Edgar Filing: CELSION CORP

CELSION CORPORATION

Date: June 27, 2007

/s/ Anthony P. Deasey

Anthony P. Deasey

Executive Vice President and Chief Financial Officer

FORM 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 21, 2007

Celsion Corporation

(Exact Name of Registrant as Specified in Charter)

Delaware

000-14242

52-1256615

(State or other jurisdiction

of incorporation)

(Commission File Number)

(IRS Employer

Identification No.)


10220-L Old Columbia Road, Columbia, Maryland		21046-2364
(Address of principal executive office)		(Zip Code)

Registrant’s telephone number, including area code: (410) 290-5390

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.135-4(c))

Item 2.01

Completion of Acquisition or Disposition of Assets.

On June 21, 2007, Celsion Corporation (the “Company”) closed the previously announced sale of its Prolieve assets (the “Prolieve Assets”) to Boston Scientific Corporation, a Delaware corporation (“Boston Scientific”). The sale of the Prolieve Assets was made pursuant to an Asset Purchase Agreement, dated April 17, 2007 (the “Asset Purchase Agreement”), that was previously filed as Exhibit 10.1 to Form 8-K filed by the Company on April 17, 2007. The use of the Prolieve Assets was approved by the Food and Drug Administration in 2004 for the treatment of benign prostatic hyperplasia. The Prolieve Assets were used by the Company in the manufacture, marketing, sale, distribution and research and development of products using thermal therapy. Prior to the sale of the Prolieve Assets, Boston Scientific was the Company’s exclusive distributor of the Prolieve Assets. As of April 30, 2007, Boston Scientific owned 7.94% of the Company’s common stock.

The Prolieve Assets were sold to Boston Scientific for an aggregate purchase price of $60 million payable in three installments consisting of $30 million at closing and $15 million on each of the first and second anniversaries of the closing. In addition to the other indemnification provisions, such as indemnification for breaches of representations, warranties and covenants contained in the Asset Purchase Agreement, the Company agreed to indemnify Boston Scientific for a period of two years from the closing, in an amount up to $15 million of incurred costs, in the event of unforeseen intellectual property claims related to the Prolieve Assets. The $30 million payable at closing was reduced by approximately $17 million, representing the principal and accrued interest due on promissory notes previously issued by the Company to Boston Scientific, and by the amounts of certain royalty payments to American Medical Systems, Inc. and AMS Research Corporation (together referred to as “AMS”) under the Settlement and License Agreement dated as of February 7, 2007 among AMS and the Company (the “Settlement Agreement”). The Settlement Agreement was previously filed as Exhibit 10.1 to Form 10-Q filed by the Company on May 10, 2007.

The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the complete terms of the Asset Purchase Agreement, a copy of which is attached to the Form 8-K filed by the Company on April 18, 2007 and is incorporated herein by reference.

Item 9.01

Financial Statements and Exhibits.

(b)

Financial Statements.

The following pro forma financial statements are filed as part of this Current Report on Form 8-K:

Pro Forma Consolidated Balance Sheet as of March 31, 2007 and notes thereto

Pro Forma Consolidated Statement of Operations as of March 31, 2007 and notes thereto

Pro Forma Consolidated Statement of Operations for each of the years ended December 31, 2006, 2005 and 2004 and notes thereto

(c)

Exhibits.


Exhibit Number		Description
99.1		Press Release, dated June 21, 2007
10.1		Asset Purchase Agreement, dated as of April 17, 2007, by and between Celsion Corporation and Boston Scientific Corporation, incorporated herein by reference to Exhibit 10.1 to Form 8-K filed by the Company on April 17, 2007.

- 2 -

CELSION CORPORATION

PRO FORMA BALANCE SHEET

(UNAUDITED)


	March 31, 2007

	As Reported		Pro Forma Adjustments					Pro Forma
ASSETS
Current assets
Cash and cash equivalents	$	552,387	$	9,043,499		(1	)	$	9,595,886
Short term investments		7,000,000		—					7,000,000
Accounts receivable - trade		1,113,046		(1,113,046	)	(2	)		—
Other receivables		25,693		14,977,909		(2	),(3)		15,003,602
Inventories		2,899,543		(2,899,543	)	(2	)		—
Prepaid Expenses		422,940		(206,799	)	(4	)		216,141

Total current assets		12,013,609		19,802,020					31,815,629


Property and equipment - at cost
Furniture and office equipment		195,508		—					195,508
Computer hardware and software		319,734		—					319,734
Laboratory and shop equipment		755,482		(401,965	)	(2	)		353,517
Leasehold improvements		132,148		—					132,148

		1,402,872		(401,965	)				1,000,907
Less: Accumulated depreciation		925,144		(233,598	)	(2	)		691,546

Net value of property and equipment		477,728		(168,367	)				309,361


Other assets
Advances - Celsion Canada, Ltd. transition agreement		600,782		—					600,782
Note receivable (net of discount of $230,192)		1,119,808		—					1,119,808
Deposits		787,703		—					787,703
Patent licensing fee		1,648,062		(1,576,812	)				71,250

