CELSION : 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, 2020.

Strategic and Clinical Overview

Celsion Corporation ("Celsion" and 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 and ThermoDox®, a
proprietary heat-activated liposomal encapsulation of doxorubicin, currently
under investigator-sponsored development for several cancer indications. 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.



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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.

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 U.S. in 2014 with an
estimated 14,000 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, where the five-year survival rates
are 25 - 41 percent and 11 percent, respectively. First-line chemotherapy
regimens are typically platinum-based combination therapies. Although this first
line of treatment has an approximate 80 percent response rate, 55 to 75 percent
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
percent 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.




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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.




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;

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  ? 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 March 2, 2019, the Company announced final progression free survival ("PFS")
results from the OVATION I Study. Median PFS in patients treated per protocol
(n=14) was 21 months and was 17.1 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.



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.

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? 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.



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 in the second half of 2021. 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. Currently, 27 patients have had their interval debulking
surgery with the following results:

? 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.

30

? 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 U.S. and Canada have
been initiated, with three more sites expected to be added by the end of the
first quarter. Clinical investigators met in early February 2021 in a virtual
meeting and expressed excitement about the potential for GEN-1 to treat advanced
ovarian cancer and, despite the challenges and earlier delays posed by the
COVID-19 pandemic, they remain committed to completing enrollment in the study
during the second half of 2021.

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 platform technology.



Celsion's PLACCINE DNA vaccine technology platform is characterized by a single
multi-cistronic DNA plasmid vector expressing multiple pathogen antigens along
with a potent immune modifier and delivered with a synthetic delivery system. It
is easily 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 already established supply chain to
produce any plasmid vector and its assembly into a respective vaccine
formulation.



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.



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Our Next Generation Vaccine Initiative

Celsion's next generation vaccine initiative stands at the confluence of
immunotherapy and immunogenicity and envisions delivery, on a single plasmid,
multiple SARS-CoV-2 antigens in conjunction with a potent immune modifier,
interleukin-12 (IL-12), which directs a TH-1 immune response, stimulates T-cell
immunity, and also promises the promotion of humoral immunity (antibody
response). While most COVID-19 vaccines in late-stage clinical development are
monovalent (S protein antigen only), Celsion has taken this 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.



Celsion's vaccine candidate approach comprises a single plasmid vector
containing the DNA sequence encoding the cytokine IL-12 and multiple SARS-CoV-2
antigens, including S antigen in combination with the membrane (M) or
nucleocapsid (N) antigen. 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.

? 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.

? 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.




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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 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.

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 U.S., approximately 65,000 cases per year in Europe and is
increasing at approximately 2-3% per year worldwide. Global incidence (per 2017
GLOBALCAN statistics) is reported at 755,000 cases. The World Health
Organization (the "WHO") has projected that HCC will be the most prevalent form
of cancer by 2030. HCC is commonly diagnosed in patients with longstanding
hepatic disease and cirrhosis (primarily due to hepatitis C in the U.S., Japan
and Europe and hepatitis B in Asia).



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.



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.



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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.

We also conducted additional analyses that further strengthen the evidence for the HEAT Study subgroup.

? We commissioned an independent computational model at the University 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 August 13, 2019, the Company announced that results from an independent
analysis of the Company's ThermoDox® HEAT Study conducted by the National
Institutes of Health (NIH) were published in the peer-reviewed publication,
Journal of Vascular and Interventional Radiology. The analysis was conducted by
the intramural research program of the NIH and the NIH Center for Interventional
Oncology, with the full data set from the Company's HEAT Study. The analysis
evaluated the full data set to determine if there was a correlation between
baseline tumor volume and RFA heating time (minutes/tumor volume in
milliliters), with or without ThermoDox® treatment, for patients with HCC. The
NIH analysis was conducted under the direction of Dr. Bradford Wood, MD,
Director, NIH Center for Interventional Oncology and Chief, NIH Clinical Center
Interventional Radiology.



