CELSION CORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

The following discussion and analysis of our financial condition and results of
operations This discussion contains forward-looking statements that involve
risks and uncertainties. Our actual results may differ materially from those
discussed in forward-looking statements. Factors that might cause a difference
include, but are not limited to, those discussed above under "Cautionary Note
Regarding Forward-Looking Statements", and in Item 1A. Risk factors in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Strategic and Clinical Overview

Celsion Corporation ("Celsion" or the "Company") is a fully integrated, clinical
stage biotechnology company focused on advancing a portfolio of innovative
treatments including DNA-based immunotherapies, next generation vaccines and
directed chemotherapies through clinical trials and eventual commercialization.
The Company's product pipeline includes GEN-1, a DNA-based immunotherapy for the
localized treatment of ovarian cancer. ThermoDox®, Celsion's proprietary
heat-activated liposomal encapsulation of doxorubicin, currently under
investigator-sponsored development for several cancer indications, is being
managed though Celsion's wholly owned subsidiary, Celsion GmbH. Additionally,
Celsion has two feasibility stage platform technologies for the development of
novel nucleic acid-based immunotherapies and next generation vaccines and other
anti-cancer DNA or RNA therapies. Both are novel synthetic, non-viral vectors
with demonstrated capability in nucleic acid cellular transfection.

IMMUNO-ONCOLOGY Program

On June 20, 2014, the Company completed the acquisition of substantially all of
the assets of EGEN, a private company located in Huntsville, Alabama. Pursuant
to the Asset Purchase Agreement, CLSN Laboratories acquired all of EGEN's right,
title and interest in substantially all of the assets of EGEN, including cash
and cash equivalents, patents, trademarks and other intellectual property
rights, clinical data, certain contracts, licenses and permits, equipment,
furniture, office equipment, furnishings, supplies and other tangible personal
property. A key asset acquired from EGEN was the TheraPlas technology platform.
The first drug candidate developed from this technology platform is GEN-1.

THERAPLAS Technology Platform

TheraPlas is a technology platform for the delivery of DNA and mRNA therapeutics
via synthetic non-viral carriers and is capable of providing cell transfection
for double-stranded DNA plasmids and large therapeutic RNA segments such as
mRNA. There are two components of the TheraPlas system, a plasmid DNA or mRNA
payload encoding a therapeutic protein, and a delivery system. The delivery
system is designed to protect the DNA/mRNA from degradation and promote
trafficking into cells and through intracellular compartments. We designed the
delivery system of TheraPlas by chemically modifying the low molecular weight
polymer to improve its gene transfer activity without increasing toxicity. We
believe that TheraPlas may be a viable alternative to current approaches to gene
delivery due to several distinguishing characteristics, including enhanced
molecular versatility that allows for complex modifications to potentially
improve activity and safety.

The design of the TheraPlas delivery system is based on molecular
functionalization of polyethyleneimine (PEI), a cationic delivery polymer with a
distinct ability to escape from the endosomes due to heavy protonation. The
transfection activity and toxicity of PEI is tightly coupled to its molecular
weight; therefore, the clinical application of PEI is limited. We have used
molecular functionalization strategies to improve the activity of low molecular
weight PEIs without augmenting their cytotoxicity. In one instance, chemical
conjugation of a low molecular weight branched BPEI1800 with cholesterol and
polyethylene glycol (PEG) to form PEG-PEI-Cholesterol (PPC) dramatically
improved the transfection activity of BPEI1800 following in vivo delivery.
Together, the cholesterol and PEG modifications produced approximately 20-fold
enhancement in transfection activity. Biodistribution studies following
intraperitoneal or subcutaneous administration of DNA/PPC nanocomplexes showed
DNA delivery localized primarily at the injection site with only small amount
escaping into the systemic circulation. PPC is the delivery component of our
lead TheraPlas product, GEN-1, which is in clinical development for the
treatment of ovarian cancer. The PPC manufacturing process has been scaled up
from bench scale (1-2 g) to 0.6Kg, and several current Good Manufacturing
Practice ("cGMP") lots have been produced with reproducible quality.

We believe that TheraPlas has emerged as a viable alternative to current
approaches due to several distinguishing characteristics such as strong
molecular versatility that may allow for complex modifications to potentially
improve activity and safety with little difficulty. The biocompatibility of
these polymers reduces the risk of adverse immune response, thus allowing for
repeated administration. Compared to naked DNA or cationic lipids, TheraPlas is
generally safer, more efficient, and cost effective. We believe that these
advantages place Celsion in a strong position to capitalize on this technology
platform.

24

Ovarian Cancer Overview

Ovarian cancer is the most lethal of gynecological malignancies among women with
an overall five-year survival rate of 45%. This poor outcome is due in part to
the lack of effective prevention and early detection strategies. There were
approximately 20,000 new cases of ovarian cancer in the U.S. in 2021 with an
estimated 13,000 deaths. Mortality rates for ovarian cancer declined very little
in the last forty years due to the unavailability of detection tests and
improved treatments. Most women with ovarian cancer are not diagnosed until
Stages III or IV, when the disease has spread outside the pelvis to the abdomen
and areas beyond causing swelling and pain. The five-year survival rates for
Stages III and IV are 39% and 17%, respectively. First-line chemotherapy
regimens are typically platinum-based combination therapies. Although this first
line of treatment has an approximate 80% response rate, 55% to 75% of women will
develop recurrent ovarian cancer within two years and ultimately will not
respond to platinum therapy. Patients whose cancer recurs or progresses after
initially responding to surgery and first-line chemotherapy have been divided
into one of the two groups based on the time from completion of platinum therapy
to disease recurrence or progression. This time period is referred to as
platinum-free interval. The platinum-sensitive group has a platinum-free
interval of longer than six months. This group generally responds to additional
treatment with platinum-based therapies. The platinum-resistant group has a
platinum-free interval of shorter than six months and is resistant to additional
platinum-based treatments. Pegylated liposomal doxorubicin, topotecan, and
Avastin are the only approved second-line therapies for platinum-resistant
ovarian cancer. The overall response rate for these therapies is 10% to 20% with
median overall survival ("OS") of eleven to twelve months. Immunotherapy is an
attractive novel approach for the treatment of ovarian cancer particularly since
ovarian cancers are considered immunogenic tumors. IL-12 is one of the most
active cytokines for the induction of potent anti-cancer immunity acting through
the induction of T-lymphocyte and natural killer cell proliferation. The
precedence for a therapeutic role of IL-12 in ovarian cancer is based on
epidemiologic and preclinical data.

GEN-1 Immunotherapy

GEN-1 is a DNA-based immunotherapeutic product candidate for the localized
treatment of ovarian cancer by intraperitoneally administering an Interleukin-12
("IL-12") plasmid formulated with our proprietary TheraPlas delivery system. In
this DNA-based approach, the immunotherapy is combined with a standard
chemotherapy drug, which can potentially achieve better clinical outcomes than
with chemotherapy alone. We believe that increases in IL-12 concentrations at
tumor sites for several days after a single administration could create a potent
immune environment against tumor activity and that a direct killing of the tumor
with concomitant use of cytotoxic chemotherapy could result in a more robust and
durable antitumor response than chemotherapy alone. We believe the rationale for
local therapy with GEN-1 is based on the following:

? Loco-regional production of the potent cytokine IL-12 avoids toxicities and

poor pharmacokinetics associated with systemic delivery of recombinant IL-12;

? Persistent local delivery of IL-12 lasts up to one week and dosing can be

    repeated; and

  ? Local therapy is ideal for long-term maintenance therapy.

OVATION I Study. In February 2015, we announced that the U.S. Food and Drug
Administration ("FDA") accepted, without objection, the Phase I dose-escalation
clinical trial of GEN-1 in combination with the standard of care in neoadjuvant
ovarian cancer (the "OVATION I Study"). On September 30, 2015, we announced
enrollment of the first patient in the OVATION I Study. The OVATION I Study was
designed to:

(i) identify a safe, tolerable and therapeutically active dose of GEN-1 by

        recruiting and maximizing an immune response;

  (ii)  enroll three to six patients per dose level and evaluate safety and
        efficacy; and

  (iii) attempt to define an optimal dose for a follow-on Phase I/II study.

