Celsion upgrade and expectations

JPMorgan Chase & Co. raised their target price on Celsion on Thursday, to $8.50.

http://www.americanbankingnews.com/2011/07/29/jpmorgan-chase-co-jpm-analysts-raise-price-target-on-celsion-co-clsn-to-8-50/

While typically I would hesitate to even point this out, since Needham is the only analyst thus far to cover the company, I view the addition of JPM to the coverage "stable" as a good thing. With enrollment in the HEAT trial expected to be completed at 600 either this coming week or next, and the 190th Progression Free Survival (PFS) event expected in a similar timeframe, the more eyeballs the better.

They raised another $18M in cash two weeks ago, appearing flush with cash for the first time in years, while maintaining an outstanding share count somewhere around 23M. While they typically have their Q2 earnings call in the first week or so of August, it would not surprise me in the least to see them await these two events before hosting that call - I'm sure the management has no desire to hear all the questions about the trial that they would simply need to be answering within another week!

I still expect a decent runup into August and September; with the price at a post-offering price of $3.83 I'd like to see it hit between $5 and $7 in the next 2-8 weeks. The interim calculation results, still explicitly guided for by the end of September, are expected to take 6-8 weeks after the 600 & 190 events. I'd hazard that the later of those two events will happen by August 12.

I know several readers have advised me they have purchased Celsion shares or options; I still think shares are "safer" but acknowledge the leverage options allow. For me, as a new trade and looking at the October or January calls, I would pay the little extra premium the January strikes demand, for the security of the extra three months.

I hold a pretty large position of CLSN and will be lightening the load in Aug and Sep prior to the interim results.

Regards,
Trond

Today's trades and new Port24 additions

I have two trades for covered call fanatics, today. PIP and VHC both have very good arguments for a trade which yield 14 and 8%, respectively.

PIP is trading at $2.74, with the Aug11 $2.50s selling for $0.65. You'll end up losing 24 cents on the shares, if exercised, but gain the 65 cents on the option, netting 41 cents profit per $2.74 share - over 14% for a month. On the downside (especially important to note if they lose their lawsuit) you are "protected" down to $2.09.

VHC is trading at $34.55 with the Aug11 $35s selling for $2.80. That is an 8% dividend while you wait, with an extra 1% of capital gains if exercised.

I think both of these will end where they are, or higher, on 8/19/11.

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On the Port24 front, I miss having NBIX already, but will not buy in again here.
I bought 2500 CORT at $3.82, 6000 PPHM at $1.78, and 1800 ZIOP at $5.87. I am trying to buy lots of stock that end up somewhere around $10K at a whack.

I sold 20 Jan12 $2.50 calls against 2000 of the 6000 PPHM (Peregrine Pharma) for $25/contract. This is about a 14% return for the 6 month period, with an additional 40% return if exercised. I LOVE this risk/reward ratio, especially since I've only sold options on a third of the position. If the price rises into the $2s again, I will sell more, at much higher premiums.

I also sold 18 Aug11 $6 calls against the ZIOP (Ziopharm) for $25/contract. While "only" a 4% return for the month, I am more than willing to either lose the stock if over $6, or rinse and repeat under $6.

CORT (Corcept) is a stock I will hang onto for a couple months, assuming there will be a runup into the $5s or more as the FDA PDUFA date approaches. I'll sell calls at that point.

Port24:
19.8% annualized return (since 5/14/2008)
$5,468.80 in cash
1500 ARQL (0)
1200 BTX (0)
2600 CLDX (0)
9000 CLSN (0)
1600 DCTH (0)
300 DNDN (0)
1100 EXEL (0)
2000 MITI (0)
7000 NNVC (0)
2500 PIP (0)
1600 SGMO (0)
2500 CORT (0)
6000 PPHM (20)
1800 ZIOP (18)

July options

Oops, neglected to update the options expiration on the Port24 last weekend!

I had four stocks with calls sold against them - DNDN, EXEL, NBIX, and PIP. Dendreon and Exelixis expired under the strike price, so I retain the shares. NBIX and PIP were called away (although I retain some extra PIP, as I did not sell calls against the entire position).

The Port positions are shown below; I have $35,397.31 in cash with a 20.5% annualized return as of 7/22/11.