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 NIH analysis of
results from 437 patients in the HEAT Study (all patients with a single lesion
representing 62.4% of the study population). 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 to
patients treated with RFA alone. A one-unit increase in RFA duration per tumor
volume was shown to result in about a 20% improvement in OS for patients
administered ThermoDox®, compared to RFA alone. The authors conclude that
increasing RFA heating time in combination with ThermoDox® significantly
improves OS and establishes an improvement of over two years versus the control
arm when the heating time per milliliter of tumor is greater than 2.5 minutes.
This finding was consistent with the Company's own results, which defined the
optimized RFA procedure as a 45-minute treatment for tumors with a diameter of 3
centimeters. Thus, the NIH analysis lent support to the hypothesis underpinning
the OPTIMA Study.



34






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.

? 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.

35

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 will 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 intend to renew 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 plans to begin enrolling patients in a Phase I pancreatic

cancer study with ThermoDox® in combination with High 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 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.

? As evidence of the ongoing support Celsion enjoys from the NIH, they have

organized a clinical project to evaluate ThermoDox® plus the chemotherapy drug

mitomycin in bladder cancer. Depending on the NIH timelines, this study may

    commence as early as 2021.




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 March
31, 2021, the Company has incurred approximately $318 million of cumulative net
losses and we had approximately $54.6 million in cash and cash equivalents,
short-term investments, and receivable on sale of net operating losses. 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.



36






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 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 WHO 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
100 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 2020 and into 2021 due to 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 enrolment of patients. This may delay
commercialization efforts. The Company continues to monitor its operating
activities in light of these events. The specific impact, if any, is not readily
determinable as of the date of these 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.

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.



37






During 2020, 2019 and 2018, the Company 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 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 NOLs totaling $13 million receiving net proceeds of $12.2 million.
In June 2020 and as updated in September 2020, the Company filed an application
with the New Jersey Economic Development Authority to sell substantially all of
its remaining State of New Jersey net operating losses totaling $2.0 million
available under the program. On February 12, 2021, the New Jersey Economic
Development Authority approved the full amount of the Company's application. In
February of 2021, the Company entered into an agreement to sell the net
operating losses from the 2020 application and the Company received net proceeds
of approximately $1.85 million on May 10, 2021. 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
innovative funding program in future years.



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 twenty-four (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 8 to these financial statements.



As more fully discussed in Note 10, during 2021 through the date of the filing
of this Quarterly Report on Form 10-Q, the Company has raised approximately $6.9
million in gross proceeds from the use of its JonesTrading Capital on DemandTM
financing facility, $35 million from a registered direct financing completed in
January 2021, $15 million from a registered direct financing completed on April
5, 2021, and $1.5 million from warrant exercises. With $54.6 million in cash and
cash equivalents, short-term investments and income tax receivable from the sale
of its New Jersey net operating loss at March 31, 2021, coupled with $15 million
of gross proceeds received from the sale of equity from a registered direct
offering it completed on April 5, 2021, the Company believes it has sufficient
capital resources to fund its operations through the end of 2024.



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 State of New Jersey net operating losses 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.



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 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 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 NOLs totaling $13 million receiving net proceeds of $12.2 million.
In June 2020 and as updated in September 2020, the Company filed an application
with the New Jersey Economic Development Authority to sell substantially all of
its remaining State of New Jersey net operating losses totaling $2.0 million
available under the program. On February 12, 2021, the New Jersey Economic
Development Authority approved the full amount of the Company's application. In
February of 2021, the Company entered into an agreement to sell the net
operating losses from the 2020 application and the Company received net proceeds
of approximately $1.85 million on May 10, 2021. Beginning in 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
innovative funding program in future years.



38






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 8 to our Consolidated Financial Statements contained in
this Form 10-K.



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 during January 2021, had been
fully utilized by the end of January 2021.



On March 19, 2021, the Company filed with the SEC a $100 million shelf
registration statement on Form S- (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 2020 and 2021 through the date of this Quarterly Report filed on Form 10-Q, we issued a total of 62.5 million shares of common stock as discussed below for an aggregate $83.2 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 2019, the Company sold and

issued an aggregate of 0.5 million shares under the Capital on Demand

Agreement, receiving approximately $1.0 million in gross proceeds. During

2020, the Company sold and issued an aggregate of 5.2 million shares under the

Capital on Demand Agreement, receiving approximately $6.2 million in gross

proceeds. During 2021 through the date of this Quarterly Report on Form 10-Q,

the Company sold 7.2 million shares under the Capital on Demand Agreement,

receiving approximately $6.9 million in gross proceeds under the Capital on

Demand Agreement.

