Thermodox in HCC: The Science Points to Phase III HEAT Success

With all the confusion over the company deciding/not deciding to issue a PR for the occurrence of 190+ PFS events to trigger the interim analysis, I thought it would be important to re-focus investors' attention on what is, in fact, the most important question as it relates to Celsion and the HEAT trial:

Will Thermodox hit its primary endpoint (33% improvement in PFS-accelerated endpoint, eventually, overall-survival (OS) as well upon realization of 372 deaths) and prove successful in the HEAT study?

Whether this occurs at the interim (due to overwhelming efficacy, unlikely, but still on the table) or at the top-line read-out of 380 PFS events next year this time, I would like to present here my assessment of the scientific basis pointing towards a high probability of success in the HEAT trial. As you will see, much of the basis of my argument revolves around the well-documented patterns/factors associated with local recurrence in HCC, in addition to the proposed mechanism of action for Thermodox.

Rationale for the Trial

There exists a great unmet need in the treatment of liver lesions greater than 3 cm. Few would question the efficacy/safety of radiofrequency ablation for tumors smaller than 3cm. In such cases, local recurrence is not such a significant medical issue, although it still occurs. A consensus in the literature, however, without question, supports the notion that local recurrence is strongly associated with liver lesions greater than 3cm treated with RFA, the population of patients squarely targeted in Celsion's Phase III study. The extent to which the HEAT trial indeed is addressing an area of significant unmet need is no best exemplified by the National Cancer Institute's (NCI) Clinical Trials Planning Meeting (CTPM) designation of the HEAT trial as one of 8 priority trials in HCC in 2010. That, in and of itself, speaks volumes about the importance of this trial, and why the company has maintained that the results of the trial are highly anticipated by the medical community.

In an attempt to address some of these limitations, newer RFA devices/electrodes have been developed that can ablate larger areas of volume, but physician experience with these remains limited, and no large studies have corroborated their clinical utility. Similarly, RFA has been investigated in combination with transarterial chemoembolization (TACE) or bland embolization (TAE), with the rationale being to use TACE to shrink the tumor initially while cutting off blood supply to the lesion, and then using RFA after to ablate a smaller tumor. While this approach has had some success, again, no large-scale randomized trials have been published to definitively validate its clinical role.

Risk Factors for Local Tumor Progression

All of the following (not an exhaustive list) have been identified by a strong body of literature as being related to local tumor progression following RFA (Reference #1, specifically refer to Tables 1 and 2):

Reference #1- Annal Surg- Local Recurrence After Hepatic Radiofrequency Coagulation 2005.pdf

1. Lesion size >3cm
• Again, this is squarely the population targeted in the HEAT study, up to a maximum of 7cm.
  
  
2. Percutaneous vs Laparoscopic/Open-Surgical RFA
• Most patients in the HEAT trial have received percutaneous RFA, reflecting how RFA is done globally as part of today's SOC. Despite the higher chances of local progression with a percutaneous approach, clinicians likely favor it due to its convenience (can be done on outpatient basis) and its better treatment-related complication rates than a laparoscopic or open-surgical approach.
  
  
3. Lack of a 0.5/1.0 cm ablative safety margin
• Several papers, very recently, have identified that local tumor progression is associated with a lack of safety ablation margin, which essentially is removal of part of the healthy liver tissue surrounding the lesion via RFA. It is in these areas where micrometastases invisible to CT scans at 1 month follow-up can result in recurrence. Interestingly enough, the margins are precisely where Thermodox flexes its muscle. In fact, as I will show below, imaging results to date show the potential of Thermodox to add up to a 1-2 cm rim of heavily concentrated doxorubicin around the targeted lesion.
  
  
4. Proximity to major vessel
• This results in what is called the "heat sink effect", whereby the presence of a major vessel reduces the likelihood of achieving the clinically required RFA temperature for complete tissue necrosis. Depending on tumor location, heat sink can be a major barrier to overcome using RFA alone, which explains why it is indeed associated with recurrence. However, Thermodox activates at relatively low temperatures (39.5-42 degrees C) that are still attainable in these locations. So, in this instance, Thermodox would not only be working at the periphery, but would also have a greater effect inwards towards the center of the lesion. 

Having discussed the risk factors for local progression, it is important to highlight some nuances in the term "local progression", as the literature has often mixed up true local progression with intrahepatic distant progression. The former would be progression around the area of the ablated tumor, while the latter would be an entirely new lesion that surfaces in a remote location of the liver (see below for more on distant progression). Consistent with point #3 above regarding the use of an ablative safety margin, scores of literature confirm that local progression indeed often occurs right at the periphery of the ablated tumor. Hence, from this, we can postulate with a relatively high level of confidence that local control can be improved by expanding the zone of ablation.

Below, I would point the reader to two studies (Reference #2 and Reference #3) published in well-respected journals that speak to the site and patterns of recurrence, among other things discussed in the papers. Note that the overwhelming proportion of local recurrences are "contiguous" rather than "adjacent", or distant. Also, more importantly, notice that the most common first site of recurrence, is local as well. This is important given the PFS metric in the HEAT study, which captures any and all types of progressions, intra/extrahepatic, and all-cause death. As an aside, this paper once again shows the strong relationship between tumor size and progression, as well as safety margin and progression.

Reference #2- Annal Surg. Onc - Local Recurrence after Lap RFA 1032 tumors Jul 2008.pdf

 

Consistent with the study above, note in Table 2 of reference #3 that the most common type of local progression is "extrazonal, peripheral, nodular", irrespective of whether or not the tumor type was an HCC or metastases. This also has big implications for the colorectal liver mets study Celsion is planning to initiate. Also of importance, Table 1 shows that more than half of all progressions occur within the first 12 months, with a median of 12 months for HCC and just under 7 months for metastases (colorectal mets in particular are much more aggressive than HCC, more thoughts on this below), and do notice that this study looked at tumors much smaller than those being observed in the HEAT study. Keep this information handy as we discuss expectations for the HEAT trial control arm (RFA alone) below later in the article.

Reference #3- RJR- LTP After RFA of Liver Tumors- Analysis of Morph. Pattern and Site 2007.pdf
 

Data Collected to Date

At this point, it would seem logical to jump straight to the Thermodox Phase I data, but doing so should only be preceded by a review of studies conducted to date looking at non heat-sensitive liposomal doxorobucin (marketed by J&J as Doxil/Caelyx) in conjunction with RFA. This is clearly not what Doxil is indicated for, but again, referring back to the unmet need of successfully ablating large liver lesions, the medical community has recently examined how the combination of Doxil + RFA could enhance the area of ablation for RFA. This was actually a topic at the most recent World Conference of Interventional Oncology (WCIO) meeting (Reference #4). The reader is probably wondering how and why a non heat-sensitive liposome could possibly enhance the zone of ablation with RFA? The reasons for this synergistic effect boil down to the following:

1. Hyperthermia increases the porosity of tumors, enhancing liposome extravastion into tumor interstitium
   
   
2. Cellular stress through the production of oxidative nitrative lipid, DNA, and protein damage
   
   
3. Increased cell apoptosis

Refer to the following papers and presentations from my blog which support this synergistic potential. In reference #4, take special notice of the imaging results of RFA + non heat-sensitive liposomal doxorubicin. In reference #5, examine table 2 and look at the % increase in ablation volume with RFA + Doxil. As expected and seen in many prior Celsion company presentations, the ablation volume significantly decreases with RFA alone as time progresses.

Reference #6 is an interesting one, and I am compelled to include it here out of academic honesty. While focused on much smaller lesions, this small study did not show any impact on progression by adding Doxil to RFA, and more oddly, did not show any increase in ablation zone. It does stand out as somewhat of an anomaly in terms of the effect on ablation size with liposomal doxorobucin.

