UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐	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

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification Number)

997 Lenox Drive, Suite 100,

Lawrenceville, NJ 08648

(Address of principal executive offices)

(609) 896-9100

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common stock, par value $0.01 per share		CLSN		Nasdaq Capital Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check One):

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 12, 2022, the Registrant had 7,098,741 shares of common stock, $0.01 par value per share, outstanding.

CELSION CORPORATION

QUARTERLY REPORT ON

FORM 10-Q

TABLE OF CONTENTS

		Page(s)
PART I: FINANCIAL INFORMATION

Item 1.	Financial Statements and Notes (Unaudited)	1
	Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	1
	Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2022 and 2021	3
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months and Six Months Ended June 30, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended June 30, 2022 and 2021	7
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2022 and 2021	8
	Notes to the Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38

Item 4.	Controls and Procedures	38

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3.	Defaults Upon Senior Securities	39

Item 4.	Mine Safety Disclosures	39

Item 5.	Other Information	39

Item 6.	Exhibits	40

SIGNATURES		41

Cautionary Note Regarding Forward-Looking Statements

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of this Quarterly Report on Form 10-Q, including, without limitation, any projections of earnings, revenue or other financial items, any statements of the plans and objectives of management for future operations (including, but not limited to, pre-clinical development, clinical trials, manufacturing and commercialization), uncertainties and assumptions regarding the impact of the COVID-19 pandemic on our business, operations, clinical trials, supply chain, strategy, goals and anticipated timelines, any statements concerning proposed drug candidates, potential therapeutic benefits, or other new products or services, any statements regarding future economic conditions or performance, any changes in the course of research and development activities and in clinical trials, any possible changes in cost and timing of development and testing, capital structure, financial condition, working capital needs and other financial items, and any statements of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential” or “continue,” or the negative thereof or other comparable terminology. Although we believe that our expectations are based on reasonable assumptions within the bounds of our knowledge of our industry, business, and operations, we cannot guarantee that actual results will not differ materially from our expectations.

Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, including, but not limited to, the inherent uncertainty in the drug development process, our ability to raise additional capital to fund our planned future operations, our ability to obtain or maintain FDA and foreign regulatory approvals for our drug candidates, potential impact of the outbreak, duration and severity of the COVID-19 pandemic on our business, our ability to enroll patients in our clinical trials, risks relating to third parties conduct of our clinical trials, risks relating to government, private health insurers and other third-party payers coverage or reimbursement, risks relating to commercial potential of a drug candidate in development, changes in technologies for the treatment of cancer, impact of development of competitive drug candidates by others, risks relating to intellectual property, volatility in the market price of our common stock, potential inability to maintain compliance with The Nasdaq Marketplace Rules and the impact of adverse capital and credit market conditions. These and other risks, assumptions are described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and in other documents that we file or furnish with the SEC. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. All forward-looking statements speak only as of the date they are made, and we do not intend to update any forward-looking statements, except as required by law or applicable regulations. We operate in a highly competitive, highly regulated, and rapidly changing environment and our business is in a state of evolution. Therefore, it is likely that new risks will emerge, and that the nature and elements of existing risks will change, over time. It is not possible for management to predict all such risk factors or changes therein, or to assess either the impact of all such risk factors on our business or the extent to which any individual risk factor, combination of factors, or new or altered factors, may cause results to differ materially from those contained in any forward-looking statement.

Except where the context otherwise requires, in this Quarterly Report on Form 10-Q, the “Company,” “Celsion,” “we,” “us,” and “our” refer to Celsion Corporation, a Delaware corporation and its wholly owned subsidiaries, CLSN Laboratories, Inc., a Delaware corporation and Celsion GmbH, A Swiss corporation.

Trademarks

The Celsion brand and product names, including but not limited to Celsion^® and ThermoDox^® contained in this document are trademarks, registered trademarks or service marks of Celsion Corporation or its subsidiary in the United States (“U.S.”) and certain other countries. This document also contains references to trademarks and service marks of other companies that are the property of their respective owners.

PART I: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CELSION CORPORATION

CONDENSED CONSOLIDATED

BALANCE SHEETS

	June 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	26,742,128	$	19,586,272
Investment in debt securities - available for sale, at fair value		15,371,480		29,803,095
Accrued interest receivable on investment securities		29,728		108,844
Advances and deposits on clinical programs and other current assets		2,767,570		2,447,413
Total current assets		44,910,906		51,945,624

Property and equipment (at cost, less accumulated depreciation and amortization)		561,662		477,011

Other assets:
Money market investments, restricted cash		6,000,000		6,000,000
Deferred income tax asset		–		1,383,446
In-process research and development, net		13,366,234		13,366,234
Operating lease right-of-use assets, net		430,412		690,995
Deposits and other assets		58,761		183,489
Total other assets		19,855,407		21,624,164

Total assets	$	65,327,975	$	74,046,799

See accompanying notes to the condensed consolidated financial statements.

