Celsion Corporation (CLSN) Q4 2021 Earnings Conference Call March 31, 2022 11:00 AM ET Company Participants Monique Kosse - Managing Director, LifeSci Advisors Michael Tardugno - Chairman, President and Chief Executive Officer Jeffrey Church - Senior Vice President, Chief Financial Officer and Corporate Secretary Nicholas Borys - Senior Vice President and Chief Medical Officer Khursheed Anwer - Executive Vice President and Chief Science Officer Conference Call Participants Kumaraguru Raja - Brookline Capita ...

PART I [Business](index=5&type=section&id=ITEM%201.%20BUSINESS) Celsion is a clinical-stage biotech focused on DNA-based immunotherapies, next-gen vaccines, and directed chemotherapies - The company is a clinical-stage biotechnology firm focusing on DNA-based immunotherapies (**GEN-1** for ovarian cancer), next-generation vaccines (**PLACCINE** platform), and directed chemotherapies (**ThermoDox®**)[20](index=20&type=chunk) - The company's business strategy is to advance its product candidates through collaborative arrangements and manage development risks by diversifying its pipeline[69](index=69&type=chunk)[71](index=71&type=chunk) - As of December 31, 2021, the company had **$56.9 million** in cash, cash equivalents, and investments, anticipated to fund operations through the end of **2024**[72](index=72&type=chunk) [Immuno-Oncology Program](index=6&type=section&id=IMMUNO-ONCOLOGY%20Program) The Immuno-Oncology program centers on the TheraPlas platform, with lead candidate **GEN-1** for ovarian cancer, showing promising Phase I/II results - The company's lead immuno-oncology candidate, **GEN-1**, is a DNA-based immunotherapy from the TheraPlas platform for localized ovarian cancer treatment[21](index=21&type=chunk)[27](index=27&type=chunk) - The **OVATION I (Phase I)** study of **GEN-1** showed an **86% objective response rate (ORR)** and **100% disease control rate**, with a median **PFS of 21 months**[32](index=32&type=chunk)[33](index=33&type=chunk) - Interim data from the ongoing **OVATION 2 (Phase I/II)** study showed an **80% complete tumor resection (R0) rate** in the **GEN-1** arm versus **58%** in the control, a **38% improvement**[43](index=43&type=chunk)[44](index=44&type=chunk) - In February 2022, the DSMB recommended the **OVATION 2** study continue as planned, finding the safety profile acceptable with no dose-limiting toxicities[43](index=43&type=chunk) [PLACCINE DNA Vaccine Technology Platform](index=11&type=section&id=PLACCINE%20DNA%20VACCINE%20TECHNOLOGY%20PLATFORM) Celsion is developing the **PLACCINE** platform for novel DNA-based vaccines, initially a next-gen COVID-19 vaccine, showing promising preclinical immunogenicity - The **PLACCINE** platform uses a single multi-cistronic DNA plasmid vector to express multiple pathogen antigens, aiming for broad-spectrum protection and resistance to mutations like SARS-CoV-2[46](index=46&type=chunk)[47](index=47&type=chunk)[55](index=55&type=chunk) - Preclinical in vivo studies showed the **PLACCINE** vaccine produced antibodies and a cytotoxic T-cell response specific to the SARS-CoV-2 spike antigen in mice[56](index=56&type=chunk) - In January 2022, a non-human primate (NHP) challenge study was initiated to evaluate the vaccine's safety, immunogenicity, and protection against SARS-CoV-2[57](index=57&type=chunk) [ThermoDox® Directed Chemotherapy](index=13&type=section&id=THERMODOX%C2%AE%20DIRECTED%20CHEMOTHERAPY) **ThermoDox®**, a heat-activated liposomal doxorubicin, saw its pivotal Phase III OPTIMA study halted in 2020 due to futility, with development continuing via investigator-sponsored studies - The global **Phase III OPTIMA** study of **ThermoDox®** for primary liver cancer was stopped in July 2020 due to futility, based on a DMC recommendation[64](index=64&type=chunk) - In February 2021, the company ceased following patients in the **OPTIMA** Study after independent analyses found no justification for continuation[67](index=67&type=chunk) - **ThermoDox®** is still evaluated in investigator-sponsored studies for pancreatic and metastatic breast cancer[68](index=68&type=chunk)[70](index=70&type=chunk) [Government Regulation](index=17&type=section&id=GOVERNMENT%20REGULATION) Celsion's products face extensive FDA and international regulation, with **GEN-1** receiving Fast Track and both **GEN-1** and **ThermoDox®** gaining Orphan Drug Designation - The company's products are regulated as drugs and biological products by the **FDA**, requiring extensive preclinical and multi-phase clinical trials for approval[76](index=76&type=chunk)[77](index=77&type=chunk) - **GEN-1** received **Fast Track designation** from the **FDA** in January 2021, expediting development and review for unmet medical needs[93](index=93&type=chunk) - Both **GEN-1** (ovarian cancer) and **ThermoDox®** (hepatocellular carcinoma) have **Orphan Drug Designation** from the **FDA**, offering potential market exclusivity[98](index=98&type=chunk) [Intellectual Property](index=33&type=section&id=INTELLECTUAL%20PROPERTY) Celsion's IP portfolio includes owned and licensed patents for **ThermoDox®** (expiring by 2026) and **TheraPlas/GEN-1** (expiring by 2028), supplemented by trade secrets - The **ThermoDox®** technology is protected by licensed and owned patents with expiration dates extending to **2026**[145](index=145&type=chunk) - The **TheraPlas** technology platform, including **GEN-1**, is covered by owned U.S. and international patents with expiration dates ranging from **2020 to 2028**[146](index=146&type=chunk) [Recent Events](index=34&type=section&id=RECENT%20EVENTS) In early 2022, Celsion raised **$28.5 million** via preferred stock, executed a **15-for-1 reverse stock split**, and subsequently redeemed the preferred stock - In January 2022, the company raised gross proceeds of approximately **$28.5 million** through the sale of Series A and Series B Convertible Redeemable Preferred Stock[153](index=153&type=chunk) - On February 28, 2022, the company implemented a **15-for-1 reverse stock split** of its common stock[155](index=155&type=chunk) - On March 3, 2022, the company redeemed all outstanding shares of its Series A and Series B Preferred Stock for cash, retiring the entire class[154](index=154&type=chunk) [Risk Factors](index=36&type=section&id=ITEM%201A.RISK%20FACTORS) Celsion faces significant risks including historical losses, high drug development failure rates, capital raising dependency, regulatory hurdles, and reliance on third parties - The company has a history of significant operating losses, with an accumulated deficit of **$333 million** as of December 31, 2021[160](index=160&type=chunk) - Drug development is highly uncertain, exemplified by **ThermoDox®'s** failure to meet primary endpoints in two **Phase III** trials[162](index=162&type=chunk) - The company will need to raise additional capital to fund future operations, which may not be available on favorable terms[164](index=164&type=chunk) - The **COVID-19** pandemic poses a risk of disrupting preclinical studies, clinical trials, and regulatory timelines[170](index=170&type=chunk)[173](index=173&type=chunk) - The company relies on third parties for clinical trials and manufacturing, making it vulnerable to partner delays or failures[188](index=188&type=chunk)[193](index=193&type=chunk) [Properties](index=61&type=section&id=ITEM%202.%20PROPERTIES) Celsion leases two primary facilities: a 9,850 sq ft corporate office in Lawrenceville, NJ (lease to Sept 2023), and 11,246 sq ft of research/lab space in Huntsville, AL - The company leases a **9,850 square foot** corporate office in Lawrenceville, NJ, with the lease term extending to **September 2023**[263](index=263&type=chunk) - The company leases approximately **11,246 square feet** of office and lab space in Huntsville, Alabama, under two separate agreements[264](index=264&type=chunk) Future Lease Payments | Future Lease Payments | Amount ($) | | :--- | :--- | | 2022 | $601,495 | | 2023 | $238,609 | | **Total Future Payments** | **$840,104** | [Legal Proceedings](index=61&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) Celsion is involved in three legal proceedings related to **ThermoDox®** and the **OPTIMA** study: a securities class action, a derivative lawsuit, and a books and records demand - The company is defending a putative securities class action (**Spar v. Celsion**) alleging false and misleading statements regarding **ThermoDox®**[267](index=267&type=chunk) - A derivative shareholder lawsuit (**Fidler v. Tardugno**) has been filed against certain directors and officers, alleging breach of fiduciary duty related to statements about **ThermoDox®**[268](index=268&type=chunk) - A complaint regarding