Everything was going great for Celsion Corporation (CLSN) in the run up to the Phase III HEAT trials of ThermoDox, a drug used for treatment of hepatocellular carcinoma, a type of liver cancer. Then all hell broke loose and the stock that had appreciated more than 160% in six months prior to January 30, 2013, went into a tailspin and closed 81% lower than its previous close on January 31, 2013. Adding insult to injury, the stock lost an additional 12.6% next day, raising questions about the survival of the company.
What went Wrong
It all started with the company announcing that ThermoDox in combination with radiofrequency ablation (RFA) did not meet the primary endpoint of the phase III HEAT study in patients with hepatocellular carcinoma.
From the events prior to the release of the findings of the study, it appears that the management would have been as dumbstruck and letdown as the investors. The recent insider buying and the upbeat statement made by the management regarding ThermoDox, all indicate that the management was not expecting this.
On January 22, 2013, the company had announced what investors were long hoping for - a technology development agreement with Zhejiang Hisun Pharmaceutical Company Ltd., a Chinese pharmaceutical company. Under the terms, the Chinese company would pay $5 million upfront to Celsion and in return Celsion would provide support for it in its development program for manufacturing ThermoDox.
Under the terms of the agreement, the Chinese company was to pay $5 million (non-refundable) upfront to Celsion and another $5 million within 60 days of execution of the contract. Over the next ten years, Celsion was expecting to receive some hundreds of million dollars from exclusive licensing rights for the Greater China market that includes China, Hong Kong and Macau.
Come February 5, 2013, Celsion announced
