Item 1.01 Entry into a Material Definitive Agreement.
On June 6, 2014, Celsion Corporation, a Delaware corporation ("Celsion"), and
Egen, Inc., an Alabama corporation ("EGEN"), entered into an Asset Purchase
Agreement (the "Purchase Agreement"), pursuant to which Celsion, or a subsidiary
of Celsion, will acquire substantially all of EGEN's assets and assume certain
liabilities (the "Acquisition") for an aggregate purchase price of up to $44.4
million, subject to adjustments for certain expenses, of which up to $30.4
million will become payable, in cash, shares of common stock of Celsion ("Common
Stock") or a combination thereof, at Celsion's option, upon achieving certain
earnout milestones set forth in the Purchase Agreement (the "Earnout Payment").
Celsion will pay $3.4 million in cash and issue 2,712,188 shares of Common Stock
with a total value of $8.5 million at $3.1340 per share to EGEN at the closing
of the Acquisition. In addition, Celsion will hold back, for a period ending
upon the later of the second anniversary of the closing date and August 2, 2016,
670,070 shares of Common Stock with a total value of $2.1 million at $3.1340 per
share as partial security for any post-closing adjustments of certain expenses
and EGEN's indemnification obligations under the Purchase Agreement. Of the
Earnout Payment, $12.4 million will become payable upon achieving certain
specified development milestones relating to an EGEN-001 ovarian cancer study to
be conducted by Celsion or its subsidiary, $12.0 million will become payable
upon achieving certain specified development milestones relating to an EGEN-001
glioblastoma multiforme brain cancer study to be conducted by Celsion or its
subsidiary, and up to $6.0 million will become payable upon achieving certain
specified development milestones relating to EGEN's TheraSilence technology
acquired in the Acquisition. Celsion's obligations to make the Earnout Payments
will terminate on the seventh anniversary of the closing date.
The issuance of Common Stock in the Acquisition will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"). Celsion will file,
within 90 days after the closing of the Acquisition and, at its option, the
issuance of Common Stock in relation to any Earnout Payment, with the Securities
and Exchange Commission (the "SEC") a registration statement relating to the
resale of such shares of Common Stock.
The Purchase Agreement contains customary representations and warranties
regarding EGEN and Celsion, covenants regarding the conduct of EGEN's business
prior to the consummation of the Acquisition, indemnification provisions,
termination and other provisions customary for transactions of this nature. The
closing of the Acquisition will be subject to the approval of the stockholders
of EGEN and other closing conditions, including, among others, the continuing
accuracy of representations and warranties and compliance with covenants made by
the parties in the Purchase Agreement, and delivery of customary closing
certificates, third-party consents, approvals, and other instruments and
The above description of the Purchase Agreement does not purport to be complete
and is qualified in its entirety by reference to the full text of the Purchase
Agreement, a copy of which will be filed as an exhibit to Celsion's Quarterly
Report on Form 10-Q for the quarter ending June 30, 2014.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
On June 9, 2014, Celsion borrowed an additional $5 million from Hercules
Technology Growth Capital, Inc. ("Hercules") pursuant to that certain Loan and
Security Agreement dated as of November 25, 2013, by and between Celsion and
Hercules (the "Loan Agreement"). The Loan Agreement provides that Celsion may
borrow from Hercules a secured term loan of up to $20 million. Celsion received
the first advance of $5 million under the term loan on November 25, 2013 and may
request, subject to Hercules' consent in its sole discretion, an additional $15
million in up to three advances with each advance in a minimum amount of $5
million before June 30, 2014 unless extended upon Hercules' consent. The term
loan bears interest at a floating per annum rate equal to the greater of (i)
11.25 percent and (ii) the sum of 11.25 per cent plus the prime rate minus 3.25
per cent. Payments under the Loan Agreement are interest only for the first
twelve months after November 25, 2013, followed by a 30-month amortization
period of principal and interest through the scheduled maturity date.
Celsion previously issued to Hercules a warrant (the "Warrant") exercisable to
purchase 97,493 shares of Common Stock in conjunction with the borrowing of the
first advance of $5 million under the term loan on November 25, 2013. The
Warrant provides that an additional 97,493 shares of Common Stock will
automatically become exercisable when Hercules makes an additional advance to
Celsion in a minimum amount of $5 million under the term loan. In connection
with the borrowing of the additional $5 million by Celsion, the Warrant becomes
exercisable by Hercules to purchase a total of 194,986 shares of Common Stock.
The above descriptions of the Loan Agreement and the Warrant do not purport to
be complete and are qualified in their entirety by reference to the full texts
of the Loan Agreement and the Warrant. A copy of the Loan Agreement is filed as
Exhibit 10.28 to Celsion's Annual Report on Form 10-K for the fiscal year ended
December 31, 2013 filed with the SEC on March 13, 2014. A copy of the Warrant is
filed as Exhibit 4.2 to the registration statement on Form S-3 filed with the
SEC on February 13, 2014.
Item 3.02 Unregistered Sales of Equity Securities.
The information in Item 2.03 of this Current Report on Form 8-K in relation to
the Warrant is incorporated by reference into this Item 3.02. The Warrant was
previously issued in a private transaction exempt from registration under the
Securities Act, pursuant to Section 4(2) thereof.
Item 7.01 Regulation FD Disclosure.
On June 10, 2014
issued a press release announcing the entering into of
the Purchase Agreement. A copy of the press release is furnished herewith as
Exhibit 99.1 to this Current Report on Form 8-K.
On June 10, 2014
issued a press release announcing the borrowing of an
additional $5 million
from Hercules under the Loan Agreement. A copy of the
press release is furnished herewith as Exhibit 99.2 to this Current Report on
The information in this Item 7.01, including Exhibit 99.1 and Exhibit 99.2, is
being furnished and shall not be deemed filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liability of that section, nor shall such information be deemed
to be incorporated by reference in any registration statement or other document
filed under the Securities Act or the Exchange Act, except as otherwise stated
in such filing.
The information in this Current Report on Form 8-K, including Exhibit 99.1 and
Exhibit 99.2, contains forward-looking statements. Such forward-looking
statements involve risks and uncertainties, including, without limitation, the
risk that closing conditions to the Acquisition are not satisfied; difficulties
and operational and financial risks associated with integrating Celsion
after completion of the Acquisition; unforeseen changes in the course of
research and development activities and in clinical trials; the significant
expense, time, and risk of failure of conducting clinical trials; the need for
to evaluate its future development plans; possible changes in cost and
timing of development and testing, capital structure, financial condition,
working capital needs and other financial items; possible acquisitions or
licenses of other technologies, assets or businesses or the possible failure to
make such acquisitions or licenses; possible actions by customers, suppliers,
competitors, regulatory authorities; and other risks detailed from time to time
in the Celsion's
periodic reports filed with the SEC
, including its Quarterly
Report on Form 10-Q filed on May 8, 2014
assumes no obligation to
update or supplement forward-looking statements that become untrue because of
subsequent events, new information or otherwise.
Item 9.01 Financial Statements and Exhibits.
99.1 Press release titled "Celsion Corporation to Acquire EGEN, Inc." issued
by Celsion Corporation on June 10, 2014.
99.2 Press release titled "Celsion Closes Second $5 Million Tranche under Loan
Facility Agreement with Hercules Technology Growth Capital" issued by
Celsion Corporation on June 10, 2014.