A great long-term medical device and biotech company is Celsion Corporation. AMEX: CLN
A nice time to buy right now imo
See this interview:
SPENCER J. VOLK - CELSION - (CLN)
CEO Interview - published 07/03/00
DOCUMENT # KAH604
SPENCER J. VOLK became President, Chief Executive Officer and a Director of Celsion Corporation in June 1997. Mr. Volk is known for his ability to turn around companies, primarily through growth strategies. He has accomplished this for PepsiCo International, where he rose to Senior Vice President for the Western Hemisphere; Church & Dwight (Arm & Hammer), where he was President and Chief Operating Officer; and Tropicana, as President and Chief Executive Officer. Most recently, as President and Chief Operating Officer of Sunbeam International, he expanded the company overseas and achieved record profit levels. Mr. Volk is an experienced senior executive who brings broad management skills and international experience required to build a major medical treatment services company.
Sector: Health Services
TWST: Could we start out with a brief history and overview of Celsion?
Mr. Volk: Celsion was founded in 1982 by Dr. Augustine Cheung, and it was called Cheung Laboratories. It had its IPO in 1985. Since then, over $22 million has been invested by the company in developing focused microwave heat technology to treat cancer and other diseases. The first generation of that equipment was produced in the late 1980s. It was really based on the technology of microwave ovens, which was all that was available at that time, and the whole industry was using that kind of basic technology, which worked pretty well on topical tumors. But there wasn’t a way of focusing the heat inside the body and not burning your skin or the surrounding healthy tissue. As a result, many of the companies — in fact, the majority of them — went broke because they weren’t able to develop a technology that took advantage of the scientific fact that heat kills cancer cells. If you can get the temperature high enough — and it doesn’t actually have to be very high, we’re only talking 117°-118°F — you kill cancer cells forever, and those cells cannot come back. So the question is, how do you get heat into the body without burning someone?
TWST: And the answer is?
Mr. Volk: Dr. Cheung went to MIT, where they were involved in the defense initiative of Star Wars, and they were aiming microwaves at incoming enemy missiles and nullifying the enemy jammers. Why, then, couldn’t we focus microwave heat on a tumor and nullify the excess microwaves that would otherwise burn the skin or surrounding healthy tissue? Dr. Alan Fenn at the Lincoln Labs of MIT said, “Yes, we could do that; it will take a few years, but we can do so.” They basically perfected a means of focusing heat in the body, without burning the surrounding healthy tissue or the skin, and patented it. Celsion acquired a license for the technology on an exclusive worldwide basis, and it has been that technology that we have moved forward and now have in clinical trials at UCLA and the Breast Surgery Center in West Palm Beach. We have completed the attempted ablation; that is, the death of tumors in seven patients so far who were scheduled to have mastectomies due to large-sized tumors. The FDA required us to treat such patients so that after our treatment, the mastectomy would be performed and the cancerous tumor could then be examined pathologically. We have to do a total of 10 patients in our Phase I clinicals, wherein safety and feasibility have to be proven. We have done that to the doctors’ satisfaction. The treatment is feasible and it is safe; nobody’s been burned, nobody’s even been uncomfortable, but, more importantly, in six out of the seven women treated, large tumors have been significantly reduced in size by an average of 50%. This reduction in tumor size occurred after our heat treatment, and the patients then waited an average of five days before having their mastectomies. The FDA required Celsion to chose only women about to undergo mastectomies to be treated. So we are going to complete the Phase I clinicals with three more patients, submit this data to the government after FDA review of our Phase I data, and then go on to Phase II clinicals, which, because this is a medical device, is all that is required to then obtain a premarketing approval (PMA) and move to commercialization in the USA. The hospitals that we will add to our current list of UCLA and the Breast Surgery Center are Harvard’s teaching hospital, Massachusetts General Hospital, as well as Hammersmith Hospital in London, a leading European medical center.
TWST: What other potential uses does this have beyond breast cancer?
