CPXX: The DSMB Recommends Phase III to Continue

By Grant Zeng, CFA

NASDAQ:CPXX

On Dec. 1, 2014, Celator (CPXX) announced that the independent Data and Safety Monitoring Board (DSMB) for the Company's Phase III clinical study of CPX-351 has completed a second planned safety review and recommended that the study continue as planned without any modifications.

The DSMB decision was based on the safety analysis of the first 225 randomized patients, out of a total of 309 patients who were enrolled in the study. The DSMB will conduct an additional review after all patients become evaluable for safety review.

Celator’s lead clinical program CPX-351is a 5:1 synergistic ratio of cytarabine:daunorubicin, co-encapsulated in a nano-scale liposome, based on Celator's CombiPlextechnology platform.

In December 2012, Celator initiated a pivotal Phase III study of CPX-351 in partnership with the Leukemia & Lymphoma Society® (LLS). This is a multicenter, randomized, open-label Phase III study of CPX-351 versus the current standard of care, conventional cytarabine and daunorubicin therapy (7+3) in patients with untreated high-risk (secondary) acute myeloid leukemia (sAML). Patients were randomized to receive CPX-351 (100u/m²; Days 1, 3, 5) or conventional 7+3 chemotherapy. The primary efficacy endpoint of the study is overall survival. Secondary endpoints include complete response (CR+CRi) rate, duration of remission, 30- and 60-day mortality, event-free survival, aplasia rate, and rate of stem cell transplant.

In December 2013, the independent Data and Safety Monitoring Board (DSMB) reviewed the first 75 patients and recommended the study continue as planned without any modifications.

The DSMB decision is in line with our expectations. It’s not a surprise to us because CPX-351 already demonstrated excellent safety profile in previous clinical studies.

We Look Forward to the Release of Efficacy Data

In October, 2014, Celator completed the targeted enrollment of 300 patients.

The Company is on track to announce remission rate data, a secondary endpoint in 2Q15. Overall survival data is expected to be available in 1Q16 with the NDA anticipated to be filed in the 2H16. We estimate CPX-351 to be approved in late 2017 or early 2018 by the FDA.

Celator is also conducting a Phase II pharmacokinetic and pharmacodynamics (PK/PD) study evaluating the effects of CPX-351 on cardiac repolarization in adult patients with acute hematologic malignancies, including acute myeloid leukemia (AML), acute lymphoblastic leukemia (ALL), and myelodysplastic syndrome (MDS). This study will also include patients with moderate baseline hepatic and renal impairment, extending the range of safety and pharmacokinetic observations to this important group of patients.

This PK/PD study is an open-label, single-arm, thorough PK/PD assessment, which will support the NDA filing for CPX-351.

If approved, CPX-351 may ultimately replace 7+3 on the basis of improved efficacy and acceptable safety.

Celator’s balance sheet remains strong. As of September 30, 2014, Celator held cash and cash equivalents of $20.4 million. With the proceeds from the October financing, the Company should have cash of approximate $28 million at the end of 2014. Current cash balance will allow the Company to carry its operations into the 2nd half of 2016.

We continue to rate Celator shares an Outperform and reiterate our 12-month price target of $7.00 per share.

But keep in mind the risks. Since Celator is still a clinical stage company, there are still clinical and regulatory hurdles for the company to overcome. Even when CPX-351 is approved, there are still commercial risks since CPX-351 will be the first commercial product for the company. In addition, general market condition will also have significant impact on the company’s share price down the road. However, overall, we believe Celator is a name for investors with a long term investment horizon and high risk tolerance.

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