Celsion Corp.
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-15911 CELSION CORPORATION(Exact Name of Registrant as Specified in Its Charter) DELAWARE 52-1256615(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 997 LENOX DRIVE, SUITE 100LAWRENCEVILLE, NJ 08648(Address of Principal Executive Offices) (Zip Code) (609) 896-9100Registrant’s Telephone Number, Including Area Code Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which RegisteredCOMMON STOCK, PAR VALUE $0.01 PER SHARE NASDAQ CAPITAL MARKET Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes [ ] No [X] Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes [ ] No [X] 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 1934during 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 filingrequirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and willnot be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10-K. [X] Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or anemerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company”in Rule 12b-2 of the Exchange Act. (Check one) Large Accelerated Filer[ ] Accelerated Filer[ ]Non-accelerated Filer[ ] Smaller Reporting Company[X] Emerging Growth Company[ ] If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [ ] No [X] The aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $52.1 million as of June 30, 2018 (the lastbusiness day of the Registrant’s most recently completed second fiscal quarter) based on the closing sale price of $2.95 for the Registrant’s common stock onthat date as reported by The NASDAQ Capital Market. For purposes of this calculation, shares of common stock held by directors, officers and stockholderswho own greater than 10% of the Registrant’s outstanding stock at June 30, 2018 were excluded. This determination of executive officers and directors asaffiliates is not necessarily a conclusive determination for any other purpose. As of March 28, 2019, 19,562,020 shares of the Registrant’s common stock were issued and outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant’s definitive Proxy Statement to be filed for its 2019 Annual Meeting of Stockholders are incorporated by reference into Part IIIhereof. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the end of the fiscal year covered by this AnnualReport on Form 10-K.  CELSION CORPORATIONFORM 10-KTABLE OF CONTENTS PART I1ITEM 1.BUSINESS1 FORWARD-LOOKING STATEMENTS1 OVERVIEW2 THERMODOX®2 THERMODOX® FOR THE TREATMENT OF PRIMARY LIVER CANCER2 Liver Cancer Overview2 Celsion’s Approach2 The OPTIMA Study3 THERAPLAS TECHNOLOGY PLATFORM4 Ovarian Cancer Overview4 GEN-15 OVATION Study6 OVATION 2 Study6 BUSINESS STRATEGY AND DEVELOPMENT PLAN6 RESEARCH AND DEVELOPMENT EXPENDITURES7 GOVERNMENT REGULATION7 MANUFACTURING AND SUPPLY12 SALES AND MARKETING12 PRODUCT LIABILITY AND INSURANCE13 COMPETITION13 ThermoDox®13 GEN-113 INTELLECTUAL PROPERTY13 Licenses13 Patents and Proprietary Rights14 EMPLOYEES14 COMPANY INFORMATION15 AVAILABLE INFORMATION15 RECENT EVENTS15ITEM 1A.RISK FACTORS15ITEM 1B.UNRESOLVED STAFF COMMENTS29ITEM 2.PROPERTIES29ITEM 3.LEGAL PROCEEDINGS30ITEM 4.MINE SAFETY DISCLOSURES30 i CELSION CORPORATIONFORM 10-KTABLE OF CONTENTS (continued) PART II31 ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES31 Market for Our Common Stock31 Record Holders Dividend Policy31 Securities Authorized for Issuance Under Equity Compensation Plans31 Unregistered Shares of Equity Securities31 Issuer Purchases of Equity Securities31ITEM 6.SELECTED FINANCIAL DATA31ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS31 Overview32 Business Plan38 Financing Overview38 Critical Accounting Policies and Estimates40 Results of Operations41 Financial Condition, Liquidity and Capital Resources43 Contractual Obligations45 Off-Balance Sheet Arrangements45ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK46ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA46ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE46ITEM 9A.CONTROLS AND PROCEDURES46ITEM 9B.OTHER INFORMATION46 PART III47 ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE47ITEM 11.EXECUTIVE COMPENSATION47ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS47ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE47ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES47 PART IV48 ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES48 1. FINANCIAL STATEMENTS48 2. FINANCIAL STATEMENT SCHEDULES48 3. EXHIBITS48ITEM 16.FORM 10-K SUMMARY52 SIGNATURES53 ii PART I ITEM 1.BUSINESS FORWARD-LOOKING STATEMENTS Certain of the statements contained in this Annual Report on Form 10-K are forward-looking and constitute forward-looking statements within the meaningof Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the“Exchange Act”). In addition, from time to time we may publish forward-looking statements relating to such matters as anticipated financial performance,business prospects, technological developments, product pipelines, clinical trials and research and development activities, the adequacy of capital reservesand anticipated operating results and cash expenditures, current and potential collaborations, strategic alternatives and other aspects of our present andfuture business operations and similar matters that also constitute such forward-looking statements. These statements involve known and unknown risks,uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materiallydifferent from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Such factorsinclude, among other things, unforeseen changes in the course of research and development activities and in clinical trials; possible changes in cost, timingand progress of development, preclinical studies, clinical trials and regulatory submissions; our collaborators’ ability to obtain and maintain regulatoryapproval of any of our product candidates; possible changes in capital structure, financial condition, future working capital needs and other financialitems; changes in approaches to medical treatment; introduction of new products by others; success or failure of our current or future collaborationarrangements, risks and uncertainties associated with possible acquisitions of other technologies, assets or businesses; our ability to obtain additionalfunds for our operations; our ability to obtain and maintain intellectual property protection for our technologies and product candidates and our ability tooperate our business without infringing the intellectual property rights of others; our reliance on third parties to conduct preclinical studies or clinicaltrials; the rate and degree of market acceptance of any approved product candidates; possible actions by customers, suppliers, strategic partners, potentialstrategic partners, competitors and regulatory authorities; compliance with listing standards of The NASDAQ Capital Market; and those listed under “RiskFactors” below and elsewhere in this Annual Report on Form 10-K. In some cases, you can identify forward-looking statements by terminology such as “expect,” “anticipate,” “estimate,” “plan,” “believe, “could,” “intend,”“predict”, “may,” “should,” “will,” “would” and words of similar import regarding the Company’s expectations. Forward-looking statements are onlypredictions. Actual events or results may differ materially. Although we believe that our expectations are based on reasonable assumptions within thebounds of our knowledge of our industry, business and operations, we cannot guarantee that actual results will not differ materially from our expectations.In evaluating such forward-looking statements, you should specifically consider various factors, including the risks outlined under “Risk Factors.” Thediscussion of risks and uncertainties set forth in this Annual Report on Form 10-K is not necessarily a complete or exhaustive list of all risks facing theCompany at any particular point in time. We operate in a highly competitive, highly regulated and rapidly changing environment and our business is in astate 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 possiblefor 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 towhich any individual risk factor, combination of factors, or new or altered factors, may cause results to differ materially from those contained in anyforward-looking statement. Except as required by law, we assume no obligation to revise or update any forward-looking statement that may be made fromtime to time by us or on our behalf for any reason, even if new information becomes available in the future. Unless the context requires otherwise or unlessotherwise noted, all references in this Annual Report on Form 10-K to “Celsion” “the Company”, “we”, “us”, or “our” are to Celsion Corporation, aDelaware corporation and its wholly owned subsidiary, CLSN Laboratories, Inc., also a Delaware Corporation. Trademarks The Celsion brand and product names, including but not limited to Celsion® and ThermoDox®, contained in this document are trademarks, registeredtrademarks or service marks of Celsion Corporation or its subsidiary in the United States (U.S.) and certain other countries. This document also containsreferences to trademarks and service marks of other companies that are the property of their respective owners. 1 OVERVIEW Celsion is a fully-integrated development clinical stage oncology drug company focused on advancing innovative cancer treatments, including directedchemotherapies, DNA-mediated immunotherapy and RNA based therapies. Our lead product candidate is ThermoDox®, a proprietary heat-activatedliposomal encapsulation of doxorubicin, currently in a Phase III clinical trial for the treatment of primary liver cancer (the “OPTIMA Study”). Second in ourpipeline is GEN-1, a DNA-mediated immunotherapy for the localized treatment of ovarian cancer. These investigational products are based on technologiesthat provide the platform for the future development of a range of therapeutics for difficult-to-treat forms of cancer. The first technology is LysolipidThermally Sensitive Liposomes, a heat sensitive liposomal based dosage form that targets disease with known chemotherapeutics in the presence of mildheat. The second technology is TheraPlas, a novel nucleic acid-based treatment for local transfection of therapeutic DNA plasmids. With these technologieswe are working to develop and commercialize more efficient, effective and targeted oncology therapies that maximize efficacy while minimizing side effectscommon to cancer treatments. THERMODOX® Liposomes are manufactured submicroscopic vesicles consisting of a discrete aqueous central compartment surrounded by a membrane bilayer composed ofnaturally occurring lipids. Conventional liposomes have been designed and manufactured to carry drugs and increase residence time, thus allowing the drugsto remain in the bloodstream for extended periods of time before they are removed from the body. However, the current existing liposomal formulations ofcancer drugs and liposomal cancer drugs under development do not provide for the immediate release of the drug and the direct targeting of organ specifictumors, two important characteristics that are required for improving the efficacy of cancer drugs such as doxorubicin. A team of research scientists at DukeUniversity 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. Through a perpetual, world-wide, exclusive development and commercialization license from Duke University, we have licensed this novel, heat-activated liposomal technology that isdifferentiated from other liposomes through its unique low heat-activated release of encapsulated chemotherapeutic agents. We are using 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 tumorcancer. 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 approximately35,000 cases per year in the U.S., approximately 65,000 cases per year in Europe and is rapidly growing worldwide at approximately 755,000 cases per year.HCC has the fastest rate of growth of all cancers and is projected to be the most prevalent form of cancer by 2030. HCC is commonly diagnosed in patientswith longstanding hepatic disease and cirrhosis (primarily due to hepatitis C in the U.S. 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 ortransplantation at time of diagnosis because early stage liver cancer generally has few symptoms and when finally detected the tumor frequently is too largefor surgical resection. There are few alternative treatments, since radiation therapy and chemotherapy are largely ineffective in treating liver cancer. Fortumors generally up to 5 centimeters in diameter, RFA has emerged as the standard of care treatment which directly destroys the tumor tissue through theapplication of high temperatures administered by a probe inserted into the core of the tumor. Local recurrence rates after RFA directly correlate to the size ofthe 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, localrecurrence 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 theablation zone because temperatures in the periphery may not be high enough to destroy cancer cells. Our ThermoDox® treatment approach is designed toutilize the ability of RFA devices to ablate the center of the tumor while simultaneously thermally activating our ThermoDox® liposome to release itsencapsulated doxorubicin to kill any remaining viable cancer cells throughout the heated region, including the tumor ablation margins. This novel treatmentapproach is intended to deliver the drug directly to those cancer cells that survive RFA. This approach is designed to increase the delivery of the doxorubicinat the desired tumor site while potentially reducing drug exposure distant to the tumor site. 2 The OPTIMA Study The OPTIMA Study represents an evaluation of ThermoDox® in combination with a first line therapy, RFA, for newly diagnosed, intermediate stage HCCpatients. HCC incidence globally is approximately 755,000 new cases per year and is the third largest cancer indication globally. Approximately 30% ofnewly diagnosed patients can be addressed with RFA. On February 24, 2014, we announced that the United States Food and Drug Administration (the “FDA”) provided clearance for the OPTIMA Study, which is apivotal, 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 clinical trial called the HEAT Study (the “HEATStudy”). The OPTIMA Study is supported by a hypothesis developed from an overall survival analysis of a large subgroup of patients from the HEAT Study. The OPTIMA Study was designed with extensive input from globally recognized HCC researchers and expert clinicians and after receiving formal writtenfeedback from the FDA. 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, whichwill 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 this clinical trial is overall survival (“OS”), and the secondary endpoints are progression free survival and safety. The statistical plancalls for two interim efficacy analyses by an independent Data Monitoring Committee (“DMC”). Post-hoc data analysis from our earlier Phase III HEAT Study suggest 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 beenconducted since the top line progression free survival (“PFS”) data from the HEAT Study were announced in January 2013, with each data set demonstratingsubstantial improvement in clinical benefit over the control group with statistical significance. On August 15, 2016, we announced updated results from itsfinal retrospective OS analysis of the data from the HEAT Study. These results demonstrated that in a large, well bounded, subgroup of patients with a singlelesion (n=285, 41% of the HEAT Study patients), treatment with a combination of ThermoDox® and optimized RFA provided an average 54% riskimprovement in OS compared to optimized RFA alone. The Hazard Ratio (“HR”) at this analysis is 0.65 (95% CI 0.45 - 0.94) with a p-value of 0.02. MedianOS for the ThermoDox® group has been reached which translates into a two-year survival benefit over the optimized RFA group (projected to be greater than80 months for the ThermoDox® plus optimized RFA group compared to less than 60 months projection for the optimized RFA only group). We completed enrollment of 556 patients in the Phase III OPTIMA Study in August 2018. Data for the study will be reviewed as it matures up to two interimanalyses expected to be conducted in the second half of 2019 and in mid-2020. We expect that the final efficacy analysis, if necessary, will be completed inearly 2021. If the study proves to provide a clinically meaningful improvement in overall survival, Celsion will immediately apply for marketingauthorization in the US, Europe and China. ThermoDox® has received U.S. FDA Fast Track Designation and has been granted orphan drug designation forprimary liver cancer in both the U.S. and the EU. Additionally, the U.S. FDA has provided ThermoDox® with a 505(b)(2) registration pathway. Subject to asuccessful trial, the OPTIMA Study has been designed to support registration in all key primary liver cancer markets. We fully expect to submit registrationalapplications in the U.S., Europe and China. We expect to submit and believes that applications will be accepted in South Korea, Taiwan and Vietnam, threeother significant markets for ThermoDox® if it were to receive approval in Europe, China or the U.S. On December 18, 2018, we announced that the DMC for the OPTIMA Study completed its last scheduled review of all patients enrolled in the trial andunanimously recommended that the OPTIMA Study continue according to protocol to its final data readout. The DMC’s recommendation was based on theCommittee’s assessment of safety and data integrity of all patients randomized in the trial as of October 4, 2018. The DMC reviewed study data at regularintervals throughout the patient enrollment period, with the primary responsibilities of ensuring the safety of all patients enrolled in the study, the quality ofthe data collected, and the continued scientific validity of the study design. As part of its review of all 556 patients enrolled into the trial, the DMC evaluateda quality matrix relating to the total clinical data set, confirming the timely collection of data, that all data are current as well as other data collection andquality criteria. While this information should be viewed with caution since it is based on a retrospective analysis of a subgroup, we also conducted additional analyses thatfurther strengthen the evidence for the HEAT Study subgroup. We commissioned an independent computational model at the University of South CarolinaMedical School. The results unequivocally indicate that longer RFA heating times correlate with significant increases in doxorubicin concentration aroundthe RFA treated tissue. In addition, we conducted a prospective preclinical study in 22 pigs using two different manufacturers of RFA and human equivalentdoses of ThermoDox® that clearly support the relationship between increased heating duration and doxorubicin concentrations. 3 IMMUNO-ONCOLOGY Program On June 20, 2014, we completed the acquisition of substantially all of the assets of EGEN, a private company located in Huntsville, Alabama. Pursuant to theAsset Purchase Agreement, CLSN Laboratories acquired all of EGEN’s right, title and interest in and to substantially all of the assets of EGEN, including cashand 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 andthe first drug candidate developed from it 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 celltransfection for double-stranded DNA plasmids and large therapeutic RNA segments such as mRNA. There are two components of the TheraPlas system, aplasmid DNA or mRNA payload encoding a therapeutic protein, and a delivery system. The delivery system is designed to protect the DNA/RNA fromdegradation and promote trafficking into cells and through intracellular compartments. We designed the delivery system of TheraPlas by chemicallymodifying the low molecular weight polymer to improve its gene transfer activity without increasing toxicity. We believe that TheraPlas is a viablealternative to current approaches to gene delivery due to several distinguishing characteristics, including enhanced molecular versatility that allows forcomplex 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 distinctability to escape from the endosomes due to heavy protonation. The transfection activity and toxicity of PEI is tightly coupled to its molecular weighttherefore the clinical application of PEI is limited. We have used molecular functionalization strategies to improve the activity of low molecular weight PEIswithout augmenting their cytotoxicity. In one instance, chemical conjugation of a low molecular weight branched BPEI1800 with cholesterol andpolyethylene 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 followingintraperitoneal or subcutaneous administration of DNA/PPC nanocomplexes showed DNA delivery localized primarily at the injection site with only smallamount escaping into the systemic circulation. PPC is the delivery component of our lead TheraPlas product, GEN-1, which is in clinical development for thetreatment ovarian cancer and in preclinical development for the treatment of glioblastoma. The PPC manufacturing process has been scaled up from benchscale (1-2 g) to 0.6Kg, and several current Good Manufacturing Practice, (“cGMP”) lots have been produced with reproducible quality. TheraPlas has emerged as a viable alternative to current approaches due to several distinguishing characteristics such as strong molecular versatility thatallows for complex modifications to potentially improve activity and safety with little difficulty. The biocompatibility of these polymers reduces the risk ofadverse 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 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 inpart 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 withan estimated 14,000 deaths. Mortality rates for ovarian cancer declined very little in the last forty years due to the unavailability of detection tests andimproved treatments. Most women with ovarian cancer are not diagnosed until Stages III or IV, when the disease has spread outside the pelvis to the abdomenand areas beyond causing swelling and pain, where the five-year survival rates are 25 - 41 percent and 11 percent, respectively. First-line chemotherapyregimens are typically platinum-based combination therapies. Although this first line of treatment has an approximate 80 percent response rate, 55 to 75percent of women will develop recurrent ovarian cancer within two years and ultimately will not respond to platinum therapy. Patients whose cancer recurs orprogresses after initially responding to surgery and first-line chemotherapy have been divided into one of the two groups based on the time from completionof platinum therapy to disease recurrence or progression. This time period is referred to as platinum-free interval. The platinum-sensitive group has aplatinum-free interval of longer than six months. This group generally responds to additional treatment with platinum-based therapies. The platinum-resistantgroup 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 to20 percent with median overall survival of eleven to twelve months. Immunotherapy is an attractive novel approach for the treatment of ovarian cancerparticularly since ovarian cancers are considered immunogenic tumors. IL-12 is one of the most active cytokines for the induction of potent anti-cancerimmunity acting through the induction of T-lymphocyte and natural killer cell proliferation. The precedence for a therapeutic role of IL-12 in ovarian canceris based on epidemiologic and preclinical data. 4 GEN-1 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 astandard chemotherapy drug, which can potentially achieve better clinical outcomes than with chemotherapy alone. We believe that increases in IL-12concentrations at tumor sites for several days after a single administration could create a potent immune environment against tumor activity and that a directkilling 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 ofrecombinant IL-12; ●Persistent local delivery of IL-12 lasts up to one week and dosing can be repeated; and ●Ideal for long-term maintenance therapy. OVATION Study In February 2015, we announced that the FDA accepted, without objection, the Phase Ib dose-escalation clinical trial of GEN-1 in combination with thestandard of care in neo-adjuvant ovarian cancer (the “OVATION Study”). On September 30, 2015, we announced enrollment of the first patient in theOVATION Study. The OVATION Study was designed (i) to identify a safe, tolerable and potentially therapeutically active dose of GEN-1 by recruiting andmaximizing an immune response and (ii) to enroll three to six patients per dose level to evaluate safety and efficacy and attempt to define an optimal dose fora follow-on Phase I/II study. In addition, the OVATION Study establishes a unique opportunity to assess how cytokine-based compounds such as GEN-1directly affect ovarian cancer cells and the tumor microenvironment in newly diagnosed patients. The study was designed to characterize the nature of theimmune 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 primarysite 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 Study at four clinical sites at the University of Alabama at Birmingham, Oklahoma University Medical Center, WashingtonUniversity in St. Louis and the Medical College of Wisconsin. During 2016 and 2017, we announced data from the first fourteen patients in the OVATIONStudy who completed treatment. On October 3, 2017 and again on March 2, 2109, we announced final clinical and translational research data from theOVATION Study, a Phase Ib dose escalating clinical trial combining GEN-1 with the standard of care for the treatment of newly-diagnosed patients withadvanced Stage III/IV ovarian cancer who will undergo neoadjuvant chemotherapy followed by interval debulking surgery. The Company reported positive clinical data from the first fourteen patients who have completed treatment in the OVATION Study. GEN-1 plus standardchemotherapy produced positive clinical results, with no dose limiting toxicities and positive dose dependent efficacy signals which correlate well withpositive surgical outcomes. The OVATION Study evaluated escalating doses of GEN-1 (36 mg/m2, 47 mg/m2, 61 mg/m2 and 79 mg/m2) administeredintraperitoneally in combination with three cycles of neoadjuvant chemotherapy prior to interval debulking surgery, followed by three cycles of NAC in thetreatment of newly diagnosed patients with Stage III/IV ovarian cancer. In this Phase IB dose-escalation study, the 14 patients who were evaluable for response demonstrated median PFS of 21 months in patients treated perprotocol and 17.1 months for the intent-to-treat population (n=18) for all dose cohorts, including three patients who dropped out of the study after 13 days orless, and two patients who did not receive full NAC and GEN-1 cycles. In addition, 100% of patients administered NAC plus the two higher doses of GEN-1experienced an objective tumor response (defined as a partial or complete response) compared to only 60% of patients given the two lower doses.Pathological changes were assessed as part of the study, with the density of markers measured in tissue sections assessed via immunohistochemistry staining.Among patients administered the high doses of GEN-1 (n=8), pre-treatment to post-treatment reductions in key biomarkers were observed (FoxP3 -62.5%;IDO-1 -60%; PD-1 -62.5%; PD-L1 -37.5%). Reductions were also observed in patients administered the lower doses of GEN-1 (n=4) for all but one of the fourkey biomarkers (FoxP3 -40%; IDO-1 -40%; PD-1 +25%; PD-L1 -37.5%). The ratio of CD8+ cells to the four key immunosuppressive cell signals increasedfollowing treatment in 60 - 80% of patients. Dose-limiting toxicity was not reached in the OVATION I Study. 5 OVATION 2 Study On November 13, 2017, the Company filed its Phase I/II clinical trial protocol with the U.S. Food and Drug Administration for GEN-1 for the localizedtreatment 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 whilemaximizing an immune response. The Phase I portion of the study will be followed by a continuation at the selected dose in 130 patient randomized Phase IIstudy. The study protocol is summarized below: ●Open label, 1:1 randomized design ●Enrollment up to 130 patients with Stage III/IV ovarian cancer patients at ten U.S. centers ●Primary endpoint of improvement in progression-free survival (PFS) comparing GEN-1 with neoadjuvant chemotherapy versus neoadjuvantchemotherapy alone. Because of the risks and uncertainties discussed in this Annual Report on Form 10-K, among others, we are unable to estimate the duration and completioncosts of our research and development projects or when, if ever, and to what extent we will receive cash inflows from the commercialization and sale of aproduct. Our inability to complete any of our research and development activities, preclinical studies or clinical trials in a timely manner or our failure toenter into collaborative agreements when appropriate could significantly increase our capital requirements and could adversely impact our liquidity. Whileour estimated future capital requirements are uncertain and could increase or decrease as a result of many factors, including the extent to which we choose toadvance our research, development activities, preclinical studies and clinical trials, or if we are in a position to pursue manufacturing or commercializationactivities, we will need significant additional capital to develop our product candidates through development and clinical trials, obtain regulatory approvalsand manufacture and commercialize approved products, if any. We do not know whether we will be able to access additional capital when needed or on termsfavorable to us or our stockholders. Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the futuresuccess of our business. As a clinical stage biopharmaceutical company, our business and our ability to execute our strategy to achieve our corporate goals are subject to numerousrisks and uncertainties. Material risks and uncertainties relating to our business and our industry are described in “ Part I, Item 1A. Risk Factors “ in thisAnnual Report on Form 10-K. BUSINESS STRATEGY AND DEVELOPMENT PLAN We have not generated and do not expect to generate any revenue from product sales in the next several years, if at all. An element of our business strategyhas been to pursue, as resources permit, the research and development of a range of product candidates for a variety of indications. We may also evaluatelicensing cancer products from third parties for cancer treatments to expand our current product pipeline. This is intended to allow us to diversify the risksassociated with our research and development expenditures. To the extent we are unable to maintain a broad range of product candidates, our dependence onthe success of one or a few product candidates would increase and results such as those announced in relation to the HEAT study on January 31, 2013 willhave a more significant impact on our financial prospects, financial condition and market value. We may also consider and evaluate strategic alternatives,including investment in, or acquisition of, complementary businesses, technologies or products. As demonstrated by the HEAT Study results, drug researchand development is an inherently uncertain process and there is a high risk of failure at every stage prior to approval. The timing and the outcome of clinicalresults are extremely difficult to predict. The success or failure of any preclinical development and clinical trial can have a disproportionately positive ornegative impact on our results of operations, financial condition, prospects and market value. Our current business strategy includes the possibility of entering into collaborative arrangements with third parties to complete the development andcommercialization of our product candidates. In the event that third parties take over the clinical trial process for one or more of our product candidates, theestimated completion date would largely be under the control of that third party rather than us. We cannot forecast with any degree of certainty whichproprietary products or indications, if any, will be subject to future collaborative arrangements, in whole or in part, and how such arrangements would affectour development plan or capital requirements. We may also apply for subsidies, grants or government or agency-sponsored studies that could reduce ourdevelopment costs. As of December 31, 2018, we had $27.7 million dollars in cash and short-term investments including interest receivable. Given our development plans, weanticipate cash resources will be sufficient to fund our operations into the third quarter of 2020. The Company has approximately $31 million availablecollectively for future sale of equity securities under a common stock purchase agreement with Aspire Capital Fund, LLC and a common stock salesagreement with JonesTrading International Services LLC. Other than these two facilities that provide us the ability to sell equity securities in the future, wehave no other committed sources of additional capital. 6 As a result of the risks and uncertainties discussed in this Annual Report on Form 10-K, among others, we are unable to estimate the duration and completioncosts of our research and development projects or when, if ever, and to what extent we will receive cash inflows from the commercialization and sale of aproduct if one of our product candidates receives regulatory approval for marketing, if at all. Our inability to complete any of our research and developmentactivities, preclinical studies or clinical trials in a timely manner or our failure to enter into collaborative agreements when appropriate could significantlyincrease our capital requirements and could adversely impact our liquidity. While our estimated future capital requirements are uncertain and could increaseor decrease as a result of many factors, including the extent to which we choose to advance our research and development activities, preclinical studies andclinical trials, or whether we are in a position to pursue manufacturing or commercialization activities, we will need significant additional capital to developour product candidates through development and clinical trials, obtain regulatory approvals and manufacture and commercialize approved products, if any.We do not know whether we will be able to access additional capital when needed or on terms favorable to us or our stockholders. Our inability to raiseadditional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business. See Item 7 - Management’sDiscussion and Analysis of Financial Condition and Results of Operations for additional information regarding the Company’s financial condition,liquidity and capital resources. RESEARCH AND DEVELOPMENT EXPENDITURES We are engaged in a limited amount of research and development in our own facilities and have sponsored research programs in partnership with variousresearch institutions, including the National Institutes of Health, the NCI and Duke University. We are currently, with minimal cash expenditures, sponsoringclinical and pre-clinical research at the University of Oxford, University of Utrecht and the Children’s Hospital Research Institute. The majority of thespending in research and development is for the funding of ThermoDox® clinical trials. Research and development expenses were approximately $11.9million and $13.1 million for the years ended December 31, 2018 and 2017, respectively. See Item 7 - Management’s Discussion and Analysis of FinancialCondition and Results of Operations for additional information regarding expenditures related to our research and development programs. GOVERNMENT REGULATION Government authorities in the U.S., at the federal, state and local level, and in other countries extensively regulate, among other things, the research,development, testing, quality control, approval, manufacturing, labeling, post-approval monitoring and reporting, recordkeeping, packaging, promotion,storage, advertising, distribution, marketing and export and import of pharmaceutical products such as those we are developing. The process of obtainingregulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure ofsubstantial time and financial resources Regulation in the United States In the United States, the FDA regulates drugs and biological products under the Federal Food, Drug, and Cosmetic Act (FDCA), the Public Health Service Act(PHSA) and implementing regulations. Failure to comply with the applicable FDA requirements at any time pre- or post-approval may result in a delay ofapproval or administrative or judicial sanctions. These sanctions could include the FDA’s imposition of a clinical hold on trials, refusal to approve pendingapplications, withdrawal of an approval, issuance of warning or untitled letters, product recalls, product seizures, total or partial suspension of production ordistribution, injunctions, fines, civil penalties or criminal prosecution. Research and Development The vehicle by which FDA approves a new pharmaceutical product for sale and marketing in the U.S. is a New Drug Application (“NDA”) or a BiologicsLicense Application (BLA). A new drug or biological product cannot be marketed in the United States without FDA’s approval of an NDA/BLA. The stepsordinarily required before a new drug can be marketed in the U.S. include (a) completion of pre-clinical and clinical studies; (b) submission and FDAacceptance of an Investigational New Drug application (IND), which must become effective before human clinical trials may commence; (c) completion ofadequate and well-controlled human clinical trials to establish the safety and efficacy of the product to support each of its proposed indications; (d)submission and FDA acceptance of an NDA/BLA; (e) completion of an FDA inspection and potential audits of the facilities where the drug or biologicalproduct is manufactured to assess compliance with the current good manufacturing practices (cGMP) and to assure adequate identity, strength, quality,purity, and potency; and (e) FDA review and approval of the NDA/BLA. Pre-clinical tests include laboratory evaluations of product chemistry, toxicity, formulation and stability, as well as animal studies, to assess the potentialsafety and efficacy of the product. Pre-clinical safety tests must be conducted by laboratories that comply with FDA regulations regarding good laboratorypractice. The results of pre-clinical tests are submitted to the FDA as part of an IND and are reviewed by the FDA before the commencement of human clinicaltrials. Submission of an IND will not necessarily result in FDA authorization to commence clinical trials, and the absence of FDA objection to an IND doesnot necessarily mean that the FDA will ultimately approve an NDA/BLA or that a product candidate otherwise will come to market. 7 Clinical trials involve the administration of the investigational product to human subjects under the supervision of a qualified principal investigator.Clinical trials must be conducted in accordance with good clinical practices under protocols submitted to the FDA as part of an IND and with patientinformed consent. Also, each clinical trial must be approved by an Institutional Review Board (IRB), and is subject to ongoing IRB monitoring. Clinical trials are typically conducted in three sequential phases, but the phases may overlap or be combined. Phase I clinical trials may be conducted inpatients or healthy volunteers to evaluate the product’s safety, dosage tolerance and pharmacokinetics and, if possible, seek to gain an early indication of itseffectiveness. Phase II clinical trials usually involve controlled trials in a larger but still relatively small number of subjects from the relevant patientpopulation to evaluate dosage tolerance and appropriate dosage; identify possible short-term adverse effects and safety risks; and provide a preliminaryevaluation of the efficacy of the drug for specific indications. Phase III clinical trials are typically conducted in a significantly larger patient population andare intended to further evaluate safety and efficacy, establish the overall risk-benefit profile of the product, and provide an adequate basis for physicianlabeling. In certain circumstances, a therapeutic product candidate being studied in clinical trials may be made available for treatment of individual patients. Pursuantto the 21st Century Cures Act (Cures Act) which was signed into law in December 2016, the manufacturer of an investigational product for a serious diseaseor condition is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for individual patient accessto such investigational product. There can be no assurance that any of our clinical trials will be completed successfully within any specified time period or at all. Either the FDA or we maysuspend clinical trials at any time on various grounds, including among other things, if we, the FDA, our independent DMC, or the IRB conclude that clinicalsubjects are being exposed to an unacceptable health risk. The FDA inspects and reviews clinical trial sites, informed consent forms, data from the clinicaltrial sites (including case report forms and record keeping procedures) and the performance of the protocols by clinical trial personnel to determinecompliance with good clinical practices. The conduct of clinical trials is complex and difficult, and there can be no assurance that the design or theperformance of the pivotal clinical trial protocols of any of our current or future product candidates will be successful. The results of pre-clinical studies and clinical trials, if successful, are submitted to FDA in the form of an NDA or BLA. Among other things, the FDA reviewsan NDA to determine whether the product is safe and effective for its intended use and reviews a BLA to determine whether the product is safe, pure, andpotent, and in each case, whether the product candidate is being manufactured in accordance with cGMP. The testing, submission, and approval processrequires substantial time, effort, and financial resources, including substantial application user fees and annual product and establishment user fees. OnAugust 3, 2017, Congress passed the FDA Reauthorization Act of 2017 (FDARA) which reauthorizes the various user fees to facilitate the FDA’s productreview and oversight. There can be no assurance that any approval will be granted for any product at any time, according to any schedule, or at all. The FDAmay refuse to accept or approve an application if it determines that applicable regulatory criteria are not satisfied. The FDA may also require additionaltesting for safety and efficacy. Even, if regulatory approval is granted, the approval will be limited to specific indications. There can be no assurance that anyof our current product candidates will receive regulatory approvals for marketing or, if approved, that approval will be for any or all of the indications that werequest. The FDA has agreed to certain performance goals in the review of NDAs and BLAs. The FDA has 60 days from its receipt of an NDA or BLA to determinewhether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.Once the NDA/BLA is accepted for filing, most standard reviews applications are completed within ten months of filing; most priority review applications arereviewed within six months of filing. Priority review are applied to a product candidate that the FDA determines has the potential to treat a serious or life-threatening condition and, if approved, would be a significant improvement in safety or effectiveness compared to available therapies. The review process forboth standard and priority review may be extended by the FDA for three additional months to consider certain late-submitted information, or informationintended to clarify information already provided in the submission. FDA Regulations Specific to Gene-Based Products The Food and Drug Administration (FDA) regulates gene-based products as biological products. Biological products intended for therapeutic use may beregulated by either the Center for Biologics Evaluation & Research (CBER) or the Center for Biologics Evaluation & Research (CDER). Gene-based productsare subject to extensive regulation under the FDCA, the PHSA, and their implementing regulations. Additional Controls for Biological Products To help reduce the increased risk of the introduction of adventitious agents, the PHSA emphasizes the importance of manufacturing controls for productswhose attributes cannot be precisely defined. The PHSA also provides authority to the FDA to immediately suspend licenses in situations where there exists adanger to public health, to prepare or procure products in the event of shortages and critical public health needs, and to authorize the creation andenforcement of regulations to prevent the introduction or spread of communicable diseases in the United States and between states. 