In addition, the OVATION I Study established a unique opportunity to assess how
cytokine-based compounds such as GEN-1, directly affect ovarian cancer cells and
the tumor microenvironment in newly diagnosed ovarian cancer patients. The study
was designed to characterize the nature of the immune response triggered by
GEN-1 at various levels of the patients' immune system, including:

? Infiltration of cancer fighting T-cell lymphocytes into primary tumor and

tumor microenvironment including peritoneal cavity, which is the primary site

of metastasis of ovarian cancer;

? Changes in local and systemic levels of immuno-stimulatory and

immunosuppressive cytokines associated with tumor suppression and growth,

    respectively; and

  ? Expression profile of a comprehensive panel of immune related genes in
    pre-treatment and GEN-1-treated tumor tissue.



25





We initiated the OVATION I Study at four clinical sites at the University of
Alabama at Birmingham, Oklahoma University Medical Center, Washington University
in St. Louis, and the Medical College of Wisconsin. During 2016 and 2017, we
announced data from the first fourteen patients in the OVATION I Study. On
October 3, 2017, we announced final translational research and clinical data
from the OVATION I Study.

Key translational research findings from all evaluable patients are consistent
with the earlier reports from partial analysis of the data and are summarized
below:

? The intraperitoneal treatment of GEN-1 in conjunction with NACT resulted in

dose dependent increases in IL-12 and Interferon-gamma (IFN-?) levels that

were predominantly in the peritoneal fluid compartment with little to no

changes observed in the patients' systemic circulation. These and other

post-treatment changes including decreases in VEGF levels in peritoneal fluid

are consistent with an IL-12 based immune mechanism;

? Consistent with the previous partial reports, the effects observed in the IHC

analysis were pronounced decreases in the density of immunosuppressive T-cell

signals (Foxp3, PD-1, PDL-1, IDO-1) and increases in CD8+ cells in the tumor

    microenvironment;

  ? The ratio of CD8+ cells to immunosuppressive cells was increased in
    approximately 75% of patients suggesting an overall shift in the tumor

microenvironment from immunosuppressive to pro-immune stimulatory following

treatment with GEN-1. An increase in CD8+ to immunosuppressive T-cell

populations is a leading indicator and believed to be a good predictor of

improved OS; and

? Analysis of peritoneal fluid by cell sorting, not reported before, shows a

treatment-related decrease in the percentage of immunosuppressive T-cell

(Foxp3+), which is consistent with the reduction of Foxp3+ T-cells in the

primary tumor tissue, and a shift in tumor naïve CD8+ cell population to more

efficient tumor killing memory effector CD8+ cells.

The Company also reported positive clinical data from the first fourteen
patients who completed treatment in the OVATION I Study. GEN-1 plus standard
chemotherapy produced no dose limiting toxicities and positive dose dependent
efficacy signals which correlate well with positive surgical outcomes as
summarized below:

? Of the fourteen patients treated in the entire study, two patients

demonstrated a complete response, ten patients demonstrated a partial response

and two patients demonstrated stable disease, as measured by RECIST criteria.

This translates to a 100% disease control rate and an 86% objective response

rate ("ORR"). Of the five patients treated in the highest dose cohort, there

was a 100% ORR with one complete response and four partial responses;

? Fourteen patients had successful resections of their tumors, with nine

patients (64%) having a complete tumor resection ("R0"), which indicates a

microscopically margin-negative resection in which no gross or microscopic

tumor remains in the tumor bed. Seven out of eight (88%) patients in the

    highest two dose cohorts experienced a R0 surgical resection. All five
    patients treated at the highest dose cohort experienced a R0 surgical
    resection; and

? All patients experienced a clinically significant decrease in their CA-125

protein levels as of their most recent study visit. CA-125 is used to monitor

certain cancers during and after treatment. CA-125 is present in greater

concentrations in ovarian cancer cells than in other cells.

On July 29, 2021, the Company announced final progression free survival ("PFS")
results from the OVATION I Study published in the Journal of Clinical Cancer
Research. Median PFS in patients treated per protocol (n=14) was 21 months and
was 18.4 months for the intent-to-treat ("ITT") population (n=18) for all dose
cohorts, including three patients who dropped out of the study after 13 days or
less, and two patients who did not receive full NAC and GEN-1 cycles. Under the
current standard of care, in women with Stage III/IV ovarian cancer undergoing
NAC, their disease progresses within about 12 months on average. The results
from the OVATION I Study support continued evaluation of GEN-1 based on
promising tumor response, as reported in the PFS data, and the ability for
surgeons to completely remove visible tumor at interval debulking surgery. GEN-1
was well tolerated, and no dose-limiting toxicities were detected.
Intraperitoneal administration of GEN-1 was feasible with broad patient
acceptance.

26





OVATION 2 Study. The Company held an Advisory Board Meeting on September 27,
2017 with the clinical investigators and scientific experts including those from
Roswell Park Cancer Institute, Vanderbilt University Medical School, and M.D.
Anderson Cancer Center to review and finalize clinical, translational research
and safety data from the OVATION I Study in order to determine the next steps
forward for our GEN-1 immunotherapy program.

On November 13, 2017, the Company filed its Phase I/II clinical trial protocol
with the FDA for GEN-1 for the localized treatment of ovarian cancer. The
protocol is designed with a single dose escalation phase to 100 mg/m² to
identify a safe and tolerable dose of GEN-1 while maximizing an immune response.
The Phase I portion of the study will be followed by a continuation at the
selected dose in approximately 110 patients randomized Phase II study.

In the OVATION 2 Study, patients in the GEN-1 treatment arm will receive GEN-1
plus chemotherapy pre- and post-interval debulking surgery ("IDS"). The OVATION
2 Study will include up to 110 patients with Stage III/IV ovarian cancer, with
12 to 15 patients in the Phase I portion and up to 95 patients in Phase II. The
study is powered to show a 33% improvement in the primary endpoint, PFS, when
comparing GEN-1 with neoadjuvant + adjuvant chemotherapy versus neoadjuvant +
adjuvant chemotherapy alone. The PFS primary analysis will be conducted after at
least 80 events have been observed or after all patients have been followed for
at least 16 months, whichever is later.

In March 2020, the Company announced encouraging initial clinical data from the
first 15 patients enrolled in the Phase I portion of the OVATION 2 Study for
patients newly diagnosed with Stage III and IV ovarian cancer. The OVATION 2
Study combines GEN-1, the Company's IL-12 gene-mediated immunotherapy, with
standard-of-care neoadjuvant chemotherapy (NACT). Following NACT, patients
undergo interval debulking surgery (IDS), followed by three additional cycles of
chemotherapy.

GEN-1 plus standard NACT produced positive dose-dependent efficacy results, with no dose-limiting toxicities, which correlates well with successful surgical outcomes as summarized below:

? Of the 15 patients treated in the Phase I portion of the OVATION 2 Study, nine

patients were treated with GEN-1 at a dose of 100 mg/m² plus NACT and six

patients were treated with NACT only. All 15 patients had successful

resections of their tumors, with eight out of nine patients (88%) in the GEN-1

treatment arm having an R0 resection, which indicates a microscopically

margin-negative complete resection in which no gross or microscopic tumor

remains in the tumor bed. Only three out of six patients (50%) in the NACT

only treatment arm had a R0 resection.

? When combining these results with the surgical resection rates observed in the

Company's prior Phase Ib dose-escalation trial (the OVATION 1 Study), a

population of patients with inclusion criteria identical to the OVATION 2

Study, the data reflect the strong dose-dependent efficacy of adding GEN-1 to

    the current standard of care NACT:



                                                      % of
                                                    Patients
                                                    with R0
                                                   Resections
0, 36, 47 mg/m² of GEN-1 plus NACT       n=12               42 %
61, 79, 100 mg/m² of GEN-1 plus NACT     n=17               82 %

? The ORR as measured by Response Evaluation Criteria in Solid Tumors (RECIST)

criteria for the 0, 36, 47 mg/m² dose GEN-1 patients were comparable, as

expected, to the higher (61, 79, 100 mg/m²) dose GEN-1 patients, with both

groups demonstrating an approximate 80% ORR.

On March 23, 2020, the Company announced that the European Medicines Agency (the
"EMA") Committee for Orphan Medicinal Products ("COMP") has recommended that
GEN-1 be designated as an orphan medicinal product for the treatment of ovarian
cancer. GEN-1 is an IL-12 DNA plasmid vector encased in a non-viral nanoparticle
delivery system, which enables cell transfection followed by persistent, local
secretion of the IL-12 protein. GEN-1 previously received orphan designation
from the FDA.

