Imunon, Inc. quarterly report, Q3 FY2021

Business context and reporting period

This is Celsion Corporation’s Form 10-Q for the quarter and nine months ended September 30, 2021, filed November 15, 2021. The filing identifies the registrant as Celsion Corporation (Nasdaq: CLSN), although the request names Imunon, Inc.

Celsion was a clinical-stage biotechnology company developing GEN-1, an ovarian-cancer immunotherapy, ThermoDox, a heat-activated chemotherapy, and the PLACCINE DNA vaccine platform. The company reported minimal licensing revenue and no product sales.

Financial results and position

• Revenue and margins: Revenue was unchanged year over year. With revenue limited to licensing amortization and operating costs far exceeding it, the filing does not present a meaningful operating margin.
• Expense trends: Q3 R&D was approximately flat year over year; nine-month R&D declined 10.6%. G&A rose 51.6% in Q3 and 49.2% for nine months, attributed mainly to stock compensation, professional fees and directors’ and officers’ insurance.
• Cash flow: Nine-month operating cash use was $11.14 million; investing cash use was $29.15 million, largely reflecting purchases of debt securities; financing provided $54.77 million, principally from equity issuance.
• Liquidity: At September 30, cash and equivalents were $25.65 million, short-term available-for-sale investments $28.86 million, accrued investment interest $0.04 million, and restricted cash $6.0 million. Management reported these resources totalled approximately $60.6 million. Working capital was $50.3 million, versus $12.0 million at December 31, 2020.
• Debt and liabilities: Notes payable were $5.81 million, reported as non-current; the $6 million SVB draw was secured by an equal restricted-cash reserve. Total liabilities were $20.13 million, including a $7.35 million earn-out milestone liability.
• Capital and dilution: Common shares outstanding increased from 40.7 million at December 31, 2020 to 86.6 million at September 30, 2021. The company reported $52.69 million net proceeds from equity financing facilities, $1.51 million from warrant exercises, and $5.76 million net proceeds from the SVB facility during the nine months.

Material changes versus the prior comparable period

• Net loss narrowed year over year, partly because Q3 2020 included a $2.37 million non-cash impairment of the glioblastoma in-process research and development asset and a larger earn-out remeasurement charge. Operating loss nevertheless increased, reflecting higher total operating expenses.
• For the nine months, net loss improved by $1.92 million, while operating loss worsened by $1.82 million; lower interest expense and the absence of the prior-year impairment helped reduce net loss.
• The company replaced its Horizon debt with a $10 million SVB facility in June 2021, used $6 million to repay Horizon, and held $6 million in restricted cash as collateral. Up to $4 million remained available to draw within 12 months of closing.
• Substantial equity financing strengthened liquidity but materially increased the share count. Available-for-sale debt securities, which were absent at year-end 2020, totalled $28.86 million at quarter-end.

Outlook, commentary, risks and unusual items

• Management expected operating losses to continue and stated that current resources, together with potential New Jersey net operating loss-sale proceeds, were expected to fund operations through the end of 2024. This is an estimate, not a guarantee; the filing also says actual funding needs could be higher or arise sooner.
• Management cited approximately $15 million of potential future NOL-sale proceeds, while describing a 2021 application for about $1.6 million of NOLs and expected proceeds of up to approximately $1.4 million. Timing and availability are uncertain.
• OVATION 2, a Phase II study of GEN-1 in advanced ovarian cancer, was enrolling; management anticipated completing enrollment of up to 110 patients in the first half of 2022. The filing reported interim surgical resection results, which are not a final efficacy outcome. GEN-1 had received FDA Fast Track designation.
• The Phase III OPTIMA ThermoDox study was discontinued: after a futility recommendation, the company stopped following patients in February 2021. The filing says retrospective subgroup findings were not pursued given regulatory hurdles.
• PLACCINE remained in preliminary/preclinical development. The company reported 2021 mouse-study antibody and T-cell findings, not clinical evidence of safety or effectiveness in people.
• COVID-19 had not significantly affected operations through the reported period, according to management, but could disrupt trials, enrollment, financing and operations. Other key risks include clinical and regulatory uncertainty, the need for additional capital and potential shareholder dilution.
• Three shareholder-related matters remained unresolved: a securities class action, a derivative action, and a books-and-records demand. The company said it intended to defend them; likelihood and potential loss could not be estimated. A separate stockholder action was settled in 2020, including $187,500 in legal fees and repricing of certain options.
• The earn-out liability is a Level 3 fair-value estimate based on milestone probabilities and timing; it increased by $0.33 million over the first nine months. This was a non-cash expense. The filing reported no material changes to previously disclosed risk factors and stated disclosure controls were effective at a reasonable-assurance level.

Important facts for investors to verify

• Confirm the issuer identity and name: this supplied filing is for Celsion Corporation, not Imunon, Inc.
• Assess whether the projected runway through 2024 remains supportable given operating cash use, trial spending, restricted cash and uncertain NOL-sale proceeds.
• Track OVATION 2 enrollment, study design, control-arm comparisons and eventual clinical endpoints; distinguish interim surgical data from confirmatory evidence.
• Review the terms, collateral requirements, interest rate and remaining availability of the SVB facility, as well as the $7.35 million milestone liability.
• Quantify potential dilution from future financing, outstanding options and warrants, and any additional share issuance.
• Monitor the unresolved litigation and any subsequent changes to estimated loss exposure, clinical plans or management’s runway outlook.