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Holding Celsion? Don't Sell Just Yet


The bottom line for all of us with profits in Celsion now is to decide if and how much to let ride going into the HEAT study results.

Editor's note: The preceding column originally appeared in the September 28 issue of InsiderInsights.

After nearly eighteen months in shares of development-stage biotech firm Celsion (NASDAQ:CLSN), my firm is sitting on a decent, hard-won profit north of 65% as we await a major event for the firm. Being investors, not gamblers, we usually begin taking profits in biotech positions at this point. But at the admitted risk of getting too greedy, we're maintaining our Buy rating for investors able to shoulder a high-risk/high-reward position.

Celsion's Thermodox treatment therapy uses heat-sensitive nano-particles to precisely place cancer-treatment drugs within tumors. The company has secured patents in the United States and Japan, and Thermodox is currently in Phase III trials for the treatment of liver cancer. Although Thermodox is also in earlier clinical testing phases for the treatment of breast cancer and colorectal cancer, the "HEAT" trial for liver cancer is the main driver of Celsion's price right now. HEAT is a multinational, double-blind, placebo-controlled, pivotal study of Thermodox in combination with radio frequency ablation for primary liver cancer.

Shares of Celsion hit a major speed bump late last year after Celsion's Phase III HEAT study failed to meet many investors' expectations for early success. We stuck with the then-losing position, expecting investors to again place their chits on HEAT results as they grew closer. That has certainly come to pass, and HEAT is now expected to reach its total of 380 "events of progression" that will mark the end of the trial "in late 2012." The bottom line for all of us with profits in Celsion now is to decide if and how much to let ride going into the HEAT results.

"Easy" Money Already Made

We've been using insiders to get us into beaten-down biotechs for nearly three decades now. And though dev-stage biotechs with insider buying predictably tend to trade up into their next milestone event, what happens on that milestone date is much less predictable. That is why we commonly take some profits off the table when we're fortunate to have them at this point in our investment thesis for a biotech. Adding to the unpredictability in Celsion's case is that its next milestone date lies somewhere within the wide range of tomorrow through year end.

Investors should also remind themselves that HEAT reaching its goal of 380 events of progression is not the same as knowing the outcome of the trial. "Celsion will likely have to have data cleaned up and verified," relays Keith Markey of Griffin Securities. "There's nothing unusual about that, but it takes a little bit longer in a multinational trial like the HEAT trial. Clean data will then be presented to HEAT's Data Monitoring Committee. And when finished with that, Celsion will be able to make an announcement about the results."

So Mr. Markey believes there could be a good a good month or two lag between the HEAT trial completing, and knowing the results. But he remains very bullish on the stock and has an $18 price target. Adding comfort to his conclusion, he further points out that the multinational nature of the HEAT trial means that a nod from either the US's FDA or the European Medicines Agency ("EMA") should allow countries like China (where the demand for this application of Thermodox is particularly large) to allow commercialization.
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