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

[UPDATED] Brean Murray Timing Suspect, Logic Flawed, as New Downgrade and $1 PT Causes Further Drama

I guess nothing about this upcoming Phase III data release for Celsion will be "conventional", far from it. Before moving on to the Brean news, I want to make a couple comments with respect to the antics from yesterday. I am not a Wall Street person per se, and perhaps I am a bit young and naive, but I hope that ALL BULLS AND BEARS agree with me in saying that what we saw yesterday as far as trading activity for Celsion was highly suspicious, and smells of blatant manipulation. Regardless of the outcome of the trial, for whatever it's worth, I personally call on the SEC to investigate thoroughly what happened yesterday. After years of research, I hate to see the most pivotal outcome in this company's history get tarnished with traders conducting blatant manipulation. Regardless of what side you are on, I hope you agree with my views here, as we have seen this countless times in biotech ahead of binary events. One interesting note on ihub from a poster speculated on what may have happened yesterday, it is worth a read.

With yesterday's antics behind us, today we woke up to a downgrade from Brean Murray's Jon Aschoff, dropping his target price from $7 to $1. While I do not have access to the report, Adam Feuerstein reported the news earlier this AM and included the verbiage from Jon Aschoff. I tweeted earlier as well that the "gloves are off" at this juncture, so let me be a bit blunt here:

1. The sheer timing of this "downgrade" is highly, highly suspect given HEAT data being just around the corner. Note that I do NOT view the Roth report issued yesterday in the same vain, since that report was primarily meant to be "coverage" of what happened during the irregular trading yesterday, not necessarily a sudden shift in their fundamental view of Celsion (which, incidentally, with a $10 price target, I think should be re-thought). Adam Feuerstein himself tweeted earlier as well that Aschoff's timing was "stupid", despite Adam's own belief ThermoDox will fail. I suppose this is nothing new for Jon Aschoff, as he had a similar situation pan out with Dendreon a few years ago. The bottom line is, for Aschoff to have a sudden change in heart, fundamentally, regarding Celsion, with data near is very suspect.
2. Aschoff's piece is missing facts, and his logic is highly questionable. Let me preface this by saying even the staunchest of bears, and you ALL know I have sought and "battled" many of them over the years, believe that for ThermoDox to hit it's accelerated endpoint in progression-free survival, itself, would be a HUGE accomplishment. In fact, I have said it before as well, PFS is almost an "unfair" endpoint for ThermoDox, yet one in which I think ThermoDox will handily show clinical benefit by reducing most local and some distant progressions. No bear I have come across believes there would be a sell-off on news of positive PFS data, to the contrary, the consensus is a 100-200% gain from today's current market cap. PFS aside, I have discussed before, and the company and KOLs have confirmed numerous times, patients in the HEAT trial will not only potentially receive up to 2 ablations to achieve an initial complete ablation, but will likely receive multiple RFA treatments post-progression, according to their randomized protocol.
   
   So, all that aside, let's read verbatim what he wrote, and my comments are in [red brackets]:
   
   "We are downgrading Celsion to Sell from Buy due to robust share price strength prior to a highly binary event in 1Q13 that, in our view, will define whether or not the company remains viable thereafter. Recent share price strength places the valuation at a level where we expect more downside from negative results than sustainable upside from positive results [so, if trial succeeds, they don't see any upside, and if trial fails, magnitude on downside is much larger than increase if positive. FINE, but read carefully, he is generically speaking about either outcome, not saying one way or another which will happen]. We question the sustainability of a positive valuation inflection upon the potential showing of a progression free survival (PFS) benefit due to the need to show at least a clinically meaningful overall survival (OS) benefit thereafter, which after only a single administration of one active therapy (RFA) versus two active therapies (RFA and ThermoDox), appears more difficult than benefiting PFS, given the introduction of any additional therapy between progression and death [Again, factually incorrect, he assumes patients won't receive any additional doses of ThermoDox post progression, which is simply untrue. Even if they don't, and progression times are significantly extended with even one dose of ThermoDox, PFS we know is already a strong surrogate for survival in HCC]. Despite the HEAT trial's SPA, meeting the PFS primary endpoint is not a shoe-in for approval without at the very least a strong numerical OS advantage for those treated with ThermoDox [FINE, once again. But OS is a secondary endpoint, I believe Aschoff is forgetting that PFS is an accelerated endpoint here. The big problem here, for his own sake, is his implicit assumption that PFS will be positive, and once again, even the "bearest" of bears believe hitting PFS itself would be both meaningful clinically, and catapult Celsion from a valuation perspective. And furthermore, Aschoff KNEW OF THE TRIAL PROTOCOL upon initiating coverage, didn't he? Why does he suddenly believe that PFS is a big issue, when Aschoff never raised this before in his earlier report from Feb 16, 2012?] ."

