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 ...

Celsion Corporation (CLSN) Q3 2020 Results Earnings Conference Call November 16, 2020 11:00 AM ET Company Participants Michael Tardugno - Chairman, President and CEO Jeff Church - Executive Vice President and CFO Dr. Nicholas Borys - Executive Vice President and CMO Kim Golodetz - LHA Investor Relations Conference Call Participants Hartaj Singh - Oppenheimer Raj Kumar - Brookline Capital Markets Operator Please standby. Good morning. My name is Casey, and I will be your operator today. At this time, I would ...

Product Pipeline and Clinical Studies - Celsion's product pipeline includes GEN-1 for ovarian cancer and ThermoDox, currently in Phase III for primary liver cancer[150] - The OPTIMA Study has enrolled 556 patients globally, evaluating ThermoDox in combination with RFA, with a primary endpoint of overall survival[156] - Post-hoc analysis from the HEAT Study indicated a 54% risk improvement in overall survival for patients treated with ThermoDox plus RFA compared to RFA alone[154] - The first interim analysis of the OPTIMA Study showed a hazard ratio of 0.63, indicating a 37% reduction in the risk of death compared to RFA alone[158] - The second interim analysis reached a hazard ratio of 0.70, representing a 30% reduction in the risk of death compared to RFA alone[164] - Median progression-free survival for the OPTIMA Study reached 17 months, which is favorable compared to 16 months in the HEAT Study subgroup[162] - The OPTIMA Study has lost only 4 patients to follow-up, significantly below the expected loss rate of 3% per year[162] - The DMC recommended the continuation of the OPTIMA Study based on safety and data integrity assessments[157] - The NIH published an analysis indicating that increased RFA heating time correlates with improved overall survival in patients treated with ThermoDox[160] - Celsion plans to continue following patients for overall survival, with a milestone of 197 deaths expected in mid-2021[166] - The HEAT Study did not meet the primary endpoint of progression-free survival (PFS) in a Phase III trial with 701 patients, indicating no clinically meaningful improvement[167] - In the OVATION Study, 14 patients treated with GEN-1 plus standard chemotherapy achieved a 100% disease control rate and an 86% objective response rate (ORR) as per RECIST criteria[171] - The median PFS for patients treated per protocol in the OVATION Study was 21 months, compared to an average of 12 months under the current standard of care for Stage III/IV ovarian cancer[173] - The OVATION 2 Study aims to show a 33% improvement in PFS by comparing GEN-1 with neoadjuvant plus adjuvant chemotherapy versus chemotherapy alone[176] - In the OVATION 2 Study, 64% of patients achieved complete tumor resection (R0) after treatment with GEN-1, with 88% in the highest dose cohorts[179] - The objective response rate (ORR) for patients receiving 0, 36, 47 mg/m² of GEN-1 plus NACT was approximately 80%, comparable to higher dose cohorts[181] - The European Medicines Agency recommended GEN-1 for orphan medicinal product designation for ovarian cancer treatment[182] - The independent Data Safety Monitoring Board (DSMB) approved the continuation of the OVATION 2 Study based on safety reviews of the first eight patients[177] Financial Performance and Capital Management - As of September 30, 2020, the company has incurred approximately $309 million in cumulative net losses and has $18.3 million in cash, investment securities, and interest receivable[189] - The company expects operating losses to continue for the foreseeable future due to ongoing product development and marketing efforts[190] - The company sold net operating losses totaling $13 million in 2018 and 2019, receiving net proceeds of $12.2 million[195] - The company has $10 million in capital from the Horizon Credit Agreement, with $5 million repaid and the remaining obligations restructured[196] - The company raised approximately $30.7 million in gross proceeds from issuing 17.8 million shares of common stock during 2019 and 2020[203] - The company received net proceeds of approximately $9.1 million from an underwritten offering of approximately 2.7 million shares at a price of $3.4875 per share[204] - The company has up to $24.5 million of remaining availability under the LPC Purchase Agreement with Lincoln Park Capital Fund, LLC[197] - The company returned the proceeds of a $632,220 PPP Loan in full on May 13, 2020, and later received a new PPP Loan for $692,530[200][201] - The company continues to monitor the impact of COVID-19 on its operations, with potential material impacts on future financial condition and results[192] - For the three months ended September 30, 2020, the company's net loss was $8.1 million, compared to a net loss of $5.5 million for the same period in 2019, representing a 47.3% increase in net loss[214] - For the nine months ended September 30, 2020, the company's net loss was $18.5 million, compared to a net loss of $13.7 million for the same period in 2019, indicating a 35.1% increase in net loss[214] - As of September 30, 2020, the company had $18.3 million in cash, investments, interest receivable, and income tax receivable, which is expected to fund operations through the end of 2021[215] - The company sold and issued an aggregate of 2.6 million shares under the LPC Purchase Agreement, receiving approximately $1.8 million in gross proceeds during 2020[206] - Under the 2018 Aspire Purchase Agreement, the company sold a total of 3.4 million shares, receiving $6.5 million before the agreement was terminated[205] - The 2019 Aspire Purchase Agreement allowed the company to sell up to $10.0 million of shares, with $0.7 million received from the sale of 0.5 million shares in 2019[205] - The company entered into a Capital on Demand Sales Agreement with JonesTrading, allowing for the sale of up to $16.0 million in shares, with $1.0 million and $4.5 million received in 2019 and 2020 respectively[205] - The LPC Purchase Agreement allows the company to sell up to $26.0 million of shares at its discretion, with a maximum purchase limit of 400,000 shares per business day[206] - The company issued 437,828 shares to Lincoln Park as LPC Commitment Shares, with an initial purchase of 1,000,000 shares for $1.00 per share[206] - The company plans to seek additional capital through public or private equity offerings, debt financing, and strategic alliances, which may dilute existing stockholder ownership[238] - If adequate funds are not available, the company may need to delay or reduce the scope of its research and development programs[239] - The company maintains a diversified investment portfolio to preserve capital and maximize income, with cash flow subject to interest rate fluctuations[241] Operating Expenses and Financial Metrics - Total operating expenses decreased by 22.3% to $4.3 million in Q3 2020 from $5.5 million in Q3 2019[216] - Loss from operations improved by 22.8%, amounting to $(4.2) million in Q3 2020 compared to $(5.4) million in Q3 2019[216] - Research and development expenses decreased by 32.2% to $2.5 million in Q3 2020 from $3.7 million in Q3 2019[218] - General and administrative expenses were stable at $1.8 million for both Q3 2020 and Q3 2019[219] - The company recognized a non-cash impairment charge of $2.4 million for the GBM asset in Q3 2020[220] - For the nine months ended September 30, 2020, total operating expenses decreased by 13.1% to $14.1 million from $16.2 million in the same period of 2019[226] - R&D expenses for the first nine months of 2020 decreased by 14.7% to $8.5 million compared to $10.0 million in the same period of 2019[227] - The company had an accumulated deficit of $309 million as of September 30, 2020[235] - The fair value of the earn-out milestone liability was assessed at $7.1 million as of September 30, 2020, with a non-cash charge of $1.1 million recognized in Q3 2020[223] - As of September 30, 2020, total current assets were $19.9 million, with cash and cash equivalents of $18.3 million, resulting in net working capital of $14.5 million[236] - Net cash used in operating activities for the first nine months of 2020 was $11.9 million, while net cash provided by investing activities was $7.9 million and financing activities provided $15.4 million[237] - The company received $1.3 million from two PPP Loans in 2020, which have been fully repaid as of September 30, 2020[237]