Reference #4- WCIO 2011 Presentation (Note the imaging results of RFA + non-heat sensitive liposomal doxorubucin)

Reference #5- AJR- RFA of Hepatic Tumors- Increased Tumor Dest, with Adj. Lip Dox 2002.pdf


Reference #6- Hepatol. Int. - RFA of Small HCC with intravenous peg lip dox 2011.pdf


So, the takeaway here is that normally, RFA alone results in a reduced size of ablation zone as time progresses (clearly noticeable via CT at 1 month scan), while the addition of non-heat sensitive liposomal doxorubicin generally leads to an enhanced area of ablation (with the exception of what was seen in Reference #6). In fact, so compelling is this information that experts in the academic community have recently suggested that a large randomized trial be conducted to evaluate RFA + non-heat sensitive for large liver tumors (Reference #7, Oddly enough, though the author was talking about RFA + Doxil rather than RFA + heat-sensitive liposome trials, he does not bother mentioning the late-stage HEAT study underway).

Reference #7- Radiology- Trials and RFA plus liposomal dox - 2010.pdf


One could hypothesize that RFA + Doxil would prove superior to RFA alone in a large-scale, randomized trial such as Celsion's HEAT study. Remember, we are talking about a liposome that was not even designed to be used in this manner, and one that does not have the unique characteristics of Thermodox that is designed to result in rapid intratumoral drug release in very high concentrations. Also, I don't believe there are any plans to initiate such a large study for Doxil + RFA, so the sheer level of evidence will clearly be in favor of Thermodox + RFA when the HEAT trial is complete.

Enter Thermodox: MOA and Results to Date
I won't go into much detail around what Thermodox actually is (I presume most are familiar with the basic technology), but as many of you know, it is a heat-sensitive, liposomal formulation of doxorobucin. The liposomes are technically much different than Doxil, even without the heat sensitivity aspects (Thermodox has a shorter half-life, among other things). Thermodox releases its payload of free doxorubicin only upon the application of locally applied heat, ideally, between 39.5-42 degrees Celsius. Thermodox is given as a simple intravenous (IV) solution 30 minutes before the application of heat, and as a function of the leaky vasculature of tumors, Thermodox nanoparticles (100nm in size) aggregate within the site of the tumor. This tumor liposome aggregation effect is especially pronounced in the liver. The following temperature gradient image taken from one of the references below shows one common type of RF electrode and the spectrum of temperature surrounding the centrally coagulated lesion area. In the 40-45 degree band below, that is where Thermodox would kick in. This is important, since we know from the papers above that local recurrence almost always occurs right at the periphery of the originally ablated tumor, and we also know that an ablative safety margin has been associated with less recurrence (still doesn't get rid of it entirely, since achieving an optimal margin under current imaging guidance is very challenging).

Cool-tip RFA Electrode Ablation Temperature Spectrum 

Before moving on to the actual data from the Phase I trial, to tie together exactly how Thermodox works, I would highly recommend the reader to view the following video from the inventor of the low temperature-sensitive liposome technology, Dr. David Needham from Duke University (lengthy, but a nice overview).

Thermodox Phase I Trial
The Phase I trial of 24 patients for Thermodox is not quite an apples to apples comparison to the HEAT trial. I will quickly point out some of the key differences:

1. Endpoint- Phase I trial endpoint was "treatment failure", operationally defined as disease progression (TTP) and/or initiation of a new therapy. The Phase III trial primary endpoint is progression-free survival (PFS), a broader/more sensitive metric that encompasses local/distant/extrahepatic progression, as well as all-cause death.
   
2. Patient Population- The Phase I was an "all comers" trial. A total of 9 patients had HCC, 15 had metastatic liver tumors from various sites. Generally, colorectal liver mets are the most aggressive from what I have seen (worse than HCC), while neuroendocrine mets are the least aggressive. (On a separate note, it is for this reason that I also perceive the fact that Celsion is initiating a randomized PII colorectal liver mets trial before having HEAT results in hand, as a nice sign of confidence.)

With all that said, the following article (Reference #8), recently published in Future Oncology by Celsion's Chief Medical Officer and one of the HEAT trial lead investigators (Dr. Ronnie Poon) presents a fantastic overview of the results. In my opinion, the most important point to take away from the trial is the strong dose response relationship seen up to the 50mg/m2 MTD. Overall, across all patients, TTF at the >=50mg/m2 dose was 374 days, while it was 80 days for those treated at <=50mg/m2 dose, again, suggestive of clinical activity and strong dose response. Of note, in the Phase 1 trial, there were 4 patients with tumors >5cm, 2 treated at <50mg/m2 (treatment failure at 25 and 93 days) and 2 >50mg/m2 (treatment failure at 261 and 374 days).  In terms of safety, the profile of Thermodox was consistent with that of regular doxorubicin.

Reference #8- Future Onc. - LTLD Adjuvant to Increase RFA Cure Rate- 2011.pdf
Imaging studies from the Phase I data (Reference #9) also tell a compelling story. After all, imaging studies (dynamic CT) will be telling the entire story in terms of identifying progression in the HEAT trial. Keep in mind the imaging studies I referenced above in regards to RFA + non-heat sensitive liposomal doxorubicin as you view this. Note that similar to that seen with RFA + non-heat sensitive liposomal doxorubicin, the area of ablation significantly expands following RFA + Thermodox, while again, the area of ablation for RFA alone clearly contracts within the first month. Take special note of this on slide 20, as well as slide 23, which shows a 1cm and 2cm drug "rim" at 28 days post-ablation

Reference #9- Imaging Features in RFA + Heat Nanoparticles.pdf


So, similar to the RFA + Doxil (non heat-sensitive liposomal doxorubicin), we see an enlarged ablation area with Thermodox, and this is precisely what we would expect given the synergistic effect many have hypothesized exists between RFA and liposomal dox in general. Of course, I did not highlight one very important difference between the two types of liposomal doxorubicin: With Thermodox, there is rapid, intratumoral release of doxorobucin at ~10x the dose as one would expect from regular systemic administration of regular dox (pay close attention to the video with Dr. Needham, above). Coupled with the well-documented high rates of progression seen in larger tumors, the relationship between treating the tumor margins and progression, and imaging results of liposomal dox + RFA (both Doxil and Thermodox), we can now piece together precisely why there is so much enthusiasm heading into the interim analysis of the 600 patient Phase III HEAT trial.

Summary and Key Factors to Be Aware of in the HEAT Trial

I think it is very safe to say that there is a lot of "activity" taking place within the treatment paradigm for HCC, particularly as it relates to intermediate and advanced disease. Ultimately, considering where the current standard of care is with respect to intermediate stage HCC and the documented unmet needs in treatment, I strongly believe a unique window of opportunity exists for Thermodox, with obvious clear competitive implications as well. Without question, there is a strong desire today within the interventional radiology community to overcome some of the very real limitations of RFA for larger sized liver lesions. Thermodox, given its minimal impact on the current standard of care (30 minute IV before RFA) and elegance with which it is expected to significantly extend the reach of RFA, could prove to be a major advancement in the treatment of HCC. Make no mistake, the HEAT study is squarely designed to address a significant unmet need.

Timing is quite important here for Celsion, and this relates back to the current standard of care undergoing a period of evolution, as I mentioned above. While this is not meant to be an exhaustive overview of competitive threats, here are some below that might be competitive with RFA + Thermodox in the future, or in other words, where the standard of care might evolve to in the future. Again, I posit that Celsion's Phase III HEAT study is being executed at just the right time, while there is still much ambiguity in the treatment paradigm, and with potential data coming out of the trial much earlier than many of the discussed treatment modalities below. Given the robustness of the HEAT study, a successful trial would in effect add significant clarity to a very ambiguous treatment paradigm for HCC.

• RFA + TACE- A fair amount of evidence shows significant promise for RFA + TACE, as well as more novel forms such as RFA + DEB-TACE (doxorobucin-eluting beads). However, no large studies such as the HEAT trial exist to firmly establish this treatment as a "gold standard" approach, particularly since there remains much debate over the timing of when TACE should be done relative to RFA, and the added morbidity presented by adding another inherently complicated procedure such as TACE. Also, I posed this question to management during a prior conference call, and Celsion CMO Dr. Borys made it quite clear that Thermodox as an RFA adjuvant could quite easily complement any combination approaches with TACE anyways.
  