CELSION CORPORATION

CONDENSED CONSOLIDATED

BALANCE SHEETS

(Continued)

	June 30, 2022			December 31, 2021
	(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable – trade	$	2,392,972		$	2,547,251
Other accrued liabilities		3,788,458			3,173,537
Operating lease liability - current portion		459,542			548,870
Deferred revenue - current portion		250,000			500,000
Total current liabilities		6,890,972			6,769,658

Earn-out milestone liability		5,396,000			5,396,000
Notes payable – non-current portion, net of deferred financing costs		5,945,091			5,854,461
Operating lease liability - non-current portion		53,419			230,749
Total liabilities		18,285,482			18,250,868

Commitments and contingencies		–			–

Stockholders’ equity:

Preferred Stock - $0.01 par value (100,000 shares authorized, and no shares issued or outstanding at June 30, 2022 and December 31, 2021)		–			–

Common stock - $0.01 par value (112,500,000 shares authorized; 7,098,763 and 5,770,538 shares issued at June 30, 2022 and December 31, 2021, respectively; and 7,098,741 and 5,770,516 shares outstanding at June 30, 2022 and December 31, 2021, respectively)		70,988			57,705
Additional paid-in capital		396,413,587			388,600,979
Accumulated other comprehensive loss		(70,034	)		(7,974	)
Accumulated deficit		(349,286,860	)		(332,769,591	)
Total stockholders’ equity before treasury stock		47,127,681			55,881,119

Treasury stock, at cost (22 shares at June 30, 2022 and December 31, 2021)		(85,188	)		(85,188	)
Total stockholders’ equity		47,042,493			55,795,931

Total liabilities and stockholders’ equity	$	65,327,975		$	74,046,799

See accompanying notes to the condensed consolidated financial statements.

CELSION CORPORATION

CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

(Unaudited)

	2022			2021			2022			2021
	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021

Licensing revenue	$	125,000		$	125,000		$	250,000		$	250,000

Operating expenses:
Research and development		3,226,295			2,593,412			6,321,715			5,164,985
General and administrative		2,876,976			2,602,990			5,748,533			5,539,761
Total operating expenses		6,103,271			5,196,402			12,070,248			10,704,746

Loss from operations		(5,978,271	)		(5,071,402	)		(11,820,248	)		(10,454,746	)

Other (expense) income:
Gain (loss) from change in valuation of earn-out milestone liability		–			81,000			–			(70,000	)
Investment income (loss)		40,355			(349	)		52,459			2,062
Interest expense		(105,024	)		(221,227	)		(4,751,281	)		(378,841	)
Recognized loss on extinguishment of debt		–			(234,419	)		–			(234,419	)
Other (expense) income		3			(2,000	)		1,801			(1,456	)
Total other (expense) income, net		(64,666	)		(376,995	)		(4,697,021	)		(682,654	)

Net loss	$	(6,042,937	)	$	(5,448,397	)	$	(16,517,269	)	$	(11,137,400	)

Net loss per common share
Basic and diluted	$	(0.87	)	$	(0.95	)	$	(2.59	)	$	(2.19	)

Weighted average shares outstanding
Basic and diluted		6,981,970			5,728,250			6,372,908			5,077,696

See accompanying notes to the condensed consolidated financial statements.

CELSION CORPORATION

CONDENSED CONSOLIDATED

STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	2022			2021			2022			2021
	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Other comprehensive loss

Changes in:
Realized gains on debt securities recognized in investment income, net	$	21,596		$	1,785		$	23,934		$	1,785
Unrealized losses on debt securities, net		(32,652	)		(7,340	)		(85,994	)		(5,555	)

Change in unrealized losses on available for sale securities, net		(11,056	)		(5,555	)		(62,060	)		(3,770	)

Net loss		(6,042,937	)		(5,448,397	)		(16,517,269	)		(11,137,400	)

Comprehensive loss	$	(6,053,993	)	$	(5,453,952	)	$	(16,579,329	)	$	(11,141,170	)

See accompanying notes to the condensed consolidated financial statements.