8 After a BLA is approved, the biological product may be subject to official lot release as a condition of approval. As part of the manufacturing process, themanufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official release bythe FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history ofmanufacture of the lot and the results of all of the manufacturer’s tests performed on the lot. The FDA may also perform certain confirmatory tests on lots ofsome products, such as viral vaccines, before releasing the lots for distribution by the manufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of biological products.As with drugs, after approval of biological products, manufacturers must address any safety issues that arise, are subject to recalls or a halt in manufacturing,and are subject to periodic inspection after approval. Expedited Development and Review Programs The FDA has various programs, including Fast Track, priority review, accelerated approval and breakthrough therapy, which are intended to expedite orsimplify the process for reviewing product candidates, or provide for the approval of a product candidate on the basis of a surrogate endpoint. Even if aproduct candidate qualifies for one or more of these programs, the FDA may later decide that the product candidate no longer meets the conditions forqualification or that the time period for FDA review or approval will be lengthened. Generally, product candidates that are eligible for these programs arethose for serious or life-threatening conditions, those with the potential to address unmet medical needs and those that offer meaningful benefits over existingtreatments. For example, Fast Track is a process designed to facilitate the development and expedite the review of product candidates to treat serious or life-threatening diseases or conditions and fill unmet medical needs. Although Fast Track and priority review do not affect the standards for approval, the FDA will attempt to facilitate early and frequent meetings with a sponsorof a Fast Track designated product candidate and expedite review of the application for a product candidate designated for priority review. Acceleratedapproval provides for an earlier approval for a new product candidate that meets the following criteria: is intended to treat a serious or life-threatening diseaseor condition, generally provides a meaningful advantage over available therapies and demonstrates an effect on a surrogate endpoint that is reasonably likelyto predict clinical benefit or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality (IMM) that is reasonably likely topredict an effect on IMM or other clinical benefit. A surrogate endpoint is a laboratory measurement or physical sign used as an indirect or substitutemeasurement representing a clinically meaningful outcome. As a condition of approval, the FDA may require that a sponsor of a product candidate receivingaccelerated approval perform post-marketing clinical trials to verify and describe the predicted effect on irreversible morbidity or mortality or other clinicalendpoint, and the product may be subject to accelerated withdrawal procedures. In the Food and Drug Administration Safety and Innovation Act (FDASIA) which was signed into law in July 2012, the U.S. Congress encouraged the FDA toutilize innovative and flexible approaches to the assessment of product candidates under accelerated approval. The law required the FDA to issue relatedguidance and also promulgate confirming regulatory changes. In May 2014, the FDA published a final Guidance for Industry titled “Expedited Programs forSerious Conditions-Drugs and Biologics,” which provides guidance on FDA programs that are intended to facilitate and expedite development and review ofnew product candidates as well as threshold criteria generally applicable to concluding that a product candidate is a candidate for these expediteddevelopment and review programs. In addition to the Fast Track, accelerated approval and priority review programs discussed above, the FDA also provided guidance on a new program forBreakthrough Therapy designation, established by FDASIA to subject a new category of product candidates to accelerated approval. A sponsor may seekFDA designation of a product candidate as a “breakthrough therapy” if the product candidate is intended, alone or in combination with one or more othertherapeutics, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product candidate maydemonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observedearly in clinical development. A request for Breakthrough Therapy designation should be submitted concurrently with, or as an amendment to, an IND, butideally no later than the end of Phase 2 meeting. 9 Disclosure of Clinical Trial Information Sponsors of clinical trials of FDA-regulated products are required to register and disclose certain clinical trial information. Information related to the product,patient population, phase of investigation, trial sites and investigators, and other aspects of the clinical trial is then made public as part of the registration.Sponsors are also obligated to disclose the results of their clinical trials within one year of completion, although disclosure of the results of these trials can bedelayed in certain circumstances for up to two additional years. Competitors may use this publicly available information to gain knowledge regarding theprogress of development programs. Orphan Drug Designation In 2009, the FDA granted orphan drug designation for ThermoDox® for the treatment of HCC. Orphan drug designation does not convey any advantage in, orshorten the duration of, the regulatory review and approval process. However, if a product which has an orphan drug designation subsequently receives thefirst FDA approval for the indication for which it has such designation, the product is entitled to orphan drug exclusivity, which means the FDA may notapprove any other application to market the same drug for the same indication for a period of seven years, except in limited circumstances, such as a showingof clinical superiority to the product with orphan exclusivity. Orphan drug designation can also provide opportunities for grant funding towards clinical trialcosts, tax advantages and FDA user-fee benefits. Hatch-Waxman Exclusivity The FDCA provides a five-year period of non-patent data exclusivity within the U.S. to the first applicant to gain approval of an NDA for a new chemicalentity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety. During the exclusivityperiod, the FDA generally may not accept for review an abbreviated new drug application (ANDA) or a 505(b)(2) NDA submitted by another company thatreferences the previously approved drug. However, an ANDA or 505(b)(2) NDA referencing the new chemical entity may be submitted after four years if itcontains a certification of patent invalidity or non-infringement. Biosimilars The Biologics Price Competition and Innovation Act of 2009 (BPCIA) created an abbreviated approval pathway for biological product candidates shown tobe highly similar to or interchangeable with an FDA licensed reference product. Biosimilarity sufficient to reference a prior FDA-approved product requiresthat there be no differences in conditions of use, route of administration, dosage form, and strength, and no clinically meaningful differences between thebiological product candidate and the reference product in terms of safety, purity, and potency. Biosimilarity must be shown through analytical trials, animaltrials, and a clinical trial or trials, unless the Secretary of Health and Human Services waives a required element. A biosimilar product candidate may bedeemed interchangeable with a prior approved product if it meets the higher hurdle of demonstrating that it can be expected to produce the same clinicalresults as the reference product and, for products administered multiple times, the biological product and the reference product may be switched after one hasbeen previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference product. To date, ahandful of biosimilar products and no interchangeable products have been approved under the BPCIA. Complexities associated with the larger, and oftenmore complex, structures of biological products, as well as the process by which such products are manufactured, pose significant hurdles to implementation,which is still being evaluated by the FDA. A reference product is granted 12 years of exclusivity from the time of first licensure of the reference product, and no application for a biosimilar can besubmitted for four years from the date of licensure of the reference product. The first biological product candidate submitted under the abbreviated approvalpathway that is determined to be interchangeable with the reference product has exclusivity against a finding of interchangeability for other biologicalproducts for the same condition of use for the lesser of (i) one year after first commercial marketing of the first interchangeable biosimilar, (ii) 18 months afterthe first interchangeable biosimilar is approved if there is no patent challenge, (iii) 18 months after resolution of a lawsuit over the patents of the referenceproduct in favor of the first interchangeable biosimilar applicant, or (iv) 42 months after the first interchangeable biosimilar’s application has been approvedif a patent lawsuit is ongoing within the 42-month period. Post-Approval Requirements After FDA approval of a product is obtained, we and our contract manufacturers are required to comply with various post-approval requirements, includingestablishment registration and product listing, record-keeping requirements, reporting of adverse reactions and production problems to the FDA, providingupdated safety and efficacy information for drugs, or safety, purity, and potency for biological products, and complying with requirements concerningadvertising and promotional labeling. As a condition of approval of an NDA/BLA, the FDA may require the applicant to conduct additional clinical trials orother post market testing and surveillance to further monitor and assess the drug’s safety and efficacy. The FDA can also impose other post-marketingcontrols on us as well as our products including, but not limited to, restrictions on sale and use, through the approval process, regulations and otherwise. TheFDA also has the authority to require the recall of our products in the event of material deficiencies or defects in manufacture. A governmentally mandatedrecall, or a voluntary recall by us, could result from a number of events or factors, including component failures, manufacturing errors, instability of productor defects in labeling. 10 In addition, manufacturing establishments in the U.S. and abroad are subject to periodic inspections by the FDA and must comply with current goodmanufacturing practices (cGMP). To maintain compliance with cGMP, manufacturers must expend funds, time and effort in the areas of production andquality control. The manufacturing process must be capable of consistently producing quality batches of the product candidate and the manufacturer mustdevelop methods for testing the quality, purity and potency of the product candidate. Additionally, appropriate packaging must be selected and tested, andstability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its proposed shelf-life. Foreign Clinical Studies to Support an IND, NDA, or BLA The FDA will accept as support for an IND, NDA, or BLA a well-designed, well-conducted, non-IND foreign clinical trial if it was conducted in accordancewith GCP and the FDA is able to validate the data from the trial through an on-site inspection, if necessary. A sponsor or applicant who wishes to rely on anon-IND foreign clinical trial to support an IND must submit supporting information to the FDA to demonstrate that the trial conformed to GCP. Thisinformation includes the investigator’s qualifications; a description of the research facilities; a detailed summary of the protocol and trial results and, ifrequested, case records or additional background data; a description of the drug substance and drug product, including the components, formulation,specifications, and, if available, the bioavailability of the product candidate; information showing that the trial is adequate and well controlled; the name andaddress of the independent ethics committee that reviewed the trial and a statement that the independent ethics committee meets the required definition; asummary of the independent ethics committee’s decision to approve or modify and approve the trial, or to provide a favorable opinion; a description of howinformed consent was obtained; a description of what incentives, if any, were provided to subjects to participate; a description of how the sponsor monitoredthe trial and ensured that the trial was consistent with the protocol; a description of how investigators were trained to comply with GCP and to conduct thetrial in accordance with the trial protocol; and a statement on whether written commitments by investigators to comply with GCP and the protocol wereobtained. Regulatory applications based solely on foreign clinical data meeting these criteria may be approved if the foreign data are applicable to the U.S. populationand U.S. medical practice, the trials have been performed by clinical investigators of recognized competence, and the data may be considered valid withoutthe need for an on-site inspection by FDA or, if FDA considers such an inspection to be necessary, FDA is able to validate the data through an on-siteinspection or other appropriate means. Failure of an application to meet any of these criteria may result in the application not being approvable based on theforeign data alone. New Legislation and Regulations From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the testing,approval, manufacturing and marketing of products regulated by the FDA. In addition to new legislation, FDA regulations and policies are often revised orinterpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether further legislative changeswill be enacted or whether FDA regulations, guidance, policies or interpretations will be changed or what the effect of such changes, if any, may be. Regulation Outside of the U.S. In addition to regulations in the U.S., we will be subject to a variety of regulations of other countries governing, among other things, any clinical trials andcommercial sales and distribution of our product candidates. Whether or not we obtain FDA approval (clinical trial or marketing) for a product, we mustobtain the requisite approvals from regulatory authorities in countries outside of the U.S., such as the EU and Chine, prior to the commencement of clinicaltrials or marketing of the products in those countries. The approval process and requirements governing the conduct of clinical trials, product licensing,pricing and reimbursement vary greatly from place to place, and the time may be longer or shorter than that required for FDA approval. In the EU, before starting a clinical trial, a valid request for authorization must be submitted by the sponsor to the competent authority of the EU MemberState(s) in which the sponsor plans to conduct the clinical trial, as well as to an independent national Ethics Committee. A clinical trial may commence onlyonce the relevant Ethics Committee(s) has (have) issued a favorable opinion and the competent authority of the EU Member State(s) concerned has (have) notinformed the sponsor of any grounds for non-acceptance. Failure to comply with the EU requirements may subject a company to the rejection of the requestand the prohibition to start a clinical trial. Clinical trials conducted in the EU (or used for marketing authorization application in the EU) must be conductedin accordance with applicable Good Clinical Practice (“GCP”) and Good Manufacturing Practice (“GMP”) rules, ICH guidelines and be consistent withethical principles. EU Member State inspections are regularly conducted to verify the sponsor’s compliance with applicable rules. The sponsor is required torecord and report to the relevant national competent authorities (and to the Ethics Committee) information about serious unexpected suspected adversereactions (“S.U.S.A.Rs”). The way clinical trials are conducted in the EU will undergo a major change when the new EU Clinical Trial Regulation(Regulation 536/2014) comes into application in 2019. 11 As in the U.S., no medicinal product may be placed on the EU market unless a marketing authorization has been issued. In the EU, medicinal products may beauthorized either via the mutual recognition and decentralized procedure, the national procedure or the centralized procedure. The centralized procedure,which is compulsory for medicines produced by biotechnology or those medicines intended to treat AIDS, cancer, neurodegenerative disorders or diabetesand is optional for those medicines that are highly innovative, provides for the grant of a single marketing authorization that is valid for all EU MemberStates. Marketing authorizations granted via the centralized procedure are valid for all EU Member States. Products submitted for approval via the centralizedprocedure are assessed by the Committee for Medicinal Products for Human Use (CHMP), a committee within the European Medicine Agency (EMA). TheCHMP assesses, inter alia, whether a medicine meets the necessary quality, safety and efficacy requirements and whether it has a positive risk-benefit balance.The requirements for an application dossier for a biological product contain different aspects than that of a chemical medicinal product. In the EU, the requirements for pricing, coverage and reimbursement of any product candidates for which we obtain regulatory approval are provided for bythe national laws of EU Member States. Governments influence the price of pharmaceutical products through their pricing and reimbursement rules andcontrol of national health care systems that fund a large part of the cost of those products to consumers. We may seek orphan designations for our product candidates. In the EU, as we understand it, a medicinal product may be designated as an orphan medicinalproduct if the sponsor can establish that it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating conditionaffecting not more than five in 10 thousand persons, or that, for the same purposes, it is unlikely that the marketing of the medicinal product would generatesufficient return; and that there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized inthe EU or, if such method exists, that the medicinal product will be of significant benefit to those affected by that condition. Sponsors who obtain orphandesignation benefit from a type of scientific advice specific for designated orphan medicinal products and protocol assistance from the EMA. Fee reductionsare also available depending on the status of the sponsor and the type of service required. Marketing authorization applications for designated orphanmedicinal products must be submitted through the centralized procedure. The EU Data Protection Directive and Member State implementing legislation may also apply to health-related and other personal information obtainedoutside of the U.S. The Directive will be replaced by the EU General Data Protection Regulation in May 2018. The Regulation will increase ourresponsibility and liability in relation to personal data that we process, and we may be required to put in place additional mechanisms to ensure compliancewith the new EU data protection rules. MANUFACTURING AND SUPPLY We do not currently own or operate manufacturing facilities for the production of preclinical, clinical or commercial quantities of any of our productcandidates. We currently contract with third party contract manufacturing organizations (CMOs) for our preclinical and clinical trial supplies, and we expectto continue to do so to meet the preclinical and any clinical requirements of our product candidates. We have agreements for the supply of such drugmaterials with manufacturers or suppliers that we believe have sufficient capacity to meet our demands. In addition, we believe that adequate alternativesources for such supplies exist. However, there is a risk that, if supplies are interrupted, it would materially harm our business. We typically order rawmaterials and services on a purchase order basis and do not enter into long-term dedicated capacity or minimum supply arrangements. Manufacturing is subject to extensive regulations that impose various procedural and documentation requirements, which govern record keeping,manufacturing processes and controls, personnel, quality control and quality assurance, among others. Our CMOs manufacture our product candidates undercurrent Good Manufacturing Practice (cGMP) conditions. cGMP is a regulatory standard for the production of pharmaceuticals that will be used in humans. SALES AND MARKETING Our current focus is on the development of our existing portfolio, the completion of clinical trials and, if and where appropriate, the registration of ourproduct candidates. We currently do not have marketing, sales and distribution capabilities. If we receive marketing and commercialization approval for anyof our product candidates, we intend to market the product either directly or through strategic alliances and distribution agreements with third parties. Theultimate implementation of our strategy for realizing the financial value of our product candidates is dependent on the results of clinical trials for our productcandidates, the availability of regulatory approvals and the ability to negotiate acceptable commercial terms with third parties. 12 PRODUCT LIABILITY AND INSURANCE Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing and marketing of human therapeutic products. Wepresently have product liability insurance limited to $10 million per incident, and if we were to be subject to a claim in excess of this coverage or to a claimnot covered by our insurance and the claim succeeded, we would be required to pay the claim out of our own limited resources. COMPETITION Competition in the discovery and development of new methods for treating and preventing disease is intense. We face, and will continue to face, competitionfrom pharmaceutical and biotechnology companies, as well as academic and research institutions and government agencies both in the U.S. and abroad. Weface significant competition from organizations pursuing the same or similar technologies used by us in our drug discovery efforts and from organizationsdeveloping pharmaceuticals that are competitive with our product candidates. Most of our competitors, either alone or together with their collaborative partners, have substantially greater financial resources and larger research anddevelopment staffs than we do. In addition, most of these organizations, either alone or together with their collaborators, have significantly greaterexperience than we do in developing products, undertaking preclinical testing and clinical trials, obtaining FDA and other regulatory approvals of products,and manufacturing and marketing products. Mergers and acquisitions in the pharmaceutical industry may result in even more resources being concentratedamong our competitors. These companies, as well as academic institutions, governmental agencies, and private research organizations, also compete with usin recruiting and retaining highly qualified scientific personnel and consultants. Our ability to compete successfully with other companies in thepharmaceutical and biotechnology field also depends on the status of our collaborations and on the continuing availability of capital to us. ThermoDox® Although there are many drugs and devices marketed and under development for the treatment of cancer, the Company is not aware of any other heatactivated drug delivery product either being marketed or in human clinical development. In addition, the Company is not aware of any other Phase IIIclinical trial for the treatment of HCC or primary liver cancer. GEN-1 Studied indications for GEN-1 include ovarian cancer and glioblastoma multiforme (GBM) brain cancer. In evaluating the competitive landscape for bothindications, early stage indications are treated with chemotherapy (temozolomide, BCNU, CCNU for brain cancer; docetaxel, doxil and cisplatinum forovarian cancer), while later stage ovarian and GBM cancer are treated with Bevacizumab - Avastin ®, an anti-angiogenesis inhibitor. Avastin ® is currentlyalso being evaluated for early stage disease. In product positioning for both indications, there currently is no direct immunotherapy competitor for GEN-1, which will be studied as an adjuvant to bothchemotherapy standard of care regimens, as well as anti-angiogenesis compounds. To support these cases, we have conducted clinical studies in combinationwith chemotherapy for ovarian cancer, and preclinical studies in combination with both temozolomide and Bevacizumab-Avastin ®. INTELLECTUAL PROPERTY Licenses Duke University License Agreement In 1999, we entered into a license agreement with Duke University under which we received exclusive rights, subject to certain exceptions, to commercializeand use Duke’s thermo-liposome technology. In relation to these liposome patents licensed from Duke University, we have filed two additional patentsrelated to the formulation and use of liposomes. We have also licensed from Valentis, CA certain global rights covering the use of pegylation for temperaturesensitive liposomes. In 2003, our obligations under the license agreement with Duke University with respect to the testing and regulatory milestones and other licensedtechnology performance deadlines were eliminated in exchange for a payment of shares of our common stock. The license agreement continues to be subjectto agreements to pay a royalty based upon future sales. In conjunction with the patent holder, we have filed international applications for a certain number ofthe U.S. patents. Our rights under the license agreement with Duke University extend for the longer of 20 years or the end of any term for which any relevant patents are issuedby the United States Patent and Trademark Office. Currently we have rights to Duke’s patent for its thermo-liposome technology in the U.S. and to futurepatents received by Duke in Canada, the EU, Japan and Australia, where it has patent applications have been granted. The European grant provides coveragein the European Community. For this technology, our license rights are worldwide, including the U.S., Canada, certain EU Member States, Australia, HongKong, and Japan. 13 Patents and Proprietary Rights Celsion holds an exclusive license agreement with Duke University for its temperature-sensitive liposome technology that covers the ThermoDox®formulation. Celsion also has issued patents which pertain specifically to methods of storing stabilized, temperature-sensitive liposomal formulations andwill assist in the protection of global rights. These patents will extend the overall term of the ThermoDox® patent portfolio to 2026. These patents are thefirst in this family, which includes pending applications in the U.S., Europe and additional key commercial geographies in Asia. This extended patent runwayto 2026 allows for the evaluation of future development activities for ThermoDox® and Celsion’s heat-sensitive liposome technology platform. For the ThermoDox® technology, we either exclusively license or own U.S. and international patents with claims and methods and compositions of mattersthat cover various aspects of lysolipid thermally-sensitive liposomes technology, with expiration dates ranging from 2018 to 2026. For the TheraPlas technology, we own three U.S. and international patents and related applications with claims and methods and compositions of matters thatcover various aspects of TheraPlas and GEN-1 technologies, with expiration dates ranging from 2020 to 2028. There can be no assurance that an issued patent will remain valid and enforceable in a court of law through the entire patent term. Should the validity of apatent be challenged, the legal process associated with defending the patent can be costly and time consuming. Issued patents can be subject to oppositions,interferences and other third-party challenges that can result in the revocation of the patent or maintenance of the patent in amended form (and potentially ina form that renders the patent without commercially relevant or broad coverage). Competitors may be able to circumvent our patents. Development andcommercialization of pharmaceutical products can be subject to substantial delays and it is possible that at the time of commercialization any patentcovering the product has expired or will be in force for only a short period of time following commercialization. We cannot predict with any certainty if anythird-party U.S. or foreign patent rights, other proprietary rights, will be deemed infringed by the use of our technology. Nor can we predict with certaintywhich, if any, of these rights will or may be asserted against us by third parties. Should we need to defend ourselves and our partners against any such claims,substantial costs may be incurred. Furthermore, parties making such claims may be able to obtain injunctive or other equitable relief, which could effectivelyblock our ability to develop or commercialize some or all of our products in the U.S. and abroad and could result in the award of substantial damages. In theevent of a claim of infringement, we or our partners may be required to obtain one or more licenses from a third party. There can be no assurance that we canobtain a license on a reasonable basis should we deem it necessary to obtain rights to an alternative technology that meets our needs. The failure to obtain alicense may have a material adverse effect on our business, results of operations and financial condition. In addition to the rights available to us under completed or pending license agreements, we rely on our proprietary know-how and experience in thedevelopment and use of heat for medical therapies, which we seek to protect, in part, through proprietary information agreements with employees, consultantsand others. There can be no assurance that these proprietary information agreements will not be breached, that we will have adequate remedies for any breach,or that these agreements, even if fully enforced, will be adequate to prevent third-party use of the Company’s proprietary technology. Please refer to “Item1A, Risk Factors,” including, but not limited to, “We rely on trade secret protection and other unpatented proprietary rights for important proprietarytechnologies, and any loss of such rights could harm our business, results of operations and financial condition.” Similarly, we cannot guarantee thattechnology rights licensed to us by others will not be successfully challenged or circumvented by third parties, or that the rights granted will provide us withadequate protection. Please refer to “Item 1A, Risk Factors,” including, but not limited to, “Our business depends on licensing agreements with third partiesto permit us to use patented technologies. The loss of any of our rights under these agreements could impair our ability to develop and market our products.” EMPLOYEES As of March 28, 2019, we employed 29 full-time employees. We also maintain active independent contractor relationships with various individuals, most ofwhom have month-to-month or annual consulting agreements. None of our employees are covered by a collective bargaining agreement, and we consider ourrelationship with our employees to be good. 14 COMPANY INFORMATION Celsion was founded in 1982 and is a Delaware corporation. Our principal executive offices are located at 997 Lenox Drive, Suite 100, Lawrenceville, NJ08648. Our telephone number is (609) 896-9100. The Company’s website is www.celsion.com. The information contained in, or that can be accessedthrough, our website is not part of, and is not incorporated in, this Annual Report on Form 10-K. AVAILABLE INFORMATION We make available free of charge through our website, www.celsion.com, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reportson Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to theSecurities and Exchange Commission (the SEC). In addition, our website includes other items related to corporate governance matters, including, amongother things, our corporate governance principles, charters of various committees of the Board of Directors, and our code of business conduct and ethicsapplicable to all employees, officers and directors. We intend to disclose on our internet website any amendments to or waivers from our code of businessconduct and ethics as well as any amendments to its corporate governance principles or the charters of various committees of the Board of Directors. Copiesof these documents may be obtained, free of charge, from our website. The SEC also maintains an internet site that contains reports, proxy and informationstatements and other information regarding issuers that file periodic and other reports electronically with the Securities and Exchange Commission. Theaddress of that site is www.sec.gov. The information available on or through our website is not a part of this Annual Report on Form 10-K and should not berelied upon. RECENT EVENTS On March 28, 2019, the Company and EGWU, Inc. (formerly known as EGEN, Inc.) (“EGWU”), entered into an amendment (the “Amendment”) to the AssetPurchase Agreement discussed in Note 5. (the “Asset Purchase Agreement”). The Amendment provides that payment of the of $12.4 million earnoutmilestone liability under the Asset Purchase Agreement related to the Ovarian Cancer Indication can be made, at the Company’s option, in the followingmanner: a)$7.0 million in cash to EGWU within 10 business days of achieving the milestone; or b)$12.4 million to EGWU, which is payable in cash, common stock of the Company, or a combination of either, within one year of achieving themilestone. Additionally, the Amendment extends the Earnout Term (as defined in the Amendment) as it applies to the EGEN-001 Ovarian Cancer Milestone from seven(7) years to eight (8) years from the original signing date of the Asset Purchase Agreement. As consideration for entering into the Amendment, the Company will issue to EGWU 200,000 warrants to purchase common stock with an exercise price of$0.01 per share. The Company will record this transaction in the first quarter of 2019. ITEM 1A.RISK FACTORS We are providing the following cautionary discussion of risk factors, uncertainties and assumptions that we believe are relevant to our business. These arefactors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected or historical results and ourforward-looking statements. We note these factors for investors as permitted by Section 21E of the Securities Exchange Act, and Section 27A of theSecurities Act. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider the following tobe a complete discussion of all potential risks or uncertainties that may impact our business. Moreover, we operate in a competitive and rapidly changingenvironment. New factors emerge from time to time and it is not possible to predict the impact of all of these factors on our business, financial condition orresults of operations. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, orotherwise. RISKS RELATED TO OUR BUSINESS We have a history of significant losses from operations and expect to continue to incur significant losses for the foreseeable future. Since our inception, our expenses have substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit of $274 million atDecember 31, 2018. For the years ended December 31, 2018 and 2017, we incurred a net loss of $11.9 million, and $20.4 million, respectively. We currentlyhave no product revenue and do not expect to generate any product revenue for the foreseeable future. Because we are committed to continuing our productresearch, development, clinical trial and commercialization programs, we will continue to incur significant operating losses unless and until we complete thedevelopment of ThermoDox®, GEN-1 and other new product candidates and these product candidates have been clinically tested, approved by the UnitedStates Food and Drug Administration (FDA) and successfully marketed. The amount of future losses is uncertain. Our ability to achieve profitability, if ever,will depend on, among other things, us or our collaborators successfully developing product candidates, obtaining regulatory approvals to market andcommercialize product candidates, manufacturing any approved products on commercially reasonable terms, establishing a sales and marketing organizationor suitable third-party alternatives for any approved product and raising sufficient funds to finance business activities. If we or our collaborators are unable todevelop and commercialize one or more of our product candidates or if sales revenue from any product candidate that receives approval is insufficient, wewill not achieve profitability, which could have a material adverse effect on our business, financial condition, results of operations and prospects. 15 Drug development is an inherently uncertain process with a high risk of failure at every stage of development. Our lead drug candidate failed to meet itsprimary endpoint in our earlier Phase III clinical trial. On January 31, 2013, we announced that our lead product ThermoDox® in combination with radiofrequency ablation (RFA) failed to meet the primaryendpoint of the Phase III clinical trial for primary liver cancer, known as the HEAT study. We have not completed our final analysis of the data and do notknow the extent to which, if any, the failure of ThermoDox® to meet its primary endpoint in the Phase III trial could impact our other ongoing studies ofThermoDox® including a pivotal, double-blind, placebo-controlled Phase III trial of ThermoDox® in combination with RFA in primary liver cancer, knownas the OPTIMA study, which we launched in the first half of 2014. The trial design of the OPTIMA study is based on the overall survival data from the post-hoc analysis of results from the HEAT study. ThermoDox® is also being evaluated in a Phase II clinical trial for recurrent chest wall breast cancer and otherpreclinical studies. In addition, we have initiated a Phase I dose-escalation clinical trial of GEN-1 in combination with the standard of care in neo-adjuvantovarian cancer, known as the OVATION Study, and plan to expand our ovarian cancer development program to include a Phase I/II dose escalating trialevaluating GEN-1, known as the OVATION II Study, in ovarian cancer patients. Preclinical testing and clinical trials are long, expensive and highly uncertain processes and failure can unexpectedly occur at any stage of clinicaldevelopment, as evidenced by the failure of ThermoDox® to meet its primary endpoint in the HEAT study. Drug development is inherently risky and clinicaltrials take us several years to complete. The start or end of a clinical trial is often delayed or halted due to changing regulatory requirements, manufacturingchallenges, required clinical trial administrative actions, slower than anticipated patient enrollment, changing standards of care, availability or prevalence ofuse of a comparator drug or required prior therapy, clinical outcomes including insufficient efficacy, safety concerns, or our own financial constraints. Theresults from preclinical testing or early clinical trials of a product candidate may not predict the results that will be obtained in later phase clinical trials of theproduct candidate. We, the FDA or other applicable regulatory authorities may suspend clinical trials of a product candidate at any time for various reasons,including a belief that subjects participating in such trials are being exposed to unacceptable health risks or adverse side effects. We may not have thefinancial resources to continue development of, or to enter into collaborations for, a product candidate if we experience any problems or other unforeseenevents that delay or prevent regulatory approval of, or our ability to commercialize, product candidates. The failure of one or more of our drug candidates ordevelopment programs could have a material adverse effect on our business, financial condition and results of operations. We will need to raise additional capital to fund our planned future operations, and we may be unable to secure such capital without dilutive financingtransactions. If we are not able to raise additional capital, we may not be able to complete the development, testing and commercialization of ourproduct candidates. We have not generated significant revenue and have incurred significant net losses in each year since our inception. For the year ended December 31, 2018,we had a net loss of $11.9 million and used $7.0 million to fund operations. We have incurred approximately $274 million of cumulated net losses. As ofDecember 31, 2018, we had approximately $27.7 million in cash and short-term investments including interest receivable. We have substantial future capital requirements to continue our research and development activities and advance our product candidates through variousdevelopment stages. For example, ThermoDox® is being evaluated in a Phase III clinical trial in combination with RFA for the treatment of primary livercancer and other preclinical studies. We completed a Phase I dose-escalation clinical trial of GEN-1 in combination with the standard of care in neo-adjuvantovarian cancer in the third quarter of 2017 and expanded our clinical development program for GEN-1 into a follow-on Phase I/II trial for newly diagnosedovarian cancer in 2018. To complete the development and commercialization of our product candidates, we will need to raise substantial amounts of additional capital to fund ouroperations. Our future capital requirements will depend upon numerous unpredictable factors, including, without limitation, the cost, timing, progress andoutcomes of clinical studies and regulatory reviews of our proprietary drug candidates, our efforts to implement new collaborations, licenses and strategictransactions, general and administrative expenses, capital expenditures and other unforeseen uses of cash. We do not have any committed sources offinancing and cannot assure you that alternate funding will be available in a timely manner, on acceptable terms or at all. We may need to pursue dilutiveequity financings, such as the issuance of shares of common stock, convertible debt or other convertible or exercisable securities. Such dilutive equityfinancings could dilute the percentage ownership of our current common stockholders and could significantly lower the market value of our common stock.In addition, a financing could result in the issuance of new securities that may have rights, preferences or privileges senior to those of our existingstockholders. If we are unable to obtain additional capital on a timely basis or on acceptable terms, we may be required to delay, reduce or terminate our research anddevelopment programs and preclinical studies or clinical trials, if any, limit strategic opportunities or undergo corporate restructuring activities. We alsocould be required to seek funds through arrangements with collaborators or others that may require us to relinquish rights to some of our technologies,product candidates or potential markets or that could impose onerous financial or other terms. Furthermore, if we cannot fund our ongoing development andother operating requirements, particularly those associated with our obligations to conduct clinical trials under our licensing agreements, we will be in breachof these licensing agreements and could therefore lose our license rights, which could have material adverse effects on our business. 