Financial Data and Key Metrics Changes - As of June 30, 2020, Celsion's cash and short-term investments were $25.5 million, which includes net cash proceeds of $1.8 million from the sale of unused New Jersey net operating losses [37] - The net loss for the second quarter of 2020 was $5.3 million or $0.18 per share, compared to a loss of $5.9 million or $0.29 per share for the same period in 2019, indicating a decrease in losses [40] - Operating expenses decreased by 14% from $5.7 million last year to $4.9 million in the current quarter [40] Business Line Data and Key Metrics Changes - Research and development expenses were $3 million compared to $3.6 million a year ago, with clinical development costs for the Phase III OPTIMA Study down to $600,000 from $1.2 million last year [41] - Costs associated with the OVATION 2 Study increased modestly to about $200,000 in the second quarter, compared to $100,000 in the same period last year [41] - General administrative expenses were $1.9 million in the second quarter of this year, down from $2.1 million for the same period in 2019, primarily due to lower professional fees [42] Market Data and Key Metrics Changes - The company anticipates completing enrollment of approximately 105 patients in the OVATION 2 Study over the next 12 months [9] - The independent Data Monitoring Committee for the Phase 3 OPTIMA Study recommended considering stopping the study due to crossing the futility boundary [24][25] Company Strategy and Development Direction - Celsion is focusing on the development of GEN-1, a gene-mediated immunotherapy for advanced ovarian cancer, and has received Orphan Drug Designation from both the USFDA and the European Medicines Agency [22] - The company is taking steps to eliminate non-essential expenses related to ThermoDox, expecting to save $8 million to $9 million over the next 18 months [23] - Celsion is committed to ensuring sufficient capital to complete enrollment of the OVATION Study and is actively managing cash resources [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the potential of GEN-1, highlighting its promising early results and the importance of ongoing studies [22][35] - The company is closely monitoring the impact of the COVID-19 pandemic on its operations and clinical trials, with no major protocol deviations expected for the OVATION 2 Study [66] - Management acknowledged the uncertainty surrounding the OPTIMA Study and emphasized the importance of data maturity in interpreting results [27][60] Other Important Information - The company reported a 22.5% decrease in net cash used for operating activities, from $10.2 million in the prior year to $7.9 million in the current quarter [38] - Celsion has a $75 million shelf registration statement on file with the SEC, with $45 million remaining, providing future funding flexibility [39] Q&A Session Summary Question: Improvements to the manufacturing process for GEN-1 - Management discussed efforts to reduce costs and improve the manufacturing process for GEN-1, including working with multiple suppliers to ensure redundancy and competitive pricing [49][50] Question: Continuation of the OPTIMA trial - Management indicated that they are monitoring patient outcomes closely and may have clarity on the trial's direction by the fourth quarter [54][55] Question: Impact of COVID-19 on the OVATION 2 Study - Management confirmed that they are following ASCO guidelines and do not expect major protocol deviations due to COVID-19 [66] Question: NIH analysis expectations - Management expects the NIH analysis to provide insights into data maturity and the relationship between heating time and survival [70][69] Question: Anomalous data from the OPTIMA trial - Management is evaluating all possibilities regarding the anomalous data from the 26 patients and is investigating the causes of death [75]

PART I: FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements show increased cash and equity from financing activities, offset by continued net operating losses Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $22,653,760 | $6,875,273 | | Total current assets | $26,796,060 | $16,235,198 | | Total assets | $46,722,960 | $38,278,367 | | Total current liabilities | $9,205,745 | $7,894,457 | | Total liabilities | $22,514,798 | $23,719,332 | | Total stockholders' equity | $24,208,162 | $14,559,035 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Licensing revenue | $125,000 | $250,000 | | Research and development | $2,990,861 | $6,042,910 | | General and administrative | $1,901,136 | $3,740,042 | | Loss from operations | $(4,766,997) | $(9,532,952) | | Net loss | $(5,342,935) | $(10,399,813) | | Net loss per common share | $(0.18) | $(0.37) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited, Six Months Ended June 30) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash (used in) operating activities | $(7,923,276) | $(10,161,871) | | Net cash provided by (used in) investing activities | $5,147,269 | $(1,642,414) | | Net cash provided by financing activities | $18,554,494 | $4,464,060 | | **Increase (decrease) in cash and cash equivalents** | **$15,778,487** | **$(7,340,225)** | - The company is a development-stage oncology drug company focused on advancing a portfolio of innovative cancer treatments, including directed chemotherapies (ThermoDox®) and DNA-mediated immunotherapies (GEN-1)[43](index=43&type=chunk) - As of June 30, 2020, the company has incurred approximately **$301 million of cumulative net losses** and had approximately **$25.5 million in cash, investment securities, and interest receivable**, with management believing it has sufficient capital to fund operations through the end of 2021[47](index=47&type=chunk)[54](index=54&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses clinical trial updates, including a futility recommendation for the ThermoDox® study, alongside financial results showing lower operating losses and sufficient capital through 2021 [Strategic and Clinical Overview](index=31&type=section&id=Strategic%20and%20Clinical%20Overview) The company's strategic focus is on advancing its lead oncology candidates, ThermoDox® and GEN-1, through clinical development towards commercialization - The company's lead product candidates are ThermoDox®, a proprietary heat-activated liposomal encapsulation of doxorubicin, and GEN-1, a DNA-based immunotherapy for the localized treatment of ovarian cancer[130](index=130&type=chunk) - In July 2020, the independent Data Monitoring Committee (DMC) recommended considering **stopping the global Phase III OPTIMA Study of ThermoDox®** for primary liver cancer after a futility analysis[143](index=143&type=chunk)[175](index=175&type=chunk) - The GEN-1 OVATION 2 study (Phase I/II) is evaluating GEN-1 plus standard chemotherapy in newly diagnosed Stage III/IV ovarian cancer, with initial Phase I data showing a **78% complete tumor resection (R0) rate** in the GEN-1 arm versus 50% in the chemotherapy-only arm[154](index=154&type=chunk)[160](index=160&type=chunk) - In March 2020, the European Medicines