Total other assets		4,156,355		(1,576,812	)				2,579,543


Total assets	$	16,647,692	$	18,056,841				$	34,704,533

CELSION CORPORATION

PRO FORMA BALANCE SHEET

(UNAUDITED)


	March 31, 2007

	As Reported			Adjustments					Pro Forma
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities
Accounts payable - trade	$	2,132,390		$	(1,260,073	)	(5	)	$	872,317
Other accrued liabilities		972,314			(675,254	)	(5	)		297,060
Accrued non-cash compensation		4,750			—					4,750
Current portion of deferred revenue		571,428			(571,428	)	(6	)		—

Total current liabilities		3,680,882			(2,506,755	)				1,174,127


Long-term liabilities
Deferred revenue - license fee		1,666,667			(1,666,667	)	(6	)		—
Loan payable - principal		15,000,000			(15,000,000	)	(7	)		—
Loan payable - interest		1,624,573			(1,624,573	)	(7	)		—
Other liabilities		35,176			—					35,176

Total long-term liabilities		18,326,416			(18,291,240	)				35,176

Total liabilities		22,007,298			(20,797,995	)				1,209,303


Stockholders’ (deficit) equity
Common stock - $0.01 par value (250,000,000 shares authorized; 10,770,652 shares issued and outstanding at March 31, 2007)		107,707			—					107,707
Additional paid-in capital		87,377,171			—					87,377,171
Accumulated deficit		(92,844,484	)		38,854,836					(53,989,648	)

Total stockholders’ (deficit) equity		(5,359,606	)		38,854,836					33,495,230


Total liabilities and stockholders’ (deficit) equity	$	16,647,692		$	18,056,841				$	34,704,533

Notes to unaudited Pro Forma Balance Sheet

(1)	To record the cash received with the first installment pursuant to the sale of Prolieve

(2)	To remove the assets conveyed in the sale of Prolieve

(3)	To record the remaining receivable due on the sale of Prolieve net of a reserve for potential claims on Itellectual Property .

(4)	To write off assets that will not be realized after the sale of Prolieve.

(5)	Payables are deemed to have been settled out of the proceeds from the sale.

(6)	To remove the liabilities that will be written off at settlement.

(7)	To record the payment of the loan and interest

CELSION CORPORATION

PRO FORMA STATEMENT OF OPERATIONS

(UNAUDITED)


	Quarter Ended March 31, 2007
	As Reported			Pro Forma Adjustments				Proforma
Revenues:
Sales of equipment and parts	$	2,931,862		$	(2,931,862	)	(1)	$	—
Returns and allowances		8,897			(8,897	)	(2)		—

Total revenues		2,922,965			(2,922,965	)			—
Cost of sales		1,536,399			(1,536,399	)	(3)		—

Gross profit		1,386,566			(1,386,566	)			—

Operating expenses:
Research and development		2,425,440			(654,628	)	(4)		1,770,812
General and administrative		1,294,169			—				1,294,169

Total operating expenses		3,719,609			(654,628	)			3,064,981

Loss from operations		(2,333,043	)		(731,938	)			(3,064,981	)

Other income (expense):
License fee income amortization		142,857			(142,857	)	(5)		—
Interest income		180,779			—				180,779
Interest expense		(348,263	)		—				(348,263	)


Loss before income taxes		(2,357,670	)		(874,795	)			(3,232,465	)
Income taxes		—			—				—


Net loss		$(2,357,670)		$	(874,795	)		$	(3,232,465	)


Net loss per common share (basic and diluted)	$	(0.22	)	$	(0.08	)		$	(0.31	)


Weighted average shares outstanding		10,746,869			10,746,869				10,746,869

Notes to unaudited Pro Forma Statement of Operations

(1)

To remove revenues related to the Prolieve business.

(2)

To remove the returns and allowances related to the Prolieve business.

(3)

To remove the cost of sales related to the Prolieve business.

(4)

To remove research and development expenses related to the Prolieve business.

(5)

To remove license fee amortization related to the Prolieve business.

CELSION CORPORATION

PRO FORMA STATEMENT OF OPERATIONS

(UNAUDITED)


	Year Ended December 31, 2006
	As Reported			Pro Forma Adjustments					Proforma
Revenues:
Sales of equipment and parts	$	11,624,676		$	(11,624,676	)	(1	)	$	—
Returns and allowances		373,859			(373,859	)	(2	)		—

Total revenues		11,250,817			(11,250,817	)				—
Cost of sales		6,669,075			(6,669,075	)	(3	)		—

Gross profit		4,581,742			(4,581,742	)				—

Operating expenses:
Research and development		9,345,381			(2,914,200	)	(4	)		6,431,181
General and administrative		3,722,991								3,722,991

Total operating expenses		13,068,372			(2,914,200	)				10,154,172


Loss from operations		(8,486,630	)		(1,667,542	)				(10,154,172	)

Other income (expense):
Gain on the sale of Celsion (Canada) Ltd.		1,011,923			—					1,011,923
License fee income amortization		571,429			(571,429	)	(5	)		—
Other expense, net		(213,869	)		—					(213,869	)
Interest income		636,561			—					636,561
Interest expense		(1,103,644	)		—					(1,103,644	)


Loss before income taxes		(7,584,230	)		(2,238,971	)				(9,823,201	)

Income taxes		—			—					—


Net loss	$	(7,584,230	)	$	(2,238,971	)			$	(9,823,201	)


Net loss per common share (basic and diluted)	$	(0.71	)	$	(0.21	)			$	(0.92	)


Weighted average shares outstanding		10,728,435			10,728,435					10,728,435

Notes to unaudited Pro Forma Statement of Operations

(1)

To remove revenues related to the Prolieve business.