16 If we do not obtain or maintain FDA and foreign regulatory approvals for our drug candidates on a timely basis, or at all, or if the terms of anyapproval impose significant restrictions or limitations on use, we will be unable to sell those products and our business, results of operations andfinancial condition will be negatively affected. To obtain regulatory approvals from the FDA and foreign regulatory agencies, we must conduct clinical trials demonstrating that our products are safe andeffective. We may need to amend ongoing trials, or the FDA and/or foreign regulatory agencies may require us to perform additional trials beyond those weplanned. The testing and approval process require substantial time, effort and resources, and generally takes a number of years to complete. The time tocomplete testing and obtaining approvals is uncertain, and the FDA and foreign regulatory agencies have substantial discretion, at any phase ofdevelopment, to terminate clinical studies, require additional clinical studies or other testing, delay or withhold approval, and mandate product withdrawals,including recalls. In addition, our drug candidates may have undesirable side effects or other unexpected characteristics that could cause us or regulatoryauthorities to interrupt, delay or halt clinical trials and could result in a more restricted label or the delay or denial of regulatory approval by regulatoryauthorities. Even if we receive regulatory approval of a product, the approval may limit the indicated uses for which the drug may be marketed. The failure to obtaintimely regulatory approval of product candidates, the imposition of marketing limitations, or a product withdrawal would negatively impact our business,results of operations and financial condition. Even if we receive approval, we will be subject to ongoing regulatory obligations and continued regulatoryreview, which may result in significant additional expense and subject us to restrictions, withdrawal from the market, or penalties if we fail to comply withapplicable regulatory requirements or if we experience unanticipated problems with our product candidates, when and if approved. Finally, even if we obtainFDA approval of any of our product candidates, we may never obtain approval or commercialize such products outside of the United States, given that wemay be subject to additional or different regulatory burdens in other markets. This could limit our ability to realize their full market potential. Our industry is highly regulated by the FDA and comparable foreign regulatory agencies. We must comply with extensive, strictly enforced regulatoryrequirements to develop, obtain, and maintain marketing approval for any of our product candidates. Securing FDA or comparable foreign regulatory approval requires the submission of extensive preclinical and clinical data and supporting information foreach therapeutic indication to establish the product candidate’s safety and efficacy for its intended use. It takes years to complete the testing of a new drug orbiological product and development delays and/or failure can occur at any stage of testing. Any of our present and future clinical trials may be delayed,halted, not authorized, or approval of any of our products may be delayed or may not be obtained due to any of the following: ●any preclinical test or clinical trial may fail to produce safety and efficacy results satisfactory to the FDA or comparable foreign regulatoryauthorities; ●preclinical and clinical data can be interpreted in different ways, which could delay, limit or prevent marketing approval; ●negative or inconclusive results from a preclinical test or clinical trial or adverse events during a clinical trial could cause a preclinical study orclinical trial to be repeated or a development program to be terminated, even if other studies relating to the development program are ongoing orhave been completed and were successful; ●the FDA or comparable foreign regulatory authorities can place a clinical hold on a trial if, among other reasons, it finds that subjects enrolled in thetrial are or would be exposed to an unreasonable and significant risk of illness or injury; ●the facilities that we utilize, or the processes or facilities of third-party vendors, including without limitation the contract manufacturers who will bemanufacturing drug substance and drug product for us or any potential collaborators, may not satisfactorily complete inspections by the FDA orcomparable foreign regulatory authorities; and ●we may encounter delays or rejections based on changes in FDA policies or the policies of comparable foreign regulatory authorities during theperiod in which we develop a product candidate, or the period required for review of any final marketing approval before we are able to market anyproduct candidate. In addition, information generated during the clinical trial process is susceptible to varying interpretations that could delay, limit, or prevent marketingapproval at any stage of the approval process. Moreover, early positive preclinical or clinical trial results may not be replicated in later clinical trials. As moreproduct candidates within a particular class of drugs proceed through clinical development to regulatory review and approval, the amount and type ofclinical data that may be required by regulatory authorities may increase or change. Failure to demonstrate adequately the quality, safety, and efficacy of anyof our product candidates would delay or prevent marketing approval of the applicable product candidate. We cannot assure you that if clinical trials arecompleted, either we or our potential collaborators will submit applications for required authorizations to manufacture or market potential products or thatany such application will be reviewed and approved by appropriate regulatory authorities in a timely manner, if at all. 17 New gene-based products for therapeutic applications are subject to extensive regulation by the FDA and comparable agencies in other countries. Theprecise regulatory requirements with which we will have to comply, now and in the future, are uncertain due to the novelty of the gene-based productswe are developing. The regulatory approval process for novel product candidates such as ours can be significantly more expensive and take longer than for other, better knownor more extensively studied product candidates. Limited data exist regarding the safety and efficacy of DNA-based therapeutics compared with conventionaltherapeutics, and government regulation of DNA-based therapeutics is evolving. Regulatory requirements governing gene and cell therapy products havechanged frequently and may continue to change in the future. The FDA has established the Office of Cellular, Tissue and Gene Therapies within its Center forBiologics Evaluation and Research (CBER), to consolidate the review of gene therapy and related products, and has established the Cellular, Tissue andGene Therapies Advisory Committee to advise CBER in its review. It is difficult to determine how long it will take or how much it will cost to obtainregulatory approvals for our product candidates in either the U.S. or the European Union or how long it will take to commercialize our product candidates. Adverse events or the perception of adverse events in the field of gene therapy generally, or with respect to our product candidates specifically, may have aparticularly negative impact on public perception of gene therapy and result in greater governmental regulation, including future bans or stricter standardsimposed on gene-based therapy clinical trials, stricter labeling requirements and other regulatory delays in the testing or approval of our potential products.For example, if we were to engage an NIH-funded institution to conduct a clinical trial, we may be subject to review by the NIH Office of BiotechnologyActivities’ Recombinant DNA Advisory Committee (the RAC). If undertaken, RAC can delay the initiation of a clinical trial, even if the FDA has reviewedthe trial design and details and approved its initiation. Conversely, the FDA can put an investigational new drug (IND) application on a clinical hold even ifthe RAC has provided a favorable review or an exemption from in-depth, public review. Such committee and advisory group reviews and any new guidelinesthey promulgate may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes inregulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates or lead to significant post-approvallimitations or restrictions. Any increased scrutiny could delay or increase the costs of our product development efforts or clinical trials. Even if our products receive regulatory approval, they may still face future development and regulatory difficulties. Government regulators may imposesignificant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies. Thisgovernmental oversight may be particularly strict with respect to gene-based therapies. Serious adverse events, undesirable side effects or other unexpected properties of our product candidates may be identified during development or afterapproval, which could lead to the discontinuation of our clinical development programs, refusal by regulatory authorities to approve our productcandidates or, if discovered following marketing approval, revocation of marketing authorizations or limitations on the use of our product candidatesthereby limiting the commercial potential of such product candidate. As we continue our development of our product candidates and initiate clinical trials of our additional product candidates, serious adverse events,undesirable side effects or unexpected characteristics may emerge causing us to abandon these product candidates or limit their development to more narrowuses or subpopulations in which the serious adverse events, undesirable side effects or other characteristics are less prevalent, less severe or more acceptablefrom a risk-benefit perspective. Even if our product candidates initially show promise in these early clinical trials, the side effects of drugs are frequently only detectable after they are testedin large, Phase 3 clinical trials or, in some cases, after they are made available to patients on a commercial scale after approval. Sometimes, it can be difficultto determine if the serious adverse or unexpected side effects were caused by the product candidate or another factor, especially in oncology subjects whomay suffer from other medical conditions and be taking other medications. If serious adverse or unexpected side effects are identified during developmentand are determined to be attributed to our product candidate, we may be required to develop a Risk Evaluation and Mitigation Strategy (REMS) to mitigatethose serious safety risks, which could impose significant distribution and use restrictions on our products. In addition, drug-related side effects could also affect subject recruitment or the ability of enrolled subjects to complete the trial, result in potential productliability claims, reputational harm, withdrawal of approvals, a requirement to include additional warnings on the label or to create a medication guideoutlining the risks of such side effects for distribution to patients. It can also result in patient harm, liability lawsuits, and reputational harm. Any of theseoccurrences could prevent us from achieving or maintaining market acceptance and may harm our business, financial condition and prospects significantly. 18 We do not expect to generate revenue for the foreseeable future. We have devoted our resources to developing a new generation of products and will not be able to market these products until we have completed clinicaltrials and obtain all necessary governmental approvals. Our lead product candidate, ThermoDox® and the product candidates we purchased in ouracquisition of EGEN, including GEN-1, are still in various stages of development and trials and cannot be marketed until we have completed clinical testingand obtained necessary governmental approval. Following our announcement on January 31, 2013 that the HEAT Study failed to meet its primary endpointof progression free survival, we continued to follow the patients enrolled in the HEAT Study to the secondary endpoint, overall survival. Based on the overallsurvival data from the post-hoc analysis of results from the HEAT Study, we launched a pivotal, double-blind, placebo-controlled Phase III trial ofThermoDox® in combination with RFA in primary liver cancer, known as the OPTIMA Study, in the first half of 2014. GEN-1 is currently in an early stage ofclinical development for the treatment of ovarian cancer. We conducted a Phase I dose-escalation clinical trial of GEN-1 in combination with the standard ofcare in neo-adjuvant ovarian cancer starting in the second half of 2015 and completing enrollment in 2017. We also expanded our ovarian cancerdevelopment program to include a Phase I/II dose escalating trial evaluating GEN-1 in ovarian cancer patients. Our delivery technology platforms, TheraPlasand TheraSilence, are in preclinical stages of development. Accordingly, our revenue sources are, and will remain, extremely limited until our productcandidates are clinically tested, approved by the FDA or foreign regulatory agencies and successfully marketed. We cannot guarantee that any of our productcandidates will be approved by the FDA or any foreign regulatory agency or marketed, successfully or otherwise, at any time in the foreseeable future or atall. We may not successfully engage in future strategic transactions, which could adversely affect our ability to develop and commercialize productcandidates, impact our cash position, increase our expense and present significant distractions to our management. In the future, we may consider strategic alternatives intended to further the development of our business, which may include acquiring businesses,technologies or products, out- or in-licensing product candidates or technologies or entering into a business combination with another company. Anystrategic transaction may require us to incur non-recurring or other charges, increase our near- and long-term expenditures and pose significant integration orimplementation challenges or disrupt our management or business. These transactions would entail numerous operational and financial risks, includingexposure to unknown liabilities, disruption of our business and diversion of our management’s time and attention in order to manage a collaboration ordevelop acquired products, product candidates or technologies, incurrence of substantial debt or dilutive issuances of equity securities to pay transactionconsideration or costs, higher than expected collaboration, acquisition or integration costs, write-downs of assets or goodwill or impairment charges,increased amortization expenses, difficulty and cost in facilitating the collaboration or combining the operations and personnel of any acquired business,impairment of relationships with key suppliers, manufacturers or customers of any acquired business due to changes in management and ownership and theinability to retain key employees of any acquired business. Accordingly, although there can be no assurance that we will undertake or successfully completeany transactions of the nature described above, any transactions that we do complete may be subject to the foregoing or other risks and have a materialadverse effect on our business, results of operations, financial condition and prospects. Conversely, any failure to enter any strategic transaction that wouldbe beneficial to us could delay the development and potential commercialization of our product candidates and have a negative impact on thecompetitiveness of any product candidate that reaches market. Strategic transactions, such as acquisitions, partnerships and collaborations, including the EGEN acquisition, involve numerous risks, including: ●the failure of markets for the products of acquired businesses, technologies or product lines to develop as expected; ●uncertainties in identifying and pursuing acquisition targets; ●the challenges in achieving strategic objectives, cost savings and other benefits expected from acquisitions; ●the risk that the financial returns on acquisitions will not support the expenditures incurred to acquire such businesses or the capital expendituresneeded to develop such businesses; ●difficulties in assimilating the acquired businesses, technologies or product lines; ●the failure to successfully manage additional business locations, including the additional infrastructure and resources necessary to support andintegrate such locations; ●the existence of unknown product defects related to acquired businesses, technologies or product lines that may not be identified due to the inherentlimitations involved in the due diligence process of an acquisition; ●the diversion of management’s attention from other business concerns; ●risks associated with entering markets or conducting operations with which we have no or limited direct prior experience; 19 ●risks associated with assuming the legal obligations of acquired businesses, technologies or product lines; ●risks related to the effect that internal control processes of acquired businesses might have on our financial reporting and management’s report onour internal control over financial reporting; ●the potential loss of key employees related to acquired businesses, technologies or product lines; and ●the incurrence of significant exit charges if products or technologies acquired in business combinations are unsuccessful. We may never realize the perceived benefits of the EGEN acquisition or potential future transactions. We cannot assure you that we will be successful inovercoming problems encountered in connection with any transactions, and our inability to do so could significantly harm our business, results of operationsand financial condition. These transactions could dilute a stockholder’s investment in us and cause us to incur debt, contingent liabilities andamortization/impairment charges related to intangible assets, all of which could materially and adversely affect our business, results of operations andfinancial condition. In addition, our effective tax rate for future periods could be negatively impacted by the EGEN acquisition or potential futuretransactions. Our business depends on license agreements with third parties to permit us to use patented technologies. The loss of any of our rights under theseagreements could impair our ability to develop and market our products. Our success will depend, in a substantial part, on our ability to maintain our rights under license agreements granting us rights to use patented technologies.For instance, we are party to license agreements with Duke University, under which we have exclusive rights to commercialize medical treatment productsand procedures based on Duke’s thermo-sensitive liposome technology. The Duke University license agreement contains a license fee, royalty and/orresearch support provisions, testing and regulatory milestones, and other performance requirements that we must meet by certain deadlines. If we breach anyprovisions of the license and research agreements, we may lose our ability to use the subject technology, as well as compensation for our efforts indeveloping or exploiting the technology. Any such loss of rights and access to technology could have a material adverse effect on our business. Further, we cannot guarantee that any patent or other technology rights licensed to us by others will not be challenged or circumvented successfully by thirdparties, or that the rights granted will provide adequate protection. We may be required to alter any of our potential products or processes or enter into alicense and pay licensing fees to a third party or cease certain activities. There can be no assurance that we can obtain a license to any technology that wedetermine we need on reasonable terms, if at all, or that we could develop or otherwise obtain alternate technology. If a license is not available oncommercially reasonable terms or at all, our business, results of operations, and financial condition could be significantly harmed, and we may be preventedfrom developing and commercializing the product. Litigation, which could result in substantial costs, may also be necessary to enforce any patents issued toor licensed by us or to determine the scope and validity of another’s claimed proprietary rights. If any of our pending patent applications do not issue, or are deemed invalid following issuance, we may lose valuable intellectual property protection. The patent positions of pharmaceutical and biotechnology companies, such as ours, are uncertain and involve complex legal and factual issues. We ownvarious U.S. and international patents and have pending U.S. and international patent applications that cover various aspects of our technologies. There canbe no assurance that patents that have issued will be held valid and enforceable in a court of law through the entire patent term. Even for patents that are heldvalid and enforceable, the legal process associated with obtaining such a judgment is time consuming and costly. Additionally, issued patents can be subjectto opposition, interferences or other proceedings that can result in the revocation of the patent or maintenance of the patent in amended form (and potentiallyin a form that renders the patent without commercially relevant or broad coverage). Further, our competitors may be able to circumvent and otherwise designaround our patents. Even if a patent is issued and enforceable, because development and commercialization of pharmaceutical products can be subject tosubstantial delays, patents may expire early and provide only a short period of protection, if any, following the commercialization of products encompassedby our patents. We may have to participate in interference proceedings declared by the U.S. Patent and Trademark Office, which could result in a loss of thepatent and/or substantial cost to us. We have filed patent applications, and plan to file additional patent applications, covering various aspects of our technologies and our proprietary productcandidates. There can be no assurance that the patent applications for which we apply would actually issue as patents or do so with commercially relevant orbroad coverage. The coverage claimed in a patent application can be significantly reduced before the patent is issued. The scope of our claim coverage canbe critical to our ability to enter into licensing transactions with third parties and our right to receive royalties from our collaboration partnerships. Sincepublication of discoveries in scientific or patent literature often lags behind the date of such discoveries, we cannot be certain that we were the first inventorof inventions covered by our patents or patent applications. In addition, there is no guarantee that we will be the first to file a patent application directed toan invention. 20 An adverse outcome in any judicial proceeding involving intellectual property, including patents, could subject us to significant liabilities to third parties,require disputed rights to be licensed from or to third parties or require us to cease using the technology in dispute. In those instances where we seek anintellectual property license from another, we may not be able to obtain the license on a commercially reasonable basis, if at all, thereby raising concerns onour ability to freely commercialize our technologies or products. We rely on trade secret protection and other unpatented proprietary rights for important proprietary technologies, and any loss of such rights couldharm our business, results of operations and financial condition. We rely on trade secrets and confidential information that we seek to protect, in part, by confidentiality agreements with our corporate partners, collaborators,employees and consultants. We cannot assure you that these agreements are adequate to protect our trade secrets and confidential information or will not bebreached or, if breached, we will have adequate remedies. Furthermore, others may independently develop substantially equivalent confidential andproprietary information or otherwise gain access to our trade secrets or disclose such technology. Any loss of trade secret protection or other unpatentedproprietary rights could harm our business, results of operations and financial condition. Our products may infringe patent rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantialdamages or limit our ability to commercialize our products. Our commercial success depends on our ability to operate without infringing the patents and other proprietary rights of third parties. There may be third partypatents that relate to our products and technology. We may unintentionally infringe upon valid patent rights of third parties. Although we currently are notinvolved in any material litigation involving patents, a third-party patent holder may assert a claim of patent infringement against us in the future.Alternatively, we may initiate litigation against the third-party patent holder to request that a court declare that we are not infringing the third party’s patentand/or that the third party’s patent is invalid or unenforceable. If a claim of infringement is asserted against us and is successful, and therefore we are found toinfringe, we could be required to pay damages for infringement, including treble damages if it is determined that we knew or became aware of such a patentand we failed to exercise due care in determining whether or not we infringed the patent. If we have supplied infringing products to third parties or havelicensed third parties to manufacture, use or market infringing products, we may be obligated to indemnify these third parties for damages they may berequired to pay to the patent holder and for any losses they may sustain. We can also be prevented from selling or commercializing any of our products that use the infringing technology in the future, unless we obtain a licensefrom such third party. A license may not be available from such third party on commercially reasonable terms or may not be available at all. Any modificationto include a non-infringing technology may not be possible, or if possible may be difficult or time-consuming to develop, and require revalidation, whichcould delay our ability to commercialize our products. Any infringement action asserted against us, even if we are ultimately successful in defending againstsuch action, would likely delay the regulatory approval process of our products, harm our competitive position, be expensive and require the time andattention of our key management and technical personnel. We rely on third parties to conduct all of our clinical trials. If these third parties are unable to carry out their contractual duties in a manner that isconsistent with our expectations, comply with budgets and other financial obligations or meet expected deadlines, we may not receive certaindevelopment milestone payments or be able to obtain regulatory approval for or commercialize our product candidates in a timely or cost-effectivemanner. We do not independently conduct clinical trials for our drug candidates. We rely, and expect to continue to rely, on third-party clinical investigators, clinicalresearch organizations (CROs), clinical data management organizations and consultants to design, conduct, supervise and monitor our clinical trials. Because we do not conduct our own clinical trials, we must rely on the efforts of others and have reduced control over aspects of these activities, including,the timing of such trials, the costs associated with such trials and the procedures that are followed for such trials. We do not expect to significantly increaseour personnel in the foreseeable future and may continue to rely on third parties to conduct all of our future clinical trials. If we cannot contract withacceptable third parties on commercially reasonable terms or at all, if these third parties are unable to carry out their contractual duties or obligations in amanner that is consistent with our expectations or meet expected deadlines, if they do not carry out the trials in accordance with budgeted amounts, if thequality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols or for other reasons, or if they fail tomaintain compliance with applicable government regulations and standards, our clinical trials may be extended, delayed or terminated or may becomesignificantly more expensive, we may not receive development milestone payments when expected or at all, and we may not be able to obtain regulatoryapproval for or successfully commercialize our product candidates. Despite our reliance on third parties to conduct our clinical trials, we are ultimately responsible for ensuring that each of our clinical trials is conducted inaccordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires clinical trials to be conducted in accordance withgood clinical practices for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurateand that the rights, integrity and confidentiality of clinical trial participants are protected. We also are required to register ongoing clinical trials and post theresults of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines,adverse publicity and civil and criminal sanctions. Our reliance on third parties that we do not control does not relieve us of these responsibilities andrequirements. If we or a third party we rely on fails to meet these requirements, we may not be able to obtain, or may be delayed in obtaining, marketingauthorizations for our drug candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our drug candidates. This couldhave a material adverse effect on our business, financial condition, results of operations and prospects. 21 Because we rely on third party manufacturing and supply partners, our supply of research and development, preclinical and clinical developmentmaterials may become limited or interrupted or may not be of satisfactory quantity or quality. We rely on third party supply and manufacturing partners to supply the materials and components for, and manufacture, our research and development,preclinical and clinical trial drug supplies. We do not own manufacturing facilities or supply sources for such components and materials. There can be noassurance that our supply of research and development, preclinical and clinical development drugs and other materials will not be limited, interrupted,restricted in certain geographic regions or of satisfactory quality or continue to be available at acceptable prices. Suppliers and manufacturers must meetapplicable manufacturing requirements and undergo rigorous facility and process validation tests required by FDA and foreign regulatory authorities in orderto comply with regulatory standards, such as current Good Manufacturing Practices. In the event that any of our suppliers or manufacturers fails to complywith such requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materialsbecomes limited or interrupted for other reasons, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilitiesor resources, or enter into an agreement with another third party, which we may not be able to do on reasonable terms, if at all. Our business is subject to numerous and evolving state, federal and foreign regulations and we may not be able to secure the government approvalsneeded to develop and market our products. Our research and development activities, pre-clinical tests and clinical trials, and ultimately the manufacturing, marketing and labeling of our products, areall subject to extensive regulation by the FDA and foreign regulatory agencies. Pre-clinical testing and clinical trial requirements and the regulatory approvalprocess typically take years and require the expenditure of substantial resources. Additional government regulation may be established that could prevent ordelay regulatory approval of our product candidates. Delays or rejections in obtaining regulatory approvals would adversely affect our ability tocommercialize any product candidates and our ability to generate product revenue or royalties. The FDA and foreign regulatory agencies require that the safety and efficacy of product candidates be supported through adequate and well-controlledclinical trials. If the results of pivotal clinical trials do not establish the safety and efficacy of our product candidates to the satisfaction of the FDA and otherforeign regulatory agencies, we will not receive the approvals necessary to market such product candidates. Even if regulatory approval of a productcandidate is granted, the approval may include significant limitations on the indicated uses for which the product may be marketed. We are subject to the periodic inspection of our clinical trials, facilities, procedures and operations and/or the testing of our products by the FDA to determinewhether our systems and processes, or those of our vendors and suppliers, are in compliance with FDA regulations. Following such inspections, the FDA mayissue notices on Form 483 and warning letters that could cause us to modify certain activities identified during the inspection. Failure to comply with the FDA and other governmental regulations can result in fines, unanticipated compliance expenditures, recall or seizure of products,total or partial suspension of production and/or distribution, suspension of the FDA’s review of product applications, enforcement actions, injunctions andcriminal prosecution. Under certain circumstances, the FDA also has the authority to revoke previously granted product approvals. Although we have internalcompliance programs, if these programs do not meet regulatory agency standards or if our compliance is deemed deficient in any significant way, it couldhave a material adverse effect on the Company. We are also subject to recordkeeping and reporting regulations. These regulations require, among other things, the reporting to the FDA of adverse eventsalleged to have been associated with the use of a product or in connection with certain product failures. Labeling and promotional activities also areregulated by the FDA. We must also comply with record keeping requirements as well as requirements to report certain adverse events involving ourproducts. The FDA can impose other post-marketing controls on us as well as our products including, but not limited to, restrictions on sale and use, throughthe approval process, regulations and otherwise. Many states in which we do or may do business, or in which our products may be sold, if at all, impose licensing, labeling or certification requirements thatare in addition to those imposed by the FDA. There can be no assurance that one or more states will not impose regulations or requirements that have amaterial adverse effect on our ability to sell our products. 22 In many of the foreign countries in which we may do business or in which our products may be sold, we will be subject to regulation by national governmentsand supranational agencies as well as by local agencies affecting, among other things, product standards, packaging requirements, labeling requirements,import restrictions, tariff regulations, duties and tax requirements. There can be no assurance that one or more countries or agencies will not imposeregulations or requirements that could have a material adverse effect on our ability to sell our products. We have obtained Orphan Drug Designation for ThermoDox® and may seek Orphan Drug Designation for other product candidates, but we may beunsuccessful or may be unable to maintain the benefits associated with Orphan Drug Designation, including the potential for market exclusivity. ThermoDox® has been granted orphan drug designation for primary liver cancer in both the U.S. and Europe. As part of our business strategy, we may seekOrphan Drug Designation for other product candidates, but we may be unsuccessful. Regulatory authorities in some jurisdictions, including the U.S. andEurope, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a drug as anorphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individualsannually in the U.S., or a patient population greater than 200,000 in the U.S. where there is no reasonable expectation that the cost of developing the drugwill be recovered from sales in the U.S. Even though we have obtained Orphan Drug Designation for ThermoDox® and may obtain such designation for other product candidates in specificindications, we may not be the first to obtain marketing approval of these product candidates for the orphan-designated indication due to the uncertaintiesassociated with developing pharmaceutical products. In addition, exclusive marketing rights in the U.S. may be limited if we seek approval for an indicationbroader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation was materially defective or if themanufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Further, even if we obtainorphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs with different activemoieties can be approved for the same condition. Even after an orphan product is approved, the FDA can subsequently approve the same drug with the sameactive moiety for the same condition if the FDA concludes that the later drug is safer, more effective or makes a major contribution to patient care. OrphanDrug Designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review orapproval process. In addition, while we may seek Orphan Drug Designation for other product candidates, we may never receive such designations. Fast Track designation may not actually lead to a faster development or regulatory review or approval process. ThermoDox® has received U.S. FDA Fast Track Designation. However, we may not experience a faster development process, review, or approval compared toconventional FDA procedures. The FDA may withdraw our Fast Track designation if the FDA believes that the designation is no longer supported by datafrom our clinical or pivotal development program. Our Fast Track designation does not guarantee that we will qualify for or be able to take advantage of theFDA’s expedited review procedures or that any application that we may submit to the FDA for regulatory approval will be accepted for filing or ultimatelyapproved. Legislative and regulatory changes affecting the healthcare industry could adversely affect our business. Political, economic and regulatory influences are subjecting the healthcare industry to potential fundamental changes that could substantially affect ourresults of operations. There have been a number of government and private sector initiatives during the last several years to limit the growth of healthcarecosts, including price regulation, competitive pricing, coverage and payment policies, comparative effectiveness of therapies, technology assessments andmanaged-care arrangements. For example, the Affordable Care Act, passed in 2010, enacted a number of reforms to expand access to health insurance whilealso reducing or constraining the growth of healthcare spending, enhancing remedies against fraud and abuse, adding new transparency requirements forhealthcare industries, and imposing new taxes on fees on healthcare industry participants, among other policy reforms. Further, the 2016 Presidential andCongressional elections and subsequent developments have caused the future state of many core aspects of the current health care marketplace to beuncertain, as the new Presidential Administration and Congress have repeatedly expressed a desire to repeal all or portions of the Affordable Care Act. It isuncertain whether or when any legislative proposals will be adopted or what actions federal, state, or private payors for health care treatment and services maytake in response to any healthcare reform proposals or legislation. We cannot predict the effect healthcare reforms may have on our business and we can offerno assurances that any of these reforms will not have a material adverse effect on our business. In addition, uncertainty remains regarding proposedsignificant reforms to the U.S. health care system. 23 Since its enactment, some of the provisions of the ACA have yet to be fully implemented, while certain provisions have been subject to judicial,congressional, and executive challenges. As a result, there have been delays in the implementation of, and action taken to repeal or replace, certain aspects ofthe ACA. The U.S. Supreme Court has upheld certain key aspects of the legislation, including a tax-based shared responsibility payment imposed on certainindividuals who fail to maintain qualifying health coverage for all or part of a year, which is commonly known as the requirement that all individualsmaintain health insurance coverage or pay a penalty, referred to as the “individual mandate.” However, as a result of tax reform legislation passed inDecember 2017, the individual mandate has been eliminated effective January 1, 2019. According to the Congressional Budget Office, the repeal of theindividual mandate will cause 13 million fewer Americans to be insured in 2027 and premiums in insurance markets may rise. Since January 2017, PresidentTrump has signed two Executive Orders designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of therequirements for health insurance mandated by the ACA. One Executive Order directs federal agencies with authorities and responsibilities under the ACA towaive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states,individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. The second Executive Order terminates the cost-sharing subsidies that reimburse insurers under the ACA. Several state Attorneys General filed suit to stop the administration from terminating the subsidies,but their request for a restraining order was denied by a federal judge in California on October 25, 2017. The loss of the cost share reduction payments isexpected to increase premiums on certain policies issued by qualified health plans under the ACA. Further, on June 14, 2018, U.S. Court of Appeals for theFederal Circuit ruled that the federal government was not required to pay more than $12 billion in ACA risk corridor payments to third-party payors whoargued were owed to them. The effects of this gap in reimbursement on third-party payors, the viability of the ACA marketplace, providers, and potentiallyour business, are not yet known. Moreover, we cannot predict what healthcare reform initiatives may be adopted in the future. Further, federal and state legislative and regulatorydevelopments are likely, and we expect ongoing initiatives in the United States to increase pressure on drug pricing. Such reforms could have an adverseeffect on anticipated revenues from reloxaliase and any other product candidates that we may successfully develop and for which we may obtain regulatoryapproval and may affect our overall financial condition and ability to develop product candidates. We may fail to comply with evolving European and other privacy laws. Since we conduct clinical trials in the European Economic Area (“EEA”), we are subject to additional European data-privacy laws. The General DataProtection Regulation, (EU) 2016/679 (“GDPR”) became effective on May 25, 2018, and deals with the processing of personal data and on the freemovement of such data. The GDPR imposes a broad range of strict requirements on companies subject to the GDPR, including requirements relating tohaving legal bases for processing personal information relating to identifiable individuals and transferring such information outside the EEA, including tothe United States, providing details to those individuals regarding the processing of their personal information, keeping personal information secure, havingdata processing agreements with third parties who process personal information, responding to individuals’ requests to exercise their rights in respect of theirpersonal information, reporting security breaches involving personal data to the competent national data protection authority and affected individuals,appointing data protection officers, conducting data protection impact assessments, and record-keeping. The GDPR increases substantially the penalties towhich we could be subject in the event of any non-compliance, including fines of up to 10,000,000 Euros or up to 2% of our total worldwide annual turnoverfor certain comparatively minor offenses, or up to 20,000,000 Euros or up to 4% of our total worldwide annual turnover for more serious offenses. Given thelimited enforcement of the GDPR to date, we face uncertainty as to the exact interpretation of the new requirements on our trials and we may be unsuccessfulin implementing all measures required by data protection authorities or courts in interpretation of the new law. In particular, national laws of member states of the EU are in the process of being adapted to the requirements under the GDPR, thereby implementingnational laws which may partially deviate from the GDPR and impose different obligations from country to country, so that we do not expect to operate in auniform legal landscape in the EEA. Also, as it relates to processing and transfer of genetic data, the GDPR specifically allows national laws to imposeadditional and more specific requirements or restrictions, and European laws have historically differed quite substantially in this field, leading to additionaluncertainty. Further, the impact of the impending “Brexit”, (whereby the United Kingdom is planning to leave the EEA in March of 2019), either with orwithout a “deal” is uncertain and cannot be predicted at this time. In the event we continue to conduct clinical trials in the EEA, we must also ensure that we maintain adequate safeguards to enable the transfer of personaldata outside of the EEA, in particular to the United States, in compliance with European data protection laws. We expect that we will continue to faceuncertainty as to whether our efforts to comply with our obligations under European privacy laws will be sufficient. If we are investigated by a European dataprotection authority, we may face fines and other penalties. Anype1 such investigation or charges by European data protection authorities could have anegative effect on our existing business and on our ability to attract and retain new clients or pharmaceutical partners. We may also experience hesitancy,reluctance, or refusal by European or multi-national clients or pharmaceutical partners to continue to use our products and solutions due to the potential riskexposure as a result of the current (and, in particular, future) data protection obligations imposed on them by certain data protection authorities ininterpretation of current law, including the GDPR. Such clients or pharmaceutical partners may also view any alternative approaches to compliance as beingtoo costly, too burdensome, too legally uncertain, or otherwise objectionable and therefore decide not to do business with us. Any of the foregoing couldmaterially harm our business, prospects, financial condition and results of operations 24 The success of our products may be harmed if the government, private health insurers and other third-party payers do not provide sufficient coverageor reimbursement. Our ability to commercialize our new cancer treatment systems successfully will depend in part on the extent to which reimbursement for the costs of suchproducts and related treatments will be available from government health administration authorities, private health insurers and other third-party payors. Thereimbursement status of newly approved medical products is subject to significant uncertainty. We cannot guarantee that adequate third-party insurancecoverage will be available for us to establish and maintain price levels sufficient for us to realize an appropriate return on our investment in developing newtherapies. Government, private health insurers and other third-party payors are increasingly attempting to contain healthcare costs by limiting both coverageand the level of reimbursement for new therapeutic products approved for marketing by the FDA. For example, Congress passed the Affordable Care Act in2010 which enacted a number of reforms to expand access to health insurance while also reducing or constraining the growth of healthcare spending,enhancing remedies against fraud and abuse, adding new transparency requirements for healthcare industries, and imposing new taxes on fees on healthcareindustry participants, among other policy reforms. Federal agencies, Congress and state legislatures have continued to show interest in implementing costcontainment programs to limit the growth of health care costs, including price controls, restrictions on reimbursement and other fundamental changes to thehealthcare delivery system. In addition, in recent years, Congress has enacted various laws seeking to reduce the federal debt level and contain healthcareexpenditures, and the Medicare and other healthcare programs are frequently identified as potential targets for spending cuts. New government legislation orregulations related to pricing or other fundamental changes to the healthcare delivery system as well as a government or third-party payer decision not toapprove pricing for, or provide adequate coverage or reimbursement of, our product candidates hold the potential to severely limit market opportunities ofsuch products. Accordingly, even if coverage and reimbursement are provided by government, private health insurers and third-party payors for uses of ourproducts, market acceptance of these products would be adversely affected if the reimbursement available proves to be unprofitable for health care providers. Our products may not achieve sufficient acceptance by the medical community to sustain our business. The commercial success of our products will depend upon their acceptance by the medical community and third-party payors as clinically useful, costeffective and safe. Any of our drug candidates or similar product candidates being investigated by our competitors may prove not to be effective in trial or inpractice, cause adverse events or other undesirable side effects. Our testing and clinical practice may not confirm the safety and efficacy of our productcandidates or even if further testing and clinical practice produce positive results, the medical community may view these new forms of treatment as effectiveand desirable or our efforts to market our new products may fail. Market acceptance depends upon physicians and hospitals obtaining adequatereimbursement rates from third-party payors to make our products commercially viable. Any of these factors could have an adverse effect on our business,financial condition and results of operations. The commercial potential of a drug candidate in development is difficult to predict. If the market size for a new drug is significantly smaller than weanticipate, it could significantly and negatively impact our revenue, results of operations and financial condition. It is very difficult to predict the commercial potential of product candidates due to important factors such as safety and efficacy compared to other availabletreatments, including potential generic drug alternatives with similar efficacy profiles, changing standards of care, third party payor reimbursement standards,patient and physician preferences, the availability of competitive alternatives that may emerge either during the long drug development process or aftercommercial introduction, and the availability of generic versions of our successful product candidates following approval by government health authoritiesbased on the expiration of regulatory exclusivity or our inability to prevent generic versions from coming to market by asserting our patents. If due to one ormore of these risks the market potential for a drug candidate is lower than we anticipated, it could significantly and negatively impact the revenue potentialfor such drug candidate and would adversely affect our business, financial condition and results of operations. Several of our current clinical trials are being conducted outside the United States, and the FDA may not accept data from trials conducted in foreignlocations. Several of our current clinical trials are being conducted outside the United States. Although the FDA may accept data from clinical trials conducted outsidethe United States, acceptance of these data is subject to certain conditions imposed by the FDA. For example, the clinical trial must be well designed andconducted and performed by qualified investigators in accordance with ethical principles. The trial population must also adequately represent the U.S.population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. In general,the patient population for any clinical trials conducted outside of the United States must be representative of the population for whom we intend to label theproduct in the United States. In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the data will be dependentupon its determination that the trials also complied with all applicable U.S. laws and regulations. We cannot assure you that the FDA will accept data fromtrials conducted outside of the United States. If the FDA does not accept the data from such clinical trials, it would likely result in the need for additionaltrials, which would be costly and time-consuming and delay or permanently halt our development of our product candidates. 