Mr. Volk: In fact, our goal is to develop equipment for virtually any cancer in which there is a primary tumor present. Our next project is to develop an application for prostate cancer. Beyond that, we will seek to develop variations of our equipment for lung cancer, liver, kidney, and brain tumors.
TWST: So there really is broad, general use for this approach?
Mr. Volk: Absolutely.
TWST: How big is the potential market for this product?
Mr. Volk: The market is — rather sadly — enormous. As you perhaps know, over 180,000 women are coming down with breast cancer each year, and that number is expected to go up rather dramatically to close to 400,000 by the year 2015-2020, simply because of the boomer generation getting to that very susceptible age.
TWST: So it’s purely demographics.
Mr. Volk: Demographics, exactly. We have similar numbers of men getting prostate cancer. Then we have a very large number of people also getting lung cancer. If you take breast, prostate and lung, that’s 50% of all the cancers that occur — and each of those cancer types is, unfortunately, growing. So the market is enormous, whether here in the US or worldwide.
TWST: And this approach doesn’t eliminate any current treatments.
Mr. Volk: Basically, to give you an idea as to what is currently being done in breast cancer, you have either surgery, which is unfortunately somewhat disfiguring in the case of a lumpectomy and can be quite disfiguring in the case of a mastectomy where the entire breast is removed; then there’s the treatment with either chemotherapy or radiation, both of which have toxic side effects. What Celsion is talking about here is a minimally invasive means of destroying tumors with heat alone with no toxic side effects and no disfigurement. Initially what we believe will happen is that in the case of lumpectomies we will be able to kill the tumor completely — these are the smaller tumors. If further clinical testing bears out our initial results, we believe the surgeon would be able to remove a dead tumor and wouldn’t have to cut out the large area around the tumor that he currently does, trying to capture all the microscopic cancer cells that may be near the tumor. We will have killed those with this heat, so he can cut out a very small area, just the tumor itself, knowing that it’s a dead tumor.
TWST: How far away from turning this whole concept into a commercial product are you?
Mr. Volk: We would hope to have our Phase II clinicals completed at the hospitals I mentioned some time in the latter part of 2001 and, therefore, be able to become commercialized in 2002. A great deal of this has to do with what the FDA decides, but that, we think, would be the kind of timetable, conservatively, that we would be looking at.
TWST: What would be the first commercial use of it?
Mr. Volk: It would definitely be for breast cancer. However, I must mention that while I have focused on what we have been working very hard against, breast cancer, in fact, another utilization of heat we have developed is in the treatment of a male disease problem called benign prostatic hyperplasia (BPH). This is the natural enlargement of the prostate gland that happens to almost every aging male. As the prostate enlarges, it tends to pinch off the urethra that leads from the bladder outward. That results in a number of nasty things happening. The individual has to get up frequently during the night, he has a sense of urgency to urinate, he sometimes has painful urination, has difficulty urinating — and this happens to virtually all men. Fifty percent of all men at the age of 55 have this disease; by the time individuals are 75, 90% of all men have BPH. We have developed an angioplasty-style balloon catheter, which is inserted in the urethra, and which contains a very tiny microwave antenna in the middle of it, and we very gently expand the balloon catheter inside the urethra at the blockage and turn on the microwave heat at the same time. This pushes the walls of the urethra out. The heat then also kills a number of the cells outside the walls of the urethra and denatures the proteins out there so that there is a natural stent, or opening, created within the urethra. Once the catheter has been withdrawn, our Phase I studies indicate that the individual has immediate relief and can get up, walk out — it’s an in-office style of treatment versus today’s microwave treatments, which are either the use of equipment called a Prostatron or that from Urologics. Those also use microwave heat, but they tend to basically cook the prostate and try to rid the individual of the prostate itself by heating it to a very, very high temperature. We don’t do that. That approach frequently requires catheterization for the individual, and you don’t get results until at least six weeks later. Another approach — and a much more popular one — is using drugs. The only problem is that you’ve got to take that pill every day for the rest of your life, and it currently costs about $750-$1,000 a year to do this. All of this, we would intend to overcome with a one-step, walk in, be treated, walk out procedure. We have just completed our Phase I clinicals of 20 patients at the Montefiore Hospital with Dr. Arnold Melman, Chairman of the Department of Urology. We expect to enter BPH Phase IIs very shortly, and the hospitals we will be using will be Walter Reed Medical Center, Johns Hopkins, which is considered by many professionals in the field to be a leading United States hospital, and a number of HCA hospitals, which we’re negotiating with at the moment. We have tremendous enthusiasm and acceptance for this product as well as our breast cancer procedure.