a corporate books and records demand (**Pacheco v. Celsion**) has been filed concerning the **OPTIMA** Study[269](index=269&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=63&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Celsion's common stock trades on The Nasdaq Capital Market under "CLSN"; the company has never paid cash dividends and plans to retain earnings for growth - The company's common stock trades on The Nasdaq Capital Market under the ticker symbol **"CLSN"**[274](index=274&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future, retaining earnings to fund business growth[276](index=276&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=64&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Celsion's 2021 net loss was **$20.8 million**, an improvement from 2020, with cash and investments increasing to **$56.9 million**, sufficient through 2024 [Results of Operations](index=85&type=section&id=Results%20of%20Operations) For 2021, Celsion's net loss was **$20.8 million**, a slight improvement from 2020, due to reduced R&D expenses, offset by higher G&A costs and a **$2.0 million** goodwill impairment Financial Performance (2021 vs 2020) | Financial Metric | 2021 ($M) | 2020 ($M) | Change ($M) | | :--- | :--- | :--- | :--- | | **Net Loss** | **($20.8)** | **($21.5)** | **$0.7 Decrease** | | Revenue | $0.5 | $0.5 | No Change | | R&D Expenses | $10.6 | $11.3 | $0.7 Decrease | | G&A Expenses | $10.9 | $7.6 | $3.3 Increase | - The decrease in R&D expenses was primarily due to a **$1.2 million** reduction in costs associated with the **OPTIMA** Study, which was halted in 2020[369](index=369&type=chunk) - The increase in G&A expenses was mainly due to higher non-cash stock compensation (**$1.3 million**), professional fees including legal costs (**$1.5 million**), and insurance premiums (**$0.3 million**)[370](index=370&type=chunk) - A non-cash goodwill impairment charge of **$2.0 million** was recognized in Q4 2021 due to deterioration in biotech public capital markets[375](index=375&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=87&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) As of December 31, 2021, Celsion's cash, cash equivalents, and investments totaled **$56.9 million**, up from **$17.2 million** in 2020, sufficient to fund operations through 2024 Financial Position (as of Dec 31) | Metric | Dec 31, 2021 ($M) | Dec 31, 2020 ($M) | | :--- | :--- | :--- | | Cash, Cash Equivalents & Investments | $56.9 | $17.2 | | Net Working Capital | $45.1 | $12.0 | | Accumulated Deficit | $333 | $312 | - Net cash used in operating activities was **$16.2 million** for 2021[385](index=385&type=chunk) - The company believes its current capital resources are sufficient to fund operations through **2024**[385](index=385&type=chunk) [Financial Statements and Supplementary Data](index=88&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents Celsion's audited consolidated financial statements for 2021 and 2020, including the independent auditor's report highlighting critical audit matters Key Financial Data (2021 vs 2020) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | **Balance Sheet ($M)** | | | | Total Assets | $74.0 | $37.5 | | Total Liabilities | $18.3 | $18.9 | | Total Stockholders' Equity | $55.8 | $18.6 | | **Statement of Operations ($M)** | | | | Net Loss | ($20.8) | ($21.5) | | Net Loss Per Share | ($3.83) | ($10.08) | | **Statement of Cash Flows ($M)** | | | | Net Cash Used in Operating Activities | ($16.2) | ($15.6) | | Cash at End of Year | $25.6 | $17.2 | - The independent auditor, WithumSmith+Brown, PC, identified the valuation of goodwill, in-process research and development (**IPR&D**), and the earn-out milestone liability as critical audit matters due to significant estimation and subjective judgment[542](index=542&type=chunk)[543](index=543&type=chunk)[546](index=546&type=chunk)[549](index=549&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=90&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Celsion's Board of Directors has seven members, including Chairman and CEO Michael H. Tardugno, and operates with four committees, emphasizing good governance practices - The Board of Directors has seven members, with **Michael H. Tardugno** serving as Chairman, President, and CEO[403](index=403&type=chunk)[405](index=405&type=chunk)[406](index=406&type=chunk) - The Board has four committees: Audit, Compensation, Nominating and Governance, and Science and Technology[422](index=422&type=chunk) - The company emphasizes good governance, with six of seven directors being independent, annual board committee self-evaluations, and an executive compensation clawback policy[424](index=424&type=chunk) [Executive Compensation](index=96&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Celsion's executive compensation is performance-based, with CEO Michael H. Tardugno's 2021 total compensation at **$2.33 million**, tied to corporate objectives 2021 Named Executive Officer Compensation | Name | Position | Total Compensation ($) | | :--- | :--- | :--- | | Michael H. Tardugno | Chairman, President & CEO | $2,333,125 | | Nicholas Borys | Executive VP & CMO | $789,947 | | Khursheed Anwer | Executive VP & CSO | $1,020,478 | | Jeffrey Church | Executive VP & CFO | $1,087,963 | - The compensation philosophy emphasizes performance-based, "at-risk" pay; in 2021, **74%** of the CEO's target total direct compensation was performance-based or stock-linked[449](index=449&type=chunk) - The 2021 incentive plan objectives included product development, research, finance, and corporate development goals, with financial and business development objectives met, but not research or bonus objectives[466](index=466&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=112&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) As of March 30, 2022, Celsion's directors and executive officers as a group beneficially owned **5.57%** of common stock, with **512,884** securities available for future issuance under equity plans - As of March 30, 2022, all directors and executive officers as a group beneficially owned **321,557 shares**, representing **5.57%** of the outstanding common stock[516](index=516&type=chunk) - CEO **Michael H. Tardugno** was the largest individual insider holder, with beneficial ownership of **150,359 shares**, or **2.61%** of the company[516](index=516&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2021) | Plan Category | Securities to be Issued Upon Exercise | Securities Remaining for Future Issuance | | :--- | :--- | :--- | | Approved by security holders | 433,676 | 512,884 | | Not approved by security holders | 9,332 | 0 | | **Total** | **443,008** | **512,884** | [Principal Accountant Fees and Services](index=115&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Withum, Brown + Smith PC served as Celsion's independent auditor, with total fees of **$166,384** in 2021 and **$179,000** in 2020, all pre-approved by the Audit Committee Accountant Fees (2021 vs 2020) | Fee Category | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Audit Fees | $124,500 | $101,000 | | Audit-Related Fees | $17,550 | $69,000 | | Tax Fees | $24,334 | $9,000 | | **Total Fees** | **$166,384** | **$179,000** | - The company's independent accountant is **Withum, Brown + Smith PC**[521](index=521&type=chunk) - All audit and non-audit services were pre-approved by the Audit Committee in accordance with its policy[524](index=524&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=117&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the consolidated financial statements and the independent auditor's report, along with a comprehensive list of exhibits including corporate documents and material agreements - This section contains the list of consolidated financial statements filed with the report[526](index=526&type=chunk)[527](index=527&type=chunk) - A detailed list of exhibits is provided, including key corporate documents, material agreements (such as the Asset Purchase Agreement with EGEN and license agreements with Duke University), and executive employment agreements[529](index=529&type=chunk)[530](index=530&type=chunk)[531](index=531&type=chunk)

Celsion Corporation (CLSN) Q3 2021 Earnings Conference Call November 15, 2021 11:00 AM ET Company Participants Kim Golodetz – HLA Michael Tardugno – Chairman, CEO and President Jeffrey Church – Chief Financial Officer Nicholas Borys – Chief Medical Officer Khursheed Anwer – Chief Science Officer Conference Call Participants Kumar Raja – Brookline Capital Markets David Bautz – Zacks Small Cap Research Mike Worth – Celsion Operator Good morning. My name is Bobby, and I will be your operator today. At this ti ...