  
• RFA + Sorafenib (Phase III STORM Trial)- I am unclear when data from this trial is expected to be released by Bayer/Onyxx, but I don't think it will be coming before top-line results from the HEAT study. Either way, given Sorafenib's established position in the advanced HCC market, this could prove to be a viable threat to Thermodox as an adjuvant to RFA. On the other hand, Sorafenib is very expensive, and thus, has really had limited success in the area of the world most afflicted with HCC, such as China. Also, similar to TACE, nothing precludes the use of Thermodox as part of triple therapy here.
  
  
• Newer RFA Devices (Multiple Probes)- RFA devices will continue to evolve on their own, as manufacturers make incremental improvements to expand an even greater area of ablation (particularly under percutaneous application). This is still very much evolving (see Reference #10 below). 5 years from now, such devices may be part of the "standard of care", but it certainly is not there yet. The same can be said about RFA + TACE for example. Without Thermodox, 5-8 years from now, the "standard of care" for intermediate HCC might have been RFA + TACE.  The fact is, we are not 5-8 years from now, and I once again highlight how opportune this period is for Celsion and Thermodox from a sheer timing perspective.  

Reference #10- Exp Rev Devices- RFA-Going Multipolar- 2011.pdf

Things to Watch Out For in the HEAT Study

1. Distant Intrahepatic Progression- I have discussed this before in another thread (http://celsion.blogspot.com/2011/08/perils-of-pfs-as-heat-study-primary.html) and it is worth pointing out once again, that as a function of the trial's PFS endpoint, distant intrahepatic progression will be captured and counted against both arms of the trial. One expects Thermodox to primarily flex its muscle locally, within the area of the ablated tumor(s), and while I have seen some reports illustrating the relationship between local progression and distant spread, it remains to be seen how Thermodox will impact such progression. It's ability to do so (i.e. prevent some intrahepatic distant spread), in my opinion, could mean the difference between overwhelming efficacy leading to an early NDA at the interim, versus having to wait for top-line data next year. Make no mistake, there will be distant intrahepatic spread in the trial, though one expects local spread to be the most common first site of recurrence.
   
   
2. Protocol Standardization Regarding an Ablative Safety Margin- I have called investor relations regarding whether or not the HEAT trial specifies a protocol for obtaining, for example, a 0.5cm or 1.0cm area of safety margin in the trial, or whether or not this decision is deferred to each of the trial sites. I am yet to hear an answer back from them. While there is a pretty clear relationship between such a safety margin and progression as I have discussed, this is still a fairly "hot" area of research in terms of the ideal margin. I would not be surprised if this decision was deferred to the participating trial sites, particularly since the choice of RFA device (with some broad guidance, of course) and type of procedure (open, laparoscopic, percutaneous) were left open-ended to the respective investigators. Not standardizing a 0.5cm or 1.0cm safety margin, in my opinion, is likely to favor Thermodox.
   
   
3. Control Arm Performance- There has been some debate over exactly what the control arm will look like in the HEAT study but I think it is fair to say there is no reason to think it will significantly deviate from what has been reported in the literature to date. Management has maintained an estimated 12 month median progression-free survival time for the control arm. I would caution the reader that few, if any papers, in the literature look at true progression-free survival as defined in the HEAT study, and thus, finding apples to apples comparisons has been challenging. Either way, I truly do concur with the approximate 12 month estimate management has publicly maintained, though I think the RFA-only arm in the HEAT study might be doing slightly better than that. Historically, percutaneous RFA is associated with higher rates of recurrence holding other factors constant, and we know that the overwhelming majority of patients in the HEAT study received RFA in this manner as well. The above-mentioned "safety margin" issue, for example, could impact how the control arm will look in the HEAT study. Lastly, some recent literature has pointed to newer multipolar RFA (discussed above) as being able to achieve a much larger ablation compared to older RFA probes. The data is still very preliminary, and I highly doubt investigators have enough experience using multipolar RFA such that it would be employed regularly in the HEAT study globally. Thus, I would expect recurrence, both local and distant, to be on the higher end of what is reported in recent literature.
   
   Having identified some of the factors that might impact the performance of the control arm in the HEAT study, below is an adapted image from Figure 1 of Reference #11 of what I believe the Kaplan-Meier progression-free survival curve will look like for the RFA-only arm. Keep in mind that PFS is a broad measure, capturing local progression, distant intrahepatic progression, extrahepatic progression, and death. With respect to Reference #11, disease-free survival (as defined by the authors) is an excellent surrogate for PFS, thus enhancing the utility of this reference. While the average lesion size is smaller than what we should expect in the HEAT study (in fact, this study did not find a difference in DFS by lesion size, interestingly), at 3.8cm, and laparoscopic RFA was employed, the study took place from 1997-2006. On the one hand, one could say that there have been some incremental technical improvements that might have been employed since the inception of the HEAT study in 2008. Yet, on the other hand, the study in Reference #11 used all laparoscopic RFA (in contrast to the HEAT study's predominant percutaneous focus), and the HEAT study is likely to have larger, more advanced HCC lesions in general. All in all, accounting for some of these differences, and after a brief email exchange with one of the authors of the study (Dr. Berber), my own assessment is that the original DFS curve from that study remains a solid reference from which one could estimate the outcomes in the control arm of the HEAT study. The flattening of the curve after roughly 2 years is squarely in line with what I have seen in the literature, particularly as it relates to local progression.
   
   
4. Sensitivity of Identifying Recurrence via CT Scans- Much of the variability in the literature regarding local progression rates following RFA, in my opinion, can be attributable to variations in how scans are interpreted. I cannot underscore this issue enough, as there exists today some debate about what actually comprises "progression." Obviously, this is standardized in the HEAT study, but the sensitivity of how the reviewers are judging progression will play a big role in PFS determination between both arms. I am just putting this somewhat random piece of information out there for you to consider. (Look no further than slides 4-9 from this very recent 2011 presentation made at WCIO from an earlier blog post to see what I am talking about: http://celsion.blogspot.com/2011/08/from-wcio-2011-highly-relevant.html)

Reference #11- HPB- Lap RFA of HCC long-term follow-up 2008.pdf

Estimated PFS Curve (Adapted from N. Ballem et al.)

Wrap-up

For as long as this article is, I likely omitted some other tangentially related topics. However, hopefully this article provides a solid overview of some of the salient issues to think about from a scientific perspective as it relates to the HEAT trial, while outlining some of the reasons why I remain highly confident in the success of Celsion's HEAT study. On the topic of what we should expect in the upcoming interim analysis, I will refrain from making any speculation, for example, by using the estimated control arm PFS curve from above and approximating the timing of the 190th event. As Dr. Borys has reiterated many times, the DMC will take into account the totality of the Thermodox risk-benefit profile in making their recommendation. With that said, a quick glance at the expected PFS curve for the control arm, coupled with the historic enrollment rates in the HEAT trial, gives me confidence that Thermodox is tracking well.

As I have also stressed many times, success in the HEAT study is, ultimately, validation for the entire LTSL platform. Given the significant near-term liver (HCC, CRLM) commercial opportunities and pipeline potential, much is at stake in terms of shareholder value. Of course, even more is at stake for potential future patients.

As always, I look forward to any feedback or comments you might have. Thank you.

Best,
Siavoche

*I would like to thank long-time cancer-cause advocate and LTSL-proponent Mitch Landgraf for editing this article.

Don't Bank on a 190+ PFS Event Press Release

In an effort to get some clarity as to whether or not Celsion would issue a press release confirming a minimum of 190 progression-free survival (PFS) events from their Phase III HEAT trial to formally trigger the interim analysis, I decided to reach out to Celsion IR today.

After a brief (5-10 min max) conversation with Susan from Celsion IR (I would add, she is extremely helpful and knowledgeable, a great asset to Celsion), it sounds like the company is leaning towards not issuing a press release regarding confirmation of 190+ PFS events, formally initiating the approximately 8 week long interim analysis process. I know, this stands contrary to what many of us were thinking, but this also does not surprise me that much since Michael Tardugno, Celsion CEO, was hesitant to firmly say whether or not they would do so. It appears, they have chosen not to, but I want to stress, IR mentioned that they have "not heard plans of doing so" (paraphrasing), and probably thinks they won't, but the company could always turn around and do so anyways.

