CEO letter

March 29, 2008

Dear Fellow Celsion Shareholder,

Over this past year you have witnessed remarkable transformation of your company. Just a little more than a year ago Celsion's focus represented a confusing mix of a medical device business, with marginal profitability, and a very promising oncology aspiration. For the investment community, we were difficult to judge. For our employees it was even difficult to post results. Our challenges were many. Our financial resources were limited.

The new Celsion

In a just year's time we have changed all that.

Last January, we announced a six-point plan to stabilize and focus the company. Of that plan, we accomplished all of our milestones and did so in a time frame that exceeded my expectations. In just 12 short months, we repositioned Celsion as a pure play oncology drug development company committed to two objectives:

Unlocking the promise of our lead drug, ThermoDox^®, for the benefit of those who have few medical options
Driving shareholder value

Most importantly, we entered 2008 with the FDA agreement for two separate registrational trials that define the regulatory pathways having the potential to bring ThermoDox, our tumor-targeting leading drug, to market.

Fourth Quarter Financial Results

Our total research and development expenses were $2.2 million for the fourth quarter of 2007, an increase of $700,000 over the prior year's amount of $1.5 million. On an annual basis, 2007's R&D expenses were $8.2 million compared to $6.1 million for 2006. Following the sale of our medical device business the company has focused solely on its clinical activities that further the development of its ThermoDox drug. Accordingly, the 2007 results include increases in preclinical and clinical costs, drug manufacturing costs, patient recruitment costs, and additional clinical staffing.

Our general and administrative expenses were $500,000 for the quarter compared to $900,000 for the same period in 2006. The decrease was attributable to a reduction in accrued contingent liabilities. When comparing year over year, the G&A expenses increased $1.3 million, moving from $4.1 million in 2006 to $5.4 million in 2007. The increase was due in part to accrued severance payments and benefit costs associated with restructuring and cost reductions. Additionally, we incurred higher professional fees, consulting fees and auditing fees in 2007 over 2006.

Net interest income was $146,000 in the fourth quarter of 2007 compared to an expense of $170,000 in the same quarter of 2006. Annually, the net interest expense for 2007 was $26,000 versus $467,000 in 2006. This is due to the elimination of the loan that was previously due to Boston Scientific.

In 2007, the income from discontinued operations was $208,000 for the fourth quarter and $50 million for the year, which included a gain on the sale of $48 million.

We ended the year with $6 million in cash and $30 million in receivables. These amounts, plus the line of credit facility, provide us with the liquidity necessary to further our clinical trials as planned. We will continue to carefully manage our cash and focus our resources only on those activities that forward our strategy.

A year's worth of accomplishment

For Celsion, 2007 was a year of results. During the first half of the year we made great strides in mitigating risks inherent to our business; during the second half we focused on execution.

Risk Mitigation:

Financially

We reduced our spending and built a 30-month spending outlook that gives us confidence that we can bring ThermoDox through a pivotal program to a point where we have sufficient data to support an NDA.
We insured our exposure to the remote potential of IP litigation that could reduce our cash payment from Boston Scientific.
We established a $6.5 million line of credit to bridge us between payments from Boston in the event we saw an opportunity to accelerate our clinical program.

ThermoDox Development

We aggressively pursued RCW on a parallel path to our primary liver program to ensure that we had at least two paths to bring ThermoDox through the clinical and regulatory pathway.
We met with the FDA to review our CMC brief to ensure that the agency was in agreement with our process, specs, methods and stability programs and that our quality was sufficient to support Phase III trials and eventual commercial production.
We focused our research only on two narrow indications, both of which provide a clear, uncomplicated regulatory pathway.

Our Talent

We re-staffed the company and developed those competencies that we believed were necessary for success.
We added individuals with experience and demonstrated capability in drug development in clinical operations, quality and regulatory affairs.
We implemented a compensation program that rewards results, motivates high performance and aligns our employees with the interest of our shareholders.

Execution:

Phase I Primary Liver Program

We completed our Phase I HCC dosing escalation study and we are working with our PIs at National Cancer Institute and Queen Mary Hospital to ensure results are published in peer-reviewed journals and presented at International Medical Conferences.

Elimination of barriers to enrollment in our RCW study

We worked aggressively with Duke to advertise and remove barriers to enrollment in our RCW study and to bring on a second site to ensure that we have a safe and, we believe, therapeutic dose for use in our pivotal study.

A successful SPA submission

We worked literally around the clock when necessary to bring our SPA submission for primary liver cancer to a successful close. Concurrently, we completed all of the ground work necessary to initiate our trial literally within weeks of the FDA agreement.

Pivotal Phase II RCW

We successfully presented the FDA with an argument that an open Phase II study with an end point other than survival could be the basis for ThermoDox approval pending , of course, the outcome of the study. We now count ourselves among the few who have an agreed SPA study and written agreement on a second clinical pathway to approval in a second indication.