PART I: FINANCIAL INFORMATION Presents Celsion's unaudited condensed consolidated financial statements and notes on business, policies, and financial condition for Q3 2021 and 2020 [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents Celsion's unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and equity, with detailed notes for Q3 2021 and 2020 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Summarizes Celsion's financial position, including assets, liabilities, and stockholders' equity, as of September 30, 2021, and December 31, 2020 | Metric | September 30, 2021 (Unaudited) | December 31, 2020 | | :----------------------------------- | :----------------------------- | :------------------ | | Total Assets | **$79,468,517** | **$37,527,338** | | Total Liabilities | **$20,127,336** | **$18,916,257** | | Total Stockholders' Equity | **$59,341,181** | **$18,611,081** | - Total assets **increased significantly** from **$37.5 million** at December 31, 2020, to **$79.5 million** at September 30, 2021, primarily driven by an increase in cash and cash equivalents and investment in debt securities[14](index=14&type=chunk) - Stockholders' equity **more than tripled** from **$18.6 million** at December 31, 2020, to **$59.3 million** at September 30, 2021, largely due to increased additional paid-in capital[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details Celsion's revenues, expenses, and net loss for the three and nine months ended September 30, 2021 and 2020 | Metric (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Licensing Revenue | **$125** | **$125** | **$375** | **$375** | | Total Operating Expenses | **$5,187** | **$4,285** | **$15,891** | **$14,068** | | Loss from Operations | **$(5,062)** | **$(4,160)** | **$(15,516)** | **$(13,693)** | | Net Loss | **$(5,411)** | **$(8,072)** | **$(16,548)** | **$(18,471)** | | Net Loss per Common Share (Basic and Diluted) | **$(0.06)** | **$(0.24)** | **$(0.21)** | **$(0.62)** | - Net loss **decreased** for both the three-month period (from **$8.1 million** to **$5.4 million**) and nine-month period (from **$18.5 million** to **$16.5 million**) ended September 30, 2021, compared to the prior year, despite an increase in total operating expenses[20](index=20&type=chunk) - Basic and diluted net loss per common share **improved significantly** from **$(0.24)** to **$(0.06)** for the three-month period and from **$(0.62)** to **$(0.21)** for the nine-month period, primarily due to a higher weighted average number of shares outstanding[20](index=20&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Reports Celsion's comprehensive loss, including net loss and other comprehensive income/loss items, for the three and nine months ended September 30, 2021 and 2020 | Metric (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Loss | **$(5,410,544)** | **$(8,071,596)** | **$(16,547,944)** | **$(18,471,409)** | | Change in unrealized (losses) gains on available for sale securities, net | **$5,909** | **$(7,866)** | **$2,139** | **$(42,778)** | | Comprehensive Loss | **$(5,404,635)** | **$(8,079,462)** | **$(16,545,805)** | **$(18,514,187)** | - The company reported a comprehensive loss of **$(16.5) million** for the nine months ended September 30, 2021, an improvement from **$(18.5) million** in the prior year, primarily influenced by the net loss and changes in unrealized gains/losses on available-for-sale securities[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Outlines Celsion's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2021 and 2020 | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | **$(11,135)** | **$(11,887)** | | Net cash (used in) provided by investing activities | **$(29,148)** | **$7,929** | | Net cash provided by financing activities | **$54,768** | **$15,422** | | Change in cash, cash equivalents and restricted cash | **$14,485** | **$11,464** | | Cash, cash equivalents and restricted cash at end of period | **$31,649** | **$18,340** | - Net cash provided by financing activities **increased significantly** to **$54.8 million** in the first nine months of 2021, up from **$15.4 million** in 2020, primarily due to proceeds from common stock sales[26](index=26&type=chunk) - Investing activities shifted from providing **$7.9 million** in cash in 2020 to using **$29.1 million** in 2021, mainly due to increased purchases of investment securities[26](index=26&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Presents the changes in Celsion's stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit, for the nine months ended September 30, 2021 | Metric (in thousands) | Sep 30, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Common Stock (shares) | **86,557,736** | **40,701,022** | | Common Stock (amount) | **$866** | **$407** | | Additional Paid-in Capital | **$387,107** | **$330,290** | | Accumulated Deficit | **$(328,548)** | **$(312,000)** | | Total Stockholders' Equity | **$59,341** | **$18,611** | - Total stockholders' equity **increased substantially** from **$18.6 million** at January 1, 2021, to **$59.3 million** at September 30, 2021, driven by **significant** equity financing activities, including sales of common stock and warrant exercises[34](index=34&type=chunk) - The number of outstanding common shares **more than doubled** from **40.7 million** at January 1, 2021, to **86.6 million** at September 30, 2021, reflecting **substantial** equity issuances[34](index=34&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Business Description](index=13&type=section&id=Note%201.%20Business%20Description) Describes Celsion Corporation's core business as a clinical-stage biotechnology company focused on developing immunotherapies, vaccines, and chemotherapies - Celsion Corporation is a clinical-stage biotechnology company focused on developing DNA-based immunotherapies, next-generation vaccines, and directed chemotherapies[35](index=35&type=chunk) - Key product candidates include GEN-1 (DNA-based immunotherapy for ovarian cancer) and ThermoDox (heat-activated liposomal doxorubicin for various cancer indications)[35](index=35&type=chunk) - The company also has two feasibility-stage platform technologies for novel nucleic acid-based immunotherapies and vaccines, utilizing synthetic, non-viral vectors[35](index=35&type=chunk) [Note 2. Basis of Presentation](index=13&type=section&id=Note%202.%20Basis%20of%20Presentation) Explains the accounting principles and assumptions used in preparing the unaudited condensed consolidated financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations, with all **significant** intercompany balances and transactions eliminated[36](index=36&type=chunk) - Management's estimates and assumptions are used in preparing the financial statements, and actual results could differ materially[38](index=38&type=chunk) - The company continues to monitor the impact of the COVID-19 pandemic on its financial condition, operations, and asset valuations, noting potential future impacts[38](index=38&type=chunk) [Note 3. Financial Condition and Business Plan](index=13&type=section&id=Note%203.%20Financial%20Condition%20and%20Business%20Plan) Discusses Celsion's financial position, cumulative losses, capital resources, and strategic plans, including the halt of the OPTIMA Study - Celsion has incurred cumulative net losses of approximately **$329 million** since inception and expects operating losses to continue due to ongoing R&D and product development efforts[39](index=39&type=chunk)[40](index=40&type=chunk) | Metric | September 30, 2021 | | :------------------------------------------------ | :------------------- | | Cash and cash equivalents, restricted cash, short-term investments and interest receivable | **$60.6 million** | - The company believes it has **sufficient capital** resources to fund operations through the end of **2024**, supported by recent financings and potential future sales of New Jersey net operating losses[45](index=45&type=chunk) - The global Phase III OPTIMA Study for ThermoDox in HCC was **halted** in February 2021 due to futility, following a DMC recommendation[42](index=42&type=chunk) [Note 4. New Accounting Pronouncements](index=15&type=section&id=Note%204.%20New%20Accounting%20Pronouncements) Outlines the adoption and evaluation of new accounting standards by Celsion Corporation - The company adopted ASU 2016-13 (Credit Losses) and ASU 2019-12 (Income Taxes) in Q1 2021, neither of which had a material impact on its consolidated financial statements[48](index=48&type=chunk)[49](index=49&type=chunk) - Celsion is currently evaluating the effects of adopting ASU 2020-04 (Reference Rate Reform) and ASU 2021-04 (Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options)[50](index=50&type=chunk)[51](index=51&type=chunk) [Note 5. Restricted Cash](index=16&type=section&id=Note%205.