLATE, their randomized, Phase 2 trial of ThermoDox in colorectal liver metastases, was supposed to start enrolling upon completion of the HEAT study enrollment, which occurred in August, not a peep from the company on this, and here we are in December. In fact, Mr. Tardugno at the Rodman & Renshaw conference said he is hopeful the ABLATE trial would enroll its first patient by the end of September. You get the drift here.

So, what is my point with all this? Well, with good leadership comes a certain "benefit of the doubt" that supporters are willing to afford the company. Many, including myself, have given the company the benefit of the doubt in many instances. The issue in Japan, for example, is one such area where I strongly backed the company, and gave many reasons for doing so. I have since reached out to the company in several instances asking what potential new trial design they are expecting for the "new" trial their partner, Yakult, will be conducting in Japan, and have heard nothing, and we have received absolutely nothing on any of the recent calls (this ties to my questions outlined for "transparency" below).

Part of the benefit of the doubt discussion also ties into the recent dilutions we have seen. Yes, I understand the company needs funding, as exemplified by 3 financings earlier this year. As their CFO has stated, they touted to raise "at 52 week highs" when the stock was in the 4's, which implies that a raise at 52 week lows can be viewed as none other than sub-par. Well, following the interim analysis, we got exactly that, another dilution, at near 52 week lows. It is beyond me why the company would say at the recent Q3 cc that they have enough cash to last them through all 2012 milestones, and immediately after raise money under what by all accounts, represent sub-optimal terms.

Some of the biggest areas the company will need to laser focus their leadership pertains to a second license deal for ThermoDox (which like the other milestones mentioned above, has been significantly delayed), commercial manufacturing, and initiation of the rolling NDA (let's see if that end of year estimate for that happens). Commercial manufacturing capabilities appear to be progressing well, as 3 registrational batches should be complete by year's end. Depending on the terms of the deal, the NDA is also heavily tied to the 2nd license deal, as their potential big pharma partner would play a strong role in supporting the NDA submission. Make no mistake, completing an NDA is not for the faint of heart, and having a partner handy for that is critical for Celsion (not to point fingers, but Exhibit "A" on that is Delcath).

Admittedly, I was one of many shareholders convinced that the interim analysis would be followed by a second license deal, hence, negating the need for cash since such a deal, depending on its size and scope, would have a considerable upfront cash component. The clearance of the interim removes a significant amount of risk for a potential partner, and as I said above, if the data was "borderline halt", a partner should be all but ready to sign on. In fact, CEO Mr. Tardugno made a very clear reference to this in the Q1 conference call earlier this year, saying, "We're hopeful that following this interim analysis we can find terms that would represent the appropriate basis that would lead to a license. That’s all I’d like to say at this point." Mind you, this second deal has been promised to be completed in 2010, let alone 2011. So yet again, we have another broken promise. Mr. Tardugno has also in the past made many remarks about the importance of credibility for developmental drug companies, and I would respectfully submit to him that repeated broken promises is a sure of way of slowly losing credibility. From my perspective, the "benefit of the doubt" allowance has been entirely exhausted by the company.

While talking about leadership, I think it might be a good time to discuss the recent drama brewing between Celsion and its largest shareholder, Mangrove Partners (related to this mess, I assume, are the company bylaw changes and executive termination agreements that were recently filed as well). As many of you know, I recently interviewed Mangrove Partners' founder, Nathaniel August, and he has never been one to be shy with words. Recall during the Q3 call that Mr. August vehemently tried to put the CEO on the spot to "be accountable" if the study's final data read-out does not occur by the end of 2012. As I would assume there are legal teams looking into this as we speak, I am not going to provide too much commentary here other than to summarize exactly what happened:

• Mangrove approached the company to participate in the recent direct offering
• Celsion agreed, but, as outlined in the recent 8-K "proposed as part of the negotiations that Mangrove enter into a customary standstill agreement." This "agreement" submitted by Celsion to Mangrove, to date, has not been released to the public.
• Mangrove "took the bait", if you will, and in his words from the 13D/A, "I did continue to negotiate to see how far he [CEO] would go"
• Mangrove ultimately declined to participate in the deal, and sent the Celsion board a scathing letter which, among other things, asked the company to assign two designees of Mangrove Partners to the Board, hire an independent bank to explore all strategic alternatives, set goals for management that carry the potential for termination, and review the actions of management "in their attempt to silence a stockholder."
• In effect, Mangrove is accusing the company of bribery, in his words, the "basest of actions." From my own personal interactions with Nathaniel August over the past couple days, I can assure you he is genuinely upset.
• In the 8-K cited above, Celsion rebutted, and specifically made clear that they would not follow any of Mangrove's recommendations.

