Celsion (CLSN 3.24%) has finally released data for its closely watched phase 3 HEAT trial after starving investors for the entire month of January. The results? The study evaluating ThermoDox and radiofrequency ablation (RFA) failed to meet its primary endpoint of improving progression-free survival (PFS) by at least 33% over the placebo in patients with hepatocellular carcinoma, or HCC. Secondary endpoints didn't fare much better.
Were there any bright spots in the trial results? Can the problems be addressed? Were there any indications that failure was imminent? What do the results for Celsion's most advanced trial mean for the future of ThermoDox, which is currently in five separate clinical trials for the company?
The results are in... right?
I planned on displaying a table of results from the company's conference call this morning, but CEO Michael Tardugno skirted hard numbers and quickly opened the floor to questions. That is never a good sign. When asked about additional details by an analyst from Ross Capital Partners, Tardugno said, "It was not close." Ouch. In yet another blow, the company announced that the recent partnership with Hisun will be reviewed as soon as this afternoon.
Investors sometimes think that a PFS that comes in just under that specified in the trial design is good enough to squeeze through approval from the Food and Drug Administration. The reality is that the bar is set, in this case at 33%, and it is very difficult to wiggle over it. Investors hoping for a possible close call were defeated in a blowout when Tardugno admitted that the "results do not support" moving forward with the study "in any major market."
Hindsight is 20/20
The randomized, double-blinded, and placebo-controlled phase 3 HEAT study enrolled 701 patients with HCC, the most common type of liver cancer. In November, the trial reached the 380th event of progression that allowed the company to unblind the patient population and perform a final analysis. But was the trial doomed to failure from the beginning?
One major red flag in the ability to prove statistical significance was the fact that the trial progressed to phase 3 after evaluating data in just nine HCC patients in phase 1/2. Going from nine data points to 380 is quite a leap. Another red flag was the large improvement (33%) over placebo needed to meet the primary endpoint. Previous large-scale trials have demonstrated the power of RFA in treating HCC patients without the aid of a chemotherapy drug, which might suggest that adding a drug would not result in a statistically significant improvement. In hindsight, this could have been a major reason to remain cautious about the chances of success of the HEAT trial.
Celsion's pipeline
Let's imagine that a major league baseball team infuses its farm system with a certain type of player: bulky outfielders wielding power bats that prey on fastballs. Then suddenly, pitchers around the league begin to combat these hitters with masterful off-speed pitches and, at the same time, the slower-than-average outfielders suffer defensively. As you can imagine, the team's once-promising farm system could quickly become a drag on the franchise's future.
Similarly, Celsion's future could suffer from betting too heavily on ThermoDox and hyperthermia therapies. The company has five trials in the pipeline that utilize a hyperthermia ablation technology, such as high intensity focused ultrasound (HIFU) or RFA. Should any of these trials advance to phase 3, the company will likely need to show large improvements over the standard of care similar to the 33% threshold in the HEAT trial.
Foolish bottom line
With this failure, investors of micro-cap biotech companies may want to pay more attention to the Feuerstein-Ratain Rule in the future. I explained why the rule works earlier this month, and it is now 23 for 23 in predicting phase 3 oncology outcomes in micro-cap companies. Unfortunately for investors, Celsion's future looks pretty bleak to me. The two trials in the on-deck circle (DIGNITY and ABLATE) are both in phase 2, which means the company is at least a few years away from having its next shot at FDA approval. Can switching active chemotherapy drugs make a big difference? Time will tell, but as I mentioned above, beating stand-alone RFA will be extremely difficult.
