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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2004 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 000-14242
CELSION CORPORATION
-------------------
(Exact name of registrant as specified in its charter)
DELAWARE 52-1256615
-------- -----------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
10220-L OLD COLUMBIA ROAD, COLUMBIA, MARYLAND 21046-2364
---------------------------------------------------------
(Address of principal executive offices) (Zip code)
(410) 290-5390
--------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes No X
--- ---
AS OF MAY 14, 2004, THE REGISTRANT HAD OUTSTANDING 160,494,067 SHARES OF COMMON
STOCK, $.01 PAR VALUE.
SEC 1296 (1-04) POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF
INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND
UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER.
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements and Notes.
Balance Sheets
Statements of Operations
Statements of Cash Flows
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures about Market
Risk.
Item 4. Controls and Procedures.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
EXHIBITS
11 Statement Re. Computation of Earnings Per Share.
31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Index to Financial Statements
-----------------------------
Page
----
Balance Sheets 4
March 31, 2004 and December 31, 2003
Statements of Operations for the 6
Three Months Ended March 31, 2004 and 2003
Statements of Cash Flows for the 7
Three Months Ended March 31, 2004 and 2003
Notes to Financial Statements 8
3
CELSION CORPORATION
BALANCE SHEETS
March 31, 2004 and December 31, 2003
ASSETS
March 31, December 31,
2004 2003
---- ----
(Unaudited) (Unaudited)(1)
Current assets:
Cash ............................................. $19,426,771 $12,272,407
Trade account receivable ...................... 100,000 --
Other receivables ............................. 29,249 16,753
Materials ................................ 1,258,973 838,992
Work-in-process ............................... -- 37,308
Finished goods ................................ 424,438 41,410
Prepaid expenses .............................. 283,156 361,967
----------- -----------
Total current assets .................... 21,522,587 13,568,837
----------- -----------
Property and equipment - at cost:
Furniture and office equipment ................ 152,693 146,508
Computer hardware and software ................ 240,856 218,758
Laboratory and shop equipment ................. 319,621 212,379
Leasehold improvements ........................ 107,258 107,258
----------- -----------
820,428 684,903
Less accumulated depreciation .............. 329,398 296,068
----------- -----------
Net value of property and equipment ..... 491,030 388,835
----------- -----------
Other assets:
Investment in Celsion China, Ltd. ........... 175,965 --
Escrow account-license fee .................. 2,000,000 --
Deposits .................................... 23,622 23,622
Prepaid inventory development costs ......... 433,538 417,453
Patent licenses (net of amortization) ....... 38,240 41,087
----------- -----------
Total other assets .......................... 2,671,365 482,162
----------- -----------
Total assets ......................... $24,684,982 $14,439,834
=========== ===========
4
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2004 2003
---- ----
(Unaudited) (Unaudited)(1)
------------ ------------
Current liabilities:
Accounts payable - trade .......................................... $ 1,997,017 $ 631,097
Accrued noncash compensation ...................................... 65,037 153,316
Other accrued liabilities ......................................... 542,382 202,426
Current portion of deferred revenue ............................... 571,428 --
------------ ------------
Total current liabilities ................................... 3,175,864 986,839
------------ ------------
Deferred revenue - license fee ....................................... 3,380,953 --
------------ ------------
Stockholders' equity:
Common Stock $0.01 par value: 200,000,000 shares authorized,
158,011,201 and 148,034,473 shares issued and outstanding at March 31,
2004 and December 31, 2003, respectively ............................. 1,580,112 1,480,345
Additional paid-in capital ........................................ 82,845,950 72,204,867
Accumulated deficit ............................................... (66,297,897) (60,232,217)
------------ ------------
Total stockholders' equity ................................. 18,128,165 13,452,995
------------ ------------
Total liabilities and stockholders' equity ........... $ 24,684,982 $ 14,439,834
============ ============
See accompanying notes.
(1) In December 2003, the Company changed its fiscal year end from September 30
to December 31. The balance sheet at September 30, 2003 was audited but the
balance sheet at December 31, 2003 was not audited.
5
CELSION CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
----------------------------
2004 2003
---- ----
Revenue:
Sales ....................................... $ 100,000 $ --
Cost of sales .............................. 67,066 --
------------- -------------
Gross margin ............................... 32,934 --
Other manufacturing and distribution costs.. 7,721 --
Operating expenses:
General and administrative .................... 1,569,388 1,141,021
Research and development ...................... 4,586,084 3,652,560
------------- -------------
Total operating expenses ................... 6,155,472 4,793,581
------------- -------------
Loss from operations ........................... (6,130,259) (4,793,581)
License fee income amortization ................ 47,619 --
Interest income ................................ 40,995 6,564
Loss from investment in Celsion China, Ltd. .... (24,035) --
------------- -------------
Loss before income taxes ....................... (6,065,680) (4,787,017)
Income taxes ................................... -- --
------------- -------------
Net loss ....................................... $ (6,065,680) $ (4,787,017)
Dividends on preferred stock ................... -- (52,553)
------------- -------------
Net loss attributable to common stockholders ... $ (6,065,680) $ (4,839,570)
============= =============
Net loss per common share (basic and diluted) .. $ (0.04) $ (0.04)
============= =============
Weighted average shares outstanding ............ 153,221,009 108,726,231
============= =============
See accompanying notes.
