Celsion Bulls and Bears: Balancing Investor Views Heading into Final HEAT Data

There appears to be a resurgence of interest in Celsion at the moment. Perhaps some new investors have stumbled upon my blog as of late, learning about Celsion via the recently conducted interview CEO Michael Tardugno had with Reuters or after reading the newly released CEO letter on the corporate website.

Celsion- June 2012

As I have said in my very first blog post and reiterated during subsequent posts/tweets, I am very optimistic and confident in the potential of ThermoDox®, and this is what shaped my initial investment in Celsion. That being the case, I would caution any investor who simply seeks out data/opinions reinforcing their own personal opinions, and this is even more important in pharma/biotech investing. Thus, my approach has been to challenge my investment thesis from day one, “prove myself wrong”, if you will, and this has given rise to a solid appreciation for some of the “bearish” views that some might have on Celsion.

Rather than a high-level bulls/bears piece, I thought I would get very specific, and look at this from multiple perspectives. Again, arming investors with as much information as possible has been the intent from day one with my blog. With that said, the table below summarizes this assessment:

"Bullish Views"	"Bearish Views"
General Very low market cap for a late-stage Phase III oncology company, "dirt cheap". Sufficient cash on hand until mid-2013, reiterated multiple times by the company. Low burn rate of $5M/quarter. Very low/negligible debt Analyst targets several multiples of current price (click here for a comparative review of Griffin Securities, Rodman & Renshaw, Brean Murray and Roth Capital analyst reports) Recent large investment stake by Orbimed Advisors Steady and consistent insider buying, not a single insider sale. Positive HEAT trial outcome should fetch anywhere from 250M-600M (in my humble opinion) market cap valuation Apparent sentiment shift post-ASCO, reflected in recent strength in stock price Strong management team, company encourages questions from shareholders (I can personally attest to this) 6/29/2012 Update--> $10M loan agreement announced (first $5M tranch now, second $5M only after positive HEAT data), in my opinion, completely eliminates nagging dilution concerns pre-data, a major positive for shareholders. Total of 102,740  warrants issued as part of this deal.	General Wall Street may be pricing Celsion appropriately given the level of risk in the HEAT trial, "efficient markets" at work? The "Feuerstein-Ratain Rule", might it be at play here? Admittedly out of necessity, company was trigger happy to raise money in 2011, sometimes at unfavorable prices (Note to Celsion--> If you repeatedly insist you have enough cash on hand, don't be surprised if shareholders get upset if another raise is made pre-data). Large-scale recent exits by Mangrove and Ayer capital, large institutional holders. Institutional ownership remains relatively low (~15%, though I suspect that will change nearing data)
ThermoDox® as an Asset / LTSL Pipeline ThermoDox® enjoys every available regulatory advantage available (SPA, orphan designation, fast-track, accelerated endpoint, priority review) A “pipeline within a product”, ThermoDox® has demonstrated clinical potential in multiple indications, including liver mets and recurrent chest wall breast cancer. Pancreatic cancer and bone metastases to be examined further downstream. Company specifically targeting high-unmet need areas within oncology Platform can be triggered by all available approved sources of hyperthermia (RFA, Microwave, HIFU), "heat is heat is heat." HIFU adoption in particular is inevitable given completely non-invasive approach, ability to monitor temperatures in real-time marries this technology to ThermoDox® Platform focus is on established chemotherapeutics, limiting risk and accelerating approval process (505b2) Patent protection to 2021 and 2024, respectively, for 3 lipid and 4 lipid Needham family patents Fully paid off patent, licensed from Duke Other pipeline products include docetaxel and carboplatin, as well as combining agents for real-time monitoring Use of hyperthermia growing in oncology regardless of ThermoDox®, this trend clearly bodes well for Celsion.	ThermoDox® as an Asset / LTSL Pipeline Celsion essentially banking everything on ThermoDox®, only late-stage asset Colorectal liver metastases (CRLM) trial deliberately slow to enroll patients, recurrent chest wall (RCW) will not be enrolled until end of 2013 earliest. All platform products limited to indications where hyperthermia is already part of SOC, places finite parameters around market size. Adoption of microwave and HIFU still slow in the US. Liposomes accumulate in the liver, thus, while ThermoDox® ideal for liver applications, accumulation outside of liver largely dependent upon leaky tumor vasculature. Improving delivery of old chemos not as "sexy" as new molecular entities, and in my opinion, payers not as willing to accept significant price premiums for them either. Docetaxel and carboplatin pipeline products still very early stage, years away from the market Modest (~5%) royalty due to Duke