On March 26, 2020, the Company announced with Medidata, a Dassault Systèmes
company, that examining matched patient data provided by Medidata in a synthetic
control arm ("SCA") with results from the Company's completed Phase Ib
dose-escalating OVATION I Study showed positive results in progression-free
survival ("PFS"). The hazard ratio ("HR") was 0.53 in the ITT group, showing
strong signals of efficacy. Celsion believes these data may warrant
consideration of strategies to accelerate the clinical development program for
GEN-1 in newly diagnosed, advanced ovarian cancer patients by the FDA. In its
March 2019 discussion with Celsion, the FDA noted that preliminary findings from
the Phase Ib OVATION I Study were exciting but lacked a control group to
evaluate GEN-1's independent impact on impressive tumor response, surgical
results and PFS. The FDA encouraged the Company to continue its GEN-1
development program and consult with FDA with new findings that may have a
bearing on designations such as Fast Track and Breakthrough Therapy.

27





SCAs have the potential to revolutionize clinical trials in certain oncology
indications and some other diseases where a randomized control is not ethical or
practical. SCAs are formed by carefully selecting control patients from
historical clinical trials to match the demographic and disease characteristics
of the patients treated with the new investigational product. SCAs have been
shown to mimic the results of traditional randomized controls so that the
treatment effects of an investigational product can be visible by comparison to
the SCA. SCAs can help advance the scientific validity of single arm trials, and
in certain indications, reduce time and cost, and expose fewer patients to
placebos or existing standard-of-care treatments that might not be effective for
them.

On July 27, 2020, the Company announced the randomization of the first two
patients in the Phase II portion of the OVATION 2 Study with GEN-1 in advanced
ovarian cancer. The Company anticipates completing enrollment of up to 110
patients before the end of the third quarter of 2022. Because this is an
open-label study, the Company intends to provide clinical updates throughout the
course of treatment including response rates and surgical resection scores.

In February 2021, the Company announced that it has received Fast Track
designation from the FDA for GEN-1, its DNA-mediated IL-12 immunotherapy
currently in Phase II development for the treatment of advanced ovarian cancer
and also provided an update on the OVATION 2 Study. The Company reported that
approximately one-third, or 34 patients, of the anticipated 110 patients had
been enrolled into the OVATION 2 Study, of which 20 are in the treatment arm and
14 are in the control. Of the 34 patients enrolled in the trial, 27 patients
have had their interval debulking surgery with the following results:

? 80% of patients treated with GEN-1 had a R0 resection, which indicates a

microscopically margin-negative complete resection in which no gross or

microscopic tumor remains in the tumor bed.

? 58% of patients in the control arm had an R0 resection.

? This interim data represents a 38% improvement in R0 resection rates for GEN-1

patients compared with control arm patients and is consistent with the

reported improvement in resection scores noted in the encouraging Phase I

OVATION I Study, the manuscript of which has been submitted for peer review

    publication.



In February 2022, the Company announced that following a pre-planned interim
safety review of 81 as treated patients randomized in the OVATION 2 Study, the
Data Safety Monitoring Board (DSMB) unanimously recommended that the OVATION 2
Study continue treating patients with the dose of 100 mg/m2. The DSMB also
determined that safety is satisfactory with an acceptable risk/benefit, and that
patients tolerate GEN-1 during a course of treatment that lasts up to six
months. No dose-limiting toxicities were reported.

The Company also announced that over 75% of the projected 110 patients have been
enrolled in the OVATION 2 Study. Interim clinical data from the first 39
patients who have undergone interval debulking surgery showed that the GEN-1
treatment arm is showing a 27% improvement in R0 surgical resection rate over
the control arm.

Through May 15, 2022, 85% of the patients have been enrolled in the OVATION 2
study. To date no patient in the treatment arm of the phase 2 portion of the
trial has received all 17 doses of the GEN-1 treatment as prescribed in the
study protocol. Implications will be assessed in conjunction with the primary
end point, PFS, results.

PLACCINE DNA VACCINE TECHNOLOGY PLATFORM

In January 2021, the Company announced the filing of a provisional U.S. patent
application for a novel DNA-based, investigational vaccine for preventing or
treating infections from a broad range of infectious agents including the
coronavirus disease using its PLACCINE DNA vaccine technology platform
("PLACCINE"). The provisional patent covers a family of novel composition of
multi-cistronic vectors and polymeric nanoparticles that comprise the PLACCINE
DNA vaccine platform technology for preventing or treating infectious agents
that have the potential for global pandemics, including the SARS-CoV-2 virus and
its variations, using the Company's TheraPlas platform technology.

Celsion's PLACCINE DNA vaccine technology platform is characterized by a single
multi-cistronic DNA plasmid vector expressing multiple pathogen antigens
delivered with a synthetic delivery system. We believe it is adaptable to
creating vaccines for a multitude of pathogens, including emerging pathogens
leading to pandemics as well as infectious diseases that have yet to be
effectively addressed with current vaccine technologies. This flexible vaccine
platform is well supported by an established supply chain to produce any plasmid
vector and its assembly into a respective vaccine formulation.

28





PLACCINE is an extension of the Company's synthetic, non-viral TheraPlas
delivery technology currently in a Phase II trial for the treatment of
late-stage ovarian cancer with GEN-1. Celsion's proprietary multifunctional DNA
vaccine technology concept is built on the flexible PLACCINE technology platform
that is amenable to rapidly responding to the SARS-CoV-2 virus, as well as
possible future mutations of SARS-CoV-2, other future pandemics, emerging
bioterrorism threats, and novel infectious diseases. Celsion's extensive
experience with TheraPlas suggests that the PLACCINE-based nanoparticles are
stable at storage temperatures of 4oC to 25oC, making vaccines developed on this
platform easily suitable for broad world-wide distribution.

Celsion's vaccine approach is designed to optimize the quality of the immune
response dictating the efficiency of pathogen clearance and patient recovery.
Celsion has taken a multivalent approach in an effort to generate an even more
robust immune response that not only results in a strong neutralizing antibody
response, but also a more robust and durable T-cell response. Delivered with
Celsion's synthetic polymeric system, the proprietary DNA plasmid is protected
from degradation and its cellular uptake is facilitated.

COVID-19 Vaccine Overview

Emerging data from the recent literature indicates that the quality of the
immune response as opposed to its absolute magnitude is what dictates SARS-CoV-2
viral clearance and recovery and that an ineffective or non-neutralizing
enhanced antibody response might actually exacerbate disease. The
first-generation COVID-19 vaccines were developed for rapid production and
deployment and were not optimized for generating cellular responses that result
in effective viral clearance. Though early data has indicated some of these
vaccines to be over 95% effective, these first-generation vaccines were
primarily designed to generate a strong antibody response and, while they have
been shown to provide prophylactic protection against disease, the durability of
this protection is currently unclear. The vast majority of these vaccines have
been specifically developed to target the SARS-CoV-2 Spike (S) protein
(antigen), though it is known that restricting a vaccine to a sole viral antigen
creates selection pressure that can serve to facilitate the emergence of viral
resistance. Indeed, even prior to full vaccine rollout, it has been observed
that the S protein is a locus for rapid evolutionary and functional change as
evidenced by the D614G, Y453F, 501Y.V2, and VUI-202012/01 mutations/deletions.
This propensity for mutation of the S protein leads to future risk of efficacy
reduction over time as these mutations accumulate.

Our Next Generation Vaccine Initiative

Celsion's vaccine candidate comprises a single plasmid vector containing the DNA
sequence encoding multiple SARS-CoV-2 antigens. Delivery will be evaluated
intramuscularly, intradermally, or subcutaneously with a non-viral synthetic DNA
delivery carrier that facilitates vector delivery into the cells of the injected
tissue and has potential immune adjuvant properties. Unique designs and
formulations of Celsion vaccine candidates may offer several potential key
advantages. The synthetic polymeric DNA carrier is an important component of the
vaccine composition as it has the potential to facilitate the vaccine
immunogenicity by improving vector delivery and, due to potential adjuvant
properties, attract professional immune cells to the site of vaccine delivery.

Future vaccine technology will need to address viral mutations and the
challenges of efficient manufacturing, distribution, and storage. We believe an
adaptation of our TheraPlas technology, PLACCINE, has the potential to meet
these challenges. Our approach is described in our provisional patent filing and
is summarized as a DNA vaccine technology platform characterized by a single
plasmid DNA with multiple coding regions. The plasmid vector is designed to
express multiple pathogen antigens. It is delivered via a synthetic delivery
system and has the potential to be easily modified to create vaccines against a
multitude of infectious diseases, addressing:

? Viral Mutations: PLACCINE may offer broad-spectrum and mutational resistance

(variants) by targeting multiple antigens on a single plasmid vector.

