Celsion shares routed after PhIII liver cancer study flops

Celsion was the center of a considerable amount of market buzz over the last year as the small biotech pushed a late-stage cancer drug through a Phase III liver cancer study. Its stock price tripled as investors rode a swell of enthusiasm that Celsion ($CLSN) could beat the tough odds that face any small-cap company trying to make it all the way through an oncology program. 

Until this morning. Celsion announced that its late-stage drug ThermoDox failed the study, unable to demonstrate a significant improvement in progression-free survival. And its stock price instantly popped on the news, dropping 83% in minutes.

"We are disappointed that the HEAT Study did not provide sufficient evidence of clinical effectiveness of ThermoDox as measured by the trial's primary endpoint," said Celsion CEO Michael H. Tardugno. "We will consider following the patients currently enrolled in the HEAT Study to the secondary endpoint, overall survival, and are conducting additional analyses of the data from the trial in order to assess the future strategic value of ThermoDox."

Some traders had been betting that Celsion could beat the Feuerstein-Ratain rule, named in part after TheStreet's Adam Feuerstein, which concludes that biotechs with a market cap under $300 million have had a 100% failure rate with Phase III cancer studies. Just days ago China's Zhejiang Hisun Pharmaceutical provided a $5 million upfront to grab an Asian development deal for ThermoDox.

The traders and Hisun, though, bet wrong and the Feuerstein-Ratain rule remains unbroken. Celsion will release data at an upcoming scientific conference, but company officials said the PFS data wouldn't support a filing in any of the world's biggest markets. Company officials said this morning that they will be in touch with Hisun later today. There's enough cash on hand to get "well into 2014," but a strategic review of its spending plans will be launched.

- here's the press release