TWST: So there are other things you have near-term, as well.
Mr. Volk: Yes, the BPH in particular.
TWST: You’ve given us your approach. What’s to stand in the way of this becoming readily accepted?
Mr. Volk: When you say “readily accepted,” I assume you mean by the medical fraternity?
TWST: The medical establishment, yes.
Mr. Volk: I don’t believe that there’s anything at the moment in terms of alternatives that would suggest that this wouldn’t be readily accepted. Both of these approaches should be readily accepted. The medical personnel with whom we’ve spoken on both of these approaches are highly enthusiastic — and they’re some of the best people operating in the country today. If a company like ours was working with one of the 10 best hospitals in America today, that would be considered to be very good news. In fact, we’re working with five of the top 10 from Johns Hopkins to Duke Medical Center to UCLA to Sloan-Kettering to Massachusetts General Hospital. So we know that some of the very best medical people in America believe that what we are doing has real merit.
TWST: So there’s a confidence level that it works.
Mr. Volk: Yes, a high degree — and these are the doctors speaking, not me.
TWST: You know the marketplace. Is anybody else developing something similar?
Mr. Volk: Nobody is using what we call the MIT technology, or “Adaptive Phased Array,” which simply means that you’re able to focus the microwave heat and nullify out any of the excess microwaves. There isn’t any other device we know of that does that. Other people are trying to use heat in different ways, but to our knowledge nobody has a means of getting heat to a focused target in the body without burning the individual. There are other approaches; for example, ultrasound has been used. The difficulty with it is that it doesn’t go through either bone or air, so you’ve got a large degree of difficulty in getting to a number of the tumors, for instance, lungs, or those that are around or near significant bone masses. So we aren’t aware at this point of anything that is a considerable threat on the horizon.
TWST: As you look out over the next couple of years, how would you describe the strategy that you’re going to follow?
Mr. Volk: We are basically remaining extremely focused on bringing the two items that I have mentioned to you — breast cancer treatment and benign prostatic hyperplasia treatment — to commercialization. Having said that, we are also working with Duke University on the development of heat-sensitive liposomes. Heat-sensitive liposomes are an improvement over today’s liposomes, since they are made in such a way that they melt at a very specific temperature. Non-heat sensitive liposomes are like little microscopic M&M tablets; instead of having chocolate in the center they’ve got a highly toxic cancer drug. They’re injected intravenously into the body and go through the body benignly to the tumor and then leak out into the tumor in a period of two to four hours; but with non-heat sensitive liposomes, very little of the drug leaks out in an effective manner. Duke has developed a heat-sensitive liposome, which is also injected intravenously into the body. It travels benignly to the tumor site where our heating device (or other heating devices that simply require a relatively low level of temperature) melts the heat-sensitive liposome, and it dumps almost its entire cargo of toxic drugs into the tumor. Duke has measured this in laboratory tests and determined that you get 50 times the amount of drug into the tumor that way as through the use of non-heat sensitive liposomes — and it happens in a matter of minutes instead of hours. Duke has done small animal studies using heat sensitive liposomes. They put a highly virulent laser tumor in the mice, one that would normally kill them in five days. They put a cancer drug, doxorubicin, in their heat sensitive liposomes and injected then into the mice. In 11 out of 11 mice, the tumors regressed completely and 65 days later the tumors had not returned and the mice were all still alive – in 11 out of 11 cases! Now they are going to do tests on larger animals to make certain that toxicity trials are successful, and they believe they will be, simply because the drug is dumped into the tumor and — unlike chemotherapy where you poison the whole body in hopes of killing the tumor — we’re just dumping into the tumor. Duke will complete those studies, and then, assuming positive results, we will submit a new drug application to the FDA and will seek to form alliances with drug companies to develop and test whatever drugs they wish to put into these thermosensitive liposomes. We have both a near-term strategy for proceeding with commercialization as rapidly as possible, and then there’s a developmental strategy working with Duke University — and recently, also with Sloan-Kettering, where they are conducting gene therapy work, and with which Celsion has obtained worldwide rights to their technology. But this is longer term for the company.