Agency (EMA) recommended **orphan medicinal product designation for GEN-1** for the treatment of ovarian cancer[158](index=158&type=chunk) [Business Plan and Financial Condition](index=40&type=section&id=Business%20Plan%20and%20Financial%20Condition) Despite a history of losses and COVID-19 risks, the company reports sufficient capital to fund operations through 2021 via recent financing activities - The company has incurred substantial operating losses since inception, with an **accumulated deficit of approximately $301 million** as of June 30, 2020[169](index=169&type=chunk) - With **$25.5 million in cash, investments, and receivables**, plus potential proceeds from selling New Jersey NOLs and an equity facility, management believes it has sufficient capital to fund operations through the end of 2021[178](index=178&type=chunk)[195](index=195&type=chunk) - The company raised approximately **$27.8 million in gross proceeds** from various equity transactions in 2019 and the first half of 2020, including an underwritten offering in June 2020 that yielded net proceeds of approximately $9.1 million[95](index=95&type=chunk)[185](index=185&type=chunk) - The **COVID-19 pandemic is identified as a risk** that could materially impact future financial condition, results of operations, and cash flows, potentially disrupting clinical trials and capital raising efforts[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) [Financial Review](index=46&type=section&id=FINANCIAL%20REVIEW%20FOR%20THE%20THREE%20AND%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202020%20AND%202019) Operating losses decreased for the three and six-month periods ended June 30, 2020, driven by lower R&D and G&A expenses Comparison of Operating Results (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development | $2,991 | $3,558 | (15.9)% | | General and administrative | $1,901 | $2,137 | (11.0)% | | **Loss from operations** | **$(4,767)** | **$(5,570)** | **14.4%** | | **Metric** | **Six Months Ended June 30, 2020** | **Six Months Ended June 30, 2019** | **Change (%)** | | Research and development | $6,043 | $6,325 | (4.5)% | | General and administrative | $3,740 | $4,355 | (14.1)% | | **Loss from operations** | **$(9,533)** | **$(10,430)** | **8.6%** | - **R&D expenses decreased by $0.6 million** in Q2 2020 compared to Q2 2019, primarily due to a decrease in costs for the OPTIMA Study from $1.2 million to $0.6 million[198](index=198&type=chunk) - **G&A expenses decreased** in Q2 2020 compared to Q2 2019, mainly due to lower professional fees[199](index=199&type=chunk) - The company recognized a **non-cash charge of $0.3 million** for the six months ended June 30, 2020, from the change in fair value of the earn-out milestone liability, compared to a non-cash benefit of $3.0 million in the same period of 2019[210](index=210&type=chunk)[211](index=211&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate changes affecting its investment portfolio, with no significant changes from the 2019 Form 10-K - The company's primary investment objective is to preserve capital while maximizing income without significantly increasing risk[220](index=220&type=chunk) - Cash flow and earnings are subject to fluctuations from changes in interest rates in the investment portfolio, which consists of various issuers, types, and maturities and is classified as available-for-sale[220](index=220&type=chunk) - The information required for this item is not significantly different from what was disclosed in the 2019 Form 10-K[221](index=221&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes during the quarter - Management, including the CEO and CFO, concluded that as of June 30, 2020, the company's **disclosure controls and procedures are effective** at a reasonable assurance level[222](index=222&type=chunk) - **No changes in internal control** over financial reporting were identified during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[223](index=223&type=chunk) PART II: OTHER INFORMATION [Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company entered into a settlement agreement to resolve a 2019 shareholder lawsuit concerning the 2018 Stock Incentive Plan - A shareholder derivative and class action lawsuit was filed on September 20, 2019, alleging breaches of fiduciary duties concerning the approval of the 2018 Stock Incentive Plan[226](index=226&type=chunk) - On April 24, 2020, the parties entered into a Settlement Agreement to resolve the lawsuit, with terms including the repricing of certain stock options and a **payment of $187,500 for plaintiff's legal fees**[227](index=227&type=chunk) - A court hearing for final approval of the settlement was scheduled for September 8, 2020[227](index=227&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant financial, clinical, regulatory, and operational risks, including the need for future capital and potential COVID-19 disruptions - **Financial Risk:** The company has a history of significant losses, with an **accumulated deficit of $301 million** as of June 30, 2020, and will need to raise additional capital to fund future operations[229](index=229&type=chunk)[234](index=234&type=chunk) - **Clinical Trial Risk:** Drug development is inherently uncertain, and the DMC recommended considering **stopping the Phase III OPTIMA study for ThermoDox® due to futility**, which highlights the high risk of failure at any stage[231](index=231&type=chunk)[232](index=232&type=chunk) - **Pandemic Risk:** The COVID-19 outbreak could adversely impact the business by disrupting preclinical studies, clinical trial enrollment, supply chains, and the ability to raise capital[245](index=245&type=chunk)[326](index=326&type=chunk) - **Regulatory Risk:** The company's novel gene-based products are subject to extensive and uncertain regulation by the FDA and other agencies, which could delay or prevent approval[250](index=250&type=chunk) - **Commercialization Risk:** The company **relies on third parties for clinical trials and manufacturing** and currently has no internal sales or marketing capabilities, which are critical for commercial success[277](index=277&type=chunk)[280](index=280&type=chunk)[316](index=316&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported during the period - None[337](index=337&type=chunk) [Defaults Upon Senior Securities](index=67&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - None[338](index=338&type=chunk) [Mine Safety Disclosures](index=67&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[338](index=338&type=chunk) [Other Information](index=67&type=section&id=Item%205.%20Other%20Information) No other information was required for disclosure during the period - None[339](index=339&type=chunk) [Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including key agreements, plan amendments, and required officer certifications - Key exhibits filed include the **Underwriting Agreement with Oppenheimer & Co. Inc.** dated June 22, 2020, and the **Settlement Agreement** related to the O'Connor v. Braun et al. shareholder action[341](index=341&type=chunk) - The list also includes amendments to the 2018 Stock Incentive Plan, CEO and CFO certifications under Sarbanes-Oxley, and XBRL data files[341](index=341&type=chunk)

Celsion Corporation (CLSN) Q1 2020 Results Conference Call May 15, 2020 11:00 AM ET Company Participants Kim Golodetz - IR, LHA Investor Relations Michael Tardugno - Chairman, President and Chief Executive Officer Jeffrey Church - Senior Vice President and Chief Financial Officer Dr. Nicholas Borys - Chief Medical Officer Conference Call Participants Hartaj Singh - Oppenheimer Matthew Cross - JonesTrading Raj Kumar - Brookline Capital Markets Operator Good morning. My name is Cathy and I will be your operat ...