HEAT Study and Outcome Phase III predicated on a Phase I trial demonstrating strong dose response relationship, particularly in patients who had failed multiple lines of therapy Robust trial design using PFS as an accelerated endpoint, and OS as secondary confirmatory endpoint Overwhelming majority of literature (please do look for yourself on my blog) points to local recurrence originating precisely where ThermoDox® activates via RFA sub-lethal zone Largest study in intermediate stage HCC, data from HEAT study will be "bullet-proof" and widely accepted by regulatory authorities. Succeed or fail, this trial will be a major contribution to the medical literature. Company and Chief Medical Officer in particular continue to stress importance of data quality, particularly given the radiologic PFS endpoint. Builds off of an existing standard of care for unresectable HCC in radiofrequency ablation (RFA), synergy potential very evident. Study has cleared multiple DMC reviews for safety, all unanimous recommendations to continue. ThermoDox® likely very safe. No protocol changes since trial initiated. Successful interim efficacy analysis completed November 2011, key endorsement that efficacy on the right track. According to the recent CEO letter, Celsion's anticipated timing of 380 PFS events (an event that will be PR'd, my guess sometime in early Q4) is "reasonably consistent with the assumptions that we made in constructing the HEAT study" Initiation of the CRLM trial (granted that trial is purely looking at local progression) before HEAT data can be viewed as a sign of confidence, mechanism of action for ThermoDox's proposed efficacy exactly the same. Further, recurrence patterns are very similar between CRLM and HCC, in fact, CRLM tougher to treat in general. Fair to say company has maintained a very close working relationship with the FDA, company prides itself on sharing this relationship with investors. Company lead investigators, all prominent KOLs, continue to express optimism about ThermoDox® and ongoing HEAT study.	HEAT Study and Outcome Phase I study small (24 patients), most patients were not HCC, progression times largely incomparable to established literature. No Phase II conducted. PFS not the "ideal" endpoint for a drug with a predominant local effect such as ThermoDox®, it simply is not. Implicit assumption of the trial is that local progression (and technical failures) will account for a sufficient number of events such that ThermoDox® can make an impact. Distant intrahepatic progression outside of ThermoDox®' "reach" remains the biggest threat jeopardizing the trial's outcome, something I have mentioned repeatedly. Trial did not include microwave ablation, which is also emerging alongside RFA as another ablative approach for HCC and liver mets. Enrollment paused/halted in Japan due to differences in SOC (bridging study to commence after HEAT results, partner Yakult still very much engaged, however)
Competition and Commercialization A good analog to point to for commercialization success is Doxil, another liposomal encapsulation of doxorubicin. Very large potential patient population in initial HCC indication. Current HCC treatment paradigm is very unclear, HEAT study will add tremendous clarity and confidence to medical community about RFA's potential in combination with ThermoDox® 1st line therapy in HCC and liver metastases, limited competition. Aggressive pricing potential given expected outpatient, rather than inpatient, utilization Attractive licensing asset (J&J and Merck marketed Doxil/Caelyx, now solely J&J), ThermoDox® is a "green-light" into emerging markets for big pharma Attractive deal in place for Japan with Yakult-Honsha Significant milestone achieved with signing of Chinese manufacturing partner Hisun (in many ways, this is much more than simply a manufacturing agreement) Significant (and I would argue, natural) off-label potential with CRLM, especially given strong HCC data Adoption facilitated by ease of incorporation into existing SOC, simple intravenous (IV) infusion (This is clearly not Delcath's ChemoSAT system)	Competition and Commercialization Most HCC patients are in China, difficult market for pricing, penetration, and IP protection. Entry into Japan, another key market with relatively flexible pricing potential, delayed by at least 1-1.5 years relative to US/EU. RFA alone + TACE also being used for similar tumor sizes, early stage Sorafenib might also be source of competition. Pricing too aggressively can lead to restrictions from payers (prior authorizations, step edits, etc), payers beginning to scrutinize medical benefit oncologics more closely in general. Aggressive pricing very problematic in fixed reimbursement, inpatient settings. Company should consider not only the obvious Nexavar and Doxil as pricing analogs, but also, TACE, doxorubicin-eluting beads (DEBDOX), Therasphere, SIR-spheres, and RFA itself, all as potential analogs to base pricing on. Matter of necessity for Celsion to secure a large partner to commercialize Ex-US, no licensing deals outside of Japan yet Impact of IV drug administration within interventional radiology suite will likely require some physician education, particularly to ensure compliance with optimal "timing" of administration and heat source

So what does all of this give you? Why should you care? Plain and simple, if you are bullish, be mindful of some of the potential bear views, and if you are bearish, know that a compelling bull case can be made to invest in Celsion. You all know where I ultimately stand on this, I think the HEAT trial will succeed, despite the risks I point out inherent in the trial, and ThermoDox® will very rapidly make its way as a first-line standard of care for unresectable HCC patients not eligible for transplantation. More importantly, I do think the management team is well aware of some of the “bear concerns” I have raised, and I am optimistic about their confidence in ensuring they are addressed/mitigated to the extent possible.

