Celsion Corporation (NASDAQ:CLSN) is a company that we have looked at on a couple of occasions over the past six months or so here at Insider Financial and, as part of our most recent coverage, we noted that the company had been a big winner for any of our readers that picked up an exposure to Celsion based on our long-term bull thesis for the stock.
That was at the start of October and – at that time – the company had run to around $6 a share on the back of some translational data from an early stage study of its lead development asset.
Fast forward a month or so (a little more than a month) and the company has taken a real hit, currently trading in and around $2.12 a share. From the price at which we last looked at this one, then, that’s a close to 65% decline.
So what’s next?
Well, first it’s important to address what caused the decline.
This is a development stage biotechnology stock and – as such – it’s subject to some real swings and roundabouts on various types of inputs. Generally, at this end of the market, there are a handful of things that are going to move a company’s share price. Positive data or a regulatory development will push a company up. As will a license deal or a partnership. Anything that implies dilution – equity issue, warrants, preferred, etc. – or a reverse split will push the company’s stock down. As, of course, will the above inputs (trial data, regulatory update) if they hit press as negative.
In this instance, we got some trial data that caused a run (good) and then, shortly after the data hit press, management announced a follow-on offering that would see it offer 2.64 million shares and warrants priced at $2.50, which, at the time of the announcement, was 13% below the company’s previous closing price of $2.86 (bad).
So it’s this raise that was behind the decline.
Of course, dilution is never a good thing. Nobody wants dilution. With that said, if the company that raises the cash can put it to use to get the company to a major growth catalyst, it’s not always all bad.
In order to try and figure out whether that’s the case here, we’ve only got to look at the company’s latest news and its development pipeline.
Specifically, Celsion just announced the submission of a protocol to the FDA in the US that details the strategy and goals for a trial investigating the safety and efficacy of its lead development asset, GEN-1.
The trial is a phase I/II investigation looking at the GEN-1 asset in a target indication of stage III/IV ovarian cancer. That’s an incredibly tough patient population to go after and, outside of investigational therapies, there’s basically no option for these patients outside of palliative care.
The company completed a phase IB trial earlier this year (this was the trial mentioned above, the one that got the stock running at the end of September) and the data turned out pretty well.
The upcoming mid-stage will attempt to build on this early stage data and, if it does, it will strongly validate GEN-01 as a promising development stage asset in what is, as mentioned, an incredibly tough indication with a very large unmet need in place as things stand.
This study, then, is what we are looking at as potentially negating the impact of the dilution that came about on the back of the above-discussed raise. If the company can use the cash raised to get to completion and – subsequently – can put out data that suggests efficacy, we should see a recovery above and beyond the early October highs.
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Disclosure: We have no position in CLSN and have not been compensated for this article.