25 We have no internal sales or marketing capability. If we are unable to create sales, marketing and distribution capabilities or enter into alliances withothers possessing such capabilities to perform these functions, we will not be able to commercialize our products successfully. We currently have no sales, marketing or distribution capabilities. We intend to market our products, if and when such products are approved forcommercialization by the FDA and foreign regulatory agencies, either directly or through other strategic alliances and distribution arrangements with thirdparties. If we decide to market our products directly, we will need to commit significant financial and managerial resources to develop a marketing and salesforce with technical expertise and with supporting distribution, administration and compliance capabilities. If we rely on third parties with such capabilitiesto market our products, we will need to establish and maintain partnership arrangements, and there can be no assurance that we will be able to enter into third-party marketing or distribution arrangements on acceptable terms or at all. To the extent that we do enter into such arrangements, we will be dependent on ourmarketing and distribution partners. In entering into third-party marketing or distribution arrangements, we expect to incur significant additional expensesand there can be no assurance that such third parties will establish adequate sales and distribution capabilities or be successful in gaining market acceptancefor our products and services. Technologies for the treatment of cancer are subject to rapid change, and the development of treatment strategies that are more effective than ourtechnologies could render our technologies obsolete. Various methods for treating cancer currently are, and in the future, are expected to be, the subject of extensive research and development. Many possibletreatments that are being researched, if successfully developed, may not require, or may supplant, the use of our technologies. The successful developmentand acceptance of any one or more of these alternative forms of treatment could render our technology obsolete as a cancer treatment method. We may not be able to hire or retain key officers or employees that we need to implement our business strategy and develop our product candidates andbusiness, including those purchased in the EGEN asset acquisition. Our success depends significantly on the continued contributions of our executive officers, scientific and technical personnel and consultants, includingthose retained in the EGEN acquisition, and on our ability to attract additional personnel as we seek to implement our business strategy and develop ourproduct candidates and businesses. Our operations associated with the EGEN acquisition are located in Huntsville, Alabama. Key employees may depart if wefail to successfully manage this additional business location or in relation to any uncertainties or difficulties of integration with Celsion. We cannotguarantee that we will retain key employees to the same extent that we and EGEN retained each of our own employees in the past, which could have anegative impact on our business, results of operations and financial condition. Our integration of EGEN and ability to operate in the fields we acquired fromEGEN may be more difficult if we lose key employees. Additionally, during our operating history, we have assigned many essential responsibilities to arelatively small number of individuals. However, as our business and the demands on our key employees expand, we have been, and will continue to be,required to recruit additional qualified employees. The competition for such qualified personnel is intense, and the loss of services of certain key personnel orour inability to attract additional personnel to fill critical positions could adversely affect our business. Further, we do not carry “key man” insurance on anyof our personnel. Therefore, loss of the services of key personnel would not be ameliorated by the receipt of the proceeds from such insurance. Our success will depend in part on our ability to grow and diversify, which in turn will require that we manage and control our growth effectively. Our business strategy contemplates growth and diversification. Our ability to manage growth effectively will require that we continue to expend funds toimprove our operational, financial and management controls, reporting systems and procedures. In addition, we must effectively expand, train and manageour employees. We will be unable to manage our business effectively if we are unable to alleviate the strain on resources caused by growth in a timely andsuccessful manner. There can be no assurance that we will be able to manage our growth and a failure to do so could have a material adverse effect on ourbusiness. 26 We face intense competition and the failure to compete effectively could adversely affect our ability to develop and market our products. There are many companies and other institutions engaged in research and development of various technologies for cancer treatment products that seektreatment outcomes similar to those that we are pursuing. We believe that the level of interest by others in investigating the potential of possible competitivetreatments and alternative technologies will continue and may increase. Potential competitors engaged in all areas of cancer treatment research in the U.S.and other countries include, among others, major pharmaceutical, specialized technology companies, and universities and other research institutions. Most ofour current and potential competitors have substantially greater financial, technical, human and other resources, and may also have far greater experiencethan do we, both in pre-clinical testing and human clinical trials of new products and in obtaining FDA and other regulatory approvals. One or more of thesecompanies or institutions could succeed in developing products or other technologies that are more effective than the products and technologies that wehave been or are developing, or which would render our technology and products obsolete and non-competitive. Furthermore, if we are permitted tocommence commercial sales of any of our products, we will also be competing, with respect to manufacturing efficiency and marketing, with companieshaving substantially greater resources and experience in these areas. We may be subject to significant product liability claims and litigation. Our business exposes us to potential product liability risks inherent in the testing, manufacturing and marketing of human therapeutic products. We presentlyhave product liability insurance limited to $10 million per incident and $10 million annually. If we were to be subject to a claim in excess of this coverage orto a claim not covered by our insurance and the claim succeeded, we would be required to pay the claim with our own limited resources, which could have asevere adverse effect on our business. Whether or not we are ultimately successful in any product liability litigation, such litigation would harm the businessby diverting the attention and resources of our management, consuming substantial amounts of our financial resources and by damaging our reputation.Additionally, we may not be able to maintain our product liability insurance at an acceptable cost, if at all. Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in amaterial disruption of our product development programs. Despite the implementation of security measures, our internal computer systems and those of our CROs and other contractors and consultants are vulnerableto damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Such events couldcause interruptions of our operations. For instance, the loss of preclinical data or data from any clinical trial involving our product candidates could result indelays in our development and regulatory filing efforts and significantly increase our costs. To the extent that any disruption or privacy or security breachwere to result in a loss of, or damage to, our data, or inappropriate disclosure of confidential or proprietary information, we could be subject to reputationalharm, monetary fines, civil suits, civil penalties or criminal sanctions and requirements to disclose the breach, and other forms of liability and thedevelopment of our product candidates could be delayed. RISKS RELATED TO OUR SECURITIES The market price of our common stock has been, and may continue to be volatile and fluctuate significantly, which could result in substantial losses forinvestors and subject us to securities class action litigation. The trading price for our common stock has been, and we expect it to continue to be, volatile. The price at which our common stock trades depends upon anumber of factors, including our historical and anticipated operating results, our financial situation, announcements of technological innovations or newproducts by us or our competitors, our ability or inability to raise the additional capital we may need and the terms on which we raise it, and general marketand economic conditions. Some of these factors are beyond our control. Broad market fluctuations may lower the market price of our common stock andaffect the volume of trading in our stock, regardless of our financial condition, results of operations, business or prospect. The closing price of our commonstock as reported on The NASDAQ Capital Market had a high price of $7.14 and a low price of $1.28 in the 52-week period ended December 31, 2017, a highprice of $3.48 and a low price of $1.35 in the 52-week period ended December 31, 2018, and a high price of $2.46 and a low price of $1.67 from January 1,2019 through March 28, 2019. Among the factors that may cause the market price of our common stock to fluctuate are the risks described in this “RiskFactors” section and other factors, including: ●results of preclinical and clinical studies of our product candidates or those of our competitors; ●regulatory or legal developments in the U.S. and other countries, especially changes in laws and regulations applicable to our product candidates; ●actions taken by regulatory agencies with respect to our product candidates, clinical studies, manufacturing process or sales and marketing terms; ●introductions and announcements of new products by us or our competitors, and the timing of these introductions or announcements; ●announcements by us or our competitors of significant acquisitions or other strategic transactions or capital commitments; ●fluctuations in our quarterly operating results or the operating results of our competitors; 27 ●variance in our financial performance from the expectations of investors; ●changes in the estimation of the future size and growth rate of our markets; ●changes in accounting principles or changes in interpretations of existing principles, which could affect our financial results; ●failure of our products to achieve or maintain market acceptance or commercial success; ●conditions and trends in the markets we serve; ●changes in general economic, industry and market conditions; ●success of competitive products and services; ●changes in market valuations or earnings of our competitors; ●changes in our pricing policies or the pricing policies of our competitors; ●changes in legislation or regulatory policies, practices or actions; ●the commencement or outcome of litigation involving our company, our general industry or both; ●recruitment or departure of key personnel; ●changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; ●actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, othercomparable companies or our industry generally; ●actual or expected sales of our common stock by our stockholders; ●acquisitions and financings, including the EGEN acquisition; and ●the trading volume of our common stock. In addition, the stock markets, in general, The NASDAQ Capital Market and the market for pharmaceutical companies in particular, may experience a loss ofinvestor confidence. Such loss of investor confidence may result in extreme price and volume fluctuations in our common stock that are unrelated ordisproportionate to the operating performance of our business, financial condition or results of operations. These broad market and industry factors maymaterially harm the market price of our common stock and expose us to securities class action litigation. Such litigation, even if unsuccessful, could be costlyto defend and divert management’s attention and resources, which could further materially harm our financial condition and results of operations. Future sales of our common stock in the public market could cause our stock price to fall. Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the marketprice of our common stock and could impair our ability to raise capital through the sale of additional equity securities. As of March 28, 2019, we had19,562,020 shares of common stock outstanding, all of which, other than shares held by our directors and certain officers, were eligible for sale in the publicmarket, subject in some cases to compliance with the requirements of Rule 144, including the volume limitations and manner of sale requirements. Inaddition, all of the shares of common stock issuable upon exercise of warrants will be freely tradable without restriction or further registration upon issuance. Our stockholders may experience significant dilution as a result of future equity offerings or issuances and exercise of outstanding options andwarrants. In order to raise additional capital or pursue strategic transactions, we may in the future offer, issue or sell additional shares of our common stock or othersecurities convertible into or exchangeable for our common stock, including the issuance of common stock in relation to the achievement, if any, ofmilestones triggering our payment of earn-out consideration in connection with the EGEN acquisition. Our stockholders may experience significant dilutionas a result of future equity offerings or issuances. Investors purchasing shares or other securities in the future could have rights superior to existingstockholders. As of March 28, 2019, we have a significant number of securities convertible into, or allowing the purchase of, our common stock, including1,593,162 shares of common stock issuable upon exercise of warrants outstanding, 3,630,747 options to purchase shares of our common stock and restrictedstock awards outstanding, and 20,652 shares of common stock reserved for future issuance under our stock incentive plan. 28 The adverse capital and credit market conditions could affect our liquidity. Adverse capital and credit market conditions could affect our ability to meet liquidity needs, as well as our access to capital and cost of capital. The capitaland credit markets have experienced extreme volatility and disruption in recent years. Our results of operations, financial condition, cash flows and capitalposition could be materially adversely affected by continued disruptions in the capital and credit markets. Our ability to use net operating losses to offset future taxable income are subject to certain limitations. On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The Tax Reform Act significantly changes U.S. tax law by,among other things, lowering corporate income tax rates, implementing a quasi-territorial tax system, providing a one-time transition toll charge on foreignearnings, creating a new limitation on the deductibility of interest expenses and modifying the limitation on officer compensation. The Tax Reform Actpermanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. We currently have significantnet operating losses (NOLs) that may be used to offset future taxable income. In general, under Section 382 of the Internal Revenue Code of 1986, asamended (the Code), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset futuretaxable income. During 2018, 2017 and years prior, we performed analyses to determine if there were changes in ownership, as defined by Section 382 of theInternal Revenue Code that would limit our ability to utilize certain net operating loss and tax credit carry forwards. We determined we experiencedownership changes, as defined by Section 382, in connection with certain common stock offerings in 2011, 2013, 2015, 2017 and 2018. As a result, theutilization of our federal tax net operating loss carry forwards generated prior to the ownership changes is limited. Future changes in our stock ownership,some of which are outside of our control, could result in an ownership change under Section 382 of the Code, which would significantly limit our ability toutilize NOLs to offset future taxable income. We have never paid cash dividends on our common stock in the past and do not anticipate paying cash dividends on our common stock in theforeseeable future. We have never declared or paid cash dividends on our common stock. We do not anticipate paying any cash dividends on our common stock in theforeseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result,capital appreciation, if any, of our common stock will be the sole source of gain for the foreseeable future for holders of our common stock. Anti-takeover provisions in our charter documents and Delaware law could prevent or delay a change in control. Our certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition that a stockholder may consider favorable byauthorizing the issuance of “blank check” preferred stock. This preferred stock may be issued by our Board of Directors on such terms as it determines,without further stockholder approval. Therefore, our Board of Directors may issue such preferred stock on terms unfavorable to a potential bidder in the eventthat our Board of Directors opposes a merger or acquisition. In addition, our Board of Directors may discourage such transactions by increasing the amount oftime necessary to obtain majority representation on our Board of Directors. Certain other provisions of our bylaws and of Delaware law may also discourage,delay or prevent a third party from acquiring or merging with us, even if such action were beneficial to some, or even a majority, of our stockholders. ITEM 1B.UNRESOLVED STAFF COMMENTS None. ITEM 2.PROPERTIES In July 2011, we entered into a lease with Brandywine Operating Partnership, L.P., a Delaware limited partnership for a 10,870 square foot premises located inLawrenceville, New Jersey in connection with the relocation of our offices from Columbia, Maryland. In late 2015, Lenox Drive Office Park LLC, purchasedthe real estate and office building and assumed the lease. Under the current terms of the lease, which was amended effective May 1, 2017 and is set to expireon September 1, 2022, we reduced the size of the premises to 7,565 square feet and are paying a monthly rent that ranges from approximately $18,900 in thefirst year to approximately $20,500 in the final year of the amendment. On February 1, 2019, we amended the current terms of the lease to increase the size ofthe premises by 2,285 square feet to 9,850 square feet and also extended the lease term by one year to September 1, 2023. In conjunction with the February 1,2019 lease amendment, we agreed to modify our one-time option to cancel the lease as of the 36th month after the May 1, 2017 lease commencement date. In connection with the Asset Purchase Agreement, in June 2014, we assumed the existing lease with another landlord for an 11,500 square foot premiseslocated in Huntsville, Alabama. In January 2018, we entered into a new 60-month lease agreement for 9,049 square feet with rent payments of approximately$18,100 per month. 29 We paid $457,321 and $502,716 in connection with our New Jersey and Alabama facility leases in 2018 and 2017, respectively. Following is a summary of the future minimum payments required under leases that have initial or remaining lease terms of one year or more as of December31, 2018:For the year ending December 31: OperatingLeases 2019 $450,430 2020 454,213 2021 457,995 2022 379,823 2023 18,098 Total minimum lease payments $1,760,559 We believe our existing facilities are suitable and adequate to conduct our business. ITEM 3.LEGAL PROCEEDINGS We are not currently a party to any material legal proceedings. ITEM 4.MINE SAFETY DISCLOSURES Not Applicable. 30 PART II ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIES Market for Our Common Stock Our common stock trades on The NASDAQ Capital Market under the symbol “CLSN”. Record Holders As of March 28, 2019, there were approximately 13,500 stockholders of record of our common stock. The actual number of stockholders may be greater thanthis number of record stockholders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and othernominees. This number of stockholders of record also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain all of our future earnings for use in theoperation of our business and to fund future growth and do not anticipate paying any cash dividends in the foreseeable future. Any future determination todeclare cash dividends will be made at the discretion of our Board of Directors, subject to applicable law, and will depend on our financial condition, resultsof operations, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant. Securities Authorized for Issuance Under Equity Compensation Plans See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matter-Equity Compensation Plan Information.” Unregistered Shares of Equity Securities None Issuer Purchases of Equity Securities None. ITEM 6.SELECTED FINANCIAL DATA Not required. ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussions should be read in conjunction with our financial statements and related notes thereto included in this Annual Report on Form 10-K. The following discussion contains forward-looking statements made pursuant to the safe harbor provisions of Section 27A of the Securities Act andSection 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These statements are based on our beliefs andexpectations about future outcomes and are subject to risks and uncertainties that could cause actual results to differ materially from anticipated results.Factors that could cause or contribute to such differences include those described under “Part I, Item 1A - Risk Factors” appearing in this Annual Report onForm 10-K and factors described in other cautionary statements, cautionary language and risk factors set forth in other documents that we file with theSecurities and Exchange Commission. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information,future events or otherwise. 31 Overview Celsion is a fully-integrated development stage oncology drug company focused on advancing a portfolio of innovative cancer treatments, includingdirected chemotherapies, DNA-mediated immunotherapy and RNA based therapies. Our lead product candidate is ThermoDox®, a proprietary heat-activatedliposomal encapsulation of doxorubicin, currently in a Phase III clinical trial for the treatment of primary liver cancer (the “OPTIMA Study”). Second in ourpipeline is GEN-1, a DNA-mediated immunotherapy for the localized treatment of ovarian cancer. We have two platform technologies providing the basis forthe future development of a range of therapeutics for difficult-to-treat forms of cancer including: Lysolipid Thermally Sensitive Liposomes, a heat sensitiveliposomal based dosage form that targets disease with known chemotherapeutics in the presence of mild heat and TheraPlas, a novel nucleic acid-basedtreatment for local transfection of therapeutic plasmids. With these technologies we are working to develop and commercialize more efficient, effective andtargeted oncology therapies that maximize efficacy while minimizing side-effects common to cancer treatments. ThermoDox ThermoDox® is being evaluated in a Phase III clinical trial for primary liver cancer, which we call the OPTIMA Study, which was initiated in 2014.ThermoDox® is a liposomal encapsulation of doxorubicin, an approved and frequently used oncology drug for the treatment of a wide range of cancers.Localized heat at hyperthermia temperatures (greater than 40° Celsius) releases the encapsulated doxorubicin from the liposome enabling highconcentrations of doxorubicin to be deposited preferentially in and around the targeted tumor. The OPTIMA Study. The OPTIMA Study represents an evaluation of ThermoDox® in combination with a first line therapy, radio frequency ablation(“RFA”), for newly diagnosed, intermediate stage HCC patients. HCC incidence globally is approximately 755,000 new cases per year and is the third largestcancer indication globally. Approximately 30% of newly diagnosed patients can be addressed with RFA alone. On February 24, 2014, we announced that the FDA provided clearance for the OPTIMA Study, which is a pivotal, double-blind, placebo-controlled Phase IIItrial of ThermoDox®, in combination with standardized RFA, for the treatment of primary liver cancer. The trial design of the OPTIMA Study is based on thecomprehensive analysis of data from an earlier clinical trial called the HEAT Study, which is described below. The OPTIMA Study is supported by ahypothesis developed from an overall survival analysis of a large subgroup of patients from the HEAT Study. The OPTIMA Study was designed with extensive input from globally recognized hepatocellular carcinoma (“HCC”) researchers and expert clinicians andafter receiving formal written consultation from the FDA. The OPTIMA Study was designed to enroll up to 550 patients globally at approximately 65 clinicalsites in the U.S, Canada, European Union (“EU”), China and other countries in the Asia-Pacific region and will evaluate ThermoDox® in combination withstandardized RFA for a minimum of 45 minutes for treating lesions three to seven centimeters, versus standardized RFA alone. The primary endpoint for thisclinical trial is overall survival (“OS”), and the secondary endpoints are progression free survival and safety. The statistical plan calls for two interim efficacyanalyses by an independent Data Monitoring Committee (“DMC”). On December 16, 2015, we announced that we had received the clinical trial application approval from the CFDA to conduct the OPTIMA Study in China.This clinical trial application approval will allow Celsion to enroll patients at up to 20 clinical sites in China. On April 26, 2016, we announced that the firstpatient in China had been enrolled in the OPTIMA Study. Results from the OPTIMA Study, if successful, will provide the basis for a global registration filingand marketing approval. On September 5, 2018, the Company announced that it reached its enrollment objective of 556 patients for the OPTIMA Study. The primary endpoint for thestudy is OS. The OPTIMA Study’s design and statistical plan incorporates two pre-planned interim efficacy analyses by the study’s DMC, and the first interimanalysis is expected to occur in the second half of 2019. The DMC’s interim analyses will evaluate safety, efficacy and futility to determine if there issignificant evidence of clinical benefit. On December 18, 2018, the Company announced that the DMC for the Company’s OPTIMA Study completed its last scheduled review of the patientsenrolled in the trial and unanimously recommended that the OPTIMA Study continue according to protocol to its final data readout. The DMC’srecommendation was based on the Committee’s assessment of safety and data integrity of all patients randomized in the trial as of October 4, 2018. The DMCreviewed study data at regular intervals throughout the patient enrollment period, with the primary responsibilities of ensuring the safety of all patientsenrolled in the study, the quality of the data collected, and the continued scientific validity of the study design. As part of its review of all 556 patientsenrolled into the trial, the DMC evaluated a quality matrix relating to the total clinical data set, confirming the timely collection of data, that all data arecurrent as well as other data collection and quality criteria. 32 Post-hoc data analysis from the Company’s earlier Phase III HEAT Study suggest that ThermoDox® may substantially improve OS, when compared to thecontrol 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 OSsweeps have been conducted since the top line progression free survival (“PFS”) data from the HEAT Study were announced in January 2013, with each dataset demonstrating substantial improvement in clinical benefit over the control group with statistical significance. On August 15, 2016, the Companyannounced 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 RFAprovided an average 54% risk improvement in OS compared to optimized RFA alone. The Hazard Ratio (“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 RFAgroup (projected to be greater than 80 months for the ThermoDox® plus optimized RFA group compared to less than 60 months projection for the optimizedRFA only group). Additional findings from this most recent analysis specific to the Chinese patient cohort of 223 patients are summarized below: ●In the population of 154 patients with a single lesion who received optimized RFA treatment for 45 minutes or more showed a 53% riskimprovement in OS (HR = 0.66) when treated with ThermoDox® plus optimized RFA. ●These data continue to support and further strengthen ThermoDox®’s potential to significantly improve OS compared to an RFA control in patientswith lesions that undergo optimized RFA treatment for 45 minutes or more. The clinical benefit seen in the intent-to-treat Chinese patient cohortfurther confirms the importance of RFA heating time as 72% of patients in this large patient cohort in China received an optimized RFA treatment. While this information should be viewed with caution since it is based on a retrospective analysis of a subgroup, we also conducted additional analyses thatfurther strengthen the evidence for the HEAT Study sub-group. We commissioned an independent computational model at the University of South CarolinaMedical School. The results indicate that longer RFA heating times correlate with significant increases in doxorubicin concentration around the RFA treatedtissue. In addition, we conducted a prospective preclinical study in 22 pigs using two different manufacturers of RFA and human equivalent doses ofThermoDox® that clearly support the relationship between increased heating duration and doxorubicin concentrations. On November 29, 2016, the Company announced the results of an independent analysis conducted by the National Institutes of Health (the “NIH”) from theHEAT Study which reaffirmed the correlation between increased RFA burn time per tumor volume and improvements in overall survival. The NIH analysis,which sought to evaluate the correlation between RFA burn time per tumor volume (min/ml) and clinical outcome, concluded that increased burn time pertumor volume significantly improved overall survival in patients treated with RFA plus ThermoDox® compared to patients treated with RFA alone. For allpatients with single lesions treated with RFA plus ThermoDox®: ●One-unit increase in RFA duration per tumor volume improved overall survival by 20% (p=0.017; n=227); ●More significant differences in subgroup of patients with RFA burn times per tumor volume greater than 2.5 minutes per ml; ●Cox multiple covariate analysis showed overall survival to be significant (p=0.038; Hazard Ratio = 0.85); and ●Burn time per tumor volume did not have a significant effect on overall survival in single lesion patients treated with RFA only. The HEAT Study. On January 31, 2013, we announced that ThermoDox® in combination with radio frequency ablation (“RFA”) did not meet the primaryendpoint of progression free survival (“PFS”) for the 701-patient clinical trial in patients with hepatocellular carcinoma (HCC), also known as primary livercancer (the HEAT Study). We determined, after conferring with the HEAT Study’s independent DMC, that the HEAT Study did not meet the goal ofdemonstrating persuasive evidence of clinical effectiveness, that being a clinically meaningful improvement in progression free survival (PFS), that couldform the basis for regulatory approval. In the trial, ThermoDox® was well-tolerated with no unexpected serious adverse events. Following the announcementof the HEAT Study results, we continued to follow patients for overall survival (OS), the secondary endpoint of the HEAT Study. We have conducted acomprehensive analysis of the data from the HEAT Study to assess the future strategic value and development strategy for ThermoDox®. Findings from the HEAT Study post-hoc data analysis suggest that ThermoDox® may substantially improve overall survival, when compared to the controlgroup, 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 havebeen conducted since the top line PFS data from the HEAT Study were announced in January 2013, with each data set demonstrating progressiveimprovement in clinical benefit and statistical significance. On August 15, 2016, the Company announced the most recent post-hoc OS analysis from theHEAT 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),the combination of ThermoDox® and optimized RFA provided an average 54% risk improvement in OS compared to optimized RFA alone. The HazardRatio at this latest OS 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 translatesinto a two-year survival benefit over the optimized RFA group (projected to be greater than 80 months for the ThermoDox® plus optimized RFA groupcompared to less than 60 months projection for the optimized RFA only group). These data continue to strongly suggest that ThermoDox® may significantlyimprove Overall Survival compared to an RFA control in patients whose lesions undergo optimized RFA treatment for 45 minutes or more as well as supportthe protocol for our Phase III OPTIMA Study as described below. 33 Findings from the HEAT Study post-hoc data analysis have shown to be well balanced and not diminished in anyway by other factors. Supplementarycomputational modeling and prospective preclinical animal studies have shown additional support the relationship between heating duration and clinicaloutcomes. These data have been presented, without objection, at multiple scientific and medical conferences in 2013 through 2016 by key HEAT Studyinvestigators and leading liver cancer experts. On October 16, 2017, the Company announced the publication of the manuscript, “Phase III HEAT STUDY Adding Lyso-Thermosensitive LiposomalDoxorubicin to Radiofrequency Ablation in Patients with Unresectable Hepatocellular Carcinoma Lesions,” in Clinical Cancer Research, a peer-reviewedmedical journal. The article reports on one of the largest controlled studies in hepatocellular carcinoma. It provides a comprehensive review of ThermoDox ®for the treatment of primary liver cancer. The article details learnings from the Company’s 701 patient HEAT Study and includes results from computersimulation studies and includes findings from a post hoc subgroup analysis, all of which are consistent with each other and which - when examined together -suggests a clearer understanding of a key ThermoDox® heat-based mechanism of action: the longer the target tissue is heated, the greater the doxorubicintissue concentration. Additionally, the article explores a new hypothesis prompted by these findings: ThermoDox® when used in combination withRadiofrequency Ablation (RFA) standardized to a minimum dwell time of 45 minutes (sRFA > 45 minutes), may increase the overall survival (OS) of patientswith HCC. The lead author is Won Young Tak, M.D., Ph.D., Professor Internal Medicine, Gastroenterology & Hepatology, Kyungpook National UniversityHospital Daegu, Republic of Korea, and there are 22 HEAT Study co-authors along with Nicholas Borys, M.D., Celsion’s senior vice president and chiefmedical officer. IMMUNO-ONCOLOGY Program On June 20, 2014, we completed the acquisition of substantially all of the assets of EGEN, a private company located in Huntsville, Alabama. Pursuant to theAsset Purchase Agreement, CLSN Laboratories acquired all of EGEN’s right, title and interest in and to substantially all of the assets of EGEN, including cashand 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 andthe first drug developed from it 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 celltransfection for double-stranded DNA plasmids and large therapeutic RNA segments such as mRNA. There are two components of the TheraPlas system, aplasmid DNA or mRNA payload encoding a therapeutic protein, and a delivery system. The delivery system is designed to protect the DNA/RNA fromdegradation and promote trafficking into cells and through intracellular compartments. We designed the delivery system of TheraPlas by chemicallymodifying the low molecular weight polymer to improve its gene transfer activity without increasing toxicity. We believe that TheraPlas is a viablealternative to current approaches to gene delivery due to several distinguishing characteristics, including enhanced molecular versatility that allows forcomplex modifications to improve activity and safety. The design of TheraPlas delivery system is based on molecular functionalization of polyethyleneimine (PEI), a cationic delivery polymer with a distinctability to escape from the endosomes due to heavy protonation. The transfection activity and toxicity of PEI is tightly coupled to its molecular weighttherefore the clinical application of PEI is limited. We have used molecular functionalization strategies to improve the activity of low molecular weight PEIswithout augmenting their cytotoxicity. In one instance, chemical conjugation of a low molecular weight branched BPEI1800 with cholesterol andpolyethylene 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 followingintraperitoneal or subcutaneous administration of DNA/PPC nanocomplexes showed DNA delivery localized primarily at the injection site with only smallamount escaping into systemic circulation. PPC is the delivery component of our lead TheraPlas product, GEN-1, which is in clinical development for thetreatment ovarian cancer and in preclinical development for the treatment of glioblastoma. The PPC manufacturing process has been scaled up from benchscale (1-2 g) to 0.6Kg, and several cGMP lots have been produced with reproducible quality. TheraPlas has emerged as a viable alternative to current approaches due to several distinguishing characteristics such as strong molecular versatility thatallows for complex modifications to improve activity and safety with little difficulty. The biocompatibility of these polymers reduces the risk of adverseimmune response, thus allowing for repeated administration. Compared to naked DNA or cationic lipids, TheraPlas is generally safer, more efficient, and costeffective. We believe that these advantages place Celsion in strong position to capitalize on this technology. 34 GEN-1 GEN-1 is a DNA-based immunotherapeutic product for the localized treatment of ovarian and brain cancers 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 astandard chemotherapy drug, which can potentially achieve better clinical outcomes than with chemotherapy alone. We believe that increases in IL-12concentrations at tumor sites for several days after a single administration could create a potent immune environment against tumor activity and that a directkilling 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 are based on the following: ●Loco-regional production of the potent cytokine IL-12 avoids toxicities and poor pharmacokinetics associated with systemic delivery ofrecombinant IL-12; ●Persistent local delivery of IL-12 lasts up to one week and dosing can be repeated; ●Ideal for long-term maintenance therapy. 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 inpart 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 withan estimated 14,000 deaths. Mortality rates for ovarian cancer declined very little in the last forty years due to the unavailability of detection tests andimproved treatments. Most women with ovarian cancer are not diagnosed until Stages III or IV, when the disease has spread outside the pelvis to the abdomenand areas beyond causing swelling and pain, where the five-year survival rates are 25 - 41 percent and 11 percent, respectively. First-line chemotherapyregimens are typically platinum-based combination therapies. Although this first line of treatment has an approximate 80 percent response rate, 55 to 75percent of women will develop recurrent ovarian cancer within two years and ultimately will not respond to platinum therapy. Patients whose cancer recurs orprogresses after initially responding to surgery and first-line chemotherapy have been divided into one of the two groups based on the time from completionof platinum therapy to disease recurrence or progression. This time period is referred to as platinum-free interval. The platinum-sensitive group has aplatinum-free interval of longer than six months. This group generally responds to additional treatment with platinum-based therapies. The platinum-resistantgroup 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 to20 percent with median overall survival of eleven to twelve months. Immunotherapy is an attractive novel approach for the treatment of ovarian cancerparticularly since ovarian cancers are considered immunogenic tumors. IL-12 is one of the most active cytokines for the induction of potent anti-cancerimmunity acting through the induction of T-lymphocyte and natural killer cell proliferation. The precedence for a therapeutic role of IL-12 in ovarian canceris based on epidemiologic and preclinical data. GEN-I OVATION Study. In February 2015, we announced that the FDA accepted, without objection, the Phase I dose-escalation clinical trial of GEN-1 incombination with the standard of care in neo-adjuvant ovarian cancer (the “OVATION Study”). On September 30, 2015, we announced enrollment of the firstpatient in the OVATION Study. The OVATION Study was designed to (i) identify a safe, tolerable and potentially therapeutically active dose of GEN-1 byrecruiting and maximizing an immune response; (ii) to enroll three to six patients per dose level and will evaluate safety and efficacy and (iii) attempt todefine an optimal dose for a follow-on Phase I/II study. In addition, the OVATION Study establishes a unique opportunity to assess how cytokine-basedcompounds such as GEN-1, directly affect ovarian cancer cells and the tumor microenvironment in newly diagnosed patients. The study was designed tocharacterize 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 primarysite 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 Study at four clinical sites at the University of Alabama at Birmingham, Oklahoma University Medical Center, WashingtonUniversity in St. Louis and the Medical College of Wisconsin. During 2016 and 2017, we announced data from the first fourteen patients in the OVATIONStudy, who completed treatment. 