CEO letter

December 14, 2011

Dear Fellow Shareholders,

As always, I start this letter with my thanks for your support and continued interest in Celsion. Our enthusiasm, and that of our many collaborators in the global oncology community, is at a high as we stand at the precipice of data from arguably one of the most important trials, if not in oncology, than certainly in liver cancer. The continued momentum behind our Phase 3 HEAT study is underscored by several accomplishments of the past few months, most notably the successful outcome of the planned interim analysis for safety, efficacy and futility by the study's independent Data Monitoring Committee (DMC).

The HEAT Study is, of course, our multinational, double-blind, placebo-controlled, pivotal study of ThermoDox®, a proprietary heat-activated liposomal encapsulation of doxorubicin, in combination with radio frequency ablation (RFA) for hepatocellular carcinoma (HCC), also known as primary liver cancer. Primary liver cancer is one of the most deadly forms of cancer and ranks as the fifth most common solid tumor cancer. The incidence of primary liver cancer today is approximately 26,000 cases per year in the United States, approximately 40,000 cases per year in Europe and is rapidly growing worldwide at approximately 700,000 cases per year, due to the high prevalence of Hepatitis B and C in developing countries.

The HEAT Study is the largest study ever undertaken in intermediate hepatocellular carcinoma, and is the culmination of many years of planning and coordination with clinicians, patients and regulatory bodies in ten countries around the world. This study has been executed to the highest standards of clinical, statistical and regulatory rigor, from design through execution, and is the foundation for our near- and long-term value potential as a company.

As we announced in late November, our DMC completed a planned interim analysis for safety, efficacy and futility and unanimously recommended that the study continue to its final analysis, as planned. It cannot be said enough: this outcome was a very positive development for the Company, for the HEAT Study, for ThermoDox and for our liposomal encapsulation technology.

The DMC evaluated data from 613 patients in its review, and also conducted a formal interim analysis. A total of 380 events of progression, which are projected to occur in late 2012, are required to reach the planned final analysis of the study. An important element of the independent committee's review was the statistical method used to conduct the analysis. During the opening session of the interim analysis meeting with the DMC, the Company defined and the DMC implemented a monitoring boundary for interim and final analysis. In the closing session it was noted by the DMC that additional interim efficacy analyses could be conducted with a de minimis statistical penalty if the company so chooses. As a result, the company is pursuing an additional preplanned efficacy review prior to the final PFS efficacy review at 380 events, and will seek to amend our Special Protocol Assessment (SPA) Agreement with the FDA accordingly. We are encouraged by what may be another opportunity for unblinding, assuming of course, FDA agreement.

Addressing a Global Challenge

The global importance of establishing an effective treatment for primary liver cannot be understated. Clinical outcomes in this disease remain poor, with the 5-year survival rate at less than 10% and median survival from time of diagnosis at approximately 30 months. Cure, usually through surgery, is possible in fewer than 20% of patients. By 2020, the World Health Organization estimates that primary liver cancer may become the number one cancer worldwide, surpassing lung cancer.

With liver cancer representing a major global challenge, we have implemented a streamlined, global regulatory strategy aimed at addressing as many markets as possible, as rapidly as possible, with our HEAT study. We have focused in particular on the Asia Pacific region where the incidence of hepatitis B, a leading cause of liver cancer, is widespread. The HEAT Study has already reached sufficient local enrollment to support registration filings in two important markets in the Asia-Pacific region, South Korea and Taiwan. Enrollment in China is quickly approaching the minimum 200 patient requirement necessary to support local registrational filing in this important market, where over one-half of the incidences of primary liver cancer exist. In Japan, our partner Yakult, remains enthusiastic about ThermoDox and plans to continue evaluation of ThermoDox separately from the HEAT study, due to the different standard of care in Japan.

In the U.S., we have secured several designations which will support our clinical, regulatory and commercial goals. In addition to the SPA, we have received Fast Track designation from the FDA, providing for a rolling NDA submission, a 6 month regulatory review and a simplified review process. Additionally, FDA has provided support for a 505(b) 2 NDA submission. We have already begun addressing the chemistry, manufacturing and controls portion of the application by working to complete three registration batches of ThermoDox, the foundation for an uninterrupted, global commercial supply at launch. Adding to a successful commercial strategy, we have also secured Orphan Drug Designation for ThermoDox in primary liver cancer in both Europe and the United States, providing for ten and seven years of market exclusivity, respectively, following launch. All together, these strategies are expected to provide for a more streamlined and straightforward review process as well as a successful product launch, and are the work of a very dedicated and focused group of individuals at the Company.

A Pipeline within a Product

If the HEAT trial proves successful, it would add not only one of the most important new weapons to the oncologist's arsenal, but validate a novel, highly-versatile technology with the potential to affect many cancers. While the significant majority of our capital resources are focused on the HEAT study, we recognize that ThermoDox's unique properties support its potential well beyond this study's indication, and are taking steps to explore its utility in other areas.

We continue to move forward with planning and execution of additional studies where ThermoDox has demonstrated potential for significant benefit, including:

Recurrent chest wall breast cancer, which is the subject of the Company's ongoing Phase I/II potentially registrational DIGNITY study,
Metastatic liver cancers or cancers of various primary origin metastasized to the liver, through initiation of the ABLATE study, a randomized Phase II study, and
Bone cancers, the subject of a planned Phase II study with joint research partner Philips Healthcare.

Our clinical development team has taken great care to ensure that these studies are supportive of potential Compendia listing of ThermoDox in their respective indications. Compendia listing in the US supports adoption from the medical community as well as reimbursement from private and public payors. We view this as a critical means of multiplying the clinical and commercial value of ThermoDox as rapidly as possible following its validation in the HEAT Study. Furthermore, as ThermoDox represents an attractive, late-stage asset, we continue to explore partnering opportunities which would complement and advance our global commercialization strategy.

We recognize that, as a development stage company, it is critical that we maintain a strong balance sheet while closely shepherding our capital resources. To that end, we have raised substantial capital since mid-year, more than $50 million, which largely eliminates our near-term reliance on the capital markets and provides us with the resources to fund operations through mid-2013. We also continue to diligently maintain fiscal discipline - our team remains lean and our investments focused - all while planning for the substantial growth potential we face as a company.

We are extremely proud of the progress we have made to date and excited by the continued positive momentum in our HEAT Study and other programs. While inherently unpredictable, the business of drug development requires patience, perseverance and planning. The commitment of the Celsion team, combined with your continued support, help to ensure that we maintain this focus and that our path is a successful one. We remain as committed as ever toward building substantial, long-term value for you, our shareholders, and look forward to our road ahead. As always, we welcome your inquiries and interest.

Sincerely,

Michael H. Tardugno
President and CEO