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Celsion Out in Cold Following HEAT Failure with ThermoDox

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By Catherine Shaffer
Staff Writer

A devastating clinical trial failure disappointed investors in Celsion Corp., of Ames, Iowa, plunging the company's stock into free fall.

Celsion's shares (NASDAQ:CLSN) fell 81.2 percent, or $6.51, Thursday to close at $1.51, as the company jumped into damage-control mode.

Celsion said it is considering following patients enrolled in the HEAT study in hepatocellular carcinoma (HCC) to the secondary endpoint of overall survival, and is carrying out additional analyses of data to assess future strategic potential of the drug, ThermoDox.

CEO Michael H. Tardugno said in a conference call that the control arm of the trial performed "a bit better" than anticipated, and that the therapeutic arm "did not perform as well as we would like it to.

"Primary liver cancer is a complicated disease," he added. "This is a tough indication."

Tardugno expressed continued confidence in the ThermoDox platform. "We know the mechanism is reliable. When we apply heat, we release the therapeutic contents."

ThermoDox is an encapsulated form of doxorubicin. The drug is surrounded by a heat-sensitive liposome that rapidly changes structure when heated, at which point it releases doxorubicin. It is intended to target therapy to the tumor, and to expand the effective treatment zone to micrometastases which cause recurrence of disease after treatment.

In the trial, Celsion lined up ThermoDox plus radiofrequency ablation against radiofrequency ablation alone in the randomized, placebo-controlled study in 701 patients with intermediate, unresectable HCC. The primary endpoint was progression-free survival (PFS), as indicated by a special protocol assessment with the FDA.

The study was designed to show a 33 percent improvement in PFS, with 80 percent power and "p" value of 0.05.

However, patients in the control arm of the study performed about 20 percent better than expected, and patients on ThermoDox performed worse.

Celsion said it will continue enrolling patients in its Phase II DIGNITY study in breast cancer, but will reconsider its ABLATE Phase II study of ThermoDox in colorectal liver metastases.

"We are disappointed by the failure of the HEAT study, and we highlight the increased risk around the company's pipeline, which is driven by ThermoDox in additional indications," wrote Joseph Pantginis, an analyst with Roth Capital Partners. Roth downgraded Celsion's stock from "buy" to "neutral," and lowered its price target from $10 to $1 .70.

Pantginis speculated that negative perceptions around the HEAT failure could affect expectations for the data readout for DIGNITY.

There is also some uncertainty regarding a second $5 million anticipated payment from Celsion's Chinese partner, Zhejiang Hisun Pharmaceutical Co. Ltd. The companies have plans to discuss strategic options in the near future.

Celsion signed a commercial supply agreement with Hisun in May 2012. Under the agreement, Celsion received financing and investment required for completion of technology transfer and production of registration batches in China. The two companies also agreed to collaborate for approval of ThermoDox in China.

The response from Jonathan Aschoff at Brean Capital was even more negative. "Given that the HEAT trial result was unimpressive enough to keep private, we can no longer have any confidence in other trial results," Aschoff wrote. Brean reduced its price target for Celsion to 75 cents, "reflecting purely the $27 million current cash balance, and forgetting any liabilities for the time being."

Aschoff suggested that the HEAT result would hinder enrollment in the breast cancer trial, "as well as any other trial attempted, and that even if enrolled, a similar outcome will occur in future trials."

In response to questions about whether the trial itself may have been compromised by failure to adhere to protocol or by geographic differences, Tardugno shared comments from the data monitoring committee. "This was a very well-executed trial across the board in some territories and countries for which Phase III trials are rare. There were no data quality issues or currentness issues that impacted the results of the trial," Tardugno said.

HCC is a hot field with a number of competitors ready to move into the void left by ThermoDox. Astex Pharmaceuticals Inc., for example, recently began a Phase II study of its compound SGI-110 in HCC patients who failed prior treatment with Nexavar (sorafenib, Onyx Pharmaceuticals Inc. and Bayer AG).

Exelixis Inc. is heading for pivotal trials of its approved thyroid cancer drug Cometriq (cabozntinib) in HCC and renal cell carcinoma.

ArQule Inc. is investigating tivantinib in HCC. Last June, it reported positive results for the drug in second-line patients receiving tivantinib as monotherapy. With its partner Daiichi Sankyo Co. Ltd., the company recently enrolled its first patient in a pivotal Phase III trial of tivantinib in HCC.

And 4SC AG is advancing its pan-histone deacetylase inhibitor, resminostat, into a pivotal Phase III trial in second-line HCC in the first half of 2013 following positive data from a Phase II trial.