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(Contributor's note: This article covers a micro-cap stock, which sometimes moves without rhyme or reason and carries significantly more risk than large-cap stocks. Please be aware of the risks associated with these stocks. Don't be a fool, stay in school.)

Celsion (NASDAQ:CLSN) is newer, revamped, and looking stronger so far after its Phase III earnings crash earlier in the year. It made recent runs up to over $2 from its post-crash low in the $0.70 area, but has seen interest wane after the rally. The recent falling share price was the result of a blog that provided old and misleading information about the company, causing a panic sell-off and bringing the stock price down about 45% in just days.

In response, I took the 6 biggest bearish myths used by shorts and absolutely skewered them in this article. Celsion has since dropped back to the $1 area, but still remains a good, albeit speculative, buy in this investor's opinion.


(Click to enlarge)

I've been covering Celsion since the beginning of January 2013, when it was anticipating its Phase III results for ThermoDox with RFA (radio frequency ablation). ThermoDox, Celsion's main focus, 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. Their Phase III results were hardly what the company expected, as they didn't meet their primary endpoint, and the stock subsequently tanked in January 2013.

I've previously argued that the post-ThermoDox Phase III trials Celsion could be worth $4/share, and I'm sticking with that analysis. Celsion has some work ahead of them if they want to make it happen, and this article is to point out that they keep chomping away in the right direction, a little at a time.

This morning, Celsion announced that they'd be moving seasoned executive and Senior VP Jeffrey Church in to the position of CFO. Church had previously served in this position, and this PR reads more like Greg Weaver, the former CFO, was shown the door to save costs. Either way, I'm fine with it due to the cost cutting and my caveats being met in terms of Mr. Church's executive experience. The press release reads:

This announcement follows the resignation of Gregory Weaver, the Company's Chief Financial Officer who, after 7 years of service to Celsion, will be pursuing other professional opportunities consistent with his extensive experience in commercial and development stage companies. Mr. Weaver's resignation, which is effective June 30, 2013, includes a transition plan designed to ensure continuity of business operations.

Michael H. Tardugno, Celsion's President and Chief Executive Officer stated, "Greg has made many important contributions to the Company as CFO and during his six years of service as a Board Director. We thank him for his service and wish him well in the pursuit of his new endeavors. It's also important to note that the transition of CFO responsibilities is being made to a very capable member of our senior management team, Jeff Church, and that this restructuring is an integral part of the Company's cash conservation plans announced earlier this year. We maintain our commitment to the efficient use of our financial and human resources as we enter a pivotal time for the Company."

This is just another "small ball" step in the right direction for Celsion. My caveats to continue being bullish on Celsion after the crash of January 2013 included a major part about restructuring and cash conservation. Although this is not a major step for the company, it comes after the company had reduced their workforce by 30% and it's another executive salary that we can deduct from the company's cash burn. With over $50 mil in cash and investments in the bank and a burn rate of about $1 mil a month, this looks to be that strategy - effectively at work.

In addition to this news, Celsion released news two weeks ago in regards to continued study and presentation of their HEAT study data, presented by Professor Riccardo Lencioni at the 2013 European Conference on Interventional Oncology in Budapest. The presentation continues to hammer home the thought that RFA optimization times may have a "marked" impact on the success of ThermoDox in the future.

You can download the entire presentation from Celsion's website, using this link. The company released a press release on June 20th in regards to this presentation, commenting on some of the details:

"I am pleased to present this post-hoc analysis of a large subgroup of patients from the Phase III HEAT Study to the European and international interventional oncology community which may be indicating a meaningful clinical benefit in both progression free survival (PFS) and overall survival (OS) in patients who received an optimized RFA procedure," said Professor Lencioni. "It is important to note the duration of heat from the RFA procedure is a key factor in a successful clinical outcome when combined with ThermoDox®. These findings are consistent with our understanding that increased perfusion and associated heating time are important factors for ensuring that the heat-sensitive liposomes are activated to deposit high concentrations of doxorubicin in the tumor and the surrounding liver tissue."

So, day by day, Celsion executives continue to play small ball and make the correct decisions to "right the ship." They secured financing at a price that's currently almost 40% above the current market price, they continue to cut costs, and they're focused on security in moving the company forward. I haven't written about Celsion in a while, so let's take a quick look at what other catalysts, aside from continuing to pull back cost, I'm expecting to come down the pipeline soon.

The first news that I'm convinced is definitely coming sooner than later is the announcement of an acquisition. The company has been alluding to this over the past few months, and at last disclosure had about ten potential candidates. There's two types of companies that I can see Celsion acquiring:

  • A company with a pipeline - this would again build even more value into Celsion's pipeline and give them "another leg to stand on," aside from the liposomal transport pipeline that represents everything Celsion has right now.
  • A profitable company - with cash in the bank and the option of doling out some stock, why wouldn't Celsion consider acquiring a company that's already profitable? It would be a substantial way to lighten the cash burn on the company and give Celsion a true leg to stand on for future institutional financing and business strategy.

It's also important to make note of a correction that a reader was helpful enough to make for me with regards to Celsion's DIGNITY study. We can expect the results to that study for recurrent chest wall cancer in 2014, not 2013. So, although these Phase II study results are likely to be a catalyst for the stock, we're not going to see them until 2014. The DIGNITY study could go a long way in proving whether or not the failure from the HEAT study was in the method of delivery or in the drug itself. Several of Dr. Nick Borys's presentations on ThermoDox with Breast cancer recurrence have, in the past, reeked with confidence from the company that they'll find success in this area.

To conclude my sentiments heading into July 2013, my caveats continue to be met for Celsion to be a speculative long position for me. At $1 and change a share, the company's valuation, to me, has made it a continued buy. As I continue to accumulate a position, waiting for the eventual catalyst that's going to take them over $2 (possibly on their way to $4 again), I re-emphasize my bullish sentiments on Celsion.

Disclosure: I am long CLSN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.