The bottom line is, if you believe a positive PFS outcome, which he implicitly assumes, warrants a $1 price target, then by all means listen to Aschoff. 

As my friend @biorunup tweeted earlier today as well, "data is the great equalizer", and I agree, data will end this debate once and for all. Best of luck to you.

Best,
Siavoche

[UPDATE TO ARTICLE 1/17, 7:46 PM PT] 
Just to give you some more color highlighting why Brean Murray's report today was extremely suspect and a demonstration of very questionable logic/rationale, consider the following direct quotes from his first report, which I linked above. Now, call me crazy, but one would think to change one's opinion on something, in general, requires one to re-visit the original crux of one's opinion, right? What is particularly baffling to me is that nothing in his report today, not even close, conflicted with these primary drivers for his original bull thesis. MOST BAFFLING to me is that his concerns over PFS as the HEAT primary endpoint, the crux of his argument today, was never once mentioned, not even as a minor risk, in his original report. That, my dear friends, tells me something is terribly wrong about today's report, because a study's primary endpoint would be one of the very first things anybody conducting DD would give thought to, especially a supposed "analyst". I do not buy that it suddenly dawned on him to look askance on PFS, literally days before top-line data. Let's have a look at some other glaring inconsistencies not addressed in today's report:

-"The Phase 3 ThermoDox trial should read out in 4Q12, and we are expecting a positive PFS outcome."
Question--> Has that changed from today's new downgrade? No, it's actually reinforced, date aside. 

-"We believe ThermoDox will be broadly adopted once it's approved."
Question--> Has that changed from today's new downgrade? No

-"We believe the potential end-markets for ThermoDox use are significant."
Question--> Has that changed from today's new downgrade? No

-"Celsion is carefully monitoring the Phase 3 ThermoDox trial to avoid common pitfalls."
Question--> Has that changed from today's new downgrade? No

-"We further believe that a positive PFS result would likely rapidly attract an ex-US partner"
Question--> Has that changed from today's new downgrade? No, and this is my favorite one. I suppose PFS is valuable enough to attract an ex-US partner, yet, that same Ex-US partner, with much greater understanding of the regulatory environment, would do so knowing regulatory agencies would want OS rather than PFS for approval? Nevermind that such an Ex-US partnership itself would be another major catalyst for the company's valuation. There are so many things just simply wrong with the logic and rationale for a $1 PT here it is hard to believe.

Good luck to all longs,
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

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

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

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

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

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

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

Best,
Siavoche
#15vs25

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

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

My own takeaways from the PR:

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

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

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

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

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

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


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

Best,
Siavoche
#15vs25

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

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

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

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Celsion and the Risks of Clinical Trials

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

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

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

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

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

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

Questions for Celsion Management During Upcoming Q3 CC

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

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

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

Best,

Siavoche

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

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

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

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

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

Best,
Siavoche

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

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

Now, on to the article.

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

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

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

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

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

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

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

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

Best,
Siavoche

Invitation for Guest Authors Regarding Celsion, Seeking Rational Bear Views

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

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

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

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

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

Best,
Siavoche