Delcath Announces First Quarter 2017 Financial Results
May 09 2017 - 8:00AM
Delcath Systems, Inc. (NASDAQ:DCTH), an interventional oncology
Company focused on the treatment of primary and metastatic liver
cancers, announces financial results for the three months ended
March 31, 2017.
Highlights for the first quarter of 2017 and
recent weeks include:
- First quarter 2017 revenue of $0.74 million, an increase of
100% compared with revenue of $0.37 million in prior year
quarter;
- CHEMOSAT treatment milestone set by SPIRE Southampton Hospital
in the U.K. with more than 100 CHEMOSAT treatments performed,
including eight treatments on a single patient;
- Announced a Special Protocol Assessment (SPA) agreement with
the U.S. Food and Drug Administration (FDA) for the
design of a pivotal trial of Melphalan/HDS to treat patients with
intrahepatic cholangiocarcinoma (ICC);
- The American Journal of Clinical Oncology published a
single-center retrospective review finding that the Company’s
investigational percutaneous hepatic perfusion (PHP) with
Melphalan/HDS offered promising results with a doubling of overall
survival (OS), significantly longer progression-free survival (PFS)
and hepatic progression-free survival (hPFS) compared with other
targeted therapies; and
- Favorable data from two institutions were presented at the
Regional Cancer Therapies Symposium and showed strong tumor
response and overall survival with the Company’s investigational
PHP therapy in patients with ocular melanoma that metastasized to
the liver.
“During the first three months of 2017 we
continued to advance our clinical development programs in ocular
melanoma liver metastases and intrahepatic cholangiocarcinoma,
while making steady progress with commercialization of CHEMOSAT in
Europe,” said Jennifer K. Simpson, Ph.D., MSN, CRNP President and
CEO of Delcath. “As we announced recently, we have concluded
a new SPA agreement with the FDA for the initiation of a pivotal
trial for the use of Melphalan/HDS in patients with ICC. This new
trial will enroll approximately 295 ICC patients at about 40
clinical sites in the U.S. and Europe, with the primary endpoint of
overall survival and with secondary and exploratory endpoints that
include safety, progression-free survival, objective response rate
and quality-of-life measures. The trial is designed to be
cost-effective and conducted in a financially prudent manner, with
modest investment in this fiscal year. In conjunction with the
FOCUS Trial in ocular melanoma liver metastases, our clinical
development programs now include two paths toward potential U.S.
market approvals.
“In Europe, we continue to make steady progress
with the commercialization of CHEMOSAT. Our first quarter
revenue of more than $0.7 million was double the prior year
period’s sales, driven primarily by national reimbursement in
Germany under the ZE system. With coverage under the ZE system now
in place, we expect product sales growth from this market for the
remainder of 2017. Elsewhere in Europe, we continue to
focus on building the clinical and pharmacoeconomic data to support
reimbursement applications in other key markets. We expect
that positive negotiations for coverage in Germany will
support our efforts for payment levels in other markets such as
the U.K. and the Netherlands. Securing reimbursement
coverage in additional European markets remains critical to future
revenue growth for CHEMOSAT,” concluded Dr. Simpson.
First Quarter Financial
Results
Revenue for the three months ended March 31,
2017 was $0.74 million, an increase of 100% from $0.37 million for
the prior year period. Selling, general and administrative expenses
were approximately $2.4 million, unchanged from the prior year
quarter. Research and development expenses for the current
quarter increased to $2.3 million from $1.3 million in the prior
year quarter. Total operating expenses for the current
quarter were $4.7 million compared with $3.7 million in the prior
year quarter.
The Company reported a net loss for the 2017
first quarter of $11.3 million, or $0.25 per share based on 45.1
million weighted average common shares outstanding, compared with a
net loss in the prior year period of $1.8 million or $1.25 per
share based on 1.5 million weighted average common shares
outstanding. The increase is primarily due to an $8.4 million
increase in interest expense primarily related to the amortization
of debt discounts, a non-cash item, and a $1.0 million increase in
operating expenses primarily related to increased investment in
clinical trial initiatives. This was offset by a $0.4 million
change in the fair value of the warrant liability, a non-cash item,
and a $0.27 million improvement in gross profit due to higher
sales.
Balance Sheet Highlights
As of March 31, 2017, Delcath had cash and cash
equivalents of $6.4 million, compared with $4.4 million as of
December 31, 2016. During the first quarter of 2017, the
Company used $3.8 million of cash to fund operating activities.
Delcath believes it has sufficient capital and access to committed
capital to fund its operating activities through the end of
2017.