PART I: FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Celsion Corporation's unaudited condensed consolidated financial statements for Q1 2020 show a net loss of $5.1 million, an increase from $2.4 million in the prior year - The company recorded a **net loss of $5.1 million** in Q1 2020, an increase from **$2.4 million** in Q1 2019[21](index=21&type=chunk)[184](index=184&type=chunk) Condensed Consolidated Balance Sheet Summary | Indicator | March 31, 2020 (Unaudited) | December 31, 2019 | | :------------------- | :----------------------- | :------------------- | | **Assets:** | | | | Cash and cash equivalents | $5,746,184 | $6,875,273 | | Investment in debt securities - available for sale | $9,887,455 | $7,985,886 | | Receivable from sale of net operating losses | $1,819,324 | $0 | | Total current assets | $18,876,700 | $16,235,198 | | Total assets | $38,936,624 | $38,278,367 | | **Liabilities and Stockholders' Equity:** | | | | Total current liabilities | $7,430,184 | $7,894,457 | | Earn-out milestone liability | $5,758,983 | $5,717,709 | | Total liabilities | $22,728,088 | $23,719,332 | | Total stockholders' equity | $16,208,536 | $14,559,035 | Condensed Consolidated Statements of Operations Summary (Three Months Ended) | Indicator | March 31, 2020 | March 31, 2019 | | :------------------- | :------------- | :------------- | | Technology development and licensing revenue | $125,000 | $125,000 | | Research and development expenses | $3,052,049 | $2,767,659 | | General and administrative expenses | $1,838,906 | $2,217,864 | | Total operating expenses | $4,890,995 | $4,985,523 | | Operating loss | $(4,765,955) | $(4,860,523) | | Change in fair value of earn-out milestone liability (loss) gain | $(41,274) | $3,130,000 | | Net loss | $(5,056,878) | $(2,367,452) | | Basic and diluted net loss per common share | $(0.20) | $(0.12) | | Weighted-average common shares outstanding | 25,804,349 | 19,104,785 | Condensed Consolidated Statements of Cash Flows Summary (Three Months Ended) | Indicator | March 31, 2020 | March 31, 2019 | | :------------------- | :------------- | :------------- | | Net cash used in operating activities | $(4,975,067) | $(5,535,858) | | Net cash used in investing activities | $(1,948,769) | $(5,996,980) | | Net cash provided by financing activities | $5,794,747 | $1,754,885 | | Decrease in cash and cash equivalents | $(1,129,089) | $(9,777,953) | | Cash and cash equivalents at end of period | $5,746,184 | $3,575,590 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's business, accounting policies, financial condition, new accounting standards, and various financial instruments, highlighting ongoing operating losses and future financing needs for R&D and commercialization - The company has accumulated **net losses of approximately $296 million** since inception, with cash, investment securities, and receivables totaling approximately **$17.5 million** as of March 31, 2020[43](index=43&type=chunk)[215](index=215&type=chunk) - Operating losses are expected to continue, requiring substantial additional capital to fund R&D activities and advance product candidates[44](index=44&type=chunk)[216](index=216&type=chunk) - The COVID-19 pandemic may significantly impact the company's future financial condition, operating results, and cash flows, potentially disrupting clinical trial progress and patient enrollment[45](index=45&type=chunk)[47](index=47&type=chunk)[166](index=166&type=chunk) [Note 1. Business Description](index=13&type=section&id=Note%201.%20Business%20Description) Celsion Corporation is a clinical-stage oncology company developing ThermoDox and GEN-1, aiming for more efficient and targeted cancer therapies - Celsion Corporation is a clinical-stage oncology company focused on developing product candidates including ThermoDox (for primary liver cancer in Phase III trials) and GEN-1 (a DNA-mediated immunotherapy for ovarian cancer)[38](index=38&type=chunk) - The company utilizes two platform technologies, Lysolipid Thermally Sensitive Liposomes and TheraPlas (novel nucleic acid therapeutics), to develop highly efficient and targeted oncology treatments[38](index=38&type=chunk) [Note 2. Basis of Presentation](index=13&type=section&id=Note%202.%20Basis%20of%20Presentation) The condensed consolidated financial statements are prepared in accordance with GAAP and SEC regulations, with management monitoring COVID-19's impact on financial condition and asset valuations - Financial statements are prepared in accordance with GAAP and Form 10-Q instructions, with all significant intercompany balances and transactions eliminated[39](index=39&type=chunk) - Management is monitoring the potential impact of the COVID-19 pandemic on the company's financial condition, operating results, and the valuation of long-lived assets, intangible assets, and goodwill[41](index=41&type=chunk) [Note 3. Financial Condition and Business Plan](index=14&type=section&id=Note%203.%20Financial%20Condition%20and%20Business%20Plan) The company has incurred significant operating losses since inception, with accumulated net losses of approximately $296 million and $17.5 million in cash and investments as of March 31, 2020, anticipating further losses and additional funding needs, potentially impacted by COVID-19 - As of March 31, 2020, the company had accumulated **net losses of approximately $296 million**, with cash, investment securities, interest receivable, and receivables from the sale of New Jersey net operating losses totaling approximately **$17.5 million**[43](index=43&type=chunk)[52](index=52&type=chunk) - Operating losses are expected to continue, with profitability dependent on successful government approvals, manufacturing, and sales of new product candidates[44](index=44&type=chunk) - The COVID-19 pandemic may adversely affect the company's ability to raise additional capital and impact clinical trial progress and patient enrollment[46](index=46&type=chunk)[47](index=47&type=chunk) [Note 4. New Accounting Pronouncements](index=15&type=section&id=Note%204.%20New%20Accounting%20Pronouncements) The company is evaluating the impact of new accounting pronouncements, including ASU 2016-13 and ASU 2019-12, while ASU 2018-13 adoption had no financial statement impact - The company will adopt ASU 2016-13 in Q1 2021, with no significant impact expected on the condensed consolidated financial statements[55](index=55&type=chunk) - The adoption of ASU 2018-13 had no impact on the company's condensed consolidated financial statements[56](index=56&type=chunk) - The company is evaluating the impact of adopting ASU 2019-12 (Income Taxes) on the condensed consolidated financial statements[57](index=57&type=chunk) [Note 5. Net Loss per Common Share](index=16&type=section&id=Note%205.