16.

TECHNOLOGY DEVELOPMENT AND LICENSING AGREEMENTS

May

2012

the Company entered into a long term commercial supply agreement with Zhejiang Hisun Pharmaceutical Co. Ltd. (Hisun) for the production of ThermoDox® in the China territory. In accordance with the terms of the agreement, Hisun will be responsible for providing all of the technical and regulatory support services, including the costs of all technical transfer, registration and bioequivalence studies, technical transfer costs, Celsion consultative support costs and the purchase of any necessary equipment and additional facility costs necessary to support capacity requirements for the manufacture of ThermoDox®. Celsion will repay Hisun for the aggregate amount of these development costs and fees commencing on the successful completion of

three

registration batches of ThermoDox®. Hisun is also obligated to certain performance requirements under the agreement. The agreement will initially be limited to a percentage of the production requirements of ThermoDox® in the China territory with Hisun retaining an option for additional global supply after local regulatory approval in the China territory. In addition, Hisun will collaborate with Celsion around the regulatory approval activities for ThermoDox® with the China State Food and Drug Administration (CHINA FDA). During the

first

quarter of

2015,

Hisun completed the successful manufacture of

three

registration batches of ThermoDox® and the Company accrued

$685,787

for the aggregate development costs and fees associated with these batches in

March

2015.

This amount was paid in

April

2015.

January

18,

2013,

we entered into a technology development contract with Hisun, pursuant to which Hisun paid us a non-refundable research and development fee of

million to support our development of ThermoDox

in mainland China, Hong Kong and Macau (the China territory). Following our announcement on

January

31,

2013

that the HEAT study failed to meet its primary endpoint, Celsion and Hisun have agreed that the Technology Development Contract entered into on

January

18,

2013

will remain in effect while the parties continue to collaborate and are evaluating the next steps in relation to ThermoDox®, which include the sub-group analysis of patients in the Phase III HEAT Study for the hepatocellular carcinoma clinical indication and other activities to further the development of ThermoDox

for the Greater China market. The

$5.0

million received as a non-refundable payment from Hisun in the

first

quarter

2013

has been recorded to deferred revenue and will continue to be amortized over the

year term of the agreement, until such time as the parties find a mutually acceptable path forward on the development of ThermoDox

based on findings of the ongoing post-study analysis of the HEAT Study data.

July

19,

2013,

the Company and Hisun entered into a Memorandum of Understanding to pursue ongoing collaborations for the continued clinical development of ThermoDox® as well as the technology transfer relating to the commercial manufacture of ThermoDox® for the China territory. This expanded collaboration includes development of the next generation liposomal formulation with the goal of creating safer, more efficacious versions of marketed cancer chemotherapeutics.

Among the key provisions of the Celsion-Hisun Memorandum of Understanding are:

	●	Hisun will provide the Company with non-dilutive financing and the investment necessary to complete the technology transfer of its proprietary manufacturing process and the production of registration batches for the China territory;

	●	Hisun will collaborate with the Company around the clinical and regulatory approval activities for ThermoDox® as well as other liposomal formations with the CHINA FDA; and

	●	Hisun will be granted a right of first offer for a commercial license to ThermoDox® for the sale and distribution of ThermoDox® in the China territory.

August

2016,

we signed a Technology Transfer, Manufacturing and Commercial Supply Agreement (“GEN-

Agreement”) with Hisun to pursue an expanded partnership for the technology transfer relating to the clinical and commercial manufacture and supply of GEN-

Celsion’s proprietary gene mediated, IL-

immunotherapy, for the greater China territory, with the option to expand into other countries in the rest of the world after all necessary regulatory approvals are in effect. The GEN-

Agreement will help to support supply for both ongoing and planned clinical studies in the U.S., and for potential future studies of GEN-

in China. GEN-

is currently being evaluated by Celsion in

first

line ovarian cancer patients.

Key provisions of the GEN-

Agreement are as follows:

	●	the GEN- 1 Agreement has targeted unit costs for clinical supplies of GEN- 1 that are substantially competitive with the Company’s current suppliers;

	●	once approved, the cost structure for GEN- 1 will support rapid market adoption and significant gross margins across global markets;

	●	Celsion will provide Hisun a certain percentage of China’s commercial unit demand, and separately of global commercial unit demand, subject to regulatory approval;

	●	Hisun and Celsion will commence technology transfer activities relating to the manufacture of GEN- 1, including all studies required by CFDA for site approval; and

	●	Hisun will collaborate with Celsion around the regulatory approval activities for GEN- 1 with the CFDA. A local China partner affords Celsion access to accelerated CFDA review and potential regulatory exclusivity for the approved indication.