Recent Financial Transactions
On April 2, 2017, Delcath entered into separate
Warrant Repurchase Agreements with each of the investors named on
the Schedule of Buyers attached to our Securities Purchase
Agreement dated June 6, 2016. Pursuant to the Warrant Repurchase
Agreements, each investor agreed to a Controlled Account Release in
an aggregate amount equal to $7,876,312, which funds in each case
were paid to the respective investor in exchange for cancellation
of the Warrants issued to each investor under the Securities
Purchase Agreement. Delcath anticipates that the cash remaining in
the Controlled Accounts after this transaction will be sufficient
to fund operating activities through the end of 2017.
About Delcath Systems
Delcath Systems, Inc. is an interventional
oncology Company focused on the treatment of primary and metastatic
liver cancers. Our investigational product—Melphalan Hydrochloride
for Injection for use with the Delcath Hepatic Delivery System
(Melphalan/HDS) —is designed to administer high-dose chemotherapy
to the liver while controlling systemic exposure and associated
side effects. We have commenced a global Phase 3 FOCUS clinical
trial for Patients with Hepatic Dominant Ocular Melanoma (OM) and
plan to initiate a Registration trial for intrahepatic
cholangiocarcinoma (ICC) in the Fall of 2017. Melphalan/HDS has not
been approved by the U.S. Food & Drug
Administration (FDA) for sale in the U.S. In Europe, our
system has been commercially available since 2012 under the trade
name Delcath Hepatic CHEMOSAT® Delivery System for Melphalan
(CHEMOSAT), where it has been used at major medical centers to
treat a wide range of cancers of the liver.
Forward Looking
Statements:Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements made by
the Company or on its behalf. This news release contains
forward-looking statements, which are subject to certain risks and
uncertainties that can cause actual results to differ materially
from those described. Factors that may cause such differences
include, but are not limited to, uncertainties relating to:
the timing and results of the Company’s clinical trials
including without limitation the OM and ICC clinical trial
programs, timely enrollment and treatment of patients in the
global Phase 3 OM clinical trial, IRB or ethics committee clearance
of the Phase 3 OM and ICC Registration trial protocols
from participating sites and the timing of site activation
and subject enrollment in each trial, the impact of the
presentations at major medical conferences and future clinical
results consistent with the data presented, approval of Individual
Funding Requests for reimbursement of the CHEMOSAT procedure, the
impact, if any of ZE reimbursement on potential CHEMOSAT
product use and sales in Germany, clinical adoption, use and
resulting sales, if any, for the CHEMOSAT system to deliver and
filter melphalan in Europe including the key markets of Germany and
the UK, the Company’s ability to successfully commercialize the
Melphalan HDS/CHEMOSAT system and the potential of the Melphalan
HDS/CHEMOSAT system as a treatment for patients with primary and
metastatic disease in the liver, our ability to obtain
reimbursement for the CHEMOSAT system in various markets,, approval
of the current or future Melphalan HDS/CHEMOSAT system for delivery
and filtration of melphalan or other chemotherapeutic agents for
various indications in the U.S. and/or in foreign markets, actions
by the FDA or other foreign regulatory agencies, the Company’s
ability to successfully enter into strategic partnership and
distribution arrangements in foreign markets and the timing and
revenue, if any, of the same, uncertainties relating to the timing
and results of research and development projects, our ability to
maintain NASDAQ listing, and uncertainties regarding the Company’s
ability to obtain financial and other resources for any research,
development, clinical trials and commercialization activities.
These factors, and others, are discussed from time to time in our
filings with the Securities and Exchange Commission. You should not
place undue reliance on these forward-looking statements, which
speak only as of the date they are made. We undertake no obligation
to publicly update or revise these forward-looking statements to
reflect events or circumstances after the date they are made.
