IMUNON, INC. The following discussions should be read in conjunction with our financial
statements and related notes thereto included in this Annual Report. The
following discussion contains forward-looking statements made pursuant to the
safe harbor provisions of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934 and the Private Securities Litigation Reform
Act of 1995. These statements are based on our beliefs and expectations about
future outcomes and are subject to risks and uncertainties that could cause
actual results to differ materially from anticipated results. Factors that could
cause or contribute to such differences include those described under "Part I,
Item 1A - Risk Factors" appearing in this Annual Report and factors described in
other cautionary statements, cautionary language and risk factors set forth in
other documents that we file with the
Overview
IMMUNO-ONCOLOGY Program
On
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.
57
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
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 22,000 new cases of ovarian cancer in the
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.
58
OVATION I Study. In
(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.
We initiated the OVATION I Study at four clinical sites at the
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.
59
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
OVATION 2 Study. The Company held an Advisory Board Meeting on
On
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
60
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
On
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
61
On
On
? 12 of 15, or 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.
? 7 of 12 patients, or 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.
The Company further reported that 22 clinical sites in the
PLACCINE DNA VACCINE TECHNOLOGY PLATFORM
In
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.
62 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
? While the antibodies against S antigen would prevent virus entry into cells,
the M and N antibodies could help virus clearance through antibody-mediated
opsonization and phagocytosis. The presentation of multiple antigens on the
cell surface of vaccine-injected tissue produces a broad variety of killer
T-cells which could potentially produce more efficient viral clearance than a
single antigen vaccine.
? Since IL-12 is an essential regulator of the differentiation, proliferation,
and maintenance of T helper 1 (TH-1) cells that generate killer T-cells and
memory T-cells against virally infected cells, its simultaneous expression
could boost the viral clearance by the vaccine and improve the immune system's
memory against any future exposure of the same virus.
? Finally, 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 along with a potent immune modifier. 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.
63
? Enhanced Efficacy: The potent immune modifier IL-12 may improve humoral and
cellular responses to viral antigens and can be incorporated in the plasmid.
? Durable Efficacy: PLACCINE delivers a DNA plasmid-based antigen that can
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.
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
THERMODOX® for the Treatment of Primary Liver Cancer
Primary Liver Cancer Overview
Hepatocellular carcinoma ("HCC") is one of the most common and deadliest forms
of cancer worldwide. It ranks as the third most common solid tumor cancer. It is
estimated that up to 90% of liver cancer patients will die within five years of
diagnosis. The incidence of primary liver cancer is approximately 35,000 cases
per year in the
At an early stage, the standard first line treatment for liver cancer is surgical resection of the tumor. Up to 80% of patients are ineligible for surgery or transplantation at time of diagnosis because early-stage liver cancer generally has few symptoms and when finally detected the tumor frequently is too large for surgical resection. There are few alternative treatments since radiation therapy and chemotherapy are largely ineffective in treating liver cancer. For tumors generally up to 5 centimeters in diameter, RFA has emerged as the standard of care treatment which directly destroys the tumor tissue through the application of high temperatures administered by a probe inserted into the core of the tumor. Local recurrence rates after RFA directly correlate to the size of the tumor. For tumors 3 cm or smaller in diameter the recurrence rate has been reported to be 10 - 20%; however, for tumors greater than 3 cm, local recurrence rates of 40% or higher have been observed.
64Celsion'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.
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
On
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
We also conducted additional analyses that further strengthen the evidence for the HEAT Study subgroup.
? We commissioned an independent computational model at theUniversity of South Carolina Medical School . The results unequivocally indicate that longer RFA heating times correlate with significant increases in doxorubicin concentration around the RFA treated tissue. ? In addition, we conducted a prospective preclinical study in 22 pigs using two different manufacturers of RFA and human equivalent doses of ThermoDox® that clearly support the relationship between increased heating duration and doxorubicin concentrations.