%20Restricted%20Cash) Details the nature and amount of Celsion's restricted cash, primarily held as collateral for a loan facility - As a condition of the **$10 million** SVB Loan Facility, Celsion is required to maintain **$6.0 million** in a segregated money market account as cash collateral, which is classified as restricted cash[52](index=52&type=chunk) | Metric | September 30, 2021 | September 30, 2020 | | :-------------------------- | :------------------- | :------------------- | | Cash and cash equivalents | **$25,648,849** | **$18,339,728** | | Money market investments, restricted | **$6,000,000** | - | | Total | **$31,648,849** | **$18,339,728** | [Note 6. Net Loss per Common Share](index=16&type=section&id=Note%206.%20Net%20Loss%20per%20Common%20Share) Explains the calculation of basic and diluted net loss per common share, noting anti-dilutive potential common shares - Basic and diluted loss per share were the same for the three and nine months ended September 30, 2021 and 2020, as potential common shares were anti-dilutive[55](index=55&type=chunk) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss per common share (Basic and diluted) | **$(0.06)** | **$(0.24)** | **$(0.21)** | **$(0.62)** | | Weighted average shares outstanding (Basic and diluted) | **86,557,736** | **34,112,254** | **79,667,613** | **29,934,764** | [Note 7. Investment in Debt Securities-Available for Sale](index=16&type=section&id=Note%207.%20Investment%20in%20Debt%20Securities-Available%20for%20Sale) Provides details on Celsion's investment in debt securities classified as available-for-sale, including fair values and investment income - As of September 30, 2021, investments in debt securities available for sale totaled **$28.9 million**, consisting of government-backed debt securities and commercial paper, with unrealized gains and losses reported in accumulated other comprehensive loss[56](index=56&type=chunk)[59](index=59&type=chunk) | Investment Category | September 30, 2021 Fair Value | | :------------------ | :---------------------------- | | Commercial paper | **$7,784,894** | | Government backed debt securities | **$21,079,470** | | Total | **$28,864,364** | | Investment Income (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest and dividends accrued and paid | **$6** | **$3** | **$10** | **$66** | | Realized (losses) gains | **$(3)** | **$7** | **$(5)** | **$53** | | Investment income, net | **$4** | **$10** | **$6** | **$119** | [Note 8. Fair Value Measurements](index=18&type=section&id=Note%208.%20Fair%20Value%20Measurements) Describes Celsion's fair value measurements for financial and non-financial assets and liabilities, categorized by a three-level hierarchy - The company uses a three-level hierarchy for fair value measurements, with investments in debt securities classified as Level 2[61](index=61&type=chunk)[63](index=63&type=chunk) - In-process R&D and earn-out milestone liability are classified as Level 3, valued using **significant** unobservable inputs[64](index=64&type=chunk) | Asset/Liability | Fair Value (Sep 30, 2021) | Level 1 | Level 2 | Level 3 | | :----------------------------------- | :------------------------ | :------ | :------ | :------ | | Investment in debt securities - available for sale | **$28,864,364** | **$0** | **$28,864,364** | **$0** | | In-process R&D | **$13,366,234** | **$0** | **$0** | **$13,366,234** | | Earn-out milestone liability | **$7,345,000** | **$0** | **$0** | **$7,345,000** | [Note 9. Intangible Assets](index=19&type=section&id=Note%209.%20Intangible%20Assets) Details Celsion's intangible assets, including acquired in-process R&D and goodwill, and their impairment status - Acquired in-process research and development (IPR&D) from EGEN, Inc. includes TheraPlas and TheraSilence platforms, with the ovarian cancer indication valued at **$13.3 million** and not impaired as of September 30, 2021[66](index=66&type=chunk)[67](index=67&type=chunk) - The GBM product candidate IPR&D, originally valued at **$9.4 million**, was fully impaired and written off in Q3 2020, resulting in a **$2.4 million** non-cash charge[68](index=68&type=chunk) - Goodwill of approximately **$2.0 million**, resulting from the EGEN acquisition, was not impaired as of September 30, 2021[70](index=70&type=chunk) | Intangible Asset | Balance at Jan 1, 2021, net | Amortization | Balance at Sep 30, 2021, net | | :----------------- | :-------------------------- | :----------- | :--------------------------- | | IPR&D | **$13,366,234** | - | **$13,366,234** | | Goodwill | **$1,976,101** | - | **$1,976,101** | | Covenant Not To Compete | **$113,660** | **$(113,660)** | **$0** | [Note 10. Accrued Liabilities](index=20&type=section&id=Note%2010.%20Accrued%20Liabilities) Presents a breakdown of Celsion's accrued liabilities as of September 30, 2021, and December 31, 2020 | Accrued Liability | September 30, 2021 | December 31, 2020 | | :------------------------------------------ | :------------------- | :------------------- | | Amounts due to contract research organizations and other contractual agreements | **$1,276,317** | **$636,000** | | Accrued payroll and related benefits | **$1,247,460** | **$1,736,271** | | Accrued professional fees | **$265,350** | **$66,850** | | Accrued interest | **$16,250** | - | | Other | **$19,411** | **$19,411** | | Total | **$2,824,788** | **$2,458,532** | - Total other accrued liabilities **increased** to **$2.8 million** at September 30, 2021, from **$2.5 million** at December 31, 2020, primarily due to higher amounts due to contract research organizations and professional fees[72](index=72&type=chunk) [Note 11. Notes Payable](index=21&type=section&id=Note%2011.%20Notes%20Payable) Details Celsion's loan facility with Silicon Valley Bank, including terms, interest rates, and repayment schedule - In June 2021, Celsion entered into a **$10 million** loan facility with Silicon Valley Bank (SVB), using **$6 million** to retire all outstanding indebtedness with Horizon Technology Finance Corporation[73](index=73&type=chunk) - The SVB Loan Facility bears interest at a WSJ Prime-based variable rate (currently **3.25%**), with interest-only payments for the first **24 months**, followed by a **24-month** amortization period[74](index=74&type=chunk) - The company recognized a **$234,419** loss on the termination of the Horizon Credit Agreement during the nine months ended September 30, 2021, which included early termination and end-of-term fees[87](index=87&type=chunk) | SVB Loan Facility Future Principal Payments | Amount | | :---------------------------------------- | :------- | | 2022 | **$0** | | 2023 | **$750,000** | | 2024 | **$3,000,000** | | 2025 and thereafter | **$2,250,000** | | Subtotal of future principal payments | **$6,000,000** | | Unamortized debt premium, net | **$(191,226)** | | Total | **$5,808,774** | [Note 12. Stockholders' Equity](index=23&type=section&id=Note%2012.%20Stockholders'%20Equity) Describes Celsion's equity financing activities, including shelf registration, direct offerings, and warrant exercises, impacting common stock and additional paid-in capital - Celsion filed a new **$100 million** shelf registration statement on Form S-3 in March 2021, declared effective on March 30, 2021, allowing for the issuance of common stock, preferred stock, or warrants[89](index=89&type=chunk) - During the first nine months of 2021, the company raised approximately **$6.9 million** in gross proceeds from its Capital on Demand facility, **$35 million** from a January 2021 registered direct offering, **$15 million** from an April 2021 registered direct offering, and **$1.5 million** from warrant exercises[91](index=91&type=chunk)[95](index=95&type=chunk)[97](index=97&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - The LPC Purchase Agreement with Lincoln Park Capital Fund, LLC, under which Celsion could sell up to **$26.0 million** in shares, was terminated in January 2021[100](index=100&type=chunk) [Note 13. Stock-Based Compensation](index=25&type=section&id=Note%2013.%20Stock-Based%20Compensation) Details Celsion's stock-based compensation plans, including amendments to the incentive plan, outstanding awards, and recognized compensation costs - The 2018 Stock Incentive Plan was amended in June 2021, increasing available shares by **7.7 million** to a total of **14.1 million** for equity awards[102](index=102&type=chunk) | Metric | Sep 30, 2021 | Jan 1, 2021 | | :-------------------------------- | :----------- | :---------- | | Stock Options Outstanding | **6,602,705** | **4,624,725** | | Restricted Stock Awards Outstanding | **10,750** | **2,750** | | Compensation Cost (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total stock-based compensation cost | **$701** | **$417** | **$3,074** | **$1,448** | | R&D portion | **$241** | **$164** | **$1,123** | **$542** | | G&A portion | **$459** | **$253** | **$1,950** | **$906** | - As of September 30, 2021, there was **$2.4 million** of unrecognized compensation cost, expected to be recognized over a weighted-average period of **1.0 years**[110](index=110&type=chunk) [Note 14. Earn-Out Milestone Liability](index=27&type=section&id=Note%2014.