35 On October 3, 2017, we announced final clinical and translational research data from the OVATION Study, a Phase Ib dose escalating clinical trial combiningGEN-1 with the standard of care for the treatment of newly-diagnosed patients with advanced Stage III/IV ovarian cancer who will undergo neoadjuvantchemotherapy followed by interval debulking surgery. Key translational research findings from all evaluable patients are consistent with the earlier reports from partial analysis of the data and are summarizedbelow: ●The intraperitoneal treatment of GEN-1 in conjunction with neoadjuvant chemotherapy resulted in dose dependent increases in IL-12 andInterferon-gamma (IFN-γ) 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-12based immune mechanism; ●Consistent with the previous partial reports, the effects observed in the IHC analysis were pronounced decreases in the density ofimmunosuppressive 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 tumormicroenvironment from immunosuppressive to pro-immune stimulatory following treatment with GEN-1. An increase in CD8+ toimmunosuppressive T-cell populations is a leading indicator and believed to be a good predictor of improved overall survival; 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 tomore 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 Study. GEN-1 plus standardchemotherapy produced positive clinical results, with no dose limiting toxicities and positive dose dependent efficacy signals which correlate well withpositive 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 andtwo patients demonstrated stable disease, as measured by RECIST criteria. This translates to a 100% disease control rate and an 86% objectiveresponse rate (“ORR”). Of the five patients treated in the highest dose cohort, there was a 100% ORR with one complete response and four partialresponses; ●Fourteen patients had successful resections of their tumors, with nine patients (64%) having a complete tumor resection (“R0”), which indicates amicroscopically margin-negative resection in which no gross or microscopic tumor remains in the tumor bed. Seven out of eight (88%) patients inthe highest two dose cohorts experienced a R0 surgical resection. All five patients treated at the highest dose cohort experienced a R0 surgicalresection; ●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 monitorcertain cancers during and after treatment. CA-125 is present in greater concentrations in ovarian cancer cells than in other cells; and On March 2, 2019, the Company announced final PFS results from the OVATION Study. Median progression-free survival (PFS) in patients treated perprotocol (n=14) was 21 months and was 17.1 months for the intent-to-treat population (n=18) for all dose cohorts, including three patients who dropped outof 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 StageIII/IV ovarian cancer undergoing NAC, the disease progresses within about 12 months on average. The results from the OVATION Study support continuedevaluation of GEN-1 based on promising tumor response, as reported in the PFS data, and the ability for surgeons to completely remove visible tumor atdebulking surgery. GEN-1 was well tolerated and no dose-limiting toxicities were detected. Intraperitoneal administration of GEN-1 was feasible with broadpatient acceptance. GEN-1 OVATION 2 Study. The Company held an Advisory Board Meeting on September 27, 2017 with the clinical investigators and scientific expertsincluding 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 Phase IB OVATION 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. Theprotocol 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 12 patient Phase I portion of the study will be followed by a continuation at the selected dose in up to 118 patient randomized Phase II study. 36 The study protocol was unanimously supported by an expert medical advisory board and lead investigators from the Phase IB OVATION Study and issummarized below: ●Open label, 1:1 randomized design; ●Enrollment up to 130 patients with Stage III/IV ovarian cancer patients at ten U.S. centers; and ●Primary endpoint of improvement in PFS comparing GEN-1 with neoadjuvant chemotherapy versus neoadjuvant chemotherapy alone. On September 6, 2018, the Company announced it began dosing patients in the OVATION 2 Study. Acquisition of EGEN Assets On June 20, 2014, we completed the acquisition of substantially all of the assets of EGEN, which has changed its company name to EGWU, Inc. after theclosing of the acquisition, pursuant to an asset purchase agreement (the “Asset Purchase Agreement”) dated as of June 6, 2014, by and between EGEN andCelsion. We acquired all of EGEN’s right, title and interest in and to 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. In addition, CLSN Laboratories assumed certain specified liabilities of EGEN, including the liabilities arisingout of the acquired contracts and other assets relating to periods after the closing date. The total purchase price for the asset acquisition is up to $44.4 million,including potential future earnout payments of up to $30.4 million contingent upon achievement of certain earnout milestones set forth in the Asset PurchaseAgreement. At the closing, we paid approximately $3.0 million in cash after the expense adjustment and issued 193,728 shares of our common stock toEGEN. The shares of common stock were issued in a private transaction exempt from registration under the Securities Act, pursuant to Section 4(2) thereof. Inaddition, the Company issued the Holdback Shares on June 16, 2017. Our obligations to make the earnout payments will terminate on the seventh anniversary of the closing date. In the acquisition, we purchased GEN-1, a DNA-based immunotherapy for the localized treatment of ovarian and brain cancers, and two platform technologies for the development of treatments for thosesuffering with difficult-to-treat forms of cancer, novel nucleic acid-based immunotherapies and other anti-cancer DNA or RNA therapies, including TheraPlasand TheraSilence. At September 30, 2017 and 2018, after the Company’s annual assessments of the totality of the events that could impair IPR&D, the Company determinedcertain IPR&D assets related to the development of its GBM product candidate may be impaired. To arrive at this determination, the Company assessed thestatus of studies in GBM conducted by its competitors and the Company’s strategic commitment of resources to its studies in primary liver cancer andovarian cancer. The Company estimated the fair value of the IPR&D related to GBM at September 30, 2017 and 2018 using the MPEEM. After its assessmenton September 30, 2017, the Company concluded that the GBM asset, valued at $9.4 million, was partially impaired and wrote down the GBM asset to $6.9million on September 30, 2017, incurring a non-cash charge of $2.5 million in the third quarter of 2017. After its assessment on September 30, 2018, theCompany concluded that the GBM asset, valued at $6.9 million, was partially impaired and wrote down the GBM asset to $2.4 million on September 30,2018, incurring a non-cash charge of $4.5 million in the third quarter of 2018. As no other indicators of impairment existed during the 2018, the Company concluded none of the other IPR&D assets were impaired at during 2018. 37 Covenant Not to Compete (CNTC) Pursuant to the EGEN Purchase Agreement, EGEN provided certain covenants (“Covenant Not To Compete”) to the Company whereby EGEN agreed, duringthe period ending on the seventh anniversary of the closing date of the acquisition on June 20, 2014, not to enter into any business, directly or indirectly,which competes with the business of the Company nor will it contact, solicit or approach any of the employees of the Company for purposes of offeringemployment. Business Plan As a clinical stage biopharmaceutical company, our business and our ability to execute our strategy to achieve our corporate goals are subject to numerousrisks and uncertainties. Material risks and uncertainties relating to our business and our industry are described in “Part I, Item 1A. Risk Factors” in thisAnnual Report on Form 10-K. As of December 31, 2018, we had $27.7 million dollars in cash and short-term investments including interest receivable. Given our development plans, weanticipate cash resources will be sufficient to fund our operations into the third quarter of 2020. The Company has approximately $31 million availablecollectively for future sale of equity securities under a common stock purchase agreement with Aspire Capital Fund, LLC and a common stock salesagreement with JonesTrading International Services LLC. Other than these two facilities that provide us the ability to sell equity securities in the future, wehave no other committed sources of additional capital and there is uncertainty whether additional funding will be available when needed on terms that willbe acceptable to it, or at all. If the Company would not be able to obtain financing when needed, it could be unable to carry out the business plan and mayhave to significantly limit its operations and its business and its financial condition and results of operations could be materially harmed. Financing Overview Equity, Debt and Other Forms of Financing As more fully discussed in Note 9 of the Financial Statement included in the Form 10K, during the fourth quarter of 2018, the Company received eligibilityfrom the New Jersey Economic Development Authority to sell, and did sell, $11.1 million of its unused New Jersey net operating losses under theTechnology Business Tax Certificate Program, receiving $10.4 million of non-dilutive financing in the process. During 2017 and 2018, we issued a total of 17.3 million shares of common stock in the following equity transactions for an aggregate $44.1 million in grossproceeds. In June 2018, we entered a $10 million loan facility with Horizon Technology Finance Corporation (“Horizon”). ●The Company received gross proceeds of $22.0 million from the exercise of warrants to purchase approximately 7.6 million shares of common stockin 2017. ●On October 27, 2017, the Company entered into the Underwriting Agreement with the Underwriter, relating to the issuance and sale in the October2017 Underwritten Offering of 2,640,000 shares of common stock of the Company and warrants to purchase an aggregate of 1,320,000 shares ofcommon stock of the Company. Each share of common stock was sold together with 0.5 warrants (the “Investor Warrants”), each whole InvestorWarrant being exercisable for one share of common stock, at an offering price of $2.50 per share and related Investor Warrants. Pursuant to the termsof the Underwriting Agreement, the Underwriter has agreed to purchase the shares and related Investor Warrants from the Company at a price of$2.325 per share and related Investor Warrant. Each Investor Warrant is exercisable six months from the date of issuance. The Investor Warrants havean exercise price of $3.00 per whole share and expire five years from the date first exercisable. The Company received $6.6 million of gross proceedsfrom the sale of the Shares and Investor Warrant. The October 2017 Underwritten Offering closed on October 31, 2017. ●On July 6, 2017, the Company entered into a securities purchase agreement with several investors, pursuant to which the Company agreed to issueand sell, in a registered direct offering, an aggregate of 2,050,000 shares of common stock of the Company at an offering price of $2.07 per share forgross proceeds of $4.2 million before the deduction of the placement agent fee and offering expenses. In addition, the Company sold Pre-FundedSeries CCC Warrants to purchase 385,000 shares of common stock (and the shares of common stock issuable upon exercise of the Pre-Funded SeriesCCC Warrants), in lieu of shares of common stock to the extent that the purchase of common stock would cause the beneficial ownership of thePurchaser, together with its affiliates and certain related parties, to exceed 9.99% of our common stock. The Pre-Funded Series CCC Warrants weresold at an offering price of $2.06 per share for gross proceeds of $0.8 million, are immediately exercisable for $0.01 per share of common stock anddo not have an expiration date. As of August 11, 2017, the Prefunded Series CCC Warrants were fully exercised. In a concurrent private placement,the Company agreed to issue to each investor, for each share of common stock and pre-funded warrant purchased in the offering, a Series AAAWarrant and Series BBB Warrant, each to purchase one share of common stock. The Series AAA Warrants are initially exercisable six monthsfollowing issuance and terminate five and one-half years following issuance. The Series AAA Warrants have an exercise price of $2.07 per share andare exercisable to purchase an aggregate of 2,435,000 shares of common stock. The Series BBB Warrants are immediately exercisable followingissuance and terminate twelve months following issuance. The Series BBB Warrants have an exercise price of $4.75 per share and are exercisable topurchase an aggregate of 2,435,000 shares of common stock. Subject to limited exceptions, a holder of a Series AAA and Series BBB Warrant willnot have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 9.99% of thenumber of shares of common stock outstanding immediately after giving effect to such exercise. 38 ●In the February 2017 Public Offering, the Company entered into a securities purchase agreement whereby it sold an aggregate of 1,384,705 shares ofcommon stock of the Company at an offering price of $3.22 per share. In addition, the Company sold Series AA Warrants to purchase up to1,177,790 shares of common stock and Pre-Funded Series BB Warrants to purchase up to 185,713 shares of common stock. The Series AA Warrantshave an exercise price of $3.22 per share, have a five-year life and are immediately exercisable. The Pre-Funded Series BB Warrants were offered at$3.08 per share, are immediately exercisable for $0.14 per share of common stock, do not have an expiration date and were issued in lieu of shares ofcommon stock to the extent that the purchase of common stock would cause the beneficial ownership of the purchaser of such shares, together withits affiliates and certain related parties, to exceed 9.99% of our common stock. The Company received approximately $5.0 million in gross proceedsbefore the deduction of the placement agent fees and offering expenses (excluding any proceeds from the exercise of the warrants) in the February2017 Public Offering. During the first quarter of 2017, all 185,713 of the Series BB Pre-Funded warrants were exercised in full. ●On June 27, 2018, the Company entered into the Horizon Credit Agreement with Horizon that provided $10 million in new capital. The Companydrew down $10 million upon closing of the Horizon Credit Agreement on June 27, 2018. The Company anticipates that it will use the fundingprovided under the Horizon Credit Agreement for working capital and advancement of its product pipeline. The obligations under the HorizonCredit Agreement are secured by a first-priority security interest in substantially all assets of Celsion other than intellectual property assets. Theobligations will bear interest at a rate calculated based on one-month LIBOR plus 7.625%. Payments under the loan agreement are interest only forthe first twenty-four (24) months after loan closing, followed by a 24-month amortization period of principal and interest through the scheduledmaturity date. ●On August 31, 2018, we entered into the Aspire Purchase Agreement with Aspire Capital Fund which provides that, upon the terms and subject tothe conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $15.0 million of shares of theCompany’s common stock over the 24-month term of the Aspire Purchase Agreement. On October 12, 2018, the Company filed with the SEC aprospectus supplement to the 2018 Shelf Registration Statement registering all of the shares of common stock that may be offered to Aspire Capitalfrom time to time. The timing and amount of sales of the Company’s common stock to Aspire Capital. Aspire Capital has no right to require anysales by the Company but is obligated to make purchases from the Company as directed by the Company in accordance with the PurchaseAgreement. There are no limitations on use of proceeds, financial or business covenants, restrictions on future fundings, rights of first refusal,participation rights, penalties or liquidated damages in the Purchase Agreement. In consideration for entering into the Purchase Agreement,concurrently with the execution of the Purchase Agreement, the Company issued to Aspire Capital 164,835 Commitment Shares. The AspirePurchase Agreement may be terminated by the Company at any time, at its discretion, without any cost to the Company. Any proceeds from theCompany receives under the Aspire Purchase Agreement are expected to be used for working capital and general corporate purposes. During 2018and as of December 31, 2018, the Company sold and issued an aggregate of 100,000 shares under the Purchase Agreement, receiving approximately$0.2 million. ●We were a party to a Controlled Equity OfferingSM Sales Agreement (ATM) dated as of February 1, 2013 with Cantor Fitzgerald & Co., pursuant towhich we may sell additional shares of our common stock having an aggregate offering price of up to $25 million through “at-the-market” equityofferings from time to time. From February 1, 2013 through December 31, 2016, the Company sold and issued an aggregate of 105,681 shares ofcommon stock under the ATM, receiving approximately $7.4 million in net proceeds. During 2017, the Company sold 1,221,348 shares of commonstock under the ATM, receiving approximately $3.9 million in net proceeds. During 2018, the Company sold 457,070 shares of common stockunder the ATM, receiving approximately $1.2 million in net proceeds. On October 10, 2018, the Company delivered notice to Cantor terminatingthe ATM effective as of October 20, 2018. From February 2013 through the date of termination, the Company sold 1,784,396 shares of CommonStock under the Sales Agreement generating gross proceeds of $12.8 million. The Company has no further obligations under the Sales Agreement. ●On October 29, 2018, the Company and certain investors holding warrants to purchase 1.6 million shares collectively of the Company’s commonstock received in the February 27, 2017 Public Offering and the October 2017 Underwritten Offering, entered into warrant exchange agreementswhereby the Company issued 820,714 shares collectively of common stock to these investors in exchange for the warrants. After the warrantexchange, warrants outstanding totaled 1.6 million with a weighted average exercise price of $5.75 per share. Approximately 1.2 million of theseoutstanding warrants with a strike price of $6.20 per share will expire on April 4, 2019. 39 ●On December 4, 2018, the Company entered into a new Capital on DemandTM Sales Agreement (the “Capital on Demand Agreement”) withJonesTrading Institutional Services LLC, as sales agent (“JonesTrading”), pursuant to which the Company may offer and sell, from time to time,through JonesTrading shares of Common Stock having an aggregate offering price of up to $16.0 million. The Company intends to use the netproceeds from the offering, if any, for general corporate purposes, including research and development activities, capital expenditures and workingcapital. The Company is not obligated to sell any Common Stock under the Capital on Demand Agreement and, subject to the terms and conditionsof the Capital on Demand Agreement, JonesTrading will use commercially reasonable efforts, consistent with its normal trading and sales practicesand applicable state and federal law, rules and regulations and the rules of The NASDAQ Capital Market, to sell Common Stock from time to timebased upon Celsion’s instructions, including any price, time or size limits or other customary parameters or conditions the Company may impose.Under the Capital on Demand Agreement, JonesTrading may sell Common Stock by any method deemed to be an “at the market offering” as definedin Rule 415 promulgated under the Securities Act of 1933, as amended. The Capital on Demand Agreement will terminate upon the earlier of (i) thesale of all shares of our common stock subject to the Sales Agreement, and (ii) the termination of the Capital on Demand Agreement by JonesTradingor Celsion. The Capital on Demand Agreement may be terminated by JonesTrading or the Company at any time upon 10 days’ notice to the otherparty, or by JonesTrading at any time in certain circumstances, including the occurrence of a material adverse change in the Company. TheCompany has not sold any shares under the Capital on Demand Agreement. On June 20, 2014, we completed the acquisition of substantially all the assets of EGEN, Inc. At the closing, we paid approximately $3.0 million in cash andissued 193,728 shares of its common stock to EGEN. In addition, 47,862 shares of common stock were issuable to EGEN pending satisfactory resolution ofany post-closing adjustments of expenses and EGEN’s indemnification obligations under the EGEN Purchase Agreement. These shares were issued on June16, 2017. In November 2013, the Company entered into a loan agreement with Hercules Technology Growth Capital, Inc. (Hercules) which permits up to $20 million incapital to be distributed in multiple tranches (the Hercules Credit Agreement). The Company drew the first tranche of $5 million upon closing of the HerculesCredit Agreement in November 2013 and used approximately $4 million of the proceeds to repay the outstanding obligations under its loan agreement withOxford Finance LLC and Horizon Technology Finance Corporation as discussed further below. On June 10, 2014, the Company closed the second $5 milliontranche under the Hercules Credit Agreement. The proceeds were used to fund the $3.0 million upfront cash payment associated with Celsion’s acquisition ofEGEN, as well as the Company’s transaction costs associated with the EGEN acquisition. Upon the closing of this second tranche, the Company has drawndown a total of $10 million under the Hercules Credit Agreement. The obligations under the Hercules Credit Agreement are in the form of securedindebtedness bearing interest at a calculated prime-based variable rate (11.25% per annum since inception through December 17, 2015, 11.50% fromDecember 18, 2015 through December 15, 2016 and 11.75% since). Payments under the loan agreement were interest only for the first twelve months afterloan closing, followed by a 30-month amortization period of principal and interest through June 1, 2017, at which time this loan was paid in full. Please refer to Note 2 of the Financial Statements contained in this Form 10-K. Also refer to Item IA, Risk Factors, including, but not limited to, “We willneed to raise substantial additional capital to fund our planned future operations, and we may be unable to secure such capital without dilutive financingtransactions. If we are not able to raise additional capital, we may not be able to complete the development, testing and commercialization of our productcandidates.” Critical Accounting Policies and Estimates Our financial statements, which appear at Item 8 to this Annual Report on Form 10-K, have been prepared in accordance with accounting principles generallyaccepted in the U.S., which require that we make certain assumptions and estimates and, in connection therewith, adopt certain accounting policies. Oursignificant accounting policies are set forth in Note 1 to our financial statements. Of those policies, we believe that the policies discussed below may involvea higher degree of judgment and may be more critical to an accurate reflection of our financial condition and results of operations. 40 In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09 “Revenue from Contracts with Customers (Topic 606),” which supersedesall existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when ittransfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. ASU2014 - 09 was originally going to be effective on January 1, 2017; however, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic606) - Deferral of the Effective Date,” which deferred the effective date of ASU 2014-09 by one year to January 1, 2018. In March 2016, the FASB issued ASUNo. 2016 - 8, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations. The amendments in this ASU do not change thecore principle of ASU No. 2014 - 09 but the amendments clarify the implementation guidance on reporting revenue gross versus net. The effective date forthe amendments in this ASU is the same as the effective date of ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10, “Revenue fromContracts with Customers (Identifying Performance Obligations and Licensing),” to clarify the implementation guidance on identifying performanceobligations and licensing (collectively “the new revenue standards”). The new revenue standards allow for either “full retrospective” adoption, meaning thestandard is applied to all periods presented, or “modified retrospective” adoption, meaning the standard is applied only to the most current period presentedin the financial statements. The new revenue standard became effective for us on January 1, 2018. Under the new revenue standards, we recognize revenuefollowing a five-step model prescribed under ASU No. 2014-09; (i) identify contract(s) with a customer; (ii) identify the performance obligations in thecontract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenueswhen (or as) we satisfy the performance obligation. As further described in Note 16, the Company currently has only one contract subject to the new revenuestandards. After performance of the five-step model discussed above, the Company concluded the adoption of the new revenue standards as of January 1,2018 did not change our revenue recognition policy nor does it have an effect on our financial statements using either the full retrospective or the modifiedretrospective adoption methods. Stock-Based Compensation In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation, which simplifies various aspects of accounting for share-basedpayments. The areas for simplification involve several aspects of the accounting for share-based payment transactions, including the income taxconsequences and classification on the statements of cash flows. The Company adopted the standard during the first quarter of 2017 and has elected torecognize the effect of forfeitures in compensation cost when they occur. There was no retrospective impact to the consolidated financial statements,including the consolidated statements of cash flows as a result of the adoption of this standard. In-Process Research and Development, Other Intangible Assets and Goodwill During 2014, the Company acquired certain assets of EGEN, Inc. As more fully described in Note 5 to our Consolidated Financial Statements, the acquisitionwas accounted for under the acquisition method of accounting which required the Company to perform an allocation of the purchase price to the assetsacquired and liabilities assumed. Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets andliabilities based on their estimated fair values as of the acquisition date. We review our financial reporting and disclosure practices and accounting policies on an ongoing basis to ensure that our financial reporting and disclosuresystem provides accurate and transparent information relative to the current economic and business environment. As part of the process, the Companyreviews the selection, application and communication of critical accounting policies and financial disclosures. The preparation of our financial statements inconformity with accounting principles generally accepted in the U.S. requires that our management make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. We review our estimates and the methods by which they are determined on an ongoing basis. However, actualresults could differ from our estimates. Results of Operations Comparison of Fiscal Year Ended December 31, 2018 and Fiscal Year Ended December 31, 2017. For the year ended December 31, 2018, our net loss was $11.9 million compared to a net loss of $20.4 million for the year ended December 31, 2017. In thefourth quarter of 2018, the Company recorded a $10.4 million tax benefit from the sale of its New Jersey net operating losses under the Technology BusinessTax Certificate Program. With $27.7 million in cash and investments including interest receivable on hand at December 31, 2018, the Company believes ithas sufficient capital resources to fund its operations into the third quarter of 2020. Technology Development and 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 thefirst quarter 2013 has been recorded to deferred revenue and will be amortized over the ten-year term of the agreement; therefore, we recognized revenue of$500,000 in each of the years 2018 and 2017. 41 Research and Development Expenses Research and development (“R&D”) expenses decreased to $11.9 million in 2018 compared to $13.1 million in 2017. Costs associated with the Phase IIIOPTIMA Study were $4.7 million in 2018 compared to $6.7 million in 2017. During the third quarter of 2018, the Company announced it had completedenrollment in the OPTIMA Study. This decrease in R&D expenses resulted from cost concessions negotiated with our lead contract research organization(CRO) for the OPTIMA Study as well as lower monthly CRO fees and program expenses after completion of enrollment of this Phase III study during the thirdquarter of 2018. Costs associated with the OVATION studies were $0.4 million in 2018 compared to $0.2 million in 2017. The Company announced thecompletion of enrollment of all cohorts of the OVATION I Study in 2017. The Company initiated the OVATION 2 Study during 2018. Other clinical costsremained relatively unchanged at $2.5 million in 2018 and compared to $2.4 million in 2017. In 2018, other clinical costs included an increase of $0.5million in non-cash stock compensation expense compared to the same period of 2017. In early 2017, the Company executed a cost reduction plan byreducing the costs associated with the support of the ThermoDox® studies in Europe. The majority of the $0.5 million in 2017 costs were realized in the firstquarter of 2017. Costs associated with the production of ThermoDox to support the OPTIMA Study remained relatively unchanged at $1.1 million in 2018and 2017. The Company expects the clinical supply costs associated with supporting the OPTIMA Study to be significantly reduced starting in 2019. Costsassociated with CLSN Laboratories (which includes research and development activities for GEN-1, TheraPlas and TheraSilence) were $2.8 million in 2018compared to $2.3 million in 2017 as the Company expanded its manufacturing capabilities and reduced the costs to manufacture GEN-1 for its plannedclinical study requirements beyond 2018. Other research and development costs related to preclinical operations and regulatory affairs were $0.3 million in2018 compared to $0.2 million in 2017. General and Administrative Expenses General and administrative expenses increased to $9.7 million in 2018 compared to $5.9 million in 2017. This increase is primarily attributable to (i) higherprofessional fees of approximately $0.7 million, (ii) higher travel expenses of $0.1 million and (iii) higher compensation expenses totaling $2.9 million.Compensation expenses include costs associated with additional personnel additions as well as an increase of $2.3 million related to non-cash stock optioncompensation expense in 2018 compared to 2017. Change in Earn-out Milestone Liability The total aggregate purchase price for the acquisition of assets from EGEN included potential future earn-out payments contingent upon achievement ofcertain milestones. The difference between the aggregate $30.4 million in future earn-out payments and the $13.9 million included in the fair value of theacquisition consideration at June 20, 2014 was based on the Company’s risk-adjusted assessment of each milestone and utilizing a discount rate based on theestimated time to achieve the milestone. These milestone payments are fair valued at the end of each quarter and any change in their value is recognized inthe condensed consolidated financial statements. In connection with the write down of the IPR&D asset mentioned below, the Company concluded there was a reduced probability of payments of the earn-outmilestones associated with the GBM asset as of September 30, 2018 and reduced the earnout milestone at that time. As of December 31, 2018, the Companyfair valued these milestones at $8.9 million and recognized a non-cash benefit of $3.6 million in 2018 as a result of the change in the fair value of thesemilestones from $12.5 million at December 31, 2017. In connection with the write down of the IPR&D asset mentioned above, the Company concluded there was a reduced probability of payments of the earn-outmilestones associated with the GBM asset as of September 30, 2017 and reduced the earnout milestone at that time. As of December 31, 2017, the Companyfair valued these milestones at $12.5 million and recognized a non-cash benefit of $0.7 million in 2017 as a result of the change in the fair value of thesemilestones from $13.2 million at December 31, 2016. Impairment of IPR&D After our annual assessment of the totality of the events that could impair IPR&D at September 30, 2018, the Company determined certain IPR&D assetsrelated to the development of its GBM product candidate may be impaired. To arrive at this determination, the Company assessed the status of studies inGBM conducted by its competitors and the Company’s strategic commitment of resources to its studies in primary liver cancer and ovarian cancer. TheCompany concluded that the GBM asset, valued at $6.9 million, was partially impaired and wrote down the GBM asset to $2.5 million incurring a non-cashcharge of $4.5 million in the third quarter of and the year ended 2018. The Company concluded none of the other IPR&D assets were impaired at December31, 2018. At September 30, 2017, after our assessment of the totality of the events that could impair IPR&D, the Company determined certain IPR&D assets related tothe development of its GBM product candidate may be impaired. To arrive at this determination, the Company assessed the status of studies in GBMconducted by its competitors and the Company’s strategic commitment of resources to its studies in primary liver cancer and ovarian cancer. The Companyconcluded that the GBM asset, valued at $9.4 million, was partially impaired and wrote down the GBM asset to $6.9 million incurring a non-cash charge of$2.5 million in the third quarter of and the year ended 2017. The Company concluded none of the other IPR&D assets were impaired at December 31, 2017. 42 Investment income and interest expense The Company realized $0.4 million of interest income from its short-term investments during 2018. Investment income was negligible in 2017. In connection with its debt facilities, the Company incurred interest expense of $0.7 million during 2018 compared to $0.1 million during 2017. TheCompany entered a new loan facility with Horizon Technology Finance Corporation on June 27, 2018. In the second quarter of 2017, Company paid off itsprior loan facility with Hercules Technology Growth Capital, Inc. Income Tax Benefit Annually, the State of New Jersey enables approved technology and biotechnology businesses with New Jersey net operating tax losses the opportunity tosell these losses through the Technology Business Tax Certificate Program (the “NOL Program”), thereby providing cash to companies to help fund theiroperations. The Company determined it met the eligibility requirements of the NOL Program for 2018 and filed its application with the New Jersey EconomicDevelopment Authority (NJEDA) in June 2018. In this application, the Company requested authorization of up to $12.5 million in tax benefits from itscumulative New Jersey net operating losses to be eligible for sale. In September 2018, the NJEDA notified the Company that its application receivedapproval under the NOL Program for 2018 and after receiving approval from the NJEDA to transfer $11.1 million of tax benefits in December 2018, theCompany successfully transferred these approved tax benefits which resulted in receipt of $10.4 million in net cash proceeds to the Company at the end of2018. The Company has approximately $3.9 million in future tax benefits remaining under the NOL Program for future years Deemed dividend During 2017, we recognized deemed dividends totaling $0.3 million collectively in regard to multiple agreements with certain warrant holders, pursuant towhich these warrant holders agreed to exercise, and the Company agreed to reprice certain warrants as summarized below: ●Warrants to purchase 790,410 shares of common stock were repriced at $2.70; and ●Warrants to purchase 506,627 shares of common stock were repriced at $1.65. The Company received $3.0 million in gross proceeds from the sale of the repriced warrants. Inflation We do not believe that inflation has had a material adverse impact on our revenue or operations in any of the past three years. Financial Condition, Liquidity and Capital Resources Since inception we have incurred significant losses and negative cash flows from operations. We have financed our operations primarily through the netproceeds from the sales of equity, credit facilities and amounts received under our product licensing agreement with Yakult and our technology developmentagreement with Hisun. The process of developing and commercializing ThermoDox®, GEN-1 and other product candidates and technologies requiressignificant research and development work and clinical trial studies, as well as significant manufacturing and process development efforts. We expect theseactivities, together with our general and administrative expenses to result in significant operating losses for the foreseeable future. Our expenses havesignificantly and regularly exceeded our revenue, and we had an accumulated deficit of $274 million at December 31, 2018. At December 31, 2018 we had total current assets of $28.1 million (including cash, cash equivalents and short-term investments and related interestreceivable on short-term investments of $27.7 million) and current liabilities of $6.1 million, resulting in net working capital of $22.0 million. At December31, 2017 we had total current assets of $24.3 million (including cash, cash equivalents and short-term investments and related interest receivable on short-term investments of $24.2 million) and current liabilities of $6.2 million, resulting in net working capital of $18.1 million. We have substantial future capitalrequirements to continue our research and development activities and advance our product candidates through various development stages. The Companybelieves these expenditures are essential for the commercialization of its technologies. Net cash used in operating activities for 2018 was $7.0 million. Our net loss of $11.9 million for 2018 included the following non-cash transactions: (i) $4.6million in non-cash stock-based compensation expense, (ii) $4.5 million non-cash charge from the impairment of one of its IPR&D product candidates and(iii) $0.2 million in non-cash amortization expense of other intangible assets offset by the non-cash benefit based on the change in the earn-out milestoneliability. The $7.0 million net cash used in operating activities was mostly funded from cash and cash equivalents, short term investments, cash proceedsreceived in equity financings during 2018 coupled with $10.4 million in cash proceeds from the sale of New Jersey net operating losses under theTechnology Business Tax Certificate Program. At December 31, 2018, we had cash, cash equivalents, short-term investments and related interest receivableon short term investments of $27.7 million. Net cash provided by financing activities was $10.6 million during 2018 resulting from $9.7 million in net proceeds from the Horizon Credit Facility and$0.9 million in net proceeds from the sale of our common stock through the sale of equity. 43 On June 27, 2018, the Company entered into the Horizon Credit Agreement with Horizon that provided $10 million in new capital. The Company drew down$10 million upon closing of the Horizon Credit Agreement on June 27, 2018. The Company anticipates that it will use the funding provided under theHorizon Credit Agreement for working capital and advancement of its product pipeline. The obligations under the Horizon Credit Agreement are secured bya first-priority security interest in substantially all assets of Celsion other than intellectual property assets. The obligations will bear interest at a ratecalculated based on one-month LIBOR plus 7.625%. Payments under the loan agreement are interest only for the first twenty-four (24) months after loanclosing, followed by a 24-month amortization period of principal and interest through the scheduled maturity date. On August 31, 2018, we entered into the Aspire Purchase Agreement with Aspire Capital Fund which provides that, upon the terms and subject to theconditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $15.0 million of shares of the Company’s commonstock over the 24-month term of the Aspire Purchase Agreement. On October 12, 2018, the Company filed with the SEC a prospectus supplement to the 2018Shelf Registration Statement registering all of the shares of common stock that may be offered to Aspire Capital from time to time. The timing and amount ofsales of the Company’s common stock to Aspire Capital. Aspire Capital has no right to require any sales by the Company but is obligated to make purchasesfrom the Company as directed by the Company in accordance with the Purchase Agreement. There are no limitations on use of proceeds, financial or businesscovenants, restrictions on future funding, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. Inconsideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement, the Company issued to Aspire Capital164,835 Commitment Shares. The Aspire Purchase Agreement may be terminated by the Company at any time, at its discretion, without any cost to theCompany. Any proceeds from the Company receives under the Aspire Purchase Agreement are expected to be used for working capital and general corporatepurposes. During 2018 and as of December 31, 2018, the Company sold and issued an aggregate of 100,000 shares under the Purchase Agreement, receivingapproximately $0.2 million. We are a party to a Controlled Equity OfferingSM Sales Agreement (ATM) dated as of February 1, 2013 with Cantor Fitzgerald & Co., pursuant to which wemay sell additional shares of our common stock having an aggregate offering price of up to $25 million through “at-the-market” equity offerings from time totime. From February 1, 2013 through December 31, 2016, the Company sold and issued an aggregate of 105,681 shares of common stock under the ATM,receiving approximately $7.4 million in net proceeds. During 2017, the Company sold 1,221,348 shares of common stock under the ATM, receivingapproximately $3.9 million in net proceeds. During 2018, the Company sold 457,070 shares of common stock under the ATM, receiving approximately $1.2million in net proceeds. On October 10, 2018, the Company delivered notice to Cantor terminating the ATM effective as of October 20, 2018. From February2013 through the date of termination, the Company sold 1,784,396 shares of Common Stock under the Sales Agreement generating gross proceeds of $12.8million. The Company has no further obligations under the Sales Agreement. On October 29, 2018, the Company and certain investors holding warrants to purchase 1.6 million shares collectively of the Company’s common stockreceived in the February 27, 2017 Public Offering and the October 2017 Underwritten Offering, entered into warrant exchange agreements whereby theCompany issued 820,714 shares collectively of common stock to these investors in exchange for the warrants. After the warrant exchange, warrantsoutstanding totaled 1.6 million with a weighted average exercise price of $5.75 per share. Approximately 1.2 million of these outstanding warrants with astrike price of $6.20 per share will expire on April 4, 2019. On December 4, 2018, the Company entered into a Capital on DemandTM Sales Agreement (the “Capital on Demand Agreement”) with JonesTradingInstitutional Services LLC, as sales agent (“JonesTrading”), pursuant to which the Company may offer and sell, from time to time, through JonesTradingshares of Common Stock having an aggregate offering price of up to $16.0 million. The Company intends to use the net proceeds from the offering, if any, forgeneral corporate purposes, including research and development activities, capital expenditures and working capital. The Company is not obligated to sellany Common Stock under the Capital on Demand Agreement and, subject to the terms and conditions of the Capital on Demand Agreement, JonesTradingwill use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations andthe rules of The NASDAQ Capital Market, to sell Common Stock from time to time based upon Celsion’s instructions, including any price, time or size limitsor other customary parameters or conditions the Company may impose. Under the Capital on Demand Agreement, JonesTrading may sell Common Stock byany method deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Capital onDemand Agreement will terminate upon the earlier of (i) the sale of all shares of our common stock subject to the Sales Agreement, and (ii) the termination ofthe Capital on Demand Agreement by JonesTrading or Celsion. The Capital on Demand Agreement may be terminated by JonesTrading or the Company atany time upon 10 days’ notice to the other party, or by JonesTrading at any time in certain circumstances, including the occurrence of a material adversechange in the Company. The Company has not sold any shares under the Capital on Demand Agreement. We had cash, investment securities and interest receivable of $27.7 million on hand at December 31, 2018 and have $31 million collectively available forfuture sales under the Aspire Purchase Agreement and the Capital on Demand Agreement. However, our future capital requirements will depend uponnumerous unpredictable factors, including, without limitation, the cost, timing, progress and outcomes of clinical studies and regulatory reviews of ourproprietary drug candidates, our efforts to implement new collaborations, licenses and strategic transactions, general and administrative expenses, capitalexpenditures and other unforeseen uses of cash. 44 We may seek additional capital through further public or private equity offerings, debt financing, additional strategic alliance and licensing arrangements,collaborative arrangements, or some combination of these financing alternatives. If we raise additional funds through the issuance of equity securities, thepercentage ownership of our stockholders could be significantly diluted, and the newly issued equity securities may have rights, preferences, or privilegessenior 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, andprivileges senior to those of our common stock. If we seek strategic alliances, licenses, or other alternative arrangements, such as arrangements withcollaborative partners or others, we may need to relinquish rights to certain of our existing or future technologies, product candidates, or products we wouldotherwise seek to develop or commercialize on our own, or to license the rights to our technologies, product candidates, or products on terms that are notfavorable 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 otherarrangement being even less favorable to us and our stockholders than if the overall economic climate were stronger. We also will continue to look forgovernment sponsored research collaborations and grants to help offset future anticipated losses from operations and, to a lesser extent, interest income. If adequate funds are not available through either the capital markets, strategic alliances, or collaborators, we may be required to delay or, reduce the scope of,or terminate our research, development, clinical programs, manufacturing, or commercialization efforts, or effect additional changes to our facilities orpersonnel, or obtain funds through other arrangements that may require us to relinquish some of our assets or rights to certain of our existing or futuretechnologies, product candidates, or products on terms not favorable to us. Contractual Obligations In July 2011, we entered into a lease with Brandywine Operating Partnership, L.P., a Delaware limited partnership for a 10,870 square foot premises located inLawrenceville, New Jersey in connection with the relocation of our offices from Columbia, Maryland. In late 2015, Lenox Drive Office Park LLC, purchasedthe real estate and office building and assumed the lease. Under the current terms of the lease, which was amended effective May 1, 2017 and is set to expireon September 1, 2022, we reduced the size of the premises to 7,565 square feet and are paying a monthly rent that ranges from approximately $18,900 in thefirst year to approximately $20,500 in the final year of the amendment. On February 1, 2019, we amended the current terms of the lease to increase the size ofthe premises by 2,285 square feet to 9,850 square feet and also extended the lease term by one year to September 1, 2023. In conjunction with the February 1,2019 lease amendment, we agreed to modify our one-time option to cancel the lease as of the 36th month after the May 1, 2017 lease commencement date. In connection with the Asset Purchase Agreement, in June 2014, we assumed the existing lease with another landlord for an 11,500 square foot premiseslocated in Huntsville, Alabama. In January 2018, we entered into a new 60-month lease agreement for 9,049 square feet with rent payments of approximately$18,100 per month. We paid $502,716 and $578,943 in connection with our New Jersey and Alabama facility leases in 2018 and 2017, respectively. Following is a summary ofthe future minimum payments required under leases that have initial or remaining lease terms of one year or more as of December 31, 2018: For the year ending December 31: Operating Leases 2019 $450,430 2020 454,213 2021 457,995 2022 379,823 2023 18,098 Total minimum lease payments $1,760,559 We believe our existing facilities are suitable and adequate to conduct our business. Off-Balance Sheet Arrangements We do not utilize off-balance sheet financing arrangements as a source of liquidity or financing. 