%20Net%20Loss%20per%20Common%20Share) Basic and diluted loss per share are calculated by dividing net loss by weighted-average shares outstanding, with diluted loss per share being identical to basic due to anti-dilutive potential common shares Net Loss per Common Share (Three Months Ended) | Indicator | March 31, 2020 | March 31, 2019 | | :------------------- | :------------- | :------------- | | Basic and diluted net loss per share | $(0.20) | $(0.12) | | Weighted-average common shares outstanding | 25,804,349 | 19,104,785 | - Diluted net loss per share is the same as basic net loss per share due to the anti-dilutive effect of other warrants and equity awards[59](index=59&type=chunk) [Note 6. Investment in Debt Securities Available for Sale](index=16&type=section&id=Note%206.%20Investment%20in%20Debt%20Securities%20Available%20for%20Sale) As of March 31, 2020, the company held available-for-sale debt securities with a fair value of $9,887,455, measured at fair value with unrealized gains/losses reported in equity Investment in Debt Securities Available for Sale (Fair Value) | Date | Fair Value | | :------------- | :------------- | | March 31, 2020 | $9,887,455 | | December 31, 2019 | $7,985,886 | Net Investment Income (Three Months Ended) | Indicator | March 31, 2020 | March 31, 2019 | | :------------- | :------------- | :------------- | | Interest and dividends | $45,077 | $104,410 | | Realized gains | $43,232 | $9,381 | | Net investment income | $88,309 | $113,791 | [Note 7. Fair Value Measurements](index=18&type=section&id=Note%207.%20Fair%20Value%20Measurements) The company uses a three-level fair value hierarchy under FASB ASC Section 820, classifying available-for-sale securities as Level 2 and earn-out milestone liabilities and IPR&D as Level 3 - The company classifies available-for-sale securities as Level 2 fair value measurements, while earn-out milestone liabilities and in-process research and development (IPR&D) are classified as Level 3[67](index=67&type=chunk) Summary of Assets and Liabilities by Fair Value Hierarchy | Item | Total Fair Value March 31, 2020 | Total Fair Value December 31, 2019 | | :--------------------------------- | :----------------------- | :------------------- | | **Assets:** | | | | Corporate debt securities, available for sale (Level 2) | $9,887,455 | $7,985,886 | | **Liabilities:** | | | | Earn-out milestone liability (Level 3) | $5,758,983 | $5,717,709 | [Note 8. Intangible Assets](index=18&type=section&id=Note%208.%20Intangible%20Assets) Intangible assets primarily comprise IPR&D and goodwill from the EGEN Inc. acquisition, including ovarian cancer and GBM candidates, with the GBM candidate having a $7 million accumulated impairment, and non-compete agreements being amortized - In-process research and development (IPR&D) acquired from EGEN Inc. was initially valued at **$24.2 million**, including **$13.3 million** for ovarian cancer indication and **$9.4 million** for a glioblastoma multiforme (GBM) candidate[70](index=70&type=chunk) - The GBM candidate had an accumulated impairment of **$7 million** as of 2018, with a remaining carrying value of **$2.4 million** as of March 31, 2020, and December 31, 2019[72](index=72&type=chunk) Summary of Intangible Assets Net Fair Value (March 31, 2020) | Item | Net Balance March 31, 2020 | Net Balance January 1, 2020 | | :------------------- | :------------------- | :------------------- | | In-process research and development (IPR&D) | $15,736,491 | $15,736,491 | | Goodwill | $1,976,101 | $1,976,101 | | Non-compete agreement | $284,147 | $340,976 | [Note 9. Accrued Liabilities](index=20&type=section&id=Note%209.%20Accrued%20Liabilities) Other accrued liabilities primarily consist of amounts due to contract research organizations, accrued salaries and benefits, and accrued professional fees Summary of Other Accrued Liabilities | Item | March 31, 2020 | December 31, 2019 | | :--------------------------------- | :------------- | :------------- | | Amounts due to contract research organizations and other contractual agreements | $305,000 | $475,440 | | Accrued salaries and related benefits | $924,659 | $1,604,541 | | Accrued professional fees | $150,000 | $204,155 | | Other | $19,411 | $19,411 | | Total | $1,399,070 | $2,303,547 | [Note 10. Note Payable](index=20&type=section&id=Note%2010.%20Note%20Payable) The company entered into a $10 million credit agreement with Horizon Technology Finance Corporation, subsequently agreeing in May 2020 to defer two principal payments totaling $833,333 due in August and September 2020 - The company entered into a **$10 million** credit agreement with Horizon Technology Finance Corporation and, on May 13, 2020, agreed to defer two principal payments totaling **$833,333** due in August and September 2020[51](index=51&type=chunk)[82](index=82&type=chunk)[170](index=170&type=chunk)[174](index=174&type=chunk) Horizon Credit Agreement Future Principal Payment Schedule (as of March 31, 2020) | Year | Amount | | :------------------- | :------------- | | 2020 | $2,500,000 | | 2021 | $4,583,333 | | 2022 | $2,916,667 | | 2023 and thereafter | $0 | | Subtotal future principal payments | $10,000,000 | | Net unamortized debt issuance costs | $(100,257) | | Total | $9,899,743 | [Note 11. Stockholders' Equity](index=21&type=section&id=Note%2011.%20Stockholders'%20Equity) The company raised capital through various equity financing instruments, including a common stock purchase agreement with Aspire Capital Fund, LLC and an at-the-market offering with JonesTrading Institutional Services LLC, completing a registered direct offering of 4.57 million common shares for approximately $4.8 million in February 2020 - In Q1 2020, the company sold **1 million** shares of common stock through a common stock purchase agreement with Aspire Capital Fund, LLC, generating approximately **$1.6 million** in gross proceeds[85](index=85&type=chunk)[176](index=176&type=chunk) - On February 27, 2020, the company completed a registered direct offering of **4,571,428** shares of common stock at **$1.05 per share**, generating approximately **$4.8 million** in gross proceeds[88](index=88&type=chunk)[175](index=175&type=chunk) - As part of the registered direct offering, the company issued new warrants to investors to purchase **3,200,000** shares of common stock at an exercise price of **$1.24 per share**[88](index=88&type=chunk)[175](index=175&type=chunk) [Note 12. Stock-Based Compensation](index=22&type=section&id=Note%2012.