? Durable Efficacy: PLACCINE delivers a DNA plasmid-based antigen that could

result in durable antigen exposure and a robust vaccine response to viral

antigens.

? Storage & Distribution: PLACCINE allows for stability that is compatible with

manageable vaccine storage and distribution.

? Simple Dosing & Administration: PLACCINE is a synthetic delivery system that

should require a simple injection that does not require viruses or special

equipment to deliver its payload.

We are conducting preliminary research associated with our recently announced
proprietary DNA vaccine platform provisional patent filing. At the same time, we
are redoubling our efforts and R&D resources in our immuno-oncology and next
generation vaccine program.

29





On September 2, 2021, the Company announced results from preclinical in vivo
studies showing production of antibodies and cytotoxic T-cell response specific
to the spike antigen of SARS-CoV-2 when immunizing BALB/c mice with the
Company's next-generation PLACCINE DNA vaccine platform. Moreover, the
antibodies to SARS-CoV-2 spike antigen prevented the infection of cultured cells
in a viral neutralization assay. The production of antibodies predicts the
ability of PLACCINE to protect against SARS-CoV-2 exposure, and the elicitation
of cytotoxic T-cell response shows the vaccine's potential to eradicate cells
infected with SARS-CoV-2. These findings demonstrate the potential
immunogenicity of Celsion's PLACCINE DNA vaccine, which is intended to provide
broad-spectrum protection and resistance against variants by incorporating
multiple viral antigens, to improve vaccine stability at storage temperatures of
4o C and above, and to facilitate cheaper and easier manufacturing.

On January 31, 2022, the Company announced it had engaged BIOQUAL, Inc., a
preclinical testing contract research organization, to conduct a non-human
primate (NHP) challenge study with Celsion's DNA-based approach for a SARS-CoV-2
vaccine. The NHP pilot study follows the generation of encouraging mouse data
and will evaluate the Company's lead vaccine formulations for safety,
immunogenicity and protection against SARS-CoV-2. In completed preclinical
studies, Celsion demonstrated safe and efficient immune responses including IgG
response, neutralizing antibodies and T-cell responses that parallel the
activity of commercial vaccines following intramuscular (IM) administration of
novel vaccine compositions expressing a single viral antigen. In addition,
vector development has shown promise of neutralizing activity against a range of
SARS-CoV-2 variants. Celsion's novel DNA-based vaccines have been based on a
simple intramuscular injection that does not require viral encapsulation or
special equipment for administration.

In April 2022, the Company presented its PLACCINE platform technology at the
2022 World Vaccine Congress. In an oral presentation during a Session on Cancer
and Immunotherapy, Dr. Khursheed Anwer, Celsion's Chief Science Officer,
highlighted the Company's technology platform in his presentation entitled:
"Novel DNA Approaches for Cancer Immunotherapies and Multivalent Infectious
Disease Vaccines." PLACCINE is demonstrating the potential to be a powerful
platform that provides for rapid design capability for targeting two or more
different variants of a single virus in one vaccine. There is a clear public
health need for vaccines today that address more than one strain of viruses,
like COVID-19, which have fast evolving variant capability to offer the widest
possible protection. Murine model data has thus far been encouraging and
suggests that the Company's approach provides not only flexibility, but also the
potential for efficacy comparable to benchmark COVID-19 commercial vaccines with
durability to protect for more than 6 months.

In the murine model, our multivalent PLACCINE vaccine targeted against two
different variants showed to be immunogenic as determined by the levels of IgG,
neutralizing antibodies, and T-cell responses. Additionally, our multivalent
vaccine was equally effective against two different variants of the COVID-19
virus while the commercial mRNA vaccine appeared to have lost some activity
against the newer variant. The Company continues to evaluate our technology and
look forward to the results from our ongoing proof-of-concept non-human primate
study evaluating our PLACCINE vaccine against the challenge from live SARS-CoV-2
virus in the second quarter, with durability results available in the second
half of this year.

THERMODOX® - DIRECTED CHEMOTHERAPY

Liposomes are manufactured submicroscopic vesicles consisting of a discrete
aqueous central compartment surrounded by a membrane bilayer composed of
naturally occurring lipids. Conventional liposomes have been designed and
manufactured to carry drugs and increase residence time, thus allowing the drugs
to remain in the bloodstream for extended periods of time before they are
removed from the body. However, the current existing liposomal formulations of
cancer drugs and liposomal cancer drugs under development do not provide for the
immediate release of the drug and the direct targeting of organ specific tumors,
two important characteristics that are required for improving the efficacy of
cancer drugs such as doxorubicin. A team of research scientists at Duke
University developed a heat-sensitive liposome that rapidly changes its
structure when heated to a threshold minimum temperature of 39.5º to 42º
Celsius. Heating creates channels in the liposome bilayer that allow an
encapsulated drug to rapidly disperse into the surrounding tissue. This novel,
heat-activated liposomal technology is differentiated from other liposomes
through its unique low heat-activated release of encapsulated chemotherapeutic
agents. We are able to use several available focused-heat technologies, such as
radiofrequency ablation ("RFA"), microwave energy and high intensity focused
ultrasound ("HIFU"), to activate the release of drugs from our novel heat
sensitive liposomes.

Investigator sponsored THERMODOX® for the Treatment of Various Cancers

Celsion's Approach

While RFA uses extremely high temperatures (greater than 90° Celsius) to ablate
the tumor, it may fail to treat micro-metastases in the outer margins of the
ablation zone because temperatures in the periphery may not be high enough to
destroy cancer cells. Our ThermoDox® treatment approach is designed to utilize
the ability of RFA devices to ablate the center of the tumor while
simultaneously thermally activating our ThermoDox® liposome to release its
encapsulated doxorubicin to kill any remaining viable cancer cells throughout
the heated region, including the ablation margins. This novel treatment approach
is intended to deliver the drug directly to those cancer cells that survive RFA.
This approach is designed to increase the delivery of the doxorubicin at the
desired tumor site while potentially reducing drug exposure distant to the

tumor
site.

30





OPTIMA Study

The OPTIMA Study represents an evaluation of ThermoDox® in combination with a
first line therapy, RFA, for newly diagnosed, intermediate stage HCC patients.
The OPTIMA Study was designed to enroll up to 550 patients globally at
approximately 65 clinical sites in the U.S., Canada, European Union (EU), China
and other countries in the Asia-Pacific region and will evaluate ThermoDox® in
combination with standardized RFA, which will require a minimum of 45 minutes
across all investigators and clinical sites for treating lesions three to seven
centimeters, versus standardized RFA alone. The primary endpoint for the OPTIMA
Study is OS, and the secondary endpoints are progression free survival and
safety. The statistical plan calls for two interim efficacy analyses by an
independent Data Monitoring Committee ("DMC").

On February 24, 2014, we announced that the FDA provided clearance for the
OPTIMA Study, which is a pivotal, double-blind, placebo-controlled Phase III
trial of ThermoDox®, in combination with standardized RFA, for the treatment of
primary liver cancer. The trial design of the OPTIMA Study is based on the
comprehensive analysis of data from an earlier Phase III clinical trial called
the HEAT Study (the "HEAT Study"). The OPTIMA Study is supported by a hypothesis
developed from an OS analysis of a large subgroup of patients from the HEAT
Study.

Post-hoc data analysis from our earlier Phase III HEAT Study suggests that
ThermoDox® may substantially improve OS, when compared to the control group, in
patients if their lesions undergo a 45-minute RFA procedure standardized for a
lesion greater than 3 cm in diameter. Data from nine OS sweeps have been
conducted since the top line progression free survival PFS data from the HEAT
Study were announced in January 2013, with each data set demonstrating
substantial improvement in clinical benefit over the control group with
statistical significance. On August 15, 2016, we announced updated results from
its final retrospective OS analysis of the data from the HEAT Study. These
results demonstrated that in a large, well bounded, subgroup of patients with a
single lesion (n=285, 41% of the HEAT Study patients), treatment with a
combination of ThermoDox® and optimized RFA provided an average 54% risk
improvement in OS compared to optimized RFA alone. The HR at this analysis is
0.65 (95% CI 0.45 - 0.94) with a p-value of 0.02. Median OS for the ThermoDox®
group has been reached which translates into a two-year survival benefit over
the optimized RFA group (projected to be greater than 80 months for the
ThermoDox® plus optimized RFA group compared to less than 60 months projection
for the optimized RFA only group). This information should be viewed with
caution since it is based on a retrospective analysis of a subgroup.