I countered by asking whether or not this is a material event, just like the 600th patient enrollment, that would need to be PR'd, to which Susan mentioned that companies do not ordinarily report the number of events from their trials, prior to formal data releases. I didn't bring up the fact that I have seen other companies do so ahead of interim analyses, such as Genvec, but her point is well taken. Similar to Keryx, companies often just come out with interim results, and leave it at that. So, I think it is fair enough.

More importantly, IR mentioned that since the interim will be triggered by a minimum of 190 confirmed events, if they issued a PR saying 195 or 200 events have been confirmed, it might raise confusion amongst investors as to the discrepancy between 190 and 195, or 200. In other words, they don't want to have to explain to investors via this PR the difference between when 190 events ACTUALLY happened in the patient population, and when these events were ultimately CONFIRMED. That is what it boils down to.

To tie it all together, I asked the following, "Ok, so is it fair to say the next PR we hear from Celsion regarding the HEAT trial will be the actual interim results?", to which IR responded in the affirmative. And, I would also add, IR made it a point to say September is off the table for the results, and mentioned that it would be "early Q4." I threw out October as a potential time, and IR agreed that is likely a "good guess."

Reading between the lines, here is the vibe I got (I must stress, my own impressions/opinions):

1. 190 events have happened in the population, right now it is squarely about confirmation of the number of events from the company's independent radiology CRO.  
2. In all likelihood, the interim analysis will be based on MORE than 190 events. 
3. Since the interim is expected to take 8 weeks, and since IR thought my October date was a "good guess", I am working under the assumption that the company has indeed received confirmation of 190+ events, and the interim is actively underway as we speak. In other words, we are in the nascent stages of a de facto, potential "run-up" to results.

Take it for what it's worth. For me, this makes no difference one way or another since I am long regardless, and not playing any options. However, I know this might have some implications for many of you, particularly those of you expecting the interim results by the October options expiration date. It will be a close one, in my opinion.

Best of luck, interesting times ahead.

Siavoche

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UPDATE: I spoke with another very helpful IR rep from Celsion today, and he confirmed with little ambiguity the company's intentions of not issuing a PR for the 190+ PFS event confirmation to formally trigger the interim analysis. His reasons were very similar to Susan's, namely, that companies don't often issue such PR's (instead, focusing on the very material interim itself) and that doing so could also be viewed as "celebrating the progression of disease" (I'm paraphrasing, those are my words). In other words, why issue a PR describing patient progressions as a potential milestone.

For investors worried about the company being ambiguous about this, particularly in light of CEO Michael Tardugno overtly not addressing this issue at the recent Rodman & Renshaw presentation, one should objectively ask themselves the following, particularly from the vantage point of CEO:

"What does the company gain by NOT issuing a PR about the 190+ PFS events?"

The answer...absolutely nothing that can benefit them. It does not change the data in the trial, the Q4 timing of the interim analysis, nothing, other than a bit more flexibility in terms of when they actually release the inevitable interim results...in fact, the only possible and most likely reaction would be a negative one from the public, questioning the company's transparency. Obviously, that is not what they desire or want, but they had to know that this would be an inevitable reaction from an investment community that is extremely sensitive about their investments, particularly in this choppy, what's-going-to-happen-tomorrow market. Hence, the company, in my eyes, must have a very good reason for deciding not to do this, especially since they always have been extremely open about PR'ing just about anything and everything related to the company (go ahead, check their PR history http://celsion.com/releases.cfm).

I should reiterate that this is probably one of the most sensitive and delicate periods of interaction between Celsion and their independent Data Monitoring Committee (DMC). From what I have heard from company presentations and other shareholders is that the company has great respect for the DMC, and has bent over backwards to ensure a positive relationship with their DMC throughout the HEAT trial duration. During their last quarterly conference call, the CEO clearly stated that Celsion wants the data to be "actionable" as possible for the DMC. Rather than assuming some nefarious reason for "withholding" information regarding the 190+ PFS events, it might be driven by something as simple as a request from the DMC. After all, once the 190+ clock starts, the pressure really does fall on the DMC. This 'deference for the DMC' theory also implies that if the DMC wanted the company to issue the PR, they most certainly would have done so.

My own personal belief, at this point, is that the decision not to release the PR is probably due to the fact that the company and DMC are probably still unsure exactly how many events will be officially "locked" in to the interim analysis, perhaps because more events are coming in from their CRO. So, in that sense, this is actually a good thing, as the company has a strong incentive to make sure that the data set being used for the interim is as large as possible.

Who knows...but what I think we can and should assume right now, is that the decision not to issue a PR by no means is a reflection of something negative brewing at Celsion, or a desire not to be transparent. My own interactions with the company prove to me that they are unbelievably responsive to their shareholder base, and I appreciate their transparency. As I tweeted to somebody earlier, if we don't see interim data within the Q4 timeline that the company has promised (and mind you, this is a revised data from the earlier 'September' guidance), I will be the very first to scream "red flag" at the top of my lungs. Until then, continue your DD on the company, its technology, the underlying rationale for the HEAT study, and make a firm investment decision that makes you comfortable. With the market volatility on top of the volatility biotechs typically face as they approach a binary event, this is not a period for the faint of heart to be holding the stock. 

What the Rest of 2011 Holds for Celsion

Amidst a volatile US market/economic backdrop, anticipation continues to build for Celsion, particularly leading into the announcement of confirmation of at least 190 progression-free survival (PFS) events from the HEAT study to formally trigger initiation of the interim analysis. Volume has fallen significantly, and the stock has made a modest recovery back over $3, but there remain a lot of potential catalysts between now and the end of the year. As many of you probably already know, I am holding my shares for the long-haul, and do not plan on trading until at least final results of the HEAT study are out, if not, all the way through FDA approval. With that said, investors might see some opportunities surrounding these anticipated 2011 events. I've made an effort to list them chronologically based on my best guess of when they would occur.

1. PR confirming at least 190 PFS events from HEAT trial --> triggers interim analysis
• My guess is this happens very soon, by end of August or early September.
2. Enrollment/treatment of first patient in the Thermodox Phase II colorectal liver mets study (CRLM)
3. Update on the recurrent chest wall breast cancer DIGNITY Phase II study protocol
• In my opinion, a decision to move Thermodox as earlier line therapy, which the company has clearly alluded to, could be pretty significant.
4. Initiation of the Thermodox Phase II prostate cancer bone metastases study with partner, Philips, using MRI-guided High Intensity Focused Ultrasound (MRI-HIFU)
• I recall the company mentioning, along with Philips, they have another meeting with the FDA in September to submit some additional data. Note that Philips' Sonalleve MRI-HIFU device is not yet approved in the US, so that will probably have its own 510k/PMA device application as well, though they are collectively being regulated as a drug-device combination.  
5. The HEAT study interim analysis results, likely due 8 weeks after the 190+ PFS announcement. (my guess, by end of October, early November at the very latest). 
• This is obviously the catalyst many investors are thinking about, and rightfully so. At this point, with a chance for futility being "de minimis" to quote the CEO, I think we can safely assume we are looking at either a continuation to 380 events, or overwhelming efficacy sufficient to justify an early NDA. While the study was designed for the former and that is clearly the likely outcome, speculation is all over the place. I personally give an overwhelming efficacy outcome a likelihood of 20%. If the study continues to 380 events, in all likelihood, top-line results would be out 1 year from now. As another reminder, there will not be actual data revealed if the DMC recommends a continuation to 380 events, so investors need to keep that in mind.
6. Update on the company's carboplatin preclinical research, which, is being spearheaded by the inventor of the company's LTSL platform technology, Duke University's Dr. David Needham.
7. The company also alluded to finally revealing the partner and product behind the "secret" fourth product in the company's pipeline (Thermodox, Docetaxel, Carboplatin being the first three). I have my guesses what this fourth product can be, but I will save that for another post ;-)
8. Completion of a second license deal (the first being Yakult in Japan, see my Japan article) with a major big pharma company. 
• Similar to the HEAT trial enrollment which has lagged behind company estimates for some time, so has the elusive second deal. As a reminder, the company is 100% committed to licensing Thermodox out to a major pharma partner for ex-US geographies, but Celsion is likely considering "going it alone" in the US based on prior statements. Either way, the partner, deal terms, affected geographies, etc., could be game changing for the company. As a reminder, when asked during a cc why this second deal has taken so long, the CEO stated that they are confident a deal will be made following the interim analysis. Outside of a trial halt for early efficacy, a second deal with good terms is probably the biggest catalyst for the company. A fellow poster on the yahoo mb ("Celsiodaat") and knowledgeable investor has insisted for a very long time now the potential partner could be Merck. I happen to strongly agree with that pick for a variety of reasons, not the least of which includes the fact that up until 2010, Merck had international rights to J&J's non-heat sensitive liposomal doxorubicin (Doxil, marketed outside the US in most countries as Caelyx). Between J&J and Merck, Doxil was/is $600-$700M drug. 
9. Tying into a second deal, we should also be hearing about CMC updates for Thermodox as the company gears up for registrational batch manufacturing. 
10. Official guidance from the European Medicines Agency (EMA) regarding Thermodox' filing strategy for the EU.
11. Initiation of rolling NDA for Thermodox.