TWST: As we look down the road, when will you begin to generate meaningful revenues?
Mr. Volk: I think we can confidently count on the year 2002. I say “confidently” in the belief that the FDA will recognize that what we have tested will be a tremendous boon to women with breast cancer and to men with BPH and that they will give us PMA approval, so that by 2002, we should be well underway, initially with BPH, then toward the latter part of that year with breast cancer therapy.
TWST: Does that require an expedited approach by the FDA to meet that timeline?
Mr. Volk: Yes, it does. We’ve been told that that’s what will happen.
TWST: Is the company positioned and staffed today to accomplish what you need to over the next two or three years?
Mr. Volk: The answer to that is no. That is because up until this year we did not have the funds to be able to operate other than as a virtual company with a very small nucleus of people. But now, through a private placement and a calling of warrants, the company is sufficiently well-situated financially, and it has funds to carry out not only everything that I have described in the way of getting to commercialization as well as new development work in a research sense, but we also now have the funds to start building our staff in a way that will allow us to do the commercialization. We are in the process of doing that right now.
TWST: We’ve seen a lot of alliances formed in the industry over the last couple of years. Are you going to do something of that nature to further what you’re doing?
Mr. Volk: Yes, we definitely see alliances as a very significant aspect of what we’re doing, both in terms of the distribution of our products, where we see major alliances being a possibility for us, and certainly in terms of any development concerning new drugs. There, we will definitely want to talk to various companies. At the moment, we are in very preliminary discussions with two major firms, well known, multi-billion-dollar firms. We don’t know where those discussions will go, but this is the beginning. We anticipate additional discussions just because we are going to need the strength and partnership of large drug companies.
TWST: As you have talked to people about what you’re doing, what has the general reaction been?
Mr. Volk: There are two kinds of people we talk to. The doctors, frankly, are all very excited. They have known about hypothermia in the past but they also knew that the equipment didn’t live up to the potential of the science. Now that they’re hearing that in fact there is equipment that can provide them with what they want, they get very excited. In fact, we’ve had to stop talking to major medical institutions because they all want a piece of equipment and want to start doing their own research on the particular cancer they’re interested in, and we just don’t have the current resources to be able to accommodate all of these keenly interested medical centers. When it comes to the average person in the street — and in particular women with breast cancer or men with BPH — invariably their question is, “When can I be treated?” — for all the obvious reasons!
TWST: The answer is, “not yet.”
Mr. Volk: The answer is, “Unfortunately, not yet.” Until our clinical trials are done, people who would like to be able to utilize these treatments right now are simply unable to.
TWST: As this comes closer to approval, do you become an acquisition target?
Mr. Volk: I guess that’s always a possibility. We are hopeful that the kinds of partnering that we’re able to do may preclude that being a high-likelihood situation, but it’s very difficult to tell in today’s world. Now in terms of what we would like to do strategically, we would very much like to be able to develop these products and take them out commercially before anything like that happens. I mean, we’ve watched other companies with much less in the way of product. For instance, liposomes; one liposome company was acquired with product that really hasn’t proven very successful. A firm paid $500 million for that particular company, and it was a one-product company. We think that we have tremendous potential down the road and would like to be able to develop that potential before anybody comes at us.
TWST: Do you have the management team in place that you need?
Mr. Volk: We have part of the management team in place. As I mentioned, we now have the funds, and we are literally in negotiation with individuals now to beef up our management team in a number of areas — financial, pharmaceutical and engineering. All of those positions are being discussed right now.