45 ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The primary objective of our cash investment activities is to preserve principal while at the same time maximizing the income we receive from ourinvestments without significantly increasing risk. Some of the securities that we invest in may be subject to market risk. This means that a change inprevailing interest rates may cause the principal amount of the investment to fluctuate. For example, if we hold a security that was issued with a fixed interestrate at the then-prevailing rate and the interest rate later rises, the principal amount of our investment will probably decline. A hypothetical 50 basis pointincrease in interest rates reduces the fair value of our available-for-sale securities at December 31, 2018 by an immaterial amount. To minimize this risk in thefuture, we intend to maintain our portfolio of cash equivalents and marketable securities in a variety of securities, including commercial paper, governmentand non-government debt securities and/or money market funds that invest in such securities. We have no holdings of derivative financial or commodityinstruments. As of December 31, 2018, our investments consisted of investments in corporate notes and obligations or in money market accounts andchecking funds with variable market rates of interest. We believe our credit risk is immaterial. ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements, supplementary data and report of independent registered public accounting firm are filed as part of this report on pages F-1 throughF-32 and incorporated herein by reference. ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A.CONTROLS AND PROCEDURES (a)Disclosure 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 Rules13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) under the supervision, and with the participation, of ourmanagement, including our principal executive officer and principal financial officer. Based on that evaluation, our principal executive officer and principalfinancial officer concluded that as of December 31, 2018, which is the end of the period covered by this Annual Report on Form 10-K, our disclosure controlsand procedures are effective. (b)Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed by, or under the supervision of, our chiefexecutive officer and chief financial officer, or persons performing similar functions, and effected by our Board of Directors, management and otherpersonnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with accounting principles generally accepted in the United States of America (GAAP). Our internal control over financial reporting includesthose policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions anddisposition of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with authorization ofmanagement and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,or disposition of the Company’s assets that could have a material effect on the financial statements. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018. In making this assessment,management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the 2013 Internal Control-IntegratedFramework. Based on its evaluation, management has concluded that the Company’s internal control over financial reporting is effective as of December 31,2018. Pursuant to Regulation S-K Item 308(b), this Annual Report on Form 10-K does not include an attestation report of our company’s registered publicaccounting firm regarding internal control over financial reporting. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliancewith the policies or procedures may deteriorate. A control system, no matter how well designed and operated can provide only reasonable, but not absolute,assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and thebenefits of controls must be considered relative to their cost. (c)Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting in the fiscal quarter ended December 31, 2018, which were identified inconnection with our management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, orare reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B.OTHER INFORMATION On March 28, 2019, the Company and EGWU, Inc. (formerly known as EGEN, Inc.) (“EGWU”), entered into an amendment (the “Amendment”) to the AssetPurchase Agreement discussed in Note 5. (the “Asset Purchase Agreement”). The Amendment provides that payment of the of $12.4 million earnoutmilestone liability under the Asset Purchase Agreement related to the Ovarian Cancer Indication can be made, at the Company’s option, in the followingmanner: a)$7.0 million in cash to EGWU within 10 business days of achieving the milestone; or b) b)$12.4 million to EGWU, which is payable in cash, common stock of the Company, or a combination of either, within one year of achieving themilestone. Additionally, the Amendment extends the Earnout Term (as defined in the Amendment) as it applies to the EGEN-001 Ovarian Cancer Milestone from seven(7) years to eight (8) years from the original signing date of the Asset Purchase Agreement. As consideration for entering into the Amendment, the Company will issue to EGWU 200,000 warrants to purchase common stock with an exercise price of$0.01 per share. The Company will record this transaction in the first quarter of 2019. 46 PART III ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this Item 10 is herein incorporated by reference to the definitive Proxy Statement to be filed with the Securities and ExchangeCommission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. Our Code of Ethics and Business Conduct is applicable to all employees, including the principal executive officer, principal financial officer and principalaccounting officer or controller, or persons performing similar functions. The Code of Ethics and Business Conduct is posted on our website atwww.celsion.com. ITEM 11.EXECUTIVE COMPENSATION The information required by this Item 11 is herein incorporated by reference to the definitive Proxy Statement to be filed with the Securities and ExchangeCommission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this Item 12 is herein incorporated by reference to the definitive Proxy Statement to be filed with the Securities and ExchangeCommission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this Item 13 is herein incorporated by reference to the definitive Proxy Statement to be filed with the Securities and ExchangeCommission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item 14 is herein incorporated by reference to the definitive Proxy Statement to be filed with the Securities and ExchangeCommission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K. 47 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)The following documents are filed as part of this Annual Report on Form 10-K: 1. FINANCIAL STATEMENTS The following is a list of the consolidated financial statements of Celsion Corporation filed with this Annual Report on Form 10-K, together with the reportsof our independent registered public accountants and Management’s Report on Internal Control over Financial Reporting. PageREPORTS Reports of Independent Registered Public Accounting FirmsF-1 FINANCIAL STATEMENTS Consolidated Balance SheetsF-2Consolidated Statements of OperationsF-4Consolidated Statements of Comprehensive LossF-5Consolidated Statements of Cash FlowsF-6Consolidated Statements of Changes in Stockholders’ EquityF-7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTSF-9 2. FINANCIAL STATEMENT SCHEDULES All financial statement schedules are omitted because the information is inapplicable or presented in the notes to the consolidated financial statements. 3. EXHIBITS The following documents are included as exhibits to this report: EXHIBITNO. DESCRIPTION 2.1* Asset Purchase Agreement dated as of June 6, 2014, by and between Celsion Corporation and EGEN, Inc., incorporated herein by reference toExhibit 2.1 to the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2014. 3.1 Certificate of Incorporation of Celsion, as amended, incorporated herein by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q of theCompany for the quarter ended June 30, 2004. 3.2 Certificate of Ownership and Merger of Celsion Corporation (a Maryland Corporation) into Celsion (Delaware) Corporation (inter alia, changingthe Company’s name to “Celsion Corporation” from “Celsion (Delaware) Corporation”), incorporated herein by reference to Exhibit 3.1.3 to theAnnual Report on Form 10-K of the Company for the year ended September 30, 2000. 3.3 Certificate of Amendment of the Certificate of Incorporation effective and filed on February 27, 2006, incorporated therein by reference toExhibit 3.1 to the Current Report on Form 8-K of the Company filed on March 1, 2006. 3.4 Certificate of Amendment to Certificate of Incorporation effective October 28, 2013, incorporated herein by reference to Exhibit 3.1 to theCurrent Report on Form 8-K of the Company filed on October 29, 2013. 3.5 Certificate of Amendment to Certificate of Incorporation effective June 15, 2016, incorporated herein by reference to Exhibit 3.1 to the CurrentReport on Form 8-K of the Company, filed on June 15, 2016. 48 3.6 Certificate of Amendment to Certificate of Incorporation, effective May 26, 2017, incorporated herein by reference to Exhibit 3.1 to the CurrentReport on Form 8-K of the Company, filed on May 26, 2017. 3.7 Amended and Restated By-laws dated November 27, 2011, incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K ofthe Company, filed on December 1, 2011. 4.1 Form of Common Stock Certificate, par value $0.01, incorporated herein by reference to Exhibit 4.1 to the Annual Report on Form 10-K of theCompany for the year ended September 30, 2000. 4.2 Warrant to Purchase Stock, dated June 27, 2012, by and between Celsion Corporation and Oxford Finance LLC, incorporated herein by referenceto Exhibit 4.1 to the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2012. 4.3 Warrant to Purchase Stock, dated June 27, 2012, by and between Celsion Corporation and Horizon Technology Finance Corporation,incorporated herein by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2012. 4.4 Form of Representative’s Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K ofthe Company filed on October 31, 2017. 4.5 Form of Placement Agent Common Stock Purchase Warrant incorporated herein by reference to Exhibit 4.4 to the Current Report on Form 8-K ofthe Company filed on July 11, 2017. 4.6 Registration Rights Agreement dated as of November 25, 2013, by and between Celsion Corporation and Hercules Technology Growth Capital,Inc., incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-3 (File No.: 333-193936) filed on February 13, 2014. 4.7 Registration Rights Agreement dated as of June 20, 2014, by and between Celsion Corporation and Egen, Inc., incorporated herein by reference toExhibit 4.1 to the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2014. 4.8 Form of Series AA Warrant, incorporated herein by reference to Exhibit 4.26 to the Registration Statement to the Registration Statement on FormS-1 of the Company filed on February 13, 2017. 4.9 Form of Representative’s Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.30 to the Registration Statement onForm S-1 of the Company filed on June 6, 2017. 4.10 Registration Rights Agreement, dated August 31, 2018, between Celsion Corporation and Aspire Capital Fund, LLC incorporated by reference toExhibit 4.1 to the Current Report on Form 8-K of the Company filed on September 4, 2018 10.1*** Celsion Corporation 2007 Stock Incentive Plan, as amended, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-Kof the Company filed on May 16, 2017. 10.2*** Form of Stock Option Grant Agreement for Celsion Corporation 2004 Stock Incentive Plan, incorporated herein by reference to Exhibit 10.2 tothe Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2006. 10.3*** Form of Stock Option Grant Agreement for Celsion Corporation 2007 Stock Incentive Plan, incorporated herein by reference to Exhibit 10.1.6 tothe Annual Report on Form 10-K of the Company for the year ended December 31, 2007. 10.4*** Stock Option Agreement effective January 3, 2007, between Celsion Corporation and Michael H. Tardugno, incorporated herein by referenceExhibit 10.1 to the Current Report on Form 8-K of the Company filed on January 3, 2007. 10.5 Form Inducement Offer to Exercise Common Stock Purchase Warrants, incorporated herein by reference to exhibit 10.3 to the Quarterly Report onForm 10-Q of the Company for the quarter ended September 30, 2017. 49 10.6 Form of Warrant Exercise Agreement, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filedon June 26, 2017. 10.7 Form of Warrant Exercise Agreement, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filedon June 23, 2017. 10.8 Form of Warrant Exercise Agreement, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filedon June 9, 2017. 10.9*** Amended and Restated Employment Agreement, effective March 30, 2016, between Celsion Corporation and Mr. Michael H. Tardugno,incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K of the Company filed on March 30, 2016. 10.10*** Employment Offer Letter, entered into on June 15, 2010, between the Company and Jeffrey W. Church, incorporated herein by reference toExhibit 10.1 to the Current Report on Form 8-K of the Company filed on June 18, 2010. 10.11* Patent License Agreement between the Company and Duke University dated November 10, 1999, incorporated herein by reference to Exhibit10.9 to the Annual Report on Form 10-K of the Company for the year ended September 30, 1999. 10.12* License Agreement dated July 18, 2003, between the Company and Duke University, incorporated herein by reference to Exhibit 10.1 to theRegistration Statement on Form S-3 (File No. 333-108318) filed on August 28, 2003. 10.13* Development, Product Supply and Commercialization Agreement, effective December 5, 2008, by and between the Company and Yakult HonshaCo., Ltd., incorporated herein by reference to Exhibit 10.15 to the Annual Report on Form 10-K of the Company for the year ended December 31,2008. 10.14* The 2nd Amendment To The Development, Product Supply And Commercialization Agreement, effective January 7, 2011, by and between theCompany and Yakult Honsha Co., Ltd. incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filedon January 18, 2011. 10.15 Lease Agreement, executed July 21, 2011, by and between Celsion Corporation and Brandywine Operating Partnership, L.P., incorporated hereinby reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on July 25, 2011. 10.16 First Amendment to Lease Agreement, executed April 20, 2017, by and between Celsion Corporation and Lenox Drive Office Park, LLC,incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 10-Q of the Company filed on November 14, 2017. 10.17* Technology Development Agreement effective as of May 7, 2012, by and between Celsion Corporation and Zhejiang Hisun Pharmaceutical Co.Ltd., incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2012. 10.18 Loan and Security Agreement, dated June 27, 2012, by and among Celsion Corporation, Oxford Finance LLC, as collateral agent, and the lendersnamed therein, incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of the Company for the quarter ended June30, 2012. 10.19 Controlled Equity OfferingSM Sales Agreement, dated February 1, 2013, by and between Celsion Corporation and Cantor Fitzgerald & Co.,incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on February 1, 2013. 10.20 Securities Purchase Agreement, dated February 22, 2013, by and among Celsion Corporation and the purchasers named therein, incorporatedherein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on February 26, 2013. 50 10.21* Technology Development Contract dated as of January 18, 2013, by and between Celsion Corporation and Zhejiang Hisun Pharmaceutical Co.Ltd., incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31,2013. 10.22 Loan and Security Agreement dated as of November 25, 2013, by and between Celsion Corporation and Hercules Technology Growth Capital,Inc., incorporated herein by reference to Exhibit 10.28 to the Annual Report on Form 10-K of the Company for the year ended December 31,2013. 10.23 Securities Purchase Agreement dated as of January 15, 2014, by and between Celsion Corporation and the purchasers named therein,incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on January 21, 2014. 10.24*** Employment Offer Letter effective as of June 2, 2014, between the Company and Khursheed Anwer incorporated herein by reference to Exhibit10.27 to the Annual Report on Form 10-K of the Company for the year ended December 31, 2014. 10.25 Securities Purchase Agreement dated as of May 27, 2015, by and among Celsion Corporation and the purchasers named therein, incorporatedherein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on May 29, 2015. 10.26 Securities Purchase Agreement dated as of June 13, 2016, by and among Celsion Corporation and the purchasers named therein, incorporatedherein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on June 17, 2016. 10.27*** Amended and Restated Change in Control Agreement dated as of September 6, 2016, by and between the Company and Michael H. Tardugno,incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30,2016. 10.28*** Amended and Restated Change in Control Agreement dated as of September 6, 2016, by and between the Company and Nicholas Borys, M.D.,incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30,2016. 10.29*** Amended and Restated Change in Control Agreement dated as of September 6, 2016, by and between the Company and Jeffrey W. Church,incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30,2016. 10.30*** Amended and Restated Change in Control Agreement dated as of September 6, 2016, by and between the Company and Timothy J. Tumminello,incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30,2016. 10.31 Securities Purchase Agreement dated as of December 20, 2016, by and among Celsion Corporation and the purchasers named therein,incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed in December 23, 2016. 10.32 Form of Securities Purchase Agreement incorporated herein by reference to Exhibit 10.33 to the Registration Statement on Form S-1 of theCompany filed on February 13, 2017. 10.33 Securities Purchase Agreement, dated July 6, 2017, by and among Celsion Corporation and the purchaser named therein, incorporated herein byreference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on July 11, 2017. 10.34 Securities Purchase Agreement, dated July 6, 2017, by and among Celsion Corporation and the purchaser named therein, incorporated herein byreference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on July 11, 2017. 51 10.35 Lease Agreement dated January 15, 2018, by and between Celsion Corporation and HudsonAlpha Institute of Biotechnology for office and labspace located in Huntsville, Alabama incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Company forthe quarter ended March 31, 2018. 10.36 Venture Loan and Security Agreement dated June 27, 2018, by and between Celsion Corporation and Horizon Technology Finance Corporationincorporated herein by reference to Exhibit 10.0 to the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2018. 10.37 Common Stock Purchase Agreement, dated August 31, 2018 between Celsion Corporation and Aspire Capital Fund, LLC incorporated byreference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on September 4, 2018. 10.38 Capital on DemandTM Sales Agreement, dated December 4, 2018, between Celsion Corporation and JonesTrading Institutional Services LLCincorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on December 4, 2018. 21.1+ Subsidiaries of Celsion Corporation23.1+ Consent of WithumSmith+Brown, PC, independent registered public accounting firm for the Company.31.1+ Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2+ Certification of Chief Financial Officer 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 of2002.32.2^ Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002.101** The following materials from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, formatted in XBRL(Extensible Business Reporting Language): (i) the audited Consolidated Balance Sheets, (ii) the audited Consolidated Statements of Operations,(iii) the audited Consolidated Statements of Comprehensive Loss, (iv) the audited Consolidated Statements of Cash Flows, (v) the auditedConsolidated Statements of Changes in Stockholders’ Equity and (vi) Notes to Consolidated Financial Statements. * Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of1934, amended, and the omitted material has been separately filed with the Securities and Exchange Commission.+ Filed herewith.^ Furnished herewith.** XBRL information is filed herewith.*** Management contract or compensatory plan or arrangement. ITEM 16. FORM 10-K SUMMARY None 52 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused its annual report on Form 10-K tobe signed on its behalf by the undersigned thereunto duly authorized. CELSION CORPORATION Registrant March 29, 2019By:/s/ MICHAEL H. TARDUGNO Michael H. Tardugno Chairman of the Board, President and Chief Executive Officer March 29, 2019By:/s/ JEFFREY W. CHURCH Jeffrey W. Church Executive Vice President andChief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrantand in the capacities and on the dates indicated: Name Position Date /s/ MICHAEL H. TARDUGNO Chairman of the Board, President and Chief ExecutiveOfficer March 29, 2019(Michael H. Tardugno) (Principal Executive Officer) /s/ JEFFREY W. CHURCH Executive Vice President and Chief Financial March 29, 2019(Jeffrey W. Church) Officer (Principal Financial Officer) /s/ TIMOTHY J. TUMMINELLO Controller and Chief Accounting Officer March 29, 2019(Timothy J. Tumminello) /s/ AUGUSTINE CHOW Director March 29, 2019(Augustine Chow, Ph.D.) /s/ FREDERICK J. FRITZ Director March 29, 2019(Frederick J. Fritz) /s/ ROBERT W. HOOPER Director March 29, 2019 (Robert W. Hooper) /s/ ALBERTO R. MARTINEZ Director March 29, 2019(Alberto Martinez, M.D.) /s/ DONALD BRAUN Director March 29, 2019(Donald Braun, Ph.D.) /s/ ANDREAS VOSS Director March 29, 2019(Andreas Voss, M.D.) 53 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders ofCelsion Corporation: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Celsion Corporation (the “Company”) as of December 31, 2018 and 2017, the relatedconsolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the two years in the period endedDecember 31, 2018 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in allmaterial respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of thetwo years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America. Adoption of ASU No. 2014-09 As discussed in Note 1 to the financial statements, the Company changed its method of accounting for revenue recognition in each of the two years in theperiod ended December 31, 2018 due to the adoption of ASU No. 2014-09, Revenue from Contracts with Customers. Basis for Opinion. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations ofthe Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, norwere we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding ofinternal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control overfinancial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures inthe financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ WithumSmith+Brown, PC WithumSmith+Brown, PC We have served as the Company’s auditor since 2017. Princeton, New JerseyMarch 29, 2019 F-1 CELSION CORPORATION CONSOLIDATED BALANCE SHEETS December 31, 2018 2017 ASSETS Current assets: Cash and cash equivalents $13,353,543 $11,444,055 Investment securities - available for sale, at fair value 14,257,998 12,724,020 Accrued interest receivable on investment securities 68,309 54,440 Advances and deposits on clinical programs and other current assets 451,293 89,186 Total current assets 28,131,143 24,311,701 Property and equipment (at cost, less accumulated depreciation and amortization) 184,627 175,771 Other assets: In-process research and development, net 15,736,491 20,246,491 Goodwill 1,976,101 1,976,101 Other intangible assets, net 568,292 795,608 Deposits and other assets 258,933 8,761 Total other assets 18,539,817 23,026,961 Total assets $46,855,587 $47,514,433 See accompanying notes to the consolidated financial statements. F-2 CELSION CORPORATION CONSOLIDATED BALANCE SHEETS (Continued) December 31, 2018 2017 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable ─ trade $3,020,638 $3,416,863 Other accrued liabilities 2,585,898 2,282,827 Deferred revenue - current portion 500,000 500,000 Total current liabilities 6,106,536 6,199,690 Earn-out milestone liability 8,907,664 12,538,525 Note Payable, net of deferred financing costs 9,417,037 ─ Deferred revenue - non-current portion 1,500,000 2,000,000 Other liabilities - non-current 63,278 71,710 Total liabilities 25,994,515 20,809,925 Commitments ─ ─ Stockholders’ equity: Preferred Stock - $0.01 par value (100,000 shares authorized, and no shares issued or outstanding atDecember 31, 2018 and 2017) ─ ─ Common stock - $0.01 par value (112,500,000 shares authorized; 18,832,168 and 17,277,299 sharesissued at December 31, 2018 and 2017, respectively, and 18,831,834 and 17,276,965 sharesoutstanding at December 31, 2018 and 2017, respectively) 188,322 172,772 Additional paid-in capital 294,393,313 288,408,976 Accumulated other comprehensive gain (loss) 29,872 (10,164)Accumulated deficit (273,665,247) (261,781,888)Total stockholders’ equity before treasury stock 20,946,260 26,789,696 Treasury stock, at cost (334 shares at December 31, 2018 and 2017) (85,188) (85,188)Total stockholders’ equity 20,861,072 26,704,508 Total liabilities and stockholders’ equity $46,855,587 $47,514,433 See accompanying notes to the consolidated financial statements. F-3 CELSION CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Year ended December 31, 2018 2017 Technology development and licensing revenue $500,000 $500,000 Operating expenses: Research and development 11,865,523 13,078,710 General and administrative 9,699,521 5,889,722 Total operating expenses 21,565,044 18,968,432 Loss from operations (21,065,044) (18,468,432) Other income (expense): Gain from change in earn-out milestone liability 3,630,861 649,701 Impairment of in-process research and development (4,510,000) (2,520,000)Investment income, net 353,682 26,041 Interest expense (712,025) (91,756)Other income 52 2,270 Total other expense (1,237,430) (1,933,744) Net loss before income tax benefit (22,302,474) (20,402,176) Income tax benefit 10,419,115 ─ Net loss (11,883,359) (20,402,176) Deemed dividend related to warrant modification ─ (345,685) Net loss attributable to common shareholders $(11,883,359) $(20,747,861) Net loss attributable to common shareholders per common share - basic and diluted $(0.68) $(2.72) Weighted average common shares outstanding - basic and diluted 17,582,879 7,627,210 See accompanying notes to the consolidated financial statements. F-4 CELSION CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS December 31, 2018 2017 Net loss $(11,883,359) $(20,402,176) Changes in: Realized loss on investment securities recognized in investment income, net 10,164 - Unrealized gain (loss) on investment securities 29,872 (10,164)Other comprehensive income (loss) 40,036 (10,164) Comprehensive loss $(11,843,323) $(20,412,340) See accompanying notes to the consolidated financial statements F-5 CELSION CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, 2018 2017 Cash flows from operating activities: Net loss $(11,883,359) $(20,402,176)Non-cash items included in net loss: Depreciation and amortization 356,859 553,010 Change in fair value of earn-out milestone liability (3,630,861) (649,701)Impairment of in-process research and development 4,510,000 2,520,000 Stock-based compensation 4,604,415 1,105,245 Shares issued in exchange for services 29,841 ─ Shares issued to satisfy certain obligations ─ 235,072 Amortization of deferred finance charges and debt discount associated with note payable 199,153 35,370 Change in deferred rent liability (8,432) 59,358 Net changes in: Interest receivable on investments (13,869) (50,432)Advances and deposits on clinical programs and other current assets (362,107) 115,222 Other assets (250,172) ─ Accounts payable – trade (396,225) 537,885 Deferred revenue (500,000) (500,000)Other accrued liabilities 303,071 (200,929)Net cash used in operating activities (7,041,686) (16,642,076) Cash flows from investing activities: Purchases of investment securities (16,973,942) (12,734,184)Proceeds from sale and maturity of investment securities 15,480,000 1,680,000 Refund on security for letter of credit ─ 100,000 Purchases of property and equipment (138,399) (38,629)Net cash (used in) provided by investing activities (1,632,341) (10,992,813) Cash flows from financing activities: Proceeds from issuance of common stock equity, net of issuance costs 858,515 17,910,401 Proceeds from note payable, net of issuance costs 9,725,000 ─ Proceeds from exercise of common stock warrants ─ 21,140,304 Principal payments on note payable ─ (2,595,923)Net cash provided by financing activities 10,583,515 36,454,782 Increase in cash and cash equivalents 1,909,488 8,819,893 Cash and cash equivalents at beginning of period 11,444,055 2,624,162 Cash and cash equivalents at end of period $13,353,543 $11,444,055 Cash (paid for) received from: Interest $(512,872) $(56,386)Income tax benefit $10,419,115 $─ Non-cash financing activities: Fair value of common stock issued as equity issuance costs charged against paid in capital $450,000 ─ Fair value of common stock and warrants issued in connection with notes payable $507,116 ─ Fair value of stock issued in exchange for cancelation of warrants $8,207 Fair value of modification of warrant exercise prices included in paid in capital ─ 345,685 Fair value of deemed dividend related to modification of warrant exercise prices charged against paid incapital ─ (345,685) See accompanying notes to the consolidated financial statements. F-6 CELSION CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 2018 AND 2017 Common StockOutstanding Additional Treasury Stock Accum.Other Shares Amount Paid inCapital Shares Amount Compr.Income AccumulatedDeficit Total Balance at January 1, 2017 2,230,118 $22,305 $248,168,421 334 $(85,188) $- $(241,379,712) $6,725,826 Net loss - - - - - - (20,402,176) (20,402,176)Registered direct and ATMcommon stock offerings 7,296,352 72,964 17,837,437 - - - - 17,910,401 Exercise of common stockwarrants 7,617,148 76,171 21,064,133 - - - - 21,140,304 Shares issued to satisfy certainobligations 130,055 1,301 233,771 - - - - 235,072 Realized and unrealized gains andlosses, net, on investmentssecurities - - - - - (10,164) - (10,164)Stock-based compensationexpense - - 1,105,245 - - - - 1,105,245 Issuance of restricted stock 3,357 34 (34) - - - - - Modification of warrant exerciseprices - - 345,685 - - - - 345,685 Deemed dividend related towarrant exercise pricemodifications - - (345,685) - - - - (345,685)Effect of reverse stock split (65) (3) 3 - - - - - Balance at December 31, 2017 17,276,965 $172,772 $288,408,976 334 $(85,188) $(10,164) $(261,781,888) $26,704,508 See accompanying notes to the consolidated financial statements F-7 CELSION CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (continued) YEARS ENDED DECEMBER 31, 2018 AND 2017 Common StockOutstanding Additional Treasury Stock Accum.Other Shares Amount Paid inCapital Shares Amount Compr.Income AccumulatedDeficit Total Balance at January 1, 2018 17,276,965 $172,772 $288,408,976 334 $(85,188) $(10,164) $(261,781,888) $26,704,508 Net loss - - - - - - (11,883,359) (11,883,359)Sale of equity through ATM andcommon stock purchaseagreement 557,070 5,572 983,528 - - - - 989,100 Common stock issuance inexchange for cancellation ofcommon stock warrants 820,714 8,207 (138,792) - - - - (130,585) Common stock and warrants topurchase common stock issued inconnection with equity and debtfacilities 164,835 1,648 505,468 - - - - 507,116 Realized and unrealized gains andlosses, net, on investmentssecurities - - - - - 40,036 - 40,036 Stock-based compensationexpense - - 4,604,415 - - - - 4,604,415 Issuance of restricted stock 12,250 123 29,718 - - - - 29,841 Balance at December 31, 2018 18,831,834 $188,322 $294,393,313 334 $(85,188) $ 29,872 $(273,665,247) $20,861,072 See accompanying notes to the consolidated financial statements F-8 CELSION CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Celsion Corporation (“Celsion” and the “Company”) is a fully-integrated development stage oncology drug company focused on advancing a portfolio ofinnovative cancer treatments, including directed chemotherapies, DNA-mediated immunotherapy and RNA based therapies. Our lead product candidate isThermoDox ®, a proprietary heat-activated liposomal encapsulation of doxorubicin, currently in a Phase III clinical trial for the treatment of primary livercancer (the “OPTIMA Study”). Second in our pipeline is GEN-1, a DNA-mediated immunotherapy for the localized treatment of ovarian cancer. We have twoplatform technologies providing the basis for the future development of a range of therapeutics for difficult-to-treat forms of cancer including: LysolipidThermally Sensitive Liposomes, a heat sensitive liposomal based dosage form that targets disease with known therapeutics in the presence of mild heat andTheraPlas, a novel nucleic acid-based treatment for local transfection of therapeutic plasmids. With these technologies we are working to develop andcommercialize more efficient, effective and targeted oncology therapies that maximize efficacy while minimizing side-effects common to cancer treatments Basis of Presentation The accompanying consolidated financial statements of Celsion have been prepared in accordance with generally accepted accounting principles (“GAAP”)in the United States and include the accounts of the Company and CLSN Laboratories, Inc. All intercompany balances and transactions have beeneliminated. The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates, and assumptions that affectthe amount reported in the Company’s financial statements and accompanying notes. Actual results could differ materially from these estimates. Events and conditions arising subsequent to the most recent balance sheet date through the date of the issuance of these consolidated financial statementshave been evaluated for their possible impact on the financial statements and accompanying notes. No events and conditions would give rise to anyinformation that required accounting recognition or disclosure in the financial statements other than those arising in the ordinary course of business. Use of Estimates The preparation of financial statements in conformity with US GAAP requires the Company to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofexpenses during the reporting period. On an ongoing basis, the Company evaluates its estimates using historical experience and other factors, including the current economic environment.Significant items subject to such estimates are assumptions used for purposes of determining stock-based compensation, the fair value of the convertiblenotes, and accounting for research and development activities. Management believes its estimates to be reasonable under the circumstances. Actual resultscould differ significantly from those estimates. Significant estimates in these financials are the valuation of options granted and valuation methods used todetermine the recoverability of goodwill and other intangible assets. Revenue Recognition On January 1, 2018, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all related amendments (the“new revenue standard”) to all contracts with customers using the modified retrospective method. The adoption of the new revenue standard had no impacton retained earnings as of December 31, 2017 and, accordingly, no cumulative adjustment was required. We do not expect the new revenue standard to havea significant impact on our net income on an ongoing basis. The Company’s sole revenue stream is related to the Hisun agreement described in Note 16.There were no accounts receivable as of December 31, 2018 or 2017. Contract liabilities from the Hisun agreement amounted to $1,500,000 and $2,000,000at December 31, 2018 and 2017, respectively. Contract liabilities values represent the value of cash received before the services were provided. In accordancewith ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the considerationwhich the Company received or expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that theCompany determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii)identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations inthe contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. At contract inception, the Company assesses the goodsor services promised within each contract that falls under the scope of ASC 606, determines those that are performance obligations and assesses whether eachpromised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respectiveperformance obligation when (or as) the performance obligation is satisfied. The application of these five steps necessitates the development of assumptionsthat require judgment to determine the stand-alone selling price, which may include forecasted revenues, development timelines and probabilities oftechnical and regulatory success. F-9 Cash and Cash Equivalents Cash and cash equivalents include cash on hand and investments purchased with an original maturity of three months or less. A portion of these funds are notcovered by FDIC insurance. Fair Value of Investment Securities The carrying values of investment securities approximate their respective fair values. Short Term Investments The Company classifies its investments in marketable securities with readily determinable fair values as investments available-for-sale in accordance withAccounting Standards Codification (ASC) 320, Investments - Debt and Equity Securities. Available-for-sale securities consist of debt and equity securitiesnot classified as trading securities or as securities to be held to maturity. The Company has classified all of its investments as available-for-sale. Unrealizedholding gains and losses on available-for-sale securities are reported as a net amount in accumulated other comprehensive gain or loss in stockholders’ equityuntil realized. Gains and losses on the sale of available-for-sale securities are determined using the specific identification method. The Company’s short-terminvestments consist of corporate bonds. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is provided over the estimated useful lives of therelated assets, ranging from three to seven years, using the straight-line method. Amortization is recognized over the lesser of the life of the asset or the leaseterm. Major renewals and improvements are capitalized at cost and ordinary repairs and maintenance are charged against operating expenses as incurred.Depreciation expense was approximately $130,000 and $326,000 for the years ended December 31, 2018 and 2017, respectively. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an assetmay not be recoverable. An asset is considered impaired if its carrying amount exceeds the future net undiscounted cash flows that the asset is expected togenerate. If such asset is considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset, if any, exceeds its fairvalue determined using a discounted cash flow model. Deposits Deposits include real property security deposits and other deposits which are contractually required and of a long-term nature. In-Process Research and Development, Other Intangible Assets and Goodwill During 2014, the Company acquired certain assets of EGEN, Inc. As more fully described in Note 5, the acquisition was accounted for under the acquisitionmethod of accounting which required the Company to perform an allocation of the purchase price to the assets acquired and liabilities assumed. Under theacquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets and liabilities based on their estimated fair valuesas of the acquisition date. Impairment or Disposal of Long-Lived Assets The Company assesses the impairment of its long-lived assets under accounting standards for the impairment or disposal of long-lived assets whenever eventsor changes in circumstances indicate that the carrying value may not be recoverable. For long-lived assets to be held and used, the Company recognizes animpairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the differencebetween the carrying amount and fair value. Comprehensive Income (Loss) Accounting Standards Codification (“ASC”) 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive income (loss)and its components in the Company’s consolidated financial statements. The objective of ASC 220 is to report a measure comprehensive income (loss) of allchanges in equity of an enterprise that result from transactions and other economic events in a period other than transactions with owners. Comprehensivegains (losses) result from changes in unrealized gains and losses from investment securities. F-10 Research and Development Research and development costs are expensed as incurred. Equipment and facilities acquired for research and development activities that have alternativefuture uses are capitalized and charged to expense over their estimated useful lives. Net Loss Per Common Share Basic and diluted net loss per common share was computed by dividing net loss for the year by the weighted average number of shares of common stockoutstanding, both basic and diluted, during each period. The impact of common stock equivalents has been excluded from the computation of dilutedweighted average common shares outstanding in periods where there is a net loss, as their effect is anti-dilutive. For the years ended December 31, 2018 and 2017, the total number of shares of common stock issuable upon exercise of warrants and equity awards is4,764,405 and 3,761,844 respectively. For the year ended December 31, 2018 and 2017, diluted loss per common share is the same as basic loss per commonshare as all options and all warrants that were convertible into shares of the Company’s common stock were excluded from the calculation of diluted earningsattributable to common stockholders per common share as their effect would be anti-dilutive. Income Taxes Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future taxconsequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases andoperating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in theyears in which those temporary differences are expected to be recovered or settled. The effect on deferred tax asset and liabilities of a change in tax rates isrecognized in results of operations in the period that the tax rate change occurs. Valuation allowances are established, when necessary, to reduce deferred taxassets to the amount expected to be realized. In accordance with ASC 740, Income Taxes, a tax position is recognized as a benefit only if it is “more likelythan not” that the tax position taken would be sustained in a tax examination, presuming that a tax examination will occur. The Company recognizes interestand/or penalties related to income tax matters in the income tax expense category. As more fully discussed in Note 9, the Company the Company completed the sale of a portion of its New Jersey net operating losses totaling approximately$11.1 for net proceeds of approximately $10.4 million. Such proceeds are reflected as a tax benefit for the year ended December 31, 2018. Stock-Based Compensation In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation, which simplifies various aspects of accounting for share-basedpayments. The areas for simplification involve several aspects of the accounting for share-based payment transactions, including the income taxconsequences and classification on the statements of cash flows. The Company adopted the standard during the first quarter of 2017 and has elected torecognize the effect of forfeitures in compensation cost when they occur. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) and are adopted by us as of thespecified effective date. Unless otherwise discussed, we believe that the impact of recently issued accounting pronouncements will not have a material impacton the Company’s consolidated financial position, results of operations, and cash flows, or do not apply to our operations. In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09 “Revenue from Contracts with Customers (Topic 606),” which supersedesall existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when ittransfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. ASU2014 - 09 was originally going to be effective on January 1, 2017; however, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic606) - Deferral of the Effective Date,” which deferred the effective date of ASU 2014-09 by one year to January 1, 2018. In March 2016, the FASB issued ASUNo. 2016 - 8, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations. The amendments in this ASU do not change thecore principle of ASU No. 2014 - 09 but the amendments clarify the implementation guidance on reporting revenue gross versus net. The effective date forthe amendments in this ASU is the same as the effective date of ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10, “Revenue fromContracts with Customers (Identifying Performance Obligations and Licensing),” to clarify the implementation guidance on identifying performanceobligations and licensing (collectively “the new revenue standards”). The new revenue standards allow for either “full retrospective” adoption, meaning thestandard is applied to all periods presented, or “modified retrospective” adoption, meaning the standard is applied only to the most current period presentedin the financial statements. The new revenue standard became effective for us on January 1, 2018. Under the new revenue standards, we recognize revenuefollowing a five-step model prescribed under ASU No. 2014-09; (i) identify contract(s) with a customer; (ii) identify the performance obligations in thecontract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenueswhen (or as) we satisfy the performance obligation. As further described in Note 16, the Company currently has only one contract subject to the new revenuestandards. After performance of the five-step model discussed above, the Company concluded the adoption of the new revenue standards as of January 1,2018 did not change our revenue recognition policy nor does it have an effect on our financial statements using either the full retrospective or the modifiedretrospective adoption methods. F-11 In January 2016, the FASB issued Accounting Standards Update No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,”which requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income (other than thoseaccounted for under the equity method of accounting). This guidance is effective for fiscal years, and interim periods within those years, beginning afterDecember 15, 2017. Based on the Company’s evaluation, the adoption of the ASU 2016-01 does not have a material impact on its consolidated financialstatements or its disclosures. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases” (Topic 842), which requires that lessees recognize assets andliabilities for leases with lease terms greater than twelve months in the statement of financial position. Leases will be classified as either finance or operating,with classification affecting the pattern of expense recognition in the income statement. This update also requires improved disclosures to help users offinancial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginningafter December 15, 2018, including interim reporting periods within that reporting period. The FASB subsequently issued the following amendments to ASU2016-02, which have the same effective date and transition date of January 1, 2019: ●ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which amends certain narrow aspects of the guidance issued in ASU 2016-02;and ●ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which allows for a transition approach to initially apply ASU 2016-02 at theadoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption as well as anadditional practical expedient for lessors to not separate non-lease components from the associated lease component. We evaluated ASU 2016-02 and its impact on the consolidated financial statements and related disclosures. We have identified all of our leases which consistof the New Jersey corporate office lease and the Alabama lab facility lease, see Note 17, and we estimate the adoption of this standard will result in therecognition of right-of-use assets and related lease liabilities on the consolidated balance sheets as of January 1, 2019 of approximately $1.1 to $1.3 millionrelated to our operating lease commitments, with no material impact to the opening balance of retained earnings. In January 2017, the FASB issued Accounting Standard Update No. 2017-04, “Intangibles-Goodwill and Other, Simplifying the Test for GoodwillImpairment,” which eliminated Step 2 from the goodwill impairment test. Under the revised test, an entity should perform its annual, or interim, goodwillimpairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount bywhich the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated tothat reporting unit. This ASU is effective for any interim or annual impairment tests for fiscal years beginning after December 15, 2019, with early adoptionpermitted. The Company adopted this method for its impairment testing of goodwill during 2017 and 2018. Based on the Company’s evaluation, theadoption of the ASU 2017-04 did not have any material impact on its consolidated financial statements or its disclosures. 2. FINANCIAL CONDITION Since inception, the Company has incurred substantial operating losses, principally from expenses associated with the Company’s research and developmentprograms, clinical trials conducted in connection with the Company’s product candidates, and applications and submissions to the U.S. Food and DrugAdministration. We have not generated significant revenue and have incurred significant net losses in each year since our inception. We have incurredapproximately $274 million of cumulated net losses. As of December 31, 2018, we had approximately $27.7 million in cash, investment securities andinterest receivable. We have substantial future capital requirements to continue our research and development activities and advance our product candidatesthrough various development stages. The Company believes these expenditures are essential for the commercialization of its technologies. The Company expects its operating losses to continue for the foreseeable future as it continues its product development efforts, and when it undertakesmarketing and sales activities. The Company’s ability to achieve profitability is dependent upon its ability to obtain governmental approvals, manufacture,and market and sell its new product candidates. There can be no assurance that the Company will be able to commercialize its technology successfully or thatprofitability will ever be achieved. The operating results of the Company have fluctuated significantly in the past. We have substantial future capitalrequirements associated with our continued research and development activities and to advance our product candidates through various stages ofdevelopment. The Company believes these expenditures are essential for the commercialization of its technologies. F-12 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 factorsinclude 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 licensingarrangements; ●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. The Company has based its estimate on assumptions that may prove to be wrong. The Company may need to obtain additional funds sooner or in greateramounts than it currently anticipates. Potential sources of financing include strategic relationships, public or private sales of the Company’s shares or debt,the additional sales from the sale of its State of New Jersey net operating losses in the future and other sources. If the Company raises funds by sellingadditional shares of common stock or other securities convertible into common stock, the ownership interest of existing stockholders may be diluted. Annually, the State of New Jersey enables approved technology and biotechnology businesses with New Jersey net operating tax losses the opportunity tosell these losses through the Technology Business Tax Certificate Program (the “NOL Program”), thereby providing cash to companies to help fund theiroperations. The Company determined it met the eligibility requirements of the NOL Program for 2018 and filed its application with the New Jersey EconomicDevelopment Authority (NJEDA) in June 2018. In this application, the Company requested authorization of up to $12.5 million in tax benefits from itscumulative New Jersey net operating losses to be eligible for sale. In September 2018, the NJEDA notified the Company that its application receivedapproval under the NOL Program for 2018 and after receiving approval from the NJEDA to transfer $11.1 million of tax benefits in December 2018, theCompany successfully transferred these approved tax benefits which resulted in receipt of $10.4 million in net cash proceeds to the Company at the end of2018. The Company has approximately $3.9 million in future tax benefits remaining under the NOL Program for future years. With $27.7 million in cash, investment securities and interest receivable at December 31, 2018, the Company believes it has sufficient capital resources tofund its operations into the third quarter of 2020. The Company will be required to obtain additional funding to continue development of its current productcandidates within the anticipated time periods, if at all, and to continue to fund operations. As more fully discussed in Note 10, the Company hasapproximately $31 million available collectively for future sale of equity securities under a common stock purchase agreement with Aspire Capital Fund,LLC and a common stock sales agreement with JonesTrading International Services LLC. 3. SHORT TERM INVESTMENTS AVAILABLE FOR SALE Short-term investments available for sale of $14,257,998 and $12,724,020 as of December 31, 2018 and 2017, respectively, consist of corporate debtsecurities. These investments are valued at estimated fair value, with unrealized gains and losses reported as a separate component of stockholders’ equity inaccumulated other comprehensive loss. Securities available for sale are evaluated periodically to determine whether a decline in their value is other than temporary. The term “other than temporary”is not intended to indicate a permanent decline in value. Rather, it means that the prospects for near term recovery of value are not necessarily favorable, orthat there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the security. Management reviews criteria such as themagnitude and duration of the decline, as well as the reasons for the decline, to predict whether the loss in value is other than temporary. Once a decline invalue is determined to be other than temporary, the value of the security is reduced and a corresponding charge to earnings is recognized. F-13 A summary of the cost, fair value and maturities of the Company’s short-term investments is as follows: December 31, 2018 December 31, 2017 Cost Fair Value Cost Fair Value Short-term investments Corporate debt securities $14,228,126 $14,257,998 $12,734,184 $12,724,020 Total $14,228,126 $14,257,998 $12,734,184 $12,724,020 December 31, 2018 December 31, 2017 Cost Fair Value Cost Fair Value Short-term investment maturities Within 3 months $5,383,488 $5,393,743 $- $- Between 3-12 months 8,844,638 8,864,255 12,734,184 12,724,020 Total $14,228,126 $14,257,998 $12,734,184 $12,724,020 The following table shows the Company’s investment securities gross unrealized gains (losses) and fair value by investment category and length of time thatindividual securities have been in a continuous unrealized loss position at December 31, 2018 and 2017. The Company has reviewed individual securities todetermine whether a decline in fair value below the amortizable cost basis is other than temporary. December 31, 2018 December 31, 2017 Available for sale securities (all unrealized holdinggains and losses are less than 12 months at date ofmeasurement) Fair Value UnrealizedHoldingGains(Losses) Fair Value UnrealizedHoldingGains(Losses) Investments with unrealized gains $7,515,676 $38,068 $748,148 $570 Investments with unrealized losses 6,742,322 (8,196) 11,975,872 (10,734)Total $14,257,998 $29,872 $12,724,020 $(10,164) Investment income, which includes net realized losses on sales of available for sale securities and investment income interest and dividends, is summarized asfollows: 2018 2017 Interest and dividends accrued and paid $331,780 $26,041 Accretion of investment discounts and premiums, net 32,066 - Losses investment maturity and sales, net (10,164) - Investment income net $353,682 $26,041 4. FAIR VALUES OF FINANCIAL INSTRUMENTS FASB Accounting Standards Codification (ASC) Section 820 “Fair Value Measurements and Disclosures,” establishes a three-level hierarchy for fair valuemeasurements which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Thethree levels of inputs that may be used to measure fair value are as follows: Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurementdate; Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in marketsthat are not active; or other inputs that are observable or can be corroborated by observable market data; and Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions that market participants would use in pricing an asset orliability. F-14 Cash and cash equivalents, other current assets, accounts payable and other accrued liabilities are reflected in the condensed consolidated balance sheet attheir approximate estimated fair values primarily due to their short-term nature. The fair values of securities available for sale is determined by relying on thesecurities’ relationship to other benchmark quoted securities and classified its investments as Level 2 items in both 2018 and 2017. There were no transfers ofassets or liabilities between Level 1 and Level 2 and no transfers in or out of Level 3 during the year ended December 31, 2018 or 2017. The changes in Level3 liabilities were the result of changes in the fair value of the earn-out milestone liability included in earnings and in-process R&D. The earnout milestoneliability is valued using a risk-adjusted assessment of the probability of payment of each milestone, discounted to present value using an estimated time toachieve the milestone (see Note 12). The in-process R&D – GBM is valued using a multi-period excess earnings method (see note 5). Assets and liabilities measured at fair value are summarized below: Total FairValue Quoted Prices InActive Markets ForIdenticalAssets/Liabilities(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservableInputs (Level 3) Assets: Recurring items as of December 31, 2018 Corporate debt securities, available for sale $14,257,998 $─ $14,257,998 $─ Recurring items as of December 31, 2017 Corporate debt securities, available for sale $12,724,020 $─ $12,724,020 $─ Liabilities: Recurring items as of December 31, 2018 Earn-out milestone liability (Note 12) $8,907,664 $─ $─ $8,907,664 Non-recurring items as of December 31, 2018 In process R&D (Note 5) $15,736,491 $─ $─ $15,736,491 Recurring items as of December 31, 2017 Earn-out milestone liability (Note 12) $12,538,525 $─ $─ $12,538,525 Non-recurring items as of December 31, 2017 In process R&D (Note 5) $20,246,491 $─ $─ $20,246,491 5. ACQUISITION OF EGEN, INC. On June 20, 2014, we completed the acquisition of substantially all of the assets of EGEN, Inc., an Alabama corporation, which has changed its companyname to EGWU, Inc. after the closing of the acquisition (“EGEN”), pursuant to an Asset Purchase Agreement dated as of June 6, 2014, by and between EGENand Celsion (the “Asset Purchase Agreement”). We acquired all of EGEN’s right, title and interest in and to substantially all of the assets of EGEN, includingcash 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. In addition, CLSN Laboratories assumed certain specified liabilities ofEGEN, including the liabilities arising out of the acquired contracts and other assets relating to periods after the closing date. At the time of the acquisition, thew total purchase price for the asset acquisition was up to $44.4 million, including potential future earnout payments of upto $30.4 million contingent upon achievement of certain earnout milestones set forth in the Asset Purchase Agreement. We paid approximately $3.0 millionin cash after the expense adjustment and issued 241,590 shares of our common stock to EGEN. The shares of common stock were issued in a privatetransaction exempt from registration under the Securities Act, pursuant to Section 4 (2) thereof. F-15 The following table summarizes the fair values of these assets acquired and liabilities assumed related to the acquisition. Property and equipment, net $35,000 In-process research and development 24,211,000 Other Intangible assets (Covenant not to compete) 1,591,000 Goodwill 1,976,000 Total assets: 27,813,000 Accounts payable and accrued liabilities (235,000)Net assets acquired $27,578,000 Acquired In-process Research and Development Acquired in-process research and development (IPR&D) consists of EGEN’s drug technology platforms: TheraPlas and TheraSilence. The fair value of theIPR&D drug technology platforms was estimated to be $24.2 million as of the acquisition date. As of the closing of the acquisition, the IPR&D wasconsidered indefinite lived intangible assets and will not be amortized. IPR&D is reviewed for impairment at least annually as of our third quarter endedSeptember 30, and whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable. At December 31, 2016, the Company determined one of the IPR&D assets related to the development of its RNA delivery system being developed withcollaborators using their RNA product candidates may be impaired and after an assessment, the Company concluded that this asset, valued at $1.4 million,was impaired. Therefore, the Company wrote off the value of this IPR&D asset, incurring a non-cash charge of $1.4 million in the fourth quarter of 2016. At September 30, 2018 and 2017, after the Company’s annual assessments of the totality of the events that could impair IPR&D, the Company determinedcertain IPR&D assets related to the development of its glioblastoma multiforme cancer (GBM) product candidate may be impaired. To arrive at thisdetermination, the Company assessed the status of studies in GBM conducted by its competitors and the Company’s strategic commitment of resources to itsstudies in primary liver cancer and ovarian cancer. The Company estimated the fair value of the IPR&D related to GBM at September 30, 2018 and 2017using the multi-period excess earnings method (MPEEM). Significant unobservable assumptions used by the Company in the MPEEM model are potentialFDA approval, commercialization dates, dosage pricing, profitability and present value factor. After its assessment on September 30, 2017, the Companyconcluded that the GBM asset, valued at $9.4 million, was partially impaired and wrote down the GBM asset to $6.9 million on September 30, 2017,incurring a non-cash charge of $2.5 million in the third quarter of 2017. After its assessment on September 30, 2018, the Company concluded that the GBMasset, valued at $6.9 million, was partially impaired and wrote down the GBM asset to $2.4 million on September 30, 2018, incurring a non-cash charge of$4.5 million in the third quarter of 2018. After recognizing the impairment related to the IPR&D costs of $4,510,000 in 2018 and $2,520,000 in 2017, theresulting carrying value of its IPR&D costs totaled $15,736,491 and $20,246,491 at December 31, 2018 and 2017, respectively. At September 30, 2018 and 2017, the Company evaluated its IPR&D of the ovarian cancer indication and concluded that it is not more likely than not thatthe asset is impaired. As no other indicators of impairment existed during the fourth quarter of 2018, the Company concluded none of the other IPR&D assetswere impaired at December 31, 2018. The carrying amount of the ovarian cancer indication was $13.3 million at December 31, 2018 and 2017. Covenants Not To Compete Pursuant to the EGEN Purchase Agreement, EGEN provided certain covenants (“Covenant Not To Compete”) to the Company whereby EGEN agreed, duringthe period ending on the seventh anniversary of the closing date of the acquisition on June 20, 2014, not to enter into any business, directly or indirectly,which competes with the business of the Company nor will it contact, solicit or approach any of the employees of the Company for purposes of offeringemployment. The Covenant Not to Compete which was valued at approximately $1.6 million at the date of the EGEN acquisition has a definitive life and isamortized on a straight-line basis over its life of 7 years. The Company recognized amortization expense of $227,316 in 2018 and 2017. The carrying valueof the Covenant Not to Compete was $568,292, net of $1,022,922 accumulated amortization, as of December 31, 2018 and $795,608, net of $795,606accumulated amortization, respectively, as of December 31, 2017 F-16 Following is a schedule of future amortization amounts during the remaining life of the Covenant Not to Compete. Year EndedDecember 31, 2019 $227,316 2020 227,316 2021 113,660 Total $568,292 Goodwill The purchase price exceeded the estimated fair value of the net assets acquired by approximately $2.0 million which was recorded as Goodwill. Goodwillrepresents the difference between the total purchase price for the net assets purchased from EGEN and the aggregate fair values of tangible and intangibleassets acquired, less liabilities assumed. Goodwill is reviewed for impairment at least annually as of our third quarter ended September 30 or sooner if webelieve indicators of impairment exist. As of September 30, 2018, we concluded that the Company’s fair value exceeded its carrying value therefore “it is notmore likely than not” that the Goodwill was impaired. As no other indicators of impairment existed during the fourth quarter of 2018, the Companyconcluded it is “not more likely than not” Goodwill was impaired. Following is a summary of the net fair value of the assets acquired in the EGEN acquisition for the two years ended December 31, 2018: IPR&D Goodwill Covenant Not ToCompete Balance at January 1, 2017, net $22,766,491 $1,976,101 1,022,924 Amortization - - (227,316)Impairment charge (2,520,000) - - Balance at December 31, 2017, net 20,246,491 1,976,101 795,608 Amortization - - (227,316)Impairment charge (4,510,000) - - Balance at December 31, 2018, net 15,736,491 1,976,101 568,292 6. PROPERTY AND EQUIPMENT Year Ended December 31, 2018 2017 Machinery and equipment (5-7 year life) $2,596,170 $2,495,959 Furniture and fixtures (3-5 year life) 267,712 248,709 Leasehold improvements (5-7 year life) 289,004 269,819 3,152,886 3,014,487 Less accumulated depreciation and amortization (2,968,259) (2,838,716)Total $184,627 $175,771 7. OTHER ACCRUED LIABILITIES Other accrued liabilities at December 31, 2018 and 2017 include the following: Year Ended December 31, 2018 2017 Amounts due to contract research organizations and other contractual agreements $749,369 $665,373 Accrued payroll and related benefits 1,592,590 1,258,265 Accrued professional fees 198,654 264,668 Other 45,285 94,521 Total $2,585,898 $2,282,827 8. NOTES PAYABLE Horizon Credit Agreement On June 27, 2018, the Company entered into a loan agreement with Horizon Technology Finance Corporation (“Horizon”) that provided $10 million in newcapital (the “Horizon Credit Agreement”). The Company drew down $10 million upon closing of the Horizon Credit Agreement on June 27, 2018. TheCompany will use the funding provided under the Horizon Credit Agreement for working capital and advancement of its product pipeline. The obligations under the Horizon Credit Agreement are secured by a first-priority security interest in substantially all assets of Celsion other thanintellectual property assets. The obligations will bear interest at a rate calculated based on one-month LIBOR plus 7.625%. The effective interest rate atDecember 31, 2018 was 9.98%. Payments under the loan agreement are interest only for the first twenty-four (24) months after loan closing, followed by a 24-month amortization period of principal and interest through the scheduled maturity date. At its option, the Company can prepay all of the outstandingprincipal balance by prepaying the outstanding principal balance and an amount equal to 1-3% of the outstanding principal balance at that time, based onthe amount of time prior to the maturity date of the notes. F-17 The Horizon Credit Agreement contains customary representations, warranties and affirmative and negative covenants including, among other things,covenants that limit or restrict Celsion’s ability to grant liens, incur indebtedness, make certain restricted payments, merge or consolidate and makedispositions of assets. Upon the occurrence of an event of default under the Horizon Credit Agreement, the lenders may cease making loans, terminate theHorizon Credit Agreement, declare all amounts outstanding to be immediately due and payable and foreclose on or liquidate Celsion’s assets that comprisethe lenders’ collateral. The Horizon Credit Agreement specifies a number of events of default (some of which are subject to applicable grace or cure periods),including, among other things, non-payment defaults, covenant defaults, a material adverse effect on Celsion or its assets, cross-defaults to other materialindebtedness, bankruptcy and insolvency defaults and material judgment defaults. As a fee in connection with the Horizon Credit Agreement, Celsion issued Horizon warrants exercisable for a total of 190,114 shares of Celsion’s commonstock (the “Horizon Warrants”) at a per share exercise price of $2.63. The Horizon Warrants are immediately exercisable for cash or by net exercise from thedate of grant and will expire after ten years from the date of grant. Celsion registered the Horizon Warrants on Form S-3 (File No. 333 - 227236) filed with theSecurities and Exchange Commission on September 7, 2018 and declared effective on October 10, 2018. The Company valued the Horizon Warrants issuedusing the Black-Scholes option pricing model and recorded a total of $507,116 as a direct deduction from the debt liability consistent with the presentationof a debt discount and are being amortized as interest expense using the effective interest method over the life of the loan. In connection with the Horizon Credit Agreement, the Company incurred financing fees and expenses totaling $175,000 which are recorded and classified asdebt discount. In addition, the Company paid loan origination fees of $100,000 which has been recorded and classified as debt discount. These debt discountamounts totaling $782,116 are being amortized as interest expense using the effective interest method over the life of the loan. Also, in connection with eachof the Horizon Credit Agreements, the Company is required to pay an end of term charge equal to 4.0% of the original loan amount at time of maturity.Therefore, these amounts totaling $400,000 are being amortized as interest expense using the effective interest method over the life of the loan. During 2018, the Company incurred $512,872 in interest expense and amortized $199,153 respectively, as interest expense for debt discounts and end ofterm charges in connection with the Horizon Credit Agreement. Following is a schedule of future principle payments, net of unamortized debt discounts and amortized end of term charges, due on the Horizon CreditAgreement: For the year endingDecember 31, 2019 $- 2020 - 2021 4,583,333 2022 5,000,000 2023 and thereafter 416,667 Subtotal of future principle payments 10,000,000 Unamortized debt issuance costs, net (582,963)Total $9,417,037 Hercules Credit Agreement In November 2013, the Company entered into a loan agreement with Hercules Technology Growth Capital, Inc. (Hercules) which permits up to $20 million incapital to be distributed in multiple tranches (the Hercules Credit Agreement). The Company drew the first tranche of $5 million upon closing of the HerculesCredit Agreement in November 2013 and used approximately $4 million of the proceeds to repay the outstanding obligations under its loan agreement withOxford Finance LLC and Horizon Technology Finance Corporation as discussed further below. On June 10, 2014, the Company closed the second $5 milliontranche under the Hercules Credit Agreement. The proceeds were used to fund the $3.0 million upfront cash payment associated with Celsion’s acquisition ofEGEN, as well as the Company’s transaction costs associated with the EGEN acquisition. Upon the closing of the second tranche, the Company had drawndown a total of $10 million under the Hercules Credit Agreement. The obligations under the Hercules Credit Agreement were in the form of secured indebtedness bearing interest at a calculated prime-based variable rate(11.25% per annum since inception through December 17, 2015, 11.50% from December 18, 2015 through December 15, 2016 and 11.75% since). Paymentsunder the loan agreement were interest only for the first twelve months after loan closing, followed by a 30 -month amortization period of principal andinterest through the scheduled maturity date of June 1, 2017. In connection with the Hercules Credit Agreement, the Company incurred cash expenses of$122,378 which were recorded as deferred financing fees. These deferred financing fees were amortized as interest expense using the effective interest methodover the life of the loan. In addition, the Company paid loan origination fees of $230,000 which has been classified as debt discount. This amount is beingamortized as interest expense using the effective interest method over the life of the loan. F-18 As a fee associated with the Hercules Credit Agreement, the Company issued Hercules a warrant for a total of 6,963 shares of the Company’s common stock(the Hercules Warrant) at a per share exercise price of $50.26, exercisable for cash or by net exercise from November 25, 2013. Upon the closing of the secondtranche on June 10, 2014, this warrant became exercisable for an additional 6,963 shares of the Company’s common stock. The Hercules Warrant expired onNovember 25, 2018. Hercules has certain rights to register the common stock underlying the Hercules Warrant pursuant to a Registration Rights Agreementwith the Company dated November 25, 2013. The registration rights expired on the date when such stock may be sold under Rule 144 without restriction orupon the first-year anniversary of the registration statement for such stock, whichever is earlier. The common stock issuable pursuant to the Hercules Warrantwas filed pursuant to Rule 415 under the Securities Act of 1933 on the Prospectus for Registration Statement No. 333 - 193936 and was declared effective onSeptember 30, 2014. The Company valued the Hercules Warrants issued using the Black-Scholes option pricing model and recorded a total of $476,261 as adirect deduction from the debt liability consistent with the presentation of a debt discount and are being amortized as interest expense using the effectiveinterest method over the life of the loan. Also, in connection with each of the $5.0 million tranches, the Company was required to pay an end of term chargeequal to 3.5% of each original loan amount at time of maturity. Therefore, these amounts totaling $350,000 were amortized as interest expense using theeffective interest method over the life of the loan. The loan balance and end of term charges on the Hercules Credit Agreement was paid in full in June 2017.For 2017, the Company incurred $56,386 in interest expense and amortized $35,370 as interest expense for deferred fees, debt discount and end of termcharges in connection with the Hercules Credit Agreement. 9. INCOME TAXES On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The Tax Reform Act significantly changes U.S. tax law by,among other things, lowering corporate income tax rates, implementing a quasi-territorial tax system, providing a one -time transition toll charge on foreignearnings, creating a new limitation on the deductibility of interest expenses and modifying the limitation on officer compensation. The Tax Reform Actpermanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. F-19 The income tax provision (benefit) for the years ended December 31, 2018 and 2017 consists of the following: 2018 2017 Federal Current $- $- Deferred - - State and Local - - Current (10,419,000) - Deferred - - Effective tax rate $(10,419,000) - A reconciliation of the Company’s statutory tax rate to the effective rate for the years ended December 31, 2018 and 2017 is as follows: 2018 2017 Federal statutory rate 21.0% 21.0%State taxes, net of federal tax benefit 36.9 6.6 Permanent differences (3.8) - Other (9.4) - Change in valuation allowance and deferred rate change, net 2.0 (27.6)Effective tax rate 46.7% -% The components of the Company’s deferred tax asset as of December 31, 2018 and 2017 are as follows: December 31, 2018 2017 Net operating loss carryforwards $51,498,000 $62,216,000 Other Deferred tax assets, net 1,092,000 2,415,000 Subtotal 52,590,000 64,631,000 Valuation allowance (52,590,000) (64,631,000)Total deferred tax asset $- $- The evaluation of the realizability of such deferred tax assets in future periods is made based upon a variety of factors that affect the Company’s ability togenerate future taxable income, such as intent and ability to sell assets and historical and projected operating performance. At this time, the Company hasestablished a valuation reserve for all of its deferred tax assets. Such tax assets are available to be recognized and benefit future periods. As of December 31,2018, the Company had net operating losses of approximately $229.7 million of which $222.2 million, if unused, will expire starting in 2023 through 2037.The Federal net operating loss generated for the year ended December 31, 2018 of approximately $7.5 million can be carried forward indefinitely. However,the deduction for net operating losses incurred in tax years beginning after January 1, 2018 is limited to 80% of annual taxable income During 2018, 2017 and in prior years, the Company performed analyses to determine if there were changes in ownership, as defined by Section 382 of theInternal Revenue Code that would limit its ability to utilize certain net operating loss and tax credit carry forwards. The Company determined that itexperienced ownership changes, as defined by Section 382, in connection with certain common stock offerings in July 2011, February 2013, June 2013, June2015, February 2017, June 2017, October 2017 and August 2018. As a result, the utilization of the Company’s federal tax net operating loss carry forwardsgenerated prior to the ownership changes are limited. As of December 31, 2018, the Company has net operating loss carry forwards for U.S. federal and statetax purposes of approximately $233 million, before excluding net operating losses that have been limited as a result of Section 382 limitations. The annuallimitation due to Section 382 for net operating loss carry forward utilization is approximately $4.2 million per year for approximately $90 million in netoperating loss carry forwards existing at the ownership change occurring in July 2011, approximately $1.4 million per year for approximately $34 million ofadditional net operating losses occurring from July 2011 to the ownership change that occurred in February 2013, approximately $1.5 million per year forapproximately $4 million of additional net operating losses occurring from February 2013 to the ownership change that occurred in June 2013,approximately $1.6 million per year for approximately $40 million of additional net operating losses occurring from June 2013 to the ownership change thatoccurred in June 2015, approximately $0.3 million per year for approximately $35 million of additional net operating losses occurring from June 2015 to theownership change that occurred in February 2017, approximately $0.3 million per year for approximately $7 million of additional net operating lossesoccurring from February 2017 to the ownership change that occurred in June 2017, approximately $0.8 million per year for approximately $5 million ofadditional net operating losses occurring from June 2017 to the ownership change that occurred in October 2017, and approximately $1.5 million per year forapproximately $30 million of additional net operating losses occurring from October 2017 to the ownership change that occurred in August 2018. Theutilization of these net operating loss carry forwards may be further limited if the Company experiences future ownership changes as defined in Section 382of the Internal Revenue Code. Sale of New Jersey Net Operating Losses The Company received approval to sell a portion of the Company’s New Jersey NOLs as part of the Technology Business Tax Certificate Program sponsoredby The New Jersey Economic Development Authority. Under the program, emerging biotechnology companies with unused NOLs and unused research anddevelopment credits are allowed to sell these benefits to other companies. In December 2018, the Company received cash proceeds of $10.4 million from thesale of NOLs. Such proceeds are reflected as a tax benefit for the year ended December 31, 2018. F-20 10. STOCKHOLDERS’ EQUITY In September 2018, the Company filed with the SEC a new $75 million shelf registration statement on Form S-3 (the 2018 Shelf Registration Statement) (FileNo. 333-227236) that allows the Company to issue any combination of common stock, preferred stock or warrants to purchase common stock or preferredstock. This shelf registration was declared effective on October 12, 2018 and will expire three years from that date. Increase in the Number of Authorized Shares At the 2016 Annual Meeting of Stockholders of the Company in June 2016, the Company’s stockholders approved an increase in the number of theauthorized shares of the Company’s common stock from 75,000,000 shares to 112,500,000 shares. The number of the authorized shares of preferred stockremains at 100,000 shares. The aggregate number of shares of all classes of stock that the Company may issue, after giving effect to such amendment asapproved by the stockholders, will be 112,600,000 shares. Reverse Stock Split On May 26, 2017, the Company effected a 14-for-1 reverse stock split of its common stock which was made effective for trading purposes as of thecommencement of trading on May 30, 2017. As of that date, each 14 shares of issued and outstanding common stock and equivalents was consolidated intoone share of common stock. All shares have been restated to reflect the effects of the 14 -for- 1 reverse stock split. In addition, at the market open on May 30,2017, the Company’s common stock started trading under a new CUSIP number 15117N503 although the Company’s ticker symbol, CLSN, remainedunchanged. The reverse stock split was previously approved by the Company’s stockholders at the 2017 Annual Meeting held on May 16, 2017, and the Companysubsequently filed a Certificate of Amendment to its Certificate of Incorporation to effect the stock consolidation. The primary reasons for the reverse stocksplit and the amendment are: ●To increase the market price of the Company’s common stock making it more attractive to a broader range of institutional and other investors,and ●To provide the Company with additional capital resources and flexibility sufficient to execute its business plans including the establishment ofstrategic relationships with other companies and to ensure its ability to raise additional capital as necessary. Immediately prior to the reverse stock split, the Company had 56,982,418 shares of common stock outstanding which consolidated into 4,070,172 shares ofthe Company’s common stock. No fractional shares were issued in connection with the reverse stock split. Holders of fractional shares have been paid out incash for the fractional portion with the Company’s overall exposure for such payouts consisting of a nominal amount. The number of outstanding optionsand warrants were adjusted accordingly, with outstanding options being reduced from approximately 2.4 million to approximately 0.2 million andoutstanding warrants being reduced from approximately 33.5 million to approximately 2.4 million. October 2017 Underwritten Offering On October 27, 2017, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Oppenheimer & Co. Inc. (the“Underwriter”), relating to the issuance and sale (the “Offering”) of 2,640,000 shares (the “Shares”) of the Company’s common stock, $0.01 par value pershare (the “Common Stock”), and warrants to purchase an aggregate of 1,320,000 shares of Common Stock. Each share of Common Stock is being soldtogether with 0.5 warrants (the “Investor Warrants”), each whole Investor Warrant being exercisable for one share of Common Stock, at an offering price of$2.50 per share and related Investor Warrants. Pursuant to the terms of the Underwriting Agreement, the Underwriter agreed to purchase the Shares and related Investor Warrants from the Company at aprice of $2.325 per share and related Investor Warrants. Each Investor Warrant is exercisable six months from the date of issuance. The Investor Warrants havean exercise price of $3.00 per whole share and expire five years from the date first exercisable. On October 26, 2018, the Company and the holders of theInvestor Warrants entered into Warrant Exchange Agreements (the “Exchange Agreements”) whereby each of the holders of the Investor Warrants elected tosurrender Investor Warrants, representing 1,320,000 shares of Common Stock collectively. In exchange for the surrender of the Investor Warrants, theseholders received 820,714 shares of Common Stock. In connection with this exchange and the exchange discussed below with 321,428 warrants from theFebruary 14, 2017 Public Offering, the Company incurred approximately $130,000 of broker and legal fees which are presented as a component ofstockholders equity. The Company received $6.6 million of gross proceeds from the sale of the Shares and Investor Warrant. This Offering was made pursuant to the Company’seffective shelf registration statement on Form S- 3 (File No. 333 - 206789) filed with the Securities and Exchange Commission on September 4, 2015, anddeclared effective on September 25, 2015, including the base prospectus dated September 25, 2017 included therein and the related prospectus supplement.The Company also issued to the Underwriter warrants to purchase up to 66,000 shares of the Company’s common stock, such issuance being exempt fromregistration pursuant to Section 4 (a)(2) of the Securities Act. Each Underwriter warrant is exercisable six months from the date of issuance, have an exerciseprice of $2.87 per whole share, and expire five years from the date first exercisable. F-21 July 6, 2017 Common Stock Offering On July 6, 2017, the Company entered into a securities purchase agreement with several investors, pursuant to which the Company agreed to issue and sell, ina registered direct offering, an aggregate of 2,050,000 shares of common stock of the Company at an offering price of $2.07 per share for gross proceeds of$4,243,500 before the deduction of the placement agent fee and offering expenses. In addition, the Company sold Pre-Funded Series CCC Warrants topurchase 385,000 shares of common stock (and the shares of common stock issuable upon exercise of the Pre-Funded Series CCC Warrants), in lieu of sharesof common stock to the extent that the purchase of common stock would cause the beneficial ownership of the Purchaser, together with its affiliates andcertain related parties, to exceed 9.99% of our common stock. The Pre-Funded Series CCC Warrants were sold at an offering price of $2.06 per share for grossproceeds of $793,100, are immediately exercisable for $0.01 per share of common stock and do not have an expiration date. In a concurrent privateplacement, the Company agreed to issue to each investor, for each share of common stock and pre-funded warrant purchased in the offering, a Series AAAWarrant and Series BBB Warrant, each to purchase one share of common stock. The Series AAA Warrants are initially exercisable six months followingissuance and terminate five and one-half years following issuance. The Series AAA Warrants have an exercise price of $2.07 per share and are exercisable topurchase an aggregate of 2,435,000 shares of common stock. The Series BBB Warrants are immediately exercisable following issuance and terminate twelvemonths following issuance. The Series BBB Warrants have an exercise price of $4.75 per share and are exercisable to purchase an aggregate of 2,435,000shares of common stock. Subject to limited exceptions, a holder of a Series AAA and Series BBB Warrant will not have the right to exercise any portion of itswarrants if the holder, together with its affiliates, would beneficially own in excess of 9.99% of the number of shares of common stock outstandingimmediately after giving effect to such exercise. During the fourth quarter of 2017, all 385,000 of the Series CCC Pre-Funded warrants were exercised in full. On October 4, 2017, the Company entered into letter agreements (the “Exercise Agreements”) with the holders of the Series AAA and Series BBB Warrantsissued in the July 6, 2017 Common Stock Offering (the “Exercising Holders”). The Exercise Agreements amended the Series AAA Warrants to permit theirimmediate exercise. Prior to the execution of the Exercise Agreements, the Series AAA Warrants were not exercisable until January 11, 2018. Pursuant to theExercise Agreements, the Exercising Holders and the Company agreed that the Exercising Holders would exercise all of their Existing Warrants with respectto 4,665,000 shares of Common Stock underlying such Existing Warrants. The Series AAA Warrants and Series BBB Warrants were exercised at a price of$2.07 per share and $4.75 per share, respectively, which were their respective original exercise prices. The Company received approximately $16.6 million ingross proceeds from the sale of these warrants. The Exercise Agreements