6
CELSION CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
----------------------------
2004 2003
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ......................................................... $ (6,065,680) $ (4,787,017)
Non-cash items included in net loss:
Depreciation and amortization ................................. 36,177 24,694
Amortization of deferred revenue - license fee income ......... (47,619) --
Loss from investment in Celsion China, Ltd. ................... 24,035 --
Common Stock and stock options issued for compensation and other
operating expenses .......................................... 366,788 2,337,000
Stock based compensation ...................................... 256,305 --
Net changes in:
Trade receivable .............................................. (100,000) --
Other receivables ............................................. (12,496) (3,747)
Inventories ................................................... (765,701) (130,255)
Prepaid expenses .............................................. 78,811 82,656
Escrow account - license fee .................................. (2,000,000) --
Prepaid inventory development costs ........................... (16,083) 19,740
Accounts payable-trade ........................................ 1,365,920 (56,942)
Other accrued liabilities ..................................... 339,954 79,745
Deferred revenue - license fee ................................ 4,000,000 --
Net cash used by operating activities ....................... (2,539,589) (2,434,126)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Celsion China, Ltd. ................................ (200,000) --
Purchase of property and equipment ............................... (135,525) (7,506)
------------ ------------
Net cash used by investing activities ....................... (335,525) (7,506)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of stock issuances ...................................... 10,029,478 5,038,350
Payment of note payable .......................................... -- (500,000)
------------ ------------
Net cash provided by financing activities ................... 10,029,478 4,538,350
------------ ------------
NET INCREASE IN CASH ............................................... 7,154,364 2,096,718
Cash at beginning of period ........................................ 12,272,407 1,050,606
------------ ------------
Cash at end of the period .......................................... $ 19,426,771 $ 3,147,324
============ ============
See accompanying notes.
7
CELSION CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of Celsion
Corporation (which we sometimes refer to as Celsion, the Company, we or us) have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all adjustments, consisting
only of normal recurring accruals considered necessary for a fair presentation,
have been included in the accompanying unaudited financial statements. Operating
results for the three-month period ended March 31, 2004 are not necessarily
indicative of the results that may be expected for any other interim period or
for any full year. For further information, refer to the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2003. On December 3, 2003, the Company filed
with the Securities and Exchange Commission (the SEC) a Current Report on Form
8-K reporting, under Item 5, that, effective December 31, 2003, it was changing
its fiscal year end from September 30 to December 31.
NOTE 2. COMMON STOCK OUTSTANDING AND PER SHARE INFORMATION
For the three-month periods ended March 31, 2004 and 2003, per share
data is based on the weighted average number of shares of common stock, par
value $0.01 per share (Common Stock), outstanding. Outstanding warrants and
options that can be converted into Common Stock are not included, as their
effect is anti-dilutive.
NOTE 3. NEW ACCOUNTING PRONOUNCEMENTS
In January 2003, the FASB issued FASB Interpretation 46, Consolidation
of Variable Interest Entities - an Interpretation of ARAB No. 51 (FIN 46). This
interpretation provides guidance related to identifying variable interest
entities (previously known as special purpose entities or SPEs) and determining
whether such entities should be consolidated. Certain disclosures are required
if it is reasonably possible that a company will consolidate or disclose
information about a variable interest entity when it initially applies FIN 46.
This interpretation became effective for the Company's quarter beginning
October 1, 2003. The Company has not had an investment in or contractual
relationship or other business relationship with a variable interest entity and
therefore the adoption of FIN 46 did not have any impact on our results of
operations and financial condition. However, if the Company enters into any such
arrangement with a variable interest entity in the future (or any entity with
which we currently have a relationship is reconsidered based on guidance in FIN
46 to be a variable interest entity), the Company's reported results of
operations and financial condition may be affected.
NOTE 4. FAIR VALUE ACCOUNTING FOR STOCK PLANS
The Company has long-term compensation plans that permit the granting
of incentive awards in the form of stock options. The Company had adopted the
disclosure-only provisions of Statement of Financial Accounting Standard (SFAS)
No. 148, which allow companies to continue to measure compensation costs for
stock options granted to employees using the value-based method of accounting
prescribed by APB Opinion No. 25 Accounting for Stock Issued to Employees (APB
25). Celsion has elected to follow APB 25 and the related interpretations in
accounting for its employee stock options.
The following table illustrates the effect on net income and earnings
per share if the Company had applied the fair value recognition provisions of
Statement 123, to its stock-based employee plans:
8
Three Months Ended March 31,
----------------------------
2004 2003
---- ----
Net loss attributable to common
stockholders, as reported ............... $(6,065,680) $(4,839,570)
Add: Stock-based employee compensation
expense included in reported net loss
256,305 --
Deduct: Total stock-based employee
compensation expense determined using the
fair value-based method for all awards .. (353,508) (75,855)
----------- -----------
Pro forma net loss ...................... $(6,162,883) $(4,915,425)
=========== ===========
Loss per share:
Basic - as reported ..................... $ (0.04) $ (0.04)
=========== ===========
Basic - pro forma ....................... $ (0.04) $ (0.05)
=========== ===========
NOTE 5. INVESTMENT IN CELSION CHINA, LTD.
We have formed a joint venture to develop our technologies and
distribute our products in greater China with Asia Pacific Life Science Group,
Ltd., a group of Hong Kong-based investors. We announced the joint venture on
December 15, 2003 and made a $200,000 investment to purchase a 45.45% equity
position in Celsion China, Ltd. on February 5, 2004.
The financial records of Celsion China, Ltd. as of March 31, 2004
reflected the following:
US$
---------
Cash ........................... $ 382,383
Deposits ....................... 192
Prepaid expense ................ 4,056
Total current assets ...... 386,631
---------
Fixed assets, net .............. 449
---------
Total assets .............. $ 387,080
=========
Liabilities .................... $ --
Equity ......................... 440,073
Accumulated deficit ............ (52,993)
---------
Total liabilities and equity $ 387,080
=========
Celsion accounts for the investment in Celsion China, Ltd. under the
equity method, The investees' functional currency is the Hong Kong Dollar. No
foreign currency adjustment was necessary during the quarter. The loss from this
unconsolidated investee for the quarter ended March 31, 2004 can be recalculated
as follows and is comprised of only general and administrative costs. Celsion
China, Ltd. had no commercial sales for the quarter.