CELSION CORPORATION

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

(Unaudited)

	2022			2021
	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities:

Net loss	$	(16,517,269	)	$	(11,137,400	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		341,954			383,801
Change in fair value of earn-out milestone liability		–			70,000
Recognition of deferred revenue		(250,000	)		(250,000	)
Stock-based compensation		1,486,522			2,372,945
Deferred income tax asset		1,383,446			1,845,823
Amortization of deferred finance charges and debt discount associated with notes payable		90,630			145,884
Net changes in:
Accrued interest on investment securities		79,116			(105,000	)
Advances, deposits, and other current assets		(195,429	)		(183,756	)
Accounts payable and accrued liabilities		193,984			(491,694	)
Net cash used in operating activities		(13,387,046	)		(7,349,397	)

Cash flows from investing activities:
Purchases of investment securities		(8,405,445	)		(40,927,055	)
Proceeds from sale and maturity of investment securities		22,775,000			9,000,000
Purchases of property and equipment		(166,022	)		(227,000	)
Net cash provided by (used in) investing activities		14,203,533			(32,154,055	)

Cash flows from financing activities:
Proceeds from redeemable convertible preferred stock offering		28,500,000			–
Payment upon redemption of redeemable convertible preferred stock		(28,500,000	)		–
Proceeds from sale of common stock equity, net of issuance costs		6,339,369			52,697,265
Proceeds from exercise of common stock warrants		–			1,508,666
Proceeds from exercise of options to purchase common stock		–			4,725
Proceeds from the SVB Loan Facility, net of issuance costs		–			5,756,630
Payoff of the Horizon Credit Agreement and accrued end of term fees		–			(5,190,587	)
Net cash provided by financing activities		6,339,369			54,776,699

Net change in cash, cash equivalents and restricted cash		7,155,856			15,273,247
Cash, cash equivalents and restricted cash at beginning of period		25,586,272			17,164,177
Cash, cash equivalents and restricted cash at end of period	$	32,742,128		$	32,437,424

See accompanying notes to the condensed consolidated financial statements.

CELSION CORPORATION

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

	2022			2021
	Six Months Ended June 30,
	2022			2021

Supplemental disclosures of cash flow information:
Interest paid on note payable and redemption of convertible redeemable preferred stock	$	4,267,107		$	267,360

Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from lease payments	$	299,947		$	264,546

Realized and unrealized losses, net, on investment securities	$	(62,060	)	$	(3,770	)

See accompanying notes to the condensed consolidated financial statements.

CELSION CORPORATION

CONDENSED CONSOLIDATED

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

THREE MONTHS ENDED JUNE 30, 2022 AND 2021

	Shares		Amount		Capital		Shares		Amount			Loss			Deficit			Equity
	Common Stock Outstanding				Additional Paid in		Treasury Stock					Accumulated Other Comprehensive			Accumulated			Total stockholders’
	Shares		Amount		Capital		Shares		Amount			Loss			Deficit			Equity

Balance at April 1, 2022		5,770,467	$	57,705	$	389,595,593		22	$	(85,188	)	$	(58,978	)	$	(343,243,923	)	$	46,265,209
Net loss		-		-		-		-		-			-			(6,042,937	)		(6,042,937	)
Sale of equity through equity through registered direct offering		1,328,274		13,283		6,326,086		-		-			-			-			6,339,369
Realized and unrealized gains (losses), net, on investments securities		-		-		-		-		-			(11,056	)		-			(11,056	)
Stock-based compensation expense		-		-		491,908		-		-			-			-			491,908
Balance at June 30, 2022		7,098,741	$	70,988	$	396,413,587		22	$	(85,188	)	$	(70,034	)	$	(349,286,860	)	$	47,042,493

	Common Stock Outstanding				Additional Paid in		Treasury Stock					Accumulated Other Comprehensive			Accumulated			Total stockholders’
	Shares		Amount		Capital		Shares		Amount			Loss			Deficit			Equity

Balance at April 1, 2021		5,001,285	$	50,013	$	372,682,792		22	$	(85,188	)	$	1,785		$	(317,689,344	)	$	54,960,058
Net loss		-		-		-		-		-			-			(5,448,397	)		(5,448,397	)
Sale of equity through equity financing facilities		769,231		7,692		13,746,095		-		-			-			-			13,753,787
Realized and unrealized gains (losses), net, on investments securities		-		-		-		-		-			(5,555	)		-			(5,555	)
Stock-based compensation expense		-		-		793,619		-		-			-			-			793,619
Balance at June 30, 2021		5,770,516	$	57,705	$	387,222,506		22	$	(85,188	)	$	(3,770	)	$	(323,137,741	)	$	64,053,512

See accompanying notes to the condensed consolidated financial statements.

CELSION CORPORATION

CONDENSED CONSOLIDATED

SEC Form 10-Q filed by Celsion Corporation