Now, how all this plays out will be very interesting. On the one hand, Mr. August owns a considerable portion of the company, so the company has to walk a fine line. However, I think it is very clear, from the very first 13D, that Mangrove all along has wanted to play an "active" role in Celsion's day to day operations, suggesting a SPA amendment among other things, well in advance of the interim analysis. Clearly, Mangrove is still interested in the prospects of the company, and this "bribe" accusation certainly does allow him an opportunity to put an even more pressure on the company. Understandably, he has reason to be frustrated with management, as I have mentioned above, I do as well. However, whether or not the "standstill agreement" will be viewed as a "bribe" is yet to be seen. My personal suspicion is that such deals happen all the time in Wall Street, and are tacitly understood by the "players" involved. I also do believe that Celsion management is trying to keep Mangrove Partners at bay as much as possible. 

My primary concern is that this whole mess, and that is the only way to describe it, does not impact the commercialization prospects of ThermoDox. The company owes it to their employees, their global collaborators, physicians, and most importantly, patients. 

Transparency

The company has prided itself on transparency in the past (they have been very transparent with me, sans a few exceptions in which emails went unanswered), so, this section of the article will simply be a list of questions I am personally asking management to answer and clarify for us all. I will go on the record saying that a few weeks back, I personally reached out to Celsion CEO Michael Tardugno for an interview that would be made available to my blog visitors (I have yet to hear anything back, and understandably, probably won't for a while). In the wake of the Mangrove mess, transparency from the company resurfaces as more important than ever. Whether it's via interview, email, or any other communication method, what is most important is that we get answers to the following questions below, which I know many fellow shareholders have in mind:

1. When was the Lan DeMets implementation decided upon, and who decided on that (company, DMC, FDA)? Was this part of the original statistical analysis plan (SAP) or was this something newly decided during the interim analysis? Did the DMC make this recommendation?
2. What exactly does the company mean by "sufficient rationale" to conduct another interim look? Was a second look a specific recommendation made by the DMC on the basis of the strength of the data? Or is this entirely an assumption of the company looking at blinded data?
3. (12/4 Update) The company historically has maintained an estimated 12M time for the control arm PFS. Having gone through the interim, has the company adjusted this internal working assumption?
4. What is the proposed timeline for modifying the SPA with the FDA? Has the company initiated this process already?
5. Will the company PR when a decision is made on the SPA amendment?
6. Assuming the SPA is amended, when would a second interim took place? Specifically, how many PFS does the company expect would be needed for the second look? 
7. Would a second interim look be dependent on a particular number of OS, rather than PFS, events? If so, how many events?
8. How many OS events were in the interim analysis? Clearly, some of the PFS events might be deaths, but OS events are likely to be much lower. 
9. Where does HEAT enrollment stand today? When does the company expect to complete the planned enrollment in China? When does the company expect 700 patients to be enrolled? Will these events be PR'd?
10. The company has provided not a single meaningful update on Japan for the past 6 months. Exactly what potential trial design revisions does Celsion expect will be introduced into the separate study of ThermoDox in Japan by Yakult? Is there a possibility for a lower dose of ThermoDox to be tested? The company must have some working internal assumptions about what Yakult is planning.
11. When exactly is the new trial in Japan set to start?
12. Where exactly do we stand in potential negotiations with partners for ThermoDox? What specific geographies is the company considering for such a deal, and would it include all future ThermoDox indications? Are there any specific milestones partners are waiting for before signing a deal(s)? Please elaborate with as much detail as possible. 
13. What is the status of the ABLATE study? The trial has been on ClinicalTrials.gov since early November, but no PR as of yet for treated patients. 
14. (12/4 Update) What is the company's expectation for the performance of the control arm in this study (local recurrence at 1 year)?
15. (12/4 Update) What is the status of the Philips HIFU trial? A recent Rodman & Renshaw analyst report (See Street/Other Stock Coverage Section) put a Q4 2012 timeline for this trial to initiate. How does the company reconcile that with prior estimates that the trial would begin in 2011?
16. What is the status of the DIGNITY study? Will this be opened up to other cancers or introduced as earlier line therapy?

Concluding Remarks

I apologize for the length of the article, but there was much to be discussed at this juncture. Let me be very clear in that I remain extremely optimistic that the HEAT trial will be a success. In fact, I would place the odds of a successful trial to upwards of 80% at this point. So, the science is absolutely there, as I have argued here, and argued before. What needs to be ensured moving forward is strong, effective leadership, and a commitment to remain as transparent as possible to all stakeholders involved with the company. With the interim cleared, commercialization of ThermoDox is well within reach now. Moving forward, however, management has their work cut out for them, as there remain several, unaccomplished milestones needed to truly transition the company to a potential oncology powerhouse. I look forward to seeing the Celsion story unfold further, and you can bet that I am holding my shares very tightly through the bumpy roads that might be ahead.