%20Earn-Out%20Milestone%20Liability) Explains the earn-out milestone liability related to the Ovarian Cancer Indication, including its fair value and changes recognized - The earn-out milestone liability related to the Ovarian Cancer Indication was modified in March 2019, offering two payment options: **$7.0 million** in cash or **$12.4 million** in cash/stock[113](index=113&type=chunk)[116](index=116&type=chunk) | Metric | September 30, 2021 | December 31, 2020 | | :-------------------------------- | :------------------- | :------------------- | | Fair value of earn-out milestone liability | **$7,345,000** | **$7,018,000** | - A non-cash charge of **$0.3 million** was recognized for the nine months ended September 30, 2021, due to changes in the fair value of the earn-out milestone liability, with both payment options weighted at **50% probability**[113](index=113&type=chunk)[115](index=115&type=chunk) [Note 15. Warrants](index=28&type=section&id=Note%2015.%20Warrants) Summarizes Celsion's warrant activity, including outstanding warrants, exercises, and weighted average exercise price | Warrant Activity | Number of Warrants Issued | Weighted Average Exercise Price | | :------------------------------- | :------------------------ | :------------------------------ | | Warrants outstanding at Dec 31, 2020 | **3,853,566** | **$1.35** | | Warrants exercised during 9M 2021 | **(1,216,667)** | **$1.24** | | Warrants outstanding at Sep 30, 2021 | **2,636,899** | **$1.40** | - As of September 30, 2021, **2.6 million warrants** were outstanding with a weighted average exercise price of **$1.40** and a remaining contractual **term of 4.1 years**[117](index=117&type=chunk) [Note 16. Leases](index=28&type=section&id=Note%2016.%20Leases) Details Celsion's operating lease arrangements for office and R&D facilities, including lease liabilities and expenses - Celsion has operating leases for office and R&D facilities in New Jersey and Alabama, with the New Jersey lease extended to September 1, 2023, and the Alabama lease amended in 2021[118](index=118&type=chunk)[119](index=119&type=chunk) - The adoption of ASC Topic 842 in January 2019 resulted in the recognition of right-of-use (ROU) assets and lease liabilities for operating leases on the balance sheet[120](index=120&type=chunk) | Lease Metric | September 30, 2021 | | :-------------------------- | :------------------- | | Total lease liabilities | **$907,782** | | Weighted average remaining life | **1.7 years** | | Weighted average discount rate | **8.28%** | | Operating lease expense (9M 2021) | **$413,577** | [Note 17. Technology Development and Licensing Agreements](index=29&type=section&id=Note%2017.%20Technology%20Development%20and%20Licensing%20Agreements) Describes Celsion's commercial supply and technology development agreements, particularly with Zhejiang Hisun Pharmaceutical Co. Ltd - Celsion has a long-term commercial supply agreement with Zhejiang Hisun Pharmaceutical Co. Ltd. (Hisun) for ThermoDox production in China, with Hisun responsible for technical and regulatory support[122](index=122&type=chunk) - A **$5.0 million** non-refundable technology development fee received from Hisun in 2013 for ThermoDox development in China is being recognized as revenue ratably over a **10-year term** through 2022[123](index=123&type=chunk)[126](index=126&type=chunk) - An expanded partnership with Hisun for GEN-1 (IL-12 immunotherapy) includes technology transfer for clinical and commercial manufacturing and supply in Greater China, with potential for global expansion[125](index=125&type=chunk)[128](index=128&type=chunk) [Note 18. Commitments and Contingencies](index=30&type=section&id=Note%2018.%20Commitments%20and%20Contingencies) Outlines Celsion's legal commitments and contingencies, including shareholder lawsuits and a corporate books and records demand - A shareholder derivative and putative class action lawsuit (O'Connor v. Braun et al.) regarding the 2018 Stock Incentive Plan was settled in April 2020, involving repricing of stock options and payment of **$187,500** in legal fees[127](index=127&type=chunk)[129](index=129&type=chunk) - Two additional lawsuits were filed: a securities class action (Spar v. Celsion Corporation, et al.) in October 2020 alleging misleading statements about ThermoDox, and a derivative shareholder lawsuit (Fidler v. Michael H. Tardugno et al.) in February 2021 alleging breach of fiduciary duty related to ThermoDox[130](index=130&type=chunk)[131](index=131&type=chunk) - A complaint regarding a corporate books and records demand (Pacheco v. Celsion Corporation) was filed in August 2021 concerning the OPTIMA Study[132](index=132&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Celsion's financial condition, operations, and strategic initiatives, covering clinical pipeline, R&D, financing, and liquidity for Q3 2021 and 2020 [Strategic and Clinical Overview](index=32&type=section&id=Strategic%20and%20Clinical%20Overview) Provides an overview of Celsion's strategic focus as a clinical-stage biotechnology company and its product pipeline - Celsion is a clinical-stage biotechnology company focused on advancing DNA-based immunotherapies, next-generation vaccines, and directed chemotherapies[135](index=135&type=chunk) - The product pipeline includes GEN-1 for ovarian cancer and ThermoDox for various cancer indications, along with TheraPlas and PLACCINE platform technologies[135](index=135&type=chunk) [IMMUNO-ONCOLOGY Program](index=32&type=section&id=IMMUNO-ONCOLOGY%20Program) Details Celsion's immuno-oncology program, focusing on the TheraPlas technology platform and GEN-1 for ovarian cancer - The TheraPlas technology platform, acquired from EGEN, Inc., is a synthetic non-viral carrier for DNA and mRNA therapeutics, designed to improve gene transfer activity and safety[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - GEN-1, a DNA-based IL-12 immunotherapy for ovarian cancer, is delivered via the TheraPlas system and is currently in Phase II development (OVATION 2 Study)[141](index=141&type=chunk)[147](index=147&type=chunk) - The OVATION 2 Study, which combines GEN-1 with standard-of-care neoadjuvant chemotherapy, has enrolled **approximately one-third** of its anticipated 110 patients, with interim data showing an **80% R0 resection rate** for GEN-1 treated patients versus **58% for the control arm**[154](index=154&type=chunk)[155](index=155&type=chunk)[159](index=159&type=chunk) - GEN-1 received **Fast Track designation** from the FDA and **Orphan Medicinal Product designation** from the EMA for ovarian cancer[151](index=151&type=chunk)[155](index=155&type=chunk) [PLACCINE DNA VACCINE TECHNOLOGY PLATFORM](index=36&type=section&id=PLACCINE%20DNA%20VACCINE%20TECHNOLOGY%20PLATFORM) Introduces Celsion's PLACCINE DNA vaccine technology platform, its design, and preclinical findings for infectious disease prevention - Celsion filed a provisional U.S. patent application for its PLACCINE DNA vaccine technology platform, designed for preventing or treating infections from a broad range of infectious agents, including SARS-CoV-2[156](index=156&type=chunk) - PLACCINE utilizes a single multi-cistronic DNA plasmid vector expressing multiple pathogen antigens and an immune modifier (IL-12), delivered with a synthetic system, offering potential for broad-spectrum protection and stability[157](index=157&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - Preclinical in vivo studies showed PLACCINE induced antibodies and cytotoxic T-cell responses specific to the SARS-CoV-2 spike antigen, with antibodies preventing infection of cultured cells[167](index=167&type=chunk) [THERMODOX- DIRECTED CHEMOTHERAPY](index=39&type=section&id=THERMODOX-%20DIRECTED%20CHEMOTHERAPY) Discusses ThermoDox, Celsion's heat-activated liposomal doxorubicin, including the halt of the OPTIMA Study and ongoing investigator-sponsored trials - ThermoDox is a proprietary heat-activated liposomal encapsulation of doxorubicin, designed to release the drug directly at tumor sites when heated by technologies like RFA, improving efficacy and reducing systemic exposure[168](index=168&type=chunk)[169](index=169&type=chunk) - The global Phase III OPTIMA Study for ThermoDox in combination with RFA for primary liver cancer (HCC) was **halted** in February 2021 due to futility, as independent analyses did not find **sufficient** evidence to justify continuing patient follow-up for overall survival[170](index=170&type=chunk)[177](index=177&type=chunk)[179](index=179&type=chunk) - Celsion continues to support investigator-sponsored studies using ThermoDox in breast cancer, pancreatic cancer (Phase I study with HIFU at Oxford University), and bladder cancer (potential NIH study)[180](index=180&type=chunk)[182](index=182&type=chunk) [Business Plan](index=43&type=section&id=Business%20Plan) Outlines Celsion's financial outlook, including cumulative losses, capital resources, and the impact of the COVID-19 pandemic - Celsion has incurred **substantial** operating losses since inception, totaling approximately **$329 million**, and expects these losses to continue as it advances