Accumulated deficit ............ $ (52,993)
Ownership percentage ........... 45.45%
---------
Loss recorded for the quarter... $ (24,035)
=========
9
Celsion Corporation's balance sheet at March 31, 2004 reflects the
investment in Celsion China in the account entitled "Investment in Celsion
China, Ltd.," the components of which are as follows:
Initial cash investment ........ $ 200,000
45.45% accumulated loss ........ (24,035)
---------
Net investment carrying value .. $ 175,965
=========
NOTE 6. LICENSING AGREEMENT
The Distribution Agreement dated January 21, 2003 between Celsion
Corporation and Boston Scientific Corporation (BSC or Boston Scientific)
entitled Celsion to a $4,000,000 licensing fee, effective upon the occurrence of
certain events, in return for granting BSC a seven-year, royalty-free, exclusive
right to market, distribute, import, export, use, sell and offer to sell
Celsion's Prolieve(TM) Thermodilatation system worldwide, with the exception of
China, Taiwan, Hong Kong, Macao, Mexico and Central and South America. All of
the conditions were met, and we received cash from BSC during the current
quarter, in the amount of $2,000,000. The remaining $2,000,000 was placed in an
escrow account, pursuant to the terms of the Distribution Agreement. The escrow
is designed to provide available funds for payment in the event of certain
contingencies occurring during the 36-month term of the escrow. The escrow is
held in an interest-bearing account, with interest accruing for the benefit of
Celsion, but subject to the escrow. All amounts held in the account at the end
of the term of the escrow are payable to Celsion. However, Celsion bears full
responsibility for payment of claims subject to the escrow in excess of
available escrowed funds. The Company will recognize the licensing fee ratably,
at the rate of approximately $46,700 per month, over the seven-year term of the
Distribution Agreement.
NOTE 7. INVENTORY
We have increased inventory levels to meet expected commercial sales
requirements for both Prolieve Thermodilatation system control units and
associated kits (catheters). March 31, 2004 inventory balances are as follows:
Control units .............................. $ 424,438
Kit components ............................. 1,084,218
Other parts ................................ 174,755
----------
Total Prolieve inventory at March 31, 2004.. $1,683,411
==========
NOTE 8. ACCOUNTS PAYABLE
Accounts payable increased by $1,365,920 for the current quarter, from
$631,097 for the quarter ended December 31, 2003. The increases in the various
categories of items in accounts payable are as follows:
Control units .............................. $ 235,100
Kit components ............................. 254,200
Other parts ................................ 23,600
Legg Mason ................................. 410,000
Liposome costs ............................. 274,300
Capital equipment for Manufacturing ........ 77,300
License fee ................................ 50,000
Other categories ........................... 41,420
----------
$1,365,920
==========
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
Statements and terms such as "expect", "anticipate", "estimate",
"plan", "believe", and words of similar import, regarding the Company's
expectations as to the development and effectiveness of its technologies, the
potential demand for its products, and other aspects of its present and future
business operations, constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Although the Company
believes that its expectations are based on reasonable assumptions within the
bounds of its knowledge of its business and operations, the Company cannot
guarantee that actual results will not differ materially from its expectations.
In evaluating such forward-looking statements, readers should specifically
consider the various factors contained in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 2003, including, without
limitation, unforeseen changes in the course of research and development
activities and in clinical trials; possible changes in cost and timing of
development and testing, capital structure, and other financial items; changes
in approaches to medical treatment; introduction of new products by others;
possible acquisitions of other technologies, assets or businesses; and possible
actions by customers, suppliers, competitors and regulatory authorities. These
and other risks and uncertainties could cause actual results to differ
materially from those indicated by such forward-looking statements, including
those set forth in "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Risk Factors" contained in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 2003, as well as
those set forth below and elsewhere in this Report.
The discussion of risks and uncertainties set forth in this Report and in the
Company's Annual Report on Form 10-K and in other filings with the SEC is not
necessarily a complete or exhaustive list of all risks facing the Company at any
particular point in time. We operate in a highly competitive, highly regulated
and rapidly changing environment and our business is in a state of evolution.
Therefore, it is likely that new risks will emerge, and that the nature and
elements of existing risks will change, over time. It is not possible for
management to predict all such risk factors or changes therein, or to assess
either the impact of all such risk factors on our business or the extent to
which any individual risk factor, combination of factors, or new or altered
factors, may cause results to differ materially from those contained in any
forward-looking statement. We disclaim any obligation to revise or update any
forward-looking statement that may be made from time to time by us or on our
behalf.
OVERVIEW
Celsion Corporation is a medical technology company applying
proprietary focused-heat technology in the development and commercialization of
products to treat cancer and other diseases. In 1989, we obtained FDA
premarketing approval to use our microwave-based Microfocus 1000 heat therapy
system on surface and (PMA) subsurface tumors in conjunction with radiation
therapy. We marketed this system until 1995. Since that time, we have been
engaged in research and development of new treatment systems.
Our pipeline presently consists of the following products, in the
indicated stages of development:
Product Status
- ---------------------------------------------- -----------------------------------------------------
o Prolieve Thermodilatation system for Premarketing approval was received on February 19,
the treatment of BPH.................. 2004 and commercialization has begun through Boston
Scientific.
o Heat-only breast cancer treatment Currently the subject of multi-site pivotal Phase II
system................................ clinical trials.
o ThermoDox(TM) (Doxorubicin-laden Currently the subject of multi-site Phase I clinical
thermo-liposome)...................... trials in conjunction with the Prolieve system for the
treatment of prostate cancer. In addition, approval
has been received to begin Phase I clinical trials in
connection with radio frequency ablation in the
treatment of liver cancer.
o Cancer Repair Inhibitor (CRI)......... Currently the subject of pre-clinical studies at
Sloan-Kettering Cancer Institute.
