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