(2)

To remove the returns and allowances related to the Prolieve business.

(3)

To remove the cost of sales related to the Prolieve business.

(4)

To remove research and development expenses related to the Prolieve business.

(5)

To remove license fee amortization related to the Prolieve business.

CELSION CORPORATION

PRO FORMA STATEMENT OF OPERATIONS

(UNAUDITED)


	Year Ended December 31, 2005
				Pro Forma
	As Reported			Adjustments					Proforma

Revenues:
Sales of equipment and parts	$	12,458,863		$	(12,458,863	)	(1	)	$	—
Returns and allowances		138,722			(138,722	)	(2	)		—

Total revenues		12,320,141			(12,320,141	)				—
Cost of sales		8,112,760			(8,112,760	)	(3	)		—


Gross profit		4,207,381			(4,207,381	)				—

Operating expenses:
Research and development		10,081,483			(3,114,175	)	(4	)		6,967,308
General and administrative		3,405,409			—					3,405,409

Total operating expenses		13,486,892			(3,114,175	)				10,372,717


Loss from operations		(9,279,511	)		(1,093,206	)				(10,372,717	)

Other income (expense):
Gain on the sale of Celsion (Canada) Ltd.		—			—					—
License fee income amortization		571,429			(571,429	)	(5	)		—
Other expense, net		(96,891	)		—					(96,891	)
Interest income		299,245			—					299,245
Interest expense		(179,591	)		—					(179,591	)


Loss before income taxes		(8,685,319	)		(1,664,635	)				(10,349,954	)

Income taxes		—			—					—


Net loss	$	(8,685,319	)	$	(1,664,635	)			$	(10,349,954	)


Net loss per common share (basic and diluted)	$	(0.81	)	$	(0.16	)			$	(0.97	)


Weighted average shares outstanding		10,725,091			10,725,091					10,725,091

Notes to unaudited Pro Forma Statement of Operations

(1)

To remove revenues related to the Prolieve business.

(2)

To remove the returns and allowances related to the Prolieve business.

(3)

To remove the cost of sales related to the Prolieve business.

(4)

To remove research and development expenses related to the Prolieve business.

(5)

To remove license fee amortization related to the Prolieve business.

CELSION CORPORATION

PRO FORMA STATEMENT OF OPERATIONS

(UNAUDITED)


	Year Ended December 31, 2004
	As Reported			Pro Forma Adjustments					Proforma
Revenues:
Sales of equipment and parts	$	2,506,228		$	(2,506,228	)	(1	)	$	—
Returns and allowances		—			—					—

Total revenues		2,506,228			(2,506,228	)				—
Cost of sales		2,100,888			(2,100,888	)	(2	)		—

Gross profit		405,340			(405,340	)				—

Operating expenses:
Research and development		11,533,421			(3,671,538	)	(3	)		7,861,883
General and administrative		3,470,869			—					3,470,869

Total operating expenses		15,004,290			(3,671,538	)				11,332,752


Loss from operations		(14,598,950	)		3,266,198					(11,332,752	)

Other income (expense):
Gain on the sale of Celsion (Canada) Ltd.		—			—					—
License fee income amortization		476,191			(476,191	)	(4	)		—
Other expense, net		(92,203	)		—					(92,203	)

Interest income		229,914			—					229,914

Interest expense		—			—					—


Loss before income taxes		(13,985,048	)		2,790,007					(11,195,041	)

Income taxes		—			—					—


Net loss	$	(13,985,048	)	$	2,790,007				$	(11,195,041	)


Net loss per common share (basic and diluted)	$	(1.32	)	$	0.26				$	(1.06	)


Weighted average shares outstanding		10,583,772			10,583,772					10,583,772

Notes to unaudited Pro Forma Statement of Operations

(1)

To remove revenues related to the Prolieve business.

(2)

To remove the cost of sales related to the Prolieve business.

(3)

To remove research and development expenses related to the Prolieve business.

(4)

To remove license fee amortization related to the Prolieve business.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX


Exhibit Number		Description

99.1		Press Release, dated June 21, 2007

10.1		Asset Purchase Agreement, dated as of April 17, 2007, by and between Celsion Corporation and Boston Scientific Corporation, incorporated herein by reference to Exhibit 10.1 to Form 8-K filed by the Company on April 17, 2007.