Since 1995, we have generated no revenues and have funded our
operations primarily through private placements of our equity securities. During
the most recently completed fiscal quarter, following FDA premarketing approval
of our Prolieve Thermodilatation system, we received one-time licensing fees of
$4,000,000 under our agreement with Boston Scientific Corporation, the
distributor of our Prolieve system. We received an additional $100,000 from the
sale to Boston Scientific of catheter kits for use with the Prolieve system.
Until such time, if any, as we are able to complete development and testing of,
and gain necessary regulatory approvals for, one or more of our other products,
sales of the Prolieve system and catheter kits will represent our only source of
revenue. We presently do not have any committed sources of financing. Therefore,
we are reliant on revenues from the sale of our Prolieve products and from funds
generated through the sale of our securities for to fund our ongoing operations.
The Prolieve system consists of a microwave generator and conductors
along with a computer and computer software programs that control the focusing
and application of heat (control units), plus a specially designed,
one-time-use catheter. We expect to generate revenues from sales of control
units and catheter kits. Under our agreement with Boston Scientific, we are
entitled to receive our costs plus 50% of the difference between such costs and
the average selling price (determined in accordance with the agreement) for each
control unit and 50% of the revenue generated from the sale of catheter kits,
for which Celsion bears the cost of goods sold. During the introduction of the
Prolieve system, we expect that sales of both control units and catheter kits
will increase. However, over time we expect that sales will level off.
Our principal costs consist of the following:
o Cost of sales, relating to the production and sale of Prolieve
control units and catheter kits, which are being marketed by Boston
Scientific under s seven-year agreement (expiring in 2011);
o Research and development costs, including licensing fees due in
connection with various of our technologies, the costs of sponsored
research and pre-clinical and clinical trials for our breast cancer
treatment system, ThermoDox and Cancer Repair Inhibitor, as well as
certain ongoing studies related to our Prolieve system, and the
costs of development and design of other products and equipment;
and
o Corporate overhead.
Our research and development activities, pre-clinical tests and
clinical trials and, ultimately, the manufacturing, marketing and labeling of
each of our products, are subject to extensive regulation by the FDA. We may not
bring to market any product until we have received permission to do so, in the
form of a premarketing approval, from the FDA. As we believe we are best suited
to conduct or oversee basic research and development activities, to pursue a
prototype product through clinical testing and regulatory approval, and to
engage in initial manufacturing and marketing activities during product launch,
we do not intend to engage in large-scale manufacturing with respect to our
products. Instead, for the foreseeable future, we intend generally to outsource
the manufacture of final commercial products, components and disposables, as
well as the marketing of our products. Therefore, in connection with the
approval and commercialization of each product, we will be required to identify
and negotiate production and marketing arrangements with third parties, as we
have done in connection with our Prolieve system.
11
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 2004
and Three Months Ended March 31, 2003
Actual Results
----------------------------
Three Months Ended March 31, Change
---------------------------- ------------------------
2004 2003 Dollars Percent
----------- -------------- ----------- -------
Revenue:
Sales ....................................... $ 100,000 $ -- $ 100,000 N/A
Cost of sales ............................... 67,066 -- 67,066 N/A
Gross margin ................................ 32,934 -- 32,934 N/A
Other manufacturing and distribution costs .. 7,721 -- 7,721 N/A
Operating expenses:
General and administrative .................. 1,569,388 1,141,021 428,367 38%
Research and development .................... 4,586,084 3,652,560 933,524 26%
----------- ----------- -----------
Total operating expenses ...................... 6,155,472 4,793,581 1,361,891 28%
----------- ----------- -----------
Loss from operations .......................... (6,130,259) (4,793,581) (1,336,678) 28%
=========== =========== ===========
Interest income ............................... 40,995 6,564 34,431 524%
The Company received a PMA for its Prolieve system from the FDA on
February 19, 2004 and thereafter commenced commercial introduction of the system
through Boston Scientific Corporation. Product sales for the current quarter,
all of which were generated subsequent to February 19, consist of one shipment
of our Prolieve Thermodilatation system kits (catheters) sold to Boston
Scientific. There were no product sales during the comparable quarter in 2003,
which predated the commercial introduction of our Prolieve system.
Other manufacturing and distribution costs represent freight charges
for shipping inventory from one warehouse to another, scrap parts, and
incidental manufacturing costs.
The $428,367 (38%) increase in general and administrative expense
during the quarter ended March 31, 2004 was attributable primarily to a payment
in the amount of $410,000 to Legg Mason for investment banking services rendered
with respect to the Distribution Agreement between Celsion and Boston
Scientific.
The increase of $933,524 (26%) in research and development expense
during the current quarter was due primarily to costs recorded with respect to
the Separation and Release Agreement with Mr. Daniel S. Reale in connection with
Mr. Reale's resignation as an Executive Vice President and President of our
Oncology Division, as stated in our Report on Form 8-K filed with the Securities
and Exchange Commission on March 1, 2004.
Our expenses for the quarter ended March 31, 2004 included
approximately $2,255,000 of unusual, nonrecurring items, consisting of (i) a
termination fee payment in the amount of $350,000 in connection with migration
of manufacturing of the catheter kits for our Prolieve system to a new supplier;
(ii) a payment in the amount of $410,000 to Legg Mason for investment banking
services rendered in connection with negotiation of our strategic relationship
with Boston Scientific in 2003, which became due with receipt of the PMA; (iii)
expenses in the approximate amount of $972,000 in connection with the separation
of Daniel Reale from the Company; and (iv) cash bonuses in the approximate
amount of $623,000 granted to our employees in connection with receipt of the
PMA for the Prolieve system. In contrast, our expenses for the quarter ended
March 31, 2003 included an unusual, nonrecurring payment to Duke University
under our licensing arrangements for our thermo-liposome technology. During the
quarter ended March 31, 2004 substantially all of the net increase in operating
expenses not due to these unusual items was attributable to increased personnel
and consulting costs in connection with completion of the PMA process and the
commencement of commercialization of the Prolieve system.
