NEW YORK (Reuters) – Michael Tardugno, chief executive of tiny Celsion Corp, is convinced he has a $1 billion cancer therapy on his hands with its ThermoDox treatment for liver cancer.

The company, with a market valuation of only about $70 million and all of 16 employees, is not trying to reinvent the wheel. But by placing a very old cancer drug – the chemotherapy doxorubicin – into a new delivery method and adding heat, Celsion believes it has a recipe for success that can address a large need in cancer.

“Certainly this is a $1 billion drug,” Tardugno told Reuters in an interview.

“We don’t bring the newest biotechnology to market in our drug system,” he said. “We have the ability to take a very promising technology and apply it to an unmet medical need.”

About 750,000 new cases of liver cancer are diagnosed each year. The World Health Organization has predicted that by 2020 liver cancer will surpass lung as the No. 1 cancer worldwide.

ThermoDox is intended for liver cancer patients not eligible for resection surgery.

Tardugno was not ready to predict multiple billions in annual sales just yet and noted that all, of course, depends on positive data from its pivotal late stage trial.

Celsion said it could have initial data from its Phase III trial of 700 patients with primary liver cancer by the end of this year. Given the priority status bestowed upon ThermoDox by health regulators in the United States and elsewhere, Celsion could have its first drug on the market in relatively short order.

“There’s a chance if we execute perfectly here that we could be seeing an approval by the end of 2013,” Tardugno said. “The FDA is giving us every chance possible for rapid trial, rapid reading of the results and a filing strategy that will allow us to bring an NDA (new drug application) to the agency very quickly.”

The FDA and European regulators have agreed that a 33 percent improvement in the time it takes for the disease to worsen – progress-free survival (PFS)- is an approvable goal for Celsion’s therapy in liver cancer. The company will also provide overall survival data when it becomes available.

Once the Phase III data is released, Celsion will be looking for licensing deals with other companies to sell ThermoDox in Asia, Europe and emerging markets.

“There’s more than one multi-national company … that have initiated diligence” regarding potential licensing deals, Tardugno said.

“We believe we can be the best stewards for ThermoDox in the United States,” he said, but added that “positive data will inspire some very serious discussions about a license to the U.S. market.”

The company is also testing ThermoDox in breast cancer that has spread to a patient’s chest wall and in pancreatic cancer.

Celsion shares closed up 3.7 percent to $2.22 on Tuesday, after trading as high as $2.32.

TIGHT REIN ON CASH

When Tardugno become CEO five years ago, Celsion was a medical device company. He sold the device assets to Boston Scientific for about $40 million and used those funds to focus on new drug development.

The company has since sought to spend sparingly and efficiently. It is burning cash at a rate of about $5 million a quarter, which will allow it to complete the pivotal trial without raising more cash. It pays its contract manufacturer for ThermoDox according to production milestones, not time and materials, Tardugno said.

The company has also signed a supply agreement with China’s Zhenjian Hisun Pharmaceutical Co to manufacture ThermoDox for China, where liver cancer is especially prevalent due to high rates of hepatitis. That deal gives Celsion regulatory exclusivity in China, which Tardugno sees as stronger than the country’s patent protections.

As government health plans and private insurers scrutinize the costs of new drugs more closely, ThermoDox could prove to be relatively cost effective as it uses a generic medicine and is administered just once on an outpatient basis, Tardugno said.

ThermoDox encapsulates doxorubicin in a liposome, a type of fat bubble or vessel, that naturally makes its way to the liver after being introduced intravenously. A low level of heat is then applied directly to the cancerous lesion using a process called radiofrequency ablation.

Current treatment for liver cancer that has not spread might use ablation alone on small tumors. Adding the doxorubicin allows treatment of larger tumors because it expands the treatment area.

Celsion believes its unique delivery method can help avoid some of the serious side effects associated with doxorubicin, including heart problems.

“You can deliver a drug directly to a tumor in concentrations that if you had otherwise delivered this concentration systemically you’d kill the patient,” Tardugno explained.

(Reporting By Bill Berkrot; Editing by Michele Gershberg, Gary Hill and Gunna Dickson)