On
65
The article titled, "RFA Duration Per Tumor Volume May Correlate with Overall
Survival in Solitary Hepatocellular Carcinoma Patients Treated with RFA Plus
Lyso-thermosensitive Liposomal Doxorubicin," discussed the
In
On
On
?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. 66 ? In parallel, the Company submitted all OPTIMA Study clinical trial data to theNational Institutes of Health (NIH) with the expectation of receivings 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 theNIH paper published in theJournal 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
Investigator-Sponsored Studies with ThermoDox®
Below are summaries of several investigator-sponsored studies using ThermoDox®:
?Oxford University plans to begin enrolling patients in a Phase I pancreatic cancer study with ThermoDox® in combination withHigh Intensity Focused Ultrasound (HIFU) in the first half 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 theInternational 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 inthe Netherlands continues to enroll patients in a Phase I breast cancer study to determine the safety, tolerability and feasibility of ThermoDox® in combination withMagnetic 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 theDutch Cancer Society , theCenter for Translational Molecular Medicine (a public-private partnership inthe Netherlands ), will be conducted atUniversity Medical Center Utrecht and will enroll up to 12 newly diagnosed mBC patients.Celsion will supply Thermodox® clinical product for the trial. ? As evidence of the ongoing supportCelsion enjoys from theNIH , they have organized a clinical project to evaluate ThermoDox® plus the chemotherapy drug mitomycin in bladder cancer. Depending on theNIH timelines, this study may commence as early as 2021. 67
Because of the risks and uncertainties discussed in this Annual Report, among others, we are unable to estimate the duration and completion costs of our research and development projects or when, if ever, and to what extent we will receive cash inflows from the commercialization and sale of a product. Our inability to complete any of our research and development activities, preclinical studies or clinical trials in a timely manner or our failure to enter into collaborative agreements when appropriate could significantly increase our capital requirements and could adversely impact our liquidity. While our estimated future capital requirements are uncertain and could increase or decrease as a result of many factors, including the extent to which we choose to advance our research, development activities, preclinical studies and clinical trials, or if we are in a position to pursue manufacturing or commercialization activities, we will need significant additional capital to develop our product candidates through development and clinical trials, obtain regulatory approvals and manufacture and commercialize approved products, if any. We do not know whether we will be able to access additional capital when needed or on terms favorable to us or our stockholders. Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business.
Covenant Not to Compete (CNTC)
Pursuant to the EGEN Purchase Agreement,
Business Plan
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 "Part I, Item 1A. Risk Factors" in this Annual Report on Form 10-K.
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
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.
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;
68
? 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.
On
As more fully discussed below, in
As more fully discussed in Note 10 to our Consolidated Financial Statements
contained in this Form 10-K, during 2021 through the date of the filing of this
Annual Report on Form 10-K, the Company has raised
With
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
69 Financing Overview
Equity, Debt and Other Forms of Financing
During 2020, 2019 and 2018, the Company submitted applications to sell a portion
of the Company's
In
During 2019 and 2020, we issued a total of 21.1 million shares of common stock
as discussed below for an aggregate
? OnOctober 28, 2019 , Company, entered into the 2019 Aspire Purchase Agreement withAspire Capital . The terms and conditions pursuant to the 2019 Aspire Purchase Agreement are substantially similar to the 2018 Aspire Purchase Agreement. Pursuant to the new 2019 Aspire Purchase Agreement,Aspire Capital is committed to purchase up to an aggregate of$10.0 million of shares of the Company's common stock over the 24-month term of the 2019 Aspire Purchase Agreement. Concurrently with entering into the 2019 Aspire Purchase Agreement, the Company also entered into a registration rights agreement withAspire Capital (the "Registration Rights Agreement"), in which the Company agreed to file one or more registration statements, as permissible and necessary to register under the Securities Act of 1933, as amended (the "Securities Act"), registering the sale of the shares of the Company's common stock that have been and may be issued toAspire Capital under the 2019 Aspire Purchase Agreement. In consideration for entering into the 2019 Aspire Purchase Agreement, the Company issued toAspire Capital an additional 100,000 Commitment Shares. OnNovember 8, 2019 , the Company filed with theSEC a Registration Statement on Form S-1 registering all the shares of common stock that may be offered toAspire Capital from time to time under the 2019 Aspire Purchase Agreement. During 2019, the Company sold 0.5 million shares of common stock under the 2019 Aspire Purchase Agreement, receiving approximately$0.7 million in gross proceeds. OnMarch 5, 2020 , the Company delivered notice toAspire Capital terminating the 2019 Aspire Purchase Agreement effective as ofMarch 6, 2020 . During the first quarter of 2020, the Company sold 1.0 million shares of common stock under the 2019 Aspire Purchase Agreement and received$1.6 million in gross proceeds. 