Risks remain, as they do with every biotech, and for that, I encourage everyone to continue their DD. At the same time, I would challenge investors to identify a company with a better risk/reward than Celsion. The market, dare I say, is beginning to take notice of the company's potential.

As always, please let me know if you have any questions or comments.

Best,
Siavoche

Dr. Ronnie Poon, HEAT Lead Investigator, Discusses HCC, Outlines Potential of ThermoDox

Released coincident to this year's ASCO conference, I was excited to see another investigator interview recording made available by Celsion today. As many of you recall, Rodman & Renshaw's Dr. Reni Benjamin conducted a similar interview a few months back with Dr. Steven Libutti (who leads the ABLATE Phase II study), which I commented on as well.

Arguably, this is an even more impactful interview (not to discount Dr. Libutti, of course) since it involves Dr. Ronnie Poon, a lead Co-PI in the HEAT study, and one of the most well-respected liver cancer physicians in the world. Of note, Dr. Ronnie Poon is based in China, which is by far the biggest potential market for ThermoDox in HCC, and he has personally treated "15 or 16" patients in the HEAT study according to the interview. Of course, Dr. Poon also lead the Phase I study as well.

I like how these interviews have been conducted, as they are not meant to be "advertising" for Celsion and ThermoDox. Rather, Dr. Benjamin asked Dr. Poon to discuss the typical treatment HCC patients receive, and from that very broad context, how ThermoDox might play a role in the treatment paradigm alongside resection, transplantation, transarterial approaches, and later stage treatments such as Nexavar. Below are some of the highlights of the discussion, but I highly recommend you listen for yourself (see below, I embedded it here as well).

• True global incidence of HCC likely underestimated, 750,000 cited in most sources, but this is likely an underestimation, 55% of which are in China. 
• Surgery and transplantation are the best treatments for HCC larger than 3cm, but very few patients are eligible for such treatment. Dr. Poon mentioned that in reality, only 2% of patients end up with transplantation, and 20-25% get resection.
• Transarterial treatments such as TACE and deb-TACE are used for patients with very large tumors, 5-6 lesions in number.
• Ideally, RFA should take the place of surgery because of the extensive time and invasive nature of surgery. Ablation has similar efficacy to surgery for tumors <3cm (some data does challenge what he said though, but it's a moot point since few patients are eligible for surgery anyways).
• Approximately 30% of HCC patients are eligible for RFA on first diagnosis, and Dr. Poon without ambiguity emphasized that RFA is indeed today's SOC for early/intermediate stage disease. Interestingly, Dr. Poon emphasized that among the 20-25% of patients getting surgical resection, 70% of those will develop recurrence and will inevitably receive treatment with RFA as well. Taking it all together, 40-45% of patients are eligible for RFA. 
• Dr. Poon mentioned that incomplete ablation and recurrence around the tumor margins are common issues in lesions >3cm, again, something I have reiterated many times, and this serves as the rationale for ThermoDox.
• Dr. Poon emphasized that local control can be improved by ThermoDox' proposed mechanism of action, in which high concentrations of chemo are released in the margins surrounding the tumor in the so-called, thermal zone, or sub-lethal temperature zone, where there are micrometastases present that cannot be seen using imaging techniques.
• Regular doxorubicin suffers from very high toxicity, ThermoDox is "definitely a safe drug", with side effects that are "not clinically significant"
• Dose response seen in Phase I was the rationale for jumping straight to Phase III. Dr. Poon mentioned that initially, there were "some issues" in working with the FDA to design the Phase III trial, primarily around the use of OS versus PFS as the study's primary endpoint. However, Dr. Poon emphasized that PFS is a clinically appropriate endpoint for intermediate stage patients. He later added that the trial was "designed as good as it can be"
• There will be a "lot of expectations for the results of this trial", according to Dr. Poon, primarily because the HEAT study is the largest intermediate stage trial conducted and there are very few, if any, other trials looking at this line of therapy (versus late stage, for example, which he mentions a lot of companies are looking at). 
• High quality trial sites selected in the HEAT study should help to reduce site to site variation in data
• Theoretically, a patient could get 6 or 7 administrations of ThermoDox before they hit the doxorubicin dose ceiling. Dr. Poon emphasizes that a typical patient might get 2-4 RFA treatments in their course of treatment. 
• Even a 20-25% improvement in PFS in this population is meaningful, according to Dr. Poon. Recall that the HEAT study needs to show a 33% improvement.
• As an adjunct to RFA, Dr. Poon highlighted that ThermoDox can be readily incorporated into standard practice, suggesting a rapid pace of adoption assuming positive data and approval of course. Simplicity and familiarity of doxorubicin should accelerate adoption, but education will still be needed to time the administration of the drug and beginning the RFA procedure to take advantage of the PK/PD profile of ThermoDox.
• One area where I will take issue with Dr. Poon is in how he described heat plus non-heat sensitive Doxil. While immediate release of chemo is indeed not seen with heat plus Doxil (as would be expected), he did not mention that there is some literature suggesting that RFA + Doxil increases the tumor necrosis volume. I was surprised he did not bring this up.
• An interesting area Dr. Poon suddenly veered into was around the topic of pricing, suggesting that price could be a barrier for some patients. However, Dr. Poon was quick to highlight the relatively high price of an often used analog for ThermoDox (Nexavar, a poor analog if you ask me in all honesty).

