Seeking Alpha
Long/short equity, contrarian, special situations, wild cards
Profile| Send Message|
( followers)  

(Editor’s Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.)

Celsion's OPTIMA Study: Key Points

  • What is the company looking at accomplishing?

The company is continuing on its path to increase overall survival in patients that have HCC - the most common type of liver cancer that usually develops as a secondary byproduct of cirrhosis or hepatitis infections.

Celsion is using its patented liposomal transport system of delivering doxorubucin, an already prominent cancer fighting drug, directly to the tumor site where it is then heated (radio frequency ablation, or "RFA") to release the drug en masse on site.

  • Does the company have the money to fund OPTIMA?

According to the company's last capital raise in mid January, the company has about $57 million cash on hand to do its business with. At a burn rate of around $1m/month, further major dilution may be avoidable for the company for this trial. While the company has had to dilute and has managed its share structure accordingly via reverse split, it has generally been timely with each of its financings over the last 2 years, with most coming at the market price after Celsion stock had a momentary pop upward.

Additionally, the company has a $20 million loan it can draw on, of which it has drawn about 25%.

  • Is this trial likely to succeed where HEAT failed?

While you can never offer a definitive answer, the post-hoc data that Celsion has pulled from the HEAT study would definitely suggest that the company does have a chance of finding success with this trial. Celsion is targeting certain tumor sized and increased RFA times during this trial, basing both on the successful O/S data of the HEAT trial. In short, the company is following the path that HEAT looks to have set out for them.

What You Need to Know

After an ugly 2013 which included a reverse split, several financings, and tons of post-hoc study from the company's HEAT Phase III trial for liver cancer, Celsion (NASDAQ:CLSN) announced this morning that they're going forward with a new Phase III trial for hepatocellular carcinoma, the most common type of liver cancer.

The company's press release stated:

Celsion Corporation announced today that the U.S. Food and Drug Administration (FDA) has reviewed and provided clearance for the Company's planned pivotal, double-blind, placebo-controlled Phase III trial of ThermoDox®, its proprietary heat-activated liposomal encapsulation of doxorubicin in combination with radio frequency ablation (RFA) in primary liver cancer, also known as hepatocellular carcinoma (HCC). The trial design is based on a comprehensive analysis of data from the Company's Phase III HEAT Study, which demonstrated that treatment with ThermoDox resulted in a 55% improvement in overall survival in a substantial number of HCC patients that received an optimized RFA treatment. Celsion (CLN) expects to launch the study in the first half of 2014.

So, the OPTIMA study is going to basically be the HEAT study, part 2. The difference? The company found in its post-hoc analysis of the HEAT study results that patients with longer RFA (radio frequency ablation) times and with lesions of 3-7 cm found more overall survival success.

In the patient subgroup treated in the ThermoDox® arm, whose RFA procedure lasted longer than 45 minutes (285 patients or 63% of single lesion patients) clinical results indicate a 55% improvement in overall survival, a Hazard Ratio of 0.64 (95% CI 0.41 - 1.00) and a P-value = 0.0495. Median overall survival for this subgroup has not yet been reached.

The OPTIMA study will apply this type of RFA and will only focus on lesions of 3 to 7 cm - its expected to enroll 550 patients globally, with sites in the US, Europe, China, and Asia. The primary endpoint is going to be overall survival.

(click to enlarge - source Yahoo! Finance)

My thesis has always been that Celsion is likely to inch its way up through this trial towards the end of it. Like most biotechs, as a Phase III trial is taking place and buzz makes its way around about it, the stock generally inches upwards. Regardless of the outcome of this Phase III trial, we're likely to see the same thing here. The results, which will still be a long while down the road, will be a bona fide binary event.

While I certainly hope that the Phase III trial is a success, as I was one of the bulls on the original trial and I do believe the company's patented delivery system makes sense and should work, the safe trade would be to take some off of the table before the results are announced - if this study doesn't meet its primary endpoint, we're going to see Celsion take another dive a la the one we saw in January 2013.

However, if you're a bull on Celsion, with its new share structure post-reverse split, there could be long-term opportunity for major growth if the company is able to meet its primary endpoint in this new study. We'll soon know if the RFA >45mins for 3cm-7cm lesions theory is going to hold water. If it does, it's likely a simple fix to apply to larger tumors and will open enormous doors for Celsion and the research its been doing for years.

In addition to this trial, Celsion is also currently conducting its Phase I DIGNITY trial for its drug in recurrent chest wall cancer. The initial results from this study have been positive, but no major formal outcome has come to yet. The company last releasedinformation suggesting that its Phase I DIGNITY study was showing some positive results - with a local response rate of over 60% in a pool of 23 evaluated patients

Celsion continues to have an extremely strong partnership in China with Hisun Pharmaceutical that they can leverage, should the company continue to find success. They can use this partnership to eventually tap into China's patient population for certain cancers - liver cancer is prominent there and Hisun has made it clear that they want first dibs at anything Celsion has approved in China.

The new trial is set to be in the first half of 2014.

Source: Celsion's OPTIMA Study: What You Need To Know