Celsion Corp shares plunged by more than 80 percent after a late-stage study of the company's experimental liver cancer treatment ThermoDox failed to meet the main goal of increasing patients' survival without worsening their cancer.
The stock fell to a low of $1.41 before recovering slightly to trade at $1.46 on heavy volume on the Nasdaq on Thursday.
"I don't believe the data will support (marketing) registration in any of the major markets," Celsion Chief Executive Michael Tardugno said on a conference call.
The trial, named HEAT, consisted of 701 patients across 11 countries and was designed to show a 33 percent improvement in progression-free survival.
Celsion said it was conducting additional analyses of data from the trial to assess the future value of ThermoDox.
Patients on the control arm performed about 20 percent better than expected whereas those on ThermoDox performed worse than anticipated, Roth Capital Partners analyst Joseph Pantginis said, quoting the company.
"We are disappointed by the failure of the HEAT study and we highlight the increased risk around the company's pipeline which is driven by ThermoDox," he said.
ThermoDox is also being tested in mid-stage studies as a drug-delivery method for breast and colorectal cancers.
Celsion CEO Tardugno said the company will continue enrolling patients in the mid-stage breast cancer study.
ThermoDox utilizes a liposome -- a tiny bubble composed of lipids -- as a vehicle to transport a commonly used chemotherapy drug called doxorubicin, directly to the tumor.
Localized heat releases doxorubicin, depositing it in and around the tumor, maximizing the effect of the medication.
The liver-cancer study compared the HEAT results against patients treated with a procedure where tumors are destroyed using electricity, otherwise called radiofrequency ablation.
Pantginis downgraded Celsion's rating to "neutral" from "buy" and slashed his price target on the stock to $1.70 from $10, saying the target is now based solely on the mid-stage study of ThermoDox in breast cancer.
Celsion said it had sufficient cash to cover its expenses well into 2014. It has unaudited cash and investments of about $27 million.
CEO Tardugno said the company will review its colorectal cancer trial in the context of the HEAT results and then decide on whether to continue with the study.
(Reporting By Pallavi Ail in Bangalore; Editing by Roshni Menon and Sreejiraj Eluvangal)