amended the Series AAA Warrants to permit their immediate exercise. Prior to the execution of the Exercise Agreements, the SeriesAAA Warrants were not exercisable until January 11, 2018. Pursuant to the Exercise Agreements, the Exercising Holders and the Company agreed that theExercising Holders would exercise all of their Existing Warrants with respect to 4,665,000 shares of Common Stock underlying such Existing Warrants. TheSeries AAA Warrants and Series BBB Warrants were exercised at a price of $2.07 per share and $4.75 per share, respectively, which were their respectiveoriginal exercise prices. The Company received approximately $16.6 million in gross proceeds from the sale of these warrants. The Exercise Agreements also provide for the issuance of 1,166,250 Series DDD Warrants, each to purchase one share of Common Stock (the “Series DDDWarrants”). The Series DDD Warrants have an exercise price $6.20, are exercisable one year following issuance and terminate six months after they areinitially exercisable. The Series DDD Warrants and the shares of Common Stock issuable upon the exercise of the Series DDD Warrants were offered pursuantto the exemption provided in Section 4(a)(2) under the Securities Act or Rule 506(b) promulgated thereunder. Pursuant to the Exercise Agreements, the SeriesDDD Warrants shall be substantially in the form of the Existing Warrants and the Company will be required to register for resale the shares of Common Stockunderlying the Series DDD Warrants. February 14, 2017 Public Offering On February 14, 2017, the Company entered into a securities purchase agreement whereby it sold, in a public offering (the “February 2017 Public Offering”),an aggregate of 1,384,704 shares of common stock of the Company at an offering price of $3.22 per share. In addition, the Company sold Series AA Warrants(the “Series AA Warrants”) to purchase up to 1,177,790 shares of common stock and Pre-Funded Series BB Warrants (the “Pre-Funded Series BB Warrants”)to purchase up to 185,713 shares of common stock. The Series AA Warrants have an exercise price of $3.22 per share, have a five-year life and areimmediately exercisable. The Pre-Funded Series BB Warrants were offered at $3.08 per share, were immediately exercisable for $0.14 per share of commonstock, do not have an expiration date and were issued in lieu of shares of common stock to the extent that the purchase of common stock would cause thebeneficial ownership of the purchaser of such shares, together with its affiliates and certain related parties, to exceed 9.99% of our common stock. TheCompany received approximately $5.0 million in gross proceeds before the deduction of the placement agent fees and offering expenses (excluding anyproceeds from the exercise of the warrants) in the February 2017 Public Offering. F-22 Concurrently with the exchange agreements associated with the Investor Warrants discussed above on October 26, 2018, the Company and certain holders ofthe Series AA Warrants entered into Exchange Agreements whereby certain holders of the Series AA Warrants elected to surrender their Series AA Warrants,representing 321,428 shares of Common Stock collectively. In exchange for the surrender of their Series AA Warrants, these holders received 160,414 sharesof Common Stock. Collectively the Company incurred broker and legal fees of approximately $0.1 million associated with the Exchange Agreements andrecorded these as costs of equity financing and charged against additional paid-in capital. In connection with the February 2017 Public Offering, the Company filed with the SEC a registration statement on Form S-1 (Registration No. 333-215321)on December 23, 2016, as amended by Pre-Effective Amendment No. 1 filed with the Commission on January 20, 2017, as further amended by Pre-EffectiveAmendment No. 2 filed with the Commission on February 13, 2017, as further amended by Pre-Effective Amendment No. 3 filed with the Commission onFebruary 13, 2017 and as further amended by Pre-Effective Amendment No. 4 filed with the Commission on February 14, 2017 for the registration of thesecurities issued and sold under the Securities Act of 1933, as amended. As of December 31, 2017, all 185,713 of the Series BB Pre-Funded warrants were exercised in full. During 2017, we received approximately $2.4 million fromthe exercise of Series AA Warrants to purchase 747,254 shares of common stock. Reduced Exercise Price of Warrants On February 22, 2013, the Company entered into a securities purchase agreement with certain investors pursuant to which the Company agreed, among otherthings, to issue warrants (the “2013 Warrants”) to purchase up to 95,811 shares of our common stock at an exercise price of $74.34 per share to such investorsin a registered direct offering. On January 15, 2014, the Company entered into a securities purchase agreement with certain investors pursuant to which theCompany agreed, among other things, to issue warrants (the “2014 Warrants”) to purchase up to 64,348 shares of our common stock at an exercise price of$57.40 per share to such investors in a registered direct offering. On June 9, 2017, the Company entered into warrant exercise agreements (the “ExerciseAgreements”) with certain holders of the 2013 Warrants, the 2014 Warrants and the June 2016 Warrants (the “Exercising Holders”), which Exercising Holdersown, in the aggregate, warrants exercisable for 790,410 shares of our common stock. Pursuant to the Exercise Agreements, the Exercising Holders and theCompany agreed that the Exercising Holders would exercise their 2013 Warrants, the 2014 Warrants and the June 2016 Warrants with respect to 790,410shares of our common stock underlying such warrants for a reduced exercise price equal to $2.70 per share. The Company received aggregate gross proceedsof approximately $2.1 million from the exercise of the 2013 Warrants, the 2014 Warrants and the June 2016 Warrants by the Exercising Holders. The reduced exercise price of the 2013 Warrants, the 2014 Warrants and the June 2016 Series C Warrants increased the fair value of the warrants byapproximately $0.2 million. This increase in fair value is recorded as a deemed dividend in additional paid in capital due to the retained deficit and itincreased the net loss available to common shareholders on the consolidate statement of operations. On May 27, 2015, the Company entered into a securities purchase agreement with certain investors pursuant to which the Company agreed, among otherthings, to issue warrants (the “2015 Warrants”) to purchase up to 139,284 shares of the Company’s common stock at an exercise price of $36.40 per share, tosuch investors in a registered direct offering. Between June 22, 2017 through June 26, 2017, the Company and holders of the 2015 Warrants and theDecember 2016 Warrants (the “Exercising Investors”) entered into agreements whereby the Company agreed that the Exercising investors would exercisetheir 2015 Warrants and the June 2016 Warrants with respect to 506,627 shares of our common stock underlying such warrants for a reduced exercise priceequal to $1.65 per share. The Company received aggregate gross proceeds of approximately $0.8 million from the exercise of the 2015 Warrants and the June2016 Warrants by the Exercising Investors. The reduced exercise price of the 2015 Warrants increased the fair value of the warrants by approximately $0.1 million. This increase in fair value is recordedas a deemed dividend in additional paid in capital due to the retained deficit and it increased the net loss available to common shareholders on theconsolidate statement of operations. Aspire Purchase Agreement On August 31, 2018, we entered into a common stock purchase agreement (the “Aspire Purchase Agreement”) with Aspire Capital Fund, LLC (“AspireCapital”) which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to anaggregate of $15.0 million of shares of the Company’s common stock over the 24-month term of the Aspire Purchase Agreement. On October 12, 2018, theCompany filed with the SEC a prospectus supplement to the 2018 Shelf Registration Statement registering all of the shares of common stock that may beoffered to Aspire Capital from time to time. F-23 Under the Aspire Purchase Agreement, on any trading day selected by the Company, the Company has the right, in its sole discretion, to present AspireCapital with a purchase notice (each, a “Purchase Notice”), directing Aspire Capital (as principal) to purchase up to 100,000 shares of the Company’scommon stock per business day, up to $15.0 million of the Company’s common stock in the aggregate at a per share price (the “Purchase Price”) equal to thelesser of: ●the lowest sale price of the Company’s common stock on the purchase date; or ●the arithmetic average of the three (3) lowest closing sale prices for the Company’s common stock during the ten (10) consecutive trading daysending on the trading day immediately preceding the purchase date. The Company and Aspire Capital also may mutually agree to increase the number of shares that may be sold to as much as an additional 2,000,000 shares perbusiness day. In addition, on any date on which the Company submits a Purchase Notice to Aspire Capital in an amount equal to at least 100,000 shares, the Company alsohas the right, in its sole discretion, to present Aspire Capital with a volume-weighted average price purchase notice (each, a “VWAP Purchase Notice”)directing Aspire Capital to purchase an amount of stock equal to up to 30% of the aggregate shares of the Company’s common stock traded on its principalmarket on the next trading day (the “VWAP Purchase Date”), subject to a maximum number of shares the Company may determine. The purchase price pershare pursuant to such VWAP Purchase Notice is generally 97% of the volume-weighted average price for the Company’s common stock traded on itsprincipal market on the VWAP Purchase Date. The Purchase Price will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring during theperiod(s) used to compute the Purchase Price. The Company may deliver multiple Purchase Notices and VWAP Purchase Notices to Aspire Capital from timeto time during the term of the Purchase Agreement, so long as the most recent purchase has been completed. There are no trading volume requirements or restrictions under the Purchase Agreement, and the Company will control the timing and amount of sales of theCompany’s common stock to Aspire Capital. Aspire Capital has no right to require any sales by the Company but is obligated to make purchases from theCompany as directed by the Company in accordance with the Purchase Agreement. There are no limitations on use of proceeds, financial or businesscovenants, restrictions on future funding, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. Inconsideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement, the Company issued to Aspire Capital164,835 shares of the Company’s common stock (the “Commitment Shares”). The Company’s policy is to record specific incremental costs directlyattributable to an offering as a charge against the gross proceeds, if any, when the offering becomes effective. These Commitment Shares valued at $450,000were recorded in September 2018 as costs of equity financing and charged against additional paid-in capital. The Aspire Purchase Agreement may beterminated by the Company at any time, at its discretion, without any cost to the Company. Aspire Capital has agreed that neither it nor any of its agents,representatives and affiliates shall engage in any direct or indirect short-selling or hedging of the Company’s common stock during any time prior to thetermination of the Purchase Agreement. Any proceeds from the Company receives under the Aspire Purchase Agreement are expected to be used for workingcapital and general corporate purposes. During 2018 and as of December 31, 2018, the Company sold and issued an aggregate of 100,000 shares under thePurchase Agreement, receiving approximately $0.2 million. During 2019 and as of March 28, 2019, the Company sold and issued an aggregate of 600,000shares under the Purchase Agreement, receiving approximately $1.3 million. Capital on DemandTM Sales Agreement On December 4, 2018, the Company entered into a Capital on DemandTM Sales Agreement (the “Capital on Demand Agreement”) with JonesTradingInstitutional Services LLC, as sales agent (“JonesTrading”), pursuant to which the Company may offer and sell, from time to time, through JonesTradingshares of Common Stock having an aggregate offering price of up to $16.0 million. The Company intends to use the net proceeds from the offering, if any, forgeneral corporate purposes, including research and development activities, capital expenditures and working capital. The Company is not obligated to sell any Common Stock under the Capital on Demand Agreement and, subject to the terms and conditions of the Capital onDemand Agreement, JonesTrading will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state andfederal law, rules and regulations and the rules of The NASDAQ Capital Market, to sell Common Stock from time to time based upon Celsion’s instructions,including any price, time or size limits or other customary parameters or conditions the Company may impose. Under the Capital on Demand Agreement,JonesTrading may sell Common Stock by any method deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Actof 1933, as amended. The Capital on Demand Agreement will terminate upon the earlier of (i) the sale of all shares of our common stock subject to the Sales Agreement, and (ii) thetermination of the Capital on Demand Agreement by JonesTrading or Celsion. The Capital on Demand Agreement may be terminated by JonesTrading or theCompany at any time upon 10 days’ notice to the other party, or by JonesTrading at any time in certain circumstances, including the occurrence of a materialadverse change in the Company. F-24 The Company will pay JonesTrading a commission of 3.0% of the aggregate gross proceeds from each sale of Common Stock and has agreed to provideJonesTrading with customary indemnification and contribution rights. The Shares will be issued pursuant to Celsion’s previously filed and effective Registration Statement on Form S-3 (File No. 333-227236), the base prospectusdated October 12, 2018, filed as part of such Registration Statement, and the prospectus supplement dated December 4, 2018, filed by Celsion with theSecurities and Exchange Commission. The Company did not sell any shares under the Capital on Demand Agreement as of December 31, 2018. During 2019and as of March 28, 2019, the Company sold and issued an aggregate of 122,186 shares under the Capital on Demand Agreement, receiving approximately$0.3 million. Controlled Equity Offering On February 1, 2013, the Company entered into a Controlled Equity Offering SM Sales Agreement (the “ATM Agreement”) with Cantor Fitzgerald & Co., assales agent (“Cantor”), pursuant to which Celsion could offer and sell, from time to time, through Cantor, shares of our common stock having an aggregateoffering price of up to $25.0 million (the “ATM Shares”) pursuant to the 2015 Shelf Registration Statement. Under the ATM Agreement, Cantor may sellATM Shares by any method deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended,including sales made directly on The NASDAQ Capital Market, on any other existing trading market for our common stock or to or through a market maker.On October 10, 2018, the Company delivered notice to Cantor terminating the ATM effective as of October 20, 2018. The Company has no furtherobligations under the Sales Agreement. During 2018, the Company received approximately $1.2 million in proceeds from the sale of 457,070 shares ofcommon stock under the ATM Agreement and during 2017, it received approximately $3.9 million in proceeds from the sale of 1,221,348 shares of commonstock under the ATM Agreement. From February 1, 2013 through September 30, 2018, the Company sold and issued an aggregate of 1,784,396 shares ofcommon stock under the ATM Agreement, receiving approximately $12.8 million in gross proceeds. 11. STOCK-BASED COMPENSATION The Company has long-term compensation plans that permit the granting of equity based-awards in the form of stock options, restricted stock, restrictedstock units, stock appreciation rights, other stock awards, and performance awards. At the 2018 Annual Stockholders Meeting of the Company held on May 15, 2018, stockholders approved the Celsion Corporation 2018 Stock IncentivePlan (the “2018 Plan”). The 2018 Plan, as adopted, permits the granting of 2,700,000 shares of Celsion common stock as equity awards in the form ofincentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, other stock awards, performance awards,or in any combination of the foregoing. Prior to the adoption of the 2018 Plan, the Company had maintained the Celsion Corporation 2007 Stock IncentivePlan (the 2007 Plan). The 2007 Plan permitted the granting of 688,531 shares of Celsion common stock as equity awards in the form of incentive stockoptions, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock, performance awards, or in anycombination of the foregoing. The 2018 Plan replaced the 2007 Plan although the 2007 Plan remains in effect for awards previously granted under the 2007Plan. Under the terms of the 2018 Plan, any shares subject to an award under the 2007 Plan which are not delivered because of the expiration, forfeiture,termination or cash settlement of the award will become available for grant under the 2018 Plan. The Company has issued stock awards to employees and directors in the form of stock options and restricted stock. Options are generally granted with strikeprices equal to the fair market value of a share of Celsion common stock on the date of grant. Incentive stock options may be granted to purchase shares ofcommon stock at a price not less than 100% of the fair market value of the underlying shares on the date of grant, provided that the exercise price of anyincentive stock option granted to an eligible employee owning more than 10% of the outstanding stock of Celsion must be at least 110% of such fair marketvalue on the date of grant. Only officers and key employees may receive incentive stock options. Option and restricted stock awards vest upon terms determined by the Compensation Committee of the Board of Directors and are subject to acceleratedvesting in the event of a change of control or certain terminations of employment. The Company issues new shares to satisfy its obligations from the exerciseof options or the grant of restricted stock awards. On September 28, 2018, the Compensation Committee of the Board of Directors approved the grant of (i) inducement stock options (the “Inducement OptionGrants”) to purchase a total of 164,004 shares of Celsion common stock and (ii) inducement restricted stock awards (the “Inducement Stock Grants”) totaling19,000 shares of Celsion common stock to three new employees. All awards have a grant date of September 28, 2018. Each of Inducement Option Grant hasan exercise price per share equal to $2.77, the closing price of Celsion’s common stock as reported by Nasdaq on September 28, 2018. Each InducementOption Grant will vest over three years, with one-third vesting on the one-year anniversary of the employee’s first day of employment with the Company andone-third vesting on the second and third anniversaries thereafter, subject to the new employee’s continued service relationship with the Company on eachsuch date. Each Inducement Option Grant has a ten-year term and is subject to the terms and conditions of the applicable stock option agreement. Each ofInducement Stock Grant will vest on the one-year anniversary of the employee’s first day of employment with the Company and are subject to the newemployee’s continued service relationship with the Company through such date and is subject to the terms and conditions of the applicable restricted stockagreement. F-25 As of December 31, 2018, there were a total of 3,399,893 shares of Celsion common stock reserved for issuance under the 2018 Plan, which were comprised of3,064,741 shares of Celsion common stock subject to equity awards previously granted under the 2018 Plan and 2007 Plan and 335,152 shares of Celsioncommon stock available for future issuance under the 2018 Plan. As of December 31, 2018, there were a total of 106,502 of Celsion common stock subject tooutstanding inducement awards. Total compensation cost charged related to stock options and restricted stock awards amounted to $4.6 million and $1.1 million during 2018 and 2017,respectively as was recognized in operating expenses. As of December 31, 2018, there was $1.8 million of total unrecognized compensation cost related tonon-vested stock-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 0.9 years. The weightedaverage grant date fair values of the stock options granted during 2018 and 2017 was $2.36 and 2.32, respectively. A summary of stock option awards as of December 31, 2018 and changes during the two-year period ended December 31, 2018 is presented below: Stock Options NumberOutstanding Weighted AverageExercise Price Weighted AverageRemainingContractual Term(years) Aggregate IntrinsicValue Outstanding at January 1, 2017 211,213 $61.59 Granted 535,964 $2.69 Canceled or expired (43,735) $164.12 Outstanding at December 31, 2017 703,442 $10.34 Granted 2,629,004 $2.26 Canceled or expired (183,703) $25.96 Outstanding at December 31, 2018 3,148,743 $2.67 9.2 $- Exercisable at December 31, 2018 1,689,902 $2.97 9.1 $- A summary of the status of the Company’s non-vested restricted stock awards as of December 31, 2018 and changes during the two year period endedDecember 31, 2018, is presented below: Restricted Stock NumberOutstanding WeightedAverageGrant DateFair Value Non-vested stock awards outstanding at January 1, 2017 4,785 $37.42 Granted (3,357) $42.20 Vested and issued (1,428) $26.18 Non-vested stock awards outstanding at December 31, 2017 - $- Granted 35,000 $2.71 Vested and issued (6,000) $2.77 Forfeited (6,500) $2.64 Non-vested stock awards outstanding at December 31, 2018 22,500 $2.72 F-26 A summary of stock options outstanding at December 31, 2018 by price range is as follows: Options Outstanding Options Exercisable Range of Exercise Prices Number WeightedAverageRemainingContractualTerm(in years) WeightedAverageExercisePrice Number WeightedAverageRemainingContractualTerm(in years) WeightedAverageExercisePrice Up to $5.00 3,084,252 9.2 $2.34 1,625,807 9.2 $2.34 Above $5.00 to $81.90 64,491 7.0 $19.00 64,095 7.0 $19.00 3,148,743 1,689,902 The fair values of stock options granted were estimated at the date of grant using the Black-Scholes option pricing model. The Black-Scholes model wasoriginally developed for use in estimating the fair value of traded options, which have different characteristics from Celsion’s stock options. The model isalso sensitive to changes in assumptions, which can materially affect the fair value estimate. The Company used the following assumptions for determiningthe fair value of options granted under the Black-Scholes option pricing model: Year Ended December 31, 2018 2017 Risk-free interest rate 2.82 to 3.02% 2.21 to 2.32%Expected volatility 99.9 - 102.12% 90.4 - 100.8%Expected life (in years) 8.5 to 10 10 Expected dividend yield 0.0% 0.0% Expected volatilities utilized in the model are based on historical volatility of the Company’s stock price. Starting in 2017, the Company made the electionto account for forfeitures when they occur. 12. EARN-OUT MILESTONE LIABILITY The total aggregate purchase price for the EGEN Acquisition included potential future Earn-out Payments contingent upon achievement of certainmilestones. The difference between the aggregate $30.4 million in future Earn-out Payments and the $13.9 million included in the fair value of theacquisition consideration at June 20, 2014 was based on the Company’s risk-adjusted assessment of each milestone (10% to 67%) and utilizing a discountrate based on the estimated time to achieve the milestone (1.5 to 2.5 years). The earn-out milestone liability will be fair valued at the end of each quarter andany change in their value will be recognized in the financial statements. At December 31, 2018, the Company fair valued the earn-out milestone liability at $8.9 million and recognized a non-cash gain of $3.6 million during 2018as a result of the change in the fair value of earn-out milestone liability of $12.5 million at December 31, 2017. Included in the non-cash gain during 2018,was the reduction of the liability by $3.9 million during the third quarter of 2017 related to the write down of one of the in-process research and developmentassets (see Note 5) as the Company believes there is a de minimis probability of the payout of the related earn-out milestone liabilities. The fair value of theremaining earn-out milestone liabilities at December 31, 2018 was based on the Company’s risk-adjusted assessment of each milestone (80%) utilizing adiscount rate based on the estimated time to achieve the milestone (1.25 years). At December 31, 2017, the Company fair valued the earn-out milestone liability at $12.5 million and recognized a non-cash gain of $0.6 million during 2017as a result of the change in the fair value of earn-out milestone liability of $13.2 million at December 31, 2016. The non-cash gain during 2017 resulted fromthe reduction of the liability by $1.4 million during the third quarter of 2017 related to the partial write down of one of the in-process research anddevelopment assets (see Note 5) as the Company believes there is a reduced probability of the payout of the related earn-out milestone liabilities. The fairvalue of the remaining earn-out milestone liabilities at December 31, 2017 was based on the Company’s risk-adjusted assessment of each milestone (50% to80%) utilizing a discount rate based on the estimated time to achieve the milestone (1.3 to 1.5 years). The following is a summary of the changes in the earn-out milestone liability for 2017 and 2018: Balance at January 1, 2017 $13,188,226 Non-cash gain from the adjustment for the change in fair value included in 2017 net loss (649,701)Balance at December 31, 2017 12,538,525 Non-cash gain from the adjustment for the change in fair value included in 2018 net loss (3,630,861)Balance at December 31, 2018 $8,907,664 F-27 13. WARRANTS As more fully described in Notes 8 and 10, the Company completed a series of equity and debt financing transactions in 2018 and 2017 that included theissuance of warrants to purchase 190,114 and 9,231,628 shares, respectively, of the Company’s common stock. During 2018, the Company and certaininvestors holding warrants to collectively purchase 1.6 million shares of the Company’s common stock, which were received in the February 2017 PublicOffering and the October 2017 Underwritten Offering, entered into warrant exchange agreements whereby the Company issued 820,714 shares of its commonstock in exchange for the cancellation of the warrants. Investors exercised warrants to purchase 7,617,148 shares of common stock providing $22.0 million ingross proceeds to the Company during 2017. Warrants to purchase 13,927 and 44,037 shares of common stock expired during 2018 and 2017, respectively.After the warrant exchange, warrants outstanding totaled approximately 1.6 million with a weighted average exercise price of $5.75 per share as of December31, 2018. Approximately 1.2 million of these outstanding warrants with a strike price of $6.20 per share will expire on April 4, 2019. Following is a summary of all warrant activity for the two years ended December 31, 2018: Warrants Number ofWarrantsIssued WeightedAverageExercisePrice Warrants outstanding at January 1, 2017 1,487,958 $9.39 Warrants issued in connection with 2017 equity transactions 9,231,628 $3.46 Warrants exercised during 2017 (7,617,147) $2.89 Warrants expired during 2017 (44,037) $209.23 Warrants outstanding at December 31, 2017 3,058,402 $5.29 Warrants issued in connection with 2018 debt transaction 190,114 $2.63 Warrants cancelled in exchange for common stock (1,641,427) $3.04 Warrants expired during 2018 (13,927) $226.24 Warrants outstanding and exercisable at December 31, 2018 1,593,162 $5.36 Aggregate intrinsic value of outstanding warrants at December 31, 2018 $- Weighted average remaining contractual terms (years) 1.87 14. CELSION EMPLOYEE BENEFIT PLANS Celsion maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code. The plan covers substantially all employees over the ageof 21. Participating employees may defer a portion of their pretax earnings, up to the IRS annual contribution limit. The Company makes a matchingcontribution up to a maximum of 3% of an employee’s annual salary. The Company’s total matching contributions for the years ended December 31, 2018and 2017 was $93,948 and $77,352 respectively. During 2018 and 2017, the Company also provided a discretionary contribution totaling $181,999 and$172,497, respectively, which represented 6% of each eligible participant’s annual salary in each of 2018 and 2017. These amounts were paid in January ineach of the subsequent years. 15. LICENSES OF INTELLECTUAL PROPERTY AND PATENTS On November 10, 1999, the Company entered into a license agreement with Duke University (“Duke”) under which the Company received worldwideexclusive rights (subject to certain exceptions) to commercialize and use Duke’s thermally sensitive liposome technology. The license agreement containsannual royalty and minimum payment provisions due on net sales. The agreement also required milestone-based royalty payments measured by variousevents, including product development stages, FDA applications and approvals, foreign marketing approvals and achievement of significant sales. However,in lieu of such milestone-based cash payments, Duke agreed to accept shares of the Company’s common stock to be issued in installments at the time eachmilestone payment is due, with each installment of shares to be calculated at the average closing price of the common stock during the 20 trading days priorto issuance. The total number of shares issuable to Duke under these provisions is subject to adjustment in certain cases, and Duke has piggyback registration rights forpublic offerings taking place more than one year after the effective date of the license agreement. On January 31, 2003, the Company issued 253,691 sharesof common stock to Duke University valued at $2.2 million as payment for milestone-based royalties under this license agreement. An amendment to theDuke license agreement contains certain development and regulatory milestones, and other performance requirements that the Company has met with respectto the use of the licensed technologies. The Company will be obligated to make royalty payments based on sales to Duke upon commercialization, until thelast of the Duke patents expire. For the years ended December 31, 2018 and 2017, the Company has not incurred any expense under this agreement and willnot incur any future liabilities until commercial sales commence. F-28 Under the November 1999 license agreement with Duke, the Company has rights to the thermally sensitive liposome technology, including Duke’s U.S.patents covering the technology as well as all foreign counter parts and related pending applications. Foreign counterpart applications have been issued inthe EU, Hong Kong, Australia and Canada and have been allowed in Japan. The EU patent has been validated in Austria, Belgium, France, Germany, GreatBritain, Italy, Luxembourg, Monaco, Spain and Switzerland. In addition, the Duke license agreement provides the Company with rights to multiple issuedand pending U.S. patents related to the formulation, method of making and use of heat sensitive liposomes. The Company’s rights under the licenseagreement with Duke extend for the life of the last-to-expire of the licensed patents. The Company has licensed from Valentis, CA certain global rights covering the use of pegylation for temperature sensitive liposomes. In addition to the rights available to the Company under completed or pending license agreements, the Company is actively pursuing patent protection fortechnologies developed by the Company. Among these patents is a family of pending US and international patent applications which seek to protect theCompany’s proprietary method of storing ThermoDox® which is critical for worldwide distribution channels. ThermoDox® is a registered trademark in the U.S., Argentina, Australia, Canada, China, Columbia, the EU Member States: (Austria, Belgium, Bulgaria,Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Korea, Latvia, Lithuania, Luxembourg,Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, the United Kingdom), Hong Kong, Israel, Japan, New Zealand, Peru,Philippines, Russia, Singapore, South Korea and Taiwan. The Company has registered transliterations of ThermoDox® in China, Hong Kong, Japan,Singapore, South Korea and Taiwan. The Company has an additional 14 trademark protection applications pending for ThermoDox® in countries world-wide. Finally, through proprietary information agreements with employees, consultants and others, the Company seeks to protect its own proprietary know-howand trade secrets. The Company cannot offer assurances that these confidentiality agreements will not be breached, that the Company will have adequateremedies for any breach, or that these agreements, even if fully enforced, will be adequate to prevent third-party use of the Company’s proprietarytechnology. Similarly, the Company cannot guarantee that technology rights licensed to it by others will not be successfully challenged or circumvented bythird parties, or that the rights granted will provide the Company with adequate protection. 16. TECHNOLOGY DEVELOPMENT AND LICENSING AGREEMENTS On May 7, 2012, the Company entered into a long-term commercial supply agreement with Zhejiang Hisun Pharmaceutical Co. Ltd. (Hisun) for theproduction of ThermoDox® in the China territory. In accordance with the terms of the agreement, Hisun will be responsible for providing all of the technicaland regulatory support services, including the costs of all technical transfer, registration and bioequivalence studies, technical transfer costs, Celsionconsultative support costs and the purchase of any necessary equipment and additional facility costs necessary to support capacity requirements for themanufacture of ThermoDox®. Celsion will repay Hisun for the aggregate amount of these development costs and fees commencing on the successfulcompletion of three registration batches of ThermoDox®. Hisun is also obligated to certain performance requirements under the agreement. The agreementwill initially be limited to a percentage of the production requirements of ThermoDox® in the China territory with Hisun retaining an option for additionalglobal supply after local regulatory approval in the China territory. In addition, Hisun will collaborate with Celsion around the regulatory approval activitiesfor ThermoDox® with the China State Food and Drug Administration (CHINA FDA). During the first quarter of 2015, Hisun completed the successfulmanufacture of three registration batches of ThermoDox®. On January 18, 2013, we entered into a technology development contract with Hisun, pursuant to which Hisun paid us a non-refundable research anddevelopment fee of $5 million to support our development of ThermoDox ® in mainland China, Hong Kong and Macau (the China territory). Following ourannouncement on January 31, 2013 that the HEAT study failed to meet its primary endpoint, Celsion and Hisun have agreed that the TechnologyDevelopment Contract entered into on January 18, 2013 will remain in effect while the parties continue to collaborate and are evaluating the next steps inrelation to ThermoDox ® , which include the sub-group analysis of patients in the Phase III HEAT Study for the hepatocellular carcinoma clinical indicationand other activities to further the development of ThermoDox ® for the Greater China market. The $5.0 million received as a non-refundable payment fromHisun in the first quarter 2013 has been recorded to deferred revenue and will continue to be amortized over the 10 -year term of the agreement, until suchtime as the parties find a mutually acceptable path forward on the development of ThermoDox ® based on findings of the ongoing post-study analysis of theHEAT Study data. F-29 On July 19, 2013, the Company and Hisun entered into a Memorandum of Understanding to pursue ongoing cooperation for the continued clinicaldevelopment of ThermoDox® as well as the technology transfer relating to the commercial manufacture of ThermoDox® for the China territory. Thisexpanded level of cooperation includes development of the next generation liposomal formulation with the goal of creating safer, more efficacious versionsof marketed cancer chemotherapeutics. Among the key provisions of the Celsion-Hisun Memorandum of Understanding are: ●Hisun will provide the Company with internal resources necessary to complete the technology transfer of the Company’s proprietarymanufacturing process and the production of registration batches for the China territory; ●Hisun will coordinate with the Company around the clinical and regulatory approval activities for ThermoDox® as well as other liposomalformations with the CHINA FDA; and ●Hisun will be granted a right of first offer for a commercial license to ThermoDox® for the sale and distribution of ThermoDox® in the Chinaterritory. On August 8, 2016, we signed a Technology Transfer, Manufacturing and Commercial Supply Agreement (“GEN-1 Agreement”) with Hisun to pursue anexpanded partnership for the technology transfer relating to the clinical and commercial manufacture and supply of GEN- 1, Celsion’s proprietary genemediated, IL- 12 immunotherapy, for the greater China territory, with the option to expand into other countries in the rest of the world after all necessaryregulatory approvals are in effect. The GEN- 1 Agreement will help to support supply for both ongoing and planned clinical studies in the U.S., and forpotential future studies of GEN- 1 in China. GEN- 1 is currently being evaluated by Celsion in first line ovarian cancer patients. Key provisions of the GEN-1 Agreement are as follows: ●the GEN-1 Agreement has targeted unit costs for clinical supplies of GEN-1 that are substantially competitive with the Company’s currentsuppliers; ●once approved, the cost structure for GEN-1 will support rapid market adoption and significant gross margins across global markets; ●Celsion will provide Hisun a certain percentage of China’s commercial unit demand, and separately of global commercial unit demand, subject toregulatory approval; ●Hisun and Celsion will commence technology transfer activities relating to the manufacture of GEN-1, including all studies required by CFDA forsite approval; and ●Hisun will collaborate with Celsion around the regulatory approval activities for GEN-1 with the CFDA. A local China partner affords Celsionaccess to accelerated CFDA review and potential regulatory exclusivity for the approved indication. The Company evaluated the Hisun arrangement in accordance with ASC 606 and determined that its performance obligations under the agreement includethe non-exclusive, royalty-free license, research and development services to be provided by the Company, and its obligation to serve on a joint committee.The Company concluded that the license was not distinct since its value is closely tied to the ongoing research and development activities. As such, thelicense and the research and development services are be bundled as a single performance obligation. Since the provision of the license and research anddevelopment services are considered a single performance obligation, the $5,000,000 upfront payment is being recognized as revenue ratably through 2022. 17. COMMITMENTS In July 2011, the Company executed a lease (the “Lease”) with Brandywine Operating Partnership, L.P. (Brandywine), a Delaware limited partnership for a10,870 square foot premises located in Lawrenceville, New Jersey. In October 2011, the Company relocated its offices to Lawrenceville, New Jersey fromColumbia, Maryland. The lease has a term of 66 months and provides for 6 months of rent free, with the first monthly rent payment of approximately $23,000due and paid in April 2012. Also, as required by the Lease, the Company provided Brandywine with an irrevocable and unconditional standby letter of creditfor $250,000, which the Company secured with an escrow deposit at its banking institution of this same amount. The standby letter of credit was reduced by$50,000 on each of the 19th, 31st and 43rd months from the initial term, and the remaining $100,000 amount was reduced when the Lease term expired inApril 2017. In late 2015, Lenox Drive Office Park LLC, purchased the real estate and office building and assumed the lease. This lease was set to expire onApril 30, 2017. In April 2017, the Company and the landlord amended the Lease effective May 1, 2017. The Lease amendment extended the term of theagreement for an additional 64 months, reduced the premises to 7,565 square feet, reduced the monthly rent and provided four months free rent. On February1, 2019, we amended the current terms of the lease to increase the size of the premises by 2,285 square feet to 9,850 square feet and also extended the leaseterm by one year to September 1, 2023. In conjunction with the February 1, 2019 lease amendment, we agreed to modify our one-time option to cancel thelease as of the 36th month after the May 1, 2017 lease commencement date. The monthly rent will range from approximately $18,900 in the first year toapproximately $20,500 in the final year of the amendment. The Company also has a one-time option to cancel the lease as of the 24th month after thecommencement date of the Lease amendment. In connection with the EGEN Asset Purchase Agreement in June 2014, the Company assumed the existing lease with another landlord for an 11,500 squarefoot premises located in Huntsville Alabama. This lease has a remaining term of one month with rent a payment of approximately $23,200 per month. InJanuary 2018, the Company and this landlord entered into a new 60 -month lease which reduced the premises to 9,049 square feet with rent payments ofapproximately $18,100 per month. The Company paid $457,321 and $502,716 in connection with these leases in 2018 and 2017, respectively. Following is a summary of the future minimumpayments required under leases that have initial or remaining lease terms of one year or more as of December 31, 2018: For the year ending December 31: OperatingLeases 2019 $450,430 2020 454,213 2021 457,995 2022 379,823 18,098 Total minimum lease payments $1,760,559 F-30 18. SUBSEQUENT EVENTS On March 28, 2019, the Company and EGWU, Inc, entered into an amendment to the Asset Purchase Agreement discussed in Note 5 (the “Amended AssetPurchase Agreement”). Pursuant to the Amended Asset Purchase Agreement, payment of the earnout milestone liability related to the Ovarian CancerIndication of $12.4 million has 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. The Company will provide EGWU, Inc. 200,000 warrants to purchase common stock at a strike price of $0.01 per warrant share as consideration for enteringinto this agreement. The Company will record this transaction in the first quarter of 2019. F-31  Exhibit 21.1 Subsidiaries of Celsion Corporation Name Jurisdiction ofIncorporation CLSN Laboratories, Inc. Delaware   Exhibit 23.1 CONSENT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements of Celsion Corporation on Form S-1 (333-221543, 333-219414, 333-217156 and 333-214353), Form S-3 (Nos. 333-174960, 333-183286, 333-198786, 333-193936, 333-205608, 333-206789 and 333-227236) and on Form S-8(Nos. 333-139784, 333-145680, 333-183288, 333-207864) of our report dated March 29, 2019, relating to the consolidated financial statements, whichappears in this Form 10-K. /s/ WithumSmith+Brown, PC Princeton, New JerseyMarch 29, 2019  Exhibit 31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TOSECURITIES EXCHANGE ACT OF 1934 RULES 13a-14(a) AND 15d-14(a)AS ADOPTED PURSUANT TO §302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael H. Tardugno, certify that: 1.I have reviewed this Annual Report on Form 10-K of Celsion Corporation; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 29, 2019/s/ Michael H. Tardugno Michael H. Tardugno President and Chief Executive Officer   Exhibit 31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TOSECURITIES EXCHANGE ACT OF 1934 RULES 13a-14(a) AND 15d-14(a)AS ADOPTED PURSUANT TO §302 OF THE SARBANES-OXLEY ACT OF 2002 I, Jeffrey W. Church, certify that: 1.I have reviewed this Annual Report on Form 10-K of Celsion Corporation; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 29, 2019/s/ Jeffrey W. Church Jeffrey W. Church Executive Vice President and Chief Financial Officer   Exhibit 32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICERPURSUANT TO 18 UNITED STATES CODE § 1350AS ADOPTED PURSUANT TO§ 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Celsion Corporation (the “Company”) on Form 10-K for the year ended December 31, 2018, as filed with theSecurities and Exchange Commission on or about March 29, 2019 (the “Report”), I, Michael H. Tardugno, President and Chief Executive Officer of theCompany, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. March 29, 2019/s/ Michael H. Tardugno Michael H. Tardugno President and Chief Executive Officer This certification accompanies each Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by §906 has been provided to the Company and will be retained by the Company and furnished to theSecurities and Exchange Commission or its staff upon request.   Exhibit 32.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICERPURSUANT TO 18 UNITED STATES CODE § 1350AS ADOPTED PURSUANT TO§ 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Celsion Corporation (the “Company”) on Form 10-K for the year ended December 31, 2018, as filed with theSecurities and Exchange Commission on or about March 29, 2019 (the “Report”), I, Jeffrey W. Church, Executive Vice President and Chief Financial Officerof the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. March 29, 2019/s/ Jeffrey W. Church Jeffrey W. Church Executive Vice President and Chief Financial Officer This certification accompanies each Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by §906 has been provided to the Company and will be retained by the Company and furnished to theSecurities and Exchange Commission or its staff upon request.  

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