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Introduction and Q1 Earnings

I've been covering Celsion (NASDAQ:CLSN) since the beginning of January 2012, when it was anticipating its Phase III results for ThermoDox with RFA (radio frequency ablation).

ThermoDox is a unique liposomal delivery method of getting doxorubicin to the site of cancer tumors being treated. Preliminary trials looked great and the idea behind ThermoDox was one that made sense: delivering a concentration of an often-used cancer drug to the site of the tumor by its Liposomal transport system, and using heat to activate it en masse.

Celsion is evaluating ThermoDox in a Phase III clinical trial for primary liver cancer, as well as Phase II clinical trial for colorectal liver metastasis and a Phase II clinical trial for recurrent chest wall breast cancer.

Celsion reported their Q1 results this morning, beating analyst estimates with an EPS of -$0.12 compared to estimates of -$0.16, and slightly missing revenue with a reported $125k versus analyst estimates of $190k. Its cash burn was down from $6.2 million in the first quarter of 2012 to $651,000 in the first quarter of 2013. The full earnings press release can be found here.

I wasn't expecting anything groundbreaking on the financial side of things, but was far more interested in the conference call and the executive's editorialization of things in the 11AM conference call this morning.

However, the real story lies not in the financials reported in quarter 1, but in the future of the company and the steps being taken by executives to ensure that the company does have a future.

After the post-Phase III crash, the company went through the mandatory "battening of the hatches", curbing costs, raising some rather dilutive financing, and pondering mergers and acquisitions to see that the fundamentals of the company remain strong should ThermoDox not work out.

Recently, the company reported that it had found a modicum of success with certain subgroups of ThermoDox when RFA had been applied for certain amounts of time.

On April 23rd of this year, Celsion reported that after a thorough review of its HEAT study, there was clear evidence that ThermoDox showed a "marked improvement" (company's words, not mine) when RFA is optimized. CEO Michael Tardugno commented:

Michael Tardugno, Celsion's Chief Executive Officer, added, "Based on the strength of these findings, the Company will request a meeting with regulatory authorities for guidance on moving forward with our HCC development program. We plan to disclose the details of the HEAT Study data at upcoming medical meetings and in a peer-reviewed publication. We will provide updates on these activities when appropriate."

Today's Conference Call

CEO Michael Tardugno led off the call today. The first thing the call covered was the Phase III HEAT study, following up on the post-hoc data Celsion found. Tardugno comments that the post-hoc analysis was done by one group that was involved in the initial HEAT study, as well as one independent group.

Tardugno did take a moment to remind investors that the post-hoc data is extremely speculative and not yet of any "statistical significance." Having said that, the call was littered with hints afterward about the potential benefits going forward.

It was repeated several times during the call, just as it was in its PR, that ThermoDox can markedly improve PFS in a "large subgroup" of patients.

Tardugno went on to comment that Celsion's data at its disclosed upcoming May 16th presentation will tell more, and will be subsequently posted on Celsion's website. He commented that Celsion was going to perform some limited trials and animal testing over the summer, and then plans on meeting with the FDA to discuss pursuing more clinical studies with regards to ThermoDox. He noted later in the call that Celsion wanst to be able to do this "well before the end of 2013".

In April, the company was restructured, eliminating one-third of the workforce, consisting mostly of contractors and consultants. Tardugno and others alluded to trimming the fat off of the company in order to maintain "bare bones" personnel. They noted that they can be effective with the personnel they have on board now, as they've operated like this in the past.

Celsion finished the quarter with $45.9 million cash and investments on hand, double what they had on hand after Q1 last year.

Tardugno repeated that they are very confident in their liposomal deliver technology, but are also exploring acquisitive potentials to mitigate the "all-in" risk on just focusing on technology.

CFO Greg Weaver offered a short update, noting there's 51.6 million shares of common stock outstanding, and that it's costing about $1 million a month to run the business as is.

Dr. Nick Borys followed, stating the review of the Phase III data started as soon as it was released. He noted that they determined early on that patients with smaller lesions had some obvious success. He used "marked improvement in PFS and survival" again, as Celsion used in their last press release.

Borys noted that longer RFA times were a factor and that they improved outcomes in all size tumors.

He stated that there is a "major" subgroup who appear to have benefit and that HEAT may be the foundation for the ultimate future success of ThermoDox.

VP of Corporate Strategy, Jeff Church, reaffirmed quickly that Celsion is working with Cantor Fitzgerald on acquisition candidates, and that they've identified about 10 potential targets already. He noted that these companies would have complimentary products and technologies that will help mitigate growth.

Tardugno ended by stating that the company is moving forward and focused on the future. He stated the company is still working with Phillips on RFA and is still confident in the non-invasive method of treating cancer using doxorubicin.

Conclusion

This seemed like a pretty good call to me. Celsion executives sounded confident about the future, and I'm satisfied with the cuts they've made and the corporate strategy they're using in response to the Phase III failure earlier this year. I'm staying long Celsion for the time being, with an eye on its upcoming May 16th presentation of ThermoDox data.

Source: Celsion's Q1 Call: What You Need To Know