product development[183](index=183&type=chunk)[184](index=184&type=chunk) - The company had **$60.6 million** in cash, cash equivalents, restricted cash, short-term investments, and interest receivable as of September 30, 2021, and believes it has **sufficient capital** to fund operations through the end of **2024**[190](index=190&type=chunk) - The COVID-19 pandemic has not **significantly** impacted business or operations through 2021, but future developments could materially affect financial condition, results, and cash flows, potentially disrupting clinical trials and capital raising[185](index=185&type=chunk) - Celsion continues to participate in the New Jersey Technology Business Tax Certificate Program, selling net operating losses to generate proceeds, with **$1.85 million** received in May 2021 and an application for **$1.6 million** in 2021[188](index=188&type=chunk) [Financing Overview](index=45&type=section&id=Financing%20Overview) Summarizes Celsion's financing activities, including equity offerings, debt facilities, and sales of net operating losses - Celsion has utilized various financing methods, including equity offerings, debt facilities, and sales of New Jersey net operating losses (NOLs)[193](index=193&type=chunk) - In 2021, the company raised approximately **$6.9 million** from its Capital on Demand facility, **$35 million** from a January registered direct offering, **$15 million** from a March registered direct offering, and **$1.5 million** from warrant exercises[197](index=197&type=chunk)[198](index=198&type=chunk)[200](index=200&type=chunk) - A new **$100 million** shelf registration statement on Form S-3 was filed and declared effective in March 2021 to support future capital needs[196](index=196&type=chunk) - The company secured a **$10 million** loan facility with Silicon Valley Bank in June 2021, using **$6 million** to repay the Horizon Credit Agreement[194](index=194&type=chunk) [Financial Review for the Three and Nine Months Ended September 30, 2021 and 2020](index=48&type=section&id=Financial%20Review%20for%20the%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202021%20and%202020) Analyzes Celsion's financial performance, including licensing revenue, R&D expenses, G&A expenses, and other financial metrics [Licensing Revenue](index=48&type=section&id=Licensing%20Revenue) Reviews Celsion's licensing revenue, primarily from the amortization of a technology transfer fee | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Licensing Revenue | **$125,000** | **$125,000** | **$375,000** | **$375,000** | - Licensing revenue **remained flat** at **$125,000** for both the three-month periods and **$375,000** for both the nine-month periods ended September 30, 2021 and 2020, derived from the amortization of a **$5.0 million** non-refundable technology transfer fee from Hisun[204](index=204&type=chunk)[212](index=212&type=chunk) [Research and Development Expenses](index=48&type=section&id=Research%20and%20Development%20Expenses) Examines Celsion's research and development expenses, highlighting changes in spending across various clinical programs | R&D Expense (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total R&D Expenses | **$2,468** | **$2,492** | **$7,633** | **$8,535** | | OVATION 2 Study costs | **$200** | **$200** | **$1,000** | **$700** | | OPTIMA Study costs | **$200** | **$500** | **$600** | **$1,800** | | GEN-1 & PLACCINE development | **$1,100** | **$700** | **$3,100** | **$2,300** | | CMC costs | **$300** | **$600** | **$1,100** | **$1,700** | - Total R&D expenses **decreased** by **$0.9 million** to **$7.6 million** for the nine months ended September 30, 2021, primarily due to reduced costs for the OPTIMA Study following its halt, despite increased spending on the OVATION 2 Study and GEN-1/PLACCINE development[213](index=213&type=chunk) - R&D expenses for the three months ended September 30, 2021, **remained stable** at **$2.5 million** compared to the prior year, with a **decrease** in OPTIMA study costs offset by increases in GEN-1/PLACCINE development[205](index=205&type=chunk) [General and Administrative Expenses](index=49&type=section&id=General%20and%20Administrative%20Expenses) Analyzes Celsion's general and administrative expenses, detailing the factors contributing to changes in these costs | G&A Expense (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total G&A Expenses | **$2,719** | **$1,793** | **$8,258** | **$5,533** | - General and administrative expenses **increased** by **$0.9 million** to **$2.7 million** for the three months ended September 30, 2021, and by **$2.7 million** to **$8.3 million** for the nine months, mainly due to higher non-cash stock compensation, professional fees, and directors' and officers' insurance premiums[206](index=206&type=chunk)[214](index=214&type=chunk) [Impairment of IPR&D Liability](index=49&type=section&id=Impairment%20of%20IPR%26D%20Liability) Reports on the impairment of Celsion's in-process research and development (IPR&D) asset for the GBM product candidate - In Q3 2020, Celsion recognized a non-cash impairment charge of **$2.4 million** for its GBM product candidate IPR&D asset, fully writing off its remaining value[207](index=207&type=chunk)[215](index=215&type=chunk) - **No** IPR&D asset impairment charges were recorded during the three or nine months ended September 30, 2021[207](index=207&type=chunk)[215](index=215&type=chunk) [Change in Earn-out Milestone Liability and Warrant Expense](index=49&type=section&id=Change%20in%20Earn-out%20Milestone%20Liability%20and%20Warrant%20Expense) Discusses changes in the fair value of Celsion's earn-out milestone liability and related non-cash charges - The fair value of the earn-out milestone liability for the Ovarian Cancer Indication was **$7.3 million** at September 30, 2021, up from **$7.0 million** at December 31, 2020[216](index=216&type=chunk) - A non-cash charge of **$0.3 million** was recognized for the nine months ended September 30, 2021, due to the change in fair value, with both **$7.0 million** and **$12.4 million** payment options weighted at **50% probability**[216](index=216&type=chunk) - For the three months ended September 30, 2021, a non-cash benefit of **$0.2 million** was recognized from the change in fair value of the earn-out milestone liability[208](index=208&type=chunk) [Investment Income and Interest Expense](index=49&type=section&id=Investment%20Income%20and%20Interest%20Expense) Reviews Celsion's investment income and interest expense, noting the impact of debt refinancing | Metric (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Investment income | Insignificant | Insignificant | Insignificant | **$100** | | Interest expense | **$100** | **$500** | **$500** | **$1,100** | - Interest expense **decreased significantly** to **$0.1 million** for the three months and **$0.5 million** for the nine months ended September 30, 2021, compared to the prior year, following the payoff of the Horizon Credit Agreement and new SVB loan facility[211](index=211&type=chunk)[219](index=219&type=chunk) - A **$0.2 million** loss on debt extinguishment was recognized in the first nine months of 2021 due to early termination and end-of-term charges paid to Horizon[219](index=219&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=51&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) Assesses Celsion's financial condition, liquidity, and capital resources, including accumulated deficit and future funding needs - Celsion has an accumulated deficit of **$329 million** as of September 30, 2021, and expects continued operating losses due to **significant** R&D and clinical trial expenditures[220](index=220&type=chunk) | Metric | September 30, 2021 | | :------------------------------------------------ | :------------------- | | Total current assets | **$56.8 million** | | Total current liabilities | **$6.5 million** | | Net working capital | **$50.3 million** | | Cash, cash equivalents, short-term investments, interest receivable and restricted cash | **$60.6 million** | - The company believes its current capital resources are **sufficient** to fund operations through the end of **2024**, but may seek additional capital through equity, debt, strategic alliances, or NOL sales, which could dilute existing stockholders[222](index=222&type=chunk)[223](index=223&type=chunk) [Off-Balance Sheet Arrangements and Contractual Obligations](index=51&type=section&id=Off-Balance%20Sheet%20Arrangements%20and%20Contractual%20Obligations) States that Celsion Corporation has no off-balance sheet arrangements or contractual obligations to report - Celsion Corporation has **no** off-balance sheet arrangements or contractual obligations to report[225](index=225&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Outlines Celsion's market risk exposure, focusing on interest rate fluctuations affecting its investment portfolio, aiming for capital preservation and income maximization - The primary objective of Celsion's investment activities is capital preservation and