The net increase in expenditures discussed above resulted in an
increase in the loss from operations for the three-month period ended March 31,
2003 of $1,336,678 or 28%, to $6,130,259 from $4,793,581 in the comparable
period during the prior fiscal year.
Interest income, which is reflected net of any interest expense,
increased by 524%, or $34,431, for the quarter ended March 31, 2004 from
comparable quarter in 2003. The increase was due to higher average cash balances
and a higher rate of return on account balances. The higher cash balances were,
in turn, the result of private placements of our equity securities over the last
12 months, as well as aggregate payments in connection with the sale of our
Common Stock to and licensing fees from Boston Scientific, as discussed
elsewhere herein.
12
LIQUIDITY AND CAPITAL RESOURCES
Since inception, our expenses have significantly exceeded our revenues,
resulting in an accumulated deficit of $66,297,896 at March 31, 2004. We have
incurred negative cash flows from operations since our inception and have funded
our operations primarily through the sale of equity securities. In addition,
during the quarter ended March 31, 2004, we received aggregate payments in the
amount of $8,000,000 from Boston Scientific in the form of payments for purchase
of shares of our Common Stock and of licensing fees for our Prolieve system. As
of March 31, 2004, we had cash of $19,426,771 and total current assets of
$21,522,587, compared with current liabilities of $3,175,864, resulting in a
working capital surplus of $18,346,722. As of December 31, 2003, we had
$12,272,407 in cash and total current assets of $13,568,837, compared with
current liabilities of $986,839, which resulted in a working capital surplus of
$12,581,998 at the fiscal year end. Net cash used in the Company's operating
activities was $4,539,589 for the three months ending March 31, 2004.
On January 31, 2004, the Company issued 2,727,273 shares of its Common
Stock and associated warrants to purchase 818,182 shares of its Common Stock in
connection with a private placement offering. The private placement offering was
made exclusively to one institutional "accredited investor" as that term is
defined in Rule 501 under the Securities Act of 1933, as amended (the Securities
Act). These securities were issued at a price of $1.10 per share and associated
fractional warrant. The warrants issued to the investor entitle the investor to
purchase that number of shares of Common Stock equal to 30% of the number of
shares of Common Stock initially issued to the investor in the offering. The
warrants are exercisable at $1.50 per share of Common Stock, subject to call
under certain circumstances. In connection with the private placement offering,
the Company issued warrants to a finder to purchase 283,636 shares of its Common
Stock at an exercise price of $1.10 per share. The Company realized gross
proceeds in the amount of $3,000,000 and paid a cash finder's fee in the amount
of $240,000 in connection with the sale of these securities. In addition, during
the quarter, the Company issued a total of 3,809,667 shares of its Common Stock
for cash consideration of $2,404,702 upon exercise of outstanding stock purchase
warrants. The warrants were exercised in accordance with their respective terms
at prices ranging from $0.39 to $1.20 per share. The Company also issued
1,292,566 shares of its Common Stock for cash consideration of $861,769 upon
exercise of stock options. On March 2, 2004, the Company issued 2,083,333 shares
of its Common Stock to Boston Scientific for cash consideration of $4,000,000
pursuant to the Transaction Agreement between the Company and Boston Scientific
Corporation (the Transaction Agreement). Subsequently, on April 7, 2004, the
Company issued 1,273,885 shares of its Common Stock to Boston Scientific for
cash consideration of $2,000,000 pursuant to the Transaction Agreement.
During the three months ended March 31, 2004, we expended approximately
$6,011,535 (including research and development outlays, compensation expenses,
including recruitment and relocation expenses for new employees, expenses
relating to previously repriced stock options and increased business development
costs for BPH, liposome and gene therapy products) for clinical testing of our
breast cancer and prostate cancer treatment systems, as well as corporate
overhead. For fiscal year ending December 31, 2004, we expect to expend a total
of approximately $12 million for clinical testing of our breast cancer, prostate
cancer and liver cancer treatment systems, as well as corporate overhead, all of
which we have funded, or expect to fund, from our current resources. On February
19, 2004, we received FDA approval for our Prolieve Thermodilatation system,
clearing the path for Celsion and Boston Scientific to introduce the BPH
treatment. We anticipate that sales of Prolieve control units and catheter kits
will generate revenues on a going-forward basis, although it is not possible for
us to predict the timing or amount of such revenues. The foregoing amounts are
estimates based upon assumptions as to the scheduling of institutional clinical
research and testing personnel, the timing of clinical trials and other factors
that are not fully predictable or within our control.
On January 5, 2004, we issued an Irrevocable Letter of Credit (LOC) in
the amount of $500,000 to Sanmina-SCI Corporation, the manufacturer for
Celsion's Prolieve Thermodilatation system. The LOC, which will expire on June
30, 2004, was requested by Samina-SCI Corporation to cover the purchases of raw
material inventory for Prolieve production. The LOC is collateralized by
$650,000 of U.S. Treasury Bills. Until the LOC termination date, we are
restricted from use of these funds.