70 ? OnDecember 4, 2018 , the Company entered into a new Capital on DemandTM Sales Agreement (the "Capital on Demand Agreement") withJonesTrading Institutional Services LLC , as sales agent ("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 . The Company intends to use the net proceeds from the offering, if any, for general corporate purposes, including research and development activities, capital expenditures and working capital. The Company is not obligated to sell any Common Stock under the Capital on Demand Agreement and, subject to the terms and conditions of the Capital on Demand Agreement, JonesTrading will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of The Nasdaq Capital Market, to sell common stock from time to time based uponCelsion's instructions, including any price, time or size limits or other customary parameters or conditions the Company may impose. Under the Capital on Demand Agreement, JonesTrading may sell common stock by any method deemed to be an "at the market offering" as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Capital on Demand Agreement will terminate upon the earlier of (i) the sale of all shares of our common stock subject to the Sales Agreement, and (ii) the termination of the Capital on Demand Agreement by JonesTrading orCelsion . The Capital on Demand Agreement may be terminated by JonesTrading or the Company at any time upon 10 days' notice to the other party, or by JonesTrading at any time in certain circumstances, including the occurrence of a material adverse change in the Company. The Company did not sell any shares under the Capital on Demand Agreement during 2018. During 2019, 2020 and thus far in 2021, the Company sold 0.5 million, 5.2 million and 7.2 million shares of common stock under the Capital on Demand Agreement, respectively, receiving gross proceeds of approximately$1.0 million ,$6.2 million and$6.9 million , respectively. ? OnFebruary 27, 2020 , we entered into a Securities Purchase Agreement (the "Purchase Agreement") with several institutional investors, pursuant to which we agreed to issue and sell, in a registered direct offering (the "February 2020 Offering"), an aggregate of 4,571,428 shares (the "Shares") of our common stock at an offering price of$1.05 per share for gross proceeds of approximately$4.8 million before the deduction of the Placement Agent fees and offering expenses. The Shares were offered by the Company pursuant to a registration statement on Form S-3 (File No. 333-227236). The Purchase Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing. In a concurrent private placement (the "Private Placement"), the Company agreed to issue to the investors that participated in the Offering, for no additional consideration, warrants, to purchase up to 2,971,428 shares of Common Stock (the "Original Warrants"). The Original Warrants were initially exercisable six months following their issuance and were set to expire on the five-year anniversary of such initial exercise date. The Warrants had an exercise price of$1.15 per share subject to adjustment as provided therein. OnMarch 12, 2020 , the Company entered into private exchange agreements (the "Exchange Agreements") with holders the Warrants. Pursuant to the Exchange Agreements, in return for a higher exercise price of$1.24 per share of Common Stock, the Company issued new warrants to the Investors to purchase up to 3,200,000 shares of Common Stock (the "Exchange Warrants") in exchange for the Original Warrants. The Exchange Warrants, like the Original Warrants, are initially exercisable six months following their issuance (the "Initial Exercise Date") and expire on the five-year anniversary of their Initial Exercise Date. Other than having a higher exercise price, different issue date, Initial Exercise Date and expiration date, the terms of the Exchange Warrants are identical to those of the Original Warrants. OnJuly 31, 2020 , the Company filed a Form S-3 Registration Statement to register the shares of Common Stock issuable under the Exchange Warrants; the Registration Statement was declared effective by theSEC onAugust 13, 2020 . No Exchange Warrants were exercised during 2020. During 2021 thus far, the Company has issued 1.2 million shares pursuant to investors exercising Exchange Warrants, receiving approximately$1.5 million in gross proceeds. 