Yep, there are a lot of things happening outside of just the interim analysis. As a shareholder, I am quite excited at what lies ahead. As always, feel free to leave comments or ask any questions. 

Best,

Siavoche

The Celsion HEAT Study and Japan: Brief Overview

With respect to Celsion and the Phase III HEAT study, one of the questions potential investors/stakeholders might ask (and rightfully so) is the following:

"If things are going so well in the HEAT study, what is going on in Japan and why is the trial paused for enrollment there?"

Again, this is a great question and one that provoked me to coalesce all the facts from the various company conference calls and presentations into a cohesive article. Here is an overview of Celsion, the HEAT study, and Japan, broken into as many discrete facts as possible.

1. For starters, Japan is a indeed a very important and large HCC market, technically, the largest developed country market for HCC in the world. 
2. Celsion partnered with Yakult to develop Thermodox in Japan in mid 2008 (http://celsion.com/releasedetail.cfm?ReleaseID=328465), representing Celsion's first license agreement (later to be amended, see bullet 10 below). Yakult is funding the HEAT trial in Japan, and funds it solely.
3. A near consensus in the literature clearly shows Japan as having one of the slowest drug approval processes in the world, compounded by severe bureaucracy and stringent regulations. This is now a basic starting assumption most pharma companies have in approaching the Japanese market for product commercialization (As one example, Nexavar was approved for HCC in the US in November of 2007, and in Japan in May of 2009).
4. Japan will rarely allow manufacturers to skip to a phase 3 trial without prior clinical study in phase 1/2 studies specific to patients from its own population. Recall that Celsion's Phase 1 studies did not include any Japanese patients. Celsion's/Yakult's ability to jump straight to Phase 3 trial in Japan as part of the HEAT study is, in my opinion, somewhat of an 'innovative' approach, and not usually done. (Read item 3 on page 5 from this overview of conducting trials in Japan from the PMDA: http://www.pmda.go.jp/english/service/pdf/notifications/0928010-e.pdf)
5. In late 2010, the DMC decided to suspend further enrollment in Japan only following a review of safety data from 18 patients enrolled to date at that time (http://celsion.com/releasedetail.cfm?ReleaseID=512752). This was re-recommended in February, as the DMC was still 'pending certain guidance' from the Japanese FDA equivalent, the PMDA (http://celsion.com/releasedetail.cfm?ReleaseID=549437).
6. Dr. Borys mentioned in the Q1 2011 conference call that the hold was neither a 'clinical nor regulatory' hold, but rather, related to differences in standard of care. This was actually first reported by well-respected blogger, G. Chambers from Gekkowire.com (http://www.gekkowire.com/?p=7671). At the 2011 annual shareholders meeting, CEO Michael Tardugno mentioned in detail that the difference in SOC relates to the fact that Japanese patients undergoing RFA in general are often hospitalized for an extended period of time, in contrast to the rest of the world. Thus, Japan has collected an abundance of hospitalizaton-related safety data that appears to be incomparable to the rest of the world.
7. In the now outdated CEO letter from last December (http://celsion.com/letter.cfm), Michael Tardugno clearly states that the Japanese cohort, just like the rest of the world, have safety profiles consistent with the doxorubicin label. This is quite an important point as it pertains to safety.
8. Keep in mind outside of Japan, 582 patients were enrolled in the HEAT study. There have been four (unless I missed a PR) unanimous DMC recommendations to continue enrollment throughout the trial. To the extent that the pause in Japan is related to some kind of safety issue collected as part of routine hospitalization of patients undergoing RFA in Japan, the broader DMC recommendations for 582 patients likely eclipses those concerns (Not to mention, by the way, that recurrent chest wall (RCW) breast cancer patients treated with Thermodox receive 4-6 cycles of Thermodox, in contrast to just 1 in the HEAT study, and the MTD was recently set at 50mg/m2, exactly as in the HEAT study). 
• http://www.celsion.com/releasedetail.cfm?ReleaseID=469443 
• http://www.celsion.com/releasedetail.cfm?ReleaseID=512752 
• http://www.celsion.com/releasedetail.cfm?ReleaseID=549437 
• http://www.celsion.com/releasedetail.cfm?ReleaseID=590333
9. To round out potential safety concerns, in one of the very few instances where a key investigator of the HEAT trial was quoted publicly, Dr. Lencioni, one of the most influential KOLs in the HCC space and lead EU HEAT trial investigator, said there were no safety issues in the HEAT trial. In my opinion, his assessment was a reflection of the trial in its entirety, including Japan. (http://www.medscape.com/viewarticle/739078)
10. In January 2011, Yakult and Celsion agreed to a revised license agreement, whereby Yakult agreed to pay Celsion $2M upfront and $2M when and if enrollment resumes, in exchange for a 40% reduction of approval related milestone payments (http://celsion.com/releasedetail.cfm?ReleaseID=543572). I think one could reasonably conclude from this revised agreement that it represents a strong sign of confidence from Yakult. 
11. The data collected to date from the 18 patients enrolled in Japan will be used in all future trial analyses, including the interim and top-line read-outs. To hit the point home, these 18 patients forever will remain part of the HEAT study (I confirmed this with investor relations via a telephone call June, 2011).
12. Celsion needs 60 patients in Japan to support registration. Since enrollment has completed without Japan, Celsion will pursue patients from Japan above and beyond the 600 to support registration.
13. The current SPA agreed to with the FDA is completely unaffected by any of the above-mentioned issues in Japan, and the company will be able to get approval in the US, China, EU and any other country where they have recruited enough patients for local approval.
14. In the most recent 2011 Q2 conference call, Dr. Borys was quoted as saying: “Now that our HEAT study has met its goal of 600 patients, our partner in Japan, Yakult, is planning to continue an evaluation of Thermodox in Japan in a separate study.” What specific protocol is used, when this next study initiates, or any other details are not yet known, though I am sure we will be hearing from the company in the near future. But, we do know with certainty that Thermodox will be studied in Japan, with full support from their partner, Yakult.

In summary, it is unfortunate that potential approval of Thermodox in Japan (assuming the trial is successful, of course) is now all but guaranteed to be delayed relative to the rest of the world. However, given the unique characteristics of the Japanese regulatory system and the collective, historical experience of several other drug companies seeking to develop and commercialize their products in Japan, it also does not surprise me in the least bit. I'll be sure to provide any future updates on Japan as they materialize.

If you have any comments or if I missed something above, as always, feel free to let me know.

