Celsion's Newest Cancer Treatment Adds To Upside

| About: Celsion Corporation (CLSN)

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Development of a new treatment for highly lethal brain cancer that claims the lives of up to 60% of diagnosed patients is set to start soon by Celsion Corporation (NASDAQ:CLSN), using ThermoDox, its patented heat-activated liposomal form of the anti-cancer agent doxorubicin that has been shown to concentrate at the site of tumors. Preclinical studies to be conducted at the Harvard Medical School and the Brigham and Women's Hospital, renowned as two of the top research facilities in the country, will examine the effect of ThermoDox on glioblastoma multiforme (GBM) in conjunction with high intensity focused ultrasound (HIFU). Dr. Costas Arvanitis, PhD, trained at the Imperial College of London and a leader in ultrasound-based medicine directed toward oncology, heads the preclinical efforts.

ThermoDox and HIFU can be viewed as a technology platform, as evidenced by Celsion's work using the drug/device combination to achieve results in other clinical trials. The DIGNITY study for recurrent chest wall breast cancer is in Phase II, as is the ABLATE study for colorectal liver cancer. Celsion is also applying its unique methodology to pancreatic and metastatic liver cancer, though these are in earlier stages. Thus, Celsion's new direction into GBM complements its pipeline of ThermoDox indications and knowledge gained from one study on the intricacies of blending ThermoDox and HIFU could be applied to others.

Key to ThermoDox's potential to treat GBM and a reason for Dr. Arvanitis' excitement is the ability of the drug to more easily cross the blood-brain barrier in a concentration considered by researchers to approach therapeutic levels not seen with existing pharmaceuticals. Cancer in the form of GBM is the most aggressive of brain malignancies because of its attack on glial cells that act as the supportive scaffolding in the central nervous system. More than half of brain-based tumors are classified as GBM; its categorization captures another 20% of tumors inside the cranium. While incidence is not large - about 23,000 people in the US are diagnosed each year - mortality is high enough for oncologists and patients to view the disease as a tremendous unmet medical need, always an attraction for grant money (a path Celsion will pursue) and doctors happy to lead clinical trials.

Methods to treat GBM have been lacking. Standard-of-care radiation and chemotherapy offers patients roughly 15 months of life. Survival with no intervention is under five months. There is an option of surgical removal of the tumor where damage to surrounding tissue brings the prospect of diminished cognitive or physical functioning. Devices and pharmaceuticals fall short. The Gliadel Wafer, made by Eisai Co., Ltd. (OTCPK:ESALY) and publicly available since the late 1990s is an invasive device inserted in the brain at time of resection that deploys radiation as an adjunct therapy and only increases median survival by a handful of months. Temodar by Merck & Co. (NYSE:MRK) has shown to extend life when used with radiation, but the chance of severe convulsions reduce its attractiveness.

Immunotherapy may have promise, but not without consequence. Agenus Inc. (NASDAQ:AGEN) just released Phase II results of its Prophage G-200 vaccine in GBM, where survival at six months shot up to 90%, a new high. Still, the drug must be used in conjunction with Avastin, an angiogenesis inhibitor. At the time of Avastin's approval, supporting data showed no improvement in survival and tumor response rate after 4.2 months was 25.9%. In fact, approval for this indication may be revoked, as it had with breast cancer.

The worst offender in medicine's effort to treat GBM lies in the realm of voodoo science - the NovoTTF-100A from privately-held Novocure. As if its cumbersome name is not bad enough, this device has patients tote around a six-pound piece of equipment with electrodes attached to the user's skull so an electric field can be maintained at the tumor site to keep cancer cells from dividing. However, prognosis of only six months survival is all this strange contraption has offered.

One of the reasons radiation and chemotherapy are not effective in GBM is because cancer stem cells survive both these therapeutic onslaughts, living long enough to proliferate into a new generation. Successors become progressively immune. Damage is increasingly done to surrounding tissue, a bad situation for GBM because the brain is limited in its ability to repair itself and much of its structure and function is still unknown. The extent of damage is difficult to determine. More and more, researchers are looking toward a targeted approach such as the kind Celsion can provide.

Celsion encountered a regulatory speed bump last year when its most advanced clinical trial, the HEAT study in Phase III for primary hepatic cell carcinoma (HCC) did not meet its primary endpoint, a 33% improvement in progression-free survival at a specific level of statistical significance. The stock suffered and investor confidence sank. Later scrutiny of the data revealed that treatment times were too short, and the most recent post-hoc analysis suggests ThermoDox coupled with optimized radio-frequency ablation for more than 45 minutes reveals a landmark 55% improvement in overall survival at two years. Armed with this information, Celsion is more likely to conduct any additional studies, GBM included, with treatment times that have a better chance of reaching trial endpoints.

On the subject of liver studies and in the category of misguided science, investors should pay particular note to recent stock price runs in Intercept Pharmaceuticals (NASDAQ:ICPT) whose Phase II trials were interrupted with positive news of its drug for fatty, cirrhosis-laden livers. The drug proposes to regulate liver bile in an attempt to prevent future liver-related illness. Bile acid malabsorption through the intestines, often leading to diarrhea, is akin to simple irritable bowel syndrome, making Intercept's highly-touted remedy little more than a trumped-up form of Imodium. Worse, the National Institutes of Health in a rare pronouncement asserts the drug causes abnormally high cholesterol levels versus placebo, another way of saying that Intercept is making livers fattier and more dangerous to their owners.

More mature pharmaceutical firms have been exploring therapy for liver disease, a condition that can progress from high fat content, to cirrhosis, to HCC, but with less than ideal means. Bayer AG (OTCPK:BAYRY) and Amgen Inc. (NASDAQ:AMGN) suggest using the toxic compound Nexavar, choosing to ignore that it causes excessive bleeding and, ironically, jaundiced skin among a long list of other adverse side effects.

Celsion raised a significant amount of money last month, propping up its balance sheet to close to $57 million in cash and investments. The stock is trading far below a valuation I had previously derived based on their market potential after commercialization of ThermoDox. Risks, however, are clear - the technology is still under official verification and the FDA needs to decide if data from the Company's initial Phase III HEAT study in liver cancer can be accepted with differences in data format. Approval for additional pivotal studies may not occur but if Celsion is given the green light, a large, multi-center clinical trial in the US and abroad will carry a big expense that could drain resources significantly without future capital funding. Additionally, investing in micro-capitalization biotechnology stocks holds risks specific to them: lower float to attract smart money investors, and less agility to move in and out of positions.

Further, a preclinical study is a very early benchmark; approval of ThermoDox for GBM needs to surmount significant hurdles - first, safety, then efficacy. Enrollment may be slow due to the small number of available clinical trial subjects. Proof of ThermoDox's effectiveness and potential commercialization may meet with a skeptical medical community who are often hesitant to sway from their needles and scalpels.

For a company like Celsion, scientifically superior to weaker competitors that use archaic and often hazardous methods to treat some of cancer's biggest challenges, a market capitalization of approximately $60 million is an opportunity for investors. Celsion targets conditions of unmet medical need, seeking better alternatives than those offered by drug companies with bloated valuations toiling in bad technology. With no optimal treatment for sick brains and livers, medicine should soon recognize that ThermoDox is a contender for a new solution.

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