71 ? OnSeptember 8, 2020 , the Company entered into a purchase agreement (the "LPC Purchase Agreement") and a Registration Rights Agreement (the "Registration Rights Agreement") withLincoln Park Capital Fund, LLC ("Lincoln Park"), pursuant to which, upon the terms and subject to the conditions and limitations set forth therein, the Company has the right to sell to Lincoln Park up to$26.0 million of shares of the Company's Common Stock at the Company's discretion as described below (the " LPC Offering"). Over the 36-month term of the LPC Purchase Agreement, we have the right, but not the obligation, from time to time, in our sole discretion and subject to certain conditions, including that the closing price of our Common Stock is not below$0.25 per share, to direct Lincoln Park to purchase up to an aggregate amount of$26.0 million (subject to certain limitations) of shares of Common Stock. Under the Purchase Agreement, on any business day selected by us, we may direct Lincoln Park to purchase up to 400,000 shares (the "Regular Purchase Share Limit") of our Common Stock (each such purchase, a "Regular Purchase"). Lincoln Park's maximum obligation under any single Regular Purchase will not exceed$1,500,000 unless we mutually agree to increase the maximum amount of such Regular Purchase. The purchase price for shares of Common Stock to be purchased by Lincoln Park under a Regular Purchase will be the equal to the lower of (in each case, subject to the adjustments described in the LPC Purchase Agreement): (i) the lowest sale price for our Common Stock on The Nasdaq Capital Market on the applicable purchase date, and (ii) the arithmetic average of the three lowest sale prices for our Common Stock on The Nasdaq Capital Market during the ten trading days prior to the purchase date. If we direct Lincoln Park to purchase the maximum number of shares of Common Stock we then may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the LPC Purchase Agreement, we may direct Lincoln Park to make an "accelerated purchase" of an additional amount of Common Stock that may not exceed the lesser of (i) 300% of the number of shares purchased pursuant to the corresponding Regular Purchase and (ii) 30% of the total number of shares of our Common Stock traded on The Nasdaq Capital Market during a specified period on the applicable purchase date as set forth in the Purchase Agreement. Under certain circumstances and in accordance with the Purchase Agreement, the Company may direct Lincoln Park to purchase shares in multiple accelerated purchases on the same trading day. The Purchase Agreement prohibits us from issuing or selling to Lincoln Park under the Purchase Agreement: (i) in excess of 6,688,588 shares of our Common Stock (the "Exchange Cap"), unless we obtain stockholder approval to issue shares in excess of the Exchange Cap or the average price of all applicable sales of our Common Stock to Lincoln Park under the LPC Purchase Agreement equal or exceed the lower of (a) the Nasdaq Official Closing Price (as defined in the Purchase Agreement) immediately preceding the execution of the LPC Purchase Agreement or (b) the average of the five Nasdaq Official Closing Prices for the Common Stock immediately preceding the execution of the LPC Purchase Agreement, as adjusted in accordance with the rules of The Nasdaq Capital Market, and (ii) any shares of our Common Stock if those shares, when aggregated with all other shares of our Common Stock then beneficially owned by Lincoln Park and its affiliates would result in Lincoln Park and its affiliates having beneficial ownership of more than 9.99% of the then total outstanding shares of our Common Stock. The LPC Purchase Agreement does not limit our ability to raise capital from other sources at our sole discretion, except that we may not enter into any equity line or similar transaction for 36 months, other than an "at-the-market" offering. The LPC Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties and agreements of us and Lincoln Park, indemnification rights and other obligations of the parties. We have the right to terminate the Purchase Agreement at any time on one business days' notice to Lincoln Park, at no cost to us. As consideration for entering into the Purchase Agreement, we issued 437,828 shares of our Common Stock to Lincoln Park (the "LPC Commitment Shares"). We will not receive any cash proceeds from the issuance of the LPC Commitment Shares. Also pursuant to the Purchase Agreement, Lincoln Park agreed to an initial purchase of 1,000,000 shares of our Common Stock for an aggregate purchase price of$1,000,000 or$1.00 per share. Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of our shares of Common Stock. The Offering is being made pursuant to our effective Registration Statement on Form S-3 (File No. 333-227236) (the "Registration Statement"), which was previously filed with theSEC onSeptember 7, 2018 , and declared effective by theSEC onOctober 12, 2018 , and the prospectus supplement related to the Offering filed with theSEC onSeptember 8, 2020 . During 2020 the Company sold and issued an aggregate of 3.3 million shares, including the LPC Commitment Shares, under the LPC Purchase Agreement, receiving approximately$2.2 million in gross proceeds. During 2020, the Company sold and issued an aggregate of 3.3 million shares, including the LPC Commitment Shares, under the LPC Purchase Agreement, receiving approximately$2.2 million in gross proceeds. During the first quarter of 2021, the Company sent a letter to Lincoln Park terminating the LPC Offering effectiveJanuary 21, 2021 . The Company did not sell any shares under the LPC Purchase Agreement during 2021. ? OnJanuary 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 25,925,925 shares of the Company's common stock at an offering price of$1.35 per share for gross proceeds of approximately$35 million before the deduction of Placement