Our technology as a platform

We have established our heat sensitive Liposomal technology as a platform capable of delivering high concentrations of more than just doxorubicin. Celsion has developed formulations that include docetaxel and carboplatin; and, in the case of docetaxel, have demonstrated a stable formulation and superior efficacy to free docetaxel in small animal xenograph studies.

The NASDAQ

We've moved our common stock listing to the NASDAQ Stock Exchange. The intent? To provide our shareholders with the advantages of the electronic market and to encourage new investors who limit their portfolios to NASDAQ and NYSE-listed companies.

We repurchased shares held by Boston Scientific

Being bullish on our company and our future, we took advantage of an opportunity to repurchase 660K shares held by Boston Scientific at a price we thought to be a bargain, reducing pressure on share price and freeing Celsion from its obligation to provide a right of first offer to Boston in the event of future licensing opportunities. Of course, if and when we need cash, we will always have the option to register and sell the shares. If we did so today, our $2.7 million purchase would net us a $1.3 million profit.

Primary liver cancer update

On Jan. 18, we were delighted to announce that the FDA had agreed with our pivotal study submission. It took three-and-a half submissions and almost nine months, but the effort was worth it. We believe that we have agreement on a quality study that we can stand behind and will show definitively whether ThermoDox can be an effective treatment for HCC. In our announcement, we recognized the FDA for their collaborative approach. I honestly have to say that throughout the process, the FDA's project team took all of our meetings and calls and offered constructive recommendations. We appreciate their support.

Concurrently with our submissions and responses, we were diligently organizing and preparing for success. By the time we received notification, we had contracts with all of our CROs, established roles and responsibilities, initiated regulatory approvals in countries outside the U.S., initiated pre-study site visits and submitted draft protocols for review where possible. As a result, I can share with you that we have a CTA (IND) in China, we have IRB approval at North Shore Long Island Hospital, our clinical supplies will ship to depots and NSLI very soon and patient screening is in progress. Our goal is to have two sites up and operating in March and 25 to 30 sites recruiting in seven countries by the end of the year. We are planning to enroll the study over 18 months, and, based on the literature, expect see enough events in the 14 to 16 months thereafter to conclude whether we have seen a delay in progression in the active arm sufficient to claim success.

Recurrent chest wall cancer study

We have seen acceleration in enrollment in the Phase I RCW study. We have 11 patients now in the study and trials at the 40 mg cohort are nearing completion. Assuming that the safe dose is established at 50 mg, we expect to complete the Phase I program in Q3, if not sooner.

In the meantime, we are preparing for success. As we did with the liver program, we have begun planning for our pivotal Phase II study. We do so as a result of the FDA's agreement that the study, as we proposed last November:

Focuses on a population of patients who have no medical options;
Provides an endpoint — a durable complete response — that addresses clinical benefit sufficient for approval;
And that the results from the study, depending on the data, provide the basis for an approvable NDA submission.

Development program for our heat-sensitive Liposomal technology platform

As we announced last November, confirming studies in mice were completed demonstrating that our heat sensitive Liposomal formulation of docetaxel has a statistically significant superior anti-tumor effect when compared to the free form and traditional Liposomal formulations. We have also confirmed that the formulation is stable and reproducible.

We have begun transferring the formulation technology to our labs to further optimize for manufacturing and we will begin a second round of preclinical studies and toxicology work in the second half of 2008. Our goal is to have data sufficient to file an IND in 2009.

Our Active Tumor Targeting Program, which is based on a peptide of six amino acids that have affinity for EGF receptors inherent in many solid tumors, continues to progress. Our immediate focus is on formulation combining the ligand with our unique liposomal structure. As you recall, we have an exclusive option to acquire this technology and have filed U.S. and international patents giving us a broad set of claims should we exercise our option to acquire.

Last November, I mentioned that we were discussing a joint research agreement with a major medical device company that addresses the potential for non-invasive High Intensity Focused Ultrasound to open up a broad range of indications for which ThermoDox could be studied. I continue to be optimistic that we will have an agreement in the reasonable near term.

The goal with all of this work is to demonstrate, through feasibility, the potential of our platform, its depth and breadth. We cannot let our development work distract us from our primary mission: bringing ThermoDox through our clinical trials. So our work, at least at this juncture, will be limited to advancing the promise and potential of your company.

I'd like to conclude by saying that the men and women at Celsion have made great progress in the past year. Their hard work, professional knowledge and commitment have been inspirational. It is because of them I am more excited every day about the future and the direction of our company.

I look forward to sharing more news with you in the near future and thank you for your continued support.

Sincerely,

Michael H. Tardugno
President & Chief Executive Officer