? On February 27, 2020, we entered into a Securities Purchase Agreement (the

"February 2020 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 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. In a concurrent private placement (the "Private

Placement"), the Company issued to the investors that participated in the

February 2020 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 date of issue

and were set to expire on the five-year anniversary of such initial exercise

date. The Original Warrants had an exercise price of $1.15 per share subject

to adjustment as provided therein. On March 12, 2020, the Company entered into

private exchange agreements (the "Exchange Agreements") with holders of the

Original 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. On July 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

the SEC on August 13, 2020. No Exchange Warrants were exercised during 2020.

During 2021 through the date of this Quarterly Report on Form 10-Q, the

Company issued 1.2 million shares pursuant to investors exercising Exchange

    Warrants, receiving approximately $1.5 million.




39

? On June 22, 2020, the Company entered into an underwriting agreement (the

"Underwriting Agreement") with Oppenheimer & Co. Inc. (the "Underwriter"),

relating to the issuance and sale (the "Underwritten Offering") of 2,666,667

shares of the Company's common stock. Pursuant to the terms of the

Underwriting Agreement, the Underwriter agreed to purchase the shares at a

price of $3.4875 per share. The Underwriter offered the shares at a public

offering price of $3.75 per share, reflecting an underwriting discount equal

to $0.2625, or 7.0% of the public offering price. The net proceeds to the

Company from the Underwritten Offering, after deducting the underwriting

discount and estimated offering expenses payable by the Company, were

approximately $9.1 million.

? On September 8, 2020, the Company entered into a purchase agreement (the "LPC

Purchase Agreement") and a Registration Rights Agreement (the "Registration

Rights Agreement") with Lincoln 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"). 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. The Company sent a letter to Lincoln Park

terminating the LPC Offering effective January 21, 2021. The Company did not

sell any shares under the LPC Purchase Agreement in 2021.

? 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 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 the January 2021

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

(the "January 2021 Placement Agent Agreement") with A.G.P./Alliance Global

Partners (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 11,538,462 shares of the

Company's common stock, at an offering price of $1.30 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 March 2021 Purchase Agreement

contains customary representations, warranties and agreements by the Company

and customary conditions to closing. The closing of the Offering occurred on

April 5, 2021. The Company will account for the March 31, 2021 Offering in the

second quarter of 2021. In connection with the March 2021 Offering, the

Company entered into a placement agent agreement (the "March 2021 Placement

Agent Agreement") with A.G.P./Alliance Global Partners, as lead placement

agent ("AGP," and 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. Under the March 2021

Purchase Agreement and March 2021 Placement Agent Agreement, the Company and

its subsidiaries are prohibited, for a period of 90 days after the closing

from issuing, entering into any agreement to issue or announcing any issuance

or proposed issuance 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 AGP or the investors participating in the offering. For purposes of

the March 2021 Offering, AGP and the investors from the Company's January 2021

Offering waived a similar 90-day restriction in the placement agent agreement

    and purchase agreement for that transaction.




40

Significant Accounting Policies

Our significant accounting policies are more fully described in Note 1 to our
consolidated financial statements included in our 2020 Annual Report on Form
10-K for the year ended December 31, 2020 filed with the SEC on March 19, 2021.
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, 2021 AND 2020

Results of Operations

For the three months ended March 31, 2021, our net loss was $5.7 million compared to a net loss of $5.1 million for the same three-month period of 2020.

With $54.6 million in cash and cash equivalents, short-term investments, and
receivable on sale of net operating losses at March 31, 2021, coupled with
approximately $15 million of gross proceeds received from the sale of equity in
the March 2021 Offering closed on April 5, 2021 and with future sales of the
Company's State of New Jersey net operating losses, the Company believes it has
sufficient capital resources to fund its operations through 2024.



