2012 has been a very exciting year for pharmaceuticals, with a lot of good clinical trial results that attracted more investor capital into the biotech sector. As we're continuously improving our understanding of cancer-causing mutations, we're finding new physiologic pathways that can serve as new targets for next-generation therapeutic compounds.
Many of these new biochemical targets are filling in the gaps left by older cancer compounds, while usually offering improved safety profiles (hence, less intensity of side effects in patients). This is creating a much bigger market of second-line cancer drugs that offers oncologists more options than they've ever had previously, and simultaneously benefits the pharmaceutical industry in growth. With no apparent shortage of external funding either, it seems likely that R&D budgets for more obscure and/or deadly forms of cancer begin to grow too.
Sadly, the highly prominent (and deadly) liver cancers haven't really enjoyed the huge progress made in the pharmaceutical industry. Treatment is still centered around surgery, chemotherapy, and liver transplantation (if possible). The exception came with the FDA approval of receptor tyrosine kinase-inhibiting compound Sorafenib (more commonly called Nexavar) for the treatment of Hepatocellular Carinoma (HCC). This drug was developed by Onyx Pharmaceuticals (NASDAQ: ONXX) and is now marketed by the German pharmaceutical giant Bayer.
HCC is, by far, the most common type of liver cancer. The United States diagnosed 26,190 new cases last year, which is a surprisingly small fraction of the estimated 560,000 cases worldwide. Keep in mind that these are not only very large figures for cancer incidence, but that the numbers smaller due to undiagnosed cases of liver cancer.
These numbers are huge, which provides more than enough financial incentive for making a better HCC drugs. Since development is always quite straightforward for the larger pharmaceutical companies (they are very cash-rich businesses), I think it's the complexity of liver cancer that is preventing many of these companies from starting research programs on a new generation of liver cancer treatment.
Celsion (NASDAQ: CLSN) is looking to address the issue with ThermoDox®, which is the centerpiece of Celsion's new system for the destruction of HCC tumors. ThermoDox is a thermally-sensitive Doxorubicin "payload" that is released in at a high concentration directly at the site of HCC cancer cells. The release is triggered by a radio frequency ablation (RFA) at the site of the tumor, which heats the tissue enough to destroy the malignant cells and triggers ThermoDox into activation. The increased permeability of heated tissue also helps ThermoDox's heat-activated doxorubicin reach cells that could have been shielded from a standard doxorubicin injection.
This non-invasive procedure is very promising for certain tough-to-treat forms of cancers like Heptaocellular Carcinoma, since it is a huge potential jump in drug delivery to cancer cells. While the situation hasn't been fully explored, we know that many of our problems in drug-based cancer treatments come from the delivery of the compound to the malignant cell. This means that, if successful enough, ThermoDox can pursue much more than HCC treatment.
Celsion is also pursuing programs in colorectal liver cancer, and recurrent chest wall breast cancer which are both working on phase II trials, but the current spotlight is on Celsion's HCC prospects. Nexavar (sorafenib), the aforementioned HCC drug, was nothing short of a blockbuster and brought Bayer $1 billion in 2011 and the developer Onyx a hefty $277 million in revenues. Celsion is only trading at a market capitalization of $181 million, which implies that ThermoDox is not going to be anything like Nexavar in the market for HCC treatment.
We may see a lot more interest in Celsion after December 2012, which is the predicted primary completion date of the Phase III ThermoDox HCC study that was initiated in 2008 (known as the HEAT study). The market obviously wants to see ThermoDox reach its primary endpoint in order to validate the study's purpose. This means that we need a statistically significant improvement of Progression Free Survival for HCC patients over three years versus the placebo arm to pave the way for an NDA submission.
There is a risk that the phase III data will be poor, but CLSN could generate a disproportionately large amount of bullish speculation if it succeeds now. This is not only due to a lack of competition in the HCC market, but on the potential for ThermoDox to succeed in the treatment of other cancers - especially those with few drug-based options. The stock's trading in the last few months suggests that the market has realized the relative undervaluation of ThermoDox, and is working towards a correction.