Agents fees and offering expenses. The shares were offered by the Company pursuant to a registration statement on Form S-3 (File No. 333-227236) (the "Registration Statement") and a registration statement on Form S-3 (File No. 333-252320) filed pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act"). TheJanuary 2021 Purchase Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing. The closing of theJanuary 2021 Offering occurred onJanuary 26, 2021 . In connection with theJanuary 2021 Offering, the Company entered into a placement agent agreement (the "January 2021 Placement Agent Agreement") with A.G.P./Alliance Global Partners (together withBrookline Capital Markets , the "January 2021 Placement Agents") pursuant to which the Company agreed to pay theJanuary 2021 Placement Agents a cash fee equal to 7% of the aggregate gross proceeds raised from the sale of the securities sold in theJanuary 2021 Offering and reimburse theJanuary 2021 Placement Agents for certain of their expenses in an amount not to exceed$82,500 . 72 TheJanuary 2021 Placement Agent Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and theJanuary 2021 Placement Agents, including for liabilities under the Securities Act, other obligations of the parties and termination provisions. Under theJanuary 2021 Purchase Agreement andJanuary 2021 Placement Agent Agreement, the Company and its subsidiary are prohibited, for a period of 90 days after the closing, from issuing, entering into any agreement to issue or announcing the issuance or proposed issuance of any shares of common stock or any other securities that are at any time convertible into, or exercisable or exchangeable for, or otherwise entitle the holder thereof to receive common stock, without the prior written consent of the placement agents or the investors participating in the offering, subject to specific exceptions.
Please refer to Note 2 to our Consolidated Financial Statements contained in this Form 10-K. Also refer to Part II, Item IA, Risk Factors, including, but not limited to, "We will need to raise substantial additional capital to fund our planned future operations, and we may be unable to secure such capital without dilutive financing transactions. If we are not able to raise additional capital, we may not be able to complete the development, testing and commercialization of our product candidates."
Critical Accounting Policies and Estimates
Our financial statements, which appear at Part II, Item 8. Financial Statements
and Supplementary Data have been prepared in accordance with accounting
principles generally accepted in the
During 2014, the Company acquired certain assets of
Lease Accounting
In
? ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which amends
certain narrow aspects of the guidance issued in ASU No. 2016-02; and
? ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which allows for a
transition approach to initially apply ASU No. 2016-02 at the adoption date
and recognize a cumulative-effect adjustment to the opening balance of
retained earnings in the period of adoption as well as an additional practical
expedient for lessors to not separate non-lease components from the associated
lease component.
73
We adopted Accounting Standards Codification ("ASC") Topic 842 effective
In
In
We review our financial reporting and disclosure practices and accounting
policies on an ongoing basis to ensure that our financial reporting and
disclosure system provides accurate and transparent information relative to the
current economic and business environment. As part of the process, the Company
reviews the selection, application and communication of critical accounting
policies and financial disclosures. The preparation of our financial statements
in conformity with accounting principles generally accepted in the
Results of Operations
Comparison of Fiscal Year Ended
For the year ended
In
74
Research and Development Expenses
Research and development ("R&D") expenses decreased
General and Administrative Expenses
General and administrative expenses decreased
Change in Earn-out Milestone Liability
The total aggregate purchase price for the acquisition of assets from
On
?$7.0 million in cash within 10 business days of achieving the milestone; or ?$12.4 million in cash, common stock of the Company, or a combination of either, within one year of achieving the milestone.
The Company provided
At
At
75 Impairment of IPR&D
IPR&D is reviewed for impairment at least annually as of our third quarter ended
Investment income and interest expense
The Company realized
Income Tax Benefit
Annually, the
In early 2020, the Company entered into an agreement to sell these net operating
losses and received net proceeds of approximately
Inflation
We do not believe that inflation has had a material adverse impact on our revenue or operations in any of the past three years.
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
76
At
Net cash used in operating activities for 2020 was
The Company may seek additional capital through further public or private equity offerings, debt financing, additional strategic alliance and licensing arrangements, collaborative arrangements, 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, or collaborators, 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
We do not utilize off-balance sheet financing arrangements as a source of liquidity or financing.
© Edgar Online, source