In August 2018, the Company announced that the OPTIMA Study was fully enrolled.
On August 5, 2019, the Company announced that the prescribed number of OS events
had been reached for the first prespecified interim analysis of the OPTIMA Phase
III Study. Following preparation of the data, the first interim analysis was
conducted by the DMC. The DMC's pre-planned interim efficacy review followed 128
patient events, or deaths, which occurred in August 2019. On November 4, 2019,
the Company announced that the DMC unanimously recommended the OPTIMA Study
continue according to protocol. The recommendation was based on a review of
blinded safety and data integrity from 556 patients enrolled in the OPTIMA
Study. Data presented demonstrated that PFS and OS data appeared to be tracking
with patient data observed at a similar point in the Company's subgroup of
patients followed prospectively in the earlier Phase III HEAT Study, upon which
the OPTIMA Study was based.

On April 15, 2020, the Company announced that the prescribed minimum number of
events of 158 patient deaths had been reached for the second pre-specified
interim analysis of the OPTIMA Phase III Study. The hazard ratio for success at
158 deaths is 0.70, which represents a 30% reduction in the risk of death
compared with RFA alone. On July 13, 2020, the Company announced that it has
received a recommendation from the DMC to consider stopping the global OPTIMA
Study. The recommendation was made following the second pre-planned interim
safety and efficacy analysis by the DMC on July 9, 2020. The DMC analysis found
that the pre-specified boundary for stopping the trial for futility of 0.900 was
crossed with an actual value of 0.903. However, the 2-sided p-value of 0.524 for
this analysis provides uncertainty, subsequently, the DMC left the final
decision of whether or not to stop the OPTIMA Study to Celsion. There were no
safety concerns noted during the interim analysis. The Company followed the
advice of the DMC considered its options either to stop the study or continue to
follow patients after a thorough review of the data, and an evaluation of our
probability of success.

On August 4, 2020, the Company issued a press release announcing it would
continue following patients for OS, noting that the unexpected and marginally
crossed futility boundary, suggested by the Kaplan-Meier analysis at the second
interim analysis on July 9, 2020, may be associated with a data maturity issue.
On October 12, 2020, the Company provided an update on the ongoing data analysis
from its Phase III OPTIMA Study with ThermoDox® as well as growing interest
among clinical investigators in conducting studies with ThermoDox® as a
monotherapy or in combination with other therapies.

31

? Celsion engaged a global biometrics contract research organization, with

forensic statistical analysis capability that specializes in data management,

statistical consulting, statistical analysis and data sciences, with

particular expertise in evaluating unusual data from clinical trials and

experience with associated regulatory issues. The primary objective of the

CRO's work was to determine the basis and reasoning behind continuing to

follow patients for survival, and if there were outside influences that may

have impacted the forecast of futility.

? In parallel, the Company submitted all OPTIMA Study clinical trial data to the

National Institutes of Health (NIH) and with the expectation of receiving a

    report on the following:

? A Cox Regression Analysis for single solitary lesions including minimum burn

time per tumor volume, evaluating similarities to the hypothesis generated

from the NIH paper published in the Journal of Vascular and Interventional

Radiology, in which the key finding was that increased RFA heating time per

tumor volume significantly improved OS in patients with single lesion HCC who

were treated with RFA plus ThermoDox®, compared with patients treated with RFA

alone.

? A site-by-site evaluation for RFA heating time-based anomalies that may have

contributed to the treatment arm performance.

? An image-based evaluation comparing results from the OPTIMA Study to the data

from the HEAT Study that led to the RFA heating time hypothesis.

On February 11, 2021, the Company provided a final update on the Phase III
OPTIMA Study and the decision to stop following patients in the Study.
Independent analyses conducted by a global biometrics contract research
organization and the NIH, did not find any evidence of significance or factors
that would justify continuing to follow patients for OS. Therefore, the Company
notified all clinical sites to discontinue following patients. The OPTIMA Study
database of 556 patients is now be frozen at 185 patient deaths. While the
analyses did identify certain patient subgroups that appear to have had a
clinical benefit, the Company concluded that it would not be in its best
interest to pursue these retrospective findings as the regulatory hurdles
supporting further discussion will be significant.

Investigator-Sponsored Studies with ThermoDox®

Celsion continues working closely and supporting investigations by others
throughout the world in breast cancer, pancreatic cancer and in solid tumors in
children. Following inquiries from the NIH, we renewed our Cooperative Research
and Development Agreement (CRADA) with the Institute at a nominal cost, one goal
of which is to pursue their interest in a study of ThermoDox® to treat patients
with bladder cancer. Importantly, Celsion is developing a business model to
support these investigator-sponsored studies in a manner that will not interfere
with the Company's focus on our GEN-1 program and vaccine development
initiative.

Below are summaries of several investigator-sponsored studies using ThermoDox®:

? Oxford University commenced enrolling patients in a Phase I pancreatic cancer

study with ThermoDox® in combination with High Intensity Focused Ultrasound

(HIFU) in July of 2021. The primary objective of this trial, the PanDox Study:

Targeted Doxorubicin in Pancreatic Tumors, is to quantify the enhancement in

intratumoral doxorubicin concentration when delivered with ThermoDox® and

HIFU, versus doxorubicin monotherapy. This study is being undertaken pursuant

to promising data in a mouse model of pancreatic cancer, which was published

in the International Journal of Hyperthermia in 2018. That preclinical study

showed a 23x increase in intratumoral doxorubicin concentration with

ThermoDox® + HIFU, compared with a 2x increase in intratumoral doxorubicin

concentration with free doxorubicin plus HIFU.

? Utrecht University in the Netherlands continues to enroll patients in a Phase

I breast cancer study to determine the safety, tolerability and feasibility of

ThermoDox® in combination with Magnetic Resonance Guided High Intensity

Focused Ultrasound (MR-HIFU) hyperthermia and cyclophosphamide therapy for the

local treatment of the primary tumor in metastatic breast cancer (mBC). This

investigator-sponsored study, which is being funded by the Dutch Cancer

Society, the Center for Translational Molecular Medicine (a public-private

partnership in the Netherlands), will be conducted at University Medical

Center Utrecht and will enroll up to 12 newly diagnosed mBC patients. Celsion

    will supply Thermodox® clinical product for the trial.



32





Business Plan

Since inception, the Company has incurred substantial operating losses,
principally from expenses associated with the Company's research and development
programs, clinical trials conducted in connection with the Company's product
candidates, and applications and submissions to the U.S. Food and Drug
Administration. The Company has not generated significant revenue and has
incurred significant net losses in each year since our inception. As of December
31, 2021, the Company has incurred approximately $343 million of cumulative net
losses. As of March 31, 2022, the Company had $47.3 million in cash and cash
equivalents, short-term investments, interest receivable and restricted cash.
The Company has substantial future capital requirements to continue its research
and development activities and advance its product candidates through various
development stages. The Company believes these expenditures are essential for
the commercialization of its technologies.

The Company expects its operating losses to continue for the foreseeable future
as it continues its product development efforts, and when it undertakes
marketing and sales activities. The Company's ability to achieve profitability
is dependent upon its ability to obtain governmental approvals, manufacture, and
market and sell its new product candidates. There can be no assurance that the
Company will be able to commercialize its technology successfully or that
profitability will ever be achieved. The operating results of the Company have
fluctuated significantly in the past.

In January 2020, the World Health Organization declared an outbreak of
coronavirus, COVID-19, to be a "Public Health Emergency of International
Concern," and the U.S. Department of Health and Human Services declared a public
health emergency to aid the U.S. healthcare community in responding to COVID-19.
This virus has spread to over 200 countries, including the U.S. Governments and
businesses around the world have taken unprecedented actions to mitigate the
spread of COVID-19, including, but not limited to, shelter-in-place orders,
quarantines, significant restrictions on travel, as well as restrictions that
prohibit many employees from going to work. Uncertainty with respect to the
economic impacts of the pandemic has introduced significant volatility in the
financial markets. The Company did not observe significant impacts on its
business or results of operations during 2021 or thus far in 2022 due to the
global emergence of COVID-19. While the extent to which COVID-19 impacts the
Company's future results will depend on future developments, the pandemic and
associated economic impacts could result in a material impact to the Company's
future financial condition, results of operations and cash flows.