Best,
Siavoche

ThermoDox Reimbursement Deep Dive (Part 1)

As we await the results of the HEAT trial interim analysis, I thought it might be a good idea to shed light on an area often characterized by significant misunderstanding and confusion pertaining to biologics and pharmaceuticals: pricing and reimbursement (P&R). Admittedly, this is an inherently confusing area, and one undergoing significant changes currently, as the Patient Protection and Affordable Care Act (PPACA) contains several provisions directly (e.g. increased mandatory Medicaid rebates) and indirectly (e.g. bundled payment pilots, creation of CMS independent payment advisory board) impacting drug P&R. I would be lying if I said the timing of this multi-part article is a mere coincidence to the recent Dendreon (DNDN) news, in which, among other things, poor reimbursement was blamed by management for the lackluster sales of Provenge. I'm glad to report that in the case of Thermodox, reimbursement should be a lot more straight-forward, although, as I will point out, there are some potentially significant risks Celsion should be aware of as it develops and refines its global pricing and reimbursement strategy.

Make no mistake, all pharma/biotech companies, not just Celsion, need to keep a very close pulse on the reimbursement environment surrounding their products. So integral is this function to the successful commercialization of new drugs that nearly all big drug companies have built, or are in the process of building, internal capabilities (e.g. functional areas such as "Managed Markets", "Global Pricing", etc.) to meet this emerging need.

I should point out a few assumptions/limitations of my article:

1. This article, of course, assumes a successful HEAT trial outcome, which remains yet to be seen.
2. The focus of this article will be for the US, despite the fact that for HCC at least, most Thermodox revenue will come from Ex-US markets, Asia in particular. The reimbursement system is significantly different in the EU (country by country variations make it far from homogenous) and Asia (still evolving in China)
3. Within the US, I will focus on Medicare, despite the fact that private payers will probably also account for a good chunk of patients given the epidemiology of HCC. I would argue, however, that private payers often do adopt Medicare reimbursement guidelines in many instances.

With that said, let's review the reimbursement environment surrounding Thermodox.

It's absolutely fundamental to understand a few important concepts. Drug prices are not regulated in the US (unlike many other developed countries), and thus, manufacturers are free to price drugs as they see fit (some government payers such as Medicaid and the VA are eligible for mandatory discounts, but companies can still price freely). This should not be confused with reimbursement, which is what providers (i.e. physicians, hospitals) are paid by 3rd party payers. There can be, and often is, a significant disconnect between a drugs price and its accompanying reimbursement from a particular payer. Thus, reimbursement can be viewed as a de facto limiter of drug pricing in the US. Second, the site or setting of care is often a critical determinant of how a drug will be reimbursed. In the case of Thermodox, one can think of this in terms of when the drug would be used as part of percutaneous/laparoscopic vs. open-surgical RFA, with the former likely to be done in an outpatient setting, while the latter would most likely be done within the inpatient setting. There are big differences in terms of how Thermodox gets "paid for" in these settings. And lastly, drugs are typically covered by payers under either a patient's medical benefit (typically, physician-administered agents, and this broad bucket includes physician services and hospital care) or the pharmacy benefit (typically orals or self-administered injectables). In all likelihood, Thermodox would be a medical benefit product, just as Doxil is today as well.

Below are some key definitions, along with a fair amount of added color/context for these terms. Several articles I posted under the Payer/Reimbursement-Related  header contain excellent primers to give you an even more in-depth look at these terms and P&R in general, so by no means is this an exhaustive list of relevant terms:

• Wholesale Acquisition Cost (WAC) - This is essentially the manufacturer's sticker or list price, if you will, and is publicly available from vendors such as PriceRx and Medispan.
• Average Wholesale Price (AWP) - Many consultants and industry folks call this "Ain't What's Paid", and I would agree that AWP has completely lost its value as a reimbursement benchmark. This is not an average of anything nor does it reflect actual transaction prices as ASP does (see below). Instead, publishing houses often arbitrarily apply a 20% or 25% mark-up over WAC to arrive at AWP. AWP is still being used by some payers and state Medicaid agencies, but a recent court ruling has put the nail in its coffin and it should be phased out by the end of 2012.   
• Average Sales Price (ASP) - A reimbursement benchmark for Medicare Part B drugs (medical benefit drugs, not to be confused with Medicare's Part D program for pharmacy benefit drugs) that became effective January 2005 as a result of the Medicare Modernization Act (MMA) of 2003. ASP replaced the above-discussed AWP as a reimbursement benchmark under Part B (this is a good example of how private payers copy Medicare, as many have since adopted ASP as well). ASP is based on manufacturer reported actual selling price and units sold data and takes into account most rebates, volume discounts and other price concessions. In contrast to AWP-based reimbursement under Medicare, ASP-based reimbursement has resulted in lower reimbursement to providers (more a function of AWP not reflecting actual drug prices at all), especially to providers who are unable to obtain the volume discounts and recessions built into the ASP calculation. It is updated on a quarterly basis and available to the public via the CMS website. https://www.cms.gov/McrPartBDrugAvgSalesPrice/
• Medicare Part A - Hospital insurance that covers the cost of care in hospitals, skilled nursing facilities, hospice and home health care. Most people do not have premiums for Part A, but patients are subject to annual deductibles and cost-sharing beyond 60 days of hospitalization.
• Medicare Part B - Covers medical services including physician services (including physician administered drugs) and outpatient care.  Under Part B, there is a monthly premium, annual deductible, and 20% coinsurance for all services rendered. However, supplemental insurance often insulates individuals from most cost-sharing under Part B.
• Medicare Severity Diagnosis-Related Group (MS-DRG) - In laymen's terms, this is a flat payment made by Medicare under the Inpatient Prospective Payment System (IPPS) to hospitals for all care related to a particular hospitalization. ICD-9-CM diagnosis and procedure codes determine which MS-DRG will apply, of which there ~750. There can only be one MS-DRG per hospitalization, and the cost of all drugs are included in this payment. So, if the cost of a drug used in the hospital is very high relative to the overall expected DRG, hospitals are going to be much less inclined to use the drug.  
• Ambulatory Payment Classification (APC) - Again, in simple terms, similar to the DRG system, this is Medicare's outpatient equivalent used as part of the Outpatient Prospective Payment System (OPPS). However, Healthcare Common Procedure Coding System (HCPCS) level 1 and 2 codes determine the particular APC that would apply (Level 1 HCPCS = CPT codes, Level 2 HCPCS = J, C, and other codes). Note, there can be multiple APCs per outpatient encounter, and many APCs are specific to particular drugs, known as separately covered outpatient drugs (SCODs). CMS pays for drugs separately in this setting if their daily cost exceeds a threshold of $70, otherwise, they are bundled into their related APC. It is very likely that Thermodox will be separately reimbursed under the OPPS.

From that starting point, refer to the tables below (click table to enlarge) for an overview of Thermodox reimbursement across three distinct sites of care, primarily from the vantage point of the pre-health care reform bill era. Note that reimbursement is very similar in the physician office and hospital outpatient settings. Given its close relationship to Thermodox, I included actual Doxil examples for illustrative purposes only, as well as examples pertinent to radiofrequency ablation (RFA) of the liver.

Table 1 - Hospital Inpatient

Table 2 - Physician Office

Table 3 - Hospital Outpatient

Hopefully, having read the definitions above and my descriptions, the tables above make some sense at least. I have simplified it in many ways, for example, C codes are also used in the hospital outpatient setting for drugs, which I did not mention. In general, notice that I make a fundamental distinction between physician services/hospital payment and drug payments. Given that Thermodox will likely be used primarily in the outpatient setting, reimbursement for the drug will be separate and based on the ASP + benchmark. It will be absolutely critical for Celsion to not only understand how Thermodox would be reimbursed, but to also understand the prevailing reimbursement dynamics surrounding RFA in general. A quick glance at the payment rates, for example, make it very clear that the cost of Thermodox might (yet to be determined by Celsion) exceed the reimbursement cost of an RFA procedure, and this has some variation by the site of care.

The Importance of Coding for Thermodox at Launch

Before moving on to opportunities and risks, I want to point out and clarify a critically important topic as it relates to coding, or lack thereof at launch. The tables above, and real-world J code examples for Doxil (i.e. J9001), for example, reflect a "steady state" situation long after the launch of the product. Similarly, Thermodox will likely NOT have a definitive J code at the outset, but this is not the end of the world.