maximizing income without **significantly** increasing risk[226](index=226&type=chunk) - The company's cash flow and earnings are subject to fluctuations due to changes in interest rates, as it maintains a diversified portfolio of debt securities classified as available-for-sale[226](index=226&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded Celsion's disclosure controls and procedures were effective as of September 30, 2021, with no material changes in internal control over financial reporting - As of September 30, 2021, Celsion's disclosure controls and procedures were **deemed effective** at the reasonable assurance level[228](index=228&type=chunk) - **No** changes in internal control over financial reporting materially affected or are reasonably likely to materially affect the company's internal control during the reporting period[229](index=229&type=chunk) - Management acknowledges that control systems provide only reasonable, not absolute, assurance against all errors and fraud due to inherent limitations[230](index=230&type=chunk) PART II: OTHER INFORMATION Provides additional information not included in the financial statements, such as legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) Details Celsion's ongoing and settled legal proceedings, including shareholder derivative, securities class action, and corporate books and records demands related to ThermoDox - A shareholder derivative and putative class action lawsuit (O'Connor v. Braun et al.) regarding the 2018 Stock Incentive Plan was settled in April 2020, involving repricing of stock options and payment of **$187,500** in legal fees[233](index=233&type=chunk)[234](index=234&type=chunk) - A putative securities class action (Spar v. Celsion Corporation, et al.) was filed in October 2020, alleging false and misleading statements regarding ThermoDox, which the company intends to vigorously defend[235](index=235&type=chunk) - A derivative shareholder lawsuit (Fidler v. Michael H. Tardugno et al.) was filed in February 2021, alleging breach of fiduciary duty related to ThermoDox, which the company also intends to contest vigorously[236](index=236&type=chunk) - A complaint for a corporate books and records demand (Pacheco v. Celsion Corporation) was filed in August 2021 concerning the OPTIMA Study[237](index=237&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2020 Annual Report on Form 10-K were identified, though new or immaterial risks may emerge - **No material changes** to risk factors from the 2020 Annual Report on Form 10-K were identified[238](index=238&type=chunk) - The company acknowledges that new or currently immaterial risks may emerge and adversely affect its business, financial condition, or results of operations[238](index=238&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds to report - There were **no** unregistered sales of equity securities or use of proceeds to report[239](index=239&type=chunk) [Item 3. Defaults Upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities to report - There were **no** defaults upon senior securities to report[239](index=239&type=chunk) [Item 4. Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company - Mine safety disclosures are **not applicable** to the company[240](index=240&type=chunk) [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) No other information to report - There is **no other information** to report[241](index=241&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including stock incentive plan amendments, loan agreements, CEO/CFO certifications, and XBRL financial statements - Exhibits include the Third Amendment to the Celsion Corporation 2018 Stock Incentive Plan and the Loan and Security Agreement with Silicon Valley Bank dated June 18, 2021[244](index=244&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer, pursuant to the Sarbanes-Oxley Act, are filed herewith[244](index=244&type=chunk) - The financial statements are also provided in XBRL (Extensible Business Reporting Language) format[244](index=244&type=chunk) [SIGNATURES](index=56&type=section&id=SIGNATURES) The report is duly signed by the Chairman, President, Chief Executive Officer, and Executive Vice President, Chief Financial Officer - The report is **duly signed** on November 15, 2021, by Michael H. Tardugno, Chairman, President and Chief Executive Officer, and Jeffrey W. Church, Executive Vice President and Chief Financial Officer[246](index=246&type=chunk)[247](index=247&type=chunk)

Celsion Corporation (CLSN) Q2 2021 Earnings Conference Call August 12, 2021 11:00 AM ET Company Participants Kim Golodetz - SVP and Principal Michael Tardugno - Chairman, CEO and President Nicholas Borys - Chief Medical Officer Jeffrey Church - Chief Financial Officer Khursheed Anwer - Executive VP & Chief Scientific Officer Conference Call Participants Kumar Raja - Brookline Capital Operator Please standby, and good morning. My name is Nick, and I will be your operator today. At this time, I would like to ...

Product Development and Clinical Trials - Celsion Corporation's product pipeline includes GEN-1, a DNA-based immunotherapy for ovarian cancer, and ThermoDox, a heat-activated liposomal encapsulation of doxorubicin [131]. - The OVATION I Study reported a median progression-free survival (PFS) of 21 months for patients treated with GEN-1, compared to an average of 12 months under current standard care for Stage III/IV ovarian cancer [141]. - In the OVATION I Study, GEN-1 demonstrated a 100% disease control rate and an 86% objective response rate (ORR) among the fourteen patients treated [142]. - The OVATION 2 Study aims to show a 33% improvement in PFS when comparing GEN-1 with neoadjuvant plus adjuvant chemotherapy versus chemotherapy alone [144]. - The TheraPlas delivery system for GEN-1 has been scaled up to produce 0.6 kg of cGMP lots with reproducible quality [134]. - The TheraPlas technology platform enhances gene transfer activity by approximately 20-fold compared to traditional methods [134]. - The OVATION 2 Study includes up to 110 patients, with 12 to 15 in the Phase I portion and up to 95 in Phase II [144]. - The first fourteen patients in the OVATION I Study experienced no dose-limiting toxicities, indicating a favorable safety profile for GEN-1 [141]. - Celsion's GEN-1 treatment resulted in a 64% complete tumor resection rate (R0) among patients, with 88% in the highest dose cohorts achieving R0 [142]. - The company believes that the immunotherapy approach with GEN-1 could create a more robust and durable antitumor response compared to chemotherapy alone [137]. - GEN-1 treatment resulted in an 82% overall response rate (ORR) for patients receiving higher doses (61, 79, 100 mg/m²) compared to 42% for lower doses (0, 36, 47 mg/m²) in the OVATION I Study [147]. - The Phase Ib OVATION I Study showed a hazard ratio of 0.53 for progression-free survival (PFS), indicating strong efficacy signals for GEN-1 in newly diagnosed advanced ovarian cancer patients [148]. - In the Phase I portion of the OVATION 2 Study, 88% of patients treated with GEN-1 achieved R0 resection compared to 50% in the control arm, reflecting a 38% improvement [150]. - As of February 2021, 34 out of 110 patients had been enrolled in the OVATION 2 Study, with 22 clinical sites initiated across the U.S. and Canada [153]. - The company received Fast Track designation from the FDA for GEN-1, facilitating accelerated clinical development for advanced ovarian cancer treatment [153]. Vaccine Development - The PLACCINE DNA vaccine technology platform aims to address a broad range of infectious agents, including SARS-CoV-2, with a provisional patent application filed in January 2021 [154]. - Celsion's vaccine candidates utilize a multivalent approach to enhance immune response, targeting multiple SARS-CoV-2 antigens alongside IL-12 to stimulate T-cell immunity [160]. ThermoDox and Liver Cancer Treatment - The company’s heat-sensitive liposome technology allows for targeted drug release at specific temperatures, enhancing the efficacy of chemotherapy for liver cancer [166]. - Primary liver cancer (HCC) incidence is approximately 35,000 cases per year in the U.S. and is projected to become the most prevalent form of cancer by 2030 [167]. - Local recurrence rates after radiofrequency ablation (RFA) for liver tumors greater than 3 cm can exceed 40%, highlighting the need for improved treatment options [168]. - The OPTIMA Study aims to enroll up to 550 patients globally to evaluate ThermoDox in combination with RFA for intermediate stage HCC patients [170]. - The primary endpoint of the OPTIMA Study is overall survival (OS), with secondary endpoints including progression-free survival (PFS) and safety [170]. - Post-hoc analysis from the HEAT Study indicated a 54% risk improvement in OS for patients treated with ThermoDox plus optimized RFA compared to optimized RFA alone, with a hazard ratio of 0.65 [172]. - The median OS for the ThermoDox group is projected to exceed 80 months, compared to less than 60 months for the optimized RFA