The Company's ability to raise additional capital may be adversely impacted by
potential worsening global economic conditions and the recent disruptions to,
and volatility in, financial markets in the U.S. and worldwide resulting from
the ongoing COVID-19 pandemic. The disruptions caused by COVID-19 may also
disrupt the clinical trials process and enrollment of patients. This may delay
commercialization efforts. The Company continues to monitor its operating
activities in light of these events, and it is reasonably possible that the
virus could have a negative effect on the Company's financial condition and
results of operations. The specific impact, if any, is not readily determinable
as of the date of the Financial Statements.

The actual amount of funds the Company will need to operate is subject to many
factors, some of which are beyond the Company's control. These factors include
the following:

?  the progress of research activities;

?  the number and scope of research programs;

?  the progress of preclinical and clinical development activities;

? the progress of the development efforts of parties with whom the Company has

entered into research and development agreements;

? the costs associated with additional clinical trials of product candidates;

? the ability to maintain current research and development licensing

arrangements and to establish new research and development and licensing

arrangements;

? the ability to achieve milestones under licensing arrangements;

? the costs involved in prosecuting and enforcing patent claims and other

intellectual property rights; and

? the costs and timing of regulatory approvals.

33





On July 13, 2020, the Company announced that it has received a recommendation
from the independent DMC to consider stopping the global Phase III OPTIMA Study
of ThermoDox® in combination with RFA for the treatment of HCC, or primary liver
cancer. The recommendation was made following the second pre-planned interim
safety and efficacy analysis by the DMC on July 9, 2020. The DMC's analysis
found that the pre-specified boundary for stopping the trial for futility of
0.900 was crossed with an actual value of 0.903. The Company followed the advice
of the DMC and considered its options to either stop the study or continue to
follow patients after a thorough review of the data, and an evaluation of the
probability of success. On February 11, 2021, the Company issued a letter to
shareholders stating that the Company was notifying all clinical sites to
discontinue following patients in the OPTIMA Study.

Since 2018, the Company has annually submitted applications to sell a portion of
the Company's State of New Jersey net operating losses as part of the Technology
Business Tax Certificate Program sponsored by The New Jersey Economic
Development Authority. Under the program, emerging biotechnology companies with
unused New Jersey NOLs and unused research and development credits are allowed
to sell these benefits to other New Jersey-based companies. In 2018 and 2019,
the Company sold cumulative New Jersey NOLs from 2011 to 2018 totalling $13
million and received net proceeds of $12.2 million. As part of the Technology
Business Tax Certificate Program, the Company sold $1.5 million and $2.0 million
of its New Jersey NOLs in 2021 and 2020, respectively. The sale of these net
operating losses resulted in net proceeds to the Company of approximately $1.4
million in 2021 and $1.9 million in 2020. During 2021, the New Jersey State
Legislature increased the maximum lifetime benefit per company from $15 million
to $20 million, which will allow the Company to participate in this funding
program in future years for up to an additional $3.5 million in net operating
losses under this maximum lifetime benefit.

In June 2018, the Company entered into a Credit Agreement with Horizon
Technology Finance Corporation ("Horizon") that provided $10 million in capital
(the "Horizon Credit Agreement"). The obligations under the Horizon Credit
Agreement are secured by a first-priority security interest in substantially all
assets of Celsion other than intellectual property assets. Payments under the
loan agreement are interest only (calculated based on one-month LIBOR plus
7.625%) for the first 24 months through July 2020, followed by a 21-month
amortization period of principal and interest starting on August 1, 2020 and
ending through the scheduled maturity date on April 1, 2023. On August 28, 2020,
in connection with an Amendment to the Horizon Credit Agreement, Celsion repaid
$5 million of the $10 million loan and $0.2 million in related end of term
charges, and the remaining $5 million in obligations were restructured. As more
fully discussed in Note 11 to the Financial Statements, in June 2021, the
Company entered into a $10 million loan facility with SVB. The Company
immediately used $6 million from this facility to retire all outstanding
indebtedness with Horizon. The remaining $4 million under the Silicon Valley
Bank loan facility ("SVB Loan Facility") will be available to be drawn down up
to 12 months after closing. The funding is in the form of money market secured
indebtedness bearing interest at a calculated WSJ Prime-based variable rate
(currently 3.25%). Payments under the loan agreement are interest only for the
first 24 months after loan closing, followed by a 24-month amortization period
of principal and interest through the scheduled maturity date.

The Company has based its estimates on assumptions that may prove to be wrong.
The Company may need to obtain additional funds sooner or in greater amounts
than it currently anticipates. Potential sources of financing include strategic
relationships, public or private sales of the Company's shares or debt, the sale
of the Company's New Jersey NOLs and other sources. If the Company raises funds
by selling additional shares of common stock or other securities convertible
into common stock, the ownership interest of existing stockholders may be
diluted. See Note 12 for a discussion of the Company's issuance and redemption
of Series A Preferred Stock and Series B Preferred Stock as well as receiving
gross proceeds of $7.0 million dollars through selling approximately 1.3 million
shares of common stock in a registered direct offering during April 2022.

Financing Overview

Equity, Debt and Other Forms of Financing

Since 2018, the Company has annually submitted applications to sell a portion of
the Company's State of New Jersey net operating losses as part of the NOL
Program sponsored by The New Jersey Economic Development Authority. Under the
program, emerging biotechnology companies with unused New Jersey NOLs and unused
research and development credits are allowed to sell these benefits to other New
Jersey-based companies. In 2018 and 2019, the Company sold cumulative New Jersey
NOLs from 2011 to 2018 totalling $13 million and received net proceeds of $12.2
million. As part of the NOL Program, the Company sold $1.5 million and $2.0
million of its New Jersey NOLs in 2021 and 2020, respectively. The sale of these
net operating losses resulted in net proceeds to the Company of approximately
$1.4 million in 2021 and $1.9 million in 2020. During 2021, the New Jersey State
Legislature increased the maximum lifetime benefit per company from $15 million
to $20 million, which will allow the Company to participate in this funding
program in future years for up to an additional $3.5 million in New Jersey NOLs
under this maximum lifetime benefit.

34





As previously discussed, the Company entered into a Credit Agreement with
Horizon Technology Finance Corporation ("Horizon") that provided $10 million in
capital (the "Horizon Credit Agreement") in June 2018. In August, 2020, in
connection with an Amendment to the Horizon Credit Agreement, Celsion repaid $5
million of the $10 million loan and $0.2 million in related end of term charges,
and the remaining $5 million in obligations were restructured. In June 2021, the
Company entered into a $10 million loan facility with Silicon Valley Bank. The
Company immediately used $6 million from this facility to retire all outstanding
indebtedness with Horizon Technology Finance Corporation. The remaining $4
million will be available to be drawn down up to 12 months after closing.
Payments under the loan agreement are interest only for the first 24 months
after loan closing, followed by a 24-month amortization period of principal and
interest through the scheduled maturity date.

In September 2018, the Company filed with the SEC a $75 million shelf
registration statement on Form S-3 (the 2018 Shelf Registration Statement) that
allows the Company to issue any combination of common stock, preferred stock or
warrants to purchase common stock or preferred stock. This shelf registration
was declared effective on October 12, 2018 and was fully utilized by the end of
January 2021.

On March 19, 2021, the Company filed with the SEC a new $100 million shelf
registration statement on Form S-3 (File No. 333-254515) (the "2021 Registration
Statement") that allows the Company to issue any combination of common stock,
preferred stock or warrants to purchase common stock or preferred stock. This
shelf registration was declared effective on March 30, 2021.

During 2021 and 2022 through the date of this Quarterly Report filed on Form
10-Q, we issued a total of 4.4 million shares of common stock as discussed below
for an aggregate $65.4 million in gross proceeds.

? On December 4, 2018, the Company entered into the Capital on Demand Agreement

with JonesTrading, pursuant to which the Company may offer and sell, from time

to time, through JonesTrading shares of Common Stock having an aggregate

offering price of up to $16.0 million. During 2021, the Company sold 0.5

million shares under the Capital on Demand Agreement, receiving approximately

$6.9 million in gross proceeds under the Capital on Demand Agreement.