Until a permanent code is issued, which can take up to one year (perhaps longer), new drugs and biologics must be coded using miscellaneous codes within the physician and hospital outpatient setting (often using J or C codes). For example:

• J9999 is used for new chemotherapy agents in the physician office setting.
• C2399 is used for new chemotherapy agents in the hospital outpatient setting.

Because several drugs might be using these miscellaneous codes, by definition, local Medicare contractors will have to perform a manual billing process, and this will also require additional documentation on the CMS-1500 form (physician office) and UB-04 forms (hospital outpatient). Education by the manufacturer and CMS is required to ensure that these forms are completed appropriately, as incomplete forms are one of the most common reasons for drugs not getting appropriate reimbursement at launch. In terms of timing for payments to providers, Medicare contractors cannot pay electronic claims earlier than 14 days, but no later than 30 (without having to pay interest), and for manual claims, they usually take the full 30 days.

And finally, new drugs are paid differently during this interim period (So, forget about all that ASP + 5% or 6% stuff for the moment). Claims submitted for new drugs from the physician office setting will be paid at WAC + 6%, assuming a WAC has been published. In the outpatient setting, oddly enough, reimbursement is set at 95% of AWP, of course, assuming an AWP has been published as well. Thinking through these surrogate payment benchmarks, this makes sense, since the new product will not have been on the market long enough for CMS to calculate an ASP.

While I do think reimbursement should be relatively clear and easy to obtain for Thermodox, I do want to point out the following risks and opportunities that management should keep in mind:

Opportunities

1. Obtain pass-thru status for the hospital outpatient setting - Celsion will have to be proactive in seeking this status from CMS, although this is by no means a game-changer. Typically, the main criteria for new drugs seeking pass-thru stastus is that the cost of the drug "must not be insignificant in comparison" to the applicable payment rate. Keep in mind that pass-thru status is transitional and eventually is phased out after 2 or 3 years. On the inpatient side, there is an opportunity for hospitals to obtain "add-on" payments for very expensive drugs, but this is rarely done and I will not speak to it much further. 
2. Price Thermodox aggressively - To the extent that Thermodox is not used primarily for hospital inpatients, it is clear that providers have an incentive to often use higher cost drugs on the outpatient side in an ASP + environment (within limit, of course, ask Provenge providers), and absent any restrictions from Medicare, Celsion could price Thermodox relatively aggressively. Note earlier in the article I made a distinction between the pharmacy and medical benefit. Unlike the pharmacy benefit, in which payers can place products on tiers and introduce greater utilization management techniques in the wake of high drug prices, this generally does not occur on the medical benefit to the same degree. Coding differences and logistical challenges make this extremely challenging, and this is a topic outside the scope of this article. 
3. Ensure data is available to justify inevitable off-label decisions made by physicians - Most payers, including Medicare, use widely available compendia (such as by NCCN) to inform potential off-label reimbursement decisions. In fact, Medicare must do so by law, and many states have similar laws that apply to private payers. This will be critical in obtaining coverage for potential utilization of Thermodox outside of HCC, most notably, in  colorectal liver mets and potentially other secondary liver mets. 

Risks/Challenges

1. Assignment of Thermodox to the same J-code as Doxil (J9001) by CMS - This is probably the biggest risk to Thermodox from a pricing perspective, but one that is relatively unlikely. CMS typically does this with drugs considered to be interchangeable, typically, with generics. Recall ASP is a volume weighted average. If CMS assigns Thermodox to J9001, this means that reimbursement will be a blended average of the ASP of both those drugs. Since utilization of Thermodox is likely to be relatively low following launch and ramp up over time, initially, the ASP will be heavily dominated by lower Doxil prices. So, this means that if Celsion priced Thermodox at a 50%-100% premium to Doxil, nobody will stop their pricing, but providers will be taking a bit hit in reimbursement for using Thermodox. Here is where reimbursement becomes the "de facto" limiter of manufacturer pricing, and in such a scenario, Celsion would be forced to price Thermodox similarly to Doxil. While I am digressing a bit, this is precisely one of the biggest sources of contention for biosimilars in the US, and that is, will they receive their own unique J-codes, or be bundled in to their counterpart branded J-codes? Again, I see this as being highly unlikely for Celsion and Thermodox, but it is something to keep in mind. For those wondering, generic Adriamycin or non-liposomal doxorubicin, is billed under J9000, completely separate from Doxil. 
2. Thermodox' value proposition needs to be clearly defined - This goes without say, but Celsion needs to clearly articulate the value of Thermodox to payers in order to avoid potential restrictions. 
3. Local or National Coverage Decisions - In Medicare, reimbursement decisions are typically made by local carriers, fiscal intermediaries, and Medicare Administrative Contractors, or MACs. Ultimately, each contractor at the local level can develop a local coverage decision (LCD) to make payment criteria more stringent. In the case of Thermodox, this might certainly come into play with respect to off-label use in liver mets or recurrent chest wall breast cancer before getting an official label extension via registrational trials, though in oncology, few payers push back on off-label usage. While not done too often, coverage decisions can happen at the national level via a national coverage decision (NCD), at which point, all local carriers would have to follow the NCD. Not all NCDs or LCDs are "restrictive" per se, but again, this should be taken into account. 
4. Bundled oncology payments - This is a concept being piloted by CMS under the recent PPACA bill. Essentially, what such bundles would do is provide a single payment across Medicare Part A and Part B sites of care for an episode of care. So, in contrast to having separate payments in the inpatient setting and separate payments in the outpatient setting, this would create a lump sum that applies to both sites of care. Similar to the DRG system on the inpatient side, you could see how this once again creates a de facto barrier on potential drug pricing. 

Well, I hope you found this article useful. I am sure the reader by now will appreciate how complex drug pricing and reimbursement can be, especially when one considers that I only looked at one payer (albeit, a big one in Medicare) and one country. This will be the first article of a few more to come hopefully, and I am inclined to write one focusing specifically on the Asian markets (though I will have to do some more homework). By the way, many of the references I used for this article, are available on my blog under the reimbursement section.

Thanks again, feel free to leave me your comments or feedback.

Celsion Q2 Conference Call Write-Up

Overall, I thought today's conference call by the Celsion management team was a very positive one. Along with the 10-Q filed early this morning, below are some of my takeaways from the conference call. Note, I am only mentioning relatively "new" information, and I won't rehash items that are still status quo.

• The general tone of all speakers was quite positive, in my opinion. This is somewhat touchy feely and subjective I understand, but my 'spidey sense' is usually quick to pick up on optimism in one's tone of voice :-) 
• Initiation of the interim analysis for the HEAT trial will take place once 190 events are confirmed by the company's independent radiology CRO, and data collection will take a "minimum" of 8 weeks. It sounds as if the company is awaiting a new update of the total number of PFS events confirmed to date. Looking at the 10-Q this morning, it appears management has slightly shifted the timeline for the interim analysis data from September to "Q4", although my guess is that it would be no later than end of October. 
• Assuming the HEAT trial is not stopped at the interim, the CEO said the top-line readout of 380 events could happen "possibly as early as 1 year from now." 
• Dr. Borys, the chief medical officer, clearly stated that the DMC's interim analysis will take into account safety, efficacy and overall risk-benefit profile. He was clear in reminding investors that it would be "inappropriate to give a singular number or statistical criteria that would be indicative of a positive outcome." 
• In China, 150 patients have been enrolled to date, and the study will continue enrolling patients until registrational target of 200 is reached. South Korea and Taiwan have already hit their enrollment requirements. Of note, Dr. Borys mentioned that Yakult, Celsion's Japanese partner, will enroll patients in a separate study from the HEAT study to support a registrational filing. 
• No official decision on the RCW DIGNITY Phase II study yet in terms of expanding the trial to include other cancers. Of note, if the trial is expanded into other cancers (either superficial cancers or earlier line RCW), it will remain a Phase II but will not be registrational because it will likely be randomized and include a control arm (asked by yours truly). 
• Celsion had a meeting with the EMA pre-advice committee. They will resubmit their briefing book submission later in August, and are expecting guidance for their EU filing strategy from the EMA by year end. 
• The company announced that they are initiating the colorectal liver mets study, which will be led by Dr. Steve Libutti. The company plans to have 6-8 total sites, and the company reiterated their goal of having liver mets data on hand by the time of Thermodox' approval in HCC. 
• Michael Tardugno reiterated in the Q&A that all company revenue forecasts made to date for Thermodox in HCC assume that 25% of patients are eligible for RFA, and Celsion peak share will be half of that, or 12.5%. They are assuming time to peak share will be 5-7 years following launch. 
• (UPDATE: Forgot to include pricing discussed during Q&A) In discussing potential pricing of Thermodox, the CEO mentioned that Doxil and Nexavar are being explored as potential analogs, priced at $12K and $60K per course of therapy, respectively. The company will likely partner with vendors and other consultants to conduct a global pricing study to inform future pricing decisions. My suspicion is that they will not price Thermodox more than $10K-$20K maximum per treatment in HCC (recall that dosing in other indications, such as RCW, will be much greater than liver, and thus, total cost for a course of therapy will be much higher) 
• Financials 
• Raised $33.6M since beginning of the quarter, $25M of which was in Q3. 
• Company has enough cash to last until Q4 2012 
• No plans to tap CEFF in the future 
• All preferred stock will be converted to common by end of August 
• 36 million shares fully diluted 