13
We anticipate that our available cash on hand will be sufficient to
fund our activities through December 2005. However, our dependence on raising
additional capital beyond fiscal 2004 will continue at least until we are able
to generate significant sales of our Prolieve system and related kits, as well
as our other new technologies. Our future capital requirements and the adequacy
of our financing depend upon numerous factors, including the successful
commercialization of our Prolieve Thermodilatation system and breast cancer
treatment systems, progress in product development efforts, progress with
pre-clinical studies and clinical trials, the cost and timing of production
arrangements, the development of effective sales and marketing activities, the
cost of filing, prosecuting, defending and enforcing intellectual property
rights, competing technological and market developments and the development of
strategic alliances for the marketing of our products. We will be required to
obtain additional funding through equity or debt financing, strategic alliances
with corporate partners and others, or through other sources not yet identified.
We do not have any committed sources of additional financing, and cannot
guarantee that additional funding will be available in a timely manner, on
acceptable terms, or at all. If adequate funds are not available, we may be
required to delay, scale back or eliminate certain aspects of our operations or
attempt to obtain funds through unfavorable arrangements with partners or others
that may require us to relinquish rights to certain of our technologies, product
candidates, products or potential markets or which otherwise may be materially
unfavorable to us. Furthermore, if we cannot fund our ongoing development and
other operating requirements, particularly those associated with our obligation
to conduct clinical trials under our licensing agreements, we will be in breach
of our commitments under those licensing agreements and could therefore lose our
license rights, which could have material adverse effects on our business.
RISK FACTORS
As we have moved into commercialization of our Prolieve
Thermodilatation system, certain of the risks, uncertainties and challenges
facing our business have changed. The following discussion supplements, in light
of such changes, the information that appears under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Risk
Factors" in our Annual Report on Form 10-K for the fiscal year ended September
30, 2003. As indicated elsewhere herein, due to the nature of our industry and
business, the following discussion and that in the Annual Report is not
necessarily a complete or exhaustive list of all risks facing the Company at any
particular point in time. The presence or absence of a risk in the discussion
below should not be taken to imply a necessary change in that risk subsequent to
the date of our Form 10-K.
WE HAVE A HISTORY OF SIGNIFICANT LOSSES AND EXPECT TO CONTINUE SUCH LOSSES FOR
THE FORESEEABLE FUTURE.
Since Celsion's inception in 1982, our expenses have substantially
exceeded our revenues, resulting in continuing losses and an accumulated deficit
of $66,297,896 at March 31, 2004, including losses of $14,293,081 for the 12
months ended December 31, 2003 and $6,065,680 for the quarter ended March 31,
2004. Because we presently have only limited revenues and are committed to
continuing our product research, development and commercialization programs, we
will continue to experience significant operating losses unless and until we
complete the development of new products and these products have been clinically
tested, approved by the FDA and successfully marketed. In addition, we have
funded our operations for many years primarily through the sale of the Company's
securities and have limited working capital for our product research,
development, commercialization and other activities.
WE DO NOT EXPECT TO GENERATE SIGNIFICANT REVENUE FOR THE FORESEEABLE FUTURE.
Since 1995 we have devoted our resources to developing a new generation
of thermotherapy and other products, but are not able to market these products
unless and until we complete clinical testing and obtain all necessary
governmental approvals. On February 19, 2004, we received a PMA from the FDA for
the first of our new generation of thermotherapy products--our Prolieve
Thermodilatation system for the treatment of BPH--and, since that time, our
distributor Boston Scientific has begun commercial introduction of the Prolieve
system. However, we can give no assurance as to how much revenue, if any, will
be generated by Prolieve sales or when sales of Prolieve systems may occur. In
addition, at the present time our other products are still in various stages of
development and testing and cannot be marketed until we have completed clinical
testing and obtained necessary governmental approval. Accordingly, current
revenue sources to sustain our operations are extremely limited and will remain
so until and unless our Prolieve system is marked successfully and/or until our
other new products are
14
clinically tested, approved by the FDA and successfully marketed. We cannot
guarantee that any or all of our products will be successfully tested, approved
by the FDA or marketed, successfully or otherwise, at any time in the
foreseeable future or at all.
SOME OF OUR TECHNOLOGY IS STILL UNDERGOING CLINICAL TESTING; OUR TECHNOLOGIES
MAY NOT ACHIEVE SUFFICIENT ACCEPTANCE BY THE MEDICAL COMMUNITY TO SUSTAIN OUR
BUSINESS.
To date, microwave heat therapy has not been widely accepted in the
United States medical community as an effective treatment for BPH or for cancer
treatment, with or without the concurrent use of radiation. We believe that this
is primarily due to the inability of earlier technology adequately to focus and
control heat directed at specific tissue locations and to conclusions that were
drawn from a widely publicized study by the Radiation Oncology Therapy Group
that purported to show that thermotherapy in conjunction with radiation was only
marginally effective. Subsequent to the publication of this study, the
HealthCare Financing Administration, or HCFA (now known as the Centers for
Medicare and Medicaid Services, or CMS) established a low medical reimbursement
rate for all thermotherapy equipment designed to be used in conjunction with
radiation. While management believes that our new technology is capable of
overcoming the limitations of the earlier technology, the medical community may
not embrace the perceived advantages of our "Adaptive Phased Array," or APA,
focused heat therapy without more extensive testing and clinical experience than
we will be able to provide. To date, we have received a PMA from the FDA for our
Prolieve system for the treatment of BPH, but we can offer no assurance that the
Prolieve system will be accepted by the medical community widely or at all. Our
new cancer treatment technology is currently in Phase II trials. This technology
may not prove as effective in practice as we on anticipate. If further testing
and clinical practice do not confirm the safety and efficacy of our technology
or, even if further testing and practice produce positive results but the
medical community does not view this new form of heat therapy as effective and
desirable, our efforts to market our new products may fail, with material
adverse consequences to our business. We intend to petition CMS for a new
reimbursement code for our breast cancer treatment. The success of our business
model depends significantly upon our ability to petition successfully for
reimbursement codes. However, we cannot offer any assurances as to when, if
ever, CMS may act on our request to establish a reimbursement code for our
breast cancer treatment system. In addition, there can be no assurance that the
reimbursement level established for our breast cancer treatment system, if
established, will be sufficient for us to carry out our business plan
effectively.