These were just the salient points brought up, again, I do recommend investors listen for themselves:

Looking broadly at these "meet the investigator" interviews Celsion has coordinated, I have to applaud them for doing so. Again, these are extremely well-known, world renowned physicians, so I can't think of much more they can do to generate interest for ThermoDox. Speaking for myself, I very much do appreciate hearing firsthand from highly respected clinicians in the field.

The data will ultimately tell the story...you can be sure that the eyes of the interventional/surgical oncology world will be glued to the outcome of the HEAT study, hopefully due by end of year (the inevitable PR of 380 confirmed PFS events triggering the 6-10 week "countdown" will give us much more clarity as to timing). As this year's ASCO winds down, I am already looking forward to ASCO 2013.

Best,
Siavoche

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

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

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

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

Best,
Siavoche

Celsion Secures Strategic China Manufacturing Agreement, CEO presents at Deutsche Bank Conference

Today, investors saw a new press release from Celsion, specifically announcing that the company has entered into a long-term supply agreement with Hisun Pharmaceuticals for the manufacturing of ThermoDox in the China market. The market did not seem to pay much attention to this announcement, but I would argue this represents a key milestone along the commercialization path for ThermoDox, particularly since China represents the largest market for the company in HCC. The agreement includes the following:

1. Tech transfer for proprietary manufacturing process, and non-dilutive funds to support that endeavor (I imagine there is a lot of legal work there, IP in emerging markets is a scary topic, read about Bayer's experiences with Nexavar in India)
2. Production of China registration batches
3. Option for Hisun to globally manufacture ThermoDox following SFDA approval
4. Support for regulatory approval activities in China
5. An undisclosed manufacturing price that "will support high gross margins across global territories"

My own personal thought is that this agreement with Hisun gets the company one step closer to global licensing agreement with a big pharma partner. I found it quite interesting that the press release made a reference to Pfizer's JV with Hisun, a greater than half billion dollar agreement signed in February. According to that agreement, both companies will contribute assets to the JV. I could see how a Pfizer-Celsion deal fits very nicely into this arrangement. As I have tweeted and reiterated many times before, ThermoDox presents big pharma with a very attractive product to penetrate emerging markets, particularly China, especially given the initial indication focus on HCC. My own thoughts are that a deal will not be announced until manufacturing is completely squared away, and this point has been reiterated by the company before (see below).

In other news, Michael Tardugno also presented at the 37th Annual Deutsche Bank Health Care Conference. There was nothing particularly new or exciting presented:

• Reconfirmed final data from the HEAT study would be available at the end of 2012
• Final confirmatory OS data due 18-24 months after top-line PFS results
• Reiterated enough cash on hand to last until Q3 of 2013, burn rate of $1.7M for next 18 months (company likely has just over $20M as of right now)
• Revenue potential of $500M by 2017 in HCC using 10% global share capture rate
• Phase II RCW trial to commence patient enrollment in the second half of 2012
• Company working to establish "redundant manufacturing capability" from high quality sites, "which we believe would be very important to a successful high quality license with a multinational company"
• In response to the sole Q&A question regarding business development, Mr. Tardugno said the "enthusiasm coming from our investigators [HCC] is nothing short of remarkable". He added, "We would be looking forward to firm license discussions with what we think would be a multinational partner post data for markets outside the US"

The last point was probably the most interesting one, as it tells me the company is really playing hard ball with potential partners. Post data, assuming success, the terms of such a licensing deal exponentially change in the company's favor. That said, if the company is truly not seeking a deal until end of the year, I see a cash raise likely in Q3, as I have mentioned before, hopefully in the 3-5 range. Absent a cash raise, the company will have $10M in cash by the end of 2012, and I sense they are no longer looking to "scrape the barrel" as they have done in the past. 

