After Phase III failure, Celsion is still worthless

After much debate from bulls and bears, in late January, Celsion (NASDAQ: CLSN) reported that the Phase 3 HEAT study of ThermoDox failed to meet the primary endpoint of achieving at least a 33% improvement in progression-free survival (PFS). This was not surprising to our group, who had been highlighting the many risks that could potentially derail the trial and whether it was an active drug. Currently the stock is trading up on hype, not substance, that any subgroup analysis could somehow steer them away from bankruptcy. We find this unlikely and believe their entire platform offers little value. With current net cash of under, $0.50 per share, investors are facing dilutive financings to fund a lame duck.

No hope for HEAT study subgroups

In their press release following HISUN’s termination of their option to license ThermoDox for the Greater China market, Celsion appears to have gotten some traders(not investors) hopes up that sub-group analyses might paint a different picture. This notion is quite far-fetched, especially after CEO Mike Tardugno disclosure on the HEAT conference call that the primary endpoint “wasn’t close” and they only saw a modest benefit in PFS. The notion that the sub-group analysis of patients from China will look better than the overall trial is highly unlikely.

Investors should also realize that the company is questioning whether or not they will continue to follow up on patients for overall survival. This reluctance to continue the study in hopes of seeing a benefit in overall survival suggests the initial data likely shows little difference between both arms.

Terrible financial shape

We think bankruptcy is in the near future for Celsion. Unfortunately, the reality is that the HEAT trial reflects poorly on their entire platform. We would be surprised if they would even be able to sell off rights to LTSL technology, whose patents run out in 2021. HEAT was validation for the entire platform, which failed miserably, as predicted by us and several others. With approximately $27 million as of January 31, 2013, long-term debt of $4.14 million and total liabilities of $12.385 million, Celsion has net cash under $15 million.

They have also recently announced a $25 million ATM through Cantor. At current prices, holders of Celsion are looking at considerable dilution for a company with little to no prospects.

Pipeline prospects are quite dim

Following the HEAT study failure, we have to question the utility of their other ongoing single-arm or randomized trials. They have several ongoing collaborations that aren’t likely to bear any fruit. All of these trials and collaborations were started before the Phase 3 data of the HEAT study was known. With only modest signs of efficacy in the Phase 3, we don’t believe they are likely to see significant benefits in ongoing trials that will alter the trajectory of the company based on similar reasons outlined in our analysis of Thermodox.

In 2012, they began a Phase II study of ThermoDox and Philip’s Sonalleve MR-Guided HIFU technology for the palliation of painful metastases to the bone. They also have a collaboration with the University of Oxford to begin a clinical study of ThermoDox® plus HIFU in the treatment of metastatic liver cancer. Treatment of the first patient is targeted for the first half of 2013.

In February 2012, they started a randomized 88-patient Phase II study of ThermoDox in combination with RFA(ABLATE), for the treatment of colorectal liver metastases. The primary study endpoint is based on one year local tumor recurrence, with secondary endpoints of time to progression and overall survival. In our opinion, the ABLATE trial is very unlikely to produce meaningful data. That trial has local progression at 1 year as the primary endpoint. Single-agent doxorubicin has little history of success in this indication and based on the outcome of the Phase 3 HEAT study, we doubt this will change. With such little effect on local progression, it seems unlikely this trial will be successful.

They also have a single-arm Phase 2 study in breast cancer recurrence at the chest wall (BCRCW). This trial, DIGNITY, has been enrolling very slowly and likely won’t complete until mid-2014 or later. Data released at ESMO 2012 didn’t really inspire much confidence in this program either. The study showed a target lesion response rate of 45%(CR 9.1% – 1/11, PR 36.4% – 4/11) without local progression. This doesn’t compare that well to previous studies in heavily pre-treated patients, see either of the following studies from 2002 or 2010 which demonstrated much higher response rates. Early signs point to Thermodox only performing similar to hyperthermia alone if not worse.


We have a hard time finding any value in any of their assets now that Thermodox appears similar to placebo. Traders will likely talk the stock up as “oversold”, hype the subgroup analyses, or short squeeze candidate. Just make sure you recognize the company thus far is a failure and their pipeline is not impressing anyone in the clinic or on Wall Street. When a company is tied to a platform technology and it fails, what are you left with?

Disclosure: Author is short CLSN

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