IF WE ARE NOT ABLE TO OBTAIN NECESSARY FUNDING, WE WILL NOT BE ABLE TO COMPLETE
THE DEVELOPMENT, TESTING AND COMMERCIALIZATION OF OUR TREATMENTS AND PRODUCTS.
We will need substantial additional funding in order to complete the
development, testing and commercialization of our breast cancer treatment system
and heat-activated liposome and cancer repair inhibitor products, as well as
other potential new products. We expended approximately $14,333,740 in the
12-month period ended December 31, 2003 and an additional $6,155,472 in the
three months ended March 31, 2004. As of that date, we had available a total of
approximately $19,426,771 to fund our operations. We have both increased the
pace of development work on our present products and made a significant
commitment to our heat-activated liposome and cancer repair inhibitor research
and development projects and it is our intention to at least maintain, or
increase the pace and scope of these activities. The increase in the scope of
present development work and the commitment to these new projects will require
additional external funding, at least until we are able to generate sufficient
cash flow from sale of one or more of our products to support our continued
operations. We do not have any committed sources of financing and cannot offer
any assurances that additional funding will be available in a timely manner, on
acceptable terms or at all.
If adequate funding is not available, we may be required to delay,
scale back or eliminate certain aspects of our operations or attempt to obtain
funds through unfavorable arrangements with partners or others that may force us
to relinquish rights to certain of our technologies, products or potential
markets or that could impose onerous financial or other terms. Furthermore, if
we cannot fund our ongoing development and other operating requirements,
particularly those associated with our obligations to conduct clinical trials
under our licensing agreements, we will be in breach of these licensing
agreements and could therefore lose our license rights, which could have
material adverse effects on our business.
15
WE PRESENTLY HAVE LIMITED MARKETING AND SALES CAPABILITY AND WILL BE REQUIRED TO
DEVELOP SUCH CAPABILITIES AND TO ENTER INTO ALLIANCES WITH OTHERS POSSESSING
SUCH CAPABILITIES IN ORDER TO COMMERCIALIZE OUR PRODUCTS SUCCESSFULLY.
We have begun to commercialize and market our Prolieve Thermodilatation
system through Boston Scientific. Consequently, we are dependent upon Boston
Scientific for the successful introduction and marketing of our Prolieve system.
There can be no assurance that Boston Scientific will establish adequate sales
and distribution capabilities or be successful in gaining market acceptance for
Prolieve system. We intend to market our other products, if and when such
products are approved for commercialization by the FDA, through other strategic
alliances and distribution arrangements with third parties. There can be no
assurance that we will be able to establish such sales and marketing
capabilities successfully or successfully enter into third-party marketing or
distribution arrangements and, to the extent that we do enter into such
arrangements, we will be dependent, to some degree, on our marketing and
distribution partners. We have limited experience and capabilities in marketing,
distribution and direct sales, although we expect to attempt to recruit
experienced marketing and sales personnel as we pursue commercialization. In
attracting, establishing and maintaining a marketing and sales force or entering
into third-party marketing or distribution arrangements with other companies, we
expect to incur significant additional expense. There can be no assurance that,
to the extent we enter into any commercialization arrangements with third
parties as and when our other products or services receive FDA approval, such
third parties will establish adequate sales and distribution capabilities or be
successful in gaining market acceptance for our products and services. There
also can be no assurance that our direct sales, marketing, licensing and
distribution efforts would be successful or that revenue from such efforts would
exceed expenses.
WE DEPEND ON THIRD-PARTY SUPPLIERS TO PROVIDE US WITH COMPONENTS REQUIRED FOR
OUR PRODUCTS AND MAY NOT BE ABLE TO OBTAIN THESE COMPONENTS ON FAVORABLE TERMS
OR AT ALL.
We are not currently manufacturing any products, but are using our
facilities to assemble prototypes of the equipment for research and development
purposes. We currently purchase certain specialized microwave and thermometry
components and applicator materials and the catheter unit used for our clinical
trial products from single or limited source suppliers because of the small
quantities involved. While we have not experienced any significant difficulties
in obtaining these components, the loss of an important current supplier could
require that we obtain a replacement supplier, which could result in delays and
additional expense in being able to make prototype equipment available for
clinical trials and other research purposes. For our Prolieve equipment, we use
outside contractors to manufacture finished equipment and the disposable
catheter kit used in conjunction with the equipment. In turn, these suppliers
are dependent on single source and other components suppliers. Although we
believe that alternative sources of supply would be available if the need arose,
the loss of one or more of these suppliers would require that we obtain a
replacement source, which could result in delays and additional expense to
redesign the product to accept the replacement vendor.
THE EXERCISE OF OUR OUTSTANDING OPTIONS AND WARRANTS COULD RESULT IN SIGNIFICANT
DILUTION OF OWNERSHIP INTERESTS IN OUR COMMON STOCK OR OTHER CONVERTIBLE
SECURITIES.
As of March 31, 2004, we had outstanding and exercisable warrants and
options to purchase a total of 24,881,083 shares of our Common Stock at exercise
prices ranging from $0.25 to $5.00 per share (and a weighted average exercise
price of approximately $0.88 per share). In addition, we had outstanding but
unexercisable and unvested warrants and options to purchase a total of 1,965,000
shares of our Common Stock at exercise prices ranging from $0.40 to $1.50 per
share. Some of the prices are below the current market price of our Common
Stock, which has ranged from a low of $1.10 to a high of $1.46 over the 20
trading days ending March 31, 2004. If holders choose to exercise such warrants
and options at prices below the prevailing market price for the Common Stock,
the resulting purchase of a substantial number of shares of our Common would
have a dilutive effect on our stockholders and could adversely affect the market
price of our issued and outstanding Common Stock and convertible securities. In
addition, holders of these options and warrants who have the right to require
registration of
16
the Common Stock under certain circumstances and who elect to require such
registration, or who exercise their options or warrants and then satisfy the
one-year holding period and other requirements of Rule 144 of the Securities
Act, will be able to sell in the public market shares of Common Stock purchased
upon such exercise.