I do expect Celsion to continue its run; HEAT enrollment and the 190th PFS event should occur within 3 weeks now. I intend (in the Port24) to start taking some profits around the $5 mark - I'd bought lots around $2.64 and $2.31.

Regards,
Trond

# / Ticker / (calls sold)
1500 ARQL (0)
1200 BTX (0)
2600 CLDX (0)
9000 CLSN (0)
1600 DCTH (0)
300 DNDN (0)
1100 EXEL (0)
2000 MITI (0)
7000 NNVC (0)
2500 PIP (0)
1600 SGMO (0)

Celsion HEATing up

Please excuse the title - I promise that is the last time I'll use that atrocious pun.

I spoke to Jeff Church from Celsion Friday morning. Mr Church was the CFO until last Tuesday, when he was promoted to Senior Vice President, Strategy and Investor Relations. I've copied some notes of that chat at the end. Much is not exactly "new" information, but this is the first I've seen of the specific number of patients needed to be considered "registrational" for various Asian countries. My thanks to Mr. Church for taking the time to speak with me!

Please understand that these are MY words, even the text in quotes are my recollection of his words as I took extremely abbreviated notes as we were talking.

Last week the DMC also did a review of the 535 patients already randomized in the HEAT trial and unanimously recommended the trial continue. This gives extra credence to the notion that the upcoming interim look will have no problem at all with a futility analysis. It's interesting to note that this look was not even "supposed" to happen - they had expected enrollment to be completed by now!

A report called "Biorunup" was released on Thursday that calculated a fair market share price of $5.67 to $7.16 at the interim look. I take pride in saying all the way last winter that I expected $5-7 right before the interim look. I still think that is a pretty fair assumption - although I expect several spikes that may take up to $9 or more for brief periods.

Here's to a good-to-great interim look. I am still holding an obscene amount of Celsion in my real money accounts, as well as my Port24 holdings at around 20% and a similar weighting in my Marketocracy mutual fund. I will begin slimming the holdings at around $5.

Regards,
Trond
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Celsion notes 7/15/2011
Telephone chat w/ Jeff Church

Congrats on promotion.

Can only speak to cash as have publicly released - $2M at eoQ1, raised $18M since. Should have “enough” through calendar year but will need more before filing. [guidance was for ~$1.3M/mo, so should have used 5.2M through eom July = 14.8M at this point]

Addressed payables from Q1 filing as liabilities, have some room to do payments, should not be regarded as immediately gone from cash. Most are CRO payments. These will not go away after enrollment completes, as when patients progress and are followed for OS, still make payments. But they’ll “be over the hump of the bell curve”.

I suggested a direct stock purchase program, helps existing shareholders get new shares first as well as gives company a steady, though small, source of capital that remains under their control. Pretty much dismissed this.

600 enrolled by end of July, “maybe a week into Aug.” 190 PFS events “maybe another week”.
Reiterated interim results by end of September.

Japan needs 60 to be “registrational” – how many in other Asian countries? China = 200 (both control and drug arm), Korea 90, Taiwan 90. China “almost there”.

CRLM trial, timing? Been “lots of planning”, takes some time, his view is most important piece is getting sign off by the review. They have that. Expects trial to start “in Q3”.

NDA has three modules: preclinical, manufacturing, clinical trials. They can use Dox safety and equivalency data for preclinical. Manufacturing will take huge amount of work, registrational batches for drug and stability, facility inspection, etc.

Interim enough for approval, “Possible, not a lot of probability”.

HIFU trial – excited for different heating modalities, get to hard to treat areas. [imagine trying RFA inside a bone!]

Q2 update

Well, color me annoyed - I spent nearly an hour writing a post last night, only to have the Post feature not work.

Basically, Port24 is doing well, with an annualized 18.24% return, or $157,121.31. I started about 3 and 1/4 years with $100K, and the goal of achieving 24% a year. So while I am clearly quite short of that, the S&P and Nasdaq, respectively, have returned over that same time period 0.2% and 5.9%.

My marketocracy fund is also doing well: Interestingly it is almost the same return at 18.37% annualized, only over 4 1/4 years.

There was a lot more fluff, but it looks like you'll be spared that, dear reader.

:-)
Trond