? On January 22, 2021, the Company entered into a Securities Purchase Agreement

(the "January 2021 Purchase Agreement") with several institutional investors,

pursuant to which the Company agreed to issue and sell, in a registered direct

offering (the "January 2021 Offering"), an aggregate of 1,728,395 shares of

the Company's common stock at an offering price of $20.25 per share for gross

proceeds of approximately $35 million before the deduction of the January 2021

Placement Agents (as defined below) fee and offering expenses. The January

2021 Purchase Agreement contains customary representations, warranties and

agreements by the Company and customary conditions to closing. The closing of

the January 2021 Offering occurred on January 26, 2021. In connection with the

January 2021 Offering, the Company entered into a placement agent agreement

with A.G.P./Alliance Global Partners ("AGP" and together with Brookline

Capital Markets, the "January 2021 Placement Agents") pursuant to which the

Company agreed to pay the January 2021 Placement Agents a cash fee equal to 7%

of the aggregate gross proceeds raised from the sale of the securities sold in

the January 2021 Offering and reimburse the January 2021 Placement Agents for

certain of their expenses in an amount not to exceed $82,500.

? On March 31, 2021, the Company entered into a Securities Purchase Agreement

(the "March 2021 Purchase Agreement") with several institutional investors,

pursuant to which the Company agreed to issue and sell, in a registered direct

offering (the "March 2021 Offering"), an aggregate of 769,230 shares of the

Company's common stock, at an offering price of $19.50 per share for gross

proceeds of approximately $15 million before the deduction of the placement

agents fee and offering expenses. The shares were offered by the Company

pursuant to the 2021 Registration Statement. The closing of the offering

occurred on April 5, 2021.

In connection with the March 2021 Offering, the Company entered into a

placement agent agreement with AGP, as lead placement agent (together with

JonesTrading Institutional Services LLC and Brookline Capital Markets, a

division of Arcadia Securities, LLC, serving as co-placement agents, the

"March 2021 Placement Agents"), pursuant to which the Company agreed to pay

the March 2021 Placement Agents an aggregate cash fee equal to 7% of the

aggregate gross proceeds raised from the sale of the securities sold in the

offering and reimburse the Placement Agents for certain of their expenses in

an amount not to exceed $82,500.

? On January 10, 2022, the Company entered into the Preferred Stock Purchase

Agreement with several institutional investors, pursuant to which the Company

agreed to issue and sell, in the Preferred Offerings, (i) 50,000 shares of

Series A Preferred Stock, and (ii) 50,000 shares of Series B Preferred Stock,

in each case at an offering price of $285 per share, representing a 5%

original issue discount to the stated value of $300 per share, for gross

proceeds of each Preferred Offering of $14.25 million, or approximately $28.50

million in the aggregate for the Preferred Offerings, before the deduction of

the Placement Agent's (as defined below) fee and offering expenses. The shares

of Series A Preferred Stock have a stated value of $300 per share and are

convertible, at a conversion price of $13.65 per share, into 1,098,901 shares

of common stock (subject in certain circumstances to adjustments). The shares

of Series B Preferred Stock have a stated value of $300 per share and are

convertible, at a conversion price of $15.00 per share, into 1,000,000 shares

of common stock (subject in certain circumstances to adjustments). The closing

    of the Preferred Offerings occurred on January 13, 2022.



35

The Company held a special meeting of stockholders to consider an amendment

(the "Amendment") to the Company's Certificate of Incorporation, as amended

(the "Charter"), to effect a reverse stock split of the outstanding shares of

common stock ("Common Stock") by a ratio to be determined by the Board of

Directors of the Company (the "Reverse Stock Split"), ranging from 7-to-1 to,

10-to-1, 12-to-1 or 15-to-1. The investors have agreed in the Purchase

Agreement to not transfer, offer, sell, contract to sell, hypothecate, pledge

or otherwise dispose of the shares of the Preferred Stock until the Reverse

Stock Split, to vote the shares of the Series A Preferred Stock purchased in

the Preferred Offerings in favor of such Amendment and to vote the shares of

the Series B Preferred Stock purchased in the Preferred Offerings in a manner

that "mirrors" the proportions on which the shares of Common Stock (excluding

any shares of Common Stock that are not voted) and Series A Preferred Stock

are voted on the Reverse Stock Split and the Amendment.

The holders of Preferred Stock will be entitled to dividends, on an as-if

converted basis, equal to dividends actually paid, if any, on shares of Common

Stock. The Preferred Stock is convertible into shares of Common Stock at a

rate of $13.95 per share for the Series A Preferred Stock and $15.00 per share

    for the Series B Preferred Stock. The conversion price can be adjusted
    pursuant to the Certificate of Designation. The Preferred Stock can be
    converted at the option of the holder at any time after the Company has
    received stockholder approval for the Reverse Stock Split and filed the
    requisite Amendment with the Delaware Secretary of State's office to

effectuate the Reverse Stock Split (the "Reverse Stock Split Date"), subject

to beneficial ownership limitations set forth in the applicable Certificate of

Designation. In addition, on or after the Reverse Stock Split Date, and

subject to the satisfaction of certain conditions, the Company can cause the

holders of the Preferred Stock to convert their shares of Preferred Stock,

    subject to such beneficial ownership limitations.

    Each holder of the Preferred Stock has the right to cause the Company to

redeem all or part of their shares of the Preferred Stock from the earlier of

receipt of stockholder approval of the reverse stock split or of 90 days

following the original issue date until 120 days following the original issue

date, the "Redemption Date," in cash at a redemption price equal to 105% of

the stated value plus an amount equal to accumulated but unpaid dividends, if

any, on such shares (whether or not earned or declared, but excluding interest

on such dividends) up to, but excluding, the Redemption Date. In connection

with the Preferred Offerings, the Company entered into a placement agent

agreement (the "Placement Agent Agreement") with AGP in which the Company paid

$1,000,000 as a placement agent fee and $110,000 to reimburse AGP for certain

expenses related to the Preferred Stock offering.

On March 3, 2022, the Company redeemed for cash at a price equal to 105% of

the $300 stated value per share all of its 50,000 outstanding shares of Series

A Preferred Stock and its 50,000 outstanding Series B Preferred Stock. As a

result, all shares of the Preferred Stock have been retired and are no longer

outstanding and Celsion's only class of outstanding stock is its common stock.

Each share of common stock entitles the holder to one vote.

The Series A Preferred Stock and Series B Preferred Stock were recorded as a

liability on the condensed consolidated balance sheet during the first quarter

of 2022 until the preferred shares were redeemed during the same quarter. The

Company recognized $4,551,567 as interest expense for the preferred shares

during the first quarter of 2022, which was composed of: (a) $3,000,000 as the

difference between the redemption price for the preferred shares and the net

proceeds received from the issuance of the preferred shares, (b) $1,110,000

paid to AGP as a placement agent fee and reimbursement for certain expenses,

and (c) $441,567 in legal fees recognized in the first quarter that were

attributed to the preferred shares.

The Placement Agent Agreement contains customary representations, warranties

and agreements by the Company, customary conditions to closing,

indemnification obligations of the Company and AGP, including for liabilities

under the Securities Act, other obligations of the parties and termination

provisions.

? On April 6, 2022, the Company entered into a Securities Purchase Agreement

(the "April 2022 Purchase Agreement") with several institutional investors,

pursuant to which the Company agreed to issue and sell, in a registered direct

offering (the "April 2022 Offering"), an aggregate of 1,328,274 shares of the

Company's common stock at an offering price of $5.27 per share for gross

proceeds of $7.0 million before the deduction of the April 2022 Placement

Agent (as defined below) fees and offering expenses. The April 2022 Purchase

Agreement contains customary representations, warranties and agreements by the

Company and customary conditions to closing. The closing of the April 2022

Offering occurred on April 8, 2022. In connection with the April 2022

Offering, the Company entered into a placement agent agreement with

A.G.P./Alliance Global Partners (the "April 2022 Placement Agent") pursuant to

which the Company agreed to pay the April 2022 Placement Agent a cash fee

equal to 6.5% of the aggregate gross proceeds raised from the sale of the

securities sold in the April 2022 Offering and reimburse the April 2022

Placement Agent for certain of their expenses in an amount not to exceed

$50,000.



36

Significant Accounting Policies

Our significant accounting policies are more fully described in Note 1 to our
consolidated financial statements included in our 2021 Annual Report on Form
10-K for the year ended December 31, 2021 filed with the SEC on March 31, 2022.
See Note 4 to the Condensed Consolidated Financial Statements contained in this
Quarterly Report on Form 10-Q.

As a clinical stage biopharmaceutical company, our business, and our ability to
execute our strategy to achieve our corporate goals are subject to numerous
risks and uncertainties. Material risks and uncertainties relating to our
business and our industry are described in "Item 1A. Risk Factors" under "Part
II: Other Information" included herein.