OUR STOCK PRICE HAS BEEN, AND COULD BE, VOLATILE.
Market prices for our Common Stock and the securities of other medical,
high technology companies have been volatile. Our Common Stock has had a high
price of $2.10 and a low price of $0.39 in the 52-week period ended March 31,
2004. Factors such as announcements of technological innovations or new products
by us or by our competitors, government regulatory action, litigation, patent or
proprietary rights developments and market conditions for medical and high
technology stocks in general can have a significant impact on the market for our
Common Stock.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
We have conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the Exchange Act)) under the supervision of our Chief Executive Officer
and Chief Financial Officer as of the end of the fiscal quarter covered by this
Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of March 31, 2004,
our disclosure controls and procedures were effective to ensure that information
required to be disclosed in reports that Celsion files or submits under the
Exchange Act is recorded, processed, summarized and reported in a timely manner.
In designing, implementing and evaluating our disclosure controls and
procedures, our management recognizes that any controls and procedures, no
matter how well designed and implemented, may not be effective in all
circumstances. However, we believe that our disclosure controls and procedures
provide reasonable assurance of achieving the desired disclosure control
objectives.
There have not been any significant changes in our internal controls or
in other factors subsequent to the date the evaluation was completed that could
significantly affect such controls and no corrective actions have been required
with regard to significant deficiencies and material weaknesses.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
During the fiscal quarter ended March 31, 2004, the Company issued
1,292,566 shares of its Common Stock for cash consideration of $861,769 upon
exercise of stock options. Additionally, the Company issued the following
securities without registration under the Securities Act:
- On January 31, 2004, the Company issued 2,727,273 shares of its
Common Stock and associated warrants to purchase 818,182 shares
of its Common Stock in connection with a private placement
offering. The private placement offering was made exclusively to
one institutional "accredited investor" as that term is defined
in Rule 501 under the Securities Act. These securities were
issued at a price of $1.10 per share and associated fractional
warrant. The warrants issued to the investor entitle the
investor to purchase that number of shares of Common Stock equal
to 30% of the number of shares of Common Stock initially issued
to the investor in the offering. The warrants are exercisable at
$1.50 per share of Common Stock, subject to call under certain
17
circumstances. In connection with the private placement
offering, the Company issued warrants to a finder to purchase
283,636 shares of its Common Stock at an exercise price of $1.10
per share. The Company realized gross proceeds in the amount of
$3,000,000 and paid a cash finder's fee in the amount of
$240,000 in connection with the sale of these securities. The
shares issued are restricted stock, endorsed with the Company's
standard restricted stock legend, with a stop transfer
instruction recorded by the transfer agent. The certificates
representing the warrants have a similar restrictive legend.
Accordingly, the Company views the shares issued as exempt from
registration under Sections 4(2) and/or 4(6) of the Securities
Act.
- On March 2, 2004, the Company issued 2,083,333 shares of its
Common Stock to Boston Scientific for a cash consideration of
$4,000,000 pursuant to the Transaction Agreement. These shares
are restricted stock, endorsed with a restricted legend, with
stop transfer instructions recorded by the transfer agent.
Accordingly, the Company views the shares issued as exempt from
registration under Sections 4(2) and/or 4(6) of the Securities
Act.
- During the quarter, the Company issued a total of 3,809,667
shares of its Common Stock for cash consideration of $2,404,702
upon exercise of outstanding stock purchase warrants. The
warrants were exercised in accordance with their respective
terms at prices ranging from $0.39 to $1.20 per share. These
shares are restricted stock, and the certificates representing
such shares are endorsed with Celsion's standard restrictive
legend, with a stop transfer instruction recorded by the
transfer agent. Accordingly, Celsion views the shares issued as
exempt from registration under Sections 4(2) and/or 4(6) of the
Securities Act.
- During the quarter, from time to time the Company also issued a
total of 63,889 shares of its Common Stock to two outside
consultants for services valued at $71,499. These shares are
restricted stock, endorsed with the Company's standard
restricted stock legend, with stop transfer instructions
recorded by the transfer agent. Accordingly, the Company views
the shares issued as exempt from registration under Sections
4(2) and/or 4(6) of the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5 OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
11 Statement Re. Computation of Earnings Per Share.
31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
18
32.2 Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
On March 1, 2004, the Company filed with the SEC a Current Report
on Form 8-K reporting, under Item 5, that, effective February 23,
2004, the Company had entered into a Separation and Release
Agreement with Daniel S. Reale in connection with Mr. Reale's
resignation as an Executive Vice President and President of the
Company's Oncology Division. A copy of the Separation and Release
Agreement was attached as Exhibit 99.1 to the Report on Form 8-K.
On March 22, 2004, the Company filed with the SEC a Current Report
on Form 8-K reporting, under Item 5, that the Company had released
to its stockholders a letter regarding the status of its business,
the development of its products and certain personnel changes. A
copy of the stockholders' letter was attached as Exhibit 99.1 to
the Report on Form 8-K.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: May 17, 2004
CELSION CORPORATION
-------------------
Registrant
By: /s/ Augustine Y. Cheung
-----------------------
Augustine Y. Cheung
President and Chief Executive Officer
By: /s/Anthony P. Deasey
--------------------
Anthony P. Deasey
Chief Operating Officer and Chief
Financial Officer (Principal Financial
and Chief Accounting Officer)
20