As always, please feel free to leave any questions or comments.

Best,
Siavoche

Celsion Q3 Conference Call Write-Up

"I want to open the call with a comment that I have made to a number of stakeholders over the last  months, and that's this: I believe we're really on to something. We stand at the precipice of data from arguably one of the most important trials, if not in oncology, then certainly in liver cancer."


"The interim analysis, such as this one, is not uncommon in large, registrational trials in oncology. A halt for efficacy is, however, uncommon...That said, this is the first assessment of efficacy undertaken in a randomized population for a large study using Thermodox. So, the outcome [of the interim analysis] is certainly difficult for us to predict."


— Michael Tardugno, CEO, during prepared remarks of the 2011 Q3 conference call

Given investor anticipation for the HEAT study interim analysis, I knew going into this call it would be one of the more memorable conference calls conducted by Celsion. To those of you who heard the call live, I think you would agree that indeed, it did turn out that way, particularly due to the lively Q&A session. Before the call, I emailed management many questions surrounding the interim analysis among other things, and I urged them to proactively address the interim analysis process and where they stand in the totality of the process. I'm glad that this issue was addressed in the CEO's prepared remarks. In what was a very informative, yet explosive, call at times, here is my summary of themes from the call, with quotes peppered in throughout:

• A minimum of 190 PFS has been confirmed in Q3 per the SEC filing, and the interim analysis is still scheduled for Q4. In fact, management mentioned on the call that the DMC meeting date has been scheduled, and upon questioning from Nathaniel August during the Q&A, was understandably reluctant to disclose the exact date. My suspicion is the date of the DMC meeting is scheduled for sometime before the end of this month. 
• In the Q&A, the company mentioned that at the time of the announcement of complete enrollment of 600 patients in early August, the company was at or near 190 events based on their own internal tracking, not an official count of confirmed cases. The company eventually requested their independent CRO for an official count, with a "cushion." While the exact number was not revealed, I suspect it will be just under 200. 
• Stopping rules for interim: The company was unable to provide the P value required for a halt, in response to a question from Nathaniel August during the Q&A. The CEO said that for a decision to be made to halt the study, there "must be a strong rationale for doing so. The PFS bar has been set high intentionally to conserve alpha...an overall survival bar has not been set, but will have to be trending in the right direction. Thermodox toxicity profile again will be evaluated in parallel on a risk-benefit basis, as it has been in previous DMC reviews."
• The fact that management highlighted there is no specific OS bar set for the interim bodes well for the potential chances of an efficacy halt.  
• Also, given the previous unanimous DMC recommendations conducted to date, I would think the safety portion of the risk-benefit profile will be heavily in Thermodox' favor. So, clearly, it is all going to come down to efficacy. 
• Top-line data from 380 events is due "as early as 1 year from now", and this will be accelerated by extending HEAT enrollment to 700 patients, approximately 50 more than the ~650 anticipated from the incremental amount from the extended enrollment ongoing in China.
• During the exchange with Nathaniel August regarding who would be held responsible if final data is not out by the end of 2012, the CEO clearly stated that their decision to continue enrollment beyond 600, assuming enrollment goes as planned, should provide a benefit in terms of time to final data of 4-6 months based on their internal modeling. 
• So, I think it is fair to say that if the company did not plan to enroll any more patients beyond the 600, final data would unquestionably bleed into 2013, perhaps as late as middle of 2013. The additional 100 patients should hopefully get us final data 1 year from now. 
• There are 3 members in the DMC, as revealed by the CEO during the Q&A session. The DMC is supported by a members of their CRO and data management team. "We are fortunate to count among our IDMC members, some of the most respected statisticians and oncologists in the world, faith in their decision is absolute."
• "Safety, PFS and survival", in other words, the "totality" of the data will be used to make decision by DMC, once again stressed by Dr. Borys, as he has done on previous calls.
• Dr. Borys also reinforced the strong regulatory agency support the company has with respect to the HEAT trial, echoing Mr. Tardugno's prepared remarks. Implicit in such comments, both by the CEO and by the CMO, is that the company does not want to do anything to risk losing that support, such as unblinding the trial by releasing data without the full blessing of global regulatory agencies. 
• In response to my question about whether or not the DMC would have to consult with the FDA before an announcement is made in a potential unblinding scenario at the interim, the CEO mentioned that indeed the FDA would have to give their blessing. 
• It does not sound like there would be too much, if any, back and forth between the DMC and the FDA to make an interim decision. If the DMC recommends to unblind, the company will then consult with the FDA, and immediately issue a PR for that. So, even if the DMC recommends a halt due to overwhelming efficacy, we will not see any data immediately, just a PR saying that the company will consult with the FDA for their final blessing. Regardless, at that point it, would be a formality in my opinion.