%20Stock-Based%20Compensation) The company grants stock options and restricted stock to employees and directors under its 2018 Equity Incentive Plan, with $1.2 million in unrecognized stock-based compensation cost as of March 31, 2020, expected to be recognized over a weighted-average period of 0.9 years - As of March 31, 2020, **4,151,038** shares of Celsion common stock were reserved for issuance under equity awards from the 2018 and 2007 plans[96](index=96&type=chunk) Stock-Based Compensation Cost (Three Months Ended) | Indicator | March 31, 2020 | March 31, 2019 | | :------------------- | :------------- | :------------- | | Total stock-based compensation cost | $451,965 | $691,145 | | Charged to research and development expenses | $177,936 | $240,387 | | Charged to general and administrative expenses | $274,029 | $450,758 | - As of March 31, 2020, total unrecognized stock-based compensation cost was **$1.2 million**, expected to be recognized over a weighted-average period of **0.9 years**[98](index=98&type=chunk) [Note 13. Earn-out Milestone Liability](index=24&type=section&id=Note%2013.%20Earn-out%20Milestone%20Liability) As of March 31, 2020, the earn-out milestone liability had a fair value of $5.8 million, with the company recognizing $0.1 million in non-cash expense, valued based on risk-adjusted probabilities of 80% for a $7 million payment and 20% for a $12.4 million payment Earn-out Milestone Liability Fair Value | Date | Fair Value | | :------------- | :------------- | | March 31, 2020 | $5,758,983 | | December 31, 2019 | $5,717,709 | | March 31, 2019 | $5,800,000 | | December 31, 2018 | $8,900,000 | - The company recognized a non-cash loss of **$41,274** in Q1 2020 due to changes in the fair value of the earn-out milestone liability[101](index=101&type=chunk)[103](index=103&type=chunk)[193](index=193&type=chunk) - The liability's valuation is based on assigning **80%** probability to a **$7 million** payment and **20%** probability to a **$12.4 million** payment option[101](index=101&type=chunk)[102](index=102&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) [Note 14. Warrants](index=24&type=section&id=Note%2014.%20Warrants) As of March 31, 2020, the company had 3,826,098 warrants outstanding with a weighted-average exercise price of $1.34, including 200,000 warrants issued to EGWU, Inc. at a $0.01 exercise price with no expiration date Summary of Warrant Activity (as of March 31, 2020) | Indicator | Number of Warrants | Weighted-Average Exercise Price | | :--------------------------------- | :------------- | :------------- | | Warrants outstanding December 31, 2019 | 626,098 | $1.87 | | Warrants issued Q1 2020 | 3,200,000 | $1.24 | | Warrants outstanding March 31, 2020 | 3,826,098 | $1.34 | - **200,000** warrants issued to EGWU, Inc. have an exercise price of **$0.01** and no expiration date[105](index=105&type=chunk) [Note 15. Leases](index=25&type=section&id=Note%2015.%20Leases) The company leases office and R&D facilities, recognizing right-of-use assets and lease liabilities on its consolidated balance sheet since adopting ASC Topic 842 on January 1, 2019, with total lease liabilities of $1,438,914 and a weighted-average remaining lease term of 3.2 years as of March 31, 2020 - The company adopted ASC Topic 842 on January 1, 2019, resulting in the recognition of right-of-use assets and lease liabilities on the consolidated balance sheets[108](index=108&type=chunk) Operating Lease Liabilities and Maturities (as of March 31, 2020) | Year | Lease Payment Amount | | :------------------- | :------------- | | Remainder of 2020 | $395,178 | | 2021 | $530,734 | | 2022 | $535,579 | | 2023 | $233,117 | | 2024 and thereafter | $0 | | Subtotal future lease payments | $1,694,608 | | Less estimated interest | $(255,694) | | Total lease liabilities | $1,438,914 | | Weighted-average remaining term | 3.2 years | | Weighted-average discount rate | 9.98% | - Operating lease expense for Q1 2020 was **$130,595**, with cash paid for operating leases in operating cash flow totaling **$130,631**[110](index=110&type=chunk) [Note 16. Technology Development and Licensing Agreements](index=26&type=section&id=Note%2016.%20Technology%20Development%20and%20Licensing%20Agreements) The company has technology development, manufacturing, and commercial supply agreements with Zhejiang Hisun Pharmaceutical Co., Ltd. (Hisun) for ThermoDox and GEN-1, with Hisun's $5 million non-refundable R&D payment recognized as deferred revenue and amortized over 10 years - The company has a long-term commercial supply agreement with Hisun for ThermoDox, with Hisun responsible for manufacturing and regulatory support[111](index=111&type=chunk) - Hisun's **$5 million** non-refundable R&D payment is recorded as deferred revenue and amortized over **10 years**, recognizing **$125,000** in revenue quarterly[112](index=112&type=chunk)[116](index=116&type=chunk)[187](index=187&type=chunk) - The company also has technology transfer, manufacturing, and commercial supply agreements with Hisun for GEN-1 to support clinical studies and future supply in the US and China[115](index=115&type=chunk)[118](index=118&type=chunk)[161](index=161&type=chunk) [Note 17. Commitments and Contingencies](index=28&type=section&id=Note%2017.%20Commitments%20and%20Contingencies) The company faces a shareholder derivative and class action lawsuit alleging breaches of fiduciary duty by directors and officers regarding the 2018 Equity Incentive Plan's shareholder approval, with the outcome currently uncertain - The company is subject to a shareholder derivative and class action lawsuit alleging breaches of fiduciary duty by directors and officers in connection with the shareholder approval of the 2018 Equity Incentive Plan[119](index=119&type=chunk)[208](index=208&type=chunk) - The lawsuit seeks damages, invalidation of the 2018 Equity Incentive Plan, and disgorgement of equity awards granted[208](index=208&type=chunk) [Note 18. Subsequent Events](index=28&type=section&id=Note%2018.