                                                         Three Months Ended March 31,
                                             (In thousands)             

Change Increase (Decrease)

                                           2021           2020                                  %
Licensing Revenue:                      $      125     $      125     $           -                   - %

Operating Expenses:
Clinical Research                            1,154          1,819              (665 )             (36.6 )%
Chemistry, Manufacturing and Controls        1,418          1,233               185                15.0 %
Research and development expenses            2,572          3,052              (480 )             (15.7 )%
General and administrative expenses          2,936          1,839             1,097                59.7 %
Total operating expenses                     5,508          4,891          

    617                12.6 %
Loss from operations                    $   (5,383 )   $   (4,766 )   $        (617 )             (12.9 )%

Comparison of the Three Months Ended March 31, 2021 and 2020

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 2021 and 2020.

Research and Development Expenses

Research and development ("R&D") expenses decreased by $0.5 million to $2.6
million in the first quarter of 2021 from $3.1 million in the same period of
2020. Costs associated with the OPTIMA Study decreased to $0.1 million in the
first quarter of 2021 compared to $0.7 million in the same period of 2020. In
July 2020, the Company unblinded the OPTIMA Study at the recommendation of the
DMC to halt the study due to futility. Costs associated the OVATION 2 Study
increased to $0.4 million in the first quarter of 2021 compared to $0.3 million
in the same period of 2020. The Company initiated enrollment in the Phase 2
portion of the study during the third quarter of 2020. Regulatory costs were
$0.1 million in the first quarter of 2021 compared to $0.2 million in the same
period of 2020. Other clinical costs were $0.5 million the first quarter of 2021
compared to $0.6 million in the same period of 2020. 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 $1.0 million in the
first quarter of 2021 compared to $0.9 million in the same period of 2020.

41

General and Administrative Expenses

General and administrative expenses increased to $2.9 million in the first
quarter of 2021 compared to $1.8 million in the same period of 2020. This
increase is primarily attributable to higher non-cash stock compensation expense
of approximately $0.8 million, an increase in professional fees of $0.2 million
and an increase in premiums for directors' and officers' insurance in the first
quarter of 2021 when compared to the same period of 2020.

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, 2021, and December 31, 2020, the Company fair valued the
earn-out milestone liability at $7.2 million and $7.0 million, respectively, and
recognized a non-cash charge of $0.2 million for the three-months ended March
31, 2021. In assessing the earnout milestone liability at March 31, 2021, the
Company fair valued each of the two payment options per the Amended Asset
Purchase Agreement and weighted them at 50% and 50% probability for the $7.0
million and the $12.4 million payments, respectively.



As of March 31, 2020, and December 31, 2019, the Company fair valued the
earn-out milestone liability at $5.8 million and $5.7 million, respectively, and
recognized a non-cash charge of $0.1 million for the three-months ended March
31, 2020. In assessing the earnout milestone liability at March 31, 2020, the
Company fair valued each of the two payment options per the Amended Asset
Purchase Agreement and weighted them at 80% and 20% probability for the $7.0
million and the $12.4 million payments, respectively.

Investment income and interest expense

The Company realized $0.1 million of investment income from its short-term investments during first quarter of 2020. Investment income was insignificant during the first quarter of 2021.

The Company entered into a new loan facility with Horizon Technology Finance
Corporation on June 27, 2018. In connection with this debt facility the Company
incurred $0.2 million in interest expense in the first quarter of 2021 compared
to $0.3 million during the same period of 2020.

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 and commercializing 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 $318
million at March 31, 2021.



At March 31, 2021, we had total current assets of $56.2 million (including cash
and cash equivalents, short-term investments, and receivable from sale of its
New Jersey net operating losses of $54.6 million) and current liabilities of
$6.7 million, resulting in net working capital of $49.5 million. At December 31,
2020, we had total current assets of $18.8 million (including cash and cash
equivalents of $17.2 million) and current liabilities of $6.8 million, resulting
in net working capital of $12.0 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.



42






Net cash used in operating activities for the first three months of 2021 was
$4.7 million. Net cash used in investing activities was $15.1 million during the
first three months of 2021. Net cash provided by financing activities was $40.5
million during the first three months of 2021 from net proceeds received through
the sale of our common stock. With $54.6 million in cash, investments and income
tax receivable at March 31, 2021, coupled with approximately $15 million of
gross proceeds received from the sale of equity in the March 2021 Offering
closed on April 5, 2021 and with future sales of the Company's State of New
Jersey net operating losses, the Company believes it has sufficient capital
resources to fund its operations through 2024.



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.

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