FINANCIAL REVIEW FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

Results of Operations

For the three months ended March 31, 2022 our net loss was $10.5 million compared to a net loss of $5.7 million for the same three-month period of 2021.

With $47.3 million in cash and cash equivalents, short-term investments, interest receivable and restricted cash, coupled with $7.0 million of gross proceeds received in a registered direct offering in April 2022 and approximately $3.5 million of future planned sales of the Company's State of New Jersey net operating losses, the Company believes it has sufficient capital resources to fund its operations into the second quarter of 2025.

                                                       Three Months Ended March 31,
                                          (In thousands)               Change Increase (Decrease)
                                       2022           2021
Licensing Revenue:                  $      125     $       125     $           -                     - %

Operating Expenses:
Clinical Research                        1,321           1,154               167                  14.5 %
Chemistry, Manufacturing and
Controls (CMC)                           1,774           1,418               356                  25.1 %

Research and development expenses        3,095           2,572             

 523                  20.3 %
General and administrative
expenses                                 2,872           2,936               (64 )                (2.2 )%
Total operating expenses                 5,967           5,508               459                   8.3 %
Loss from operations                $   (5,842 )   $    (5,383 )   $        (459 )                (8.5 )%



Licensing Revenue

In January 2013, we entered into a technology development contract with Hisun,
pursuant to which Hisun paid us a non-refundable technology transfer fee of $5.0
million to support our development of ThermoDox® in the China territory. The
$5.0 million received as a non-refundable payment from Hisun in the first
quarter 2013 has been recorded to deferred revenue and will be amortized over
the ten-year term of the agreement; therefore, we recorded deferred revenue of
$125,000 in each of the first quarters of 2022 and 2021.

Research and Development Expenses

Research and development ("R&D") expenses were $3.1 million in the first quarter
of 2022 compared $2.6 million in same period of 2021. Costs associated the
OVATION 2 Study were $0.4 million in each of the first quarters of 2022 and
2021. Costs associated with the OPTIMA Study were $0.1 million in the each of
the first quarters of 2022 and 2021. In July 2020, the Company unblinded the
OPTIMA Study at the recommendation of the DMC to halt the study due to futility.
Other clinical and regulatory costs were $0.8 million the first quarter of 2022
compared to $0.6 million in the same period of 2021. R&D costs associated with
the development of GEN-1 to support the OVATION 2 Study as well as development
of the PLACCINE DNA vaccine technology platform increased to $1.5 million in the
first quarter of 2022 compared to $1.0 million in the same period of 2021. CMC
costs decreased to $0.3 million in the first quarter of 2022 compared to $0.5
million in the same period of 2021.

37

General and Administrative Expenses

General and administrative expenses were $2.9 million in in each of the first
quarters of 2022 and 2021. Lower non-cash stock compensation expense of $0.4
million was offset by higher salaries and benefits, higher professional fees
(largely legal fees to defend various lawsuits filed after the announcement in
July 2020 of the OPTIMA Phase III clinical results) and higher premiums for
directors' and officers' insurance during the first quarter of 2022 when
compared to the same prior year period.

Impairment of IPR&D Liability

IPR&D is reviewed for impairment at least annually as of our third quarter ended
September 30 by assessing if any events or changes in circumstances have
occurred which indicate that the carrying value of the assets might not be
recoverable. Due to the continuing deterioration of public capital markets in
the biotech industry and its impact on market capitalization rates in this
section, IPR&D related to the ovarian cancer indication was reviewed for
impairment during the first quarter of 2022. Based on the Company's analysis of
the IPR&D, the Company has concluded that it is not more than likely that the
asset had been impaired as of March 31, 2022. As such, no impairment charges for
IPR&D related to the ovarian cancer indication were recorded during the first
quarter of 2022.

Change in Earn-out Milestone Liability and Warrant Expense

On March 28, 2019, the Company and EGWU, Inc. entered into an amendment to its
purchase agreement ("Amended Asset Purchase Agreement"), whereby payment of the
earnout milestone liability related to the Ovarian Cancer Indication of $12.4
million had been modified. The Company has the option to make the payment as
follows:

a) $7.0 million in cash within 10 business days of achieving the milestone; or b) $12.4 million in cash, common stock of the Company, or a combination of

either, within one year of achieving the milestone.

As of March 31, 2022, and December 31, 2021, the Company fair valued the
earn-out milestone liability at $5.4 million. In assessing the fair value of the
earnout milestone liability at December 31, 2021, the Company considered each of
the settlement provisions per the Amended Asset Purchase Agreement and equally
weighted the probability of a cash or cash and common stock payment.

Investment income and interest expense UPDATE

The Company recognized interest expense of $4.6 million in the first quarter of
2022. As more fully discussed in Notes 11 and 12 of the financial statements,
the Company expensed $94,690 in interest due to the Silicon Valley Bank loan
facility and $4,551,567 in interest attributed to the Series A Preferred Stock
and Series B Preferred Stock during the first quarter of 2022. Interest expense
was $0.2 million for the first quarter of 2021.

Investment income from its short-term investments was insignificant in the first quarter of 2021 and 2022.

Financial Condition, Liquidity and Capital Resources

Since inception we have incurred significant losses and negative cash flows from
operations. We have financed our operations primarily through the net proceeds
from the sales of equity, credit facilities and amounts received under our
product licensing agreement with Yakult and our technology development agreement
with Hisun. The process of developing ThermoDox®, GEN-1 and other product
candidates and technologies requires significant research and development work
and clinical trial studies, as well as significant manufacturing and process
development efforts. We expect these activities, together with our general and
administrative expenses to result in significant operating losses for the
foreseeable future. Our expenses have significantly and regularly exceeded our
revenue, and we had an accumulated deficit of $343 million at March 31, 2022.

At March 31, 2022, we had total current assets of $43.9 million and current
liabilities of $6.6 million, resulting in net working capital of $37.3 million.
At March 31, 2022, we had cash and cash equivalents, short-term investments,
interest receivable on short term investments and money market investments ($6.0
million of which is included in other assets) of $47.3 million. At December 31,
2021 we had total current assets of $51.9 million and current liabilities of
$6.8 million, resulting in net working capital of $45.1 million. We have
substantial future capital requirements to continue our research and development
activities and advance our product candidates through various development
stages. The Company believes these expenditures are essential for the
commercialization of its technologies.

38





Net cash used in operating activities for the first three months of 2022 was
$8.0 million. Net cash provided by investing activities was $16.8 million during
the first three months of 2022. No cash was provided by financing activities
during the first three months of 2022. With $47.3 million in cash and cash
equivalents, short-term investments, interest receivable and restricted cash,
coupled with $7.0 million of gross proceeds received in a registered direct
offering in April 2022 and approximately $3.5 million of future planned sales of
the Company's State of New Jersey net operating losses, the Company believes it
has sufficient capital resources to fund its operations into the second quarter
of 2025.

We expect to seek additional capital through further public or private equity
offerings, debt financing, additional strategic alliance and licensing
arrangements, collaborative arrangements, potential sales of our net operating
losses, or some combination of these financing alternatives. If we raise
additional funds through the issuance of equity securities, the percentage
ownership of our stockholders could be significantly diluted, and the newly
issued equity securities may have rights, preferences, or privileges senior to
those of the holders of our common stock. If we raise funds through the issuance
of debt securities, those securities may have rights, preferences, and
privileges senior to those of our common stock. If we seek strategic alliances,
licenses, or other alternative arrangements, such as arrangements with
collaborative partners or others, we may need to relinquish rights to certain of
our existing or future technologies, product candidates, or products we would
otherwise seek to develop or commercialize on our own, or to license the rights
to our technologies, product candidates, or products on terms that are not
favorable to us. The overall status of the economic climate could also result in
the terms of any equity offering, debt financing, or alliance, license, or other
arrangement being even less favorable to us and our stockholders than if the
overall economic climate were stronger. We also will continue to look for
government sponsored research collaborations and grants to help offset future
anticipated losses from operations and, to a lesser extent, interest income.

If adequate funds are not available through either the capital markets,
strategic alliances, collaborators, or sales of our net operating losses, we may
be required to delay or, reduce the scope of, or terminate our research,
development, clinical programs, manufacturing, or commercialization efforts, or
effect additional changes to our facilities or personnel, or obtain funds
through other arrangements that may require us to relinquish some of our assets
or rights to certain of our existing or future technologies, product candidates,
or products on terms not favorable to us.

Off-Balance Sheet Arrangements and Contractual Obligations

None.

© Edgar Online, source Glimpses