• If a recommendation to continue is made, the company mentioned that they are maintaining their previous guidance that no additional data would be released. However, the CEO mentioned that they would "consult with the DMC in detail" regarding this topic. So, there is still the possibility that we do get some data if a recommendation is made to continue the trial. 
• A follow-up question during the Q&A, however, muddies the waters a bit. After some back and forth, the company made it seem that they would only receive pooled data (a "4 inch" stack of papers) from the interim analysis, as they have been getting from all the previous DMC meetings done to date looking at safety. 
• On the topic of a continuation decision, the company reinforced during the Q&A that this would be a meaningful step forward for negotiations with potential licensing partners. In fact, the CEO mentioned that companies might "lose the opportunity" for a potential deal if they are only willing to wait for final data. 
• In what almost seemed like a Freudian slip, shrewd listeners may have caught something interesting during the call. During the Q&A, a caller asked in many ways what data the company would receive from the DMC's decision, regardless of whether the decision is a halt or not. After going back and forth many times with this caller, here is verbatim what Mr. Tardugno said: "I think we tried to answer how ticklish this is, we are threading a needle here. We want to make sure our commitment to the FDA is maintained, and that's before we unblind the trial that we involve the agency. As we said earlier, that is going to be a matter of discussion with the DMC when we meet them in the near-term." Depending on how you want to look at this, it almost seems implicit that unblinding the trial is squarely on the company's mind (Not to mention, after my own question about FDA involvement in a potential halt scenario, Mr. Tardugno said he and Dr. Borys were just talking about that earlier in the morning). 
• CEO mentioned that the ABLATE trial is underway at Albert Einstein Medical Center, and a second trial site is nearly complete. The company also mentioned that they intend to establish other trial sites for the ABLATE study, however, how many and in what geographies, was not mentioned.
• The company provided no real meaningful update on the Philips MRI-HIFU IND for bone mets, just a simple rehash of previous information. However, the company did say that the FDA is still awaiting responses from their partner, Philips, regarding their HIFU system, Sonalleve. 
• Unfortunately, there was no meaningful update on next steps for the Phase 2 DIGNITY study.
• Jeff Church mentioned an interesting point that has gone largely unnoticed by many. He specifically mentioned that the company would seek "geographic and indication-specific partnerships", which is certainly news to me. Up until now, it was my assumption that outlicensing terms would largely include every potential Thermodox indication, but it is good to see that they are considering breaking out deals by indication.
• During Q3, the company met with the EMA pre-advice committee. The company is revising and submitting their briefing book submission, due by the end of this month. A response should be given by year end, the company will PR this event, and their approach forward in Europe. 
• From a CMC perspective, the first of three registrational batches is being completed in the next two weeks, while the remaining two batches will be done this year. Completion of these batches is critical for regulatory submission, and their scalable manufacturing approach will support 90% + margins at launch, per management. 
• Celsion intends to expand the number of contract manufacturing organizations to reduce chances of a potential delay in registration, and to give supply chain reassurance to potential partners. 
• In the Q&A, the company reinforced that they don't see any direct competitive threats in the horizon. Here is one area where I wish the caller would have countered by asking about the potential threat of Nexavar as being studied in the Phase III STORM trial. Aside from TACE + RFA, which by itself is a competitive threat, I would have liked the company to have mentioned that they are keeping adjuvant use of Nexavar in the back of their minds. But, for the most part, competition is very slim in the liver cancer space, particularly in China, where Nexavar is rarely used because of its high price. 
• Q3 ended with 21.4M in cash. At this point, using 1.7M burn rate / month, the company probably has ~$18M or so in cash.

I have said that I was expecting interim results by the end of October, early November, and I was clearly wrong. I will stick my neck out on a limb once again and say that we should have a DMC decision by the end of November, at the very latest, within the first few days of December. As I have said before , I remain highly enthusiastic regarding the outcome of the HEAT study, whether it happens at the interim or at final data next year.

Lastly, I want to thank management once again for taking my questions during the Q3 call, and for always being highly accessible to shareholders in general. I am certainly intrigued by Thermodox as an asset, but I am even more confident in management's ability to execute and successfully commercialize on its promise.

As always, feel free to leave any questions or comments. 

Best,
Siavoche