TWST: From a risk point of view, what can go wrong in this story?
Mr. Volk: It is conceivable that something could go wrong — though not in the case of BPH, because we know that we’ve got very happy patients in Phase I trials. I don’t know whether the FDA will want us to do 60, 80 or 100 more before they give us a PMA, but we know from our current patients who were treated over 15 months ago and are doing extremely well that they’re very pleased individuals. So we don’t foresee a major problem in terms of acceptability of this as a superior means of treating BPH. Insofar as the breast cancer situation is concerned, we have done extremely well; the doctors need to complete Phase I and move to Phase II where the really exciting work will be done. America’s detection techniques are so great that two-thirds of the women who get breast cancer will require only lumpectomies. We are hopeful of being able to kill those smaller tumors so that surgeons could just remove dead tumors. When it comes to women requiring mastectomies, there is a preliminary indication that larger tumors could be treated with our equipment so that the tumors will be reduced to a size where they will only have to have a lumpectomy instead of a mastectomy. This latter alternative was a surprising development that occurred to the doctors when they saw the rather exceptional results with the first seven patients. But having said all of that, we’ve only done seven patients. Are we certain this will happen with all large tumors? We feel confident, but it’s conceivable that it may not. We don’t think that’s the case, and the doctors don’t think that’s the case, and everybody is getting ready for the Phase II clinicals, so we don’t believe that. But it’s a long-shot possibility. It’s certainly not a probability.
TWST: We’ll just have to sit back and watch.
Mr. Volk: Exactly. We expect Phase II to confirm what we’ve learned in Phase I.
TWST: What’s your current cash situation, and what’s your burn rate?
Mr. Volk: Our cash situation is that we have better than $9.5 million in the bank. Our burn rate is currently approximately $215,000 a month. That, I believe, will move up toward $400,000 a month when we beef up our management team and move into Phase II clinicals. Remember that we have a very small group of people now. The company has a total of 10 full-time employees and an additional 12 or so consultants, either full- or part-time. But we currently have enough money to do everything we need to do for a minimum of another two years, and we think there are a number of other ways of raising funds in the interim.
TWST: How do you feel about the value the market is currently putting on your company?
Mr. Volk: I think that the marketplace is valuing us in anticipation of what it is we’re going to be. We are just now on the American Exchange. We’re not very well known, and a lot of people haven’t considered buying us. That will change as analysts write us up. So I think we have to feel very content with the way the marketplace is valuing the company today.
TWST: Do you think investors understand what you’re doing?
Mr. Volk: I think many of them do. Certainly, many of the investors who have been with us from the beginning for many years do. I think we’ve been fairly successful in being able to get our story out, in particular on breast cancer and, to a lesser extent, on BPH.
TWST: If you were sitting down with investors as you’ve done time and again, what two or three reasons would you give them to go out and buy your stock today?
Mr. Volk: I think the primary one is the fact that we have an exceptional technology being developed by some of the finest hospitals and institutions in the country, and that those two things by themselves provide a high degree of likelihood that at the very least a substantial portion of what we are doing will come to fruition in the marketplace. The market is enormous. We have an exceptional board of directors and we have an extremely good management team. So I think if you have a technology that is going to impact a large market effectively, or is likely to, then I think there is very good reason to be optimistic about the future of the company.
TWST: You’ve been working at it for a while, and it’s finally going to fall your way.
Mr. Volk: These things do take time. But I think if you were talking to our doctors rather than me, I would be sounding like Mr. Rogers relative to the degree of enthusiasm they have for what’s going on. As Dr. Gardner recently said, “I sincerely expect to see outstanding examples of the use of heat killing cancer through our Phase II protocol for breast cancer microwave hyperthermia.”
TWST: Thank you.
SPENCER J. VOLK
President & CEO
Celsion Corp.
10220-I Old Columbia Road
Columbia, MO 21046-1705
(410) 290-5390
(410) 290-5394 - FAX
spencer@celsion.com
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