%20Subsequent%20Events) Subsequent events include the April 2020 sale of New Jersey net operating losses for $1.8 million and the May 2020 return of a $632,220 Paycheck Protection Program (PPP) loan - In April 2020, the company completed the sale of New Jersey net operating losses, receiving **$1.8 million** in net proceeds[120](index=120&type=chunk)[168](index=168&type=chunk)[172](index=172&type=chunk) - The company received a **$632,220** loan under the Paycheck Protection Program (PPP) on April 23, 2020, but fully repaid it on May 13, 2020, out of an abundance of caution[121](index=121&type=chunk)[173](index=173&type=chunk) - The company and Horizon agreed to defer two principal payments totaling **$833,333** due in August and September 2020[122](index=122&type=chunk)[170](index=170&type=chunk)[174](index=174&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition and operating results as of March 31, 2020, focusing on R&D progress, financial performance, liquidity, and future capital needs, highlighting ongoing operating losses and financing challenges, particularly amid the COVID-19 pandemic - The company reported a **net loss of $5.1 million** in Q1 2020, an increase from **$2.4 million** in Q1 2019[184](index=184&type=chunk) - As of March 31, 2020, the company held **$17.5 million** in cash, investments, and receivables, projected to fund operations through mid-2021[171](index=171&type=chunk)[185](index=185&type=chunk) - The COVID-19 pandemic may adversely affect the company's ability to raise additional capital and impact clinical trial progress and patient enrollment[165](index=165&type=chunk)[166](index=166&type=chunk) [Strategic and Clinical Overview](index=29&type=section&id=Strategic%20and%20Clinical%20Overview) Celsion Corporation, a clinical-stage oncology company, focuses on ThermoDox for primary liver cancer (Phase III OPTIMA study) and GEN-1 for ovarian cancer (OVATION 2 study), with OPTIMA's second interim efficacy analysis expected in Q2 2020 and GEN-1 showing positive early clinical data and EU orphan drug designation - ThermoDox is undergoing a Phase III OPTIMA study for primary liver cancer, with **556** patients enrolled by August 2018[133](index=133&type=chunk) - The second interim efficacy analysis for the OPTIMA study is anticipated in Q2 2020, requiring a hazard ratio of **0.70** for success[140](index=140&type=chunk) - GEN-1's Phase I/II OVATION 2 study demonstrated positive early clinical data, with an **82%** R0 resection rate in the high-dose cohort, and received EU orphan drug designation[155](index=155&type=chunk)[156](index=156&type=chunk)[158](index=158&type=chunk) [ThermoDox®](index=29&type=section&id=ThermoDox%C2%AE) [GEN-1](index=32&type=section&id=GEN-1) [TheraPlas Technology Platform](index=36&type=section&id=TheraPlas%20Technology%20Platform) [Technology Development and Licensing Agreements](index=36&type=section&id=Technology%20Development%20and%20Licensing%20Agreements) [Business Plan](index=36&type=section&id=Business%20Plan) As a clinical-stage biopharmaceutical company, the company faces ongoing operating losses and substantial future capital needs for R&D and commercialization, with COVID-19 potentially impacting financing and clinical trials, but existing capital is projected to support operations through mid-2021 through net operating loss sales and equity financing - The company has incurred significant operating losses since inception, with accumulated **net losses of approximately $296 million** as of March 31, 2020[164](index=164&type=chunk) - The COVID-19 pandemic may adversely affect the company's ability to raise additional capital and impact clinical trial progress and patient enrollment[165](index=165&type=chunk)[166](index=166&type=chunk) - The company has secured funding through the sale of New Jersey net operating losses and anticipates existing capital resources will support operations through mid-2021[168](index=168&type=chunk)[171](index=171&type=chunk) [Financing Overview](index=38&type=section&id=Financing%20Overview) The company raises capital through equity offerings, debt financing, and net operating loss sales, securing approximately $6.4 million in Q1 2020 via a registered direct offering and Aspire Capital agreement, and deferring some principal payments on its $10 million credit agreement with Horizon in May 2020 - In April 2020, the company completed the sale of New Jersey net operating losses, generating **$1.8 million** in net proceeds[172](index=172&type=chunk) - In February 2020, the company issued approximately **5.6 million** shares of common stock through a registered direct offering and Aspire Capital agreement, generating approximately **$6.4 million** in gross proceeds[175](index=175&type=chunk)[176](index=176&type=chunk) - The company fully repaid a **$632,220** loan received under the Paycheck Protection Program (PPP) on May 13, 2020[173](index=173&type=chunk) [Significant Accounting Policies](index=41&type=section&id=Significant%20Accounting%20Policies) The company is evaluating the impact of new accounting pronouncements, including ASU 2016-13 and ASU 2019-12, while ASU 2018-13 adoption had no financial statement impact - The company will adopt ASU 2016-13 in Q1 2021, with no significant impact expected on the consolidated financial statements[179](index=179&type=chunk) - The adoption of ASU 2018-13 had no impact on the company's financial statements[180](index=180&type=chunk) - The company is evaluating the impact of adopting ASU 2019-12 (Income Taxes) on the consolidated financial statements[181](index=181&type=chunk) [Financial Review for the Three Months Ended March 31, 2020 and 2019](index=42&type=section&id=Financial%20Review%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202020%20and%202019) The company's Q1 2020 net loss expanded to $5.1 million from $2.4 million in Q1 2019, with R&D expenses increasing 10.3% to $3.1 million due to OVATION 2 study costs, and G&A expenses decreasing 17.0% to $1.8 million from reduced personnel and professional fees Summary of Operating Results (Three Months Ended) | Indicator | 2020 (in thousands) | 2019 (in thousands) | Change (Inc/Dec) | Percentage Change | | :--------------------------------- | :------------- | :------------- | :------------- | :------------- | | Licensing revenue | $125 | $125 | $0 | 0% | | Research and development expenses | $3,052 | $2,768 | $284 | 10.3% | | General and administrative expenses | $1,839 | $2,218 | $(379) | (17.0)% | | Total operating expenses | $4,891 | $4,986 | $(95) | (4.2)% | | Operating loss | $(4,766) | $(4,861) | $(95) | 1.9% | - R&D expenses increased by **$0.3 million** to **$3.1 million**, primarily due to increased costs for the OVATION 2 study[188](index=188&type=chunk) - General and administrative expenses decreased by **$0.4 million** to **$1.8 million**, primarily attributable to lower personnel costs (including non-cash stock-based compensation expense) and professional fees[190](index=190&type=chunk) [Licensing Revenue](index=42&type=section&id=Licensing%20Revenue) [Research and Development