Rally In Celsion Continues On Upcoming HEAT Study Results & SPA Declaration By FDA Print
By Brian Wilson, Lead Contributor   
Wednesday, 05 December 2012 08:40
We’ve seen a lot of exceptional performance in biotech stocks this year, especially in oncology drug development companies.

One company that has been building significant momentum in recent trading is Celsion Corporation (NASDAQ: CLSN), which is developing a treatment for hepatocellular carcinoma (HCC) known as ThermoDox. Hepatocellular carcinoma is by far the most common type of liver cancer, and is diagnosed in 26,190 new patients every year in the United States. Incidence is growing, and certain organizations (like the World Health Organization) expect liver cancer to become the most common type of cancer by year 2020.

Despite enormous improvement in oncology therapies in the last few years, liver cancer has been notoriously difficult to tackle due to the complexity of the disease and the ineffectiveness of therapies that have worked well against most other forms of cancer. As a result, many of those with liver cancer require liver transplants, although a shortage of donors creates an enormous unmet demand in liver cancer treatment.

ThermoDox is not a new anti-cancer cell compound, but the drug does offer an interesting improvement in the method of delivery of its active ingredient (a chemotherapeutic agent known as doxorubicin.) The drug is administered to patients through injection, and then “activated” at the location of liver tumors through radio frequency ablation (RFA). This process is possible because of Celsion’s usage of Lysolipid Thermally Sensitive Liposomes, which allow for ThermoDox to remain inactive unless activated with the heat generated through radio frequency ablation. This not only increases the effectiveness of the doxorubicin dosage in patients due to increased permeability of tissue from the actual heating caused by radio frequency ablation, but reduces unnecessary damage of healthy tissue – something that is a big deal to chemotherapy patients everywhere.

Celsion investors have been anticipating ThermoDox’s phase III results for quite some time (many have been patiently waiting since 2008 when the trial actually started), but speculation has been especially strong in recent months due to hints that the drug has been very successful in clinical trials, and the granting of Special Protocol Assessment by the FDA. CLSN is up nearly 80% in the last month alone, and is up almost 360% YTD. The phase III study that has been generating all of this recent optimism, the “HEAT study”, which will provide top-line results in January of 2013. This is a month later than expected, although the potential approval time of ThermoDox is cut drastically by the potential for an immediate approval of ThermoDox by the FDA due to the special protocol assessment status of the drug. Celsion investors are generally anticipating that we will see an approval of ThermoDox in the first half of 2013, which would allow for the drug’s market launch next year as well.

Although Celsion stock is trading close to its 52-week high of $8/share, investors should note that the stock is seeing enormous momentum on the buying side that could easily push shares higher. Traders that like to follow trends would certainly want to be on the long side of Celsion, at least until the stock puts an unrealistically high market capitalization on Celsion itself. I don’t see Celsion as an overvalued company until it reaches a valuation of about $400 million or so, which would mean that shares are trading north of $11.40/share. ThermoDox has substantial market prospects that will probably begin to benefit Celsion as early as next year. There is also substantial potential for a short squeeze if CLSN moves any higher. The latest data from NASDAQ (dated 11/15/12) shows that there are still an aggregate 5.5 million shares shorn CLSN. If it became clear to the holders of these positions that there was virtually no chance that CLSN would drop significantly enough to show them a profit, we would see significant short covering that could force speculators to buy back about 15% of CLSN shares.

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