It's hard to believe that we are already nearing mid-2012, and rapidly approaching final data from the HEAT study. Feel free to leave questions or comments.

Best,

Siavoche

Leading Celsion Shareholder Achieves National Cancer-Fighting Accolade

Dear blog visitors, this next post is one that I take great pride in making available to my readers. As many of you might recall, Mitch Landgraf edited my scientific deep-dive article for ThermoDox a little while ago. He is one of the, in fact, THE most active cancer "fighter" I have ever seen, relentlessly raising awareness wherever he goes. I met Mitch not long after I took an initial interest in Celsion, and I am proud to call him a good friend. The following summarizes an important milestone he recently achieved, and while slightly out of scope relative to my usual articles, I nevertheless want to do my part to support Mitch and his efforts at the American Cancer Society.

A long time shareholder, cancer-fighting volunteer, and vocal supporter of Celsion's technology lead the way to a history making cancer-fighting achievement. Mitch Landgraf, a.k.a. "Odaat," is the volunteer chairperson of The American Cancer Society Relay For Life of Upper Illinois Valley event. Due to the goodness of generous donors (including Celsion shareholders), outstanding committee and team volunteers, and Mitch's passion to fight cancer, the event was successful on an historic proportion. Not only did the event break State of Illinois records, garner multiple awards and recognitions, and rank in the top 25 events for the state of Illinois, but it did so in only its second year of existence. Most astonishingly, and unprecedented in the history of Relay For Life, the Relay For Life of Upper Illinois Valley ranked 2ND IN THE NATION from over 6,500 Relay For Life events in rankings based on participant feedback surveys. The event also had more than a ten-fold increase in monies raised and number of participants, cancer survivors, youth teams, and overall teams.

"We raised an incredible amount of money to fight cancer on the research front and to provide 100% free services to anyone affected by cancer," said Chairperson Mitch Landgraf. "I understand, Relay is a fundraiser, I get it, but my goal was not just to fight cancer, but to heal cancer. The things those oustanding feedback surveys expressed tell me that we achieved that goal...that people were moved, healed, got to cry, to laugh, to remember, to celebrate, to share fellowship with others affected by cancer, and to stand with each other in a powerful way against this insidious disease. For me, there is no disconnect between my cancer fighting volunteerism and my investment in and support of Celsion. Talk to anyone at a Relay event who watched a loved one suffer not only from cancer but from the way treatment side effects can lead to a steady demise of the body's health and the soul's joy, and you will know what I mean. Wemust get the Celsion LTSL drug delivery model to patients on a worldwide scale. I have been unabashed in sharing my personal opinion that iLTSSL technology, especially when triggered by HIFU, represents what I believe to be the drug delivery and cancer answer. Until the (increasingly near) time that it becomes widely available, I plan to stand firm in my trench with my fellow cancer fighters, survivors, caregivers, and biotech investors to fight cancer tirelessly. It is a life-changing privilege to serve as chairperson of such a healing, powerful, hope-filled event. Together, we can defeat cancer and heal its scars, one day at a time."

If you would like to help Mitch in this cause, you can make tax-deductible donations here:

http://main.acsevents.org/site/TR/RelayForLife/RFLFY12IL?px=10917803&pg=personal&fr_id=38398

by clicking "Donate on my behalf."

For more information about the event, photos, etc. go to www.relayforlife.org/upperillinoisvalleyil

(Note: Mitch wanted to make it clear that he is not a representative of Celsion or The American Cancer Society.)

Best,

Siavoche

ThermoDox Reimbursement Deep Dive (Part 2)

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

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

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

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

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

Costs (some are incremental reductions/additions)

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

Potential Incremental Outcome Improvements

• Prolonged PFS 
• Extended OS 

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

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

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

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

As always, feel free to ask any questions.

Siavoche

HIFU for Bone Metastases - Brief Overview and Implications for ThermoDox

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Best,
Siavoche

Interview with Celsion Investigator Dr. Steven Libutti

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



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

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

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

Siavoche

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Celsion 2012 Anticipated Milestones and Events

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

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

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

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

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

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

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

Best,

Siavoche