Expenses](index=42&type=section&id=Research%20and%20Development%20Expenses) [General and Administrative Expenses](index=43&type=section&id=General%20and%20Administrative%20Expenses) [Change in Earn-out Milestone Liability and Warrant Expense](index=43&type=section&id=Change%20in%20Earn-out%20Milestone%20Liability%20and%20Warrant%20Expense) [Investment income and interest expense](index=43&type=section&id=Investment%20income%20and%20interest%20expense) [Financial Condition, Liquidity and Capital Resources](index=44&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company has incurred continuous losses since inception, with an accumulated deficit of $296 million as of March 31, 2020, holding $11.5 million in net working capital, and anticipates needing additional capital through equity, debt, strategic alliances, or net operating loss sales to fund future R&D and commercialization - As of March 31, 2020, the company had an accumulated deficit of **$296 million**[197](index=197&type=chunk) Summary of Working Capital | Indicator | March 31, 2020 | December 31, 2019 | | :------------------- | :------------- | :------------- | | Total current assets | $18.9 million | $16.2 million | | Total current liabilities | $7.4 million | $7.9 million | | Net working capital | $11.5 million | $8.3 million | - The company expects to seek additional capital through equity offerings, debt financing, strategic alliances and licensing agreements, and the sale of net operating losses[200](index=200&type=chunk) [Off-Balance Sheet Arrangements and Contractual Obligations](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements%20and%20Contractual%20Obligations) The company currently has no off-balance sheet arrangements or contractual obligations - The company currently has no off-balance sheet arrangements or contractual obligations[202](index=202&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's investment objectives are capital preservation and maximizing returns without significant risk, managing cash flow and earnings exposure to interest rate changes by maintaining a diversified investment portfolio across issuers, types, and maturities - The company's primary investment objectives are capital preservation and maximizing investment income without significantly increasing risk[203](index=203&type=chunk) - The company's cash flows and earnings are exposed to changes in interest rates on its investment portfolio, with risk managed by maintaining a diversified portfolio of issuers, types, and maturities[203](index=203&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) As of March 31, 2020, management, including the CEO and CFO, assessed and concluded the company's disclosure controls and procedures were effective, with no significant changes to internal controls during the period, acknowledging inherent limitations in preventing all errors and fraud - As of March 31, 2020, the company's disclosure controls and procedures were deemed effective[204](index=204&type=chunk) - No significant changes in internal controls occurred during the reporting period[205](index=205&type=chunk) - Management acknowledges the inherent limitations of control systems, which cannot provide absolute assurance against all errors and fraud[206](index=206&type=chunk) PART II: OTHER INFORMATION [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company faces a shareholder derivative and class action lawsuit alleging breaches of fiduciary duty by directors and officers regarding the 2018 Equity Incentive Plan's shareholder approval, with the outcome currently uncertain - The company is subject to a shareholder derivative and class action lawsuit alleging breaches of fiduciary duty by directors and officers in connection with the shareholder approval of the 2018 Equity Incentive Plan[208](index=208&type=chunk) - The lawsuit seeks damages, invalidation of the 2018 Equity Incentive Plan, and disgorgement of equity awards granted[208](index=208&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks, including ongoing operating losses, product development failures, financing needs, regulatory uncertainties, COVID-19 impacts, intellectual property risks, reliance on third-party collaborations, market competition, and product liability, which could materially adversely affect the company's business, financial condition, and operating results - The company has incurred significant operating losses since inception, with an accumulated deficit of **$296 million** as of March 31, 2020, and expects to continue incurring losses in the future[210](index=210&type=chunk)[215](index=215&type=chunk) - Drug development is a lengthy, expensive, and highly uncertain process, with ThermoDox failing to meet its primary endpoint in an earlier Phase III clinical trial, highlighting the risk of product development failure[213](index=213&type=chunk)[214](index=214&type=chunk) - The COVID-19 pandemic may adversely affect the company's clinical trials, supply chain, financing capabilities, and overall business operations, including delays in patient enrollment and disruptions in regulatory approvals[225](index=225&type=chunk)[226](index=226&type=chunk) [RISKS RELATED TO OUR BUSINESS](index=46&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS) [RISKS RELATED TO OUR SECURITIES](index=69&type=section&id=RISKS%20RELATED%20TO%20OUR%20SECURITIES) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds during this reporting period - There were no unregistered sales of equity securities or use of proceeds during this reporting period[312](index=312&type=chunk) [Item 3. Defaults Upon Senior Securities](index=71&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during this reporting period - There were no defaults upon senior securities during this reporting period[312](index=312&type=chunk) [Item 4. Mine Safety Disclosures](index=72&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure is not applicable - This disclosure is not applicable[313](index=313&type=chunk) [Item 5. Other Information](index=72&type=section&id=Item%205.%20Other%20Information) There were no other information disclosures during this reporting period - There were no other information disclosures during this reporting period[314](index=314&type=chunk) [Item 6. Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including common stock purchase warrants, CEO and CFO certifications, and financial information in XBRL format - Exhibits include common stock purchase warrants, CEO and CFO certifications, and financial information in XBRL format[316](index=316&type=chunk) [SIGNATURES](index=73&type=section&id=SIGNATURES)