only group [172]. - The second interim analysis of the OPTIMA Study showed a hazard ratio of 0.70, indicating a 30% reduction in the risk of death compared to RFA alone [177]. Financial Performance and Projections - The Company has incurred approximately $323 million in cumulative net losses as of June 30, 2021, with cash and equivalents of approximately $64.5 million [185]. - The Company expects operating losses to continue as it advances product development and marketing efforts [186]. - The COVID-19 pandemic has not significantly impacted the Company's business or operations in 2020 and 2021, but future impacts remain uncertain [187]. - The Company is developing a business model to support investigator-sponsored studies without interfering with its focus on the GEN-1 program and vaccine development [182]. - For the three months ended June 30, 2021, the company's net loss was $5.4 million, compared to a net loss of $5.3 million for the same period in 2020 [205]. - For the six months ended June 30, 2021, the company's net loss was $11.1 million, compared to a net loss of $10.4 million for the same period in 2020 [205]. - The company raised approximately $6.9 million in gross proceeds from its JonesTrading Capital on Demand financing facility during 2021 [194]. - The company received net proceeds of approximately $1.85 million from the sale of net operating losses in May 2021 [191]. - The company has $64.5 million in cash and cash equivalents as of June 30, 2021, which is expected to fund operations through the end of 2024 [194]. - The New Jersey State Legislature increased the maximum lifetime benefit per company from $15 million to $20 million, allowing the company to participate in the funding program in future years [191]. - The company entered into a $10 million loan facility with Silicon Valley Bank in June 2021, using $6 million to retire existing debt [192]. - The company issued a total of 62.5 million shares of common stock for an aggregate of $83.2 million in gross proceeds during 2020 and 2021 [201]. - The company filed a new $100 million shelf registration statement with the SEC on March 19, 2021, allowing for future capital raises [200]. - The company expects to receive up to approximately $1.4 million from the sale of net operating losses during 2021 [197]. - As of June 30, 2021, the company had $64.5 million in cash and cash equivalents, which is expected to fund operations through 2024 [206]. - Licensing revenue remained unchanged at $125,000 for the three months ended June 30, 2021, compared to the same period in 2020 [207]. - Total operating expenses increased by 6.2% to $5.2 million for the three months ended June 30, 2021, compared to $4.9 million in the same period of 2020 [207]. - Research and development expenses decreased by 13.3% to $2.6 million in Q2 2021 from $3.0 million in Q2 2020 [209]. - General and administrative expenses increased by 36.9% to $2.6 million in Q2 2021 compared to $1.9 million in Q2 2020 [210]. - The company reported a loss from operations of $5.1 million for the three months ended June 30, 2021, a 6.4% increase from a loss of $4.8 million in the same period of 2020 [207]. - Net cash used in operating activities for the first half of 2021 was $7.3 million, while net cash provided by financing activities was $54.8 million [225]. - The company had an accumulated deficit of $323 million as of June 30, 2021 [222]. - Total current assets increased to $60.3 million as of June 30, 2021, compared to $18.8 million at December 31, 2020 [224]. - The company incurred $0.4 million in interest expense in the first half of 2021, down from $0.7 million in the same period of 2020 [221]. Capital and Funding Strategies - The company plans to seek additional capital through public or private equity offerings, debt financing, strategic alliances, and licensing arrangements [226]. - If adequate funds are not available, the company may need to delay or reduce the scope of its research, development, and commercialization efforts [227]. - The company maintains a diversified investment portfolio, which is subject to fluctuations due to changes in interest rates [229]. - The securities in the investment portfolio are classified as available-for-sale and recorded at fair value, with unrealized gains or losses affecting stockholders' equity [229]. - The company is exploring government-sponsored research collaborations and grants to offset anticipated operational losses [226]. - There are no off-balance sheet arrangements or contractual obligations reported [228]. - The company may need to relinquish rights to certain technologies or products if it seeks strategic alliances or alternative arrangements [226]. - The overall economic climate could impact the terms of any financing arrangements, potentially making them less favorable [226]. - The company aims to preserve capital while maximizing income from investments without significantly increasing risk [229]. - The potential dilution of stockholder ownership is a concern if additional funds are raised through equity securities [226].

Financial Data and Key Metrics Changes - The company reported a net loss of $5.7 million or $0.09 per share for Q1 2021, compared to a net loss of $5.1 million or $0.20 per share for Q1 2020, indicating a slight increase in loss per share [45] - Operating expenses increased to $5.5 million in Q1 2021, up $600,000 or 13% from $4.9 million in Q1 2020 [46] - Cash and cash equivalents at the end of Q1 2021 were $54.6 million, with additional net proceeds of $13.9 million raised in early Q2 2021 [43][44] Business Line Data and Key Metrics Changes - Research and development expenses were $2.6 million in Q1 2021, down 16% from $3.1 million in the same period last year, primarily due to decreased clinical development costs for the Phase III OPTIMA study [46] - Costs associated with GEN-1 and the OVATION II study increased to $1 million in Q1 2021 from $900,000 in the prior year [47] Market Data and Key Metrics Changes - The company raised over $60 million in equity capital during the first four months of 2021, strengthening its balance sheet [10] - The OVATION 2 study is progressing with 40% of the anticipated 110 patients enrolled, although April saw disappointing enrollment numbers [16][70] Company Strategy and Development Direction - Celsion is focused on advancing its GEN-1 product in advanced ovarian cancer and the PlaCCine vaccine platform, which aims to leverage its TheraPlas technology [11][26] - The company is exploring combination therapies with other agents like Avastin and checkpoint inhibitors, showing promising preclinical data [75][78] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to achieve development objectives and highlighted the importance of the fast track designation from the FDA for GEN-1 [6][18] - The company acknowledged challenges in patient enrollment due to COVID-19 but indicated a rebound in May and plans to optimize recruitment strategies [69][72] Other Important Information - The company has sufficient cash to fund operations through 2024 at current spending levels, with additional unused net operating losses available for future sale [44] - An annual shareholders' meeting is scheduled for June 4, 2021, where shareholders will vote on proposals including increasing the number of authorized shares [50][51] Q&A Session Summary Question: What stage is the PLACCINE platform at and what needs to be done before human dosing? - The company is in early phase development, aiming to establish proof-of-concept before discussing IND requirements with the agency [60][61] Question: What variations in enrollment are being seen at different sites for GEN-1? - The company noted that 80% of patients come from 20% of sites and is exploring additional opportunities within the GOG network to enhance recruitment [68] Question: What preclinical data exists regarding GEN-1's combination with Avastin or immuno-oncology agents? - Preclinical investigations have shown a synergistic response when combining GEN-1 with Avastin, suggesting potential for lower doses of Avastin in treatment [76][78]

Commission file number: 001-15911 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ CELSION CORPORATION (Exact name of Registrant as specified in its charter) (State or other ...

Celsion Corporation (CLSN) Q4 2020 Earnings Conference Call March 19, 2021 11:00 AM ET Company Participants Kim Golodetz - Investor Relations Michael Tardugno - Chairman, CEO and President Jeff Church - Chief Financial Officer Khursheed Anwer - Chief Science Officer Nicholas Borys - Chief Medical Officer Operator Ladies and gentlemen, good morning. My name is David, and I will be your operator today. At this time, I would like to welcome you all to Celsion’s 2020 Financial Results Conference Call. All lines ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020. or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 001-15911 CELSION CORPORATION (Exact Name of Registrant as Specified in Its Charter) DELAWARE 52-1256615 FORM 10-K (State or ...