Again, I think the call overall was quite positive. Feel free to post comments if I missed something!

Best,
Siavoche

From WCIO 2011- Highly Relevant Presentation

You might have already seen this presentation on my blog (Under RFA in Current Practice --> Recurrence Following RFA) and I won't do too much commenting here. For the purpose of establishing what the control arm in the HEAT trial might look like and why, I think you might find this presentation that was made earlier this year at WCIO quite useful. Interestingly enough, Cleveland Clinic was one of the HEAT trial sites. Note that this review only looks at colorectal liver mets (Celsion plans to initiate a ~90 patient, randomized PII trial shortly in colorectal liver mets). I would submit, however, that recurrence patterns are quite similar between HCC and colorectal liver mets. Lastly, this study was based off of laparoscopic RFA entirely, and it is yet to be known what the actual breakdown of percutaneous vs laparoscopic vs open-surgical RFA is for the HEAT trial. Some evidence suggests greater effectiveness of laparoscopic and open-surgical RFA for larger lesions. (UPDATE: It turns out management stated at the annual shareholder's meeting that ~80% of patients in the HEAT trial received percutaneous RFA)

• Slide 10 - Shows a very strong relationship between lesion size and recurrence. As you might know, the HEAT study is looking at lesions >3cm and <7cm. 
• Slide 12 - Articulates, essentially, what Thermodox is designed to do, which is to enhance the area of ablation.

Key Takeaways from HEAT enrollment PR

As expected, Celsion today announced that enrollment in their Phase 3 HEAT study has been completed. It's been a long-time coming, as management has had to frequently extend their estimated enrollment completion times in the past. In prior public statements, the company has said that, among other things, the hold-up in Japan, logistical challenges and the presence of other clinical trials seeking similar HCC patients in the HEAT study, have been key culprits contributing to the delays.

With that said, enrollment is now behind us. Today's press release marks a major milestone for the company. Here are some of my takeaways from the PR:

1. We now know for sure 190 events has not happened yet (UPDATE: or 190 has not been "confirmed" yet by DMC). This either means the control arm is doing much better than the 12M expected median time management is predicting, or Thermodox is really showing some impressive results. I would be on the lookout for a PR announcing 190 events within the next 2 weeks. 
2. Over-enrollment beyond 600 patients will happen, not just for Japan. It looks like the company will continue enrolling Chinese patients to meet the 200 required for registration. China is a major market for HCC and critical for the company. 
3. Speaking of Japan, no comment in the PR. I will just leave it at that, but I do hope management is working vigorously behind the scenes along with their partner, Yakult, to get Japan dialed in again. Make no mistake, Japan is a critical HCC market, especially because of the country's highly efficient surveillance system that identifies patients early enough to be eligible for curative treatment such as RFA.
4. Management appears extremely confident in Thermodox for HCC. I lost track of how many times in prior PR's Michael Tardugno, the company's CEO, has mentioned Thermodox as being a potential new "standard of care" for first line HCC therapy. This enthusiasm was once again expressed in this latest PR, and I think this bodes well for the HEAT study in general. Most significantly, Mr. Tardugno said this potential would become "clearer in the coming months", hinting at the outcome of the interim analysis. 

I look forward to the upcoming Q2 earnings conference call on Tuesday at 11AM ET for additional updates from management (You can use this link to access it: http://viavid.net/dce.aspx?sid=00008AFC)

Best,
Siavoche

The perils of PFS as HEAT study primary endpoint

While PFS is the agreed upon primary endpoint for the HEAT study and reinforced via the trial’s SPA (Thermodox must demonstrate a 33% PFS improvement), I have and continue to express some concern over the use of this endpoint. To clarify, while PFS is a well-accepted endpoint by the FDA and very commonly used in clinical trials (in particular because it is thought to be strongly related to overall survival and other clinically significant endpoints, but PFS allows for quicker data generation/earlier NDA submission), I believe this might not be the best endpoint to measure the effect of Thermodox.

As it relates to the HEAT study, let’s clarify exactly what a PFS "event" could consist of:

1. Local tumor progression – This would be progression relating to the originally ablated tumor.
2. Intrahepatic distant progression – Emergence of an entirely new tumor in the liver, which may or may not be related to the originally ablated tumor.
3. Extrahepatic disease progression – Tumor spread to other parts of the body
4. Death – Death from any cause

You might already see where I am going with this. I strongly believe Thermodox will flex its muscle when it comes to reducing local tumor progression. Study after study has shown that local recurrence, when it occurs, happens just peripherally to the original tumor, most often due to an insufficient ablation margin, and much more likely in larger tumors.

When Dr. Borys, Celsion’s Chief Medical Officer was asked about the choice of PFS as an endpoint, he expressed that the company was “comfortable” with the endpoint because “the most common first site of recurrence is local recurrence.” Unfortunately, this is not universal in every study I have looked at (you can find these under RFA in Current Practice). For example, from the filename “WJGS-Current Status of RFA for HCC 2010.pdf”, we see the following in Table #1:

Keep in mind, these are from smaller studies than the HEAT trial, and are generally looking at smaller lesion sizes, so we do not have an apples to apples comparison (this cannot be stressed enough, since local progression rises exponentially with larger lesion sizes). Nevertheless, LTP was on the low side, while “new recurrences”, which included intrahepatic and extrahepatic distant spread, was relatively high.

This is a subtle, but important point for investors to keep in mind with regard to the HEAT study. I have seen some evidence that suggests LTP is related to some intrahepatic spread, so by controlling the tumor locally, Thermodox might be precluding the onset of new lesions elsewhere in the liver.

I, for one, am extremely excited to see what the HEAT study will reveal. 

Awaiting HEAT enrollment and 190 PFS Events

I expect very shortly (this week at latest)Celsion will issue a press release reporting completion of enrollment in their Phase 3 HEAT study. Investors should carefully read the PR for clues or direct guidance as to whether or not 190 PFS events, half of the total 380 necessary for topline readout, has occurred yet. To reiterate, BOTH enrollment completion AND realization of 190 events are required for the upcoming interim analysis, with results due by end of September. There has been a lot of discussion amongst shareholders regarding the timing of the 190 events and the median expected PFS of the control arm. Assuming 12 months for the control arm, one could argue that the fact that 190 has not been achieved yet (assuming that is indeed true), bodes very well for the Thermodox arm in the HEAT study. We will just have to wait and see. I personally think 190 has not happened yet, but I also think the control arm might be doing better than than the 12 months management is forecasting.

We will just have to wait and see, but keep your eyes peeled for that PR regarding enrollment.

Best,
Siavoche