-Tables to Follow-
Delcath Systems, Inc. |
Condensed Consolidated Statements of Operations
and Comprehensive Loss |
(Unaudited) |
(in thousands, except share data) |
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2017 |
|
|
|
2016 |
|
Product
revenue |
|
$ |
743 |
|
|
$ |
370 |
|
Cost of
goods sold |
|
|
219 |
|
|
|
111 |
|
Gross
profit |
|
|
524 |
|
|
|
259 |
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
Selling,
general and administrative expenses |
|
|
2,415 |
|
|
|
2,377 |
|
Research
and development costs |
|
|
2,321 |
|
|
|
1,344 |
|
Total
operating expenses |
|
|
4,736 |
|
|
|
3,721 |
|
Operating
loss |
|
|
(4,212 |
) |
|
|
(3,462 |
) |
Change in
fair value of the warrant liability, net |
|
|
1,238 |
|
|
|
1,672 |
|
Interest
income (expense) |
|
|
(8,366 |
) |
|
|
5 |
|
Other
income (expense) |
|
|
8 |
|
|
|
(28 |
) |
Net
loss |
|
$ |
(11,332 |
) |
|
$ |
(1,813 |
) |
Other
comprehensive loss: |
|
|
|
|
Foreign
currency translation adjustments |
|
$ |
(22 |
) |
|
$ |
8 |
|
Comprehensive Loss |
|
$ |
(11,354 |
) |
|
$ |
(1,805 |
) |
|
|
|
|
|
Common share data: |
|
|
|
|
Basic and
diluted loss per common share* |
|
$ |
(0.25 |
) |
|
$ |
(1.25 |
) |
|
|
|
|
|
Weighted
average number of basic and diluted shares outstanding* |
|
|
45,084,357 |
|
|
|
1,455,544 |
|
|
|
|
|
|
*reflects a
one-for-sixteen (1:16) reverse stock split effected on July 21,
2016 |
|
|
|
|
|
|
|
|
|
DELCATH SYSTEMS, INC. |
|
Consolidated Balance Sheets |
|
as of March 31, 2017 and December 31, 2016 |
|
(in thousands, except share and per share data) |
|
|
|
|
|
|
|
|
|
March
31, |
|
December
31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
(Unaudited) |
|
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
6,404 |
|
|
$ |
4,409 |
|
|
Restricted cash |
|
|
20,737 |
|
|
|
27,287 |
|
|
Accounts
receivables, net |
|
|
386 |
|
|
|
403 |
|
|
Inventories |
|
|
873 |
|
|
|
660 |
|
|
Prepaid
expenses and other current assets |
|
|
624 |
|
|
|
698 |
|
|
Deferred
financing costs |
|
|
949 |
|
|
|
699 |
|
|
Total
current assets |
|
|
29,973 |
|
|
|
34,156 |
|
|
Property,
plant and equipment, net |
|
|
1,066 |
|
|
|
1,083 |
|
|
Total
assets |
|
$ |
31,039 |
|
|
$ |
35,239 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
(Deficit) |
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Accounts
payable |
|
$ |
699 |
|
|
$ |
594 |
|
|
Accrued
expenses |
|
|
3,548 |
|
|
|
3,407 |
|
|
Convertible notes payable, net of debt discount |
|
|
9,290 |
|
|
|
13,343 |
|
|
Warrant
liability |
|
|
17,513 |
|
|
|
18,751 |
|
|
Total
current liabilities |
|
|
31,050 |
|
|
|
36,095 |
|
|
Deferred
revenue |
|
|
30 |
|
|
|
30 |
|
|
Other
non-current liabilities |
|
|
545 |
|
|
|
604 |
|
|
Total
liabilities |
|
|
31,625 |
|
|
|
36,729 |
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 12) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
(Deficit) |
|
|
|
|
|
Preferred
stock, $.01 par value; 10,000,000 shares authorized; no shares
issued and outstanding at March 31, 2017 and December 31,
2016, respectively |
|
|
— |
|
|
|
— |
|
|
Common
stock, $.01 par value; 500,000,000 shares authorized; 118,568,425
and 4,131,527 shares issued and 118,457,971 and 4,112,417
shares outstanding at March 31, 2017 and December 31, 2016,
respectively* |
|
|
1,186 |
|
|
|
41 |
|
|
Additional paid-in capital |
|
|
288,862 |
|
|
|
277,749 |
|
|
Accumulated deficit |
|
|
(290,520 |
) |
|
|
(279,188 |
) |
|
Treasury
stock, at cost; 110 shares at March 31, 2017 and December 31, 2016,
respectively* |
|
|
(51 |
) |
|
|
(51 |
) |
|
Accumulated other comprehensive loss |
|
|
(63 |
) |
|
|
(41 |
) |
|
Total
stockholders' equity (deficit) |
|
|
(586 |
) |
|
|
(1,490 |
) |
|
Total
liabilities and stockholders' equity (deficit) |
|
$ |
31,039 |
|
|
$ |
35,239 |
|
|
|
|
|
|
|
|
*reflects a
one-for-sixteen (1:16) reverse stock split effected on July 21,
2016 |
|
|
|
|
|
|
|
|
|
|
|
Contact Information:
David Boral
Managing Director
CoreIR
Tel: 516 222 2560
Email: davidb@coreir.com